Financial statements offer true view of state of affairs: IHCL

Dubbed by ousted chairman Cyrus Mistry as one of the Tata group's 'legacy hotspots' that may lead to a writedown of Rs 1.18 lakh crore, Indian Hotels today hit back saying its accounts and financial statements present "true and fair view" of the state of affairs.
"The company has from time to time published its accounts and financial statements...We would like to reiterate that all such reports, accounts and financial statements present true and fair view of the state of affairs of the company and its business and at this stage the company has disclosed all material facts as required under applicable law," Indian Hotels Co Ltd (IHCL) said in a clarification to the BSE.

Additionally, the company has employed vigorous process in preparation of all such accounts/financial statements, including detailed review by board of directors and respective committees, it added.
In 2015-16, IHCL had a consolidated gross revenue of Rs 4,706.27 crore. It had a net loss of Rs 60.53 crore. For the first quarter ended June 30, 2016 the company had total income of Rs 946.63 crore and a loss of Rs 169.45 crore.
Writing to the board of Tata Sons a day after he was removed on October 24, Mistry had clubbed IHCL along with Tata Motors' passenger vehicle business, Tata Steel Europe, Tata Teleservices and Tata Power Mundra as 'legacy hotspots'.

He had said that "the capital employed in those companies has risen from Rs 1.32 lakh crore to Rs 1.96 lakh crore (due to operational losses, interest and capex)".

"This figure is close to the net worth of the group which is at Rs 1.74 lakh crore. A realistic assessment of fair value of these businesses could potentially result in a write down over time of about Rs 1.18 lakh crore," Mistry had said in his letter.
Besides, Mistry had said that many foreign properties of IHCL and holdings in Orient Hotels have been sold at a loss. The onerous terms of lease for Pierre in New York are such that it would make it a challenge to exit.

He lashed out at IHCL saying beyond flawed international strategy, it had acquired the Searock property at a highly inflated price and housed in an off-balance sheet structure.
"In the process of unravelling this legacy, IHCL has had to write down nearly its entire net worth over the past three years. This impairs its ability to pay dividends," he said.
IHCL, however, asserted that all required governance processes in respect of investment approvals, risk assessment have been considered by its board and its duly constituted committees from time to time.
"In furtherance of such review, appropriate disclosures have been made by the company as required under applicable law. In our view, the board of directors has complied with its obligations under SEBI listing obligations and Disclosure Requirements, Regulations 2015," the company added.