Sayaji Hotels Ltd Management Discussions

[Pursuant to Regulation 34 read with Part B Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

Management Discussion and Analysis Report will provide details of performance of the Company as well as the Companys approach to sustainability and risk management. This report describes

Companys objectives, projections, estimates and expectations, may constitute ‘forward-looking statements within the meaning of applicable laws and regulations. Although the expectations are based on reasonable assumptions, the actual results might differ.

Industry Structure and Developments

India continues to be one of the fastest-growing major economies in the world, supported by strong domestic consumption, increasing infrastructure investments, rapid digitalization, and favourable demographic trends. The countrys economic resilience, growing middle class, rising disposable incomes and expanding transportation network continue to provide a strong foundation for the hospitality and tourism sectors.

The Indian hospitality industry witnessed another year of strong performance during FY 2025-26, driven by sustained growth in domestic travel, business travel, MICE activities, destination weddings and spiritual tourism. Occupancy levels and average room rates remained healthy across key markets, supported by increasing demand and a relatively limited supply of quality hotel rooms in several cities.

Indias tourism ecosystem continues to evolve with increasing demand for leisure, wellness, heritage, religious, medical and experiential travel. The growth of Tier-II and Tier-III cities, improved air connectivity, highway infrastructure development and government initiatives aimed at promoting tourism have further strengthened the industrys long-term growth prospects.

The hospitality industry in India comprises luxury, upscale, mid-scale and economy hotels, along with alternative accommodation formats. Branded hotel operators continue to expand aggressively across emerging markets, while asset-light business models such as management contracts and franchise arrangements are gaining prominence. The premium and upper mid-scale segments, in particular, continue to benefit from strong demand from both corporate and leisure travellers.

Technology is playing an increasingly important role in shaping guest experiences. Digital booking platforms, mobile-based services, artificial intelligence, data analytics and personalized guest engagement solutions are becoming key differentiators in the sector. At the same time, sustainability, responsible tourism and environmentally conscious operations are gaining greater importance among travellers and hospitality operators alike.

Despite the positive outlook, the industry continues to face challenges such as inflationary pressures, rising operating costs, talent retention and increasing competition. However, the long-term fundamentals of the Indian hospitality sector remain strong, supported by favourable demographics, growing tourism demand and continued infrastructure development.

With its diversified portfolio of brands, strong presence across key markets and robust expansion pipeline, Sayaji Hotels Limited remains well positioned to capitalize on emerging opportunities and participate in the long-term growth of Indias hospitality industry.

Opportunities and Threats

The Indian hospitality industry continues to benefit from strong domestic travel demand, increasing business travel, rising disposable incomes and improving infrastructure connectivity. Expansion of airports, highways and tourism circuits across the country is creating significant growth opportunities for organized hotel operators.

Technology continues to reshape the hospitality landscape. Artificial Intelligence (AI), data analytics, contactless services, mobile applications and personalized guest engagement platforms are helping hotels improve operational efficiency, enhance guest experiences and create new revenue opportunities. Hotels that successfully leverage digital innovation are expected to gain a competitive advantage in an increasingly dynamic marketplace.

The growing preference for experiential travel, wellness tourism, spiritual tourism, destination weddings and staycations presents substantial opportunities for the hospitality sector. At the same time, increasing awareness towards sustainable tourism is encouraging hotels to adopt environmentally responsible practices, creating long-term value for guests and stakeholders.

The continued growth of Tier-II and Tier-III cities, coupled with increasing demand for branded accommodation, provides a significant opportunity for expansion through management contracts, franchise arrangements and asset-light business models.

However, the industry also faces certain challenges. Inflationary pressures, rising manpower costs, higher utility expenses and increasing operating costs continue to impact profitability across the sector. The industry also faces challenges in attracting, retaining and developing skilled talent in an increasingly competitive environment.

Further, changing consumer preferences, increasing competition from both organized and alternative accommodation providers, cybersecurity risks and rapid technological advancements require continuous investment and adaptation. Geopolitical uncertainties, climate-related risks and fluctuations in economic conditions may also impact travel demand and business performance.

The Company continues to focus on innovation, operational excellence, brand strengthening and strategic expansion to capitalize on emerging opportunities while effectively managing potential risks.

Opportunities and Threats

Opportunities	Threats
Expansion in Tier-II and Tier-III cities	Global economic uncertainties
Growth in domestic and regional tourism	Inflationary pressures and rising operating costs
Innovation and digital transformation	Talent shortages and employee retention challenges
Adoption of Artificial Intelligence (AI) and data analytics	Cybersecurity and data privacy risks
Growth in wellness, spiritual and experiential tourism	Climate change and environmental risks
Sustainable and eco-friendly hospitality practices	Rapidly changing consumer preferences
Asset-light expansion through management and franchise models	Increasing competition and market saturation
Growth in destination weddings and MICE segment	High cost of technology adoption and upgradation

Segment wise or Product-wise Performance

The Company operates in the hospitality industry and is primarily engaged in providing accommodation, food & beverage, banqueting and other related hospitality services to its guests. The nature of the Companys operations, risks, returns and internal reporting structure are such that the business is managed as a single operating segment. Accordingly, the Company operates in one reportable business segment, namely Hospitality. The financial performance of the Company for the Financial Year 2025-26 has been presented in detail in the Financial Statements forming part of this Annual Report.

Information relating to internal control systems, risk management practices and human resource initiatives has been discussed separately in the relevant sections of this Annual Report and forms an integral part thereof.

Global and Domestic Outlook

The global hospitality industry continues to witness steady growth, supported by increasing international travel, rising consumer spending on leisure experiences and sustained investments in tourism infrastructure. Despite ongoing geopolitical uncertainties, inflationary pressures and supply chain disruptions in certain regions, the travel and tourism sector remains a significant contributor to the global economy.

Technology, sustainability and personalization are increasingly shaping the future of hospitality. Hotels across the world are investing in artificial intelligence (AI), data analytics, contactless guest services and digital engagement platforms to enhance customer experiences and improve operational efficiencies. Simultaneously, environmental sustainability, responsible tourism and ESG-focused initiatives are becoming critical considerations for both hospitality operators and travellers.

International travel demand continues to strengthen, supported by improved air connectivity and growing demand for experiential, wellness and luxury travel. While challenges such as labour shortages, rising operating costs and geopolitical developments continue to influence the sector, the long-term outlook for the global hospitality industry remains positive.

Domestic Outlook

India continues to remain one of the fastest-growing major economies in the world, supported by strong domestic consumption, infrastructure development, rapid urbanization and favourable demographic trends. The countrys growing middle class, increasing disposable incomes and improved connectivity are expected to continue driving demand for travel and hospitality services.

The Indian hospitality sector has maintained strong momentum during FY 2025-26, supported by sustained growth in domestic leisure travel, business travel, destination weddings, religious tourism and MICE (Meetings, Incentives, Conferences and Exhibitions) activities. Premium and upscale hotels continue to report healthy occupancy levels and strong average room rates, supported by robust demand and limited addition of quality room inventory in several markets.

Government initiatives such as Swadesh Darshan, PRASHAD, UDAN and significant investments in airport, road and railway infrastructure are further strengthening the tourism ecosystem. Improved connectivity to Tier-II and Tier-III cities is creating new opportunities for hotel operators and accelerating demand across emerging destinations.

The Indian hospitality industry is also benefiting from increasing adoption of digital technologies, including online travel platforms, mobile-based guest services, revenue management systems and AI-driven customer engagement tools. In addition, growing preference for experiential travel, wellness tourism, eco-tourism and personalized hospitality experiences continues to reshape customer expectations and create new avenues for growth.

Industry estimates indicate that the Indian hospitality sector is expected to continue outperforming several global markets, supported by strong domestic demand, favourable economic fundamentals and increasing investments by leading hospitality brands. Demand is expected to remain robust across leisure, corporate and social segments, providing a positive outlook for the industry over the medium to long term.

Given its diversified brand portfolio, strong presence across multiple cities and robust expansion pipeline, Sayaji Hotels Limited remains well positioned to capitalize on the growth opportunities offered by the Indian hospitality sector while continuing to focus on operational excellence, guest satisfaction and sustainable growth.

World Economic Outlook

According to leading global institutions, the world economy is expected to maintain moderate growth during 2026 despite ongoing geopolitical tensions, inflationary concerns and changing trade dynamics. Economic growth is expected to be supported by resilient consumer spending, easing inflationary pressures and gradual stabilization of interest rates across major economies.

The travel and tourism sector is expected to remain one of the key contributors to global economic activity, supported by increasing international mobility, growing demand for leisure travel and continued recovery in corporate travel. However, global businesses continue to remain cautious due to geopolitical uncertainties, energy price volatility and potential disruptions in international trade.

Indian Economy

The Indian economy continues to demonstrate remarkable resilience and growth, supported by strong domestic demand, public infrastructure investments and a rapidly expanding services sector. India remains among the fastest-growing major economies globally and continues to attract significant domestic and foreign investments across industries.

The services sector remains a key driver of economic growth and employment generation, with hospitality, tourism, aviation and related industries benefiting from increasing consumer spending and improving connectivity. Government initiatives focused on infrastructure development, tourism promotion and digital transformation are expected to further strengthen Indias growth trajectory and support long-term expansion of the hospitality sector.

The Companys growth strategy remains aligned with these positive macroeconomic trends, enabling it to capitalize on emerging opportunities while maintaining a disciplined and sustainable approach towards expansion and value creation.

Sources:

International Monetary Fund (IMF) World Economic Outlook Updates, 2025-26

World Travel & Tourism Council (WTTC) Economic Impact Research Reports

Deloitte Insights India Economic Outlook, 2025-26

India Brand Equity Foundation (IBEF) Hospitality & Tourism Industry Reports

Ministry of Tourism, Government of India

Hotelivate India Hospitality Trends & Outlook Reports

ICRA Hospitality Sector Outlook Reports

Reserve Bank of India (RBI) Annual Report and Monetary Policy Statements

Risk Governance

The Company recognizes that effective risk management is critical to achieving its strategic objectives, sustaining long-term growth and creating value for stakeholders. The hospitality industry operates in a dynamic environment influenced by changing consumer preferences, economic conditions, technological advancements and regulatory developments. Accordingly, the Company has established appropriate risk management processes to identify, assess, monitor and mitigate risks while capitalizing on emerging opportunities.

The Company follows a proactive approach towards risk governance by integrating risk management practices into business planning and operational decision-making. Key risks identified by the Company and the mitigation measures adopted are outlined below:

1. Economic Slowdown and Demand Risk

The hospitality industry is highly dependent on economic activity, consumer spending, business travel and tourism demand. Economic uncertainties, inflationary pressures and geopolitical developments may impact occupancy levels and revenue growth.

Mitigation Measures:

Diversified presence across multiple cities and customer segments.

Focus on operational efficiency and cost optimization.

Strengthening customer loyalty and repeat business.

Expansion through asset-light business models and strategic partnerships.

2. Cyber Security and Data Privacy Risk

The increasing adoption of digital technologies, online booking platforms and customer data management systems exposes hospitality businesses to cybersecurity threats, data breaches and privacy-related risks.

Mitigation Measures:

Implementation of robust IT security controls and monitoring systems.

Periodic review and strengthening of cybersecurity infrastructure.

Employee awareness and training programs on information security.

Adoption of appropriate data protection and access control mechanisms.

3. Guest Experience and Service Quality Risk

Maintaining consistent service quality and guest satisfaction remains critical to business success. Negative guest experiences, service disruptions or operational lapses may impact brand reputation and customer loyalty.

Mitigation Measures:

Standardized operating procedures across all properties.

Continuous employee training and skill development initiatives.

Regular monitoring of guest feedback and online reviews.

Focus on service excellence and personalized guest experiences.

4. Brand and Reputation Risk

The hospitality business is highly dependent on brand image and reputation. Any adverse publicity, inconsistency in service standards or infringement of intellectual property rights may adversely affect the Companys brand value.

Mitigation Measures:

Strong brand governance and quality assurance mechanisms.

Consistent implementation of brand standards across properties.

Regular monitoring and protection of intellectual property rights.

Active engagement with guests through digital and social media platforms.

5. Talent Acquisition and Retention Risk

The hospitality industry continues to face challenges in attracting, developing and retaining skilled talent. Employee turnover and talent shortages may impact operational performance and service delivery.

Mitigation Measures:

Focus on employee engagement and career development.

Continuous learning and training initiatives.

Performance-based reward and recognition programs.

Creating a positive and inclusive work environment.

6. Regulatory and Compliance Risk

The Company operates in a regulated environment and is required to comply with various statutory, environmental, labour and industry-specific regulations. Non-compliance may result in financial and reputational consequences.

Mitigation Measures:

Well-defined compliance monitoring framework.

Periodic internal audits and management reviews.

Continuous tracking of regulatory developments.

Timely implementation of compliance requirements.

The Company continuously reviews its risk management framework to ensure that emerging risks are identified and addressed in a timely manner. Through a combination of strong governance practices, operational discipline and strategic planning, the Company seeks to effectively manage risks while pursuing sustainable growth opportunities.

Government Initiatives

The Government of India continues to place significant emphasis on tourism and hospitality as key drivers of economic growth, employment generation and regional development. Through a combination of policy support, infrastructure investments and tourism promotion initiatives, the Government is creating a favourable ecosystem for the sustained growth of the hospitality sector.

The Union Budget 2026-27 reaffirmed the Governments commitment towards strengthening tourism infrastructure and enhancing connectivity across the country. Continued investments in roads, airports, railways and tourism circuits are expected to further improve accessibility to major tourist destinations and unlock opportunities in emerging markets.

The Government has maintained its focus on flagship tourism initiatives such as Swadesh Darshan,

PRASHAD (Pilgrimage Rejuvenation and Spiritual Heritage Augmentation Drive) and Dekho Apna Desh, which are aimed at promoting heritage, spiritual, cultural and experiential tourism across India. These initiatives are expected to boost domestic tourism and create new opportunities for hospitality operators across multiple destinations.

Indias aviation sector continues to be a major catalyst for tourism growth. Over the last decade, the number of operational airports in the country has increased from 74 to more than 150, significantly improving regional connectivity. The Governments continued focus on the UDAN Scheme and airport infrastructure development is expected to further strengthen access to Tier-II and Tier-III cities, thereby expanding the potential market for hospitality services.

The tourism sector also continues to benefit from increasing digitalization, improved visa facilitation measures and sustained investments in tourism infrastructure. According to industry estimates, the travel and tourism sector contributes approximately 7% of Indias GDP and supports more than 75 million jobs, highlighting its importance to the national economy.

Further, the Government has continued to support destination development, heritage conservation and sustainable tourism practices, with increased focus on religious tourism, eco-tourism and integrated tourism circuits. Such initiatives are expected to drive higher tourist footfalls and support long-term growth in the hospitality industry.

The Company believes that these initiatives, coupled with Indias strong economic growth, rising disposable incomes and increasing travel demand, will continue to provide a positive growth environment for the hospitality sector. With its diversified brand portfolio and expanding presence across key destinations, the Company remains well positioned to capitalize on the opportunities arising from these developments.

Sources:

Union Budget 2026-27 Ministry of Finance, Government of India

Economic Survey 2025-26, Government of India

Ministry of Tourism, Government of India

Press Information Bureau (PIB) Releases on Tourism & Hospitality Sector

India Brand Equity Foundation (IBEF) Tourism & Hospitality Industry Reports

Ministry of Civil Aviation UDAN Scheme Updates

World Travel & Tourism Council (WTTC) Reports

Internal Control Systems and their Adequacy

The Company has an adequate system of internal controls commensurate with the size, scale and nature of its operations. The internal control framework is designed to ensure efficient operations, safeguarding of assets, accuracy of financial reporting and compliance with applicable laws, regulations and internal policies.

Documented policies, standard operating procedures and clearly defined roles and responsibilities are in place across all business functions. The effectiveness of internal controls is regularly reviewed through internal audits and management oversight, and significant observations are reviewed by the Audit Committee.

The management believes that the Companys internal control systems and internal financial controls are adequate and operating effectively

Discussion on Financial Performance with respect to Operational Performance

Total Revenue: Total Revenue increased from 14,150.81 Lakhs in FY 2024-25 to 15,316.82 Lakhs in FY 2025-26, registering a growth of 8.24%.

EBIDTA: Earnings Before Interest, Depreciation, Taxes, Amortization and Exceptional Items (EBIDTA) increased from 3,885.93 Lakhs in FY 2024-25 to 4,331.60 Lakhs in FY 2025-26, reflecting a growth of 11.47%.

Profit Before Tax: Profit Before Tax increased from 1,310.83 Lakhs in FY 2024-25 to 1,479.63 Lakhs in FY 2025-26, representing a growth of 12.88%.

Net Profit After Tax: Net Profit After Tax increased from 1,021.01 Lakhs in FY 2024-25 to 1,108.82 Lakhs in FY 2025-26, recording a growth of 8.60%.

Total Comprehensive Income: Total Comprehensive Income increased from 989.98 Lakhs in FY 2024-25 to 1,125.12 Lakhs in FY 2025-26, registering a growth of 13.65%.

Cash and Cash Equivalents: Cash and Cash Equivalents decreased from 416.01 Lakhs in FY 2024-25 to 326.17 Lakhs in FY 2025-26, reflecting a decrease of 21.60%.

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

The Company firmly believes that its employees are its most valuable asset and a key driver of sustainable growth. It continues to focus on attracting, developing and retaining talent through various learning, engagement and development initiatives while fostering a culture of professionalism, integrity and teamwork.

Industrial relations across all locations remained cordial and harmonious during the year under review. The Company continues to maintain a positive work environment and is committed to the highest standards of ethical, moral and professional conduct.

As on March 31, 2026, the Company had 611 employees on its rolls

Details of Changes in Key Financial Ratio & Return on Net Worth

The key financial ratios of the Company where there has been significant change (25% or more) and change in Return on Net Worth are summarized below along with detailed explanation:

Particulars	Unit	2025-26	2024-25	% of Change	Detailed explanation, if there is any significant change, i.e., 25% or more
Debtors Turnover Ratios	Times	11.00	16.04	(31.42%)	The ratio decreased from 16.04 times in FY 2024-25 to 11.00 times in FY 2025- 26.
Inventory Turnover Ratio	Times	24.08	30.53	(21.13%)	The ratio decreased from 30.53 times in FY 2024-25 to 24.08 times in FY 2025- 26.
Interest Coverage Ratio	Times	2.96	2.29	29.26%	The ratio increased from 2.29 times in FY 2024-25 to 2.96 times in FY 2025-26.
Current Ratios	Times	1.33	0.80	66.25%	The ratio increased from 0.80 times in FY 2024-25 to 1.33 times in FY 2025-26.
Debt Equity Ratios	%	65.11%	57	14.23%	The ratio increased from 57.00% in FY 2024-25 to 65.11% in FY 2025-26.
Operating Profit Margin	%	29.11%	28.10	3.59%	The margin increased from 28.10% in FY 2024-25 to 29.11% in FY 2025-26.
Net Profit Margin	%	7.45%	7.22	3.19%	The margin increased from 7.22% in FY 2024-25 to 7.45% in FY 2025-26.
Return on Net Worth	%	16.46%	18.00	(8.56%)	The ratio decreased from 18.00% in FY 2024-25 to 16.46% in FY 2025-26.