l) Provisions and Contingent Liabilities:
Provisions are recognised when the Company has a binding present obligation. This may be either legal because it derives from a contract, legislation or other operation of law, or constructive because the Company created valid expectations on the part of third parties by accepting certain responsibilities. To record such an obligation, it must be probable that an outflow
of resources will be required to settle the obligation and a reliable estimate can be made for the amount of the obligation. The amount recognised as a provision and the indicated time range of the outflow of economic benefits are the best estimate (most probable outcome) of the expenditure required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Noncurrent provisions are discounted if the impact is material.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
m) Borrowing Costs:
General and specific borrowing costs directly attributable to the acquisition or construction of qualifying assets that necessarily takes a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Borrowing costs consist of interest and other costs that the Company incurs in connection with the borrowing of funds. Interest income earned on temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. Borrowing costs that are not directly attributable to a qualifying asset are recognised in the statement of profit or loss using the effective interest method.
n) Statement of Cash Flows
Cash flows are reported using the indirect method, whereby profit/ (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. Cash Flow for the year is classified by operating, investing and financing activities.
o) Earnings Per Share
Basic earnings per share is computed by dividing the profit or loss after tax by the weighted average number of equity shares outstanding during the year including potential equity shares on compulsory convertible debentures. Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share.
p) Exceptional items:
The Company discloses certain financial information both including and excluding exceptional Items. The presentation of information excluding exceptional items allows a better Understanding of the underlying trading performance of the Company and provides consistency with the Company’s internal management reporting. Exceptional items are identified by virtue of either their size or nature so as to facilitate comparison with prior periods and to assess underlying trends in the financial performance of the Company. Exceptional items can include, but are not restricted to, gains and losses on the disposal of assets/ investments, impairment charges, exchange gain/ loss on long term borrowings/ assets and changes in fair value of derivative contracts.
q) Financial Instruments
(i) Financial assets
Initial recognition and measurement
Financial assets are recognised when, and only when, the Company becomes a party to the contractual provisions of the financial instrument. The Company determines the classification of its financial assets at initial recognition. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss directly attributable transaction costs. Transaction costs of financial assets carried at fair value through profit or loss are expensed in the Statement of Profit and Loss
Classification
1. Cash and Cash Equivalents - Cash comprises cash on hand and demand deposits with Banks. Cash Equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
2. Debt Instruments -The Company classifies its debt instruments as subsequently measured at amortized cost, fair value through Other Comprehensive Income or fair value through profit or loss based on its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
i) Financial assets at amortized cost
Financial assets are subsequently measured at amortized cost if these financial assets are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest. Interest income from these financial assets is included as a part of the Company’s income in the
Statement of Profit and Loss using the effective interest rate method.
ii) Financial assets at fair value through Other Comprehensive Income (FVOCI)
Financial assets are subsequently measured at fair value through Other Comprehensive Income if these financial assets are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest. Movements in the carrying value are taken through Other Comprehensive Income, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains or losses which are recognised in the Statement of Profit and Loss.
When the financial asset is derecognized, the cumulative gain or loss previously recognized in Other Comprehensive Income is reclassified from Other Comprehensive Income to the Statement of Profit and Loss. Interest income on such financial assets is included as a part of the Company’s income in the Statement of Profit and Loss using the effective interest rate method.
iii) Financial assets at fair value through profit or loss (FVTPL)
Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. A gain or loss on such debt instrument that is subsequently measured at FVTPL and is not part of a hedging relationship as well as interest income is recognised in the Statement of Profit and Loss.
3. Equity Instruments - The Company subsequently measures all equity investments (other than the investment in subsidiaries, joint ventures and associates which are measured at cost) at fair value.
Where the Company has elected to present fair value gains and losses on equity investments in Other Comprehensive Income (“FVOCI”), there is no subsequent reclassification of fair value gains and losses to profit or loss.
Dividends from such investments are recognized in the Statement of Profit and Loss as other when the Company’s right to receive payment is established. At the date of transition to Ind AS, the Company has made an irrevocable election to present in Other Comprehensive Income subsequent changes in the fair value of equity
investments that are not held for trading. When the equity investment is derecognized, the cumulative gain or loss Previously Recognized Other Comprehensive Income is reclassified from Other Comprehensive Income to the Retained Earnings directly.
De-recognition
A financial asset is derecognized only when the Company has transferred the rights to receive cash flows from the financial asset. Where the Company has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized where the Company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of Continuing Involvement in the Financial Asset.
(ii) Financial liabilities
Initial recognition and measurement financial liabilities are recognised when, and only when, the Company becomes a party to the contractual provisions of the financial instrument. The Company determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities not at fair value through profit or loss directly attributable transaction costs. Subsequent measurement after initial recognition, financial liabilities that are not carried at fair value through profit or loss are subsequently measured at amortized cost using the effective interest method. Gains and losses are recognised in the Statement of Profit and Loss when the liabilities are derecognized, and through the amortization process.
De-recognition
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs. Repurchase of the Company's own equity instruments is recognised and deducted directly in equity.
No gain or loss is recognised in the Statement of Profit and Loss on the purchase, sale, issue or cancellation of the Company's own equity instruments.
(iii) Impairment of financial assets
The Company assesses, at each reporting date, whether a financial asset or a group of financial assets is impaired. Ind AS-109 on Financial Instruments, requires expected credit losses to be measured through a loss allowance. For trade receivables only, the Company recognizes expected lifetime losses using the simplified approach permitted by Ind AS-109, from initial recognition of the receivables. For other financial assets (not being equity instruments or debt instruments measured subsequently at FVTPL) the expected credit losses are measured at the 12 Month expected credit losses or an amount equal to the lifetime expected credit losses if there has been a significant increase in credit risk since initial recognition.
r) Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt Instrument. Financial guarantee contracts issued by the Company are measured at their fair values and recognised as income in the Statement of Profit and Loss. Where guarantees in relation to loans or other payables of group companies are provided for no compensation, the fair value are accounted for as contributions and recognised as part of cost of investment
s) Business combinations
Business combinations of entities under common control are accounted using the “pooling of interests” method and assets and liabilities are reflected at the predecessor carrying values and the only adjustments that are made are to Harmonies accounting policies. The figures for the previous periods are restated as if the business combination had occurred at the beginning of the preceding period irrespective of the actual date of the combination.
B Terms and rights attached to equity shares
The Company has only one class of issued, subscribed and paid up equity shares having a par value of H 10/- each per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. In the event of liquidation of the Company the holders of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the share holders.
The company declares and pays dividend in Indian rupees. The dividend prosposed by the board of directors is subject to the approval of the share holders in the ensuing Annual General Meeting.
During the year ended 31st March, 2024 the amount of per share dividend recognized as distribution to equity share holders is NIL
C Bonus Shares/ Buy back shares for consideration other than cash issued during the past five years:
(1) Aggregate number and class of shares allotted as fully paid up pursuant to contracts without payment being received in Cash - Nil
(2) Aggregate number and class of shares allotted as fully paid up by way of Bonus shares - Nil
(3) Aggregate number and class of Shares bought back - Nil
32. Contingent liabilities not provided for in respect of:-
As per the approved Resolution Plan, contingent liabilities (which have / are capable of being crystallized) prior to October 10, 2023 (“Effective Date”) stand extinguished.
Furthermore, the Resolution Plan, among other matters, provides that except to the extent of the amount payable to the relevant Operational Creditor in accordance with the Resolution Plan, all liabilities of the Company relating in any manner to the period prior to the Effective Date, immediately, irrevocably and unconditionally stand fully and finally discharged and settled and there being no further claims whatsoever, and all the rights of the Operational Creditors and Other Creditors to invoke or enforce the same stands waived off. It is provided that any and all legal proceedings initiated before any forum by or on behalf of any Operational Creditor (including Governmental Authorities) or any Other Creditors to enforce any rights or claims against the Company also stands extinguished.
Further, in terms of the Resolution Plan, no Governmental Authority has any further rights or claims against the Company, in respect of the period prior to the Effective Date and / or in respect of the amounts written off and all legal proceedings initiated before any forum by or on behalf of any Operational Creditor (including Governmental Authorities) or any Other Creditors, to enforce any rights or claims against the Company will immediately, irrevocably and unconditionally stand withdrawn, abated, settled and/or extinguished. Further, the Operational Creditors of the Company (including Governmental Authorities) and Other Creditors will have no further rights or claims against the Company (including but not limited to, in relation to any past breaches by the Company), in respect of any liability for period prior to the Effective Date, and all such claims shall immediately, irrevocably and unconditionally stand extinguished. The Company has been legally advised that while the Resolution Plan provides for extinguishment of all liabilities of the Company owed to Operational Creditors and Other Creditors as of the Insolvency Commencement Date i.e. July 26, 2017, the implementation of the Resolution Plan does not have any such similar effect over claims or receivables owed to the Company. Accordingly, the Company has concluded that any receivables due to the Company, evaluated based on merits of underlying litigations, from various Governmental Agencies (presented under Other Financial Assets - Non current) continue to subsist.
Guarantees provided after October 10, 2023:
The company has made first and exclusive hypothecation charge on all existing and future current assets and moveable fixed assets (excluding vehicles) of Viceroy Hotels Limited in favour of M/s Loko Hospitality Private Limited for sanction of term loan amounting to H 5,000/- Lakhs from Kotak Mahindra Bank.
33. Foreign currency risk
Foreign currency risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rate. The company is not exposed to foreign currency risk as it has no borrowings in foreign currency.
36. Following are the pending litigations with income tax Department and contingent liabilities:
i) Income tax:
The company moved an application on December 18, 2023, with the income tax department for the extinguishment of all the prior year demands under the Income Tax Act, 1961 pursuant to Hon’ble NCLAT order dated October 6, 2023. Subsequently consequential orders deleting the demands raised prior to October 6, 2023, have been passed on March 14, 2024 giving effect to Hon’ble NCLAT order.
ii) Service Tax & GST:
All outstanding demands against the company “VICEROY HOTELS LIMITED” for various previous years stand waived and extinguished as per the NCLAT order.
iii) Luxury Tax / Sales Tax:
All outstanding demands against the company “VICEROY HOTELS LIMITED” for various previous years stand waived and extinguished as per the NCLAT order
37. Following are the amount outstanding and due to banks and other institutions:
1. All the liabilities existing in the beginning of the year have been extinguished and accounted as per the approved Resolution Plan.
2. Unsecured loans taken by new management
41. Segment information:
The Company’s only business is Hoteliering and hence disclosure of segment-wise information is not applicable under Indian Accounting Standard 108- 'Segmental Information’. There is no geographical segment to be reported.
42. During the financial year 2017-2018, Corporate insolvency resolution process (“CIRP”) was initiated pursuant to a petition filed by one of its financial creditors, Asset Reconstruction Company (India) Limited (“ARCIL”) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”). ARCIL filed the petition before the National Company Law Tribunal, State Bench, Hyderabad (“Adjudicating Authority”) vide Company Petition No. (IB)-219/7/(HBD)/2017 on July 03, 2017. The Adjudicating Authority admitted the said petition and the CIRP for the Company commenced on March 12, 2018. Pursuant to this, based on the application made by the Committee of Creditors of the Company (“COC”), the Hon’ble NCLT appointed Dr G.V. Narasimha Rao (“RP”) as the new Resolution Professional for conducting Corporate Insolvency Resolution Process vide order dated April 13, 2022. Pursuant to COC's approval of resolution plan dated September 29, 2022 as submitted by the Resolution Applicant, Anirudh Agro Farms Limited (“AAFL”), RP has filed an application for the approval of the resolution plan as submitted by AAFL before Hon’ble NCLT on November 11,2022. NCLT rejected the said resolution plan on June 9, 2023 on technical grounds. The order of NCLT was challenged before the Hon’ble National Company Law Appellate Tribunal, Chennai Bench (“NCLAT”). On October 6, 2023, NCLAT pronounced an order in CA(AT)(CH)(Ins).No.166 of2023 & 183 of 2023, appeals filed by the AAFL and COC respectively and allowed the IA (IBC) 1343 of 2022 in CP(IB) N0.219/2017, an application filed by the RP for approval of the Resolution Plan submitted by AAFL with NCLT under section 30 & 31 of the Insolvency and Bankruptcy Code, 2016.
The impact of the NCLAT Order is effective from the Trigger Date, i.e. October 10, 2023 and the same is reflected in the financial results for the year ended March 31,2024.
Accordingly, keeping in view the Order dated October 10, 2023:
i. As per the Resolution Plan and the order of NCLAT, Monitoring Committee (“MC”) consisting of Managing Agent (former RP), 2 representatives from CoC (assenting creditors) and 2 representatives from AAFL were appointed. AAFL, through its SPV, Loko Hospitality Private Limited infused the share capital (first tranche as per Resolution Plan) of H 60,00,00,000 (Rupees Sixty Crores only) towards subscription of Equity shares and accordingly MC confirmed that October 10, 2023 as the Trigger Date for the Resolution Plan and for payment of CIRP cost and employee related dues, and payment to financial creditors in terms of the approved Resolution Plan.
The Monitoring Committee in its meeting held on October 11,2023 has also approved the following in terms of the Resolution Plan:
1. Cancellation and extinguishment of 56,87,781 Equity shares of H 10/- each held by the erstwhile Promoter Group.
2. The Equity Shares held by the existing Public Shareholders were stand restructured, reduced, reorganized, consolidated and extinguished (as required) as a part of this Resolution Plan such that the Equity Shares held by the existing Public Shareholders post such restructuring and reorganization shall be 6,31,579 Equity Shares constituting 1% (one percent) of the issued and paid-up equity share capital of the Company
3. Issuance of 6,00,00,000 Equity Shares Face Value of H 10/- each to the Loko Hospitality Private Limited, the SPV of Resolution Applicant representing 95% of the issued & paid up equity share capital of the Company.
4. The assenting financial creditors were further allotted 25,26,316 equity shares at face value of 10 each aggregating to 253 Lakhs approx. representing 4% of the issued & paid up equity share capital of the Company.
6. Extinguishment of balance FC Debt and balance Operational Creditor Dues:
Resolution Applicant shall extinguish the Balance FC Debt (including that owed to the Related Parties) and other Operational Creditor
dues on the Effective Date, on and with effect from the NCLAT approval date by virtue of the order of the NCLAT approving the Resolution
Plan by transferring the difference amount to Reserves.
i. The issued, subscribed and paid-up share capital of the Company, post the said extinguishment, reduction/consolidation and issuance shall stand at H 6,315.79 Lakhs divided into 6,31,57,895 Equity Shares of face value of H 10/- each.
ii. Further, the Company had intimated to the Monitoring Committee that the Company plans to prepay and settle in deferred tranches to various financial creditors ahead of the schedule proposed in the Resolution Plan. Upon receiving the formal consents from the respective financial creditors, the Company had made pre-payments and settled the dues of all the financial creditors during the quarter and nine months ended December 31,2023. Consequent to this, the entire dues of various financial creditors as per the Resolution Plan, stand settled and discharged by the Company.
iii. Exceptional items for the year ended March 31, 2024, is H 318 Lakhs, which comprises of impairment of investments in the subsidiary companies, due to accumulated losses in the subsidiaries.
iv. All the liabilities that have been extinguished are accounted as per the approved Resolution Plan.
v. As per the approved Resolution Plan, the Company had to pay H 8,923.14 Lakhs to certain assenting Financial Creditors spread over a period of 675 days. However, the Company in mutual agreement with the said Financial Creditors paid an upfront payment of H 6,795.05 Lakhs within a period of 60 days and settled the liability thereby the differential amount of H 2,128.09 Lakhs is transferred to the Reserves.
vi. The Directorate of Enforcement initially made a Provisional Attachment Order in PAO No. 04/2019 dated 26.03.2019 passed by the Deputy Director, Directorate of Enforcement against M/s Viceroy Hotels Limited (the Company), which was subsequently confirmed and the Company has challenged it before the Honorable Adjudicating Authority PMLA, 2002 and the same is still sub judice. Since the resolution plan of the Company has now been approved by the Hon’ble NCLAT Chennai, the provisions of the plan specifically provide for de-attachment of properties of the Company if attached by any agency / department of the Government pursuant to any proceeding and also provide that all such proceedings / attachments /litigations related to the Company are to be extinguished / de-attached / be declared infructuous by virtue of operation of law. Now, since the new board of the Company has been constituted pursuant to the approval of the Resolution Plan, the Company has actively made representations before the Hon’ble PMLA and application seeking de attachment of the properties has been moved based on Section 32 (a) of the Insolvency and Bankruptcy Code, 2016 on the last date of hearing on 08.02.2024. The Hon’ble PMLA, taking cognizance of the said application has directed further hearing on 29.04.2024, while extending the stay granted in favor of the Company against any coercive action by the Enforcement Department. Final order for the above de-attachment of property is awaited.
vii. The company moved an application on December 18, 2023, with the income tax department for the extinguishment of all the prior year demands under the Income Tax Act, 1961 pursuant to Hon’ble NCLAT order dated October 6, 2023. Subsequently consequential orders deleting the demands raised prior to October 6, 2023, have been passed on March 14, 2024 giving effect to Hon’ble NCLAT order.
viii. The figures of previous periods/year have been reclassified/regrouped, wherever necessary, to correspond to those of the current periods/ year.
ix. The comparative financials for the year ended 31st March, 2023 have been audited by the previous statutory auditor.
x. The date of implementation of the Code on Social Security, 2020 ('the code’) relating to employee benefits is yet to be notified by the Government of India and when implemented will impact the contributions by the group towards benefits such as Provident Fund, Gratuity etc. The group will assess the impact of the code and give effect in the financial results when the code and rules thereunder are notified.
Additional Regulatory Information:
1. There are no title deeds of Immovable Property not held in the name of the Company.
2. The Company has no Investment Property Accordingly, there is no revaluation of the Investment Property
3. During the year, no revaluation of Property Plant & Equipment and Right-of-Use Assets has been done by the Company
4. No revaluation of Intangible Assets has been done by the Company during the year.
5. The Company has no Loans or Advances in the nature of Loans to specified persons that are repayable on demand or without specifying any terms or period of repayment.
6. The Company has no Intangible Assets under development.
7. Borrowings secured against Current Assets The company has made first and exclusive hypothecation charge on all existing and future current assets and moveable fixed assets (excluding vehicles) of Viceroy Hotels Limited for sanction of term loan from Kotak Mahindra Bank
8. The Company has not been declared as willful defaulter by any bank or financial institution or other lender during the year.
9. The Company had no transactions with Companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956 during the year.
10. The Company has no charges or satisfaction yet to be registered with ROC beyond the statutory period during the year.
11. The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Companies Act read with Companies
(Restriction on number of layers) Rules, 2017 during the year.
12. The Company has not traded or invested in Crypto currency or Virtual currency during the financial year.
13. During the year expenditure towards Corporate Social Responsibility (CSR) is not applicable.
As per our report of even date as attached
For M/s Deva & Co. For and on behalf of the Board of Directors of
Chartered Accountants Viceroy Hotels Limited
Firm Regn.no. 000722S
(M Devaraja Reddy) Ravinder Reddy Kondareddy Anirudh Reddy Kondareddy
Partner Managing Director & CEO Non-Executive Director
Membership No. 026202 (DIN 00040368) (DIN 08638985)
UDIN:24026202BKCNZI9365
Place: Hyderabad T.A. Veena Aravind Pradyumna Kodali
Date: 30th May 2024 Company Secretary and Compliance Officer Chief Financial Officer
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