TGB Banquets Management Discussions

The global economy witnessed a recovery in 2022 following two years of a pandemic-inflicted environment, Global tourism is steadily improving towards pre-pandemic levels consequent to the relaxation of travel restrictions across countries and increase in demand for travel. Tourist arrivals internationally for 2022 were 917 million, double that of 2021 but recovering to 63% of pre-pandemic levels of 2019, according to data from the United Nations World Tourism Organization (UNWTO). The International Monetary Fund (IMF) in their report of April 2023 estimates growth in global Real Gross Domestic Product (GDP) for 2022 to increase by 3.4% on the back of a 6.3% increase in 2021. A higher-than-usual growth in 2021 was due to a low-base effect of 2020 as a result of the global pandemic during which GDP contracted by 2.8%. 2022 saw inflationary trends across the globe, particularly in developed economies of United States of America (US), United Kingdom (UK) and Europe, which resulted in tighter monetary interventions by central banks which in turn stifled growth. Continuing invasion of Ukraine by the Russian Federation disrupted supply chains causing an increase in food, commodity and energy prices. Finally, a resurgence of COVID-19 in China weighed on the global economy in 2022.

INDIAN ECONOMY OVERVIEW

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. Total Consumption grew by 7.0% in FY 2022-23 mainly due to private consumption. Growth in exports for FY 2022-23 seems to have plateaued at 12.5% while Imports grew by 20.9% in FY 2022-23. By sectors, agriculture grew by 3.5% during FY 2022-23 after a growth of 3.0% in FY 2021-22. Mining grew by 2.4%, manufacturing by 1.6% and construction by 9.1% while electricity, gas water supply and other utilities services grew by 9.0% in FY 2022-23. Services sector exhibited the strongest growth in FY 2022-23 at 9.1%. Within services, ‘trade, hotels, transport, communication and broadcasting related services constituting about a third of overall services, grew by 13.7%. Indias service exports have nearly doubled in a decade to US$ 322.72 billion for FY2022-23 according to provisional data of the Ministry of Commerce. Indias foreign currency reserves stood at US$ 578.45 billion as of March 31, 2023 covering approximately 9 months of imports due to timely interventions of the Reserve Bank of India (RBI). 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)

Indias economic recovery from the pandemic exhibited, Travel and hospitality remained beneficiaries of such recovery. Indias service exports have risen at a staggering pace since the pre-pandemic period. Service exports have increased by more than US$60 billion per year as India gains global market share. Exports are not only of Information Technology services but also professional management and consultancy, research and development and expanding Global Capability Centres. This growth is expected to bring in higher employment, higher disposable income and thus a higher propensity to spend by ‘white-collar people working in such sectors. This is an important factor in making economic growth broad- based and inclusive. HSBCs Economic Research believes that there is a growth relay at play. It reported - “The formal sector drove growth from the pandemic lows and is now passing the baton to the informal sector, which was weak for several years but has started to grow across the rural and urban sectors. As a result, for now, overall growth remains stable.” (HSBCs Global Economic Research, March and April 2023)

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).

OVERVIEW OF THE GLOBAL HOSPITALITY AND TOURISM INDUSTRY

Global tourism is steadily improving towards pre-pandemic levels consequent to the relaxation of travel restrictions across countries and increase in demand for travel. Tourist arrivals internationally for 2022 were 917 million, double that of 2021 but recovering to 63% of pre-pandemic levels of 2019, according to data from the United Nations World Tourism Organization (UNWTOQ). Europe with the largest share of global inbound tourism registered a 92% increase over 2021 to reach nearly 80% of pre-pandemic levels. The Middle East had the strongest relative increase among all regions due to large international events such as Expo 2020 Dubai and the FIFA World Cup in Qatar. Even with a 241% increase in tourist arrivals in 2022 over 2021, Asia and the Pacific remained the weakest in terms reaching pre- pandemic levels. However, within the region, international tourist arrivals in South Asia at 25.5 million, were higher by 158% over 2021 and achieved 76% of pre-pandemic levels (Source: UNWTO, Barometer January 2023). According to the S&P Global Sector Purchasing Managers Index, the Tourism and Recreation sector led a pick-up in global business activity amongst all sectors recording its sharpest pace since May, 2022. Transportation recorded the third fastest growth behind software services (Source: S&P Global Sector PMI April 2023).

Outlook :

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. In December, 2022, 116 destinations had no COVID-19 related restrictions. In addition, 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. UNWTOQs scenarios expect international tourist arrivals to reach 80% to 95% of pre-pandemic levels in 2023 (Source: UNWTO, Barometer January 2023).

OVERVIEW OF THE INDIAN HOSPITALITY AND TOURISM INDUSTRY

FY 2022-23 continued to be a year of strong recovery in the Indian travel and tourism industry. Restrictions on flights were relaxed in most countries into and from India. Travel restrictions, documentation and certifications were also progressively relaxed for travel within India. Consequently, demand for accommodation grew significantly, mainly arising from domestic leisure travel, weddings, social events, conferences and resumption of business travel within the country. Foreign tourist arrivals were 6.19 million for the calendar year 2022 in comparison with 1.52 million in 2021.

This constituted 57% of 2019 foreign tourist arrivals at 10.93 million (Government of India, Ministry of Tourism Annual Report 2022-23). Domestic air traffic passengers for 2022 were at 123 million, growing by 47% over 2021 to 85% of pre-pandemic levels.

Outlook: The outlook for the Indian hospitality industry during 2023 remains positive. The upsides working in favour of the hospitality industry in India are good macro- economic environment evidenced by 6%+ GDP growth, superior performance by the services sector of the Indian economy, abating COVID-19 fears, continuing infrastructure development projects within the country, growth in air and railway passenger traffic and growth in demand for branded rooms outpacing a tepid growth in supply of those rooms to provide long-term sustainable demand. Moreover, the industry has learnt to work with volatility and adopt leaner cost structures thus contributing to higher profitability. Balance Sheets of large corporates have also strengthened over the past few years. Growth in the industry is largely expected from domestic demand which is expected to remain strong through FY 2023-24 even as international travel has shown green shoots of recovery and provides scope for further growth in demand. Additionally, the Indias G20 Presidency and an opportunity to host international events, including the ICC Mens World Cup, is expected to increase demand for hotels in the cities hosting the events. Growth in Indias service sector and higher disposable income of people working in it, referred to in HSBCs Economic Research paper above is also expected to increase demand for corporate travel and holidays. All segments of leisure, weddings, conferences events, airline crew layovers and corporate travel are expected to grow further during the year.

Revenue

The company recorded revenue of \3784.60 Lakhs during the financial year under review as compared to 3 2618.65 Lakhs achieved during the previous period. Expenses

During the financial year 2022-23 under review, the total expenses were \ 4073.71 Lakhs as compared to 3 4134.00 Lakhs in the previous year Key financial ratios

The key financial ratios of the Company are as follows:

1. Current Ratio is 2.28 in financial year 2022-23 compared to 2.09 in the financial year 2021-22

2. Debt equity ratio is 0.12 in financial year 2022-23 compared to in F.Y. 2021-22 was 0.11.

3. Debt Service Coverage Ratio is 30.39 in financial year 2022-23 compared to 15.10 in financial year 2021-22.

4. Operating Profit Margin of the Company in the financial year 2022-23 is 49.77%as compared to 55.00% in 2021- 22.

5. Net Profit Margin in financial year 2022-23 is 3.55% as compared to profit of -75.00% in financial year 2021-22.

6. Return to net worth in financial year 2022-23 is 1.75% compared to -26.74% returned in financial year 2021-22. 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 Svstems and their Adequacy

The Company has institutionalised an adequate system of internal controls, with documented procedures covering all corporate functions and hotel operating units. Internal controls 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.

It converges the process framework, risk and control matrix and a scoring matrix, covering all critical and important functions inter alia revenue management, hotel operations, purchase, finance, human resources and safety. A framework for each functional area is identified based on risk assessment and control, while allowing the unit to identify and mitigate high-risk areas. These policies and procedures are updated periodically and monitored by the Internal Auditor. The Boards Audit Committee oversees the adequacy of the internal control environment through periodic reviews of audit findings and by monitoring implementation of internal audit recommendations through compliance reports. The statutory auditors have opined in their report that there are adequate internal controls over financial reporting at TGB.

FINANCIAL RESULTS:

The Companys financial performance for the year ended on March 31, 2023 is summarized below:

		(Z In Lakhs)
Particulars	Year ended 31? March,2023	Year ended 31*March, 2022
Revenue from Operation	3784.60	2618.65
Other Income	433.54	96.07
Total Revenue	4218.14	2714.72
Less : Total Expenditure	4073.71	4134.00
Profit from Operations before Exceptional Items and Tax	144.43	(1419.28)
Add : Exceptional Items	-	919.16
Profit before tax	144.43	(2338.44)
Add current Tax	-	75.00
Less : Provision for taxation	-	-
Less : Deferred tax Liability	8.14	(376.44)
Profit after tax	136.29	(2037.00)
Other Comprehensive Income	-	-
Items that will not be reclassified to P & L	1.92	22.03
Re-measurement of defined benefits plans {net of tax)	-	-
Total Comprehensive Income	138.21	(2014.97)

Note: Previous years figures have been regrouped / reclassified wherever necessary to correspond with the current years classification / disclosure and may not be comparable with the figures reported earlier. COMPANYS PERFORMANCE:

Revenue:

The company recorded revenue of \3784.60 Lakhs during the financial year under review as compared to J 2618.65 Lakhs achieved during the previous period.

Profit Before Tax:

Profit before the tax during the financial year ended March 31, 2023 stood at I 144.43 lakhs as compared to the loss of I (2338.44) lakhs for the previous financial year March 31, 2022

Net Profit:

Net profit for the financial year ended March 31, 2023 stood at \ 136.29 lakhs as compared to the loss of

3 (2037.00) lakhs for the previous financial year March 31, 2022

Cautionary Statement: Statement in this Management Discussion and Analysis Report, describing the Companys objectives, estimates and expectations may constitute ‘Forward Looking Statements within the meaning of applicable laws or regulations. Actual results might differ materially from those either expressed or implied.

	By Order of the Board of Directors
	For and on behalf of the Board
Place: Ahmedabad	Narendra G. Somani
Date: August 14, 2023	Chairman & Managing Director
	(DIN: 00054229)