Royale Manor Hotels & Industries Ltd Management Discussions

ANNEXURE–B

1. OVERALL REVIEW

India is now the fastest growing, major economy in the world. The First Advance Estimates of National Income released by the National Statistical Office (NSO) of the Government of India on 29th February, 2024 (source: ), Real GDP or GDP at Constant (2011-12) Prices in the year 2023-24 is estimated to attain a level of ?172.90 lakh crore, against the FRE of GDP for the year 2022-23 of ?160.71 lakh crore. The growth rate of GDP during 2023-24 is estimated at 7.6 percent as compared to growth rate of 7.0 percent in 2022-23. The growth rates of Primary sector (comprising Agriculture, Livestock, Forestry, Fishing and Mining & Quarrying), Secondary sector (comprising Manufacturing, Electricity, Gas, Water Supply & Other Utility Services, and Construction) and Tertiary sector (Services) have been estimated as 4.4 per cent, 2.1 per cent and 10.0 per cent respectively in 2022-23 as against growth rates of 4.8 per cent, 12.7 per cent and 9.2 per cent respectively in the previous years. The growth in real GVA during 2022-23 is on account of growth in ‘Electricity, Gas, Water Supply & Other Utility Services, ‘Construction, ‘Trade, repair, Hotels and Restaurants, ‘Transport, Storage and Communication & Services related to Broadcasting, ‘Financial Services, ‘Real Estate, Ownership of Dwelling & Professional Services and ‘Other services as may be seen from Statement 4.2B. However, ‘Agriculture, Livestock, Forestry and Fishing, ‘Mining and Quarrying and ‘Public Administration and Defence have witnessed modest growth, and ‘Manufacturing sector has slightly contracted, during this period. Apart from GDP estimates, other indicators tracking the performance of the economy also point towards growth resilience. Leading indicators suggest an upturn in global economic activity. The JP Morgan global composite Purchasing Managers Index (PMI)9 registered an uptick since October 2023 with quicker expansion across both manufacturing and service sectors. The JP Morgan global manufacturing PMI has been improving and stood at a 23-month high in May 2024. Concerns regarding geopolitical conflicts, high borrowing costs and global economic fracturing were also reflected in weakening FDI flows. Global FDI flows declined in 2023 compared to 2022. Gross Value Added (GVA) of the services sector is yet to reach the level projected by the pre-pandemic trend. The granular data available until FY23 reveals that this is on account of the trade, hotel, road and air transport sectors. These sectors, taken together, contributed about 28.5 per cent to total real GVA in FY23 and were only one per cent above their levels in FY20. The stark difference in the economic performance of countries has been on account of domestic structural issues, uneven exposure to geopolitical conflicts and the impact of monetary policy tightening. The economic shocks resulting from the Russia-Ukraine conflict had an outsized impact on Europe, leading to subdued growth in large countries like Germany and France. The US also faced high inflationary pressures and consequently raised the policy rates substantially. The escalation of the Red Sea crisis amid heightened geopolitical tensions in the Middle East in October 2023 led to supply chain disruptions, sending ripples to global trade and operations. (Source: https://static.pib.gov.in/WriteReadData/specificdocs/documents/2024/feb/doc2024229315601.pdfhttps://www.indiabudget.gov.in/economicsurvey/doc/eschapter/echap01.pdf).

Indian Economic Survey (2023-24) indicate Infrastructure as- Lifting Potential Growth in the economy. On the upside are factors such as a short-term fiscal boost as many countries go to elections in 2024, faster monetary policy easing, and increase in productivity from technologies such as artificial intelligence. (Source: IMF - World Economic Outlook, April 2024). The World Banks ‘Global Economic Prospects report of January 2024 was more conservative in its estimates, putting the global real GDP growth at 2.6% for 2023, and growth forecasts at 2.4% and 2.7% for 2024 and 2025, respectively. However, the RBI has highlighted the risk of headwinds from geopolitical tensions, volatility in international financial markets, geoeconomic fragmentation, rising Red Sea disruptions and extreme weather events. Considering all these factors, the RBI has projected real GDP growth for FY 2024-25 at 7.0%. (Source: RBI Monetary policy statement, 2024-25)

According to the first UNWTO World Tourism Barometer of the year,international tourism ended 2023 at 88% of pre-pandemic levels, with an estimated 1.3 billion international arrivals.The unleashing of remaining pent-up demand, increased air connectivity, and a stronger recovery of Asian markets and destinations, are expected to underpin a full recovery by the end of 2024. The latest UNWTO data also highlights the economic impact of recovery. International tourism receipts reached USD 1.4 trillion in 2023 according to preliminary estimates, about 93% of the USD 1.5 trillion earned by destinations in 2019. Total export revenues from tourism (including passenger transport) are estimated at USD 1.6 trillion in 2023, almost 95% of the USD 1.7 trillion recorded in 2019. Preliminary estimates on the economic contribution of tourism, measured in tourism direct gross domestic product (TDGDP) point to USD 3.3 trillion in 2023, or 3% of global GDP. This indicates a recovery of pre-pandemic TDGDP driven by strong domestic and international tourism. (Source: https://www.unwto.org/)

2. SECTOR OUTLOOK IN INDIA

Indias travel industry is on a strong upswing, with outbound tourism numbers poised to exceed 30 million in 2024 compared with 273 million in 2023 and 269 million in 2019, fuelled by a combination of factors including the easing of COVID-19 restrictions, rising disposable incomes, and government initiatives to boost tourism, according to a CRISIL Ratings report.

The World Economic Forum (WEF) recently released its Travel and Tourism Development Index (TTDI) for 2024, offering a comprehensive evaluation of Indias standing in the global tourism landscape. India has secured the39th position among 119 countries in the 2024 TTDI.This ranking reflects Indias overall performance across various indicators that contribute to a robust and sustainable tourism sector. In the previous index published in 2021, India was ranked 54th. This significant jump of 15 places in just three years demonstrates substantial improvements in Indias tourism ecosystem.

3. GOVERNMENT INITIATIVES

The Champion Service Sector Scheme (CSSS) demonstrates the governments commitment to enhancing tourism infrastructure. Under CSSS, the Ministry of Tourism reimburses the Ministry of Civil Aviation for expenses related to the UDAN (Ude Desh ka Aam Nagrik) Regional Connectivity Scheme. Financial Commitment: To date, a substantial sum of 226 Crore has been reimbursed. This significant financial support underscores the governments recognition of air connectivity as a crucial factor in tourism development. Impact on Tourism: By supporting the UDAN scheme, the ministry is indirectly contributing to improved air connectivity to smaller cities and towns, thereby opening up new tourism destinations and dispersing tourist traffic beyond major cities. In the 2024 interim Budget, Finance Minister, Ms. Nirmala Sitharaman allocated 2,449.62 crore (US$ 294.8 million) to the tourism sector, a 44.7% increase from the previous fiscal year. This marks a positive change from the 2023 Union Budgets initial allocation of 2,400 crore (US$ 288.8 million), later revised to 1,692.10 crore (US$ 203.6 million). The Ministry of Tourism launched the Swadesh Darshan Scheme to develop theme-based tourist circuits, sanctioning 76 projects. Upgraded to Swadesh Darshan 2.0 (SD2.0), it targets sustainable tourism, selecting 57 destinations for development, with States/UTs preparing plans accordingly. The Prime Minister Mr. Narendra Modi inaugurates and unveils 52 tourism sector projects valued at over 1400 crore (US$ 168.5 million) under the Swadesh Darshan and PRASHAD Scheme. Ministry of Tourism has partnered with the Quality Council of India (QCI), to assist the Hospitality Industry in their preparedness to continue operations safely and mitigate risks arising out of the COVID-19 pandemic through an initiative called SAATHI (System for Assessment, Awareness and Training for Hospitality Industry). A hotel/unit goes through the SAATHI framework and agrees to fully follow the requirements wherever applicable possible, and a self-certification is issued. Self-certified Hotel/units attend webinars to clarify doubts through live interactions. If Hotel/unit desires, they may undertake site-assessment based on SAATHI framework through QCI accredited agencies and an assessment report with opportunities for improvement is shared with the assessed unit. Under this Loan Guarantee Scheme for Covid Affected Tourism Service Sector (LGSCATSS), loan up to US$ 12,110 will be extended to each Tour Operators/ Travel Agents/ Tourist Transport Operators approved/recognized by the Ministry of Tourism. Guarantees for Skill Development Loans by the member banks of IBA up to 1.5 lakh (US$ 1,801) extended by lending institutions to eligible borrowers without collateral or third-party guarantee. Visa reforms include a significantly expanded Golden Visa scheme, a five-year Green residency and new entry permits, including one for job seekers. The new system also offers additional benefits to sponsor family members. To ease travels for international tourists, the Government of India has launched a scheme wherein five lakh tourists will get free visas. In August 2022, Ministry of Tourism sanctioned 76 projects for 5,399.15 crore (US$ 678.39 million) under Swadesh Darshan Scheme for development of tourism infrastructure in the country. In June 2022, the Ministry of Tourism along with Associations of Indian Universities (AIU) initiated a 12-episode webinar series under ‘Azadi Ka Amrut Mahotsav (AKAM) to engage and expose young minds of our country to the rich and diverse heritage of the country. Till the end of September 2022, a total of 155 Dekho Apna Desh webinars have been organized by Ministry of Tourism. The Ministry of Tourism has launched the National Strategy for Sustainable Tourism and Responsible Traveller Campaign in June 2022. From November 15, 2021, India allowed fully vaccinated foreign tourists to visit India, which in turn will help revive the Indian travel and hospitality sector. In November 2021, the Ministry of Tourism signed a Memorandum of Understanding (MoU) with Indian Railway Catering and Tourism Corporation to strengthen hospitality and tourism industry. The ministry has also signed a MoU with Easy My Trip, Clear trip, , Make My Trip and Goibibo. In November 2021, the Indian government planned a conference to boost film tourism in the country with an aim to establish domestic spots as preferred filming destinations. This move is expected to create jobs and boost tourism in the country. In September 2021, the government launched NIDHI 2.0 (National Integrated Database of Hospitality Industry) scheme which will maintain a database of hospitality sector components such as accommodation units, travel agents, tour operators, & others. NIDHI 2.0 will facilitate the digitalisation of the tourism sector by encouraging all hotels to register themselves on the platform. Government is planning to boost the tourism in India by leveraging on the lighthouses in the country. 71 lighthouses have been identified for development as tourist spots. The Ministry of Road Transport and Highways has introduced a new scheme called ‘All India Tourist Vehicles Authorisation and Permit Rules, 2021, in which a tourist vehicle operator can register online for All India Tourist Authorisation/Permit. This permit will be issued within 30 days of submitting the application. The Indian Railway Catering and Tourism Corporation (IRCTC) runs a series of Bharat Darshan tourist trains aimed at taking people to various pilgrimages across the country. During 2019-20, an additional fund 1,854.67 crore (US$ 269.22 million) was sanctioned for new projects under the Swadesh Darshan scheme. Ministry of Tourism sanctioned 18 projects covering all the Northeastern States for 1,456 crore (US$ 211.35 million) to develop and promote of tourism in the region under Swadesh Darshan and PRASHAD schemes. Statue of Sardar Vallabhbhai Patel, also known as ‘State of Unity, was inaugurated in October 2018 and the total revenue generated till November 2019 stood at Yatra.com 82.51 crore (US$ 11.81 million).

The PM Gati Shakti master plan for expressways will facilitate speedier implementation of development projects under the National Infrastructure Pipeline through the use of technology to facilitate faster movement of people and goods, seamless multimodal connectivity, economic transformation, and logistical synergy. The Gati Shakti master plan is driven by 7 engines: roads, railways, airports, ports, mass transport, waterways, and logistics infrastructure. All 7 engines further supported by energy transmission, IT communication, bulk water, sewerage, and social infrastructure, will pull forward not just the economy but will also play a role in boosting tourism in India.

4. FUTURE TRENDS

Robust Demand:

• Drawing upon world-class healthcare amenities and traditional healing practices, medical tourism and wellness retreats entice 21% of international travellers.

*The travel market in India is projected to reach US$ 125 billion by FY27 from an estimated US$ 75 billion in FY20.

*International tourist arrivals are expected to reach 30.5 million by 2028.?

*According to WTTC, over the next decade, Indias Travel & Tourisms GDP is expected to grow at an average of 7.1% annually.

Diverse Attractions

*India is geographically diverse and offers a variety of cultures that come with its own experiences, making it one of the leading countries in terms of international tourism expenditure.?

*Airport enhancement and the spread of regional airports are opening new opportunities for business, and for drawing larger visits from tourists.

*The countrys big coastline is dotted with attractive beaches

Attractive Opportunities

*India is geographically diverse and offers a variety of cultures that come with its own experiences, making it one of the leading countries in terms of international tourism expenditure.

*Travel and tourism are two of the largest industries in India, with a total contribution of about US$ 199.6 billion to the countrys GDP.

*The government has taken steps to boost investments in facilitate spiritual tourism with states like Uttar Pradesh developing tourist circuits and Uttarakhand and West Bengal enhancing infrastructure for pilgrims.

Policy support

• In the 2024 interim Budget, Finance Minister Ms. Nirmala Sitharaman allocated 2,449.62 crore (US$ 294.8 million) to the tourism sector, a 44.7% increase from the previous fiscal year.

• The Ministry of Tourism launched the Swadesh Darshan Scheme to develop theme-based tourist circuits, sanctioning 76 projects. Upgraded to Swadesh Darshan 2.0 (SD2.0).?

• The Prime Minister, Mr. Narendra Modi inaugurates and unveils 52 tourism sector projects valued at over 1,400 crore (US$ 168.5 million) under the Swadesh Darshan and PRASHAD Scheme.?

(Source: https://www.ibef.org/industry/tourism-hospitality-india)

5. SWOT ANALYSIS

Strengths

- A major strength for our hotel is its preferred owned brands with its vast portfolio commanding leadership in their market segments. Quality service from the said brand strengthens the market position of hotels giving it its competitive edge as it seeks to take advantage of increasing business.

- Strengthening individual services in the areas of exclusive business meetings, food and spa to offer a wide spectrum of hospitality services in accommodations and beyond.

- Ministry of Tourism has two major schemes viz. Swadesh Darshan - Integrated Development of Theme Based Tourist Circuits and PRASHAD Pilgrimage Rejuvenation and Spiritual, Heritage Augmentation Drive for development of tourism infrastructure in the country including historical places and heritage cities.

- The Government of Gujarat strongly initiated the promotion of tourism in Gujarat with the slogan like "Kuch Din to Gujaro Gujarat mein."

- The Indian Government organized many types of international exhibitions and Celebration in Gujarat providing impetus to hospitality industry.

- Launch of the "Incredible India 2.0" Campaign of the Ministry by the Honble President of India during the National Tourism Awards function. The 2.0 Campaign marks a shift from the generic promotions being undertaken across the world to market specific promotional plans and content creation. The Campaign covers the important source markets for Indian tourism and also takes into account emerging markets with significant potential.

- A world level corporate conference viz. "Vibrant Gujarat", providing impetus to hospitality industry.

- The promoters have an established track record, having created a niche for itself in hospitality industry with good brand image for last 24 years.

- A loyal clientele base of corporate built-up over the years, providing a ready customer base.

- Strategic location of the hotel in the immediate vicinity of Airport with well-developed infrastructure gives it an added advantage over other competitors.

- Your Company continuously renovates its properties to meet the increasing competition in in the market and insured its property against natural and men made disasters. - The Ummed Ahmedabad, Ahmedabads first Five star hotel is been fruitfully proceeding its successful journey with all its pride.

- The hotel property of the company is situated just 1km from the airport and in close proximity to the government and developing industrial areas makes this location an apt choice for all the business travelers. The property is surrounded with greenery and perfectly manicured lawns compliment the citys biggest open-air swimming pool. Enjoy the tranquillity of our guest rooms and suites, explore local and global cuisines at the 24-hour coffee shop and fine dining restaurant. The hotel is known for patronizing the whos who of the worlds in recent days. Improvement of Road connectivity and Way Side amenities to the important Tourist Destinations with the help of Ministry of Road. Transport & Highways (MoRTH). Ministry of Tourism (MoT) has been pursuing the matter regarding improvement of road connectivity to important tourist destinations with the Ministry of Road Transport &Highways (MoRTH) and had submitted a list of50 Tourism Destinations to MoRTH for taking up in the first phase. MoRTH has been requested to consider setting up of Wayside Amenities, prominent sign-ages and beautification of the area, at a distance of 15-20 km where good road connectivity already exists. Out of these 50 destinations, only 23 fall under the purview of MoRTH / NHAI, where working in progress. The rest comes under the purview of PWD, BRO and the respective State Govt. The Ministry has accordingly addressed letters to the State Governments, PWD and BRO for improvement of road connectivity and provision of way side facilities. Ministry of Tourism is further in the process of finalizing a further list of 50 Tourist Destinations to be sent to MoRTH to take up in the second phase. For this, Ministry is coordinating with States/UTs for their inputs.

Weaknesses

- Hospitality Industry suffers from event risks such as pandemic Covid-19, Lockdown, terrorist attack, government stability, dollar and foreign currency condition, rupee devaluation etc.

- the company is operating in area, which is prone to these risks. –

- Hotel business in general is sensitive to fluctuation in the economy. Since, demand for hotels is affected by economic growth; a global recession might lead to downturn in the hotel industry. –

- Since tourism is global phenomenon, any adverse developments on the geo-political front are likely to impact global tourist flow and India is not an exception to same. The future of the hospitality industry is very sensitive to the global security environment.

Opportunities

- Ahmedabad is emerging as a global city with a confluence of various culture, positive political circumstances and values and also being a leading industrial city of India, the Company will be able to exploit the business travel potential offered by the city.

- UNESCO has declared Ahmedabad as World Heritage City resulting into increase in foreign visitors.

- At a time of the World Economy melt down, Global Investors envisage for safer Investments and fetch assured returns. Investors look towards India and Gujarat has been a preferred Investment Destination by way of Vibrant Gujarat Summit.

- The Government of Gujarat has declared and initiated many automobile projects resulting into increase in foreign corporate visitors.

- With the increase in the demand of Gujarati Film and Entertainment Industry, the related visitors also increased, who prefer our location only.

- The Government of Gujarat has declared and initiated many automobile projects resulting into increase in foreign corporate visitors

- The Hotel is well established and the promoters with their experience have passed through such phases without many adversities.

- Encapsulated in an oasis of warm and soothing surroundings, "The Ummed Ahmedabad" is a low-rise property spread over four acres of manicured gardens. Feel welcomed in one of the 91 rooms and suites, tastefully appointed using subtle tones, styled with custom made teak furniture and convenient amenities. Elegantly appointed rooms and suites overlook the landscaped gardens and tall trees around the hotel or provide breathtaking views of the turquoise waters of the poolside. Classic Indian and regional art adorn the rooms along with thoughtful amenities to ensure guests feel at home.

Threats

- Guest houses replace the hotels. This is a growing trend in the west and is now catching up in India also, thus diverting the hotel traffic.

- Changing trends in the west demand similar changes in India, which here are difficult to implement due to high project costs.

- Fluctuation in foreign tourist arrival. The total dependency on foreign tourists can be risky, as there are wide fluctuations in international tourism.

6. FINANCIAL PERFORMANCE WITH RESPECT TO OPERTIONAL PERFORMANCE

The financial performance of the Company for the year 2023-24 is described in the Directors Report under the head ‘FINANCIAL RESULTS.

7. SEGMENT WISE PERFORMANCE

The Company has only one segment i.e. Hotel Industry.

8. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Internal Control Systems and their Adequacy of the company for the year 2023-24 are described in the Directors Report under the head of ‘Internal Control Systems and Their Adequacy.

9. HUMAN RESOURCE DEVELOPMENT/INDUSTRIAL RELATIONS

During the year, the Company maintained harmonious and cordial industrial relations. No operating days were lost due to strike, lock out etc. Human Resources Development, in all its aspects like training, safety and social values is under constant focus of the management. The Management and the Employees are dedicated to achieve the corporate objective and the targets set before the Company.

During the financial year 2023-24, the company has not received any complaints on sexual harassment and hence no complaints remain pending as of March 31, 2024.

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

We admire our employees for better performance by taking seminars, exports talk and healthy competition among them. We motivate them to do research and development of Hotel Industries and welcome their suggestion if it achieves the benchmark of our standards. Company understands the value of human capital and tries to preserve and develop it.

11. DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREOF, INCLUDING:

Sr. No.	Financial Ratios	Year Ended 31.03.24	Year Ended 31.03.23
1	Debtors Turnover*	11.21	8.57
2	Inventory Turnover	11.45	10.62
3	Interest Coverage Ratio**	10.41	7.56
4	Current Ratio***	2.06	1.61
5	Debt Equity Ratio	0.08	0.10
6	Operating Profit Margin (%)	20.11	21.60
7	Net Profit Margin (%)	18.02	17.90

* Increase in Credit Sales resulted in increased Debtors Turnover Ratio.

** Improved business and lower finance costs resulted in improved Interest Coverage Ratio.

***Increase in Current Assets and decrease in current liabilities resulted in improved Current Ratio.

12. Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof

Return on Net Worth for the Current Financial Year ended on 31.03.24 is 7.67% as compared to 8.05% in Previous Financial Year ended on 31.03.23.

13. CAUTIONARY STATEMENT

Statements in the Management 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 assumes no responsibility to publicly amend, modify or revise the forward-looking statement on the basis of subsequent developments, domestic and international economic conditions affecting demand, supply and price conditions in the hospitality industry, changes in the Government regulations, tax regimes and other status.

By Order of the Board of Directors

For Royale Manor Hotels & Industries Limited

Sd/-

Vishwajeet Singh U Champawat

Chairman and Managing Director

DIN: 00519755

Place: Ahmedabad

Date: 05/08/2024