4 LEASES

This note provides information for leases where the Company is a lessee. The Company leases hotel premises, plant and machinery and houses for employee accomodation. Rental contracts are typically made for fixed periods of 11 months to 36 years, but may have extension and termination options as described in (iii). The weighted average discount rate for lease liabilities is 10.5 % p.a.

(iii) Extension and termination options

Extension and termination options are included in a number of residential accomodation leases across the Company. These are used to maximise operational flexibility in terms of managing the assets used in the Company’s operations. The majority of extension and termination options held are exercisable only if agreed by both the Company and the lessor. The termination option of the hotel premises leased by the Company held are exercisable only by the lessee.

Critical judgements in determining the lease term:

The Company assesses at lease commencement whether it is reasonably certain to exercise the extension and termination options. The Company reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant change in circumstances within its control and affects whether the Company is reasonably certain to exercise an option not previously included in its determination of the lease term, or not to exercise an option previously included in its determination of the lease term.

Goodwill is initially recognised based on the accounting policy for business combinations and is tested for impairment annually.

Impairment testing

Goodwill represents the cost of acquired business as established at the date of acquisition of the business in excess of the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities less accumulated impairment losses, if any.

The Company tests goodwill for impairment at least annually, or more frequently if events or changes in circumstances indicate that it might be impaired. For the purpose of impairment testing, goodwill, which arose on acquisition of the assets/entities, is allocated to a cash generating unit “CGU” representing the lowest level with the company at which goodwill is monitored for internal management reporting purposes.The carrying value of the cash generating unit is the carrying value of the net assets of the entity.

The recoverable value in use of the CGU is determined on the basis of estimated future cash flows expected to arise from the continuing use of an asset or cash generating unit and from its disposal at the end of its useful life discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

The carrying amount of goodwill is Rs. 757.20 million (March 31, 2024 - Rs. 757.20 million). The estimated value-in-use of this CGU is based on the future cash flows using a 5% annual growth rate for periods subsequent to the forecast period of 5 years and a discount rate (pre-tax) of 12.50% p.a. An analysis of the sensitivity of the computation to a change in key parameters (EBITDA, discount rates and terminal value), based on reasonable assumptions, did not identify any probable scenario in which the recoverable amount of the CGU would decrease below its carrying amount.

The outcome of the Company’s goodwill impairment test as performed in March 2025 did not result in any impairment of goodwill.

(iv) Contractual obligations

See note 38 for disclosure of contractual obligations to purchase, construct or develop investment properties or for its repairs, maintenance or enhancements.

(v) Leasing arrangements

The investment properties are leased to tenants under operating leases with rentals payable monthly. Lease income from operating leases where the group is a lessor is recognised in income on a straight-line basis over the lease term. Lease payments have no variable lease payments that depend on an index or rate. Where considered necessary to reduce credit risk, the Company may obtain bank guarantees for the term of the lease. Although the Company is exposed to changes in the residual value at the end of the current leases, the Company typically enters into new operating leases and therefore will not immediately realise any reduction in residual value at the end of these leases.

Estimation of fair value

The Company obtains independent valuations for its investment properties at least annually. The best evidence of fair value is current prices in an active

market for similar properties. Where such information is not available, the group considers information from a variety of sources including:

1. Current prices in an active market for properties of different nature or recent prices of similar properties in less active markets, adjusted to reflect those differences.

2. Discounted cash flow projections based on reliable estimates of future cash flows.

3. capitalised income projections based upon prioperty’s estimated net market income, and a capitalisation rate derived from an analysis of market evidence.

The fair values of investment properties have been determined by a registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017. The main inputs used are the rental growth rates, expected vacancy rates, terminal yields and discount rates based on comparable transactions and industry data. All resulting fair value estimates for investment properties are included in level 3.

(vii) Presenting cash flows

The Company classifies cash outflows to acquire or construct investment properties as investing cash flows and rental inflows as operating cash flows.

(i) Trade receivables are non-interest bearing and are generally on payment terms of 0 to 30 days.

(ii) No trade or other receivable are due from directors or other officers of the Company either severally or jointly with any other person. Nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member except as disclosed in note 41.

(iii) For related party balances refer note 41.

(iv) The receivable is “unbilled” because the Company has not yet issued an invoice, however, the balance has been included under trade receivable (as opposed to contract assets) because it is an unconditional right to consideration.

There are no repatriation restrictions with regard to cash and cash equivalents as at the end of the reporting period and prior periods.

Fixed deposit of Rs.373.09 million (March 31, 2024 Rs. 596.65 million) is restricted for withdrawal, out of which Rs.360.76 million (March 31, 2024 Rs. 35.42 million) is against term loans availed during the period, Rs.Nil million (March 31, 2024 Rs. 505.62 million) is against an overdraft facility availed by the Company’s related party, Schloss Chanakya Private Limited, Rs. 9.34 million (March 31, 2024 Rs. 55.60 million) is against letter of credit and Rs.2.99 (March 31, 2024 Rs. Nil) against bank guarantee.

Terms, rights, preferences and restrictions attached to equity shares

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company’s residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not show of hands) are in proportion to its share of the paid-up equity capital of the Company.

On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company.

Terms, rights, preferences and restrictions attached to preference shares

During the current year, the Company has issued 128,843,758,373,963,280 and 119,295,990 CCPS to its fellow subsidiaries of par value Rs. 100 amounting to Rs. 12,884.37 million, Rs. 37,396.33 million and Rs. 11,929.60 million respectively. These CCPS were non-redeemable, fully convertible participating preference shares. CCPS carried a preferential dividend of 12% per annum, payable at the discretion of the Company’s board of directors.

The CCPS were to be settled using the entity’s own equity instruments, and the Company was obligated to deliver a variable number of these instruments to the CCPS holders and dividend was discretionary. This arrangement met the definition of a compound financial instrument having an equity component and a liability component. Further, the conversion feature was not a derivative because its value does not vary in response to changes in the issuer’s share price. Instead, the issuer is using its shares as a ‘currency’ to settle the obligation since, if conversion is elected, the investor would have always received the number of shares equal to par value of CCPS.

Liability component of Rs. 6,765.65 million was recorded as present value of cash outflows and the residual amount of Rs. 55,761.16 million after deducting the liability component from the gross value of the instrument of Rs. 62,210.30 million was recorded as equity component. The fair value of the instrument was determined by discounting the par value by considering conversion would happen only at maturity by applying a 12% discount rate.

These CCPS were converted into 100,501,294 Equity Shares bearing face value of Rs. 10 each and a premium of Rs. 609 per Equity Share. The resultant gain on conversion of such CCPS is accounted under other equity

Nature and purpose of reserves:

i Equity component of compound financial instrument

This represents the equity portion of compulsory convertible debentures compulsory convertible preference shares issued to Project Ballet Bangalore Holdings (DIFC) Private Limited, holding company. (Refer Note 17(a)).

ii Securities premium

Securities premium is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Act.

iii Retained earnings

Retained earnings represents surplus/accumulated earnings of the Company and are available for distribution to shareholders.

iv Retained earnings - fair value as deemed cost

Retained earnings - fair value as deemed cost represents the change in fair value of property, plant and equipment on the date of transition as per deemed cost exemption adopted by the Company which is nondistributable. iv Other equity

This represents the loss on early conversion of compulsory convertible debentures and conversion of compulsory convertible preference shares.

acquired (Rs. 2,000 million) fully fungible amongst each of the co-borrowers and the Company’s hotel property in Bangalore. The door to door tenure of the loan is 15 years including moratorium of one year. The loan is repayable in 56 quarterly structured installments beginning 31 December 2020. The loan carries interest rate linked to lender’s one year marginal cost of funds based lending rate (“MCLR”), subject to annual reset, plus spread of 0.10%. The Company has available facility of Rs.Nil and rate of interest as on March 31, 2025 is 9.10 % p.a. (March 31, 2024 8.65%) with monthly rests.

With the gradual drawdown of capex in the past three years the individual limits set for Schloss Chennai Private Limited and Schloss Udaipur Private Limited got exhausted and an application to the lender was made for revision in the individual limits. However, due to the system limitation at the end of the lender, the same cannot be revised and accordingly a cross utilisation of capex limit was done during the previous year. The Company has cross charged the interest expense on such utilisation to respective entities.

(a) Primary security:

The total term loan under the said agreement is secured against assets of

the Company and other co-borrowers under the Common Facility Agreement,

interalia, including:

i. Exclusive charge on the total assets (including mortgage of property and / or mortgage of leasehold rights in case of leasehold property, if any) (present & future).

ii. Exclusive charge on brand ‘Leela’ pertaining to Hotels, other intangibles, Goodwill, Intellectual Property (IP), uncalled capital (present and future);

iii. Exclusive charge on all bank accounts including but not limited to Escrow account (present & future).

iv. First charge on the total current assets (present and future).

v. Hypothecation of cash flows

(b) Other security:

i) Pledge of 30% shares of the Company held by the Project Ballet Bangalore Holdings (DIFC) Private Limited, in favour of security trustee for the benefit of lenders for the entire term loan exposure.

ii) A guarantee of BSREP III India Ballet Holdings (DIFC) Limited., situated at Dubai upto an amount of Rs. 3,000 million, enforceable at Dubai towards meeting the shortfall in debt service obligations.

iii) A guarantee of Schloss HMA Private Limited and Leela Palaces and Resorts Limited, fellow subsidiaries, enforceable towards meeting the shortfall in debt service obligations upto March 28, 2025.

iv) Mortgage on the land situated at Agra owned by Leela Palaces and Resorts Limited.

(c) Current maturities of long-term borrowings are classified as short-term borrowings.

(d) Moratorium on interest:

The Company has availed the moratorium facility for interest on term loan for the period March, 2020 to August 2020 which has been further capitalised into term loan w.e.f. 01 October 2020 amounting Rs. 428.62 million (March 31, 2024 Rs.428.62 million).

(e) The quarterly returns or statements of current assets i.e. stock statement, FFRs etc. filed by the Company with banks or financial institutions are in agreement with the books of accounts.

(f) Loan covenants: Under the terms of the borrowing facilities, all the coborrowers are required to maintain the following covenants:

FACR 1.52, DSCR 1.34, ICR 1.89, Debt/EBITDA 5.64. The Company has met all the loan covenants during the year.

Corporate Term Loan:

The lender has granted a corporate term loan facility under the Agreement dated February 02, 2024 to the Company and co-borrowers i.e. Schloss

Chennai Private Limited, Schloss Udaipur Private Limited, Schloss Chanakya Private Limited, Schloss HMA Private Limited (w.e.f. March 29, 2025) and Leela Palaces and Resorts Limited (w.e.f. March 29, 2025) for a total amounting to Rs. 1,500.00 million for the purpose of ongoing capital expenditure (“capex”) of the Company and other co-borrowers. Major portion i.e. 2/3rd portion of the sanctioned loan to be utilized in Schloss Bangalore Limited and remaining 1/3rd will be utilized by Schloss Chanakya Private Limited, Schloss Udaipur Private Limited and Schloss Chennai Private Limited. The rate of interest is 0.10% plus 1 year MCLR i.e. 9.00% p.a., present effective rate is 9.10 % p.a. with monthly rests.

(a) Primary Security details: Exclusive charge on plant and machinary financed out of proposed corporate term loan of Rs. 1,500 million.

(b) Collateral security details: Extention of charge on current assets and fixed assets of the company and other co-borrowers as per Obligor, Coobligor structure both present and future.

(c) Corporate guarantee:

- BSREP III India Ballet Holdings (DIFC) Limited

- Schloss HMA Private Limited (upto March 28, 2025)

- Leela Palaces and Resorts Limited (upto March 28, 2025)

B The lender has granted a Working capital term Loan (WCTL) Facility under Guaranteed Emergency Credit Line 3.0 (GECL 3.0) facility of Rs. 2,000 million on December 24, 2021 to the Company to augment net working capital, requirements to meet operational liabilities. The door to door tenure of the loan is 6 years including moratorium of principal of two years. The loan is repayable in 48 quarterly structured installments beginning January 2024. The loan carries interest rate linked to lender’s six months marginal cost of funds based lending rate (“MCLR”), plus 0.2%, subject to annual reset.

(a) Primary security:

Second charge on securities mentioned in A.1.(a) above.

(b) Other security:

i) Pledge of 30% shares of the Company held by the Project Ballet Bangalore Holdings (DIFC) Private Limited, Holding company, in favour of security trustee for the benefit of lenders for the entire term loan exposure.

ii) Extension of mortgage on the land situated at Agra owned by Leela Palaces and Resorts Limited.

(c) Current maturities of long-term borrowings are classified as short term borrowings.

C Term loan II

The lender had sanctioned a term loan facility under Lease Rental Discounting (LRD) facility under the Master Facility Agreement to the Company, amounting to Rs. 1,100.00 million for the purpose of acquisition of the Galleria office in Bangalore. The door to door tenure of the loan is 15 years from the date of first disbursement. The loan’s repayable tenure is 180 monthly structured installments beginning December 2021. The loan carries interest rate linked to lender’s one year marginal cost of funds based lending rate (“MCLR”), subject to monthly and annual reset, plus spread of 0.75%. The rate of interest as on March 31, 2025 is 9.75 % p.a. with monthly rests (March 31,2024 9.40% p.a.).

(a) Primary Security:

Exclusive first charge on hypothecation of existing and future rent receivables including lease rentals, parking rental, maintenance receivables and any other receivables from existing tenants of the commercial building named “Galleria” from 1st floor to 7th floor, located at Sy. no. 94, 95, 96, HAL Stage - II, Old airport road, Kodihalli village, Varthur Hobli, now part of municipal no. 23/4, PID no. 74-49-23/4, situated at Kodihalli main road, 6th cross, Bangalore admeasuring 15,203.98 sq. ft.

(b) Collateral Security:

(a) Exclusive first charge on the commercial building named “Galleria” from 1st floor to 7th floor, located at Sy. no. 94, 95, 96, HAL Stage - II, Old airport road, Kodihalli village, Varthur Hobli, now part of municipal no. 23/4, PID no. 74-49-23/4, situated at Kodihalli main road, 6th cross, Bangalore admeasuring 15203.98 sq. ft. along with underlying land admeasuring 24,404 sq. mtrs.

(b) Assignment (by way of security interest) the right to use 305 car parking space.

(c) Exclusive charge as Lien on 3 months DSRA

(d) Exclusive charge on Escrow account

(c) Current maturities of long-term borrowings are classified as short term borrowings.

D Unsecured compulsorily convertible debentures

(a) The Company had issued 10.50% p.a. interest bearing 4,750,000 and 10,277,498 compulsory convertible debentures (“CCDs”) having face value of Rs. 100 each and term of 15 years during the year ended March 31, 2021 and March 31, 2022 respectively. These CCDs carried 10.50% p.a. coupon rate. The CCD holder shall be entitled to interest on the principal amount of CCDs outstanding at a rate of 10.50 % per annum compounded on a yearly basis, until conversion of the CCDs. Conversion terms:

At the end of the tenure (15 years), each Compulsorily Convertible Debentures (“CCD”) of face value of Rs 100 each will be converted into 1 equity share of face value of Rs 10 each. CCD can be converted during the tenure of CCD at the option of the parties i.e. CCD holders and the Company. Provided that the CCDs shall automatically stand converted into equity shares upon:

(a) Commencement of the corporate insolvency resolution process of the Company or, any of the co-borrowers under the Common Facility Agreement dated 30 September 2019 executed with the lender; or

(b) Conversion of loan into equity of the Company or any or all of the coborrowers under the Common Facility Agreement, unless otherwise instructed by the lender as per the Common Facility Agreement who have provided the loans or who may have acceded to the financing documents.

(b) Restriction on payment of interest on CCDs:

As per terms of the Common Facility Agreement referred at clause 5(A), interest on the CCDs shall be accrued but cannot be paid by the Company until all the obligations under Common Facility Agreement are completed or seized.

(c) The Company is liable to pay the interest portion on the CCD and at the end of the term of the CCD it will be converted into equity shares in the ratio of 1:1. The interest and equity conversion as included in the CCD instrument requires it to be classified as compound financial instrument having an equity component for conversion and liability component for cash outflows towards interest payments. As at March 31, 2024 Liability component is recorded as present value of cashoutflows towards interest portion and the residual amount after deducting the liability component from the gross value of the instrument is recorded as equity component post deferred tax adjustment (refer note 17(a)).

(d) Modification in terms of Compulsorily Convertible Debentures (CCDs): As per the original terms, the CCD holder was entitled to interest @ 10.50%. The Company entered into addendum agreement dated September 28, 2023 with the CCD holder for alteration of the CCD terms. As per the addendum agreement the CCD holder is entitled to interest on principal amount at the rate of 10.50% p.a. till March 2029 and henceforth it will be 12.50% p.a. compounded on yearly basis until conversion. Company accounted the modification as substantial modification and recognised the gain of Rs. 96.38 million in equity in previous year ended March 31, 2024.

(d) Extinguishment of CCDs: Project Ballet Bangalore Holdings (DIFC) Pvt. Limited, the holder of the compulsorily convertible debentures (“CCD”) has requested for the conversion of those CCDs on May 31, 2024 and these CCDs are converted into equity shares during the year. Interest on CCDs is paid during the year till the date of conversion of these CCDs to equity.

E Working capital loan

The lender has granted a working capital facility as per Agreement dated August 11, 2020 to the Company and co-borrowers i.e. Schloss Chennai Private Limited, Schloss Chanakya Private Limited, Schloss Udaipur Private Limited, Schloss HMA Private Limited (w.e.f. March 29, 2025) and Leela Palaces and Resorts Limited (w.e.f. March 29, 2025) for a total amounting to Rs. 1,000 million to meet the working capital requirement and it is repayable on demand. The loan carries interest rate linked to lender’s six monthly marginal cost of funds based lending rate (“MCLR”) plus 0.20%, subject to monthly rest. The rate of interest as on March 31, 2025 is 9.10% p.a.

As at March 31, 2024 the Company and co-borrowers i.e. Schloss Chennai Private Limited, Schloss Chanakya Private Limited, Schloss Udaipur Private Limited was having a working capital facility amounting to Rs.500 million. The rate of Interest rate as on March 31, 2024 was 8.65%p.a.

F Inter corporate deposit

The Company’s fellow subsidiaries and other related party i.e Schloss Chennai Private Limited, Schloss Udaipur Private Limited and Schloss Chanakya Private Limited have

granted deposits to the Company, for a total of Rs.NIL (March 31, 2024 Rs.1,710.10) million to meet working capital requirements and it is repayable on demand. The rate of interest as on March 31, 2024 is 12.50% p.a.

The Company utilised the borrowings for the specific purpose for which it was obtained.

This section sets out an analysis of net debt and movements in net debt for each of the years presented.

Contract Balances

The contract liabilities primarily relates to the advance consideration received from customers for which revenue is recognized when the performance obligation is over/ services delivered. Advance collection is recognised when payment is received before the related performance obligation is satisfied. This includes advances received from the customer towards rooms/ restaurant/ banquets. Revenue is recognized once the performance obligation is met i.e. on room stay/ sale of food and beverage/ provision of banquet services/ other allied services.

It also includes membership fee received for food and beverage based memberships programme and disclosed as income received in advance.

The Company has recorded revenue of Rs.60.25 million and Rs.118.98 million against opening balance of contract liabilities for the years ended March 31, 2025 and March 31,2024 respectively.

The above excludes investments in subsidiaries, joint ventures and associates amounting to Rs.45,988.82 million

Ind AS 113, ‘Fair Value Measurement’ requires classification of the valuation method of financial instruments measured at fair value in the Statement of Balance sheet, using a three level fair-value-hierarchy (which reflects the significance of inputs used in the measurements). The hierarchy gives the highest priority to un-adjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to un-observable inputs (Level 3 measurements).

The carrying amounts of trade receivables, cash and cash equivalents, fixed deposits with banks, current borrowings, trade payables, capital creditors, security deposits, employee dues payable are considered to be the same as their fair values, due to their short-term nature.

Where such items are non-current in nature, the same has been classified as Level 3 and fair value determined using discounted cash flow basis.

I nvestments in unquoted equity instruments where most recent information to measure fair value is insufficient, or if there is a wide range of possible fair value measurements, also the difference between the fair value and carrying value is not significant. Hence, carrying value has been considered as the best estimate of fair value.

Further, the Company has valued compound financial instrument (both financial liability and equity component) at fair value on intial recognition. Financial liability subsequently measured at amortised cost by adding unwinded interest. The intercorporate deposit is having fair value equivalent to carrying amount as it is repayable on demand and classified as current financial liability.

The current lending rate and the rate used in determination of fair value at inception for security deposits, lease liabilities, non-current borrowings and compound financial instruments are not significantly different. Accordingly, the fair value and carrying value for security deposits, lease liabilities, non-current borrowings and compound financial instruments are same.

The fair-value-hierarchy under Ind AS 113 are described below:

Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives and equity securities) is based on quoted market prices at the end of the reporting period. The mutual funds are valued using the closing NAV. The quoted market price used for financial assets held by the Company is the current bid price. These instruments are included in level 1.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

There have been no transfers between different fair value hierarchy levels for the year ended March 31, 2025 and March 31, 2024.

34 FINANCIAL RISK MANAGEMENT

The Company’s business activities expose it to market risk, liquidity risk and credit risk. The management develops and monitors the Company’s risk management policies. The key risks and mitigating actions are also placed before the Board of directors of the Company. The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and to control and monitor risks and adherence to limits.

Finance team and experts of respective business divisions provides assurance that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. The activities are designed to:

- protect the Company’s financial results and position from financial risks

- maintain market risks within acceptable parameters, while optimising returns; and

- protect the Company’s financial investments, while maximising returns.

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk.

A. Credit Risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk arises from trade receivables, cash and cash equivalents, bank balance, fixed deposits with banks, security deposits and other financial assets.

The Company is exposed to credit risk on its financial assets, which comprise cash and cash equivalents, bank deposits, trade receivables, security deposits and other receivables. The exposure to credit risks arises from the potential failure of counterparties to meet their obligations. The maximum exposure to credit risk at the reporting date is the carrying amount of the financial instruments.

With respect to other financial assets namely secuity deposits and other receivables, the maximum exposure to credit risk is the carrying amount of these classes of financial assets presented in the Balance Sheet. These are actively monitored and confirmed by the Company. Currently, the credit risk arising from such security deposits and other receivables is evaluated to be immaterial for the Company.

Credit Risk on cash and cash equivalents, deposits with the banks/financial institutions is generally low as the said deposits have been made with the banks/ financial institutions, who have been assigned high credit rating by international and domestic rating agencies.

Trade receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer and the geography in which it operates. Credit risk is managed through credit approvals and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company operates only in one geographical location i.e. in India. Considering the industry in which the company is operating, there is no major long outstanding receivables.

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forwardlooking information. The carrying amounts of trade receivables as disclosed in note number 13 represent the maximum credit risk exposure.

The company believes that the working capital is sufficient to meet its current requirements. The company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve bankiing facilities by continously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

Financial assets at FVTPL : The Company is also exposed to credit risks in relation to financial assets (investmenst) that are measured at FVTPL. The maximum exposure at the end of the reporting period is the carrying amount of these assets.

B. Liquidity risk

Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company’s objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. In addition, processes and policies related to such risks are overseen by senior management.

* The undrawn borrowing facilities of Rs.770.27 million is fungible amongst 6 SPV’s namely Schloss Bangalore Limited, Schloss Chanakya Private Limited, Schloss Chennai Private Limited, Schloss Udaipur Private Limited, Schloss HMA Private Limited and Leela Palaces and Resorts Limited.

(ii) Maturities of financial liabilities

The table below summarises the maturity profile of the company’s financial liabilities based on their contractual payments. The amount disclosed in the table are the contractual undiscounted cash flows. Balance due within 12 months equal their carrying balances as the impact of discouting is not significant.

C. Market risk

(a) Foreign currency risk

Foreign currency risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign currency rates. The Company makes payments internationally and is exposed to foreign exchange risk arising from foreign currency purchases, primarily with respect to USD and GBP. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the Company’s functional currency (Rs.) at the periodend. The Company’s exposure to foreign currency risk, expressed in Rs., is given in the table below. The amounts represent only the financial assets and liabilities that are denominated in currencies other than the functional currency of the Company.

An analysis by maturities is provided in note 34(B)(ii) above. The percentage of total loans shows the proportion of loans that are currently at variable rates in relation to the total amount of borrowings.

Cash flow sensitivity analysis for variable rate instruments

Profit or loss is sensitive to higher/lower interest expense from borrowings as a result of changes in interest rates.

b) Interest rate risk

Interest rate risk is the risk that changes in market interest rates will lead to changes in fair value of financial instruments or changes in interest income, expense and cash flows of the Company.

The exposure of the Company’s borrowings to interest rate changes at the end of the reporting period are included in the table below. As at the end of the reporting period, the Company had the following variable rate borrowings outstanding:

35 CAPITAL MANAGEMENT

The Company considers its total equity as shown in the balance sheet including share capital and retained earnings as the components of its balance sheet of managed capital. The Company’s objectives when managing capital are:

- Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

- Maintain an optimal capital structure to reduce the cost of capital.

The Company’s policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will

take appropriate steps in order to maintain, or if necessary adjust, its capital structure. The management monitors the return on capital as well as the level of dividends to shareholders. The Company’s goal is to continue to be able to provide return to shareholders.

No single customer contributes 10% or more of the Company’s total revenue for the period ended March 31, 2025 and March 31, 2024.

All non-current assets are held by the Company in India, the domicile country. Hence, statement for geographical information is not applicable.

Loan covenants: Under the terms of the major borrowing facilities, the company is required to comply with the following financial covenants as disclosed under note 17. The Company has complied with the applicable financial covenants.

36 SEGMENT INFORMATION

The primary reporting of the Company has been performed on the basis of business segment. Based on the “management approach” as defined in Ind AS 108 - Operating Segments, the Chief Operating Decision Maker (‘CODM’) i.e. Board of Directors of the Company, being the CODM has evaluated of The Company’s performance at an overall level as one segment which is ‘Revenue based in India Location’ that includes: (i) Revenue from room services, (ii) Revenue from food and beverages and

(iii) Other allied services in a single business segment based on the nature of the services, the risks and returns, the organization structure and the internal financial reporting systems. Accordingly, the figures appearing in these financial statements relate to the Company’s single business segment.

**Service tax department has raised demand on HLV Limited vide Show Cause Notice (“SCN”) on account of disallowance:

(a) of CENVAT availed on debit notes raised by Leela Lace Holding Private Limited for service tax paid on lease rental under Voluntary Compliance Encouragement Scheme (“VCES”) introduced by Ministry of Finance, Government of India to encourage payment of taxes on undisclosed income;

(b) on account of classification of in-room dining and mini bar under room accommodation (HLV Limited has paid service tax on in-room dining and mini bar service under restaurant category (department has considered the said services under room accommodation category to levy tax) and

(c) of abatement claimed under rent-a-cab on account of input availment on car washing, maintenance etc.

Order to SCN was received in favour of HLV Limited. However, in departmental query the issue was raised again and the department has filed an appeal before CESTAT against the order received in favour of HLV Limited.

# Company has received the notice (issued by Deputy Commissioner of Commercial Tax) on 9th March 2010 for the period FY 2005-06 to FY 2009-10 demanding the VAT @12.5% on service charges including service tax component charged on foods and service supplied at the banquet halls alleging that the service charges, service tax and cess collected relating to sale of food and beverages are presale expenses which add to the value of goods sold. Company had filed detailed reponse in this regard.

AO passed the order confirming the demand for FY 05-06, 06-07, 07-08, 08-09 and 09-10 (Upto Nov-19). Commissioner of Commercial Tax (Appeal) upheld the order passed by AO.

The Company filed an appeal before Karnataka Appellate Tribunal. Karnataka Appellate Tribunal set aside the order passed by AO in 2010.

The Department filed revision petition before Hon’ble High court of Karanataka. Hon’ble High Court allowed the revision petition in 2012 and instructed the Appellate Tribunal to undertake fresh scrutiny/ assessment of the said matter. Against High court order, SBPL has filed the Special Leave Petition (‘SLP’) before Hon’ble Supreme Court. Supreme Court dismissed the SLP on 5th April 2013 and directed the Company to approach High Court.

Till date the Company has not received any letter for fresh scrutiny in this regard.

***For period FY2019-20, officer has passed the order in Form DRC-07 where demand on account of ITC availment on immovable property [Building] which is not capitalised has been confirmed amounting to Rs. 5.92 million (including interest and penalty).

Hearing in this matter was scheduled on 20 March 2025 which was duly attended. Vide the hearing, Appellate authorities have sought additional documents which shall submitted at the time of another hearing, which will be scheduled subsequently.

For FY 2020-21, FY 2021-22 and FY 2022-23, Authorities have vide the summon issued sought certain details/information in relation discrepancies in ITC mismatch, tax liability mismatch, ITC availed on blocked credit under Section 17(5) and non payment of tax under reverse charge mechanism. In this regard, the Company had filed detailed response against the each of the observations.

Pursuant to issuance of SCN, authorities have passed the Order dated January 13, 2025 where entire demand of tax, interest and penalty has been confirmed. In this regard, the Company has filed appeal before appellate authority dated April 01, 2025. Hearing is awaited in this matter.

38 COMMITMENTS

Estimated amount of contracts remaining to be executed and not provided for (net of advances) amounts to Rs. 679.85 million (March 31, 2024 Rs.88.64 million).

40 EMPLOYEE BENEFIT OBLIGATION

a) Compensated absences

Compensated absences covers the Company’s liability for earned leaves. Accumulated compensated absences, which are expected to be availed or encashed are treated as employee benefits. The employees are entitled to accumulate leave subject to certain limits for future encashment / availment. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end.

The Company’s liability is actuarially determined (using the Projected Unit Credit method) by an Independent actuary at the end of the period. Actuarial losses/gains are recognised in statement of profit or loss in the period in which they arise.

The expense of compensated absences (non-funded) for the year ended March 31, 2025 amounting to Rs. 1.16 million (March 31, 2024: Rs. 3.32 million) has been recognized in the statement of profit and loss, based on actuarial valuation carried out using projected unit credit method.

b) Post employment obligations

Provident fund and Employees State Insurance Commission - Defined contribution plan

The Company makes provident fund contributions to defined contribution plans for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions payable under these plans by the Company are at rates specified in the rules of the schemes.

The contributions are charged to the statement of profit and loss as they accrue. The amount as an expense towards contribution to provident fund and employees state insurance for the period aggregated to Rs. 24.96 million (March 31, 2024: Rs. 22.64 million).

Gratuity - Defined benefit plan

The Company operates post-employment funded defined benefit plan that provides gratuity. The scheme provides for lumpsum payment to eligible employees on retirement, death while in employment or on termination of employment, of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to a limit of Rs. 20 lakhs. The amounts in excess of the limit are to be borne by the Company as per policy. Eligibility occurs upon completion of five years of service.

The present value of the defined benefit obligation and current service cost are measured using the projected unit credit method with actuarial valuations being carried out at each balance sheet date.

Risk exposure:

Gratuity is a defined benefit plan and the Company is exposed to the following risks:

Interest rate risk: A fall in the discount rate which is linked to the Government Security Rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.

Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future expected salaries of employees. As such, an increase in the salary expected by more than assumed level will increase the plan’s liability.

Withdrawal risk: The risk that the usual timeframe for withdrawal requests is not met, or the withdrawals from the fund due to severe adverse market conditions are suspended.

Mortality risk: Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.

Corporate guarantee

Company’s intermediate holding company i.e. BSREP III India Ballet Holdings (DIFC) Limited, fellow subsidiaries i.e. Schloss HMA Private Limited (upto March 28, 2025) and Leela Palaces and Resorts Limited (upto March 28, 2025) have given corporate guarantee and fellow subsidiaries also created charge over their total assets for the term loan facility availed by the company.

E Names of Related parties where control exists

Project Ballet Bangalore Holdings (DIFC) Private Limited (Holding Company), BSREP III India Ballet Holdings (DIFC) Limited (Intermediate Holding Company) and Brookfield Corporation (Formerly known as Brookfield Asset Management Inc.) (Ultimate controlling party).

F Terms and conditions

All outstanding balances are unsecured and repayable in cash. All transactions were made on normal commercial terms and conditions and at market rates.

43 OTHER STATUTORY INFORMATION

(i) The Company neither have any Benami property, nor any proceeding has been initiated or pending against the Company for holding any Benami property.

(ii) The Company does not have any transactions with companies struck off u/s 243 of the Companies Act, 2013 or u/s 560 of Companies Act, 2013.

(iii) The Company does not have any charges or satisfaction which is yet to be registered with Registrar Of Companies (ROC) beyond the statutory year.

(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the year.

(v) The Company has not advanced or loaned or invested funds in 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.

(vi) 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.

(vii) The Company does 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.

(viii) The Company has investment property as disclosed in fair value and accordingly its fair valuation is at year end is disclosed in note 6.

(ix) No revaluation of Property, Plant & Equipment (Including ROU) & Intangible assets has been carried out during the period.

(x) The Company has not granted loans or advances in the nature of loans to promoters, directors, KMPs and the related parties, either severally or jointly with any other person, that are:

(a) repayable on demand; or

(b) without specifying any terms or period of repayment.

(xi) The Company has not defaulted on loan from any bank or financial Institution or other lender.

(xii) Compliance with approved Scheme(s) on the basis of security of current assets - not applicable.

(xiii) The Company is not declared willful defaulter by any bank or financial institution as defined under Companies Act, 2013 or consortium thereof or other lender in accordance with the guidelines on the wilful defaulters issued by the RBI.

(xiv) The Company has complied with number of layers prescribed under clause (87) of Section 2 of the Act read with Companies (Restriction on Number of Layers) Rules, 2017.

(xv) The Company has used the borrowings from bank for specific purpose for which it was taken at the balance sheet date.

(xvi) Compliance with approved scheme of arrangements.