Casinos will simply close if this interpretation of GST liability is strictly followed. It also servers the optics of targeting the rich and mighty.
If this is true, then, that is the end of casinos in the country because Delta Corp will be the most hit. It can also severely affect the Goa economy too because Delta pays around 300 cr annually (I think) as taxes in Goa.
News looks to be planted. It does not clearly says Delta corp but is suggesting so since Delta corp has operation in sikkim and goa. Company has categorical denied any notice to SEBI sought information. Not sure if SEBI has authority to cross check with IT authority in conjunction with price movement.
Seems like this is also against international practices on gaming:
If any members have attended the AGM, please do share your notes. Thanks
Its back againā¦ govt should clarify
Anyone been to the casinos lately? How is Big Daddy Casino? They managed to bring down Dan Bilzerian to Goa last week which was quite a marketing coup. Are they a threat or will they help expand + legitimise the market?
Indiaās lottery industry worried over GST, but it is not the only problem - https://www.moneycontrol.com/news/business/economy/indias-lottery-industry-worried-over-gst-but-it-is-not-the-only-problem-4453111.html
Hi. I had been to Goa in May. And was surprised to see Delta had so many local (unlisted ) competitors. Not only the big daddy casino was bigger but was more appealing than Delta ones.
The delta are kind of outdated as they may have been bought many years back. All other competitors casinos were looking newer than Delta one.
Of course, I was not able to go inside for futher scuttlebut as I was touring with my family.
Actually I love the business of Delta and the way Delta is increasing its profits and reducing the debt, but I hate the decreasing promoterās holding in last few years and their pledged shares.
Also maybe they have to upgrade their casinos in future to keep up with the competition. So may have to take debt for it.
So still keeping away for it.
Just sharing my views.
Vikas
Offshore Casinos have to move to land in due course so why would they spend in acquiring bigger vessels. They had indicated that in case they have clarity, they could replace them with bigger ships. I think we need to see the profitability of vessels rather than grandness of the same as an investor. Though it does attract touristy type visitors which are not great revenue contributors anyway. I have not visited recently but heard that Maharaja is bigger than Deltaās two bigger casinos. You also need to keep in mind that lot of serious gamblers go to their favourite destination i.e. Delta or Pride irrespective of the grandness of each. It is somewhat due to brand stickiness or comfort level. Among all offshore casinos, Delta is the only one which is fully prepared to move to land in less time and grand manner. That is one reason there is lot of lobbying and pressure to delay transition to land as far as possible. They have to move ultimately given the state of tax collection stats in general.
Hi sumi00, I totally agree with your points. But I fail to understand promoterās holding coming down so heavily since last few years.
As per NSE website, it was 41.02 in June 15 and now its 32.77 as of June 19.
And out of that 6.08% is pledged.
I can understand that pledging can be for personal reasons also.
But If the business is such wonderful, why someone would decrease their shareholding consistently every year?
This is one big Q for me.
Vikas
Well, canāt speak for the promoter but you canāt expect the promoter to hang around throughout their lives. He has 3 daughters and they might not be interested in keep this ownership. If the fundamentals are strong one can get a new promoter as well. As long as Goa is not issuing new licenses this business will have rock solid strong cash flows and should protect the downside.
Notes on Earnings Call of Delta Corp (Q2FY20) ā
ā¢ Elections, dry docking of a vessel, extended monsoon and floods in Goa, taxi strikes in Goa- all combined together impacted growth during first half of the year.
ā¢ During next 3-5 year period we may see 15 to 20 percent growth and not 30 percent kind of growth as happened earlier. Growth on q-q basis is difficult to maintain. Every quarter we may not see 20% or 30% growth. Managed to reach 200 cr revenue in difficult times(q2).
ā¢ Online gaming business: High advt spends made in earlier quarters showed positive impact on earnings in q2. To maintain 20% EBIDTA margins in online business in future. Should be growing 20-25% over last year. Rs. 14.5 cr monthly revenue against Rs. 11 cr last year.
ā¢ Hospitality segment bore the brunt of slowdown in economy. Expect Hospitality segment to bounce back in Q3 and Q4 with festive season kicking in. Hope to recover a lot of lost ground in Q3 &Q4.
ā¢ It is very reassuring that the CFO is almost equivalent to EBIDTA for the company now. This kind of cash flow is rarely seen in any industry or any business.
ā¢ Have not witnessed much growth in visitations but maintained GGR. Strongly believe that there is potential for growth from here onwards.
ā¢ Bigger Pride vessel and Big Daddy added additional capacity in the market- at least 15-20%. Market expansion is evident given that these two guys are sustaining and Delta reporting 200 cr in revenue.
ā¢ Should see some momentum in winter session on finalization of casino policy.
ā¢ Jalesh Cruise: Had only 10 days of operations in Q2 as the ship started sail around 20th Sept; H1 revenue was 80-90 lakh with cost of around 2-2.5 cr. Next full season of operations(twelve months) may have around 25 cr in revenue.
ā¢ Will take another 3-4 weeks before Nepal casino commences operations. Nepal capex is over. opex salary expenses around 70 lakhs.
ā¢ Daman casino: next hearing scheduled on 14th November, 2019.
ā¢ No possibility of casinos closing down in Goa. Stateās economy is highly dependent on casino industry. Casinos directly employ at least 60000 people for a population of just 1.2 million. 1 direct employment generates 5-7 indirect employments (taxi drivers, restaurants, bars, flights, shacks, etc.). State has high dependence on just this one industry for revenue and employment.
ā¢ City Council of Panjim(CCP) has no authority to issue or refuse license renewals to casinos in Goa. All the CCP can do is to permit or disallow trade on jetties, that too on Panjim side of the ships. License renewal falls under the purview of the State govt. If CCP says they would not allow trade on jetties then we will trade on boats, which is not going to affect business.
ā¢ Relocation to land: Looking to prepare around 2.5 - 3 lakh sft of gaming space. To have 6-7 fold increase in capacity.
ā¢ Capex on relocation to land: Total project cost to be around 2000-2200 cr; Delta to invest 1000-1200 cr(including purchase of land, development of infrastructure on land, etc.); As on date cash available is 415 cr; generating about 300 cr of EBIDTA on yearly basis which is equivalent to cash flow; in next four years 1200 cr cash flow plus 400 cr cash balance adds up to 1600 cr; plus monetization of assets will generate further cash; Delta needs only around 1000-1200 cr capex investment; Even if we have to make the entire investments of 2000-2200 cr on our own, this is going to be done from internal accruals without having to borrow a rupee.
ā¢ GST issue: Havenāt received any communication or any notice or any letter from any department till date. We have sought clarification on the ambiguous Circular(on GST calculation) in last GST Council meeting. GST Council has referred the matter to GoM. Expect full and final clarification from the next GST Council meeting.
ā¢ Minutes of the 36th GST Council meeting show that the CM of Goa has made an extremely strong pitch in favour of casinos to ensure that the ambiguity is put to rest.
Here is the relevant para of minutes of the last GST Council meeting.
Are there 6 or 7 offshore casinos right now including Big Daddy. At many places I read both Big daddy is a make over of Haryana politician casino stuck earlier.
Isnāt the moat of delta the only six offshore licenses given by Goa govt. Once they move onshore, where is the moat? any 5 star hotel can run a casino. Whats stopping them
Total 6 offshore casino. Delta owns 3, Pride owns 2 and Big Daddy - 1. As name suggests Big Daddy is owned by the Haryana Politico. They will get one onshore license for one floating casino whenever the policy is announced so there is no additional one coming. Each offshore casino would be 6-7X in size of floating one as the license doesnāt limit the capacity. No 5 star casino can run board games i.e. Poker, rummy, black jack etc. Hotel casinos can run machine based ones like slot machines etc. There is no new entry of a any casino so no point talking about entry barrier.