Vidli Restaurants Ltd Management Discussions

Industry structure, development and outlook

The global economy witnessed a recovery in 2022 following two years of a pandemic-inflicted environment and demonstrated positive signs. The Indian economy has showed resilience and strong growth across sectors and continues to be among the fastest-growing economies in the world. The Indian economic growth in the year under review is estimated to be at 7 per cent. The accelerated pace of economic reforms and strong domestic consumption have led to higher and sustainable growth of the Indian economy and strengthened its position in the world. The geopolitical tensions caused by the prolonged Russia-Ukraine war, supply chain disruptions, high inflation, and tighter monetary conditions were some of the challenges for the economic recovery.

The outlook for the Indian hospitality industry during 2023 remains positive. The hospitality sector in India is an integral part of the travel and tourism industry and it primarily thrives on tourism. The sector in India is segmented by type like independent/unbranded hotels, Chain Hotels, branded or traditional Hotels and is highly fragmented. It is dominated by several small and unorganized players.

The industry has learnt to work with volatility and adopt leaner cost structures thus contributing to higher profitability. Although the Country offers immense attraction to foreign tourists, demand from domestic tourists is also a major booster. Opportunity to host international events, is expected to increase demand for hotels in the cities hosting the events. All segments of leisure, weddings, conferences events, airline crew layovers and corporate travel are expected to grow further during the year. The government takes several initiatives for promotion of tourism which play a major role in the growth of the hospitality industry.

Opportunities and Threats, Risks and concerns

Over the course, growth was seen in the recent times due to economic development, young and working population, rapid urbanisation, changing lifestyles, and consumption pattern. Rising trend of dining out and online food delivery, the emergence of a branded food service ecosystem, growing fast food chains, and exposure to non-native cuisines, are among factors which are beneficial for the sector. Indian consumers are willing to spend money on dining experiences similar to those found around the world and are seeking out regional and global cuisine options. This presents opportunities for food service providers to diversify their offerings and cater to varied tastes and preferences.

There has been a change in the nature of customer expectations and raised the bar in terms of the type of experience which becomes challenging as reputation and customer satisfaction is vital. Millennial driven type of brand attracting certain segment of consumer is difficult for traditional brands to catch up on. The Indian food services market is expected to remain highly competitive, with numerous players operating across various segments.

Employee management is a major challenge faced by the industry, shortage of experienced personnel, high attrition rate, lack of workforce quality is a constant task. Maintenance of food safety and hygiene, catering to changing consumer likings are some of the critical factors. Changing government guidelines becomes difficult to adhere to, risk of fire, to maintain competitive menu prices with ever changing price of raw materials, supply chain issues, numerous clearance / licenses /approvals from authorities, high real estate cost are some of the challenges faced by the industry. Terrorist attacks, biological outbreaks and incidents of political or social violence impacts specific locations and leisure travel.

Segment-wise or product-wise performance

The Company is presently operational in only one segment i.e. hospitality, food products and allied activities.

Internal control systems and their adequacy

Your Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. Review of the internal financial controls mechanism of the Company was undertaken during the year under review which covered verification of entity level controls, process level control and IT controls, review of key business processes and analysis of risk control etc. During the period under review, effectiveness of internal financial controls was evaluated. Reasonable Financial Controls are operative for all the business activities of the Company and no material weakness in the design or operation of any control was observed.

Our Company has developed a set of rules, systems, policies and procedures to ensure the reliability of financial reports, the effectiveness of the operations and its activities comply with applicable laws, rules, regulations and code of conduct. The Board of directors, management team and other connected personnel of the Company are integral part of the internal control system.

The Company has appointed M/s Pipalia Singhal & Associates, Chartered Accountants, Chartered Accountant firm to carry out the internal audit of the Company for the financial year 2022-2023. The Audit Committee of the Company reviews the internal audit report submitted by the internal auditor and provides suggestion, if any.

Discussion on financial performance with respect to operational performance

The net worth of the Company is Rs. 12.64 Crores as compared to Rs. 8.69 Crores over previous year. The Secured loans are Rs. 1.46 crores as compared to Rs. 0.75 crores in the previous year. The turnover of the Company was Rs.17.58 crores as compared to Rs. 4.16 crores in the previous year. Further, the Company has earned profit before tax of Rs. 1.01 crore as compared to Rs. 0.04 crore in the previous year. The operational performance is illustrated in detail in the financial statement.

Material developments in Human Resources / Industrial Relations front, including number of people employed.

The Company has always perceived its Manpower as its biggest strength. The emphasis is on grooming in-house talent enabling them to take higher responsibilities. As on 31^st March, 2023 the Company has 87 employees on its payroll. The Employee relations continue to be cordial at all the divisions of the Company. Your Directors place on record their deep appreciation for exemplary contribution of the employees at all levels. Their dedicated efforts and enthusiasm have been integral to your Companys steady performance.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor, including:

There are significant changes in key financial ratios mainly due to impact of Covid-19 pandemic on the operations and working of the Company. Details are mentioned under:

F - Favourable A - Adverse

Disclaimer:

Statements mentioned in this report are forward looking statements and based on certain assumptions and expectations of future events which are out of control of the Company and the actual results can differ materially from those reflected herein. The Company assumes no responsibility to publicly amend, modify or revise any statement on basis of any development, information, event.