HLV Ltd Management Discussions

<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS</dhhead>

1. Overview of Industry

Globally, FY 2025-26 remained eventful and complex, shaped by persistent geopolitical tensions, uneven economic momentum, and continued shifts in trade and travel patterns. The ongoing Russia-Ukraine conflict, continuing instability in the Middle East, heightened trade-policy uncertainty, and volatility in energy prices continued to impact supply chains, inflation expectations, transportation costs, financial markets, and business sentiment across several regions. These developments, along with elevated cyber and security concerns and a still-fragile external environment, contributed to a cautious but resilient global business landscape during the year.

Against this backdrop, global economic growth remained moderate. According to the International Monetary Fund, global growth is projected at 3.1 per cent in 2026, following 3.2 per cent in 2025, reflecting slower but still positive expansion amid renewed inflationary pressures and policy uncertainty. While services activity remained relatively supportive across many markets, manufacturing and trade continued to face headwinds from weaker demand conditions, tariff frictions, and geopolitical disruptions.

In this global context, India continued to display resilience and strong domestic momentum. Indias growth outlook for FY 2025-26 remained robust, with the Reserve Bank of India projecting real GDP growth at 7.4 per cent, supported by strong domestic demand, buoyant services activity, and sustained investment momentum even as external conditions remained uncertain. Continued infrastructure development, improving connectivity, rising disposable incomes, and sustained consumption across business and leisure segments supported a favourable demand environment for hospitality and travel-linked sectors.

The global tourism industry continued to maintain strong momentum. According to UN Tourism, international tourist arrivals reached an estimated 1.4 billion in 2024, up 11 per cent over 2023 and equivalent to 99 per cent of pre-pandemic levels, while the first quarter of 2025 recorded more than 300 million international travellers, representing a further 5 per cent increase over the corresponding period of the previous year. UN Tourism has indicated that international tourist arrivals are expected to grow by around 3 per cent to 5 per cent, suggesting a return to more normalised growth after the sharp post-pandemic rebound.

The World Travel & Tourism Council also projected 2025 to be a landmark year for the sector. WTTC estimates that travel and tourisms contribution to global GDP reached approximately US$11.6 trillion to US$11.7 trillion in 2025, accounting for about

10.3 per cent of the global economy and marking a new record above pre-pandemic levels. However, the sector continues to face external risks from geopolitical instability, changing travel corridors, airfare volatility, and inflation-led pressure on discretionary spending.

Indias hospitality sector continued to benefit from strong structural drivers. Rising domestic tourism, destination weddings, M.I.C.E. activity, spiritual tourism, premium leisure travel, and improved transport infrastructure supported growth across hotel demand segments, while branded room supply in many markets remained measured relative to demand growth. These conditions continued to provide a favourable operating environment for quality hotel assets with strong brand positioning, strategic location advantages, and differentiated service standards.

 

2. Outlook

The Indian hotel industry continues to remain on a strong footing, supported by robust domestic travel, favourable demographics, improving infrastructure, and rising aspirations for premium and experiential stays. Leisure travel, weddings, conventions, spiritual tourism, wellness-led travel, and business mobility are expected to remain important demand drivers, while the branded hotel segment is likely to benefit from favourable demand-supply dynamics in several key markets.

At the same time, the operating environment remains sensitive to geopolitical developments. Continued conflicts in certain regions, volatility in crude oil prices, and uncertainty in global trade and travel corridors may affect airline economics, traveller sentiment, and discretionary spending patterns. Nevertheless, Indias domestic demand depth, improving connectivity, and policy support for tourism and infrastructure are expected to help the sector maintain a stable growth trajectory.

 

3. Business Review

During FY 2025-26, the Hotel recorded an occupancy of 69% as against 73.80% in FY 2024-25. Average room rate (ARR) improved significantly to Rs. 12,469 from Rs. 11,170 in the previous year, representing growth of over 12%. The strong rate growth reflects the continued positioning of The Leela Mumbai as one of Indias leading luxury hospitality destinations, supported by robust demand from premium corporate travellers, retail guests, airline crews, social celebrations and international visitors.

Revenue Per Available Room (RevPAR), a key performance indicator for the hospitality sector, improved to Rs. 8,602 during FY 2025-26 from Rs. 8,242 in the previous year, reflecting the Companys continued focus on revenue optimisation and quality business mix. Total rooms revenue increased to Rs. 124.96 crore as compared to Rs. 119.29 crore in FY 2024-25, demonstrating the Hotels ability to drive revenue growth despite lower overall room inventory utilisation.

 

4. Awards and Accolades

During the Financial Year 2025-26, The Leela Mumbai received the prestigious Tripadvisor 2026 Travelers Choice Award, reaffirming its commitment to delivering exceptional guest experiences and world-class hospitality. Further underscoring its culinary excellence, The Leela Mumbai earned nominations at the esteemed ET Restaurant & Nightlife Awards 2026 across five categories: Six Degrees for Luxury Restro Bar of the Year; The Great Wall for International Cuisine Restaurant of the Year - Asian Specialty; Le Cirque Signature for International Cuisine Restaurant of the Year - European; Jamavar for Signature Restaurant in a Hotel - Indian Cuisine; and Citrus for All-Day Dining Restaurant of the Year - Hotel. These recognitions reflect the hotels continued dedication to excellence across its diverse dining offerings and its position as a leading luxury hospitality destination.

 

5. A. Sales & Marketing alliances

The Company continues to enjoy established marketing arrangements through Brookfield, for which the Company pays a fee based on the marketing expenses, and these alliances continue to support the Companys international visibility and premium market access:

 

a. Global Hotel Alliance

Global Hotel Alliance continues to be a significant platform for international outreach and loyalty-led demand generation. As one of the worlds largest alliances of independent luxury hotel brands, GHA provides access to a broad base of affluent global travellers through its DISCOVERY loyalty programme and experience-led travel ecosystem, thereby enhancing visibility, repeat business, and guest engagement.

 

b. Preferred Hotels & Resorts

Preferred Hotels & Resorts continues to be an important strategic partner for the Company by providing access to a wide network of independent luxury hotels and global sales representation across corporate, leisure, and group segments. Its established presence in key source markets supports demand generation, travel trade engagement, and stronger international positioning for the Companys hospitality offerings.

 

B. Sales, Marketing and PR Representations

The Company continues to avail the services of sales representation companies across important geographies through Preferred Hotels & Resorts. These representation arrangements continue to play an important role in engaging major tour operators, travel designers, retail agencies, and other travel trade stakeholders in their respective source markets, thereby supporting lead generation and market development.

 

6. Opportunities, Threats, Risks and Concerns

The hotel business continues to be dependent on domestic and global economic conditions, airline connectivity, consumer confidence, and the overall geopolitical environment. Ongoing geopolitical tensions, particularly in conflict-affected regions, together with trade disruptions, energy-price volatility, and inflationary risks, may influence travel flows, operating costs, and discretionary spending across hospitality markets.

The Company also continues to face concentration risk arising from heavy dependence on one hotel in Mumbai and exposure to the upper luxury segment. However, the Companys hotel continues to enjoy a premium over several competitors owing to its location advantage, established service reputation, and strong brand association. Further, the broader expansion momentum of The Leela group is expected to strengthen network visibility, brand depth, and long-term market diversification.

The Crew segment remained an important contributor to the Hotels business portfolio during the year, benefiting from Mumbais position as one of Indias busiest aviation hubs. However, the ongoing redevelopment and expansion of Terminal 1 at Mumbai Airport, coupled with the commencement of operations at Navi Mumbai International Airport, is expected to gradually alter airline operating patterns and crew accommodation requirements in the region. As aviation and cargo-related activities increasingly shift towards the Navi Mumbai airport ecosystem, a portion of airline crew demand may migrate towards hotels located in the Navi Mumbai micro-market.

The year also underscored the importance of agility in sales and marketing. In an environment shaped by geopolitical uncertainty, changing travel behaviour, and higher guest expectations, sustained focus on service excellence, direct demand generation, relationship-led selling, and alliance-based international reach remained essential to protect occupancy, average room rates, and revenue quality.

 

7. Risk Management-Leveraging our experience

Risk management is an integral part of the Companys business process. The Company has a robust risk management framework to identify, assess, and mitigate potential threats. Risks are continuously monitored and effectively controlled through ongoing efforts to conceive and implement mitigation strategies.

Pertinent policies and methods are being reviewed and modified to mitigate such risks.

The Company has taken several measures to protect the safety and security of its customers. In addition to the physical security measures, the Company has also taken sufficient insurance cover to meet the financial obligations which may arise from any untoward incidents.

To counter the risk of competition, your Company focuses on providing exceptional services consistently.

The deal with litigation matters of the Company which are crucial in nature more particularly described in Para 8 of Directors Report, the Company has engaged reputed legal practitioners on behalf of the Company.

 

8. Efficient Internal Control systems

The Company has a well-structured internal audit function. Under the guidance and supervision of an independent Audit Committee, independent and reputed firm of Chartered Accountants conduct regular audits and review adherence to control systems and procedures.

The effectiveness of internal controls is reviewed through the internal audit process.

The focus of these reviews is as follows:

- Identification of weaknesses and areas of improvement

- Compliance with defined policies and processes

- Safeguarding of tangible and intangible assets

- Management of business and operational risks

- Compliance with applicable statutes

The Audit Committee of the Board oversees the adequacy of the internal control environment through regular reviews of the audit findings and monitoring implementation of internal audit recommendations.

 

9. Human resources and industrial relations

A focused attention on attracting the best talent available in the market, which could help the Company to drive a culture oriented towards high performance and excellence. The Company has implemented an effective customer feedback system which is yielding good results. This platform helps the team to align all its efforts in delivering relevant high-quality services to the guests whilst seeking to constantly improve on standards. Industrial relations throughout the year were cordial. As on March 31,2026, the total manpower was 842 (including contract labour and fixed term contractors).

 

10. Corporate Social Responsibility and Environmental Initiatives

Your Company recognizes the need to minimise the adverse impact of its operations, on the environment. The Company maintains large gardens in and around its hotel. The Company has made substantial investments for improving energy efficiencies and fresh and waste water management.

 

11. Health and Safety Management System

Health and Safety Management System in the Company aims to reduce, eliminate or control workplace hazards and associated risks of illness or injuries to the employees, customers and contractors who might be affected by the Companys activities.

Your Company is committed to ensure healthy and safe working environment for all concerned and to improve the Health and Safety parameters. Under a well-designed program, the Company:

a. complies with the requirements of all relevant statutory, regulatory and other provisions.

b. Provides and maintains safe & healthy work place through operational procedures, safe systems and methods of work.

c. Provides sufficient information, instruction, training and supervision to enable all employees to identify, minimize and manage hazards and to contribute positively to safety at work.

d. Organizes audits and mock drills on site to ensure that operations are in compliance with health and safety management requirements and for emergency preparedness.

e. ensures that appropriate resources are available to fully implement health and safety policy and continuously review the policys relevance with respect to legal and business development.

f. seeks continuous occupational health and safety improvements through the establishment of safety management objectives, targets and programs.

 

12. Expansion / upgradation Plans

A proposal for setting up a new luxury resort and hotel at Vellimon (Asthamudi Lake) near Kollam, Kerala had been approved by the Board of the Company on February 12, 2024. The new resort and hotel will be constructed on land admeasuring approximately 12.92 acres equivalent to 52,285.39 sq. mts. taken on lease for a period of 30 years from Rockfort Estate Developers Private Limited, a promoter Group Company at Vellimon (Asthamudi Lake) near Kollam, Kerala. Preliminary work is going on like boundary wall construction and Panchayat approval etc.

 

13. Analysis / highlights of operating performance, financial results and Balance Sheet

The financial statements for the year ended March 31, 2026 have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 as amended from time to time.

The financial statement of your Company forms part of this annual report and the analysis / highlights are given below:

At present, the Company operates only one hotel "The Leela, Mumbai" with 394 guest rooms

 

Revenue:

The revenue from operations was Rs. 20,091.50 lakhs in FY 202526 against Rs. 20,331.09 lakhs in FY 2024-25

Revenue from Food & Beverages decreased by 12.56 %.

Room Revenue increased by 4.75 % mainly due to increase in room rates.

Other income was Rs. 1,334.82 lakhs in FY 2025-26 as compared to Rs. 1,509.19 lakhs in FY 2024-25.

Total revenue was Rs. 21,426.32 lakhs in FY 2025-26 against Rs. 21,840.28 lakhs in FY 2024-25.

 

Operating Expenses:

Food & Beverages consumption decreased by 7.16 % as compared to last year.

Employee Benefit expenses, including contract employee cost increased by 1.79 % as compared to last year.

 

Finance costs and interest liability:

Finance cost was Rs. 312.60 lakhs as compared to Rs. 222.62 lakhs in the previous year.

 

Depreciation and Amortization:

Depreciation and amortization expenses for the year was Rs. 1,940.06 lakhs as against Rs. 1,564.42 lakhs in previous year.

 

Other expenses:

Other expenses for the year amounted to Rs. 11,230.94 lakhs as against Rs. 10,090.57 lakhs in the previous year.

 

Profit/ (Loss) after Tax:

The Company earned a profit of Rs. 207.99 lakhs during the FY 2025-26 as against a profit of Rs. 2,612.47 lakhs during the previous year.

 

Property, Plant and Equipment (PPE):

The net Property, Plant, Equipment, capital work in progress, intangible assets, investment property and assets held for sale as on March 31, 2026 was Rs. 32,571.45 lakhs as against Rs. 30,646.08 lakhs as on the last day of the previous year.

 

Secured and Unsecured Loans:

The details of the Companys debts (in Rs. lakhs) are as follows:

Particulars	March 31, 2026	March 31, 2025
Secured Loans:
Long Term Debt	347.90	499.99
Short Term Debt including current maturities of Long Term Debt	752.36	1,318.89
Interest accrued on borrowings	-	0.93
Total	1,100.26	1,819.81

 

Share Capital:

During the year, the Company has not issued or allotted any securities. The issued and paid-up share capital of the Company as on March 31,2026 stands at Rs. 131,85,19,798/- (Rupees one hundred thirty one crores eighty five lakhs nineteen thousand seven hundred ninety eight only) divided into 65,92,59,899 (sixty five crores ninety two lakhs fifty nine thousand eight hundred ninety nine) Equity Shares of face value of Rs. 2/- (Rupees two only) each.

 

Reserves:

In view of previous years losses, Company has decided to retain the earnings to adjust with the previous years losses, therefore, the Company decided not to transfer any amount to the Reserves for the year under review.

 

Dividend:

In view of previous years losses and Companys liabilities towards disputes with Airport Authority of India, Company decided to retain the earnings to adjust with the previous years losses, hence do not recommend any dividend for the FY 2025-26.

 

Net worth:

The details of Companys net worth (in Rs. lakhs) are as follows:

Particulars	March 31, 2026	March 31, 2025
Share Capital	13,185.20	13,185.20
Free Reserves	13,195.29	13,195.39
Securities Premium Account	67,772.08	67,772.08
Total	94,152.57	94,152.67
Less:
Accumulated Loss	649,62.64	65,159.72
Intangible Assets / Intangible Assets under development	74.31	23.04
Total	65,036.95	65,182.76
Net worth	29,115.62	28,969.91

 

Financial Ratios and Return on Net-worth:

Key financial ratios and their definitions are given below:

Particulars	March 31, 2026	March 31, 2025
1 Current Ratio (in times)	1.75	1.78
2 Debt-Equity Ratio (in times)	0.075	0.088
3 Debt Service Coverage Ratio (in times)	1.42	16.58
4 Return on Equity Ratio (in %)	0.44%	5.73%
5 Inventory turnover ratio (a)	3.20	3.66
6 Trade Receivables turnover ratio (in days)	18.92	14.87
7 Trade payables turnover ratio (in days)	1.25	1.32
8 Net capital turnover ratio (in times)	1.93	2.01
9 Net profit ratio (in %)	0.97%	11.96%
10 Return on Capital employed (in %)	1.11%	6.06%
11 Return on investment (in %)	0.00%	0.00%
12 Interest Service Coverage Ratio (in times)	44.33	177.45
13 Operating profit margin (in %)	2.78%	13.64%

 

a) Interest Service Coverage Ratio equals to Profit before tax added by interest on borrowings, Provision for impairment of assets and Depreciation and Amortization expenses divided by Interest on borrowings.

b) Operating profit margin equals Profit / (Loss) before depreciation and amortisation expenses, Interest, Tax and Exceptional items less Other Income divided by Revenue from operations.

c) The definitions of other ratios are given in Note 37.14 of the Notes to Financial Statements.

 

Cautionary Statement

Statements made in the Managements Discussion and Analysis Report describing the Companys objectives, projections, estimates, predictions and expectations may be ‘forward-looking statements, within the meaning of applicable securities laws and regulations. As "forward-looking statements" are based on certain assumptions and expectations of future events over which the Company exercises no control, the Company cannot guarantee their accuracy nor can it warrant that the same will be realized by the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements on the basis of any subsequent developments or events or for any loss any investor may incur based on the "forward-looking statements".