Espire Hospitality Ltd Directors Report

Dividend Distribution Policy

The Dividend Distribution Policy (Policy) sets out the guiding principles and framework for determining the quantum and manner of dividend distribution to the equity shareholders of the Company. The Policy seeks to strike an appropriate balance between rewarding shareholders through dividend distributions and retaining adequate earnings to meet the Companys future financial, strategic, and operational requirements. The Policy shall be applicable with effect from the accounting period commencing on 1 April 2016.

Dividend shall continue to be declared on a per-share basis in respect of the Ordinary Equity Shares of the Company having a face value of 10 each. As the Company presently has no other class of shares, any dividend declared shall be distributed among all eligible shareholders in proportion to their respective shareholding as on the Record Date, subject to applicable laws and regulations.

The Company generally considers recommending dividend once in a financial year, after the announcement of the full-year financial results and before the Annual General Meeting (AGM) of the shareholders. Dividend may be recommended out of the profits of the Company for the current financial year, profits of any previous financial year(s), or a combination thereof, as may be permitted under the Companies Act, 2013 (the Act) and the rules made thereunder.

In the event of inadequacy or absence of profits in any financial year, the Board of Directors may, subject to applicable provisions of the Act and the rules made thereunder, consider recommending dividend out of the accumulated profits of previous financial years transferred to free reserves, subject to fulfilment of all prescribed conditions and statutory requirements.

The Board of Directors may also, from time to time, declare interim dividend in accordance with the provisions of the Act and other applicable laws, based on the financial performance, liquidity position, cash-flow requirements and other relevant factors prevailing at the time of such declaration.

While determining the quantum of dividend, the Company shall endeavour to maintain a prudent balance between shareholder returns and the long-term financial sustainability of the Company, taking into consideration its profitability, cash flows, capital requirements, business plans, future investment opportunities, debt obligations, regulatory requirements and other relevant internal and external factors.

The Companys dividend policy aims to balance the objective of appropriately rewarding shareholders through dividends and to support the future growth. As in the past, subject to the provisions of the applicable laws, the Companys dividend payout will be determined based on available financial resources, investment requirements and taking into account optimal shareholder return. Within these parameters, the Company would endeavor to maintain a total dividend pay-out ratio in the range of 20% to 40% of the annual standalone Profit After Tax (PAT) of the Company. While determining the nature and quantum of the dividend payout, including amending the suggested payout range as above, the Board would take into account the following factors:

Internal Factors:

i. Profitable growth of the Company and specifically, profits earned during the financial year as compared with a. Previous years and b. Internal budgets, ii. Cash flow position of the Company, iii. Accumulated reserves, iv. Earnings stability, v. Future cash requirements for organic growth/ expansion and / or for inorganic growth, vi. Brand acquisitions, vii. Current and future leverage and, under exceptional circumstances, the amount of contingent liabilities viii. Deployment of funds in short term marketable investments, ix. Long term investments, x. Capital expenditure(s), and xi. The ratio of debt to equity (at net debt and gross debt level).

External Factors: i. Business cycles,

ii. Economic environment, iii. Cost of external financing,

iv. Applicable taxes including tax on dividend, v. Industry outlook for the future years, vi. Inflation rate, and

vii. Changes in the Government policies, industry specific rulings & regulatory provision

Apart from the above, the Board also considers past dividend history and sense of shareholders expectations while determining the rate of dividend. The Board may additionally recommend special dividend in special circumstances.

The Board may consider not declaring dividend or may recommend a lower payout for a given financial year, after analyzing the prospective opportunities and threats or in the event of challenging circumstances such as regulatory and financial environment. In such event, the Board will provide rationale in the Annual Report.

The retained earnings of the Company may be used in any of the following ways:

i. Capital expenditure or working capital, ii. Organic and / or inorganic growth,

iii. Investment in new business(es) and / or additional investment in existing business(es), iv. Declaration of dividend, v. Capitalisation of shares, vi. Buy back of shares, vii. General corporate purposes, including contingencies, viii. Correcting the capital structure, ix. Any other permitted usage as per the Act.

Information on dividends paid in the last 5 years is provided in the Annual Report.

There was no dividend declared and paid during last 5 years by the company .