Mar 31, 2023
Treasury shares represents equity shares of '' 10/- each fully paid up, allotted to Mahindra Holidays & Resorts India Limited Employees'' Stock Option Trust (''ESOP Trust'') but not exercised by employees.
a) Terms / rights attached to equity shares:
i) The Company has only one class of shares referred to as equity shares having a par value of '' 10/-. Each holder of equity share is entitled to one vote per share.
ii) Repayment of capital will be in proportion to the number of equity shares held.
iii) With the adoption of new revenue recognition policy in accordance with Ind AS 115, the Company had to change its revenue recognition policy. Consequently, the Deferred Revenue and Deferred Costs had to be recomputed and that resulted in a Transition Difference. The Company is profitable and has healthy cash flows and has declared dividends every year since 2006. The Company is seeking a clarification from Ministry of Corporate Affairs (MCA) that this Transition Difference ought not to be considered for the purpose of calculation of dividend, under section 123(1) of the Companies Act, 2013. The declaration of dividend, if any shall be subject to clarification from MCA.
In the previous year, the Board of Directors at its meeting held on July 29, 2021 had approved issue of bonus shares in the proportion of 1:2, i.e. 1(one) bonus equity share of '' 10/- each for 2(two) fully paid up equity shares which was allotted on September 13, 2021 on approval being received in the shareholder''s meeting.
24 f) i) Under the Employee Stock Option Scheme (âESOS 2006") equity shares are allotted to the ESOP Trust set up by the Company. The ESOP Trust holds these shares for the benefit of the eligible employees/directors as defined under the scheme and transfers these shares to them as per the recommendation of the remuneration committee.
ii) The Company formulated the Employee Stock Option Scheme (âESOS 2014"), under which the Company has the option to issue and allot the shares either directly to the eligible employees/directors or through the ESOP Trust. To the extent allotted, ESOP Trust would hold these shares for the benefit of the eligible Employees/Directors as defined under the scheme and would transfer the shares to them as per the recommendation of the remuneration committee.
iii) The Company formulated the Employee Stock Option Scheme (âESOS 2020"), under which the Company has the option to issue and allot the shares directly to the eligible employees/directors as per the recommendation of the remuneration committee.
a) General reserve: The general reserve is used from time to time to transfer net profits from retained earnings for appropriation purposes.
b) Securities Premium: Securities premium is credited when shares are issued at premium. It is utilised in accordance with the provisions of the Act, to issue bonus shares, utilise equity related expenses like share issue expenses, etc.
c) Share option outstanding account: The Company has share option schemes under which options to subscribe the shares of the Company have been granted to certain eligible employees. The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration.
d) Capital reserve: Capital Reserves are mainly the reserves created during business combination for the gain on bargain purchase and common control mergers. It is not available for distribution as dividend.
e) Capital redemption reserve: The capital redemption reserve is used towards issue of fully paid bonus shares of the Company.
f) Revaluation reserve: The revaluation reserve is credited on account of revaluation of freehold land. It is not available for distribution as dividend.
g) Transition difference: The Cumulative effect of applying Ind AS 115 Revenue from Contract with Customers, Ind AS 116 Leases (net of deferred tax) is recognised as an adjustment to other equity, by seperately disclosing it in Transition Difference. Subsequent impact of unwinding of transition adjustments of Ind AS 115 and Ind AS 116 is included in retained earnings.
Treasury shares represents equity shares of '' 10/- each fully paid up, allotted to Mahindra Holidays & Resorts India Limited Employees'' Stock Option Trust (''ESOP Trust'') but not exercised by employees.
24 a) Terms / rights attached to equity shares:
i) The Company has only one class of shares referred to as equity shares having a par value of '' 10/-. Each holder of equity share is entitled to one vote per share.
ii) Repayment of capital will be in proportion to the number of equity shares held.
iii) With the adoption of new revenue recognition policy in accordance with Ind AS 115, the Company had to change its revenue recognition policy. Consequently, the Deferred Revenue and Deferred Costs had to be recomputed and that resulted in a Transition Difference. The Company is profitable and has healthy cash flows and has declared dividends every year since 2006. The Company is seeking a clarification from Ministry of Corporate Affairs (MCA) that this Transition Difference ought not to be considered for the purpose of calculation of dividend, under section 123(1) of the Companies Act, 2013. The declaration of dividend, if any shall be subject to clarification from MCA.
a) General reserve: The general reserve is used from time to time to transfer net profits from retained earnings for appropriation purposes.
b) Securities Premium: Securities premium is credited when shares are issued at premium. It is utilised in accordance with the provisions of the Act, to issue bonus shares, utilise equity related expenses like share issue expenses, etc.
c) Share option outstanding account: The Company has share option schemes under which options to subscribe the shares of the Company have been granted to certain eligible employees. The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration.
d) Capital reserve: Capital Reserves are mainly the reserves created during business combination for the gain on bargain purchase and common control mergers. It is not available for distribution as dividend.
e) Capital redemption reserve: The capital redemption reserve is used towards issue of fully paid bonus shares of the Company.
f) Revaluation reserve: The revaluation reserve is credited on account of revaluation of freehold land. It is not available for distribution as dividend.
g) Transition difference: The Cumulative effect of applying Ind AS 115 Revenue from Contract with Customers, Ind AS 116 Leases (net of deferred tax) is recognised as an adjustment to other equity, by seperately disclosing it in Transition Difference. Subsequent impact of unwinding of transition adjustments of Ind AS 115 and Ind AS 116 is included in retained earnings.
The Special Bench of the Income Tax Appellate Tribunal (ITAT) has, after considering the relevant facts pertaining to the Company, by its order dated May 26, 2010 upheld the contention of the Company that in the Company''s case 60% of the membership fees should be considered chargeable to tax in the year of enrolment of a member whereas the balance 40% should be charged on pro rata basis over the period of membership. The Department''s appeal against the said order is pending before Madras High Court. Consequently, the Company has continued to provide for income tax by computing income by applying the order of the ITAT.
The Company has been advised that after the introduction of Section 43CB with effect from April 1, 2017 the revenue from membership fees is chargeable as per ICDS IV. The Company is further advised that as per the said ICDS the revenue from membership fees is chargeable to tax by spreading the entire fees over the membership period. The Company has, accordingly, filed its Return of Income from Assessment Year 2017-18 onwards as per ICDS IV. However in the books of accounts, the Company has continued to make its provision for tax on the basis of the order of the ITAT. If the tax liability is computed applying ICDS IV the liability for current tax will be significantly lower with a corresponding impact in Deferred Tax.
The Special Bench of the Income Tax Appellate Tribunal (ITAT) has, after considering the relevant facts pertaining to the Company, by its order dated May 26, 2010 upheld the contention of the Company that in the Company''s case 60% of the membership fees should be considered chargeable to tax in the year of enrolment of a member whereas the balance 40% should be charged on pro rata basis over the period of membership. The Department''s appeal against the said order is pending before Madras High Court. Consequently, the Company has continued to provide for income tax by computing income by applying the order of the ITAT.
The Company has been advised that after the introduction of Section 43CB with effect from April 1, 2017 the revenue from membership fees is chargeable as per ICDS IV. The Company is further advised that as per the said ICDS the revenue from membership fees is chargeable to tax by spreading the entire fees over the membership period. The Company has, accordingly, filed its Return of Income from Assessment Year 2017-18 onwards as per ICDS IV. However in the books of accounts, the Company has continued to make its provision for tax on the basis of the order of the ITAT. If the tax liability is computed applying ICDS IV the liability for current tax will be significantly lower with a corresponding impact in Deferred Tax.
Note No. 43 - Contingent liabilities and commitments Contingent liabilities (to the extent not provided for) |
|||
Particulars |
As at |
As at |
|
March 31, 2023 |
March 31, 2022 |
||
(a) Income tax matters: |
|||
Claims aaainst the Company not acknowledged as debt (for matters disputed by |
|||
the Company) |
|||
pertaining to Revenue Recognition (timing difference *) pending before the CIT(A)/ITAT (Company appeal) |
53,711.17 |
53,711.17 |
|
interest included in the above till the date of order |
14,124.67 |
14,124.67 |
|
pertaining to other matters (mainly timing differences *), pending before the CIT(A)/ITAT (Company appeal) |
6,778.79 |
6,778.79 |
|
interest included in the above till the date of order |
1,419.92 |
1,419.92 |
|
Matters decided in favour of the Company, (but under appeal by the department) |
|||
pertaining to Revenue Recognition (timing difference *) pending before the Madras High Court (Department appeal) excluding interest |
27,140.61 |
27,140.61 |
|
(b) Service tax matters: |
|||
(i) Service tax demand on the enrollment of member as against service tax paid |
43,105.47 |
43,105.47 |
|
on receipt basis (timing differences *) (inclusive of penalty where quantified in demand) (Refer note 2 below) |
|||
(ii) Other items (inclusive of penalty where quantified in demand) |
3,468.63 |
3,468.63 |
* For matters pertaining to timing differences, if liability were to crystallise, there would be future tax benefits, except to the extent of tax rate differences and interest, if any which currently is not determinable.
Particulars |
As at March 31, 2023 |
As at March 31, 2022 |
|
(c) Luxury tax matters: In respect of certain States, the Company has received demands for payment of luxury tax for member stay at resorts as summarised below: Demands raised (inclusive of penalty) The Company has challenged the above demands before various appellate authorities / high Court, the outcome of which is pending. |
6,833.00 |
6,895.37 |
Notes:
1) The above amounts are based on demands raised, which the Company is contesting with the concerned authorities. Outflows, if any, arising out of these claims would depend on the outcome of the decision of the appellate authorities and the Company''s rights for future appeals. No reimbursements are expected.
2) The Company had received show cause notices from service tax authorities of '' 21,991.33 lakhs.The Company had received an Order in original from the principal commissioner of CGST and Central Excise confirming the demand amounting to '' 43,105.47 lakhs including interest and penalty and the same has been disclosed as Contingent liability in above table.
The Company filed rectification application against the said order before Principal Commissioner on January 18, 2022 for rectification of mistake apparent from the record as department has incorrectly interpreted the financial statement to determine service tax demand. However Principal Commissioner rejected rectification application on February 7, 2022 without giving any opportunity for personal hearing. Thereafter Company filed Writ Application before Madras High Court on February 22, 2022 against rejection of rectification application order. The Madras High Court on March 8, 2023 accepted the Company''s request to provide an opportunity for hearing and set aside the Order passed by Principal Commissioner. On March 29, 2023, the Principal Commissioner reaffirmed the Original Order dated February 7, 2022 and rejected the Company''s rectification application. The Company is contemplating to file a Writ Application before the Madras High Court against the said Order of Principal Commissioner. Company is confident that no payment is expected to be made for this matter.
3) The Company has accounted for service tax receivable of '' 822.30 lakhs (Previous year '' 752.27 lakhs) in relation to the service tax paid on ASF and Membership fee invoices for contracts which have been cancelled post GST implementation. The Company has received an unfavorable order against the refund claim and has filed an appeal against the order. Commissioner of GST and Central Excise (Appeals) has allowed the appeal and remanded back the matter to lower authorities for verification of documents.
(e) Other matters under appeal (Property related)
(i) The Government of Kerala through the Sub Collector, district of devikulam issued an Order dated July 3, 2007 cancelling the assignment of land underlying the Munnar resort and directed repossession of land on the ground that it is agricultural land and cannot be used for commercial purposes. The Company had filed an appeal before the Commissioner of Land Revenue, Trivandrum against the said Order stating that the Patta issued does not specify that the land should be used only for agricultural purpose. The Commissioner of land revenue, Trivandrum vide his Order dated November 22, 2007 dismissed the appeal filed by the Company and cancelled the assignment of land underlying the munnar resort (Total Gross Value '' 605.12 Lakhs) and further directed repossession of land on the ground that it is agricultural land and cannot be used for commercial purposes. The Company had filed a writ petition before the Kerala High Court against the said Order. The writ Petition has been disposed off by an Order dated May 21, 2019. Against the said Order, the company has filed a Writ Appeal and by an order dated June 19, 2019, the Court granted an interim stay of all further proceedings. The Writ Appeal has been dismissed by a Judgement dated May 25, 2022. The Company has filed review petition before the Kerala High Court. The same is pending.
(ii) With respect to certain claims of neighbouring property owners, the Company filed a suit in the Civil Court, Pune seeking inter-alia permanent injunction against them disturbing the possession of the Company''s resort property at Lonavala, Maharashtra and obtained an interim stay. In another development, notwithstanding these proceedings, the neighbouring property owner obtained an order from the local Mamlatdar''s Court for alleged access to his property through the resort property. The Company obtained a stay against the said order of the Mamlatdar. All matters with respect to the neighbouring property owner are currently pending before the Civil Court, Pune. Further, on account of the cancellation of the Non-Agricultural land conversion order by the Collector, Pune on the basis of complaint made by the said neighbouring owner and subsequently confirmed by the Additional Divisional Commissioner, Pune, the Company has also filed another Civil Suit at Civil Court, Pune against State of Maharashtra and Others, inter alia, seeking declaration that the proceedings and Orders in respect of cancellation of the NA status of the land underlying the resort property at Lonavala (Total Gross Value '' 1,545.01 Lakhs) are not enforceable and also sought other reliefs. Ad-interim stay has been granted against State of Maharashtra and the Collector, Pune not to give effect to the Orders of NA cancellation and the matter is pending for further hearing.
(f) Other matters:
The Company engaged a building contractor for construction of a resort. As the construction did not proceed as per agreed timelines the Company terminated the contract. The contractor has claimed '' 1,256.15 lakhs as damages for termination of the Contract. The Company has made a counter claim of '' 2,003.56 lakhs towards liquidated damages and other losses. The matter has been heard by the Arbitrator and is reserved for Orders.
(g) With respect to member complaints pending before various consumer forum and other matters:
Estimated amount of claims '' 795.91 lakhs (As at March 31, 2022: '' 579.39 lakhs). In addition, there are claims by some members seeking certain reliefs which are not agreed by the company, the financial impact of these claims are currently not ascertainable and hence not captured in above.
Note No. 44 - Employee benefits
(a) Defined contribution plan
The Company''s contribution to provident fund and superannuation fund aggregating '' 1,473.10 lakhs (2022: '' 1,312.77 lakhs) has been recognised in the Statement of Profit and Loss under the head employee benefits expense.
(b) Defined Benefit Plans (Gratuity)
The Company has a funded gratuity scheme for its employees and gratuity liability has been provided based on the actuarial valuation done at the year end. The gratuity scheme of the Company is funded with the Life Insurance Corporation of India.
The Company has a robust business risk management process to identify, evaluate and mitigate risks impacting business of the Company. This framework seeks to create transparency, minimise adverse impact on the business objectives and enhance the Company''s competitive advantage. This also defines the risk management approach across the enterprise at various levels including documentation and reporting. Risk management forms an integral part of the Company''s Business Plan. The Company has adequate internal processes to assess, monitor and manage financial risks. These risks include credit risk, liquidity risk and market risk.
(i) Credit risk management
A significant portion of the Company''s sales of vacation ownerships are by way of deferred payment schemes where the customer is obligated to pay the membership fee in Equated Monthly Instalments (EMIs) and the ensuing credit risk is managed by the Company in the following manner:
(a) preliminary assessment of customer credit worthiness, ensuring realisation of minimum down payment and adherence to internal KYC norms;
(b) collecting post dated instruments such as cheques, Automated Clearing House (ACH) mandates, standing credit card instructions from the customers at inception to ensure security cover.
From an accounting perspective, revenue is recognised only when it is probable that the economic benefits associated with the transaction will flow to the Company. The member is not allowed to use the benefits of membership untill the overdue amount is regularised or fully paid in that relevant period. The Company also assesses lifetime expected credit loss by using appropriate models, as prescribed by Ind AS 109, using past trends of collections and historical credit loss experience. The categorisation of the receivables into its ageing buckets for the purposes of estimating the expected loss allowance has been profiled based on the longest overdue of that member, for example, if a member has one instalment overdue for say 12 months, the entire receivable of the member is aggregated into that ageing bucket and the credit loss allowance is
determined after taking into account the credits against the member under âContract liability- deferred revenue - vacation ownership fee" (refer note 29 and note 34).
The allowances for credit loss and for revenue deferred at inception referred to above, carried at the end of every reporting period, are tested for adequacy and appropriately dealt with.
The Company manages liquidity risk by maintaining adequate reserves and banking facilities, by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities.
Maturities of financial liabilities
The following tables detail the Company''s remaining contractual maturity for its non-derivative financial liabilities (predominantly trade payables, retention payables, etc) with agreed repayment periods. The amount disclosed in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.
The Company has provided financial guarantees to its wholly owned subsidiaries. The amounts included above for financial guarantee contracts are the maximum amounts the Company could be forced to settle under the arrangement for the full guaranteed amount if that amount is claimed by the counterparty to the guarantee. Based on expectations at the end of the reporting period, the Company considers that it is more likely that such an amount will not be payable under the arrangement.
During the year, for borrowings from banks on the basis of security of current assets, quarterly returns or quarterly statements of current assets filed by the Company with banks are in agreement with the books of account.
(iii) Market risk management
The Company''s market risk comprises solely of its foreign currency exposure which are limited and not material to the size of its operations.
Currency Risk
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Company''s exposure to currency risk relates primarily to the Company''s investing activities when transactions are denominated in a different currency from the Company''s functional currency.
The carrying amounts of the Company''s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows.
Note No. 55 - Reporting under Rule 11(d) of the Companies (Audit and Auditor''s) Rules, 2014
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any parties (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (âUltimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
Note No.56 - NFRA order
The Company has received an order (''the Order'') from National Financial Reporting Authority (''NFRA'') on March 29, 2023 wherein NFRA has made certain observations on identification of operating segments by the Company in compliance with requirements of Ind AS 108 and the Company''s existing accounting policy for recognition of revenue on a straight-line basis over the membership period. As per the order received from NFRA, the Company is required to complete its review of accounting policies and practices in respect of disclosure of operating segments and timing of recognition of revenue from customers and take necessary measures to address the observations made in the Order by June 30, 2023. The Company is conducting review as required by the Order.
As at March 31, 2023, the management has assessed the application of its accounting policies relating to segment disclosures and revenue recognition. Basis the current assessment by the Company after considering the information available as on date; the existing accounting policies, practices and disclosures are in compliance with the respective Ind AS and accordingly have been applied by the Company in the preparation of these standalone financial statements.
Note No.57 - Estimation uncertainty relating to COVID-19 outbreak
The Company has considered internal and external sources of information, economic forecasts and industry reports, up to the date of approval of the financial statements, in determining the impact of COVID 19 pandemic on various elements of its business operations and financial statements. The Company has used the principles of prudence in applying judgements, estimates and assumptions and based on the current estimates, the Company expects to recover the carrying amount of its current and non current assets. The eventual outcome of impact of the global health pandemic may be different from those estimated as on the date of review of these financial statements depending on how long the pandemic lasts and time period taken for the economic activities to return to normalcy.
Note No. 58
The figures for the previous year have been regrouped/ reclassified to correspond with current year''s classification/ disclosure, wherever necessary.
The standalone financial statements of the Company were approved by the Board of Directors and authorised for issue on April 25, 2023.
Mar 31, 2022
a) Terms / rights attached to equity shares:
i) The Company has only one class of shares referred to as equity shares having a par value of '' 10/-. Each holder of equity share is entitled to one vote per share.
ii) Repayment of capital will be in proportion to the number of equity shares held.
iii) The dividends proposed by the Board of Directors is subject to approval of the shareholders in the Annual General Meeting.
iv) With the adoption of new revenue recognition policy in accordance with Ind AS 115, the Company had to change its revenue recognition policy. Consequently, the Deferred Revenue and Deferred Costs had to be recomputed and that resulted in a Transition Difference. The Company is profitable and has healthy cash flows and has declared dividends every year since 2006. The Company is seeking a clarification from Ministry of Corporate Affairs (MCA) that this Transition Difference ought not to be considered for the purpose of calculation of dividend, under section 123(1) of the Companies Act, 2013. The declaration of dividend, if any shall be subject to clarification from MCA.
The Board of Directors at its meeting held on July 29, 2021 had approved issue of bonus shares in the proportion of 1:2,
i.e. 1(one) bonus equity share of '' 10/- each for 2(two) fully paid up equity shares which was allotted on September 13,
2021 on approval being received in the shareholder''s meeting.
i) Under the Employee Stock Option Scheme (âESOS 2006") equity shares are allotted to the ESOP Trust set up by the Company. The ESOP Trust holds these shares for the benefit of the eligible employees/directors as defined under the scheme and transfers these shares to them as per the recommendation of the remuneration committee.
ii) The Company formulated the Employee Stock Option Scheme (âESOS 2014"), under which the Company has the option to issue and allot the shares either directly to the eligible employees/directors or through the ESOP Trust. To the extent allotted, ESOP Trust would hold these shares for the benefit of the eligible Employees/Directors as defined under the scheme and would transfer the shares to them as per the recommendation of the remuneration committee.
iii) The Company formulated the Employee Stock Option Scheme (âESOS 2020"), under which the Company has the option to issue and allot the shares directly to the eligible employees/directors as per the recommendation of the remuneration committee.
iv) The details of the Employees'' Stock Option Schemes are as under:
Type of Arrangement ESOS 2006 - Equity settled option plan administered through Employee Stock
Option Trust.
ESOS 2014 - Equity settled option plan issued directly/administered through Employee Stock Option Trust.
ESOS 2020 - Equity settled option plan issued directly Method of Settlement By issue of shares at Exercise Price.
a) General reserve: The general reserve is used from time to time to transfer net profits from retained earnings for appropriation purposes.
b) Securities Premium: Securities premium is credited when shares are issued at premium. It is utilised in accordance with the provisions of the Act, to issue bonus shares, write-off equity related expenses like share issue expenses, etc.
c) Share Option Outstanding Account: The Company has share option schemes under which options to subscribe the shares of the Company have been granted to certain eligible employees. The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration.
d) Capital Reserve: Capital Reserves are mainly the reserves created during business combination for the gain on bargain purchase and common control mergers. It is not available for distribution as dividend.
e) Capital Redemption Reserve: The capital redemption reserve is used towards issue of fully paid bonus shares of the Company.
f) Revaluation Reserve: The revaluation reserve is credited on account of revaluation of freehold land. It is not available for distribution as dividend.
g) Transition Difference: The Cumulative effect of applying Ind AS 115 Revenue from Contract with Customers, Ind AS 116 Leases (net of deferred tax) is recognised as an adjustment to other equity, by seperately disclosing it in Transition Difference. Subsequent impact of unwinding of transition adjustments of Ind AS 115 and Ind AS 116 is included in retained earnings.
The Special Bench of the Income Tax Appellate Tribunal (ITAT) has, after considering the relevant facts pertaining to the Company, by its order dated May 26, 2010 upheld the contention of the Company that in the Company''s case 60% of the membership fees should be considered chargeable to tax in the year of enrolment of a member whereas the balance 40% should be charged on pro rata basis over the period of membership. The Department''s appeal against the said order is pending before Madras High Court. Consequently, the Company has continued to provide for income tax by computing income by applying the order of the ITAT.
The Company has been advised that after the introduction of Section 43CB with effect from April 1, 2017 the revenue from membership fees is chargeable as per ICDS IV. The Company is further advised that as per the said ICDS the revenue from membership fees is chargeable to tax by spreading the entire fees over the membership period. The Company has, accordingly, filed its Return of Income from Assessment Year 2017-18 as per ICDS and proposes to make a similar claim in the Return of Income for the Financial Year 2021-22. However in the books of accounts, the Company has continued to make its provision for tax on the basis of the order of the ITAT. If the tax liability is computed applying ICDS IV the liability for current tax will be significantly lower.
Note No. 42 - Contingent liabilities and commitments Contingent liabilities (to the extent not provided for) |
|||
Particulars |
As at |
As at |
|
March 31, 2022 |
March 31, 2021 |
||
(a) Income Tax matters: |
|||
Claims aaainst the Company not acknowledged as debt (for matters disputed by |
|||
the Company) |
|||
pertaining to Revenue Recognition (timing difference *) pending before the CIT(A)/ITAT (Company appeal) |
53,711.17 |
52,652.65 |
|
interest included in the above till the date of order |
14,124.67 |
13,584.11 |
|
pertaining to other matters (mainly timing differences *), pending before the CIT(A)/ITAT (Company appeal) |
6,778.79 |
5,153.63 |
|
interest included in the above till the date of order |
1,419.92 |
1,086.96 |
|
Matters decided in favour of the Company, (but under appeal by the Department) |
|||
pertaining to Revenue Recognition (timing difference *) pending before the Madras High Court (Department appeal) excluding interest |
27,140.61 |
27,140.61 |
|
(b) Service Tax matters: |
|||
(i) Service tax demand on the enrollment of member as against service tax paid |
43,105.47 |
- |
|
on receipt basis (timing differences *) (inclusive of penalty where quantified in demand) |
|||
(ii) Other items (inclusive of penalty where quantified in demand) |
3,468.63 |
3,080.32 |
Particulars |
As at March 31, 2022 |
As at March 31, 2021 |
|
(c) Luxury Tax matters: In respect of certain States, the Company has received demands for payment of luxury tax for member stay at resorts as summarised below: |
|||
Demands raised (inclusive of penalty) |
6,895.37 |
6,895.37 |
|
The Company has challenged the above demands before various appellate authorities / High Court, the outcome of which is pending. For all such matters, the Company has made cumulative provisions for '' 698.72 lakhs (Previous year '' 698.72 lakhs) on a best estimate basis. |
* For matters pertaining to timing differences, if liability were to crystallise, there would be future tax benefits, except to the
extent of tax rate differences and interest, if any.
1) The above amounts are based on demands raised, which the Company is contesting with the concerned authorities. Outflows, if any, arising out of these claims would depend on the outcome of the decision of the appellate authorities and the Company''s rights for future appeals. No reimbursements are expected.
2) The Company had received show cause notices from service tax authorities of '' 21,991.33 lakhs. The detailed reply to the SCN was submitted by the Company and the said matter were also reported in prior financial statements. During the year, the Company has received an Order in Original from the Principal Commissioner of CGST and Central Exercise confirming the demand amounting to '' 43,105.47 lakhs including interest and penalty and the same has been disclosed as Contingent liability in above table.
The Company filed rectification application against the said order before Principal Commissioner on 18th Jan 22 for rectification of mistake apparent from the record as department has incorrectly interpreted the financial statement to determine service tax demand. However Principal Commissioner rejected rectification application on 7th Feb 22 without giving any opportunity for personal hearing. Thereafter Company filed Writ Application before Madras High Court on 22nd Feb 22 against rejection of rectification application order. The Madras High Court has admitted Writ Appeal on March 17 2022 and same is pending for disposal. Company is confident that no payment is expected to be made for this matter.
3) The Company has accounted for service tax receivable of '' 752.27 lakhs (Previous year '' 728.36 lakhs) in relation to the service tax paid on ASF and Membership fee invoices for contracts which have been cancelled post GST implementation. The Company has received an unfavorable order against the refund claim and has filed an appeal against the order.
(i) The Government of Kerala through the Sub Collector, District of Devikulam issued an Order dated July 3, 2007 cancelling the assignment of land underlying the Munnar resort and directed repossession of land on the ground that it is agricultural land and cannot be used for commercial purposes. The Company had filed an appeal before the Commissioner of Land Revenue, Trivandrum against the said Order stating that the Patta issued does not specify that the land should be used only for agricultural purpose. The Commissioner of Land Revenue, Trivandrum vide his Order dated November 22, 2007 dismissed the appeal filed by the Company and cancelled the assignment of land underlying the Munnar Resort (Total Gross Value '' 605.12 Lakhs) and further directed repossession of land on the ground that it is agricultural land and cannot be used for commercial purposes. The Company had filed a writ petition before the Kerala High Court against the said Order. The writ Petition has been disposed of by an Order dated May 21, 2019. Against the said Order, the company has filed a Writ Appeal and by an order dated June 19, 2019, the Court granted an interim stay of all further proceedings. The matter is pending.
(ii) With respect to certain claims of neighbouring property owners, the Company filed a suit in the Civil Court, Pune seeking inter-alia permanent injunction against them disturbing the possession of the Company''s resort property at Lonavala, Maharashtra and obtained an interim stay. In another development, notwithstanding these proceedings, the neighbouring property owner obtained an order from the local Mamlatdar''s Court for alleged access to his property through the resort property. The Company obtained a stay against the said order of the Mamlatdar. All matters with respect to the neighbouring property owner are currently pending before the Civil Court, Pune. Further, on account of the cancellation of the Non-Agricultural land conversion order by the Collector, Pune on the basis of complaint made by the said neighbouring owner and subsequently confirmed by the Additional Divisional Commissioner, Pune, the Company has also filed another Civil Suit at Civil Court, Pune against State of Maharashtra and Others, inter alia, seeking declaration that the proceedings and Orders in respect of cancellation of the NA status of the land underlying the resort property at Lonavala (Total Gross Value '' 1,545.01 Lakhs) are not enforceable and also sought other reliefs. Ad-interim stay has been granted against State of Maharashtra and the Collector, Pune not to give effect to the Orders of NA cancellation and the matter is pending for further hearing.
The Company engaged a building contractor for construction of a resort. As the construction did not proceed as per agreed timelines the Company terminated the contract. The contractor has claimed '' 1,256.15 lakhs as damages for termination of the Contract. The Company has made a counter claim of '' 2,003.56 lakhs towards liquidated damages and other losses. The matter has been heard by the Arbitrator and is reserved for Orders.
(g) With respect to member complaints pending before various consumer forum and other matters:
Estimated amount of claims '' 579.39 lakhs (As at March 31, 2021: '' 489.85 lakhs). In addition, there are claims by some members seeking certain reliefs which are not agreed by the company, the financial impact of these claims are currently not ascertainable and hence not captured in above.
In February 2019, the Supreme Court of India in its judgement clarified the applicability of allowances that should be considered to measure obligations under Employees Provident Fund Act, 1952. The Company has been legally advised that there are interpretative challenges on the application of judgement retrospectively and as such does not consider there is any probable obligation for past periods. Accordingly, based on legal advice the Company had made a provision for provident fund contribution from the date of the Supreme Court order.
Note No. 43 - Employee benefits
The Company''s contribution to Provident Fund and Superannuation Fund aggregating '' 1,312.77 lakhs (2021: '' 1,148.73 lakhs) has been recognised in the Statement of Profit and Loss under the head Employee Benefits Expense.
The Company''s key objective in managing its financial structure is to maximize value for shareholders, reduce cost of capital, while at the same time ensuring that the Company has the financial flexibility required to continue its expansion. The Company manages its financial structure majorly through internal accruals and makes any necessary adjustments in light of prevailing economic conditions. In this context, the capital structure of the Company consists only of equity and lease liability is not considered as debt. Equity comprises issued share capital, reserves and retained earnings as set out in the statement of changes in equity.
The Company has a robust business risk management process to identify, evaluate and mitigate risks impacting business of the Company. This framework seeks to create transparency, minimise adverse impact on the business objectives and enhance the Company''s competitive advantage. This also defines the risk management approach across the enterprise at various levels including documentation and reporting. Risk management forms an integral part of the Company''s Business Plan. The Company has adequate internal processes to assess, monitor and manage financial risks. These risks include credit risk, liquidity risk and market risk.
(i) Credit risk management
A significant portion of the Company''s sales of Vacation Ownerships are by way of deferred payment schemes where the customer is obligated to pay the membership fee in Equated Monthly Instalments (EMIs) and the ensuing credit risk is managed by the Company in the following manner:
(a) preliminary assessment of customer credit worthiness, ensuring realisation of minimum down payment and adherence to internal KYC norms;
(b) collecting post dated instruments such as cheques, Automated Clearing House (ACH) mandates, standing credit card instructions from the customers at inception to ensure security cover.
From an accounting perspective, revenue is recognised only when it is probable that the economic benefits associated with the transaction will flow to the Company. The member is not allowed to use the benefits of membership untill the overdue amount is regularised or fully paid in that relevant period. The Company also assesses lifetime expected credit loss by using appropriate models, as prescribed by Ind AS 109, using past trends of collections and historical credit loss experience. The categorisation of the receivables into its ageing buckets for the purposes of estimating the expected loss allowance has been profiled based on the longest overdue of that member, for example, if a member has one instalment overdue for say 12 months, the entire receivable of the member is aggregated into that ageing bucket and the credit loss allowance is
determined after taking into account the credits against the member under âContract liability- Deferred Revenue - Vacation ownership fee" (refer note 29 and note 34).
The allowances for credit loss and for revenue deferred at inception referred to above, carried at the end of every reporting period, are tested for adequacy and appropriately dealt with.
Currency Risk
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Company''s exposure to currency risk relates primarily to the Company''s investing activities when transactions are denominated in a different currency from the Company''s functional currency.
Note No. 53 - Estimation uncertainty relating to COVID-19 outbreak
The Company has considered internal and external sources of information, economic forecasts and industry reports, up to the date of approval of the financial statements, in determining the impact of COVID 19 pandemic on various elements of its business operations and financial statements. The Company has used the principles of prudence in applying judgements, estimates and assumptions and based on the current estimates, the Company expects to recover the carrying amount of its current and non current assets. The eventual outcome of impact of the global health pandemic may be different from those estimated as on the date of review of these financial statements depending on how long the pandemic lasts and time period taken for the economic activities to return to normalcy.
Note No. 55 - Reporting under Rule 11(d) of the Companies (Audit and Auditor''s) Rules, 2014
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (âUltimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
The figures for the previous year have been regrouped/ reclassified to correspond with current year''s classification/ disclosure. The financial statements of Mahindra Holidays & Resorts India Limited were approved by the Board of Directors and authorised for issue on May 2, 2022.
Mar 31, 2018
1 Corporate Information
The Company was incorporated on September 20, 1996, and is in the business of selling vacation ownership and providing holiday facilities.
2 Critical accounting judgements and key sources of estimation uncertainty
In the application of the Companyâs accounting policies, which are described above, the management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only the period of the revision and future periods if the revision affects both current and future periods.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below :
a. Share based payments
The entity initially measures the cost of equity settled transactions with employees using the Black Scholes model to determine the fair value of the options granted. Estimating the fair value of the share options granted require determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating the fair value for the share based payment transactions are disclosed in Note 20.
b. Defined benefit plans (gratuity)
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. Further details about the gratuity obligation are disclosed in Note 38.
c. Intangible assets under development
The Company capitalizes intangibles underdevelopment in accordance with the accounting policy. Initial capitalization of costs is based on managementâs judgement that technological and economic feasibility is confirmed.
d. Life time Expected credit losses
Life time expected credit loss allowance is computed based on historical credit loss experience and adjusted for forward-looking information on collection .
e. Estimation towards revenue deferred at inception
The quantum of revenue deferred at inception is computed based on past trends of year-wise cancellation of memberships and considering factors impacting future collections.
f. Significant financing component
Given the nature of vacation ownership business, the Company has determined that membership fee does not include a significant financing component. Where the payment is received in installments, the Company charges appropriate interest to the members.
a) The preference shares of Guestline Hospitality Management and Developmnent Services Limited can be redeemed at par at the option of the investee at any time after five years but before twenty years from the date of allotment viz. 14.01.2003 or at the option of the holder be convertibble into fully paid equity shares of the face value of Rs.10 each anytime after thirty six months from the date of allotment.
b) During the year 15,321,400 (Previous Year NIL) equity shares of Rs.10 each were alloted at par by Gables Promoters Private Limited.
3 a) Terms / rights attached to equity shares:
i) The Company has only one class of shares referred to as equity shares having a par value of Rs.10/-. Each holder of equity share is entitled to one vote per share.
ii) The dividends proposed by the Board of Directors is subject to approval of the shareholders in the Annual General Meeting.
iii) For the year ended March 31, 2018, the amount of dividend proposed to be distributed to equity shareholders is Rs.5,337.75 lacs at Rs.4 per share (Previous year Rs.4,441.79 lacs at Rs.5 per share).
iv) Repayment of capital will be in proportion to the number of equity shares held.
3 b) Shares in the Company held by Holding Company
3 c) Details of shares held by each shareholder holding more than 5% shares:
3 d) The reconciliation of the number of shares outstanding as at March 31, 2018 and March 31, 2017 is set out below:-
The Board of Directors at its meeting held on May 19, 2017 had approved issue of bonus shares in the proportion of 1:2, I.e. 1(one) bonus equity share of Rs.10/- each for 2(two) fully paid up equity shares which was allotted on July 12, 2017 on approval being received in the shareholderâs meeting.
3 e) i) Under the Employee Stock Option Scheme (âESOS 2006â) equity shares are allotted to the ESOP Trust set up by the Company. The ESOP Trust holds these shares for the benefit of the eligible employees/directors as defined under the scheme and transfers these shares to them as per the recommendation of the remuneration committee.
ii) The Company formulated the Employee Stock Option Scheme (âESOS 2014â), under which the Company has the option to issue and allot the shares either directly to the eligible employees/directors or through the ESOP Trust. To the extent allotted, ESOP Trust would hold these shares for the benefit of the eligible Employees/Directors as defined under the scheme and would transfer the shares to them as per the recommendation of the remuneration committee.
iii) The details of the Employeesâ Stock Option Schemes are as under:
Type of Arrangement ESOS 2006 - Equity settled option plan administered through Employee Stock
Option Trust.
ESOS 2014 - Equity settled option plan issued directly/administered through Employee Stock Option Trust.
Method of Settlement By issue of shares at Exercise Price.
a) General reserve: The general reserve is used from time to time to transfer net profits from retained earnings for appropriation purposes.
b) Securities Premium Reserve: Securities premium reserve is credited when shares are issued at premium. It is utilised in accordance with the provisions of the Act, to issue bonus shares, write-off equity related expenses like share issue expenses, etc.
c) Share Option Outstanding Account: The Company has share option schemes under which options to subscribe the shares of the Company have been granted to certain eligible employees. The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration.
d) Capital Reserve: Capital Reserves are mainly the reserves created during business combination for the gain on bargain purchase and common control mergers. It is not available for distribution as dividend.
e) Capital Redemption Reserve: The capital redemption reserve is used towards issue of fully paid bonus shares of the Company.
The Company has taken certain properties under operating leases with varying lease terms, cancellable at the option of the Company. The future minimum lease payments are given below.
(f) Other matters under appeal (Property related):
(i)The Government of Kerala through the Sub Collector, District of Devikulam issued an Order dated July 3, 2007 cancelling the assignment of land underlying the Munnar resort and directed repossession of land on the ground that it is agricultural land and cannot be used for commercial purposes. The Company had filed an appeal before the Commissioner of Land Revenue, Trivandrum against the said Order stating that the Patta issued does not specify that the land should be used only for agricultural purpose. The Commissioner of Land Revenue, Trivandrum vide his Order dated November 22, 2007 dismissed the appeal filed by the Company and cancelled the assignment of land underlying the Munnar Resort and further directed repossession of land on the ground that it is agricultural land and cannot be used for commercial purposes. The Company had filed a writ petition before the Kerala High Court against the said Order and on December 13, 2007, the Court granted an interim stay of all further proceedings.
(ii) With respect to certain claims of neighbouring property owners, the Company filed a suit in the Civil Court, Pune seeking inter-alia permanent injunction against them disturbing the possession of the Companyâs resort property at Lonavala, Maharashtra and obtained an ad-interim stay. In another development, notwithstanding these proceedings, the neighbouring property owner obtained an order from the local Mamlatdarâs Court for alleged access to his property through the resort property. The Company obtained a stay against the said order of the Mamlatdar. All matters with respect to the neighbouring property owner are currently pending before the Civil Court, Pune. Further, on account of the cancellation of the Non-Agricultural land conversion order by the Collector, Pune on the basis of complaint made by the said neighbouring owner and subsequently confirmed by the Additional Divisional Commissioner, Pune, the Company has also filed another Civil Suit at Civil Court, Pune against State of Maharashtra and Others, inter alia, seeking declaration that the proceedings and Orders in respect of cancellation of the NA status of the land underlying the resort property at Lonavala are not enforceable and also sought other reliefs. Ad-interim stay has been granted against State of Maharashtra and the Collector,Pune not to give effect to the Orders of NA cancellation and the matter is pending for further hearing.
(g) Other matters:
(i) The Company engaged a building contractor for construction of a resort. As the construction did not proceed as per agreed timelines the Company terminated the contract. The contractor has claimed Rs.1,256.15 lacs as damages for termination of the Contract. The Company has made a counter claim of Rs.2,003.56 lacs towards liquidated damages and other losses. The matter is pending before the Arbitrator.
(ii) The Regional Provident Fund Commissioner, Chennai had issued Summons initiating proceedings under Section 7A of the Employees Provident Fund Act for failing to remit contributions on allowances relating to employees for the period from March 2011 to February 2013 in respect of Indian employees and from April 2010 to February 2013 in respect of international employees. The PF Authorities have made a claim of Rs.189.93 lacs. The Company has filed a Writ Petition No 2408/2014 before the Madras High Court and the Court has granted an Interim stay of the above proceedings.
(iii) The Company had acquired the entire shareholding of erstwhile Holiday on Hill Resort Private Limited (erstwhile subsidiary) in the year 2012 and subsequently it was amalgamated with the Company. In the year 2013, a Show Cause Notice was issued by the Collector, Solan to the erstwhile subsidiary under the provisions of Section 118 of HP Tenancy and Land Reforms Act, 1972 (the Act) alleging that the sale by the erstwhile subsidiary had in violation of the provisions of the Act and has required the erstwhile subsidiary to show cause why the said land should not be confiscated. The erstwhile subsidiary had responded to said show cause notice, inter alia, submitting that it has not violated any provisions of the Act in as much as the Company has acquired only the shareholdings of the erstwhile subsidiary from its shareholders and no property has been sold to the Company. The matter has been disposed off by an Order dated 12th December, 2017 passed by the Financial Contoller (Appeals), HP, Shimla in Revision Application preferred by the Company.
(h) With respect to member complaints pending before various consumer fora and other matters: Estimated amount of claims Rs.493.93 lacs (As at March 31, 2017: Rs.475.36 lacs).
Note No. 4 - Employee Benefits:
(a) Defined contribution plan
The Companyâs contribution to Provident Fund and Superannuation Fund aggregating Rs.990.45 Lacs (2017: Rs.836.18 Lacs) has been recognised in the Statement of Profit or Loss under the head Employee Benefits Expense.
(b) Defined Benefit Plans (Gratuity)
The Company has a funded Gratuity Scheme for its employees and gratuity liability has been provided based on the actuarial valuation done at the year end. The Gratuity scheme of the Company is funded with the Life Insurance Corporation of India.
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the Balance sheet.
The methods and types of assumptions used in preparing the sensitivity analyses did not change compared to previous period.
The Company expects to contribute Rs.234.82 Lacs (Previous Year 151.68 lacs) to the gratuity trust during the next financial year of 2018-19.
The expected rate of return on plan assets is based on the average long term rate of return expected on investments of the fund during the estimated term of obligation.
The estimate of future salary increases, considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
The amount recognized as an expense in respect of Compensated absences is Rs.100.54 lacs (Previous Year: Rs.434.50 lacs).
Note No. 5 - Financial Instruments: Capital management
The Companyâs key objective in managing its financial structure is to maximize value for shareholders, reduce cost of capital, while at the same time ensuring that the Company has the financial flexibility required to continue its expansion. The Company manages its financial structure majorly through internal accruals and makes any necessary adjustments in light of prevailing economic conditions. In this context, the capital structure of the Company consists only of equity. Equity comprises issued share capital, reserves and retained earnings as set out in the statement of changes in equity.
Financial Risk Management Framework
The Company has a robust business risk management process to identify, evaluate and mitigate risks impacting business of the Company. This framework seeks to create transparency, minimise adverse impact on the business objectives and enhance the Companyâs competitive advantage. This also defines the risk management approach across the enterprise at various levels including documentation and reporting. Risk management forms an integral part of the Companyâs Business Plan. The Company has adequate internal processes to assess, monitor and manage financial risks. These risks include credit risk, liquidity risk and market risk.
(i) Credit risk management
A significant portion of the Companyâs sales of Vacation Ownerships are by way of deferred payment schemes where the customer is obligated to pay the membership fee in Equated Monthly Installments (EMIs) and the ensuing credit risk is managed by the Company in the following manner:
(a) preliminary assessment of customer credit worthiness, ensuring realisation of minimum down payment and adherence to internal KYC norms.
(b) collecting post dated instruments such as cheques, Automated Clearing House (ACH) mandates, standing credit card instructions from the customers at inception to ensure security cover;
From an accounting perspective, revenue is recognised only when it is probable that the economic benefits associated with the transaction will flow to the Company. The Company also assesses lifetime expected credit loss by using appropriate models, as prescribed by Ind AS 109, using past trends of collections and historical credit loss experience. The categorisation of the receivables into its ageing buckets for the purposes of estimating the expected loss allowance has been profiled based on the longest overdue of that member, for example, if a member has one installment overdue for say 12 months, the entire receivable of the member is aggregated into that ageing bucket and the credit loss allowance is determined after taking into account the credits against the member under âDeferred Revenue - entitlement feeâ (refer note 24 and note 28(a)).
The allowances for credit loss and for revenue deferred at inception referred to above, carried at the end of every reporting period, are tested for adequacy and appropriately dealt with.
The credit loss allowance carried by the Company is as under:
* With effect from FY 2015-16, the Company, in accordance with Ind AS, is deferring revenue at inception based on trends as explained and accordingly the credit loss allowance reflects a declining trend. The amounts deferred at inception and the credit loss allowance are adjusted from the carrying value of receivables (refer note 7 and 14) in the same proportion, except in cases where the allowance is directly attributable to a particular contract.
(i) Liquidity risk management
The Company manages liquidity risk by maintaining adequate reserves and banking facilities, by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities.
Maturities of financial liabilities
The following tables detail the Companyâs remaining contractual maturity for its non-derivative financial liabilities (predominantly trade payables, retention payables, etc) with agreed repayment periods. The amount disclosed in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.
The Company has provided financial guarantees to its wholly owned subsidiaries. The amounts included above for financial guarantee contracts are the maximum amounts the Company could be forced to settle under the arrangement for the full guaranteed amount if that amount is claimed by the counterparty to the guarantee. Based on expectations at the end of the reporting period, the Company considers that it is more likely that such an amount will not be payable under the arrangement.
Financing arrangements
The Company had access to following undrawn borrowing facilities at the end of the reporting period:
(ii) Market risk management
The Companyâs market risk comprises solely of its foreign currency exposure which are limited and not material to the size of its operations. Its major exposure is against currencies that have been stable over several years.
Currency Risk
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Companyâs exposure to currency risk relates primarily to the Companyâs investing activities when transactions are denominated in a different currency from the Companyâs functional currency.
The carrying amounts of the Companyâs foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows.
Of the above foreign currency exposures, none of the exposures are hedged by a derivative. These foreign currency exposures are denominated in currencies that are not very volatile. Hence, the Company is not exposed to major currency risks.
Foreign Currency Sensitivity
The Company is exposed to the following currency risks - USD, AED, THB, MYR and EUR - and the following table demonstrates the sensitivity.
Note 1: Fair value determined using NAV.
Note 2: Fair value determined using discounted cash flow method. Reconciliation of Level 3 fair values
* Fair value of financial assets and financial liabilities (that are measured at amortised cost) closely approximate their carrying value.
Note No. 6 - Expenditure on Corporate Social Responsibility:
As per Section 135 of the Companies Act 2013, the Company needs to spend 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The Company has incurred CSR expenditure on activities specified in Schedule VII of the Companies Act, 2013.
Gross amount required to be spent by the Company during the year is Rs.340 Lacs (Previous Year : Rs.288 Lacs)
Note No. 7 - Segment information
The Company is primarily engaged in the business of sale of Vacation Ownership and other related services in India. As such, the Company operates in a single segment and there are no separate reportable segments. The same is consistent with the information reviewed by the chief operating decision maker (CODM).
Payments made by the Company to political parties in India in accordance with Section 182 of Companies Act, 2013, during the year are as follows:
Ind AS 115 âRevenue from contracts with customersâ has been notified by the Ministry of Corporate Affairs on 28th Marâ18 which replaces the existing revenue recognition guidance including Ind AS 18 Revenue, Ind AS 11 Construction Contracts and Guidance Note on Accounting for Real Estate Transactions effective for accounting periods beginning on or after 1st Aprilâ18. Ind AS 115 sets out requirements for recognising revenue and costs from contracts with customers and includes extensive disclosure requirement which may have material impact on the Companyâs reporting of revenue and costs.
The companyâs business is to sell vacation ownership and provide holiday facilities to members for specified period each year, over a number of years, for which membership fee is collected. The Company is assessing the impact of the accounting changes that will arise under Ind AS 115, which include recognition of the membership fees and direct acquisition cost over the membership period. The changes highlighted above may have a material impact on the companyâs income statement and statement of financial position after transition to Ind AS 115 from 1st April 2018. Accordingly, the Companyâs Revenue Recognition Policy may undergo a change for the annual periods beginning from 1st April 2018.
* Specified Bank Notes collected and recorded at branches and resorts of the Company in the normal course of business have been deposited with banks across various locations.
The disclosures regarding details of specified bank notes held and transacted has not been made for the current year as the requirement does not pertain to financial year ended 31 March 2018. Corresponding amounts as appearing in the audited Ind AS financial statements for the period ended 31 March 2017 have been disclosed.
Note No. 8 - Regrouping/reclassification:
The figures for the previous year have been regrouped/ reclassified to correspond with current yearâs classification/ disclosure that include changes consequent to the issuance of âGuidance Note on Division II - Ind AS Schedule III to the Companies Act, 2013â.
The financial statements of Mahindra Holidays and Resorts India Limited were approved by the Board of Directors and authorised for issue on May 8, 2018.
Mar 31, 2017
Notes:
a) The preference shares of Guestline Hospitality Management and Development Services Limited can be redeemed at par at the option of the investee at any time after five years but before twenty years from the date of allotment viz. 14.01.2003 or at the option of the holder be convertible into fully paid equity shares of the face value of INR 10 each anytime after thirty six months from the date of allotment.
b) During the year, 5,738 equity shares of INR 10 each were alloted at par by Nreach Online Services Private Limited.
c) Refer Note Nos. 44 and 45 for disclosure of measurement policy as per IND AS 107, 109, 113
Treasury shares represents equity shares of INR 10/- each fully paid up alloted to Mahindra Holidays and Resorts India Limited Employees'' Stock Option Trust (''ESOP Trust'') but not exercised by employees.
20 a) Terms / rights attached to equity shares:
i) The Company has only one class of shares referred to as equity shares having a par value of '' 10/-. Each holder of equity share is entitled to one vote per share.
ii) The dividends proposed by the Board of Directors is subject to approval of the shareholders in the Annual General Meeting.
iii) For the year ended March 31, 2017, the amount of dividend proposed to be distributed to equity shareholders is '' 4,441.79 lacs at '' 5 per share (Previous year '' 4,439.04 lacs at '' 5 per share).
iv) Repayment of capital will be in proportion to the number of equity shares held.
1 e) The Board of Directors at its meeting held on May 19, 2017 approved issue of Bonus Shares in the proportion of 1:2, i.e.
(One) bonus equity share of '' 10/- each for 2 (Two) fully paid-up equity shares as on the Record Date (being informed separately), subject to the approval of the Members of the Company.
2 f) i) Under the Employee Stock Option Scheme (âESOS 2006") equity shares are allotted to the ESOP Trust set up by the Company. The ESOP Trust holds these shares for the benefit of the eligible employees/directors as defined under the scheme and transfers these shares to them as per the recommendation of the remuneration committee.
ii) The Company formulated the Employee Stock Option Scheme (âESOS 2014"), under which the Company has the option to issue and allot the shares either directly to the eligible employees/directors or through the ESOP Trust. To the extent allotted, ESOP Trust would hold these shares for the benefit of the eligible Employees/Directors as defined under the scheme and would transfer the shares to them as per the recommendation of the remuneration committee.
iii) The details of the Employees'' Stock Option Schemes are as under:
Type of Arrangement ESOS 2006 - Equity settled option plan administered through Employee Stock
Option Trust.
ESOS 2014 - Equity settled option plan issued directly/administered through Employee Stock Option Trust.
Method of Settlement By issue of shares at Exercise Price.
** Issued out of lapsed options.
# Out of the above 90,000 shares has been issued out of lapsed options.
## Out of the above 86,500 shares has been issued out of lapsed options.
(a) The Company has availed the exemption under Ind AS 101 First time Adoption, and has applied the accounting principles of Ind AS 102 only for ESOPs outstanding as of the transition date (April 1, 2015). Accordingly, the Employee compensation cost has been computed based on the fair values of the options granted for Grant VI (ESOS 2006), Grant VII (ESOS 2006), Grant VIII (ESOS 2006), Grant IX (ESOS 2006), Grant I (ESOS 2014), Grant II (ESOS 2014).
(b) The fair value of options as certified by independent valuer as of the respective dates of grant i.e. 21st February 2012 is '' 113.81 for Grant VI (ESOS 2006), Rs, 129.93 for Grant VII (ESOS 2006), 21st February 2013 is Rs, 94.43 for Grant VIII (ESOS 2006), 29th January 2014 is Rs, 83.75 for Grant IX (ESOS 2006), 22nd January 2015 is Rs, 97.24 for Grant I (ESOS 2014), 27th October 2015 is Rs, 158.85 for Grant II (ESOS 2014), 18th February 2016 is Rs, 126.91 for Grant III (ESOS 2014) and 31st January 2017 is Rs, 150.35 for Grant IV (ESOS 2014).
(f) Other matters under appeal (Property related):
(i)The Government of Kerala through the Sub Collector, District of Devikulam issued an Order dated July 3, 2007 cancelling the assignment of land underlying the Munnar resort and directed repossession of land on the ground that it is agricultural land and cannot be used for commercial purposes. The Company had filed an appeal before the Commissioner of Land Revenue, Trivandrum against the said Order stating that the Patta issued does not specify that the land should be used only for agricultural purpose. The Commissioner of Land Revenue, Trivandrum vide his Order dated November 22, 2007 dismissed the appeal filed by the Company and cancelled the assignment of land underlying the Munnar Resort and further directed repossession of land on the ground that it is agricultural land and cannot be used for commercial purposes. The Company had filed a writ petition before the Kerala High Court against the said Order and on December 13, 2007, the Court granted an interim stay of all further proceedings.
(ii) With respect to certain claims of neighbouring property owners, the Company filed a suit in the Civil Court, Pune seeking inter-alia permanent injunction against them disturbing the possession of the Company''s resort property at Lonavala, Maharashtra and obtained an ad-interim stay. In another development, notwithstanding these proceedings, the neighbouring property owner obtained an order from the local Mamlatdar''s Court for alleged access to his property through the resort property. The Company obtained a stay against the said order of the Mamlatdar. All matters with respect to the neighbouring property owner are currently pending before the Civil Court, Pune. Further, on account of the cancellation of the Non-Agricultural land conversion order by the Collector, Pune on the basis of complaint made by the said neighbouring owner and subsequently confirmed by the Additional Divisional Commissioner, Pune, the Company has also filed another Civil Suit at Civil Court, Pune against State of Maharashtra and Others, inter alia, seeking declaration that the proceedings and Orders in respect of cancellation of the NA status of the land underlying the resort property at Lonavala are not enforceable and also sought other reliefs. Ad-interim stay has been granted against State of Maharashtra and the Collector,Pune not to give effect to the Orders of NA cancellation and the matter is pending for further hearing.
(g) Other matters:
(i) The Company engaged a building contractor for construction of a resort. As the construction did not proceed as per agreed timelines the Company terminated the contract. The contractor has claimed '' 1,256.15 lacs as damages for termination of the Contract. The Company has made a counter claim of '' 2,003.56 lacs towards liquidated damages and other losses. The matter is pending before the Arbitrator.
(ii) The Regional Provident Fund Commissioner, Chennai had issued Summons initiating proceedings under Section 7A of the Employees Provident Fund Act for failing to remit contributions on allowances relating to employees for the period from March 2011 to February 2013 in respect of Indian employees and from April 2010 to February 2013 in respect of international employees. The PF Authorities have made a claim of '' 189.93 lacs. The Company has filed a Writ Petition No 2408/2014 before the Madras High Court and the Court has granted an Interim stay of the above proceedings.
(iii)The Company had acquired the entire shareholding of erstwhile Holiday on Hill Resort Private Limited (erstwhile subsidiary) in the year 2012 and subsequently it was amalgamated with the Company. In the year 2013, a Show Cause Notice was issued by the Collector, Solan to the erstwhile subsidiary under the provisions of Section 118 of HP Tenancy and Land Reforms Act, 1972 (the Act) alleging that the sale by the erstwhile subsidiary had in violation of the provisions of the Act and has required the erstwhile subsidiary to show cause why they said land should not be confiscated. The erstwhile subsidiary had responded to said show cause notice, inter alia, submitting that it has not violated any provisions of the Act in as much as the Company has acquired only the shareholdings of the erstwhile subsidiary from its shareholders and no property has been sold to the Company. The matter is pending before the Collector, Solan.
(h) With respect to member complaints pending before various consumer fora and other matters: Estimated amount of claims Rs, 475.36 lacs (As at March 31, 2016: Rs, 949.02 lacs, as at April 1, 2015: Rs, 826.50 lacs).
(a) Defined contribution plan
The Company''s contribution to Provident Fund and Superannuation Fund aggregating Rs, 836.18 Lacs (2016: '' 729.76 Lacs) has been recognized in the Statement of Profit or Loss under the head Employee Benefits Expense.
(b) Defined Benefit Plans (Gratuity)
The Company has a funded Gratuity Scheme for its employees and gratuity liability has been provided based on the actuarial valuation done at the year end. The Gratuity scheme of the Company is funded with the Life Insurane Corporation of India.
Defined benefit plans - as per actuarial valuation on March 31, 2017 and March 31, 2016:
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognized in the Balance sheet.
The methods and types of assumptions used in preparing the sensitivity analyses did not change compared to previous period.
The Company expects to contribute Rs, 151.68 Lacs to the gratuity trust during the next financial year of 2017-18.
Financial Risk Management Framework
The Company has a robust business risk management process to identify, evaluate and mitigate risks impacting business including those which may threaten the existence of the Company. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company''s competitive advantage. This also defines the risk management approach across the enterprise at various levels including documentation and reporting. Risk management forms an integral part of the Company''s Business Plan. The Company has adequate internal processes to assess, monitor and manage financial risks. These risks include credit risk, liquidity risk and market risk.
(i) Credit risk management
A significant portion of the Company''s sales of Vacation Ownerships are by way of deferred payment schemes where the customer is obligated to pay the membership fee in Equated Monthly Installments (EMIs) and the ensuing credit risk is managed by the Company in the following manner:
(a) preliminary assessment of customer credit worthiness, ensuring realization of minimum down payment and adherence to internal KYC norms.
(b) collecting post dated instruments such as cheques, Automated Clearing House (ACH) mandates, standing credit card instructions from the customers at inception to ensure security cover;
From an accounting perspective, revenue is recognized only when it is probable that the economic benefits associated with the transaction will flow to the Company. The Company also assesses lifetime expected credit loss by using appropriate models, as prescribed by Ind AS 109, using past trends of collections and historical credit loss experience. The categorization of the receivables into its ageing buckets for the purposes of estimating the expected loss allowance has been profiled based on the longest overdue of that member, for example, if a member has one installment overdue for say 12 months, the entire
receivable of the member is aggregated into that ageing bucket and the credit loss allowance is determined after taking into account the credits against the member under âDeferred Revenue - Vacation Ownership entitlement fee" (refer note 24 and note 29(a)).
The allowances for credit loss and for revenue deferred at inception referred to above, carried at the end of every reporting period, are tested for adequacy and appropriately dealt with.
* With effect from FY 2015-16, the Company, in accordance with Ind AS, is deferring revenue at inception based on trends as explained and accordingly the credit loss allowance reflects a declining trend. The amounts deferred at inception and the credit loss allowance are adjusted from the carrying value of receivables (refer note 7 and 14) in the same proportion, except in cases where the allowance is directly attributable to a particular contract.
(i) Liquidity risk management
The Company manages liquidity risk by maintaining adequate reserves and banking facilities, by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities.
Maturities of financial liabilities
The following tables detail the Company''s remaining contractual maturity for its non-derivative financial liabilities (predominantly trade payables, retention payables, etc) with agreed repayment periods. The amount disclosed in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.
The Company has provided financial guarantees to its wholly owned subsidiaries. The amounts included above for financial guarantee contracts are the maximum amounts the Company could be forced to settle under the arrangement for the full guaranteed amount if that amount is claimed by the counterparty to the guarantee. Based on expectations at the end of the reporting period, the Company considers that it is more likely that such an amount will not be payable under the arrangement.
Financing arrangements
The Company had access to following undrawn borrowing facilities at the end of the reporting period:
Maturities of financial assets
The following table details the Company''s expected maturity for its non-derivative financial assets (predominantly trade receivables, receivables from related parties, etc). The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company''s liquidity risk management as the liquidity is managed on a net asset and liability basis.
(iii) Market risk management
The Company''s market risk comprises solely of its foreign currency exposure which are limited and not material to the size of its operations. Its major exposure is against currencies that have been stable over several years.
Currency Risk
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Company''s exposure to currency risk relates primarily to the Company''s investing activities when transactions are denominated in a different currency from the Company''s functional currency.
Note 1: Fair value determined using quoted market prices.
Note 2: Fair value determined using PE multiples, revenue multiples, etc.
Note 3: Fair value determined using the estimated credit risk of the counterparty.
* Fair value of financial assets and financial liabilities (that are measured at amortised cost) closely approximate their carrying value.
Note No. 4 - Expenditure on Corporate Social Responsibility:
As per Section 135 of the Companies Act 2013, the Company needs to spend 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The Company has incurred CSR expenditure on activities specified in Schedule VII of the Companies Act, 2013.
Gross amount required to be spent by the Company during the year is INR 280 Lacs (PY 2015-16: '' 271.90 Lacs)
There have been no overdue amounts as on the reporting date or any time during the year for which interest is paid or payable.
Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.
Note No. 5 - Segment information:
The Company is primarily engaged in the business of sale of Vacation Ownership and other related services in India. As such, the Company operates in a single segment and there are no separate reportable segments. The same is consistent with the information reviewed by the chief operating decision maker (CODM).
Notes:
1 Dividends not recognized as liability until declared
Under Indian GAAP, proposed dividends are recognized as a liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, proposed dividend is recognized as a liability in the period in which it is declared by the Company (usually when approved by shareholders in a general meeting) or paid. In the case of the Company, declaration of dividends occur after the period end. Therefore the liability recorded for this dividend has been derecognized against retained earnings.
2 Expected credit loss provision
Under Indian GAAP, trade receivables have been provided based on management judgment on recoverability of overdue receivables based on assessment during collection based on policy consistently followed . Under Ind AS, such provision needs to be made using the expected credit loss model . The difference in provision under the two methods have been recognized against retained earnings.
3 ESOP fair value accounting
Under Indian GAAP, the Company recognized only the intrinsic value for the Employee Stock Option as an expense. Ind AS requires the fair value of the stock options to be determined using an appropriate pricing model recognized over the vesting period. The cost of stock options which were granted prior to and still unvested at April 1, 2015 have been recognized at fair value and adjusted against retained earnings.
4 Other comprehensive income
Under Indian GAAP the Company recognized costs related to its post-employment defined benefit plan on an actuarial basis and continues to follows the same methodology under Ind AS. However, while under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss, under Ind AS, re-measurements (comprising actuarial gains and losses, etc.) are charged to Retained earnings through Other Comprehensive Income.
* Specified Bank Notes collected and recorded at branches and resorts of the Company in the normal course of business have been deposited with banks across various locations.
Note No. 6 - Regrouping/reclassification:
The figures for the previous year have been regrouped/reclassified to correspond with the current year''s classification/disclosure.
The financial statements of Mahindra Holidays and Resorts India Limited were approved by the Board of Directors and authorized for issue on May 19, 2017.
Mar 31, 2016
I) In accordance with the Guidance Note issued by the Institute of
Chartered Accountants of India, the shares allotted to ESOP Trust
including bonus shares but not exercised by the employees have been
reduced from the share capital by Rs. 7,224,380 (previous year Rs.
7,546,050) and securities premium account reduced by Rs. 136,136,140
(previous year 145,180,792). The said shares will be added to the
issued share capital as and when ESOP Trust issues the shares to the
concerned persons on their exercising the option and till such shares
are issued the amount received from ESOP Trust is disclosed under
"other current liabilities".
ii) The Company has adopted the intrinsic value method in accounting
for employee cost on account of ESOS for Grant I (ESOS 2006), Grant II
(ESOS 2006), Grant III (ESOS 2006) and Grant V (ESOS 2006) and for all
the other grants, the fair value method has been adopted. The intrinsic
value of the shares granted under Grant I (ESOS 2006),Grant II (ESOS
2006), Grant III (ESOS 2006) and Grant V (ESOS 2006) based on the
valuations obtained from an independent valuer is Rs. 16 per equity
share as on 31st March, 2006, Rs. 52 per equity share as on 1st January
2007, 31st August 2008 and 1st November 2008, based on the Discounted
Cash Flow Method. The fair value of the shares granted under Grant VI
(ESOS 2006), Grant VII (ESOS 2006), Grant VIII (ESOS 2006), Grant IX
(ESOS 2006) and Grant III (ESOS 2014) based on the fair value market
price is Rs. 370, Rs. 323, Rs. 323, Rs. 253 and Rs. 370 per share
respectively. As the difference between the intrinsic value/fair value
and the exercise price per share is Rs. Nil, no employee compensation
cost has been charged.
iii) In respect of the options granted under the Grant I (ESOS 2014)
and Grant II (ESOS 2014) of Employee Stock Option Plan, in accordance
with guidelines issued by SEBI, the accounting value of the options is
accounted as deferred employee compensation, which is amortised on a
straight line basis over the period between the date of grant of
options and the date of vesting. Consequently, employee compensation
cost include Rs. 1,745,456 (previous year Rs. 238,374) being the
amortisation of deferred employee compensation.
iv) Fair Value of options based on Black Scholes option pricing model
:
(a) The fair value of options based on the valuation of the independent
valuer for Grant I (ESOS 2006), Grant II (ESOS 2006), Grant III (ESOS
2006) and Grant V (ESOS 2006) as of the respective dates of grant i.e.
15th July 2006, 30th March 2007, 1st November 2007 and 1st November
2008 is Rs. 4.28, Rs. 16.36, Rs. 16.55 and Rs. 16.04 respectively.
(b) "The fair value of options based on the valuation of the
independent valuer as of the respective dates of grant i.e. 21st
February 2012 is Rs. 113.81 for Grant VI (ESOS 2006), Rs. 129.93 for
Grant VII (ESOS 2006), 21st February 2013 is Rs. 94.43 for Grant VIII
(ESOS 2006), 29th January 2014 is Rs. 83.75 for Grant IX (ESOS 2006),
22nd January 2015 is Rs. 97.24 for Grant I (ESOS 2014), 27th October
2015 is Rs. 158.85 for Grant II (ESOS 2014), 18th February 2016 is Rs.
126.91 for Grant III (ESOS 2014)."
(D) Other matters under appeal:
i) Property Related:
(a) The Government of Kerala through the Sub Collector, District of
Devikulam issued an Order dated July 3, 2007 cancelling the assignment
of land underlying the Munnar resort and directed repossession of land
on the ground that it is agricultural land and cannot be used for
commercial purposes. The Company has fled an appeal before the
Commissioner of Land Revenue, Trivandrum against the said Order stating
that the Patta issued does not specify that the land should be used
only for agricultural purpose. The Commissioner of Land Revenue,
Trivandrum vide his Order dated November 22, 2007 dismissed the appeal
fled by the Company and cancelled the assignment of land underlying the
Munnar Resort and further directed repossession of land on the ground
that it is agricultural land and cannot be used for commercial
purposes. The Company has fled a writ petition before the Kerala High
Court against the said Order and on December 13, 2007, the Court
granted an interim stay of all further proceedings.
(b) With respect to the land underlying the resort at Tungi:
The Collector Pune, vide his order, has cancelled the Non-Agricultural
("NA") status of the land. Against this order, the Company has fled an
appeal before the Additional Divisional Commissioner (ADC), Pune
challenging the cancellation of the NA status of the land. The matter
is pending for orders. The Company has also fled a Civil Suit at Civil
Court, Pune against the State of Maharashtra and others, inter alia,
seeking declaration that the proceedings and orders in respect of the
cancellation of the NA status of the land underlying the resort
property at Lonavala are not enforceable and sought other reliefs. An
ad-interim stay has been granted against the State of Maharashtra and
the Collector, Pune, not to give effect to the orders of NA cancellation
and the matter is pending for further hearing;
In respect of certain claims of a neighboring property owner, the
Company has fled a suit in the Civil Court, Pune seeking inter-alia
permanent injunction against him disturbing the possession of the
Company''s resort property at Lonavala, Maharashtra and obtained an
ad-interim stay. In another development, notwithstanding these
proceedings, the neighboring property owner obtained an order from the
local Mamlatdar''s Court for alleged access to his property through the
resort property. The Company obtained a stay against the said order of
the Mamlatdar. All matters with respect to the neighboring property
owner are currently pending before the Civil Court, Pune.
(c) Pursuant to a "public interest litigation" fled before the Gujarat
High Court, the officials of the Forest and Revenue departments undertook
an inspection of all resorts (including the Company''s resort) at Gir in
March 2015. Consequently, the Forest Department has alleged certain
irregularities and sealed some structures / rooms in April 2015. The
Company has denied the alleged violations and made its representations
before a Committee constituted by the Gujarat High Court and the matter
is pending hearing.
None of the matters contained in (a) to (c) above affect the routine
operations of the resorts.
ii) Others:
(a) The Company had engaged a building contractor for construction of a
resort. As the construction did not proceed as per agreed timelines the
Company terminated the contract. The contractor has claimed Rs.
125,614,668 as damages for termination of the Contract. The Company has
made a counter claim of Rs. 200,356,002 towards liquidated damages and
other losses. The matter is pending before the Arbitrator.
(b) The Regional Provident Fund Commissioner, Chennai had issued
Summons initiating proceedings under Section 7A of the Employees
Provident Fund Act for failing to remit contributions on allowances
relating to employees for the period from March 2011 to Feb 2013 in
respect of Indian employees and from April 2010 to Feb 2013 in respect
of international employees. The PF Authorities have made a claim of Rs.
18,993,169. The Company has fled a Writ Petition No 2408/2014 before
the Madras High Court and the Court has granted an Interim stay of the
above proceedings.
(c) With respect to member complaints pending before various consumer
for a and other matters: Estimated amount of claims Rs. 94,901,717/-
(previous year: Rs. 82,650,033/-).
1. Employee Benefits:
1.1 Defined benefit plans
The Company has a funded Gratuity Scheme for its employees and gratuity
liability has been provided based on the actuarial valuation done at
the year end.
2. Segment Reporting:
The Company is primarily engaged in the business of sale of Vacation
Ownership and other related services in India. As such, the Company
operates in a single segment and there are no separate business and
geographic reportable segments for the purpose of Accounting Standard
17 on Segment Reporting.
3. Expenditure on Corporate Social Responsibility:
As per Section 135 of the Companies Act, 2013, the Company needs to
spend 2% of its average net profit for the immediately preceding three
financial years on corporate social responsibility (CSR) activities. The
Company has incurred CSR expenditure on activities specified in Schedule
VII of the Companies Act, 2013.
a. Gross amount required to be spent by the Company during the year is
Rs. 27,189,781/-
4. Details of Amalgamations and Arrangements:
In terms of the Scheme of Amalgamation and Arrangement, (''the Scheme''),
erstwhile Competent Hotels Private Limited, Divine Heritage Hotels
Private Limited and Holiday on Hills Resorts Private Limited, wholly
owned subsidiaries of the Company (referred to as ''transferor
companies''), engaged in the business of rendering resort facilities)
have been merged with the Company (''Transferee Company''), upon which
the entire business, including all assets, liabilities and reserves of
the Transferor Companies stand transferred to and vested in the
Transferee Company. The amalgamation has been accounted under the
''pooling of interest method''and the assets and liabilities transferred
have been recorded at their book values as on the Appointed Date.
The Scheme fled by the Company has been approved by the Hon''ble High
Courts of judicature at New Delhi, Rajasthan (Jaipur Bench), Himachal
Pradesh (Shimla) and Chennai with an Appointed Date of April 1, 2015
and effective date of March 31, 2016 (''the Efective Date''), being the
date on which all the requirements under the Companies Act, 2013 have
been completed.
There was no allotment of shares to the Transferor Companies''equity
shareholders since the Transferor Companies were wholly owned
subsidiaries of the Company.
Details of Amalgamations and Arrangements during the previous year:
In terms of the Scheme of Amalgamation and Arrangement, (''the Scheme''),
the erstwhile Bell Tower Resorts Private Limited (a wholly owned
subsidiary of the Company)(referred to as ''Transferor Company''), had
been merged with the Company (''Transferee Company''), upon which the
entire business, including all assets and liabilities of the Transferor
Company stood transferred to and vested in the Transferee Company. The
amalgamation had been accounted under the ''pooling of interest
method''and the assets and liabilities transferred were recorded at
their book values as on the Appointed Date.
The Scheme fled by the Company had been approved by the Hon''ble High
Court of Bombay at Goa on May 2,2014 and by the Hon''ble High Court of
Madras on June 23, 2014 with the Appointed Date of April 1, 2013 and an
effective date of July 31, 2014 (''the Effective Date''), being the date on
which the copies of the orders of the Hon''ble High Court has been fled
with the Registrar of Companies.
There was no allotment of shares to the Transferor Company''s equity
shareholders since the Transferor Company was a wholly owned subsidiary
of the Company.
5. The figures for the previous year have been regrouped/reclassified to
correspond with the current year''s classification/ disclosure. The
figures are not comparable with the previous year on account of the
amalgamations that were given effect to in the current year.
Mar 31, 2015
1 a) Shares in the company held by each shareholder holding more than
5% shares specifying the number of shares held.
1 b) i) Under the Employee Stock Option Scheme (ESOS 2006) equity
shares are allotted to the Mahindra Holidays & Resorts India Limited
Employees'' Stock Option Trust (the trust) set up by the Company. The
trust holds these shares for the benefit of the eligible
Employees/Directors as defined under the scheme and transfers these
shares to them as per the recommendation of the remuneration committee.
ii) During the year the Company formulated the Employee Stock Option
Scheme (ESOS 2014), under which the company proposed to issue and allot
the shares either directly or to the existing Mahindra Holidays &
Resorts India Limited Employees'' Stock Option Trust (the trust). To the
extent allotted, the trust would hold these shares for the benefit of
the eligible Employees/Directors as defined under the scheme and would
transfer the shares to them as per the recommendation of the
remuneration committee.
iii) The details of the Employees'' Stock Option Schemes are as under:
Type of Arrangement :
ESOS 2006 - Equity settled option plan administered through Employee
Stock Option Trust.
ESOS 2014 - Equity settled option plan issued directly/administered
through Employee Stock Option Trust.
Method of Settlement :
By issue of shares at Exercise Price.
Note (a) 35%,30%,15%,10% and 10% on expiry of 12,24,36,48 and 60 months
from the date of grant respectively. Note (b) Minimum of 100 and a
miximum of all the options vested but not exercised till that date.
iv) Summary of Stock options (including bonus shares)
Issued out of lapsed options.
Out of the above 90,000 shares have been issued out of lapsed options.
Out of the above 86,500 shares have been issued out of lapsed options.
v) In accordance with the Guidance Note issued by the Institute of
Chartered Accountants of India, the shares allotted to the trust
including bonus shares but not excercised by the employees have been
reduced from the share capital by Rs. 7,546,050 and securities premium
account reduced by Rs. 145,180,792. The said shares will be added to the
issued share capital as and when the trust issues the shares to the
concerned persons on their exercising the option and till such shares
are issued the amount received from the trust is disclosed under
"other current liabilities".
vi) The Company has adopted the intrinsic value method in accounting
for employee cost on account of ESOS for Grant I (ESOS 2006), Grant II
(ESOS 2006), Grant III (ESOS 2006) and Grant V (ESOS 2006) and for all
the other grants fair value method adopted. The intrinsic value of the
shares granted under Grant I (ESOS 2006),Grant II (ESOS 2006), Grant
III (ESOS 2006) and Grant V (ESOS 2006) based on the valuations
obtained from an independent valuer is Rs. 16 per equity share as on 31st
March, 2006, Rs. 52 per equity share as on 1st January, 2007, 31st
August, 2008 and 1st Novmeber 2008, based on the Discounted Cash Flow
Method. The fair value of the shares granted under Grant VI (ESOS
2006),Grant VII (ESOS 2006), Grant VIII (ESOS 2006) and Grant IX (ESOS
2006) based on the fair value market price is Rs. 370, Rs. 323, Rs. 323 and Rs.
253 per share respectively. As the difference between the intrinsic
value/fair value and the exercise price per share is Rs. Nil, no employee
compensation cost has been charged.
vii) In respect of the options granted under the Grant I (ESOS 2014) of
Employee Stock Option Plan, in accordance with guidelines issued by
SEBI, the accounting value of the options is accounted as deferred
employee compensation, which is amortised on a straight line basis over
the period between the date of grant of options and the eligible dates
for conversion into equity shares. Consequently, employee compensation
cost include Rs. 238,374 (previous year nil) being the amortisation of
deferred employee compensation.
viii) Fair Value of options based on Black Scholes option pricing
model:
The fair value of options based on the valuation of the independent
valuer for Grant I (ESOS 2006), Grant II (ESOS 2006), Grant III (ESOS
2006) and Grant V (ESOS 2006) as of the respective dates of grant i.e.
15th July 2006, 30th March 2007, 1st November 2007 and 1st November
2008 is Rs. 4.28, Rs. 16.36, Rs. 16.55 and Rs. 16.04 respectively.
The fair value of options based on the valuation of the independent
valuer as of the respective dates of grant i.e. 21st February 2012 is Rs.
113.81 for Grant VI (ESOS 2006), Rs. 129.93 for Grant VII (ESOS 2006),
21st February 2013 is Rs. 94.43 for Grant VIII (ESOS 2006), 29th January
2014 is Rs. 83.75 for Grant IX (ESOS 2006) and 22nd January 2015 is Rs.
97.24 for Grant I (ESOS 2014).
Had the Company adopted the fair value method in respect of options
granted, the total amount that would have been amortised over the
vesting period is Rs. 167,679,000 and the impact on the financial
statements would be:
Previous years'' figures have been regrouped to reflect the re-alignment
of options granted between normal and bonus shares with consequential
adjustments to Securities Premium Account, General Reserve Account and
amounts due from ESOP Trust Account.
Trade payable are dues in respect of goods purchased and services
rendered in the normal course of business.
The particulars regarding dues to Micro enterprises and small
enterprises have been determined to the extent such parties have been
identified on the basis of information available with the Company. This
has been relied upon by the auditors. There are no dues payable to such
parties as at the balance sheet date. * **
* There are no amounts due and outstanding to be transferred to
Investor Education and Protection Fund as at March 31,2015.
** Other payables mainly represent the Commission payable to non-whole
time directors, amounts received from ESOP Trust on issue of shares,
provision for estimated cost of offers made to members on acquisition,
deferred rent on rent equalization under AS-19, renovation and
pre-opening expenses in respect of resorts.
a) The preference shares of Guestline Hospitality Management and
Development Services Limited will be redeemed at par at the option of
the investee at any time after five years but before twenty years from
the date of allotment viz 14.01.2003 or at the option of the holder be
convertible into fully paid equity shares of the face value of Rs. 10/-
each anytime after thirty six months from the date of allotment.
b) On June 18, 2014, the Company acquired the entire share capital of
Competent Hotels Private Limited (CHPL) from the existing shareholders
and consequent to this, CHPL has become a wholly owned Subsidiary of
the Company.
c) On June 26, 2014, the Company subscribed to the entire share capital
of MHR Holdings (Mauritius) Limited (MHRML).
Others include outstanding for less than six months from the date they
are due for payment and amounts due within one year from the date of
Balance Sheet.
2.1 Pursuant to entitlement fee being recognised from the year of
admission of each member as against from the year of entitlement, there
has been an increase in revenue in current year amounting to Rs.
73,068,129. Also refer note no. 46 for adjustments relating to past
periods.
2.2 These services have been rendered only upto October 31, 2014.
The company has been securitising amounts receivable including future
interest receivable thereon. The excess of consideration received over
the principal amounts of receivable from members (net of reversals in
respect of cancelled members) is recognised as income from
Securitisation.
3 Contingent Liabilities
As at March 31st
Particulars 2015 2014
(A) Receivables securitised, with
recourse.
Certain specified Receivables have 1,867,971,631 2,689,790,487
been securitised with a bank for availing
finance In case a member defaults in
payment to the bank, the bank would have
recourse to the company. In such cases,
the company has recourse to the customer.
(B) Claims against the company not acknowledged
as debts
1) Luxury tax claimed on members'' stay at 251,052,544 74,671,145
resorts (inclusive of penalty)
2) Service tax claimed on interest on 638,770,100 638,770,100
instalments and other items (inclusive of
penalty where quantified in demand)
Interest (estimated) [Rs 120,780,224
(2014: Rs 120,780,224)
3) Income tax matters in dispute
(a) Pertaining to Revenue Recognition 1,978,570,362 2,033,473,937
(timing differences)*
Assessment Years 1998-99 to Assessment Year
2003-04 and Assessment Year 2005-06 to
Assessment Year 2009-10 The matter has been
decided in favour of the Company by the
appellate authorities, the Department has
filed an appeal before the Madras High
Court; Tax (excluding interest)
Assessment Years 2004-05 and Assessment
Year 2010-11 to Assessment Year 2012-13
Company''s appeal before the CIT(A) is 2,753,180,338 1,824,923,160
pending; Tax (including interest of
Rs 716,762,503)
b) Pertaining to other matters
(mainly timing differences)*
From Assessment Year 2004-05 onwards 324,338,723 283,720,946
Company''s appeal before Appellate
authorities is pending; Tax (including
interest of Rs 76,297,746)
* For matters pertaining to timing
differences, if liability were to
crystalise, there would be future tax
benefits, except to the extent of
tax rate differences and interest,if any.
Notes:
1) The above amounts are based on demands
raised, which the Company is contesting
with the concerned authorities. Outflows,
if any, arising out of these claims would
depend on the outcome of the decision of
the appellate authorities and the company''s
rights for future appeals. No reimbursements
are expected.
2) In respect of above matters, it is not
practicable for the Company to estimate the
closure of these issues and the consequential
timing of cash flows if any; the Company has
also been legally advised that the consequential
impact of matters referred in 1 and 2 above in
respect of assessments remaining to be completed
may not be material.
(C) Guarantees given by the company for
subsidiaries Value in foreign currency
Amount of Guarantee given (EURO) 11,200,000 -
Outstanding amount against Guarantee (EURO) 10,924,562 -
Value in INR
Amount of Guarantee given 757,736,000 -
Outstanding amount against Guarantee 739,101,242 -
(D) Other matters under appeal
i) Property Related
(a) The Government of Kerala issued an Order dated July 3, 2007
cancelling the assignment of land underlying the Munnar resort and
directed repossession of land on the grounds that it is agricultural
land and cannot be used for commercial purposes. The Company has filed
an appeal before the Commissioner of Land Revenue against the Order
stating that the patta issued does not specify that the land should be
used only for agricultural purpose and also obtained a Stay Order from
the Kerala High Court against eviction from the property.
The Commissioner of Land Revenue, Trivandrum vide his Order dated
November 22, 2007 dismissed the appeal filed by the Company against the
Order of the Sub-Collector, District of Devikulam dated July 3, 2007
cancelling the assignment of land underlying the Munnar Resort and
directing repossession of land on the grounds that it is agricultural
land and cannot be used for commercial purposes. The Company filed a
writ petition before the Kerala High Court against the said Order and
on December 13, 2007, the Court granted an interim stay of all further
proceedings.
(b) With respect to the land underlying the resort at Tungi, the
Sub-Divisional Magistrate, Maval, vide order dated 6th June, 2014
suspended the boarding and lodging license of the resort. The Company
has filed an appeal before the Collector, Pune, and obtained a stay
against the suspension. The final order in respect of this matter is
awaited. The Company also filed an appeal before the Additional
Divisional Commissioner Pune, challenging the cancellation of the
"Non Agricultural" status of the land and obtained a stay against the
cancellation. The matter is pending hearing and disposal.
With respect to certain claims of a neighbouring property owner, the
Company filed a suit in the Civil Court, Pune seeking inter-alia
permanent injunction against him disturbing the possession of the
Company and obtained an ad-interim stay. In another development,
notwithstanding these proceedings, the neighbouring property owner
obtained an order from the Mamlatdar''s Court for alleged access to his
property through the resort property. The Company obtained a stay
against the order aforesaid and all matters with respect to the
neighbouring property owner are currently pending before the Civil
Court, Pune.
(c) Pursuant to a "public interest litigation" filed before the
Gujarat High Court, the officials of the Forest and Revenue departments
undertook an inspection of all resorts (including the Company''s resort)
at Gir in March 2015. Consequently, the Forest Department has alleged
certain irregularities and sealed some structures / rooms in April
2015. The Company has denied the alleged violations and made its
representations before a Committee constituted by the Gujarat High
Court and the matter is pending hearing .
None of the matters contained in (a) to (c ) above affect the routine
operations of the resorts.
(ii) The Company engaged a building contractor for construction of a
resort. As the construction did not proceed as per agreed timelines the
Company terminated the contract. The contractor has claimed
Rs.12,56,14,668 as damages for termination of the Contract. The Company
has made a counter claim of Rs.20,03,56,002 towards liquidated damages
and other losses. The matter is pending before the Arbitrator.
(iii) The Regional Provident Fund Commissioner, Chennai had issued
Summons initiating proceedings under Section 7A of the Employees
Provident Fund Act for failing to remit contributions on allowances
relating to employees for the period from March 2011 to Feb 2013 in
respect of Indian employees and from April 2010 to Feb 2013 in respect
of international employees. The PF Authorities have made a claim of
Rs.1,89,93,169. The Company has filed a Writ Petition No 2408/2014 before
the Madras High Court and the Court has granted an Interim stay of the
above proceedings.
(iv) With respect to member complaints pending before various consumer
fora and other matters: Estimated amount of claims Rs. 8,26,50,033
(previous year: Rs. 5,51,20,252).
4 (i) The company did not have material foreseeable losses on
long-term contracts.
(ii) The company did not enter into any derivative contracts during the
year.
During the year, pursuant to the notification of Schedule II to the
Companies Act, 2013 with effect from April 1, 2014, the Company revised
the estimated useful life of some of its assets to align the useful
life with those specified in Schedule II. The details of previously
applied depreciation method, rates / useful life are as follows:
Pursuant to the transition provisions prescribed in Schedule II to the
Companies Act, 2013, the Company has fully depreciated the carrying
value of assets, net of residual value, where the remaining useful life
of the asset was determined to be nil as on April 1, 2014, and has
adjusted an amount of Rs. 102,610,025 (net of deferred tax Rs. 52,836,157)
against the opening Surplus balance in the Statement of Profit and Loss
under Reserves and Surplus.
The depreciation expense in the Statement of Profit and Loss for the
year is higher by Rs. 219,172,670 consequent to the change in the useful
life of the assets.
5 Employee Benefits
The following table sets out the funded status of the defined benefit
scheme and amount recognised in the financial statements.
6 Segment Reporting:
The Company has a single reportable segment namely sale of Vacation
Ownership and other services for the purpose of Accounting Standard 17
on Segment Reporting. Business segment is considered as the primary
segment.
7 The Company has taken certain properties under operating lease and
those leases are cancellable in nature. Accordingly, no disclosure has
been given in this regard.
8 Related Party Transactions:
(i) Names of related parties and nature of relationship where control
exists:
A. Holding Company : Mahindra & Mahindra Limited
B. Subsidiary Companies :
Mahindra Hotels & Residences India Limited
Divine Heritage Hotels Private Limited
Gables Promoters Private Limited
Holiday on Hills Resorts Private Limited
Competent Hotels Private Limited
Bell Tower Resorts Private Limited (till March 31, 2014)
Mahindra Holidays and Resorts USA Inc. (till May 19, 2014)
Heritage Bird (M) Sdn Bhd.
Infinity Hospitality Group Company Limited *
MH Boutique Hospitality Limited **
MHR Holdings (Mauritius) Limited Covington S.a.r.l***
C. Associate Companies : Holiday Club Resorts Oy
D. Fellow Subsidiaries with whom the company has transactions during
the year :
Bristlecone Inc
Bristlecone India Limited
Defence Land Systems India Limited
EPC Industries Limited
Mahindra Automobile Distributor Private Limited
Mahindra Consulting Engineers Limited
Mahindra Defence Systems Limited
Mahindra Engineering Services Limited
Mahindra EPC Services Private Limited
Mahindra First Choice Services Limited
Mahindra First Choice Wheels Limited
Mahindra Integrated Township Limited
Mahindra Intergrated Business Solutions Private Limited
Mahindra Intertrade Limited
Mahindra Life Space Developers Limited
Mahindra Logistics Limited
Mahindra Navistar Automatives Limited
Mahindra Residential Developers Limited
Mahindra Retail Private Limited
Mahindra Reva Electric Vehicles Private Limited
Mahindra Shubhlabh Services Limited
Mahindra Solar One Private Limited
Mahindra Steel Services Centre Limited
Mahindra Two Wheelers Limited
Mahindra World City (Jaipur) Limited
Mahindra World City Developers Limited
Mahindra World School
Tech Mahindra Limited
E. Other entities under the control of the company :
Mahindra Holidays & Resorts India Limited Employees'' Stock Option Trust
F. Entity in which the company has joint control :
Arabian Dreams Hotels Apartments LLC
G. Key Management Personnel :
Mr. Rajiv Sawhney (Managing Director & CEO till March 31, 2014)
Mr. Kavinder Singh (Managing Director & CEO from November 3, 2014)
Mr. Dinesh Shetty (Company Secretary)
Mr. S Krishnan (Chief Financial Officer)
Mr. S Krishnan (Executive Director & Chief Financial Officer from
January 22, 2015)
* By virtue of management control. Further MH Boutique Hospitality
Limited holds balance 51% equity. ** By virtue of management control.
*** Step down subsidiary.
9 During the year, the Company incurred an aggregate amount of Rs.
30,397,176 towards corporate social responsibility in compliance of
Section 135 of the Companies Act 2013 read with relevant schedule and
rules made thereunder.
10 Scheme of Amalgamation and Arrangement
a i. In terms of the Scheme of Amalgamation and Arrangement, (''the
Scheme''), the erstwhile Bell Tower Resorts Private Limited (a wholly
owned subsidiary of the Company, which was engaged in the business of
rendering resort facilities )(referred to as ''Transferor Company''), has
been merged with the Company (''Transferee Company''), upon which the
entire business, including all assets , liabilities and reserves of the
Transferor Company stand transferred to and vested in the Transferee
Company. The amalgamation has been accounted under the ''pooling of
interest method'' and the assets and liabilities transferred have been
recorded at their book values as on the Appointed Date .
The Scheme filed by the Company has been approved by the Hon''ble High
Court of Bombay at Goa on May 2,2014 and by the Hon''ble High Court of
Madras on June 23, 2014 with the Appointed Date of April 1, 2013 and an
effective date of July 31, 2014 (''the Effective Date''), being the date
on which the copies of the orders of the Hon''ble High Court has been
filed with the Registrar of Companies.
The current year figures are to that extent not strictly comparable to
those of previous year.
ii. There was no allotment of shares to the Transferor Company''s equity
shareholders since the Transferor Company was a wholly owned subsidiary
of the Company.
iii. Details of assets and liabilities and deficit in statement of
profit and loss acquired on amalgamation and treatment of the
difference between the Share capital of the transferror company and
cost of investment in the books of the Transferee Company are listed
below :
b The loss of the transferor company for the year ended March 31, 2014
has been adjusted against the Surplus in Statement of Profit and Loss
at the beginning of the year.
11 Exceptional item represents a net debit of Rs. 218,797,194 written off
consequent to adjustments relating to past periods, made to the
balances carried forward under Receivables as at the year end, in the
Deferred Service Tax Account, Deferred Interest Account and other
accounts, aggregating to Rs. 737,373,047 (debit) and the Deferred
Entitlement Fee Account amounting to Rs. 518,575,853 (credit). These
adjustments are arising from the reconciliation exercise carried out by
the company of these accounts necessitated, inter-alia, due to the
migration of underlying data to the ERP system implemented in the
previous financial years, and Management''s decision to recognize the
entitlement fee commencing from the year of admission of each member as
against from the year of entitlement.
12 On May 19 2014, Mahindra Holidays and Resorts USA Inc., wholly owned
subsidiary of the company was dissolved voluntarily.
13 The figures for the previous year have been regrouped/reclassified
to correspond with the current year''s classification/ disclosure.
Mar 31, 2014
1 Corporate Information
The company was incorporated on September 20, 1996, and is in the
business of selling vacation ownership and providing holiday
facilities.
Note 2 : Share Capital
a) Terms / rights attached to equity shares:
i) The company has only one class of shares referred to as equity
shares having a par value of Rs. 10/-. Each holder of
equity share is entitled to one vote per share.
ii) The dividends proposed by the Board of Directors is subject to
approval of the shareholders in the Annual General
Meeting.
iii) For the year ended March 31, 2014, the amount of dividend proposed
to be distributed to equity shareholders is Rs. 355,123,424 at Rs. 4 per
share (Previous year Rs. 355,123,424 at Rs. 4 per share).
iv) Repayment of capital will be in proportion to the number of equity
shares held.
v) The fair value of options based on the valuation of the independent
valuer for grants I to III and V as of the respective dates of grant
i.e. 15th July 2006, 30th March 2007, 1st November 2007 and 1st
November 2008 is Rs. 4.28, Rs. 16.36, Rs. 16.55 and Rs. 16.04 respectively.
The fair value of options based on the valuation of the independent
valuer as of the respective dates of grant i.e. 21st February 2012 is Rs.
113.81 for grant VI and Rs. 129.93 for grant VII, 21st February 2013 is Rs.
94.43 for grant VIII, 29th January 2014 is Rs. 83.75 for grant IX.
3 Contingent Liabilities In Rs.
As at March 31,
2014 2013
(A) Receivables securitised, with recourse
Certain specified Receivables have been
securitised with a bank for availing 2,689,790,487 3,844,877,592
finance. In case a member defaults in
payment to the bank, the bank would
have recourse to the company. In such
cases, the company has recourse to the
customer.
(B) Claims against the company not
acknowledged as debts
1) Luxury tax claimed on membership,
room revenue and other services 74,671,145 72,350,714
provided to members, which has been
disputed by the company.
2) Service tax demands for various
years disputed by the company. 638,770,100 589,846,508
3) Income tax matters
(a) Time share income
i) The Income Tax Department''s appeal
against the orders of the CIT(A) for
the assessment years 1998-99 to 2003-04
and 2005-06 to 2009-10 in respect of
issues relating to revenue recognition,
was decided in favour of the Company by
the Appellate Tribunal . Amount under
dispute was Rs. 2,710,025,658 (including
interest of Rs. 676,551,721).
ii) For the assessment years 2004-05,
2010-11 & 2011-12, the company''s appeal
is pending with CIT(A). The amount of
demand is Rs. 1,824,923,160/- (including
interest of Rs. 475,881,114/-)
(b) Other matters disputed which are
timing differences
Demand raised on account of disallowance
of expenditure during construction,
software expenses, website development
expenses, renovation expenses and project
design cost Rs. 160,641,473/- (including
interest of Rs. 36,348,559/-). As at
March 31, 2013 Rs. 142,707,705 (including
interest of Rs. 32,469,862).
However even if these liabilities
crystalise, there would be future tax
benefits available on account of timing
dif erences, except on the outcome of the
appeals
(c) Other disallowances
Interest on other disallowces included in
the contingent liability is 123,079,473 115,055,341
Rs. 30,254,625 (as at March 31, 2013
Rs. 26,616,570)
The above are exclusive of consequential
ef ect of similar matters in respect
of the assessments remaining to be
completed.
The above amounts are based on demands
raised, which the company is contesting
with the concerned authorities.
Outfl ows, if any, arising out of
these claims would depend on the outcome
of the decision of the appellate
authorities and the company''s rights
for future appeals. No reimbursements
are expected.
(C) Other matters under appeal
(i) The Government of Kerala issued an Order dated July 3, 2007
cancelling the assignment of land underlying the Munnar resort and
directed repossession of land on the grounds that it is agricultural
land and cannot be used for commercial purposes. The Company has filed
an appeal before the Commissioner of Land Revenue against the Order
stating that the patta issued does not specify that the land should be
used only for agricultural purpose and also obtained a Stay Order from
the Kerala High Court against eviction from the property. The
Commissioner of Land Revenue, Trivandrum vide his Order dated November
22, 2007 dismissed the appeal filed by the Company against the Order
of the Sub-Collector, District of Devikulam dated July 3, 2007
cancelling the assignment of land underlying the Munnar Resort and
directing repossession of land on the grounds that it is agricultural
land and cannot be used for commercial purposes. The Company filed a
writ petition before the Kerala High Court against the said Order and
on December 13, 2007, the Court granted an interim stay of all further
proceedings.
(ii) The Company engaged a building contractor for construction of a
resort. As the construction did not proceed as per agreed timelines the
Company terminated the contract. The contractor has claimed Rs. 12.56
Crores as damages for termination of the Contract. The Company has made
a counter claim of Rs. 20.03 Crores towards liquidated damages and other
losses. The matter is pending before the Arbitrator.
(iii) The Regional Provident Fund Commissioner, Chennai had issued
Summons initiating proceedings under Section 7A of the Employees
Provident Fund Act for failing to remit contributions on allowances
relating to employees for the period from March 2011 to Feb 2013 in
respect of Indian employees and from April 2010 to February 2013 in
respect of international employees. The PF Authorities have made a
claim of Rs. 1.89 Crores. The Company has filed a Writ Petition before
the Madras High Court and the Court has granted an Interim stay of the
above proceedings.
4 Employee benefits
The following table sets out the funded status of the defi ned benefit
scheme and amount recognised in the financial statements.
5 In June 2009, the Company made an Initial Public Of er of 58,96,084
equity shares of Rs. 10 each for cash at a premium of Rs. 290 per equity
share, aggregating to Rs. 17,688.25 lacs of which Rs. 16,242.51 lacs were
utilised for construction of resorts and Rs. 1,445.74 lacs towards issue
expenses.
6 On April 12, 2013, the Company allotted 41,41,084 equity shares of Rs.
10 each for cash at a premium of Rs. 245 per equity share aggregating to
Rs. 10,559.76 lakhs, pursuant to shares issued under an Institutional
Placement Programme (IPP). Out of the total proceeds, the Company has
spent Rs. 308.78 lakhs towards issue expenses, Rs. 7,313.68 lakhs towards
capital expenditure and the balance has been invested in debt schemes
of mutual funds/Fixed Deposits with Bank/ lying in bank account.
7 The particulars regarding dues to Micro enterprises and small
enterprises have been determined to the extent such parties have been
identifi ed on the basis of information available with the Company.
This has been relied upon by the auditors. There are no dues payable
to such parties as at the balance sheet date.
8 Related Party Transactions:
(i) Names of related parties and nature of relationship where control
exists:
A. Holding Company Mahindra & Mahindra Limited
B. Subsidiary Companies
Mahindra Holidays and Resorts USA Inc.
Mahindra Hotels & Residences India Limited
MHR Hotel Management GmbH (till 29th November, 2013)
Heritage Bird (M) Sdn Bhd.
Bell Tower Resorts Private Limited
BAH Hotelanlagen AG (till 29th November, 2013)
Divine Heritage Hotels Private Limited
Gables Promoters Private Limited
Holiday on Hills Resorts Private Limited
Infi nity Hospitality Group Company Limited *
MH Boutique Hospitality Limited **
C. Fellow Subsidiaries with whom the
company has transactions during the year
Mahindra Intertrade Limited
Mahindra Consulting Engineers Limited
Mahindra First Choice Wheels Ltd
Mahindra First Choice Services Limited
Mahindra Navistar Automotives Limited.
Mahindra Reva Electric Vehicles Private Limited
Mahindra Lifespace Developers Limited
Mahindra Retail Private Limited
Mahindra Two Wheelers Limited
Mahindra Vehicle Manufacturers Limited
Mahindra Shubhlabh Services Limited.
Mahindra Automobile Distributor Private Limited
Mahindra EPC Services Private Limited
Mahindra Engineering Services Limited
Mahindra Steel Service Centre Limited
Mahindra Logistics Limited
Bristlecone Inc.
Bristlecone India Limited.
Defence Land Systems India Private Limited
EPC Industries Limited
Mahindra Defence Systems Limited
Mahindra Integrated Township Ltd
Mahindra Integrated Business Solutions Private Limited
Mahindra Solar One P Ltd.
Mahindra Steel Services Centre Ltd
Mahindra World City (Jaipur) Ltd
Mahindra World City Developers Ltd
9 During the year, the Board of Directors at their Meeting held on
17th September, 2013 approved the Scheme of Amalgamation and
Arrangement of Bell Tower Resorts Private Limited (wholly owned
subsidiary) with the Company. The Scheme was approved by the share
holders at the Court Convened Meeting held on 19th February 2014. The
appointed date under the Scheme is 1st April, 2013 and the Scheme will
be effective upon the filling of certified copies of the Orders of
the High Court of Madras & High Court of Bombay at Goa with respective
Registrar of Companies. The Company has obtained the approval of the
High Court of Bombay at Goa,while the approval of High Court of Madras
is awaited. Consequently no impact of the Scheme has been given in the
financial statements for the year ended 31st March, 2014.
10 The Board of Directors at their Meeting held on 29th January, 2014
has resolved to liquidate by way of voluntary dissolution of its wholly
owned subsidiary company in USA, Mahindra Holidays and Resorts USA
Inc., subject to requisite approvals in USA. Accordingly, the
subsidiary is in the process of completing the voluntary dissolution
formalities and the impact on account of this on the operations of the
Company is immaterial.
11 The figures for the previous year have been regrouped/reclassified
to correspond with the current year''s classification/ disclosure.
Mar 31, 2013
1 Corporate information
The company was incorporated on September 20, 1996, and is in the
business of selling vacation ownership and providing holiday
facilities.
2 Securitisation
The company has been securitising amounts receivable including future
interest receivable thereon. The excess of consideration received over
the principal amounts of receivable from members (net of reversals in
respect of cancelled members) is recognised as income from
Securitisation.
3 Segment Reporting:
The Company has a single reportable segment namely sale of Vacation
Ownership and other services for the purpose of Accounting Standard 17
on Segment Reporting. Business segment is considered as the primary
segment.
4 In June 2009, the company made an Initial Public Offer of 5,896,084
equity shares of Rs. 10 each for cash at a premium of Rs. 290 per
equity share, aggregating to Rs. 17,688.25 lakhs of which Rs. 16,205.68
lakhs have been spent towards the object of the issue (Rs 14,759.94
lakhs were utilised for construction of resorts and Rs. 1,445.74 lakhs
towards issue expenses) and the balance has been invested in debt
schemes of mutual funds.
5 The particulars regarding dues to Micro enterprises and small
enterprises have been determined to the extent such parties have been
identified on the basis of information available with the Company. This
has been relied upon by the auditors. There are no dues payable to
such parties as at the balance sheet date.
6 Related party Transactions:
(i) Names of related parties and nature of relationship where control
exists:
A. Holding Company Mahindra & Mahindra Limited
B. Subsidiary Companies Mahindra Holidays and Resorts USA Inc.
Mahindra Hotels & Residences India Limited
MHR Hotel Management GmbH
Heritage Bird (M) Sdn Bhd.
Bell Tower Resorts Private Limited
BAH Hotelanlagen AG
Divine Heritage Hotels Private Limited
Gables Promoters Private Limited
Holiday on Hills Resorts Private Limited
Infinity Hospitality Group Company Limited *
MH Boutique Hospitality Limited **
C. Fellow Subsidiaries with whom the company has transactions during
the year
Mahindra Intertrade Limited
Mahindra Consulting Engineers Limited
Mahindra First Choice Wheels Ltd
Mahindra First Choice Services Limited
Mahindra Navistar Automotives Limited.
Mahindra Reva Electric Vehicles Private Limited
Mahindra Lifespace Developers Limited
Mahindra Retail Private Limited
Mahindra Two Wheelers Limited
Mahindra Vehicle Manufacturers Limited
Mahindra Shubhlabh Services Limited.
Mahindra Automobile Distributor Private Limited
Mahindra EPC Services Private Limited
Mahindra Engineering Services Limited
Mahindra Steel Service Centre Limited
Mahindra Logistics Limited
D. Other entities under the control of the company
Mahindra Holidays & Resorts India Limited Employees'' Stock Option Trust
E. Entity in which the company has joint control
Arabian Dreams Hotels Apartments LLC
F. Key Management Personnel Mr Ramesh Ramanathan (Managing Director)
(upto April 30, 2011)
Mr Rajiv Sawhney (Managing Director & CEO) (since May 1, 2011)
* By virtue of management control. Further MH Boutique Hospitality
Limited holds balance 51 % equity.
** By virtue of management control
7 On 12th April, 2013 the Company through an Institutional Placement
Programme (IPP) allotted 4,141,084 equity shares of Rs. 10/- each at a
premium of Rs. 245/- per share aggregating to Rs.10,559.76 lacs. The
Net Issue Proceeds will be utilized for expansion/renovation of
existing resorts, acquisition of new land parcels/properties,
construction/development of new resorts and for general corporate
purposes.
8 The figures for the previous year have been regrouped/reclassified
to correspond with the current year''s classification/ disclosure.
Mar 31, 2012
1 a) The above includes 48,995,228 equity shares allotted as fully
paid-up by way of Bonus shares by capitalisation of balance in
Statement of Profit & Loss and General Reserve on November 24, 2007 in
the ratio of 5 equity shares for every 3 shares held.
1 b) Terms / rights attached to equity shares:
i) The company has only one class of shares referred to as equity
shares having a par value of Rs. 10/-. Each holder of equity share is
entitled to one vote per share.
ii) The dividends proposed by the Board of Directors is subject to
approval of the shareholders in the Annual General Meeting.
iii) For the year ended March 31, 2012, the amount of per share
dividend proposed for equity shareholders is Rs. 4. The total dividend
appropriation for the year ended March 31, 2012 amounted to Rs.
393,481,836 including tax on proposed dividend of Rs.54,922,748.
iv) Repayment of capital will be in proportion to the number of equity
shares held.
1 c) Under the Employee Stock Option Scheme equity shares are allotted
to the Mahindra Holidays & Resorts India Limited Employees' Stock
Option Trust (the trust) set up by the company. The trust holds these
shares for the benefit of the eligible employees/Directors as defined
under the scheme and issues the shares to them as per the
recommendation of the remuneration committee.
** Issued out of lapsed options.
# Out of the above 90,000 shares has been issued out of lapsed options.
## Out of the above 86,500 shares has been issued out of lapsed
options.
iii) In accordance with the Guidance Note issued by the Institute of
Chartered Accountants of India, the shares allotted to the trust
including bonus shares but not allotted to the employees have been
reduced from the share capital by Rs. 7,941,680 and securities premium
account reduced by Rs. 145,676,908. The said shares will be added to
the issued share capital as and when the trust issues the shares to the
concerned persons on their exercising the option and till such shares
are issued the amount received from the trust is disclosed under
current liabilities
The General Reserve has been reduced by Rs. 1,314,290 for bonus shares
issued on exercise of stock options during the year.
iv) The company has adopted the intrinsic value method in accounting
for employee cost on account of ESOS for grant I to V. For grant VI and
VII fair value method adopted. The intrinsic value of the shares
granted under grant I to V based on the valuations obtained from an
independent valuer is Rs. 16 per equity share as on March 31, 2006, Rs.
52 per equity share as on January 1, 2007, August 31, 2008 and November
1, 2008 based on the Discounted Cash Flow Method. The fair value of the
shares granted under grant VI and VII is based on the fair value market
price is Rs. 370 and Rs. 323 per share respectively. As the difference
between the intrinsic value/fair value and the exercise price per share
is Rs. Nil no employee compensation cost has been charged.
v) The fair value of options based on the valuation of the independent
valuer as of the respective dates of grant i.e. July 15, 2006, March
30, 2007, November 1, 2007 and November 1, 2008 is Rs. 4.28, Rs. 16.36,
Rs. 16.55 and Rs. 16.04 respectively.
The fair value of options based on the valuation of the independent
valuer as of the respective dates of grant i.e. February 21, 2012 is
Rs. 113.81 for grant VI and Rs. 129.93 for grant VII.
Had the company adopted the fair value method in respect of options
granted, the total amount that would have been amortised over the
vesting period is Rs. 10,383,964 and the impact on the financial
statements would be :
1 d) As approved by the Board, the company has given an interest free
loan of Rs. 132,000,000 without interest to Mahindra Holidays & Resorts
India Limited Employees Stock Option Trust for the purchase of shares
of the company under the employee stock option scheme.
NOTE:
a) The preference shares of Guestline Hospitality Management and
Development Services Limited will be redeemed at par at the option of
the investee at any time after five years but before twenty years from
the date of allotment viz January 14, 2003
b) The preference shares of Guestline Hospitality Management and
Development Services Limited shall at the option of the holder be
convertible into fully paid equity shares of the face value of Rs. 10
each anytime after thirty six months from the date of allotment.
c) On December 21, 2011, the Company has acquired the entire share
capital of Bell Tower Resorts Private Limited (BTRPL) from the existing
shareholders and consequent to that BTRPL has become a wholly owned
Subsidiary of the Company. This subsidiary has a 106 room resort in
Goa.
2. Securitisation
The company has been securitising amounts receivable including future
interest receivable thereon. The excess of consideration received over
the principal amounts of receivable from members (net of reversals in
respect of cancelled members) is recognised as income from
Securitisation.
3. Contingent Liabilities
Rs
As at As at
Mar 31, 2012 Mar 31, 2011
(a) Receivables securitised, with
recourse.
Certain specified receivables have
been securitised with a bank 2,673,122,303 2,036,782,120
for availing finance. In case a
member defaults in payment to the
bank, the bank would have recourse
to the company. In such cases, the
company has recourse to the customer.
(b) Claims against the company not
acknowledged as debts
Claims not acknowledged as debts
represent luxury tax claimed 6,420,314 6,420,314
on room revenue and other services
provided to members, which has been
disputed by the company. The
possibility of reimbursement depends
on the outcome of the cases pending
before the adjudicating authority.
(c) Income tax matters
i) The Income Tax Department's appeal
against the orders of the CIT (A)
for the assessment years 1998-99 to
2003-04, in respect of issues
relating to revenue recognition, was
decided in favour of the company
by the appellate tribunal.
Amount involved was Rs 208,385,010
(including interest of Rs. 58,051,475).
For the assessment year 2004-05 &
2009-10 the company's appeal is
pending with CIT(A) .
For the assessment years 2005-06 to
2008-09, the company has gone on appeal
to the ITAT in respect of the same issue.
The amount involved, exclusive of
consequential effect of similar matter
in respect of the assessments remaining
to be completed, is Rs. 2,550,307,954
(Including interest of Rs. 560,448,771);
As at March 31, 2011, Rs. 1,925,645,407/-
(Including interest of Rs. 382,089,632).
ii) Disallowance of expenditure during
construction, software expenses, website
development expenses, renovation expenses
and Project design cost. Rs. 110,849,237/-
(Including interest of Rs. 24,029,144);
As at March 31, 2011 Rs. 43,935,275/-
(Including interest of Rs. 7,384,579)
The above are exclusive of consequential
effect of similar matter in respect of
the assessments remaining to be completed.
However, even if these liabilities
crystallise, there would be future tax
benefits available on account of timing
differences, except for interest and
income tax rate differences. Cash
outflows would depend on the outcome of
the appeals.
iii) Other disallowances (including
interest of Rs. 43,757,139) 193,408,965 166,844,896
(as at March 31, 2011 Rs. 9,909,258)
(d) Other matters under appeal
(i) The Government of Kerala issued an Order dated July 3, 2007
cancelling the assignment of land underlying the Munnar resort and
directed repossession of land on the grounds that it is agricultural
land and cannot be used for commercial purposes. The Company has filed
an appeal before the Commissioner of Land Revenue against the Order
stating that the patta issued does not specify that the land should be
used only for agricultural purpose and also obtained a Stay Order from
the Kerala High Court against eviction from the property.
The Commissioner of Land Revenue, Trivandrum vide his Order dated
November 22, 2007 dismissed the appeal filed by the Company against the
Order of the Sub-Collector, District of Devikulam dated July 3, 2007
cancelling the assignment of land underlying the Munnar Resort and
directing repossession of land on the grounds that it is agricultural
land and cannot be used for commercial purposes. The Company filed a
writ petition before the Kerala High Court against the said Order and
on December 13, 2007, the Court granted an interim stay of all further
proceedings.
(ii) The Company had received a notice dated December 11, 2009 from
Commissioner, Ooty Municipality seeking demolition of the unauthorised
construction at Zest Danish Villa Resort situated at No.30, Sheddon
Road, Ooty. The Company has filed a review petition before the
Municipal Administration and Water Supply Department, Chennai and
hearing is awaited.
(iii) The Company engaged a building contractor for construction of a
resort. As the construction did not proceed as per agreed timelines the
Company terminated the contract. The contractor has claimed Rs. 12.56
crores as damages for termination of the Contract. The Company has made
a counter claim of Rs. 20.03 crores towards liquidated damages and
other losses. The matter is pending before the Arbitrator.
h. In the absence of the relevant information from the actuary, the
above details do not include the composition of plan assets /
experience adjustments for certain years.
4. Segment Reporting:
The Company has a single reportable segment namely sale of Vacation
Ownership and other services for the purpose of Accounting Standard 17
on Segment Reporting. Business segment is considered as the primary
segment
5. In June 2009, the company made an Initial Public Offer of
5,896,084 equity shares of Rs. 10 each for cash at a premium of Rs. 290
per equity share, aggregating to Rs. 17,688.25 lakh of which Rs.
12,624.24 lakh have been spent towards the object of the issue (Rs.
11,178.50 lakh were utilised for construction of resorts and Rs.
1,445.74 lakh towards issue expenses) and the balance has been invested
in debt schemes of mutual funds.
6. The particulars regarding dues to Micro enterprises and small
enterprises have been determined to the extent such parties have been
identified on the basis of information available with the Company. This
has been relied upon by the auditors. There are no dues payable to such
parties as at the balance sheet date.
7. Capital work in progress of Rs. 1,836,382,470 (Previous year Rs.
1,345,026,170) includes expenditure during Construction pending
allocation of Rs.245, 428,002 (Previous year Rs. 151,593,864).
8. The Revised Schedule VI has become effective from April 1, 2011
for the preparation of financial statements. This has significantly
impacted the disclosure and presentation made in the financial
statements. Previous year's figures have been regrouped/reclassified,
wherever necessary, to correspond with the current year's
classification/ disclosure.
Mar 31, 2011
1. Employees stock option scheme
Under the Employee Stock Option Scheme equity shares are allotted to
the Mahindra Holidays & Resorts India Limited Employees Stock Option
Trust (the trust) set up by the company. The trust holds these shares
for the benefit of the eligible employees/Directors as defined under
the scheme and issues the shares to them as per the recommendation of
the remuneration committee.
In accordance with the Guidance Note issued by the Institute of
Chartered Accountants of India, the shares allotted to the trust
including bonus shares but not allotted to the employees have been
reduced from the share capital by Rs. 6,240,940 and securities premium
account reduced by Rs. 4,212,960. The said shares will be added to the
issued share capital as and when the trust issues the shares to the
concerned persons on their exercising the option and till such shares
are issued the amount received from the trust is disclosed under
current liabilities.
The General Reserve has been reduced by Rs. 1,731,680 for bonus shares
issued on exercise of stock options during the year.
The company has adopted the intrinsic value method in accounting for
employee cost on account of ESOS. The intrinsic value of the shares
based on the valuations obtained from an independent valuer is Rs. 16
per equity share as on 31st March, 2006, Rs.52 per equity share as on
1st January, 2007, 31.08.2008 and 01.11.2008 based on the Discounted
Cash Flow Method. As the difference between the intrinsic value and the
exercise price per share is Rs. Nil no employee compensation cost has
been charged.
The fair value of options based on the valuation of the independent
valuer as of the respective dates of grant i.e. 15th July 2006, 30th
March 2007, 1st November 2007 and 1st November 2008 is Rs. 4.28, Rs.
16.36, Rs.16.55 and Rs.16.04 respectively.
Had the company adopted the fair value method in respect of options
granted, the total amount that would have been amortised over the
vesting period is Rs.10,383,964 and the impact on the financial
statements would be :
Mahindra Holidays & Resorts India Limited
2. Secured loans
Loans and advances from a bank are secured by an exclusive charge on
inventories, receivables and other moveable assets.
3. contingent Liabilities
Rs.
As at As at
March 31, 2011 March 31, 2010
(a) Receivables securitised,
with recourse. 2,036,782,120 2,657,820,819
Certain specified Receivables have
been securitised with a bank for availing
finance. In case a member defaults in
payment to the bank, the bank would
have recourse to the company. In such
cases, the company has recourse to the
customer.
(b) Claims against the company not
acknowledged as debts 6,420,314 9,668,526
Claims not acknowledged as debts
represent luxury tax claimed on room
revenue and other services provided to
members, which has been disputed by
the company. The possibility of
reimbursement depends on the outcome of
the cases pending before the adjudicating
authority.
(c) Income tax matters
(i) The Income Tax Departments appeal
against the orders of the CIT(A) for the
assessment years 1998-99 to 2002-03, in respect of
issues relating to revenue recognition, was
decided in favour of the Company by the
Appellate Tribunal in May 2010. Amount involved was
Rs. 116,013,707 (including interest of
Rs 58,051,475). For the assessment years 2003-04
to 2008-09, the Company has gone on appeal to the
CIT(A) in respect of the same issue. The amount
involved, exclusive of consequential effect of
similar matter in respect of the assessments
remaining to be completed, is Rs. 1925,645,407
(including interest of Rs. 382,089,632); As at
31st March, 2010, Rs. 1,315,373,266/- (including
interest of Rs. 251,752,898).
(ii) Disallowance of expenditure during
construction / Software expenses.
Rs. 43,935,275/- (including interest of
Rs. 7,384,579); As at 31st March, 2010
Rs. 35,484,928/- (including interest of
Rs. 5,966,891)
The above are exclusive of consequential effect
of similar matter in respect of the assessments
remaining to be completed.
However, even if these liabilities crystallise,
there would be future tax benefits available on
account of timing differences, except for interest
and income tax rate differences. Cash outflows
would depend on the outcome of the appeals.
(iii) Other disallowances (including interest
of Rs. 22,633,591) 166,844,896 78,537,507
(as at 31st March, 2010 Rs. 9,909,258)
(d) Other matters under appeal
(i) The Government of Kerala issued an Order dated 3rd July 2007
cancelling the assignment of land underlying the Munnar resort and
directed repossession of land on the grounds that it is agricultural
land and cannot be used for commercial purposes. The company has filed
an appeal before the Commissioner of Land Revenue against the Order
stating that the patta issued does not specify that the land should be
used only for agricultural purpose and also obtained a Stay Order from
the Kerala High Court against eviction from the property.
The Commissioner of Land Revenue, Trivandrum vide his Order dated
November 22, 2007 dismissed the appeal filed by the Company against the
Order of the Sub-Collector, District of Devikulam dated 3rd July 2007
cancelling the assignment of land underlying the Munnar Resort and
directing repossession of land on the grounds that it is agricultural
land and cannot be used for commercial purposes. The Company filed a
writ petition before the Kerala High Court against the said Order and
on December 13, 2007, the Court granted an interim stay of all further
proceedings.
f. In the absence of the relevant information from the actuary, the
above details do not include the composition of plan assets /
experience adjustment in respect of actuarial losses / gains.
g. Estimates of future salary increases considered in actuarial
valuation take account of inflation, seniority, promotions, increments
and other relevant factors such as supply and demand in the employment
market
4. Segment Reporting:
The Company has a single reportable segment namely sale of Vacation
Ownership and other services for the purpose of Accounting Standard 17
on Segment Reporting. Business segment is considered as the primary
segment
5. Related party Transactions:
(i) Names of related parties and nature of relationship where control
exists:
A. Holding Company Mahindra & Mahindra Limited
B. Subsidiary Companies Mahindra Holidays & Resorts U.S.A Inc.
Mahindra Hotels & Residences India Limited MHR Hotel Management GmbH
Heritage Bird (M) Sdn Bhd. BAH Hotelanlagen AG
C. Fellow Subsidiaries with whom Mahindra Logisoft Business Solutions
Limited the company has transactions Mahindra Intertrade Limited
Mahindra United Football Company
Mahindra Navistar Automotives Limited
Mahindra Shubhlabh Services Limited
Mahindra & Mahindra Financial Services Limited
Mahindra Lifespace Developers Limited
Mahindra World City (Jaipur) Limited
Mahindra World City Developers Limited
Mahindra First choice Wheels Limited
Mahindra First Choice Services Limited
Mahindra Ugine Steel Company Limited
Mahindra Logistics Limited
Mahindra Retail Private Limited
D. Other entities under the control of the company Mahindra Holidays &
Resorts India Limited ESOP Trust
E. Key Management Personnel Ramesh Ramanathan (Managing Director)
6. In June 2009, the company made an Initial Public Offer of
5,896,084 equity shares of Rs 10 each for cash at a premium of Rs 290
per equity share, aggregating to Rs 17,688.25 lacs of which Rs
11,139.20 lacs have been spent towards the object of the issue (Rs
9,693.46 lacs were utilised for construction of resorts and Rs 1,445.74
lacs towards issue expenses) and the balance has been invested in debt
schemes of mutual funds.
7. The particulars regarding dues to Micro enterprises and small
enterprises have been determined to the extent such parties have been
identified on the basis of information available with the Company. This
has been relied upon by the auditors.
8. Previous years figures have been regrouped / recast, wherever
necessary, to conform to this years classification.
Mar 31, 2010
1. Employeesà stock option scheme
Under the Employee Stock Option Scheme equity shares are allotted to
the Mahindra Holidays & Resorts India Limited Employeesà Stock Option
Trust (the trust) set up by the company. The trust holds these shares
for the beneft of the eligible employees/Directors as defned under the
scheme and issues the shares to them as per the recommendation of the
remuneration committee.
In accordance with the Guidance Note issued by the Institute of
Chartered Accountants of India, the shares allotted to the trust
including bonus shares but not allotted to the employees have been
reduced from the share capital by Rs. 9,429,110 and securities premium
account reduced by Rs. 6,443,016. The said shares will be added to the
issued share capital as and when the trust issues the shares to the
concerned persons on their exercising the option and till such shares
are issued the amount received from the trust is disclosed under
current liabilities.
The General Reserve has been reduced by Rs. 2,302,890 for bonus shares
issued on exercise of stock options.
The company has adopted the intrinsic value method in accounting for
employee cost on account of ESOS. The intrinsic value of the shares
based on the valuations obtained from an independent valuer is Rs. 16
per equity share as on 31st March, 2006, Rs.52 per equity share as on
1st January, 2007, 31.08.2008 and 01.11.2008 based on the Discounted
Cash Flow Method. As the difference between the intrinsic value and the
exercise price per share is Rs. Nil no employee compensation cost has
been charged.
The fair value of options based on the valuation of the independent
valuer as of the respective dates of grant i.e. 15th July 2006, 30th
March 2007, 1st November 2007 and 1st November 2008 is Rs. 4.28, Rs.
16.36, Rs.16.55 and Rs.16.04 respectively.
Had the company adopted the fair value method in respect of options
granted, the total amount that would have been amortised over the
vesting period is Rs.10,383,964 and the impact on the fnancial
statements would be :
3. Secured loans
Loans and advances from a bank are secured by an exclusive charge on
inventories, receivables and other moveable assets. Deferred payment
under hire purchase is secured by hypothecation of assets fnanced.
2. Securitisation
The company has been securitising amounts receivable including future
interest receivable thereon. The excess of consideration received over
the principal amounts of receivable from members (net of reversals in
respect of cancelled members) is recognised as income from
Securitisation.
3. Contingent Liabilities
(In Rs.)
As at Mar As at Mar
31, 2010 31, 2009
(a) Receivables securitised, with recourse. 2,657,820,819 1,623,163,525
Certain specifed Receivables have been
securitised with a bank for availing fnance.
In case a member defaults in payment to
the bank, the bank would have recourse to
the company. In such cases, the company has
recourse to the customer.
(b) Claims against the company not
acknowledged as debts 9,668,526 9,668,526
Claims not acknowledged as debts represent
luxury tax claimed on room revenue and other
services which has been disputed by the company.
The possibility of reimbursement depends on
the outcome of the cases pending before the
adjudicating authority.
(c) Income tax matters
(i) The Income Tax Department has fled appeals against the orders of
the CIT(A) during FY2005-06 for the assessment years 1998-99 to
2002-03, in respect of the issues relating to revenue recognition,
which were decided in favour of the Company. Amount involved with
respect to this matter (including demand for the assessment years
2003-04, 2004-05 , 2005-06, 2006-07 and 2007-08 for which assessments
were subsequently completed in respect of which the Company has
gone/will be going on appeal. The above are exclusive of consequential
effect of similar matter in respect of the assessments remaining to be
completed) is Rs. 1,315,373,266/- (including interest of Rs.
251,752,898); As at 31st March, 2009, Rs. 779,467,899/- (including
interest of Rs. 137,783,499).
(ii) Disallowance of expenditure during construction/Software expenses.
Rs. 35,484,928/- (including interest of Rs. 5,966,891); As at 31st
March, 2009 Rs. 31,266,979/- (including interest of Rs 4,900,440) The
above are exclusive of consequential effect of similar matter in
respect of the assessments remaining to be completed. However, even if
these liabilities crystallise, there would be future tax benefts
available on account of timing differences, except for interest and
income tax rate differences. Cash outfows would depend on the outcome
of the appeals.
(iii) Others (including interest of Rs 9,909,258) 78,537,507 50,397,417
(as at 31st March, 2009 Rs 10,454,727)
(d) Other matters under appeal
(i) The Government of Kerala issued an Order dated 3rd July 2007
cancelling the assignment of land underlying the Munnar resort and
directed repossession of land on the grounds that it is agricultural
land and cannot be used for commercial purposes. The company has
fled an appeal before the Commissioner of Land Revenue against
the Order stating that the patta issued does not specify that the land
should be used only for agricultural purpose and also obtained a Stay
Order from the Kerala High Court against eviction from the property.
The Commissioner of Land Revenue, Trivandrum vide his Order dated
November 22, 2007 dismissed the appeal fled by the Company against the
Order of the Sub-Collector, District of Devikulam dated 3rd July 2007
cancelling the assignment of land underlying the Munnar Resort and
directing repossession of land on the grounds that it is agricultural
land and cannot be used for commercial purposes. The Company fled a
writ petition before the Kerala High Court against the said Order and
on December 13, 2007, the Court granted an interim stay of all further
proceedings.
(ii) The Company had received a notice dated December 11, 2009 from
Commissioner, Ooty Municipality seeking to demolish the unauthorized
construction at Zest Danish Villa Resort situated at No.30, Sheddon
Road, Ooty. The Company has fled a review petition before the Municipal
Administration and Water Supply Department , Chennai which is awaiting
hearing.
4. Segment Reporting
The Company has a single reportable segment namely sale of Vacation
Ownership and other services for the purpose of Accounting Standard 17
on Segment Reporting. Business segment is considered as the primary
segment
5. The year end foreign currency exposures that have not been hedged
by a derivative instrument of otherwise are given below
6. The company made an initial public offer of 5,896,084 equity shares
of Rs 10 each for cash at a premium of Rs 290 per equity share,
aggregating to Rs 17688.25 lacs of which Rs 6,761.75 lacs have been
spent towards the object of the issues (Rs 5316.01 lacs were
utilised for construction of resorts and Rs 1,445.74 lacs towards
issue expenses and the balance has been invested in debt schemes
of mutual funds.
7. As of date, the company has not received confirmations from any
suppliers who have registered under the "Micro small and Medium
Enterprises Development Act 2006" and hence no disclosures have been
made under the said act.
8. Previous years Figure have been regrouned/recast wherever
necessary to conform to this years classification
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