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Chalet Hotels Ltd.

BSE: 542399 Sector: Services
NSE: CHALET ISIN Code: INE427F01016
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NSE 13:44 | 29 Sep 339.30 2.00
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OPEN 339.00
PREVIOUS CLOSE 337.50
VOLUME 14429
52-Week high 362.85
52-Week low 210.90
P/E
Mkt Cap.(Rs cr) 6,964
Buy Price 339.05
Buy Qty 11.00
Sell Price 339.90
Sell Qty 61.00
OPEN 339.00
CLOSE 337.50
VOLUME 14429
52-Week high 362.85
52-Week low 210.90
P/E
Mkt Cap.(Rs cr) 6,964
Buy Price 339.05
Buy Qty 11.00
Sell Price 339.90
Sell Qty 61.00

Chalet Hotels Ltd. (CHALET) - Auditors Report

Company auditors report

To the Members of Chalet Hotels Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of Chalet HotelsLimited ("the Company") which comprise the standalone balance sheet as at March31 2021 and the standalone statement of profit and loss (including other comprehensiveincome) the standalone statement of changes in equity and the standalone statement ofcash flows for the year then ended and notes to the Standalone financial statementsincluding a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as "standalone financial statements").

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2021and its loss and other comprehensive income changes in equity and its cash flows for theyear ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under Section 143(10) of the Act. Our responsibilities under those SAs arefurther described in the Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the Rules thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion on the standalonefinancial statements.

Emphasis of Matter

a) We draw attention to Note 42 (c) of the standalone financialstatements in respect of the entire building comprising of the hotel and apartmentstherein purchased together with a demarcated portion of the leasehold rights to land atVashi (Navi Mumbai) from K. Raheja Corp Private Limited on which the Company's FourPoints by Sheraton Hotel has been built. The allotment of land by City & IndustrialDevelopment Corporation of Maharashtra Limited (‘CIDCO') to K. Raheja CorpPrivate Limited has been challenged by two public interest litigations and the matter iscurrently pending with the Honorable Supreme Court of India.

Pending the outcome of proceedings and a final closure of the matterno adjustments have been made in the standalone financial statements as at and for theyear ended March 31 2021 to the carrying value of the leasehold rights (reflected asprepayments) aggregating to ` 50.93 million (March 31 2020: ` 52.13 million) and thehotel assets thereon (reflected as property plant and equipment) as at March 31 2021 is` 400.77 million (March 31 2020: ` 427.21 million) respectively.

Our opinion is not modified in respect of the above matter. b) We drawattention to Note 49 to the standalone financial statements relating to remunerationpaid/payable to the Managing Director & CEO of the Company for the financial yearended March 31 2021 being in excess of limits prescribed under Section 197 of the Act by` 47.49 million of which the proportionate remuneration from February 09 2021 of ` 6.63million is subject to approval of the shareholders.

Our opinion is not modified in respect of the above matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

Deferred Tax Assets (refer note 23 to the standalone financial statements)
The Key Audit Matter How the matter was addressed in our audit
The carrying amount of the Deferred tax assets represents 4.24 % of the Company's total assets. Our audit procedures included:
• Obtained the approved business plans projected profitability statement.
Recognition and measurement of deferred tax assets Under Ind AS the Company is required to reassess recognition of deferred tax asset at each reporting date. • Evaluated the design and testing the operating effectiveness of controls over quarterly assessment of deferred tax balances and underlying data.
• Evaluated the projections of future taxable profits. Testing the underlying data and assumptions used in the profitability projections and performing sensitivity analysis.
The Company has recognised deferred tax assets on brought forward losses / deductions and other temporary differences as set out in note 23 to the standalone financial statements.
The Company's deferred tax assets in respect of brought forward losses / deductions are based on the projected profitability. Such projected profitability is based on approved business plans which demonstrate availability of sufficient taxable income to utilise such losses / deductions. • Assessed the recoverability of deferred tax assets by evaluating profitability Company's forecasts and fiscal developments.
• Considered the adequacy of the Company's disclosures on deferred tax and assumptions used. The Company's disclosures concerning income taxes are included in note 23 to the standalone financial statements.
We focused on this area as recognition of deferred tax requires significant judgment in estimating future taxable income and accordingly recognition of deferred tax.
Impact of COVID-19 on Going concern (refer note 57 to the standalone financial statements)
The Key Audit Matter How the matter was addressed in our audit
The impact of the COVID-19 pandemic and measures to control the virus have created uncertainties related to going concern for the Company. Our audit procedures included:
• Obtained understanding of the key controls relating to the Company's forecasting process.
The Company has assessed the impact of COVID-19 on the future cash flow projections. • Obtained an understanding of key assumptions adopted by the Company in preparing the cash flow forecast for revenue fixed costs operating costs capital expenditure and commitments. Assessed the key assumptions based on our understanding of the Company's business.
The Company has prepared a range of scenarios to estimate cash flows from operating activities and the financing requirements. Based on the above the standalone financial statements of the Company for the year ended March 31 2021 have been prepared on a going concern basis.
• Compared the future expected cash flows in the cash flow forecast with the Company's business plan approved by the Board of Directors
• Performed sensitivity analysis to the cash flow forecast by considering plausible changes to the key assumptions adopted by the Company and its impact on the going concern assumption.
In view of uncertainties identified outlined above we identified a key audit matter related to going concern due to the significant judgement required to conclude on the going concern assumption.
• Obtained details of borrowing disbursed subsequent to the year end and tested with underlying documentation.
• Assessed compliance with the loan covenants during the year and subsequent to the year-end.
• Considered the adequacy of the Company's disclosure in respect of management's assessment of going concern assumption.
Litigations and Claims (refer note 11 29 36 and 42 to the standalone financial statements)
The Key Audit Matter How the matter was addressed in our audit
As at March 31 2021 the Company has two key litigations pertaining to Bengaluru Residential project carried under inventories and leasehold rights to land at Vashi (Navi Mumbai) from K. Raheja Corp Private Limited. Our procedures included amongst others:
• Evaluated the design and implementation of the Company's controls over the assessment of litigations and completeness of disclosures and tested operating effectiveness of these controls.
We focused on this area as a key audit matter due to inherent uncertainty in measurement as per accounting standards to determine amount to be provided for and the disclosures to be made • Read correspondence from the Company's external lawyers in response to our requests for significant litigations and assessed the competence and objectivity of the external lawyers; and
• Additionally considered effect of new information post April 01 2021 till the date of signing of the report to evaluate any change required in the Company's position on the litigation and claims as at March 31 2021.
• Assessed the Company's disclosures adequately reflect the quantitative and qualitative considerations in relation to the matters in accordance with auditing standards.

Other Information

The Company's management and Board of Directors are responsiblefor the other information. The other information comprises the information included in theCompany's annual report but does not include the standalone financial statements andour auditors' report thereon.

Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

Management's and Board of Directors' Responsibility for theStandalone Financial Statements

The Company's management and Board of Directors are responsiblefor the matters stated in Section 134(5) of the Act with respect to the preparation ofthese standalone financial statements that give a true and fair view of the state ofaffairs profit/loss and other comprehensive income changes in equity and cash flows ofthe Company in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone financial statements management and Boardof Directors are responsible for assessing the Company's ability to continue as agoing concern disclosing as applicable matters related to going concern and using thegoing concern basis of accounting unless management either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

• As part of an audit in accordance with SAs we exercise professional judgmentand maintain professional skepticism throughout the audit. We also: identify and assessthe risks of material misstatement of the standalone financial statements whether due tofraud or error design and perform audit procedures responsive to those risks and obtainaudit evidence that is sufficient and appropriate to provide a basis for our opinion. Therisk of not detecting a material misstatement resulting from fraud is higher than for oneresulting from error as fraud may involve collusion forgery intentional omissionsmisrepresentations or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures in the standalone financial statementsmade by the Management and Board of Directors.

• Conclude on the appropriateness of management's use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters.

We describe these matters in our auditors' report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors' Report) Order 2016("the Order") issued by the Central Government of India in terms of Section 143(11) of the Act we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

A) As required by Section 143(3) of the Act we report that: a) we havesought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit;

b) in our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

c) the standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account;

d) in our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards (Ind AS) specified under Section 133 of the Act;

e) on the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 from being appointed as a director in terms of Section 164(2) of theAct; and

f) with respect to the adequacy of the internal financial controls with reference tothe standalone financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B"

(B) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. the Company has disclosed the impact of pending litigations as at March 31 2021 onits financial position in its standalone financial statements - Refer Notes 36 and 42 tothe standalone financial statements;

ii. the Company has made provision as required under the applicable law or Ind AS formaterial foreseeable losses if any on long-term contracts including derivativecontracts Refer note 29 to the standalone financial statements;

iii. there were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company; and iv. the period November 08 2016 toDecember 30 2016 have not been made in these standalone financial statements since theydo not pertain to the financial year ended March 31 2021.

(C) With respect to the matter to be included in the Auditors' Report underSection 197(16) of the Act we report that: i. we draw a attention to note 49 to theStandalone Financial Statement relating to remuneration paid / payable to the ManagingDirector & CEO of the Company for the financial year ended March 31 2021 being inexcess of limits prescribed under Section 197 of the of the Act by ` 47.49 million ofwhich the proportionate remuneration from February 09 2021 of ` 6.63 million is subjectto approval of the shareholders. Our opinion is not modified in respect of this matter.

ii. the Ministry of Corporate Affairs has not prescribed other details under Section197(16) of the Act which are required to be commented upon by us.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Mansi Pardiwala
Partner
Mumbai Membership No: 108511
May 18 2021 UDIN: 21108511AAAACV9123

Annexure A to the Independent Auditors' Report – March 312021

With reference to the Annexure A referred to in the Independent Auditors' Reportto the members of the Company on the standalone financial statements for the year endedMarch 31 2021 we report the following:

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets including property plant and equipmentand investment properties.

(b) The Company has a regular programme of physical verification of its fixed assetsincluding property plant and equipment and investment properties by which the fixedassets including property plant and equipment and investment properties are verified bythe management according to a phased programme designed to cover all the items once inthree years. In our opinion this periodicity of physical verification is reasonablehaving regard to the size of the Company and the nature of its assets. In accordance withthe policy the Company has physically verified certain fixed assets including propertyplant and equipment and investment properties during the year and no discrepancies werenoticed in respect of assets verified during the year.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable propertiescomprising of freehold land and buildings and lease agreement in respect of the leaseholdland and building as listed in Notes 2 and 4 of the standalone financial statements areheld in the name of the Company except as stated in the table below:

Land / building Number of cases Freehold Note in the standalone financial statements Gross block (Rs. in million) Net block (Rs. in million) Remarks
Building 1 Freehold 2 544.90 331.18 Refer note 42 (c) in the standalone financial statements in respect of the matter which is presently under litigation

Further in respect of the leasehold land acquired by the Companyattention is invited to the table below:

Land / building Number of cases Freehold Note in the standalone financial statements Gross block (Rs. in million) Net block (Rs. in million) Remarks
Land 1 Lease hold 11 65.06 50.93 Refer note 42 (c) in the standalone financial statements in respect of the matter which is presently under litigation

(ii) The inventory has been physically verified by the management during the year. Inour opinion the frequency of such verification is reasonable. The Company does not haveany stock lying with third parties at the year-end. The discrepancies noticed onverification between the physical stocks and the book records were not material and havebeen dealt with in books of account.

(iii) The Company has granted unsecured loans to two companies covered in the registermaintained under Section 189 of the Companies Act 2013 (‘the Act'). The Companyhas not granted any other loans secured or unsecured to firms or other parties coveredin the register required to be maintained under Section 189 of the Act.

i) According to the information and explanations given to us and based on the auditprocedures conducted by us we are of the opinion that the unsecured loan granted to onewholly owned subsidiary is interest free and the interest in case of the unsecured loangranted to other company and other terms and conditions of the unsecured loans granted bythe Company to the two companies covered in the register required to be maintained underSection 189 of the Act are not prima facie prejudicial to the interests of the Company.

ii) According to the information and explanations given to us and based on the auditprocedures conducted by us the unsecured loans granted to the companies are repayable ondemand. The Company has not made demand during the current year and one of the unsecuredloans granted is interest-free. Accordingly the requirements related to payment ofprincipal and interest are not applicable.

iii) There are no overdue amounts of more than 90 days in respect of the unsecuredloans granted to the companies during the year.

(iv) In our opinion and according to the information and explanations given to us andbased on the audit procedures conducted by us the Company has complied with theprovisions of Sections 185 of the Act in respect of loans granted and guarantee givenduring the year.

Accordingly the provisions of Section 185 of the Act in respect of investments madeand securities provided are not applicable to the Company. According to the informationand explanations given to us the provisions of Section 186 of the Act in respect of theloans given guarantees given and security provided are not applicable to the Companysince it is covered as a Company engaged in infrastructural facilities. The Company hasnot made any investments during the year and accordingly the provisions of Section 186of the Act in respect of investments made during the year are not applicable to theCompany.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted deposits as per the directives issued by the Reserve Bank ofIndia and the provisions of Sections 73 to 76 or any other relevant provisions of the Actand the rules framed thereunder. Accordingly paragraph 3(v) of the Order is notapplicable to the Company.

(vi) We have broadly reviewed the books of accounts maintained by the Company pursuantto the rules prescribed by the Central Government for the maintenance of cost recordsunder Section 148(1) of the Act and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained. However we have not made a detailedexamination of the records.

(vi) (a) According to the information and explanations given to us and on the basis ofour examination of records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including Provident fund Employees'State Insurance Goods and Service tax Labour cess Profession tax Property tax Cessand other material statutory dues have been regularly deposited during the year by theCompany with the appropriate authorities. Amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues of Income-tax have generally beenregularly deposited during the year by the Company with the appropriate authoritiesthough there have been slight delays in a few cases. As explained to us the Company didnot have any dues on account of wealth tax.

According to the information and explanations given to us noundisputed amounts payable in respect of Provident fund Employees' State InsuranceIncome-tax Goods and Services tax Labour cess Profession tax Property tax Cess andother material statutory dues were in arrears as at March 31 2021 for a period of morethan six months from the date they became payable

(b) According to the information and explanations given to us thereare no dues of Income-tax Sales tax Service tax Value added tax and Goods and Servicetax as at March 31 2021 which have not been deposited with the appropriate authoritieson account of any dispute except as stated below:

Name of the statute Nature of the dues Amount not deposited on account of demand Rs. in million Amount paid Rs. in million Financial year (F.Y.) to which the amount relates Forum where dispute is Pending
Finance Act 1994 Denial of CENVAT credit of service tax paid on Marriott fees paid 57.91 - FY 2004-05 to FY 2010-11 CESTAT Mumbai
Finance Act 1994 Demand for service tax on Telephone services and Laundry wet cleaning service as accommodation services 4.24 - FY 2011-12 Commissioner (appeals) Hyderabad
MVAT Act 2002 Joint Commissioner has included Service Tax in the Gross Turnover and charged VAT on the same demand is not included in the Demand Notice as the same is covered under section 23 (8) of MVAT Act 9.35 - FY 2012-13 Joint Commissioner Appeals LTU-2
TVAT Act 2002 VAT demand on Sale of cocktail 1.59 0.40 FY 2010-11 to FY 2012-13 Deputy Commissioner Hyderabad
TVAT Act 2002 VAT demand on sale of cocktail and others 1.76 1.41 FY 2013-14 to FY 2015-16 Deputy Commissioner Hyderabad
Income Tax Act 1961 Section 14A of Income-tax Act 1961 disallowance 134.65 - FY 2015-16 to FY 2017-18 Commissioner of Income tax (Appeals)
Income Tax Act 1961 Depreciation disallowance 7.09 - FY 2012-13 to FY 2017-18 Commissioner of Income tax (Appeals)
Income Tax Act 1961 Deemed rental income on house property 13.73 - FY 2015-16 to FY 2016-17 Commissioner of Income tax (Appeals)
Income Tax Act 1961 Disallowance of Sahar retail and commercial interest 169.43 - FY 2018-19 Commissioner of Income tax (Appeals)
Income Tax Act 1961 Disallowance of administrative charges 7.04 - FY 2011-12 Commissioner of Income tax (Appeals)
Foreign Trade Policy (Duty of Customs) Recovery of SFIS benefits granted to foreign brands 5.74 - 2017 Karnataka High Court

(vii) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted during the year in repayment of loans orborrowings to banks or financial institutions. The Company does not have any loans orborrowings from government and dues to debenture holders during the year.

(viii) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not raised any moneys by way ofinitial public offer or further public offer (including debt instruments) during the year.In our opinion and according to the information and explanations given to us the termloans taken by the Company has been applied for the purpose for which they are raised.

(ix) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by themanagement.

(x) According to the information and explanations given to us and based on ourexamination of the records of the Company due to inadequate profits during the currentyear the managerial remuneration paid / payable to the Managing Director & CEO of theCompany is in excess of the limits specified under Section 197 of the Act read withSchedule V to the Act by ` 47.49 million of which the proportionate remuneration fromFebruary 09 2021 of ` 6.63 million is subject to approval of the shareholders. Refer note49 of the Standalone Financial Statements.

(xi) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company and the Nidhi Rules 2014 are not applicable to it.

Accordingly paragraph 3(xii) of the Order is not applicable to the Company.

(xii) In our opinion and according to the information and explanations given to us theCompany has entered into transactions with related parties in compliance with theprovisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the standalone financial statements as required byIndian Accounting Standard (Ind AS) 24 Related Party Disclosures specified under Section133 of the Act.

(xiii)According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly paid convertible debenturesduring the year. Accordingly paragraph 3(xiv) of the Order is not applicable to theCompany.

(xiv) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has not entered into any non- cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly paragraph 3(xvi) of the Order is not applicable to the Company.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Mansi Pardiwala
Partner
Mumbai Membership No: 108511
May 18 2021 UDIN: 21108511AAAACV9123

Annexure B to the Independent Auditors' Report on the StandaloneFinancial Statements for the year ended March 31 2021

Report on the internal financial controls with reference to theaforesaid standalone financial statements under Clause (i) of Sub-section 3 of Section 143of the Companies Act 2013

(Referred to in paragraph 1 A (f) under ‘Report on Other Legal andRegulatory Requirements' section of our report of even date)

Opinion

We have audited the internal financial controls with reference to thestandalone financial statements of Chalet Hotels Limited ("the Company") as ofMarch 31 2021 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.

In our opinion the Company has in all material respects adequateinternal financial controls with reference to the standalone financial statements and suchinternal financial controls were operating effectively as at March 31 2021 based on theinternal financial controls with reference to the standalone financial statements criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management are responsible for establishing andmaintaining internal financial controls based on the internal financial controls withreference to the standalone financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 (hereinafterreferred to as "the Act")

Auditors' Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to the standalone financial statements based onour audit. We conducted our audit in accordance with the Guidance Note and the Standardson Auditing prescribed under Section 143(10) of the Act to the extent applicable to anaudit of internal financial controls with reference to financial statements. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to financial statements were established and maintainedand whether such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls with reference to the standalone financial statements.

Meaning of Internal Financial controls with Reference to FinancialStatements

A company's internal financial controls with reference tofinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. Acompany's internal financial controls with reference to financial statements includethose policies and procedures that (1) pertain to the maintenance of records that inreasonable detail accurately and fairly reflect the transactions and dispositions of theassets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could havea material effect on the Standalone financial statements.

Inherent Limitations of Internal Financial controls with Reference tothe Standalone Financial Statements

Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to Standalone financial statements to future periods are subjectto the risk that the internal financial controls with reference to financial statementsmay become inadequate because of changes in conditions or that the degree of compliancewith the policies or procedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Mansi Pardiwala
Partner
Mumbai Membership No: 108511
May 18 2021 UDIN: 21108511AAAACV9123

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