(XVI) PROVISIONS AND CONTINGENT LIABILITIES AND ASSET
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a result of
a past events, it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of
the time value of money is material, provisions are discounted using a current pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability. When
discounting is used, the increase in the provision due to the passage of time is recognised as a finance
cost.
Contingent liabilities and assets
Contingent liabilities are possible obligations that arise from past events and whose existence will only be
confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within
the control of the Company. Where it is not probable that an outflow of economic benefits will be required,
or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the
probability of outflow of economic benefits is remote.
(XVII) REVENUE RECOGNISATION
a) Revenue in case of Hotels & Resorts Business
Revenue is recognised at the transaction price that is allocated to the performance obligation. Revenue includes
room revenue, food and beverage sale and banquet services which is recognised once the rooms are occupied,
food and beverages are sold and banquet services have been provided as per the contract with the customer.
In relation to laundry income, airport transfers income and other allied services, the revenue has been
recognised by reference to the time of service rendered.
b) Revenue in case of Sale of Services in real estate segment
Revenue in case of property maintenance services shall be recognized on fulfillment of performance obligations
as per the contracts.
c) Interest
Revenue is recognized on a time proportion basis using the effective interest rate method.
(XVIII) EXPENDITURE
Expenses are accounted for on the accrual basis and provisions are made for all known losses and liabilities.
(XIX) BORROWINGCOSTS
Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalised as part of
the cost of the asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for
intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred.
Borrowing cost includes exchange differences to the extent regarded as an adjustment to the borrowing
costs.
(XX) TAXATION
Income tax expense comprises of current tax and deferred tax. It is recognised in the Statement of Profit and
Loss except to the extent that it relates to items recognised in other comprehensive income or directly in
equity.
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and
any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax
reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty,
if any relating to income taxes. It is measured using tax rates enacted at the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the
recognised amounts, and it is intended to realise the asset and settle the liability on a net basis.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes.
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are
recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that
is probable that future taxable profits will be available against which they can be used. Deferred tax assets
unrecognised or recognised, are reviewed at each reporting date and are recognised / reduced to the extent
that it is probable / no longer probable respectively that the related tax benefit will be realised. Significant
management judgement is required to determine the probability of deferred tax asset.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised
or liability is settled, based on the laws that have been enacted or substantively enacted by the reporting
date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which
the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and
liabilities.
(XXII) SEGMENT REPORTING
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker is considered to be the Board of Directors who
makes strategic decisions and is responsible for allocating resources and assessing performance of the operating
segments.
(XXIII) EARNING PER SHARE
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity
shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding
during the period. Since there is no potential; dilutive equity shares hence there is no impact on basic EPS while
calculating dilutive EPS.
(XXIV) CASH FLOW STATEMENT
The cash flows from operating, investing and financing activities of the Company are segregated based on the
available information. Cash flows from operating activities are reported using the indirect method, whereby
profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature
and any deferrals or accruals of past or future cash receipts or payments.
(XXV) RECENT PRONOUNCEMENT
Ministry of Corporate Affairs (“MCA”) notifies new standard or amendments to the existing standards under
Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31,
2025, MCA has not notified any new standards or amendments to the existing standards applicable to the
Company.
Term deposit amounting to Rs. 2.50Lakhs (PY Rs. 2.34Lakhs) has been given as security against the bank
gurantee submitted to Department of Trade and Taxes Delhi. The tenure of the Bank Guarantee has already
been expired however the Bank Guarantee is yet to be released by the Department of Trade and Taxes, Delhi.
Term Deposit amounting to Rs.188.30 Lakhs (PY 66.30) pledged with Bank against borrowings facilities.
13.3 The company has not reserved any equity shares for issue under options and contracts/commitments for sale of
shares/disinvestment.
13.4The company for the period of five years immediately preceding the Balance Sheet date has not:
(i) allotted any equity shares as fully paid up pursuant to contract(s) without payment being received in cash
(ii) alloted any fully paid up shares by way of bonus shares nor has bought back any class of equity shares
13.5 The company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of equity shares is entitled to
one vote per share. The dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders, in the ensuing
Annual General Meeting. In the event of liquidation, the equity shareholders are entitled to receive only the residual assets of the
company. The distribution of dividend, if any, is in the proportion to the number of equity shares held by the shareholders.
The Company has not been able to identifythe vendors who are registered as Micro, Small and Medium Enterprises as per the
provisions of the Micro, Small and Medium Enterprises DevelopmentAct, 2006. Accordingly, the disclosures required under Schedule III
to the Companies Act, 2013 in respect of the amount due to Micro, Small and Medium Enterprisesand the principal amount and
interest paid to them during the year, have not been furnished accurately.
ESPIRE HOSPITALITY LIMITED
Notes forming part of Financial Statements for the year ended March 31, 2025
(Rupees in lakhs, exceptfor share data and ifotherwisestated)
Valuation processes
The finance department of the Company includes a team that performs the valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair
values. This team reports directly to the Senior Management. Discussions on valuation and results are held between the Senior Management and valuation team atleast once every
quarter in line with the Company's quarterly reporting periods.
b. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
Ý Credit risk ;
Ý Liquidity risk ;
Ý Market Risk - Interest rate
Risk management framework
The Company's board of directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The board of directors has authorized
respective business Managers to establish the processes, who ensures that executive management controls risks through the mechanism of properly defined framework.
The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and
adherence to limits. Risk management policies and systems are reviewed by the business managers periodically to reflect changes in market conditions and the Company's activities.
The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees
understand their roles and obligations.
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
Credit risk on cash and cash equivalents is limited as the Company generally invests in deposits with banks with high credit ratings assigned by domestic credit rating agencies. The
loan represents security deposits given to suppliers, employees and others. The credit risk associated with such deposits is relatively low.
As per Ind AS 109, the Company makes allowance for doubtful trade receivable using simplified approach , significant judgement is used to estimate doubtful accounts as prescribed
in IND AS 109 . In estimating doubtful accounts historical and anticipated customer performance are considered. Changes in the economy, industry, or specific customer conditions
may require adjustments to the allowance for doubtful accounts recorded in financial statements. This is done on the basis of company's past history, existing market conditions as
well as forward looking estimates at the end of each reporting period. Based on the business environment in which the Company operates, management considers that the trade
receivables (other than receivables from government departments) are in default (credit impaired) if the payments are more than 365 days past due however the Company based
upon past trends determine an impairment allowance for loss on receivables outstanding for more than 365 days past due and the probability of recovery determined by the
competent management.
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another
financial assets. The Company's approach to manage liquidity is to have sufficient liquidity to meet it's liabilties when they are due, under both normal and stressed circumstances,
without incurring unacceptable losses or risking damage to the Company's reputation.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to
meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by
maintaining availability under credit facilities.
Liquidity risk results from the Company's potential inability to meet the obligations associated with its financial liabilities, for example settle-ment of financial debt and paying
suppliers. The Company's liquidity is managed by Company Treasury. The aim is to ensure effective liquidity management, which primarily involves obtaining sufficient committed
credit facilities to ensure adequate financial resources and, to some extent, tapping a range of funding sources.
Market risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk namely: currency
risk and interest rate risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
A. Interest rate risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's exposure to the risk of
changes in market interest rates relates primarily to the Company's borrowings with floating interest rates.
Exposure to interest rate risk
The Company's interest rate risk arises majorly from the term loan carrying floating rate of interest. These obligations exposes the Company to cash flow interest rate risk. The
exposure of the Company's borrowing to interest rate changes as reported to the management at the end of the reporting period are as follows:
31. c Fair value measurement and financial instruments
Capital Management
The primary objective of the management of the Company's capital structure is to maintain an efficient mix of debt and equity in order to achieve a low cost of capital, while taking
into account the desirability of retaining financial flexibility to pursue business opportunities and adequate access to liquidity to mitigate the effect of unforeseen events on cash flows.
Management also monitors the return on equity.
The Board of directors regularly review the Company's capital structure in light of the economic conditions, business strategies and future commitments.
For the purpose ofthe Company's capital management, capital includes issued share capital, securites premium and all other equity reserves. Debt includes term loan
During the financial year ended 31 March 2025, no significant changes were made in the objectives, policies or processes relating to the management of the Company's capital
structure.
32. Commitment & Contingent Liabilities:-
a) LG Electronics India Pvt. Ltd (LG) had filed a suit against the company, Usha India Ltd., and
others for the recovery of ? 465.02 lakhs given as security deposit for the premises A-41, Mohan Co-operative
Industrial Estate, New Delhi -110044 taken by it on lease from Usha India Ltd. and against the maintenance
service agreement for the same premises entered into with the Company. The Company has denied its liability
on the ground that it has already assigned the agreement to Lord Mahadev Trust on 6th August, 1997 and
transferred the security deposit of ? 87.19 lakhs received by the Company to the said Trust. However, Hon'ble
High Court of Delhi has passed a part joint decree of ? 231.26 lakhs in favour of LG and the LG filed an
execution petition and subsequently the Court directed the Company to transfer a sum of ? 4.50 lakhs to LG.
The liability on accountof above decree has not been ascertained by the court among the parties to the suit.
However, the management is of the opinion based on legal advices, that the Company shall not be liable to
make any payment to L.G, even the amount of ? 4.50 lakhs shall be recovered by the company from LG
Electronics India Pvt. Ltd (LG).Presently ? 4.50 lakhs so transferred to LG Electronics has been shown under
the head of Long term Loan and Advances .
b) An income tax demand of ?46.77 lakhs has been raised by the Income Tax Department vide intimation dated
28th February 2025 under Section 143(1) of the Income-tax Act, 1961 for the Assessment Year 2024-25 (Financial
Year 2023-24). The demand primarily relates to the disallowance of expenses, specifically Provident Fund (PF),
Employees' State Insurance (ESI), and other expenses.
Based on the advice of tax consultants, the Company believes it has a good case on merits. Accordingly, no
provision has been made in the books of account, and the amount has been disclosed as a contingent liability.
b) Commitments
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of
advances) Nil (previous year Nil)
Basis for Segment reporting
Factors used to identify the entity's reportable segments, including the basis of organization
The company is engaged in hospitality business of operating and managing hotels / resorts. Operating
segments are reported in a manner consistent with the internal reporting provided to the Chief Operating
Decision Maker (CODM). The CODM is considered to be the Board of Directors who makes strategic
decisions and is responsible for allocating resources and assessing performance of the operating
segments. The CODM has determined only one operating segment i.e. hospitality business.
The geographical segment have been identified on the basis of the location of customers. The total market
of the Company can be segregated into domestic market as they do not have any overseas market.
35. Impairment of Non-Financial Assets
All significant assets and cash generating unit were tested for impairment. The recoverable amount of
significant assets and cash generating units was found higher than the carrying value. No impairment was
identified.
37. Value of Imports on CIF basis : NIL (Previous . Year Nil)
38. Details of imported and indigenous raw materials, spare parts, and components consumed
Raw Materials: NIL(Previous. Year Nil)
Stores & spares: NIL(Previous Year Nil)
39. Expenditure in foreign currency: 1,39,48,495 (Previous Year Nil).
Earning In Foreign currency: NIL (Previous Year Nil).
40. Exceptional items NIL (Previous Year Nil)
41. The Micro and Small Enterprises have been identified by the Company from the available information,
which has been relied upon by the auditors. According to such identification, the information as required
to be reported as per Micro, Small and Medium Enterprise Development Act, 2006 as at March 31, 2025 are
as under:-
42. The company neither holds any benami property nor any proceedings have been initiated or pending
against the company for holding any benami property under the Benami Transactions (Prohibition) Act,
1988 (45 of 1988) and the rules made thereunder.
43. Gross amount required to be spent on CSR activities during the year is Nil (Previous year Nil).
44. The Company has not undertaken any transactions with companies struck off under section 248 of the
Companies Act, 2013 or section 560 of Companies Act, 1956
45. There is no charge or satisfaction pending for registration with the Registrar of Companies beyond the
statutory period.
46. The Company has not traded or invested in Crypto currency or Virtual Currency during the year ended
March 31, 2025 and March 31, 2024.
47. The company has complied with the number of layers prescribed under clause (87) of section 2 of the Act
read with Companies (Restriction on number of Layers) Rules, 2017.
48. The Company has been sanctioned working capital limits in excess of ? 5 crore, in aggregate from banks
and financial institutions, however there was no requirement for submission of monthly / quarterly
statement of current assets for the financial year ending March 31, 2025.
49. The Company has established a comprehensive system of maintenance of information and documents that
are required by the transfer pricing legislation under section 92-92F of the Income Tax Act, 1961.
50. There are no undisclosed incomes that has been surrendered or disclosed as income during the year in the
tax assessments under the Income Tax Act, 1961.
51. The Company has used accounting software that includes an audit trail (edit log) feature, which was
enabled and operational throughout the year for all relevant transactions.
52. Audit Trail:
i. The Company has used accounting software that includes an audit trail (edit log) feature, which
was enabled and operational throughout the year for all relevant transactions.
ii. There were no instances where the audit trail feature was tampered with during the period it was
enabled.
iii. The audit trail has been preserved by the Company as per applicable statutory record retention
requirements.
53. Previous year's figures have been regrouped / rearranged wherever necessary.
For Bansal & Co LLP For Espire Hospitality Limited
Chartered Accountants
Firm Reg No:001113N/N500079
Siddharth Bansal GaganOberoi AkhilArora
Partner Director Managing Director & CEO
Membership No:518004 DIN:00087963 DIN: 09436540
Place: New Delhi
Date: 29th May 2025
Sumeer Narain Mathur Rajeev Chatterjee
Company Secretary Chief Financial Officer
& Compliance Officer
M.No.: FCS9042
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