Shri Vile Parle Kelvani Mandal’s

Narsee Monjee College of Commerce and Economics

(Autonomous)

Bachelor of Management Studies (BMS) Programme

2020-21

SY-BMS Semester IV Division B

Course Name: Auditing

Project Title: - Audit Report of Chalet Hotels Limited

Submitted By:
Student’s Name SAP ID Roll No
Rishit Sanghvi 45401190112 B-047
 Chalet Hotels Limited

About the Company

Chalet Hotels Limited owns, manages, develops and asset manages high-end
hotels in India’s gateway cities. Chalet's focus is on the mainstream, upscale and
luxury segments of the hotel industry.
The Company has developed hotels at strategic locations generally with high
entry barriers and in high-density business districts. Developed on large land
parcels, its hotels have a sizeable inventory of rooms as well a wide range of
amenities, such as fine dining and speciality restaurants, large banquet and
outdoor spaces.
Chalet has developed commercial and retail spaces, in proximity to its existing
hotels, partnering with brands such as Inorbit, Novotel, Marriott and The Orb.
The Company's endeavour is to target the luxury, upper upscale and upscale
hotel segments at an efficient gross built-up area and development cost per key.

Name and Details of the Statutory Auditor

The audit was conducted 2020 by Mansi Pardiwalla (Membership No: 108511,
UDIN: 20108511AAAADM5039) who is a designated partner in BSR & Co.
LLP. It is a Limited Liability Partnership firm which was incorporated on 14 th
October 2013.
It is registered at Registrar of Companies, Mumbai and its Registration Number
is 10124W/W-100022. The firm’s total obligation of contribution is Rs.
192,786,608.
BSR & Co. LLP’s official email address is kaushalkishore@bsraffiliates.com
and its registered address is 14 Floor, Central B Wing & North C Wing, Nesco
IT Park 4, Nesco Centre, Western Express Highway, Gor Mumbai, Mumbai
City (MH 400063)
Year of the Annual Report

The information written in this assignment is retrieved from the annual report of
Chalet Hotels Limited made for the financial year 2019-2020

Type of Opinion

The auditor has expressed a clean/ unqualified opinion about the standalone
financial statements of Chalet Hotels Limited. As per the opinion of the auditor
as well the information/explanation provided to the auditor, the financial
statements have true and fair representation of the financial performance of the
company. The financial statements are free from material errors and are
prepared in accordance to the Companies Act, 2013 and as per the accounting
standards and principles accepted in India.

Basis of Opinion

The audit was conducted on the following basis:

 The Audit was conducted in compliance to the Standards on Accounting

(SA) specified under section 143(10) of the Act.

 Auditor’s responsibilities under the Standards on Accounting (SA) which are

further disclosed in the “Auditor’s Responsibility for the Audit of the
Standalone Financial Statements” section of the company’s annual report are
completely adhered while conducting this Audit.

 The Auditing firm is independent of the company in accordance to the Code

of Ethics issued by the Institute of Chartered Accountants of India (ICAI)
together with the ethical requirements that are relevant to the audit as per the
provisions of the government rules and regulations.

 The Auditing firm has fulfilled all its ethical responsibilities with respect to
the Code of Ethics proposed by ICAI.

 According to the Auditor, the evidence obtained is sufficient and fair in

order to form a basis of opinion on standalone financial statements.
Key Audit Matters of the Company

The following Key audit matters are those matters that, in accordance to the
Auditor’s professional judgement, were of most significance in the audit of the
standalone financial statements of 2019-2020

1) Impact of COVID-19 on Going Concern

On 11th March 2020, World Health Organization declared the Novel
Coronavirus outbreak as a pandemic. The Government of India also took a
series of preventive measures in order to contain the outbreak, which included
imposing multiple “lock-downs” throughout the nation from 22 nd March
onwards. These lockdowns and restrictions severely affected the hospitality
segment of India.
The impact of this pandemic and the measures which were initiated to control
this pandemic lead to a number of events and conditions which indicated
uncertainties related to going concern for the group.
2) Deferred Tax Assets
3) Business Combinations
Commenting on Financial Performance of the Company from the
Perspective of the Stakeholder on the basis of Auditor’s Report

As per the Independent Auditor’s Report, stakeholders can be assured about true
and fair representation of financial performance of the company depicted
through its standalone financial statements, as the report is free from any
material misstatements.
According to standalone financial statements, the Revenue from
Operations(RFO) in March 2019 was Rs. 9871.73 million. Revenue from
Operations experienced a nominal decline of Rs.60.45 million i.e. around 0.61%
in March 2020. Other income reduced by 41.4% resulting decrement of 2.48%
in Total Revenue from Rs.10347.81 million in 2019 to Rs.10090.25 million in
2020
Total Expenses were reduced to Rs.6445.13 million in 2020 from Rs.6679.47
million in 2019. Due to this Earnings Before Interest, Depreciation,
Amortization and Tax (EBITDA) declined by 0.63% from Rs.3668.34 million
in 2019 to Rs. 3645.12 million in 2020.
However, the Profit Before Income Tax is increased in 2020 by Rs.1191.96
million to Rs.1008.48 million when compared to the loss of Rs.183.48 million
in 2019. The company made Profit of Rs.996.26 million in 2020 while it had
made a loss of Rs.76.27 million in 2019. This was because the Finance Cost in
2019 was Rs.2656.69 million while it reduced by 44.97% to Rs.1461.76 million
in 2020. Due to this reason Earnings Per Equity Share (Face value of Rs.10
each) increased to Rs.5.01 in 2020 from loss of Rs.0.48 in 2019.
The Indian hotels' industry first started feeling the ripple effects of the global
COVID-19 turmoil towards the end of February 2020, which worsened at the
beginning of March 2020. Occupancy across hotels in key cities declined
rapidly and as per the estimates it declined by a staggering 45% compared to the
previous year. Such a steep decline in such a short period of time has never been
witnessed by the sector. Therefore, COVID-19 dented EBITDA by 0.63% in the
year 2020.
In a nutshell, shareholders are content with the increment in EPS which has
resulted due to massive decrement in Finance Costs of the Company. However,
one must acknowledge the fact that the EBITDA has decreased and so has the
Revenue from Operations. This has further led to reduction in Return on Capital
Employed which can be considered as a negative indicator for the Company.

Screenshots of the Independent Auditor’s Report

 Declaration of Originality

I hereby declare that this assignment titled “Audit Report of Chalet Hotels
Limited” is entirely my own work and that any additional sources of
information have been duly cited.
I hereby declare that any offline/online sources published or unpublished, from
which I have quoted or drawn references have been referenced fully in the
References list. I understand that failure to do so will lead to plagiarism and
severe disciplinary action will be initiated against me.
I understand that I may be required to present the assignment and /or appear for
viva (Offline and/ or Online). I acknowledge that it is my responsibility to keep
myself updated with the schedule of the presentation/ viva and I will ensure I
am available during the same.

Name of Students Signature

Rishit Sanghvi (B047)

References

The information included in this assignment has been procured from the
Standalone Financial Statements and Independent Auditor’s Report published in
the Annual Report 2019-2020 of Chalet Hotels Limited.

The link of Annual Report 2019-2020 is mentioned below:

https://www.chalethotels.com/wp-content/uploads/2020/07/Chalet-Hotels-
Limited-Annual-Report-2019-20.pdf