Ladies and Gentlemen
I have great pleasure in writing to you all shareholders on the performance of thecompany and the general economic environment in the world particularly after theunprecedented impact of COVID -19 pandemic on businesses and on human lives which wasnever witnessed in recent times.
The company's operations are in travel and tourism industry and the hospitalityindustry has been among the sectors hit hardest by the Corona Virus pandemic with theresulting lockdowns and economic slowdown decimating revenues profits and incurred cashlosses to meet the obligations of the company.
General Economic Environment
The Indian economy witnessed a sharp drop in GDP following the impact of COVID 19 induced lockdown during first half of FY21 showed moderate signs of improvement in thesecond half of FY 21. The GST collections also got robust from November 2020 onwards.However the second wave that started in late March 2021 has come in the way of furtherrecovery necessitating deployment of resources to protect the lives safety and basicneeds of a large vulnerable sections of society besides augmenting healthcareinfrastructure that is needed to fight the second wave.
There have been lock downs by all the States across the country since April 2021causing shutdown of manufacturing facilities as well as off-line trade in mostgeographies. Following the drop in cases and mass scale vaccination initiatives thelockdown is being relaxed in stages in many geographies since mid-June 2021.
The silver lining is that following a bountiful monsoon in FY 21 the monsoon during FY22 is also expected to be normal. Unlike the Q1 of the previous year the GST collectionsduring the first quarter of this fiscal year have been sizable indicative of a reasonablestate of activity in the overall economy.
Notwithstanding the huge spends on COVID relief packages the Union Government keptinvesting in various infrastructure projects and schemes envisaged in the Union Budget forFY 20-21 and it is expected that the planned investments outlined in the FY 22 budget willalso continue. This can create employment as well as income generation that can boostconsumption especially in the rural economy in the coming months.
Notwithstanding the positives outlined above there does exist a fair probability ofconditions remaining uncertain over a longer duration as the pandemic is yet to abateboth globally and locally with the emergence of newer and newer strains. The second wavehas impacted every other family forcing sizable spends on healthcare and also leading to amindset to preserve cash for any future emergency. Large scale deficit financingnecessitated by the pandemic can have inflationary effects affecting disposable income. Itis expected that the ever-resilient Indians will fight their way up to restore growth.
Indian Hospitality Sector
The Indian hotel industry has taken a hit of over Rs 1.30 lakh crore in revenue for thefiscal year 2020-21 due to the impact of the COVID-19 pandemic (Source: As per theFederation of Hotel & Restaurant Associations of India (FHRAI reports). The apexindustry body submitted a representation to the Hon'ble Prime Minister and a few otherUnion Ministers urging immediate support from the government to save the hospitalitysector from imminent collapse and has requested for several fiscal measures for this.
As pr the FHRAI reports the Indian hotel industry's total revenue in FY2019-20 stoodat Rs.1.82 lakh crore and revenues generated by the Industry during the FY2020-21 wasapproximately 75 per cent lower than the previous year revenues resulting in a revenuehit of around Rs.1.30 lakh crore. The pandemic left many hotels and restaurants to closetheir businesses because this is labour intensive industry and has large volume of fixedcost components which many small time entrepreneurs find it difficult to sustain in thelong run. The industry witnessed closure of many businesses and rise in nonperformingassets (NPAs).
The industry per-se since March 2020 has been struggling to manage its statutory andrevenue / capital expenditure obligations repayment of loans with interest which is notjust difficult but impossible under a more severe economic environment due to pandemic.
The Government of India announced Emergency Credit Line Guarantee Scheme (ECLGS) whichhelped some companies to raise money to meet the obligations and also the loan repaymentmoratorium announced by Reserve Bank of India in March 2020 for a period of 6 months i.e.March to August 2020 also helped the company. The Industry association has also requestedthe Government that the sector is very much in need to waive off property tax watercharges electricity charges and excise license fees for the lockdown period and someState Government(s) come forward and waived for the lockdwon period.
When the second wave of the virus was at its peak in April and May 2021 the Federationof Hotel and Restaurant Associations of India (FHRAI) the apex industry body soughtimmediate help from Hon'ble Prime Minister for government aid to save the hospitalitysector from imminent collapse.
With the above background I shall proceed to briefly cover the highlights of FY 21 andthe steps being taken by your Company to stay stronger in these turbulent times.
Financial Year 2020-21
Your company had to deal with the following major challenges during FY 20-21.
a. Lockdown that started during the second fortnight of March 2020 continued upto endQ1 of FY 21
b. The company operated with only Taj Deccan during Q1 of FY21 and gradually opened TajChandigarh in July Taj Club House in September Taj Krishna & Vivanta Begumpet inNovember 2020 and Taj Banjara in December 2020.
c. The company took various cost saving initiatives during the closed down period ofthe hotels and normalized the operations gradually.
Total income of the company for the year ended 31st March 2021 is Rs.96.82 Crore ascompared to Rs.313.84 Crore of the previous year. EBITDA was Rs.0.47 Crore as againstRs.75.35 Crore and Loss After Tax of Rs.26.13 Crore as compared to Profit After Tax ofRs.23.31 Crore of the previous year. The company achieved an overall occupancy of 40% asagainst 65% with an ADR of Rs. 3980 as against Rs. 5481.
Total income of the company for the year ended 31st March 2021 is Rs.96.82 Crore ascompared to Rs.313.84 Crore of the previous year. The company reported a Loss After Tax ofRs.39.65 Crore as compared to Profit After Tax of Rs.27.56 Crore of the previous year.
Due to the current pandemic times and keeping in view the company philosophy toconserve cash the company has not declared any dividend for the FY 2020-21.
On a stand-alone basis your Company is having a debt of Rs. 178.52 Crore as againstRs. 165.62 Crore in the previous year. The company repaid Rs. 24.38 Crore during the yearunder review and also borrowed Rs. 33.25 Crore under ECLGS scheme of Government of India.
I want to extend my heartfelt gratitude to all the employees ofTAJGVK who dedicatetheir best to the organization and I count on continued support of Central and StateGovernments Bankers and all other stakeholders who reposed confidence in the company ina sustainable manner during these challenging times and look forward to engaging with themmore intensely.
Dr. G V K Reddy
Non Executive Chairman