International Travel House Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS FOR THE FINANCIAL YEAR ENDED 31st MARCH, 2024

BUSINESS ENVIRONMENT

As per the International Monetary Fund (IMF) (World Economic Outlook¹, April 2024), the global recovery during the year remained steady but slow and differed from one region to the other; the forecast for global growth in 2023 was 3.2%, and this rate is expected to be maintained in both the years 2024 and 2025. Indias growth is projected to remain strong, with a predicted rate of 6.7% in the year 2024 and 6.5% in the year 2025. This strength can be attributed to the countrys solid domestic demand and growing working- age population, cementing its position as one of the worlds top-performing and influential economies.

Although the overall travel recovery is progressing well, there has been a shift in traffic patterns, domestic travel has shown the strongest recovery, while international travel has been slower to rebound. In terms of market segments, leisure travel has recovered before business travel. The total number of global domestic passengers in 2023 exceeded that of 2019 by 3.9%. On the other hand, international air traffic continued to lag behind its pre-pandemic levels but maintained a steady and strong growth rate, reaching 88.6% in 20 23².

In the year 2023, the domestic airline passenger traffic in India showed a notable increase of 8.2% compared to the previous year. This growth exceeded pre-pandemic levels by 6%². Additionally, foreign tourist arrivals into India saw a promising recovery, reaching 84.5%³ of the levels recorded in 2019.

According to the Global Business Travel Association (GBTA) Business Travel Industry Outlook Poll Jan 2024⁴, the global business travel industry has entered a new phase. More than four in five travel managers (83%) worldwide say their companys business travel volume have increased. As businesses and travellers alike recognize the importance of face-to-face interactions for successful transactions, there are promising signs for growth in travel volume and expenditure in the year 2024.

FINANCIAL PERFORMANCE

During the year under review, your Company recorded Operating Income of Rs.21,732.79 lakhs (previous year Rs.18,404.73 lakhs) reflecting a growth of 18% over the previous year due to healthy growth in business travel. The Other Income of the Company was Rs.392.85 lakhs (previous year Rs.285.52 lakhs) and Post-tax profits for the year was Rs.2,250.30 lakhs (previous year Rs.2,838.59 lakhs including one time deferred tax credit of Rs.1,007.29 lakhs).

PROFITS, DIVIDEND AND RETAINED EARNINGS

		(Rs. in lakhs)
PARTICULARS	2023-24	2022-23
PROFITS
a. Profit Before Tax	3,043.68	1,831.30
b. Tax Expense
Current Tax	69.57	-
Deferred Tax	723.81	(1,007.29)
c. Profit for the year	2,250.30	2,838.59
d. Other Comprehensive Income	(41.24)	(44.16)
e. Total Comprehensive Income	2,209.06	2,794.43
STATEMENT OF RETAINED EARNINGS
a. At the beginning of the year	8,636.68	5,842.25
b. Add: Profit for the year	2,250.30	2,838.59
c. Add: Other Comprehensive Income	(41.24)	(44.16)
d. Less: Dividend Paid	(279.81)	-
e. At the end of the year	10,565.94	8,636.68

Your Directors are pleased to recommend a Dividend of Rs.5.00 per Equity Share (Previous Year Rs.3.50 per Equity Share) of Rs.10/- each, for the year ended 31^st March, 2024. Total cash outflow on account of Final Dividend will be Rs.399.72 lakhs.

Details of changes in Key Financial Ratios and Return on Net Worth

The key financial ratios of the Company where there have been significant changes (25% or more) are summarized below, pursuant to Schedule V (B) to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations):

Particulars	2023-24	2022-23	% Change	Reason for change
Return on Net Worth (%)#	16.94	25.99	(35)	Refer Note 1 below
Net Profit Ratio (%)	10.42	15.67	(33)
Return on Capital Employed (%)*	22.97	16.80	37	Higher revenue and profit in current year.

# Calculated on Average Net worth.

* Capital Employed means Share Capital + Other Equity (Net Worth) + Total Debt + Deferred Tax Liability.

Note 1- Return on Equity and Net Profit Ratio of current year is not comparable with the last year due to one-time credit towards deferred tax assets of Rs.1,022.14 lakhs recognized in the previous year.

BUSINESSES

Travel Management Services

Most of the travel buyers report showed increase in bookings and spending for 2023 and it is expected that this year-over year growth trend will continue (GBTA Poll Jan 2024). Industry professionals also expect some challenges ahead, with rising travel costs and overall geopolitical conditions. The financial year 2023-24 also witnessed the growing importance of sustainability in business travel.

As per GBTA estimates, India could fully reach pre-2019 spending levels by 2025 and is expected to reach 120% of its pre-COVID business travel spend in 2027.

The strong growth in the Indian aviation sector where improving seat capacity and infrastructure are both areas of focus, augur well for growth in travel.

Your Company continued its endeavours to augment its digital interventions to further enhance customer service and process efficiency through automation of related business processes. While some key industry sectors witnessed a slowdown in travel coupled with rising costs, the efforts in retention and new business acquisition coupled with initiatives to widen the service offerings and reduce structural cost helped grow the business volumes, revenue and margins.

Your Company continues to offer a full range of business travel solutions for domestic and international travel including Air Ticketing, Hotel Accommodation, Mobility solutions, Visa facilitation, Insurance and Foreign Exchange services as part of its overall bouquet of services.

Meetings, Incentives, Conferences and Exhibitions (MICE)

Corporate MICE gained momentum in later part of 2023, while visa delays continued to be a challenge for some destinations; visa-friendly destinations like Thailand, Malaysia, Dubai, Singapore witnessed increase in MICE groups.

Your Company handled several Outbound & Domestic groups in the year from sectors including Infrastructure, Media, Automobile, Information Technology and Apparels. The expected economic growth should support the revival for both domestic and outbound MICE in the coming year. Your Company continues to engage with Tourism Boards/Destination Management Companies/Global Hotel Chains & Airlines to enable offer clients enhanced experiences.

Outbound and Domestic Leisure

Indian travellers are eager to explore a diverse range of domestic and international destinations, each offering its unique allure and experiences. While preferences may vary based on individual interests and travel trends, certain destinations stand out as perennial favourites. According to the World Travel & Tourism Councils (WTTC) "World Economic Impact 2024", Indias domestic tourism sector is recovering significantly, while international travel spend remains below pre-pandemic levels.

Some of the top domestic destinations preferred by travellers included Goa, Kerala, Rajasthan, Himachal Pradesh and Uttarakhand. On the other hand, top international destinations favourite among Indian travellers were Dubai, Singapore, Thailand and Sri Lanka.

Your Company continued its efforts towards enhancing unique customer experiences which led to the launch of new products like Wildlife Safaris (Kenya, South Africa), Kashmir Tulip Festival, Magical Journeys, Long Weekend Specials.

Car Rental Services

With the increasing trends in business travel trips, the Indian car rental sector also made recoveries in this segment towards the pre pandemic transaction levels. The market is anticipated to grow further, driven by factors such as improvement in the rise of mobile applications and online platforms, connectivity & road infrastructure and the expansion of services to tier-2 and tier-3 cities.

Your Companys continuous focus on margin expansion through structural cost interventions, optimum asset mix, whilst constantly enhancing the scope on quality & safety, has enabled growth in revenue generation.

With the improving ecosystem for EVs (charging stations/wider price range of EV vehicles) coupled with growing importance of sustainability initiatives in business, the EV adoption is steadily building. Further to the EV pilot project run in the previous financial year, your Company in the year 2023-24 continued to induct EVs into the mobility fleet, these vehicles have clocked an estimated 2.91 lakh Kms in the year and the inventory built up during the year has the potential to save approximately 300 MT of CO₂ per annum. This addition of EVs in a phased manner across major cities of operations will continue in the next financial year as well.

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

The Company does not have any subsidiary, associate or joint venture.

INTERNAL FINANCIAL CONTROLS

Corporate Governance in your Company operates at interlinked levels which clearly delineates the roles, responsibilities and authorities across the different levels of the governance structure. Your Company also has a Code of Conduct which commits Management to conform to the systems and processes, conduct business ethically and ensure strict compliance with all applicable laws and regulations. These policies have been widely communicated across the organisation and together with the planning & review processes and the Risk Management Framework, they create a controlled environment across the Company and provide the foundation for Internal Financial Controls with reference to your Companys Financial Statements.

Your Companys Financial Statements are prepared on the basis of the Material Accounting Policies that are carefully selected by the Management and approved by the Audit Committee and the Board of Directors (‘the Board). These Policies are supported by the Corporate Accounting, System and Policies that apply to the entity as a whole to implement the tenets of Corporate Governance and Accounting Policies uniformly across your Company. The Accounting Policies are reviewed and updated from time to time. These in turn are supported by a set of policies and Standard Operating Procedures (‘SOPs) that have been established for individual functions.

Your Company uses Information Technology Systems as a business enabler and also to maintain its books of accounts. The SOPs, in tandem with the Information Management Policy, reinforce the control environment. The whole gamut of controls, policies, procedures and systems are reviewed by management and audited by the Internal Auditor whose findings and recommendations are reviewed by the Audit Committee and tracked through till implementation.

Your Company has in place adequate internal financial controls with reference to Financial Statements. Such controls have been assessed during the year taking into consideration the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. Based on the results of this assessment carried out by the Management, no reportable material weakness or significant deficiencies in the design or operation of internal financial controls was observed. Nonetheless, your Company recognises that any internal financial control framework, no matter how well designed, has inherent limitations and accordingly, regular audit and review processes are undertaken to ensure that such systems are reinforced on an ongoing basis.

RISK MANAGEMENT

Your Company continues to focus on a system-based approach to business risk management and it has been an integral part of your Companys strategy. Backed by strong internal control systems, the current Risk Management Framework consists of the following key elements:

- The Corporate Governance Policy approved by the Board clearly lays down the roles and responsibilities of various entities in relation to risk management covering a range of responsibilities, from strategic to operational. These role definitions, inter alia, provide the foundation for your Companys Risk Management Policy that is endorsed by the

Board and is aimed at ensuring formulation of appropriate risk management procedures, their effective implementation and independent monitoring and reporting by Internal Auditor.

- A combination of policies and procedures bring robustness to the process of ensuring that business risks are effectively addressed.

- Appropriate structures are in place to proactively monitor and manage the inherent risks in businesses with unique/relatively high risk profiles.

- Internal Audit is an independent and external function and carries out risk focused audits, enabling identification of areas where risk management processes may need to be further strengthened. These audits are conducted by M/s Grant Thornton Bharat, LLP, Chartered Accountants (‘GT) who are the Internal Auditor of the Company. The Audit Committee of the Board reviews Internal Audit findings and provides strategic guidance on internal controls. The Audit Review Committee closely monitors the internal control environment within your Company including implementation of action plans emerging out of internal audit findings.

- A robust and comprehensive framework of strategic planning and performance management ensures realisation of business objectives based on effective strategy implementation. The annual planning exercise requires identification of top risks and sets out a mitigation plan with agreed timelines and accountabilities. Businesses are required to confirm periodically that all relevant risks have been identified, assessed, evaluated and that appropriate mitigation systems have been implemented.

Your Company endeavours to continuously sharpen its Risk Management systems and processes in line with a rapidly changing business environment. A combination of policies and processes adequately addresses the various risks associated with your Companys businesses. The risk management practices of your Company and Internal Audit processes, have been found to be relevant and commensurate with the size and complexity of its operations.

AUDIT AND SYSTEMS

Your Company believes that strong internal controls that are commensurate with the size and scale of your Companys operations are concomitant to the principle of governance that freedom of management should be exercised within a framework of appropriate checks and balances.

Your Company remains committed to ensuring a mature and effective internal control environment that, inter-alia provides assurance on orderly and efficient conduct of operations, security of assets, prevention and detection of frauds/errors, accuracy and completeness of accounting records, timely preparation of reliable financial information, adherence with relevant statutes and compliance with related party transactions.

Your Companys internal control systems include documented policies and procedures, segregation of duties and careful selection and professional development of employees.

Your Companys independent and robust Internal Audit processes provide assurance on the adequacy and effectiveness of internal controls, compliance with operating systems, internal policies and regulatory requirements.

GT, the Internal Auditor, have assured the Company that they are adequately skilled and resourced to deliver high standards of audit assurances. In the context of the IT environment of your Company, systems and policies relating to Information Management are periodically reviewed and benchmarked for contemporariness. Compliance with the Information Management policies receives focused attention of the Internal Auditor.

The Audit Committee of your Board met four times during the year. The Terms of Reference of the Audit Committee inter-alia include reviewing the adequacy and effectiveness of the internal control environment, monitoring implementation of the action plans emerging out of review of significant Internal Audit findings including those relating to strengthening of your Companys risk management systems and discharging of statutory mandates.

The Statutory Auditor and Secretarial Auditor of your Company have not reported any fraud to the Audit Committee or the Board under Section 143 (12) of the Companies Act, 2013 (‘the Act), including Rules made thereunder.

HUMAN RESOURCE DEVELOPMENT

Your Company has put sharper focus on outcome by aligning the entire workforce with the growth aspirations while keeping the manpower strength restrained. This alignment has been instrumental in driving success for the Company, fostering a culture of dedication and excellence. Each member has contributed to collective achievements of the organization and has set the stage for continued progress.

Your Company values the contribution made by all employees and recognizes that the key factor in its success is the loyalty and commitment of all the people who work within it. In recognition of our dedicated employees & to celebrate their contributions, your Company has extended the Service Milestone Awards to the employees who have been with the Company for 10, 20, and 25 years.

Your Company truly believes in nurturing future talent to meet evolving needs, strengthen talent pipeline and enrich organizational culture with fresh perspectives and ideas. The focus of your Companys recruitment strategy is to attract and retain the best talent in order to sustain the growth projection for the coming years.

The Companys Human Resource is invested in building meaningful careers for its workforce by providing learning opportunities and relevant skills enabling them to remain updated & aligned with business outcomes. Your Companys learning and development programs are designed to support functional expertise through e-learning programs as well as classroom sessions.

Your Company is deeply committed to the well-being of its employees and continuously works towards fostering a positive and supportive work environment. Throughout the year, your Company carried out a variety of employee well-being initiatives and programs.

Your Company has accelerated adoption of technology in Human Resource functions and has implemented automation across the key stages of employee lifecycle. This comprehensive approach ensures a seamless and efficient experience for all employees, streamlining processes and enhancing overall productivity.

Your Company finds it imperative to follow policies and procedures to facilitate an unbiased and safe working environment. Your Company has adopted a Policy on Sexual Harassment (POSH) as per the provisions of the Prevention of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder. The Company has undertaken people scope classroom and virtual sensitization sessions geared towards employee awareness on POSH. The Company has Internal Committees to ensure that adequate preventive measures are taken and grievances in this regard, if any, are effectively addressed. During the year under review, no complaint relating to sexual harassment was received.

FORWARD-LOOKING STATEMENTS

This Report contains forward-looking statements that involve risks and uncertainties. When used in this Report, the words ‘anticipate, ‘believe, ‘estimate, ‘expect, ‘intend, ‘will and other similar expressions as they relate to the Company are intended to identify such forward-looking statements. Your Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Actual results, performances or achievements could differ materially from those expressed or implied in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of their dates. This Report should be read in conjunction with the financial statements included herein and the notes thereto.