Today's Top Gainer
Note:Top Gainer - Nifty 50 More
Tourism has now become a significant industry in India. It is a sun rise industry, an employment generator, a significant source of foreign exchange for the country. Tourism in India is the third largest foreign exchange earner of the country. The booming tourism industry has had a cascading effect on the hospitality sector with an increase in the occupancy ratios and average room rates. As per Travel and Tourism Competitiveness Report by World Economic Forum, has ranked India at the sixth place in tourism and hospitality. The hotel industry in India thrives largely due to the growth in tourism and travel. Due to the increase in tourism with rising foreign and domestic tourists, hotel sector is bound to grow. There is an emergence of budget hotels in India to cater to the majority of the population who seek affordable stay. International companies are also increasingly looking at setting up such hotels. Imbalance in increase in tourists both domestic and foreign not been supported with equal number of rooms is a latent source of opportunity for growth.
The tourism and hospitality sector is among the top 10 sectors in India to attract the highest Foreign Direct Investment (FDI). According to the data released by Department of Industrial Policy and Promotion (DIPP), the hotel and tourism sector attracted around US$ 9.2 billion of FDI between April 2000 andMarch2018.
The Indian Hospitality industry has emerged as one of the key industries driving the growth of the service sector and, thereby, the Indian economy. The tourism and hospitality sectors direct contribution to GDP in 2016 was 47 Billion. Also, tourism in india accounts for 7.5% of the GDP & is the 3rd Largest Foreign Exchange earner for the country. This is said to have translated into an overall pick up in the economic activities, thereby having a positive impact on the demand for hotel industry in the country.
At the close of FY16, the country saw macroeconomic stability owing to a decline in inflation, fiscal deficit and current account deficit. Going forward, the Union Budget FY18 has identified some Major pillars that will support economic growth for the country that includes tax reforms, fiscal discipline, investment in infrastructure, ease of doing business, agriculture and farmer welfare, rural sector, social sector, education, and job creation.
The Indian government has also taken several steps to make India a global tourism hub. To increase the travel and tourism in India the government plans to cover 150 countries under e- visa scheme by the end of the year. The government has also introduced e-Tourist Visa (e-TV) for 150 countries as against the earlier coverage of 113 countries.
In the long term, the demand-supply gap in India is very real and that there is need for more hotels. The shortage is especially true within the budget hotels and the mid-market hotels segment. There is an urgent need for budget and midmarket hotels in the country as travelers look for safe and affordable accommodation. Various domestic and international brands have made significant inroads into this space and more are expected to follow as the potential for this segment of hotels becomes more obvious. With a rise in online competition, popular models have come up with online travel agents (OTAs) offering a single marketplace for all travel- related needs. There are also seen meta search engines like Trip Advisor and Make My Trip, that operate like travel discovery platforms. Further, online accommodation reservation services like Oyo Rooms have gained popularity. Apart from this, branded hotels are seen operating direct bookings through their websites.
Apart from the above initiatives, the government has proactively sought foreign investment from countries such as China, the United States and Japan, leading to an increase of business related travel to the country.
It should be noted that that the base for tourism in India is still very low. The spurt in demand for hotel accommodation over the last few years has inflated hotel rooms in the country. However, a number of international brands across all hotel segments are planning to or have recently entered the Indian market. Furthermore, domestic hotel chains, too, are embarking on strong expansion and development plans across all hotel segments.
The international travel and tourism industry continues to be one of the largest global industries and a major engine of economic growth. At present, 1 in every 11 people worldwide are employed by the tourism sector, with the industry generating US$ 7.2 trillion or 9.8% of the global GDP in 2015. As per the most recent data, Foreign Tourist Arrivals (FTAs) in India increased 11.8% YoY due to 670000 tourists in August 2016. Further, Foreign Exchange Earnings (FEEs) from tourism increased 13.1% YoY to Rs. 129 billion in August 2016 (source: Ministry of Tourism).
As per the Ministry of Tourism, the number of tourists arriving on e-Tourist Visa (e-TV) during the month of August 2016 reached a total of66,097 tourists. This meant a growth ofl96.6%ona YoY basis. Domestic travel spending also witnessed impetus, attributing 82.5% to the direct Travel & Tourism GDP. The appreciation of the US dollar has made international travel unattractive to many who are now seeking to travel within the country for holidays.
F.Y. 2016-17 also saw the first Incredible India Tourism Investment Summit 2016. The event was organised from September 21-23, 2016. The summit witnessed signing of 86 Memoranda of Understanding (MOU) worth around Rs 150 billion for the development of tourism and hospitality projects. The 2016-2017 Union Budget allocated Rs 15.9 billion to infrastructural development and promotion which is a 70% hike over the previous year.
The Company believes that there is a significant potential for growth of hospitability business in India. During the year, it has taken several measures to tap this opportunity. As most of its addressable market is very active online, the Company has made a conscious effort to focus on digital, both as a channel for future growth and to build its brand. As a result, response times to customer leads, queries or online mentions are being cut drastically. The Companys results of operations are primarily affected by room revenue and food and beverage revenue in its hotel. Room revenue is dependent upon the number of hotel rooms occupied by guests and the rate at which such guests can be charged.
The Company with a view to expand its business has made an investment in a new project at Poovar, Kerala, by acquisition of an existing resort and surrounding land approximately 6 acres to develop this resort from an existing 13 rooms to 75 rooms with all amenities, and has purchased
floral Plots at Kulathoor Village, Taluka Neyyatinkara, District Thiruvananthapuram.
The prime motive of Company has been profitable growth and to achieve the same, the Company has been fast re-shaping its processes aligning its people to the vision of creating long term shareholder value. The Company has included general trading in its main objects in the current financial year and now operates in three segments. The Management believes that Company will be able to achieve better growth in all three segments in the future.
DISCUSSION ON OPERATIONAL PERFORMANCE & FINANCE HIGHLIGHTS:
During the year under consideration the income of your Company has increased to Rs. 1811.68 Lac in the current year from Rs. 1490.43 Lac earned in the previous year. The Profit before Tax (PBT) of the Company for the current year has increased to Rs. 84.55 Lac as against 76.76 Lac in the previous year. Similarly the Profit after Tax (PAT) for the current year is Rs. 62.78 Lac as compared to Rs. 51.70 Lac earned in the previous year.
The Management is expects growth form this sector in long run as the business climate has turned positive and will be able to acquire and expand more business in future.
Our income from other sources comprises of interest income from bank and other non-operating income.
Efficient resort operations are central to delivering a holiday experience that meets the expectations of our customers. This encompasses three key areas: infrastructure and facilities, holiday activities, and food and beverage (F&B). The Company continued its initiative on institutionalizing postholiday feedback as the chief mechanism to measure its success in delivering quality holiday experience to its customers and addressing their concerns. We are happy to report that the feedback scores have consistently improved dining the year. Efforts are in progress to further improve the coverage of the feedback, both in terms of processes and resort location.
OPPORTUNITIES, THREATS, RISKS AND CONCERNS:
Viewed on face value, the Govts annual budget produced no cheer from hospitality. Tourism, hospitality and hotels did not even find mention and taxes increased. Viewed more broadly, though, there is hope. If airport, road and rail infrastructure improves, as planned, manufacturing & industry will benefit. 3-5 yr tax holiday for start-ups should boost this sector too. Rural and farm initiatives could deliver more income to smaller towns. Optimistically, we may gain indirectly.
Winter 17-18 provided a glimmer of hope. Revenues have largely improved over the same period in the previous year. India wide new hotel room supply is petering off. We expect further gains in REVPAR in 18-19.
Goa still maintains its position as Indias No.l leisure destination. Strong domestic demand, combined with inbound interest, keeps Goas engine running. We will tread FY17 with some caution. Events in Europe, and the indifferent health of Europes largest economies, may see downward inbound traffic. We forecast modest growth in Gross Revenue in the coming year.
The company has made units investments at Poovar Islands Resorts at Kulahtoor Village, Taluka Neyyatinkara and District Thiruvananthpuram in Kerala in view of further expansion.
Risk management is an integral part of the Companys business process. With the help of experts in this field, risks are carefully mapped and a risk management framework is evolved. Pertinent policies and methods are set forth to mitigate such risks. The Company has taken several measures at all its properties to beef up its security preparedness. In addition to the physical security measures, the Company has also taken adequate insurance cover to meet financial obligations which may arise from any untoward incidents. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has a proper and adequate internal control system to ensure that all the assets are safe-guarded and protected against the loss from unauthorized use or disposition and those transactions are authorized, recorded and reported correctly.
The internal control is supplemented by an extensive internal audit, periodical review by the management and documented policies, guidelines and procedures. The internal control is designed to ensure that the financial and other records are reliable for preparing financial statements and other data and for maintaining accountability of assets.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES:
The Company continues to lay emphasis on developing and facilitating optimum human performance. Performance of management was the key word for the Company this year. Recruitment process has been strengthened to ensure higher competence levels. During the year, the Company successfully inducted people to meet the needs of the growing business, both from outside as well as through talent management and capability development initiatives aimed at development of existing employees. The employee strength is 110 as on3r* March, 2018.