TajGVK Hotels & Resorts Ltd Management Discussions

Forward Looking Statement

Your Company has been reporting consolidated results taking into account the results of its Subsidiary Company i.e. Green Woods Palaces and Resorts Private Limited (which operates the Taj Santacruz Hotel in Mumbai). The Management Discussion and Analysis section therefore, covers the financial results of your Company for the financial year 2025-26. Some statements describing the projections, estimates, expectations or outlook, may be forward looking. Actual results may, however, differ materially from those stated, on account of various factors such as changes in government regulations, tax regimes, economic developments within India, exchange rates and interest rates fluctuations, impact of competition, demand and supply constraints, etc.

Global Economy

The global economy in FY25-26 faces a subdued growth trajectory of around 2.5% to 2.7%, dampened by supply-side energy shocks, rising geopolitical tensions in the Middle East, and lingering trade policy shifts. Developed nations experience sticky inflation, while major economic drivers like the US and China slow down.

The global economy is facing another major shock. The conflict in the Middle East has triggered sharp increases in energy prices, renewed inflationary pressures, and fueled expectations of tighter monetary policy. Global growth is projected to slow to 2.5 percent in 2026, from 2.9 percent in 2025·the lowest rate since the COVID-19 pandemic·amid weaker prospects for economies dependent on energy imports and those directly affected by hostilities. Activity is expected to firm in 2027-28 as energy supplies recover, monetary easing resumes, and trade strengthens.

Growth in emerging market and developing economies (EMDEs) is expected to slow to 3.6 percent this year. For all EMDE regions, growth this year is forecast to be weaker than in 2025. Per capita income growth in EMDEs is projected to slow in 2026 to its weakest pace since the pandemic. Ke level of per capita income across EMDEs excluding China and India, relative to advanced economies, is not expected to return to the pre-pandemic level until after 2028, implying nearly a decade of lost income convergence. Risks to the outlook remain skewed to the downside. A renewed escalation of hostilities or more prolonged disruptions to commodity flows could further raise commodity prices, intensify inflationary pressures and food insecurity, trigger financial stress, and lower growth. If energy supply disruptions prove more severe than assumed and are accompanied by substantial financial stress, global growth could fall to just 1.3 percent in 2026. Persistent trade policy uncertainty, geopolitical strains, and weather related shocks also pose material risks. On the upside, broader investment in and adoption of artificial intelligence (AI) could lift activity.

Policy action is critical to address ongoing challenges. Enhanced global cooperation is needed to safeguard energy and food security, bolster the trading system, and advance the energy transition. Domestically, policy makers will need to balance controlling inflation with supporting activity, strengthen fiscal sustainability, and maintain financial stability.

Slower growth prospects translate into reduced investment, constrained hiring, and tighter fiscal space, compounding the challenge of creating jobs in EMDEs with growing workforces in an era of potentially transformative change linked to AI. Meeting this challenge will require a concerted agenda centered on the conditions for job creation: investing in physical, human, and digital capital; fostering a business-friendly environment; and mobilizing private investment. In addition to the global and regional outlooks, this edition of Global Economic Prospects features two analytical chapters. One chapter examines the impact of government debt on interest rates. Another chapter considers the challenges of fiscal policy in commodity-exporting EMDEs.

Navigating Volatility: Fiscal Policy and Commodity Price Swings. Large commodity market disruptions·most recently triggered by the conflict in the Middle East·have brought renewed attention to the persistent fiscal challenges faced by commodity-exporting EMDEs. Since 2000, fiscal positions in these economies have generally been weaker than those in other EMDEs, reflecting lower and more volatile revenues, commodity price swings, and limited buffer accumulation in good times. Government debt across EMDEs has risen since the global financial crisis, but commodity exporters are especially vulnerable. A 1 percent increase in commodity prices raises both revenues and primary spending in commodity exporters by about 0.4 percent after five years, suggesting that revenue windfalls are gradually spent rather than saved. Fiscal positions over commodity price cycles vary across exporters of different commodi ties. Primary balances in energy and metal exporters strengthen during booms and worsen in slumps, mainly as a result of revenue swings, while primary spending remains broadly contained; debt ratios fall in booms and rise in slumps. In contrast, agricultural exporters increase spending in booms, offsetting revenue gains and leading to more lasting debt accumulation.

Macroeconomic Trends

Sluggish Global Growth: World output remains well below pre-pandemic averages (3.2%), with the World Bank projecting global expansion at 2.5%.

Energy and Supply Shocks: Regional conflicts have spiked oil, freight, and insurance costs, keeping inflation elevated in developed economies (averaging near 2.9%).

Major Power Slowdown: US GDP growth cools to the 1.5%·2.1% range, and China moderates down toward 4.5%-4.6% amid structural transitions.

Indian Economy

Indias GDP growth for FY26 is estimated at 7.4 per cent driven by the double engine of consumption and investment. It reaffirms Indias status as the fastest-growing major economy for the fourth consecutive year. This was highlight of the Economic Survey 2025-26 tabled by the Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman in Parliament today.

The Survey says the real GDP growth for FY27 is projected at 6.8-7.2 per cent, while the potential growth for India is estimated at around 7 per cent. The Survey points out that the domestic demand continues to underpin economic growth in FY26. According to the First Advanced Estimate, the share of final private consumption expenditure (PFCE) in GDP rose to 61.5 per cent in FY26. This strength in consumption reflects a supportive macroeconomic environment, characterised by low inflation, stable employment conditions, and rising real purchasing power. Moreover, steady rural consumption, bolstered by strong agricultural performance, and the gradual improvement in urban consumption, aided by the rationalisation of direct and indirect taxes, reaffirm that the momentum in consumption demand is broad-based.

Along with consumption, investment has continued to anchor growth in FY26, with the share of gross fixed capital formation (GFCF) estimated at 30.0 per cent. Investment activity strengthened in the first half of the year, with, GFCF expanding by 7.6 per cent, exceeding the pace recorded in the corresponding period last year and remaining above the pre-pandemic average of 7.1 per cent.

Regional Bright Spots (India Focus)

Out performer Status: Indias real GDP growth for FY25-26 is estimated at a robust 7.4%, retaining its position as the fastest- growing major economy.

Domestic Resiliency: Strong private consumption (growing around 7%), public capital expenditure, and lower headline retail inflation fuel domestic momentum.

External Sector Stability: High foreign exchange reserves ($700B+) and record services exports buffer the domestic market against international trade headwinds.

Global Hospitality and Tourism Industry

The global tourism industry reached a new post-pandemic peak in 2025, fully surpassing pre-COVID levels. According to the UNWTO Barometer (January 2026), international tourist arrivals are estimated to have reached 1.52 billion in 2025, representing a 4% increase over 2024 and reaffirming a return to long-term growth trends. Growth was supported by strong demand from large source markets, expanded air connectivity, and continued visa facilitation initiatives across destinations.

Europe remained the most visited region, accounting for about 52% of global international arrivals, with 794 million visitors. International arrivals in Europe grew by 4% Y-o-Y and marginally exceeded pre-pandemic levels. The Americas recorded approximately 218 million international arrivals, reflecting ~1% growth over 2024 and reaching 99% of 2019 levels.

The Middle East continued to outperform pre-pandemic benchmarks, with international tourist arrivals exceeding 2019 levels by 39%, although growth over the previous year remained modest at 3%. Africa also surpassed pre pandemic performance, registering a 17% increase over 2019 and an 8% Y-o-Y growth in arrivals during 2025.

The Asia-Pacific (APAC) region made significant progress in its recovery, recording 331 million international arrivals in 2025. The regions share of global arrivals increased to ~22%, while overall arrivals recovered to 91% of pre pandemic levels.

In revenue terms, total export earnings from tourism, including passenger transport, are estimated to have reached a record USD 2.2 trillion in 2025, representing an approximately 5% increase from 2024. International tourism receipts also recorded extraordinary growth during the year, with several destinations reporting higher growth in receipts than in arrivals.

Outlook

Whilst the global hospitality and tourism sector entered 2026 from a position of strength, having completed its post pandemic recovery, the outlook for the year ahead remains characterised by measured optimism amidst persistent uncertainties.

Geopolitical tensions in West Asia have impacted tourism activity across the region, driven primarily by heightened uncertainty and operational disruptions. These developments have weighed on traveller confidence and influenced destination preferences, resulting in some moderation in international travel flows. Given the regions importance within global travel networks, the impact has extended beyond immediate markets, with spillover effects on broader tourism and hospitality demand.

Although geopolitical risks and economic conditions in certain markets continue to present near-term uncertainties, the broader environment remains supportive of the industry. The sector has repeatedly demonstrated resilience, rebounding strongly from far more severe disruptions in the past. The global hospitality and tourism industry remains well poised for long-term growth, supported by stable employment markets, a healthy level of business activity and resilient leisure demand.

The travel and tourism sector also continues to benefit from favourable structural drivers, supported by sustained demand for both business and leisure travel. Rising disposable incomes and the expansion of the middle class across emerging markets remain key demand catalysts. Travel demonstrated resilience as a discretionary spending category, while business travel demands remain strong.

Indian Hospitality and Tourism Industry

The Indian travel and tourism industry remained on a positive trajectory in FY2025-26, led by strong domestic leisure demand and improving corporate travel. Inbound travel also continued its gradual recovery, supported by better connectivity and visa facilitation. As per World Travel & Tourism Council (WTTC) Economic India Impact Report 2025, the tourism sector accounted for an estimated 9.4% of total employment in India during FY2023-24 and contributed 6.6% to Indias GDP, underlining its significant role in supporting economic growth and employment generation.

During calendar year 2025, India recorded 9.02 million foreign tourist arrivals and foreign exchange earnings of 27,363.8 crores. Domestic tourist visits stood at 4,132.8 million during the same period. A facilitative visa regime remains a key enabler for inbound tourism. As of December 2025, Indias e-visa facility covered nationals of 172 countries, with entry permitted through 33 international airports, 16 seaports, and 2 land ports.

Resilient leisure demand and improving corporate travel supported occupancy levels during the year, while continued supply discipline helped sustain pricing momentum across ADR and RevPAR. The sector extended the upcycle witnessed between FY2023-24 and FY2025-26, with occupancy, ADR and RevPAR remaining at or above pre COVID levels. As per Horwath HTL, national occupancy stood at 64% in 2025 (2024: 63.0%), while ADR increased to 8,624 (+8.5% Y-o-Y) and RevPAR rose to 5,522 (+8.7% Y-o-Y). Looking ahead, a structural demand-supply imbalance across key markets, coupled with improving infrastructure may support sustained occupancy levels and healthy pricing, including in select Tier 2 and 3 markets, subject to macroeconomic conditions and any event-related disruptions.

ICRA projects demand growth of 8-10% CAGR compared with supply growth of 5-6% during FY2025-FY2028. Supply additions are expected to remain measured due to higher land and construction costs, longer approval timelines and talent availability, which may continue to support occupancy and ADR levels.

Ongoing initiatives under Swadesh Darshan 2.0 and PRASHAD, destination development across select iconic sites, connectivity enhancement measures and community-based tourism initiatives such as homestays are expected to improve destination readiness over time. Skilling programmes, including Capacity Building for Service Providers (CBSP), Paryatan Mitra and Paryatan Didi, may further support service quality and employability, although execution and uptake will remain important.

RCS UDAN has also been introduced to strengthen regional air connectivity through affordability measures and viability support, with 53 tourism routes operational to improve access to key and iconic tourist destinations.

Effective September 22, 2025, the GST rate on hotel rooms priced up to 7,500 per day was reduced to 5% (without input tax credit), improving affordability, simplifying taxation, and supporting demand in the mid scale and budget segments, despite the trade-off arising from the loss of input tax credit for businesses.

Outlook

The hospitality sector is expected to remain stable in FY2026-27, supported by domestic leisure travel and MICE demand, with room rates likely to remain firm. According to ICRA, industry revenues are projected to grow by ~7-9% Y-o-Y in FY2026-27, with occupancy and ARR continuing to improve. Near-term performance, however, may be affected by geopolitical developments in West Asia and related aviation disruptions, which could temporarily impact select international and corporate travel corridors while keeping fuel, logistics and utility costs elevated.

Over the medium to long term, structural drivers, including rising discretionary spending, an expanding middle class and continued business travel, are expected to support industry growth. Indias rising prominence in the global economy is also expected to contribute to sectoral growth by attracting higher inflows of foreign visitors, including heads of states and senior business executives.

The Companys strong domestic presence, balanced portfolio of owned, leased and managed properties; diversified brand architecture across geographies and segments; and stable stream of fee-based income provide a strong platform for sustained growth. These strengths enhance the Companys ability to navigate evolving economic conditions with agility, reinforce resilience, and capitalise on emerging opportunities over the medium to long term.

Property Upgrades and Renovations

We carry out necessary upgradations to keep our hotels 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. During the year your company has carried out renovation 24 guest rooms at Taj Deccan as part of its phased refurbishment plan to maintain best in class customer satisfaction at its properties. It also refurbished the roof top F&B outlet at Taj Club House, Chennai and relaunched it as a roof top bar Lava to attract the young discerning patrons in the city and company has completed construction of all rooms and public area works of Begaluru Hotel Project. This project consists of 255 room Hotel and estimate of project cost is around 450 crores.

Environment, Health and Safety

Weare committed towards operating in an environmentally responsible manner while catering to the interests of our diverse stakeholders. During the year, we took various measures to mitigate the impact of our operations on the climate and environment and preserve the planet for the future generations.

Optimising use of natural resources such as energy and water and managing waste efficiently are some of our priority focus areas. We have persistently worked towards optimising energy and water usage and responsible waste management. The hotels have generated significant savings by conserving water and energy and installing organic waste convertors to reduce waste sent to landfill.

Your Companys hotel i.e. Taj Club House, Chennai utilises power from renewable energy sources, which not only helps in reducing the carbon footprint, but also in optimising cost of power. We source 3 Million units renewable energy mainly through Power Purchase Agreements with private power producers operating in the green power sector. Additionally, we emphasise on reducing our energy consumption wherever possible. Waste management is an integral part of your Companys environment management endeavour. Your Company promotes waste reduction, as well as segregation and recycling. The Hotel units either process waste using onsite waste treatment plants or engages certified vendors to promptly collect the waste for further processing. Sludge from sewage treatment plants is safely disposed by the agencies contracted for the management of these units. We are committed to phasing out single-use plastics across all our properties and have been making steadfast progress towards this goal every year. Water is a critical and scarce resource for local communities and for our industry. We are aware of the increasing water stress in our areas of operation and the need to strive for maximum water efficiency. We optimise our water consumption and work hard to mitigate our impact on the availability of freshwater. We manage our water resources and utility in an efficient manner, thereby ensuring there is no water shortage at any time. Water security assessment of hotels is undertaken regularly to identify water-related risks and strengthen preparedness to manage them.

Safety continues to be one of the top priority areas of your Company wherein all measures have been taken to ensure safety of all stakeholders. Your Company continues to drive awareness on safety across hotels. Common safety hazards and their safeguards have been highlighted in specially designed animated safety videos, and, case studies based on true incidents continue to be shared with the hotels as a learning tool. The approach of routinely identifying safety risks associated with operations helps your Company implement appropriate and effective mitigation plans and ensures adherence to overall Safety compliance. The Fire and Life Safety (FLS) audits, Standard Operating Procedures (SOPs) on safety such as Safe Sewage Treatment Plant Operations, Safe Banqueting Operations, Visitors etc., To ensure a continuous focus on safety, we created and implemented a Basic Safety Training Module for all hotels. This will act as an induction as well as refresher module for all employees. Teams at hotels continue to drive health, safety and security awareness sessions continuously, thus ensuring unwavering focus.

Food Safety, Hygiene and Cleanliness

Continuous improvement of the Food Safety Management System by training and optimising the capacities of people, processes and technologies is an ongoing exercise. To increase the rigour in respect of Food Safety, Hygiene and Cleanliness audits were conducted by an external audit partner, ensuring implementation of FSSAI guidelines and standards. In order to address the challenges posed during of the COVID-19 pandemic, your Company has taken several measures to ensure safety and wellbeing of its associates and guests. Following are some of the safety measures undertaken at hotel units.

Human Capital

Your Companys employees are its most valuable asset, who enable the Company to deliver a level of service that is amongst the highest in the hospitality industry. A combination of a robust talent management strategy and a transparent performance management system, leading to an attractive long term compensation philosophy, is employed to attract and retain the best available talent We continually strive to make our operations more efficient, while creating a respectful work environment for each member of our team. Our key performance processes have been improved continually and updated with the intention of ensuring that they serve as effective enablers for people development and keep our talent management strategy upto date.

Risk Governance and Management

The process of risk governance and management involves identification of risks, framing an adequate response to manage and mitigate the risks identified, followed by constant monitoring and review of the risk management process. The Risk Management Committee of the Board is responsible for developing and monitoring the risk management policies and also oversees how management monitors compliance with the Companys risk management policies and procedures. Internal audit department facilitates identification of risks and mitigants.

Company Overview

Your Company witnessed robust growth in revenue across all hotels. The company achieved higher revenues across the business segments viz, rooms, Banquets and restaurants compared to previous financial year.

Financials

Revenue from operations for FY 2025-26 was Rs.502.53 crores as compared to Rs.461.32 crores in the previous year. The room revenues were at Rs.260.45 crores and the food and beverage income was Rs. 198.97 crores.

Expenditure

Total Expenses increased to 344.52 crores during the current year from Rs. 332.73 crores in the previous year. While Total Income increased by 9% from the previous year, total Expenses increased by 4% from the previous year mainly due to increase in variable costs consequent to increased business activity. There was also spend of Rs.8.01 crores on renovation of rooms and public areas at our hotels as compared to the previous year.

Profit Before Tax

The company reported a Profit Before Tax of Rs.158 crores as compared to Rs.128.59 crores in the previous year.

Profit After Tax

The company reported a Profit After Tax of Rs.116.97 crores as compared to a Profit After Tax of Rs.94.85 crores in the previous year.

Variances Under each Expenditure Head are explained below

Food and Beverages Consumed: Whilst Food and Beverages Income increased by 5% from the previous year, Food and Beverages Consumed actually increased by 8% to Rs.41.06 crores from Rs.38.16 crores in the previous year. This is primarily on account of impact on business in the first few months of the year due to Operation Sindoor as well as the increase in raw material cost and transportation due to the West Asia crisis. Cost as a percentage of Food and Beverages was almost stagnant at 20% as against a similar percentage in the previous year.

Employee benefit expenses and Payment to Contractors

Employee Benefit Expenses and Payment to Contractors increased by 12% to Rs.94.71 crores in the current year from Rs.84.51 crores in the previous year. This was mainly due to an increase in employee costs commensurate with increase in business activities. The increase was also attributed towards merit increases, increments paid to employees, negotiated salary increases with labour unions, talent development initiatives and compliance of necessary laws.

Depreciation and Amortisation Expenses

Depreciation and Amortisation Expenses decreased by 4% from Rs.13.20 crores in the previous year to Rs.12.64 crores in FY 2025-26, on account of cessation of depreciation on fully written down assets as well as disposal of certain assets during the year.

Other Operating and General Expenses

Other Operating and General Expenses increased by 2% to Rs.191.45 crores in the current year from Rs.187.99 crores in the previous Year.

Finance Costs

Finance Costs for the current year at Rs.4.66 crores was lower than the preceding year by Rs.4.19 crores or 47%. The reduction was mainly due to repayment of term loans and effective working capital management.

Liquidity and Debt

The Company maintained a good liquidity position during the year and met all its interest and principal repayment obligations. At the end of the year, the liquidity position represented by cash, cash equivalents and fixed deposits were at Rs.92.88 crores over the previous year to Rs.70.23 crores. As at 31st March, 2026 the Company had Rs.21.18 crores of cash and bank balance and Rs.30 crores as undrawn credit facilities, which provide the Company financial flexibility. During the year, the gross debt increased by Rs.70.44 crores on account of drawal of term loan availed for Yelahanka hotel project, subsequent to repayment of first instalment of Rs.5 crores.

Internal Control Systems and Their Adequacy

Your Company has institutionalized an adequate system of internal controls, with documented procedures covering all corporate functions and hotel operating units. 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. Your Companys Internal Auditors carryout audit of the transactions of the Company periodically, in order to ensure that recording and reporting are adequate and proper. Internal Audit also verifies whether internal controls and checks & balances in the systems are adequate, proper and up to date. Corrective actions for any weaknesses in the system that may be disclosed by the Audits are taken. The focus of these reviews is:

• 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

The Boards Audit & Risk Management Committee oversees the adequacy of the internal control environment through periodic reviews of audit findings and monitoring implementations of internal audit recommendations through compliance reports.

The internal controls currently in place at your Company are commensurate with the size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use, executing transactions with proper authorisation and ensuring compliance with corporate policies. The Statutory Auditors have opined in their report that there are adequate internal controls over financial reporting at your Company.

Risk Mitigation Initiatives

Your Company employs various policies, processes and methods to counter the following risks effectively:

• Continuously evaluates options for improving profitability of its assets.

• Counters the risk from growing competition and new supply by extensively improving its service standards, as also progressively renovating its properties, across the multi-brand portfolio.

• Counters the security/terrorism risk by constantly reviewing and implementing various security measures at all its properties.

• With the advent and increasing use of online transactions, there is an increasing proportion of sharing of revenues with online travel agents. Adequate measures were taken to educate customers on the benefits of booking directly on the Taj website and the website has also been revamped to enhance the customer experience. Additionally, mobile platforms have been developed for customers, specially targeted at the loyalty and on-thego segments.