Ras Resorts & Apart Hotels Ltd Management Discussions

1. BUSINESS OVERVIEW & TRENDS

The business of the hotel has stabilized and the average room rates realization has improved

2. NATURE OF INDUSTRY

2.1 Currently the industry is in growth phase, This will prepare us for the "new normal", with changed customer perceptions about travel, consumption, services and leisure.

2.1.1 The key characteristics of the hotel Industry are :

The industry is primarily capital intensive coupled with depreciation costs on the buildings, furniture, fixtures and equipment and other assets. During periods of growth the depreciation and interest costs rise rapidly as capacity additions take place. The relevant parameter for evaluation of management performance in the growth mode is thus EBITDA (Earnings Before Interest Tax Depreciation and Amortization), rather than Profit After Tax (PAT), since the depreciation and interest costs are expensed relatively quickly (over a 8-10 year frame) against an asset that has a life of 80 to 100 years.

2.1.2 The hotel industry is also cyclical due to the nature of capacity additions being lumpy while the demand growth is smooth. However, the exact position of the industry on the business cycle varies from city to city, depending on the forces of demand and supply in that city.

2.1.3 Seasonality Trend: The Indian hotel industry reflects a clear seasonality trend in normal times. For example in India, the tourism and hospitality industry shows signs of an uptrend in the months of November to February due to higher tourist flows. The months of June to September on the other hand are months of low occupancies and revenue, with fewer business or leisure visitors. There is considerable improvement in the months of June to September that we have experienced. However there is hope that this coming year the pent up demand of the last two covid ears will sustain even during non season months.

2.1.4 Strong dependence on the services economy: The hotel industry tourist segment is highly dependent on services economy in terms of performance. Thus in the years of the services economy boom, the hotels business has grown well and has been relatively unaffected by the under performance of the manufacturing sectors of the economy.

2.1.5 Brand Impact: The hotel industry is haracterized by strong brand focus resulting in choices being made by the customer based on factors beyond price - especially in the high-end segment where the brand is a hallmark of product and service quality. Your Company has tied up with Treat Resorts and re-branded itself as Ras Resorts by Treat to improve sales and brand recognition.

2.1.6 Instant perish ability of the product: The industry belongs to the service sector and thus the product (service) is instantly consumed and cannot be replenished. Thus, one needs to maximize utilization of available capacity and reduce marginal costs over marginal revenues. Thus, one needs to maximize utilization of available capacity and reduce marginal costs over marginal revenues.

2.1.7 The major cost drivers in the industry are:

- Food and beverage costs

- Employee costs

- Power and fuel expenses

- Administrative and other overhead costs

- Advertising and publicity expenses

- Operating and Marketing Fee

3. BUSINESS PERFORMANCE

The significant trends that drive the hotel industry are the opportunities for growth into new markets. Hospitality industry is undergoing a period of unprecedented change and becoming more a real estate play and will continue to transform. This is also a period

of unparalleled opportunity and the need of the hour is to remain at the forefront of understanding the travellers need and demand, both now and into the future. Understanding these key business drivers and delivering the technology will support the hoteliers to stay competitive in a rapidly changing world.

4. RISK FACTORS

4.1 Risks related to presence in Silvassa, India

4.1.1 Political and economic environment risks: With the political and economic environment becoming stable in India, the hospitality industry will be benefited. With the services sector increasing its contribution share of the Indian GDP, over the medium term the fortunes of our industry are expected to improve further. With India joining the global mainstream of business and attracting more foreign investments and its presently high levels of domestic tourist traffic, the future has good potential for the hotel industry.

4.1.2 Socio-Political risks: The Hotels industry aces risk from the volatile socio-political environment in the local area.

4.2 Industry / sector specific risks

4.2.1 Infrastructure related risks:

Presence of good infrastructure in terms of airports/ roads is critical to attract customers. With the Government of India planning to privatize the airport, to increase efficiency to international standards and the commissioning of the Golden Quadrilateral Highway, business activity is expected to improve, and the hotel industry will benefit from these improvements in infrastructure.

4.2.2.Government concessions / restrictions to the hospitality industry:

Tourism as a major economic activity has been identified as such by the Government of India. The importance of the sector is expected to grow in the coming years.

4.3 Risk associated with the Company

4.3.1 With the Operations and Marketing being outsourced the main risk is the effectiveness of the management service provider

4.3.2 To strengthen the operations and develop attention to detail your Company has asked the management service provider for added training as a requirement for all new hires.

4.3.3 Client Concentration: Your Company hotel provides its services to 7 broad market segments, namely - Corporate/Business, Leisure, Longstayers, Groups, Conferences, Events (including weddings) and holiday Packages.

5. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

5.1 The systematic evaluation and improvement of internal control and internal Audit continued during the year 2023-2024. The coverage has been comprehensive and exhaustive with a great degree of involvement of the Unit personnel and satisfactory compliance with previous years agreed audit recommendations.

6. LIMITATIONS OF FINANCIAL STATEMENTS

6.1 The accounting standard definition of a contingent liability is as follows:

- a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the entitys control; or

- a present obligation that arises from past events but is not recognized because it is not probable that a transfer of economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability.

7. FUTURE OUTLOOK

7.1 INTERNATIONAL

7.1.1 Has Little or no impact on our domestic market who we mainly service.

7.2 FUTURE OUTLOOK FOR INDIA

7.2.1 India will also see impact of its GDP and a lot depends liberalization of the economy.

7.2.2 The Indian economy looks poised for high growth.

7.2.3 Development of road infrastructure is expected to improve conditions in the country and could emerge as a growth driving factor for the economy on the whole.

7.3 FUTURE OUTLOOK FOR THE INDUSTRY

In the medium and long term, the demand for the Rooms and F & B is expected to grow because of the following factors:

- Improvements in the infrastructure sector viz. roads

- Higher Disposable income

- Pent up demand from the lockdown periods

- Investment Reforms will further boost up long-term capital inflow into the sector.

In the long term, for the growth of the industry to be sustained, issues like poor, high levels of taxation need to be solved specially the GST rates. Land development, less of paper and legal work, faster execution is needed to meet the growing demand. Adding rooms at a faster pace would stabilise the room rates and not have a negative effect on the potential demand in the future.

7.4 REAL ESTATE ACTIVITY

Real Estate business activities in Silvassa are at a standstill due to government regulations.

7.5 CONCERNS FOR THE FUTURE

The good monsoon could enhance the business mood. Online travel agents near monopoly and penetration are effecting the net price realization for hotel rooms.

8. HUMAN RESOURCES AND INDUSTRIAL RELATIONS

8.1 The company has a Management Service Agreement with M/s. Mundra Enterprises Pvt. Ltd., who are providing us the human resource for providing customer service to the hotel guest, 95% of this staff remains on the pay rolls of M/s. Mundra Enterprise Pvt. Ltd.

8.2 The Companys mission is to achieve and sustain leadership in the Hospitality industry and to deliver value to its customers by rewarding and recognizing quality customer care based upon individual and team performance. The Company provides opportunities for continuous learning and development and abides by fair policies to ensure the well being of its employees, their family, the community and the environment.

8.3 Improvements in all the areas of the hotels have been affected through:

8.3.1 A clear understanding of the groups vision, philosophy and flexibility in the Customer Relationship Management;

8.3.2 To build a culture of trust and transparency, Staff Meetings have been initiated where employees are briefed on the new activities and the business scenario and regular training imparted.

9. CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates 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. Actual results could differ materially from those expressed or implied. Significant factors that could make a difference to the Companys operations include domestic economic conditions affecting demand, supply and price conditions in the hospitality industry, changes in government regulations, tax regimes and other statutes.