o) Provisions, Contingent liabilities and Contingent assets
Provisions
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive
obligation that is reasonably estimable, and it is probable that an outflow of economic benefits will be
required to settle the obligation. If the effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. The increase in the provision
due to the passage of time is recognised as interest expense.
Contingent liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed
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 is not recognised because it is not probable that an outflow of
resources will be required to settle the obligation or it cannot be measured with sufficient reliability. The
Company does not recognise a contingent liability but discloses its existence in the standalone financial
statements.
Contingent assets
Contingent assets are neither recognised nor disclosed. However, when realisation of income is virtually
certain, related asset is recognised.
p) Income taxes
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability
during the year. Current and deferred tax are recognised in statement of profit and loss, except when they
relate to items that are recognised in other comprehensive income or directly in equity, in which case, the
current and deferred tax are also recognised in other comprehensive income or directly in equity,
respectively.
(i) Current tax:
Current tax expenses are accounted in the same period to which the revenue and expenses relate. Provision
for current income tax is made for the tax liability payable on taxable income after considering tax
allowances, deductions and exemptions determined in accordance with the applicable tax rates and the
prevailing tax laws.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the
recognised amounts and there is an intention to settle the asset and the liability on a net basis.
While determining the tax provisions, the Company assesses whether each uncertain tax position is to be
considered separately or together with one or more uncertain tax positions depending upon the nature and
circumstances of each uncertain tax position.
(ii) Deferred tax :
Deferred income tax is recognised using the balance sheet approach. Deferred income tax assets and liabilities
are recognised for deductible and taxable temporary differences arising between the tax base of assets and
liabilities and their carrying amount in standalone financial statements, except when the deferred income tax
arises from the initial recognition of goodwill, an asset or liability in a transaction that is not a business
combination and affects neither accounting nor taxable profits or loss at the time of the transaction.
Deferred income tax assets are recognised to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences and the carry forward of unused tax credits and unused
tax losses can be utilised.
Deferred tax liabilities are generally recognized for all taxable temporary differences except in respect of
taxable temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures where the timing of the reversal of the temporary difference can be controlled and it is probable
that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each Balance Sheet date and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred
income tax asset to be utilised.
Deferred tax liabilities and assets are measured at tax rates that are expected to apply in the period in which
the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or
substantially enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities and when they relate to income taxes levied by the same taxation
authority and the Company intends to settle its current tax assets and liabilities on a net basis.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in
other comprehensive income or in equity). Deferred tax items are recognised in correlation to the
underlying transaction either in OCI or directly in equity.
Minimum Alternative Tax (“MAT”) credit forming part of Deferred tax assets is recognized as an asset only
when and to the extent there is reasonable certainty that the Company will pay normal income tax during the
specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit
asset is written down to the extent there is no longer a reasonable certainty to the effect that the Company
will pay normal income tax during the specified period.
_ q) 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 are classified by operating, investing and financing activities.
r) 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.
t) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The Company is engaged in the business of operating and managing hotels/ resorts
and providing related services, which constitutes its single reportable segment.
u) 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.
However, trade receivables that do not contain a significant financing component are measured at transaction
price.
Classification
• 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.
• Debt Instruments - the Company classifies its debt instruments as subsequently measured at amortised 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.
(a) Financial assets at amortised cost -
Financial assets are subsequently measured at amortised 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.
(b) 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 derecognised, the cumulative gain or loss previously recognised 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.
(c) Financial assets at fair value through profit or loss (FVTPL) -
Assets that do not meet the criteria for amortised 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.
• 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 recognised in the Statement of Profit and Loss as other income 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 derecognised, the cumulative gain or loss previously recognised in Other
Comprehensive Income is reclassified from Other Comprehensive Income to the Retained Earnings directly.
De-recognition
A financial asset is derecognised 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 derecognised.
Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset,
the financial asset is not derecognised. 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 amortised cost using the effective interest method. Gains and losses are recognised
in the Statement of Profit and Loss when the liabilities are derecognised, and through the amortisation
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.
Derivatives
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently re-measured to their fair value at the end of each reporting period. The accounting for
subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument,
and if so, the nature of the item being hedged and the type of hedge relationship designated. During the
years reported, no hedge relationship was designated.
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 recognises 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.
(iv) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there
is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a
net basis, to realise the assets and settle the liabilities simultaneously.
v) Cash and cash equivalents
Cash and cash equivalent in the statement of financial position comprises cash at banks and on hand,
demand deposits, short-term deposits with an original maturity of three months or less and highly liquid
investments that are readily convertible into known amounts of cash, which are subject to an insignificant
risk of changes in value.
w) Rounding of amounts
All amounts disclosed in the standalone financial statements and notes have been rounded off to the nearest
lakhs with two decimals as per the requirement of Schedule III, unless otherwise stated.
x) Recent accounting pronouncements
Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards under
Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended 31 March
2025, MCA has notified Ind AS - 117 Insurance Contracts and amendments to Ind AS 116 - Leases, relating to
sale and leaseback transactions, applicable to the Company w.e.f. 1 April 2024. The Company has reviewed
the new pronouncements and based on its evaluation has determined that it does not have any significant
impact in its financial statements.
7 | Investments (Cont’d)~
4 | On 30 March 2024, the Investments held In Compulsorily Convertible Debentures of Icon Hospitality Private Limited were converted Into equity shares In 1:1 ratio.-
5 In the board meeting held on 14 August 2024, the Board has approved the sale of Royal Orchid Maharashtra Private Limited, a wholly owned subsidiary. Accordingly,
the investment amounting to ^ 5 has been classified as Assets held-for-sale. Also, refer Note 20.
6 During the earlier years, the management had classified its investment made in Multi Hotels Limited (a subsidiary of the Company) as an asset held for sale. While
the management continues to have the intention to dispose off the said investment, the conditions for classification of an asset held for sale in accordance with Ind
AS 105 - 'Non-current Assets Held for Sale and Discontinued Operation' have not been met as at 31 March 2025. Accordingly, the Company has reclassified the said
investment to Non-Current Investments. Also, refer Note 20.
7 During the previous year ended 31 March 2024, Royal Orchid Mumbai Private Limited (a subsidiary of the Company) had obtained a loan from HDFC Bank which was
disbursed in the current year. In this regard, the Company had provided a guarantee amounting to ^5,100 against which the Company has accounted a deemed
investment amounting to ^119.79.
8 Also, Refer Note 51
c) Terms and rights attached to equity shares
The Company has one class of equity shares having a face value of ^ 10 per share. Each holder of the equity
shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The
dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing
Annual General Meeting. In the event of liquidation of the Company, the holders of equity will be entitled
to receive the 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 shareholders.
d) Aggregate number of bonus shares issued and shares issued for consideration other than cash during
the period of five years immediately preceding the reporting date
The Company has not issued any bonus shares nor has there been any buy back of shares during five years
immediately preceding 31 March 2025. Further, the Company has not issued any shares without payment
being received in cash.
e) The Company paid a final dividend of 25% (^2.5 per equity share) which resulted in a cash outflow of
^685.63 in the current year. Further, the Board of Directors of the Company, in its meeting held on 27 May
2025, proposed a final dividend of 25% (^ 2.5 per equity share). The proposal is subject to the approval of
shareholders at the upcoming Annual General Meeting and if approved would result in a cash outflow of ^
685.63.
44 Related party transactions (cont'd)
Note:
Terms and conditions of transactions with related parties
All Related Party Transactions entered during the year were in ordinary course of the business and on arm’s
length basis. Outstanding balances at the year-end are unsecured and gross amounts are settled in cash.
Refer Note 8 and 17 for terms and conditions of loans given to subsidiaries and associate. Refer note 23
for loans taken from related parties.
There have been no guarantees provided or received for any related party receivables or payables except
as disclosed. For the year ended 31 March, 2025, the Company has not recorded any impairment of
receivables relating to amounts owed by related parties (31 March 2025: ^ Nil). This assessment is
undertaken each financial year through examining the financial position of the related party and the
market in which the related party operates.
45 | Employee benefit plans
a) Defined contribution plans
The Company makes Provident Fund and Employee State Insurance Scheme contributions which are defined
contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a
specified percentage of the payroll costs to fund the benefits. The Company recognised ^ 157.27 (Year
ended 31 March 2024: ^ 140.53) for Provident Fund contributions, and ^ 30.71 (Year ended 31 March 2024:
^ 30.73) for Employee State Insurance Scheme contributions in the Statement of Profit and Loss. The
contributions payable to these plans by the Company are at rates specified in the rules of the schemes.
b) Defined benefit plans
The Company offers gratuity benefit scheme to its employees in India as per 'The Payment of Gratuity Act,
1972'. Under the act, employee who has completed five years of service is entitled to gratuity benefit. The
level of benefits provided depends on the member’s length of service and salary at retirement age. This is
a defined benefit plan as per Ind AS 19 and is an unfunded scheme. The following table sets out the status
of the gratuity plan as required under Indian Accounting Standard (Ind AS) - 19 - Employee benefits:
Description of Risk Exposures
Valuations are performed on certain basic set of pre-determined assumptions which may vary over time.
Thus, the Company is exposed to various risks in providing the above benefit which are as follows:
a. Interest Rate Risk:
The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an
increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value
of liability (as shown in financial statements).
b. Liquidity Risk:
This is the risk that the Company is not able to meet the short term benefit payouts. This may arise due
to non-availability of enough cash/cash equivalent to meet the liabilities or holding of illiquid assets not
being sold in time.
c. Salary Escalation Risk:
The present value of the above benefit plan is calculated with the assumption of salary increase rate of
plan participants in future. Deviation in the rate of increase in salary in future for plan participants from
the rate of increase in salary used to determine the present value of obligation will have a bearing on the
plan's liability.
d. Demographic Risk:
The Company has used certain mortality and attrition assumptions in valuation of the liability. The
Company is exposed to the risk of actual experience turning out to be worse compared to the
assumption.
e. Regulatory Risk:
Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act, 1972 (as
amended from time to time). There is a risk of change in regulations requiring higher gratuity payouts (for
example, increase in the maximum liability on gratuity of ^ 20).
f. Asset Liability Mismatching or Market Risk:
The duration of the liability is longer compared to duration of assets exposing the company to market
risks for volatilities/fall in interest rate.
For the purpose of the Company’s capital management, capital includes issued capital, additional paid in
capital and all other equity reserves attributable to the equity holders. The primary objective of the
Company’s capital management is to maximise the shareholder value.
In order to achieve this overall objective, the company’s capital management, amongst other things, aims
to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that
define capital structure requirements. Breaches in meeting the financial covenants would permit the bank
to immediately call loans and borrowings. There have been no breaches in the financial covenants of any
interest-bearing loans and borrowing in the current period.
The Company manages its capital structure and makes adjustments in light of changes in economic
conditions and the requirements of the financial covenants. To maintain or adjust the capital structure,
the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new
shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus
net debt. The Company includes within net debt, interest bearing loans and borrowings less cash.
The Company's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk.
The Company's focus is to foresee the unpredictability of financial markets and seek to minimize potential
adverse effects on it's financial performance. The Company's exposure to credit risk is influenced mainly
by the individual characteristic of each customer.
The Company's risk management activity focuses on actively securing the Company’s short to medium-term
cash flows by minimising the exposure to volatile financial markets. Long-term financial investments are
managed to generate lasting returns.
The Company does not actively engage in the trading of financial assets for speculative purposes nor does
it write options. The most significant financial risks to which the Company is exposed are described below.
(A) Credit risk analysis
Credit risk is the risk that a counterparty fails to discharge an obligation to the Company, resulting in a
financial loss. The Company is exposed to this risk for various financial instruments. The Company’s
maximum exposure to credit risk is limited to the carrying amount of financial assets, as summarised
below:
Trade receivables are typically unsecured and are derived from revenue earned from customers primarily
located in India. Credit risk has always been managed by the Company through credit approvals,
establishing credit limits and continuously monitoring the creditworthiness of customers to which the
Company grants credit terms in the normal course of business. On account of adoption of Ind AS 109,
Financial Instruments, the Company uses expected credit loss model to assess the impairment loss or gain.
The provision for expected credit loss takes into account available external and internal credit risk factors
and Company's historical experience for customers.
An impairment analysis is performed at each reporting date using a provision matrix to measure expected
credit losses. The provision rates are based on days past due for customers excluding related party
receivables. The calculation reflects the probability-weighted outcome, the time value of money and
reasonable and supportable information that is available at the reporting date about past events, current
conditions and forecasts of future economic conditions. Generally, trade receivables are written off if past
due for more than 180 days and are not subject to enforcement activity. The Company has evaluated all
debts less than 180 days and impairment loss on these debts were not material.
A2: Cash and cash equivalents
The credit risk for cash and cash equivalents is considered negligible, since the counterparties are
reputable banks with high quality external credit ratings._
Financial assets that are neither past due nor impaired
Cash and cash equivalents, advances recoverable, loans and advances to employees, security deposit and
other financial assets are neither past due nor impaired._
Financial assets that are past due but not impaired
There is no other class of financial assets that is past due but not impaired.
The Company’s cash and cash equivalents and other bank balances are held in reputed banks, which
management believes are of high credit quality and hence no impairment allowance has been recognized.
Other non-current financial assets and loans majorly comprises of the rental deposits, fixed deposits and
loans to related parties, which the management believes are of high credit quality and hence no
impairment allowance has been recognized. Other financial assets and loans which majorly comprises of
interest on deposits and receivables and loans to related parties are also monitored on an ongoing basis
and the Company’s exposure to bad debts is not significant. Hence no impairment allowance is recognised
on these financial assets._
(B) Liquidity risk
Liquidity risk is that the Company might be unable to meet its obligations. The Company manages its
liquidity needs by monitoring scheduled debt servicing payments for long-term financial liabilities as well
as forecast cash inflows and outflows due in day-to-day business. The data used for analysing these cash
flows is consistent with that used in the contractual maturity analysis below. Liquidity needs are monitored
in various time bands, usually on a month on month basis. Long-term liquidity needs for a 360-day lookout
period are identified monthly. Net cash requirements are compared to available borrowing facilities in
order to determine headroom or any shortfalls. This analysis shows that available borrowing facilities are
expected to be sufficient over the lookout period._
The Company’s objective is to maintain cash and marketable securities to meet its liquidity requirements
for 30-day periods at a minimum. This objective was met for the reporting periods. Funding for long-term
liquidity needs is additionally secured by an adequate amount of committed credit facilities and the ability
to sell long-term financial assets._
The Company’s non-derivative financial liabilities that have contractual maturities (including interest
payments where applicable) are summarised below:
50 Financial risk management (Cont’d)
(C) Market risk
The Company is exposed to market risk through its use of financial instruments and specifically to currency
risk and interest rate risk, which result from both its operating and investing activities.
(i) Foreign currency risk
The predominant currency of the Company's revenues and operating cash flows is Indian Rupees (INR). The
Company is exposed to foreign exchange risk on account of advances given to its wholly owned subsidiary
in foreign currency. The exchange rate between the rupee and foreign currencies has changed substantially
in recent years and may fluctuate substantially in the future. Consequently, the results of the Company’s
operations are adversely affected as the rupee appreciates/ depreciates against these currencies.
Foreign currency denominated financial assets and liabilities which expose the Company to currency risk
are disclosed below. There are no forward exchange contracts entered into by the Company as at 31 March
2025 and 31 March 2024. The yearend foreign currency exposures that have not been hedged by derivative
instrument or otherwise are given below:
52 | Contingent liabilities
(a) | Claims against the Company not acknowledged as debt:
(i) The Company has been named as a defendant in a suit filed in mid 2008 by Kamat Hotels (India) Limited
(‘the plaintiff’ or "Kamat Hotels") with Bombay High Court restraining the alleged use of the trademark of
the Company and a relief of a permanent injunction restraining the Company from using the trademark
‘Orchid’. The Company had filed an application seeking an interim injunction while the above proceedings
are pending. The Bombay High Court vide its interim order dated 05 April 2011, has allowed the Company
to continue to operate its current hotels as on that date but has restrained the Company from opening new
hotels under the said brand. However, the Division bench of the Bombay High Court vide its order dated
06 May 2011 has partially stayed operation of the said Order and allowed opening of one of Company’s
proposed hotels in Vadodara under the ‘Royal Orchid’ brand.
During the year ended 31 March 2014, the Company has obtained two favorable rulings from the Intellectual
Property Appellate Board ("IPAB"). Kamat Hotels had preferred to appeal the ruling of IPAB in Madras High
Court. The Madras High Court has passed orders cancelling the registration in Class 42 of Trademarks Act
and the Company has filed a Special Leave Petition "SLP" with the Honorable Supreme Court in 2015. Reply
to SLP was filed by Kamat Hotels in the form of Counter affidavit and the Company has filed a Rejoinder
in the form of an affidavit. The matter was partly heard by the Honorable Supreme Court in April and May
of 2017 and has advised Kamat Hotels to consider the options for settlement by displaying the disclaimers
on the Websites regarding the disassociation between the two brands. On 13 February 2018, the Supreme
Court dismissed the SLP filed by the Company and consequently, the Company has filed a Chamber Appeal
against the said Order which was listed on August 3, 2018. The Chamber accepted the clarification filed
by the Company. Therefore, the management believes that the outcome of SLP affects only the registration
of the trademarks in Class 42 and does not in any way affect the use of marks by the Company.
52 Contingent liabilities (Cont’d)
(a) Claims against the Company not acknowledged as debt (Cont’d)
(ii) The Company has been named as a defendant in two civil suits on a portion of land taken on lease from
the Karnataka State Tourism Development Corporation ("KSTDC") for the operation of the Hotel Royal
Orchid Regenta, Bangalore, which is adjacent to the hotel premises. One of the civil suit has been settled
in favour of the Company, against which an appeal before the High Court of Karnataka, is pending and in
the other matter the Company has an injunction against the other party. Management believes that these
cases are not material and will not adversely affect its operations.
(iii) The Company had received tax demand including interest, from the Indian tax authorities for payment of
^ 136.98 for assessment year 2018-19, 2009-10 and 2011-12 (31 March 2024: ^ 78.30 for assessment year
2018-19) arising on denial of certain expenditures and disallowances made. Currently, the matter for
assessment year 2018-19, 2009-10 and 2011-12 is pending for adjudication before the Commissioner of
Income Tax (Appeals) [CIT(A)]. The Company is contesting all the above demands and the management
believes that the final outcome of all the disputes would be in favour of the Company and will not have
any material adverse effect on the financial position and results of operations.
(iv) The Company had filed a contempt petition against another party from whom shares of a subsidiary was
purchased, for not complying with the consent terms agreed before the Bombay High Court in relation to
providing second right of way to the immoveable property held by the said subsidiary in which the Company
had made an investment. During the year, the Company has disposed its interest in this subsidiary and
accordingly has written back the provision created by the Company amounting to ^250. While the contempt
petition is still being contested, the Company has obtained a legal opinion basis which the Company is of
the view that this amount will not be payable.
(v) The Company has been named as a defendant in a suit filed by Novex Communication Private Limited ('the
Plaintiff) for infringement of its intellectual property rights. The Plaintiff has demanded for deposit of ^50
as well as injunction restraining the Company from playing or allowing to be played music, the rights for
which vests in the Plaintiff. The Company is of the view that this amount will not be payable.
53 | Guarantee and Support letters'
The Company has given guarantees to financial institutions, banks for loans sanctioned to subsidiary /
associate amounting to ^ 12,722.56 (31 March 2024: ^ 13,072.56). Also refer Note 44.
54 Leases
Where the Company is a lessee
The Company's significant leasing arrangements are in respect of leases for buildings and land for running
their hotel business
These premises are generally rented on lease term ranging from 11 months to 30 years and with escalation
clause. There are no subleases.
58 Other Statutory Information
1 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 company (Ultimate Beneficiaries) or_
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
2 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 Company 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.
3 The Company has reviewed transactions to identify if there are any transactions with struck off
Companies. To the extent information is available on struck off Companies, there are no transactions
with struck off Companies.
4 The Company does not have any Benami property, where any proceeding has been initiated or pending
against the Company for holding any Benami property._
5 The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond
the statutory period._
6 The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
7 The Company doest not have any such 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 provisions of the Income Tax Act, 1961)._
59 Interim Order cum Show Cause Notice issued by SEBI
The Securities and Exchange Board of India (SEBI) on 31 March 2023 issued an Interim Order cum Show
Cause Notice to the Company, its Managing Director, a Director and its Chief Financial officer (collectively
called 'Noticees') for not considering Ksheer Sagar Developers Private Limited ('KSDPL') as a subsidiary of
Royal Orchid Hotels Limited and treating it as an associate and thereby overstating the consolidated net
profit of the Royal Orchid Group and misrepresenting the consolidated financial statements for the
financial year ended 31 March 2022. The Interim Order had directed the Company to restate its
consolidated financial statements for the year ended 31 March 2022 and prepare its consolidated financial
statements for the year ended 31 March 2023 after considering KSDPL as a subsidiary._
The Interim Order also contained show cause notices to show cause as to why suitable
directions/prohibitions under Sections 11 (1), 11 (4) and 11B (1) of SEBI Act should not be issued against
the Noticees. The order also contained show cause notices to show cause as to why inquiry should not be
held in terms of Rule 4 of Securities and Exchange Board of India (Procedure for Holding Inquiry and
Imposing Penalties) Rules, 1995 and penalty be not imposed on them under Sections 11 (4A) and 11 B (2)
read with Section 15HA and/or 15HB of the SEBI Act, 1992 for the above alleged violations of provisions of
the SEBI Act, LODR Regulations and PFUTP Regulations._
The Company, its Board and its Audit Committee had carried out a detailed evaluation of the above order
cum show cause notice and on the advice from its legal counsel had filed an appeal with the Securities
Appellate Tribunal ('SAT') against the order cum show cause notice issued by SEBI. The SAT on 9 May 2023
had stayed the effect and operation of the order cum show cause notice issued by SEBI till 30 June 2023
which was further extended till 17 August 2023. On 17 August 2023, the Company had requested an
opportunity to be heard and respond to the show cause notice issued by SEBI which was granted by the
SAT and the stay granted by SAT on 9 May 2023 continued to stay in effect. Consequently, the Company
has responded to show cause notice issued by SEBI and the matter was heard by SEBI on 30 October 2023.
The Company had been given time till 15 November 2023 to make its additional submissions before SEBI.
The Company had submitted its response basis which SEBI issued its final order on 11 October 2024 stating
that while the company had classified KSDPL incorrectly as an associate, it could not conclude that this
incorrect classification resulted in an illegal gains made by the Noticees.
59 Interim Order cum Show Cause Notice issued by SEBI (Cont’d)
Accordingly, the final order directed the Noticees to:
(a) File a public disclosure to the stock exchanges containing the directions of the order within 7 days of the
receipt of Order.
(b) Disclose the financial statements and audit report for FY 2021 -22, 2022-23 and 2023-24 to the stock
exchanges
(c) File a report detailing the impact on the Consolidated Financial Statements of the Company for FY 2021 -22,
2022-23 and 2023-24 had KSDPL been considered a subsidiary of the Company
(d) Pay monetary penalties of ?5 lakhs and ?1 lakh each under Section 15HA and 15HB of the SEBI Act within 45
days of the order.
The Company carried out a detailed evaluation of the final order and on advice from its legal counsel filed an
appeal with the SAT. The SAT on 5 November 2024 has admitted the appeal filed by the Company and has stayed
the above order with respect to directions listed in points (b) and (c) above till the date of next hearing on 4
August 2025. The final order on the monetary penalties levied has been stayed on the condition that 50% of the
penalties imposed are deposited by the Noticees. The Noticees on the date of the SAT stay order have deposited
the said amounts. Amounts as considered necessary have been provided for by the Company. The SAT has given
the Company four weeks to file its responses from date of its order. The Company has filed a public disclosure
to the stock exchanges containing the directions of the final order. On 7 Jaunary 2025, SEBI filed an affidavit in
response to the appeal filed with the SAT by the Company. Consequently, on 8 January 2025, the Company was
given two weeks to file a rejoinder and the next hearing date was set to 29 January 2025. The Company filed the
rejoinder on 28 January 2025. The next hearing date was set to 21 March 2025 which was moved to 23 April 2025
and currently the matter will be heard on 4 August 2025.
In the year ended 31 March 2022, the management had assessed that due to change in the composition of the
Board of Directors of the aforesaid investee company, the Holding Company lost control of the investee company
and had accounted for such ‘loss of control’ in accordance with the ‘control assessment’ principles enunciated
under Ind AS 110, Consolidated Financial Statements and accordingly the management is of the view that SEBI’s
contention, as included in the aforesaid final order is not tenable.
Based on the Managements evaluation of loss of control and that the above mentioned final order has been stayed
by the SAT, no adjustments, as directed by the said order, has been considered in the consolidated financial
results/ consolidated financial statements of the Company for the year ended 31 March 2025. Accordingly, no
adjustments have been considered necessary in respect of classification of the said investment, in these
standalone financial statements.
60 | NCLT petition under Sections 241 and 242
On 22 February 2024, few shareholders comprising of 50% of the shareholding (collectively called as the Tambi
Group) in Ksheer Sagar Developers Private Limited (KSDPL) filed a petition with the Hon’ble National Company
Law Tribunal (NCLT) under Sections 241 and 242 of the Companies Act, 2013 (the Act) pertaining to Oppression
and Mismanagement in the affairs of KSDPL. The matters raised in the said petition included matters relating to
related party transactions, delayed appointment of independent directors, change in status of the KSDPL from
subsidiary to associate, wrongful conduct of independent directors, process to appoint independent directors,
conduct of chairman of the Board of KSDPL amongst others. Amongst the various reliefs sought, one of the relief
sought was to halt the Extra Ordinary General Meeting (EOGM) on 1 March 2024 from taking place. ROHL on 28
February 2024 filed its response to the said petition with the NCLT disputing all the claims made by the Tambi
Group.
The NCLT on 29 February 2024 directed all the parties to carry out the EOGM as planned and comply with the
provisions of Companies Act 2013.
The EOGM was duly conducted on 1 March 2024 with the independent director as the Chairman. Only one business
relating to the appointment of a new independent director was conducted and an ordinary resolution was duly
passed. With effect from 2 March 2024, board of KSDPL has only one independent director. Also, Royal Orchid
Hotels Limited’s (ROHL) Administrative Committee has resolved that the current Independent Director shall be
the Chairman in the Board and General Meetings of KSDPL
Subsequent to the EOGM, the Tambi Group filed an Interlocutory Application on 11 March 2024 with the NCLT
stating that the appointment of independent director was not in accordance with the Act. A Compliance Affidavit
on 16 April 2024 was filed on behalf of KSDPL submitting how the interim order of NCLT dated 29 February 2024
was complied with. On 23 May 2024, the Tambi Group filed another Interlocutory Application requesting the
NCLT to halt the approval of the independent director of KSDPL as the Chairman of the Board of KSDPL. The
NCLT on 28 May 2024 directed all the parties to carry out the Board Meeting as planned. During the year, the
Tambi group has filed various additional Interlocutory Applications with the NCLT which has been responded to
by the Company and the matter is currently pending with the NCLT, the next hearing date is 29 May 2025.
In the responses filed with the NCLT, ROHL has stated before the NCLT that relevant provisions of the Act as
applicable to a deemed public company are not applicable to the KSDPL. ROHL believes that there has been no
change in its assessment of control as per ‘control assessment’ principles enunciated under Ind AS 110 and
accordingly continues to disclose in the Standalone Financial Statements.
61 | Audit Trail"
The Ministry of Corporate Affairs (MCA) has prescribed a requirement for companies under the proviso to
Rule 3(1) of the Companies (Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules
2021 requiring companies which uses accounting software for maintaining its books of account, shall use
only such accounting software which has a feature of recording audit trail of each and every transaction,
creating an edit log of each change made in the books of account along with the date when such changes
were made and ensuring that the audit trail cannot be disabled.
The Company has used certain accounting software for maintaining its books of account, which have the
feature of recording audit trail (edit log) facility and the same has been operated throughout the year for
all relevant transactions recorded in the respective software except for the instances mentioned below:
i) The accounting software used for maintenance of certain revenue records is operated by a third-party
software service provider. In the absence of the ‘Independent Service Auditor’s Assurance Report on the
Description of Controls, their Design and Operating Effectiveness’ (‘Type 2 report’ issued in accordance
with SAE 3402, Assurance Reports on Controls at a Service Organization) for the year ended 31 March 2025,
the Company is unable to demonstrate whether the audit trail feature of the said software was enabled at
the database level for all relevant transactions recorded. Further, due to absence of the Type 2 report,
the Company was not able to verify if audit trail pertaining to financial year from 2023 to 2024 was
preserved as per the statutory requirements for record retention.
ii) The accounting software used for maintenance of certain revenue records is operated by a third-party
software service provider. The Type 2 report issued in accordance with SAE 3402, Assurance Reports on
Controls at a Service Organization does not provide any information on existence of audit trail (edit logs)
for any direct changes made at the database level. Further, the audit trail pertaining to financial year
from 2023 to 2024 has not been preserved by the Company as per the statutory requirements for record
retention.
iii) The accounting software used for maintenance of books of accounts which is operated by a third-party
software service provider. In absence of the Type 2 report issued in accordance with SAE 3402, Assurance
Reports on Controls at a Service Organization for the year ended 31 March 2025, the Company is unable to
demonstrate whether the audit trail feature of the said software was enabled at the database level for all
relevant transactions recorded.
iv) The accounting software used for maintenance of books of accounts which is operated by a third-party
software service provider. In absence of the Type 2 report issued in accordance with SAE 3402, Assurance
Reports on Controls at a Service Organization for the year ended 31 March 2025, the Company is unable to
demonstrate whether the audit trail feature of the said software was enabled at the database level for all
relevant transactions recorded. Further, the audit trail has not been preserved at the application level by
two units of the Company as per the statutory requirements for record retention due to absence of the
Type 2 report, the Company was not able to verify if audit trail pertaining to financial year from 2023 to
2024 was preserved as per the statutory requirements for record retention.
v) The audit trail for an accounting software used for the maintenance of accounting records of one unit of
the Company has not been preserved by the Company as per the statutory requirements for record
retention from 1 April 2023 to 23 April 2q23._
This is the summary of material accounting policies and notes to the accompanying financial statements referred to in our
report of even date.
For Walker Chandiok & Co LLP For and on behalf of the Board of Directors of Royal Orchid Hotels Limited
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Hemant Maheshwari Chander K Baljee Keshav Baljee Amit Jaiswal Dr. Ranabir Sanyal
Partner Managing Director Director Chief Financial Officer Company Secretary
Membership No.: 096537 DIN: 00081844 DIN: 00344855 MM No. F7814
Bengaluru Bengaluru Mumbai Bengaluru Bengaluru
27 May 2025 27 May 2025 27 May 2025 27 May 2025 27 May 2025
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