Lords Ishwar Hotels Ltd Management Discussions

1. INDUSTRY STRUCTURE AND DEVELOPMENTS:

Indias economy has positioned itself as the fastest-growing among major global economies, poised to ascend to one of the top three economic powers worldwide in the coming decade. This growth is anchored by Indias resilient democracy and strong international partnerships. According to the International Monetary Fund, India achieved a robust real GDP growth rate of 6.8% during the fiscal year 2023-24, surpassing the global growth projection of 3.1%. Looking forward, India is set to sustain its upward trajectory with an anticipated growth rate of 6.8% for the fiscal year 2024-25. The future of Indias hospitality sector looks promising, fueled by growing domestic tourism, higher disposable incomes, and the emergence of appealing new travel destinations.

India stands as a vast market in the realm of travel and tourism, boasting a rich array of specialized offerings including cruises, adventure activities, medical and wellness retreats, sports tourism, MICE events, eco-friendly travel options, film tourism, rural experiences, and religious pilgrimages. Recognized globally as a hub for spiritual journeys, India attracts both domestic enthusiasts and international visitors seeking profound cultural and spiritual experiences. During the financial year 2023-24, Indias hospitality sector has undergone a notable resurgence characterized by an increase in hotel rates, rising airfares, and a surge in travel expenditures. This revitalization has sparked a promising phase for the nations tourism and hospitality industries of particular significance is the growing trend in religious tourism, where destinations like the Ayodhya Ram Temple, Kashi Vishwanath Temple, and Mahakal Temple in Ujjain have seen a rising influx of pilgrims in search of spiritual fulfilment. This trend underscores Indias appeal as a cultural and spiritual destination, drawing both domestic and international travellers seeking profound experiences.

2. OPPORTUNITIES, THREATS, RISK AND CONCERNS:

Opportunities:

In 2024, the market penetration of vacation ownership in India is relatively low compared to more established markets like the USA. The industry in India is still developing, with estimates suggesting that it has penetrated less than 1% of Indian households. The concept of vacation ownership is gaining traction, but its still in the early stages of growth compared to more mature markets. As the industry evolves and awareness increases, market penetration may gradually rise.

In the upcoming year, Indias hospitality sector is poised for significant growth driven by economic trends, international events, and shifting consumer preferences. The countrys G20 Presidency and high-profile events like the ICC Mens World Cup are expected to boost tourism and hotel demand, enhancing Indias global visibility as a premier destination. This surge, combined with rising disposable incomes and growth in the corporate and MICE sectors, will lead to increased spending on both leisure and business travel. Key opportunities include expanding infrastructure, integrating smart and sustainable technology solutions, and catering to the growing interest in wellness tourism. Strategic partnerships and collaborations, both locally and internationally, will further enhance the sectors appeal and market reach.

Your Company is in well position to take advantage of the following situations:

Healthy economy having positive support of Tourism Sector.

Well framed State and Central Government policies to attract tourists.

Proximity to Railway station and Bus station.

Healthy Competition in the city.

Extending the product portfolio by offering various types of facilities.

Demand between the national and the inbound tourists can be easily managed due to difference in the period of holidays.

Threats, Risk and Concerns:

Although global inflation remains persistently high, even as major central banks have tightened monetary policies, it poses significant challenges to the hospitality industry. High inflation rates and rising interest rates are expected to cause economic damage to the sector and severely curtail the growth of small businesses, according to industry leaders. Another operational risk in the hospitality industry is the ability to consistently attract, retain, and motivate managerial talent and skilled personnel, especially in a high-growth sector with unique characteristics. Additionally, some resorts are vulnerable to natural calamities such as earthquakes, floods, landslides, and cyclones, which can affect the accessibility of hotels for members. Furthermore, there are regulatory and legal risks associated with tax proceedings, legal disputes related to properties, customer complaints, and non-compliance with various regulations, including environmental and hospitality sector regulations.

The hospitality industry faces several critical threats and risks that could impact its growth and stability. Economic instability, including downturns and high inflation, can reduce discretionary spending and squeeze profit margins. Maintaining high hygiene standards is essential to prevent negative reviews and health concerns, while increasing regulatory pressures for environmental sustainability require significant investment. Technological disruptions, such as cybersecurity threats and the need for continuous tech upgrades, pose additional challenges. Intense competition from alternative accommodations, market saturation, and geopolitical factors like political instability and travel restrictions further complicate the landscape. Labor challenges, including staffing issues and wage pressures, alongside environmental risks from natural disasters and climate change, and regulatory and compliance issues, add to the sectors vulnerabilities.

3. FINANCIAL AND OPERATIONAL PERFORMANCE:

The total revenue of your Company for the year 2023-24 was increased to Rs. 770.13 lacs as against Rs. 742.51 lacs of the previous year. The Company reported net profit after tax of Rs. 49.02 lacs for the year 2023-24 in comparison with a net profit after tax of Rs. 11.35 lacs of the previous year.

4. DETAIL OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

Details of Significant changes in Key Financial Ratios given in Note No. 44 of the Notes on financial statements for the year ended on 31^st March, 2024.

5. FUTURE PROSPECTS:

The hospitality industry has increasingly embraced sustainable practices, responding to travellers heightened awareness of environmental impact. This trend is expected to continue, shaping the industrys future direction. Taking advantage of the growing demand for unique travel experiences involves identifying and promoting new vacation spots and attractions across India. With its diverse landscapes, natural beauty, and rich cultural heritage, India offers a wealth of opportunities. Discovering and highlighting lesser-known destinations, offbeat locations, and historical sites can significantly boost tourism and open up new avenues for the hospitality sector.

The future outlook for Indias hotel industry is highly promising, buoyed by several key drivers of growth. Increasing domestic and international travel, fueled by rising incomes and improved accessibility, is set to boost demand across leisure, business, and MICE segments. Government initiatives like Swadesh Darshan and PRASHAD, aimed at enhancing tourism infrastructure nationwide, will further stimulate growth. Ongoing infrastructure developments including new airports and better connectivity will ease travel logistics and support industry expansion. Rising disposable incomes, particularly among the middle class, are expected to drive higher spending on travel and accommodation. Emerging trends favouring sustainable tourism, wellness retreats, and experiential travel will attract a discerning clientele, while major global events hosted in India will create surges in hotel demand. Technological advancements in hospitality management will enhance operational efficiency and guest satisfaction, reinforcing the sectors growth trajectory.

Looking ahead, your company remains optimistic about the long-term outlook for Indias travel and tourism sector. Focusing on mid-market segments, where disruptions are minimal, your locations prioritize guest comfort and cater to their specific needs. Your directors are confident about the future and are eager to capitalize on these opportunities.

6. ADEQUACY OF INTERNAL CONTROL SYSTEM:

The Company has put in place a comprehensive and independent system of internal controls specifically designed to ensure the protection and safeguarding of all its assets against unauthorized access or loss. These robust controls meticulously oversee that all transactions are properly authorized, meticulously recorded, and accurately reported. To reinforce these controls, the Company has instituted a detailed internal audit program that undergoes regular scrutiny by management. This program is supported by a set of well-documented policies, guidelines, and procedures that govern every aspect of the internal control system. The framework is meticulously crafted to guarantee the reliability and integrity of financial records and other critical data. It plays a crucial role in facilitating the accurate preparation of financial statements and ensures rigorous accountability for all assets. By adhering to these rigorous standards and practices, the Company maintains a high level of operational transparency and financial integrity.

7. HUMAN RESOURCE DEVELOPMENT:

The manpower employed in your Company for 2023-24 was 55 employees. The Company depends extensively on its human assets and consider this as one of the most precious assets and not affordable to lose.

Your Company has a team of able and experienced industry professionals. Your Company always believe to invest in human resources by means of providing various facilities, with a view to strengthen its presence in existing business and for taking advantage of the emerging growth opportunities in the hospitality sector. Your Company seeks regular feedback from its employees to ascertain their levels of satisfaction and to ensure that employees morale and motivation are constantly improved. Critical human resource issues are analysed, corrective actions initiated and results monitored regularly. In order to preserve competent employees and to provide homely environment, your Company has arranged monthly staff function, religious programs, picnic tours, etc. Human resource is drawn from diverse academic backgrounds and the Company has placed emphasis on recruiting people with formal training that matches their job profile.

8. CAUTIONARY STATEMENT:

Certain statements made in the Management discussion and analysis report, describing the

Companys objectives, projections, estimates, predictions and expectations may be forward looking statements, within the meaning of applicable securities law and regulations and actual results may differ materially from those expressed or implied. Significant factors that make differences to Companys operations include competition, changes in Government policies and regulations, tax regimes and economic development within India. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent development, information or events or otherwise.