TajGVK Hotels & Resorts Ltd Management Discussions

Forward Looking Statement

Your Company has been reporting consolidated results taking into account the results of its joint venture company i.e. Greenwoods Palaces and Resorts Private Limited (which operates the Taj Santacruz Hotel in Mumbai). The Management Discussion and Analysis section therefore, covers the financial results of your Company for the financial year 2024-25. Some statements describing the projections, estimates, expectations or outlook, may be forward looking. Actual results may, however, differ materially from those stated, on account of various factors such as changes in government regulations, tax regimes, economic developments within India, exchange rates and interest rates fluctuations, impact of competition, demand and supply constraints, etc.

Global Economy

The Year in Review According to the International Monetary Funds World Economic Outlook (April 2025), Global GDP is estimated to have grown by 3.3% in 2024. Despite tight monetary conditions and geopolitical uncertainty, 2024 surprised on the upside. In advanced economies, labour markets remained tight, real wages recovered, and services demand supported output. Meanwhile, emerging and developing economies continued to be engines of global growth. Though challenges persisted such as lingering inflation and diverging national conditions, the year marked a turning point from crisis management to recovery and rebalancing. The United States emerged as a growth leader among advanced economies, registering a projected 2.8% expansion, supported by strong consumer spending and business investment. Emerging markets, particularly India (6.5%) and China (5.0%), remained key drivers of global momentum.

A major bright spot has been the easing of inflationary pressures globally. The combination of tighter monetary policy, lower energy prices, and stabilising food supplies contributed to this welcome trend. In advanced economies, headline inflation is projected to decline from 4.6% in 2023 to 2.6% in 2024. In emerging markets, inflation moderation has been more uneven but improving nonetheless from 8.0% in 2023 to 7.7% in 2024. Inflation in advanced economies is projected to stabilise around 2.5% in 2025, while emerging markets and developing economies are expected to see a decrease in inflation to 5.5%. However, core inflation, especially in services, remains sticky in several countries, keeping central banks cautious.

The Global Economic outlook for 2025 is marked by cautious optimism amid persistent uncertainties. The International Monetary Fund (IMF) projects a slowdown in global growth to 2.8%, followed by a recovery to 3.0% in 2026. Advanced economies are expected to experience a decline in growth to 1.4%, with the United States projected to grow at 1.8%. Emerging markets and developing economies are forecasted to grow by 3.7%, driven by continued strong performances from China and India. However, trade policy uncertainty remains elevated, impacting global trade flows and economic sentiment. Governments are likely to tighten fiscal policies, and central banks may continue to adjust interest rates to manage inflation and support economic growth

Indian Economy

India remained among the fastest-growing major economies globally, retaining its position as the worlds fifth-largest economy in nominal GDP terms and the third largest in Purchasing Power Parity (PPP). As per the Second Advance Estimates of National Income released by the National Statistical Office (NSO) in February 2025, Indias real GDP is projected to grow by 6.5% in FY 2024-25 as compared to 9.2% in FY 2023-24. This growth is supported by strong momentum in industry and construction with an estimated growth rate of 8.6% resulting from an infrastructure-led growth strategy. Services is expected to grow by 7.3% led by the Financial, Real Estate and Professional Services sector estimated to grow by 7.2% and Trade, Hotels, Transport, Communication and Services Related to Broadcasting sector expected to grow by 6.4%. Other sectors of agriculture is estimated to grow by 4.6% while manufacturing is expected to grow by 4.3%. Private consumption (Private Final Consumption Expenditure - PFCE) constituting 56.7% of GDP, grew by 7.6% during the year, recovering from the moderation seen in the previous year. Gross Fixed Capital Formation (GFCF), at 33.4% of GDP, witnessed a robust growth of 6.1%, reflecting sustained public capex and a gradual crowding-in of private investments. On the external front, exports grew by 7.1%, while imports saw a marginal decline of 1.1%, indicating stabilising trade conditions. Inflation conditions eased in FY2024-25. As of February 2025, inflation for FY 2024-25 averaged 4.7% compared to 5.4% during the same period in FY 2023-24. Core inflation fell to a four-year low of 3.5%, supported by subdued input costs and prudent monetary policy. During Year 2023-24, the rate of unemployment declined to 4.9% (2023: 5.0%) while the labour force participation rate remained nearly unchanged, with a marginal decline from 59.8% to 59.60%. Indias external fundamentals remained resilient, with foreign exchange reserves standing at $645 billion as of March 7, 2025. Indias current account deficit (CAD) remained stable at 1.1% of GDP in Q3 FY 2025 in comparison to Q3 FY 2024, but moderated from 1.8% of GDP in Q2 FY 2025.

Global Hospitality and Tourism Industry

The Global Tourism Industry continued its strong resurgence in 2024, nearly achieving full recovery from the pandemics impact. Results were driven by strong post-pandemic demand, robust performance from large source markets and the ongoing recovery of destinations in Asia and the Pacific. As per UNWTO Barometer January 2025, international tourist arrivals are estimated to have reached 1.4 billion in 2024, marking an 11% growth over 2023 and 99% of pre-pandemic levels. Europe

remained the most visited region with a 52% share, surpassing 747 million international arrivals, a 5% increase vis-a-vis 2023, and slightly exceeding its 2019 benchmark, while the Americas registered 214 million travellers, a 7% increase vis-avis 2023, and reached 97% of pre-pandemic levels. The Middle East registered 1% growth over the previous year, however, surpassing 2019 arrivals by 32%, while Africa also outperformed pre-pandemic levels by 7% and 12% had a increase vis-a-vis 2023. The Asia-Pacific (APAC) region made significant strides toward recovery, recording 316 million international arrivals with an overall share increase to 22% in 2024 as against 18% in 2023. While still lagging behind 2019 numbers at 87% recovery, the regions growth on y-o-y basis was steepest at 33% accelerated by a revival in key markets. Total export revenues from tourism (including passenger transport) are estimated at a record USD 1.9 trillion in 2024, about 3% higher than before the pandemic and 4% more than in 2019 (real terms).

Outlook

The Global Tourism and Hospitality sector is poised for continued growth in 2025, following a full recovery from the pandemic in the previous year. According to the United Nations World Tourism Organisation (UNWTO), international tourist arrivals are projected to increase by 3% to 5% compared to 2024, indicating a normalisation of growth following the sharp post-pandemic rebound. Confidence within the industry remains high ?€” UNWTOs January 2025 Confidence Index reports that 64% of surveyed travel professionals anticipate stronger performance this year than in 2024. This optimism is underpinned by key enablers such as enhanced air connectivity and the simplification of visa processes, both of which are expected to further support the sectors expansion. The World Travel & Tourism Council (WTTC) forecasts that 2025 will be a landmark year for the industry. The sectors global economic contribution is expected to reach a record breaking $11.7 trillion ?€” up from $10.9 trillion in 2023 and $10.3 trillion in 2019. This represents a 6.7% increase over the previous year and a 13% rise compared to pre-pandemic levels. Moreover, travel and tourism are set to support 371 million jobs globally in 2025, surpassing employment levels seen before the pandemic. However the industry continues to face external risks, including trade tensions and geopolitical instability, which may influence traveller behaviour and discretionary spend potentials. Travellers are expected to prioritise valuedriven options and intra-regional trips. According to CBREs 2025 Global Hotel Outlook, the Asia-Pacific region is set to experience modest revenue per available room (RevPAR) growth, fuelled by rising wealth and demand that is outpacing relatively slow new supply.

Indian Hospitality and Tourism Industry

FY 2024-25 marked another landmark year for Indian tourism, driven by strong fundamentals such as a youthful population, rising employment, growing disposable incomes, and solid domestic demand. Improved infrastructure, greater connectivity, and increased investments have further accelerated the sectors momentum. The Union Budget 2025-26 allocated H2,541 crore ($291 million) for the tourism sector, with a focus on infrastructure upgrades, skill development, and easing travel. Key initiatives include the development of 50 leading tourist destinations, improved transport connectivity, and expanding the e-visa programme. As of December 2024, e-visas are available to citizens from 167 countries under 9 categories ?€” making travel to India simpler and more accessible. The Ministry of Tourism advanced its flagship schemes such as Swadesh Darshan, Prashad, Udan and Dekho Apna Desh, encouraging regional and cultural tourism. Under PRASHAD, 27 new sites across 18 states and UTs were selected for development, with a continued emphasis on spiritual and heritage tourism. States have also introduced their own policies and incentives to promote local travel and boost their tourism economies. This year also saw major strides in airport infrastructure, with 10 new greenfield airports becoming operational bringing the total count to 159 by the end of December 2024. Largescale projects at Noida (Jewar) and Navi Mumbai are nearing completion and are set to open in 2025. Foreign tourist arrivals reached 9.7 million in 2024 as against 9.23 million in 2023. This years arrival denoted a recovery of 88% of the 2019 high of 10.9 million, signalling steady progress toward full recovery. Outbound travel, on the other hand, surged ahead, with 30.2 million Indians travelling abroad in 2024 ?€” 12% above pre-COVID levels. Domestic air travel remained strong, growing by 6% to 161 million passengers and surpassing 2019 figures by 12%. Key demand drivers included leisure travel, weddings, business events, and corporate travel. According to the India Hotel Market Review 2024 by Horwath HTL, national occupancy stood at 63.9% for 2024 as compared to 62.1% in 2023. While the occupancy is still marginally below the 2019 level of 64.5%, Revenue per day was 82% higher than 2019 indicating market growth both in terms of capacity and size. The average daily rate (ADR) rose to Rs.7,951, marking a 7.5% y-o-y increase and revenue per available room (RevPAR) rose to Rs.5,078, marking 10.7% year on year increase. Udaipur reported highest ADR followed by Mumbai and then by Goa and New Delhi highlighting the continued demand for premium destinations.

Outlook

The Indian hotel industry enters 2025 on a strong footing, supported by sustained domestic travel, infrastructure upgrades, and rising interest from international markets. Continued economic growth, rising disposable incomes, and evolving travel aspirations especially among millennials and Gen Z are fuelling demand for both leisure and business stays. The sector is witnessing increased traction in tier-2 and tier-3 cities, driven by improved air connectivity, the rise of hybrid work models, and state-level initiatives promoting tourism circuits. The continued advent of spiritual tourism, weddings in India, and strong M.I.C.E activity (Meetings, Incentives, Conferences and Exhibitions) surrounding large state of the art conventions centres are providing a strong impetus to growth. According to industry estimates, demand for branded hotel rooms in India is expected to continue outpacing supply growth which remains moderate. As per Horwath HTL, the industry has a pipeline of 1,05,000 branded rooms expected by 2029 subject to some slippages. This trend reflects a positive outlook for the industry, fuelled by

rising tourism, business travel, and infrastructure improvements. Indias hospitality industry presents a significant potential for market penetration with just 0.1 branded room inventory per 1,000 people.

While heightened trade tensions and global geopolitical risks weigh strongly on the economy, the governments continued support through tourism-friendly policies, infrastructure spending, and ease-of-travel initiatives are expected to keep the sector on a stable growth trajectory. Backed by robust fundamentals, favourable supply-demand dynamics, and a maturing hospitality ecosystem, the Indian hotel industry is well-positioned for a strong and sustainable performance in 2025 and beyond. A balanced portfolio of owned, leased and managed properties; iconic brands; and a robust, well-diversified topline gives 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.

Property Upgrades and Renovations

We carry out necessary upgradations to keep our hotels in good condition and to offer better value in terms of great ambience and comfort, while keeping the needs of our customers at the core of these changes. During the year your company has carried out renovation / refurbishment of Taj Deccan and also company has started construction activities for Begaluru Hotel Project. This project consists of 256 room Hotel and estimate of project cost is around 326 crores.

Environment, Health and Safety

We are committed towards operating in an environmentally responsible manner while catering to the interests of our diverse stakeholders. During the year, we took various measures to mitigate the impact of our operations on the climate and environment and preserve the planet for the future generations.

Optimising use of natural resources such as energy and water and managing waste efficiently are some of our priority focus areas. We have persistently worked towards optimising energy and water usage and responsible waste management. The hotels have generated significant savings by conserving water and energy and installing organic waste convertors to reduce waste sent to landfill.

Your Companys hotel i.e. Taj Club House, Chennai utilises power from renewable energy sources, which not only helps in reducing the carbon footprint, but also in optimising cost of power. We source 3 Million units renewable energy mainly through Power Purchase Agreements with private power producers operating in the green power sector. Additionally, we emphasise on reducing our energy consumption wherever possible. Waste management is an integral part of your Companys environment management endeavour. Your Company promotes waste reduction, as well as segregation and recycling. The Hotel units either process waste using onsite waste treatment plants or engages certified vendors to promptly collect the waste for further processing. Sludge from sewage treatment plants is safely disposed by the agencies contracted for the management of these units. We are committed to phasing out single-use plastics across all our properties and have been making steadfast progress towards this goal every year. Water is a critical and scarce resource for local communities and for our industry. We are aware of the increasing water stress in our areas of operation and the need to strive for maximum water efficiency. We optimise our water consumption and work hard to mitigate our impact on the availability of freshwater. We manage our water resources and utility in an efficient manner, thereby ensuring there is no water shortage at any time. Water security assessment of hotels is undertaken regularly to identify water-related risks and strengthen preparedness to manage them.

Safety continues to be one of the top priority areas of your Company wherein all measures have been taken to ensure safety of all stakeholders. Your Company continues to drive awareness on safety across hotels. Common safety hazards and their safeguards have been highlighted in specially designed animated safety videos, and, case studies based on true incidents continue to be shared with the hotels as a learning tool. The approach of routinely identifying safety risks associated with operations helps your Company implement appropriate and effective mitigation plans and ensures adherence to overall Safety compliance. The Fire and Life Safety (FLS) audits, Standard Operating Procedures (SOPs) on safety such as Safe Sewage Treatment Plant Operations, Safe Banqueting Operations, Visitors etc., To ensure a continuous focus on safety, we created and implemented a Basic Safety Training Module for all hotels. This will act as an induction as well as refresher module for all employees. Teams at hotels continue to drive health, safety and security awareness sessions continuously, thus ensuring unwavering focus.

Food Safety, Hygiene and Cleanliness

Continuous improvement of the Food Safety Management System by training and optimising the capacities of people, processes and technologies is an ongoing exercise. To increase the rigour in respect of Food Safety, Hygiene and Cleanliness audits were conducted by an external audit partner, ensuring implementation of FSSAI guidelines and standards.

Human Capital

Your Companys employees are its most valuable asset, who enable the Company to deliver a level of service that is amongst the highest in the hospitality industry. A combination of a robust talent management strategy and a transparent performance management system, leading to an attractive long term compensation philosophy, is employed to attract and retain the best

available talent We continually strive to make our operations more efficient, while creating a respectful work environment for each member of our team. Our key performance processes have been improved continually and updated with the intention of ensuring that they serve as effective enablers for people development and keep our talent management strategy upto date.

Risk Governance and Management

The process of risk governance and management involves identification of risks, framing an adequate response to manage and mitigate the risks identified, followed by constant monitoring and review of the risk management process. The Risk Management Committee of the Board is responsible for developing and monitoring the risk management policies and also oversees how management monitors compliance with the Companys risk management policies and procedures. Internal audit department facilitates identification of risks and mitigants.

Company Overview

Your Company witnessed robust growth in revenue across all hotels. The company achieved higher revenues across the business segments viz, rooms, Banquets and restaurants compared to previous financial year.

Financials

Revenue from operations for FY 2024-25 was Rs.461.32 crores as compared to Rs.410.89 crores in the previous year. The room revenues were at Rs.247.08 crores and the food and beverage income was Rs.188.91 crores.

Expenditure

Total Expenses increased to Rs.332.73 crores during the current year from Rs.305.84 crores in the previous year. While Total Income increased by 12% from the previous year, total Expenses increased by 9% from the previous year mainly due to increase in variable costs consequent to increased business activity. There was also spend of Rs.9.97 crores on renovation of rooms and public areas at our hotels and a provision of Rs.11.61 crores towards a demand for Cross Subsidy Surcharge from Telangana State Southern Power Distribution Company Limited (TGSPDCL) on electricity units procured from third party producer pertaining to financial years from 2004-2005 to 2015-2016.

Profit Before Tax

The company reported a Profit Before Tax of Rs.128.59 crores as compared to Rs.105.05 crores in the previous year.

Profit After Tax

The company reported a Profit After Tax of Rs.94.85 crores as compared to a Profit After Tax of Rs.74.41 crores in the previous year.

Variances Under each Expenditure Head are explained below

Food and Beverages Consumed: Whilst Food and Beverages Income increased by 6% from the previous year, Food and Beverages Consumed increased by 5% to Rs.38.16 crores from Rs.36.37 crores in the previous year. Cost as a percentage of Food and Beverages Income was almost stagnant at 20% as against the same % in the previous year.

Employee benefit expenses and Payment to Contractors

Employee Benefit Expenses and Payment to Contractors increased by 10% to Rs. 84.51 crores in the current year from Rs.76.74 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.

Depreciation and Amortisation Expenses

Depreciation and Amortisation Expenses decreased by 5% from Rs.13.95 crores in the previous year to Rs.13.20 crores in FY 2024-25, on account of cessation of depreciation on fully written down assets as well as disposal of certain assets during the year.

Other Operating and General Expenses

Other Operating and General Expenses increased by 13% to Rs.187.99 crores in the current year from Rs.165.82 crores in the previous Year.

Finance Costs

Finance Costs for the current year at Rs.8.85 crores were lower than the preceding year by Rs.4.09 crores or 32%. The reduction was mainly due to repayment of term loans and effective working capital management.

Liquidity and Debt

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 were at Rs.70.23 crores as against Rs.73.21 crores in the previous year. This was primarily due to redemption of fixed deposits to prepay term loans. The Company repaid all existing term loans during the financial year and became a debt free as at March 31, 2025. As at 31st March, 2025 the Company had undrawn credit facilities of Rs.30 crores, which provide the Company financial flexibility.

Internal Control Systems and Their Adequacy

Your Company has institutionalized 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. Your Companys Internal Auditors carryout audit of the transactions of the Company periodically, in order to ensure that recording and reporting are adequate and proper. Internal Audit also verifies whether internal controls and checks & balances in the systems are adequate, proper and up to date. Corrective actions for any weaknesses in the system that may be disclosed by the Audits are taken. The focus of these reviews is:

?€? 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

The Boards Audit & Risk Management Committee oversees the adequacy of the internal control environment through periodic reviews of audit findings and monitoring implementations of internal audit recommendations through compliance reports.

The internal controls currently in place at your Company are commensurate with the size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorivzed use, executing transactions with proper authorisation and ensuring compliance with corporate policies. The Statutory Auditors have opined in their report that there are adequate internal controls over financial reporting at your Company.

Risk Mitigation Initiatives

Your Company employs various policies, processes and methods to counter the following risks effectively:

?€? Continuously evaluates options for improving profitability of its assets.

?€? Counters the risk from growing competition and new supply by extensively improving its service standards, as also progressively renovating its properties, across the multi-brand portfolio.

?€? Counters the security/terrorism risk by constantly reviewing and implementing various security measures at all its properties.

?€? With the advent and increasing use of online transactions, there is an increasing proportion of sharing of revenues with online travel agents. Adequate measures were taken to educate customers on the benefits of booking directly on the Taj website and the website has also been revamped to enhance the customer experience. Additionally, mobile platforms have been developed for customers, specially targeted at the loyalty and on-thego segments.