Le Waterina Resorts & Hotels Ltd Management Discussions

The management of Le Waterina Resorts & Hotels Limited presents below its analyses covering the segment wise performance of the Company for the year 2013-14 and an outlook for the future. The report conveys expectations on future performance based on an assessment of the current business environment. These could vary based on future developments.

Industrys Structure and Development:

Your company has incurred capital expenditure for Health Care activities like Halotherapy and for renovating the hotel and expanding spas. As you are aware that this Halotherapy therapy is toally non medicinal and an add on treatment for all kinds of Lungs and Skin related ailments like Asthma, Bronchities, COPD, Eczema, Sinusitisis etc. and is beneficial to patients of all ages. There had been delays in the implementation of these projects. However, their potential for growth is very good.

There is tremendous growth potential for tourism related industry. The format and delivery of Indian hotel industry has evolved over the period of time in terms of the technology, eco friendly activities, pricing, market segmentation, regional preferences etc. Due to competitive market, the occupancy and room rates have been under tight leash for the present. However, our company expects the market to recover following the recovery in the economy in general.

Risks and Concerns

i. General Risks

The hotel business is dependent on economic conditions globally as well as in India. Local market conditions, excess hotel room supply in some cities, reduced international or local demand for hotel rooms, fluctuations in interest rates and foreign exchange rates, government policies and regulations on taxation, natural and social factors, etc do affect the hotel business. In addition to the above risks, your company faces the threat of terrorists activities, occurrence of infectious diseases, natural calamities and so on, may affect the flow of foreign tourists to India and movement of domestic tourists.

ii. Operational Risks

Operational risks mainly relate to meeting customer expectation in terms of quality of service and maintaining a balance between the inventory of resorts/hotels and growth of customers. In addition to the above, your company has operations only in India. Hence, the Company is vulnerable to domestic socio-political and economic conditions. Another operational risk is the ability to consistently attract, retain and motivate managerial talent and other skilled personnel, especially in a high growth industry like ours.

iii. Financial Risks

The Companys business involves significant investments in building hotels/resorts for its operations. These expose the Company to risks in. terms of timely and adequate availability of funds at competitive rates to finance its growth.

iv. Increased Outbound Travel

Due to overall competitiveness of international airfares and higher disposable income available with travelers destinations such as Southeast Asia, Europe and Australia have become more affordable to domestic travelers This has increased the number of outbound travelers and it is bound to present a mild risk to the hotel segmen for resorts in India.

v. Regulatory and Legal Risks

Le Waterina is exposed to regulatory and legal risks in carrying out its business. These include lege proceedings on properties, customer complaints, noncompliance of regulations including environments regulations and those pertaining to the hospitality sector. The company has systems and controls in place d mitigate these risks and minimize instances of non- compliance.

Risk Management Systems

The Companys risk management strategy is based on a clear understanding of various risks, disciplined risk assessment and measurement procedures and continuous monitoring. The policies and procedures established for this purpose are continuously benchmarked with best practices.

Internal Control System

The Company has adequate internal control procedures commensurate with its size and nature of the business. These business control procedures ensures efficient use and protection of the resources and compliances with the policies, procedures and status. The internal control system provides for well-documented policies, guidelines, authorizations and approval procedures.

Regulatory and Legal Risks

The Company is exposed to environmental regulations. The Company has adequate system and controls to mitigate various risks.

Health, Safety, Security Environment

The Company accords high priority to health, safety and environment. The Company has one manufacturing plant in operation. The Company emphasize on marinating a healthy and safe environment in and around its factory. Safety awareness is inculcated through regular safety awareness program.

Human Resources / industrial Relations

Employer - employee relation remained cordial during the year. Training and development of employees continue to be an area of prime importance. There is no material changes in Human resources front during the year under review.

Cautionary Statement

The Management Discussion and Analysis Report contains forwarding looking statements based upon the data available with the company, assumptions with regard to global economic conditions, the government policies etc. The Company cannot guarantee the accuracy of assumptions and perceived performance of the Company in future. Therefore, it is cautioned that the actual results may materially differ from those expressed or implied in the report.

Discussion on Financial performance with respect to operational performance:

Your Company has made a turnover of Rs.11,08,04.508/- as compared to Rs.11,59,85,022/- of previous year and has made a Profit after Tax of the Rs.8,45,058/- as compared to Rs. 28,50,484/- in the previous year.

Material developments in Human Resources /Industrial Relations front, including number of people employed.

There have been no material changes / developments in Human relations front.

For and Behalf of the Board

For LE WATERINA RESORT & HOTELS LIMITED

Sanjay Jalan

Managing Director

Sriperambudur, the 22^nd day of August, 2014