MANAGEMENT DISCUSSION & ANALYSIS REPORT

Your Company has been reporting consolidated results taking into account the results of its subsidiary. This discussion, therefore, covers the financial results and other developments during April, 2014 to March, 2015. Some statements in this discussion 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 and abroad, exchange rates and interests rates fluctuations, impact of competition, demand and supply constraints.

OVERVIEW OF THE GLOBAL & INDIAN TOURISM INDUSTRY

The hospitality industry in India is showing a slow but steady revival in the sector. The change of government at the Centre has improved the business sentiment. However, it seems the part of the positive sentiment comes from discounted room rate. With competition becoming fierce, some top hotels are offering deep discounts at their F & B outlets to boost sales. Another factor that has led to discount is increase of external competition from standalone restaurants which is making hotels revisit pricing strategy. In Bangalore several new restaurants have been mushroomed in the city and so, in order to offer a better value to customer, hotels are offering a better package of facilities. In this complex situation, hotels will have to focus on deriving revenue from all fronts-room, F&B, conference and events which will help in deriving higher profitability. This will help the hotel to derive high profitability. It is expected Indian leisure tourist to begin travelling in destination for reasons other than to visit friends or relatives and therefore to stay in more hotels. To brpare for the increase in Indian tourist, hotels have to provide safety & security and variety of things to do and see the overall image of the destination, good tourist facility and infrastructure. Given the current demand, supply dynamics, stable political situation and the likelihood of overall economic growth, the Indian hospitality sector is on the cusp of a much expected growth trajectory. As the airline fares to Bangalore are comparably higher it is not likely to be on top of the leisure destinations favorites. The outlook for Bangalore is further complicated by reason of an addition of minimum 450 keys by the end of the financial year 2015-16 which is a supply surplus far bigger than the expected growth of the market and will bring average rates more under brssure. Long term outlook with over 500 keys to be added in the coming 3 years does not foresee a change in this trend. It is therefore important that the existing hotels ensure that their product and services are utmost competitive.

In the last few years, the Indian Hotel Industry has been facing weak demand and an excess supply of rooms caused by optimism about the Indian growth story prior to 2008. This has led to new hotel openings by Indian and International hospitality brands. However, due to the economic slowdown, supply outpaced demand, supbrssing Average Room Rate (ARR) and reducing occupancy. As we look to the future, the Travel and Tourism industry has globally emerged as one of the fastest growing sectors, contributing significantly to economic growth and development. The World Travel and Tourism Council (WTTC) in its Annual Economic Impact Report 2014 estimates that the contribution of travel and tourism to the Indian GDP will be 7.3% in 2014. This is expected to grow by 7% p.a. reaching INR 14,000 billion by 2024. India has potential to become a brferred tourist destination globally. The long term outlook  for the Indian hospitality industry continues to be buoyant with growth outperforming the general economy. Inbound tourism continues to have modest growth of international tourists arrival and receipts. However, the domestic market will see strong growth with more Indians travelling, resulting in an expected revenue growth of 8.2% in the financial year 2015-2016. The tourism sector in India faces several issues that needs to be addressed for the sector to realize its true potential. Visa on arrival from key markets in Europe and America, safety and security of tourists, specially women, infrastructure development, identification of new tourist destinations and regulatory and policy changes need attention from all stakeholders.

Recently, the Government of India announced a proposal to extend a visa on arrival scheme (VOA) for visitors from 180 countries. A proposal for an electronic travel authorization system will allow foreign travelers to apply for a visa electronically and receive an online confirmation in five working days has also been cleared. Presently, the VOA scheme is available to tourists from eleven countries, mainly from South East Asia and two European countries. Since its introduction, there is a continuous and significant growth of tourists arrivals reconfirming the need to quickly extend this facility to the identified 180 countries. According to a study undertaken by WTTC and UNWTO, these improvements in the Visa regime could result in upto 6 million more international visitors travelling to India resulting in corresponding growth in revenue and creating 1.8 million jobs over three years.

OPPORTUNITIES, THREATS, RISKS & CONVERNS

Hotel industry in India has huge staff turnover, Rising staff & utility costs, staff retention & guests satisfaction are the major concerns of the hotel industry in India. There is a risk that the elements of Indian Hotel market may move into over supply at least in the short term. Delivering the brand experience consistently at a transparent price point will be vital to success. The benefit of loyalty program will continue to be a key differentiation for th consumer. Hotels have to realign their expenditure, optimize opportunal and efficiency and adopt flexible business model. They have to provide new facilities in the existing properties, stylish bars and other F & B outlets, free hotel-wide-Wifi connection to customers plus fitness areas besides offering discounts announcing happy hours and free wine testing events to leisure travelers. Despite all these profitability will continue to remain a concern with high operational and debt costs.

With a newly elected government at the centre and focus on infrastructure development, the travel and tourism industry is expected to receive a major boost. The Le Meridien group, with its globally acclaimed hotels, world class services and strong brand identity is ideally poised to take advantage of these opportunities.

REVIEW OF OPERATIONS

During the year under report, the global economic turmoil especially in the western countries and political turmoil in the Middle East have caused unbrcedented recession and job losses all around the world. The Indian economy too suffered heavily with lower export of goods and services. The Indian IT and BPO business is languishing. Hospitality industry too is badly affected pushing the room occupancyand average room rate significantly lower levels.

Hence, sales turnover of the Company has increased from Rs.5072 lakhs to Rs.7177 lakhs as compared to the brvious year. However, the Hotel revenue has marginally increased. During the year under report, the hotel business is hit by the entry of new five star hotels in the city of Bangalore resulting in stiff competition. Hence, it will be difficult to improve the working results in current financial year.

SEGMENT WISE PERFORMANCE

The Company is operating a five star hotel business by name & style as Le Meridien, Bangalore. The Company's 100% subsidiary Company is operating a three star hotel at Kochi, Kerala. The Company has diversified into electricity generation through Wind Turbine Generators (WTG) for captive consumption and sale of electricity to the State Govt., and outside consumers. Further, the Company has considerable earnings on investments. The segment-wise performance is reported elsewhere in this Annual Report.

RENOVATIONS

Your Company undertook renovation of guest rooms, Banquet Halls, public areas as per the ongoing product up-gradation initiatives.

GUEST EXPERIENCE

The enhanced service levels are achieved through focused training programmes based on guest feedback and audits (external and internal) conducted to check the performance against the standards.

SALES & MARKETING INITIATIVES

Your Company has various promotional and incentive schemes such as Starwood brferred guest incentive scheme, Bookers incentives, Sale & Marketing executives incentive scheme, local and international travel agents incentive scheme etc., to attract local and foreign guests. The Company is undertaking various sales blitzes to the important cities in the country. The Company is also tapping the Starwood's global network for room bookings through internet.

RISK AND CONCERNS

Industry Risk

General Economic Conditions :

The hospitality industry is prone to impact due to fluctuations in the economy caused by changes in global and domestic economies, changes in local market conditions, excess hotel room supply, reduced international or local demand for hotel rooms and associated services, competition in the industry, government policies and regulations, fluctuations in interest rates and foreign exchange rates and other social factors. Since demand for hotels is affected by world economic growth, a global recession could also lead to a downturn in the hotel industry.

Socio-Political Risks :

In addition to economic risks, your Company faces risks from the socio-political environment, internationally as well as within the country and is affected by events like political instability, conflict between nations, threat of terrorist activities, occurrence of infectious diseases, extreme weather conditions and natural calamities, etc., which may affect the level of travel and business activity.

Company Specific Risks :

The Company specific risks remain by and large the same as mentioned hereinabove. Further, being a single hotel it cannot have an effective marketing leverages. The industry in general has a high operating leverage which has further increased with on-going renovations and product upgrades. However, the Company is by  and large a debt free Company.

RISK MITIGATION INITIATIVES

Your Company employs various policies and methods to counter these risks effectively, as enumerated below :

Your Company has implemented various security measures at its property which inter alia include screening of guest's luggage, installation of security bollards & metal detectors, etc. to counter the security risk.

By extensively improving its service standards, as also renovating and repositioning all its key outlets, your Company counters the risk from growing competition and new properties. Further, it gains operating and financial leverage, by diversification of business activities and leveraging the strengths of its high reserves.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Internal information systems ensure smooth information flow to facilitate proper control. Adherence to the systems is then validated through the process of internal audit. The Company has adequate system of internal audit control to ensure that all the assets are safeguarded and protected. Regular internal audits are conducted by the professional Chartered Accountant firm and reports submitted by these Internal Auditors are periodically reviewed by the Audit Committee of the Board. The findings and compliance/s are reported to the apex level management on a periodic basis. The Company has constituted an in-house Committee for timely implementation of internal audit recommendations. The Company has clear systematic process and well-defined roles and responsibilities for people at different hierarchical levels. This ensures appropriate information flow o facilitate monitoring.

Development in Human Resources and industrial relations

The Company believes that the quality of the employees is the key to its success in the long run and is committed to provide necessary human resource development and training opportunities to equip them with skills, enabling them to keep pace with ongoing technological advancements and evolve. Hotel Le Meridien Bangalore is known worldwide for its impeccable services - a reflection of careful employee selection, training and motivation. Employees are provided opportunity to grow and prosper. In the mean time all efforts are being made to control cost so as to maintain brsent level of profitability. We are also seeking opportunities in different markets and segments to continue diversify our revenue.  Industrial relations remained stable throughout the financial year 2014-15.  As on 31st March, 2015 the number of people employed by the Company was 316.

CAUTIONARY STATEMENT

The views and futuristic statements contained in this report are the perception of management and subject to certain risks and uncertainty that could cause actual results to differ materially from those reflected in such statements. Readers should carefully review the other information in this Annual Report and in the Company's periodic reports. The Company undertakes no obligation to publicly update or revise any of these futuristic statements, whether as a result of new information, future events, or otherwise.