Industry Overview – Hotel Industry Poised to Grow

Travel & Tourism Contribution to India’s GDP Room Night Demand Vs Supply
Direct Contribution Total Contribution % Change (Direct) Available Room Nights/Day Room Night Demand/Day Occupancy
2000000 25% 120,000 68%
24% 20% 63% 66%
1500000 90,000 64%
15% 60%
1000000 10% 9% 60,000 58% 60%
8% 10% 58%
6%
500000 30,000 56%
5%

0 0% 0 52%
2013 2014 2015 2016 2017 2012/13 2013/14 2014/15 2015/16 2016/17

The Tourism Sector Employs 81 Million People in India, 12.4% of The Total Employed in the Country
‒ FTAs Growth – 9.37 million foreign tourists arrived in India in 2018, expected to grow to Foreign Tourists Arriving in India (Mn)
30.5 million by 2028. The Government is targeting 2% share in world's international tourist
arrivals by 2025
20
‒ E-Visas Boost – Arrivals through e-tourist visas increased 41.5% YoY to 2 mn (Jan-Nov 2018),
this facility has been made available to citizens of 161 countries
9 10
‒ Room demand growth has been consistently outpacing supply growth for past few years 7 8
‒ About 10,000 rooms were added to chain affiliated hotel inventory in 2017
2014 2015 2016 2017 2020T
‒ Average room rate has increased by INR 89 only and still remains behind the 2013 market
USD Bn – Tourism & USD Bn – Tourism &
‒ Supply Pipeline — especially hotels nearing completion. is still narrow across most cities.
2017 has also seen addition of new supply in Mumbai, Bengaluru and NCR 91 Hospitality Sector’s Direct 195 Hospitality Sector’s Direct
Contribution to GDP (2017) Contribution to GDP (2028)
‒ F&B and banquets continue to be significant revenue generators across all segments
Highest in terms of travel & Largest foreign exchange
‒ Growing Luxury Segment – The luxury travel market in India grew at 12.8% in 2015 7th tourism’s total contribution 3rd earner for India at USD
‒ Industry growth is expected to pick up significantly starting financial year 2019 to GDP 25.84 billion (2018)

Boosted by Increasing Occupancy, Higher Room Rates and Growing FTAs, the Industry is Poised to Grow Rapidly

1
History of Hotel Leela Group

1981 1986 1991 2001 2006 2009 2011 2013 2015

Kovalam
The Leela The Leela The Leela
The Leela, Hotels The Leela
The Leela, Goa Palace, Palace, Palace, The Leela, Goa
Mumbai acquired & Palace, Delhi
Incorporation begins Bengaluru Udaipur Chennai (management
begins restarted as begins
operations begins begins begins contract)
operations The Leela operations
operations operations operations
Kovalam

The Leela
‒ Founded in 1983 by Late Captain CP Nair, The Leela Palaces, Hotels and Resorts The Leela, The Leela,
Ambience,
Gur`gaon Kovalam
has grown from 1 hotel to 9 award-winning 5-Star properties across India Delhi
(management (management
(management
‒ Existing Locations – Prime urban cities of Bangalore, Chennai, Delhi, Gurgaon, contract) contract)
contract)
Mumbai & New Delhi and holiday destinations of Goa, Kovalam and Udaipur

Current Business Highlights
‒ Upcoming Launches – The Leela Palace Jaipur, The Leela Palace Agra, The Leela
Hotel and Residences Bhartiya City Bengaluru and The Leela Lake Asthamudi
Kerala. Leela is also in discussions for managing an overseas hotel
‒ ‘Asset-Light’ Strategy – future growth plans to operate hotels through
Management Contracts in growing luxury hotels segment
‒ Award Winning Chain – Ranked among top 10 “World’s Best Hotel Brands” by
Travel + Leisure, USA 2018 Readers’ survey, 3rd time in a row
‒ Global Hotel Alliance – enabling the group to offer The Leela
DISCOVERY to 6 Mn+ global customers
‒ International Sales & Marketing Alliance – with “Preferred Hotels
& Resorts” group to push products to global procurement heads
‒ Recently Awarded Management Contract – to operate India’s
largest Convention & Exhibition Centre, the 34-acre Mahatma
Mandir. Also launching The Leela Gandhinagar, a 300-room hotel
within complex

2
Fast Growing Pan-India Footprint Focussed on Key Hospitality Hotspots

OWNED & MANAGED HOTELS

Location Rooms
The Leela Ambience, Mumbai 391
The Leela Palace and The Leela Ambience, Delhi
Gurgaon
Bengaluru 357
Udaipur 80
Delhi (The Leela Palace) 254
Chennai 326
Total 1,408
The Leela Palace,
Udaipur
MANAGED HOTELS
Location Rooms
The Leela Palace, Chennai
Goa 206
Gurgaon 411
The Leela, Mumbai Kovalam 183
Delhi (The Leela Ambience) 480
Total 1,280

The Leela Palace, Bengaluru

The Leela, Goa The Leela, Kovalam Total – 2,688 Rooms

3
Recent Highlights and Management Team
Revenue & EBITDA Number of Hotels Number of Rooms Annual RevPAR
Revenue (INR Lakhs) EBITDA (INR Lakhs)
9 2,688 INR 14.25 Lakhs
768 739 743
651 670 ‒ Bid of INR 4,200 Crores – The company has recently received a bid of INR 4,200 crores
643
for the 4 top-of-the-line properties – in New Delhi, Bangalore, Chennai and Udaipur from
Dubai billionaire Rashid Al Habtoor in January 2019
195 216 219 ‒ $350 million Investment – in the form of both debt and equity received from a
163
119 98 consortium including Thailand’s Minor International PCI in November 2018
‒ Debt Default – The company defaulted in September 2018 on interest payment of INR
FY13 FY14 FY15 FY16 FY17 FY18 21.2 million to LIC on secured redeemable NCDs issued by the company

– 36+ years of experience in hotel industry
– Honorable Secretary of Federation of Hotels & Restaurants Association of India
Vivek Nair – Council Member of the World Travel & Tourism Council, India Initiative
Chairman – Central Governing Council Member of Services Export Promotion Council
Management Team
– 36+ years of experience in management, administration and
marketing
Dinesh Nair – Took over management of Leela Scottish Lace in early 1980s and
focussed on the American Juniors Sportswear market

Co-Chairman
& MD – Executive Committee Member of South Indian Hotels & Restaurants Association & MD – Was instrumental in ensuring rapid growth in sales, transforming
– Post Graduate in Hotel Management from Cornell University's School of Hotel Leela Scottish Lace into one of the largest exporters of fashion
Administration, after graduating from St. Xavier's College, Mumbai garments from India to USA

– CFO of Leela Group since May, 2018 – 37+ years of experience in hotel industry
– Mr. Shah joined as General Manager Finance in May 2011 and was promoted as – Joined The Leela Group in 2006 as SVP
Rajan Shah Vice President Finance, in October 2015 Rajiv Kaul – Mr Kaul has held executive positions at India's 3 leading hotel
CFO – 28+ years of experience in finance and accounting President companies, Leela, Oberoi and Taj groups
– Past experience with Leela Scottish Lace, Bombay Rayon Ltd and Bajaj Hindustan – Diploma in Hotel Management and MBA in Hospitality
Sugars Ltd Management

Strong Business Fundamentals & Operating Metrics Vis-à-vis Industry

4
Robust Financial Performance

Income (INR Crores) EBITDA & EBITDA Margin

Other Income Other Services Rental & Related Services 500

40% 45%

1,400 EBITDA (INR Lakhs) EBITDA Margin 39%

Managed Hotels Food & Beverages Owned Hotels 450

474
40%

1,200 400

35%

37% 412
141 350

36%
1,000 33% 361
30%

300

31% 30%
800 402 311 25%

375
250

27%
350 25% 260 20%

600 326 200

253 304 216 219

204 242 260 284 19% 195
15%

243
150

400 15% 163 10%

588
100

432 479 531 119

200 356 380 310 335 354 358 393 50 98 5%

0
0 0%

FY13 FY14 FY15 FY16 FY17 FY18 FY19P FY20P FY21P FY22P FY23P FY13 FY14 FY15 FY16 FY17 FY18 FY19P FY20P FY21P FY22P FY23P

Expenses (INR Crores) Shareholding (31-Dec 2018)

1,400 Finance Cost Depreciation Other Expenses Employee Expenses COGS
Promoter Group
1,200 7%
10% JM Financial ARC
1,000 502
174
405 187
800 198 191 ITC Ltd
224 8% 47%
600
338 363 LIC
296 315
400 295 314 297 254 270 266 278
200 242 265 290 26% Indian Public
186 198 188 192 192 193 201 221
0 Others
FY13 FY14 FY15 FY16 FY17 FY18 FY19P FY20P FY21P FY22P FY23P

Fast Growth with Increasing Profitability Expected in the Medium Term

5
Investment Highlights

A leading player in the growing

Strong business fundamentals
luxury hotels segment, with a
and operating metrics
well-recognized brand name

Alliances with Preferred Hotel Attractive valuation enhancing a Experienced management team
Group, Global Hotel Alliance, compelling investment with rich industry experience &
ESPA, Le-Cirque and Megu opportunity proven execution capabilities

All Hotels Award-Winning

Best-in-Class Alliances & Tie-Ups Properties with High Brand
Recall

6
Valuation Analysis
Fundamental Valuation – Discounted Cash Flow
PARTICULARS FY19P FY20P FY21P FY22P FY23P TV
PAT -4,930 2,323 5,164 8,395 12,971
Add: Depreciation & Amortization 8,477 9,033 9,655 10,356 11,151
Less: Capex 30,628 -9,033 -9,655 -10,356 -11,151
Less: Increase in Net Working Capital -13,135 -9,958 -8,915 -3,192 3,333
Add: Post Tax Int Income 1,351 1,579 1,818 1,593 1,585
Free Cash Flow to the Firm 22,390 -6,056 -1,933 6,796 17,889 559,387

Years Discounted No. of Years 1.00 2.00 3.00 4.00 5.00 5.00
Discount Factors PVF 0.94 0.89 0.83 0.78 0.74 0.74
Discounted Cash Flows INR 21,065 -5,360 -1,609 5,324 13,184 412,258

Valuation Parameters Relative Valuation – Public Comparables

WACC 6.3% Company Market Cap EBITDA Margin EV/Revenue EV/EBITDA
Terminal Growth Rate 3.0% Indian Hotels 17,987 18% 4.0 22.9
Discounted Terminal Value 412,258 EIH 11,120 19% 5.9 31.5
Discounted Cash Flows 32,603 Mahindra Holiday 2,689 16% 1.9 12.0
Enterprise Value (EV) 444,861 Taj GVK 1,119 26% 4.2 16.3
Implied Equity Value (EV) 125,592 EIH Assoc Hotel 1,043 29% 2.6 8.9
Oriental Hotels 691 17% 2.9 17.1
Industry 34,650 21% 3.6 18.1

Fundamental Valuation Implies an Intrinsic Share Price of INR 19.92, Significantly Higher than Prevailing Market Price of INR 12.95

7
Attractive Investment Opportunity for Multitude of Investors

Type of Regulatory
Names Synergies Funding Sources
Institution Hurdles

Xander group, Brookfield, ‒ Opportunity to enter the fast growing luxury hotel
Real Estate segment and diversify portfolio
Blackstone, ASK Group, APG,
Focussed ‒ Internal accruals (cash ‒ N/A
Indiabulls Real Estate, Red Fort ‒ Participation in high earning potential of Leela
Investors payment to promoters)
Capital Group

RNT Associates, PremjiInvest,
Family family offices of Shapoorji
Offices Pallonji, Hinduja family, Burman
family, Piramal family etc
‒ Opportunity to enter the fast growing luxury hotel
segment and diversify portfolio ‒ Internal accruals (cash
‒ N/A
‒ Participation in high earning potential of Leela payment to promoters)
Group

IFC, Westbridge Capital, ‒ Participation in the growth potential with

Private Edelweiss Private Equity, Carlyle, expansion plans across India and abroad ‒ Internal accruals (cash
‒ N/A
Equity Funds KKR, TPG, CX Partners, Warburg ‒ Opportunity to exit at a high multiple due to payment to promoters)
Pincus etc attractive valuation being offered

Langham Hotels, Mandarin
International Oriental, Como Hotels & Resorts,
Strategics New Century Hotels & Resorts
etc
‒ Opportunity to enter the Indian Market and build ‒ Internal accruals (cash ‒ N/A – 100% FDI
a turnaround story through vast industry payment to promoters) permitted under
experience and bringing in international best
‒ Share swap automatic route
practices

8
 Thank You

TEAM NAME – PRODIGY

Members – Harneet Kaur Bhatia and Rohan Rao
Institution – IIM Lucknow