MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Industry structure, developments and outlook

The India’s economic fundamentals have improved with the combined impact of strong government reforms, RBI's inflation focus supported by benign global commodity prices. According to International Monetary Fund World Economic Outlook April, 2015, India ranks seventh globally in terms of Gross Domestic Product (GDP) at current prices. As per the Central Statistics Office, the GDP growth rate for financial year 2015-16 is 7.6 % compared to 7.4 % in the financial year 2014-15. The economic activities which witnessed significant growth were ‘financing, insurance, real estate and business services’ at 11.5 per cent and ‘trade, hotels, transport, communication services’ at 10.7 per cent. According to a Goldman Sachs report released in September 2015, India could grow at a potential 8 per cent on average from fiscal 2016 to 2020 powered by greater access to banking, technology adoption, urbanization and other structural reforms.

Numerous foreign companies are setting up their facilities in India on account of various government initiatives like Make in India and Digital India. The Make in India initiative was launched with an aim to boost the manufacturing sector of Indian economy. This initiative is expected to increase the purchasing power of an average Indian consumer, which would further boost demand and hence spur development, in addition to benefiting investors. Besides, the Government has also come up with Digital India initiative, which focuses on three core components: creation of digital infrastructure, delivering services digitally and to increase the digital literacy. The government is looking at a number of reforms and resolution of pending tax disputes to attract investments.

The Indian food industry is poised for huge growth, increasing its contribution to world food trade every year. In India, the food sector has emerged as a high-growth and high-profit sector due to its immense potential for value addition, particularly within the food processing industry.

In India, the restaurant market is mainly comprised of the organized and unorganized restaurant market. The organized restaurant market includes the Quick Service Restaurants, the full service restaurants, PBCL (Pubs, Bars, Clubs and Lounges) and the food courts and kiosks. The unorganized restaurant market includes the roadside vendors, Dhabas, Chinese vans and trolleys. The market has significantly expanded primarily owing to the high demand among the large Indian population over the years. The Quick Service Restaurants and the casual dining restaurants accounts for a major share of the revenues of the organized chain market in India.

The restaurant industry in India has witnessed a sound growth, which has been fueled by the advent of large number of national as well as international chains in the organized market. This can be attributed to the changing demographics, increase in disposable incomes, urbanisation and growth of organized retail. The Food and Beverage industry in the recent past has attracted foreign investments into India and has played an integral role in portraying India as a land of opportunity. Foreign investments results in more capital flow into India and indirectly provides employment and availability of world-class products. The combined food and beverage service market growing at Compound Annual Growth Rate of 23-24 % and it’s expected to touch Rs. 3, 80,000/- Crores by 2017.

The online food ordering business in India is in its nascent stage, but witnessing exponential growth. The organized food business in India is worth US$ 48 billion, of which food delivery is valued at US$ 15 billion. With online food delivery players building scale through partnerships with the restaurants, the online food ordering business has a huge potential and a promising future.

Opportunities and Threats, Risks and concerns

The changing lifestyles with the increasing nuclear families, hectic work schedules and a rise in the urbanization in India over the past years have supported the growth of the restaurant market. Today, the numbers of Internet users have increased which resulted into ordering the food online and also in finding out the best restaurant as per food brference. Now-days, dining out has become frequent activity unlike earlier when it was restricted to specific occasions.

In spite of huge demand, the restaurant owners and operators face disadvantages and challenges unique to the operation of a restaurant business such as hiring and retaining quality kitchen, utility and service staff, lack of adequate skilled manpower, high attrition rate, strict adherence to health and safety regulations, risk of fire, setting menu prices that attract customers and exceed the cost structure, issues of breakdown of equipment and spoilt food, multiple taxes and its cascading effect, numerous clearance / licenses /approvals from authority(ies), high real estate cost.

Threats to the restaurant industry can be from changes in economic variance, risk associated with the competitor who offers similar food types and service on competitive price, scarcity of raw materials, rise in food price which directly effects the cost of food and reduction in profit margin.

Segment–wise or product-wise performance

The Company is brsently operating in only one segment i.e. restaurants.

Internal control systems and their adequacy

The Company understands the importance for adequate internal controls and has a systematic internal controls system in place. The Company has appointed M/s. VBG & Co. as Internal Auditors. Internal audits are carried out at regular intervals and the audit reports are periodically laid before the Audit Committee for review. Observations, if any, in the internal control system is rectified immediately on high priority.

Discussion on financial performance with respect to operational performance

The Company has reported profits during the year under review. The operational performance of the Company is on the growth path. The operational details are mentioned in the financial statement.

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

The Company understands the value of human resource and continuously strives to build a team with experience, integrity and good governance. Various incentives are also provided to nurture and retain the human resource. The relations of the management with staff and workers remained cordial during the entire year. As on 31st March, 2016 the Company has 21 employees on its payroll.

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.