Suba Hotels Ltd Management Discussions

OF FINANCIAL POSITION AND RESULTS OF OPERATIONS

The following discussion is intended to convey managements perspective on our financial condition and results of operations for the financial year ended on March 31, 2025, March 31, 2024 and March 31, 2023. You should read the following discussion of our financial condition and results of operations together with our restated consolidated financial statements included in the Red Herring Prospectus. You should also read the section entitled “Risk Factors” beginning on page 34 of this Red Herring Prospectus, which discusses several factors, risks and contingencies that could affect our financial condition and results of operations. The following discussion relates to our Company and is based on our restated consolidated financial statements, which have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Regulations. Portions of the following discussion are also based on internally prepared statistical information and on other sources. Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year (“Fiscal Year”) are to the twelve-month period ended March 31 of that year.

In this section, unless the context otherwise requires, any reference to “we”, “us” or “our” refers to Suba Hotels Limited (erstwhile "Hotel Suba Star Private Limited"), our Company. Unless otherwise indicated, financial information included herein are based on our “Restated Consolidated Financial Statements” for Financial Year ended on March 31, 2025, March 31, 2024, and March 31, 2023 included in this Red Herring Prospectus beginning on page 29.

BUSINESS OVERVIEW

We are one of Indias largest domestic hotel chains in the mid-market sector with 88 operational hotels as of July 2025, comprising 4,096 keys across over 50 cities, around 81% of which are located in emerging markets in tier 2 and 3 cities. The hotel chain also boasts a portfolio of 40 hotels in the pre-opening phase, encompassing 1,831 rooms. (Source: JLL Report). We operate in the mid-market hotel sector, consisting of upscale, upper-midscale, midscale, and economy brands domestic as well as international. We primarily cater to guests across business, leisure, and religious tourism, delivering superior service standards at attractive price points. Our hotel portfolio encompasses a diverse range of business models, including owned, managed, revenue share & lease, and franchised properties. We currently categorize our hotel portfolio into four distinct hotels categories based on business models that includes owned, managed, revenue share & lease and franchised hotels.

The hospitality sector demonstrates robust growth as branded hotel signings reached 42,071 keys by December 2024, with continued momentum in Q1 2025 adding 79 new hotel signings totaling 9,478 keys. Notably, Tier 2 and 3 cities dominate the expansion landscape, accounting for 77% of all branded hotel signings and 83% of actual openings (11,352 keys) in 2024. Management contracts remain the preferred business model, representing 81% of total signings, while franchise agreements and lease/revenue share arrangements account for 14% and 5% respectively. (Source: JLL Report).

Indias tourism industry, with its rich tapestry of heritage, culture, and diversity, is rapidly emerging as a global destination of choice and a significant catalyst for economic development. Acknowledging its potential for employment generation, the Union BudgeRs 2025-26 has devoted U2541.06 crore to enhance infrastructure, develop skills, and streamline travel processes. A cornerstone initiative involves transforming 50 premier tourist destinations in partnership with state governments through a competitive approach, ensuring superior facilities and accessibility. Through dedicated efforts, the tourism sector is positioned to propel Indias journey toward developed nation status by 2047. (Source: JLL Report).

Our diverse range of hotel categories such as owned, managed, revenue share & lease and franchised hotels and extensive portfolio of domestic and international brands are strategically designed to cater to various market segments. Positioned in prime locations and competitively priced, we offer exceptional value, which has driven our rapid expansion into markets traditionally underserved by chain-affiliated hotels. As of July 31, 2025, our portfolio of operating hotels consists of 5 owned hotels consisting of 227 rooms, 19 managed hotels consisting of 823 rooms, 16 hotels on revenue share & lease basis consisting of 577 rooms and 48 franchised hotels consisting of 2,469 rooms.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR:

In the opinion of the Board of Directors of our Company, there have not arisen, since the date of March 31, 2025 as disclosed in this Red Herring Prospectus, any significant developments or any circumstance that materially or adversely affect or are likely to affect the profitability of our Company or the value of its assets or its ability to pay its material liabilities within the next twelve months.

KEY FACTORS AFFECTING THE RESULTS OF OPERATION:

Our Companys future results of operations could be affected potentially by the following factors:

1. General economic conditions in India, changes in laws and regulations.

2. Changes in revenue mix, including geographic mix of our revenues.

3. Changes in Fiscal, Economic or Political conditions in India.

4. Increased market fragmentation.

5. Competition with existing and new entrants.

6. Ability to renew franchise and lease agreements.

7. Brand Image.

8. Technology System and Infrastructure Risks.

9. The extent to which business is seasonal

Our Companys business is subject to seasonality. For further information, kindly check “Risk Factors” on page 34 in this Red Herring Prospectus.

OUR SIGNIFICANT ACCOUNTING POLICIES

For Significant accounting policies please refer Significant Accounting Policies, “Annexure IV” beginning under Chapter titled “Financial Information of our Company” beginning on page 76 of the Red Herring Prospectus.

Principle Components of our Restated Statement of Assets & Liabilities

COMPARISON OF F.Y. 2025 WITH F.Y. 2024:

Particulars	For the period ended March 31,		Increase/ (Decrease)
	2025 (Rs in l akhs)	2024 (Rs in lakhs)	Amount (Rs in l akhs)	%
Liabilities
Long- Term Borrowings	1,061.58	1,053.73	7.85	0.74%
Short Term Borrowings	3,961.73	3,519.32	442.41	12.57%
Trade payables	473 .73	784.40	(310.67)	(39.61%)
Assets
Inventories	24.96	13.71	11.25	82.04%
Trade receivables	1,259.93	652.43	607.50	93.11%
Short term loan and advances	1,190.57	1,266.19	-75.62	-5.97%

Long- Term Borrowings

Long-term borrowings increased marginally by Rs7.85 lakhs (0.74%), from Rs1,053.73 lakhs in fiscal 2024 to Rs1,061.58 lakhs in fiscal 2025. This slight increase was primarily driven by funding requirements for expansion.

Short Term Borrowings

Short-term borrowings decreased by Rs442.41 lakhs, representing a 12.57% increase from Rs3,519.32 lakhs in Fiscal 2024 to Rs3,961.73 lakhs in Fiscal 2025. This increase was primarily due to repayment of loans repayable on demand from related parties and current maturities of long-term borrowings.

Trade payables

Trade payables decreased by Rs473.73 lakhs i.e.39.61%, decreased from Rs784.40 lakhs in fiscal 2024 to Rs473.73 lakhs in fiscal 2025. The reduction was primarily driven by upfront payments for goods and services to secure better pricing and improve margins.

Inventories

The inventory increased by Rs11.25 lakhs, rising from Rs13.71 lakhs in Fiscal 2024 to Rs24.96 lakhs in Fiscal 2025. This increase is attributable to higher food and restaurant income, supported by an increase in the number of operational hotels.

Trade receivables

Trade receivables increased by Rs607.50 lakhs i.e. 93.11%, increase from Rs652.43 lakhs in fiscal 2024 to Rs1,259.93 lakhs in fiscal 2025. The increase in trade receivables is primarily driven by extended credit terms and a higher pricing strategy aimed at accelerating revenue growth

Short term loan and advances

Short-term loans and advances decreased by Rs75.62 lakhs i.e. 5.97%, decline from Rs1,266.19 lakhs in fiscal 2024 to Rs1,190.57 lakhs in fiscal 2025.

COMPARISON OF F.Y. 2024 WITH F.Y. 2023:

Particulars	For the period ended March 31,		Increase/ (Decrease)
	2024 (Rs in lakhs)	2023 (Rs in lakhs)	Amount (Rs in lakhs)	%
Liabilities
Long- Term Borrowings	1,053.73	377.34	676.39	179.25%
Short Term Borrowings	3,519.32	4,231.85	(712.53)	(16.84%)
Trade payables	784.40	613.63	170.77	27.83%
Assets
Inventories	13.71	3.19	10.52	330.12%
Trade receivables	652.43	325.00	327.43	100.75%
Short term loan and advances	1,266.19	1,289.97	(23.78)	(1.84%)

Long- Term Borrowings

Long-term borrowings increased marginally by Rs676.39 lakhs (179.25%), from Rs377.34 lakhs in fiscal 2023 to Rs1,053.73 lakhs in fiscal 2024. The increase was largely attributable to capital requirements for expanding our network of hotels.

Short Term Borrowings

Short-term borrowings decreased by Rs712.53 lakhs, representing a 16.84% decrease from Rs4,231.85 lakhs in Fiscal 2023 to Rs3,519.32 lakhs in Fiscal 2024. This decrease was primarily due to repayment of other short-term borrowings.

Trade payables

Trade payables increased by Rs167.26 lakhs i.e.27.83%, increased from Rs613.63 lakhs in fiscal 2023 to Rs 784.40 lakhs in fiscal 2024.The increase was largely attributable to the growth and expansion of business activities.

Inventories

The inventory increased by Rs10.52 lakhs, rising from Rs3.19 lakhs in Fiscal 2023 to Rs13.71 lakhs in Fiscal 2025. This increase is attributable to an increase in the number of operational hotels.

Trade receivables

Trade receivables increased by Rs327.43 lakhs i.e. 100.75%, increase from Rs325.00 lakhs in fiscal 2023 to Rs652.43 lakhs in fiscal 2024. The increase in trade receivables is primarily driven by extended credit terms and a higher pricing strategy aimed at accelerating revenue growth

Short term loan and advances

Short-term loans and advances decreased by U23.78 lakhs i.e. 1.84%, decline from Rs1,289.97 lakhs in fiscal 2023 to Rs1,266.19 lakhs in fiscal 2024.

RESULTS OF KEY OPERATIONS

The following table sets forth select financial data from our restated financial statement of profit and loss for the financial years ended March 31, 2025, 2024 and 2023 the components of which are also expressed as a percentage of total revenue for such period and financial years.

(Rs in lakhs)

Particulars	For the year ended on
	March 31, 2025	% of Total Income	March 31, 2024	% of Total Income	March 31, 2023	% of Total Income
Revenue from operation	7,924.32	99.07%	5,227.65	98.64%	3,503.30	99.53%
Other income	74.17	0.93%	71.96	1.36%	16.57	0.47%
Total Revenue	7,998.49	100.00%	5,299.61	100.00%	3,519.86	100.00%
Cost of materials consumed	748.75	9.36%	532.31	10.04%	409.51	11.63%
Employee benefit expenses	1,613.60	20.17%	1,030.08	19.44%	502.35	14.27%
Finance cost	190.92	2.39%	49.88	0.94%	25.74	0.73%
Depreciation & amortization expense	257.15	3.21%	238.38	4.50%	265.52	7.54%
Other expenses	3,255.07	40.69%	2,316.87	43.72%	1,711.80	48.63%
Total Expenses	6,065.48	75.83%	4,167.53	78.64%	2,914.92	82.81%
Profit Before Tax	1,933.01	24.17%	1,132.08	21.36%	604.95	17.19%
Tax Expenses	417.86	5.22%	236.21	4.46%	326.63	9.28%
Profit (Loss) for the Year	1,515.15	18.94%	895.87	16.90%	278.32	7.91%

Review of Restated Financials

Revenue from Operations: Revenue from operations consists of :-

i) Room Income.

a. Owned

b. Revenue share and lease

c. Franchise

d. Managed

ii) Food & Restaurant

iii) Other Operating income

(Rs in lakhs)

Particulars	For the year ended on
	March 31, 2025	As a % of total operational revenue	March 31, 2024	As a % of total operational revenue	March 31, 2023	As a % of total operational revenue
Room Income:
Owned	1,749.78	22.08%	1,402.49	26.83%	1,269.97	36.25%
Revenue share and lease	3,615.64	45.63%	2,245.42	42.95%	1,180.42	33.69%
Franchise	789.88	9.97%	676.55	12.94%	355.84	10.16%
Managed	190.84	2.41%	177.80	3.40%	49.92	1.43%
Food & Restaurant	1,140.69	14.39%	645.76	12.35%	597.98	17.07%

 

Particulars	For the year ended on
	March 31, 2025	As a % of total operational revenue	March 31, 2024	As a % of total operational revenue	March 31, 2023	As a % of total operational revenue
Other Operating Income	437.48	5.52%	79.63	1.52%	49.15	1.40%
Total	7,924.32	100.00%	5,227.65	100.00%	3,503.30	100.00%

Other Income: Other income includes Interest income, Foreign Exchange Gain/(Loss), Sundry balances written back and Other Miscellaneous Income.

Total Income: Our total income comprises revenue from operations and other income.

Total Expenses: Companys total expenses consist of Cost of materials consumed, Employee benefit expenses, Finance cost, Depreciation and amortization expense, and other expenses.

Employee Benefits Expense: Employee benefit expense includes Salaries and incentives, bonus; Contributions to provident and other funds; Staff welfares; and Provision for gratuity.

Finance Cost: Finance cost includes Bank charges, Bank commission on credit card, Interest expense and Other Financial charges.

Other expenses: Other expenses mainly consist of Rent including lease rent, Electricity expenses, Royalty expenses, Trainee/ Manpower expenses, Commission and sales promotion expenses, Other general expenses, Professional fees etc.

COMPARISON OF F.Y. 2025 WITH F.Y. 2024:

Revenue from Operations

The Companys revenue from operations in the financial year 2024-25 is Rs 7,924.32 lakhs. This represents Rs 2,696.67 lakhs or 51.58% increase compared to the previous financial years revenue from operations of Rs 5,227.65 lakhs. The increase is on account of organic as well as inorganic growth.

• Room income from ‘Revenue share and lease in the financial year 2024-25 increased by Rs1,370.21 lakhs or 61.02% as compared to the financial year 2023-24, mainly due to the increase in the number of rooms. The category had 757 rooms across 14 hotels in 2025, compared to 518 rooms across 12 hotels in 2024, reflecting an addition of 239 rooms.

• Room income from ‘Franchise in the financial year 2024-25 increased by Rs 113.33 lakhs or 16.75% as compared to financial year 2023-24 this is mainly on account of increase of 75 rooms as compared to 2024 i.e. 2469 rooms in 2025 compared to 2394 rooms in 2024.

• Room income from ‘Owned in the financial year 2024-25 increased by Rs 347.29 lakhs or 24.76% as compared to financial year 2023-2024 this is mainly on account of increase of 25 rooms as compared to 2024 i.e. 227 rooms in 2025 compared to 202 rooms in 2024. In addition to this one of the owned hotels was operational for complete year in 2025 as compared to 6 months in 2024. There is also increase in average operational revenue per room night sale.

• Food & Restaurant income in the financial year 2024-25 increased by Rs 494.94 lakhs or 76.44% as compared to financial year 2023-24 is primarily on account of increase in new hotels which added Rs 368.95 lakhs in revenue in 2025 and also increase in revenue in from food & restaurant income from the existing hotels.

• Other operating income for the financial year 2025 increased by t357.85 lakhs (449.38%) over 2024, primarily driven by higher income from the spa, which rose to t224.88 lakhs in 2025 from t8.80 lakhs in 2024. In addition, revenues from outside catering grew significantly to t137.31 lakhs in 2025 from t22.82 lakhs in 2024.

Other Income

Other Income in the financial year 2024-25 increased by Rs 2.21 lakhs or 3.07% reaching Rs 74.17 lakhs in comparison to the Rs 71.96 lakhs earned in the Financial Year 2023-24. This increase was primarily due to increase in Sundry balances written back of Rs 5.26 lakhs, increase in Other miscellaneous income of Rs 1.51 lakhs, decrease in foreign exchange gain/ (loss) of Rs 9.39 lakhs, decrease in interest on fixed deposits Rs 1.65 lakhs, decrease in interest received from others Rs 1.21 lakhs and decrease in interest received on I.T refund Rs 0.40 lakhs.

Cost of materials consumed

Cost of materials consumed in the financial year 2024-25 increased by 40.66%, reaching Rs 748.75 lakhs constituting 9.36% of total income.

Employee Benefits Expenses

Employee benefit expenses in the Financial Year 2024-25 increased by 56.65%, reaching Rs 1,613.60 lakhs in comparison to the Rs 1,030.08 lakhs incurred in the Financial Year 2023-24. This rise in employee expenses primarily stemmed from increases in Salaries and incentives, bonus which went up by Rs 556.55 lakhs and increase staff welfares which went up by Rs 13.76 lakhs.

Finance Costs

Finance Costs in the Financial Year 2024-25 increased by 282.73%, reaching Rs 190.92 lakhs in comparison to the Rs 49.88 lakhs incurred in the Financial Year 2023-24. This rise in finance costs primarily stemmed from increases in Interest expense which went up by Rs 120.25 lakhs, bank charges which went up by Rs 32.83 lakhs and other financial charges which went down by 11.31 lakhs.

Depreciation and amortization expenses

Depreciation and amortization in the Financial Year 2024-25 increased by 7.87%, reaching Rs 257.15 lakhs in comparison to the Rs 238.38 lakhs incurred in the Financial Year 2023-24.

Other Expenses

Other expenses in the Financial Year 2024-25 increased by 40.49%, reaching Rs 3,255.07 lakhs in comparison to the Rs 2,316.87 lakhs incurred in the Financial Year 2023-24. This increase in other expenses was primarily attributed to several factors, including Rs 680.73 lakhs increase in Rent including lease rent, Rs 89.51 lakhs increase in Electricity expense, Rs 43.59 lakhs increase in conducting fees, Rs 31.96 lakhs increase in laundry expenses and Rs 30.39 lakhs increase in Guest amenities expenses.

Tax Expenses

Tax expenses increased by 76.90%, reaching a total of Rs 417.86 lakhs in the financial year 2024-25, in contrast to the Rs 236.21 lakhs in the financial year 2023-24.

Profit after Tax (PAT)

Due to the aforementioned factors, the profit experienced an upswing, primarily driven by the growth in total income and a decrease in total expenses as a percentage of total income. The Profit After Tax (PAT) for the financial year 2024-25 reached Rs 1,515.14 lakhs, marking a notable increase from Rs 895.87 lakhs in the financial year 2023-24. In the financial year 2024-25, PAT constituted 18.94% of the total revenue, in contrast to 16.90% in the fiscal year 2023-24.

Rationale for increase in Profit after Tax (PA T) compared to Revenue from Operation

The increase in Profit after Tax (PAT) compared to Revenue from operation is mainly on account of organic and inorganic growth as below:

1. The growth in Room income in owned category in 2025 compared to 2024 is 24.76% organic growth in the room revenue from 5 owned hotels and increase in 25 rooms as compared to 2024 i.e. 227 rooms in 2025 compared to 202 rooms in 2024.

2. The growth in room income in Revenue share and Lease category in 2025 compared to 2024 is 61.02 % this is mainly on account of increase in 6 units under the category i.e. 14 hotels in 2025 compared to 12 hotels in 2024.

3. There is 16.75 % growth in revenue from franchisee operation in 2025 compared to 2024 the said growth is mainly on account of increase of 75 rooms as compared to 2024 i.e. 2469 rooms in 2025 compared to 2394 rooms in 2024.

4. There is increase in Avg. operational revenue per room night sale of hotels.

The increase in Profit after Tax (PAT) compared to Revenue from operation is mainly on account of below points:

1. Increase in EBITDA Margin:

(Rs in lakhs)

Particulars	For the year ended on
	March 31, 2025	% of Total Income	March 31, 2024	% of Total Income
Revenue from operation	7,924.32	99.07%	5,227.65	98.64%
Other income	74.17	0.93%	71.96	1.36%
Total Revenue	7,998.49	100.00%	5,299.61	100.00%
Cost of materials consumed	748.75	9.36%	532.31	10.04%
Employee benefit expenses	1,613.60	20.17%	1,030.08	19.44%
Other expenses	3,255.07	40.70%	2,316.87	43.72%
EBITDA	2,391.88	29.77%	1,387.18	26.18%
Finance cost	190.92	2.39%	49.88	0.94%
Depreciation & amortization expense	257.15	3.21%	238.38	4.50%
Profit Before Tax	1,933.01	24.17%	1,132.08	21.36%
Tax Expenses	417.86	5.22%	236.21	4.46%
Profit (Loss) for the Year	1,515.15	18.94%	895.87	16.90%

As observed from the table above, there is a marginal improvement in the EBITDA margin by 3.59%, mainly due to the expansion of business operations, i.e., an increase in revenue while keeping fixed/semi- variable costs the same. However, the finance cost as a percentage of revenue increased by 1.45%, resulting in a net increase in the PAT margin by 2.04%.

2. Decrease in Depreciation and Amortization expenses:

> Revenue from operations increased by Rs2,696.67 lakhs in 2024-2025 compared to 2023-2024. This increase in operational revenue is majorly contributed by revenue models such as i) Revenue share and lease, ii) Franchise, and iii) Managed. These revenue models do not require major investment in fixed assets, i.e., the company successfully increased revenue without major increases in fixed assets. Thus, the depreciation expenses did not increase with the rise in operational revenue.

> The company follows the WDV method of accounting for depreciation, which relatively reduces the depreciation cost in the absence of major additions.

> As a result, the relative decline in depreciation expense as a proportion of revenue contributed to an increase of 1.29% in the PAT margin.

COMPARISON OF F.Y. 2024 WITH F.Y. 2023:

Revenue from Operations

The Companys revenue from operations in the financial year 2023-24 is Rs 5,227.65 lakhs. This represents Rs 1,724.35 lakhs or 49.22% increase compared to the previous financial years revenue from operations of Rs 3,503.30 lakhs. The increase is on account of organic as well as inorganic growth.

• Room income from ‘Revenue share and lease in the financial year 2023-24 increased by Rs 1,065.00 lakhs or 90.22% as compared to financial year 2022-23 this is mainly on account of increase in 6 hotels under the category i.e. 12 hotels in 2024 compared to 6 hotels in 2023. In terms of rooms there was increase of 274 rooms as compared to 2023 i.e. 518 rooms in 2024 compared to 244 rooms in 2023.

• Room income from ‘Franchise in the financial year 2023-24 increased by Rs 320.71 lakhs or 90.13% as compared to financial year 2022-23 this is mainly on account of increase of 281 rooms as compared to 2023 i.e. 2394 rooms in 2024 compared to 2113 rooms in 2023. Also, franchise operations were for entire year in 2024 as compared to 9 months in 2023.

• Room income from ‘Owned in the financial year 2023-24 increased by Rs 132.51 lakhs or 10.43% as compared to financial year 2022-2323 this is mainly on account of increase of 38 rooms as compared to 2023 i.e. 202 rooms in 2024 compared to 164 rooms in 2023.

• Room income from ‘Managed in the financial year 2023-24 increased by Rs 127.88 lakhs or 256.15% as compared to financial year 2022-23 this is mainly on account of increase in property count i.e. 16 hotels in 2024 compared to 9 hotels in 2023. In terms of rooms there was increase of 327 rooms as compared to 2023 i.e. 649 rooms in 2024 compared to 322 rooms in 2023.

• Food & Restaurant income in the financial year 2023-24 increased by Rs 47.78 lakhs or 7.99% as compared to financial year 2022-23

Other Income

Other Income in the financial year 2023-24 increased by Rs 55.39 lakhs or 334.38%, reaching Rs 71.96 lakhs in comparison to the Rs 16.57 lakhs incurred in the Financial Year 2022-23. This increase was primarily due to increase in Sundry balances written back of Rs 54.23 lakhs, increase in Other miscellaneous income of Rs 11.36 lakhs and decrease in foreign exchange gain/ (loss) of Rs 9.39 lakhs.

Cost of materials consumed

Cost of materials consumed in the financial year 2023-24 increased by 29.99%, reaching Rs 532.31 lakhs constituting 10.04% of total income.

Employee Benefits Expenses

Employee benefit expenses in the Financial Year 2023-24 increased by 105.05%, reaching Rs 1,030.08 lakhs in comparison to the Rs 502.35 lakhs incurred in the Financial Year 2022-23. This rise in employee expenses primarily stemmed from increases in Salaries and incentives, bonus which went up by Rs 535.63 lakhs and staff welfares which went down by Rs 14.88 lakhs.

Finance Costs

Finance Costs in the Financial Year 2023-24 increased by 93.76%, reaching Rs 49.88 lakhs in comparison to the Rs 25.74 lakhs incurred in the Financial Year 2022-23. This rise in finance costs primarily stemmed from increases in Interest expense which went up by Rs 16.72 lakhs and other financial charges which went up by 10.06 lakhs.

Depreciation and amortization expenses

Depreciation and amortization in the Financial Year 2023-24 decreased by 10.22%, reaching Rs 238.38 lakhs in comparison to the Rs 265.52 lakhs incurred in the Financial Year 2022-23.

Other Expenses

Other expenses in the Financial Year 2023-24 increased by 35.35%, reaching Rs 2,316.87 lakhs in comparison to the Rs 1,711.80 lakhs incurred in the Financial Year 2022-23. This increase in other expenses was primarily attributed to several factors, including Rs 174.17 lakhs increase in Rent including lease rent, Rs 122.62 lakhs increase in Royalty expense, Rs 63.98 lakhs increase in Revenue commission expenses, Rs 60.74 lakhs increase in Electricity expenses, Rs 54.69 lakhs increase in Professional fees and Rs 50.91 lakhs increase in Commission and sales promotion expenses.

Tax Expenses

Tax expenses decreased by 27.68%, reaching a total of Rs 236.21 lakhs in the financial year 2023-24, in contrast to the Rs 326.63 lakhs in the financial year 2022-23.

Profit after Tax (PA T)

Due to the aforementioned factors, the profit experienced an upswing, primarily driven by the growth in total income and a decrease in total expenses as a percentage of total income. The Profit After Tax (PAT) for the financial year 2023-24 reached Rs 895.87 lakhs, marking a notable increase from Rs 278.32 lakhs in the financial year 2022-23. In the financial year 2023-24, PAT constituted 16.90% of the total revenue, in contrast to 7.94% in the fiscal year 2022-23.

Rationale for increase in Profit after Tax (PAT) compared to total income

The increase in Profit after Tax (PAT) compared to Revenue from operation is mainly on account of organic and inorganic growth as below:

1. The growth in Room income in owned category in 2024 compared to 2023 is 10.43% organic growth in the room revenue from 5 owned hotels.

2. The growth in room income in Revenue share and Lease category in 2024 compared to 2023 is 90.22 % this is mainly on account of increase in 6 units under the category i.e. 12 hotels in 2024 compared to 6 hotels in 2023.

3. There is 90.13 % growth in revenue from franchisee operation in 2024 compared to 2023 the said growth is mainly on account of full year of Master Franchise operation compared to 9 months of 2023.

4. The revenue from property under management contract increased by 256.1517 % in 2024 compared to 2023 is mainly on account of increase in property count i.e. 16 hotels in 2024 compared to 9 hotels in 2023.

5. Acquisition of the UAE based 100 % subsidiary which is acquired in current financial year i.e. 2023- 24.

6. There is increase in Avg. operational revenue per room night sale of hotels.

7. There is increase in Avg. Occupancy % of hotels

The increase in Profit after Tax (PAT) compared to Revenue from operation is mainly on account of below points:

1. Increase in EBITDA Margin:

Particulars	For the year ended on
	March 31, 2024	% of Total Income	March 31, 2023	% of Total Income
Revenue from operation	5,227.65	98.64%	3,503.30	99.53%
Other income	71.96	1.36%	16.57	0.47%
Total Revenue	5,299.61	100.00%	3,519.86	100.00%
Cost of materials consumed	532.31	10.04%	409.51	11.63%
Employee benefit expenses	1,030.08	19.44%	502.35	14.27%
Other expenses	2,316.87	43.72%	1,711.80	48.63%
EBITDA	1,387.18	26.18%	874.69	24.85%
Finance cost	49.88	0.94%	25.74	0.73%
Depreciation & amortization expense	238.38	4.50%	265.52	7.54%
Profit Before Tax	1,132.08	21.36%	604.95	17.19%
Tax Expenses	236.21	4.46%	326.63	9.28%
Profit (Loss) for the Year	895.87	16.90%	278.32	7.91%

As observed from the table above, there is a marginal improvement in the EBITDA margin by 1.33%, mainly due to the expansion of business operations, i.e., an increase in revenue while keeping fixed/semi-variable costs the same. However, the finance cost as a percentage of revenue increased by 0.21%, resulting in a net increase in the PAT margin by 1.12%.

2. Decrease in Depreciation and Amortization expenses:

> Revenue from operations increased by Rs1,724.35 lakhs in 2023-2024 compared to 2022-2023.

This increase in operational revenue is majorly contributed by revenue models such as i) Revenue share and lease, ii) Franchise, and iii) Managed. These revenue models do not require major investment in fixed assets, i.e., the company successfully increased revenue without major increases in fixed assets. Thus, the depreciation expenses did not increase with the rise in operational revenue.

> The company follows the WDV method of accounting for depreciation, which relatively reduces the depreciation cost in the absence of major additions.

> As a result, the relative decline in depreciation expense as a proportion of revenue contributed to an increase of 3.04% in the PAT margin.

3. Tax expenses:

> The company acquired a wholly owned subsidiary operating a hotel in Dubai, UAE, effective from January 2024. In the restated consolidated financial statement, the operational revenue from this subsidiary amounted to T467.96 lakhs and T322.65 lakhs as Profit Before Tax (PBT). The effective tax rate in INR is 6.63%, i.e., a tax provision of Rs21.41 lakhs, resulting in a PAT contribution of T301.24 lakhs. In contrast, PBT from Indian operations is T809.43 lakhs, with a corresponding tax provision of T214.80 lakhs, reflecting an effective tax rate of 26.54%.

> Thus, the lower effective tax rate for the UAE operations led to a significant reduction in overall tax expenses, contributing to a 4.82% increase in the PAT margin.

Cash Flow

The table below summaries our cash flows from our Restated Financial Information for the financial years ended on 2025, 2024, and 2023:

(Rs in lakhs)

Particulars	FY 2025	FY 2024	FY 2023
Net cash (used in)/ Generated from operating activities	393.73	1,052.19	977.46
Net cash (used in)/ Generated from investing activities	(493.72)	(847.70)	(1,197.17)
Net cash (used in)/ Generated from finance activities	259.34	(86.04)	385.03
Net increase/ (decrease) in cash and cash equivalents	159.35	118.46	165.32
Cash and Cash Equivalents at the beginning of the period	375.24	256.79	91.46
Cash and Cash Equivalents at the end of period	534.60	375.24	256.79

Cash Flow from/(used in) Operating Activities

Net cash generated from operating activities in the Fiscal 2025 was Rs 393.73 lakhs and our profit before tax that period was Rs 1,933.00 lakhs. The difference was primarily attributable to depreciation, amortisation and impairment of Rs 259.34 lakhs, finance costs of Rs 201.72 lakhs, and thereafter change in working capital of Rs (1,609.13) lakhs respectively, resulting in gross cash generated from operations at Rs 792.55 lakhs. We have income tax paid of Rs 388.02 lakhs.

Net cash generated from operating activities in the Fiscal 2024 was Rs 1,052.19 lakhs and our profit before tax that period was Rs 1,132.08 lakhs. The difference was primarily attributable to depreciation, amortisation and impairment of Rs 238.38 lakhs, finance costs of Rs 49.88 lakhs, and thereafter change in working capital of Rs (166.04) lakhs respectively, resulting in gross cash generated from operations at Rs 1,240.79 lakhs. We have income tax paid of Rs 188.60 lakhs.

Net cash generated from operating activities in the Fiscal 2023 was Rs 977.46 lakhs and our profit before tax that period was Rs 604.95 lakhs. The difference was primarily attributable to depreciation, amortisation and impairment of Rs 265.52 lakhs, finance costs of Rs 25.74 lakhs, and thereafter change in working capital of Rs 333.60 lakhs respectively, resulting in gross cash generated from operations at Rs 1,238.60 lakhs. We have income tax paid of Rs 261.14 lakhs.

Cash Flow from/(used in) Investing Activities

In the Fiscal 2025, our net used in investing activities was Rs 259.34 lakhs, which was primarily for Payments for acquisition of property, plant and equipment and intangible assets of t (201.56) lakhs, Payments made for Capital work-in-progress of t (295.18) lakhs and Interest received of Rs 3.03 lakhs during the said period.

In the Fiscal 2024, our net used in investing activities was Rs 847.70 lakhs, which was primarily for Payments for acquisition of property, plant and equipment and intangible assets of t (135.25) lakhs, Payments made for Capital work-in-progress of t (717.12) lakhs and Interest received of Rs 4.67 lakhs during the said period.

In the Fiscal 2023, our net used in investing activities was Rs 1,197.17 lakhs, which was primarily for Payments for acquisition of property, plant and equipment and intangible assets of t (990.60) lakhs, Payments made for Capital work-in-progress of t (213.54) lakhs and Interest received of Rs 6.98 lakhs during the said period.

Cash Flow from/(used in) Financing Activities

In the Fiscal 2025, our net cash generated from financing activities was Rs 248.54 lakhs. This was primarily due to Repayment of long-term borrowings of t (311.16) lakhs, Proceeds from long term borrowings of Rs 424.81 lakhs, Repayment of short-term borrowings of t (752.42) lakhs, Proceeds from short term borrowings of Rs 1,089.04 lakhs and Finance costs of t (201.72) lakhs.

In the Fiscal 2024, our net cash used in financing activities was t (86.04) lakhs. This was primarily due to Repayment of long-term borrowings of t (185.32) lakhs, Proceeds from long term borrowings of Rs 861.70 lakhs, Repayment of short term borrowings of t (1,906.13) lakhs, Proceeds from short term borrowings of Rs 1,193.59 lakhs and Finance costs of t (49.88) lakhs.

In the Fiscal 2023, our net cash generated from financing activities was Rs 385.03 lakhs. This was primarily due to Repayment of long-term borrowings of t (211.11) lakhs, Proceeds from long term borrowings of Rs 36.64 lakhs, Proceeds from short term borrowings of Rs 585.25 lakhs and Finance costs of t (25.74) lakhs.

Information required as per Item 11 (II) (C) (iv) of Part A of Schedule VI to the SEBI Regulations:

1. Unusual or infrequent events or transactions

To our knowledge there have been no unusual or infrequent events or transactions that have taken place during the last three years other than shut down of business due to COVID-19.

2. Significant economic changes that materially affected or are likely to affect income from continuing operations.

Our business has been subject, and we expect it to continue to be subject to significant economic changes arising from the trends identified above in ‘Factors Affecting our Results of Operations and the uncertainties described in the section entitled “Risk Factors” beginning on page 34 of this Draft Red Herring Prospectus. To our knowledge, except as we have described in this Draft Red Herring Prospectus, there are no known factors which we expect to bring about significant economic changes.

3. Income and Sales on account of major product/main activities

Income and sales of our Company mainly consist of

a) Room Income.

b) Food & Restaurant

c) Other Operating income.

Room Income is further bifurcated into

a) Owned.

b) Revenue share and lease.

c) Franchise

d) Managed

4. Whether the company has followed any unorthodox procedure for recording sales and revenues

Our Company has not followed any unorthodox procedure for recording sales and revenues.

5. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations.

Apart from the risks as disclosed under Section titled “Risk Factors beginning on page 34 in this Draft Red Herring Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

6. Extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices.

Increases in revenues are by and large linked to increases in volume of business.

7. Total turnover of each major industry services in which the issuer company operated.

The Company is in the business of, the relevant industry data, as available, has been included in the chapter titled “Industry Overview ” beginning on page 34 of this Draft Red Herring Prospectus.

8. Status of any publicly announced new products or business services.

Our Company has not announced any new services or business services.

9. The extent to which business is seasonal.

Our Companys business is subject to seasonality. For further information, kindly check “Risk Factors beginning on page 34 in this Draft Red Herring Prospectus

10. Any significant dependence on a single or few suppliers or customers.

The % of contribution of our Companys suppliers vis-a-vis the total revenue from operations respectively for the Fiscal 2025, 2024 and 2023 is as follows:

Particulars	Top Suppliers as a percentage (%) of total purchases
	Fiscal 2025	Fiscal 2024	Fiscal 2023
Top 5	18.05%	14.40%	13.81%
Top 10	22.13%	23.82%	23.33%

The % of contribution of our Companys customers vis-a-vis the total revenue from operations respectively for the Fiscal 2025, 2024 and 2023 is as follows:

Particulars	Top Customers as a percentage (%) of total sales
	Fiscal 2025	Fiscal 2024	Fiscal 2023
Top 5	1.51%	3.02%	3.87%
Top 10	2.23%	4.98%	6.50%

11. Competitive conditions.

Competitive conditions are as described under the Chapters titled “Industry Overview” and “Our Business” beginning on pages 123 and 148, respectively of this Draft Red Herring Prospectus.