eih ltd Management discussions

1. ECONOMIC OVERVIEW

1.1. Global economy

According to the IMF, the world economy recovered strongly in 2021, rising 6.1% from 2020 driven by vaccination drives and opening up of economies. After a strong start to the year, the momentum weakened in the second quarter due to increasing infections from the second wave in emerging and developing markets and supply disruptions. Continued fiscal support in advanced economies and accommodative monetary stance created positive environment for pick up in private investments and consumption. The global trade for goods and services slowly gained momentum as the year progressed and exceeded pre-pandemic levels. However, the inability of supply to keep pace with demand led to shortages of key inputs, leading to an inflationary environment. The world economy weakened towards the end of the year on rising inflation and resurgence of COVID cases in developed economies. The Russia-Ukraine crisis has further aggravated inflationary pressure across the globe.

1.1.1. Outlook

The IMF projects the world economy to grow by 3.6% in 2022, much lower than the 4.9% it was projecting in October 2021, with growth lower than expected across all regions. The downgrade in estimates is primarily due to rising inflation, which reached multi-decade highs in early 2022 as a consequence of the war between Russia and Ukraine. Rising food and fuel prices are impacting low-income countries more severely. Tightened monetary policy has led to increases in interest rates and asset price volatility since the start of 2022. Inflationary pressure will demand aggressive policy responses going forward. Globally, central banks are expected to raise interest rates further and fiscal support is set to generally decline in 2022. Chinas economy could slow more than currently projected due to their strict zero-COVID policy, which will have cascading effect across the globe and setback the recovery, particularly in emerging market and developing economies. While the COVID-19 pandemic is not acute, new variants can cause disruptions to regional and global economies.

1.2. Indian economy

According to the National Statistical Offices Second Advanced Estimates, Indias real GDP grew by 8.9% in FY2022 as compared to a degrowth of 7.3% in FY2021. The economic recovery was derailed by the pandemics second wave in early FY2022, which overwhelmed the nations hospital infrastructure. The Governments swift response along with localised lockdowns and accelerated vaccinations led to sharp V-shaped recovery. Many factors were the driving force in propelling growth in FY2022, including increase in exports, capital expenditure in infrastructure, and continuous rise in industrial activity along with favourable fiscal and monetary policies. Vaccination drives were highly successful, leading to higher consumer confidence. However, recovery was not broad-based as private sector investment and contact-intensive services have still not come back to their levels prior to the COVID impact.

1.2.1. Outlook

According to the IMF, Indias projected economic growth for FY2023 is 8.2%. This growth will be driven by higher capital expenditure, infrastructure development through the new institutional framework, a boost to the manufacturing sector and buoyant exports.

The growth estimates have seen downward revisions due to the ongoing conflict in Ukraine, which will cause inflation to be higher than previously expected. Consequently, growth will be influenced by global headwinds such as elevated commodity prices, global logistics, supply side bottlenecks and rising prices of industrial raw materials. For the first half of the next fiscal year, inflation is projected to be at 5 per cent.

The RBI has embarked on a normalisation of eased monetary policy undertaken since March 2020 to mitigate the distress due to the pandemic. RBI has increased the policy repo rate by 40bps and more such hikes are expected in the current financial year as the RBI will continue with policy normalisation amid elevated inflation. Rates on long term bonds are at elevated levels driven by higher yields on US bonds and higher domestic inflation.

The year 2021 yielded significant returns for stock market investors as improved profitability of companies, increased participation by retail investors, and a series of initial public offerings drove this stock market rally. However, global factors like the US Federal Reserves announcement and interest rate hikes along with the risk from the Russia- Ukraine war are likely to cause volatility in markets. Foreign investors exposure to Indian assets and US dollar movement will also impact the markets direction in the coming months.

2. OVERVIEW OF THE TRAVEL AND HOSPITALITY INDUSTRY

2.1. Global scenario

According to the World Travel & Tourism Council (WTTC), the global Travel & Tourism sector is expected to contribute $8.35 trillion in 2022 and $9.6 trillion in 2023 to the global economy, a return to its pre-pandemic level. In 2019, tourism accounted for a tenth of global GDP and jobs. In 2020, the pandemic led to a 49% or $4.5 trillion decline in travel and tourism due to lockdowns and mobility restrictions, leaving 62 million people jobless.

As the pandemic is no longer acute, the global travel and tourism market is expected to recover and reach prepandemic levels in 2023. As per the WTTC, the continuation of the ongoing vaccine and booster rollout, and easing of restrictions to international travel, could result in 58 million new jobs in 2022, to reach more than 330 million, almost at pre-pandemic levels.

In Asia-Pacific, the hospitality industry will likely be $3.4 trillion in 2023, above the $3.3 trillion size in 2019. Compared with North America and Europe, travel has lagged in the Asia-Pacific region because of strict border restrictions in many countries. In Southeast Asia, travel has restarted as entry and COVID-19 quarantine rules are eased.

Over the long-term, the travel and tourism industry is expected to post an annual average growth rate of 5.8% from 2022 to 2032 versus the 2.7% increase in global GDP, and create 126 million jobs new jobs within the next decade.

2.2. Indian scenario

The rich and varied culture of India makes it a major travel destination for many international tourists. The year 2021 turned out to be a recovery year for the Indian travel and hospitality sector post the 2020 pandemic.

The Tourism and Hospitality industry is one of the largest service industries in India. For the past decade, the tourism sector accounted for about 7% of Indias GDP. In FY2020, the industry accounted for 39 million jobs, which is projected to increase to 53 million jobs by 2027.

While the earlier part of Q4 started to witness an impact due to the Omicron wave, the quarter was the best performing period of the year bolstered by long weekends, festivals and social gatherings. The sector witnessed a doubling of Revenue Per Available Room (RevPAR).

2.2.1. Outlook

The hotel industry in India is expected to reach a value of INR 1.2 trillion by the end of 2023 owing to the high arrival rate of foreign tourists and business delegates. Leading hotel companies are leveraging advance technologies such as artificial intelligence, machine learning, internet of things, near-field communication, mobile payment and data analytics to increase online reservations, improve the return on advertising spend, better understand guest preferences and build stronger customer relationships.

There is significant pent-up demand for tourism in the domestic market due to restrictions imposed over the last two years caused by the pandemic. Also, the diversion of outbound leisure travel to domestic tourism has been positive for the Indian hospitality sector. Therefore, domestic tourism is expected to recover faster than international travel.

The 100% FDI in the hotel and tourism sector will lead to more investments in the country through the automatic route. Announcements around PM Gati Shakti for multi modal transport, 400 new Vande Bharat trains, integrated connectivity between railway stations and PMs Development Initiatives for North-East, etc will have medium to long term growth implications for tourism in India. The Ministry of Tourism has been allocated INR 2,400 crore in the Union Budget which is 18.42% higher than the allocation for FY21- 22. The Swadesh Darshan Scheme and the PRASHAD Scheme are among the major initiatives taken by the government.

The Governments Incredible India campaign, extension of e-tourist visa facility to 171 countries, increasing medical tourism and coastal tourism through promotion of intraregional trade among Indian Ocean Rim countries are expected to drive global tourists to India.

3. INDUSTRY TRENDS POST PANDEMIC

• The increased emphasis on digital channels to establish a distinct online presence is extremely beneficial to business. The epidemic has driven customers to use digital booking mediums after carefully reading online reviews, which eventually influence their booking decision.

• The growing middle class, rising levels of their disposable income, increasing interest among millennials to travel in their home country are a few major reasons that are making the domestic travel industry more profitable.

• In the aftermath of the epidemic, guests top priorities are sanitation, safety, and contactless services. As a response, the industry is embracing technology at a rapid speed in order to keep up with guest changing expectations.

• One of the significant changes brought about by the pandemic is the way people work. With the rise of the hybrid working model, people are experimenting with their work settings by traveling to new locations and working from there.

4. FINANCIAL AND OPERATING PERFORMANCE

The revenue and profitability of the Company was affected due to the outbreak of the second and third waves of the Covid-19 pandemic during the Financial Year. The lockdown imposed by Central and State Governments as well as other countries globally and consequent travel restrictions to avoid the spread of the Covid-19 pandemic had an adverse impact on almost all channels including corporate, leisure, MICE and direct business, all of which were severely impacted. The total revenue earned during the year was mainly due to occupancy driven by the domestic travellers. With Indias very successful vaccination drive that resulted in Covid-19 infection declining, the domestic travel related marketing and sales initiative taken by the Company to boost occupancies resulted in strong improvement in FY 2021-22 compared with the preceding Financial Year. [More information on the impact of COVID-19 on the Companys operations is given in Note No. 58 of the Notes to the Accounts.]

The Company recorded a revenue of INR 9107.58 Million in 2021-22, an increase of 92.29% year-on-year from INR 4,736.42 Million in 2020-21. EBITDA was at INR 298.81 Million, up 112.79% year-on-year from INR (2,336.73) Million. The Company incurred a loss before tax of Rs.1329.36 Million compared to a loss before tax of INR 4,430.50 Million in the previous year. Overall, the net loss for the year was INR 1,182.05 Million compared to the net loss of INR 3,431.24 Million in the previous year. The comprehensive income was INR (1,174.30) Million as against INR (3,400.36) Million in 2020-21. The loss includes exceptional items of INR (141.80) Million in 2021-22 and INR (489.85) Million in 2020-21.

The Company and its hotels have taken various initiatives to protect the health and safety of guests and employees. These initiatives have been implementing and are adhered to in accordance with the World Health Organization (WHO) guidelines. The exhaustive measures that have been introduced at the hotels are available on their websites Oberoi Hotels & Resorts and Trident Hotels.

5. MANAGING RISKS

5.1. Risk charter

The RMC relies on reviews and reports to periodically assess risks while effectively executing business strategy and reviewing key leading indicators. It reviews with management, the Companys risk appetite and strategy relating to key risks, as well as the guidelines, policies and processes for monitoring and mitigating such risks.

Key responsibilities of the RMC

• Annual review and approval of the risk management framework of the Company

• Periodic review of the risk management processes and practices of the Company to ensure that appropriate measures are taken to achieve a prudent balance between risk and reward in both ongoing and new business activities

• Evaluation of significant risk exposures of the Company and assessment of the managements actions to mitigate the exposures in a timely manner

• Reporting to the Board its evaluations, actions and recommendations

5.2. Risk management framework

The risk management framework of the Company includes the guidelines, policies and processes for risk assessment and risk management. The RMC has identified 12 key risks that could potentially impact the business:

(i) Risk of Business Slowdown;

(ii) Risk of Low or Negative Returns;

(iii) Risk of Deterioration of Financial Health;

(iv) Risk of Business Interruption;

(v) Risk of Impact on Environment;

(vi) Risk of Impact on Reputation;

(vii) Safety, Health and Security Risk;

(viii) Cyber Risk;

(ix) Risk of Inadequate Compliance;

(x) Risk of Fraud;

(xi) Risk of Inadequate Growth; and

(xii) Risk of Retention of Talent;

The RMC has also constituted a Risk Management Sub-Committee comprising Mr. Arjun Singh Oberoi as Chairperson and Mr. Vikramjit Singh Oberoi as CoChairperson. Mr. Kallol Kundu, Chief Financial Officer has been nominated as Chief Risk Officer.

The Committee shall closely monitor the risks listed above and report its findings regularly to the Board.

6. THE OBEROI CENTRE OF EXCELLENCE

The Oberoi Centre of Excellence (TOCE) commenced operations on October 1, 2019 with the broad objective of introducing contemporary IT-enabled processes to enhance efficiency, eliminating redundancy, and achieving economies of scale in different processes across the Organization. In its second year of operations, the centre achieved several of the benefits envisaged for the Organization, namely, optimizing manpower in Finance, Procurement and IT functions, and improving workflows, compliances and controls with increased use of technology.

7. STRATEGIC ALLIANCE BETWEEN THE COMPANY AND MANDARIN ORIENTAL HOTEL GROUP

The Company entered into a strategic alliance with Mandarin Oriental Hotel Group for Oberoi Hotels & Resorts without any commercials attached. The alliance is without cost, fee and revenue share. The two groups will collaborate in the areas of marketing, sales, loyalty, food and beverages, human resources, spa and sustainability.

8. BUSINESS CONSOLIDATION AND EXPANSION

Hotels and resorts under planning and development

• Construction of The Oberoi Doha is currently underway. This luxury hotel will consist of 237 rooms and suites. In addition, forty-five service apartments are being built within the development. The hotel is likely to open in the fourth quarter of 2023. The property will be managed by a wholly owned subsidiary of the Company.

• Work on The Oberoi Rajgarh Palace located near Khajuraho, Madhya Pradesh is in progress. The resort will provide luxury accommodation on a 62-acre site next to the Panna forest reserve.

• Land use consent for the Companys 55-acre beach-front site at Goa has been obtained. Further approvals will be sought once planning of the resort has been completed.

• Planning of the Oberoi Hotel as part of a mixed-use development in Bengaluru is in progress

• The Oberoi Wildlife Resort Bandhavgarh is located on a 22-acre site, five kilometers from Bandhavgarh National Park in Madhya Pradesh. The jungle resort will consist of luxury tents, a restaurant and a spa. The construction of the resort is underway and is likely to open in the third quarter of 2023. This resort will be managed by EIH Limited

• An overseas subsidiary of the Company will operate two resorts, i.e. The Oberoi and Trident, on the island of KohTan located five kilometres south-west of Koh Samui, Thailand. The lush green 100-acre site overlooks a two-kilometre pristine beach. The plan incorporates an Oberoi Resort and a Trident Resort with several restaurants, meeting and recreation facilities, spas and wellness centres. Planning of both hotels is in progress.

• The Oberoi Kathmandu is being developed on a greenfield site measuring six acres. The luxury hotel will be near important tourist attractions of the Royal Palace, Thamel and other important business locations. The hotel will incorporate 80 keys on a low-rise garden setting with multiple restaurants, meeting facilities, spa and wellness centre and recreational facilities. The hotel will be managed by a wholly owned subsidiary of the C ompany.

• The Oberoi Wildlife Resort located next to Bardia National Park Nepal will be developed on a greenfield site measuring ~30 acres. The resort will comprise 20 luxury tents, a restaurant, a spa and a wellness centre. The hotel will be managed by a wholly owned subsidiary of the Company.

9. AWARDS

The Oberoi Group ranked the Best Hotel Group in India by Travel + Leisure, India & South Asia Indias Best Awards 2021.

Oberoi Hotels & Resorts was ranked fifth amongst the Top 25 Hotel Brands in the World by Travel + Leisure, US, Worlds Best Awards 2021.

Oberoi Hotels & Resorts won the Editors Choice Award for Best Hygiene Standards, by Travel + Leisure, India & South Asia Indias Best Awards 2020.

**Oberoi Hotels & Resorts was voted the Best Hotel Group for the third consecutive year by Telegraph Travel Awards, UK - 2019, 2018 and 2017.

**Due to the pandemic, The Telegraph Travel Awards did not take place in 2020 and 2021.

HOTEL	AWARD	AWARDED BY
The Oberoi, New Delhi	Top 100 Hotels in the World (Ranked 10th)	Travel + Leisure, USA Worlds Best Awards 2021
	Favourite Indian Business Hotel	Conde Nast Traveller, India Readers Travel Awards 2021
	Runner Up The 2020 Gold List	Conde Nast Traveler, USA and UK
The Oberoi, Mumbai	Top 25 Hotels - India (Ranked 3rd)	TripAdvisor 2022 Travelers Choice Awards
	Top 15 Asia City Hotels (Ranked 1st)	Travel + Leisure, USA Worlds Best Awards 2020
	Best Leisure Hotel	Travel + Leisure, India & South Asia Worlds Best Awards 2020
The Oberoi, Gurgaon	Top 25 Hotels - India (Ranked 1st)	TripAdvisor 2022 Travelers Choice Awards
	Top 25 Luxury Hotels - India (Ranked 2nd)	TripAdvisor 2022 Travelers Choice Awards
The Oberoi Beach Resort, Al Zorah	Best Leisure Hotel in UAE	Business Travel Awards 2021 and 2022
	Best Staycations Experience in the	BBC Good food Middle East Magazine Award 2021
	Northern Emirates
	Worlds Leading Beach Villa Resort	World Travel Awards 2021
	Middle Easts Leading Luxury Beach Resort	World Travel Awards 2021
	Ajmans Leading Hotel Suite:	World Travel Awards 2021
	Kohinoor Suite
	Ajmans Leading Luxury Resort	World Travel Awards 2021
The Oberoi Amarvilas, Agra	Gold List 2022	Conde Nast Traveller, India
The Oberoi Vanyavilas, Wildlife Resort, Ranthambhore	Favourite Safari Lodge in India	Conde Nast Traveller, India Readers Travel Awards 2021
	Top 15 Resort Hotels in Asia (Ranked 4th)	Travel + Leisure, USA Worlds Best Awards 2021
	Top 5 India Hotel Resorts (Ranked 3rd)	Travel + Leisure, USA Worlds Best Awards 2021
The Oberoi Udaivilas, Udaipur	Top 5 India Hotel Resorts (Ranked 1st)	Travel + Leisure, USA Worlds Best Awards 2021
	Top 15 Resort Hotels in Asia (Ranked 2nd)	Travel + Leisure, USA Worlds Best Awards 2021
	Top 100 Hotels in the World (Ranked 8th)	Travel + Leisure, USA Worlds Best Awards 2021
The Oberoi Sukhvilas Spa Resort,	Editors Choice Award for Best Wellness Retreat in India	Travel + Leisure, India & South Asia Indias Best Awards 2021
New Chandigarh	Best Destination Spa for International Travellers	Travel + Leisure, India & South Asia Indias Best Awards 2021
The Oberoi Cecil, Shimla	Top 25 Hotels - India (Ranked 8th)	TripAdvisor 2022 Travellers Choice Awards
The Oberoi Beach Resort, Al Zorah	Top 25 Hotels - Middle East (Ranked 2nd)	TripAdvisor 2022 Travellers Choice Awards
	Top 25 Luxury Hotels - Middle East (Ranked 2nd)	TripAdvisor 2022 Travellers Choice Awards
The Oberoi Beach Resort Mauritius	Top 25 Hotels - Africa (Ranked 2nd)	TripAdvisor 2022 Traveller Choice Awards
The Oberoi, Marrakech	Favourite New Hotels Around The World	Conde Nast Traveller, India, Hot List 2021
	Best New Hotel openings in Major Cities	Honoree in the Departures, USA Legend Awards 2020
	Best New Hotel openings in the World	Travel + Leisure, US, IT List 2020
	Best Hotel Exterior (Africa & West Asia)	Prix Versailles - The World Architecture and Design Award 2020
	Best New Hotel openings in the World	Conde Nast Traveller, USA, Hot List 2020
	Best New Hotel openings in the World	Conde Nast Traveller, UK, Hot List 2020
	Best New Hotel opening in the World	Conde Nast Traveller, Middle East, Hot List 2020
	Best New Hotel opening in the World	Departures, USA Legend Awards 2020
	The Most Over-the-Top Luxurious Suites of the Year	Departures, USA Legend Awards 2020
	The Most Stunning Hotel Pools of the Year	Departures, USA Legend Awards 2020
	Best Hotels for landscaping & Outdoor Spaces	AHEAD Middle East and Africa 2020
	Best Resort Hotel	AHEAD Middle East and Africa 2020

10. HUMAN RESOURCES

The Oberoi Group believes that people are our greatest asset. We also believe that engaged teams deliver the best results. We, therefore, work towards creating highly engaged teams and empower them to accomplish new milestones in guest delight. These teams are constantly guided by the Companys values illustrated in The Oberoi Dharma.

We continuously review and realign our people practices and policies to ensure that our policies not only support our teams but also act as a catalyst in achieving Organizational objectives.

Some of these practices are listed below:

1. Diversity and Inclusion - One of our key focus areas in the People Strategy is to maintain Gender Diversity. Our endeavor is to provide the best working environment and be an employer of choice for women. Inspite of a difficult year and a hiring freeze, we were able to maintain the gender diversity in our Hotels in FY 202122.

2. Performance Management - Our focus on Performance Management continued with adherence to the bell curve across all group Hotels and Business Units. Apart from review of Balance Scorecards for each level, a major grade restructuring exercise was completed for all Hotels/ Business units.

3. HR capability building - One of the important initiative this year was to enhance capabilities of our HR Leaders. Monthly online workshops were conducted covering all statutory acts which will continue in FY 2022-23.

4. Employee well-being - We believe in ensuring safety, security and health for our guests as well as our employees. All employees of the company were administered two doses of the Covid vaccine including third party vendor staff. As on date, 100% of our employees are vaccinated with a double dose of the Covid vaccine. Upon eligibility the employees including third party vendor staff are being administered the booster dose.

5. Employee Welfare - The National Pension Scheme was launched for all executives to provide social security post retirement. The scheme was initiated by the Government of India and is regulated by PFRDA.

6. Industrial Relations remained stable throughout the year.

Learning & Development

The Oberoi Centre of Learning and Development (OCLD) stayed committed to the philosophy of training and developing people with exceptional hospitality related competencies.

1. OCLD continued to be focused on its core Management Training Programmes. The pedagogy continues to evolve with continued focus on student centred learning through case studies, simulations and live projects.

2. The three-year undergraduate Systematic Training and Education Programme (STEP) also continued at hotels despite the pandemic.

3. The Company-wide Learning and Development initiatives focussed on developing competencies on guest delight, leadership, wellness and productivity.

• The overall training man-days for executives was 6,116 with an average of 7.52 man-days per executive.

• The overall training man-days for staff was 1,07,787 with an average of 20.74 man-days per staff member.

Some of the key interventions included:

• Sessions by Mr. David Nicholls, Global Director of Food and Beverage, Mandarin Oriental Group and Mr. Vijay Thacker - Partner and CEO of Crowe Advisory India and Managing Director of Horwath HTL India.

• OCLD also initiated the O&MO Peer Programme - a collaboration with Mandarin Oriental where executives with similar levels and interests are partnered for a period of 3 months.

• Long term development programmes like the Executive Development Programme and Supervisory Development Programme were revived after a break due to the Covid 19 pandemic.

• A wellness series was run for all hotel colleagues which focussed on meditation, yoga, nutrition and managing stress.

• There was continued focus to identify, nurture and retain our Top Talent. High potential executives had Individual Development Plans.

As on 31st March 2022, the number of people employed by the group was 9,105.

11. INTERNAL CONTROL MECHANISM AND ADEQUACY

The Organisations commitment to the internal control mechanism flows from The Oberoi Dharma, which states that "We, as members of The Oberoi Group, are committed to a conduct which is of the highest standards - ethical, intellectual, financial and moral". Adequate internal control processes have been laid down at the entity level as well as at the process level to provide an assurance on the orderly and efficient conduct of operations, safeguarding of assets, prevention and detection of fraud and errors, accurate and timely completion of accounting records, timely preparation of reliable financial information and compliance towards laws and regulations.

Appropriate checks and balances have been built in the internal control mechanisms to reflect its necessary concomitance to the principle of governance without affecting the ease of operations and management.

11.1. Internal financial controls (IFC)

The Directors have devised a framework for IFC to be followed by the Company that conforms to the requirements of Section 134(5) (e) of the Companies Act, 2013 and incorporates measures that ensure the adequacy and continuing operating effectiveness of such IFC. Furthermore, in accordance with Section 149(8), read with the Code for Independent Directors laid down under Schedule IV, Clause II (4) of the Companies Act, 2013, the Independent Directors have satisfied themselves on the integrity of financial information and ensured that financial controls and systems of risk management are robust and defensible.

To enable the Directors to meet these responsibilities, the Board has devised the necessary systems, frameworks and mechanisms within the Company and has empowered the Audit Committee to periodically review and confirm that the mechanism remains effective and fit for purpose.

In line with global best practices applicable to organisations of a similar size, nature and complexity, the Companys internal control framework has been designed through structured control risk assessments by way of Standard Operating Procedures (SOPs), Risk and Control Matrices (RACM), Information Technology (IT) policies, ERP-based information systems including MIS and automated system controls inbuilt within the ERP and other IT systems. Periodic testing of the RACM is conducted by the Internal Audit team as part of management testing, which is automated through data analytics tool.

With increased instances of information security breaches and data leakages being reported across the globe, the Company has a policy of reviewing its IT security infrastructure. Commensurate actions are taken to scale up infrastructure wherever required.

As part of continuous audit monitoring, a data analytics tool has been implemented by the Internal Audit team to observe the deviations from the standard. The exceptions are then reported back to the functional/unit heads with the responsibility of rectifying these exceptions within a definitive time frame.

The Internal Audit team has been entrusted with the responsibility of devising adequate monitoring mechanisms and procedures to ensure prevention and detection of failures and faults in processes and reporting their observations along with mitigating actions within defined target dates to the Audit Committee of the Board of Directors every quarter.

11.2. Internal audit mechanism and review systems

The Internal Audit Department is headed by the Chief Internal Auditor and comprises a strong internal workforce of ERP-trained Chartered Accountants with specialised skillsets in the areas of information security, financial, business, legal, statutory, projects and process audits. The Internal Audit team regularly works with reputed co-sourced firms for audits and specialised tasks undertaken by the internal audit team. This ensures that industry best practices are followed.

The department works on matured Computer Assisted Audit Techniques (CAATs) and deploys online monitoring mechanisms across IT systems of all functions and units of the Company. Focus areas for specific audits are determined based on structured assessment of risk and a yearly internal audit plan approved by the Audit Committee. All reported observations of audits are maintained in an online databases for comprehensiveness, ease of accessibility and structured follow-ups.

Periodically, IT security audits are conducted by the joint teams of Internal Audit and the IT department. Audits for vulnerability assessment and penetration testing are also done by specialised external agencies.

The Company has a structured team of senior executives who meet periodically under the aegis of the Managing Director and Chief Executive Officer to address and resolve pending audit issues. The Chief Internal Auditor is responsible for and presents the findings to the Audit Committee every quarter, in the order of the impact of risks involved and probabilities of their occurrence, and the pendency of issues in various units, together with the periodicity and status thereof.

The Audit Committee takes cognisance of the presentation and provides its direction and guidance for further action. Besides, the Chief Internal Auditor has also been entrusted with the responsibility of reporting to the Audit Committee on the adequacy of IFC in accordance with Section 177 (4) (vii) of the Companies Act, 2013.

During the Financial Year 2021-22, separate presentations on internal audit findings on four occasions and IFC controls on one occasion were shared with the Audit Committee in its meetings. The Audit Committee was satisfied with the adequacy of the internal control systems and procedures of the Company and the performance of the Internal Audit Department in respect of monitoring of such systems.