Pecos Hotels & Pubs Ltd Management Discussions.
1. INDUSTRY STRUCTURE AND DEVELOPMENT:
Indian food service industrys market size at Rs. 4,23,865 crore in 2018-19 which is expected to grow at a CAGR of nine per cent to reach Rs. 5,99,782 crore by 2022-23, India Food Services Report 2019, released by the National Restaurant Association of India recently. The product offerings of the industry are of a wide spectrum in terms of both price and quality, responding to a huge demand from every section of society. We see this industry growing at an even faster pace for years to come with India being the youngest country in the world along with an internet and tech-savvy consumer base, having a high disposable income with little time to cook indoors.
2. OPPORTUNITIES & THREATS:
Guest today are very discerning & value conscious, to keep them coming back we need to be consistent in our quality. This gives us an opportunity to carve out a market share for our company that would be profitable and durable over the long term. Sudden changes in government regulation have proved to be a significant threat to our industry. We can however mitigate this threat by wider diversification both geographically and in our product offering. We feel that the future growth of Pecos will come from diversifying into smaller cities. We would be opening the first Pecos outlet outside Bangalore in Pune shortly which will be a huge step in this direction.
3. SEGMENT WISE OR PRODUCT WISE PERFORMANCE:
Your company will concentrate on consolidating and growing its well-established brand "PECOS PUBS" in markets outside Bangalore and other key cities in India. The company is focusing on cities where we are confident of an established fan following of our brand. There is an ongoing process of our research and development to identify new product verticals that can evolve into brands of the future.
Your Management holds a very positive outlook for the brand going forward. "Pecos Pubs" was awarded the best pub of 2019 by "INDIA NIGHTLIFE. This is an honor hard won by consistent performance over the years.
5. RISKS AND CONCERNS:
Your company has been dealing with businesses such as competition, attrition, pilferage etc. for decades, and we have developed robust risk mitigation system to address these issues. Regulatory policy especially with regard to alcoholic beverage is a state subject and varies significantly from one state to another. This remains an issue of concern for us.
6. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:
Your company has invested substantial resources into technology and system-based controls for all aspects of business operations. This past year we have implemented a new robust software which enables us to manage all aspects of the business ranging from billing, cost control, material management etc., seamlessly and effectively. Every outlet is subject to real time accounting for sales and purchases. In addition, strict controls are maintained for hygiene and food quality produced.
7. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:
We are happy to announce that those unfortunate, unprecedented and unforeseen circumstances for the accounting year 2017-2018 due to the highway ban are now in the past. This year we have relocated one of our Pubs from BTM Layout to Koramangala where we anticipate a much higher volume of business. We are happy to share that the Pub is operationally profitable within 2 months of its operation at the new location. We have also undertaken the expansion of the Indiranagar outlet as we had a huge demand on weekends which was going unfulfilled due to lack of space. We anticipate that to add more to the
overall revenue in Indira Nagar with only a marginal increase in operational costs. This year the addition of one more outlet outside Bangalore in Pune gives us a lot of excitement. The venue should be operational in the month of July. We should be able to put one more outlet in Pune this financial year shortly after the first outlet settles down. The company expects to achieve a much higher level of operational profitability in the current Financial Year.
5. MATERIAL DEVELOPMENT ON HUMAN RESOURCES:
The F&B business continues to be very subjective and dependent on human capital. Your company is fully seized of this reality and continues to invest in training of existing staff to optimize their potential. Fresh talent is also introduced in the company whenever and wherever possible. Your company enjoys the privilege of having a long dedicated loyal work force in an industry which is plagued by alarming attrition rates. We believe that Our commitment to offer the best possible product plus service to our clientele is shared by each and every member of our team. This is the only recipe for our success.
|For and on behalf of the Board|
|Liam Norman Timms|
|Whole Time Director|