Benares Hotels Ltd Management Discussions

ECONOMIC ENVIRONMENT AND INDUSTRY INSIGHT

Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades. The cost-of-living crisis, tightening financial conditions in most regions, Russias invasion of Ukraine, the Israel Gaza war and the US economic policy all weigh heavily on the outlook. Global growth is forecast to slow from 6.0 percent in 2021 to 3.1 percent in 2025 (Provided the trade war does not escalate and 3.0 percent in 2026. In case the trade war between US and China is prolonged it can have recessional effect in 2026.

Global Economy and Hospitality Scenario

The global hospitality market is projected to continue its strong growth trajectory in 2025, with a forecast of reaching $5.71 trillion, up from $5.38 trillion in 2024, marking a 6.2% compound annual growth rate (CAGR). This growth is expected to be driven by various factors, including the rise of new traveller segments, the growing wellness market, and the increasing popularity of workcations and solo travel.

Review of the Business

The business for the first quarter of previous year was impacted due to elections. This was further compounded due to a fractured mandate. However, the second half saw a high growth especially in the state due to successful organization of “Mahakumbh” witnessing record attendees within a span of 2 months. During the current year, the Company saw further consolidation of business aided by leisure travel and gradual pick up in business travel.

Financial Performance

The Total Income for the year ended 31st March, 2025 stood at Rs. 14,067 lakhs as compared to Rs. 12,380 Lakhs in previous year and the Gross Operating Profit (EBIDTA) stood at Rs. 6,452 Lakhs as compared to Rs. 5,436 Lakhs in previous year.

The profit before Tax for the year was at Rs. 5,811 Lakhs as compared to profit before tax of Rs. 4,809 lakhs for the previous year. The profit after Tax for the year was at Rs. 4,325 lakhs as compared to profit after Tax of Rs. 3,604 lakhs for the previous year.

Internal control systems and their adequacy

Your Company has in place an adequate system of internal controls, with documented procedures covering all functions in the hotel operating units. Systems of internal controls are designed to 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. Adequate internal control measures are in the form of various policies & procedures issued by the Management covering all critical and important activities viz. Revenue Management, Hotel Operations, Purchase, Finance, Human Resources, Safety, etc. These policies & procedures are updated from time to time and compliance is monitored continuously. The Company continues its efforts to align all its processes and controls with global best practices.

The internal audit process through the Taj group unique Taj Positive Assurance Model is an objective methodology of providing a positive assurance based on the audits of operating units. It is a convergence of Process Framework, Risk & Control Matrix and a Scoring Matrix. A framework developed for each functional area is identified on the basis of an assessment of risk and control as also providing a score, allowing the unit to identify and mitigate high- risk areas.

The Audit and Risk Management Committee of the Board oversees the adequacy of the internal control environment through regular reviews of the audit findings and monitoring implementations of internal audit recommendations through the compliance reports submitted to them.

The Statutory Auditors of your Company report that your company has adequate internal controls over financial reporting.

Certifications and Awards

Your Company has been participating in the globally recognized EarthCheck benchmarking and certification system. Earth Check certifications are a result of extensive assessments and audits by Independent Environmental Assessors - mapping indicators ranging from energy & water consumption, waste management to sensitivity exhibited vis-a-vis social and cultural dimensions in all areas of hotel operations. Taj Ganges, Varanasi has been certified Earth Check Platinum for last two years after successfully retaining the gold category for consecutive five years. The Taj Nadesar Palace also won the best of the best award certified to just 1% of hotels listed on trip advisor.

Workforce

Total manpower employed by the company was 297 as on March 31, 2025 as compared to 298 as on March 31, 2024.