TGB Banquets & Hotels Ltd Management Discussions.

Industry Structure and Development

The Indian tourism and hospitality industry has 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 also a potentially large employment generator besides being a significant source of foreign exchange for the country.

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 incomes has continued to support the growth of domestic and outbound tourism.

During 2018, foreign tourist arrivals (FTAs) in India stood at 10.56 million, achieving a growth rate of 5.20 per cent year-on-year. FTAs in January 2019 stood at 1.10 million, up 5.30 per cent compared to 1.05 million year-on-year. During May 2019, arrivals through e-tourist visa increased by 21.70 per cent year-on-year to 1.23 million.

The travel & tourism sector in India accounted for 8 per cent of the total employment opportunities generated in the country in 2017, providing employment to around 41.6 million people during the same year. The number is expected to rise by 2 per cent annum to 52.3 million jobs by 2028.

The hospitality industry has been undergoing tremendous changes and disruptions over the last two decades. The key trends that are reshaping the industry are as follows:

• Virtual communities across social networks like Trip Advisor and Google, among others influence tourists and lead to more transparency

• Online Travel Agents (OTAs) have altered distribution channels, facilitated a shift towards large brands and have built enduring relations with travelers

• Digitalised guest experiences through apps are increasingly helping hoteliers manage many aspects of the guest cycle and experience

• Booming global tourism, owing to enablers like low-cost carriers and healthy GDP growth in emerging markets.

• Rising trend of experience economy wherein customers request extreme personalization, unique experiences, and so on

Opportunities and Threats

The Indian government has realised the countrys potential in the tourism industry and has taken several steps to make India a global tourism hub. Some of the major initiatives planned by the Government of India to give a boost to the tourism and hospitality sector of India are as follows:

• Statue of Sardar Vallabhbhai Patel, also known as State of Unity, was inaugurated in October 2018. It is the highest standing statue in the world at a height of 182 metre. It is expected to boost the tourism sector in the country and put India on the world tourism map.

• The Government of India is working to achieve 1 per cent share in worlds international tourist arrivals by 2020 and 2 per cent share by 2025.

• Under Budget 2019-20, the government allotted Rs 1,160 crore (US$ 160.78 million) for development of tourist circuits under Swadesh Darshan.

• Under Budget 2019-20, the government allotted Rs 160.50 crore (US$ 22.25 million) for development of tourist circuits under Swadesh Darshan.

While in other side International hotel chains are increasing their presence in the country, as it will account for around 47 per cent share in the Tourism & Hospitality sector of India by 2020 & 50 per cent by 2022. In effect of that Indian hotel industry will face Economic risks, high capital costs, competition in the industry, old infrastructure facilities and scarcity of land.

Also, there is an increasing competition from the startups/online industry due to the increasing penetration of the internet.

Outlook Revenue

The company recorded revenue of 8,119.17 Lakhs during the financial year under review as compared to 12,322.64 Lakhs achieved during the previous period.

Expenses

During the financial year 2018-19 under review, the total expenses were 12,729.57 Lakhs as compared to 14,967.32 Lakhs in the previous year. Due to adequate and efficient internal control system expenses of the Company has reduced marginally.

Key Financial Ratios

The key financial ratios of the Company are as follows:

1. Current Ratio is 1.36 in Financial Year 2018-19 as compared to 1.91 in the Previous Financial Year 2017-18.

2. Debt equity ratio is 0.11 in Rinancial Year 2018-19 compared to in Financial Year 2017-18 was 0.08.

3. Debt Service Coverage Ratio (0.03) in Financial Year 2018-19 compared to (0.16) in Financial Year 2017-18.

4. Operating Profit Margin of the Company in the Financial Year 2018-19 is 42.14% as compared to 46.05% in 207-18.

5. Net Profit Margin in Financial Year 2018-19 is (66.81%) as compared to profit of 0.44% in Financial Year 2017-18.

6. Return to Net worth in Financial Year 2018-19 is (52.32%) compared to 0.34% returned in Financial Year 2017-18.

Risks and Concerns

In the last few years the rise in Operating & Manpower costs has been a major cause of concern along with the raising capital needs and of course the various compliances which takes a major component of revenue.

Internal Control Systems and their Adequacy

The Company has standard operating procedures. It has in place adequate reporting systems in respect of financial performance, operational efficiencies and reporting with respect to compliance of various statutory and regulatory matters. The internal auditors of the Company had regularly conducted exhaustive internal audits pertaining to all operational areas and their reports were placed before the Audit Committee for its review and recommendations.

Human Resources and Industrial Relations

Smooth Industrial Relations and effective Human Resource Management are the key factors contributing towards success in the industry. As our company is part of the hospitality industry the importance of efficient and motivated human resources helps in achieving complete customer satisfaction. The employee strength of the Company, as on March 31, 2019 was 598.

Review of Operational and Financial Performance

As increase in the operating revenue vis--vis previous year, the EBIT stands of (4,610.40) Lakhs in the current year vis--vis

(1,274.53) Lakhs during Financial Year 2017-18. And the total comprehensive income after tax is (5,424.62) Lakhs as compared to previous year of 54.26. However the business sentiments looks negative and Company aims to do better, both in terms of profitability in the times to come and Company is focusing on retaining market share in highly competitive Hotel Market. The price earnings per share for equities also decrease to (18.52) per share against 0.19 per share in previous year.