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Company Information

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INDIAN HOTELS COMPANY LTD.

11 October 2024 | 12:00

Industry >> Hotels, Resorts & Restaurants

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ISIN No INE053A01029 BSE Code / NSE Code 500850 / INDHOTEL Book Value (Rs.) 66.44 Face Value 1.00
Bookclosure 07/06/2024 52Week High 720 EPS 8.85 P/E 80.10
Market Cap. 100857.29 Cr. 52Week Low 372 P/BV / Div Yield (%) 10.67 / 0.25 Market Lot 1.00
Security Type Other

NOTES TO ACCOUNTS

You can view the entire text of Notes to accounts of the company for the latest year
Year End :2024-03 

(i)    Cost includes improvements to buildings constructed on leasehold land - H1,423.03 crores (Previous year - H1,346.06 crores).

(ii)    Includes Building amounting to H0.68 crore (Previous year - H0.70 crore) acquired on amalgamation of TIFCO Holdings Ltd. is pending to be transferred in the name of the Company.

(iii)    Adjustment comprises of residential flats re-classified from Assets held for sale to Buildings.

(iv)    The Company's leased assets mainly comprise land, hotel properties and offices. Leases contain a wide range of different terms and conditions. The term of property leases ranges from 2 to 198 years. Many of the Company's property leases contain extension or early termination options, which are used for operational flexibility.

One of the land lease agreement with the Government has expired and is in an advanced stage of renewal. In the absence of a definitive agreement and uncertainty about the timing of the cash flows, this lease is not included in the calculation of Right-of-Use assets and corresponding Lease liabilities. The rental for this land continues to be provided as lease expense on a best estimate.

(ii)    Amounts Recognised in Profit or Loss:

The following amounts were recognised as expense:

(iv)    During the year, the Company acquired 269,718 equity shares of PIEM Hotels Limited ("PIEM") aggregating to ~7.08% of the equity share capital from the existing shareholder, viz. New Vernon Private Equity Limited (~6.80%) and Tata Investment Corporation Limited (~0.28%) (Refer Note 29).

(v)    During the year, the Company has infused additional equity in these subsidiaries. For details Refer note 30 (b).

(vi)    During the year, the Company has recognised i) an impairment loss of H81.89 crores (Previous year H21.68 crores) which represents cash loss in one of its properties in the United States of America and ii) reversal of provision for impairment in case of a Joint Venture of H10.84 crores (Previous year HNil) on revival of business, in the statement of Profit and Loss which has been classified under "Exceptional items" (Refer Note 28).

(vii)    For these investments, the Company has elected the fair value through Other Comprehensive Income irrevocable option since these investments are not held for trading.

(viii)    For these investments, cost has been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair value within that range.

(ix)    The fair value hierarchy and classification are disclosed in Note 36.

(x)    The value of these investments is less than H50,000/-

(i) The Company has one class of equity shares having a par value of H1 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

ii) On December 16, 2023, the Company issued and allotted 30,31,885 equity shares of the Company on preferential basis at an issue price of H400.06 per equity share (including a premium of H399.06 per equity share) for acquisition of additional shares in Piem Hotels Limited (a subsidiary) from its existing shareholders (Refer Note 29)

(iii) Reconciliation of the Shares Outstanding at the Beginning and at the End of the Year

(vi)    56,857 (Previous year - 56,857) Equity Shares were issued but not subscribed to as at the end of the respective years and have been kept in abeyance pending resolution of legal dispute.

(vii)    Aggregate number and class of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash, bonus shares and shares bought back for the period of 5 years immediately preceding the balance sheet date is 30,31,885 (Previous year - Nil)

(viii)    Equity Shares held by associates (part of Promoter Group)

Description of nature and purpose of each reserve

a)    Capital Reserve: Capital reserve mainly consists of reserves transferred on amalgamation of subsidiaries in earlier years.

b)    Reserve on Transfer of Equity to Entities under Common Control: It consists of gain on transfer of equity shares between entities under common control.

c)    Capital Redemption Reserve: Capital Redemption Reserve was created on redemption of Preference shares in earlier years.

d)    Securities Premium: Securities premium represents the premium charged to the shareholders at the time of issuance of equity shares. The securities premium can be utilised based on the relevant requirements of the Companies Act, 2013.

e)    Debenture Redemption Reserve: The Company created Debenture Redemption Reserve out of the profits which is available for the purpose of redemption of debentures. On redemption of debentures, the same will be transferred to General Reserve.

f)    General Reserve: General reserve was created from time to time by way of transfer of profits from retained earnings for appropriation purposes based on the provisions of the Companies Act prior to its amendment.

g)    Equity Instruments through other Comprehensive Income: This represents the cumulative gains and losses arising on the revaluation of investments in equity instruments measured at fair value through other comprehensive income, under an irrevocable option, net of amounts reclassified to retained earnings when such investments are disposed off.

(i) Non Convertible Debentures - Unsecured Include:

a)    1,500, 7.50% Unsecured Non-Convertible Debentures of H10 lakhs each aggregating H150 crores, allotted on April 23, 2020 have been fully redeemed on due date i.e. on April 21, 2023. In the previous year, this was classified under current maturities of long term borrowings.

b)    3,000, 7.95% Unsecured Non-Convertible Debentures of H10 lakhs each aggregating H300 crores, allotted on June 5, 2020 have been fully redeemed on due date i.e. on June 5, 2023. In the previous year, this was classified under current maturities of long term borrowings.

ii) Disclosure of changes in liabilities arising from financing activities (read with Cash Flow Statement)

Note 29: Acquisition of minority shares in PIEM

The Board of Directors at its meeting held on October 27, 2023 had approved the acquisition of 2,69,718 equity shares of Piem Hotels Limited ("Piem"), a subsidiary of the Company, which comprises of 2,59,000 equity shares held by New Vernon Private Equity Limited ("New Vernon") (representing 6.80% of the paid-up equity share capital of Piem) and 10,718 equity shares held by Tata Investment Corporation Limited ("TICL") (representing 0.28% of the paid-up equity share capital of Piem) by way of a combination of share swap and cash. Aggregate consideration of H133.29 crores was agreed by issue of Company's equity Shares amounting to H121.29 crores and cash amounting to H12.00 crores.

Consequently, on receipt of all necessary approvals from shareholders and Stock Exchanges, the Company on December 16, 2023 issued and allotted 28,99,484 equity shares of the Company to New Vernon and 1,32,401 equity shares of the Company to TICL (collectively, the "Allottees") on preferential basis at an issue price of H400.06 per equity share (including a premium of H399.06 per equity share) which was the price determined in accordance with chapter V of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 ("SEBI ICDR Regulations"). The same was accounted using the share price of the Company as on the allotment date of H439.95 per equity share (including a premium of H438.95 per equity share) which amounted to H133.39 crores. Resultantly, post the allotment, the Company's effective shareholding in Piem has increased from 51.57% to 58.65% and the Company's paid up Equity share capital has increased from H142.04 crores to H142.34 crores.

Note 30: Investments in Subsidiaries

a)    During the year, the Company has incorporated two International subsidiaries as per the details below:

(i)    The Company through its subsidiary has entered into a lease agreement for a hotel property in Frankfurt, namely, the Grand Hotel Hessischer Hof "hotel" for a period of 20 years with an option to renew for two terms of 5 years each. The hotel is centrally located and strategically situated near Messe Frankfurt am Main, one of the largest conventions and meeting spaces in Germany. In order to house the above lease rights of the hotel property, the Company has incorporated a wholly owned subsidiary, "IH Hospitality GmbH", Frankfurt am Main, Germany and made an initial investment of US$ 0.03 mn for incorporation through its existing wholly owned subsidiary in Netherlands. The hotel is currently under renovation.

(ii)    The Company has opened "Bombay Brasserie", the iconic restaurant, famed for its authentic, eclectic Bombay and Indian cuisines in the heart of Singapore at the South Beach area. The Company has incorporated a wholly owned subsidiary "Demeter Specialities Pte Ltd" through its existing wholly owned subsidiary in Netherlands to house this restaurant business and has made investments of US$ 1.9 mn during the year. The restaurant was formally opened in December 2023.

b)    During the year, the Company has infused additional equity in certain subsidiaries as per the details below:

(i)    Invested H55.00 crores in Genness Hospitality Private Limited, a wholly-owned subsidiary, through a subscription to its Equity Issue, and was allotted 55,00,00,000 shares. The issue proceeds will be utilised for the development of a greenfield hotel (Vivanta) in Ekta Nagar, near the site of Statue of Unity, Gujarat. Currently, this project is under development.

(ii)    Invested H35.00 crores in Qurio Hospitality Private Limited, a wholly-owned subsidiary, through a subscription to its Equity Issue, and was allotted 35,00,00,000 shares. The issue proceeds will be utilised for the development of a greenfield hotel (Ginger) in Ekta Nagar, near the site of Statue of Unity, Gujarat. Currently, this project is under development.

(iii)    Subscribed to Equity Issue of H25.00 crores in Kadisland Hospitality Private Limited, a wholly-owned subsidiary and was allotted 25,00,00,000 shares. The issue proceeds will be utilised for the development (including operation and maintenance) of a luxury hotel in Kadmat Island in the Union Territory of Lakshadweep. Currently, this project is under development.

(iv)    Subscribed to Equity Issue of H18.50 crores in Suisland Hospitality Private Limited, and was allotted 18,50,00,000 shares. The issue proceeds will be utilised for the development (including operation and maintenance) of a luxury hotel in Suheli Island in the Union Territory of Lakshadweep. Currently, this project is under development.

(v)    Invested H35.00 crores in Zarrenstar Hospitality Private Limited, through a subscription to its Equity Issue, and was allotted 35,00,00,000 shares. The issue proceeds will be utilised for the development of a brownfield hotel at Cochin International Airport.

(vi)    Invested H19.93 crores in Ideal Ice Limited, a wholly-owned subsidiary, through a subscription to its Equity Issue, and was allotted 1,99,34,977 shares.

c)    Additional Disclosure under the regulatory requirement:

Note 31: Contingent Liabilities (to the extent not provided for) and Contingent Assets

The Company is involved in a number of appellate, judicial and arbitration proceedings (including those described below) concerning matters arising in the course of conduct of the Company's businesses and is exposed to other contingencies arising from having issued guarantees to lenders of its subsidiaries and other entities. Some of these proceedings in respect of matters under litigation are in early stages, and in some other cases, the claims are indeterminate.

i)    The above figures exclude interest demands of H73.79 crores (Previous year H87.68 crores).

ii)    In respect of Income Tax matters, the Company has ongoing disputes with Income Tax Authorities relating to treatment of certain items/ adjustments carried out by the Department. The Company's appeals are pending before various Appellate Authorities. Most of these disallowances/ adjustments have been raised by the income tax authorities consistently in most of the years. Most of the issues raised by the department are repetitive in nature. The Company expects to have favourable order and sustain its position. Cash flows for the above are determinable only on receipt of judgements pending with various authorities/ Tribunals.

iii)    In respect of regulatory matters please refer Note 39.

(b)    On Account of lease agreements:

In respect of a plot of land, on which the Company has constructed a hotel, the lessor had made a claim during financial year ("FY") 2006-07 for the period September 1, 2006 to March 31, 2007, which exceeded the amount payable as per the lessor's own proposal by H13.97 crores. The said proposal of the lessor had been accepted by the Company in FY 2001-02, without prejudice to its rights under the lease deed that it had originally entered with the lessor. The claim of the lessor is also inconsistent with the decision of the Honorable Supreme Court of India ("SC") in 2004 which decided on the quantification of lease rent up to FY 2011-12. From FY 2006-07, the lessor has been raising excessive claims, which as of March 31, 2024, aggregate to H1,661 crores for periods commencing from September 1, 2006.

Based on legal advice, the Company has disputed the claims in a suit in the Honorable High Court of Judicature at Bombay ("Bombay HC"). The Bombay HC stayed the lessor's notices in FY 2018-19. Pending final disposal of the suit, the lessor has been restrained from disturbing or prejudicing the Company's possession of the plot/operation thereon, subject to the Company paying lease rentals as per the lessor's proposal that was accepted by the Company. The Company continues to pay lease rentals on this basis and accounts for these payments in accordance with its Accounting Policy 2(h) which explains the accounting of the Company's leases. The amount and timing of outflow of economic resources would depend on the outcome of the litigation.

(c)    Others:

Management is generally unable to reasonably estimate a range of possible loss for proceedings or disputes other than those included in the estimate above, including where:

(i)    plaintiffs/ parties have not claimed an amount of money damages, unless management can otherwise determine an appropriate amount;

(ii)    the proceedings are in early stages;

(iii)    there is uncertainty as to the outcome of pending appeals or motions or negotiations; and

(iv)    there are significant factual issues to be resolved; and/or there are novel legal issues presented

The Company's management does not believe, based on currently available information, that the outcomes of the above matters will have a material adverse effect on the Company's financial position, though the outcomes could be material to the Company's operating results for any particular period, depending, in part, upon the operating results for such period. It is not practicable for the Company to estimate the timings of cash flows, if any, in respect of the above.

(d)    Claims filed by the Company:

The Company has filed claims for Government incentives in case of a new Greenfield project and an expansion hotel project. The claims are in initial stage of verification and in the absence of reasonable certainty at this stage, no income has been recognised in the financial statements.

Note 32: Guarantees Given

i)    Guarantees/ Letters of Comfort given by the Company in respect of loans obtained by the company's subsidiaries and outstanding as on March 31, 2024 - H92.10 crores (Previous year - H127.17 crores).

ii)    The Company has given letter of support to certain subsidiaries during the year.

Note 33: Capital Commitments

Commitments includes the amount of purchase order (net of advance) issued to parties for completion of assets. Estimated amount of contracts remaining to be executed on capital account net of capital advances and not provided for is H117.58 crores (Previous year - H143.62 crores).

iii) Contract Balances

The contract liabilities primarily relate to the unredeemed customer loyalty points and the advance consideration received from customers for which revenue is recognised when the performance obligation is over/ services delivered.

a) Advance Collections is recognised when payment is received before the related performance obligation is satisfied. This includes advances received from the customer towards rooms/restaurant/banquets. Revenue is recognised once the performance obligation is met i.e. on room stay/ sale of food and beverage / provision of banquet services. It also includes membership fee received for Chambers Membership, Epicure membership and Spa and Health Club Memberships and disclosed as Income received in advance.

Note 35: Leases - Ind AS 116

The Company leases several assets including land, building and plant and equipment which are generally long term in nature with varying terms, escalation clauses and renewal rights expiring within five to one hundred and ninety-eight years. On renewal, the terms of the leases are renegotiated.

In addition, in certain circumstances the Company is committed to making additional lease payments that are contingent on the performance viz. gross operating profits, revenues etc. of the hotels that are being leased for which no lease liability has been recognised as it is contingent in nature and the future cash outflows for these are indeterminate.

Footnotes:

(i)    The Company has not disclosed the fair value of financial instruments such as trade receivables, trade payables, short term loans, deposits etc. because their carrying amounts are a reasonable approximation of fair value.

(ii)    The carrying amounts of the borrowings (excluding non-convertible debentures) that are not measured at fair value are reasonable approximation of fair value, as they are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period.

Fair value hierarchy:

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either

observable or unobservable and consists of the following three levels:

(a)    Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices in an active market. This includes listed equity instruments, traded debentures and mutual funds that have quoted price/ declared NAV. The fair value of all equity instruments (including debentures) which are traded in the stock exchanges is valued using the closing price as at the reporting period.

(b)    Level 2: Level 2 hierarchy includes financial instruments that are not traded in an active market (for example, traded bonds/debentures, over the counter derivatives). The fair value in this hierarchy is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

(c)    Level 3: If one or more of the significant Inputs is not based on observable market data, the instrument is included in level 3. Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. Financial instruments such as unlisted equity shares, loans are included in this hierarchy.

c) Inter level transfers:

There are no transfers between levels 1 and 2 as also between levels 2 and 3 during the year.

d) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

-    the use of quoted market prices for the equity instruments

-    the fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves

-    the fair value of non convertible debentures is valued using FIMMDA guidelines.

-    the fair value for the cross currency swaps/principal swap is determined using forward exchange rates at the balance sheet date

-    the fair value of certain unlisted shares are determined based on the income approach or the comparable market approach. For these unquoted investments categorised under Level 3, their respective cost has been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair value within that range.

-    the fair value of the remaining financial instruments is determined using the discounted cash flow analysis

Note 37: Financial Risk Management

Risk Management Framework

The Company's Board of Directors has the overall responsibility for the establishment and oversight of the Company's risk management framework. The Board of Directors has established a Risk Management Committee, which is responsible for developing and monitoring the Company's risk management policies. The Committee reports regularly to the Board of Directors on its activities.

The Company's risk management policies are established to identify and analyse the risk 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 regularly to reflect changes in market conditions and the Company's activities. The Company's Audit Committee oversees how management monitors compliance with the Company's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its oversight role by the internal audit team. The internal audit team undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.

The Company has exposure to the following risks arising from financial instruments:

-    Credit risk;

-    Liquidity risk;

-    Market risk

a) Credit Risk

Credit risk arises from the possibility that customers or counterparty to financial instruments may not be able to meet their obligations. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, analysis of historical bad debts and ageing of accounts receivable. Credit risks arises from cash and cash equivalents, deposits with banks, financial institutions and others, as well as credit exposures to customers, including outstanding receivables.

The Company's policy is to place cash and cash equivalents and short term deposits with reputable banks and financial institutions

The Company has established a credit policy under which each new customer is analysed individually for creditworthiness before entering into contract. Credit limits are established for each customer, reviewed regularly and any sales exceeding those limits require approval from the appropriate authority. There are no significant concentrations of credit risk within the Company. The carrying amount of Trade Receivables was H402.74 crores and H379.40 crores as at March 31, 2024 and 2023 respectively.

b) Liquidity Risk

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 asset. The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to Company's reputation.

Management monitors rolling forecasts of the Company's liquidity position and cash and cash equivalents on the basis of expected cash flows to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Company does not breach borrowing limits or covenants on any of its borrowing facilities, Such forecasting takes into consideration the Company's debt financing plans, covenant compliance and compliance with internal statement of financial position ratio targets.

iii) Capital risk management

The Company manages its capital to ensure that it will be able to continue as a going concern. The structure is managed to maintain an investment grade credit rating, to provide ongoing returns to shareholders and to service debt obligations, whilst maintaining maximum operational flexibility.

Consistent with others in the industry, the Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by Equity. Net debt is calculated as total borrowings (including 'current and non-current term loans' as shown in the balance sheet) less cash and cash equivalents and current investments.

c) Market Risk

Market risk is the risk that the changes in market prices such as foreign exchange rates, interest rates and equity prices will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The Company uses derivatives to manage its exposure to foreign currency risk and interest rate risk. All such transactions are carried out within the guidelines set by the risk management committee.

i) Foreign currency risk

The predominant currency of the Company's revenue and operating cash flows is Indian Rupees (INR). Movements in foreign exchange rates can affect the Company's reported profit, net assets.

The Company has foreign currency exposure for equity investments in its international subsidiaries. These investments are long term and strategic in nature with no immediate plan for its disposal, hence these investments are not being hedged.

The Company uses interest rate swaps and currency swaps to hedge its exposure in foreign currency and interest rates. However, there are no such instruments outstanding at the year end.

Sensitivity

For the year ended March 31, 2024 and March 31, 2023, every 3% depreciation/ appreciation in the exchange rate between the Indian rupee and US dollar, shall affect the Company's profit before tax by approximately -0.01% and 0.01% respectively.

ii) Interest rate risk

The Company adopts a policy to hedge the interest rate movement in order to mitigate the risk with regards to floating rate linked loans based on the market outlook on interest rates. This is achieved partly by entering into fixed rate instruments and partly by borrowing at a floating rate and using interest rate swaps as hedges of the variability in cash flows attributable to interest rate risk.

The total borrowing at variable rate was Nil as at March 31, 2024 (Previous year - H0.59 crores). The carrying value of the long term debt approximates fair value since the current interest rate approximates the market rate.

iii) Other market price risks

The Company's exposure to equity securities price risk arises from investments held by the Company and classified in the balance sheet as fair value through Other Comprehensive Income. If the equity prices of quoted investments are 3% higher/ lower, the Other Comprehensive Income for the year ended March 31, 2024 would increase/ decrease by 5.85% (for the year ended March 31, 2023: increase/ decrease by 12.77%).

(b)    The Company operates post retirement defined benefit plans as follows: -

a.    Funded:

i.    Provident Fund

ii.    Post Retirement Gratuity

iii.    Pension to Employees - Post retirement minimum guaranteed pension scheme for certain categories of employees, which is funded by the Company and the employees.

b.    Unfunded:

i.    Pension to Executive Directors and Employees - Post retirement minimum guaranteed pension scheme for select existing and retired executive directors and certain categories of employees, which is unfunded.

ii.    Post Employment Medical Benefits to qualifying employees.

(c)    Provident Fund:

The Company operates Provident Fund Scheme through a Trust - 'The Indian Hotels Company Limited Employees Provident Fund' ('the Plan'), set up by the Company and for certain categories contributions are made to State Plan.

The Plan guarantees minimum interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of separation from the Company or retirement, whichever is earlier. The benefit vests immediately on rendering of the services by the employee. In terms of the guidance note issued by the Institute of Actuaries of India for measurement of provident fund liabilities, the actuary has provided a valuation of provident fund liability and based on the assumptions provided below, there is no shortfall as at March 31, 2024 and March 31, 2023.

The Company contributed H15.11 crores and H13.94 crores towards provident fund to the Plan during the year ended March 31, 2024 and March 31, 2023 respectively and the same has been recognised in the statement of profit and loss.

In light of the Supreme Court judgement dated February 28, 2019 regarding the definition of wages for calculation of Provident fund contribution, the Company as advised, on a prudent basis, has provided for the liability prospectively from date of judgement.

(d) Pension Scheme for Employees:

The Company has formulated a funded pension scheme for certain employees. The actuarial liability arising on the above, after allowing for employees' contribution is determined as at the year end, on the basis of uniform accrual benefit, with demographic assumptions taken as Nil.

Due to the restrictions in the type of investments that can be held by the gratuity and pension fund as per the prevalent regulations, it is not possible to explicitly follow an asset-liability matching strategy to manage risk actively.

The estimate of future salary increases, considered in actuarial valuation, takes into account inflation, seniority, promotions and other relevant factors. The above information has been certified by the actuary and has been relied upon by the Auditors.

Code on Social Security, 2020:

The date of implementation of the Code on Social Security, 2020 ('the Code') relating to employee benefits is yet to be notified by the Government and when implemented will impact the contributions by the Company towards benefits such as Provident Fund, Gratuity etc. The Company will assess the impact of the Code and give effect in the financial results when the Code and Rules thereunder are notified.

Note 39: Other Regulatory Matters

The Company, on a review of its foreign operations had, in the past, made voluntary disclosures to the appropriate regulator, of what it considered to be possible irregularities, in relation to foreign exchange transactions relating to the period prior to 1998. Arising out of such disclosures, the Company received show cause notices and the Company had replied to the notices. Prior to 2018, the Company has received adjudication cum demand of H10.89 crores on certain matters which has been disputed by the Company. This has been disclosed as Contingent Liability. The Company has filed appeal against the adjudication cum demand, and the appeal is pending. During the financial year 2018-19, the Company received adjudication cum demand aggregating H1.12 crore on three other matters being contested. The Company has filed appeals against these adjudication cum demand orders and the same are pending. For the balance Show Cause Notices, adjudication proceedings are pending.

The Company reviews its income tax treatments in order to determine its impact on the financial statements. As a practice, where the interpretation of income tax law is not clear, management relies on the some or all of the following factors to determine the probability of its acceptance by the tax authority:

-    Strength of technical and judicial argument and clarity of the legislation;

-    Past experience related to similar tax treatments in its own case;

-    Legal and professional advice or case law related to other entities.

After analysing above factors for each of such uncertain tax treatments, where the Company expects that the probability to sustain its position on ultimate resolution of such uncertain tax treatment is remote, the Company ensures that such uncertain tax positions are adequately provided for in the Company's financial Statements.

Note 43: Segment Information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Managing Director and Chief Executive Officer who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the chief operating decision-maker. From the internal organisation of the Company's activities and consistent with the internal reporting provided to the chief operating decisionmaker and after considering the nature of its services, the ultimate customer availing those services and the methods used by it to provide those services, "Hotel Services" has been identified to be the Company's sole operating segment. Hotel Services include "Revenue from Operations" including Management and Operating Fees where hotels are not owned or leased by the Company. The organisation is largely managed separately by property based on centrally driven policies and the results and cash flows of the period, financial position as of each reporting date aggregated for the assessment by the Managing Director and Chief Executive Officer. The Company's management reporting and controlling systems principally use accounting policies that are the same as those described in Note 2 in the summary of significant accounting policies under Ind AS. As the Company is engaged in a single operating segment, segment information that has been tabulated below is Company-wide:

Explanations to Variance in Ratios:

1.    The debt-equity ratio is currently nil because of complete repayment of all outstanding debt during the year.

2.    Debt service coverage ratio increased due to increase in cash operating earnings and lower payments of interest and principal amounts of during the year consistent with nil debt.

3.    Net profit ratio improved due to an increase in net profit after tax from improvement in business volumes.

4.    Return on capital employed and return on equity improved with improvement in operating margins during the year.

5.    Return on investments increased with increase in yields of the investment portfolio.

6.    The Company has not presented Inventory turnover ratio since it holds inventory for consumption in the service of food and beverages and the proportion of such inventory is insignificant to total assets.

b)    Transaction with Struck off Companies:

The Company has reviewed transactions to identify if there are any transactions with struck off companies. To the extent information is available on struck off companies, there are only 4 transactions with struck off companies.

c)    Title Deeds of Leased Assets not held in the name of the Company:

The title deeds, comprising all the immovable properties of land and buildings, are held in the name of the Company as at the balance sheet date except in respect of one commercial / residential building aggregating to H0.68 crores (Gross block H1.30 crores) constructed on the leased land, which is in the possession of the Company, acquired pursuant to a scheme of amalgamation of TIFCO Holding Limited (a wholly owned subsidiary). The lease of the said land has expired in the year 2000. Erstwhile TIFCO Holdings Limited has filed a writ Petition in High Court of Mumbai on January 15, 2013 for renewal of lease.

d)    There are no borrowings from banks or financial institutions on the basis of security of current assets of the company.

e)    The Company has used funds borrowed for the specific purposes only for the purposes which it has been borrowed.

f)    The Company has not advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) any funds other than as disclosed in Note 30 (e), to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall:

-    directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalf of the Company or

-    provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

g)    The Company has not received any funds from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall:

-    directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalf of the Funding Party or provide any guarantee, security or the like from or on behalf of the Ultimate Beneficiaries.

Note 47: Audit Trail

In the ERP, audit trail at transaction level on application layer has an embedded audit trail in sub-ledger accounting tables which creates unique events for every transaction along with dates of creating and updating transactions with the identity of users. General ledger journals are not allowed to be modified after posting and the date and creator of journals are tracked. This feature cannot be disabled. Additionally, audit trail was enabled for masters and transactions in a phased manner during June and July, 2023. Audit trail feature with respect to application layer changes in accounting software has worked effectively during the year. PMS and POS (Property Management and Point of Sales software) has inbuilt audit trail feature from April 1, 2023. Post publication of ICAI implementation guide, direct database level changes was also included in audit trial scope. In respect of ERP, access to direct database level changes is available only to privileged users and for PMS and POS, it is not available to any of the Company personnel. However, the software product owners have confirmed that there is no audit trail enabled for data base level changes.

Note 48: Dividends

Dividends paid during the year ended March 31, 2024 out of Retained Earnings was H1.00 per equity share for the year ended March 31, 2023, aggregating to H142.04 crores.

The dividends declared by the Company are based on the profits available for distribution as reported in the standalone financial statements of the Company. Accordingly, the retained earnings reported in these financial statements may not be fully distributable. As of March 31, 2024, retained earnings not transferred to reserves available for distribution was H1,900.34 crores.

On April 24, 2024, the Board of Directors of the Company have proposed a final dividend of H1.75 per equity share in respect of the year ended March 31, 2024, subject to the approval of shareholders at the Annual General Meeting. If approved, the dividend would result in a cash outflow of H249.10 crores.