Howard Hotels Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian hospitality industry continued to demonstrate resilience during FY 2025-26 despite global economic uncertainties and inflationary pressures. Rising domestic tourism, increasing business travel, growth in destination weddings, and expansion of the Meetings, Incentives, Conferences and Exhibitions (MICE) segment supported demand across hotel categories.

The Governments continued focus on tourism infrastructure, enhanced connectivity, and promotion of domestic travel has further strengthened the hospitality ecosystem. Agra, being one of Indias premier tourist destinations and home to the Taj Mahal, continues to attract substantial domestic and international tourist, providing significant opportunities for hotel operators.

The Company continues to operate in the hospitality sector through its hotel property in Agra and remains focused on delivering quality guest experiences while maintaining operational efficiencies.

BUSINESS OVERVIEW

Howard Hotels Limited is engaged in the business of hospitality and hotel operations. The Company derives revenue primarily from:

• Room Revenue

• Food & Beverage Services

• Banquet and Event Services

• Other Hospitality Services

The Company operates in a single reportable business segment, namely Hospitality Services. During FY 2025-26, the Company continued its efforts towards enhancing customer satisfaction, improving operational efficiencies, cost optimization, and maintaining service standards.

Operational Performance

During FY 2025-26, the Company reported revenue from operations of Rs. 1,561.34 Lakhs as against Rs. 1,615.71 Lakhs in the previous year. Revenue from Rooms stood at Rs. 781.72 Lakhs and Food & Beverage revenue stood at Rs. 747.98 Lakhs.

Profit After Tax for the year stood at Rs. 33.37 Lakhs compared to Rs. 42.68 Lakhs during FY 2024-25. The decline in profitability was primarily attributable to higher operating expenses, particularly repair and maintenance expenses and general operating costs.

The Company continued to strengthen its balance sheet by reducing total borrowings from Rs. 458.17 Lakhs to Rs. 325.07 Lakhs during the year, resulting in improved leverage levels.

OPPORTUNITIES AND THREATS

The hospitality industry presents significant growth opportunities for the Company driven by increasing domestic and international tourism, rising business travel, growing demand for destination weddings and social events, expansion of the MICE (Meetings, Incentives, Conferences and Exhibitions) segment, and enhanced digital reach through online travel platforms. Agras position as a globally recognized tourist destination further provides a strategic advantage to the Company. However, the industry also faces certain challenges including intense competition from organized and unorganized hospitality players, economic uncertainties affecting discretionary consumer spending, increasing operational costs such as employee expenses, utilities and maintenance costs, changing customer preferences, regulatory compliances, and external factors such as geopolitical developments and unforeseen events that may impact travel and tourism activities. The Company continuously monitors these factors and adopts appropriate strategies to capitalize on opportunities while mitigating potential risks.

SEGMENT-WISE PERFORMANCE

The Company operates in a single reportable business segment, namely hospitality services, and accordingly separate segment-wise financial reporting is not applicable. During the financial year 2025-26, the Company generated revenue primarily from room operations, food and beverage services, and other hospitality-related services. Revenue from room operations stood at Rs. 781.72 Lakhs, while food and beverage services contributed Rs. 747.98 Lakhs and other services contributed Rs. 31.65 Lakhs to the total revenue from operations of Rs. 1,561.34

Lakhs. The Companys diversified revenue mix enabled it to maintain stable operations despite industry challenges. Management continued to focus on enhancing guest satisfaction, improving service standards, optimizing operational efficiencies, and strengthening the Companys presence in the hospitality sector.

OUTLOOK

The outlook for the Indian hospitality industry remains positive, supported by increasing domestic tourism, growing business travel, rising demand for destination weddings and events, improved infrastructure, and continued government focus on promoting tourism. Being located in Agra, one of Indias most prominent tourist destinations, the Company is well-positioned to benefit from the sustained growth in tourist arrivals and hospitality demand. Howard Hotels Limited remains focused on enhancing guest experience, improving operational efficiency, strengthening its food and beverage and banquet businesses, optimizing costs, and leveraging digital platforms to expand its customer base. While the Company remains mindful of challenges arising from competitive pressures and economic uncertainties, it is confident that its strategic initiatives and operational strengths will support sustainable growth and long-term value creation for all stakeholders.

RISK AND CONCERNS

The Company operates in a dynamic hospitality environment and is exposed to various business, financial, operational, and regulatory risks. Key risks include fluctuations in tourist arrivals and travel patterns, intense competition from existing and new hospitality players, changes in consumer preferences, rising costs of manpower, utilities and maintenance, economic slowdowns affecting discretionary spending, interest rate fluctuations on borrowings, and changes in regulatory and statutory requirements. The hospitality industry is also susceptible to unforeseen events such as geopolitical developments, public health concerns, and natural calamities which may adversely impact travel and tourism activities.

Howard Hotels limited has established appropriate risk management and internal control mechanisms to identify, monitor, and mitigate such risks and continuously reviews its strategies to ensure sustainable business operations and long-term growth.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Howard Hotels limited has established adequate internal control systems commensurate with the size, nature, and complexity of its business operations. These systems are designed to ensure the orderly and efficient conduct of business, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information. The internal control framework also ensures compliance with applicable laws, regulations, and internal policies.

The Companys internal audit function periodically reviews the effectiveness and adequacy of internal controls, and its observations and recommendations are placed before the Audit Committee for review. The management continuously monitors and strengthens the internal control environment to support operational efficiency, risk management, and sustainable business growth.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Howard Hotels Limited recognizes its employees as its most valuable asset and believes that a motivated and skilled workforce is essential for achieving sustainable growth and operational excellence. Howard Hotels limited continues to focus on employee development through training, skill enhancement, performance management, and employee engagement initiatives aimed at fostering a productive and positive work environment. Emphasis is also placed on maintaining high standards of workplace safety, employee welfare, and professional development. During the financial year under review, industrial relations remained cordial and harmonious across all levels of the organization. The Company remains committed to nurturing a culture of teamwork, integrity, and customer-centricity, which are critical to the success of its hospitality operations.

MATERNITY BENEFIT COMPLIANCE

In accordance with the provisions of the Maternity Benefit Act, 1961, the Company confirms its full compliance with the applicability maternity benefit norms, During the financial year under review, no employee availed maternity leave or related benefits. However, all required systems and policies are in place to support eligible employees as and when applicable.

KEY FINANCIAL RATIOS:

In compliance with Schedule V of SEBI (LODR) Regulations, 2015, the Company has disclosed key financial ratios as below:

Particulars	2025-26	2024-25
Debtors Turnover Ratio	67.68	58.16
Inventory Turnover Ratio	4.32	4.16
Interest Coverage Ratio	2.28	2.31
Current Ratio	1.04	1.09
Debt Equity Ratio	0.28	0.42
Operating Profit Margin (%)	2.11%	2.61%
Net Profit Margin (%)	2.11%	2.61%
Return on Net Worth	5.07%	6.15%
Earnings Per Share (EPS) (Rs.)	0.37	0.47

The decline in profitability ratios was primarily due to lower Profit After Tax during FY 2025-26 (Rs. 33.37 Lakhs) as compared to FY 2024-25 (Rs. 42.68 Lakhs), coupled with a marginal decline in revenue from operations.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations, and predictions may be forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied due to various factors including economic conditions, government policies, industry developments, competition, climatic conditions, and other factors beyond the Companys control.

The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.