Saj Hotels Ltd Management Discussions

MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT INDUSTRY STRUCTURE AND DEVELOPMENTS

BUSINESS OVERVIEW

Our company is engaged in Hospitality industry. We provide a diverse portfolio of Business-to-Business (B2B), Business-to-Business-to-Customer (B2B2C) and Business-to-Customer (B2C) hospitality offerings, spanning from traditional resort accommodation to villa rentals and restaurant and bar properties. We focus on providing comprehensive services to guests, including food and beverage options, recreational facilities and event hosting capabilities, reflecting a commitment to ensuring a memorable experience for our visitors. We offer a range of accommodation options across various destinations, each tailored to provide comfort and convenience. Our resorts have well-appointed rooms and suites, complemented by a variety of dining venues including restaurants, bars and in-room dining services. Our dedicated team provides personalized concierge assistance, access to rejuvenating spa facilities, and a host of recreational activities to ensure a memorable stay for every visitor. Our resorts serve as versatile event venues, equipped to host a wide array of gatherings including conferences, weddings, and social events. With comprehensive event planning and management services, we ensure seamless execution and unforgettable experiences for our clients and their guests.

GLOBAL SCENARIO

The global economy maintained steady momentum through CY 2025, with output expanding by 3.4%, supported by robust technology-related investments and resilient labour markets. Unemployment rates in several regions held near historical lows, and nominal wage growth proved sufficient to sustain real household income, underpinning consumer demand even as the global outlook began to navigate new headwinds. Regional performance was differentiated. The United States remained a primary driver, though a government shutdown late in the year produced a brief deceleration to 0.5% annualised growth before conditions normalised. The Eurozone recovered meaningfully, led by Germany, which contributed to 1.5% annualised growth. Chinas economy accelerated to 6.1% driven by export volumes that more than offset its persistent domestic demand weakness, while India recorded real GDP growth of 7.6%, the highest among major economies. The conditions of CY 2025 gave way, abruptly, to a more volatile landscape in early CY 2026. The escalation of the West Asia conflict in late February introduced a material counterforce to the tailwinds that had shaped the previous year, disrupting commodity markets, tightening financial conditions across energy-sensitive sectors, and forcing a broad reassessment of growth trajectories in both emerging and advanced economies.

Indian Economy & Hotel Industry

India consolidated its position as the worlds fastestgrowing major economy in FY 2025 26, with real GDP expanding by 7.6%, a notable acceleration from 6.5% recorded in the previous year and a significant outperformance of the IMFs emerging market peer group. Total goods and services exports reached approximately US$ 860 billion, sustaining their growth trajectory despite a turbulent global trade environment, impacted by tariffs, currency volatility, and supply chain restructuring.

Domestic demand remained economys primary growth driver. Private consumption grew by

7.0%, supported by a revival of rural markets, improved financial inclusion, and rising real household incomes. On the supply side, Gross Value Added, a measure of economic value created across sectors, expanded by 7.3%. Industry and services emerged as the principal engines, growing by 7.0% and 7.5%, respectively, while agriculture contributed a steady 3.1% despite an uneven monsoon. Financial and real estate services expanded by 9.9%, reflecting deepening capital market participation and a continued acceleration in organised lending activity. This growth cycle has been further reinforced by the most ambitious public capital formation programme in Indias modern economic history. The Union Budget 2026 27 raised infrastructure expenditure (capex) to Rs. 12.22 lakh crores, a continued commitment to transport, logistics, and digital connectivity that is compressing distances, integrating underserved regions, and creating new markets for organised commerce and premium demand.

Monetary and fiscal policies operated cohesively to sustain momentum. The RBI reduced the repo rate to 5.25% as of April 2026, a cumulative reduction of 125 basis points from the 6.50% peak of late 2024, providing meaningful relief on borrowing costs for both corporates and households. On the fiscal side, the government introduced consumption-supportive measures like GST rate rationalisation while maintaining a disciplined deficit target of 4.3% of GDP for FY 2026 27. India is undergoing a fundamental transformation of its growth architecture. Favourable demographics, large-scale digitisation of economic activity, increasing formalisation across sectors, and a capital-intensive infrastructure programme are collectively creating an economy where growth is less volatile, more geographically distributed, and more durable than at any prior point in its modern history.

This evolution has direct implications for Indias tourism and hospitality sector. The World Travel and Tourism Council ranked India as the worlds 8th largest travel and tourism economy in CY 2025, a measure of both the scale of domestic demand and the sectors rising contribution to national economic output. The ranking also underscores the opportunity: Indias tourism share of GDP remains below its potential, creating meaningful headroom for further sector expansion as per-capita incomes rise and travel penetration deepens.

According to Goldman Sachs, recent tax data shows a sharp expansion at the top end of Indias income pyramid over the past 4 5 years. The number of taxpayers reporting annual incomes between Rs. 1 crore and Rs. 5 crore has doubled to 2.10 lakh individuals, while the ultra-high-income segment earning between Rs. 5 crore and Rs. 50 crore has grown strongly from 28,000 to 50,000 individuals. This rapid increase in affluent households significantly expands the addressable market for EIH Limited and its luxury hospitality portfolio. More importantly, it indicates a structural shift in consumption behavior, where luxury hospitality is evolving from an occasional, milestone-led aspiration into a recurring lifestyle preference driven by demand for ultra-premium stays, personalised comfort, exclusivity, and curated travel experiences.

OUTLOOK

India enters FY 2026-27 with the Reserve Bank of India projecting real GDP growth of 6.9% and the government anchoring its fiscal framework to 10% nominal GDP growth. Future growth will be shaped by high-technology and industrial policy enablers: Semiconductor Mission 2.0, the Rare Earth Corridor initiative, and the Samarth 2.0 textile programme, alongside continued infrastructure expansion. Inflation is projected to average 4.6%, with the primary risk arising from a forecast of a below-normal monsoon (92% of long-period average) and residual El Ni?o dynamics that may exert upward pressure on food prices. Supply side policy vigilance will be required to manage this risk without constraining the monetary support that currently underpins domestic demand.

OPPORTUNITIES AND THREATS OPPORTUNITIES

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. According to WTTC, the contribution of Indias travel and tourism sector to Indias economy was worth Rs. 15.9 trillion (US$ 191.25 billion) in 2022. According to

WTTC, over the next decade, Indias Travel & Tourisms GDP is expected to grow at an average of 7.8% annually. The countrys big coastline is dotted with attractive beaches. Robust demand - The Medical Tourism sector was projected to reach US$ 13 billion in 2022 from US$ 5-6 million in 2019. The travel market in India is projected to reach US$ 125 billion by FY27 from an estimated US$ 75 billion in FY20. The International tourist arrivals are expected to reach 30.5 million by 2028. Attractive opportunities India offers geographical diversity, world heritage sites and niche tourism products like cruises, adventure, medical, ecotourism, etc. Incredible India has spurred growth in tourist arrivals and employment. In 2021, the Government of India announced 40,000 e-tourist visas out of 500,000 free regular visas to the tourist, to ensure a geographical spread of the incentive to important source markets globally. Policy support US$ 2.1 billion is allocated to the Ministry of Tourism in budget 2023-24 as the sector holds huge opportunities for jobs and entrepreneurship for youth. Under the Union Budget 2023-24, an outlay of US$ 170.85 million has been allocated for the Swadesh Darshan Scheme. 68 destinations/sites have been identified in 30 States/UTs for development under the PRASHAD Scheme as on March 31, 2022.The government has proposed developing 100 food streets in 100 districts across India, with the financial help of US$ 122,271.30 (Rs. 1 crore) per food street/district.

THREATS

The hospitality industry remains under pressure, grappling with both long-standing structural issues and a wave of emerging disruptions. Adapting to this evolving landscape demands constant agility, investment, and innovation. Key threats include:

Fragmented and complex regulatory frameworks across states slow expansion and raise compliance costs.

Licensing, permitting, and safety norms vary widely, leading to procedural delays.

A critical shortage of skilled labor hampers service standards and operational efficiency. This talent gap stems from weak training infrastructure and perceptions of poor work-life balance and low wages. Geopolitical unrest in regions like Eastern Europe and the Middle East disrupts travel flows and dampens confidence. Shifting seasonal patterns and climate-driven events make demand forecasting less reliable.

The surge of alternative lodging platforms heightens competition and forces constant reinvention. Frequent changes in tax regimes and property values complicate financial planning. Guest expectations now lean heavily towards sustainable practices and hyper-personalized service, requiring ongoing investment in talent and technology

OPERATIONS/STATUS OF COMPANYS AFFAIRS

During the year company got listed in NSE SME platform offering enhanced visibility and credibility. Cmpany also announced a strategic marketing and distribution arrangement via a franchise agreement with Lemon Tree Hotels Limited (LTHL). Under this arrangement, the Companys property, Saj by the Lake, Malshej Ghat, Maharashtra, will be operated and marketed under the Keys Prima by Lemon Tree Hotels brand. This partnership represents an important milestone in Saj Hotels journey. By aligning with Lemon Tree Hotels, it not only strengthens the brand presence but also gain access to a larger customer base that already trusts Lemon Trees service standards. This collaboration will enhance guest experiences at Saj by the Lake and reinforce Sajs commitment to delivering exceptional hospitality

FUTURE STRATEGY RISK AND CONCERN

While risk is an inherent aspect of any business, the company is conscious of the need to have an effective monitoring mechanism and has put in place appropriate measures for its mitigation including business portfolio, financial, legal & internal process risk.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Companys internal financial control systems are commensurate with the nature of its business and the size and complexities of its operations. These systems are designed to ensure that all the assets of the Company are safeguarded and protected against any loss and protected against loss and that all transactions are properly authorized, recorded and reported. The company is always trying to improve on the internal controls to further safeguard any leakages.

STANDALONE FINANCIAL PERFORMANCE AND FY 2025-26

(Amount in Lakhs)

Sr. No. Particular	31st March 2026(Audited)	31ST March 2025(Audited)
1 Income:	2021.95	1803.90
Total Income
2 EBITDA	875.93	758.97
3 Profit/(Loss) from Before Tax	435.69	562.37
4 Tax Expense	129.65	181.41
5 Profit After Tax	288.33	380.96
Diluted In Rs.	1.79	2.74

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED: It is your Companys belief that people are at the heart of corporate purpose and constitute the primary source of sustainable competitive advantage. Your Companys belief in trust, transparency and teamwork improved employee productivity at all levels. The Company continues to lay emphasis on developing and facilitating optimum human performance. Recruitment process has been strengthened to ensure higher competence levels. Company has total 47 employees as on March 31^st, 2026 to meet the need of business. From time to time Company introduced new employees and conduct programs to develop the skills of the employees.

KEY FINANCIAL RATIOS

The Ratios as per latest amendment to Schedule III are as below:

Ratios	Numerator	Denominator	As at 31st March,2026	As at 31st March,2025	Variance	Details of significant changes
Current ratio (in times)	Total Current assets	Total Current liabilities	4.59	4.35	5.68%	Increased on account of an increase in current assets relative to current liabilities during the year.
Debt equity ratio (in times)	Total debt	Total equity	0.46	0.01	6425.61 %	Increased on account of higher borrowings taken from the banks during the year.
Debt service coverage ratio (in times)	Earnings available for debt service = Net profit after taxes + Non- cash operating expenses + Interest +/- Deferred tax Expense	Debt service = Interest + Principal repayments	0.95	27.23	-96.52%	NA
Return on equity (%)	Net Profit after taxes	Total equity	5.84%	8.30%	-29.64%	Decrease due to lower profitability during the year.
Inventory turnover ratio (in times)	Revenue from Operations (Net)	Closing Inventory	166.66	105.64	57.77%	Improved due to lesser inventory during the year.
Trade receivable turnover ratio (in times)	Revenue from Operations (Net)	Closing Trade receivable	27.60	75.50	-63.45%	Reduced due to higher trade receivables with almost same revenue from operations during the year.
Trade Payable turnover Ratio (in times)	Net credit purchases = Gross credit purchases - purchase return	Closing Trade payables	3.76	1.92	96.08%	Increased due to timely repayment to creditors during the year.
Net capital turnover ratio (in times)	Revenue from Operations (Net)	Working capital = Total Current assets - Total Current liabilities	0.56	0.91	-38.65%	During the reporting period, the Company has availed short term borrowing from bank resulting increase in current liabilities.
Net profit ratio (%)	Net Profit after taxes	Revenue from Operations (Net)	17.08%	22.67%	-24.66%	Decreased due to a reduction in net profit margin during the year.
Return on capital employed (%)	Earnings before interest and taxes	Capital employed = Total Equity + Non Current Borrowing	9.85%	12.36%	-20.30%	Decreased due to a reduction in operating profit relative to the capital employed during the year.
Return on Investment (%)	Earnings before interest and taxes	Total Assets	8.63%	10.67%	-19.10%	Decreased due to a lower return generated on the investment during the year

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF;

The Return on Net Worth of the Company has changed during the current financial year as compared to the immediately preceding financial year, primarily on account of changes in the profitability and net worth of the Company.

The net worth/shareholders funds of the Company increased from 11,700.06 lakh as at 31 March 2025 to 11,988.39 lakh as at 31 March 2026, representing an increase of 288.33 lakh or 2.46%. The increase in net worth is primarily attributable to the increase in reserves and surplus from 10,088.56 lakh as at 31 March 2025 to 10,376.89 lakh as at 31 March 2026, while the share capital remained unchanged at 1,611.50 lakh.

The change in Return on Net Worth is attributable to the movement in the profitability of the Company in relation to its net worth during the year. The management is of the view that the change in Return on Net Worth is commensurate with the overall financial performance and operations of the Company during the financial year.

DISCLOSURES

During the year the company has not entered into any transaction of material nature with its promoters, the directors or the management, their subsidiaries or relatives etc, which may have potential conflict with the interest of the Company at large. All the details of transaction covered under related party transaction are given in the notes to accounts.

CAUTIONARY STATEMENT

Certain statements in the Management Discussion and Analysis and Directors Report describing the Companys Objectives, Strategies, projections, outlook, expectations, estimates and others may constitute forward looking statements and progressive within the meaning of applicable laws and regulations. Actual results may vary from those expressed or implied, depending upon economic conditions, Government Policies and other incidental factors. Readers are cautioned not to place undue reliance on the forward looking statements.

For And on Behalf of the Board of Directors SAJ HOTELS Limited

Karna Kartik Timbadia	Kartik M Timbadia
Managing Directo	Director
(DIN No. 01753308)	(DIN: 00473057)
Date: 03.09.2026
Place: Mumbai