Sri Havisha Hospitality & Infrastructure Ltd Management Discussions

Economic Environment and Industry Insight:

INDIAN ECONOMY: THE YEAR IN REVIEW

The Indian economy remains a bright spot amidst global slowdown and is expected to sustain its position as the fastest growing large economy. As per the provisional estimates released by Ministry of Statistics and Programme Implementation (MoSPI), Indias real GDP is projected to have grown by 6.5% in FY 2024-25. Going forward, while real GDP is expected to grow at a similar pace in FY 2025-26, Private Consumption Expenditure is expected to pick up a result of disposable incomes accruing from easing of inflation, interest rate cuts, liquidity support from RBI and tax cuts announced in the recent Union Budget.

Fundamentals of the Indian economy continue to remain healthy across sectors. The positive outlook is anchored on rising urbanisation, favourable demographics and sustained growth of the services sector, which are all expected to continue driving expansion of the economy.

As per IMF, over the next 2 years, Indias per capita nominal GDP is expected to grow at a CAGR of 6.4%. Sustenance of economic growth momentum amidst global slowdown and heightened uncertainty caused by geopolitical events and broad-based increase in infrastructural capex are some of the key monitorables going forward.

INDUSTRY INSIGHT

Global Hospitality and Tourism Industry

The Global Travel & Tourism industry remains well poised for expansion following remarkable recovery from the Covid-19 pandemic. During the year, the industry continued to witness resurgence in both leisure and business travel. As per UN Tourism, tourist arrivals worldwide grew by 11% in 2024 over the previous year, registering a 99% recovery from prepandemic levels. Most destinations exceeded their 2019 levels; however, arrival of tourists in Americas and Asia Pacific remained slightly behind their pre-pandemic levels.

The year 2024 saw robust growth in tourism earnings. As per UN Tourism, the total international tourism receipts in real terms reached $ 1.6 trillion growing by 3% over the previous year and 4% over 2019. As per World Travel and Tourism Council (WTTC), the Travel & Tourism sector accounted for 10.0% (US$ 10.9 trillion) of the global GDP and 10.6% (356.6 million jobs) of total jobs in 2024. Strong demand for travel & tourism, robust performance in large source markets, increased air connectivity and enhanced visa facilitation have contributed to the impressive recovery in global travel & hospitality industry.

Indian Hospitality and Tourism Industry

FY 2024-25 marked another landmark year for Indian tourism, driven by strong fundamentals such as a youthful population, rising employment, growing disposable incomes, and solid domestic demand. Improved infrastructure, greater connectivity, and increased investments have further accelerated the sectors momentum. The Union Budget 2025-26 allocated Rs. 2,541 crore ($291 million) for the tourism sector, with a focus on infrastructure upgrades, skill development, and easing travel. Key initiatives include the development of 50 leading tourist destinations, improved transport connectivity, and expanding the e-visa programme. As of December 2024, e-visas are available to citizens from over 160 countries under 9 categories - making travel to India simpler and more accessible.

The Ministry of Tourism advanced its flagship schemes such as Swadesh Darshan, PRASHAD, UDAN, and Dekho Apia Deri, encouraging regional and cultural tourism. Under PRASHAD, 27 new sites across 18 states and UTs were selected for development, with a continued emphasis on spiritual and heritage tourism. States have also introduced their own policies and incentives to promote local travel and boost their tourism economies.

This year also saw major strides in airport infrastructure, with 10 new Greenfield airports becoming operational bringing the total count to 159 by the end of December 2024. Largescale projects at Noida (Jewar) and Navi Mumbai are nearing completion and are set to open in 2025.

Foreign tourist arrivals reached 9.7 million in 2024 as against 9.23 million in 2023. This years arrival denoted a recovery of 88% of the 2019 high of 10.9 million, signaling steady progress toward full recovery. Outbound travel, on the other hand, surged ahead, with 30.2 million Indians travelling abroad in 2024 -12% above pre-COVID levels. Domestic air travel remained strong, growing by 6% to 161 million passengers and surpassing 2019 figures by 12%. Key demand drivers included leisure travel, weddings, business events, and corporate travel.

According to the India Hotel Market Review 2024 by Horwath HTL, national occupancy stood at 63.9% for 2024 as compared to 62.1% in 2023. While the occupancy is still marginally below the 2019 level of 64.5%, Revenue per day was 82% higher than 2019 indicating market growth both in terms of capacity and size. The average daily rate (ADR) rose to Rs.7,951, marking a 7.5% y-o-y increase and revenue per available room (RevPAR) rose to Rs.5,078, marking 10.7% year on year increase. Udaipur reported highest ADR followed by Mumbai and then by Goa and New Delhi highlighting the continued demand for premium destinations.

Outlook for FY 2025-26

Indias economic outlook for FY 2025?26 remains optimistic, underpinned by strong domestic fundamentals and supportive policy frameworks. The Reserve Bank of India (RBI), in its April 2025 Monetary Policy Statement, projects real GDP growth at 6.5% for FY 2025-26. Manufacturing activity is expected to retain its momentum, bolstered by global demand recovery, the Production-linked Incentive (PLI) schemes, and a conducive investment environment. Services are expected to grow above trend, supported by sustained demand in contact-intensive segments and digital services exports.

The global tourism and hospitality sector is poised for continued growth in 2025, following a full recovery from the pandemic. According to the United Nations World Tourism Organisation (UNWTO), international tourist arrivals are projected to increase by 3% to 5% compared to 2024, indicating a normalisation of growth following the sharp post-pandemic rebound. Confidence within the industry remains high - UNWTOs January 2025 Confidence Index reports that 64% of surveyed travel professionals anticipate stronger performance this year than in 2024.

BUSINESS REVIEW

We carry out necessary upgradations to keep our hotel in good condition and to offer better value in terms of great ambience and comfort, while keeping the needs of our customers at the core of these changes. The Company has deployed several plans which stand for Revenue growth, Excellence, Spend optimisation, Effective asset management and Thrift and financial prudence.

Diversification of Topline - a Cornerstone of SHHILs (Sri Havisha Hospitality & Infrastructure Limited) Competitive Advantage

In 2024, the global tourism industry demonstrated exceptional resilience and adaptability in the face of ongoing challenges. Despite enduring severe climate shifts, increasing geopolitical tensions, economic uncertainties, and rising travel costs, the sector proved its tenacity and advanced significantly beyond pre-pandemic levels.

In FY 2024-25, your company achieved several significant milestones. As you are aware, we secured a 30-year renewal of our Hotel Land Lease Deed with the Airports Authority of India, effective from January 1, 2023. Thereafter we have taken up in a phased manner massive renovation of our entire Hotel. This renovation is imperative to enable us to substantially improve our revenues. We have taken up the renovation in Phases wherein the first phase 19 rooms and 4 suites are totally renovated in the fourth floor. The remaining floors and public areas will be taken up soon in a phased manner.

We understand that true success encompasses more than just financial performance; it also involves making a positive impact on our stakeholders and the broader community. With this in mind, we are committed to driving positive change and creating value for everyone involved, while contributing to national growth. Our hotel, following its renovation and expansion, is anticipated to generate substantially higher revenues and profits in the future, allowing us to deliver better results for you.

Capital Allocation

SHHILs capital allocation process is aimed at creating value by funding and allocating capital to meet its strategy. This process is based on the following planks:

1. Build a strategic reserve fund with a strong cash position to meet any contingency the Company may face.

2. Operating capital expenditure for replacement of assets, renovations and refurbishments to be in line with annual depreciation.

COMPLIANCE

SHHIL deploys a robust internal check process to prevent and limit the risk of non-compliance. The Company approaches compliance from a proactive standpoint and believes in responsive intervention. Compliance with laws and regulations is an essential part of its business operations and it adheres to all national and regional laws and regulations in such diverse areas as product safety, product claims, trademark, copyright, patents, competition, employee health and safety, the environment, corporate governance, listing and disclosure, employment and taxes. Nevertheless, it is focussing on increasing awareness, documentation and supplementing the expertise of internal professionals with that of independent consultants, as may be required from time to time.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has institutionalised an adequate system of internal controls, with documented procedures covering all corporate functions and hotel operating unit. Internal controls provide reasonable assurance regarding the effectiveness and efficiency of operations, the adequacy of safeguards for assets, the reliability of financial controls, and compliance with applicable laws and regulations.

Internal controls are reviewed through the audit process, which is undertaken for operational unit and all major corporate functions under the direction of the Internal Audit. These reviews focus on:

• Identification of weaknesses and improvement areas

• Compliance with defined policies and processes

• Compliance with applicable statutes

• Safeguarding tangible and intangible assets

• Managing risk environment, including operational, financial, social and regulatory risks

• Conformity with the Code of Conduct

The Boards Audit Committee oversees the adequacy of the internal control environment through periodic reviews of audit findings as also of the resolution mechanism for critical audit issues. The statutory auditors have opined in their report that there are adequate internal controls over financial reporting.

HUMAN RESOURCES

We are a people-led organization. We strive to be an employer of choice by encouraging our employees to reach their highest potential in an engaging, professional work environment. Our people are our best assets. Their caliber and commitment is our inherent strength. With the singular objective of always being the employer of choice, we are encouraging them to discover and realize their true potential. Acquiring diverse experiences, accomplishing challenging tasks and continually learning and up skilling is enabling them to deliver their best to the company.

MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING RESULTS AND FINANCIAL

The Annual Report contains financial statements of the Company. An analysis of the financial affairs is discussed below under summarised headings.

Your Companys Audited Financial Statements are prepared in accordance with Ind AS prescribed under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015, as amended. The Company reported loss amounting to Rs. 426.58 Lakhs as per Audited Financial Statements for Financial Year ended March 31,2025. Your Company has also taken various initiatives to improve sales and optimize costs to improve profitability in the forthcoming years.

REVIEW OF THE FINANCIAL PERFORMANCE

TOTAL REVENUE

The Total Income for FY 2024-25 is Rs. 1584.15 Lakhs, which is lower than the previous years total income of Rs. 1612.39 Lakhs.

EXPENDITURE

Total expenses increased from Rs. 2009.62 Lakhs to 2051.31 Lakhs during the current year. While Total Income decreased by 1.78%, Total Expenditure increased by 2.08% which includes interest expense of Rs 418.90 lakhs on lease liability which is notional as elaborated below.

The Company executed the lease agreement with Airports Authority of India (AAI) for renewal of the leasehold rights of the land for another 30 years from the year 2023. Interest Expense on lease liability has been provided as per Ind AS 116 and the Finance Cost for the year ended 31 March 2025 of Rs. 452.69 Lakhs includes Interest expense on lease liability of INR 418.90 lakhs which is notional. It may be noted that as IND AS 116 is made applicable for the FY 2023-24 onwards.

PROFIT/ (LOSS) AFTER TAX

During the current year, the Company reported a loss of Rs. 426.58 Lakhs, as against Rs 414.91 lakhs in the previous year. It is important to note that IND AS 116, which became applicable from FY 2023-24, has impacted the financials. This accounting standard introduces a notional interest expense on lease liabilities amounting to Rs. 418.90 Lakhs for the current year which is notional.

	By Order of the Board
	FOR SRI HAVISHA HOSPITALITY
	AND INFRASTRUCTURE LIMITED
PLACE: Hyderabad DATE: 11.08.2025	D.V.MANOHAR
	CHAIRMAN & MANAGING DIRECTOR