(m) Provisions
General
Provisions are recognised when the Company
has a present obligation (legal or constructive)
as a result of a past event, 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. The expense relating to
a provision is presented in the statement of profit
and loss net of any reimbursement.
The amount recognised as a provision is the
best estimate of the consideration required to
settle the present obligation at the end of the
reporting period, taking into account the risks
and uncertainties surrounding the obligation.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax
rate that reflects, when appropriate, 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.
Provisions are reviewed at the end of each
reporting period and adjusted to reflect the
current best estimate. If it is no longer probable
that an outflow of resources would be required
to settle the obligation, the provision is reversed.
Contingent Assets/ Liabilities
Contingent assets are not recognised. However,
when realisation of income is virtually certain,
then the related asset is no longer a contingent
asset, and is recognised as an asset.
Contingent liabilities are disclosed in notes to
accounts when there is a possible obligation
arising from past events, the existence of which
will be confirmed only by the occurrence or non¬
occurrence of one or more uncertain future events
not wholly within the control of the Company or
a present obligation that arises from past events
where it is either not probable that an outflow of
resources will be required to settle or a reliable
estimate of the amount cannot be made.
(n) Deferred Revenue
The Company operates a loyalty point's
programme, which allows customers to
accumulate points when they obtain services
in the Company's Hotels. The points can be
redeemed for free products/ nights, subject to
a minimum number of points being obtained.
Consideration received is allocated between the
Room Revenue and the points issued, with the
consideration allocated to the points equal to their
fair value. Fair value of the points is determined
by applying a statistical analysis. The fair value of
the points issued is deferred and recognised as
revenue when the points are redeemed.
(o) Retirement and other employee benefits
Retirement benefit in the form of provident fund is
a defined contribution scheme. The Company has
no obligation, other than the contribution payable
to the provident fund. The Company recognizes
contribution payable to the provident fund scheme
as an expense, when an employee renders the
related service. If the contribution payable to the
scheme for service received before the balance
sheet date exceeds the contribution already paid,
the deficit payable to the scheme is recognized as
a liability after deducting the contribution already
paid. If the contribution already paid exceeds the
contribution due for services received before the
balance sheet date, then excess is recognized
as an asset to the extent that the pre-payment
will lead to, for example, a reduction in future
payment or a cash refund.
Retirement benefit in the form of gratuity is
a defined benefit scheme. Gratuity liability of
employees is accounted for on the basis of actuarial
valuation on projected unit credit method at the
close of the year. Company's contribution made
to Life Insurance Corporation is expensed off at
the time of payment of premium.
Remeasurements, comprising of actuarial gains
and losses, the effect of the asset ceiling,
excluding amounts included in net interest on
the net defined benefit liability and the return
on plan assets (excluding amounts included in
net interest on the net defined benefit liability),
are recognised immediately in the balance sheet
with a corresponding debit or credit to retained
earnings through OCI in the period in which they
occur. Remeasurements are not reclassified to
profit or loss in subsequent periods.
Past service costs are recognised in profit or loss
on the earlier of:
• The date of the plan amendment or
curtailment, and
• The date that the Company recognises
related restructuring costs
Net interest is calculated by applying the discount
rate to the net defined benefit liability or asset.
The Company recognises the following changes in
the net defined benefit obligation as an expense
in the statement of profit and loss:
• Service costs comprising current service
costs, past-service costs, gains and
losses on curtailments and non-routine
settlements; and
• Net interest expense or income
Retirement benefits in the form of Superannuation
Fund is a defined contribution scheme and the
contributions are charged to the statement of
profit and loss of the year when the contributions
to the respective funds are due. There are no
other obligations other than the contribution
payable to the respective trusts.
Short-term and other long-term employee
benefits
A liability is recognised for benefits accruing
to employees in respect of wages and salaries,
annual leave and sick leave in the period the
related service is rendered at the undiscounted
amount of the benefits expected to be paid in
exchange for that service.
Liabilities recognised in respect of short¬
term employee benefits are measured at the
undiscounted amount of the benefits expected to
be paid in exchange for the related service.
Liabilities recognised in respect of other long¬
term employee benefits are measured at the
present value of the estimated future cash
outflows expected to be made by the Group in
respect of services provided by employees up to
the reporting date.
The Company treats leaves expected to be
carried forward for measurement purposes. Such
compensated absences are provided for based on
the actuarial valuation using the projected unit
credit method at theyear-end. Remeasurement
gains/losses are immediately taken to the
statement of profit and loss and are not deferred.
The Company presents the entire leave as a
current liability in the balance sheet, since it
does not have an unconditional right to defer
its settlement for 12 months after the reporting
date. Where Company has the unconditional legal
and contractual right to defer the settlement for a
period beyond 12 months, the same is presented
as non-current liability.
(p) Financial instruments
A financial instrument is any contract that gives
rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
All financial assets are recognised initially at
fair value, plus in the case of financial assets
not recorded at fair value through profit or loss,
transaction costs that are attributable to the
acquisition of the financial asset. However, trade
receivables that do not contain a significant
financing component are measured at transaction
price. Purchases or sales of financial assets that
require delivery of assets within a time frame
established by regulation or convention in the
market place (regular way trades) are recognised
on the trade date, i.e., the date that the Company
commits to purchase or sell the asset.
Subsequent measurement
Forpurposesofsubsequentmeasurement, financial
assets are classified in following categories:
• Debt instruments at amortised cost
• Debt instruments, derivatives and equity
instruments at fair value through profit or
loss (FVTPL)
• Equity instruments measured at fair value
through other comprehensive income
(FVTOCI)
• Equity instruments in subsidiaries/associates
carried at cost
Debt instruments at amortised cost
A debt instrument is measured at the amortised
cost if both the following conditions are met:
a) The asset is held within a business model
whose objective is to hold assets for collecting
contractual cash flows, and
b) Contractual terms of the asset give rise on
specified dates to cash flows that are solely
payments of principal and interest (SPPI) on
the principal amount outstanding.
This category is the most relevant to the Company.
The difference between the transaction amount
and amortized cost in case of interest free loan
to subsidiaries based on the expected repayment
period is considered as 'deemed investment on
account of interest free loan to subsidiaries'
(Refer Note 8(i)). After initial measurement, such
financial assets are subsequently measured at
amortised cost using the effective interest rate
(EIR) method. Amortised cost is calculated by
taking into account any discount or premium on
acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included in
finance income in the profit or loss. If there is any
change in estimate for payment of loan (provided
that there was no error in original estimate),
difference in carrying amount and repayment has
been adjusted as return on capital by the parent,
based on condition/ situation prevailing on that
date. The losses arising from impairment are
recognised in the profit or loss.
Debt instrument at FV TPL
FVTPL is a residual category for debt instruments.
The Company has designated compulsory
redeemable preference shares investments in its
subsidiaries at FVTPL. The difference between
the transaction amount and amortized cost is
considered as 'deemed investment in compulsory
redeemable preference shares' (Refer Note 8(i)).
Debt instruments included within the FVTPL
category are measured at fair value with all
changes recognized in the P&L.
Equity instruments
All equity investments (other than equity
investments in subsidiaries) in scope of Ind
AS 109 are measured at fair value. Equity
instruments in subsidiaries are carried at cost
in financial statements less impairments if any.
Equity instruments included within the FVTPL
category are measured at fair value with all
changes recognized in the P&L.
Derecognition
A financial asset (or, where applicable, a part
of a financial asset or part of a Company of
similar financial assets) is primarily derecognised
(i.e. removed from the Company's balance
sheet) when:
• The rights to receive cash flows from the
asset have expired, or
• The Company has transferred its rights to
receive cash flows from the asset or has
assumed an obligation to pay the received
cash flows in full without material delay
to a third party under a 'pass-through'
arrangement; and either (a) the Company
has transferred substantially all the risks and
rewards of the asset, or (b) the Company has
neither transferred nor retained substantially
all the risks and rewards of the asset, but has
transferred control of the asset.
Impairment of financial assets
In accordance with Ind AS 109, the Company
applies expected credit loss (ECL) model for
measurement and recognition of impairment
loss on the following financial assets and credit
risk exposure:
a) Financial assets that are debt instruments,
and are measured at amortised cost e.g.,
loans, debt securities, deposits, trade
receivables and bank balance.
b) Trade receivables or any contractual right to
receive cash or another financial asset.
The Company follows 'simplified approach' for
recognition of impairment loss allowance on trade
receivables. The application of simplified approach
does not require the Company to track changes
in credit risk. Rather, it recognises impairment
loss allowance based on lifetime ECLs at each
reporting date, right from its initial recognition.
Lifetime ECL are the expected credit losses
resulting from all possible default events over
the expected life of a financial instrument. The
12-month ECL is a portion of the lifetime ECL
which results from default events that are possible
within 12 months after the reporting date.
ECL is the difference between all contractual cash
flows that are due to the Company in accordance
with the contract and all the cash flows that the
entity expects to receive (i.e., all cash shortfalls),
discounted at the original EIR.
ECL impairment loss allowance (or reversal)
recognized during the period is recognized as
income/ expense in the statement of profit and
loss (P&L). This amount is reflected under the head
'other expenses' in the P&L. The balance sheet
presentation for various financial instruments is
described below:
• Financial assets measured as at amortised
cost, contractual revenue receivables and
lease receivables: ECL is presented as
an allowance, i.e., as an integral part of
the measurement of those assets in the
balance sheet. The allowance reduces the
net carrying amount. Until the asset meets
write-off criteria, the Company does not
reduce impairment allowance from the gross
carrying amount.
• Debt instruments measured at FVTOCI: There
are no instruments measured at FVTOCI
For assessing increase in credit risk and
impairment loss, the Company combines
financial instruments on the basis of shared
credit risk characteristics with the objective
of facilitating an analysis that is designed to
enable significant increases in credit risk to
be identified on a timely basis.
The Company does not have any purchased
or originated credit-impaired (POCI) financial
assets, i.e., financial assets which are credit
impaired on purchase/ origination.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial
recognition, as financial liabilities at fair value
through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at
fair value and, in the case of loans and borrowings
and payables, net of directly attributable
transaction costs.
The Company's financial liabilities include trade
and other payables, loans and borrowings
including bank overdrafts and financial
guarantee contracts.
Subsequent measurement
The measurement of financial liabilities depends
on their classification, as described below:
Financial liabilities at fair value through profit
or loss
Financial liabilities at fair value through profit or
loss include financial liabilities held for trading
and financial liabilities designated upon initial
recognition as at fair value through profit or
loss. Financial liabilities are classified as held for
trading if they are incurred for the purpose of
repurchasing in the near term. This category also
includes derivative financial instruments entered
into by the Company that are not designated as
hedging instruments in hedge relationships as
defined by Ind AS 109.
Gains or losses on liabilities held for trading are
recognised in the profit or loss.
Financial liabilities designated upon initial
recognition at fair value through profit or loss
are designated as such at the initial date of
recognition, and only if the criteria in Ind AS 109
are satisfied. For liabilities designated as FVTPL,
fair value gains/ losses attributable to changes
in own credit risk are recognized in OCI. These
gains/ loss are not subsequently transferred
to P&L. However, the Company may transfer
the cumulative gain or loss within equity. All
other changes in fair value of such liability are
recognised in the statement of profit or loss. The
Company has not designated any financial liability
as at fair value through profit and loss.
Financial liabilities at amortised cost
This is the category most relevant to the Company.
After initial recognition, interest-bearing loans
and borrowings are subsequently measured at
amortised cost using the EIR method. Gains and
losses are recognised in profit or loss when the
liabilities are derecognised as well as through the
EIR amortisation process.
Amortised cost is calculated by taking into
account any discount or premium on acquisition
and fees or costs that are an integral part of the
EIR. The EIR amortisation is included as finance
costs in the statement of profit and loss.
This category generally applies to borrowings.
For more information refer Note 16.
Financial guarantee
Financial guarantees issued by the Company
on behalf of group companies are designated
as 'Insurance Contracts'. The Company assess
at the end of each reporting period whether
its recognised insurance liabilities (if any) are
adequate, using current estimates of future
cash flows under its insurance contracts. If that
assessment shows that the carrying amount of
its insurance liabilities is inadequate in the light
of the estimated future cash flows, the entire
deficiency is recognised in profit or loss.
If a financial guarantee is an integral element
of debts held by the entity, itisnot accounted
for separately.
Derecognition
A financial liability is derecognised when the
obligation under the liability is discharged or
cancelled or expires. When an existing financial
liability is replaced by another from the same
lender on substantially different terms, or the
terms of an existing liability are substantially
modified, such an exchange or modification
is treated as the derecognition of the original
liability and the recognition of a new liability. The
difference in the respective carrying amounts is
recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset
and the net amount is reported in the balance
sheet if there is a currently enforceable legal right
to offset the recognised amounts and there is an
intention to settle on a net basis, to realise the
assets and settle the liabilities simultaneously.
(q) Cash and cash equivalents
Cash and cash equivalent in the balance sheet
comprise cash at banks and on hand and short¬
term deposits with an original maturity of
three months or less, which are subject to an
insignificant risk of changes in value.
(r) Share-based payments
Certain employees (including senior executives)
of the Company receive part of their remuneration
in the form of share based payment transactions,
whereby employees render services in exchange
for shares or rights over shares ('equity settled
transactions').
The cost of equity-settled transactions with
employees measured at fair value at the date
at which they are granted using an appropriate
valuation model. That cost is recognised,
together with a corresponding increase in
share-based payment (SBP) reserves in equity,
over the period in which the service conditions
are fulfilled in employee benefits expense. The
cumulative expense recognised for equity-settled
transactions at each reporting date until the
vesting date reflects the extent to which the
vesting period has expired and the Company's
best estimate of the number of equity instruments
that will ultimately vest. The statement of profit
and loss expense or credit for a period represents
the movement in cumulative expense recognised
as at the beginning and end of that period and is
recognised in employee benefits expense.
Service and non-market performance conditions
are not taken into account when determining the
grant date fair value of awards, but the likelihood
of the conditions being met is assessed as part
of the Company's best estimate of the number of
equity instruments that will ultimately vest.
When the terms of an equity-settled award are
modified, the minimum expense recognised is the
expense had the terms not been modified, if the
original terms of the award are met. An additional
expense is recognised for any modification that
increases the total fair value of the share-based
payment transaction, or is otherwise beneficial
to the employee as measured at the date of
modification. Where an award is cancelled by
the entity or by the counterparty, any remaining
element of the fair value of the award is expensed
immediately through profit or loss.
(s) Measurement of EBITDA
The Company has elected to present earnings
before interest, tax, depreciation and
amortization (EBITDA) as a separate line item
on the face of the statement of profit and loss.
The Company measures EBITDA on the basis of
profit/ (loss) from core business operations. In
its measurement, the Company does not include
finance costs, finance income, depreciation
and amortization, exceptional items, if any and
tax expense.
(t) Cash Flow Statement
Cash flows are reported using the indirect
method, where by profit before tax is adjusted
for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future
operating cash receipts or payments and item
of income or expenses associated with investing
or financing cash flows. The cash flows from
operating, investing and financing activities of
the Company are segregated.
(u) Indirect taxes
Value Added Taxes/Goods & Service Tax paid on
acquisition of assets or on incurring expenses
Expenses and assets are recognised net of the
amount of sales/ value added taxes paid, except:
• When the tax incurred on a purchase of
assets or services is not recoverable from
the taxation authority, in which case, the
tax paid is recognised as part of the cost
of acquisition of the asset or as part of the
expense item, as applicable
• When receivables and payables are stated
with the amount of tax included
The net amount of tax recoverable from, or payable
to, the taxation authority is included as part of
receivables or payables in the balance sheet.
(v) Earnings Per Share (EPS)
Basic EPS is calculated by dividing the profit for the
year attributable to ordinary equity shareholders
of the Company by the weighted average number
of Equity shares outstanding during the year.
Diluted EPS is calculated by dividing the profit
attributable to ordinary equity shareholders of
the Company by the weighted average number of
Equity shares outstanding during the year plus the
weighted average number of Equity shares that
would be issued on conversion of all the dilutive
potential Equity shares into Equity shares.
(w) Refer note 29 for Significant accounting
judgements, estimates and assumptions.
Securities premium: Securities premium comprises of premium receievd on issue of shares
Surplus in the Statement of Profit and Loss: Surplus in the Statement of Profit and Loss represents
balances of profit and loss at each year end.
Other comprehensive income: Other comprehensive income represents accumulated balances of
Remeasurement (losses)/gains on defined benefit plans.
General reserve: Under the erstwhile Companies Act 1956, general reserve was created through an
annual transfer of net income at a specified percentage in accordance with applicable regulations. The
purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10%
of the paidup capital of the Company for that year, then the total dividend distribution is less than the total
distributable results for that year. Consequent to introduction of Companies Act 2013, the requirement to
mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn.
Capital redemption reserve: The Companies Act provides that companies redeeming its preference
shares at face value or nominal value is required to transfer an amount into capital redemption reserve.
This reserve can be used to issue fully paid-up bonus shares to the shareholders of the Company.
Capital reserve: Capital reserve account is recorded as difference in net worth of the transferee Company
merged and investment made in those Companies.
28. Earnings per share (Basic EPS and Diluted EPS)
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the
Company by the weighted average number of equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Company
by the weighted average number of Equity shares outstanding during the year plus the weighted average
number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into
29. Significant accounting judgements, estimates and assumptions
The preparation of the Company's financial statements requires management to make judgements,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities,
the accompanying disclosures and the disclosure of contingent liabilities and other commitments.
Uncertainty about these judgements, estimates and assumptions could result in outcomes that require
a material adjustment to the carrying amount of assets or liabilities affected in future periods. Existing
circumstances and assumptions about future developments, however, may change due to market changes
or circumstances arising that are beyond the control of the Company. Such changes are reflected in the
assumptions when they occur. The estimates and underlying assumptions are reviewed on an ongoing basis
and the revisions to accounting estimates are recognized in the period in which the estimate is revised.
Critical judgements, estimates and assumptions
a) Impairment of property, plant and equipment
Each hotel property is an identifiable asset that generates cash inflows and is independent of the
cash inflows of the other hotel properties, hence identified as cash generating units. The Company
assesses the carrying amount of hotel properties (CGU) to determine whether there is any indication
that those assets have suffered an impairment loss. Where the carrying amount of CGU exceeds its
recoverable amount (being higher of fair value less cost to sell or value in use), the asset is considered
impaired and is written down to its recoverable amount. An impairment loss (if any) is recognised in
the statement of profit and loss.
The value in use is determined basis discounted cash flow model which requires exercise of significant
judgement in determining key assumptions like forecast of future revenue, operating margins, growth
rate and selection of the discount rates. The key assumptions used for the calculations are as follows:
Sensitivity analysis of assumptions
The Company has performed sensitivity analysis on the key assumptions by /- 1% for each of the
assumptions used and ensured that the valuation is appropriate and there is no further impairment.
b) Impairment of Investment in subsidiaries having hotel properties
The Company assesses the carrying amounts of investment in subsidiaries having hotel properties
to determine whether there is any indication that those investments have suffered an impairment
loss. Where the carrying amount of investments exceed its recoverable amount, the investment is
considered impaired and is written down to its recoverable amount (being higher of fair value less cost
to sell or value in use). An impairment loss (if any) is recognised in the statement of profit and loss.
The value in use is determined basis discounted cash flow model which requires exercise of significant
judgement in determining key assumptions like forecast of future revenue, operating margins, growth
rate and selection of the discount rates. The key assumptions used for the calculations are as follows:
As at March 31, 2025, the estimated recoverable amount of the investments exceeded its
carrying amount.
Sensitivity analysis of assumptions
The Company has performed sensitivity analysis on the key assumptions by /- 1% for each of the
assumptions used and ensured that the valuation is appropriate and there is no further impairment.
c) Leases
The Company has taken certain land and land & building on long-term lease basis. The lease
agreements generally have an escalation clause and are generally non-cancellable. In assessing
whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise
an option to terminate a lease, it considers all relevant facts and circumstances that create an
economic incentive for the Company to exercise the option to extend the lease, or not to exercise the
option to terminate the lease. The Company evaluates if an arrangement qualifies to be a lease as
per the requirements of IND AS 116. Identification of a lease requires judgement. The Company uses
judgement in assessing the lease term and the applicable discount rate. The discount rate is generally
based on the incremental borrowing rate.
d) Loss Allowance on trade receivables (Expected credit loss)
An impairment analysis of trade receivables is performed at each reporting period based on the
Company's history of collections, customer's creditworthiness, existing market conditions as well as
forward looking estimates. Basis this assessment, the allowance for doubtful trade receivables as at
March 31, 2025 is considered adequate.
e) Deferred tax asset (DTA)
Deferred tax asset (DTA) is recognized only when and to the extent there is convincing evidence that
the Company will have sufficient taxable profits in future against which such assets can be utilized.
Significant management judgement is required to determine the amount of deferred tax assets that
can be recognised, based upon the likely timing and the level of future taxable profits together with
future tax planning strategies, recent business performance and developments.
30. Gratuity
The Company has a defined benefit gratuity plan (funded). The gratuity plan is governed by the Payment of
Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific
benefit. The level of benefits provided depends on the member's length of service and salary at retirement
age. The fund has the form of a trust and it is governed by the Board of Trustees, which consists of an
equal number of employer and employee representatives. The Board of Trustees is responsible for the
administration of the plan assets and for the definition of the investment strategy. The Trust Fund has
taken a Scheme of Insurance, whereby these contributions are transferred to the insurer. The Company
makes provision of such gratuity liability in the books of accounts on the basis of actuarial valuation as per
the Projected unit credit method.
risk analysis
The Company is exposed to a number of risks in the defined benefit plans. Most significant risks pertaining
to defined benefits plans and management estimation of the impact of these risks are as follows:
• Investment risk
The most of the Indian defined benefit plans are funded with Life Insurance Corporation of India.
Company does not have any liberty to manage the fund provided to Life Insurance Corporation
of India.
The present value of the defined benefit plan liability is calculated using a discount rate determined by
reference to Government of India bonds for Company's Indian operations. If the return on plan asset
is below this rate, it will create a plan deficit.
• Interest risk
A decrease in the interest rate on plan assets will increase the plan liability.
• Longevity risk/life expectancy
The present value of the defined benefit plan liability is calculated by reference to the best estimate
of the mortality of plan participants both during and at the end of the employment. Increases in the
life expectancy of the plan participants will increase the plan liability.
• Salary growth risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries
of plan participants. An increase in the salary of the plan participants will increase the plan liability.
Each year, the Board of Trustees reviews the level of funding in the Gratuity plan. Such a review
includes the asset - liability matching strategy and investment risk management policy. The Board of
Trustees decides its contribution based on the result of this annual review.
31. Commitments and contingencies
a) Leases
Operating lease commitments — Company as lessee
The Company has entered into operating leases on hotel buildings, office premises, staff hostels and others.
These are generally cancellable and are renewable by mutual consent on mutually agreed terms except
for few properties (including hotel properties at Indore, Aurangabad, Gurgaon, New Delhi, Hyderabad
(Banjara Hills) and Chandigarh.) The lease for the hotel property at Indore, Aurangabad, Gurgaon, New
Delhi, Hyderabad (Banjara Hills) and Chandigarh are non-cancellable for a period of twenty-nine, twenty-
two, thirty, twenty-seven, thirty and sixty years respectively. Refer Note No.7 for carrying value of right
to use asset recognised and Refer Note No.16(a) for carrying value of lease liability and the movement
during the year.
The weighted average of incremental borrowing rate applied to lease liabilities is 9.39% (March 31, 2024:
9.39%)
b) Commitments
Estimated amount of contracts remaining to be executed on capital account and not provided for:
Estimated amount of contracts remaining to be executed and not provided as at March 31,2025 is H 2,682.17
lakhs (March 31,2024 H 3,246.66 lakhs).
c) Contingent liabilities
Legal claim contingency
The Company has reviewed all its pending litigations and proceedings and has adequately provided for
where provisions are required and disclosed as contingent liabilities where applicable, in its financial
statements. The Company does not expect the outcome of these proceedings to have a materially adverse
effect on its financial statements.
For financials guarantee given to banks on behalf of and in respect of term loan facilities availed by its
group companies refer note 31(f).
d) During the earlier years, the Company has taken land on lease for construction of building from one of the
subsidiary Company for which South Delhi Municipal Corporation ('the Authority') has raised demand of
H 68.20 lakhs (for the financial Years 2010-11 to financial years 2013-2014) towards annual value in respect
of the hotel property situated in Hospitality District, Aerocity. Considering that the area occupied by the
Company is 41% of the hotel property, it has made provision of H 100.88 lakhs (Previous year: H 91.76
lakhs) in this regard.
e) Note on Provident Fund:
Based upon the legal opinion obtained by the management, Company is not required to create provisions
in books of accounts in view of the judgement of the Hon'ble Supreme court in the case of Vivekananda
Vidyamandirvs Regional Provident Fund Commissioner (II), West Bengal and subsequent dismissal of
review petition by Hon'ble Supreme court in the case of review petition No. 001972-001973/2019 in civil
appeal 3965-3966 in the matter of Surya Roshni Ltd Vs Employees Provident Fund and Another.
Considering the equitable cause, the High Courts may give prospective effect to the judgement which can
be done in exercise of inherent powers of High Court under Article 226 of the constitution of India.
In case of the Company, retrospective effect is remote and at present uniformity is maintained across all
brands/grades.
f) Financial guarantees
The Company has issued financial guarantees to banks on behalf of and in respect of term loan facilities
availed by its group companies for construction of new hotel project. In accordance with the policy of the
Company (refer note 2.2(p)) the Company has designated such guarantees as 'Insurance Contracts' and
classified them as contingent liabilities. Since these financial guarantees are an integral element of debts
held by entities, hence, these have not been accounted for separately.
Accordingly, there are no assets and liabilities recognized in the balance sheet under these contracts.
Refer below for details of the financial guarantees issued:
Terms and conditions of transactions with related parties
The transactions with related parties are made on terms equivalent to those that prevail in arm's length
transactions. Outstanding balances with related parties at the year-end are unsecure and settlement occurs
in cash. For the year ended March 31, 2025, the Company has not recorded any impairment of receivables
relating to amounts owed by related parties (March 31, 2024: Nil). This assessment is undertaken each
financial year through examining the financial position of the related party and the market in which the related
party operates.
Commitments with related parties
The Company has not entered into any commitments with related parties during the year.
34. Fair value measurement
This section gives an overview of the significance of financial instruments for the Company and provides
additional information on the balance sheet. Details of significant accounting policies, including the criteria
for recognition, the basis of measurement and the basis on which income and expenses are recognised,
in respect of each class of financial asset, financial liability and equity instrument.
c) Fair value measurement hierarchy for assets and liabilities
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date under current market conditions.
The Company categorizes assets and liabilities measured at fair value into one of three levels depending
on the ability to observe inputs employed in their measurement which are described as follows:
i) Level 1
Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
ii) Level 2
Inputs are inputs that are observable, either directly or indirectly, other than quoted prices included
within level 1 for the asset or liability.
iii) Level 3
Inputs are unobservable inputs for the asset or liability reflecting significant modifications to observable
related market data or Company's assumptions about pricing by market participants.
The following methods and assumptions were used to estimate the fair values:
• The fair values of the unquoted equity shares have been estimated using a DCF model. The valuation
requires management to make certain assumptions about the model inputs, including forecast cash
flows, discount rate, credit risk and volatility. The probabilities of the various estimates within the
range can be reasonably assessed and are used in management's estimate of fair value for these
unquoted equity investments.
• The fair values of compulsorily redeemable preference shares of subsidiaries have been estimated
using the fair valuation by independent valuer. The valuation requires management to make certain
assumptions about the interest rate, including forecast cash flows, discount rate, credit risk and
volatility. The probabilities of the various estimates within the range can be reasonably assessed and
are used in management's estimate of fair value for these unquoted equity investments.
35. Financial risk management objectives and policies
The Company's principal financial liabilities comprise loans and borrowings, trade and other payables.
The main purpose of these financial liabilities is to finance the Company's operations and to support its
operations. The Company's financial assets include loans, trade and other receivables, and cash & cash
equivalents that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company's senior management
oversees the management of these risks. The Company's senior management advises on financial risks
and the appropriate financial risk governance framework for the Company.The Company's financial risk
activities are governed by appropriate policies and procedure and that financial risks are identified,
measured and managed in accordance with the Company's policies and risk objectives. The Board of
Directors reviews and agrees policies for managing each risk, which are summarised as below:
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because
of changes in market prices. Market risk comprises of interest rate risk. Financial instruments affected by
market risk include loans and borrowings.
Interest rate risk
Interest rate risk is the risk that the fair value or 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 long-term debt obligations with floating interest rates.
The Company is carrying its borrowings primarily at variable rate. The Company expects the variable rate
to decline, accordingly the Company is currently carrying its loans at variable interest rates.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate
because of changes in foreign exchange rates. The Company has no exposure in foreign currency.
Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or
customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating
activities (primarily trade receivables and deposits to landlords) and from its financing activities, including
deposits with banks and financial institutions and other financial instruments.
a) Trade receivables
Customer credit risk is managed by each business location subject to the Company's established
policy, procedures and control relating to customer credit risk management. Credit quality of a
customer is assessed and individual credit limits are defined in accordance with the assessment both
in terms of number of days and amount.
An impairment analysis is performed at each reporting date on an individual basis for major clients.
In addition, a large number of minor receivables are grouped into homogenous groups and assessed
for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying
value of each class of financial assets disclosed in Note 12. The Company does not hold collateral
as security.
b) Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Company's treasury
department in accordance with the Company's policy. Investment of surplus funds are made only
with approved counterparties and within credit limits assigned to each counterparty. The Company's
maximum exposure to credit risk for the components of the balance sheet at March 31, 2025 and
March 31, 2024 is the carrying amount as given in Note 12(ii).
Liquidity risk
The Company monitors its risk of a shortage of funds by estimating the future cash flows. The
Company's objective is to maintain a balance between continuity of funding and flexibility through the
use of bank overdrafts, cash credit facilities and bank loans. The Company assessed the concentration
of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a
sufficient variety of sources of funding and debt maturity within 12 months can be rolled over with
existing lenders. As at March 31, 2025, the Company had no available (March 31, 2024: H Nil) undrawn
committed borrowing facilities.
36. Capital management
For the purpose of the Company's capital management, capital includes issued equity capital, share
premium and all other equity reserves attributable to the equity holders of the Company. The primary
objective of the Company's capital management is to maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic
conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the
Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new
shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus
net debt. The Company includes within net debt, interest bearing loans and borrowings, trade payables,
less cash and cash equivalents.
In order to achieve this overall objective, the Company's capital management, amongst other things, aims
to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that
define capital structure requirements.
Breaches in meeting the financial covenants would permit the bank to immediately call loans and
borrowings. There have been no significant breaches in the financial covenants of any interest-bearing
loans and borrowing in the current year.
No changes were made in the objectives, policies or processes for managing capital during the year ended
March 31, 2025 and March 31, 2024.
37. Recent pronouncements
a) New amendments adopted during the year
The Ministry of Corporate Affairs ('MCA'), vide notification no. G.S.R. 492(E) dated August 12, 2024, issued
the Companies (Indian Accounting Standards) Amendment Rules, 2024, introducing a new accounting
standard, Ind AS 117 relating to the accounting of Insurance Contracts and MCA through notification
no. G.S.R. 554(E) dated September 9, 2024, issued the Companies (Indian Accounting Standards)
Second Amendment Rules, 2024, amending Ind AS 116 relating to the accounting for sale and leaseback
transactions with variable lease payments. Both these amendments were applicable for annual periods
beginning on or after April 1, 2024. The Company has reviewed both these pronouncements and based on
its evaluation has determined that it does not have any significant impact in its financial statements.
b) Amendments to Ind AS issued but not yet effective
MCA has notified amendment to Ind AS 21, The Effects of Changes in Foreign Exchange Rates, vide the
Companies (Indian Accounting Standards) Amendment Rules, 2025 through Notification No. G.S.R. 291(E)
dated May 7, 2025. The amendment provide comprehensive guidance on assessing the exchangeability of
currencies, determining spot exchange rates when currencies are not exchangeable and enhancing related
disclosures. The amendment is effective for annual reporting periods beginning on or after April 1, 2025.
The Company will evaluate the impact of this amendment and implement the necessary changes in its
financial reporting for periods commencing on or after the effective date.
c) Note on Social Security:
The Code on Wages, 2019 and Code on social security, 2020 ("the codes") relating to employee
compensation and post-employment benefits that received Presidential assent have not been notified.
Further, the related rules for quantifying the financial impact have not been notified. The Company will
assess the impact of the codes when the rules are notified and will record any related impact in the period
in which the Codes become effective.
There are no new amendements/standards (other than above) that are notified, but not yet effective up
to the date of issuance of the Company's financial statements.
(i) Earning for Debt Service = Net Profit after taxes Non-cash operating expenses like depreciation and
other amortizations Interest other adjustments like loss on sale of Fixed assets etc which are non
cash in nature.
(ii) Debt Service = Interest & Lease Payments Principal Repayments (excluding prepayments).
(iii) Capital Employed = Net worth Total Debt Deferred Tax Liability-Net Intangible aseets
(iv) Working Capital= Current Assets- Current liabilities
(v) EBIT= Earning before interest, taxes and exceptional items
39. Segment Reporting
The Company is into Hoteliering business. The Board of Directors of the Company, which has been
identified as being the chief operating decision maker (CODM), evaluates the Company performance,
allocate resources based on the analysis of the various performance indicator of the Company as a single
unit. Therefore, there is no reportable segment for the Company as per the requirements of Ind AS 108
- "Operating Segments".
Information about geographical areas
The Company has only domestic operations and hence no information required for the Company as per
the requirements of Ind AS 108 - "Operating Segments".
Information about major customers
No customer individually accounted for more than 10% of the revenue.
40. During earlier year, the Company had issued equity shares to APG Strategic Real Estate Pool N.V. ('the
investor') and the investor had 41.09% (March 31, 2024 41.09%) equity stake of Fleur Hotels Limited
(formerly known as Fleur Hotels Private Limited) (a subsidiary Company) as on Balance sheet date. As per
the Shareholder's agreement, all new hotel projects will first be offered to the subsidiary. There are no
other significant commitments towards the investor.
41. During earlier years, the Company had entered into a sub license agreement with M/s Hyacinth Hotels
Private Limited (a subsidiary of the Company) as part of Infrastructure development and services
agreement entered between M/s Hyacinth Hotels Private Limited and Delhi International Airport Limited
(DIAL) to develop a hotel at Aero City, New Delhi for an initial term of 27 years, extendable at the option of
the Company for an additional period of 30 years provided DIAL gets the extension from Airport Authority
of India('AAI'). DIAL/AAI may take over the building at 'Book values'//Net Present Value', as defined in the
aforesaid agreement in case the agreement is not extended further.
42. During the previous year, the scheme of Amalgamation ('the scheme') between the Lemon Tree Hotels
Limited ('Transferee Company') and its wholly owned subsidiaries ('Transferor Company')viz. Valerian
Management Services Private Limited (Transferor Company 1"Valerian"), Grey Fox Project Management
Private Limited (Transferor Company 2"Grey Fox"), PSK Resorts & Hotels Private Limited (Transferor
Company 3 "PSK") and Dandelion Hotels Private Limited (Transferor Company 4"Dandelion") as approved
by the National Company Law Tribunal ('NCLT') has become effective w.e.f. the appointed date i.e. April
01, 2022 on approval of NCLT on December 14, 2023 and filing of order received from NCLT in Form INC-
28 with Registrar of Companies (ROC) on January 19, 2024.
On this Scheme becoming effective, with effect from the Appointed Date, the Transferee Company has
given accounting treatment in its books of accounts as per Ind AS - 103, as under:
a) Upon the scheme becoming effective The Transferee Company has accounted for the amalgamation
of the Transferor Companies in the books of accounting in accordance with the applicable accounting
standards prescribed under Section 133 of the Companies Act, 2013 read with the Companies (India
Accounting standards) Rules,2015 as amended,("Ind AS") and other accounting principles generally
accepted in India and specifically under "Pooling of Interest Method" of accounting as laid down in
Appendix C of Ind-AS 103 'Business Combination of entities under Common Control'.
b) The Transferee Company has recorded all Assets, Liabilities and Reserves of the Transferor Companies
vested in the Transferee Company pursuant to this scheme, at the respective carrying amounts in the
same form as appearing in the books of the Transferor Companies, on the Appointed Date.
c) The carrying amount of investments in the equity shares of the Transferor Companies held by
transferee Company, shall stand cancelled and there shall be no further obligation in that behalf.
d) Upon the scheme coming into effect, the surplus/deficit, if any of the net value of assets, liabilities
and reserves of the Transferor Companies acquired and recorded by the Transferee Company over the
value of investments cancelled pursuant to Clause 11.1.c, has been transferred to "Capital Reserve
Account" in the financial statements of the Transferee Company.
e) To the extent there are inter corporate loans, investments or other balances between the Transferor
Companies and Transferee Company, the same thereof shall stand cancelled. Inter Company
transactions, if any, between the Transferor Companies and the Transferee Company has been
eliminated in the Transferee Company's financial statements.
f) The financial statements of the Transferee Company (including comparative period presented in the
financial statements of the Transferee Company) has been restated for the accounting impact of
merger, as stated above, as if the merger had occurred from the beginning of the comparative period
in the financial statements.
43 As per the proviso to Rule 3(1) of Companies (Accounts) Rules, 2014, every company which uses accounting
software for maintaining its books of account, shall use only such accounting software which has a feature
of recording audit trail of each and every transaction, creating an edit log of each change made in the
books of account along with the date when such changes were made and ensuring that the audit trail
cannot be disabled.
The Company uses an accounting software for recording all the accounting transactions for the year ended
March 31, 2025. The software has a feature of recording audit trail (edit log) facility which was enabled
throughout the year except that on certain tables/ master records audit trail (edit log) facility was enabled
on March 29, 2025 and the audit trail (edit log) facility is not enabled at database level. Subsequent
to the year ended March 31, 2025, the Company has implemented audit trail (edit log) facility on this
accounting software.
In respect of maintaining revenue records, the Company has used a revenue management software. The
said software has a feature of recording audit trail (edit log) facility which was enabled throughout the
year, except that the audit trail (edit log) facility at database level was enabled on March 19, 2025 and the
software has limitation to track whether audit trail (edit logs) were tampered or not.
The audit trail that was enabled and operated for the year ended March 31, 2024, has been preserved by
the Company as per the statutory requirements for record retention.
The Management has adequate internal controls over financial reporting which were operating effectively
for the year ended March 31, 2025.
45. The Company does not have any long-term contracts including derivative contracts for which there are
any material foreseeable losses.
46. There has been no amounts which were required to be transferred to the Investor Education and Protection
Fund by the Company.
47. Other Statutory Information
(i) The Company have not traded or invested in Crypto currency or Virtual currency during the
financial year.
(ii) The Company have not any such transaction which is not recorded in the books of accounts that has
been surrendered or disclosed as income during the year in the tax assessments under the Income
Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
(iii) The Company do not have any Benami property, where any proceeding has been initiated or pending
against the Company for holding any Benami property
(iv) The Company has not entered into any transaction with companies struck off.
(v) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond
the statutory period.
(vi) 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.
(vii) During the year ended March 31, 2024, the Company has received approval from NCLT in terms
of Section 230 to 232 of the Companies Act, 2013 and accordingly, the prescribed disclosures of
Schedule III has been given. Refer note 42.
(viii) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies),
including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever
by or on behalf of the Company (Ultimate Beneficiaries) or,
b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(ix) The Company have not received any funds from any person(s) or entity(ies), including foreign entities
(Intermediaries) with the understanding that the Intermediary shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever
by or on behalf of the Company (Ultimate Beneficiaries) or,
b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
For and on behalf of the Board of Directors of
Lemon Tree Hotels Limited
Sd/- Sd/- Sd/-
Patanjali Govind Keswani Kapil Sharma Pawan Kumar Kumawat
(Chairman & Managing Director) (Chief Financial Officer) (Company Secretary)
DIN: 00002974 Mem. No.: A25377
Place: New Delhi
Date : May 29, 2025
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