MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Industry Structure and Development, Opportunities and Threats

The Indian tourism and hospitality industry is fast emerging as one of the key drivers of growth in the services sector in India. The NDA government which assumed office in May last year is laying great emphasis on the growth of tourism. This is in view of the fact that Indian Tourism Industry is a potential game changer. The advantage is that the industry is an employment generator for people with different skills, a significant source of foreign exchange earnings and it promotes economic activities benefiting the local communities. The government has taken several steps to make India a global tourism hub.

The National Heritage City Development and Augmentation Yojana (HRIDAY) for the development of 12 heritage cities in the first phase; establishment of 'Project Mausam' to establish cross cultural linkages and to revive historic maritime cultural and economic ties with 39 Indian Ocean countries, are some of the important initiatives of the Government.

Globally, the travel and tourism sector has developed into a US$ 6.5 trillion industry. The global hotel industry generates annual revenue between US$ 400 and $500 billion.

In India, foreign tourist arrivals (FTAs) have grown steadily in the last three years reaching around 7.46 million in 2014. Foreign exchange earnings from tourism in terms of US dollar grew by 7.1 per cent in 2014.

The electronic Visa on Arrival (VoA) scheme launched by the Government in November 2014for nationals of 43 countries has since been expanded to 155 countries. This has led to a massive growth in tourist arrivals. For example, in the month of January 2015, a total of 25,023 tourists arrived by availing VoA as compared to 1,903 VoA in the same month of last year.

Hospitality industry has grown by around 15 per cent in 2014-15 aided by improvement in economic and business condition in the country. The increased demand will lead to higher occupancies.

Outlook

India's travel and tourism industry has huge growth potential. The well known rating agency ICRA expects the revenue growth of Indian hotel industry strengthening to 9-11 per cent in 2015-16.

Risks and Concerns

Tourism industry is generally affected on account of:

a) Adverse law and order situation in the country or the region

b) Natural disaster or sbrad of epidemic or diseases

c) Recession in the economy

Risk mitigation

The Company's properties are geographically well sbrad and thus have greater resilience to meet the challenges in an unlikely event of any regional disturbance or natural calamity.

The Company is regularly investing in its properties to upgrade facilities and service standards. As such it is in a position to meet with the challenges of competing properties.

Internal control systems and their adequacy

Your company maintains adequate internal control systems commensurate with the Company's size and business, which provide, among other things, reasonable assurance of recording the transactions of its operations in all material aspects and providing protection against misuse or loss of the Company's assets. The systems and processes are continually reviewed for their effectiveness and augmented by documented policies and procedures.

Material developments in Human Resources

Human resource functions and initiatives of your Company to attract, train, retain and motivate employees are driven by defined value based policies. Your Company takes on a continuing basis adequate and necessary steps to maintain a competitive, healthy and harmonious work environment at all levels of working. The Company has over 338 employees.