Sinclairs Hotels Ltd Management Discussions

Global Development and Industry Structure

The global Economy witnessed a lower growth in 2023-24 as compared to earlier years, which is attributable to prevailing tight monetary and financial conditions, recent signs of stress in the banking system, rising debt levels in certain countries, rising geo-economic fragmentation, stickier than expected inflation and no signs of truce in the Russia-Ukraine war.

However, although significant challenges remain in the global environment, India is one of the fastest growing economies in the world. "TheRsIndian economy is projected to grow at 7.5% in 2024" the World Bank had said in April 2024, revising its earlier projections for the same period by 1.2% (Source: The Hindu). India is emerging as a popular travel destination in the world. This has resulted in Indian tourism and hospitality industry to emerge as the one of the key growth drivers amongst service sectors in India. The year under review i.e., FY 2023-24 marked a remarkable turnaround and return to normalcy in operations for the sector, post pandemic led disruptions in the last few years. The tourism and hospitality sector are a significant source of foreign exchange earnings and crucial for socio-economic growth.Rs It is an integral part of the ‘Make in India initiative, serving as a vital economic catalyst that fuels job creation and rapid development. The Ministry of Tourism had designated the year 2023 as the ‘Visit India Year as an invitation to the world to witness the splendor and magnificence that India offers.

Outlook

Year 2023-24 was highly encouraging, and the hospitality industrys recovery remained strong, owing to resurgence in foreign travel due to international events like Indias G20 presidency, ICC Mens World Cup etc. Indian Government has realised the countrys potential in the tourism industry and has taken several steps to make India a global tourism hub. While leisure destinations continued to thrive, the increase of corporate travels, conferences, events etc. kickstarted travelling within the country in recent years. All segments of leisure, weddings, conferences, events, and corporate travel are expected to grow further in coming years. Domestic tourism is expected to continue to be a key driver of growth of the tourism sector.

Risk and Concern

Weather condition at different tourist destinations is one of the important determinants for tourist arrivals to India. The rise in inflation rate makes consumers to take different choices when they travel. A slowdown in Indias economic growth can also hurt the hospitality business affecting both operational and financial performance. Indias GDP has grown at a good pace in the past quarters and may find it difficult to sustain the same growth owing to international slowdown and geo-political risks. An increase in power and fuel costs poses a huge threat to the hospitality industry as prices for airline tickets rise which directly affects the Company.

Risk Mitigation

The Company understands that managing risk(s) effectively is critical for execution of its strategic objectives. During the financial year the Companys margins were healthy as compared to industry standards. The multi-skilling of the teams at unit level, dynamic pricing structure, cost controls and minimizing of wastage are factors that contribute to the Company outstanding operational efficiency. Optimising use of natural resources such as energy and water and managing waste efficiently are some of our priority focus areas. We are committed towards operating in an environmentally responsible manner while catering to the interests of our diverse stakeholders. Continuous improvement of the Food Safety Management System by optimising the capacities of people, processes and technologies is an ongoing exercise. The pandemic has ensured that cleanliness came back into focus, which is standard in every hotel.

Social content creators and influencers are bringing a major change in the way travellers discover and get inspired with travel experiences. Both business and leisure travel is on a high trajectory. The result of these market developments ensures continued growth for the Company and the sector as a whole.

Internal Control System and their adequacy

Your Company has in place an adequate system of internal controls, with documented procedures covering all corporate functions and hotel operating units. Systems of internal controls are designed to provide reasonable assurance regarding the effectiveness and efficiency of operations, the adequacy of safeguards for assets, the reliability of financial controls, and compliance with applicable laws and regulations. Adequate internal control measures in the form of various policies and procedures of the Company covers all critical and important activities of the Company. These systems and processes are subject to audit and review to ensure that such systems are reinforced on an ongoing basis. Further, the Statutory Auditor have opined in their report that the Company has adequate internal controls over financial reporting.

Material developments in Human Resources

The Companys employees are its most valuable asset, who enable the Company to deliver a level of service that is amongst the best in the hospitality industry. Value based policies have been laid down to attract, train, retain and motivate employees. We continually strive to make our operations more efficient, while creating a respectful work environment for each member of our team. As on March 31, 2024, there were 395 permanent employees in the Company.

Financial and Operating Performance

Sinclairs is now a well-established and renowned home grown brand in the hospitality sector, known for high quality of service, excellent food, clean and hygienic operations, and very fair and transparent dealings. In FY 2023-24, our Company witnessed robust growth in revenue and posted a total revenue of Rs. 6512.59 lakh (Rs. 5733.09 lakh) and EBIDTA of Rs. 3134.16 lakh (Rs. 2537.12 lakh). As on March 31, 2024, Sinclairs Hotels has a presence across nine destinations within the country and the Company is in the process of further expansion. The Company is actively looking at acquiring more properties on lease to ensure faster growth with lower capital investment.

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, 2024, have been prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time, read with Section 133 and other applicable provisions of the Companies Act, 2013.

Details of Significant Key Financial Ratios are as below:

Particulars	2023-24	2022-23
Debtor Turnover	45.23%	52.30%
Inventory Turnover	24.17%	18.57%
Current Ratio	8.73%	11.13%
Net Profit Ratio	36.76%	58.07%
Return on Capital Employed	19.54%	28.54%

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

For and on behalf of the Board of Directors
147 Block G, New Alipore	Navin Suchanti
Kolkata-700053	Chairman
May 21, 2024	DIN: 00273663