[Pursuant to Regulation 34 read with Part B Schedule V of the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015]
Management Discussion and Analysis Report will provide details of performance of the
Company as well as its approach to sustainability and risk management. This report
describes Companys objectives, projections, estimates and expectations may constitute
‘forward-looking statements within the meaning of applicable laws and regulations.
Although the expectations are based on reasonable assumptions, the actual results might
differ.
INDUSTRY INSIGHT:
The Indian tourism and hospitality industry have emerged as one of the key drivers of
growth among the services sector in India. Tourism in India has significant potential
considering the rich cultural and historical heritage, variety in ecology, terrains and
places of natural beauty spread across the country. Tourism is an important source of
foreign exchange in India similar to many other countries. India is the most digitally
advanced traveler nation in terms of digital tools being used for planning, booking and
experiencing a journey. Indias rising middle class and increasing disposable income has
supported the growth of domestic and outbound tourism. The Indian airline travel market is
projected to double in size by FY 27 due to improving airport infrastructure and growing
access to passports. India is a large market for travel and tourism. It offers a diverse
portfolio of niche tourism products - cruises, adventure, medical, wellness, sports, MICE,
eco-tourism, film, rural and religious tourism. India has been recognized as a destination
for spiritual tourism for domestic and international tourists. The UNWTO expects
international tourism to consolidate its recovery in 2023 more specifically in Asia and
the Pacific region. It attributes this growth to the recent opening of several source
markets and destinations including China, which was the worlds largest outbound market in
2019. Improved performance of air traffic and robust travel demand from US markets for
European holidays backed by a strong US Dollar are expected to be the other contributors
to global growth. Domestic tourism will continue to be a key driver of recovery of the
tourism sector through 2023. Major risks threatening the ongoing recovery of tourism in
2023 remain economic, health and geopolitical risks. Prime among these are high inflation
and interest rates, spike in oil and food prices, higher transport and accommodation
costs, fear of a global recession, intermittent COVID-19 virus recurrences and the Russian
aggression against Ukraine causing unrest through Europe. UNWTOs scenarios expect
international tourist arrivals to reach 80% to 95% of pre-pandemic levels in 2023 (Source:
UNWTO, Barometer January 2023).
Safety and Hygiene:
Hygiene, cleanliness and the associated need for more safety and security are probably
some of the most important factors and hotel industry trends of the year. The pandemic has
ensured that cleanliness, which is standard in every hotel, came back into focus. In these
challenging times, hygiene is simply a part of a carefree guest experience. Hotels should
therefore do everything in their power to ensure that the guests enjoy a hygienic stay.
Hotels should accompany their guests at every step, from booking to arrival, and tell them
what measures they have taken to ensure their safety. This is not primarily about cleaning
more, as the hygiene standards in the hotel industry have always been high. It is about
showing, saying, explaining, and illustrating to the guests exactly which steps are being
carried out from beginning to the end.
Green and Sustainable Tourism:
A focus on environmental sustainability isnt new, but the degree to which guests
expect (and prefer) eco-friendly products and services is. Todays traveler wants to stay
at hotels that have integrated green practices in all aspects of their business. From
physical changes to hotel buildings, like the addition of solar panels, to F&B menus
with more vegetarian and vegan choices, its evident that these environmentally friendly
trends are here to stay. Sustainable tourism is now a new way of practicing tourism.
Tourism plays an important role in the economy of most countries. The well-being of the
host community became the priority instead of the tourists. Sustainability has been one of
the hotel industries trends for a number of years. Due to the coronavirus, environmental
protection and sustainability have slipped into the background for a short time, as it
initially seemed difficult to combine it with the new hygiene conditions.
Nevertheless, "green" tourism is still important for your potential guests.
Protection of the environment is particularly important to Generation Z and the next
generation.
Customization through Digitalization:
A trend that will become more important than ever in 2023 is customization. However,
this does not necessarily mean in personal conversation. It is much more a matter of
creating a unique and individual experience for the guest. In order for the stay to be
extraordinary, however, it takes more than just basic standards such as free Wi-Fi or a
bottle of free water in the room. Guests want to be excited, both digitally and
personally.
Act Globally and Think Locally:
Another hotel industry trend to keep an eye on in 2023 is the conflict between
advancing globalization and local context. In a world so connected by business and
economic ties, it only makes sense that globalization would have implications in the hotel
industry. As globalization drives incomes in countries around the world, more people can
afford to travel, which means that hotels face opportunities and challenges that come with
accommodating new travelers from different places. Along with this rising middle class,
increased income inequality further distances the highest earners from the rest. Luxury
travelers continue to have an appetite for over-the-top experiences. Like domestic
travelers, International Guests are interested in local attractions and regional
delicacies. Bring your surroundings to life and encourage your guests to become familiar
with their local people. In this context, it is necessary to stress the need for
collaboration.
New concepts in our Industry:
In addition to the classic hotel, a large number of new, alternative types of
accommodation have developed on the market in recent years. Boarding houses, services
apartments, co-living spaces for remote workers or single travelers are just a few
examples of these alternatives. Soon these will no longer be alternatives, but a part of
the standard as well as classic hotels. Because one thing is clear, the longer hotels are
empty, the more money is lost. And that is precisely why more and more experienced
hoteliers are looking for creative ways to fill their hotel again and use the rooms for
other purposes. This "alternative" hotel industry trend will thus continue in
2023, as far as it can be combined with the business and service strategy.
Opportunities and Threats:
While considerable challenges lie ahead, the crisis also provides an unprecedented
opportunity for transformation. It offers the possibility of rethinking tourism so as to
leverage its impact on destinations and build more resilient communities and businesses
through innovation, digitalization, sustainability and partnerships. Innovation and
sustainability will be two key pillars of a recovery focused on building tourism back
better and stronger. In a sector that employs 1 in 10 people globally, the goals of
harnessing innovation and digitalization, embracing local values, fostering accessibility
and creating decent jobs for all, especially for youth, women and the most vulnerable
groups, should be at the forefront of that recovery.
Along with opportunities as mentioned, the present scenario has come with many threats:
The hospitality industry has undergone a seismic transformation since 2020. This period
of change is set to continue through 2022 and 2023, with shifts in demographics and
technology and the post-pandemic transition to a new normal all playing decisive roles.
The pandemic disproportionately affected labor-intensive services sectors in India.
Commercial air travel, tourism, catering, leisure, personal care and retail industries,
manufacturing, trade and transportation which typically employ large numbers of
low-skilled workers faced the largest job losses. Many of the jobs in these sectors cannot
be performed remotely, making them vulnerable to lockdown and quarantine measures.
OPPORTUNITIES |
THREATS |
| • Re-think business model |
• Economic environment: world recession, rising unemployment and
jobs at risk, disposable income, uncertainty weighing on consumer and business confidence |
| • Innovation and digitalization |
• Climate Change |
• Sustainability and sustainable-oriented segments (rural,
nature, health) |
• Implementation of Lockdowns and travel restrictions |
| • Progress in adaptation plans in destinations & companies |
• Changing travel patterns |
| • Utilising Artificial Intelligence in customer support |
|
Segment wise or product-wise performance:
Your Company is in Hospitality sector and provides food and beverages and accommodation
services to the customers. We have a single segment and the comparative performance of the
Company has been detailed in the financial Statements for Financial Year 2022-23. Further
details of the adequacy of internal controls and material developments in human resource
are given in Directors Report which forms a part of this Annual Report.
Global and Domestic Outlook:
The global economy witnessed a recovery in 2022 following two years of a
pandemic-inflicted environment, although economic slowdown is concentrated in advanced
economies especially the Europe and UK where growth is expected to fall to 0.8% and -0.3%
in 2023 because of recession and inflation. IMF forecasts growth to fall from 3.4 percent
in 2022 to 2.8 percent in 2023, before settling at 3.0 percent in 2024. Advanced economies
are expected to see an especially pronounced growth slowdown, from 2.7 percent in 2022 to
1.3 percent in 2023. In a plausible alternative scenario with further financial sector
stress, global growth declines to about 2.5 percent in 2023 with advanced economy growth
falling below 1 percent. Global headline inflation in the baseline is set to fall from 8.7
percent in 2022 to 7.0 percent in 2023 on the back of lower commodity prices but
underlying (core) inflation is likely to decline more slowly. Inflations return to target
is unlikely before 2025 in most cases. (Source: IMF - World Economic Outlook Update, April
2023).
World Economic Outlook:
A Survey by the IMF staff usually published twice a year. It presents IMF staff
economists analyses of global economic developments during the near and medium term.
Chapters give an overview as well as more detailed analysis of the world economy; consider
issues affecting industrial countries, developing countries, and economies in transition
to market; and address topics of pressing current interest. Annexes, boxes, charts, and an
extensive statistical appendix augment the text. The war in Ukraine has triggered a costly
humanitarian crisis that demands a peaceful resolution. Economic damage from the conflict
will contribute to a significant slowdown in global growth in 2023. A severe double-digit
drop in GDP for Ukraine and a large contraction in Russia are more than likely, along with
worldwide spillovers through commodity markets, trade, and financial channels. Even as the
war reduces growth, it will add to inflation. Fuel and food prices have increased rapidly,
with vulnerable populations particularly in low-income countries most affected. Elevated
inflation will complicate the trade-offs central banks face between containing price
pressures and safeguarding growth. Interest rates are expected to rise as central banks
tighten policy, exerting pressure on emerging market and developing economies. Moreover,
many countries have limited fiscal policy space to cushion the impact of the war on their
economies. The invasion has contributed to economic fragmentation as a significant number
of countries sever commercial ties with Russia and risks derailing the post-pandemic
recovery. It also threatens the rules-based frameworks that have facilitated greater
global economic integration and helped lift millions out of poverty.
Indian economy:
The Indian tourism and hospitality industry have emerged as one of the key drivers of
growth among the service sector in India. Tourism in India has significant potential
considering the rich cultural and historical heritage, variety in ecology, terrains and
places of natural beauty spread across the country. Tourism is an important source of
foreign exchange in India similar to many other countries. India is now the fastest
growing major economy in the world. The First Advance Estimates of National Income
released by the National Statistical Office (NSO) of the Government of India in January
2023 estimates Indias GDP to have grown by 7.0% in FY 2022-23 following a growth of 8.7%
in FY 2021-22. The consensus of GDP growth for FY 2022-23 was in the range of 6.5% to
7.0%. (Source: India Economic Survey 2022-23 January 2023 and National Statistical Office
estimates). The outlook for FY 2023-24 is optimistic. Retail inflation ebbed out to 5.6%
in March 2023 from a peak of 7.79% in April 2022 and is expected to moderate to 5.2%. Core
inflation which remained above 6% for the year eased to 5.8% in March 2023. Among the high
frequency indicators, direct and indirect tax collection has shown strong momentum, bank
balance sheets are strong, adequately capitalised and credit offtake during the year was
highest since FY 2011-12. RBI paused increase in interest rates in April, 2023 after a 250
basis points increase during FY 2022- 23 citing reasons of resilient economic activity and
expected moderation in inflation. The Indian Rupee is stable, the Current Account Deficit
is expected to remain moderate and consumer sentiment is high. (Source: RBI Monetary
Policy, April 2023, Revised Estimates Ministry of Finance, April 2023).
RISK GOVERNANCE:
We understand that effectively managing risk is critical to the execution of our
strategic objectives. We strike a balance between managing potential risks and seizing
emerging opportunities to achieve excellence, both operationally and financially. To
fulfil the Groups strategic aims, we are embedding a culture of proactive risk management
by supporting acceptable and monitored risk-taking.
The number of risks that our sector is dealing with is on the rise. Hospitality sector
faces a variety of potential risks that hotels need to contend with, particularly as they
deal with an influx of both leisure and business travelers. Rapidly changing customer
demands and a boom in guest-facing connected technologies are among the factors changing
the risk landscape for hospitality companies. Following are risk identified and steps
taken to mitigate them:
1. Business slowdown, Inadequate growth:
After the pandemic Covid-19, the risk of business slowdown, inadequate growth and
negative returns has been increased. Especially our industry has been the most affected
one which has turned the growth chart downwards. We have identified four steps •
next-generation talent models, • data-driven decision making, • customer
loyalty, and • operational flexibility and responsiveness to map out the kind of
readiness thats likely to help our business even in a coming downturn. Whats left to
determine is the path from theory to action which we are working on.
2. Cyber Security Data Privacy:
Cybersecurity has been a big concern for a number of sectors, but the hospitality
business is more focused on preventing data and identify theft. A security breach has huge
ramifications. At the very least, businesses are required to contact other guests (past
and present) and inform them that their data may have been compromised. This alone can be
costly and may also lead to brand damage. If stolen data is used by fraudsters, the
businesses may face liability claims for failure to protect data and maintain reasonable
safeguards. As more hospitality and travel companies use digital systems to automate tasks
and manage their data, we are identifying the potential risks and putting all efforts to
bring their solution to the table.
3. Inadequate Compliances:
As the regulations proliferate and stakeholder expectations increase, organizations are
exposed to a greater degree of compliance risk than ever before. Specifically, compliance
risk is the threat posed to a companys financial, organizational, or reputational
standing resulting from violations of laws, regulations, codes of conduct, or
organizational standards of practice. Since the array of potential compliance risks facing
an organization is typically very complex, we are adopting an effective framework which
outlines and organizes the elements of an effective risk mitigation strategy that can be
applied to each compliance risk domain.
4. Guest behavior:
In hospitality industry, Guests represent the fuel, without guests and travelers, our
business wouldnt make any money. However, guests can also potentially be the biggest
threats both directly and indirectly to profitability. Lawsuits from people who are
injured or damage to guestrooms can represent a big risk to the bottom line. We have
internal controls in place to handle guest destruction and ensure travelers safety during
their stay. Small things, such as closer management of property and resources, helps in
preventing incidents like this from happening in the first place.
5. Staff:
Staff is another critical risk. During the pandemic, many employees were rooted in
their jobs because it was so difficult to find work elsewhere. As the situation improves,
staff will have more options both in and outside the industry. This means hotels are at
greater risk of having their key personnel poached by their competitors. Hiring and
retraining are options, but they come with additional expenses.
We need to address any demographic, wage level and worker satisfaction issues to ensure
that our staff remains motivated and content. New retention plans and innovative
strategies help in keeping employees engaged. At the same time, we ensure that our
employees arent actively working against us. Property theft is a big issue at many
hospitality companies, given the number of amenities they deal with on a daily basis.
While a stolen towel might not seem like much, theft adds up over the course of the year.
6. Branding:
As the hotel industry has consolidated, operators brands have expanded into a vast
number of territories, and are often instantly recognizable to customers. Therefore, it is
of vital importance to operators that the brand is protected in every unit. Hence, we
ensure that high and consistent standards are maintained throughout all locations, which
is challenging due to the geographical distance separating each establishment. We reduce
this risk by establishing strong brand guidelines which are communicated effectively to
staff in all Units.
Brand protection may equally involve the need to enforce intellectual property rights.
Any infringement by an inferior brand may affect customers perception of our brand.
Hence, we ensure that all rights are appropriately registered and regular intellectual
property audits are carried out, if standards are not maintained.
HOSPITALITY POLICIES AND GOVERNMENT INITIATIVES BOOSTING THE INDUSTRY:
SAATHI Initiative:
Ministry of Tourism has partnered with the Quality Council of India (QCI), to assist
the Hospitality Industry in their preparedness to continue operations safely and mitigate
risks arising out of the COVID-19 pandemic through an initiative called SAATHI (System for
Assessment, Awareness and Training for Hospitality Industry).
A hotel/unit goes through the SAATHI framework and agrees to fully follow the
requirements wherever applicable possible, and a self-certification is issued.
Self-certified Hotel/units attend webinars to clarify doubts through live interactions
If Hotel/unit desires, they may undertake site-assessment based on SAATHI framework
through QCI accredited agencies and an assessment report with opportunities for
improvement is shared with the assessed unit.
Tax Incentives:
An investment-linked deduction under Section-35 AD of the Income Tax Act is in place
for establishing new hotels under 2-star category and above across India, thus permitting
a 100% deduction in respect of the whole or any expenditure of capital nature.
In 2019, the Government reduced GST on hotel rooms with tariffs of Rs. 1,001 (US$
14.32) to Rs. 7,500 (US$ 107.31) per night to 12% and those above Rs. 7,501 (US$ 107.32)
to 18% to increase Indias competitiveness as a tourism destination.
Strengthening the Hospitality & Tourism Industry:
In Union Budget 2023-24, US$ 290.64 million was allocated to Ministry of Tourism as the
sector holds huge opportunities for jobs an entrepreneurship for youth in particular and
to take promotion of tourism on mission mode, with active participation of states,
convergence of government programmes and public-private partnerships.
An app will be developed covering all relevant aspects of tourism. States will be
encouraged to set up Unity Malls in State Capital as the most prominent tourism centers to
promote One District One Product, GI products, handicrafts and products of other States.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
• The Companys Total Revenue was Rs. 29273.43 Lakhs in 2022-23 as
compared to Rs. 18936.69 Lakhs in the previous year, an increase of about 54.59 %
• Earnings before Interest, Depreciation, Taxes, Amortizations and Exceptional Items
(EBIDTA) was Rs. 10588.21 Lakhs as compared to Rs. 7558.77 Lakhs, an
increase of about 40.08 %. • Profit before Tax was Rs. 7419.30 Lakhs as
compared to Rs. 3369.27 Lakhs in the previous year, an increase of about 120.20%.
• The Net Profit after tax for the year was Rs. 5509.15 Lakhs as
compared to Rs. 2646.12 Lakhs in the previous year, an increase of about 108.20
%. • Total comprehensive income was Rs. 5428.81 Lakhs as against Rs.
2760.65 Lakhs in the previous year, an increase of about 96.65%. • The
Cash and cash equivalent as at 31st March, 2023 was Rs. 189.50 Lakhs as against Rs.
674.46 Lakhs in the previous year, a decrease of about (71.90%).
• The Company continuously trying to improve the cash flow by applying the various
techniques as lease instead of buying of the property, improving inventory management,
improvement in debtors ageing and encouragement to electronic payments etc. • The
Company and the Hotels have taken various initiatives to protect the Health and Safety of
Guests and Employees. All precautions based on World Health Organization Guidelines and
directions of the Central and State Governments have been implemented and are being
strictly adhered to. • The detailed Financial and Operational Performance present in
notes to accounts for the financial year 2022-23 which forms a part of this Annual Report.
DETAILS OF CHANGES IN KEY FINANCIAL RATIO & RETURN ON NET WORTH
The key financial ratios of the Company where there has been significant change (25% or
more) and change in Return on Net Worth are summarized below along with detailed
explanation:
Particulars |
Unit |
2022-23 |
2021-22 |
% of Change |
Detailed explanation, if there is any significant change |
Debtors Turnover Ratios Inventory Turnover |
Times |
32.47 |
32.00 |
1.47 |
Increase in Revenue from Operation has resulted in an improvement in
ratio. Increase in Revenue from |
Ratio |
Times |
28.00 |
12.00 |
134.44 |
Operation has resulted in an improvement in ratio. Increase in Net
Profits & |
Interest Coverage Ratio |
Times |
5.28 |
2.82 |
47.12 |
decrease in interest has resulted in an improvement in ratio. Increase
in Current Assets in F.Y. 2022-23 compared to F.Y. |
Current Ratios |
Times |
1.51 |
1.03 |
45.54 |
2021-22 has resulted in an improvement in ratio. Decrease in Debt in
F.Y. 2022-23 compared to F.Y. 2021-22 has |
Debt Equity Ratios |
% |
13.47 |
55.49 |
(75.72) |
resulted in an improvement in ratio. Increase in Revenue from |
Operating Profit Margin |
% |
40.19 |
38.88 |
3.37 |
Operation has resulted in an improvement in ratio. Increase in Net
Profits has |
Net Profit Margin |
% |
20.91 |
16.43 |
27.28 |
resulted in an improvement in ratio. Increase in Net Profits has |
Return on Net Worth |
% |
39.41 |
31.14 |
26.56 |
resulted in an improvement in ratio. |
+91-9892691696
