Indian Hotels Co Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

ECONOMIC ENVIRONMENT AND INDUSTRY INSIGHT

Global Economy: The Year in Review

The International Monetary Fund (IMF), in its April 2024 World Economic Outlook, pointed to the surprising resilience of the global economy, which showed steady growth even as inflation receded. Global real gross domestic product (GDP) growth is estimated at 3.2% in CY 2023, and projected to grow at the same rate in CY 2024 and CY 2025. The IMF report attributed the slow pace of growth to several factors such as high borrowing costs, withdrawal of fiscal support, long-term effects of the COVID-19 pandemic, Russias invasion of Ukraine, weak growth in productivity and increasing geoeconomic fragmentation. Global inflation moderated from its peak in the middle of CY 2022 while economic activity continued to grow, thus averting a possible global recession.

IMF expects global headline inflation to fall further from the annual average of 6.8% in 2023 to 5.9% in 2024 and to 4.5% in 2025, with advanced economies returning to their inflation targets sooner than emerging markets and developing economies. Risks to the global outlook for 2024 seem broadly balanced. These risks arise from price spikes stemming from geopolitical tensions and regional conflicts such as those in Gaza, attacks in the Red Sea, and continued war in Ukraine, a slower than expected decline in core inflation and interest rates remaining higher than expected.

On the upside are factors such as a short-term fiscal boost as many countries go to elections in 2024, faster monetary policy easing, and increase in productivity from technologies such as artificial intelligence. (Source: IMF-World Economic Outlook, April 2024). The World Banks Global Economic Prospects report of January 2024 was more conservative in its estimates, putting the global real GDP growth at 2.6% for 2023, and growth forecasts at 2.4% and 2.7% for 2024 and 2025, respectively.

Real GDP, Y-O-Y% Change

Particulars	Actual 2022	Estimate 2023	Projection 2024	Projection 2025
World Output	3.5	3.2	3.2	3.2
Advanced Economies	2.6	1.6	1.7	1.8
United States of America (US)	1.9	2.5	2.7	1.9
United Kingdom (UK)	4.3	0.1	0.5	1.5
Emerging Market & Developing Economies	4.1	4.3	4.2	4.2
Emerging and Developing Asia	4.4	5.6	5.2	4.9
India	7.0	7.8	6.8	6.5
China	3.0	5.2	4.6	4.1
Emerging and Developing Europe	1.2	3.2	3.1	2.8
Sub Saharan Africa	4.0	3.4	3.8	4.0
Middle East and Central Asia	5.3	2.0	2.8	4.2

Source: IMF World Economic Outlook, April 2024. Year is a calendar year except for India, which is presented on fiscal year basis with FY 2022-23 shown in the 2022 column

Among the advanced economies, the US grew by 2.5% in 2023, and is projected to grow by 2.7% in 2024 and at a slower pace of 1.9% in 2025. Growth in the UK is estimated to remain largely flat in 2023, and thereafter increase by 0.5% in 2024 and 1.5% in 2025. The slower pace of growth in the UK is due to the impact of high energy prices and related inflation, which is expected to ease towards 2025. Chinas growth is projected to slow from 5.2% in 2023 to 4.6% in 2024, and 4.1% in 2025, mainly due to the waning of one-off consumption and fiscal stimulus factors post-pandemic and the continuing weakness of the real estate sector. Indias growth rate on the contrary is estimated at 7.8% in 2023 and projected to remain strong at 6.8% in 2024 and 6.5% in 2025, supported by strong domestic demand and a rising working-age population.

Source: IMF - World Economic Outlook, April 2024.

Indian Economy: The Year in Review

India is now the worlds fifth largest economy in terms of nominal GDP and the third largest in terms of purchasing power parity (PPP). The Second Advance Estimates of National Income released by the National Statistical Office (NSO) of the Government of India in February 2024, estimates a GDP growth rate of 7.6% for FY 2023-24 as compared to a growth rate of 7.0% in FY 2022-23. Total consumption, comprising 56% of GDP, grew by 3.0% in FY 2023-24. Exports grew marginally by 1.5% while imports grew by 10.9%. As a consequence of the governments thrust on capex, which has continued to crowd in private investment, Gross Fixed Capital Formation (GFCF) at constant prices, constituting 34% of the GDP, registered a growth of 10.2% in FY 2023-24. On the supply side, agriculture grew by 0.7%, manufacturing grew by 8.5%, construction by 10.7% and services grew by 7.5% in FY 2023-24. Within services, trade, hotels, transport, communication and broadcasting related services, constituting about a third of overall services, grew by 6.5% after a strong growth of 12.5% in FY 2022-23.

(Source: NSO estimates, February 2024).

India: Real GDP Growth (Annual Percentage Change)

SBI Research and Moodys expects Indias GDP growth for FY 2023-24 to be 8%. Till February 2024, inflation in FY 2023-24 averaged 5.4%, in comparison to 6.8% for the corresponding period in FY 2022-23. During CY 2023, the rate of unemployment declined to 3.1% (2022: 3.6%) and the labour force participation rate expanded to 59.8% (2022: 56.1%) (Source: Govt. of India - Dept. of Economic Affairs Monthly Economic Review, February 2024). Indias foreign currency reserves stood strong at $645.6 billion as of March 31, 2024, and the Indian currency remained stable during the year.

India is one of the fastest growing large economies in the world. Its economy has been propelled by favourable demographics and a good domestic, consumer-focused economy, with a rising class of affluent Indians increasing spends on premium brands. Indias investments in building a scalable digitised public infrastructure consisting of platforms for verifying the identity of people, digital payments interface and an open e-commerce network to democratise digital commerce, has placed it in a position whereby it can funnel future growth through small and medium sized businesses and the startup ecosystem. Indias service sector has also been demonstrating a consistent, strong growth domestically and through service exports. The S&P Global India Services PMI Business Activity Index at 61.2 for March 2024 was one of the strongest growth rates seen in more than 13 years [Source: S&P Global India Services Purchasing Managers Index (PMI) report, March 2024]. A strong urban demand was also evident from rising passenger vehicle sales, increased house sales, higher domestic air passenger traffic, increased digital payments and improved consumer confidence.

The outlook for FY 2024-25 remains positive. The Reserve Bank of India (RBI) expects manufacturing to maintain its momentum and services to grow above the pre-pandemic trend. Agricultural activities should gain from an expected normal south-west monsoon. Private consumption is likely to gain steam with a pick-up in rural activity; discretionary spending of urban households is expected to increase (as per the RBIs consumer survey) together with improving income levels. Credit growth and private investment are also expected to rise, given optimistic business and consumer sentiments, healthy corporate and bank balance sheets leading to an upturn in the private capex cycle.

Core inflation is likely to continue trending downwards, indicating a broad-based moderation in price pressures.

India is poised to benefit in terms of increased foreign direct investments (FDI) from a fragmented global landscape arising from new economic blocs and realignment of supply chains. It is already witnessing increased investments in semiconductors, automobiles, sustainable energy, mobile, telecom, etc. through the Production Linked Incentive (PLI) scheme and other attractive industrial policies, as well as Central and state government incentives.

However, the RBI has highlighted the risk of headwinds from geopolitical tensions, volatility in international financial markets, geoeconomic fragmentation, rising Red Sea disruptions and extreme weather events. Considering all these factors, the RBI has projected real GDP growth for FY 2024-25 at 7.0%.

(Source: RBI Monetary policy statement, 2024-25).

INDUSTRY INSIGHT

Global Hospitality and Tourism Industry

The global tourism industry demonstrated remarkable resilience and adaptability in 2023. During the year, tourist arrivals internationally were 1,286 million, showing a 34% increase vis-a-vis 2022 and an 88% recovery from the pre-pandemic levels of 2019. Europe retained the largest share of global inbound tourism, with 55% share in 2023, growing by 17% over that of 2022, and reaching 94% of the pre-pandemic levels.

The APAC region, with a share of 18% of the global tourist arrivals, registered gradual recovery since the start of 2023, growing by 155% over 2022 but the recovery is still 65% of the pre-pandemic levels of 2019. Within this region, tourism in South Asia, with its count of 29.4 million international tourists, was higher by 30% over 2022, which was 87% of the pre-pandemic levels. The Americas, with a share of 15% of global tourist arrivals registered a growth of 27% over 2022, reaching 90% of the pre-pandemic levels.

The Middle East, with a relatively smaller global share of 7%, was the only region to overcome the pre-pandemic levels. International tourist arrivals in the region increased 28% over 2022 and 22% above 2019.

Total export revenues from tourism (including passenger transport) are estimated at $1.6 trillion in 2023, which is 94% of the $1.7 trillion recorded in 2019. Preliminary estimates of tourism direct gross domestic product (TDGDP) were $3.3 trillion in 2023, which is 3% of the global GDP (Source: UNWTO, Barometer January 2024). STR reported the highest occupancy of 69% in Europe and Australia and Oceania, followed by 67% in the Middle East and 66% in Asia (excluding mainland China).

(Source: STR CoStar Group 2023)

International Tourist Arrivals by Region

	Share %	International arrivals (million)		Change %	% Level achieved
	2023	2023	2022 2019	2023/2022	2023 vs 2019
World	100	1,286.0	960.0 1,462.0	34	88
Europe	55	700.4	596.8 742.4	17	94
Asia & the Pacific	18	233.4	91.5 360.1	155	65
Americas	15	198.3	156.6 219.3	27	90
Middle East	7	87.1	67.8 71.3	28	122
Africa	5	66.4	47.5 69.1	40	96

Source: UNWTO, Barometer January 2024

Outlook

The United Nations World Tourism Organisation (UNWTO) expects international tourism to fully recover to pre-pandemic levels in 2024, with initial estimates pointing to 2% growth above 2019 levels, led by increased air connectivity, visa facilitation and a stronger recovery of Asian destinations. As many as 67% of the tourism professionals participating in the UNWTO Confidence Index Survey indicated better or much better prospects for 2024 compared to 2023 (Source: UNWTO, Barometer January 2024). The World Travel and Tourism Council (WTTC) predicts 2024 to be a record year in terms of travel and tourism. It estimates global economic contribution of the sector to reach a historically high level of $11.1 trillion compared to $9.9 trillion in 2023.

However, continuing economic headwinds, geopolitical tensions and rising conflicts that are disrupting trade remain the key concerns. Along with high inflation and interest rates, the costs of transport and accommodation could be impacted in 2024. Notwithstanding these risks, international travel is expected to accelerate in 2024 with travellers opting for value for money and intra-regional travel. Europe will likely be the largest beneficiary as it prepares for the Summer Olympics in Paris. The Americas and the APAC region are expected to benefit from inbound travellers and diminishing visa wait-times (Source: UNWTO, Barometer January 2024). According to JLL Global Hotel Investment Outlook 2024,

India, which is now the worlds most populous country, is expected to be a major growth market in 2024 as the country grows more economically prosperous and the middle class accumulates wealth.

Indian Hospitality and Tourism Industry

FY 2023-24 was a year of record results and growth for the industry. Indian tourism is being driven by favourable demographics, increasing employment, higher disposable incomes of a young middle class, robust domestic demand, increased investments and improving infrastructure and connectivity. The Ministry of Tourism of the Government of India initiated several schemes such as Swadesh Darshan, PRASHAD, UDAN and Dekho Apna Desh to promote travel.

As many as 50 tourist destinations are in the pipeline for being developed to provide a wholesome tourism experience under the Swadesh Darshan scheme.

Similarly, the PRASHAD scheme aims at the development of select pilgrimage destinations in the country. Additionally, several states of India have also undertaken initiatives and investments to promote local tourism. The governments electronic visa facility now covers practically all the countries of the world, including foreign nationals of 166 countries, and is valid for entry at 28 designated airports and five designated seaports of India. Indias remarkable economic growth, coupled with transformative changes, has had a positive impact on the tourism and hospitality sectors, ushering in a golden era - Amrit Kaal.

Foreign tourist arrivals for CY 2023 were 9.23 million in comparison with 6.43 million in 2022, registering a growth of 44%. However, the arrivals, which included G20 related business travel in CY 2023, accounted for only 85% of 2019 figures, when foreign tourist arrivals touched 10.93 million (Source: Government of India, Ministry of Tourism statistics December 2023). Thus, there is a future demand potential arising from a complete revival and growth of the sector.

Outbound tourist departures for CY 2023 were 27.27 million, surpassing the pre-pandemic levels of 2019. Domestic air passenger traffic for 2023 grew 23% at 152 million over 2022, also surpassing the pre-pandemic levels. Demand for accommodation was mainly from domestic leisure travel, weddings, social events, and conferences supported by emerging corporate business travel. Horwath HTLs India Hotel Market Review 2023 pegged the occupancy for CY 2023 at 63.6% in comparison to 59.6% in 2022, higher by 4% points yet lower than the 2019 levels of 64.5%, mainly due to the widening supply in Tier II and Tier III cities, and leisure markets. The average daily rate (ADR) for 2023 was Rs.7,479, an increase of 22% over 2022 and 32% over 2019. Udaipur topped the charts of market-wide ADR while Mumbai, Goa and Delhi have positively gained in both occupancy and ADR. Revenue per available room (RevPAR) at Rs.4,757 grew 30% as against Rs.3,654 and Rs.3,664 for 2022 and 2019, respectively.

All-India Performance Summary

Year	Occupancy %	ADR R	RevPAR R
2023	63.6	7,479	4,757
2022	59.6	6,135	3,654
2021	43.1	4,448	1,917
2019	64.5	5,684	3,664

Source: STR and Horwath HTLs India Hotel Market Review 2023

The positive sentiment in the industry was reflected by a growing pipeline. According to Horwath HTLs India Hotel Market Review 2023, 14,000 rooms were added in 2023 across 182 hotels, taking the overall chain-affiliated room supply to approximately 1,83,000 rooms. Over 60% of the supply creation was outside the key markets, with the overall inventory share of such markets now at 40%.

Outlook

The Indian hotel industry is poised for a remarkable growth driven by long-term demand. Notable drivers of this growth are (i) improved connectivity with new airports and national highways across the country, (ii) increase in business travel led by buoyant economic conditions, new convention centres and global capability centres, (iii) recovery of foreign tourist arrivals, additional middle-income households and a clearly visible trend of premiumisation leading to higher demand for leisure destinations. The advent of spiritual tourism, weddings in India, a resurgent M.I.C.E (Meetings, Incentives, Conferences and Exhibitions) tourism surrounding recent and upcoming conventions centres and growing wildlife tourism give rise to new destinations and circuits providing a strong impetus to growth. Continuing infrastructure development projects within the country, growth in air and railway passenger traffic and growth in demand are expected to provide a long and sustainable upcycle for hospitality in India. Growth in demand for branded rooms is expected to outpace growth in supply of those rooms. A report from Horwath HTL estimates growth in all India demand at 10.6% till 2027, with growth in key leisure markets at 13.3%.

Supply, on the other hand, is estimated to grow at 8% with 60% of the supply outside the top 10 destinations. In the top 8 cities where IHCLs core assets are located, supply growth is estimated at 5%.

This growth will be mainly in various micro markets, providing adequate protection to IHCL. (Source: Horwath HTL and UBS Global Research).

While challenges such as inflation and geopolitical tensions persist, proactive government support and policies, alongside a renewed focus on sustainability are likely to bolster the sectors resilience and foster sustainable growth in the coming fiscal year. Growth in Indias services sector and higher disposable income of people working in it, referred to as Affluent India, are also expected to increase demand for holidays.

STRATEGIC IMPERATIVES

The Company continues to be guided by the initiatives of Ahvaan 2025-Re-engineer Margins, Re-imagine Brandscape and Restructure Portfolio. The strategic imperatives driving its performance during the year were:

• Market leadership

Commanding RevPAR premium in key destinations and presence across price points

• Portfolio growth

Expanding footprint across the country with highest-ever signings and openings

• Unique mix

Blend of capital-light managed contracts and capital-light leases providing resilience and capital-heavy on balance sheet driving operating leverage

• New & re-imagined businesses

Focused growth of new and re-imagined businesses supported by record performance from Ginger, TajSATS, Qmin, The Chambers and ama Stays & Trails

• Asset management

Investing in systematically renovating assets to realise premium

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A balanced portfolio of owned, leased and managed properties, iconic brands and a robust, well-diversified topline give IHCL the competitive advantage to lead markets and expand its business. A strong balance sheet and free cash flow strengthen its financial position, while a focus on productivity enhances its profitability. Its framework to drive sustainability and social measures - Paathya - with several short- and long-term goals to be fulfilled by 2030, guides the Company in doing business in a responsible manner. Collectively, all these factors enable the Company to achieve its strategic targets.

Compliance

IHCL deploys a robust internal check process to prevent and limit the risk of non-compliance. The Company approaches compliance from a proactive standpoint and believes in responsive intervention. Compliance with laws and regulations is an essential part of its business operations and it adheres to all national and regional laws and regulations in such diverse areas as product safety, product claims, trademark, copyright, patents, competition, employee health and safety, the environment, corporate governance, listing and disclosure, employment, and taxes. Nevertheless, the Company is focusing on increasing awareness, documentation and supplementing the expertise of internal professionals with that of independent consultants, as may be required from time to time.

Internal Control Systems and their Adequacy

The Company has institutionalised an adequate system of internal controls, with documented procedures covering all corporate functions and hotel operating units. Internal controls provide reasonable assurance regarding the effectiveness and efficiency of operations, the adequacy of safeguards for assets, the reliability of financial controls, and compliance with applicable laws and regulations.

The internal audit process (Taj Positive Assurance Model), based on the audits of operating units and corporate functions, provides positive assurance. It converges the process framework, risk and control matrix and a scoring matrix, covering all critical and important functions inter alia revenue management, hotel operations, purchase, finance, human resources, and safety. A framework for each functional area is identified based on risk assessment and control, while allowing the unit to identify and mitigate high-risk areas.

These policies and procedures are updated periodically and monitored by the Group Internal Audit. The Company aligns all its processes and controls with best practices.

Internal controls are reviewed through the annual internal audit process, which is undertaken for every operational unit and all major corporate functions under the direction of the Group Internal Audit. These reviews focus on:

Identification of weaknesses and improvement areas	Compliance with defined policies and processes
Compliance with applicable statutes	Safeguarding tangible and intangible assets
Managing risk environment, including operational, financial, social, and regulatory risks	Conformity with the Tata Code of Conduct

The Boards Audit Committee oversees the adequacy of the internal control environment through periodic reviews of audit findings as well as the review of the resolution mechanism for critical audit issues. The statutory auditors have opined in their report that there are adequate internal controls over financial reporting at IHCL.

MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING RESULTS AND FINANCIAL POSITIONS

The Annual Report contains financial statements of the Company, both on a standalone and consolidated basis. An analysis of the financial affairs is discussed below under summarised headings.

Results of operations for the year ended March 31, 2024 Standalone Financial Results

The following table sets forth financial information for the Company for the year ended March 31, 2024.

		(Rs. crores)
	Year ended
Particulars	March 31, 2024	March 31, 2023
Income
Revenue from Operations	4,405.60	3,704.24
Other Income	184.51	107.08
Total Income	4,590.11	3,811.32
Expenses
Food and Beverages Consumed	333.11	304.59
Employee Benefit Expenses and Payment to Contractors	872.31	761.63
Depreciation and Amortisation Expenses	228.20	207.85
Other Operating and General expenses	1,487.98	1,248.31
Total Expenses	2,921.60	2,522.38
Profit before Finance Costs and Tax	1,668.51	1,288.94
Finance Costs	114.88	128.29
Profit before Exceptional Items and Tax	1,553.63	1,160.65
Exceptional Items	(71.05)	(21.68)
Profit before Tax	1,482.58	1,138.97
Tax Expense	387.65	295.94
Profit after Tax	1,094.93	843.03

An analysis of major items of financial statements are given below:

a) Income

The summary of total income is provided in the table below:

			(Rs. crores)
Particulars	Year ended		% Change
	March 31, 2024	March 31, 2023
Room Income	1,952.72	1,594.04	23
Food, Beverage & Banqueting Income	1,562.90	1,381.47	13
Other Operating Income	426.70	338.08	26
Management & Reimbursable Fees	463.28	390.65	19
Non-operating Income	184.51	107.08	72
Total Income	4,590.11	3,811.32	20
Statistical Information
Average Rate Per Room (Rs.)	15,414	13,736	12
Revenue Per Available Room (Rs.)	11,821	9,851	20
Occupancy (%)	77	72	5% points

i) Ginger Mumbai Airport opened in the third quarter of this financial year, operating 371 keys and managed by Roots Corporation Limited, a wholly owned subsidiary of the Company.

ii) Room Income for the year was higher by 23% from the previous year with an average rate per room (ARR) of Rs.15,414 and an average occupancy at 77%. ARR increased by 12% and average occupancy increased by 5 percentage points to 77% for the year. Revenue per available room (RevPAR) of Rs.11,821 increased by 20% from the previous year. Business increased across all customer segments including corporate, leisure, events, conferences and groups backed by robust demand.

iii) Food, Beverage and Banqueting Income for the year was higher by 13% from the previous year, equally contributed by banqueting events and restaurants.

iv) Other Operating Income increased by 26% over the previous year. It primarily comprises income from membership fees, rentals, spa and health club, laundry, transportation, telephone and business centre rents among others. Fee income collectively from The Chambers, Health Club, Spa and Swimming Pool membership and Epicure membership increased by 38%. Income from other services like laundry, transportation, wellness and beauty salon increased by 18% from the previous year in line with increase in occupancies.

v) Management and Reimbursable Fees at Rs.463.28 crores were higher by 19% from the previous year. The increase in management fees and reimbursable fees was mainly due to higher business activity levels of managed properties in the portfolio and new managed properties commencing operations.

vi) Non-operating Income increased by Rs.77.43 crores to Rs.184.51 crores in the current year from Rs.107.08 crores in the previous year. Non-operating Income increased mainly due to interest income on surplus funds invested Rs.18.89 crores, higher dividend of Rs.21.86 crores from investments in subsidiaries, joint ventures and associate companies and higher, non-recurring interest on income tax refunds Rs.31.13 crores.

b) Expenses

Total Expenses increased to Rs.2,921.60 crores during the current year from Rs.2,522.38 crores in the previous year.

While Total Income increased by 20% from the previous year. Total Expenses increased by 16% from the previous year mainly due to increase in variable costs consequent to increased business activity. Variances under each expenditure head are explained below:

i) Food and Beverages Consumed

	March 31, 2024	March 31, 2023	Change (%)
Food and Beverages Consumed (Rs. crores)	333.11	304.59	9
% to Food, Beverage & Banqueting Income	21	22	1% point

Food and Beverages Consumed, which is variable in nature, increased with increase in income from food, beverages and banqueting business. Whilst Food and Beverages Income increased by 13% from the previous year, Food and Beverages Consumed increased by 9%. Cost as a percentage of Food and Beverages Income was lower at 21% as against 22% in the previous year.

ii) Employee Benefit Expenses and Payment to Contractors

	March 31, 2024 (Rs. crores)	March 31, 2023 (Rs. crores)	Change (%)
Employee Benefit	872.31	761.63	(15)
Expenses and Payment to Contractors

Employee Benefit Expenses and Payment to Contractors increased by 15% to Rs.872.31 crores in the current year from Rs.761.63 crores in the previous year. This was mainly due to an increase in employee costs commensurate with increase in business activities. The increase was also attributed towards merit increases, increments paid to employees, negotiated salary increases with labour unions, talent development initiatives and compliance of necessary laws.

iii) Depreciation and Amortisation Expenses

	March 31, 2024	March 31, 2023	Change (%)
	(Rs. crores)	(Rs. crores)
Depreciation and Amortisation Expenses	228.20	207.85	(10)

Depreciation and Amortisation Expenses increased by 10% over the previous year. This was mainly due to additional depreciation on capital expenditure for renovation of hotels, depreciation of newly opened hotel Ginger Mumbai Airport and additional amortisation on right-of-use assets in line with terms of lease contract.

iv) Other Operating and General Expenses

	March 31, 2024	March 31, 2023	Change (%)
	(Rs. crores)	(Rs. crores)
Other Operating Expenses	774.57	685.76	(13)
General Expenses	713.41	562.55	(27)
Total	1,487.98	1,248.31	(19)

Other Operating and General Expenses increased by 19% to Rs.1,487.98 crores in the current year from Rs.1,248.31 crores in the previous year.

Other Operating Expenses increased by 13% to Rs.774.57 crores in the current year from Rs.685.76 crores in the previous year. Variable cost other than power and fuel, such as maintenance, linen supplies, room and catering supplies, transportation, distribution costs of commissions to travel agencies, credit card charges and costs of hosting banqueting events increased by 17% in line with change in business mix and volumes. Power and fuel cost increased by 3.4%. While consumption of power units increased on account of increase in business volume, the increase was offset by savings from purchase of renewable energy and capital expenditure on energy efficient equipment.

General Expenses increased to Rs.713.41 crores in the current year from Rs.562.55 crores in the previous year, an increase of Rs.150.86 crores. Primary reasons for such increases were increase in variable lease costs linked to turnover of leased properties, increase in variable costs linked to higher loyalty revenue and loyalty programme management expenses, insurance, rates, taxes and higher general administration costs including professional fees, travel and rent. Advertising and promotion costs increased with a judicious increase in spends on campaigns relevant to consumer sentiment and brands relating to new and re-imagined businesses.

c) Finance Costs

	March 31, 2024	March 31, 2023	Change (%)
	(Rs. crores)	(Rs. crores)
Finance Costs	Rs.114.88	128.29	10

Finance Costs for the current year at Rs.114.88 crores were lower than the preceding year by Rs.13.41 crores or 10%.

The reduction was mainly due to repayment of debentures aggregating Rs.450.00 crores in the current year out of the proceeds of the rights issue made in the financial year 2021-22. Finance Costs include interest cost on lease liabilities of Rs.98.92 crores in the current financial year in comparison to Rs.92.00 crores in the previous financial year.

d) Exceptional Items

Exceptional items include items as under:

	March 31, 2024	March 31, 2023
	(Rs. crores)	(Rs. crores)
Provision for Impairment of Investment in a Subsidiary that Incurred Losses	(81.89)	(21.68)
Reversal of Provision for Impairment in the Value of Investment in a Joint Venture	10.84
Total	(71.05)	(21.68)

Exceptional Items for the current year comprised of a provision for cash losses of foreign subsidiaries which was higher than the previous year partially set off with reversal of provision for impairment in the value of investment of a joint venture.

e) Tax Expense

Tax Expense for the year was Rs.387.65 crores as against Rs.295.94 crores in the previous year mainly due to increase in business profits in the current year.

f) Profit after Tax

During the current year, the Company generated a Profit after Tax of Rs.1,094.93 crores compared to Rs.843.03 crores in the previous year, increase of 30% from previous year. This was due to a significant improvement in the operating revenues of the Company combined with operating leverage resulting in margin expansion from 22.12% in the previous year to 23.85% in the current year.

g) Liquidity and Debt

	March 31, 2024	March 31, 2023	Change
	(Rs. crores)	(Rs. crores)
Cash and Cash Equivalents*	1,017.86	760.48	34
Current Investments	641.65	705.84	(9)
Total Liquidity	1,659.51	1,466.32	13
Gross Debt	-	450.08
Net liquidity	1,659.51	1,016.24	63

* includes balances greater than 3 months not earmarked or pledged

The Company maintained a good liquidity position during the year and met all its interest and principal repayment obligations. At the end of the year, the liquidity position represented by cash, cash equivalents and current investments increased by Rs.193.19 crores over the previous year to Rs.1,659.51 crores. Net liquidity position strengthened from Rs.1,016.24 crores to Rs.1,659.51 crores. During the year, gross debt decreased by Rs.450.08 crores consequent to redemption of Debentures.

Cash Flow

		(Rs. crores)
	Year ended
Particulars	March 31, 2024	March 31, 2023
Net Cash from/(used for) Operating Activities	1,527.71	1,227.22
Net Cash from/(used for) Investing Activities	(1,203.09)	(646.51)
Net Cash from/(used for) Financing Activities	(740.30)	(700.56)
Net Increase/(Decrease) in Cash and Cash Equivalents	(415.68)	(119.85)

Operating Activities

Net Cash generated from Operating Activities during the year was Rs.1,527.71 crores as compared to Rs.1,227.22 crores in the previous year. This is mainly attributable to an improvement in cash operating profit during the year after payment of taxes.

Investing Activities

During the year, Net Cash used for Investing Activities amounted to Rs.1,203.09 crores, compared to Rs.646.51 crores in the previous year. The Companys outlay on capital expenditure was Rs.364.20 crores, which was mainly for greenfield projects and renovations. The Company invested an amount of Rs.150 crores primarily for its hotel operations in the US, Rs.168.50 crores in its subsidiaries executing greenfield projects and Rs.19.93 crores to further capitalise its subsidiary Ideal Ice Limited. Rs.102.02 crores was liquidated from current investments while Rs.671.24 crores was invested in bank deposits. Interest and dividend received amounted to Rs.75.51 crores.

Financing Activities

During the year, Net Cash used for Financing Activities was Rs.740.30 crores as against Rs.700.56 crores in the previous year. The Company repaid outstanding borrowings of Rs.450.00 crores. The Company also paid dividend of Rs.141.83 crores, interest and borrowing costs of Rs.35.25 crores and lease liabilities of Rs.112.47 crores during the year.

Key Financial Ratios for Standalone Financials

Key financial ratios and their definitions are given below:

	Year ended
Particulars	March 31, 2024	March 31, 2023
Debt-Equity Ratio (in times)	-	0.05
Debt Service Coverage Ratio (in times)	4.56	2.78
Interest Service Coverage Ratio	n/m	n/m
(in times) - {a}
Current Ratio (in times)	1.78	1.76
Net Capital Turnover Ratio (in times)	4.63	3.25
Trade Receivables Turnover Ratio (in days)	32	29
Inventory Turnover Ratio- {b}	NA	NA
Operating Profit Margin (in %) - {c}	38.86	37.52
Net Profit Margin (in %)	23.85	22.12
Return on Capital Employed (in %)	15.20	12.50
Return on Equity (in %)	11.54	9.96

a) Interest Service Coverage Ratio equals Profit before Tax + Interest on Borrowings (Net) + Provision for Impairment of Investments + Depreciation and Amortisation divided by Interest on Borrowings (Net). This ratio is not meaningful (n/m) for the current year as Interest on Borrowings (Net) is negative.

b) Inventory Turnover Ratio has not been presented since the Company holds inventory for consumption in the service of food and beverages and the proportion of such inventory is insignificant to Total Assets.

c) Operating Profit Margin equals Profit/(Loss) before Depreciation and Amortisation Expenses, Interest,

Tax and Exceptional Items less Other Income divided by Revenue from operations.

d) The definitions of other ratios are given in Note 46 of the Notes to Standalone Financial Statements.

The Company maintained a very healthy capital structure with all outstanding borrowings repaid during the year. As a result and in combination with an increase in cash operating earnings, the Debt Service Coverage Ratio improved substantially. Growth in Revenue from Operations and Operating Profits improved the Operating Profit Margin and Net Profit Margin, Return on Capital Employed and Return on Equity in comparison with the previous year.

Consolidated Financials

The Consolidated Financial Statements comprise the Company and its subsidiaries (referred collectively as the Group) and the Groups interest in associates and joint ventures prepared

in accordance with Ind AS, as applicable to the Company.

The Consolidated Statements include the financial position of subsidiaries on a line-by-line basis and for joint ventures and associates by applying equity method of accounting.

Consolidated Results

The following table sets forth the Consolidated Financial results for the year ended March 31, 2024.

		crores)
	Year ended
Particulars	March 31, 2024	March 31, 2023
Income
Revenue from Operations	6,768.75	5,809.91
Other Income	182.92	138.90
Total Income	6,951.67	5,948.81
Expenses
Food and Beverages Consumed	520.83	472.89
Employee Benefits Expenses	1,805.21	1,582.25
Depreciation and Amortisation Expenses	454.30	416.06
Other Operating and General Expenses	2,285.58	1,950.21
Total Expenses	5,065.92	4,421.41
Profit before Finance Costs and Tax	1,885.75	1,527.40
Finance Costs	220.22	236.05
Profit before Exceptional Items, Tax, and Share of Profit of Equity Accounted Investees	1,665.53	1,291.35
Exceptional Items	-	3.29
Profit before Tax, before Share of Profit of Equity Accounted Investees and Non-controlling Interests	1,665.53	1,294.64
Tax expense	463.94	323.21
Profit after Tax, before Share of Profit of Equity Accounted Investees and Non-controlling Interests	1,201.59	971.43
Add: Share of Profit of Associates and Joint Ventures (net of tax)	128.65	81.40
Profit for the Year	1,330.24	1,052.83
Less: Non-controlling Interest in Subsidiaries	71.17	50.24
Profit after Tax Attributable to Owners of the Company	1,259.07	1,002.59

Income

Revenue from Operations increased by 17% to Rs.6,768.75 crores from Rs.5,809.91 crores in the previous year. Among key Indian subsidiaries, PIEM Hotels Limited registered a turnover of Rs.568.92 crores, a growth of 13% over the previous year and Roots Corporation Limited registered a turnover of Rs.373.80 crores, a growth of 22% over the previous year. Among key international subsidiaries, St. James Court Hotel Ltd. owning UK hotels registered a turnover of Rs.494.23 crores, growing 18% over the previous year while UOH Inc owning US hotels registered a turnover of Rs.671.18 crores, growing 2% over the previous year under challenging business conditions.

Fees from managed properties increased to Rs.470.47 crores in the current year by 18% over the previous year due to increase in turnover and profitability of managed properties as well as opening of new hotels on management contracts. Other Income increased by Rs.44.02 crores to Rs.182.92 crores from Rs.138.90 crores in the previous year on account of higher interest income generated from higher liquidity and higher, non-recurring interest on income tax refund in the current year.

Expenses

Total Expenses increased by 15% to Rs.5,065.92 crores in the current year from Rs.4,421.41 crores in the previous year. Increase in expenditure was in line with increases in business activity across the Group as revenue from operations increased by 17%. In comparison with the previous year employee benefit costs increased by 14%. Depreciation and Amortisation for the year was higher due to completed renovations at hotels, an addition of a new hotel property viz. Ginger Mumbai Airport on IHCLs standalone books and additional amortisation on right-of-use assets. Operating Expenses increased in line with increase in business volumes. Variable costs of maintenance, linen, room and catering supplies, transportation, distribution costs of commissions to travel agencies, credit card charges and costs of hosting banqueting events, all increased in line with business activity and business mix. General expenses increased mainly due to variable lease costs linked to turnover of leased properties, advertising and promotion costs, loyalty programme costs, insurance, rates, taxes and higher general administration costs including professional fees, travel and rent.

Finance Costs

Finance Costs, including interest on lease liabilities of Rs.177.10 crores for the year ended March 31, 2024 at Rs.220.22 crores was lower than the previous year by Rs.15.83 crores due to repayment of borrowings during the year.

Exceptional Items

Exceptional Items include the following:

	March 31, 2024	March 31, 2023
	(Rs. crores)	(Rs. crores)
Profit on Sale of Hotel Property in a Subsidiary	-	12.02
Exchange Gain/(Loss) on Long term Borrowings/Assets (net)	-	(8.73)
Total	-	3.29

Profit after Tax Attributable to Owners of the Company

Profit after Tax, including Share of Profit of Equity Accounted Investees Attributable to Owners of the Company for the year was Rs.1,259.07 crores as compared to a profit of Rs.1,002.59 crores in the previous year. Higher operating profits of the Group on account of improved business, higher margins and lower finance costs as well as increased business volumes and margins of joint ventures and associates contributed to the increase in profits. Roots Corporation Limited, managing the Ginger brand and TajSATS Air Catering Ltd., recorded exceptional growth in profitability during the year.

Consolidated Cash Flow

The following table sets forth selected items from the consolidated cash flow statements:

	(Rs. crores)
	Year ended
Particulars	March 31, 2024	March 31, 2023
Net Cash from/(used in) Operating Activities	1,935.14	1,618.99
Net Cash from/(used) in Investing Activities	(1,210.01)	(144.58)
Net Cash from/(used) in Financing Activities	(984.65)	(1,527.85)
Net Increase/(Decrease) in Cash and Cash Equivalents	(259.52)	(53.44)

Operating Activities

Net Cash generated from Operating Activities for the current year was Rs.1,935.14 crores as against Rs.1,618.99 crores in the previous year. The increase in Cash from Operating Activities was mainly due to improvement in business of the Group and working capital position.

Investing Activities

Net Cash used for Investing Activities was Rs.1,210.01 crores in the current year as against Rs.144.58 crores in the previous year. During the year, the Group utilised cash for planned project expenditures amounting to Rs.636.96 crores.

Financing Activities

Net Cash used for Financing Activities across the Group was Rs.984.65 crores for the current year as against Rs.1,527.85 crores in the previous year. In the current year, cash was used for repayment of borrowings, payment of lease liabilities, interest and dividends.

Closing Cash Position, Debt and Liquidity

The Group registered its highest-ever free cash flow of Rs.1,162.19 crores during the year. The cash position of the Group at the end of March 31, 2024 was Rs.2,206.28 crores comprising cash and cash equivalents of Rs.479.34 crores, current investments of Rs.724.15 crores and balances with banks in call and short-term deposit accounts of Rs.1,002.79 crores. As against this, the gross debt of the Group was Rs.260.49 crores. Consequently, the net cash position of the Group was Rs.1,945.79 crores.

Key Financial Ratios for Consolidated Financials

Key financial ratios for consolidated financial statements and their definitions are given below:

		crores)
	Year ended
Particulars	March 31, 2024	March 31, 2023
Debt-Equity Ratio (in times)	0.03	0.09
Debt Service Coverage Ratio (in times)	4.39	1.48
Interest Service Coverage Ratio (in times) - {a}	n/m	74.19
Current Ratio (in times)	1.72	1.56
Net Capital Turnover Ratio (in times)	6.13	5.38
Trade Receivables Turnover Ratio (in days)	25	22
Inventory Turnover Ratio - {b}	NA	NA
Operating Profit Margin (in %) - {c}	31.87	31.06
Net Profit Margin (in %)	17.28	16.33
Return on Capital Employed (in %)	15.12	12.96
Return on Equity (in %) - {d}	14.17	12.92

a) Interest Service Coverage Ratio equals Profit before Tax + Interest on Borrowings (Net) + Provision for Impairment of Investments + Depreciation and Amortisation divided by Interest on Borrowings (Net).

b) Inventory Turnover Ratio has not been presented since the Company holds inventory for consumption in the service of food and beverages and the proportion of such inventory is insignificant to Total Assets

c) Operating Profit Margin equals Profit/(Loss) before Depreciation and Amortisation Expenses, Interest, Tax and Exceptional Items less Other Income divided by Revenue from Operations.

d) Return on Equity equals Profit/(Loss) for the year divided by Average Total Equity including Non-controlling interests.

e) The definitions of other ratios are given in Note 46 of the Notes to Standalone Financial Statements.

The Group maintained a healthy capital structure evident from the Debt-Equity ratio at 0.03 times as compared to 0.09 times for the previous year. The Group utilised its cash for repaying its borrowings during the year and remained net cash positive. Reduction in debt and improvement in earnings improved the Debt Service Coverage ratio substantially.

Current Ratio improved to 1.72 times and Net Capital Turnover Ratio increased to 6.13 times. Growth in Revenue from Operations and Operating Profits improved the Operating Profit Margin, Net Profit Margin in comparison with the previous year. Return on Capital Employed and Return on Equity doubled from pre-pandemic levels.

Financial Highlights

				(Rs. crores)
	Standalone		Consolidated
	2023-24	2022-23	2023-24	2022-23
Total Income	4,590.11	3,811.32	6,951.67	5,948.81
Profit/(Loss) Before Tax and Exceptional Items	1,553.63	1,160.65	1,665.53	1,291.35
Profit/(Loss) Before Tax	1,482.58	1,138.97	1,665.53	1,294.64
Profit/(Loss) After Tax, Non- controlling Interest & Share of Associates & Joint Ventures	1,094.93	843.03	1,259.07	1,002.59
Total Assets	12,776.51	11,779.67	14,855.83	13,668.75
Equity Share Capital	142.34	142.04	142.34	142.04
Other Equity	10,001.60	8,696.94	9,314.31	7,839.92
Non-controlling interest	-	-	672.06	660.09
Total Equity	10,143.94	8,838.98	10,128.71	8,642.05
Borrowings	-	450.08	260.49	818.26
Net Debt/(Net Cash)	(1,659.51)	(1,016.24)	(1,945.79)	(987.43)
Book Value per Share of Rs. 1/- each- In Rs.	71.27	62.23	71.16	60.84
Earnings Per Share- Basic and Diluted- In Rs.	7.70	5.94	8.86	7.06
Dividend proposed Per Share- In Rs.	1.75	1.00	1.75	1.00