Chalet Hotels Ltd
Directors Reports
Dear Members,
Chalet Hotels Limited
The Board of Directors present your Company's Thirty Eighth Annual Report along with
the Audited Financial Statements for the Financial Year ended March 31,2023.
FINANCIAL HIGHLIGHTS
Your Company's financial performance for the Financial Year ended March 31,2023 is
summarized below:
(Rs in million)
Particulars |
Standalone |
Consolidated |
|
For the year ended |
For the year ended |
|
March 31,2023 |
March 31,2022 |
March 31,2023 |
March 31,2022 |
Revenue from Operations |
11,284.67 |
5,078.07 |
11,284.67 |
5,078.07 |
Other Income |
509.14 |
219.27 |
494.87 |
219.32 |
Total Income |
11,793.81 |
5,297.34 |
11,779.54 |
5,297.39 |
Total Expenses |
6,733.13 |
4,090.74 |
6,756.50 |
4,093.30 |
EBITDA from Continuing operations |
5,060.68 |
1,206.60 |
5,023.04 |
1,204.09 |
(Loss) from Discontinued operations |
- |
(65.37) |
- |
(65.37) |
EBITDA |
5,060.68 |
1,141.23 |
5,023.04 |
1,138.72 |
Depreciation and Amortisation Expenses |
1,173.09 |
1,184.23 |
1,173.09 |
1,184.23 |
Finance Costs |
1,538.14 |
1,440.67 |
1,544.74 |
1,444.13 |
Profit / (Loss) before Exceptional Items and Tax |
2,349.45 |
(1,483.66) |
2,305.21 |
(1,489.64) |
Exceptional Items |
423.08 |
(44.58) |
423.08 |
(44.58) |
Profit / (Loss) before Tax |
2,772.53 |
(1,528.23) |
2,728.29 |
(1,534.22) |
Tax expense/(credit) |
894.88 |
(719.53) |
895.39 |
(719.53) |
Profit/(Loss)for the year |
1,877.65 |
(808.72) |
1,832.90 |
(814.69) |
Total Comprehensive Income / (Expense) for the year |
1,873.01 |
(807.22) |
1,828.26 |
(813.19) |
Earnings per equity share Basic (') |
9.16 |
(3.94) |
8.94 |
(3.98) |
Earnings per equity share Diluted (') |
9.15 |
(3.94) |
8.94 |
(3.98) |
Note: The F inancial Statements of the Company have been approved by the Board of
Directors at the meeting held on July 3, 2023, after giving effect to the Scheme of
Arrangement and Amalgamation of Belaire Hotels Private Limited and Seapearl Hotels Private
Limited (wholly owned subsidiaries) into the Company.
The year under review started on a positive note. The Company witnessed a sharp bounce
back in business with the Company recording all-time high Revenue and EBITDA in three out
of four quarters. Various strategic and tactical initiatives by the Company continue to
yield positive results. The Company has maintained its focus on growth and prudent capital
allocation along with its unwavered commitment to the environment and sustainability
goals.
This year also marked two strategic initiatives:
- Entering into a long-term license agreement for development of a ~400 room Hotel at
Terminal 3 at Delhi International Airport. The development of the Hotel at New Delhi is
being undertaken through a Special Purpose Vehicle set up for the purpose, viz. Chalet
Airport Hotel Private Limited, which is a Wholly Owned Subsidiary of the Company, and will
give the Company an entry into the North India market.
- Acquisition of 'The Dukes Retreat' at Lonavala, the Company's maiden leisure
property. This was purchased through acquisition of shares of The Dukes Retreat Private
Limited and Sonmil Industries Private Limited.
The two initiatives are in line with the planned strategy of diversification of
geography and segments.
The Company's overall performance showed considerable improvement with Total Income at
Rs 11,793.81 million, a leap of 2.2 times over the previous year and PAT at Rs 1,877.65
million. Rental & Annuity Revenue of Rs 999.98 million contributed 8% to the Company's
Total Revenue as on March 31, 2023, as against Rs 1,019.75 million, which was 19% of the
Company's Total Revenue in the previous year.
During the year under review, the Company completed various projects as per details
given below:
- renovation of 121 rooms and the banquet facilities at 'The Westin Mumbai Powai Lake';
- expansion work on 88 rooms at Novotel Pune Nagar Road;
- construction of the commercial tower at Whitefield, viz. CIGNUS Whitefield
Bangalore?- Tower 1 has been completed and three floors have been handed over to the
tenants for fit-out;
- conversion of the mall at Bengaluru to commercial premises.
Work on the 168 room hotel i.e. The Westin Hyderabad, HITEC City has been completed and
the Hotel has commenced operations from June 04, 2023.
DEVELOPMENT PIPELINE
• Hospitality
- Conversion of the commercial centre (erstwhile Accenture Learning Centre) at
Bengaluru to Hotel rooms is in final stages of designing and approval as on the date of
this Report.
- The detailed design and plans are being worked upon for the construction of a 5-star
Hotel at Terminal 3, Delhi International Airport having ~400 rooms. This Hotel is expected
to be completed in FY2026.
• Rental & Annuity
- The Company had repurposed the land use of earlier proposed 150 room Hotel at The
Westin Complex, Powai to a Commercial office space with potential leasable area of ~0.75
million sq. ft.. The Project is at the design and approval stage.
- The superstructure for the commercial project at Powai has been completed and
internal work is being carried out towards receipt of Occupancy Certificate. The premises
are expected to be ready for handover to tenants in Q2 FY2024.
• Residential Project - Koramangala, Bengaluru
The Company has received all approvals to recommence work in respect of the residential
project at Koramangala, Bengaluru and work is in full swing. Sales are expected to
commence in Q2 FY2024. The Company will also be developing a Commercial building for
strata sale on the same land parcel.
GOING CONCERN
During the year under review, the Hospitality sector saw a significant improvement in
business and the Hospitality Revenues grew by 2.5 times to Rs 10,284.69 million. Total
Revenue for the Company grew by 2.2 times to Rs 11,793.81 million. The Company has
followed prudent cash flow management and rationalised various
processes to tighten, control and manage costs. All monetary obligations for the
Company were met out of cash generated from operations. Accordingly, the Financial
Statements for the year under review have been prepared on a Going Concern basis.
During the year under review, there has been no change in the nature of business of the
Company.
CAPITAL STRUCTURE Authorised Share Capital
Pursuant to the amalgamation of Belaire Hotels Private Limited and Seapearl Hotels
Private Limited into the Company, the Authorised Share Capital of your Company increased
from Rs 4,451,000,000 to Rs 5,981,000,000.
Paid-up Equity Share Capital
During the year under review, the Paid-up Equity Share Capital of your Company
increased by Rs 10,000 consequent to the exercise of 1,000 Stock Options into 1,000 fully
paid-up Equity Shares having a face value of Rs 10 each under Chalet Hotels Limited -
Employee Stock Option Plan 2018. The Paid-up Equity Share Capital of your Company as on
March 31,2023 stands at Rs 2,050,248,640.
Paid-up Preference Share Capital
During the year under review, fourth and final call of Rs 250,000,000 was made in
respect of the Series B Zero Coupon Non-Cumulative, Non-Convertible, Redeemable Preference
Shares ('NCRPS') resulting in an increase in the Paid-up Preference Share Capital of the
Company from Rs 1,910,000,000 to Rs 2,160,000,000, thereby making both, Series A and
Series B NCRPS, fully paid up. The amounts raised have been utilised in line with the
Subscription Agreement referred to hereinbelow.
Your Company had entered into a Subscription Agreement dated June 04, 2018 with Mr.
Ravi C. Raheja and Mr. Neel C. Raheja, Promoters of the Company, wherein they had agreed
to provide your Company with funds required to meet any costs, expenses and liabilities
pertaining to the Koramangala Residential project, including any costs and expenses
towards the ongoing litigation and the completion of the Koramangala Residential project,
by way of subscription by themselves or by their Designated Nominees to 20,000 Zero Coupon
Non-Cumulative, Non-Convertible, Redeemable Preference Shares ('NCRPS' / 'Subscription
Securities') of Rs 100,000 each in two series (viz. Series A and Series B) of 10,000 NCRPS
each, aggregating to Rs 2,000 million (Initial Subscription Amount). Further, the
Promoters of the Company have also agreed to provide additional funds as may be required
to meet the project expenses and have accordingly provided additional funds by way of an
interest-free loan amounting to Rs 450 million as on March 31,2023 and Rs 800 million as
on the date of this Report, towards meeting the project expenses.
BORROWINGS
During the year under review, the Company availed of additional borrowing facilities,
which were deployed, inter-alia, for meeting Project requirements and repayment of
high-cost debt. At the end of the year, the Company's borrowing on a standalone basis
stood at Rs 25,658.46 million and at Rs 25,696.41 million on a consolidated basis (both
excluding Preference Share Capital and Loan from Promoter-Director of Rs 2,242.30 million)
as at March 31, 2023, as compared to Rs 23,557.16 million on a standalone basis and Rs
23,593.15 million on consolidated basis (both excluding Preference Share Capital of Rs
1,746.67 million) as at March 31, 2022.
All foreign currency borrowings were repaid during the Financial Year 2023. The same
were at USD15.11 million, as at March 31,2022.
APPROPRIATIONS / DIVIDEND
Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 ('Listing Regulations'), the Company has adopted the
Dividend Distribution Policy, setting out the broad principles for guiding the Board and
the Management in matters concerning declaration and distribution of dividend, which is
attached as Annexure I hereto and is also available on the Company's website at
www.chalethotels. com/wordpress/wp-content/uploads/2021/04/Dividend-
Distribution-Policy.pdf.
In line with the Dividend Distribution Policy, no dividend is being recommended by the
Board of Directors on the Equity Shares of the Company for the year under review. As per
the terms of issue of the 0.001% Non-Cumulative, Redeemable Preference Shares ('NCRPS') of
Rs 100,000 each and subject to the Articles of Association of the Company, the NCRPS
(other than the Subscription Securities) issued are, subject to the availability of
profits during any financial year, entitled to a nominal dividend of Rs 1 on each
Preference Share per year, which amounts to Rs 1,600 for the year under review.
Further, an amount of Rs 1,873.01 million has been transferred to Retained Earnings for
the year under review. Pursuant to the applicable provisions of the Companies Act, 2013
('the Act'), read with the Investor Education and Protection Fund Authority (Accounting,
Audit, Transfer and Refund) Rules, 2016 ('the IEPF Rules'), all unpaid or unclaimed
dividends are required to be transferred by the Company to the IEPF; established by the
Government of India, after completion of seven years. Further, according to the IEPF
Rules, the shares on which dividend has not been paid or claimed by the shareholders for
seven consecutive years or more shall also be transferred to the demat account of the IEPF
Authority. The Company does not have any unpaid or unclaimed dividends and accordingly,
the aforesaid provisions are not applicable to the Company.
DEPOSITS
Your Company has neither accepted nor renewed any amount falling within the purview of
provisions of Section 73 of the Act read with the Companies (Acceptance of Deposits)
Rules, 2014 during the year under review. As such, no amount on account of principal or
interest on deposits from public was outstanding as on the date of the Balance Sheet.
LOAN FROM DIRECTORS
Pursuant to the Subscription Agreement entered into with the Company on June 04, 2018,
Mr. Ravi Raheja and Mr. Neel Raheja, Promoters and Non-Executive Directors of the Company
had agreed to provide financial support for the Koramangala Project in addition to the
Initial Subscription as and when required. In view of the same and pursuant to the
approval of the Board of Directors and the Members of the Company, Mr. Ravi Raheja and Mr.
Neel Raheja have extended interest free loans aggregating to Rs 450 million to the Company
during the year under review.
LOANS, INVESTMENTS, GUARANTEES AND SECURITIES
Your Company is engaged in 'infrastructural activities' covered under Schedule VI of
the Act and is therefore exempt from the provisions of Section 186 of the Act with regards
to Loans, Investments, Guarantees and Securities. Details of loans given, guarantee and
security provided in connection with a loan and investments made by your Company are given
in Note No. 7, 8, 14 and 55 of the Revised Standalone Financial Statements.
FOREIGN EXCHANGE EARNINGS AND OUTGO
During the year under review, your Company earned foreign exchange of Rs 3,465 million
as compared to Rs 392 million in the previous year.
The total foreign exchange outgo of your Company during the year under review was Rs
915 million as compared to Rs 562 million in the previous year.
SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
The Company has four subsidiaries and two associates as on the date of this Report.
There has been no material change in the nature of the business of the subsidiaries. The
Company does not have any Joint Venture.
Brief updates with regard to each subsidiary for the year
under review are as given below:
- Chalet Hotels & Properties (Kerala) Private Limited is a subsidiary of your
Company, which had insignificant or no operations during the year under review.
- Chalet Airport Hotel Private Limited ('CAHPL') is a wholly-owned subsidiary of the
Company which was incorporated on August 18, 2022 having the same line of business as its
Holding Company. The Company was incorporated as an SPV for the implementation of the
Hotel project at Delhi. The Company entered into a long-term License Agreement for
development of a ~400 room hotel at Terminal 3 at Delhi International Airport.
- The Board of Directors of the Company on March 22, 2023, approved the acquisition of
100% of the Equity Shares of Sonmil Industries Private Limited (Sonmil) and accordingly
post completion of the transaction, Sonmil has become a wholly owned subsidiary of the
Company on March 23, 2023. Sonmil earns income from leasing of land and reported a Total
Income of Rs 3.16 million and Net Loss (after tax) of Rs 0.09 million.
- The Board of Directors of the Company on March 22, 2023, approved the acquisition of
82.28% of the Equity Shares of The Dukes Retreat Private Limited ('Dukes') and accordingly
post completion of the transaction, Dukes has become a subsidiary of the Company on March
23, 2023. The balance 17.72% of the Equity Shares of Dukes are held by Sonmil, wholly
owned subsidiary of the Company. Dukes reported a Total Income of Rs 332.58 million and
Net Profit (after tax) of Rs 69.79 million.
The Company had filed a Scheme of Arrangement and Amalgamation of Belaire Hotels
Private Limited and Seapearl Hotels Private Limited (together referred as "Transferor
Companies") with the Company, which inter-alia aims at synergy in operations, greater
financial strength and improvement in the position of the merged entity. The Appointed
Date for the Scheme is April 01, 2020. Pursuant to the Order dated February 05, 2021
passed by the Hon'ble National Company Law Tribunal, Mumbai Bench ('Hon'ble NCLT'),
meetings of the Equity Shareholders and Preference Shareholders of the Company were held
on April 12, 2021, wherein they accorded their approval to the said Scheme. The Hon'ble
NCLT vide its Order dated May 19, 2023, approved the Scheme and the Effective Date of the
Scheme is June 19, 2023.
Further, the Company has considered March 31,2023 as the acquisition date for the
purpose of purchase price allocations/consolidation in respect of Dukes and Sonmil, since
the financial performance of these entities for the period from March 23, 2023 to March
31, 2023 is not material to the consolidated financial performance of the Company.
In terms of provisions of Section 136 of the Act, the audited financial statements of
the subsidiary companies can be accessed on the website of the Company viz.
www.chalethotels.com/annual-reports/.
Your Company holds 33.1% of the Equity Share Capital of Krishna Valley Power Private
Limited and 26.1% of the Equity Share Capital of Sahyadri Renewable Energy Private
Limited, being entities engaged in generation of hydropower. Your Company continues to
hold the aforesaid securities, however it does not have the ability to participate and
neither is involved in the operations and/ or relevant activities of these companies/
entities, and neither has exposure or rights to variable returns. Hence, the
aforementioned entities have not been considered as Associate companies in the
consolidation of Financial Statements.
The Revised Consolidated Financial Statements of your Company and its Subsidiaries,
prepared in accordance with the relevant Accounting Standards, duly audited by the
Statutory Auditors, forms part of this Annual Report. The statement under Rule 5 of the
Companies (Accounts) Rules, 2014 relating to Subsidiaries and Associates in Form AOC-1 is
annexed as Annexure II to this Report. The Company does not have any material subsidiary,
however, the Company has formulated a policy for determining material subsidiary(ies) and
such policy has been disclosed on the Company's website at
www.chalethotels.com/wordpress/wp-content/
uploads/2021/04/Policy-for-Determination-of-Material- Subsidiaries.pdf.
MANAGEMENT DISCUSSION & ANALYSIS, CORPORATE GOVERNANCE AND BUSINESS RESPONSIBILITY
& SUSTAINABILITY REPORTS
A detailed note on the state of the Company's affairs is covered in the Management
Discussion & Analysis section of the Annual Report.
Your Company has complied with the Corporate Governance requirements under the Act and
Listing Regulations, the details of which are mentioned in a separate section viz. Report
on Corporate Governance. Further, the Business Responsibility & Sustainability Report,
also forms an integral part of this Annual Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board of Directors of the Company at its Meeting held on May 01,2023 had, based on
the recommendation of the Compensation, Nomination and Remuneration Committee re-appointed
Mr. Hetal Gandhi and Ms. Radhika Piramal for a second term of Five years and Mr. Joseph
Conrad D'souza and Mr. Arthur William DeHaast as Independent Directors for a second term
of Four years, all of which would be effective June 12, 2023. The re-appointments were
also approved by the Members of the Company by way of Postal Ballot on June 5, 2023.
Further, Mr. Sanjay Sethi, Managing Director and CEO of the Company holds office upto
February 8, 2024. On the basis of the recommendation of the Compensation, Nomination and
Remuneration Committee, the Board of Directors at the meeting held on May 9, 2023, have
approved the re-appointment of Mr. Sanjay Sethi as the Managing Director and CEO of the
Company for a further period upto January 31, 2026. The same is also being placed for
approval of the Members of the Company at the forthcoming Annual General Meeting ('AGM').
In accordance with the Act and the Articles of Association of the Company, Mr. Ravi
Raheja is liable to retire by rotation and being eligible, has offered himself for
re-appointment. Accordingly, the re-appointment of Mr. Ravi Raheja is being placed for
approval of the Members at the ensuing AGM. The information pertaining to the Directors
being re-appointed as required pursuant to the Listing Regulations and Secretarial
Standard-2, forms part of the Notice convening the AGM.
During the year under review, except for professional fees paid to Mr. Arthur DeHaast,
Independent Director, no other Non-Executive Directors of the Company had any pecuniary
relationship or transactions with the Company, other than receipt of Sitting Fees towards
attending meeting of Board of Directors and / or Committees thereof.
During the year under review, there were no changes in the Directors and Key Managerial
Personnel of the Company.
ANNUAL RETURN
As provided under Sections 92(3) and 134(3)(a) of the Act, read with Rule 12 of the
Companies (Management and Administration) Rules, 2014, as amended from time to time, the
draft Annual Return of your Company in Form MGT-7 for the Financial Year 2023, is hosted
on the website of your Company at www.chalethotels.com/ annual-reports/.
NUMBER OF BOARD MEETINGS
During the Financial Year 2023, the Board of Directors met five times. The details of
the meetings held have been given in Corporate Governance Report.
DIRECTORS' RESPONSIBILITY STATEMENT
On the basis of internal financial control framework and compliance systems in place
and the work carried out by the Internal and Statutory Auditors, including audit of
internal financial controls over financial reporting and internal reviews performed by the
Management and the Audit Committee, the Board is of the opinion that your Company's
internal financial controls were reasonable and adequate for the Financial Year 2023.
Accordingly, pursuant to Section 134(5) of the Act, the Board of Directors, to the best
of their knowledge and ability, confirm that:
(i) In the preparation of the accounts for the Financial Year ended March 31, 2023, the
applicable Accounting Standards have been followed along with proper explanation relating
to material departures;
(ii) The Board of Directors have selected such accounting policies and applied them
consistently and made judgments and estimates that were reasonable and prudent in order to
give a true and fair view of the state of affairs of your Company at the end of the
Financial Year and of the profit of your Company for the Financial Year ended March
31,2023;
(iii) The Board of Directors have taken proper and sufficient care to the best of their
knowledge and ability for the maintenance of adequate accounting records in accordance
with the provisions of the Act, for safeguarding the assets of your Company and for
preventing and detecting fraud and other irregularities;
(iv) The Financial Statements for the Financial Year ended March 31, 2023 have been
prepared on a 'going concern' basis;
(v) The Board of Directors have laid down internal financial controls for your Company
which it believes are adequate and are operating effectively; and
(vi) The Board of Directors have devised proper systems to ensure compliance with the
provisions of all applicable laws and such systems are adequate and are operating
effectively.
ACCOUNTING TREATMENT
The Accounting Treatment is in line with the applicable Indian Accounting Standards
('Ind AS') recommended by The Institute of Chartered Accountants of India and prescribed
by the Central Government in accordance with Section 133 of the Act.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS INCLUDING REFERENCE TO THE FINANCIAL STATEMENTS
The Internal Financial Control Systems including inter-alia the Internal Audit and
Internal Controls are commensurate with the size and scale of your Company's operational
and commercial activities.
Your Company has provided an adequate system of internal control covering all corporate
functions and franchise hotels. The internal control systems provide assurance regarding
the effectiveness and efficiency of operations, safeguarding of assets, reliability on
financial controls and compliance with applicable laws. The operations of the hotel are
largely managed through globally reputed hospitality companies which have their respective
internal control systems in place.
Based on the recommendation of the Audit Committee, the Board has approved the
appointment of M/s. Deloitte Touche Tohmatsu India LLP as Internal Auditors of the Company
for the Financial Year 2024. The Chief Internal Auditor who reports to the Audit Committee
oversees the Internal Audit function of the Company. The reports by the Internal Auditors
are placed before the Audit Committee for their review and improvements.
AUDITORS & AUDITORS' REPORT Statutory Auditors
The Audit Committee and the Board of Directors at their respective meetings held on May
10, 2022 approved the re-appointment of M/s. B S R & Co. LLP, Chartered Accountants
(Firm Registration No. 101248W/W-100022) as the Statutory Auditors of the Company for a
second term of five years i.e. from the conclusion of the 37th AGM till the conclusion of
the 42nd AGM, which was also approved by the Members at the 37th AGM of the Company held
on September 14, 2022.
The Report of the Statutory Auditors along with its Annexures forms a part of this
Annual Report. The Auditors' Report to the Members for the year under review was issued
with an unmodified opinion.
Explanation or Comments on Qualifications, Reservations, Adverse Remarks or Disclaimers
made by the Auditors
There are no qualifications, reservations or adverse remarks or disclaimers made by
Statutory Auditors in their Revised Report on the Revised Financial Statements for the
Financial Year 2023. However, the Statutory Auditors have drawn attention i.e. Emphasis of
Matter with regard to Note 39I(c)of the Revised Standalone Financial Statements, in their
report, details of which are as follows:
"Emphasis of Matter
We draw attention to Note 391(c) to the revised standalone financial statements
regarding the ongoing litigation in respect of leasehold rights to proportionate undivided
interest in land and building at Vashi (Navi Mumbai) purchased from K Raheja Corp Private
Limited, on which the Company's Four Points By Sheraton Hotel has been built. The
allotment of land by City & Industrial Development Corporation of Maharashtra Limited
('CIDCO') to K Raheja Corp Private Limited has been challenged under two public interest
litigations. On 21 November 2014, the Honourable High Court at Bombay ordered K Raheja
Corp Private Limited to restore the land to its original condition (which would interalia
require the buildings thereon to be demolished) and hand over the vacant possession
thereof to CIDCO within six months of the date of judgement. K Raheja Corp Private Limited
has filed a special leave petition against the abovementioned order in the Honourable
Supreme Court of India. The Hon'ble Supreme Court of India on 21 January 2015 has passed
Status Quo Order and the matter is currently pending with it. The agreement for purchase
of leasehold rights between the Company and K Raheja Corp Private Limited was subject to
the outcome of the litigation and the management does not expect any potential material
loss to be borne by the Company. Pending the outcome of proceedings and a final closure of
the matter, no adjustments have been made in the revised standalone financial statements
as at 31 March 2023 to the carrying value of the leasehold rights (reflected as
prepayments) aggregating to Rs 48.54 million (31 March 2022: Rs 49.74 million) and the
hotel assets thereon (reflected as property, plant and equipment) aggregating to Rs 348.46
million as at 31 March 2023 (31 March 2022: Rs 372.12 million). Our opinion is not
modified in respect of this matter."
The Auditors have clarified that their opinion is not qualified in respect of the above
matter.
Detailed explanation in respect of the matter has been provided under Note 391(c) of
the Revised Standalone Financial Statements and are self-explanatory.
Secretarial Audit
Pursuant to the provisions of Section 204 of the Act read with Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had
appointed M/s. KDA & Associates, Company Secretaries in Practice, to undertake
Secretarial Audit for Financial Year 2023. The Secretarial Audit Report issued by them is
annexed herewith as Annexure IV. There are no qualifications, reservations, adverse
remarks or disclaimers in the report.
Further, the subsidiaries of the Company as mentioned above do not meet the criteria
for material unlisted subsidiaries. Therefore, the provisions of Regulation 24A of the
Listing Regulations, in respect of Secretarial Audit are not applicable to them, for the
year under review.
Cost Audit
Your Company has been maintaining cost accounting records as specified by the Central
Government under Section 148 of the Act read with the Companies (Cost Records and Audit)
Rules, 2014. Further, your Company was also required to conduct an audit of cost records
as specified by the Central Government under Section 148 of the Act and the Rules framed
thereunder for the Financial Year under review. The Board of Directors appointed
M/s. Chirag Trilok Shah & Co., Practicing Cost Accountant (Membership Number 23277
and Firm Registration Number 004442) as the Cost Auditor for conducting the audit of cost
records for the Financial Year 2023, at the remuneration approved by the Members at the
previous AGM.
During the year under review, none of the Auditors as mentioned above have reported any
fraud and therefore no details are required to be disclosed under Section 134(3)(ca) of
the Act.
BOARD EFFECTIVENESS AND BOARD EVALUATION
Pursuant to Section 134(3)(p) of the Act, as amended from time to time, and Regulations
17 and 25 of the Listing Regulations, the Board of Directors had carried out an annual
evaluation of its own performance, Individual Directors and its Committees, for the
Financial Year under review. A structured questionnaire was prepared after taking into
consideration the Guidance Note issued by SEBI on Board Evaluation, covering various
aspects of the Board's functioning such as adequacy of the composition of the Board and
its Committees, Board culture, execution and performance of specific duties, obligations
and governance. The feedback and suggestions received from all the Directors have been
discussed by the Independent Directors, Compensation, Nomination & Remuneration
Committee and the Board of Directors at their respective meetings. The Directors expressed
their satisfaction with the evaluation process.
INDEPENDENT DIRECTORS
All the Independent Directors have confirmed that they meet the criteria of
independence as laid down under the Act and Listing Regulations. They have declared that
they do not suffer from any disqualifications specified under the Act and are not aware of
any circumstances or situations which exist or may be reasonably anticipated that could
impair or impact the ability to discharge their duties.
Based on such confirmation / declaration, in the opinion of the Board, the Independent
Directors of your Company fulfil the conditions specified under the Act and the Listing
Regulations and are independent of the management. Further, all the Independent Directors
have registered their names in the databank of Independent Directors maintained by the
Indian Institute of Corporate Affairs and the Independent Director to whom online
self-assessment proficiency test was applicable, has completed the same.
COMMITTEES
Your Company has constituted Committees of the Board as per the requirements of the Act
and the Listing Regulations. Details of constitution, meetings held, attendance of the
members and terms of reference of the said Committees, have been enumerated in the
Corporate Governance Report which forms a part of the Annual Report.
Corporate Social Responsibility and ESG ('CSR and ESG') Committee
Your Company had adopted a CSR Policy indicating the Company's broad philosophy and
objectives, which is available on the website of your Company at
www.chalethotels.com/wordpress/wp-content/ uploads/2021/09/CSR-Policy.pdf.
The annual report on CSR activities and details about the composition of CSR and ESG
Committee along with the initiatives undertaken by the Company on CSR activities during
the year under review is annexed as Annexure III to this Report.
Compensation, Nomination and Remuneration Committee
Your Company had in compliance with the provisions of Section 178 of the Act and
Regulation 19 of the Listing Regulations, adopted a Policy for Appointment of Directors
and Remuneration of Directors and Senior Management. The salient features of the said
Policy are outlined in the Corporate Governance Report. The same is available on the
website of your Company viz. www.chalethotels.com/wordpress/wp-content/
uploads/2021/04/Policy-for-Appointment-of-Directors-
Remuneration-of-Director-and-Senior-Management.pdf.
The Compensation, Nomination and Remuneration ('CNR') Committee of your Company, while
formulating the above policy, has ensured that:
• the level and composition of remuneration be reasonable and sufficient to
attract, retain and motivate Directors/employees of the quality required to run the
Company successfully;
• relationship of remuneration to performance is clear and meets appropriate
performance benchmarks; and
• remuneration to Directors, Key Managerial Personnel and Senior Management
involves a balance between fixed and performance linked bonuses reflecting short and long
term performance objectives appropriate to the working of the Company and its goals.
The remuneration / compensation / commission (including annual increments, if any) paid
to Directors and Senior Management including KMP of the Company is determined by the CNR
Committee and are as per the terms laid down in the said Policy. The Managing Director
& CEO of your Company does not receive remuneration or commission from any of the
subsidiaries of your Company.
Audit Committee
The Committee comprises of three Independent Directors
i.e. Mr. Joseph Conrad D'Souza (Chairperson), Mr. Hetal Gandhi (Member) and Mr. Arthur
DeHaast (Member) and Mr. Ravi C. Raheja, Promoter and Non-Executive Director (Member).
During the year under review, Mr. Arthur DeHaast was appointed as the member of the
Committee by the Board of Directors at the meeting held on January 24, 2023. During the
year under review, all the recommendations made by the Committee were accepted by the
Board.
EMPLOYEE STOCK OPTION SCHEME (ESOP)
The Board had granted 2,00,000 Stock Options, each exercisable into 1 Equity Share of
Rs 10 each at a price of Rs 320 per share to the Eligible Employee under the Chalet Hotels
Limited - Employee Stock Option Plan 2018, to vest in three tranches. The Board of
Directors of the Company, based on the recommendation of CNR Committee had approved
variation in the terms of the Scheme and recommended extension of the exercise period from
two years to four years, which was also approved by the Members of the Company by way of
Postal Ballot by requisite majority on June 20, 2022.
Based on the recommendation of the CNR Committee at its meeting held on April 20, 2022,
the Board of Directors at its meeting held on May 10, 2022 approved the CHL Employee Stock
Option Plan 2022 and thereby granted 12,17,831 Options exercisable into an equal number of
Equity Shares of the Company to the Eligible Employees as per the Scheme. The same was
also approved by the Members of the Company by way of Postal Ballot by requisite majority
on June 20, 2022.
Presently, your Company has the following ESOP Schemes:
- Chalet Hotels Limited - Employee Stock Option Plan 2018
- CHL Employee Stock Option Plan 2022
The applicable disclosures as stipulated under Securities and Exchange Board of India
(Share Based Employee Benefits and Sweat Equity) Regulations, 2021 have been made
available on the website of the Company at www.chalethotels.com/annual-reports/. Further,
a certificate from M/s. KDA & Associates, Secretarial Auditors of the Company, with
respect to implementation of ESOP and confirming that the Scheme is in compliance with the
relevant SEBI Regulations and the Members approval obtained; shall be available for
inspection by Members of the Company.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
In line with the requirements of the Act and in accordance with the Listing
Regulations, your Company has formulated a policy on dealing with Related Party
Transactions ('RPTs') which is available on the website of the Company at
www.chalethotels.com/wordpress/wp-content/ uploads/2022/12/CHL-Related-Party-Policy.pdf.
During the year under review, the transactions / contracts / arrangements entered into
by the Company with related party(ies) as defined under the provisions of the Act and
Listing Regulations, were in the Ordinary Course of Business at arms' length and were
entered into with the prior approval of the Audit Committee and the Board of Directors of
the Company. The disclosure in Form AOC-2 is not applicable to the Company for the
Financial Year 2022-23 and hence does not form part of this Report. Approval of the
Members was sought at the AGM held on September 14, 2022 in respect of a Material Related
Party Transaction for raising of funds from the Promoters of the Company upto an amount of
Rs 1,000 million and the Company has availed of Rs 450 million as on March 31, 2023.
All transactions with related parties are placed before the Audit Committee for its
approval. Omnibus Approval is obtained on an each financial year basis, from the
Independent Directors of the Audit Committee in respect of Related Party Transactions
which are repetitive in nature or unforeseen, based on the criteria specified and approved
by the Board upon recommendation of the Committee. The Committee and the Board reviews on
a quarterly basis, all transactions entered into by your Company pursuant to the Omnibus
Approvals so granted.
RISK MANAGEMENT
The Committee comprises of two Independent Directors i.e. Mr. Arthur William DeHaast
(Chairperson) & Mr. Joseph Conrad D'Souza (Member), Mr. Neel C. Raheja, Promoter and
Non-Executive Director (Member) and Mr. Sanjay Sethi, Managing Director & CEO (Member)
and two members of Senior Management i.e. Mr. Milind Wadekar, Chief Financial Officer
(Member) and Mr. Rajneesh Malhotra, Chief Operating Officer (Member). There were no
changes in the composition of the Committee during the year under review. Further, your
Company has adopted a Risk Management Policy, pursuant to the provisions of Section 134 of
the Act, to identify and evaluate business risks and opportunities for mitigation of the
same on a continual basis.
Your Company is faced with risks of different types, each of which needs varying
approaches for mitigation. The risk management framework defines the risk management
approach across the enterprise. The risk framework which seeks to create transparency,
minimise adverse impact on business objective and enhance your Company's competitive
advantage, is reviewed by the Risk Management Committee periodically. An impact analysis
of the identified risks including risk mitigation approach and risk mitigation status is
also done at regular intervals taking into consideration the changing business environment
and additional steps taken by the Company to further mitigate the risks. The Policy is
available on the Company's website at
www.chalethotels.com/wordpress/wp-content/uploads/2021/1 2/Risk-Management-Policy-
renamed-as-on-October-28-2021.pdf.
Details of the key risks faced by your Company and measures for mitigation have been
provided on pages 43 and 44 of the Integrated Reporting section of the Annual Report.
Vigil Mechanism / Whistle Blower Policy
Your Company has, in accordance with Section 177 of the Act and Regulation 22 of the
Listing Regulations, formulated a Vigil Mechanism / Whistle Blower Policy for its
Directors and Employees, to enable reporting of any wrongdoing within the Company /
branches / hotels that fall short of your Company's business principles on ethics and good
business practices.
Your Company's Vigil Mechanism / Whistle Blower Policy provides a formal mechanism to
the Directors and all the employees of the Company to report their concerns about
unethical behaviour, actual or suspected fraud or violation of the Company's Code of
Conduct. The said policy is available on the Company's website at
www.chalethotels.com/wordpress/wp-content/
uploads/2023/05/Vigil-Mechanism-and-Whistle-Blower- Policy-Rev-May-09-2023.pdf.
The Policy covers the adequate safeguards against victimisation of Directors and
employees who avail of the mechanism and have also provided them direct access to the
Chairperson of the Audit Committee. Matters reported under the Vigil Mechanism are
informed to the Audit Committee from time to time. It is affirmed that no personnel of the
Company has been denied access to the Chairperson of the Audit Committee.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS, COURTS OR TRIBUNALS IMPACTING THE
GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
During the year under review, there were no significant and material orders passed by
Regulators, Courts or Tribunals impacting the Going Concern status and Company's
operations in future.
PREVENTION OF SEXUAL HARASSMENT
Your Company has complied with provisions relating to the constitution of Internal
Complaints Committee in compliance with the requirements of The Sexual Harassment of Women
at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 and the Rules framed
thereunder in respect of the Corporate Office and various units. The policy in this regard
is available on the Company's website at www.chalethotels.com/wordpress/
wp-content/uploads/2023/05/POSH-Policy Rev May-09- 2023.pdf.
During the year under review, your Company received 7 complaints on sexual harassment,
out of which 6 were resolved and 1 complaint remained pending as at the year end and has
been resolved as on the date of this Report. Appropriate actions were taken, wherever
necessary. The Company also conducts workshops from time to time to promote awareness on
the issue.
Your Company continues its strong stand against any kind of sexual harassment and has
zero tolerance for sexual harassment at workplace.
HUMAN CAPITAL INITIATIVES AND PARTICULARS OF EMPLOYEES
Your Company focuses on building on its strength by developing the capability of its
employees, through training and development and work life balance. During the year under
review, your Company has undertaken various initiatives towards nurturing talent, keeping
its people connected and taking various steps for maintaining the physical and emotional
wellbeing of its employees. Further, your Company has been listed as a Great Place to
Work? in 2023 for the fourth year in a row.
The disclosures pertaining to remuneration and other details as required under Section
197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, is annexed to this Report as Annexure V.
Further, in terms of the provisions of Section 197(12) of the Act, read with Rules 5(2)
and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014, as amended, a statement showing the names and other particulars of the employees
drawing remuneration in excess of the limits set out in the said Rules forms part of this
Report.
Having regard to the provisions of the second proviso to Section 136(1) of the Act, the
Annual Report excluding the aforesaid information is being sent to the Members of the
Company and others entitled thereto. Any Member interested in obtaining such information
may write to the Company Secretary at companysecretary@chalethotels. com and the same will
be furnished on request. The Annual Report including the aforesaid information is also
available on the Company's website.
INTEGRATED REPORTING
Your Company being among the top 500 listed companies in the country in terms of market
capitalization, has voluntarily provided Integrated Report, which encompasses both
financial and non-financial information and stakeholders' relationships to enable well
informed decisions and have a better understanding of the Company's value creation model.
The Report also touches upon aspects such as organisation's strategy, governance
framework, performance and prospects of value creation based on the six forms of capital
viz. financial, manufactured, intellectual, human, social & relationship and natural
capitals. The Integrated Report also includes ESG parameters and Company's performance
vis-a-vis these.
ENVIRONMENTAL INITIATIVES AND ENERGY MANAGEMENT
The Company was the first Hospitality Company, globally, to join Climate Group's RE100,
EP100 and EV100 initiatives linked to renewable electricity, energy efficiency and
electric mobility respectively. Under these initiatives, the Company has made the
following commitments:
- RE100 (Renewable Electricity): All properties under the Company's portfolio will move
to 100% renewable electricity by year 2031
- EP100 (Energy Productivity): Aim to double revenue per unit of electricity consumed
by the year 2029, considering a baseline year of 2016
- EV100 (Electric Vehicles): 100% of the vehicle fleet deployed across the properties
in the portfolio, that is used for guest transport, will transition to Electric Vehicles
by 2025 as part of its committed goals on climate.
Towards this, during the year under review, the Company completed installation of EV
charging stations at all its properties, accessible to both, employees as well as
visitors. The Company continues its endeavor to maintain a balance with the environment
and a steady focus on sustainability and various initiatives continue to be rolled out.
Detailed reporting on the aspects of ESG are covered in the Integrated Section of this
Annual Report.
Towards achieving its Net Zero target, GHG emissions inventorisations exercise is under
progress and completion of Net Zero timeline commitment to the Science Based Targets
Initiative (SBTi) is targeted for December 2023.
As required by Section 134 of the Act read with Rule 8 of Companies (Accounts) Rules,
2014, the information relating to conservation of energy is annexed as Annexure VI to
this Report.
The information relating to technology absorption is not given since the same is not
applicable to the Company.
MATERIAL CHANGES AND COMMITMENTS
The Hon'ble NCLT on May 19, 2023, approved the Scheme of Amalgamation of Belaire Hotels
Private Limited and Seapearl Hotels Private Limited with the Company. The
Appointed Date for the same is April 1, 2020 and the Effective Date is the date of
filing of the Scheme with the Registrar of Companies i.e. June 19, 2023.
Other than the one mentioned above, there have been no material changes and commitments
affecting the financial position of your Company, which have occurred between the end of
the Financial Year to which the Financial Statements relate and the date of this Report.
COMPLIANCE WITH SECRETARIAL STANDARDS
Your Company is in compliance with the applicable Secretarial Standards, issued by The
Institute of Company Secretaries of India and approved by the Central Government under
Section 118(10) of the Act.
GENERAL
Your Directors state that no disclosure or reporting is required in respect of the
following matters as there were no transactions on these matters during the year under
review:
- Issue of Equity Shares with differential rights as to dividend, voting or otherwise.
- Issue of shares (including sweat equity shares) to employees of the Company under any
scheme save and except Employees' Stock Option Schemes referred to in this Report.
- Payment of remuneration or commission to Managing Director & CEO of the Company
from any of its subsidiaries.
- Proceedings filed by or against the Company under the Insolvency and Bankruptcy Code,
2016.
- Onetime settlement with any Bank or Financial Institution.
ACKNOWLEDGEMENTS
Your Directors would like to thank the Members for their support received and their
continued confidence in the Company. Your Directors would like to express their sincere
appreciation for the assistance and co-operation received from the Regulatory and
Statutory Authorities, Government and its agencies, hotel & retail operating partners,
Stock Exchanges, Depositories, lenders, legal advisors, Registrar & Share Transfer
Agent, Auditors, vendors and other key stakeholders.
Your Directors place on record their gratitude to the Company's employees at all
levels.
|
For and on behalf of the Board of Directors of Chalet
Hotels Limited |
Place: Mumbai |
Sanjay Sethi |
Joseph Conrad D'Souza |
Date: July 3, 2023 |
Managing Director & CEO |
Director |
|
DIN:00641243 |
DIN:00010576 |