3.12 Provisions, Contingent Liabilities and Contingent Assets:
Provision is recognized when the Company has a present obligation (legal or constructive) as a result of past events and it is probable that the outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made.
A disclosure for contingent liability is made when there is a possible obligation, that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision/ disclosure is made. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
Contingent assets are not recognized in the financial statements. Provisions and contingencies are reviewed at each balance sheet date and adjusted to reflect the correct management estimates.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. Commitments include the amount of purchase order (net of advances) issued to parties for completion of assets. Provisions, contingent liabilities, contingent assets and commitments are renewed at each balance sheet date.
3.13 Cash and Cash Equivalents
Cash and cash equivalent comprise cash on hand and demand deposits with banks which are short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
3.14 Leases
The Company as a lessee
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
As a lessee, the Company determines the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to Infosys's operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.
Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The ROU assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right-of-use-assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right-of-use asset if the Company changes its assessment to whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The Company as a lessor
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on a straight-line basis over the term of the relevant lease.
3.15 Exceptional items
Certain occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities of the Company is such that its disclosure improves the understanding of the performance of the Company, such income or expense is classified as an exceptional item and accordingly, disclosed in the notes accompanying to the financial statements.
Notes
(i) As a fallout of the COVID-19 in India in April 2020, the RBI had issued Resolution Framework for One Time Restructuring (“OTR”). In accordance to the same, the financial institution lenders (5 No.s) entered into a Inter-Creditor Agreement on 23rd December, 2020 invoking the resolution process. As per the Guidelines, once the resolution is invoked, it needs to be implemented within 6 months, i.e., by June 22, 2021. The OTR is for obtaining extension in repayment of principal, reduction in interest rates and conversion of accrued interest into Funded Interest Term Loans (“FITL”). Summary of Revised Interest Rates & Repayment terms are summarized below.
(ii) The Company has been unable to repay Installments due till March 31,2024 as per OTR Sanction letter issued by the respective banks amounting to Rs. 21,660.03 Lakhs (in aggregate for all secured lenders taken together) and interest payment amounting to Rs. 19,136.04 Lakhs (in aggregate for all secured lenders taken together). The delay has been due to non-receipt of NOC for such sale from the lender banks despite several reminders.
iii) During FY 2022-23 YBL assigned all credit facilities to JC Flower Assets Reconstruction Pvt. Ltd. pursuant to assignment agreement dated December 16, 2022. Other lender also issued loan recall notices & initiated recovery action under SARFAESI Act, 2002. Company has argued the said assignment by YBL & recovery actions of other lenders are inconsistent with Interim order passed by the Hon'able Delhi High Court vide order dated 24/02/2022. Hon'able Delhi High Court directed all lender to comply with the order dated 24/02/2022 & stay all recovery actions.
As the future outcome is uncertain, in line with the Inter Creditor Agreement as stated above, the company has accounted all Credit
Facilities from lenders as per OTR sanctioned letter issued by them.
18 - NON - CURRENT FINANCIAL LIABILITIES - BORROWINGS ...contd.
All the Above mentioned Loans (Both Term Loans & FITLs) are secured by:- First pari passu charge of land & building of Hotel Hyatt Regency Delhi
- First pari passu charge of unsold area of New Tower Block A in Hyatt Regency Delhi (1st to 6th Floor except 3000 sq. ft at 6th Floor) & Receivable from the sale/lease.
- First pari passu charge on movable fixed assets (Excluding vehicles and power saving equipment), first pari passu charge on current assets.
- Personal guarantee of Mr. Shiv Kumar Jatia (Resigned from Chairman & Managing Director w.e.f 21st October, 2021) & Chairman & Managing Director (Mr. Amritesh Jatia)
- Pledge of shareholding of Mr. Shiv Kumar Jatia (Resigned from Chairman & Managing Director w.e.f 21st October, 2021), entities controlled by him, Asian Holding Private Limited & Other group Companies (total amounting to 7.29%) in the Company Invoked during FY 2021-22 by Yes Bank Limited.
- First pari passu Pledge of shares representing Company's investment in foreign subsidiary company.
- Charge over two power generation units of 3MW (including its Cashflows) situated at Maharashtra.
Notes:-
i) Company has been unable to repay installments due till March 31, 2024 amounting to INR 3009.97 Lakhs (principal) and INR 3858.21 Lakhs (Interest) as per OTR Sanction letter issued by the bank on account of inability to monetize CRE Assets located in hotel premises.
ii) Yes Bank Limited has issued ('YBL') “Loan Recall- Cum- Guarantee Invocation Notice” dated 17th February, 2022 & demanded that the Company should repay entire Term loan, Interest Funded Term Loans & Overdraft facilities. In addition, the Bank also invoked the Fixed Deposits provided by Asian Holdings Private Limited (Rs. 500 Lakhs) and has exercised pledge on shareholding of Mr. Shiv Kumar Jatia, entities controlled by him, Asian Holding Private Limited & Other group Companies (total amounting to 7.29%) in the Company.
iii) The Company has challenged this action in Delhi High Court & that the Hon'ble High Court has granted stay on “Loan Recall-Cum- Guarantee Invocation Notice” vide Order Dated 24/02/2022. As per Clause 6.2 of the Inter Creditor Agreement signed between the lenders dated 23rd December, 2020, the Resolution Plan, that is approved by the Majority Lenders, shall be final and binding on all the Lenders (each Lender agrees and undertakes to be bound by the approved Resolution Plan and to the resolution process and its consequent implementation that has been approved by the Majority Lenders). In accordance with this Agreement and the August 6, 2020 Framework, the Lenders have agreed that, except as provided in Clause 11.4, they shall not initiate any legal action or proceedings (including proceedings under IBC) against the Borrower or any other Person that may jeopardise the successful implementation of the Resolution Plan in accordance with the terms of such Resolution Plan.
(a) Yes Bank Limited
- Overdraft facilities (carried interest @ 9.85 % per annum)
- Yes Bank Limited -FITL I OD (carried interest @ 10.55 % per annum) - Bullet repayment on March, 2023 Both facilities are secured by :-
- First pari passu charge of land & building of Hotel Hyatt Regency Delhi
- First pari passu charge of unsold area of New Tower Block A in Hyatt Regency Delhi (1st to 6th Floor except 3000 sq ft at 6th Floor) & Receivable from the sale/lease.
- First pari passu charge on movable fixed assets (Excluding vehicles and power saving equipment), first pari passu charge on current assets
- Personal guarantee of Mr. Shiv Kumar Jatia (Resigned from Chairman & Managing Director w.e.f 21st October, 2021) & Chairman & Managing Director (Mr. Amritesh Jatia)
- Pledge of shareholding of Mr. Shiv Kumar Jatia, entities controlled by him, Asian Holding Private Limited & Other group Companies (total amounting to 7.2%) in the Company.
- First pari passu Pledge of shares representing Company's investment in foreign subsidiary company.
- Charge over two power generation units of 3MW (including its Cashflows) situated at Maharashtra.
- Presently the OD is overdrawn by Rs. 1294.22 Lakhs & out of order.
- Refer Notes under Note 18 above
35. DISCLOSURES AS REQUIRED BY INDIAN ACCOUNTING STANDARD (IND AS) 19 EMPLOYEE BENEFITS
The Company has classified the various benefits provided to employees as under:-
(a) Defined contribution plans -Provident fund
The Company has recognized the following amounts in the statement of profit and loss:
Employers' contribution to provident fund :- Current Year Rs. 204.96 Lakhs (Previous Year Rs. 194.41 Lakhs)
(b) Defined benefit plans
- Gratuity
- Compensated absences - Earned leave
In accordance with Indian Accounting Standard 19, actuarial valuation was done in respect of the aforesaid defined benefit plans based on the following assumptions-Economic Assumptions
The discount rate and salary increases assumed are the key financial assumptions and should be considered together; it is the difference or 'gap' between these rates which is more important than the individual rates in isolation.
Discount Rate
The discounting rate is based on the gross redemption yield on medium to long term risk free investments. The estimated term of the benefits/obligations works out to zero years. For the current valuation a discount rate of 7.22% p.a. (Previous Year 7.36% p.a.) compound has been used.
Salary Escalation Rate
The salary escalation rate usually consists of at least three components, viz. regular increments, price inflation and promotional increases. In addition to this any commitments by the management regarding future salary increases and the Company's philosophy towards employee remuneration are also to be taken into account. Again a long-term view as to trend in salary increase rates has to be taken rather than be guided by the escalation rates experienced in the immediate past, if they have been influenced by unusual factors.
36. CORPORATE SOCIAL RESPONSIBILITY
Pursuant to the provisions of section 135(5) of the Companies Act, 2013 (the Act), the Company has formed its Corporate Social Responsibility (CSR) Committee. As per the relevant provisions of the Act read with Rule 2(1)(f) of the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company is required to spend at least 2% of the average net profits determined under section 198 of the Companies Act 2013 during the immediately three financial years. However, due to inadequacy of profits as per Section 198 of the Companies Act, 2013, the company is not required to spend any amount on CSR activities for Financial Year 2023-24.
Gross amount required to be spent by the Company during the year: Rs. NIL (Previous year - Rs. NIL)
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
1. Fair values of cash and short term deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans from banks and other financial institutions approximate their carrying amounts largely due to short-term maturities of these instruments.
2. Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Based on the evaluation, allowances are taken to account for the expected losses of these receivables.
The company uses the following hierarchy for determining and disclosing the fair values of financial instruments by valuation technique:
Level 1 : Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2 : Other techniques for which all inputs which have a significant effects on the recorded fair value are observable, either directly or indirectly.
Level 3 : Techniques which use inputs that have a significant effects on the recorded fair value that are not based on observable market data.
The Company's financial risk management is an integral part of how to plan and execute its business strategies. The company's financial risk management policy is set by the Managing Board.
Market risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and loan borrowings.
The Company manages market risk through a treasury department, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommends risk management objectives and policies, which are approved by Senior Management and the Audit Committee. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies, and ensuring compliance with market risk limits and policies.
Interest rate risk
Interest rate risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. In order to optimize the company's position with regards to the interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of fixed rate and floating rate financial instruments in it total portfolio.
The company is not exposed to significant interest rate risk as at the specified reporting date.
Refer Note 18 and Note 21 for interest rate profile of the Company's interest-bearing financial instrument at the reporting date. Foreign currency risk
The Company operates locally, however, the nature of its operations requires it to transact in in several currencies and consequently the Company is exposed to foreign exchange risk in various foreign currencies.
The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies.
I. Foreign Currency Exposure
Refer Note 37 for foreign currency exposure as at March 31, 2024 and March 31, 2023 respectively.
Credit risk
Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly.
The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is significant increase in credit risk the company compares the risk of a default occurring an the asset at the reporting date with the risk of default as the date of initial recognition. It considers reasonable and supportive forwarding-looking information such as:
(i) Actual or expected significant adverse changes in business,
(ii) Actual or expected significant changes in the operating results of the counterparty.
(iii) Financial or economic conditions that are expected to cause a significant change to the counterparty's ability to mere its obligation,
IV. Provision for expected credit losses again “II” and “III” above
The company has assets where the counter- parties have sufficient capacity to meet the obligations and where the risk of default is very low. Hence based on historic default rates, the Company believes that, no impairment allowance is necessary in respect of above mentioned financial assets.
Liquidity Risk
Liquidity Risk is defined as the risk that the company will not be able to settle or meet its obligations on time or at reasonable price. The company's treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the company's net liquidity position through rolling forecast on the basis of expected cash flows.
Note
*Revaluation Reserve of Rs. 39,466.02 Lakhs (Rs. 40,407.36 Lakhs in FY 2022-23) is considered as part of Shareholder's equity for the purpose of calculation of ratios.
Remarks for change in ratio by more than 25% with respect to previous year :-Current Ratio
There is improvement in ratio due to increase in current assets as there is improvement in business operations.
Debt - Equity Ratio
Ratio is adverse due to decrease in Equity due to continuous loss.
Return on Equity (ROE)
Ratio become adverse due to decrease in Average Shareholder's Equity. Average Shareholder's Equity decreases due to continuous loss.
Return on capital employed (ROCE)
There is improvement in ratio as compared to last year due to slight reduction in losses & capital employed has reduced due to losses.
(iii) Details of Benami Property held :
The Company does not have any Benami property, which any proceeding has been initiated or pending against the Company for holding any Benami property.
(iv) Borrowings secured against current assets
The Company has borrowings from banks on the basis of security of current assets. Currently OD limits are out of order & negotiation is going on with bankers to restructure the same.
(v) Utilisation of borrowed funds and share premium :
The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the group (Ultimate Beneficiaries) or
(b) provide any guarantee, security to or on behalf of the Ultimate Beneficiaries.
42. Additional Regulatory Information ...contd.
The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the group shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(vi) Utilisation of borrowings availed from banks and financial institutions
The borrowings obtained by the Company financial institutions have been applied for the purposes for which such loans were taken.
(vii) Wilful defaulter
The Company has not been declared wilful defaulter by any bank or financial Institution or other lender.
(viii) Relationship with struck off companies
The Company did not have any transactions with Companies struck off u/s companies Act, 2013 or Companies Act, 1956.
(ix) Compliance with number of layers of companies
The Company had complied with the number of layers prescribed under the Section 2(87) of the Act read with the Companies ( Restriction on number of Layers ) Rules,2017.
(x) Compliance with approved scheme(s) of arrangements
The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
(xi) Undisclosed income
The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the income Tax Act,1961 (such as, search or survey or any other relevant provision of the Income Tax Act,1961).
(xii) Loans or advances to specified persons
The Company has not granted loans or advances to promoters, directors, key management personnel and the related parties (as defined under Companies Act, 2013) either severally or jointly with any other person, that are: (a) repayable on demand or (b) without specifying any terms or period of repayment.
(xiii) Details of crypto currency or virtual currency
The Company has not traded or invested in Crypto currency or Virtual Currency during the current or previous years.
(xiv) Valuation of Property, Plant and Equipment, intangible assets and investment property
The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
(xv) Title deeds of immovable properties not held in name of the Company
The title deeds of immovable properties (other than immovable properties where the Company is the lessee and the leases agreements are duly executed in favour of the company) are held in the name of the Company.
43. Loss of Control over Foreign Subsidiaries
IIn respect of foreign subsidiaries, i.e., M/s Fineline Hospitality & Consultancy Pte Ltd. (FHCPL) & M/s Lexon Hotels Venture Ltd., Mauritius (Lexon) an order for appointment of liquidator has been passed by the competent authority in Mauritius. As a result of the same, the Company has lost control of these entities. Further, during the year liquidation order is being passed by competent authority in Mauritius for liquidation of Fineline Hospitality & Consultancy Pte Ltd. (FHCPL) & Lexon Hotels Venture Ltd., Mauritius (Lexon). Accordingly, the Company will not be presenting Consolidated Financial Statements.
45. Advance paid for proposal of One time settlement
The Company has paid Rs. 1610.00 Lakhs to JC Flowers Assets Reconstruction Pvt. Ltd.(“JCF ARC”) as one of the condition of proposal by JCF ARC for One time settlement. The settlement has not completed till the approval of these financials statements.
46. Current State of Business Operations and Ability to Continue as Going Concern
The Company's financial statements are prepared on a going concern basis, which contemplates the utilization of assets and the satisfaction of obligations in the normal course of business. The operating profitability for the Company is improving significantly and it will be further aided by several cost reduction measures being adopted by the Company. The Company is in amicable discussions with Banks and Financial Institutions, to resolve financial matters in the best interest for bankers as well as shareholders. The Management is confident that its planned financial settlement will enable the Company to continue as a going concern.
47. Balances shown under trade receivables, trade payables, loans & advances, deposits are subject to confirmation, reconciliation & consequential adjustment, if any. The re-conciliation is carried out on ongoing basis & provisions wherever considered necessary have been made in line with the guidelines. Request for confirmations of balances were sent and reconciliations with the parties are carried out as an ongoing process.
48. In the opinion of the Board of Directors, the Current Assets, Loans & Advances have the value, which on realization in the ordinary course of business would be at least equal to the amount stated in the balance sheet.
49. All the expenses, income, assets and Liabilities have been accounted for, ascertained with reasonable certainty and accuracy.
50. No personal expenses have been charged to revenue accounts, other than those payable under contractual obligation.
51. Company has paid penalty amounting to INR 6,00,000/- (Six Lakhs) on May 09, 2024 to the Securities and Exchange Board of India ('SEBI') pursuant to adjudication order dated April 25, 2024 issued by SEBI pursuant to the violation of Regulation 4(1)(d), (e) & (h) and Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015
52. Regrouped, Recast, Reclassified
Figures of the earlier year have been regrouped or reclassified to confirm to Ind AS presentation requirements.
The accompanying notes are integral part of the financial statements
As per our report of even date attached On behalf of the Board of Directors
For V V KALE & CO. Asian Hotels (North) Limited
Chartered Accountants
Firm Registration No. 000897N
Vijay V. Kale AMRITESH JATIA PREETI GANDHI
Partner Chairman & Managing Director Director & Chairman of Audit Committee
Membership Number: 080821 DIN: 02781300 DIN: 08552404
Place: New Delhi TARUN SRIVASTAVA SUNIL UPADHYAY
Dated: 29.05.2024 Company Secretary Chief Financial Officer
UDIN: 24°8°821BKEJHY1981 and Compliance Officer
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