Viceroy Hotels Ltd Management Discussions.

FORWARD LOOKING STATEMENT

Your Company has been reporting consolidated results taking into account the results of its joint venture. This discussion, therefore, covers the financial results of your Company from April 2019 to March 2020.The report contains forward-looking statements, identified bywords like plans, expects, will, anticipates, believes, intends, projects, estimates and so on. All statements that address expectations or projections about the future, but not limited to the Companys strategy for growth, product development, market position, expenditures and financial results, are forward looking statements. Since these are based on certain assumptions and expectations of future events, the Company cannot guarantee that these are accurate or will be realised. The Companys actual results, performance or achievements could thus differ from those projected in any forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any such statements on the basis of subsequent developments, information or events. The Company disclaimsany obligation to update these forward-looking statements, except as may be required by law.

ECONOMIC OVERVIEW GLOBAL ECONOMY: THEYEAR IN REVIEW

The International Monetary Fund (IMF) had forecast global growth of 2.9% in 2019, its slowest pace since the global financial crisis in 2009, and downgraded its earlier forecast from 3.3%. Although trade tensions between China and the United States (US) stabilised somewhat, they impacted output and global trade. The GDP growth of the US and United Kingdom (UK) was 2.3% and 1.4% respectively, while China, India and ASEAN-5 countries growth was better at 6.1%, 4.2% and 4.8% respectively.

INDIAN ECONOMY: THEYEAR

The Indian economy grew at 4.2 per cent in 2019-20, lower than the 6.1 per cent figure registered in 2018-19, as the Covid-19 pandemic adversely impacted economic activity in the last month of the fiscal year, especially manufacturing and construction. The full-year GDP growth is the lowest India has registered in 11 years. The Central Statistics Office had earlier forecast that the economy would grow at 5 percent in 2019-20. In the January-March quarter, GDP grew at 3.1 per cent as against 5.7 per cent in the corresponding yearago period. These are the first set of GDP numbers showing the impact of the Covid-19 pandemic and the nationwide lockdown, which came into effect from 25 March, 2020.

Economists expect a massive contraction in the first quarter of 2020-21 due to the two month lock down, which likely to pull down the full year growth to a 5-7 per cent contraction. The Reserve Bank of Indias monetary policy committee refrained from providing any growth projections for the first time in its history, citing the huge uncertainties around the pandemic and its impact on various sectors. India has announced a Rs.21 lakh crore economic package comprising mainly credit support measures to different sectors. A sharp decline in domestic consumption and private investment, stress caused by the liquidity crisis at Non-Banking Financial Companies (NBFCs) and weakening credit growth had prompted the revision. Sluggish global growth caused by the downturn in manufacturing, trade and demand had also adversely impacted the Indian economy. However, the services sector continued to outperform the industrial and agricultural sectors in terms of gross value added (GVA), with service exports outperforming goods exports in the recent years. The governments fiscal stimulus through the lowering of corporate tax rates, merger of public sector banks, focus on manufacturing, support for affordable housing, together with the Reserve Bank of Indias monetary stimulus through the reduction in policy rates, and subdued oil prices were expected to propel the Indian economy. (Source: Economic Survey 2019-20)

ECONOMIC OUTLOOK (Post COVID-19) India:

The Indian government has announced a series of fiscal stimulus packages and subsidies to support small and mediumsized enterprises, farmers, migrant labour, etc. It has also introduced six-month moratoriums on loans through banks, automatic collateralfree loans to small businesses, reduced withholding tax rates and extended payment due dates. The

RBI too has announced a series of monetary measures to mitigate the risk of a liquidity crisis during economic recovery apartfrom reducing lending ratesto offset a likely creditcrunch.

In the post-COVID-19 scenario, Indias growth rate for 2020 was projected by the IMF in April, 2020 at 1.9%, assuming that the pandemic is brought under control and containment efforts can be gradually scaled back, restoring consumer and investor confidence. However, a recent World Bank Report projects Indias economy to contract by 3.2%. The wide range of economic forecasts notwithstanding, Indias recovery will depend to a large extent on how effectively it manages the health crisis, selectively isolates containment zones, reopens other zones for reviving economic activity as well as how effectively it manages geo-political dependencies. (Source: IMF World Economic Outlook, May 2020 and World BankGlobal Economic Prospects, June, 2020)

GLOBALSCENARIO

As COVID-19 continues to take its toll on human health, government responses to arrest this pandemic across the world are severely impacting economic activity. Several countries have announced large stimulus packages to support the marginalised and working-class families who have been most disadvantaged by the crisis. The US has released a US$ 2.2 trillion corona virus relief package, consisting of cash disbursement to families, financial assistance to small and medium enterprises and big businesses impacted by the virus, as well as hospitals, medical suppliers and public and non-profit health organisations for bolstering life care capabilities, critical supplies and vaccine research. The UK extended a business rates holiday to all businesses in the retail and hospitality sector for twelve months, a cash grant for survival and access to loans on attractive terms.

Countries reliant on tourism, travel, hospitality and entertainment for their growth have been particularly affected. Emerging market and developing economies face additional challenges amid unprecedented reversals in capital flows with the waning of global risk appetite, currency pressures, the stress created by weaker healthcare systems and the limited fiscal space to provide support. (Source: IMF-The Great Lockdown-World Economic Outlook). In its Report, World Economic Outlook, April, 2020, the IMF projected the global economy to contract by 3.0% in 2020. It projected the US economy to contract by 5.9%, that of the UK by 6.5%, Euro area by 7.5% and South Africa by 5.8%. Countries like Maldives could be severely impacted as they are heavily dependent on tourism, especially arrivals from China, the Middle East and Europe. In its recent report on Global Economic Prospects, June, 2020, the World Bank has forecast the global economy to contract by 5.2% in 2020 with advanced economies projected to contract by 7.0% and that of emerging marketand developing economies by2.5%.

INDUSTRY INSIGHT

GLOBAL HOSPITALITY AND TOURISM INDUSTRY (PRE-COVID-19)

Globally, international tourism witnessed 1.5 billion arrivals in 2019, recording a 4% growth in overnight visitors, which was lower than the growth rate of 6% in 2018. This was partly because of the slackening demand in advanced economies, particularly in Europe. Geopolitical stress, social unrest and a global economic slowdown contributed to a lower growth in 2019. With an 8% growth in arrivals and double the global average, the Middle East emerged as the fastest-growing region for international tourism. Although Europe continued to lead, with 743 million international tourists last year and a command of 51% of the global market, Asia and the Pacific saw a healthy 5% increase in international arrivals. In spite of the global economic slowdown, tourism spending continued to grow, with France reporting the strongest increase in international tourism expenditure among the worlds top 10 outbound markets with an 11% increase, while the US, with a 6% increase, led growth in absolute terms, aided by a strong dollar.

(Source: UNWTO Barometer Jan 2020)

GLOBAL HOSPITALITY OUTLOOK (POST-COVID-19)

According to UNWTO, a global organisation for promotion of tourism, the pandemic has already caused a drop of 22% in international tourist arrivals from January-March 2020, and could lead to a further decline of 60-80% due to COVID-19 during the year. With 67 million less international arrivals owing to lockdowns, March 2020 saw a sharp drop of 57% in arrivals and a loss of USD 80 billion in tourism exports. The Asia-Pacific region bore the biggest impact with a decline of 33 million arrivals, while the drop in Europe was 22 million.

UNWTO has given three scenarios for 2020 based on possible dates forthe gradual opening up of international borders in early July, early September or in early December. The impact translates into 850 million-1.1 billion less international tourists, loss of US$910 billion-1.2 trillion in revenues from tourism exports and risk to 100-120 million direct tourism jobs. Domestic leisure demand is expected to recover faster than the international demand, according to a survey by a UNWTO panel of experts. (Source: UNWTO, May 2020). As a sign of hope, Europe, China and South Korea seem to be easing up for domestic tourism, while Iceland has already confirmed that it would welcome international guests from June, 2020 after health checks, which could be the new normal.

INDIAN HOSPITALITY AND TOURISM INDUSTRY (PRE-COVID-19)

India is a tourism hotspot, given its diverse landscape, rich cultural heritage, and the opportunities it offers to businesses with its start-up culture and availability of a young, educated workforce. During 2019, foreign tourist arrivals (FTAs) in India stood at 10.9 million, an increase of 3.2% over 2018. Of this, 2.9 million tourists arrived on e-tourist visa as compared to 2.4 million during 2018, registering a growth of 21%.

INDIAN HOSPITALITY OUTLOOK (POST-COVID-19)

FTA footfall in India, particularly that of leisure travellers, started softening in February 2020, as COVID-19 spread across the globe. Although domestic flights resumed in June 2020, the restrictions on the entry of international travellers means that FTA is not about to pick up any time soon. Even though some countries are reopening, travel bans are expected to be rolled down only by the end of the year. The situation may not improve drastically for the hospitality sector. Except for the smaller-sized hotels, which are now covered under the MSME (micro, small and medium-sized enterprises) the hospitality sector in India has not benefited from the stimulus packages rolled out bythe government.

India ranks 3rd in World Travel & Tourism Councils list for Travel & Tourism Power and Performance. It markedly improved its position from the 40th rank in 2018 to 34th in 2019 in the World Economic Forums Travel and Tourism Competitive Index(TTCI).

The COVID-19 pandemic has impacted all businesses, though in varying degrees a major impact of the pandemic has been felt bythe travel and tourism sector consisting of airlines, hospitality, cruise liners, road and railway transportation, travel and tour operators, in addition to industries such as real estate, construction, passenger vehicles, luxury retail, etc. The COVID-19 pandemic, being highly infectious in nature, has impacted the tourism industry in an unprecedented manner, more so as the industry is highly people-centric in nature, and service delivery involves close interactions between service providersand guests.

The industry has been further impacted bythe governments responses to contain the virus, including social distancing, travel advisories, suspension of visas, prohibition against mass gatherings, cancellation of sporting and cultural events, stoppage of interstate transport, railways, etc. The hospitality and tourism industry is facing a dire and hitherto- unknown situation that has thrown up new challenges and taken the industry by surprise. Even though the government and the RBI announced stimulatory measures to mitigate the immediate challenges faced by the industries and businesses, considering the diverse nature of the hospitality and tourism industry, especially the fact that it is one of the major contributors to the GDP and also a major employment provider, the industry feels that specific measures from the government are extremely crucial for its survival in these challenging times. In this regard, the Federation of Associations in Indian Tourism & Hospitality (FAITH), has made a representation to the task force set up by the government for relief and bailout packages for the industry Despite the challenges posed by the pandemic, the hospitality industry is taking all possible measures to survive in the shortterm, revive in the short-to medium-term and thrive in the long term. The new challenges will assist the industry in preparing for a new normal, where there will be a sea-change in customer perceptions, with hygiene and safety gaining top priority, both amongst businesses and customers, and an exponential increase in the usage of digital solutions, as the world deals with the concept of contactless interchanges between people. The travel industry, worth around US$ 1.6 trillion globally, accounts for one-tenth of the worlds GDP. More importantly, the industry creates greater indirect employment opportunities, thereby helping multiply economic growth. The revival of this sector would largely depend on effective containment measures and treatments.

COMPANY OVERVIEW

Your Company delivered a healthy operating performance during FY 2019-20 in spite of decline in revenues compared to previous year. The decline in revenue was primarily due to Covid-19 pandemic in the last 45 days of the FY2019-20. The renovations undertaken in flagship properties is expected to further enhance the operating margins and revenues in the coming years.

FINANCIAL PERFORMANCE OF THE COMPANY:

The Company operate only in single segment i.e., Business of Hoteliers.

The Companys standalone operating Income has decreased by 0.19% to Rs.88.36 croresfrom Rs. 88.53 crores in the previous year.

The turnover of the company has increased by 0.03 % to Rs.88.11 crores from Rs. 88.08 crores in the previous year.

During the Financial Year under the review, the Companys consolidated total income from aggregated Rs. 126.96 Crores. The Companys consolidated profit before taxes aggregated to Rs. (15.14) Crores. The Companys consolidated profit after taxes aggregated to Rs. (16.85) 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. The 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 weaknessesand improvementareas

• Compliance with defined policiesand 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 atyour 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 thatthere are adequate internal controls overfinancial reporting atyour Company.

HUMAN RESOURCES:

Human Capital

The term human capital formation means, "The process of acquiring and increasing the number of persons who have the skills, education and experience which are critical for the development of the company. Modern technology is becoming more and more complex. With the growth of science, machinery and equipment are becoming more sophisticated. Their efficient operation requires skill and technical knowledge. Therefore, capital development is very significant and your Company endeavours to take a more strategic and supportive approach to recruiting and retention to find and retain thenew breed of evolving talent.

RISKS AND CONCERNS

Industry Risk

General economic conditions The hospitality industry is prone to the impact of changes in global and domestic economies, local market conditions, hotel room supply, international or local demand for hotel rooms and associated services, competition in the industry, government policies and regulations, fluctuation in interest rates and foreign exchange rates and other social factors. The demandfor hotels is affected byglobaleconomic sentiments; and therefore, any change impacting the other segments/industries/geographieswill invariably impact the hotel industry too.

Socio-political Risks

In addition to economic risks, your Company faces risks from the socio-political environment nationally and internationally. It is affected by events like political instability, conflict between nations, threat of terrorist activities, occurrence of infectious diseases, extreme weather conditions and natural calamities. These may affect travel and businessactivityconsiderably.

Company-specific Risks

The Company-specific risks have been reviewed and some of the critical risks are:

Heavy dependence on India

A significant portion of your Companys revenues are realised from its operations, making it susceptible to domestic, socio-political and economic conditions. Moreover, within India, the operations and earnings are primarily concentrated inSouth India, with key properties located in Hyderabad.

High Operating Leverage

The industry in general has a high operating leverage, which has further increased with on-going renovations, increased staff costs, cost of light, power and fuel. However, your Company has been able to earn higher revenues with acceptance of its products and improved RevPAR (revenue per available room) in the markets it operates in. Some of our hotels operate under lease/licence arrangements with third parties. Such arrangements are subject to various risks including unfavourable terms and conditions on renewal or non-renewal, which has a potential to impact our business. Your Company has attempted to mitigate such risks by entering into relatively long-term arrangements.

Risk Mitigation Initiatives

Your Companyemploys 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-the go segments.

COVID-19 Pandemic-Impact and mitigation measures

Your Company has carried out risk assessment to ascertain any potential COVID-19 related risks. As of now, it does not foresee any disruption in raw material supplies. Your Company does not see incremental risk to recoverability of assets (Inventories, Investments, Receivables, etc.) given the measures being taken to mitigate the risks. There is also no impact on internal financial controls due to the COVID-19 situation. However, as the situation is uncertain, dynamic, constantly evolving and beyond the control of your Company, it aims to reassess its position periodically.

Your Company has submitted a detailed response to the Stock Exchanges under Regulations 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Thefollowing section provides a recap of the same.

Impact of COVID-19

The COVID-19 pandemic in India is part of the worldwide pandemic of coronavirus disease 2019 (COVID-19) caused by Severe Acute Respiratory Syndrome Coronavirus 2 (SARS-CoV-2). The first case of COVID-19 in India, which originated from China, was reported on 30th January 2020. The outbreak has been declared an epidemic across India, where provisions of the Epidemic Diseases Act, 1897 have been invoked, leading to the temporary closure of all commercial establishments. All tourist visas have been suspended, as a majority of the confirmed cases were mainly imports.

On 22nd March, India observed a 14-hour voluntary public curfew at the instance of the Honble Prime Minister Mr. Narendra Modi. It was followed by mandatory lockdowns in COVID-19 hotspots and all major cities. Further, on 24th March, 2020 the Prime Minister ordered a nationwide lockdown for 21 days, affecting the entire 1.3 billion population of India. On 14 April, the PM extended the nationwide lockdown till 3rd May which was followed by two-week extension starting 3rd and further two- week extension starting from 17th May 2020 with some relaxations during these phases of lockdown. Beginning 1st June the Government has started un-locking the country (barring containment zones) in 3 phases.

The lockdowns and restrictions imposed on various activities due to COVID —19 have posed challenges to the Viceroy Hotels limited. The company was faced with lot of cancellations of confirmed bookings and thereby impacting the financials of the company.

The Indian hospitality industry is undoubtedly one of the biggest casualties of the COVID-19 outbreak as demand has declined to an all-time low. Global travel advisories, suspension of Visas, the imposition of Section-144 (prohibition against mass gatherings) and the ramifications of which are unprecedented. Lockdown guidelines issued by Central/State governments mandated closure of hotel operations and cessation of air traffic and other forms of public transport. This has resulted in low occupancies/shutdowns of some of the company hotels.

Steps taken to ensure smooth functioning of operations

The Company is taking all necessary measures to reduce fixed costs, rationalize resources, taking initiatives to uplift revenue. The company has put in place a series steps to optimize cost across all the lines namely Raw Material, manpower, Power & Fuel, Corporate Overheads & other costs. The Company is also in discussion with its lessors for waiver or deferment of lease rentals or concession fee during the lockdown period. Cash Conservation measures have also been initiated such as deferral of Capex & Renovation plans unless absolutely requiredfor upkeep of the operations.

During these pandemic times, the safety of our employees has been our top-most priority and the company has taken several measures to ensure their well-being. All employees in our hotels and offices have been working from home in accordance with the guidelines issued by the Central/State/Municipal authorities. The safety of essential employees who are now required to step out for work is being ensured and they have been mandated to use protective gear and take all safety precautions. All employees have been instructed to download the ArogyaSetuapp launched by the Government of India.

Estimation of the future impact of COVID-19 on its operations

Since the situation is exceptional and is changing dynamically, the Company is not in a position to gauge with certainty, the future impact on its operations. We believe there will be impact in sales volumes, revenue, and profitability for Q1 and Q2 FY21 as our hotel operations are presently shut and will gradually ramp up only after the resolution of the pandemic. However, the Company is confident about adapting to the changing business environment and respond suitably to fulfill the needs of its customers.

The Company does not foresee any challenge in recovery, post the revival of the economy and more the Tourism and Hospitality sector. However, revenues are expected to be softer in the initial phase of the lockdown and for some time after the lifting of the lockdown mainly due to lower occupancies & limited F & B offtake arising out of reduced business and leisure travel.

Existing contracts/agreements where non-fulfilment of the obligations by any party will have significant impact on the listed entitys business

The Company is well positioned to fulfil its obligations and existing contracts/arrangements. We have judiciously invoked the Force Majeure clauses for reliefs during the lock down period. At present, we do not foresee any contract/agreements which will have significant impact on the business in case of non-fulfilment of obligations by any party.

Financial Statements

The financial statements to be submitted under Regulation 33 of the LODR, shall also specify the impact of the CoVID-19 pandemic on the Company, to the extent possible. In developing the assumptions and estimates relating to the future uncertainties in the economic conditions because of this pandemic, the Company shall use internal and external sources of information and based on current estimates, the impact of the global health pandemic may be different from that estimated and the Company would continue to closely monitor any material changes to future economic conditions. This update is dynamic and will change as the situation changes, which is not in the control of the Company. We will keep our investors & other stakeholders updated with relevant updates from time to time.

Details of the impact of COVID-19 on your Company

a) Capital and financial resources-Your Company not having sufficient working capital to operate. It is quite pertinent thatthe collections of receivables and payment to vendors will delay due to the lockdown.

b) Profitability- The profitability of your Company has been adversely affected for the first quarter of FY 2020-21 due to the non operation of hotels on account of the lockdown. The situation is expected to gradually improve in the second quarter with the opening up of the market and travel industry.

c) Liquidity position - Your Company has sufficient liquidity to operate with, and therefore, there is no concern on account of the same. We are vigilant on the same and monitoring it continuously. It is also managed through strict control on various cost overheads and deferral of capital expenditure.

d) Assets - Your Company does not see incremental risk in recoverability of assets like inventory, debtors etc. The capex requirements have been deferred.

e) Internal Financial Reporting and Control - Our internal financial reporting and control are fully functional and not impacted due to COVID-19.

f) Supply chain-Your Company does not foresee any impact on its supply chain.

g) Demand for its products/services - The overall demand of the hospitality services has been impacted during lockdown.

We expect that the demand of our services will improve post lockdown, on resumption of domestic and international travels.