MANAGEMENT DISCUSSION AND ANALYSIS

The results for the period between April 1, 2014 and March 31, 2015 are used for this analysis. The actual future performance will depend on many factors including Government policies, both in India and Goa, exchange rates, situation in countries that are able to provide tourists to Goa, the favourable climate for tourism in Goa, competition, etc.

INDIA TOURISM OUTLOOK:

Tourism has been recognized as a major economic activity and creates more jobs than any other manufacturing or service sector worldwide.

In India, for the Calendar Year 2014, 8.7% of employment was contributed by the Travel and Tourism industry as per a study entitled "Economic Impact 2015 India" brpared by the World Travel & Tourism Council. This is a substantial increase in that only 7.7% of employment was contributed by Travel and Tourism in 2013. According to the same study, Travel & Tourism contributed to 6.7% of the GDP of India in 2014 as compared to 6.2% of GDP in 2013. It is evident that in India, Travel and Tourism is contributing a larger share of both employment and GDP. It is estimated that 7.7 million foreign tourists visited India last year. The Government of India has just taken a major step in the growth of this industry by issuing E-Visas to citizens of 77 countries at 9 airports including Goa. Visitor exports by India amounted to INR 1224 billion, or about US$ 20 billion. The Ministry of Commerce Annual Report of 2014-15 shows that the exports achieved by the Gems and Jewellery industry were almost US$ 42 billion, but they imported about US$ 29 billion by way of diamonds, gold etc. In contrast, the imports by the Tourism industry were negligible. Net export earnings of this magnitude by the Tourism industry help to reduce the gap between imports and exports. We are fortunate that oil imports, which constitute India's major item of import, were under control due to lower oil prices worldwide. Domestic tourism is becoming increasingly important as they spent INR 5313 billion on travel and tourism within India. The Tourism Ministry has estimated that there were 1282 million of domestic tourist visits within India in 2014. A large portion of these trips are for leisure, as there has been a considerable rise in India's disposable income. As India's growth rate in GDP is one of the highest in the world, expenditure on Meetings, Incentives, Conferences and Exhibitions (MICE) is expected to increase substantially. All of the above bode well for the domestic hospitality industry, especially in Goa, which is gaining prominence as "the party capital of India".

TOURISM TO GOA:

There was an increase in domestic tourists to Goa aided by the newly opened integrated terminal, which opened its doors in December 2013. With the provision of aerobridges, passengers can quickly embark and disembark without being exposed to the elements. This has also reduced the turnaround time. Hence more passengers are being handled and domestic flights are filled to capacity.

There was a substantial increase in Indian weddings and domestic business as a whole, as more Indians decided to visit Goa instead of going elsewhere. On the other hand, the number of passengers from Russia have declined substantially due to the devaluation of the Russian Rouble. The rates for Russian clients have had to be reduced as there was a drop in demand for all hotels and room rates became an important factor in increasing occupancies.

FINANCIAL PERFORMANCE:

The total income for the year increased from Rs.  4133 lakhs to Rs.  4903 lakhs, which is an increase of about 19%. The gross profit before Debrciation, Finance Costs and Tax increased from Rs.  836 lakhs to Rs. 1172 lakhs. Net profit after tax increased by 59% from Rs.  226 lakhs to Rs.  360 lakhs.

Our Company earned foreign exchange equivalent to Rs.  1570 lakhs, which is lower than last year as tourist arrivals from Russia were lower due to the Ukraine issue, sanctions against Russia by US and other European countries and weakening of the Rouble against USD. We had signed most of our Russian contracts in USD.

STRENGTHS / WEAKNESSES / OPPORTUNITIES AND THREATS:

The Company's only 5 star deluxe resort unit is located at Goa, which belongs to the upscale / leisure segment. This segment is particularly influenced by international events. As much of the costs are fixed, revenues of the Company can get adversely affected with any negative international event.

Further with the increased thrust on domestic market, revenues of the Company are also susceptible to domestic economic and socio-political conditions.

Goa has become the focus area for major international hotel chains and most of them have entered Goa / are entering Goa, which will increase supply of rooms in Goa and our hotel will have to compete with existing and new hotels entering in Goa. These properties tend to have larger banquet halls to tap the wedding and conference market, larger sized rooms for domestic market and larger sized spas.

The initiative of the Central and State Government to encourage affluent tourists will benefit our hotel. As informed earlier, there were over 100,000 square feet FSI available for our hotel to undertake any expansions, such as a new spa, additional rooms, a villa development, new conference center, etc., which could add increased / additional revenue streams for the existing hotel unit. The Government of Goa has allowed a further increase of 20% in FSI in this financial year.

Our Company's specific risks remain the same as enumerated in earlier years. We are in only one location in Goa. There has been a large reliance on the Russian market for revenues in the winter months, which is reducing from last year. Any disruptions in this market, especially during this period affect the year's profitability. Central and State Government policies towards tourists may change. Natural disasters cannot be brdicted. Efforts are made to make our resort a year-round destination.

The Company is de-risking the business model by attracting more domestic clients by improving the website and adding better photos of the resort for online travel agents. The largest growth for our business has been from the online travel agents. The product is more "Indian Friendly". These measures have resulted in higher revenues and improved revenue per available room (RevPAR) during the year.

There is a possibility that an additional airport at Mopa will be built, which may affect the number of arrivals at the brsent Dabolim International Airport.

RENOVATION:

There are no major renovation plans for the next financial year as major renovations have already been made in recent years.

FUTURE OUTLOOK:

World Travel and Tourism Council (WTTC) have estimated that the World Travel & Tourism GDP will grow by 3.7% and that the South Asia Region, which includes India will witness the highest growth of 6.9%. While foreign tourists will come to India in larger numbers, the number visiting Goa will depend upon the Civil Aviation policies regarding allowing of more scheduled flights into Goa airport and also on the tourism friendly policies of the Government of Goa. The cleanliness drive initiative taken by our Prime Minister by way of Swachh Bharat Abhiyan and the World Yoga Day will add to the attraction of Goa. Foreign tourists will increase to Goa as the issue of tourist E-Visas prior to Arrival has started at Goa airport.The number of domestic travelers to Goa will increase as Goa is becoming an even more popular destination. There is a trend to have a destination wedding in Goa and these are bringing in substantial business to our hotel.

EXPENDITURE:

The total expenditure increased by 14% to Rs. 4350.32 lakhs from Rs. 3830.95 lakhs in the brvious year.

Payroll cost was higher by 8% 103 lakhs) over the brvious year mainly on account of salary increments.

Other operating expenses were higher by 15.52% as compared to brvious year mainly on account of rise in cost of raw material, tariff hike in power and fuel.

Finance Costs have reduced from Rs.  217 lakhs to Rs.  169 lakhs due to repayment of loans of approximately Rs.  400 lakhs and conversion of Rupee loan into FCNR(B) loan carrying lower interest rates as shown in Note 5.3 of the Annual Report.

EARNINGS BEFORE INTEREST, DEbrCIATION, TAX AND AMORTISATION (EBIDTA):

EBIDTA registered an increase of 40% 336 lakhs) to Rs.  1172 lakhs in 2014-15 as against Rs. 836 lakhs in the brvious year.

PROFIT BEFORE TAX (PBT):

The PBT has increased by 83% to Rs. 552 lakhs from Rs. 302 lakhs in the brvious year.

PROFIT AFTER TAX (PAT):

The PAT has increased by 59% to Rs.  360 lakhs from Rs. 226 lakhs in the brvious year.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

During the current FY 2014-15, the Company's net profit before tax was above the limit of Rs. 5 crores as set out under Section 135 of the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules 2014. Accordingly, the Company has formed a CSR committee and the brscribed amount will be spent during FY 2015-16 on CSR activities under approval and supervision of CSR committee.

In the meantime, as a matter of voluntarily CSR activities, the following activities have been undertaken by the Company:

1. Environment Day 2014: On June 5, 2014, hotel employees cleaned the beach and surrounding area of hotel and did tree plantation in hotel brmises. Around 60 employees participated in this event.

2. October 2, 2014: On the occasion of Swach Bharat Abhiyan, hotel employees cleaned surrounding area and removed plastic and debris. In this event around 70 employees participated.

3. CRZ day: On CRZ day (September 20, 2014) hotel employees cleaned 2 km beach area.

4. The hotel supports Animal Birth Control (ABC) and Animal Welfare Organizations by trapping stray dogs & cats and neutering them to brvent the population from multiplying. In 2014, over 15 animals were neutered and in 2015, 10 animals have been neutered. In addition, they are administered a rabies vaccine to brvent rabies from occurring and thus make the area safe for all. The said animals are fed daily near the hotel from the waste of the butchery and from the waste of the staff cafeteria and thus they are human friendly and safe.

5. Run for Nepal: The Hotel employees participated in Run for Nepal orgnaized by SITA fund raising for earthquake affected people in Nepal on May 16, 2015.

6. Environment Day 2015: On the occasion of environment day, Hotel organized series of events between June 2 to June 5, 2015. Hotel organized following event June 2 - Poster competition, June 3 - Face Painting competition, June 4 - Wealth out of waste (Dept competition), June 5 - Beach and Road Cleaning, Tree Plantation, Oath Signing and prize distribution

7. Blood donation Camp: On the occasion of world blood donation day, hotel organized blood donation camp on June 17, 2015. This blood donation camp is supported by Govt. Medical Collage, Goa. In this camp, 23 bottles of blood were collected.

8. Kids Medical Camp for Varca Residents: Hotel organized Kids medical camp for Varca resident at Varca Panchyat Hall in association with Wockhard Hospital on July 19, 2015. In this camp health check was done for 270 kids. Mr. Prahlad Advani, Whole Time Director - Operations inaugurated this camp.

9. Blood donation:

(a) 4 bottles blood donated to Mr. Sabstian D'souza (Ex - Photographer of Mumbai Mirror) for his open heart surgery at GMC, Goa by hotel employees.

(b) Blood donation camp organized by the hotel on the occasion of World Blood Donation Day (June 17, 2015). 23 bottles of blood have been donated by the hotel employees to Government Medical College (GMC).

INTERNAL CONTROL SYSTEM AND ADEQUACY:

Adequate internal control systems exist in terms of financial reporting, efficiency of operations and compliances with various rules, regulations, etc., covering all operational departments.

The Internal Auditor reviews the internal control procedures and its implementation on a regular basis and submits monthly reports. Corrective action is taken for any weaknesses that may be reported by the Internal Auditor. In order to enhance the control system further, each department has to justify the variances and discrepancies.

The Audit Committee of the Board oversees the adequacy of the internal control procedures, monitors the implementation of internal audit recommendations through the compliance reports submitted to them.

HUMAN RESOURCES:

The Company continues its commitment to retain and promote the deserving employees. Accordingly, systems are formulated to monitor the performance, guest satisfaction and employee recognition. The Company has initiated various welfare initiatives for the staff, which includes assistance in form of short term loans in case of emergency, listening posts, improved back of the house areas and improved employee safety and security. The industrial relations have been cordial during the year. The Company continues to have a structured learning and development department to do "Training need analysis" and provide inputs for team development.

CAUTIONARY STATEMENT:

Comments made in this analysis describing the Company's objectives, estimates may be "forward looking statements" within the meaning of applicable securities law. We have used assumptions over which the Company exercises no controls. The Company cannot guarantee that the results will occur. Significant factors that can affect the Company's operations include domestic and international economic conditions affecting supply and demand, the travel patterns of foreign tourists, civil aviation policy, law and order problems in India or terrorist activities abroad, change in tax and other Government regulations, etc.

For and on behalf of the Board of Directors

SUNDER G. ADVANI

Chairman & Managing Director

(DIN 00001365)

 Place: Mumbai

Date: August 3, 2015