sinclairs hotels ltd share price Management discussions


Industry Structure and Developments

Indias hospitality sector is showing fast recovery post the Covid- 19pandemicthatcrippled it. There has been unprecedented zeal through 2022 to make up for the lost travel opportunities during the pandemic lockdowns. The hotel occupancies returned to pre- Covid level and in many cases even surpassed the same. The improving dynamics of players has resulted in supply additions, that were deferred due to Covid-19, gathering momentum during fiscals 2022 and 2023.

India is fast emerging as a popular travel destination in the world. This has resulted in Indian tourism and hospitality industry emerging as the one of the key growth drivers amongst service sectors in India. Indias ranking in the global Travel and Tourism Development Index (TTDI) is 54th in 2021. The industry was encouraged by the expansion of e-Visa scheme, restoration of e-visas for travelers which led to an increasein tourist inflow to India.

The Tourism and Hospitality sectors are a significant source of foreign exchange and crucial for socio-economic growth. According to the statistics of India Brand Equity Foundation (IBEF), the Tourism and Hospitality Industry in India is growing on robust demand, and the travel market is projected to reach US$125 billion by FY27 from an estimated US$75 billion in FY20.The influx of international tourists to India is projected to reach 30.5 million by 2028. FDI inflows in the Tourism & Hospitality sector reached US$ 16.48 billion between April-June 2022. Under Indias G20 Presidency, the Indian tourism sector is projected to contribute US$ 56 billion forex to GDP and generate 140 millionjobs.

In 2021, the travel and tourism industry in India contributed around 178 billion U.S. dollars to the countrys GDP (source: Statisca.com). The Central Government is of the view that by 2030, the tourism sector will contribute 250 billion U.S. dollars to the countrys gross domestic product (GDP). The statistics are a reflection of the booming growth and potential of the hospitality sector in India that is rising after the lull created by the pandemic.

The hospitality industry is poised to continue its rebound in 2023 after showing promising signs of recovery in previous years performance.

Outlook

The start of 2023 has been promising, and the Indian hospitality industrys outlook remains positive. Business is expected to remain steady for this year, and by capitalising on emerging trends such as staycations and sustainability, the industry can attract and retain loyal customers, create a positive impact and achieve long-term success in the post-pandemic era. The Indian Government has realised the countrys potential in the tourism industry and has taken several steps to make India a global tourism hub.

Risk and Concern

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

Risk Mitigation

Social content creators and influencers are bringing a tectonic shift in the way travelers discover and get inspired with travel experiences. Authentic experiences make peer to peer recommendations as highly trusted suggestions among travellers. Companies around the world are now working to bring together these trusted recommendations with the capability to book on the same websites, pushing social travel commerce to the mainstream. This not only makes it more trusted and convenient

to book travel experiences but also mitigates the risks associated with booking trips based on fancy AI recommendations and cookie cut online tours. Business cum Leisure travel is a growing trend. The result of these market developments will ensure continued economic recovery for the hospitality sector.

The Companys margins are healthy as compared to industry standards. The cluster approach, multiskilling of the teams at unit level, dynamic pricing structure, cost controls and minimizing of wastage are factors that contribute to the Companys outstanding operational efficiency.

Internal Control System and their adequacy

Your Company has a robust and reliable system of internal controls commensurate with the nature of the business, and the scale and complexity of operations providing reasonable assurance of recording transactions in all material aspects and providing reliable financial information. The system and processes covering all financial, operating and compliance functions are subject to regular audit and review to ensure that these systems are reinforced on an ongoing basis.

Financial and Operating Performance

Sinclairs is now a well-established and respected home grown brand in the hospitality sector, known for high quality ofservice, excellent food, clean and hygienic operations and very fair and transparent dealings. The Companys new hotel Sinclairs Yangang, in South Sikkim, commenced operations on 3rd May, 2022 but is yet to attain its full potential.

In FY 2023, your Company posted an operating Revenue of Rs 5733.09 lakh ( Rs 3433.02 lakh) and EBIDTA of Rs 2537.12 lakh (Rs 1493.92 lakh).

The Company is actively looking to expand both by way of brownfield acquisition as well as green field projects. We are looking at acquiring more properties on lease which enables us to grow faster with lower capital investment.

Material developments in Human Resources

Value based policies have been laid down to attract, train, retain and motivate employees. Your Company continuously takes steps to maintain a competitive, healthy and harmonious work environment.As on March 31,2023, there were 403 employees in the Company.

Disclosure of Accounting Treatment

The Company has adopted Indian Accounting Standards (Ind AS) with effect from April 1, 2016. Financial Statements for the year ended March 31, 2023 have been prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015as amended from time to time, read with Section 133 and other applicable provisions of the Companies Act, 2013.

Details of Significant Key Financial Ratios

Particulars

2022-23 2021-22

Debtor Turnover

52.30% 49.73%

Inventory Turnover

18.57% 12.63%

Current Ratio

11.13% 8.87%

Net Profit Ratio

58.07% 23.50%

Return on Capital Employed

28.54% 8.09%

Debt-Equity ratio is not applicable since there are no Borrowings The details of key financial ratios with explanation is provided in note no. 36 of financial statement.

For and on behalf of the Board

147 Block G New Alipore

Navin Suchanti

Kolkata 700053

Chairman

May 23, 2023

DIN: 00273663