Dreamfolks Services Ltd:Annual Report 2023-24 Analysis

Dreamfolks Services Ltd. - A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History:

Dreamfolks Services Ltd. was established in 2008 by Liberatha Peter Kallat. The company started as a provider of airport lounge access services.

Headquarters Location and Global Presence:

The company’s headquarters is located in Gurugram, Haryana, India. Dreamfolks has a significant presence in India and has expanded internationally through partnerships and collaborations.

Company Vision and Mission:

• Vision: To be the global leader in airport and travel-related services.
• Mission: To enhance the travel experience for passengers by providing convenient, comfortable, and value-added services.

Key Milestones in Their Growth Journey:

• 2008: Incorporation of Dreamfolks Services Private Limited.
• Early years: Focused on establishing a network of airport lounges and partnerships with banks and card issuers.
• Expansion of services to include meet and greet, spa services, and other travel-related offerings.
• August 2022: IPO and listing on the Indian stock exchanges.

Stock Exchange Listing Details and Market Capitalization:

Dreamfolks Services Ltd. is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). You can find the current market capitalization on financial websites like NSE and BSE.

Recent Financial Performance Highlights:

Review company financials from the past year and present:

• Revenue growth
• Profitability (Net Income, EBITDA)
• Key financial ratios (e.g., Return on Equity, Debt-to-Equity)

Management Team and Leadership Structure:

• Founder & Managing Director: Liberatha Peter Kallat

Their Products #

Complete Product Portfolio with Categories:

Dreamfolks provides a suite of services categorized as follows:

• Airport Lounge Access: Facilitating access to airport lounges for travelers.
• Food & Beverage Services: Providing access to discounted or complimentary meals at airport restaurants.
• Spa Services: Offering access to spa and wellness services at airports.
• Meet and Assist Services: Providing personalized assistance to travelers, including baggage handling and immigration support.
• Airport Transfer Services: Arranging transportation to and from airports.

Any Unique Selling Propositions or Technological Advantages:

Dreamfolks USP lies in its extensive network of partnerships and its ability to provide a seamless travel experience through a single platform.

Primary Customers #

Target Industries and Sectors:

• Banks and financial institutions (issuing credit and debit cards)
• Airlines
• Hospitality sector
• Corporate clients (offering travel benefits to employees)

Geographic Markets (Domestic vs. International):

The company operates primarily in the Indian market but has a growing international presence.

Distribution Network and Sales Channels:

• Partnerships with banks and financial institutions
• Direct sales to corporate clients
• Online travel agencies (OTAs)
• Directly through the Dreamfolks mobile app and website

Major Competitors #

Direct Competitors in India and Globally:

• Collinson Group (Priority Pass)
• Plaza Premium Group
• Other regional lounge and travel services providers.

Industry Challenges and Opportunities:

• Challenges: Intense competition, changing travel patterns, economic downturns affecting travel spending.
• Opportunities: Growing air travel market in India and globally, increasing demand for enhanced travel experiences, expansion into new service categories (e.g., travel insurance, concierge services).

Future Outlook #

Expansion Plans or Growth Strategy:

• Expanding into new geographic markets
• Diversifying its service offerings to include more travel-related products
• Strengthening partnerships with airlines and hotels
• Leveraging technology to enhance the customer experience

Industry Trends Affecting Their Business:

• Increased airport foot traffic
• Growth in premium credit card usage
• Demand for enhanced travel experiences
• Rising disposable income in emerging markets
• Increased automation and digitalization of airport services

Long-Term Vision and Strategic Goals:

• Become the leading global player in airport and travel-related services.
• Expand its service portfolio to cater to a broader range of travel needs.
• Maintain a strong focus on customer satisfaction and innovation.

Dreamfolks Services Ltd. - Financial Analysis (FY24) #

Key Financial Metrics: 3-Year Trend Analysis (FY22-FY24) #

Dreamfolks Services Ltd. has demonstrated substantial growth over the past three fiscal years.

• Revenue from Operations: Increased to INR 11,350 million in FY24, a 47% YoY rise from INR 7,733 million in FY23. The company reported a revenue CAGR of 100.4% from FY22 to FY24, significantly outpacing domestic air traffic growth of 13% in FY24. FY22 revenue was approximately INR 2,830 million.
• Passengers (PAX) Facilitated: Grew from 3.5 million in FY22 to approximately 11 million in FY24, representing a CAGR of 77.2%. Digital channels (web access, self-check-in kiosks) accounted for ~10% of monthly passenger interactions in FY24.
• Gross Margin: Remained within guidance at 12.1% in FY24.
• Adjusted EBITDA: Reached INR 1,033 million in FY24, with an Adjusted EBITDA margin of 9.1%. The CAGR for Adjusted EBITDA from FY22 to FY24 was 102%. FY22 Adjusted EBITDA was approximately INR 253 million.
• Profit After Tax (PAT): Stood at INR 686 million in FY24, compared to INR 725 million in FY23. The PAT margin for FY24 was 6.0%, a decrease from 9.4% in FY23, attributed to higher costs of services offsetting revenue growth. The CAGR for PAT from FY22 to FY24 was 105.5%. FY22 PAT was approximately INR 162 million.
• Net Worth: Exhibited a CAGR of 69.6% from FY22 to FY24. As of March 31, 2024, Net Worth (Equity Share Capital + Other Equity) was approximately INR 2,370.8 million.
• Return on Equity (RoE): Was 34.9% in FY24, down from 60.6% in FY23. The decrease is attributed to a decline in profit disproportionate to the increase in Net Worth.
• Return on Capital Employed (RoCE): Recorded at 38.1% in FY24.

Business Segment Performance #

• Core Business (Airport Lounge Access in India): Continues to be the major revenue contributor, with a 95% market share of card-based lounge access and 68% of overall lounge access in India. The company maintains 100% coverage across all 65 airport and 14 railway lounges in India.
• Diversified Services (Services beyond Indian Airport Lounges): Revenue from these services grew to 6% of total revenue in FY24, up from less than 2% in FY22. The company has a strategic vision to expand this contribution to 15-20% over the next 4-5 years.

New Service Offerings #

The portfolio has expanded to include railway lounge access, meet and assist, golf services (via Golfklik acquisition), F&B offerings, spa services, airport transfers, transit hotels/nap rooms, beauty and grooming (Looks Salon), E-sim (Matrix), pathology testing (Healthians), premium lounges at visa centers (Visa Services), gifting (MyFlowerTree), and ultra-luxury experiences (RedBeryl partnership).

• Geographical Expansion: Actively expanding global footprint, notably with the integration of over 340 Plaza Premium lounges, partnership with Grey Wall (Russia), entry into the Malaysian market, and establishment of a wholly-owned subsidiary in Singapore. Focus regions for future growth include CEMEA and Southeast Asia.

Major Strategic Initiatives and Progress #

• Service Portfolio Expansion: Successfully added multiple new services including luxury, airport transportation, healthcare, beauty/grooming, international SIMs, and gifting through strategic tie-ups (RedBeryl, Eco Mobility, Looks Salon, Matrix, MyFlowerTree, Healthians, Visa Services).
• Technology Enhancement: Leveraged proprietary in-house technology platform for operational control, seamless integration, and personalized services. Launched web-access tool and self-check-in kiosks, which now account for ~10% of monthly passenger interactions. The platform supports spend-based/usage-based benefit models for clients.

Global Footprint Expansion #

• Integrated over 340 Plaza Premium lounges globally.
• Entered Malaysian market with proprietary technology.
• Established a wholly-owned subsidiary in Singapore to target Southeast Asian growth.
• Strategic partnership with Grey Wall (Russia) for reciprocal lounge access.
• Focus on high-growth regions in CEMEA and Southeast Asia.

Detailed Analysis #

Financial Analysis of Dreamfolks Services Ltd. #

Balance Sheet Analysis #

Comparative Analysis of Assets, Liabilities, and Equity (FY2022 - FY2024) #

A comprehensive 3-year comparison for all balance sheet line items is limited by the direct availability of FY2022 data in the provided statements. The following tables present key items for FY2024 and FY2023 from the financial statements. FY2022 figures for Revenue, Net Worth, and PAT are derived from the CAGR data (FY22-FY24) mentioned in the Annual Report’s Key Performance Indicators and MD&A sections.

Consolidated Financial Highlights (INR Million) #

Operating Performance #

Revenue Analysis #

Revenue Breakdown by Segment/Geography #

Dreamfolks Services Ltd. reported a consolidated revenue from operations of INR 11,349.96 million for FY2024, a 46.77% increase from INR 7,733.00 million in FY2023. Standalone revenue also grew by 46.77%.

• Segmental Revenue: The primary revenue driver is airport lounge access services. Revenue from services other than Indian airport lounges grew to 6% of total revenue in FY2024, up from less than 2% in FY2022. The company aims for 15-20% contribution in the next 4-5 years.
• Geographical Revenue: The majority of revenue is generated within India. Exports contributed 0.02% of the total turnover for FY2024. The company is expanding globally, including entry into Malaysia and a subsidiary in Singapore, expected to increase international revenue.

Cost Structure Analysis (FY2024) #

• Cost of Services: INR 9,975.31 million (87.89% of revenue).
• Employee Benefits Expenses: INR 292.20 million (2.57% of revenue), including INR 60.09 million non-cash ESOP expense.
• Depreciation and Amortization Expenses: INR 50.13 million (0.44% of revenue).
• Finance Costs: INR 7.23 million (0.06% of revenue).
• Other Expenses: INR 100.56 million (0.89% of revenue).

The cost structure is dominated by the cost of services. Operating expenses form a relatively small proportion of total revenue.

Margin Analysis #

Gross Margin #

• FY2024: 12.11%
• FY2023: 12.93%
• A slight compression in gross margin by approximately 82 basis points YoY.

Adjusted EBITDA Margin #

• FY2024: 9.1% (Adjusted EBITDA INR 1,033 million).
• Calculated EBITDA for FY24: INR 981.89 million (8.65% margin).

Net Profit Margin (Attributable to Owners) #

• FY2024: 6.05%
• FY2023: 9.38%
• Net profit margin saw a decline of approximately 333 basis points YoY.

Operating Leverage #

Dreamfolks operates on an asset-light business model.

• Employee benefit expenses as a percentage of revenue remained relatively stable.
• Depreciation and amortization also remained a small, stable percentage of revenue. The significant growth in revenue (46.77%) outpacing the growth in operating expenses implies some degree of positive operating leverage, although the compression in gross and net margins indicates that cost pressures or changes in service mix might have partially offset these benefits in FY2024.

Non-Recurring Items #

• Profit on disposal of Investment property: INR 1.25 million.
• Gain on sale on financials instruments measured at FVTPL - Profit on sale of debt fund: INR 1.92 million.
• Gain on sale on financials instruments measured at FVTPL - On change of fair value of debt fund measured at FVTPL: INR 2.18 million.
• Tax expense related to earlier years: Charge of INR 0.27 million. These items are relatively small and are unlikely to have a material distorting effect on the underlying operational performance analysis.

GAAP vs. Non-GAAP Reconciliation #

The company uses “Adjusted EBITDA” as a key performance indicator. The annual report does not provide a specific reconciliation schedule detailing the adjustments made to arrive at “Adjusted EBITDA” from a GAAP measure like Profit Before Tax or reported EBITDA.

Cash Management: Dreamfolks Services Ltd. (FY24) Financial Analysis #

Cash Flow Analysis (Consolidated, FY24 vs FY23, INR Million) #

Operating Cash Flow (OCF) #

• Profit Before Tax (PBT): FY24: 924.53; FY23: 974.35
• Adjustments for non-cash/non-operating items:
  • Depreciation & Amortization: FY24: 63.58; FY23: 49.79
  • ESOP Expense: FY24: 60.09; FY23: 23.94
  • Finance Costs: FY24: 10.87; FY23: 10.04
  • Interest Income: FY24: (31.95); FY23: (29.26)
• Operating Profit Before Working Capital Changes: FY24: 1,048.97; FY23: 1,050.34
• Working Capital Changes:
  • Increase in Trade Payables & Other Financial Liabilities: FY24: 245.33; FY23: 382.34
  • (Increase)/Decrease in Provisions & Other Payables: FY24: (3.35); FY23: 23.60
  • Increase in Trade Receivables & Other Financial Assets: FY24: (639.93); FY23: (1,025.29)
  • (Increase)/Decrease in Other Assets: FY24: (19.19); FY23: 32.21
• Cash Generated from Operations (post WC changes): FY24: 631.83; FY23: 463.20
• Income Taxes Paid (Net): FY24: (264.96); FY23: (238.50)
• Net Cash from Operating Activities (OCF): FY24: 366.87; FY23: 224.70

Investing Cash Flow (ICF) #

• Purchase of Property, Plant & Equipment (PPE) & Intangibles (incl. CWIP & IAUD): FY24: (116.61) (PPE: 49.66, IAUD: 66.95); FY23: (65.24) (PPE: 41.75, IAUD: 11.71, Inv Prop: 11.78)
• Proceeds from Sale of PPE/Investment Property: FY24: 0.24 (PPE); FY23: 63.00 (Inv Prop)
• Decrease/(Increase) in Bank Deposits & Other Bank Balances (non-cash equivalent): FY24: (103.33); FY23: (147.56)
• Investment in Debt Funds: FY24: (499.00); FY23: (748.00)
• Profit on Sale of Mutual Funds (proceeds): FY24: 499.34; FY23: 748.76
  • Acquisition of Subsidiary (net of cash acquired): FY23: (7.42)
• Interest Received: FY24: 31.39; FY23: 28.36
• Net Cash used in Investing Activities (ICF): FY24: (187.97); FY23: (128.09)
• Note: Capex for FY24 is considered as 116.61 (PPE + IAUD). FY23 Capex is 65.24.

Financing Cash Flow (FCF) #

• Repayment of Borrowings: FY24: (1.68); FY23: (1.15)
• Proceeds from Borrowings: FY24: 0.00; FY23: 0.94
• Proceeds from Exercise of Share Options (ESOP): FY24: 13.60; FY23: 0.00
• Payment of Lease Liabilities: FY24: (12.04); FY23: (11.81)
• Dividend Paid: FY24: (26.53); FY23: (41.80)
• Other Finance Cost Paid: FY24: (10.14); FY23: (8.87)
• Net Cash generated from/(used in) Financing Activities: FY24: (36.79); FY23: (62.69)

Free Cash Flow (FCF to Firm - OCF less Capex) #

• FY24: 366.87 - 116.61 = 250.26
• FY23: 224.70 - 65.24 = 159.46
• FCF increased by 56.94% YoY.

Working Capital Management Efficiency (Consolidated) #

• Trade Receivables (Net): FY24: 2,679.51; FY23: 2,054.23
• Trade Payables: FY24: 1,625.36 (Micro/Small: 0.45; Others: 1,624.91); FY23: 1,393.11 (Micro/Small: 0.00; Others: 1,393.11)
• Revenue from Operations: FY24: 11,349.46; FY23: 7,733.02
• Cost of Services: FY24: 9,974.55; FY23: 6,809.84
• Inventory: Not applicable due to service nature.

Debtors’ Turnover Ratio (Revenue / Avg. Trade Receivables) #

• FY24: 11,349.46 / ((2679.51 + 2054.23)/2) = 11,349.46 / 2366.87 = 4.80 times
• FY23: 7,733.02 / ((2054.23 + 604.88)/2) = 7,733.02 / 1329.56 = 5.82 times (Assuming FY22 receivables were 604.88 based on FY23 MD&A’s trade receivable turnover of 6.26x and Revenue of 3760.7. If unavailable, using opening FY23 for denominator: 7733.02/2054.23 = 3.76 times. The MD&A provides a ratio of 4.7x for FY24 and 6.2x for FY23.)

Days Sales Outstanding (DSO) (Avg. Trade Receivables / Revenue * 365) #

• FY24: (2366.87 / 11349.46) * 365 = 76.1 days (MD&A: Debtors’ Turnover N/A but ratio is 4.7x, implying ~77.6 days)
• FY23: (1329.56 / 7733.02) * 365 = 62.7 days (MD&A: Debtors’ Turnover N/A but ratio is 6.2x, implying ~58.9 days)
• DSO increased, indicating a longer collection period.

Creditors’ Turnover Ratio (Cost of Services / Avg. Trade Payables) #

• FY24: 9,974.55 / ((1625.36 + 1393.11)/2) = 9,974.55 / 1509.24 = 6.61 times
• FY23: 6,809.84 / ((1393.11 + 370.02)/2) = 6,809.84 / 881.57 = 7.72 times (Assuming FY22 payables. The MD&A states a ratio of 6.7x for FY24 and 7.1x for FY23.)

Days Payables Outstanding (DPO) (Avg. Trade Payables / Cost of Services * 365) #

• FY24: (1509.24 / 9974.55) * 365 = 55.2 days (MD&A: Trade payables turnover N/A but ratio is 6.7x, implying ~54.5 days)
• FY23: (881.57 / 6809.84) * 365 = 47.2 days (MD&A: Trade payables turnover N/A but ratio is 7.1x, implying ~51.4 days)
• DPO increased, indicating the company is taking longer to pay its suppliers.

Cash Conversion Cycle (CCC) (DSO - DPO, as Inventory is nil) #

• Using calculated figures: FY24: 76.1 - 55.2 = 20.9 days; FY23: 62.7 - 47.2 = 15.5 days
• Using MD&A implied days: FY24: 77.6 - 54.5 = 23.1 days; FY23: 58.9 - 51.4 = 7.5 days
• The cash conversion cycle has elongated, primarily due to a larger increase in DSO compared to DPO.

Capex Analysis (Consolidated) #

• Total Capex (Purchase of PPE, CWIP, Intangibles, IAUD):
  • FY24: 49.66 (PPE) + 66.95 (IAUD) = 116.61 INR Million
  • FY23: 41.75 (PPE) + 11.71 (IAUD) + 11.78 (Investment Property) = 65.24 INR Million
• The company operates in a single reportable segment: “providing benefit management services through a proprietary technology platform”.
• Therefore, a capex analysis by distinct business segment is not applicable. Capex is primarily towards technology platform development (intangibles under development, software) and operational infrastructure.

Dreamfolks Services Ltd. - Financial Analysis (FY24) #

Segment Performance Analysis #

Revenue and Profitability Metrics #

• Revenue from Operations (Consolidated): INR 11,349.46 million in FY24, a 46.8% increase from INR 7,733.19 million in FY23. Revenue from Operations (Standalone) was INR 11,350.18 million in FY24.
  • Growth attributed to a rise in domestic passenger traffic and increasing accessibility to lounges.
  • Revenue CAGR (FY22-FY24): 100.4%.
• Passengers Facilitated: Approximately 11 million passengers in FY24, up from 3.5 million in FY22.
• Gross Margins: Maintained at 12.1% for FY24.
• Adjusted EBITDA (Standalone): Reached INR 1,033 million in FY24, with an adjusted EBITDA margin of 9.1%. Adjusted EBITDA CAGR of 102% (FY22-FY24).
  • Standalone EBITDA for FY24 was INR 973 million (margin 8.6%), a decline from INR 1,022 million in FY23.
• Profit After Tax (PAT):
  • Consolidated PAT for FY24: INR 686.37 million, compared to INR 725.27 million in FY23. Consolidated PAT margin was 6.05%.
  • Standalone PAT for FY24: INR 686.02 million (margin 6.0%), down from INR 724.65 million in FY23.
  • Decline in Net Profit Margin attributed to higher costs of services in FY24.
  • PAT CAGR (FY22-FY24): 105.5%.
• Return on Equity (RoE):
  • Standalone RoE for FY24: 34.9% (vs. 60.6% in FY23).
  • Consolidated RoE for FY24: 34.92% (vs. 60.72% in FY23).
  • Decrease attributed to a decrease in profit disproportionate to the increase in net worth.
• Return on Capital Employed (RoCE):
  • Standalone RoCE for FY24: 38.1% (vs. 62.65% in FY23 on consolidated basis).
  • Consolidated RoCE for FY24: 38.13% (vs. 62.64% in FY23).

Market Share and Competitive Position #

• Market Leadership: India’s largest airport lounge access aggregator.
• Market Share (India):
  • 95% market share of all card-based lounge access.
  • 68% market share of overall lounge access.
• Coverage: 100% coverage across all 65 operational airport lounges and 14 railway station lounges in India.
• Competitive Differentiator: Proprietary, in-house developed technology platform enabling scalability, customization, and operational control. Asset-light business model.

Key Products/Services Performance #

• Core Business: Airport Lounge Access remains the major revenue contributor.
• Service Diversification:
  • Revenue from services beyond Indian airport lounges grew to 6% of total revenue in FY24, up from less than 2% in FY22. Company targets 15-20% in the next 4-5 years.
• Expanded Offerings: Railway Lounge Access, Meet and Assist, Golf Games & Lessons, Food & Beverage, Spa services, Airport Transfers, Transit Hotels/Nap Rooms, Beauty & Grooming, E-Sim, Pathology testing, Premium lounges at Visa centers, Gifting Services, and Ultra Luxury experiences.
• New Tie-ups (FY24): RedBeryl (luxury experiences), Looks Salon (beauty/grooming), Matrix (E-Sim), Healthians (pathology), MyFlowerTree (gifting), Eco Mobility (airport transfers), Visa Services (visa application lounges/doorstep visa).

Dreamfolks Services Ltd. - Financial Risk Analysis Report (FY24) #

Executive Summary #

Dreamfolks Services Ltd. operates in a dynamic environment characterized by rapid technological advancements, evolving consumer preferences in the travel and lifestyle sector, and a growing, but competitive, Indian market. Key risks identified revolve around strategic execution in diversification and global expansion, operational dependence on technology and third-party contracts, financial risks including credit and foreign exchange exposure, and compliance with a complex regulatory landscape. The company demonstrates a structured approach to risk management, with established internal controls and oversight from the Board and its committees. While revenue has grown significantly, profitability metrics like Net Profit Margin and RoNW have declined in FY24, warranting close monitoring. Cybersecurity and data protection remain paramount, alongside the challenge of talent retention and managing geopolitical uncertainties impacting the travel sector.

Strategic Risks #

Market Saturation & Competition #

• Risk Description: Potential saturation in the Indian lounge aggregation market and increasing competition. The company aims to be a global, future-ready luxury travel and lifestyle service aggregator, moving beyond just Indian airport lounges.

Financial Analysis: Dreamfolks Services Ltd. - ESG Report (FY24) #

Environmental Metrics and Targets #

Energy Consumption (FY24) #

• Renewable Sources: Nil reported.
• Non-Renewable Sources:
  • Electricity: 1,24,439 MJ
  • Other (e.g., fuel): 14,310 MJ
  • Total Non-Renewable: 1,38,749 MJ
• Total Energy Consumed: 1,38,749 MJ
• Energy Intensity:
  • Per Rupee of Turnover: 12.2 MJ/INR Million (down from 16.67 MJ/INR Million in FY23).
  • Per Rupee of Turnover (PPP adjusted): 273.6 MJ/INR Million (down from 373.74 MJ/INR Million in FY23).

Water Management (FY24) #

• Total Water Withdrawal: 564.1 KL (down from 1,370 KL in FY23). Sourced from third parties.
• Total Water Consumption: 564.1 KL (down from 1,370 KL in FY23).
• Water Intensity:
  • Per Rupee of Turnover: 0.0498 KL/INR Million (down from 1.77 KL/INR Million in FY23).
  • Per Rupee of Turnover (PPP adjusted): 1.1171 KL/INR Million (down from 4.2142 KL/INR Million in FY23).
• Water Discharge: Corporate office is in a leased premise with an STP; specific discharge quantities not measured by the company. Zero Liquid Discharge mechanism is not company-specific due to leased premises, but building incorporates rainwater harvesting and STP.

Greenhouse Gas (GHG) Emissions (FY24 - Scope 1 & 2) #

• Total Scope 1 Emissions: 5.02 metric tonnes of CO2 equivalent.
• Total Scope 2 Emissions: 19.48 metric tonnes of CO2 equivalent.
• Intensity (Scope 1 & 2):
  • Per Rupee of Turnover: 0.0021 Metric tonnes of CO2 equivalent/INR Million (down from 0.0076 in FY23).
  • Per Rupee of Turnover (PPP adjusted): 0.0487 Metric tonnes of CO2 equivalent/INR Million (down from 0.0726 in FY23).
• Scope 3 Emissions: Not quantified due to complexity, but acknowledged.

Waste Management (FY24) #

• Plastic Waste: 0.08 metric tonnes.
• E-waste: Nil reported.
• Other Hazardous (Paper cups, Papers): 0.15 metric tonnes (Paper cups: 0.01, Papers: 0.14).
• Total Waste Generated: 0.23 metric tonnes.
• Waste Intensity:
  • Per Rupee of Turnover: 0.000020 metric tonnes/INR Million.
  • Per Rupee of Turnover (PPP adjusted): 0.000455 metric tonnes/INR Million.
• Practices: Source segregation, organic waste to vermicomposting, elimination of single-use plastics in food courts/amenities. Garbage collection via ECOGREEN (external agency). Building has smart composting machinery.

Environmental Targets & Initiatives #

• The company states it does not have formal KPIs but is constantly working in relevant areas.
• Technology-driven initiatives: Introduction of web access and QR code access reducing paper use (eliminating transaction slips) and changes in delivery model eliminating plastic card use.
• Office initiatives: Use of LED lights, compostable plastic bags, sensor taps.
• Certifications: Leased corporate office (Worldmark building) is LEED Gold Certified.
• Tree plantation drives.

Social Responsibility Programs #

CSR #

• Applicable as per Section 135 of Companies Act, 2013.
• FY24 Obligation: INR 7.83 million (2% of average net profit of INR 391.45 million).
• FY24 Amount Spent: INR 6.43 million (INR 6.40 million on projects, INR 0.025 million on administrative overheads).
• Unspent Amount for FY24: INR 1.40 million.
• Focus Areas: Predominantly children’s education (Project AKSHAR), girls’ welfare (protection, safety rights, education in Haryana), health & hygiene education, women safety awareness, self-defense workshops.
• Beneficiaries (Project AKSHAR FY24): 3,115 students across three schools in Gurugram.

Employee Well-being & Development #

• Total permanent employees (FY24): 83 (FY23: 68). Female representation: Board of Directors 25% (2 out of 8), KMP 50% (2 out of 4).
• Benefits: Health insurance (100% permanent employees covered), Accident insurance (100% permanent employees covered), Maternity benefits (100% eligible female permanent employees covered), Paternity benefits (Nil covered), Day care (Nil covered).
• Retirement Benefits: PF, Gratuity, ESI, NPS (all deducted and deposited with authorities for 100% eligible permanent employees).
• Training (FY24, permanent employees):
  • Health & Safety: 83 employees (100%) covered.
  • Skill Upgradation: 83 employees (100%) covered.
• Grievance Redressal: Mechanism in place for permanent employees.
• POSH: ICC constituted. No complaints received in FY24. Awareness programs conducted.

Human Rights #

• Training on human rights issues provided to 100% of permanent employees in FY24 (same as FY23).
• Wages: All permanent employees paid more than minimum wage.
• No complaints related to sexual harassment, discrimination, child labor, forced labor, wages, or other human rights issues in FY24.

UNSDG Alignment #

• Initiatives mapped to SDGs 1, 3, 4, 5, 6, 7, 9, 10, 12, 13, 15, 16, 17.

Governance Structure and Effectiveness #

Board Composition (as of March 31, 2024) #

• 8 Directors.
• Chairperson & Managing Director: Ms. Liberatha Peter Kallat.
• Executive Director: 1 (Mr. Balaji Srinivasan).
• Non-Executive Non-Independent Directors: 2 (Mr. Mukesh Yadav, Mr. Dinesh Nagpal).
• Independent Directors: 4 (Mr. Sudhir Jain, Mr. Sharadchandra Damodar Abhyankar, Ms. Prerna Kohli, Mr. Ravindra Pandey).
• Women Directors: 2 (Ms. Liberatha Peter Kallat, Ms. Prerna Kohli).

Board Meetings (FY24) #

• 6 meetings held.

Committees #

• Audit, Nomination & Remuneration, Stakeholders’ Relationship, Corporate Social Responsibility, Risk Management. All recommendations of the Audit Committee were accepted by the Board.

Board Evaluation #

• Annual evaluation of Board, Committees, and individual Directors conducted. Structured questionnaire used. Directors expressed satisfaction.

Key Policies #

• Anti-Bribery & Anti-Corruption Policy (updated, weblink available).
• Whistle Blower Policy & Vigil Mechanism (weblink available). No employee denied access to Audit Committee.
• Policy on Related Party Transactions (weblink available).
• Nomination & Remuneration Policy (weblink available).
• Code of Conduct for Directors

Financial Analysis Report: Dreamfolks Services Ltd. (FY24) #

Executive Summary #

Dreamfolks Services Ltd. reported strong revenue growth in FY24, driven by increased passenger volumes and strategic expansion of its service portfolio beyond airport lounges. Revenue from operations surged 47% YoY to INR 11,350 million. However, profitability faced pressure, with Profit After Tax (PAT) declining to INR 686 million from INR 725 million in FY23, attributed to higher cost of services. Gross margins remained stable at 12.1%, within guidance, while adjusted EBITDA stood at INR 1,033 million (9.1% margin). The company is actively diversifying its offerings (e.g., railways, lifestyle services) and expanding geographically, aiming to increase revenue from non-Indian airport lounge services, which grew to 6% of total revenue. Technological advancements, strategic partnerships, and a focus on enhancing customer experience are central to its growth strategy. Key challenges include managing cost of services, market competition, and dependencies on the travel ecosystem.

Financial Performance Analysis #

Revenue Analysis #

• Overall Growth: Consolidated revenue from operations increased by 46.8% to INR 11,350 million in FY24 from INR 7,733 million in FY23. This significantly outpaced the domestic air traffic growth of 13%, indicating market share gains and successful monetization of increased passenger footfall (~11 million PAX facilitated in FY24 vs. 3.5 million in FY22). The revenue CAGR from FY22 to FY24 was a robust 100%.
• Diversification Impact: Revenue from services beyond Indian airport lounges grew to 6% of total revenue in FY24, up from less than 2% in FY22. The company targets this segment to contribute 15-20% in the next 4-5 years, signaling a strategic shift and potential new growth avenues.

Profitability Analysis #

• Gross Profit: Gross margins were maintained at 12.1% in FY24, consistent with company guidance.
• EBITDA: Adjusted EBITDA reached INR 1,033 million, with an adjusted EBITDA margin of 9.1%. The CAGR for Adjusted EBITDA (FY22-FY24) was 102%.
• Profit Before Tax (PBT):
  • Consolidated PBT: Decreased to INR 924.53 million in FY24 from INR 974.35 million in FY23.
  • Standalone PBT: Decreased to INR 923.29 million in FY24 from INR 974.16 million in FY23.
• Profit After Tax (PAT):
  • Consolidated PAT: Decreased to INR 686.37 million in FY24 from INR 725.27 million in FY23.
  • Standalone PAT: Decreased to INR 685.99 million in FY24 from INR 725.10 million in FY23.
• Margin Contraction: Net Profit Margin (Standalone) declined to 6.0% in FY24 from 9.4% in FY23. This is attributed by management primarily to “High costs of services during FY2024” offsetting revenue growth. This indicates potential pressures from suppliers/lounge operators or increased costs associated with diversification and expansion. The long-term PAT CAGR (FY22-FY24) of 105.5% contrasts with the recent YoY decline.

Key Financial Ratios (Standalone FY24 vs FY23) #

• Return on Equity (RoE): Decreased to 34.9% in FY24 from 60.6% in FY23, primarily due to lower profit relative to an increased net worth.
• Return on Capital Employed (RoCE): Stood at 38.1% in FY24 (Standalone). Consolidated RoCE was 39.99% in FY24, down from 62.65% in FY23, reflecting the profitability pressure.
• Debt-Equity Ratio: Improved (decreased) significantly, indicating a stronger balance sheet or lower reliance on debt relative to equity.
• Current Ratio: Improved from 1.51 to 1.80 (Standalone), suggesting better short-term liquidity.
• Debtors Turnover Ratio: Remained relatively stable.
• Interest Coverage Ratio: Remained robust, indicating sufficient ability to cover interest payments.

Cash Flow #

• The standalone cash flow statement indicates net cash generated from operating activities was INR 109.39 million in FY24, a decrease from INR 604.25 million in FY23. This was primarily driven by a smaller increase in trade payables and other financial liabilities compared to the previous year, and a larger increase in trade receivables and other financial assets.
• Cash flow from investing activities showed a net outflow, largely due to investments in debt funds and purchase of intangible assets.
• Cash flow from financing activities included proceeds from ESOPs and dividend payments.

Operational and Strategic Analysis #

Market Position & Industry Dynamics #

• Dreamfolks holds a dominant market share: 95% of all card-based lounge access and 68% of overall lounge access in India. It maintains 100% coverage across airport and railway lounges in India.
• Industry tailwinds include rising disposable incomes, a growing middle class, increased credit card penetration (19% YoY growth in cards, 7% YoY growth in avg. spend/card), a surge in business travel, and growing demand for luxury travel. India is poised to be the third-largest aviation market by 2025.

Service Portfolio Expansion & Diversification #

• Core Business Extension: Expanding beyond airport lounges to railway stations, highways, and visa application centers.
• New Service Verticals: Actively adding new services such as global luxury experiences (RedBeryl), airport transfers (Eco Mobility), beauty & grooming (Looks Salon), E-sim solutions (Matrix), floral & gifting (MyFlowerTree), healthcare (Healthians), golf services (via Golfklik acquisition), and visa services. This strategy aims to create multiple touchpoints throughout the travel and lifestyle journey.

Geographical Expansion #

• Established a wholly-owned subsidiary in Singapore to tap into Southeast Asian markets.
• Entered the Malaysian market.

Financial Analysis Report: Dreamfolks Services Ltd. (FY24) #

Auditor’s Opinion and Qualifications #

Standalone Financial Statements #

• The Statutory Auditors, S.S. Kothari Mehta & Co. LLP, issued an unqualified opinion, stating that the standalone financial statements give a true and fair view as at March 31, 2024.
  • Key Audit Matter: Revenue recognition was identified as a Key Audit Matter. Audit procedures included testing passenger numbers, sales verification, control effectiveness for unbilled revenues, and contract agreement.
  • CARO Report: A discrepancy was noted in clause (ii)(b) concerning quarterly statements/returns of current assets filed with banks not tallying with books of accounts for September 2023, December 2023, and March 31, 2024.

Consolidated Financial Statements #

• The Statutory Auditors issued an unqualified opinion, stating that the consolidated financial statements give a true and fair view.
  • Key Audit Matter (Holding Company): Revenue recognition for the Holding Company was identified as a Key Audit Matter, with similar audit procedures as in the standalone audit.
  • Other Matter: The auditors did not audit the financial statements of two subsidiaries. Their opinion is based solely on the reports of other auditors. One foreign subsidiary’s financials, prepared under local GAAP, were converted to Ind AS by Holding Company management, and these conversion adjustments were audited by the primary auditors.
  • CARO Report: The CARO report for the Holding Company noted the same discrepancy in clause (ii)(b) regarding quarterly filings of current assets with banks versus books.

Key Accounting Policies #

The Group has consistently applied its accounting policies. No new standards or amendments were notified by the MCA during FY24. Key accounting policies include:

• Revenue Recognition: Revenue from services is recognized when performance obligations are satisfied and control is transferred, based on contractual terms.
• Business Combinations and Goodwill: Accounted for using the acquisition method. Goodwill is tested for impairment annually or when indicators exist.
• Property, Plant and Equipment (PPE) & Intangible Assets: Stated at cost less accumulated depreciation/amortization and impairment. Depreciation is on a WDV basis. Software is amortized over 3 years (SLM). Investment property is stated at cost less accumulated depreciation (WDV over 30 years for buildings).
• Leases (Ind AS 116): Right-of-use (ROU) assets and lease liabilities are recognized for leases, except for short-term and low-value leases. ROU assets are depreciated SLM over the shorter of lease term or useful life.
• Financial Instruments: Initially recognized at fair value. Debt instruments are subsequently measured at amortized cost or FVTOCI or FVTPL. Equity investments are measured at FVTPL. ECL model is used for impairment of financial assets not at FVTPL.
• Share-Based Payments: Equity-settled transactions are measured at fair value at grant date using Black-Scholes model and recognized as expense over the vesting period.
• Impairment of Non-Financial Assets: Reviewed at each balance sheet date. Impairment loss recognized if carrying amount exceeds recoverable amount.

Internal Control Effectiveness #

Auditor’s Opinion on Internal Financial Controls (IFC) #

• Standalone: The Company has adequate IFC over financial reporting, and such controls were operating effectively as at March 31, 2024.
• Consolidated: The Holding Company and its Indian subsidiaries have adequate IFC system over financial reporting, and such controls were operating effectively as at March 31, 2024. The report relies on other auditors’ reports for one Indian subsidiary’s IFC.

Management’s Responsibility Statement #

• Confirms that proper internal financial controls were laid down, followed, and were adequate and operating effectively.

Audit Committee #

• Oversees the internal audit function, reviews adequacy of internal control systems, and discusses significant findings with internal and statutory auditors.

Regulatory Compliance Status #

SEBI LODR Non-compliance #

• The Secretarial Audit Report highlighted that the Board composition was not in accordance with Regulation 17(1) of SEBI LODR for 42 days.