Benares Hotels Ltd Management Discussions

ECONOMIC ENVIRONMENT AND INDUSTRY INSIGHT

The global economic environment during the year under review continued to remain complex and uncertain. Growth momentum across major economies was impacted by persistent inflationary pressures, elevated interest rates, tight financial conditions and ongoing geopolitical developments.

In addition to the prolonged Russia Ukraine conflict, escalating tensions in the Middle East particularly involving Israel and Iran, and the evolving position of the United States in the region added to global uncertainty. These developments have contributed to volatility in global energy markets, supply chains and financial markets, with potential implications for inflation, consumer sentiment and business confidence worldwide. The risk of further escalation remains a key factor influencing global economic and trade outlooks. Despite these global challenges, the Indian economy continued to demonstrate relative resilience, supported by strong domestic demand, public infrastructure spending, stable financial systems and structural growth drivers. Indias growth remained largely consumption-led, with limited direct economic exposure to geopolitical conflicts, helping mitigate external shocks.

The overall macro-economic environment in India remained supportive for the travel and hospitality sector, notwithstanding higher operating costs, currency volatility and cautious international travel sentiment arising from global geopolitical uncertainties.

The global hospitality industry continued its gradual recovery and growth during the year, supported by sustained leisure travel demand, increased mobility, and the growing preference for experiential and wellness-oriented travel. Corporate travel and MICE activity also witnessed gradual improvement during the year.

In India, the hospitality sector continued to benefit from robust domestic tourism, rising disposable incomes, improved air and rail connectivity and increased destination-led demand. Religious tourism, social events, conferences and weddings remained key demand drivers. The luxury and upper-upscale segments witnessed sustained demand, supported by disciplined supply additions and favourable demand-supply dynamics.

During the year under review, the Company recorded stable and improved operational performance, supported by a strong mix of leisure, destination-led travel, social events and a steady recovery in corporate and MICE segments.

Varanasi continued to attract significant domestic and international visitor interest owing to its cultural, spiritual and heritage significance, supported by enhanced connectivity and infrastructure development. The Company benefited from consistent demand across the year, including demand generated by large-scale religious and cultural events.

Focused revenue management initiatives, sustained service quality standards and operational efficiencies

contributed to improved business consolidation during the year.

During the year, the Company enhanced its room inventory at Taj Ganges, Varanasi with the addition of 100 new rooms, increasing the total room inventory from 130 rooms to 230 rooms. This strategic expansion positions the hotel to better capitalize on the sustained demand momentum witnessed in Varanasi across leisure, pilgrimage, social events, and the steadily improving corporate and MICE segments. The incremental inventory is expected to support higher room night contribution, enable accommodation of larger groups and conferences that were earlier constrained by limited availability, and improve overall destination competitiveness. While the expanded inventory may lead to a phased ramp-up in occupancy in the initial period, medium- to long-term revenue visibility remains positive, supported by strong demand fundamentals, improved operating leverage, and enhanced opportunities for ancillary revenue through food & beverage, banqueting, and allied services. The expansion is expected to contribute meaningfully to topline growth and margin sustainability over the coming years, as the additional capacity is absorbed across multiple demand segments.

The Total Income for the year ended March 31, 2026 stood at Rs. 14,490 lakhs as compared to Rs. 14,067 Lakhs in previous year and the Gross Operating Profit (EBIDTA) stood at Rs. 6,543 Lakhs as compared to Rs. 6,452 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. 5,806 lakhs for the previous year. The profit after Tax for the year was at Rs. 4,324 lakhs as compared to profit after Tax of Rs. 4,325 lakhs for the previous year.

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 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.

The Company remains committed to sustainability and responsible hospitality practices.

Taj Ganges, Varanasi successfully retained its Earth Check Platinum Certification, reflecting sustained performance across environmental, social and operational sustainability parameters.

Taj Nadesar Palace, Varanasi continued to receive international recognition, including accolades on leading global travel platforms, reinforcing its position in the luxury heritage hospitality segment.

Total manpower employed by the company was 398 as on March 31, 2026 as compared to 297 as on March 31, 2025.