Eco Hotels and Resorts Ltd Management Discussions

1. Economic and Industry Overview

The Indian hospitality industry continued its recovery and entered a phase of structural growth during FY2025-26. Domestic tourism, pilgrimage and spiritual travel, leisure travel, corporate travel, MICE activities, destination events and improving connectivity remained key drivers of hotel demand.

The hospitality sector is also witnessing increasing consumer preference for differentiated, sustainable and experience-led accommodation. At the same time, the industry remains exposed to inflationary pressures, rising employee and operating costs, competition from established hotel chains and alternative accommodation platforms, and the significant capital and working- capital requirements associated with expansion.

Against this backdrop, Eco Hotels and Resorts Limited ("EHRL" or "the Company”) continued to build its presence as a sustainable hospitality platform, with an emphasis on an asset-light expansion model, multiple hotel brands and strategically located properties in high- demand tourism, business and pilgrimage markets.

2. Company Overview and Business Strategy

Eco Hotels and Resorts Limited is a BSE-listed hospitality company promoted by Eco Hotels UK PLC. The Company is developing a portfolio of hospitality offerings across multiple segments through brands including THE ECO, THE ECO GRAND, ECO RESORT, ECO BOUTIQUE, ECOXPRESS, ECOVALUE, and THE ECO SATVA.

Its food and beverage portfolio includes brands such as SAHAR, GGS, KICK IN THE BRICK, ECO SIP CAFE AND BANQUET HALL - SAMPARK.

The Companys strategy is based on creating a scalable hospitality platform with a differentiated focus on sustainability, vegetarian food offerings, efficient operating formats and locations with attractive tourism and business potential.

The Company is pursuing an asset-light approach, including long-term lease arrangements, management/operating arrangements and selective development opportunities. This strategy is intended to enable faster network expansion while reducing the capital intensity associated with outright ownership of hotel properties.

During FY2025-26, management continued to focus on increasing its operating footprint, establishing its brands in new markets and creating a platform capable of generating operating leverage as newly launched properties mature.

3. Business Performance During FY2025-26

FY2025-26 represented an important transition year for the Company from an early-stage expansion platform towards a larger operating hospitality business.

The Companys consolidated total revenue increased substantially during the year, reaching approximately Rs.498.91 lakh, compared with approximately Rs.109.24 lakh in FY2024-25, representing growth of approximately 357%.

Consolidated revenue from operations increased from approximately Rs.16.56 lakh in FY2024-25 to approximately Rs. 485.18 lakh in FY2025-26. The significant increase reflects the addition and ramp-up of new properties during the year.

However, the Company remained in an investment and expansion phase. Consolidated loss after tax increased to approximately Rs.1083.39 lakh, compared with approximately Rs. 354.84 lakh in FY2024-25. The increase in loss reflects the Companys continued investment in expansion, operating infrastructure, property-related costs and other expenses incurred in building the platform.

The March 2026 quarter demonstrated continuing improvement in the operating scale, with consolidated total revenue of approximately Rs.247.39 lakh, compared with approximately Rs.10.09 lakh in the corresponding quarter of the previous year.

The financial performance should therefore be viewed in the context of the Companys rapid expansion and the relatively short operating history of several of its properties. Managements key objective remains to convert increasing room inventory and occupancy into improved operating leverage, cash generation and, ultimately, sustainable profitability.

4. Operational Expansion

A significant feature of FY2025-26 was the acceleration in the Companys hotel expansion programme.

New properties in Varanasi and Vadodara commenced operations towards the end of September 2025. The performance of these properties provided encouraging evidence of demand in the Companys target markets.

The Varanasi property recorded occupancy of approximately 85% in December 2025, with 100% occupancy achieved on multiple days. The Kochi property also recorded occupancy of approximately 80% during November and December 2025.

These operating indicators demonstrate the potential of the Companys location strategy, particularly in markets supported by pilgrimage, leisure and business demand.

The Company also expanded its presence in Ayodhya, a major spiritual tourism destination. The 33-room property was launched in March 2026, providing the Company with a strategic presence in one of Indias rapidly developing pilgrimage markets.

The Company also signed its first boutique property in Udaipur, comprising 20 rooms and a rooftop vegetarian restaurant. The property is intended to strengthen the Companys presence in the leisure and experiential tourism segment. This property started from June 01 2026.

5. Market and Location Strategy

The Company is following a location-led expansion strategy, with a focus on destinations that offer strong structural demand rather than relying solely on traditional metropolitan markets.

The Companys target markets include:

• Pilgrimage and spiritual destinations;

• Leisure and tourist destinations;

• Metropolitan and business centres;

• Emerging Tier-II cities;

• High-growth suburban markets; and

• Locations supported by improving transport connectivity.

The Companys presence in Varanasi, Ayodhya and Udaipur illustrates its strategy of combining spiritual tourism with leisure and experiential travel.

The Company believes that the growth of domestic tourism, rising travel frequency and improving connectivity will continue to create opportunities for branded accommodation in emerging destinations.

6. Brand Portfolio

The Companys multi-brand strategy is intended to address different customer segments while allowing it to deploy an appropriate hotel format depending upon the location and demand characteristics.

The portfolio includes brands positioned across economy, mid-market, upscale and boutique formats.

This approach provides flexibility in developing properties with different room counts, service levels and ancillary offerings.

The Company also intends to develop its food and beverage portfolio alongside its hotel brands. Restaurants, rooftop dining, banqueting and other food and beverage offerings are expected to contribute to customer engagement as well as non-room revenue.

The Companys emphasis on vegetarian food offerings provides a further point of differentiation, particularly in pilgrimage and family- oriented tourism markets.

7. Sustainability and Environmental Positioning

Sustainability remains an important component of the Companys business positioning.

The Company seeks to integrate environmentally responsible practices into hotel design and operations, with emphasis on efficient resource utilization, responsible consumption and reduction of environmental impact.

The sustainability proposition is intended to serve both as an environmental commitment and as a business differentiator.

Going forward, the Company intends to further strengthen sustainability practices across its portfolio through energy efficiency, water conservation, waste management, responsible sourcing and environmentally conscious operating practices, wherever commercially and operationally feasible.

8. Financial Performance

Consolidated Financial Performance

(Indian Rs. in Lakhs)

Particulars	FY2025-26	FY2024-25	Change
Revenue from Operations	485.18	16.56	Significant growth
Total Revenue	498.91	109.24	357%
Loss Before Tax	1146.85	297.48	Increased
Loss After Tax	1083.39	354.84	Increased

*The FY2025?26 consolidated loss figure is presented based on the reported audited results; the final Annual Report should be used for the Companys exact classification of profit/loss line items.

The substantial increase in revenue reflects the scaling up of the Companys operating portfolio. However, the corresponding increase in operating and other expenses resulted in continued losses.

Management recognizes that revenue growth alone is not sufficient to create long-term shareholder value. The Companys focus will increasingly shift towards improving property-level profitability, optimizing costs, increasing occupancy, enhancing average room rates and generating positive operating cash flows.

9. Quarterly Momentum

The fourth quarter of FY2025-26 showed a further increase in operating scale.

Consolidated total revenue for Q4 FY2025-26 was approximately Rs. 247.24 lakh, compared with approximately Rs. 10.08 lakh in Q4 FY2024-25.

The Companys Q3 FY2025-26 revenue from operations was approximately Rs.179.31 lakh, compared with Rs. 3.63 lakh Q3 FY2024-25. The improvement in quarterly revenue reflected the contribution from recently launched properties and improving occupancy levels.

The progressive increase in quarterly revenue indicates that the Companys newly commissioned properties are beginning to contribute meaningfully to the overall revenue base.

10. Profitability

The Company continued to report losses during FY2025-26.

The principal reason is the Companys current stage of development. Several properties are in the initial ramp-up phase, while corporate, operating, lease and expansion-related expenses are being incurred ahead of the full realization of revenue potential.

The Company expects that increasing occupancy, maturation of properties, improved room-rate realization, greater utilization of food and beverage facilities and operating leverage can progressively improve property-level economics.

Management is therefore focused on achieving a sustainable balance between expansion and profitability.

The key profitability priorities are:

• Improving occupancy;

• Enhancing Average Daily Rate (ADR);

• Increasing Revenue per Available Room (RevPAR);

• Improving food and beverage contribution;

• Controlling employee and operating expenses;

• Improving procurement efficiency;

• Optimizing property-level staffing;

• Increasing direct bookings; and

• Improving cash conversion.

11. Balance Sheet and Financial Resources

The Companys expansion strategy requires adequate financial resources to support property development, lease commitments, deposits, working capital, corporate infrastructure and operating expenses.

During FY2025-26, the Company continued the process of raising funds through its partly paid-up rights issue. The rights issue and subsequent call-money process are intended to strengthen the Companys financial resources and support its business plan.

The Company is required to carefully manage its liquidity position while continuing to expand its operating portfolio.

Managements financial priorities include maintaining adequate liquidity, aligning expansion expenditure with expected operating returns, improving cash generation and ensuring disciplined deployment of capital.

The increase in lease-related liabilities associated with the Companys expansion model also requires careful monitoring. Management intends to evaluate new properties on the basis of location quality, expected demand, commercial terms, projected operating performance and long-term cash-flow potential.

12. Asset-Light Business Model

The Companys asset-light strategy remains a central component of its growth plans.

Under this model, the Company can expand its hotel network without necessarily investing the full amount required to acquire hotel real estate.

The strategy offers several potential advantages:

• Faster expansion;

• Lower upfront capital requirements;

• Access to strategic locations;

• Greater portfolio flexibility;

• Potentially improved return on capital over the long term; and

• Ability to deploy capital towards brand building, technology and operating infrastructure.

However, an asset-light model also involves contractual lease obligations, minimum guarantees or fixed commitments in certain arrangements. Therefore, careful property-level underwriting and due diligence remain critical.

Management intends to balance growth with commercial discipline and avoid expansion that could place disproportionate pressure on cash flows.

13. Business Development and Expansion Pipeline

During FY2025-26, the Company developed an extensive expansion pipeline covering both existing and new markets.

The Companys expansion opportunities included properties in markets such as Ayodhya, Udaipur, Shirdi, Chhatrapati Sambhaji Nagar, Mysore, Ayodhya 2 and Dombivli, among others.

The proposed properties include greenfield and brownfield opportunities, with varying room capacities and ancillary facilities such as restaurants and banquet spaces.

The Company has emphasized that proposed properties are subject to due diligence and commercial evaluation before final agreements are executed.

Management believes that a diversified portfolio across spiritual, leisure and business destinations can reduce concentration risk and create multiple sources of future revenue growth.

14. Food and Beverage Business

Food and beverage are an important complementary revenue stream for the Companys hospitality business.

The Companys F&B brands and concepts are intended to provide differentiated vegetarian dining experiences and increase revenue generated per guest.

Restaurants, rooftop outlets, banquets and event spaces can also attract customers who are not staying at the hotel, thereby increasing asset utilization.

The Company intends to strengthen F&B revenues by:

• Developing differentiated restaurant concepts;

• Increasing banquet and event business;

• Improving menu engineering;

• Optimizing food costs;

• Increasing restaurant utilization; and

• Integrating F&B offerings with the hotel guest experience.

15. Digitalization and Technology

Technology is increasingly important in hospitality operations and customer acquisition.

The Company intends to leverage digital channels for reservations, customer engagement, revenue management, marketing and operational monitoring.

Digital initiatives can assist the Company in:

• Improving direct bookings;

• Reducing dependence on third-party distribution;

• Personalizing customer offers;

• Monitoring guest feedback;

• Optimizing room pricing;

• Improving operational efficiency; and

• Building customer loyalty.

Going forward, the Company will continue to evaluate technology investments that provide measurable improvements in guest experience, revenue generation or operating efficiency.

16. Human Resources

Hospitality is a service-intensive industry in which employee capability and engagement have a direct impact on customer satisfaction.

As the Company expands its operating portfolio, recruitment, training and retention of skilled personnel will remain important priorities.

Management intends to strengthen standardized operating procedures, training programmes and service-quality monitoring across properties.

The Company also recognizes the importance of creating a positive workplace environment and developing managerial capabilities capable of supporting a growing multi-location hotel portfolio.

17. Risk Management

The Companys principal business risks and mitigation measures include the following:

Market and Demand Risk

Hotel demand can be affected by economic conditions, travel patterns, seasonality and changes in consumer spending.

Mitigation: The Company is diversifying its portfolio across business, leisure and pilgrimage destinations.

Competition Risk

The Company competes with established hotel chains, independent hotels, serviced apartments and online accommodation platforms.

Mitigation: Multiple brands, differentiated offerings, sustainable positioning and strategic locations are intended to provide competitive differentiation.

Expansion Risk

Rapid expansion can create execution, staffing and working-capital challenges.

Mitigation: Management intends to undertake due diligence and evaluate the commercial viability of individual properties before entering into definitive arrangements.

Financial and Liquidity Risk

The Company remains in an expansion phase and has reported losses.

Mitigation: Management is focused on improving cash flows, raising appropriate capital, controlling costs and progressively increasing property-level profitability.

Lease and Fixed Commitment Risk

An asset-light model can result in lease liabilities and fixed contractual commitments.

Mitigation: Property selection and contractual negotiations are being undertaken with greater emphasis on expected demand, occupancy potential and sustainable cash flows.

Human Capital Risk

Shortages of trained hospitality personnel may affect service quality and operating costs.

Mitigation: Training, employee development and standardized operating procedures are being strengthened.

Regulatory Risk

Hotels are subject to multiple regulatory, environmental, safety, licensing and statutory requirements.

Mitigation: The Company continues to maintain compliance systems and appropriate internal controls.

18. Internal Controls and Corporate Governance

The Company recognizes that effective internal controls are essential as its operations expand across multiple locations.

Internal controls are designed to safeguard assets, support reliable financial reporting, promote operational efficiency and ensure compliance with applicable laws and regulations.

The Company has constituted appropriate Board-level committees in accordance with applicable regulatory requirements, including the Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee.

The Company also undertakes periodic review of its governance and compliance framework.

As the business expands, management intends to further strengthen financial controls, property-level reporting, procurement controls, information systems and compliance monitoring.

19. Outlook

Management remains optimistic about the long-term prospects of the Indian hospitality sector and the Companys ability to participate in its growth.

The Companys growth strategy is supported by:

• Increasing domestic travel;

• Growth in pilgrimage and spiritual tourism;

• Rising demand for branded accommodation;

• Expansion of tourism infrastructure;

• Growth of Tier-II and Tier-III markets;

• Increasing preference for experiential travel;

• Opportunities in boutique and mid-market hospitality; and

• The scalability of the Companys asset-light operating model.

The Company intends to continue expanding its portfolio while improving the performance of existing properties.

Managements immediate focus will be on increasing the contribution of newly opened hotels, stabilizing occupancy, improving room- rate realization and enhancing property-level operating margins.

20. Outlook for FY2026-27

FY2026-27 is expected to be an important year for the Companys transition from expansion-led growth towards operating leverage.

The Company has communicated an ambitious business plan for FY2026-27, including further additions to its hotel portfolio. Managements ability to execute this expansion while maintaining financial discipline will be a key determinant of future performance.

The Company expects new properties to contribute progressively as they commence operations and move through their initial ramp- up phase.

Management will focus on the following priorities during FY2026-27:

1. Accelerating hotel openings in carefully selected markets;

2. Improving occupancy at existing properties;

3. Increasing ADR and RevPAR through effective revenue management;

4. Expanding F&B and banquet revenues;

5. Improving operating margins through scale and cost control;

6. Strengthening cash flows;

7. Optimizing lease and property-level economics;

8. Building brand awareness across target markets;

9. Expanding distribution and direct booking channels; and

10. Maintaining financial and operational discipline while scaling the business.

21. Strategic Priorities

The Companys medium- to long-term strategy can be summarized under five key priorities:

Scale

Build a meaningful pan-India hospitality portfolio through a combination of asset-light and selective development opportunities.

Brand

Establish Eco Hotels as a differentiated, sustainable and customer-focused hospitality brand across multiple price points.

Profitability

Transition from expansion-led revenue growth to sustainable property-level profitability and operating cash generation.

Sustainability

Embed environmental and responsible hospitality practices across the portfolio.

Customer Experience

Deliver consistent service, differentiated F&B concepts and technology-enabled guest experiences.

22. Key Performance Indicators

Going forward, management intends to place increasing emphasis on operating indicators that more directly reflect the performance of the hospitality business.

These include:

• Occupancy percentage;

• Average Daily Rate (ADR);

• Revenue per Available Room (RevPAR);

• Revenue from rooms;

• Food and beverage revenue;

• Revenue per occupied room;

• Property-level EBITDA;

• EBITDA margin;

• Operating cash flow;

• Direct booking contribution;

• Guest satisfaction scores; and

• Number of operational rooms/keys.

These indicators will provide a more meaningful assessment of the Companys operational progress as its hotel portfolio expands.

23. Management Assessment

FY2025-26 was a transformational year for Eco Hotels and Resorts Limited.

The Company delivered substantial growth in revenue as newly launched properties began contributing to the business. Properties in Varanasi, Vadodara and Kochi demonstrated encouraging demand, while the launch of the Companys Ayodhya property and expansion into Udaipur further strengthened its presence in high-potential tourism markets.

At the same time, the Companys financial results reflect the costs associated with rapid expansion. The significant increase in revenue has not yet translated into profitability, and the Company continues to operate in an investment and scale-up phase.

Managements principal challenge and opportunity is therefore to convert the expanding hotel network into sustainable and profitable operations.

The Companys strategy of combining an asset-light model, multiple brands, strategic locations, differentiated vegetarian F&B concepts and sustainability-led positioning provides a platform for future growth. However, disciplined execution, liquidity management, property-level profitability and prudent expansion will remain critical.

Management believes that the Company is well positioned to participate in Indias long-term hospitality growth and remains focused on creating a scalable, sustainable and financially stronger hospitality enterprise.

24. Cautionary Statement

This Management Discussion and Analysis contains statements concerning the Companys objectives, expectations, estimates and future business prospects. Such statements are forward-looking and are subject to risks and uncertainties.

Actual results may differ materially from those expressed or implied due to changes in economic conditions, tourism trends, competition, regulatory developments, property-level performance, financing conditions, costs, execution risks and other factors beyond the Companys control.

The information contained herein should be read together with the Companys audited financial statements, notes forming part thereof and other disclosures contained in the Annual Report.