KHFM Hospitality & Facility Mgt. Services Ltd Management Discussions

1. INDUSTRY STRUCTURE AND DEVELOPMENTS

KHFM Hospitality and Facility Management Services Limited operates in the Integrated Hospitality and Facility Management ("IHFM") sector and provides a comprehensive range of facility management services, including mechanised housekeeping, sanitation, security and surveillance services, horticulture and landscaping, building operations and maintenance, electrical and technical maintenance, pest control and other allied support services.

The Indian facility management industry continues to evolve from a manpower-driven service model towards an integrated, technology-enabled and outcome-oriented service framework. Increasing outsourcing of non-core activities by corporates, Government bodies, public sector undertakings, infrastructure operators, healthcare institutions, manufacturing units and other institutional clients continues to support the demand for organised facility management services.

Technology is increasingly becoming an integral part of facility management through digital attendance and workforce management systems, real-time monitoring, automated reporting, Internet of Things (IoT)-enabled solutions, smart building systems and data-led preventive maintenance. At the same time, increasing emphasis on workplace hygiene, safety, statutory compliance, energy efficiency and sustainability continues to expand the scope of organised facility management services.

Given the manpower-intensive nature of the business, availability, deployment, training and retention of personnel remain critical to operational performance. During FY 2025-26, the Company incurred Employee Benefits Expense of Rs. 5,423.10 lakhs, reflecting the significant role of human capital in the Companys service delivery model.

2. OPPORTUNITIES AND THREATS

The growing preference of organisations to outsource non-core operational functions provides significant opportunities for organised facility management companies. Increased infrastructure development, urbanisation and expansion in sectors such as healthcare, manufacturing, logistics, transportation, commercial real estate and Government infrastructure are expected to create further demand for professional facility management services.

The growing adoption of integrated contracts, where clients prefer a single service provider for multiple facility functions, also provides an opportunity to deepen existing client relationships and improve the scale and scope of operations. Technology-enabled monitoring, automation, energy management and ESG-focused facility solutions are expected to become important areas of growth.

The industry, however, remains highly competitive and manpower intensive. Key challenges include increasing employee and labour costs, shortage and attrition of skilled manpower, pressure on operating margins in competitively bid contracts, delayed collection of receivables, changes in labour and other regulatory requirements and increasing customer expectations regarding service quality and technology.

The Company continues to focus on efficient workforce deployment, cost control, employee training, technology adoption, client diversification and compliance management to mitigate these risks.

3. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Companys principal business activities fall within the integrated hospitality and facility management services segment. Its service portfolio comprises hard and soft facility management services delivered across various client locations.

The Companys operating model is substantially service and manpower driven. Accordingly, personnel deployment, supervision, productivity, service-level compliance and efficient execution of contracts have a direct bearing on operating performance.

During FY 2025-26, the Company continued to service its institutional, Government, public sector and private sector clientele while focusing on efficient execution of existing contracts and identifying new business opportunities.

In view of the integrated nature of the Companys operations, the performance of individual service verticals should be read together with the segment information and other disclosures forming part of the audited financial statements.

3. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Companys principal business activities fall within the integrated hospitality and facility management services segment. Its service portfolio comprises hard and soft facility management services delivered across various client locations.

The Companys operating model is substantially service and manpower driven. Accordingly, personnel deployment, supervision, productivity, service-level compliance and efficient execution of contracts have a direct bearing on operating performance.

During FY 2025-26, the Company continued to service its institutional, Government, public sector and private sector clientele while focusing on efficient execution of existing contracts and identifying new business opportunities.

In view of the integrated nature of the Companys operations, the performance of individual service verticals should be read together with the segment information and other disclosures forming part of the audited financial statements.

4. OUTLOOK

The outlook for the organised facility management industry remains positive in the medium to long term, supported by the increasing outsourcing of non-core operations, growth in institutional infrastructure and preference for specialised and compliant service providers.

The Company intends to focus on strengthening its existing client relationships, securing suitable new contracts, enhancing technology-driven service delivery and improving operating efficiencies.

Greater emphasis will continue to be placed on workforce productivity, training, automation, digital monitoring and compliance. The Company also intends to pursue opportunities in sectors that provide recurring service requirements and long-term business visibility.

Management remains mindful of competitive pricing, manpower costs and working-capital requirements and will continue to evaluate growth opportunities with appropriate financial and operational discipline.

5. RISKS AND CONCERNS

The Company operates in a manpower-intensive and highly competitive industry and is exposed to various risks including increase in employee and labour costs, shortage and attrition of skilled manpower, competitive pricing pressures, delays in collection of receivables, changes in applicable laws and regulatory requirements, operational risks associated with service delivery across multiple client locations and rapid technological developments. The Company seeks to mitigate these risks through effective workforce planning and deployment, employee training and engagement, prudent selection and execution of contracts, regular monitoring of receivables, adherence to statutory and contractual compliance, implementation of standard operating procedures and continuous adoption of technology-enabled processes and monitoring systems.

6. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established internal control systems commensurate with the size and nature of its operations. The internal control framework is designed to safeguard assets, ensure reliability of financial and operational information, promote operational efficiency and facilitate compliance with applicable laws, regulations and internal policies.

The controls cover major functional areas, including finance and accounts, procurement, payroll, human resources, contract execution, statutory compliance, billing and collection.

2025-26

Considering that the Companys operations involve deployment of personnel across multiple client locations, controls relating to employee attendance, payroll processing, statutory dues, client billing and contractual compliance are particularly important. The Company continues to strengthen these processes through digital systems, reporting mechanisms and periodic reviews.

The Audit Committee and management review the adequacy and effectiveness of the internal control systems and corrective measures are taken wherever necessary. The existing internal controls are considered adequate and commensurate with the Companys operations.

7. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the financial year ended March 31, 2026, the Company continued its operations in the integrated hospitality and facility management sector.

The financial performance of the Company during the year should be viewed in the context of the manpower-intensive nature of its operations, competitive contract pricing, working-capital requirements and the costs associated with deployment and management of personnel across various client locations.

During FY 2025-26, Standalone Revenue from Operations stood at Rs. 9,926.99 lakh as compared to Rs. 9,518.25 lakh in FY 2024-25. Standalone Profit After Tax stood at Rs. 314.11 lakh as compared to Rs. 324.65 lakh in the previous year. On a consolidated basis, Revenue from Operations stood at Rs. 10,695.76 lakh and Profit After Tax stood at Rs. 349.06 lakh.

The Company continues to focus on cost optimisation, timely execution of contracts, efficient manpower deployment, improved collection of receivables and prudent working-capital management. The financial statements and notes thereto provide detailed information on the Companys revenue, expenses, profitability, assets, liabilities and cash flows for FY 2025-26.

8. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

Human resources form an integral part of the Companys business model and are critical to the quality, continuity and scalability of its service delivery. The facility management industry requires deployment of personnel across diverse client locations and functions, including housekeeping, security, sanitation, horticulture, technical maintenance, supervision and other support activities.

During FY 2025-26, Employee Benefits Expense stood at ?5,423.10 lakhs, demonstrating the significant contribution of human capital to the Companys operations. As on March 31, 2026, the Company had 2,700 employees on its rolls.

The Companys human resource initiatives remain focused on recruitment, workforce deployment, skill development, health and safety, statutory compliance, performance monitoring and employee engagement. Training and development programmes are undertaken with an emphasis on job-specific skills, workplace safety, client service standards and compliance requirements.

The Company continues to use technology and digital processes for functions such as recruitment, onboarding, attendance management, payroll processing, compliance documentation and workforce monitoring. These initiatives are aimed at strengthening operational controls and enhancing productivity across client locations.

Industrial relations during the year remained cordial. The Company continues to endeavour to provide a safe, inclusive and performance-oriented work environment and recognises its employees and personnel as an important contributor to sustainable business performance.

9. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

The details of significant changes in key financial ratios, including explanations for changes of 25% or more as compared to the immediately preceding financial year, wherever applicable, shall be read in conjunction with the relevant notes forming part of the audited financial statements for the year ended March 31, 2026.

10. CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or outlook may constitute "forward-looking statements" within the meaning of applicable laws and regulations.

Actual results may differ materially from those expressed or implied due to economic conditions, changes in Government policies and regulations, competition, labour costs, availability of manpower, client requirements, technological developments and other factors beyond the Companys control.

The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statement on the basis of subsequent developments, information or events, except as may be required under applicable law.

For and on behalf of the Board KHFM Hospitality and Facility Management Services Limited

Sd/- Mr. Ravindra Hegde Managing Director DIN:01821002

Sd/- Mrs. Sujata Hegde Director & CFO DIN:01829352

Date:07th September,2026 Place:Mumbai