Chalet Hotels Ltd Directors Report.

Dear Members,

Chalet Hotels Limited

The Board of Directors present your Companys Thirty Seventh Annual Report along with the Audited Financial Statements for the Financial Year ended March 31,2022.

Financial Results

Your Companys financial performance for the Financial Year ended March 31,2022 is summarized below:

Rs in million

Particulars

Standalone

Consolidated

For the year ended

For the year ended

March 31,2022 March 31, 2021 March 31,2022 March 31, 2021
Revenue from Operations 4,807.97 2,755.06 5,078.07 2,855.76
Other Income 206.74 203.16 219.32 219.44
Total Income 5,014.71 2,958.22 5,297.39 3,075.20
Total Expenses 3,836.10 2,614.58 4,093.30 2,785.16
EBITDA from Continuing Operations 1,178.61 343.64 1,204.09 290.04
(Loss) from Discontinued Operations (65.37) (36.76) (65.37) (36.76)
EBITDA 1,113.24 306.88 1,138.72 253.28
Depreciation and Amortization Expenses 1,090.92 1,076.34 1,184.23 1,174.62
Finance Costs 1,399.54 1,450.08 1,444.13 1519.78
(Loss) before Exceptional items and Tax (1,377.22) (2,219.54) (1,489.64) (2,441.12)
Exceptional Items (44.58) (41.71) (44.58) (41.71)
(Loss) before tax (1,421.80) (2,261.25) (1,534.22) (2,482.83)
Tax expense/(credit) (720.35) (1,093.21) (719.53) (1,091.55)
(Loss) for the year (701.45) (1,168.04) (814.69) (1,391.28)
Total Comprehensive (Expense) attributable to Owners of the Company (701.16) (1,168.47) (813.19) (1,391.00)
Earnings Per Share (Basic & Diluted) (Rs) (3.42) (5.70) (3.98) (6.78)

The Company, in continuation of its strategy to stay resolute in the face of unforeseen changes, implemented various strategic and tactical changes during the year under review to bring about a turnaround and march ahead. All this was done while staying focussed on Companys sustainable development goals, whereby, we aim at making a positive impact on the environment and thereby contributing to our people and our planet.

During the year under review, the Company (including its subsidiary):

- completed the brand upgrade of Renaissance to The Westin. The Hotel is flagged as The Westin Mumbai Powai Lake from March 01, 2022. The lobby, Indian restaurant, oriental tapas bar, deli, gym, spa and 150 rooms have been renovated. Renovation of the balance 150 rooms in Tower 2 and banquets to commence from June 2022.

- re-strategized asset mix and repurposed retail assets in Mumbai (The Orb) and Bengaluru (Inorbit Mall) to commercial office space. Conversion of The Orb is complete and ~50% of the area has been let out as at March 31, 2022. Conversion of the Inorbit Mall at Bengaluru is underway and expected to be completed by Q3 FY 2022-23.

- realigned the Companys strategy with changing market dynamics and decided to change the use in respect of the land from the proposed 150 room Hotel at The Westin Complex, Powai to a proposed ~0.75 million sq. ft. of Commercial office space.

- started work on 88 unfinished rooms at Novotel Pune (Belaire Hotels Private Limited). These rooms are expected to be operational by Q3 FY 2022-23.

- work on the Commercial Projects at Powai, Mumbai and Whitefield, Bengaluru are in full swing, which are expected to be completed by Q4 FY 2022-23 and Q2 FY 2022-23 respectively.

- arrived at a settlement with Hindustan Aeronautics Limited (HAL) and obtained their NOC, to get necessary regulatory approvals and recommence construction at Koramangala, Bengaluru in due course.

Work at The Westin Hyderabad HITEC City has been on hold since March 2020. Keeping in mind the improved market dynamics, deliberation to start work is ongoing.

The sentiments remained volatile through the year in tandem with the pandemic impacting the Hospitality business. However, the year closed on a positive note with business bouncing back by the second half of February 2022.

Rental & Annuity Revenue of Rs 1,050 million contributed 20% to the Companys Total Revenue as on March 31,2022, as against Rs 931 million, which was 33% of the Companys Total Revenue in the previous year.

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, though the hospitality operations of your Company remained affected by the pandemic, there was an improvement in comparison with the previous financial year with revenue growing by 103% to Rs 4,100 million. Your Company has managed its cash flows effectively through stable revenues from the Rental & Annuity Segment and tight control on costs. 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.

There has been no change in the nature of business of the Company.

The Retail & Commercial segment has been renamed as Rental & Annuity segment, in line with the various strategic initiatives undertaken during the year under review.

Capital Structure Authorized Share Capital

During the year under review, there was no change in the Authorized Share Capital of the Company. The Authorized Share Capital of your Company is Rs 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 Rs 2,050,238,640/-.

Paid-up Preference Share Capital

During the year under review, further calls were made in respect of the Series B Zero Coupon Non-Cumulative, NonConvertible, Redeemable Preference Shares (NCRPS) thereby resulting in an increase in the Paid-up Preference Share Capital of the Company from Rs 1,410,000,000 to Rs 1,910,000,000/-. Further, the Company has made the final call of Rs 250,000,000 on the Series B NCRPS, post the end of the Financial Year, thereby making both, Series A and Series B NCRPS, fully paid up and increasing the paid-up Preference Share Capital of the Company to Rs 2,160,000,000/-. The amounts raised have been utilized in line with the Subscription Agreement referred to hereinbelow.

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 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). 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.

Borrowings

During the year under review, the Company availed of additional borrowing facilities, inter-alia, for its Projects and meeting working capital requirements. At the end of the year, the Companys borrowing on a standalone basis stood at Rs 22,963.40 million and at Rs 23,593.15 million on a consolidated basis (both excluding Preference Share Capital of Rs 1,746.67 million) as at March 31,2022, as compared to Rs 18,505.38 million on a standalone basis and Rs 19,388.62 million on consolidated basis (both excluding Preference Share Capital of Rs 1,194.61 million) as at March 31,2021.

The foreign currency borrowings as on March 31, 2022 along with those of the subsidiary company were lower at USD 15.11 million as compared to USD 20.80 million as at March 31,2021.

Subsequent to the year end, the Company has repaid the foreign currency borrowing amounting to USD 7.32 million on April 26, 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 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% NonCumulative, 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 proposed to be 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 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.

Development Pipeline Hospitality

Your Company will continue to evaluate the demand dynamics in order to assess its decision on recommencement of the Hotel Project, The Westin Hyderabad HITEC City and proposed new hotel at Airoli, Navi Mumbai. The work on expansion of the Novotel in Pune with additional 88 rooms has commenced and expected to be completed by Q3 FY 2022-23.

Rental & Annuity

The Company has decided to repurpose the land use of proposed 150 room Hotel at The Westin Complex, Powai to a Commercial office space with potential leasable area of ~0.75 million sq. ft., subject to receipt of regulatory approvals. Consequently, the potential development pipeline now assumes the construction of leasable area of nearly 2.2 million sq. ft. across the two locations, namely Powai at Mumbai and Whitefield at Bengaluru. It is to be noted that the development plan underway is for 1.4 million sq. ft. Also, considering the retail assets of the Company at Sahar, Mumbai and re-purposing of some assets at Whitefield, Bengaluru, the total leasable area including the office building already in operation will be ~3 million sq. ft.

Residential Project - Koramangala, Bengaluru

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 Aeronautics 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 resurvey within a time bound manner and thereafter, based on the re-survey, to proceed further in accordance with law to file an appeal challenging the said Order. Both, HAL and the Company had filed an appeal challenging certain parts of the Order.

The Company and HAL after discussions, signed terms for an amicable settlement of all the disputes between the parties on October 22, 2021, as per which the Company would undertake demolition of already constructed structures above 932 meters AMSL. Further, the Honble Karnataka High Court on October 26, 2021, disposed of the Writ Appeals in terms of the settlement. The Company has executed Supplemental MOUs with all existing flat owners, with revised terms, inter-alia, consenting to the revised development plans, subject to applicable regulatory approvals. Further, flat owners above 10th floor have consented to relocate to lower floors.

Demolition work of the area above 10th floor for all the 9 buildings has been completed in April 2022, and the NOC from HAL has been received. Process for obtaining all other approvals are underway.

The Company shall commence work on receipt of all necessary approvals.

Deposits

Your Company has neither accepted nor renewed any amount falling within the purview of provisions of Section 73 of the Companies Act, 2013 (the Act) read with the Companies (Acceptance of Deposit) 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

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, 14 and 55 of the Standalone Financial Statements.

Foreign Exchange Earnings and Outgo

During the year under review, your Company and its subsidiary, earned foreign exchange of Rs 380.18 million and Rs 11.46 million respectively, as compared to Rs 166.27 million and Rs 3.62 million respectively in the previous year.

The total foreign exchange outgo of your Company and its subsidiary during the year under review was Rs 525.82 million and Rs 36.58 million, respectively, as compared to Rs 377.33 million and Rs 57.97 million, respectively, in the previous year.

Subsidiaries, Associates and Joint Ventures

The Company has three subsidiaries and two associates as on March 31, 2022. 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. BHPL is the owner of Novotel Pune Nagar Road Hotel. During the year under review, BHPL reported a Total Income of Rs 278.70 million and Net Loss (after tax) of Rs (111.02) million. SHPL had insignificant or no operations and reported a Total Income of Rs 4.04 million and Net Profit (after tax) of Rs 2.72 million 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 01,2020. 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. As on the date of this Report, the final order of the NCLT is awaited.

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

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 had for securing the supply of renewable energy acquired 26.1% 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 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 8 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 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 Annual 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 and 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 09, 2021, which was approved by the Members at the Annual General Meeting (AGM) held on August 12, 2021.

In accordance with the Act and the Articles of Association of the Company, Mr. Sanjay Sethi (DIN: 00641243) 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. Sanjay Sethi is being placed for approval of the Members at the ensuing AGM. The information pertaining to the Director being re-appointed as required pursuant to the Listing Regulations and Secretarial Standard-2 forms part of the Notice convening the ensuing AGM.

Mr. Milind Wadekar, VP - Finance & Tax and the Interim Chief Financial Officer of the Company was appointed as the Chief Financial Officer of the Company effective August 10, 2021. Mr. Rajneesh Malhotra, Chief Operating Officer was designated as a Key Managerial Personnel w.e.f. October 28, 2021.

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.

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 Annual Return of your Company in Form MGT-7 for the Financial Year 2021-22, is hosted on the website of your Company at www.chalethotels.com/annual-reports/.

Number of Board Meetings

During the Financial Year 2021-22, 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 Companys internal financial controls were reasonable and adequate for the Financial Year 2021-22.

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 31,2022, 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 31,2022;

(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, 2022 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 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 2022-23. 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.

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.

Auditors and Auditors Report 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 Audit Committee and the Board 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 for a second term of five years

i.e. from conclusion of the 37th AGM till the conclusion of the 42nd AGM. The necessary resolution seeking your approval for their appointment as Statutory Auditors is included in the Notice of the ensuing AGM along with other necessary disclosures required under the Act and the Listing Regulations.

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 202122. However, the Statutory Auditor has drawn attention i.e. Emphasis of Matter with regard to Note 40(c) of the Standalone Financial Statements, in their report, details of which are as follows:

"Emphasis of Matter

We draw attention to Note 40(c) of the standalone financial statements, in respect of the entire building comprizing 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 respect of the above in the standalone financial statements for the year ended 31 March 2022. The balance of prepaid lease rental in relation to such leasehold land as of 31 March 2022 is Rs 49.74 million (31 March 2021: Rs 50.93 million) and carrying value of property, plant and equipment as at 31 March 2022 is Rs 372.12 million (31 March 2021: Rs 400.77 million).

Our opinion is not modified in respect of the above matter."

The Auditors have clarified that their opinion is not qualified in respect of the above matters.

Detailed explanation in respect of the matter has been provided under Note No. 40(c) of the 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. BNP & Associates, Company Secretaries in Practice (Firm Registration No. P2014MH037400) to undertake Secretarial Audit for Financial Year 2021-22. 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 Mr. Chirag Shah, Proprietor of 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 2021-22, at the remuneration approved the Members at the previous AGM.

During the year under review, no material fraud had been reported under Section 143(12) of the Act 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 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 10, 2022. 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 Directors to whom online self-assessment proficiency test was applicable, have 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 (CSR) Committee

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

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 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.

Audit Committee

The Committee comprises of two Independent Directors

i.e. Mr. Joseph Conrad DSouza (Chairperson), 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.

Further, on October 21, 2021, the Board of Directors had formed a separate Risk Management Committee and renamed the Audit and Risk Management Committee to Audit Committee.

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 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 two tranches of the ESOPs granted had already vested whereas the third and final tranche has vested during the year under review. The first tranche that was unexercised has since lapsed during the year under review. No options have been exercised during the year under review or till date. The Board of Directors of the Company had at its meeting held on May 10, 2022, approved variation in the terms of the Scheme and recommended extension of the exercise period from two years to four years, based on the recommendation of the CNR Committee, subject to approval of the Members of the Company.

In terms of the provisions of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, 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 M/s. BNP & Associates, Secretarial 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.

Further, the Board of Directors of the Company at the said meeting also approved a new ESOP Scheme, viz. CHL Employee Stock Option Plan 2022 envisaging a grant of 1,217,831 Options exercisable into an equal number of Equity Shares of the Company. The same was based on the recommendation of the CNR Committee and is subject to approval of the 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/policies/.

The transactions / contracts / arrangements entered into by the Company with related party(ies) as defined under the provisions of Section 2(76) of the Companies Act, 2013, during the financial year under review were in 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 2021-22 and hence does not form part of this Report.

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

Your Company had a combined Audit and Risk Management Committee looking after the functions of both the Committees and has constituted a separate Risk Management Committee with effect from October 21,2021 as required under the Listing Regulations and approved its Terms of Reference. 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, minimize adverse impact on business objective and enhance your Companys 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. 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 53 of the Integrated Reporting section of the Annual Report.

Vigil Mechanism Policy and Whistle Blower Policy

Your Company has, in accordance with Section 177 of the Act, formulated 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 and 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 victimization of Directors and employees who avail of the mechanism and also have 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 Companys operations in future

The Honble Karnataka High Court on October 26, 2021, disposed of the Writ Appeals in respect of the residential project at Bengaluru, upon amicable settlement of all the disputes with HAL.

Please refer to the section Residential Project - Koramangala, Bengaluru in this Report, for more details.

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 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. 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 certified by the Great Place to Work? Institute for the third 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 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 Companys value creation model. The Report also touches upon aspects such as organizations 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 Companys performance vis-a-vis these.

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. Your Company has become the first Hospitality Company, globally, to join Climate Groups RE100, EP100 and EV100 initiatives linked to renewable electricity, energy efficiency and electric mobility respectively. Under these initiatives, Chalet has made the following commitments:

• RE100 (Renewable Electricity): All properties under the Companys 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 and all properties will be equipped with EV Charging points accessible to both employees and visitors.

Various aspects of ESG are being covered in the Integrated Section of this Annual Report.

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

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.

- Revision in financial statements as provided under Section 139 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.

For and on behalf of the Board of Directors of Chalet Hotels Limited

Sanjay Sethi Joseph Conrad DSouza
Place: Mumbai Managing Director and CEO Independent Director
Date: May 10, 2022 DIN:00641243 DIN:00010576