silver pearl hospitality & luxury spaces ltd share price Management discussions

ANNUAL OVERVIEW AND OUTLOOK

The Asian Development Bank (ADB) projects growth in Indias gross domestic product (GDP) to moderate to 6.4% in fiscal year (FY) 2023 ending on 31 March 2024 and rise to 6.7% in FY2024, driven by private consumption and private investment on the back of government policies to improve transport infrastructure, logistics, and the business ecosystem. The projection is part of the latest edition of ADBs flagship economic publication, Asian Development Outlook (ADO) April 2023, released today.

The growth moderation for India in FY2023 is premised on an ongoing global economic slowdown, tight monetary conditions, and elevated oil prices. However, FY2024 is expected to see faster growth in investment, thanks to supportive government policies and sound macroeconomic fundamentals, lower nonperforming loans in banks, and significant corporate deleveraging that will enhance bank lending, according to ADO April 2023. “Despite the global slowdown, Indias economic growth rate is stronger than in many peer economies and reflects relatively robust domestic consumption and lesser dependence on global demand according to us.

“The Government of Indias strong infrastructure push under the Prime Ministers Gati Shakti (National Master Plan for Multimodal Connectivity) initiative, logistics development, and industrial corridor development will contribute significantly to raising industrial competitiveness and boosting future growth.” Improving labour market conditions and consumer confidence will drive growth in private consumption.

The central governments commitment to significantly increase capital expenditure in FY2023, despite targeting a lower fiscal deficit of 5.9% of GDP, will also spur demand. Helped by recovery in tourism and other contact services, the services sector will grow strongly in FY2023 and FY2024 as the impact of COVID-19 wanes. However, manufacturing growth in FY2023 is expected to be tamped down by a weak global demand, but it will likely improve in FY2024. Recent announcements to boost agricultural productivity, such as setting up digital services for crop planning and support for agriculture start-ups will be important in sustaining agriculture growth in the medium term. Inflation will likely moderate to 5% in FY2023, assuming moderation in oil and food prices, and slow further to 4.5% in FY2024 as inflationary pressures subside. In tandem, monetary policy in FY2023 is expected to be tighter as core inflation persists, while becoming more accommodative in FY2024.

The current account deficit is projected to decline to 2.2% of GDP in FY2023 and 1.9% in FY2024. Growth in goods exports is forecast to moderate in FY2023 before improving in 2024, as production-linked incentive schemes and efforts to improve the business environment, such as streamlined labour regulations, improve performance in electronics and other areas of manufacturing growth. Services exports growth has been robust and is expected to continue to strengthen Indias overall balance of payments position.

INDUSTRY OVERVIEW

During the last decade, the whole tourism sector accounted for a share of around seven percent to Indias GDP. The main driver of the sector was the hotel industry, accompanied by tour operations and the restaurant segment in tourist areas. In 2018, there were around 2.5 million hotel rooms in over 100,000 hotels across the country. Nevertheless, number vary at times, especially in the unranked category or in areas outside of tourist hotspots. In general, the market for domestic guests is nearly three times bigger than the market for international guests. The key indicators for this industry are the average daily rate (ADR) by room, the revenue per available room (RevPAR) as well as the occupancy rate.

Even before the coronavirus (COVID-19) pandemic, the average room rate had been unstable. For example, five-star hotels reached a peak in 2011 at 140 U.S. dollars, while the rate was93 U.S. dollars in 2019. Similarly, the RevPAR rate as well as the occupancy rate fluctuated in recent years. 2020 started at good rates for hoteliers in India. The shock came in late March 2020, when the government imposed a lockdown and strict travel restrictions due to the coronavirus (COVID-19) pandemic. Although the whole industry is still grappling with these consequences, there had been rays of hope: domestic demand revived businesses during the festive season towards the end of 2020, and short staycations established a new trend for stressed city-dwellers after the lockdown.

The pandemic accelerated the demand in the wellness industry across the country. This was especially the case for the urban middle class and their desire for a break from fast-paced city lives. Often, this involved travel to less crowded destinations with an indulgence for spa and wellness services.

To increase Indias competitiveness the government had reduced the goods and services tax (GST) for hotels in 2019. Other governmental measures during the pandemic included the webinar-series “Dekho apna desh” to boost domestic travel as well as initiating the assessment and awareness program SAATHI (System for Assessment, Awareness and Training for Hospitality Industry). With increasing digitalization and a prolonged work from home situation for most companies, business travel was expected to take a back seat from its traditionally strong position, paving way to leisure travellers in the near future.

OPPORTUNITIES & THREATS

Opportunities

The start of year 2023 is has been promising and Indian Hospitality Industrys outlook remains positive. Business is expected remain steady in this year and by capitalizing on emerging trends such as staycations and sustainability, the industry can attract and retain royal customers, create and positive impact and achieving long term success in the post pandemic era. The Indian Government has realized Countrys potential in the tourism industry and has taken several steps to make India a global tourism hub.

Threats

Demand erosion during the peak of pandemic had put pressure on liquidity. A weather condition at different tourist destinations is one of the important determinants for tourists arrival to India. The rise is inflation rate drives consumers to make different choices when they travel. The Fed continues to rise Interest rates, is an attempt to drive down inflation; as a result of the cost of borrowing money will continue to go up. The global economic picture is mixed heading into 2023, with the threat of recession in the United States and Europe, growing global geopolitical issues, and an increase in COVID-19 cases in some countries.

RISKS AND CONCERNS

Silver Pearl Hospitality & Luxury Spaces Limited (SPHLSL) has exposures in the business of hospitality. SPHLSL are exposed to specific risks that are particular to their respective businesses and the environments within which they operate, including market risk, competition risk, credit risk, demand risk, risk of spread of pandemic, human resource risk, operational risk, information security risks, regulatory risk and macro-economic risks. The level and degree of each risk varies depending upon the nature of activity undertaken by them.

HUMAN RESOURCE DEVELOPMENT

The Company recognizes that its success is deeply embedded in the success of its human capital. During 2022-23, the Company continued to strengthen its HR processes in line with its objective of creating an inspired workforce. The employee engagement initiatives included placing greater emphasis on learning and development, launching leadership development programme, introducing internal communication, providing opportunities to staff to seek inspirational roles through internal job postings, streamlining the Performance Management System, making the compensation structure more competitive and streamlining the performance-link rewards and incentives.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The provision of the Companies Act, 2013 relating to CSR Initiatives are not applicable to the Company.

COMPLIANCE

The Compliance function of the Company is responsible for independently ensuring that operating and business units comply with regulatory and internal guidelines. The Compliance Department of the Company continues to play a pivotal role in ensuring implementation of compliance functions in accordance with the directives issued by regulators, the Companys Board of Directors and the Companys Compliance Policy. The Audit Committee of the Board reviews the performance of the Compliance Department and the status of compliance with regulatory/internal guidelines on a periodic basis.

Mumbai, May 26, 2023	By order of the Board
	For Silver Pearl Hospitality & Luxury Spaces Limited
Registered Office :	S/d-
3B, Lal Bazar Street, Sir RNM House, 5th Floor,	Rajesh Kumar Negi
Room No. 2, Kolkata 700001 (West Bengal)	DIN: 08131019
	Chairman & Managing Director