Indian Hotels Co Ltd:Annual Report 2023-24 Analysis

The Indian Hotels Company Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History:

The Indian Hotels Company Limited (IHCL) was founded in 1903 by Jamsetji Tata. The impetus for its establishment was a racist incident faced by Tata, which led him to envision a world-class hotel accessible to all, regardless of race.

Headquarters Location and Global Presence:

IHCL is headquartered in Mumbai, India. The company has a significant presence in India and has expanded internationally, with hotels in North America, the UK, the Middle East, Africa, and Asia.

Company Vision and Mission:

• Vision: To be the most iconic and profitable hospitality company in South Asia.
• Mission: To delight our guests, create value for our stakeholders, and build a better future for our communities.

Key Milestones in their Growth Journey:

• 1903: Inauguration of The Taj Mahal Palace, Mumbai.
• 1970s-1980s: Expansion within India, establishing presence in major cities.
• 2004-2005: Acquisition of The Pierre in New York and development of international expansion strategy.
• 2010: Launches Vivanta brand
• 2021: Launches SeleQtions brand
• Continues to expand its portfolio through strategic partnerships and acquisitions.

Stock Exchange Listing Details and Market Capitalization:

IHCL is listed on the Bombay Stock Exchange (BSE: 500850) and the National Stock Exchange (NSE: INDHOTEL). Market capitalization fluctuates but is generally substantial given its leading position in the Indian hospitality sector. Check current financial websites for the latest market cap.

Recent Financial Performance Highlights:

Recent financial reports show a strong recovery in revenue and profitability after the pandemic-related downturn. IHCL has focused on cost optimization and operational efficiency to improve its financial performance. Look for recent annual or quarterly reports for details.

Management Team and Leadership Structure:

The company is led by a board of directors and a senior management team, headed by the Managing Director & CEO. The leadership team includes experts in various fields like operations, finance, marketing, and human resources.

Any Notable Awards or Recognitions:

IHCL and its hotels have received numerous awards and recognitions for excellence in hospitality, sustainability, and employee practices.

Their Products #

Complete Product Portfolio with Categories:

IHCL’s product portfolio includes:

• Luxury: Taj Hotels, Palaces, Resorts & Safaris
• Upscale: Vivanta
• Premium: SeleQtions
• Midscale: Ginger
• Amã Stays & Trails: Private Bungalow homestays

Flagship or Signature Product Lines:

The Taj Hotels, Palaces, Resorts & Safaris are IHCL’s flagship brand, known for their luxurious accommodations, exceptional service, and iconic locations.

Recent Product Launches or R&D Initiatives:

IHCL continues to launch new properties under its various brands. They also invest in technology to improve guest experience and streamline operations, including digital check-in/check-out and personalized service offerings.

Primary Customers #

Target Industries and Sectors:

• Tourism: Leisure travelers, both domestic and international.
• Corporate: Business travelers, conferences, and events.
• MICE (Meetings, Incentives, Conferences, Exhibitions): Large-scale events and gatherings.
• Weddings: Destination weddings and related events.

Geographic Markets (domestic vs. international):

IHCL has a strong presence in the domestic Indian market, but also focuses on international markets, particularly North America, the UK, the Middle East, Africa, and Asia.

Distribution Network and Sales Channels:

• Direct Booking: Through IHCL websites and mobile apps.
• Travel Agents: Partnerships with travel agencies, both online and offline.
• Online Travel Agencies (OTAs): Listing on major OTAs like Booking.com, Expedia, and MakeMyTrip.
• Corporate Clients: Direct relationships with corporate clients.

Major Competitors #

Direct Competitors in India and Globally:

• India: Oberoi Hotels & Resorts, ITC Hotels, Leela Palaces, Hotels and Resorts.
• Globally: Marriott International, Hilton Worldwide, Hyatt Hotels Corporation, InterContinental Hotels Group (IHG).

How they differentiate from competitors:

IHCL differentiates itself through:

• Heritage and Legacy: Deep roots in Indian history and culture.
• Brand Portfolio: Diversified brand portfolio catering to various segments.
• Exceptional Service: Known for its high standards of service and hospitality.
• Locations: Prime locations in major cities and tourist destinations.

Industry Challenges and Opportunities:

• Challenges: Increased competition, economic fluctuations, changing consumer preferences, and impact of global events (like pandemics).
• Opportunities: Growing tourism sector in India, increasing disposable incomes, demand for experiential travel, and development of new technologies.

Market Positioning Strategy:

IHCL positions itself as a leading hospitality company with a focus on luxury and premium segments, while also expanding its presence in mid-scale segments. Their strategy involves maintaining brand integrity, providing exceptional guest experiences, and driving revenue growth through innovation and expansion.

Future Outlook #

Expansion Plans or Growth Strategy:

IHCL plans to expand its presence both domestically and internationally through new property developments, acquisitions, and management contracts. Focus on expanding Ginger hotels and SeleQtions portfolio.

Sustainability Initiatives or ESG Commitments:

IHCL is committed to sustainability and has implemented various initiatives to reduce its environmental footprint, including energy conservation, water management, and waste reduction. They also focus on community engagement and social responsibility.

Financial Analysis: The Indian Hotels Company Limited (IHCL) - FY 2023-24 #

Key Financial Metrics: 3-Year Trend Analysis #

IHCL has demonstrated significant financial recovery and growth over the past three fiscal years, culminating in a record performance in FY 2023-24.

Derived EBITDA/Margin for prior years based on available data and growth rates.

The financial trajectory exhibits a strong rebound from FY 2021-22, which was likely impacted by pandemic-related disruptions. FY 2023-24 marks a peak in performance, with robust revenue growth across both standalone and consolidated operations. The consolidated EBITDA margin expansion to 33.7% surpasses the Ahvaan 2025 target, indicating strong operational leverage and cost management. Profitability (PAT) has seen substantial growth, underscoring the successful execution of strategic initiatives. The shift from a net debt position in FY 2021-22 to a significant net cash position by FY 2023-24 highlights effective capital management and strong free cash flow generation (₹1,162 crores in FY 2023-24). RevPAR growth indicates healthy demand and pricing power. The proposed dividend increase reflects management’s confidence in sustained profitability.

Business Segment Performance (Brand Portfolio) #

IHCL operates as a “House of Brands” with distinct performance characteristics:

Taj (Luxury) #

• Revenue: ₹9,364 crores (Brand Performance Dashboard - seems to be cumulative or group, not just Taj standalone)
• Portfolio: 110 Hotels (Operational & Pipeline)
• Performance: Continued to be India’s “Strongest Brand.” Key assets like Rambagh Palace (World’s No. 1 Hotel) drive premium positioning. Major renovations in flagship properties like Taj Mahal, New Delhi, contribute to RevPAR uplift.

Vivanta & SeleQtions (Upscale & Upper Upscale) #

• Revenue: ₹1,951 crores (Brand Performance Dashboard - seems cumulative for both)
• Portfolio: Vivanta - 67 hotels; SeleQtions - 39 hotels (Operational & Pipeline)
• Performance: Vivanta is expanding into Tier II/III cities. SeleQtions focuses on unique, hyperlocal experiences, tapping into leisure travel and niche locations. SeleQtions signed 10 hotels and opened 6 in FY24. Vivanta signed 11 and opened 3.

Ginger (Lean Luxe) #

• Revenue: ₹486 crores (Brand Performance Dashboard)
• EBITDA Margin: 41%
• Portfolio: 91 Hotels (Operational & Pipeline)
• Performance: Significant transformation under “Lean Luxe” philosophy. Legal entity (Roots Corporation Limited) achieved PBT of ₹55 crores on ₹373 crores revenue (15% PBT margin). Flagship Ginger Mumbai Airport (371 keys) showing strong performance (47% EBITDA margin, ₹6,700 ARR, 80% Occupancy). Focus on large-format hotels. Signed 6, opened 6 in FY24.

New & Re-Imagined Businesses (Aggregated) #

• Comprises: Ginger, Qmin, amã Stays & Trails, The Chambers (membership), TajSATS.
• Revenue: ₹1,588 crores (35% YoY growth).

TajSATS (Airline Catering) #

• Revenue: ₹900 crores
• Market Share: 60%
• Performance: Record performance, expanding into institutional catering. New flight kitchen at MOPA (Goa) operational, Noida upcoming.

Qmin (F&B Delivery & Outlets) #

• GMV: ₹101 crores
• Performance: Asset-light growth, integrated with Ginger hotels (35 locations).

amã Stays & Trails (Homestays) #

• GMV: ₹35 crores (42% increase)
• Portfolio: 200+ properties (103 signings, 40 openings in FY24). Rapid expansion.

Detailed Analysis #

Financial Analysis of The Indian Hotels Company Limited (IHCL) - FY 2023-24 #

Balance Sheet Analysis #

Comparative Analysis of Assets, Liabilities, and Equity (Standalone & Consolidated) #

Standalone Financials (₹ crores) #

Source: Standalone Balance Sheet (pg 244), Financial Highlights (pg 125)

Consolidated Financials (₹ crores) #

Source: Consolidated Balance Sheet (pg 259), Financial Highlights (pg 125)

Significant Changes in Major Line Items (>10% YoY) #

Standalone Financials (₹ crores) #

Key Performance Indicators #

Financial Analysis of The Indian Hotels Company Limited (IHCL) - FY 2023-24 #

Long-term Strategic Goals and Progress (Ahvaan 2025 & Beyond) #

IHCL’s “Ahvaan 2025” strategy has been central to its recent performance, with key targets reportedly achieved significantly ahead of schedule.

• Margin Expansion: Targeted 33% EBITDA margin under Ahvaan 2025; achieved 33.7% consolidated EBITDA margin in FY 2023-24.
• Debt Reduction: Targeted zero net debt; achieved a gross cash position exceeding ₹2,200 crores.
• Portfolio Expansion: Targeted 300 hotels; achieved a portfolio of 311 hotels (operational and pipeline as of April 30, 2024), including 53 new signings and 34 openings in FY 2023-24.
• Portfolio Mix: Achieved a 60:40 mix of capital-light (management contracts & Ginger operating leases) versus capital-heavy operational inventory, surpassing the 50:50 target.

Future Strategic Thrust: #

• Brand Re-imagination: Introduction of the “re-imagined Gateway” brand, targeting the upscale segment in emerging micro-markets and Tier II/III cities, with a goal of 100 hotels by 2030.
• New Business Growth: Continued scaling of new businesses (Ginger, Qmin, amã Stays & Trails, The Chambers, TajSATS), which reported a 35% revenue growth to ₹1,588 crores in FY 2023-24.
• Destination Development: Pioneering new tourism circuits, including spiritual (Ayodhya, Vrindavan, Sarnath) and untapped leisure locations like Lakshadweep (Suheli, Kadmat), aligning with national tourism objectives.
• Sustainability Integration: The ‘Paathya’ ESG+ framework is a core component, with 2030 targets for renewable energy (37% achieved vs 50% target), water recycling (48% achieved vs 100% target), and plastic elimination.

Competitive Advantages and Market Positioning #

IHCL leverages several competitive strengths to maintain market leadership:

• Brand Strength: “Taj” brand recognized as India’s strongest across sectors for the third time.
• Dominant National Presence: Operations in over 130 cities, with a total portfolio of 311 hotels (220 operational, 91 pipeline) and 37,193 keys.
• Marquee Assets & Market Dominance: Ownership and management of iconic properties in prime micro-markets.
• Financial Strength: A robust balance sheet (₹2,200+ crores gross cash, net cash positive). Market capitalization stood at ₹86,189 crores (as of April 24, 2024).
• Customer Loyalty & Service: High customer satisfaction (NPS of 73.01 for IHCL enterprise).
• Strategic Partnerships: Alliances like the one with Tree of Life Resorts (Ambuja Neotia group). TajSATS maintains a 60% market share in airline catering.
• Diversified Portfolio: Presence across luxury, upscale, lean luxe, and homestay segments.

Innovation Initiatives and R&D Effectiveness #

Innovation at IHCL is focused on enhancing guest experience, operational efficiency, and sustainability.

• Digital Transformation:
  • I-LEAP & Data Lake: Consolidation of data for advanced analytics, AI/ML predictive insights.
  • Robotics & AI: Deployment of AI-powered robots (Temi) for guest engagement and services.
  • Guest-Facing Tech: Integrated table management with Google Reserve, unified Guest Entertainment Technology, Guest Service Fulfilment Solution, and a new experiential brand website.
  • Employee Tech: Gen AI Virtual Assistant on myTAJ app for HR queries.
• Brand & Service Innovation:
  • Qmin: Evolved into a multi-format F&B brand (delivery, QSR, shops, trucks).
  • amã Stays & Trails: Rapid expansion to 200+ properties, tapping into experiential travel.
  • Re-imagined Gateway: New full-service upscale hotel offering.
  • Tree of Life Alliance: Adding boutique, experiential properties to the IHCL platform.
  • F&B Concepts: Launch of new restaurant brands (Loya, Captain’s Cellar) and international expansion (Bombay Brasserie, Singapore).
• Sustainability-linked Innovation:
  • Paathya Framework: Driving initiatives like in-house water bottling plants (40 installed), renewable energy projects (Maldives floating solar park), and ‘Innergise Green Meetings.’
  • IFC TechEmerge Collaboration: Piloting sustainable cooling technologies.
• R&D Effectiveness: Effectiveness is demonstrated through improved NPS scores, operational efficiencies, successful scaling of new business models, and progress on Paathya targets. The BRSR mentions ₹2 crores investment in EarthCheck certifications and 11.64% of standalone CAPEX in FY24 dedicated to technologies improving environmental/social impacts.

M&A Strategy and Execution #

IHCL’s expansion strategy emphasizes a mix of organic growth, strategic alliances, and asset-light models rather than large-scale M&A of existing companies.

• Strategic Alliances: The partnership with Tree of Life Resorts & Hotels (14 resorts), acquired by Ambuja Neotia group.
• Portfolio Restructuring (Ahvaan 2025): Focus on achieving a 60:40 capital-light vs. capital-heavy operational inventory mix.
• Minority Stake Acquisition: Acquisition of an additional 7.08% stake in Piem Hotels Limited (subsidiary) through a share swap and cash deal (₹133.39 crores total).

ESG Framework: IHCL’s Sustainability Initiatives #

Environmental Metrics and Targets (Paathya Framework) #

Overall Strategy #

IHCL’s ESG+ initiative, ‘Paathya’, launched in 2022, provides a time-bound roadmap to sustainable hospitality with measurable goals for 2030, aligned with Tata Group’s Aalingana goals and UN SDGs.

Renewable Energy #

• Target (2030): 50% of energy from renewable sources.
• FY 2023-24 Progress: 37% of total energy consumed from renewable sources (51% for IHCL owned hotels). 43 hotels have adopted green energy; 7 hotels operated with 100% green energy.
• Key Initiative: Operationalized Maldives’ largest floating solar park (1,080 kWp) at Taj Exotica Resort & Spa, Maldives, meeting 25% of the hotel’s energy requirements and reducing annual carbon emissions by 1,200 MT.

Water Management #

• Target (2030): 100% wastewater to be recycled.
• FY 2023-24 Progress: 48% wastewater recycled (46% for IHCL owned hotels). Water intensity at 0.62 KL/guest night (standalone BRSR). 93,377 KL water recycled through rainwater harvesting. Water risk assessments completed at 53 hotels.

Waste Management & Circular Economy #

• Target (2030): Eliminate single-use plastic beyond 10 mandated items; 100% operating hotels to have organic waste management systems.
• FY 2023-24 Progress: 86% of hotels have organic waste management systems. 40 bottling plants installed across IHCL hotels to replace plastic bottles. 28,637 m³ waste recycled. Soap for Hope initiative: 7,200 kg soaps collected, 63,084 new soaps made. Plastic reduction of 326 tonnes in FY24.

GHG Emissions & Energy Efficiency #

• Progress: 97,479 tCO2eq GHG emissions reduced (consolidated outcome). Standalone Scope 1: 22,900 tCO2e, Scope 2: 44,900 tCO2e. Energy intensity (standalone): 164.38 GJ/crore INR turnover.
• Initiatives: 343 EV charging stations installed across 146 properties. Collaboration with Siemens India saved ~6,600 MWh energy (5,075 tonnes CO2) in FY24. IFC TechEmerge sustainable cooling program piloted.

Sustainability Certifications #

• Target (2030): 100% eligible hotels will be EarthCheck certified.
• FY 2023-24 Progress: 88 hotels EarthCheck certified (10 new hotels onboarded); 59 are Platinum certified. Taj Palace, New Delhi achieved LEED Platinum certification. Two Ginger hotels received Hotel Sustainability Basics Certification.

Green Meetings #

• Target (2030): 100% business meetings and conferences will go green via ‘Innergise Green Meeting’.
• FY 2023-24 Progress: Phase 1 launched in five select hotels.

Social Responsibility Programs #

Community Development & Skilling #

• Target (2030): Skill 100,000+ youths for livelihoods.
• FY 2023-24 Progress: ~13,000 youth skilled since 2020. Operates 32 skill centres across 15 States. Launched Commis Chef Course in Kupwara, J&K. Total CSR expenditure: ₹4.54 crores (including ₹1.13 crores set off from previous year).
• Initiatives: Varanasi Weavers Programme, Tribal Home Cooks Training, support for local artisans.

Employee Volunteering #

• Target (2030): 12 hours/employee annually.
• FY 2023-24 Progress: 7.2 hours/employee. Total 1.75+ lakhs volunteering hours.

Human Capital Development #

• Total Employees (Enterprise): 40,726. Permanent Employees (Standalone): 2,806.
• Training: ₹11.33 crores expenditure. 5,56,225 total training hours. Leadership and functional development programs (LADC, TIDI, Hotelier Development Programme).
• Employee Retention (Enterprise): 75.40% (improvement of 200 bps). Standalone permanent employee turnover rate: Male 19.27%, Female 23.52%.
• Employee Well-being: WELLWEING holistic wellness framework. Employee Assistance Programme (EAP). 5,900 associates covered, 11,500+ wellness hours.

Diversity, Equity & Inclusion (DE&I) #

• Framework: “HER” (Hiring, Retaining, Environment of inclusion).
• Representation: 209 women in leadership roles. 19.61% female employees (enterprise). 148 specially-abled employees.

IHCL Financial Analysis: FY 2023-24 Forward Outlook #

Management Guidance and Assumptions #

IHCL, under its ‘Ahvaan 2025’ strategy, achieved its key targets ahead of schedule:

• EBITDA Margin: 33.7% (Target: 33%)
• Net Debt: Gross Cash of ₹2,200+ crores (Target: Zero)
• Portfolio: 311 hotels (including pipeline as of April 30, 2024) (Target: 300 hotels)
• Portfolio Mix (Operational): 60:40 Capital Light vs. Capital Heavy (Target: 50:50)

Future guidance includes:

• Gateway Brand: Expansion to a 100-hotel portfolio by 2030.
• TajSATS: Projected revenue of ₹1,000 crores in FY25.
• amã Stays & Trails: Reached 200 properties, with continued aggressive expansion.
• Paathya Sustainability Targets (by 2030):
  • 50% energy from renewable sources (FY24: 37%).
  • 100% wastewater recycled (FY24: 48%).
  • Eliminate single-use plastic beyond mandated items.
  • 100% eligible hotels EarthCheck certified (FY24: 88 hotels).
  • 100,000+ youth skilled (FY24: ~13,000 since 2020).
  • 25% women representation on Board (FY24: 17%).

This guidance is based on sustained domestic demand, recovery in foreign tourist arrivals, infrastructure development, and IHCL’s ability to execute its expansion and operational efficiency strategies.

Market Growth Forecasts #

• Global Economy (IMF, April 2024): Real GDP growth estimated at 3.2% for CY23, projected at 3.2% for CY24 and CY25. Global inflation to moderate from 6.8% (CY23) to 5.9% (CY24) and 4.5% (CY25).
• Indian Economy:
  • NSO: GDP growth of 7.6% for FY24.
  • IMF: GDP growth estimated at 7.8% (FY23), projected at 6.8% (FY24) and 6.5% (FY25).
  • RBI: Projected real GDP growth for FY25 at 7.0%.
• Global Hospitality (UNWTO, Jan 2024): International tourist arrivals at 1,286 million in CY23 (88% recovery of pre-pandemic levels). Full recovery to pre-pandemic levels expected in 2024, with 2% growth above 2019.
• Global Tourism Contribution (WTTC): Projected at $11.1 trillion in 2024 (up from $9.9 trillion in 2023).
• Indian Hospitality and Tourism:
  • WTTC projects industry to generate $50.9 billion revenue by 2028 and 50+ million jobs by 2029.
  • Foreign Tourist Arrivals (FTAs) in CY23 were 9.23 million (44% growth YoY, 85% of 2019 levels).
  • Domestic air passenger traffic in CY23 grew 23% to 152 million.
  • Horwath HTL (India Hotel Market Review 2023):
    • Occupancy (CY23): 63.6% (vs. 59.6% in CY22).
    • ADR (CY23): ₹7,479 (22% growth YoY).
    • RevPAR (CY23): ₹4,757 (30% growth YoY).
    • Supply: 14,000 rooms added in CY23.
  • Horwath HTL estimates demand growth at 10.6% (All India) and 13.3% (leisure markets) till 2027. Supply growth estimated at 8% (All India) and 5% (Top 8 cities).

Planned Strategic Initiatives #

IHCL’s strategy revolves around the ‘Ahvaan 2025’ framework (Re-Engineer Margins, Re-Imagine Brandscape, Re-Structure Portfolio) and Paathya (ESG+ framework).

• Portfolio Expansion:
  • Aggressive signing and opening of new hotels (53 signings, 34 openings in FY24).
  • Focus on pioneering new destinations and spiritual circuits.
  • Expansion in Tier II & III cities.
  • International expansion.
• Brandscape Re-imagination:
  • Scaling new businesses: Ginger, Qmin, amã Stays & Trails, The Chambers.
  • Launch and rollout of re-imagined Gateway brand.
  • Strategic alliances.
• Asset Management & Renovation:
  • Systematic renovation of key assets to drive premiumisation.
• Digital Evolution:
  • Implementation of new ERP system and Data Lake (I-LEAP) for AI/ML capabilities.
  • Launch of new brand website.
  • Robotics, Gen AI for HR, POS integration with Google Reserve.
  • Leveraging Tata Neu platform for loyalty and customer engagement.
• Sustainability (Paathya): Focus on achieving 2030 targets.
• Operational Excellence:
  • Maintaining high Net Promoter Scores (NPS).
  • Productivity and cost efficiency initiatives.
  • “One IHCL One Tata” synergies.

Capital Expenditure Plans #

• FY 2023-24 Outlay: Standalone ₹364.20 crores; Consolidated ₹636.96 crores.
• Future Investments:
  • Continued investment in hotel renovations.
  • Select new greenfield projects.
  • Development of brownfield hotel at Cochin International Airport.
  • TajSATS new flight kitchen at Noida International Airport.
  • Investment in digital capabilities.

Financial Analysis Report: The Indian Hotels Company Limited (IHCL) - FY 2023-24 #

Auditor’s Opinion and Qualifications #

• Standalone Financial Statements: The Statutory Auditors, B S R & Co. LLP, expressed an opinion that the standalone financial statements give a true and fair view in conformity with Indian Accounting Standards (Ind AS). Exceptions regarding the maintenance of books of account were highlighted concerning the audit trail (edit log) facility in certain accounting software.
• Consolidated Financial Statements: The Statutory Auditors, B S R & Co. LLP, expressed an opinion that the consolidated financial statements give a true and fair view. Similar exceptions regarding the audit trail facility in accounting software were noted.
• Key Audit Matters:
  • Standalone: Impairment Evaluation of Investments in subsidiaries, Joint Ventures, and Associates.
  • Consolidated: Impairment testing of Goodwill.

Key Accounting Policies and Changes #

• Basis of Preparation: Financial statements are prepared in accordance with Ind AS on a historical cost basis, except for certain financial instruments measured at fair value.
• Key Policies Summarized:
  • Revenue Recognition: Recognized when control of goods/services is transferred to the customer, net of indirect taxes and variable considerations. Specific policies apply to room income, F&B, banquets, rentals, management fees, and loyalty programs.
  • Leases (Ind AS 116): Right-of-Use (ROU) assets and lease liabilities are recognized.
  • Impairment of Assets: Assets are reviewed for impairment when events indicate the carrying amount may not be recoverable. Goodwill is tested annually.
  • Employee Benefits: Defined contribution plans are expensed as incurred. Defined benefit plans are accounted for using the projected unit credit method with actuarial valuations.
  • Financial Instruments: Classified and measured at amortized cost, Fair Value Through Other Comprehensive Income (FVOCI), or Fair Value Through Profit or Loss (FVTPL) based on business model and cash flow characteristics.
  • Inventories: Valued at the lower of cost (weighted average) or net realizable value.
• Changes in Accounting Policies/Recent Pronouncements (FY 2023-24 Adoption):
  • Amendments to Ind AS 8 (Accounting Policies, Changes in Accounting Estimates and Errors)
  • Amendments to Ind AS 1 (Presentation of Financial Statements)
  • Amendments to Ind AS 12 (Income Taxes)

Internal Control Effectiveness #

• Management’s Responsibility: The Board and Management are responsible for establishing and maintaining adequate internal financial controls (IFC) relevant to financial reporting.
• Auditor’s Report on IFC (Standalone): B S R & Co. LLP opined that the Company has adequate IFC with reference to financial statements and such controls were operating effectively. This opinion should be read in conjunction with their findings on the audit trail.
• Auditor’s Report on IFC (Consolidated): B S R & Co. LLP opined that the Holding Company and its Indian subsidiaries, associates, and JVs have adequate IFC and such controls were operating effectively. This opinion was based on their audit and reports of other auditors and should be read with findings on audit trail.
• The identified deficiencies in the audit trail (edit log) facility represent a weakness in the internal control environment over financial reporting.

Regulatory Compliance Status #

• General Compliance: Proper systems are devised to ensure compliance with all applicable laws and that such systems are adequate and operating effectively. Compliance with SEBI Listing Regulations.
• Secretarial Audit: The Secretarial Audit Report for IHCL and Taj SATS Air Catering Limited did not contain any qualifications, reservations, adverse remarks, or disclaimers.
• Specific Non-Compliances/Penalties (BRSR, Principle 1, Indicator 2):
  • Penalty of ₹2,100 from Metropolitan Magistrate, Vile Parle, Mumbai.
  • Penalty order of ₹17,87,294 from Assistant Commissioner Central GST, Mumbai West.
  • Penalty order of ₹16,793 from Assistant Commissioner Central GST & Central Excise, Guwahati.
  • Penalty order of ₹11,93,153 from Deputy Commissioner of State Tax, Mumbai LTU.
• Audit Trail: Non-enablement of audit trail features indicates non-compliance with Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

Legal Proceedings and Their Potential Impact #

• Contingent Liabilities:
  • Tax Disputes: Various claims from revenue authorities concerning income tax, sales tax/VAT/GST, property tax, service tax, license fees, etc., are under dispute.
  • Lease Agreement Dispute: A significant dispute exists with a lessor regarding a plot of land for a hotel.
  • Other Claims: Various other legal actions and claims exist.
• Potential Impact: An unfavorable outcome in these material litigations could impact future profitability and cash flows.

Related Party Transactions (RPTs) #

• Policy: The Company has a Board-approved RPT policy. All RPTs entered into during FY 2023-24 were in the ordinary course of business and on an arm’s length basis. All transactions were approved by the Audit and Compliance Committee.
• Nature of Transactions:
  • Company Having Significant Influence (Tata Sons Private Limited & its group): Transactions