Chalet Hotels Ltd Directors Report.

Dear Members,

Chalet Hotels Limited

The Board of Directors present your Companys Thirty Sixth Annual Report along with the Audited Financial Statements for the Financial Year ended March 31, 2021.

Financial Results

Your Companys financial performance for the Financial Year ended March 31, 2021 is summarised below:

(Rs. in million)
Standalone Consolidated
Particulars For the year ended For the year ended
March 31, 2021 March 31, 2020 March 31, 2021 March 31, 2020
Revenue from Operations 2,843.17 9,762.45 2943.87 9,808.49
Other Income 207.10 272.44 223.38 278.97
Total Income 3,050.27 10,034.89 3,167.25 10,087.46
Total Expenses 2,702.77 6,542.16 2,873.35 6379.52
EBITDA from Continuing Operations 347.50 3,492.73 293.90 3707.94
(Loss) from Discontinued Operations (40.62) (62.82) (40.62) (62.82)
EBITDA 306.88 3,429.91 253.28 3645.12
Depreciation and Amortisation Expenses 1,076.34 1,113.66 1,174.62 1,133.17
Finance Costs 1,450.08 1,446.13 1519.78 1,461.76
(Loss) / Profit before Exceptional Items and Tax (2,219.54) 870.12 (2,441.12) 1,050.19
Exceptional Items (41.71) (41.71) (41.71) (41.71)
(Loss) / Profit before tax (2,261.25) 828.41 (2,482.83) 1,008.48
Tax Expense (1,093.21) 12.27 (1,091.55) 12.22
(Loss) / Profit for the year (1,168.04) 816.14 (1,391.28) 996.26
Total Comprehensive Income / (Expense) attributable to Owners of the Company - - (1,390.48) 1015.48
Earnings Per Share (Basic & Diluted) (5.70) 3.98 (6.78) 5.01

This has been an unprecedented year. Your Company geared-up to combat the impact of the pandemic on business and tackle cashflow requirements through various cost saving initiatives, rationalisation of expenses across all verticals and addition of new revenue streams. Our associates at every hotel stood strong amidst challenging times, to serve our guests with a smile. Your Company participated in the fight against COVID by housing doctors & medics at its hotels, providing meals, PPEs and other necessities to the frontline workers.

All the projects, with the exception of renovation at the Renaissance Mumbai Convention Centre Hotel at Powai were initially kept on hold. Post evaluation of the demand dynamics of the respective markets, your Company restarted work on the Commercial Building Projects at Powai, Mumbai and Whitefield, Bengaluru.

Further, the Board of Directors of your Company has decided to repurpose a retail mall, The Orb at Sahar, Mumbai into Commercial Office space after assessment of mid to long term impact of the pandemic. A portion of the said mall at Sahar, Mumbai continues to house some retail outlets.

Our initiatives led to performance looking up during the third and fourth quarter of the financial year. However, the second wave across the country has led to restrictions on travel and lockdown orders in several parts of the country including the geographies that your Company operates in.

The efforts of various industry forums, some of which your Companys offcials actively engage with and hold executive committee positions, have been instrumental in hotels receiving Industry Status with effect from April 01, 2021, both in Maharashtra and Karnataka. With this change, hospitality industry will be charged for utilities and property tax at industrial rates along with other benefits available to industries.

Further, a detailed note on the state of the Companys affairs and that of its subsidiaries is covered in the Management Discussion & Analysis section of the Annual Report.

Going Concern

During the year under review, the hospitality operations of your Company had been adversely impacted, in line with the impact on hospitality industry. Your Company, has however managed its cash flows effectively through stable revenues from the commercial office segment. The Company has met all monetary obligations out of cash generated from operations and debt raised. Accordingly, the Financial Statements for the year under review have been prepared on a going concern basis. Further, there has been no change in the nature of business of the Company.

Capital Structure

Authorised Share Capital

During the year under review, there was no change in the Authorised Share Capital of the Company. The Authorised Share Capital of your Company is 4,451,000,000/-.

Paid-up Equity Share Capital

During the year under review, there was no change in the paid-up Equity Share Capital of the Company. The Paid-up Equity Share Capital of your Company stands at 2,050,238,640/-.

Paid-up Preference Share Capital

During the year under review, there was no change in paid-up Preference Share Capital of the Company, which stood at 1410,000,000/-.

Your Company had entered into a Subscription Agreement dated June 4, 2018 with Mr. Ravi C. Raheja and Mr. Neel C. Raheja, Promoters of the Company, wherein they 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 100,000 each in two series (viz. Series A and Series B) of 10,000 each, aggregating to 2,000 million (Initial Subscription Amount). The Promoters of your Company have further agreed that in the event the amount required towards meeting the project expenses exceeds the Initial Subscription Amount, the Promoters shall provide such additional funds as may be required to meet the project expenses. The NCRPS have been fully subscribed. An amount of 1,000 million and 250 million has been called and paid-up as on the date of the Balance Sheet in respect of the Series A NCRPS and Series B NCRPS respectively. The amounts raised have been utilised in line with the Subscription Agreement referred to hereinabove.

Further, keeping in mind the project requirements and expected capital expenditure to be incurred, it has been decided to raise upto 1000 million from the Promoters or their Designated Nominees, either by way of a further issue upto a maximum of 10,000 Zero Coupon, Non-Cumulative, Non-Convertible, Redeemable Preference Shares viz. Series C NCRPS of 100,000 each, or Unsecured Loans or Inter Corporate Deposits. The Series C NCRPS, if issued, will be allotted in tranches based on the requirement of funds.

Borrowings

The borrowing of your Company on a standalone basis stood at 18,505.38 million and on a consolidated basis stood at 19,388.63 million (both excluding Preference Share Capital of 1,194.61 million) as at March 31, 2021, as compared to 16,732.44 million on a standalone basis and 17,907.49 million on consolidated basis (both excluding Preference Share Capital of 1,107.99 million) as at March 31, 2020.

The foreign currency borrowings as on March 31, 2021 along with those of the subsidiary company were lower at US$ 20.80 million as compared to US$ 26.24 million as at March 31, 2020.

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 Companys website at www.chalethotels.com/policies/. No dividend is being recommended by the Board of Directors on the Equity Shares and the 0.001% Non-Cumulative Non-Convertible Redeemable Preference Shares for the year under review.

On account of the losses incurred during the Financial Year under review, no amount has been transferred to Reserves. 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 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.

Projects Under Development

Your Companys proposed development pipeline consists of the following projects:

Hotels

All the projects pertaining to development of new hotels, expansion and product improvement plans excluding the lobby renovation at Renaissance Mumbai Convention Centre Hotel, Powai, were kept on hold during the year under review. Your Company reaffirms its decision that the proposed development pipeline will be paced appropriately after assessment of the impact of COVID-19 on its business, demand and consumer behaviour.

Commercial, Retail and Office Space

The proposed development pipeline assumes the construction of leasable area of nearly 1.2 million square feet across two locations, namely Powai at Mumbai and Whitefield at Bengaluru, including capex on repurposing of the retail asset at Sahar, Mumbai. Additionally, repurposing of some portions of the retail asset at Sahar, Mumbai is ongoing. The new developments have started progressing after being suspended due to imposition of lockdowns across the country during the year under review. The finalisation of plans for the repurposing of assets is underway.

Re-Branding Hotels

Your Company had entered into an agreement with Marriott Hotels India Private Limited and its a_liates (Marriott) for rebranding of the existing hotel viz. Renaissance Mumbai Convention Centre Hotel, Powai, as ‘Westin Mumbai Powai Lake. The requisite upgrade of the asset for the same is expected to be completed in two phases, in the FY 2021-22 and FY 2022-23.

Residential Project – Koramangala, Bengaluru

The residential development project at Bengaluru was on hold during the year under review due to the pending writ petition. The Honble Karnataka High Court on May 29, 2020 (‘Order), delivered its judgement in the writ petition filed by your Company, in connection with the cancellation by Hindustan Aeronautical Limited (‘HAL) of its height permission for the project of your Company. The Honble High Court had by the judgement inter-alia allowed the writ petition in part and quashed the cancellation of the height NOC by HAL [in so far as cancellation of NOC for construction upto 62 meters above ground level, so that the top of the structure when erected shall not exceed 932 meters Above Mean Sea Level (‘AMSL)] and remanded the matter to HAL for re-survey of site AMSL within a time bound manner and thereafter, based on the re-survey, to proceed further in accordance with law. HAL filed an appeal challenging the said order. In November 2020, your Company also filed an appeal challenging certain parts of the order. Both matters are pending. Your Company is proposing completion of the project and is in discussions with the customers for consenting to a revised development inter-alia by limiting the height to 40 meters and adding a residential wing and a commercial building. The Company has also initiated the process for renewing/applying for permissions. Subject to the conclusion of discussions with the customers and obtaining order from the Court and NOC from HAL for the revised development, work on the project is expected to commence in the next few months.

Deposits

Your Company has neither accepted nor renewed any deposits during the year under review and 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

During the year under review, your Company has not accepted loans from any of its Directors.

Loans, Investments, Guarantees and Securities

Your Company falls within the definition of ‘Infrastructure Company as provided under Schedule VI of the Act and is therefore exempt from the provisions of Section 186 of the Act with regard to Loans, Investments, Guarantees and Securities. Details of loans given, security provided in connection with a loan and investments made by your Company are given in Note No. 7, 8, 15 and 42 of the Standalone Financial Statements.

Foreign Exchange Earnings and Outgo

During the year under review, your Company and its subsidiary, earned foreign exchange of 166.27 million and 3.62 million respectively, as compared to 4,253.37 million and 78.77 million respectively in the previous year.

The total foreign exchange outgo of your Company and its subsidiary during the year under review was 377.33 million and 57.97 million, respectively, as compared to 896.42 million and 93.05 million, respectively, in the previous year.

Subsidiaries, Associates and Joint Ventures

The Company had three subsidiaries and two associates as on March 31, 2021. There has been no material change in the nature of the business of the subsidiaries. The Company does not have any Joint Venture. Further, no company became or ceased to be a Subsidiary, Joint Venture or Associate of the Company during the year under review. Belaire Hotels Private Limited (‘BHPL) and Seapearl Hotels Private Limited (‘SHPL) are wholly-owned subsidiaries of the Company which were acquired in the previous year.

BHPL is the owner of ‘Novotel Pune Nagar Road Hotel. During the year under review, BHPL reported a Total Income of 110.88 million and Net (Loss) after tax of ( 221.35) million.

SHPL had insignificant or no operations and reported a Total Income of 6.31 million and Net Profit (after tax) of 3.64 million during the year under review.

Chalet Hotels & Properties (Kerala) Private Limited is a subsidiary of your Company, which had insignificant or no operations during the year under review.

During the year under review, the Company had filed a Scheme of Arrangement and Amalgamation of Belaire Hotels Private Limited and Seapearl Hotels Private Limited 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 1, 2020.

Pursuant to the Order dated February 05, 2021 passed by the Honble National Company Law Tribunal, Mumbai Bench (‘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 final order of the NCLT is awaited.

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-report-20-21.

Your Company had for securing the supply of renewable energy acquired 20.8% of the Equity Share Capital of Krishna Valley Power Private Limited and 26% 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 Consolidated Financial Statements of your Company and its Subsidiaries, prepared in accordance with the relevant Accounting Standards, duly audited by the Statutory Auditors, form a part of the Annual Report and are reflected in the Consolidated Accounts.

The statement under Rule 8 of the Companies (Accounts) Rules, 2014 relating to Subsidiaries & 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 Companys website at www.chalethotels.com/policies/.

Management Discussion and Analysis, Corporate Governance and Business Responsibility Reports

Your Company has complied with the requirements of Corporate Governance under the Act and the Listing Regulations. A separate section on Corporate Governance, a detailed report on Management Discussion & Analysis and Business Responsibility Report form an integral part of this Report.

Directors and Key Managerial Personnel

The Board of Directors of the Company at its Meeting held on November 10, 2020 had, based on the recommendation of the Compensation, Nomination & Remuneration Committee, reappointed Mr. Sanjay Sethi as the Managing Director & CEO of the Company for a further period of three years w.e.f. February 9, 2021, subject to the approval of the Members. The Board recommends his re-appointment as the Managing Director & CEO for which the approval of the Members is being sought in the Notice convening the Annual General Meeting (‘AGM) of the Company.

Further, in view of inadequacy of profits for payment of managerial remuneration, the Company is also seeking approval of the Members by way of a special resolution for payment of remuneration and waiver in respect of excess remuneration paid / payable to Mr. Sanjay Sethi, Managing Director & CEO. In accordance with the Act and the Articles of Association of the Company, Mr. Neel C Raheja (DIN: 00029010) is liable to retire by rotation at the ensuing AGM and being eligible, has offered himself for re-appointment. Accordingly, the re-appointment of Mr. Neel C Raheja is being placed for approval of the Members at the ensuing AGM. Mr. Rajeev Newar had expressed his desire to step down as Executive Director & CFO of the Company. Accordingly, he ceased to be an Executive Director at the end of his term with effect from August 02, 2020 and as the Chief Financial Officer with effect from August 19, 2020. Further, Mr. Milind Wadekar, VP - Finance & Tax of the Company was appointed as the Interim Chief Financial Officer of the Company effective September 15, 2020.

The disclosures pertaining to Directors being re-appointed as required pursuant to the Listing Regulations and Secretarial Standard-2 is given in the Explanatory Statement to the Notice convening the AGM.

Except for professional fees paid to Mr. Arthur DeHaast, the Non-Executive Directors of the Company had no pecuniary relationship or transaction with the Company, other than sitting fees.

In view of the COVID-19 pandemic and challenges faced by the Company thereby, the remuneration of employees, including Key Managerial Personnel & Senior Management was restructured as a mitigation measure, whereby a certain percentage component of the current compensation was made variable pay, effective April 01, 2020. The terms of remuneration of Mr. Sanjay Sethi, Managing Director & CEO was restructured accordingly which was approved by the Board of Directors at its meeting held on June 08, 2020, pursuant to recommendations of the Compensation, Nomination & Remuneration Committee. However, the component of the compensation which was converted to variable has been reinstated w.e.f. December 01, 2020.

Annual Return

As provided under Section 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 Annual Return of your Company in Form MGT-7 for the Financial Year 2020-21, shall be hosted on the website of your Company at www.chalethotels.com/annual-report-20-21.

Number of Board Meetings

During the Financial Year 2020-21, 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 & Risk Management Committee, the Board is of the opinion that your Companys internal financial controls were reasonable and adequate for the Financial Year 2020-21.

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, 2021, 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 loss of your Company for the Financial Year ended March 31, 2021;

(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, 2021 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 Companys 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 & Risk Management Committee, the Board has approved the appointment of Ernst & Young LLP as Internal Auditors of the Company for Financial Years 2021-22 and 2022-23. The Chief Internal Auditor who reports to the Audit & Risk Management Committee oversees the Internal Audit function of the Company. The reports by the Internal Auditors are placed before the Audit & Risk Management Committee for their review and improvements.

Details of Fraud

During the year under review, there were no material or serious instances of fraud falling within the purview of Section 143 (12) of the Act and Rules made thereunder, by officers or employees reported by the Statutory Auditors of the Company during the course of the audit. Therefore, no details are required to be disclosed under Section 134 (3)(ca) of the Act.

Board Effectiveness & 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 Boards 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 at the meeting of the Board of Directors held on May 18, 2021. 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.

Further, all the Independent Directors have registered their names in the databank of Independent Directors maintained by the Indian Institute of Corporate Affairs.

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 (‘CSR)

Your Company had adopted a CSR Policy indicating the broad philosophy and objectives, which is available on the website of your Company at www.chalethotels.com/policies/.

The annual report on CSR activities and details about the composition of CSR 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 & Remuneration

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 same is available on the website of your Company viz. www.chalethotels.com/ policies.

The Compensation, Nomination & 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 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) for the Directors and Senior Management will be determined and recommended by the CNR Committee and will be subject to approval by the Board.

Employee Stock Option Scheme (ESOP)

The Board had granted an option in respect of 2,00,000 Equity Shares of 10 each at a price of 320 each to Mr. Sanjay Sethi, Managing Director & CEO of your Company, under the Chalet Hotels Limited - Employee Stock Option Plan 2018, to vest in three tranches. The first tranche of ESOPs granted had vested in the previous year whereas the second tranche was vested during the year under review. No options have been exercised during the year under review or till date.

In terms of the provisions of the SEBI (Share Based Employee Benefits) Regulations, 2014, the details of the Stock Options granted under the ESOP Scheme have been made available on the website of the Company at www.chalethotels.com, under the head ‘Annual Reports in the Investor Relations section. Further, certificate from B S R & Co. LLP, Statutory Auditors of the Company, with respect to implementation of ESOP, would be placed at the ensuing AGM for inspection by the Members of the Company.

Statutory Auditors

At the AGM of your Company held on September 22, 2017, M/s. B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022), were appointed as the Statutory Auditors for a term of five consecutive years.

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 report on the Financial Statements for the Financial Year 2020-21. However, the Statutory Auditor has drawn attention i.e. Emphasis of Matter with regard to Note 42(c) and Note 49 of the Standalone Financial Statements, in their report, details of which are as follows:

Emphasis of Matter

a) We draw attention to Note 42(c) of the standalone financial statements, in respect of the entire building comprising of the hotel and apartments therein, purchased together with a demarcated portion of the leasehold rights to land at Vashi (Navi Mumbai), from K. Raheja Corp Private Limited, on which the Companys 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 by two public interest litigations and the matter is currently pending with the Honorable Supreme Court of India. Pending the outcome of proceedings and a final closure of the matter, no adjustments have been made in the standalone financial statements as at and for the year ended 31 March 2021 to the carrying value of the leasehold rights (reflected as prepayments) aggregating to 50.93 million (31 March 2020: 52.13 million) and the hotel assets thereon (reflected as property, plant and equipment) as at 31 March 2021 is 400.77 million (31 March 2020: 427.21 million) respectively.

Our opinion is not modified in respect of the above matter. b) We draw attention to Note 49 to the standalone financial statements relating to remuneration paid / payable to the Managing Director & CEO of the Company for the financial year ended 31 March 2021, being in excess of limits prescribed under Section 197 of the Act by 47.49 million, of which the proportionate remuneration from 09 February 2021 of 6.63 million is subject to approval of the shareholders. Our opinion is not modified in respect of the above matter. The Auditors have clarified that their opinion is not qualified in respect of these matters.

Detailed explanation in respect of the matters at Item No. 1 and 2 have been provided under Note No. 42(c) and Note No. 49 of the Standalone Financial Statements.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Act read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company had appointed M/s. BNP & Associates, Company Secretaries in Practice (Firm Registration No. P2014MH037400) to undertake Secretarial Audit for Financial Year 2020-21. The Secretarial Audit Report 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 for the year under review.

During the year under review, the Secretarial Auditor had not reported any fraud under Section 143(12) of the Act and therefore no details are required to be disclosed under Section 134(3)(ca) of the Act.

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 Mr. Vikas Vinayak Deodhar, Cost Accountant (Membership No. 3813) as the Cost Auditor for conducting the audit of cost records for the Financial Year 2020-21, at the remuneration approved by the Members at the previous AGM.

Audit & Risk Management Committee

The Committee comprises of two Independent- Non Executive Directors i.e. Mr. Joseph Conrad DSouza (Chairman), Mr. Hetal Gandhi (Member) and Mr. Ravi C. Raheja, Promoter and Non-Executive Director (Member). There were no changes in the composition of the Committee during the year under review. During the year under review, all the recommendations made by the Committee were accepted by the Board.

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 your Company at www.chalethotels. com/policies/.

The contracts, arrangements or transactions entered into during the year under review by the Company with Related Parties were in the Ordinary Course of Business and on an Arms Length Basis.

During the year under review, the Company had not entered into any contract / arrangement / transaction with Related Parties, which are materially significant as per the Policy adopted by your Company.

The disclosure in Form AOC-2 is not applicable to the Company for the Financial Year 2020-21 and hence does not form part of this Report.

Risk Management

Your Company has constituted an Audit and Risk Management Committee as required under the Listing Regulations. 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 need 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 Companys competitive advantage is reviewed by the Audit & 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. The Policy is available on the Companys website at www.chalethotels.com/policies/.

Details of the key risks faced by your Company and measures for mitigation have been provided on Page 44 of the Integrated Reporting section of the Annual Report.

Vigil Mechanism Policy & Whistle Blower Policy

Your Company has, in accordance with Section 177 of the Act, drawn a Whistle Blower Policy for its Directors and Employees, to enable reporting of any wrongdoing within the Company / branches / hotels that fall short of your Companys business principles on ethics and good business practices.

Your Companys 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 Companys Code of Conduct or ethics policy. The said policy is available on the Companys website at www.chalethotels.com/ policies/.

The Policy covers the adequate safeguards against victimisation of Directors and employees who avail of the mechanism and also have provided them direct access to the Chairperson of the Audit & Risk Management Committee. Matters reported under the Vigil Mechanism are informed to the Audit & Risk Management Committee from time to time. It is affirmed that no personnel of the Company has been denied access to the Chairperson of the Audit & Risk Management Committee.

Significant and Material Orders passed by Regulators, Courts or Tribunals impacting the Going Concern status and Companys operations in future

During the year under review, judgement had been passed by the Honble Karnataka High Court in respect of the residential project at Bengaluru. Please refer to the section ‘Residential Project – Koramangala, Bengaluru for more details in this Report.

The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013

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 in respect of the Corporate Office and various units. The said policy is available on the Companys website at www.chalethotels. com/policies/.

During the year under review, your Company received and/or resolved three complaints on sexual harassment, and appropriate action has been taken, wherever necessary. There are no pending cases. The Company also conducts workshops from time to time to promote awareness on the issue.

Human Capital Initiatives & Particulars of Employees

Your Company focuses on building on the capability of its employees, through training and development and work life balance. During the year under review, your Company has undertaken various training initiatives towards nurturing talent, keeping its people connected and taking various steps for maintaining the physical and emotional wellbeing of its employees. Your Company also rolled out health, hygiene and safety protocols and technology and app-based solutions to ensure employee health and safety.

Further, your Company has been certified by the Great Place to Work Institute for the second time in a row for benchmarking and planning actions to strengthen its workplace culture. 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 Companys website.

Integrated Reporting

Your Company being among the top 500 listed companies in the country in terms of market capitalisation, has voluntarily provided Integrated Report, which encompasses both financial and non-financial information to enable its Members to take well informed decisions and have a better understanding of the Companys long term perspective. The Report also touches upon aspects such as organisations 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.

Environmental Initiatives and Energy Management

The management team of your Company sets its goals for improvement, leading to various initiatives including conservation of energy. With an aim to maintain a balance with the environment and a steady focus on sustainability, your Company has led various initiatives including sourcing of energy from renewable resources. As a part of its efforts to ensure constant focus on sustainability and to support the deployment of this promise, objectives have been articulated for the year that lay out improvement targets that have led to conservation of energy. The Companys policy and priorities concerning Environment, Social and Governance initiatives are articulated as a separate ESG Report, which is being made available on www.chalethotels.com. Various aspects of ESG are also being covered in the Integrated Section of this Annual Report.

Your Company has embarked on its journey towards managing environmental impact and has set its targets therefor. As a part of the Climate Groups EV 100 initiative, which the Company has applied, it is proposed to move to electric vehicles at the hotels as a part of embracing a greener business model by reducing dependence on fossil fuels and to set up charging infrastructure at all our assets for use by guests and employees by the year 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 your Company.

Material Changes and Commitments

There have been no material changes and commitments a_ecting 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.

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 Company lauds the Central Government, State Governments, Municipal Corporations and other government bodies for their initiatives to combat the pandemic and steps in aiding the industry to emerge out of this crisis.

Your Directors place on record their gratitude to the Companys employees at all levels.