Mahindra Holidays & Resorts India Ltd Management Discussions

Mahindra Holidays & Resorts India Limited ("Mahindra Holidays", "MHRIL" or "the Company") is a leading player in the leisure hospitality industry in India. Founded in 1996, the Company has established vacation ownership business in India, where it is the market leader with over 2.97 lakh members. Together with its Finnish subsidiary, Holiday Club Resorts Oy ("HCR"), Mahindra Holidays has over 3.5 lakh members and access to 152 resorts in India, Asia, Europe and the USA — making it the largest vacation ownership company outside the USA.

Mahindra Holidays also offers its members access to over 4,300 RCI affiliate resorts worldwide and an opportunity to holiday at 440+ partner hotels in India and abroad through ‘Horizons — its own holiday exchange programme for members. In addition, it offers unique membership privileges — an unmatched range of travel and lifestyle experiences — which differentiates it within the industry. This experience ecosystem has made ‘Club Mahindra an aspirational brand in the leisure hospitality industry in India.

This Management Discussion and Analysis ("MDA") Report presents an overview of the operational and financial performance of the Company. It also discusses the macroeconomic environment and opportunities, Mahindra Holidays strategy and important initiatives taken by it during the year. We begin with a summary of the Companys performance in 2023-24.

Summary and Key Highlights

India recorded strong macroeconomic performance in 2023-24 despite headwinds in the form of inflationary pressures, tight monetary conditions and subdued global trade and investments. Growth is expected to remain strong, especially as the global economic conditions improve in 2024-25. Rising incomes and emerging trends in discretionary spends augur well for leisure travel and hospitality industry in India. The section on ‘Macroeconomic Environment and Opportunities provides a more detailed discussion.

To capitalise on these opportunities, Mahindra Holidays has a focussed strategy to drive consistent growth of its business — accelerating inventory and member additions — as well as delivering superlative customer experience. It expects technology to play an important role in this growth journey. Here are the key highlights for 2023-24:

Mahindra Holidays added 20,019 members to its vacation ownership business in 2023-24 compared to 17,477 members added in the previous year. After accounting for members who completed their tenure, the cumulative membership base stood at 2,97,771 as on March 31, 2024 compared to 2,81,820 at the end of 2022-23. See the section on ‘Membership for further details.

Mahindra Holidays aspires to double its room inventory base from about 5,000 units at the start of the year to 10,000 units by 2029-30. During the year, it added 387 rooms taking the total room inventory to 5,327 units as on March 31, 2024. It has a well-crafted strategy to meet its inventory addition targets through multiple routes including greenfield and brownfield investments, acquisition, public-private partnerships ("PPP") and leases. Further details are provided in the section on ‘Properties and New Projects.

Occupancy improved further to 85% in 2023-24, compared to 84% in 2022-23. This is a significant achievement as it comes on a larger operating inventory.

At the same time, considerable improvements were reported in member servicing parameters, feedback scores as well as appreciation on social media. Initiatives to improve resort experience, member services and excellence in operations are presented in sections on ‘Resort Operations, ‘Member Experience and ‘Business Excellence, respectively. The impact is also reflected in significant growth of revenues from referrals and upgrades.

MHRILs reported creditable financial results for 2023-24. As shown in Chart A, Total Income (including Other Income) for Mahindra Holidays as a standalone entity, increased by 9.8% from 1,306 crore in 2022-23 to 1,434 crore in 2023-24. Profit Before Tax ("PBT") increased from 214 crore in 2022-23 to 223 crore in 2023-24, whereas Profit After Tax ("PAT") grew from 159 crore in 2022-23 to 181 crore in 2023-24.

Chart A: MHRILs Financial Performance – Standalone (Rs in Crore)

Cash balances continued to be strong, increasing by

225 crore during the year to 1,383 crore at the end of 2023-24. A more detailed analysis is provided in the section on ‘Financials.

Macroeconomic Environment and Opportunities

Although global growth decelerated somewhat due to tight monetary conditions and decline in international trade and capital flows, economic activity was resilient, defying warnings of a global recession. According to the International Monetary

Fund ("IMF"), world output grew at 3.2% in 2023 beating its earlier forecast. Better than anticipated control over inflation has improved prospects of monetary easing, but these are balanced by downside risks from the evolving geopolitical situation in the Middle East and its impact on global trade. In its latest estimates released in April 2024, the IMF projects the global economic growth to be stable at about 3.2% in 2024 and 2025.

In contrast, the Indian economy saw acceleration in growth during the year. According to the second advance estimate released by the National Statistical Office in February 2024, Indias GDP grew at 7.6% in 2023-24, compared to 7% in the previous year. Growth continued to be broad-based with the exception of agriculture. With rural demand catching up and expectations of a normal south-west monsoon, consumption is expected to support growth in 2024-25. A positive outlook for Advanced Economies should also benefit Indian exports.

According to the RBIs recent Monetary Policy Report released in April 2024, Indias growth is likely to remain strong at 7% in 2024-25.

Tourism industry in India is going through a high growth phase. In 2023-24, occupancy remained strong and also the domestic air passenger tra_c and the average daily room rates scaled new highs. This outlook also benefits from the Governments strong tourism push — to make India one of the top five global tourist destinations by 2030. The vacation ownership industry, with its loyal membership base, has even better growth prospects. The aspirational consumer segment in India is increasing at a rapid pace, expanding the opportunities for growth of the business. At the same time, the current market penetration of vacation ownership in India is very low at around 2%, compared to 11% in the US, indicating considerable scope for growth.

Mahindra Holidays is the market leader in the vacation ownership business and is well placed to capitalise on these opportunities. Considering the competitive landscape, consumer expectations and major trends in the leisure travel and media consumption habits, it has devised a focussed strategy to drive consistent growth of its business — accelerating inventory and member additions — as well as delivering superlative customer experience (See Box 1). An important part of this strategy is the use of technology to drive efficiencies and scale in all spheres of the Companys operations.

Box 1: Strategic Priorities for Delivering Consistent Growth

Aggressive Inventory Addition: Mahindra Holidays aspires to double its room inventory base from about 5,000 units at the start of the year to 10,000 units by 2029-30. It aims to do so through a combination of routes: building greenfield projects through existing land banks and PPPs; expanding existing resorts; build-to-suit resorts with third-party land owners; resort acquisition and leases.

Accelerate Membership Growth: Expanding the addressable market by offering a complete product portfolio that covers all key life-stage segments. Driving high quality lead generation through referrals, alliances and digital sources. Increasing reach of MHRILs sales network through physical presence as well as deployment of effective remote-selling tools.

Technology to Drive Efficiencies: Use data analytics to understand members holidaying preferences to improve holiday booking process and in-resort experience; implementing efficient member servicing processes as well as driving business goals such as maximising occupancy, driving member spend at resorts and receivables management; deploying Artificial Intelligence ("AI") based solutions for efficient processes in Learning and Development ("L&D") and Marketing.

Build an extensive ‘Experience Ecosystem that goes beyond the choice of resorts. The central idea is to offer unique privileges and experiences to its members that strengthen the ‘Club value proposition and enhance the value of the ‘Club Mahindra brand.

Business Performance

Membership

Box 2: MHRILs Product Portfolio

‘Club Mahindra is the Companys flagship product in the vacation ownership business. CMH25 and CMH15 entitle members a weeks holiday every year for a period of 25 years and 15 years, respectively. This is aimed at families in the age group of 30+ years. Bliss is a flexible points-based product which offers a weeks holiday every year for 10 years. This is targeted at families in the 50+ age group.

During the year, the Company launched CMH4 — a shorter duration (4-year) nights-based product. It also markets GoZest, which is a 3-year points-based product. Both are aimed at young families (<30 years) to allow them to sample the Club Mahindra value proposition before moving onto the core longer-tenure products.

Mahindra Holidays has a complete product portfolio that covers all key life-stage segments (See Box 2). The Company added 20,019 members in 2023-24 compared to 17,477 in the previous year, reflecting a growth of 14.5% during the year. After accounting for members who completed their membership tenure, total membership stood at 297,771 as on March 31, 2024 compared to 281,820 at the end of 2022-23. Chart B provides data on the cumulative membership for the last 10 years.

Note: Membership includes all vacation ownership products of the Company.

This performance is a result of multi-pronged efforts of the Company, the key elements of which are presented below: First, the Companys marketing strategy is focused on establishing Club Mahindra as a premium and aspirational brand in the Holidays category, to create the brand-pull and generate quality leads for the business. Recognising current media consumption trends which favour social media, digital content is an important part of this strategy. During the year, it also used AI to drive communication and engagement.

Second, it strengthened its core presence through its branch network, on-site teams at resorts, sales offices and teams. The distribution network of franchisee and direct sales agents ("DSAs") was expanded considerably during the year.

Third, referrals and upgrades have continued to be an important contributor to the Companys success in 2023-24. The new channel for corporates launched in the previous year was expanded. This, coupled with outreach through partnerships and brand associations added to the performance considerably during the year. Fourth, MHRIL deployed a homegrown tech-enabled platform for remote selling which expanded the reach and effectiveness of the Companys sales organisation. In 2023-24, MHRIL launched a fully upgraded member website for all its products. A similar upgrade is currently in progress for the Mobile App.

As a result of these efforts, Mahindra Holidays reach increased significantly during the year. Smaller towns and cities saw their contribution to the sales mix increase. At the same time, digital and web sales continued to grow, reflecting the success of the Companys digital marketing efforts.

Another important aspect of Companys strategy is its ‘Experience Ecosystem that offer unique privileges and experiences to its members that strengthen the ‘Club value proposition and pull for the ‘Club Mahindra brand. (See Box 3).

Box 3: The Club Mahindra ‘Experience Ecosystem

‘Horizon Holiday Exchange Programme: Members can exchange their Club Mahindra room nights for stays in top-rated hotel chains after paying a nominal access fee. This currently covers 440+ hotels across 180+ locations in India and abroad, covering major cities and holiday destinations which gives more options to the members to holiday.

Travel Services and Curated Holiday Experiences: Offers its members a wide range of travel services such as airport transfers; travel assistance; curated holiday experiences, seasonal tours and weekend getaways and villas. Members can book individual services or complete packages at attractive discounts at the Companys online platforms.

‘Club M Select: An exclusive subscription programme which allows enrolled members access to several luxury lifestyle offerings: international hotels, cruises and excursions; air travel benefits; dining privileges; lifestyle experiences and luxury holidays. The platform provides exclusive member only pricing, real time booking, unrestricted access, unlimited usage as well as zero transaction charges.

‘Club Mahindra Fundays is a corporate product which allows enrolled organisations to offer holiday entitlements to its employees either as a part of their reward and recognition programme or as an employment perquisite. In 2023-24, Mahindra Holidays onboarded new corporates into the platform and the increase in utilisation of room nights was satisfactory.

Properties and New Projects

Mahindra Holidays has a pan-India presence through its extensive network of resorts across destinations including hill stations, beaches, backwaters, wildlife sanctuaries, forts and heritage destinations. It is also present in international destinations directly or through alliances in destinations such as Thailand (Bangkok, Pattaya, Phuket, Koh Samui, Chiang Mai and Krabi), Indonesia (Bali), Malaysia (Kuala Lumpur), Turkey (Istanbul), Singapore, Dubai, Sri Lanka (Colombo and Kandy), Maldives, Vietnam (Nha Trang, Hanoi, Ho Chi Minh City and Danang), Cambodia (Siem Reap and Phnom Penh), Abu Dhabi and Nepal (Kathmandu, Chitwan and Pokhara). Club Mahindra members also have a choice to access HCRs 33 resorts in Finland, Sweden and Spain.

Chart C : Number of Resorts & Cumulative Inventory (Room Units)

- Inventory (Room Units) ...... Resorts

As shown in Chart C, the Company added 387 units to its room inventory in 2023-24, taking the total inventory from 4,940 room units in 2022-23 to 5,327 room units across 110 resorts by the end of the year. This includes several international destinations, where the Company entered for the first time: Tbilisi, Nairobi, Istanbul and multiple destinations in Thailand and Vietnam. Room inventory additions in 2023-24 also included new domestic destinations such as Kaziranga (Assam), Amritsar (Punjab), Pelling (Sikkim) and Ajmer (Rajasthan). Inventory addition during the year also include expansion of 44 rooms in Assonora, Goa and acquisition of a 72-room property near Jaipur, Rajasthan.

In line with the Companys strategy, a major part of the room inventory is owned by it. In cases where resorts are under long-term lease arrangements, it manages the resorts to ensure delivery of a consistent experience to its members. It also adds inventory through short-term arrangements to test new destinations and offer greater choice to its members.

Given the long term potential of the leisure travel industry in India and Mahindra Holidays positive growth outlook, it aspires to double its room inventory base from about 5,000 units at the start of the year to 10,000 units by 2029-30. The Company has a well-crafted strategy to meet its inventory addition targets through multiple routes: building greenfield projects through existing land banks and PPPs; expanding existing resorts; build-to-suit resorts with third-party land owners; resort acquisition and leases. Currently, the Company has one expansion project in Kandaghat, Himachal Pradesh and two greenfield projects

— Ganpatipule, Maharashtra and Theog, Himachal Pradesh that are under construction. In addition, expansion projects are planned at its Puducherry and Jaipur properties, while development is also expected to commence in its PPP project with Maharashtra Tourism Development Corporation at Harihareshwar.

Mahindra Holidays also has land banks at several other destinations, including at some of its existing resorts, which provides further flexibility in adding inventory on an ongoing basis. During the year, it stepped-up its efforts to acquire land parcels in attractive destinations to build greenfield projects. MHRIL has received in-principle approval for two land parcels for PPP projects in Odisha in 2023-24. It has also entered into MOUs with the governments of Uttarakhand and Tamil Nadu to build resorts in these states. In addition, it will continue to look at opportunities for fresh leases and acquisitions, especially in regions where it perceives demand to be stronger in the medium term.

Resort Operations

E_cient resort operations and thoughtfully designed, engaging resort amenities are central to delivering immersive holiday experiences. This encompasses three key areas: infrastructure and facilities, holiday activities and F&B.

Mahindra Holidays has the unique distinction of having

29 RCI Gold Crown and 2 Silver Crown resorts, which bears testimony to the high standards of resort facilities, amenities and services that its resorts offer. During the year, significant investments were made to upgrade the quality of infrastructure and amenities at its properties.

Holiday activities are central to delivering a complete holiday experience. At Mahindra Holidays, these are institutionalised under the banner of ‘Happy Hub built around a strategy of ‘do-learn-connect. Each resort offers holiday activities suitable for various age groups. The ‘Host and ‘Champs programmes continue to be instrumental in enhancing member engagement at resorts.

Each resort has a core activities calendar which includes resort and F&B themes to provide immersive experiences to its members. Resorts usually carry out multiple such events every week. Some of the activities carried out in 2023-24 include: Curated special events to celebrate local festivals, new year and Christmas, a wide variety of International Days related to environment and F&B.

Institutionalised ‘Happy Days – a programme to celebrate key events of our holidaying members such as birthdays and anniversaries.

Introduced ‘Happy Ville, a dedicated kids area for parties, celebrations and engagement and ‘Game Verse, a one stop destination for digital gaming experience. Other new initiatives include launch of a ‘Sweet Discoveries Arena and a ‘Discover India Art Fair. In F&B, efforts are continuously undertaken to make the dining experience more exciting and fulfilling through innovation and special dining options. Mahindra Holidays also operates several successful restaurant concepts across its resorts such as Barbeque Bay, Unwind, Curries, Spice, Finz and Ripples.

Twenty-eight of its resorts are certified under ISO 22000:2018, which is an international accreditation recognising enhanced food hygiene and safety.

Mahindra Holidays has institutionalised post-holiday feedback ("PHF"), which encompasses all key areas of resort operations. This serves as a measure of its success in delivering quality holiday experience as well as identifying and addressing member concerns. The Company continues to improve its PHF scores on an ongoing basis.

Member Experience

At Mahindra Holidays excellence in member services is about a customer centric mindset and ensuring high levels of satisfaction in all its interactions with members, thus improving their overall experience of the Club Mahindra brand. Over the years, appropriate technological and digital interventions, including use of data science and analytics has become a key element of its strategy to deliver better efficiencies on key operating metrics including occupancy, referrals, upgrades, collection, proactive management of issues and retention (See Box 4).

Box 4: Data Science and Analytics to Drive Efficiencies

Improving member satisfaction through customised services: Using booking history, patterns and member profile for resort discovery and proactively recommending holiday options; generating insights on holidaying needs, food preferences and special occasions to customise attractive in-resort experiences; providing timely reminders for upcoming itineraries.

Driving occupancy though effective resort marketing: Predicting member demand and cancellations to dynamically manage inventory utilisation, thereby maximising occupancy and member holidays. Contextual marketing helps us in driving occupancy in lean season also.

Realising business goals such as upgrades, referrals and collections: Identifying members for referrals and upgrades; prioritising reach-out plan for receivables management and collections; showcasing attractive pre-booking offers for meals and in-resort experiences to drive resort incomes.

The Company carried out several resort and region specific campaigns to drive member holidays, especially among non-holidaying members. These initiatives helped arrest the negative impact of adverse weather events such as landslides and floods in Himachal, Uttarakhand and Sikkim. Besides, ensuring that eligible members holiday, is a top priority and it proactively plans first holidays for new members. As a result of these initiatives, occupancy increased to 85% in 2023-24, compared to 84% in the previous year despite a larger inventory base and impact of adverse weather in certain areas.

During the year, strong emphasis was on streamlining the digital journey of our members, especially facilitating a seamless booking experience. This was achieved through the launch of the new website, which has user-friendly features including seamless payment options and a robust referral generation system. Online bookings continue to be over 82% of the total bookings.

Member engagement is a high priority initiative as it provides opportunities to introduce members with latest offerings and curated experiences; share information on do-it-yourself tools such as our newly launched member website and mobile app; and driving referrals and upgrades. In 2023-24, the Company organised large number of Heart-to-Heart ("H2H") activities and Co_ee Meets — reaching out to over 13,000 members in the process. These resulted in a significant increase in upgrade revenues as well as referrals through the Happy Family Referral Program ("HFRP").

As noted above, all key operational metrics of effective member experience — be it referrals, product upgrades and collection have shown a healthy improvement during the year. Feedback received through internal feedback mechanisms as well as external surveys continues to be on an upward trajectory, reflecting the success of its member servicing efforts.

Business Excellence

Mahindra Holidays has adopted the principles of Total Quality Management ("TQM") under the banner of ‘The Mahindra Way — the Mahindra Groups integrated approach to promote excellence in all spheres of its operations. The Company has successfully institutionalised quality systems in all critical business functions.

During the year, MHRIL has organised a ‘Quality Marathon along with ‘Unnati – Process Improvement Projects. As a part of its quality initiatives, the Company registered 66,000+ Kaizens, 900+ CAPA (Corrective and Preventive Actions), 35 Innovation Ideas, 510 Best Practices, 29,000+ e-learning quality module certifications and 2,191+ Make Every Moment Magical stories. Over 95% employees were involved in these initiatives.

Human Resources ("HR")

Hospitality is a service-oriented business where customer experience depends on the interaction between the customers and employees. At Mahindra Holidays, we follow the SEWA philosophy that focuses on "Service with Empathy, Warmth and Attention". This philosophy is embedded in the organisation to drive a service culture while prioritising performance.

The Companys operations are spread across its 110 resorts as well as another 50+ offices. Its HR function is organised into three key areas: resort operations, customer acquisition and corporate functions. Over 70% of its people are in customer facing roles. Besides, as millennials form a large part of our workforce, providing them with right avenues to grow is the key element of its HR strategy.

MHRIL strives to ensure that its talent development and engagement practices successfully assess employee strengths, identify areas of development, augment skills through targeted L&D interventions and reward performance with opportunities for growth.

Some of the key L&D initiatives undertaken in 2023-24 were: To cater to varied learning needs of sales personnel at timely intervals, the Company introduced cohort-wise learning plans: ‘Get-Set-Go – a starter program for new hires (1-3 months); ‘Star Academy – an intermediary level learning program for employees with 4-6 months of tenure; and competency development programs for those beyond 12 months of tenure.

An upgraded Accelerated Career Enhancement ("ACE") programme was launched for frontline roles in sales and telemarketing. These career growth programmes provide greater clarity on the career roadmap and offer simplistic process to move up the ladder and improve the earning potential — thereby increasing retention and productivity of these frontline personnel.

A ‘Departmental Skills Certification programme was also institutionalised for supervisors who assist the respective departments in certifying new inductees within 45 days of joining to ensure delivery of service as per Club Mahindra standards.

The Company has fast track growth programmes such as iGrow and ‘iGrow+ to groom high-potential employees for supervisory and managerial positions. During the year, employees were identified and enrolled in these programmes. A new proficiency development program was also specially designed for Relationship Managers.

Club Mahindra Executive Training programme for resorts aims at building homegrown team of best-in-class professionals following source-hire-train model for its unique and differentiated product offerings. Over the years, this 18-month intensive programme has been successfully providing a steady stream of trained managerial talent in resorts.

Maintaining high employee engagement levels continues to be a top priority. At Mahindra Holidays, this is based on three key pillars – Communication, Joy @ Work and Rewards

& Recognition. The Company has institutionalised several mechanisms to drive these efforts.

As on March 31, 2024 there were 5,157 people on the rolls of the Company. Employee relations remained cordial throughout the year.

Information Technology ("IT")

Mahindra Holidays believes that IT plays an active role in providing a competitive edge and contributes directly to its performance. The Company has invested significant resources in its IT architecture and benefits from it in all key spheres of its operations.

During the year, the Company took several tech-based measures to support growth. This included extending the core IT infrastructure to its new operating locations — both resorts and sales offices. E_orts to upgrade its IT assets and application environment to digitise processes in customer acquisition, resort operations and member experience have already been discussed in the respective sections of this report. It is also working on developing a customised property management and point-of-sale system suitable for its specific needs. This is currently under testing and is expected to be rolled-out in the next financial year.

Security continued to be an important area of focus in 2023-24. This included upgrading security infrastructure as well as strengthening internal data security systems and processes. Several training sessions on security awareness and phishing drills were also conducted to sensitise employees.

Environment Social Governance ("ESG")

As a part of the Mahindra Group, Mahindra Holidays is guided by the ‘Rise philosophy, with the broader goal of driving positive change for all its stakeholders — including its customers, employees, vendors, shareholders — the communities in which it operates and the larger society. Adherence to the underlying principles of ESG have always been an important part of its functioning, guiding its strategic decision making to create long-term value as well as a tool for mitigating risks.

A discussion on the Companys processes and initiatives around Governance is provided in the chapter on Corporate Governance that forms a part of this Annual Report. In what follows, we present the Companys initiatives in the areas of Environment and Sustainability and Corporate Social Responsibility ("CSR").

Environment and Sustainability

Mahindra Holidays is committed to conserve the ecological integrity of its operating locations through responsible business practices and activities such as measurement of carbon footprint, conservation of biodiversity, energy conservation, use of renewable sources, water conservation and waste recycling (See Box 5).

Box 5: MHRILs Sustainability Commitments

Mahindra Holidays has committed to become Carbon Neutrality by 2040.

It is Indias first hospitality company that has signed both RE100 (Renewable Energy) and EP100 (Energy Productivity), a global campaign led by The Climate Group — setting targets to run on 100% renewable energy by 2050 and to double its energy productivity by 2030.

In 2023-24, Mahindra Holidays undertook various initiatives in the areas of renewable energy, energy saving, water conservation, waste recycling and biodiversity:

Renewable Energy and Energy Saving: Solar power is streaming in 25 of its resorts with a total installed capacity of 7,700 kWp, with 53 lakh units (kWh) generated during the year. Microgrid operations comprising solar energy and Battery Energy Storage System ("BESS") is another major initiative to bring down the use of diesel generators, which is now implemented in 9 of our resorts. Outdoor solar lights continue to be installed in landscaped areas, whereas other energy saving initiatives have been systematically implemented at resorts as a part of its energy saving action plan. Deployment of electric vehicles at resorts and charging stations has also increased.

Water Conservation: Important initiatives includes recycling of water from sewage treatment plants, rainwater harvesting, installation of water saving taps/ fixtures in rooms as well as public areas. Two of our resorts are net water positive. Utilisation of rainwater has increased in 2023-24. A new initiative to separate black and grey water treatment systems is being introduced to improve wastewater recovery. About 62% of total water consumed by the resorts was recycled in 2023-24.

Waste recycling: The Company had embarked on the ‘Zero Waste to Landfill ("ZWL") programme in 2019-20 with its Virajpet resort becoming Indias first ZWL resort. Currently, 24 of its resorts are ZWL certified, and the aim is to certify all its resorts in another few years. It is also focused on the installation of organic waste converters, vermicompost systems and biogas which are currently operational at many of its resorts. It has also initiated steps towards implementing principles of ‘circular economy, responsible sourcing and elimination of single-use plastics.

Biodiversity: MHRIL has organic gardens at 10 of its resorts: Kanha, Munnar, Corbett, Poovar, Manali, Cherai, Dharamshala, Thekkady, Kandaghat and Mahabaleshwar. Assonora Nature Park has theme-based gardens namely Herb, Spice, Butterfly, Medicinal and Nature trails. It also has butterfly gardens at Puducherry and Ashtamudi. India Business and Biodiversity Initiative ("IBBI") has developed a case study on biodiversity initiative at Madikeri, whereas 6 of its resorts are biodiversity certified. Achievements in the Companys tree plantation drive are presented in the section on CSR.

Club Mahindra Madikeri is Indias first Triple Net "0" rated resort which includes Net Zero Energy, Net Zero Water and Zero Waste to Landfill. The Companys efforts on sustainability are also reflected in the ‘Platinum green building certification (IGBC-CII) of 17 of its resorts. The Company actively participates in the Mahindra Groups Corporate Sustainability Reporting. The ‘Sustainability Report of the Group is prepared in accordance with the internationally accepted framework specified by the Global Reporting Initiative ("GRI"). This framework sets out the principles and indicators that should be used to measure and report economic, environmental and social performance.

During 2023-24, 45 resorts participated in sustainability reporting of the Group.

Corporate Social Responsibility ("CSR")

Mahindra Holidays aims to positively contribute towards the economic, environmental and social well-being of communities through its CSR interventions. The Company engages in community initiatives that are designed to ‘enrich lives and protect nature. It is committed to be in the harmony of nature, value natural resources and contribute towards a greener future.

Apart from working with not-for-profit organisations and contributing resources for CSR projects, the Company also encourages community service by its employees by involving them through its ‘Employee Social Options Programme.

During the year, 2,126 employees volunteered 13,437 person hours on CSR initiatives.

MHRIL assists communities around its resorts by rolling out interventions in the areas of Women Empowerment, Education and Livelihood and Environmental Sustainability. Key initiatives undertaken by the Company in 2023-24 are presented below: Girl Child Education: Through the ‘Nanhi Kali project, the Company supports education of 3,290 girls from socially and economically marginalised families.

Women Empowerment, Education and Livelihood: The ‘Udaan programme provided support to 100 women by enhancing their skills, while the ‘Saksham programme helped 160 women in developing businesses during the year. Both initiatives aimed at providing employment opportunities, encourage entrepreneurship and improve the financial independence of women in the community. Another 500 women benefited from a programme aimed at imparting employability and livelihood skills in Navi Mumbai.

Environmental Sustainability: 24,382 trees were planted in 2023-24 as a part of ‘Mahindra Hariyali — the tree plantation initiative of the Mahindra Group — taking the total trees planted to 539,610 since the beginning of the project in 2010-11. Under its ‘Green Guardians initiative, it distributed 500 smokeless ‘Sarala stoves which are more efficient and can use any agricultural waste as fuel. It also stepped-up its water conservation efforts by rejuvenating ponds as well as installing rainwater harvesting using rooftops of six school buildings in Puducherry. Solar lights were provided for street lighting and 90 households in Mahabaleshwar.

Financials

Standalone Financial Results

Table 1 presents the abridged financial statements of the Company as a standalone entity.

Table 1: Financial Information (Standalone)

(Rs in Crore)

Particulars	2023-24	2022-23
Income from Operations	1,314.0	1,196.2
Other Income	120.1	109.4
Total Income	1,434.1	1,305.6
Operating & Other Expenses	1,018.5	923.3
Finance cost	33.7	29.1
Depreciation	158.7	139.1
Total Expenditure	1,210.9	1,091.5
Profit Before Tax ("PBT")	223.2	214.1
Tax Expenses	42.6	55.5
Profit After Tax ("PAT")	180.6	158.6
Diluted EPS ()	8.97	7.89
Cash & Cash Equivalents	1,383.3	1,157.7
Long-term Debt	-	-
Deferred Revenues	5,595.3	5,326.5

Total Income, which includes both operating and other income, grew at 9.8% from Rs. 1,305.6 crore in 2022-23 to Rs. 1,434.1 crore in 2023-24. Income from vacation ownership, which includes income from sale of vacation ownership products (including interest income on payment plans) and Annual Subscription Fees ("ASF") are the largest components of the Companys operating income, grew at 11.9% from

Rs. 873.7 crore in 2022-23 to 977.4 crore in 2023-24. Resort Income grew at 4.4% from 322.5 crore in 2022-23 to 336.6 crore in 2023-24.

Total Expenditure grew at 10.9% from Rs. 1,091.5 crore in 2022-23 toRs. 1,210.9 crore in 2023-24, mainly on account of higher employee expenses, rent, resort expenses and other overheads. As a result, PBT grew from Rs. 214.1 crore in 2022-23 to 223.2 crore in 2023-24. After accounting for taxes, PAT grew at 13.9% from 158.6 crore in 2022-23 to 180.6 crore in 2023-24. It must be noted here that PBT, without considering theitemsinOtherIncomethatareone-o_innature,alsoreflects a healthy increase of 16.3% from Rs. 183.3 crore in 2022-23 to

213.3 crore in 2023-24.

Cash balances continued to be strong at 1,383.3 crore at the end of 2023-24. As a result, the liquidity situation of the Company remains comfortable. The Deferred Revenue pool also increased to 5,595.3 crore as on March 31, 2024. This provides visibility on future revenues and improved profitability with minimal incremental costs. The Companys strong balance sheet is further underscored by lack of any long-term debt as a standalone entity.

Table 2: Key Financial Ratios (Standalone)

Particulars	2023-24	2022-23
Debtors Turnover	1.10	1.05
Inventory Turnover	8.71	7.97
Current ratio	1.89	1.99
Operating profit margin (%)	31.6	32.0
PBT margin (%)	17.0	17.9
PAT margin (%)	13.7	13.3
Return on Net Worth* (%)	12.1	12.2

* Net worth has been derived after excluding revaluation reserve of

845.6 crore and Transition Di_erence of 1,402.7 crore.

Table 2 presents key financial ratios for Mahindra Holidays as a standalone entity. As the Company does not have any debt on its standalone balance sheet, Debt Equity and Interest Coverage ratios are not applicable and have not been calculated. None of the ratios reflects a significant change more than 25% as defined under the revised SEBI Listing Regulations between 2022-23 and 2023-24.

Holiday Club Resorts Oy

Holiday Club Resorts Oy ("HCR"), Finland, is a wholly owned subsidiary of Mahindra Holidays through its step-down subsidiary Covington S.?.r.l., Luxembourg. Established in 1986, HCR is the largest vacation ownership company in Europe and the largest operator of leisure hotels in Finland. As of March 31, 2024, HCR had 33 resorts of which 25 are in Finland, 2 in Sweden and 6 in Spain.

Its revenues are evenly split between the timeshare-related business and the hotel business. Its current timeshare membership is about 60,000 families and 1,300 companies. Besides, HCRs Spa Hotels service over 1.3 million guest visits annually.

Table 3: Summary Financials — Holiday Club Resorts

(million €)

Particulars	2023-24	2022-23
Total Income	142.3	144.2
EBITDA	5.0	5.0
Profit Before Tax ("PBT")	(0.6)	(0.5)
Profit After Tax ("PAT")	(0.8)	(0.5)

Note: As per Finnish Accounting Standard (FAS) Accounts

During the year under review, total income of HCR, which includes turnover and other operating income decreased marginally from € 144.2 million in 2022-23 to € 142.3 million in 2023-24. Revenue from Timeshare sales and Renting grew, whereas revenues from Spa Hotels came down due to weak consumer sentiment resulting in lower in-resort spend. Earnings before interest, tax, depreciation and amortization

("EBITDA") has remained stable at €5 million in 2023-24. Increase in finance costs due to rise in Euribor rates resulted in a marginal lower PBT/PAT in 2023-24 compared to previous year.

The Finnish economy continues to face market-related challenges from Russia-Ukraine war, which is further exacerbated by high inflation and interest rates. Although Spa Hotel occupancies have picked-up, in-resort spending continues to be attested due to weak consumer sentiment and higher cost of living. Timeshare business has seen an uptick as its transaction prices are lower compared to buying a second home, especially in the current high interest rate environment. At the same time, the Company continues to focus on cost management to improve performance.

Consolidated Financial Results

For the purpose of consolidation of financial results of the Company, 21 subsidiaries, 1 joint venture ("JV") and 2 associates as on March 31, 2024 were considered as per IND AS. Table 4 presents the abridged financial statements of the Company as a consolidated entity. Further details of operational and financial performance of HCR have already been provided.

Table 4: Financial Information (Consolidated)

(Rs in Crore)

Particulars	2023-24	2022-23
Income from Operations	2,704.6	2,517.0
Other Income	115.0	106.9
Total Income	2,819.6	2,623.9
Operating & Other Expenses	2,190.7	2,045.4
Finance Cost	132.2	118.6
Depreciation	336.6	290.0
Total Expenditure	2,659.5	2,454.0
Profit before Share of Profit of JVs	160.1	169.9
and Associate
Share of Profit of JVs and Associate	(0.6)	0.8
Profit Before Tax ("PBT")	159.5	170.7
Tax Expenses	43.5	56.8
Profit after Tax ("PAT")	116.0	113.9
Diluted EPS ()	5.74	5.73
Cash & Cash Equivalents	1,500.6	1,287.1
Total Debt	884.1	756.0

Total Income increased by 7.5% from 2,623.9 crore in 2022-23 to 2,819.6 crore in 2023-24, whereas Total Expenditure increased by 8.4% from 2,454 crore in 2022-23 to 2,659.5 crore in 2023-24. As a result, PBT after including share in profit/loss of JV and associates came down from 170.7 crore in 2022-23 to 159.5 crore in 2023-24. Consolidated PAT, in contrast, grew at 2% from 113.9 crore in 2022-23 to 116.0 crore in 2023-24. Accordingly, Diluted EPS increased from 5.73 in 2022-23 to 5.74 in 2023-24. The liquidity situation remained comfortable during the year, with significant improvement in cash balances. On consolidated basis, total debt increased to 884.1 crore as on March 31, 2024 compared to 756 crore at the end of the previous financial year.

Internal Controls

The Company has an adequate internal control system, commensurate with the size and nature of its business. The system is supported by documented policies, guidelines and procedures to monitor business and operational performance which are aimed at ensuring business integrity and promoting operational efficiency.

The Company conducts periodic internal audits in line with an audit plan that is drawn at the beginning of the year and is approved by the Audit Committee. The scope of the exercise includes ensuring adequacy of internal control systems, adherence to management policies and compliance with the laws and regulations of the country. The Companys ERP system has appropriate controls embedded in its processes and systems to reduce the need and reliance for compensating manual controls. These have also been strengthened from time to time.

Internal audit reports are placed before the Audit Committee of the Board of Directors, which reviews the adequacy and effectiveness of the internal control systems and suggests improvements for strengthening them.

Threats, Risks and Concerns

Mahindra Holidays risk management framework consists of identification of risks, assessment of their nature, severity and potential impact and measures to mitigate them. This framework is in place for adequate and timely reporting and monitoring. Risks are reviewed periodically and updated to reflect the business environment and change in the size and scope of the Companys operations. The Company has a Risk Management Committee consisting of four Directors.

Macroeconomic Risks

The global economic environment improved during the year. Better than anticipated control over inflation has improved prospects of monetary easing, but these are balanced by downside risks from the evolving situation in the Middle East and its impact on global trade and inflationary trends. This can adversely impact Indias growth prospects and in turn the Companys performance.

Mahindra Holidays recognises these risks. The Company approach for mitigating risks emanating from weak economic performance include its focus on customer acquisition through referrals, alliances and digital leads.

Other initiatives to generate robust performance include a complete product portfolio across all life-stage segments, a differentiated product proposition and initiatives to augment member spends at resorts. That it is an aspirational brand and the market leader in its segment augurs well for it in tough times.

Operational Risks

Operational risks mainly relate to meeting customer expectations in terms of quality of service and maintaining a balance between the inventory of resorts and growth of customers. These assume significance given the long service duration of key products. As there are multiple choices of locations and seasons, there could be occasions where the first choice of holiday requested by the members may not be available, which may result in dissatisfaction. Another operational risk is inability to consistently attract, retain and motivate managerial talent and other skilled personnel, especially in a high growth industry with unique characteristics. Further, some of the Companys resorts are in remote areas and natural calamities such as earthquake, flood and landslide may affect the accessibility of the resort to members.

The Company has invested significant resources in systems and processes to mitigate these risks. Customer satisfaction continues to be favourable and on an upward trend. Regarding room inventory, the Company will continue to be judicious in the use of different options — greenfield and PPP projects, acquisitions, expanding inventory at existing locations, long term leases and inventory arrangements — to meet the expectations of its customers and at the same time maintain a balance between demand and supply. Regarding talent management and retention, management believes that its HR practices enhance employee engagement and satisfaction to effectively mitigate this risk. The Company is alert to climate risks, including those from extreme weather events. At the same time, it believes that its focus on sustainability mitigates some of these risks by more thoughtful and efficient use of natural resources.

Financial Risks

The Companys business operations involve significant investments in building resorts. These expose it to risks in terms of timely and adequate availability of funds at competitive rates to finance its growth. Besides, it offers its customers schemes to finance the purchase of the vacation ownership and similar products, which exposes it to credit risks. The Company is, therefore, exposed to potential risk of non-payment or delayed payment of membership instalments and/or the annual subscription fee by members resulting in higher outstanding receivables. High inflation could potentially increase the cost of resort operations as well as its project and renovation related costs. The Company is also exposed to foreign exchange risks due to its overseas subsidiary companies and debts on their books.

Currently, Mahindra Holidays has no long-term debt on a standalone basis and has a strong and stable capital structure to raise money for further expansion, if needed. The Companys focus on improving quality of sales by increasing down payments and lowering EMI tenures have been very effective in bringing down credit and repayment risks. Even so, it undertakes comprehensive assessment of the profile of its customers and carefully monitors its exposure to credit risk. Several improvements have also been implemented in receivables management and collections to reduce such risks. Regarding inflation, the Company has strong processes to mitigate these risks through a combination of cost saving measures such as centralised procurement of consumables and inputs for its projects. Suitable price increases have also been passed to the consumers in the form of F&B charges as well as membership fees. In respect of foreign currency debt, the underlying assets of its overseas subsidiary companies are also in the same currency, minimising the exposure to forex-related risks. HCR has also reduced its debt over the years. However, the risks of mark-to-market movements remain and the Company monitors the situation closely in this regard.

Regulatory and Legal Risks

Mahindra Holidays is exposed to regulatory and legal risks. These include cumbersome processes and risks relating to land acquisition, conversion of land for commercial usage and development of properties, environmental clearances, approvals and activities related to development of new resorts. There are also other regulatory and legal risks pertaining to tax proceedings, legal proceedings on properties, customer complaints, non-compliance of regulations including environmental regulations and those pertaining to the hospitality sector. Further, as the Company has investments and operations in different countries, it is also exposed to political and regulatory risks that emanate from its international presence.

Mahindra Holidays has adequate systems and controls in place to reasonably mitigate these risks. The Company also believes that its proactive stance on sustainability will hold it in good stead for future development and growth.

Outlook

India continued to be an outperformer in 2023-24 in terms of macroeconomic performance. Any downside risks today emerge primarily from geopolitical situation in the Middle East and its associated impact on global trade and inflation. Overall, the outlook for domestic growth is positive, with the RBI projecting a strong 7% GDP growth in 2024-25. This also means that India will continue to be the fastest growing large economy in the world.

Demand for leisure travel in India also continues to be strong. Domestic travel is booming which is reflected in strong occupancy and all-time high air passenger tra_c or hotel room rates. The positive growth outlook and expected increase in number of households with the ability to incur discretionary spend on holidays presents significant opportunities for growth.

This augurs well for a Company like Mahindra Holidays which has built an unparalleled ecosystem delivering immersive experiences to its customers. ‘Club Mahindra today is an aspirational brand in the leisure travel and hospitality industry in India — with 110 resorts and 2,000+ unique experiences for its members to choose from.

Mahindra Holidays believes in the long-term growth potential of the leisure travel and hospitality industry in India and aspires to double its room inventory base from about 5,000 units at the start of the year to 10,000 units by 2029-30 to benefit from this opportunity.

Cautionary Statement

Certain statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include poor macroeconomic growth and consumer confidence, inability to add resorts and increase the inventory of room, cyclical demand and pricing in the Companys principal markets, changes in tastes and preferences, government regulations, tax regimes, economic development within India and other incidental factors.