MANAGEMENT DISCUSSION AND ANALYSIS

INDUSTRY STRUCTURE AND OUTLOOK

Overview of Economy:

As per the estimates released by Central Statistics Office, the growth rate of economy, measured by growth in GDP was projected to clock at 7.4 percent in 2014-15 as compared to 6.9 percent in 2013-14. The year 2014-15 witnessed lower volatility in foreign exchange market with rupee remaining relatively stable as compared to 2013-14.0n account of reduced international price of oil and foreign investment flow; there were favorable conditions on foreign exchange front. The rate of inflation remained mild in the year 2014-15. With the change of Government at the centre, a new optimism and hope of key policy reforms and revival of economy brvailed during 2014-15.

Outlook:

The Government had in the Union Budget 2015-16 projected GDP growth of 8.5 per cent this fiscal. India is one of the very few countries for which IMF and World Bank have raised their growth assessment. As per world bank's India Development update report, Indian economic growth is expected to rise to 7.5 per cent in 2015-16, followed by further acceleration to 7.9 percent in 2016-17 and 8 percent in 2017-18 on account of reforms to unlock the country's investment potential to improve the business environment, liberalize FDI, boost both public and private investment in infrastructure, quickly resolve corporate disputes, simplify taxation and lower corporate taxes.

The outlook for hotel Industry remains subdued in short to medium term because of excess room supply over demand. As expected, the hospitality industry in the country was reeling under slow down in the first half of FY 2014-15.The business environment gradually started looking up after elections due to positive vibrations from the political leadership and development agenda pronounced through the first budget of the new government. Although the overall positive sentiments have generated some momentum for the hospitality industry, the tangible results are yet to be seen. The hotel industry across markets registered growth in occupancies and RevPARs in Q3 and Q4. However, declining room rates continue to remain a matter of concern. The industry hopes an early absorption of over supply of rooms.

Hotel construction is capital intensive and has a long gestation period. In addition to constrain of high cost and availability of land, other constrain is procurement of multiple clearances required from central and state governments for hotel projects, resulting in delay in implementation of project and cost escalation. It is necessary to extend infrastructure status to the existing debt ridden hotel projects to give them longer repayment period of debts and reduced interest rate. Besides, a single point, like, Hospitality Development and Promotion Board(HDPB) for receiving applications for multiple approvals should become operational as early as possible.

Government Initiatives:

The Government had launched Tourist Visa on Arrival enabled with electronic travel authorization scheme on 27.11.2014 for nationals of 43 countries to travel to India for tourism for a short stay of 30 days whose objective of visiting India is recreation, sight-seeing, short duration medical treatment, casual business visit, casual visit to meet friends etc. This initiative has given new hope to tourism industry. For promotion of tourism, two new schemes have been announced in budget 2014-15. With a view to beautify and improve the amenities and infrastructure at pilgrimage centers of all faith, a National Mission on Pilgrimage Rejuvenation and Spiritual Augmentation Drive(PRASAD) was announced. Another scheme named as SWADESH DARSHAN has been initiated. The Government has also decided to create tourist circuits around specific theme and identified 81 destinations/circuits of national importance for integrated development of mega destinations/circuits/projects for addressing the infrastructure gaps. The Government has also launched incredible India mobile application in August, 2014 to assist tourists to access information about MoT recognized service providers.

Combrhensive Sustainable Tourism Criteria and Indicator (STCI) have been finalized for accommodation Sector and the tour operator sector to address the need for environment friendly measures like Sewage Treatment Plant, Rain Water Harvesting System, Waste Management System, Pollution Control etc. There are 36 institutes of hotel management (IHMs) comprising 21 central IHMs and 15 state IHMs and 7 Food Craft Institutes. These institutes were set up as autonomous societies to impart hospitality education/conduct training in hospitality skills. Government has also taken various initiatives for promoting tourism and hospitality sector by advertising in print and electronic media - promotion and publicity TV campaign, social awareness campaign like Athithi Devo Bhava, online campaign featuring campaign clean India, printing and production of publicity material, participation in Travel and Tourism Fairs and exhibitions, organizing seminars, workshops, road shows, organizing food festivals, Bilateral and multilateral tourism co-operation agreements etc.

OPPORTUNITIES, THREATS, RISKS AND CONCERNS

Tourism is one of the oldest and fastest evolving industries. It is well recognized as potent engine for progress of several segments of the society and the economy on account of offering job opportunities to skilled and unskilled manpower and infrastructure development. India has rich cultural diversity of its people through its languages, cuisine, traditions, festivals, customs, music, dance, religious practices, arts and craft. Several niche products of tourism like cruise, adventure, medical, wellness, gold, polo, MICE, Eco Tourism, film tourism and sustainable tourism offer tourism opportunities in all the seasons and attract tourists with specific interest.

Inspite of number of opportunities, factors like high cost and formalities for acquisition of land, high and cascading taxes, requirement of multiple approvals and delays in receipt of approval, corruption, lack of infrastructure and proper transport facilities in some area, security and safety of tourist, maintenance and cleanliness of tourist location, begging and cheating etc. acts as deterring factors and concerns for the tourism industry.

Political turbulence, terrorism, communal riots, racism, natural calamity, epidemics are few threats to the industry. The Audit Committee and the Board periodically discuss the significant business risks identified by the Management and review the measures taken for their mitigation.

REVIEW OF OPERATIONAL AND FINANCIAL PERFORMANCE

The Company has achieved an aggregate revenue of Rs. 13,930.63 lakhs for the financial year ended on 31st March, 2015 as against the revenue ofRs. 15,679.06 lakhs for the brvious financial year. The loss after taxes for the year under review was Rs. 5,915.69 lakhs as against loss after taxes of Rs. 23,260.69 lakhs for the brvious year. The Average Room Rate, during the year under review was recorded at Rs. 5,355/- at The 0rchid as compared to Rs. 5,213/- in the brvious year and at Rs. 3,284 /- at VITS as compared to Rs. 3,148/- in the brvious year.

SEGMENT WISE PERFORMANCE

The Company is brsently operating in only one segment i.e. hospitality.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Adequate internal controls have been laid down by the Company to safeguard and protect its assets as well as to improve the overall productivity of its operations. The Internal Audit Department of the Company together with Internal Auditors, M/s. Pipalia Singhal & Associates, Chartered Accountants, Mumbai, M/s. R. D. A. and Associates, Chartered Accountants, Bhubaneswar and M/s. Suhas M. Joshi, Chartered Accountants, Mumbai, ensures compliance with the brscribed internal control procedures. Internal audits are carried out at regular intervals and the audit reports are periodically laid before the Audit Committee for review.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company has 1090 employees as on 31st March, 2015. The Company values its employees as its key assets. Efforts are made on an ongoing basis to improve the efficiency of the employees by way of training, providing them with better working conditions and keeping them motivated at all times. Employees are provided opportunity to grow and prosper. The authority and responsibility chain is clearly defined and the employees are free to convey their ideas and suggestions to their superiors. Team meetings are held at frequent intervals to improve communication and interactions between the employees.

CAUTIONARY STATEMENT

Statements contained in the Management Discussion and Analysis describing the Company's estimates, projections and expectations are forward looking statements and based upon certain assumptions and expectations of future events over which the Company has no control and which could cause actual results to differ materially from those reflected in such statements. Readers should carefully review other information in this Annual Report and in the Company's periodic reports. The Company undertakes no obligation to update or revise any of these futuristic statements, whether as a result of new information, future events, or otherwise.