Schloss Bglr

Risks

• Any deterioration in the quality or reputation of its "The Leela" brand could have an adverse effect on its business, financial condition and results of operations.

• A significant portion of its total income is derived from the five hotels owned by it (aggregating to 93.46%, 93.77% and 91.13% of its total income for the Financial Year 2025, Financial Year 2024 and Financial Year 2023, respectively) and any adverse developments affecting such hotels or regions could have an adverse effect on its business, results of operations and financial condition.

• The Company and certain of its Material Subsidiaries have incurred losses in the past during Financial Years 2024 and 2023 (Rs.(21.27) million for the Financial Year 2024 and Rs.(616.79) million for the Financial Year 2023 (on a consolidated and restated basis)), as well as during Financial Year 2025 for three of its Material Subsidiaries, and may experience losses in the future which could result in an adverse effect on its business, cash flows and financial condition.

• The Company and certain of its Material Subsidiaries have had negative net cash flows in the past and may continue to have negative cash flows in the future, which could adversely affect its results of operations and financial condition.

• The company has granted security interests over certain of its assets, and any failures to satisfy its obligations under the company secured borrowings (Rs.39,087.46 million as of Financial Year 2025) could lead to invocation of security interest, resulting in a forced sale or seizure of such assets.

• The Company and certain of its Material Subsidiaries have had negative net worth in the past (Rs.(28,257.23) million as at March 31, 2024, and Rs.(25,119.63) million as at March 31, 2023, on a consolidated and restated basis) and may experience negative net worth in the future which could result in an adverse effect on its business, cash flows, financial condition and results of operations.

• The company has substantial indebtedness which requires significant cash flows to service and limits its ability to operate freely. As of March 31, 2025, it had outstanding borrowings of Rs.39,087.46 million on a restated and consolidated basis. Further, its finance costs as a percentage of total income for the Financial Year 2025 amounted to 32.57%. In addition, its may requires additional financing in the future in order to continue to grow its business, which may not be available on acceptable terms, or at all.

• The company is exposed to risks associated with the renovation and refurbishment of existing hotels. Delays in the renovation and refurbishment of existing hotels in its Portfolio may have an adverse effect on its business, financial condition and results of operations.

• The company is exposed to risks associated with the construction of new hotels, including The Leela Ayodhya, The Leela Palace Agra, The Leela Ranthambore, The Leela Palace Srinagar and The Leela Bandhavgarh. Delays in the construction of new hotels may have an adverse effect on its business, financial condition and results of operations.

• The determination of the Price Band is based on various factors and assumptions and the Offer Price of the Equity Shares, market capitalization and price to earnings ratio based on the Offer Price of the Equity Shares, may not be indicative of the market price of the Company on listing or thereafter and, as a result, you may lose a significant part or all of your investment.

• The company relies upon one of its Subsidiaries, i.e., Schloss HMA in relation to providing operations and management services to its Portfolio, and any inability on its part to attract and retain qualified personnel, including its Key Managerial Personnel and Senior Management, could adversely affect its business, results of operations, cash flows and financial condition.

• The company has issued Equity Shares pursuant to a bonus issue in the past. During the Financial Years 2024 and 2023, it had experienced losses of Rs.(21.27) million and Rs.(616.79) million, respectively. The company has also had negative net worth in the past of Rs.(28,257.23) million as at March 31, 2024 and Rs.(25,119.63) million as at March 31, 2023.

• The Restated Consolidated Financial Information include a reference to an emphasis of matter paragraph for the Financial Year 2023

• The shareholding of its Promoters in the Company, and its shareholding in certain of its Subsidiaries, are required to be, or have been, encumbered in favor of certain lenders. If events of default arise under the relevant facility agreements, such lenders could exercise their rights under the agreements, adversely affecting its business, results of operations, cash flows and prospects.

• The company has contingent liabilities and its financial condition could be adversely affected if any of these contingent liabilities materialize.

• The Company and Subsidiaries are involved in certain legal proceedings. An adverse outcome in any of these proceedings may adversely affect the profitability, reputation, business, results of operations, financial condition and cash flows of the Company and its Subsidiaries.

• There have been instances of delays in payment of statutory dues by the Company and certain of its Material Subsidiaries in the past. Any delay in payment of statutory dues in future may result in the imposition of penalties and in turn may have an adverse effect on its business, reputation, financial condition, results of operation and cash flows.

• The company derives a significant portion of its revenue from operations from the sale of food and beverages (which amounted to 36.77% for the Financial Year 2025, 36.85% for the Financial Year 2024 and 38.44% for the Financial Year 2023). Any failures to maintain the quality and hygiene standards of the food and beverages that the company offer, will adversely affect its business, results of operations, financial condition and cash flows.

• Delays or defaults in payment by its customers could affect the company cash flows and may adversely affect its financial condition and operations.

• The company intend to utilize 47.90% of its Gross Proceeds towards repayment/prepayment/redemption, in full or in part, of certain outstanding borrowings, interest accrued and prepayment penalties, as applicable, availed by certain of its wholly-owned Subsidiaries and step-down subsidiaries. Its Subsidiaries contribute to a significant portion of its total revenue from operations (amounted to 71.16% for the Financial Year 2025, 72.47% for the Financial Year 2024 and 67.22% for the Financial Year 2023), and thus the company is dependent on the continued operations of its Subsidiaries.

• The company has undertaken, and may continue to undertake, strategic acquisitions, joint ventures and investments, which may not perform in line with its expectations or may be prone to other contingencies.

• In the past, the company has acquired companies and businesses forming part of legacy assets, such as The Leela Palace Bengaluru, The Leela Palace New Delhi, The Leela Palace Chennai, The Leela Palace Jaipur and The Leela Palace Udaipur, and the sellers of such assets are subject to ongoing disputes in certain cases.

• Land ownership in India can be difficult to ascertain as land records are not easily traceable and the national digitization program has not been implemented across all states in India. Further, its may not be able to identify or correct defects or irregularities in title due to creation of adverse third-party rights in the land which the company own, lease or intend to acquire in connection with the development or acquisition of new hotels or properties, which could have an adverse impact on its business and operations.

• Its Promoters will continue to retain significant shareholding in the Company after the Offer, which will allow such Promoters to exercise significant influence over it.

• Its inability to protect or use the company intellectual property rights may adversely affect its business, results of operations, financial condition and cash flows.

• Its inability to effectively manage its expansion and execute the company growth strategy could have an adverse effect on its business, results of operations and financial condition.

• Several expenses incurred in its operations are relatively fixed and recurring in nature, and its inability to effectively manage such expenses may have an adverse effect on its business, results of operations and financial condition.

• A portion of its total income is derived from the company Managed Portfolio (4.31% for Financial Year 2025) and the franchised hotel (2.22% for the Financial Year 2025). The company is exposed to the risk of termination or non-renewal of its hotel management agreements and of the franchise arrangement that the company has entered into with third-party hotel owners which may adversely affect its business, reputation, results of operations and financial condition.

• The company has in the past entered into related-party transactions and may continue to do so in the future. Its cannot assure you that the company could not have achieved more favorable terms had such transactions not been entered into with related parties, which may adversely affect its business and results of operations.

• The Company is, and will continue to be, a foreign owned and controlled company under Indian law, and will be subject to certain restrictions under law in its capacity as a foreign owned and controlled company.

• Conflicts of interest may arise among it and other affiliates of Brookfield in course of the growth of its business.

• Its business is subject to seasonal and cyclical variations that could result in fluctuations in its results of operations.

• The company is subject to market risks such as competition, shifts in consumer preferences and changes in desirability of location, relating to its serviced apartments and branded residences.

• The hospitality sector is competitive and its inability to compete effectively may adversely affect its business, results of operations and financial condition.

• Its inability to increase average occupancy levels at its Portfolio (65.19% for Financial Year 2025, 63.05% for Financial Year 2024 and 61.06% for Financial Year 2023), may adversely affect its business, results of operations and financial condition.

• The company derives a significant proportion of its room revenues (57.0% for the Financial Year 2025) from retail and leisure guests. Any reduction in demand from such guests could have an adverse impact on its business, financial condition and results of operations.

• Its business and operations, including those relating to The Leela Palace Udaipur and The Leela Palace Agra, Uttar Pradesh, may be impacted by litigations to which the company is not parties.

• Demand for rooms in its Portfolio may be adversely affected by the increased use of business-related technology or changes in the preference of its guests due to evolving cost of travel, spending habits and consumption pattern.

• The company is subject to competition risks, reputational risk and litigation risks relating to its serviced apartments and branded residences.

• Its Subsidiary, Schloss HMA, is entitled to receive royalties under certain agreements, and any changes to this arrangement may adversely impact future royalties.

• A portion of its hotel reservations originate from travel agents and intermediaries (online travel agencies and other distribution channels). In the event such agents or intermediaries continue to gain market share compared to its direct reservation system, or if its competitors negotiate more favorable terms with such travel agents and intermediaries, its business and results of operations may be adversely affected.

• The success of its business is dependent on the company ability to anticipate and respond to customer requirements. Its business may be affected if the company is unable to identify and understand contemporary and evolving customer preferences or if the company is unable to deliver quality service as compared to its competitors.

• The company faces risks relating to operating its hotels in the luxury hospitality sector, including economic downturns, seasonal demand fluctuations and increasing competition from new entrants and alternative accommodation platforms, which may adversely affect its business, results of operations, financial condition and cash flows.

• The company has a large workforce deployed across its Portfolio. The company may not be able to effectively manage its workforce and may be exposed to service-related claims and losses or employee disruptions that could have an adverse effect on its business and reputation.

• The company does not own the land and buildings on which its Managed Portfolio and the franchised hotel are located, and one of the hotel wings at The Leela Palace Bengaluru is located in a building which has been leased to it by third parties. If the company or the third-party hotel owners are unable to comply with the terms of the lease agreements, renew its agreements or enter into new agreements, its business, results of operations and financial condition may be adversely affected.

• Any failures on its part to manage operational risks inherent in the company business, including risks arising from its reliance on third-party service providers, could adversely affect its business, reputation, results of operations and financial condition.

• Any downgrade of its credit ratings may restrict the company access to capital and thereby adversely affect its business, reputation, cash flows and results of operations.

• Its central reservations system is an important component of its business and operations and a disruption in its functioning could have an adverse effect on its business and results of operations.

• The company has availed certain credit facilities that are repayable on demand. Any demand by the lenders may adversely affect its cash flows and financial condition.

• Its insurance coverage may not be sufficient or may not adequately protect it against all material hazards, which may adversely affect its business, results of operations and financial condition.

• The company does not own the premises in which its Registered Office, Corporate Office and certain of its regional sales offices are situated.

• Its indebtedness and the conditions and restrictions imposed by its financing arrangements could adversely affect its business, results of operations, growth prospects and financial condition.

• In the event the company fails to obtain, maintain or renew our statutory and regulatory licenses, permits and approvals required to operate its business, the company business and results of operations may be adversely affected.

• The company is subject to extensive government regulation with respect to safety, health, environmental, real estate, food, excise, tax and labor laws. Any non-compliance with, or changes in, regulations applicable to its may adversely affect its business, reputation, results of operations and financial condition.

• The company is exposed to a variety of risks associated with safety, security and crisis management which could have an adverse effect on its business, results of operations, financial condition and cash flows.

• Disruptions or lack of basic infrastructure such as electricity and water supply could adversely affect its operations. Existing or planned amenities and transportation infrastructure at or near other hotels in its Portfolio and serviced apartments could be closed, relocated, terminated, delayed or not completed at all.

• Significant disruptions of information technology systems or breaches of data security could have an adverse effect on its business, results of operations, financial condition and cash flows.

• New brands and offerings that the company launch in the future may not be as successful as its anticipate, which could have an adverse effect on its business, financial condition and results of operations.

• Certain of its Directors, Key Managerial Personnel and Senior Management have interests in it other than reimbursement of expenses incurred and normal remuneration or benefits. Conflicts of interest may arise in the future, which may adversely affect its business, results of operations, financial condition and cash flows.

• The company is subject to a variety of risks relating to owning real estate assets, which may adversely affect its business and results of operations.

• One of its group companies has received a show cause notice from the SEBI which may adversely affect its reputation.

• The company relies on contract labor for carrying out certain of its operations and we may be held responsible for paying wages of such workers, if independent contractors through whom such workers are hired default on their obligations, and such obligations could have an adverse effect on its results of operations and financial condition.

• he COVID-19 pandemic affected its business and operations and any future pandemic or widespread public health emergency in the future, could adversely affect its business, financial condition, cash flows and results of operations.

• A portion of the Net Proceeds may be utilized for repayment or prepayment of specific loans incurred by the Company and certain of its Subsidiaries from State Bank of India which is an affiliate of SBI Capital Markets Limited, one of the Book Running Lead Managers.

• An inability to establish and maintain effective internal controls could lead to an adverse effect on its business, results of operations, cash flows and financial condition.

• This Red Herring Prospectus contains information from third-party industry sources, including the HVS Report, which has been exclusively commissioned and paid for by the Company solely for the purposes of the Offer. Such information is based on certain assumptions and prospective investors are advised not to place undue reliance on such information.

• Its ability to pay dividends in the future will depends on its earnings, financial condition, cash flows, working capital requirements, capital expenditures and restrictive covenants of its financing arrangements.

• The company has, in the last 12 months, issued Equity Shares at a price that could be lower than the Offer Price.

• The Net Proceeds of the Offer will be utilized for the repayment, prepayment and/or redemption of indebtedness availed of by the Company and certain of its Subsidiaries.

• Any variation in the utilization of the Net Proceeds (amount or period of deployment) would be subject to certain compliance requirements, including prior Shareholders` approval. Its funding requirements and the proposed deployment of Net Proceeds are not appraised by any independent agency, which may affect its business and results of operations.

• The company has in this Red Herring Prospectus included certain non-GAAP financial measures and certain other industry measures related to its operations and financial performance that may vary from any standard methodology that is applicable across the sector the company operates.