Chalet Hotels Ltd

Dear Members,

Chalet Hotels Limited

The Board of Directors present your Company's Thirty Ninth Annual Report along with the Audited Financial Statements for the Financial Year ended March 31,2024.

FINANCIAL HIGHLIGHTS

Your Company's financial performance for the Financial Year ended March 31,2024 is summarized below:

(Rs in million)

APPROPRIATIONS / DIVIDEND

Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('Listing Regulations'), the Company has adopted the Dividend Distribution Policy, setting out the broad principles for guiding the Board and the Management in matters concerning declaration and distribution of dividend, which is attached as Annexure I hereto and is also available on the Company's website at www.chalethotels. com/wordpress/wp-content/uploads/2023/11/Dividend- Distribution-Policy.pdf.

In line with the Dividend Distribution Policy, no dividend is being recommended by the Board of Directors on the Equity Shares of the Company for the year under review. As per the terms of issue of 0.001% Non-Cumulative, Redeemable Preference Shares of ? 100,000 each and pursuant to the Articles of Association of the Company, the said Preference Shares are, subject to the availability of profits during any financial year, entitled to a nominal

dividend of ? 1 on each Preference Share per year, which amounts to ? 1,600 for the year under review, and will be paid post approval of the Members at the ensuing Annual General Meeting ('AGM').

Further, an amount of ? 2,774.43 million has been transferred to Retained Earnings for the year under review. Pursuant to the applicable provisions of the Companies Act, 2013 ('the Act'), read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ('the IEPF Rules'), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF; established by the Government of India, after completion of seven years. Further, according to IEPF Rules, the shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority. The Company does not have any unpaid or unclaimed dividends and accordingly, the aforesaid provisions are not applicable to the Company.

BUSINESS UPDATE

In order to capitalize on emerging market opportunities and diversify our revenue streams, we have embarked on strategic initiatives to expand our presence in key markets and explore new business segments. FY 2024 marked two such strategic initiatives:

- addition of 'Courtyard By Marriott, Aravali Resort' having 158 keys, in the National Capital Region to the Company's portfolio, through acquisition of partners' share in Ayushi and Poonam Estates LLP, owning entity of the resort. This is the second leisure property in the Company's portfolio in line with our stated growth strategy to expand into the leisure space.

- launch of a second Hotel in Hyderabad, 'The Westin Hyderabad HITEC City' which is a 168-key property, managed and operated by an all-women team in partnership with Marriott International.

The Company added 88 rooms to the 'Novotel Pune Nagar Road' taking the total inventory for the said Hotel to 311 rooms.

During the year, the Company's subsidiary has entered into a Franchise and Technical Services & Development Assistance Agreement with The Indian Hotels Company Limited for a 'Taj' branded ~385-390 room Hotel at Terminal 3 at Delhi International Airport.

The Company has demonstrated strong operational and financial performance across all four quarters this year. Total Income increased by 20%, reaching Rs 14,186.63 million and PAT increased by 48%, reaching Rs 2,782.82 million. This growth can be attributed to our strong asset portfolio, stringent cost management, and a focus on maximizing revenue streams across all assets. Hospitality Revenue of Rs 12,674.80 million contributed to 89% of Total Revenue and the Rental & Annuity Revenues at Rs 1,240.76 million contributed to 9% of the Company's Total Revenue for the Financial Year ended March 31,2024.

DEVELOPMENT PIPELINE Hospitality

- construction of the ~385-390 room 'Taj' at Terminal 3, Delhi International Airport has commenced and it is expected to be operational in FY 2026

- work on ~125-130 additional guest rooms at Bengaluru Marriott Hotel Whitefield has commenced

- development of ~280 rooms hotel viz. 'Hyatt Regency' at Airoli, Navi Mumbai is at design stage

- renovation of 80 rooms and expansion of ~65-70 rooms at The Dukes Retreat, Lonavala is progressing as per plans for completion in FY 2025

Rental & Annuity

- construction work at the CIGNUS Powai? Tower 1 is nearing completion and the leasing process has commenced.

- construction work at the CIGNUS Powai? Tower 2 has commenced and is expected to be completed in FY 2027.

Residential Project - Koramangala, Bengaluru

- The first 9 towers of the project are nearing completion and Unit sales along with pricing are trending higher than expected. The construction work on the last 2 towers is in progress along with the construction work for a 0.15 msf commercial building for sale on the same land.

CAPITAL STRUCTURE Authorized Share Capital

During the year under review, the Authorized Share Capital of the Company increased pursuant to the amalgamation of Belaire Hotels Private Limited and Seapearl Hotels Private Limited with the Company. The Authorized Share Capital of your Company as on March 31, 2024 is Rs 5,981,000,000 consisting of 38,21,00,000 Equity Shares of Face Value of Rs 10 each amounting to Rs 382,10,00,000 and 21,600 Preference Shares of Face Value of Rs 1,00,000 each amounting to Rs 216,00,00,000.

Paid-up Equity Share Capital

During the year under review, the Paid-up Equity Share Capital of your Company increased by Rs 44,91,440 consequent to the exercise of 4,49,144 Stock Options into 4,49,144 fully paid-up Equity Shares having a face value of Rs 10 each under Chalet Hotels Limited - Employee Stock Option Plan 2018 and CHL Employee Stock Option Plan 2022. The Paid-up Equity Share Capital of your Company as on March 31,2024 stands at Rs 205,47,40,080.

The Company has through a Qualified Institutions Placement ('QIP'), issued and allotted 1,26,26,263 fully paid-up Equity Shares to the Eligible Qualified Institutional Buyers on April 03, 2024, pursuant to approval of the Members through a Special Resolution approved by means of Postal Ballot on March 10, 2024. This resulted in the increase in the total paid-up Equity Share Capital of the Company from Rs 205,47,40,080 comprising of 20,54,74,008 Equity Shares having a Face Value of Rs 10 each to Rs 218,10,02,710 comprising of 21,81,00,271 Equity Shares having a Face Value of Rs 10 each, post the end of the Financial Year. The proceeds of the QIP have been utilized towards repayment/pre-payment of certain outstanding borrowings and towards general corporate purposes.

Paid-up Preference Share Capital

Your Company had entered into a Subscription Agreement dated June 04, 2018 with Mr. Ravi C. Raheja and Mr. Neel C. Raheja, Promoters of the Company, wherein they had agreed to provide your Company with funds required to meet any costs, expenses and liabilities pertaining to the Koramangala Residential project, including any costs and expenses towards the ongoing litigation and the completion of the Koramangala Residential project, by way of subscription by themselves or by their Designated Nominees to 20,000 Zero Coupon Non-Cumulative, Non- Convertible, Redeemable Preference Shares ('NCRPS' / 'Subscription Securities') of Rs 100,000 each in two series (viz. Series A and Series B) of 10,000 NCRPS each, aggregating to Rs 2,000 million (Initial Subscription Amount). Further, the Promoters of the Company have also agreed to provide additional funds as may be required to meet the project expenses and have accordingly provided additional funds by way of an interest-free loan amounting to Rs 1,100 million as on March 31,2024 towards meeting the project expenses, out of which an amount of Rs 400 million has been repaid during the year.

The Company also has 1,600, 0.001% Non-Cumulative Redeemable Preference Shares having a Face Value of Rs 1,00,000 each which were due for redemption on December 21, 2023. The redemption date was extended by a period of three years to December 21,2026 pursuant to a resolution passed by the Members at the AGM held on August 10, 2023 and consequent alteration of the Articles of Association of the Company.

BORROWINGS

The Company avails of borrowings from time to time to be deployed for various purposes such as meeting Project and working capital requirements and repayment of high- cost debt. During the year under review, the Company availed of additional borrowings amounting to Rs 6,532 million and repaid Rs 5,139 million existing debt. As on March 31, 2024, the Company's borrowing stood at Rs 24,762 million on a standalone basis and at Rs 26,815 million on a consolidated basis (both excluding Preference Share Capital and Loan from Promoter- Directors, amounting to Rs 2,688 million), as compared to Rs 25,658 million on a standalone and consolidated basis (excluding Preference Share Capital and Loan from Promoter-Directors, amounting to Rs 2,280 million) as at March 31, 2023. Further, certain borrowings have been repaid from the funds raised from the issue of shares under QIP post end of the Financial Year under review.

DEPOSITS

Your Company has neither accepted nor renewed any amount falling within the purview of provisions of Section 73 of the Act read with the Companies (Acceptance of

Deposits) Rules, 2014 during the year under review. As such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the Balance Sheet.

LOAN FROM DIRECTORS

Pursuant to the Subscription Agreement entered into with the Company on June 04, 2018, Mr. Ravi Raheja and Mr. Neel Raheja, Promoters and Non-Executive Directors of the Company had agreed to provide financial support for the Koramangala Project in addition to the Initial Subscription as and when required. In view of the same and pursuant to the approval of the Board of Directors and the Members of the Company, Mr. Ravi Raheja and Mr. Neel Raheja have extended interest free loans aggregating to Rs 650 million to the Company during the year under review. As on March 31, 2024, the Promoters have provided an interest-free loan of Rs 1,100 million, out of which an amount of Rs 400 million was repaid during the year under review.

LOANS, INVESTMENTS, GUARANTEES AND SECURITIES

Your Company is engaged in 'infrastructural activities' covered under Schedule VI of the Act and is therefore exempt from the provisions of Section 186 of the Act with regards to Loans, Investments, Guarantees and Securities. Details of loans given, guarantee and security provided in connection with loan and investments made by your Company are given in Note No. 60 of the Standalone Financial Statements.

FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year under review, your Company earned foreign exchange of Rs 4,916 million as compared to Rs 3,465 million in the previous year.

The total foreign exchange outgo of your Company during the year under review was Rs 1,557 million as compared to Rs 915 million in the previous year.

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

The Company has four subsidiaries and three associates as on the date of this Report. There has been no material change in the nature of the business of the subsidiaries. The Company does not have any Joint Venture.

Brief updates in relation to each subsidiary for the year under review are as given below:

- Chalet Hotels & Properties (Kerala) Private Limited is a subsidiary of your Company, which had insignificant or no operations during the year under review.

- Chalet Airport Hotel Private Limited ('CAHPL') is a wholly owned subsidiary of the Company having the same line of business as its Holding Company. CAHPL entered into a Franchise and Technical

Services & Development Assistance Agreement with The Indian Hotels Company Limited for a 'Taj' branded ~385-390 room hotel at Terminal 3 at Delhi International Airport.

- The Dukes Retreat Private Limited ('Dukes') is a subsidiary of the Company and owner and operator of The Dukes Retreat, Lonavala an 80-room full- service resort, which is undergoing renovation and capacity addition.

- Sonmil Industries Private Limited ('Sonmil') is a wholly owned subsidiary of the Company owning the land on which The Dukes Retreat, Lonavala is situated.

The Board of Directors on February 29, 2024 approved the acquisition of partners' share in Ayushi and Poonam Estates LLP, the owning entity of Courtyard By Marriott, Aravali Resort in Faridabad. Accordingly, the Company has considered the period from March 01,2024 to March 31, 2024 for the purpose of purchase price allocations/ consolidation of the said LLP.

The Company had filed a Scheme of Arrangement and Amalgamation of Belaire Hotels Private Limited and Seapearl Hotels Private Limited with the Company. The Hon'ble National Company Law Tribunal, Mumbai Bench approved the said Scheme vide its Order dated May 19, 2023. The Appointed Date of the Scheme was April 01, 2020 and the Effective Date was June 19, 2023, when the said Order was filed with the Registrar of Companies. The Board of Directors of the Company have approved the amalgamation of Sonmil and Dukes, which are wholly owned subsidiary and subsidiary of the Company respectively, with the Company, which inter-alia aims at simplified corporate structure, synergy in operations, greater financial strength and improvement in the position of the merged entity.

In terms of provisions of Section 136 of the Act, the Audited Financial Statements of the subsidiary companies can be accessed on the website of the Company viz. www. chalethotels.com/annual-reports/.

Your Company holds 33.1% of the Equity Share Capital of Krishna Valley Power Private Limited, 26.1% in Sahyadri Renewable Energy Private Limited and 26% in TP Agastaya Limited, being entities engaged in generation of hydropower and solar power respectively. Your Company continues to hold the aforesaid securities, however it does not have the ability to participate and neither is involved in the operations and/ or relevant activities of these companies/ entities, and neither has exposure or rights to variable returns. Hence, the aforementioned entities have not been considered as Associate companies in the consolidation of Financial Statements.

The Consolidated Financial Statements of your Company and its Subsidiaries, prepared in accordance with the relevant Accounting Standards, duly audited by the Statutory Auditors, forms part of this Annual Report. The statement under Rule 5 of the Companies (Accounts)

Rules, 2014 relating to Subsidiaries and Associates in Form AOC-1 is annexed as Annexure II to this Report. The Company does not have any material subsidiary, however, the Company has formulated a policy for determining material subsidiary(ies) and such policy has been disclosed on the Company's website at www.chalethotels.com/wordpress/wp-content/ uploads/2024/02/Policy-for-Determination-of-Material- Subsidiaries.pdf.

MANAGEMENT DISCUSSION & ANALYSIS, CORPORATE GOVERNANCE AND BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORTS

A detailed note on the state of the Company's affairs is covered in the Management Discussion & Analysis section of the Annual Report.

Your Company has complied with the Corporate Governance requirements under the Act and Listing Regulations, the details of which are mentioned in a separate section viz. Report on Corporate Governance. Further, the Business Responsibility & Sustainability Report, also forms an integral part of this Annual Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board of Directors of the Company at its Meeting held on May 01,2023 had, based on the recommendation of the Compensation, Nomination and Remuneration Committee, re-appointed Mr. Hetal Gandhi (DIN: 00106895) and Ms. Radhika Piramal (DIN: 02105221) as Independent Directors for a second term of Five years and Mr. Joseph Conrad D'Souza (DIN: 00010576) and Mr. Arthur William DeHaast (DIN: 07893738) as

Independent Directors for a second term of Four years w.e.f. June 12, 2023. The re-appointments were also approved by the Members of the Company by way of Postal Ballot on June 05, 2023.

Further, on the basis of the recommendation of the Compensation, Nomination and Remuneration Committee, the Board of Directors at the meeting held on May 09, 2023 re-appointed Mr. Sanjay Sethi (DIN: 00641243) as the Managing Director and CEO of the Company for a further period upto January 31,2026 w.e.f February 09, 2024 and the same was approved by the Members of the Company at the AGM held on August 10, 2023.

In accordance with the Act and the Articles of Association of the Company, Mr. Neel Raheja (DIN: 00029010) is liable to retire by rotation and being eligible, has offered himself for re-appointment. Accordingly, the re-appointment of Mr. Neel Raheja is being placed for approval of the Members at the ensuing AGM. The information pertaining to the Directors being re-appointed as required pursuant to the Listing Regulations and Secretarial Standard-2, forms part of the Notice convening the AGM.

During the year under review, none of the Non-Executive Directors of the Company had any pecuniary relationship or transactions with the Company, other than receipt of Sitting Fees towards attending meetings of Board of Directors and / or Committees thereof. Further, pursuant to the approval of the Members of the Company by way of Postal Ballot on June 05, 2023, the Independent Directors of the Company will be paid Commission for the Financial Year 2024.

The Board of Directors at the meeting held on July 28, 2023 appointed Mr. Shwetank Singh as the Chief Growth and Strategy Officer of the Company on the basis of the recommendation of the Compensation, Nomination and Remuneration Committee, and designated him as a Key Managerial Personnel with effect from August 02, 2023.

Except as stated above, there were no other changes in the Directors and Key Managerial Personnel of the Company during the year under review.

ANNUAL RETURN

As provided under Sections 92(3) and 134(3)(a) of the Act, read with Rule 12 of the Companies (Management and Administration) Rules, 2014, as amended from time to time, the draft Annual Return of your Company in Form MGT-7 for the Financial Year 2024, is hosted on the website of your Company at www.chalethotels.com/ annual-reports/.

NUMBER OF BOARD MEETINGS

During the Financial Year 2024, the Board of Directors met eight times. The details of the meetings held have been given in Corporate Governance Report.

DIRECTORS' RESPONSIBILITY STATEMENT

On the basis of internal financial control framework and compliance systems in place and the work carried out by the Internal and Statutory Auditors, including audit of internal financial controls over financial reporting and internal reviews performed by the Management and the Audit Committee, the Board is of the opinion that your Company's internal financial controls were reasonable and adequate for the Financial Year 2024.

Accordingly, pursuant to Section 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that:

(i) i n the preparation of the accounts for the Financial Year ended March 31, 2024, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

(ii) the Board of Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent in order to give a true and fair view of the state of affairs of your Company at the end of the Financial Year and of the profit of your Company for the Financial Year ended March 31,2024;

(iii) the Board of Directors have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;

(iv) the Financial Statements for the Financial Year ended March 31, 2024 have been prepared on a going concern' basis;

(v) the Board of Directors have laid down internal financial controls for your Company which it believes are adequate and are operating effectively; and

(vi) the Board of Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and are operating effectively.

GOING CONCERN

As our operational performance was marked by efficiency and effectiveness in delivering exceptional guest experiences, our Key Performance Indicators such as occupancy rates, Average Daily Rate (ADR), and Revenue Per Available Room (RevPAR) have shown steady improvement, reflecting the success of our operational strategies. We believe that effective cash flow management is essential for maintaining financial stability and ensuring the smooth operation of a business thereby enabling strategic investments for future growth. The Company has followed prudent cash flow management and continues to rationalize various processes to tighten, control and manage costs. All monetary obligations for the Company were met out of cash generated from operations. Accordingly, the Financial Statements for the year under review have been prepared on a Going Concern basis. During the year under review, there has been no change in the nature of business of the Company.

ACCOUNTING TREATMENT

The Accounting Treatment is in line with the applicable Indian Accounting Standards ('Ind AS') recommended by The Institute of Chartered Accountants of India and prescribed by the Central Government in accordance with Section 133 of the Act.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS INCLUDING REFERENCE TO THE FINANCIAL STATEMENTS

The Internal Financial Control Systems including the Internal Audit and Internal Controls are commensurate with the size and scale of your Company's operational and commercial activities.

The managed hotels are operated through globally reputed hospitality companies which have their respective internal control systems in place. Your Company has provided an adequate system of internal control covering the franchise hotels as well as all corporate functions. The internal control systems provide assurance regarding the effectiveness and efficiency of operations, safeguarding of assets, reliability on financial controls and compliance with applicable laws.

Based on the recommendation of the Audit Committee, the Board has approved the appointment of M/s. PriceWaterhouse Coopers Services LLP as Internal Auditors of the Company for the Financial Year 2025. The Chief Internal Auditor who reports to the Audit Committee oversees the Internal Audit function of the Company. The reports by the Internal Auditors are placed before the Audit Committee for their review and improvements.

AUDITORS & AUDITORS' REPORT Statutory Auditors

The Audit Committee and the Board of Directors at their respective meetings held on May 10, 2022 approved the re-appointment of M/s. B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022) as the Statutory Auditors of the Company for a second term of five years i.e. from the conclusion of the 37th AGM till the conclusion of the 42nd AGM, which was also approved by the Members at the 37th AGM of the Company held on September 14, 2022.

The Report of the Statutory Auditors along with its Annexures forms a part of this Annual Report. The Auditors' Report to the Members for the year under review was issued with an unmodified opinion.

Explanation or Comments on Qualifications, Reservations, Adverse Remarks or Disclaimers made by the Auditors

There are no qualifications, reservations or adverse remarks or disclaimers made by Statutory Auditors in their Report on the Financial Statements for the Financial Year 2024. However, the Statutory Auditors have drawn attention i.e. Emphasis of Matter with regard to Note 43(c) of the Standalone Financial Statements, in their report, details of which are as follows:

"Emphasis of Matter

We draw attention to Note 43(c) to the standalone financial statements regarding the ongoing litigation in respect of leasehold rights to proportionate undivided interest in land and building at Vashi (Navi Mumbai) purchased from K Raheja Corp Private Limited, on which the Company's Four Points by Sheraton Hotel has been built. The allotment of land by City & Industrial Development Corporation of Maharashtra Limited ('CIDCO') to K Raheja Corp Private Limited has been challenged under two public interest

litigation. On November 21, 2014, the Honorable High Court at Bombay ordered K Raheja Corp Private Limited to restore the land to its original condition (which would interalia require the buildings thereon to be demolished) and hand over the vacant possession thereof to CIDCO within six months of the date of judgement. K Raheja Corp Private Limited has filed a special leave petition against the abovementioned order in the Honorable Supreme Court of India. The Hon'ble Supreme Court of India on January 21, 2015 has passed Status Quo Order and the matter is currently pending with it. The agreement for purchase of leasehold rights between the Company and K Raheja Corp Private Limited was subject to the outcome of the litigation and the management does not except any potential material loss to be borne by the Company. Pending the outcome of proceedings and a final closure of the matter, no adjustments have been made in the standalone financial statements as at March 31, 2024 to the carrying value of the leasehold rights (reflected as prepayments) aggregating to Rs 47.34 million (March 31, 2023: 48.54 million) and the hotel assets thereon (reflected as property, plant and equipment) aggregating to Rs 366.17 million as at March 31,2024 (March 31,2023: Rs 348.46 million).

Our opinion is not modified in respect of this matter."

The Auditors have clarified that their opinion is not modified in respect of the above matter. Detailed explanation in respect of the matter has been provided under Note 43(c) of the Standalone Financial Statements and are self-explanatory.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Act read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had appointed M/s. KDA & Associates, Company Secretaries in Practice, to undertake Secretarial Audit for Financial Year 2024. The Secretarial Audit Report issued by them is annexed herewith as Annexure IV. There are no qualifications, reservations, adverse remarks or disclaimers in the report.

Further, the subsidiaries of the Company as mentioned above do not meet the criteria for material unlisted subsidiaries. Therefore, the provisions of Regulation 24A of the Listing Regulations, in respect of Secretarial Audit are not applicable to them, for the year under review.

Cost Audit

Your Company has been maintaining cost accounting records as specified by the Central Government under Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014. Further, your Company was also required to conduct an audit of cost records as specified by the Central Government under Section 148 of the Act and the Rules framed thereunder for the Financial

Year under review. The Board of Directors appointed M/s. Chirag Trilok Shah & Co., Practicing Cost Accountant (Membership Number 23277 and Firm Registration Number 004442) as the Cost Auditor for conducting the audit of cost records for the Financial Year 2024, at the remuneration approved by the Members at the previous AGM.

During the year under review, none of the Auditors as mentioned above have reported any fraud and therefore no details are required to be disclosed under Section 134(3)(ca) of the Act.

BOARD EFFECTIVENESS AND BOARD EVALUATION

Pursuant to Section 134(3)(p) of the Act, as amended from time to time, and Regulations 17 and 25 of the Listing Regulations, the Board of Directors had carried out an annual evaluation of its own performance, Individual Directors and its Committees for the Financial Year under review. A structured questionnaire was prepared after taking into consideration the Guidance Note issued by SEBI on Board Evaluation, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance. The feedback and suggestions received from all the Directors have been discussed by the Independent Directors, Compensation, Nomination & Remuneration Committee and the Board of Directors at their respective meetings. The Directors expressed their satisfaction with the evaluation process.

INDEPENDENT DIRECTORS

All the Independent Directors have confirmed that they meet the criteria of independence as laid down under the Act and Listing Regulations. They have declared that they do not suffer from any disqualifications specified under the Act and are not aware of any circumstances or situations which exist or may be reasonably anticipated that could impair or impact the ability to discharge their duties.

Based on such confirmations / declarations, in the opinion of the Board, the Independent Directors of your Company fulfil the conditions specified under the Act and the Listing Regulations and are independent of the management. Further, all the Independent Directors have registered their names in the databank of Independent Directors maintained by the Indian Institute of Corporate Affairs and the Independent Director to whom online self-assessment proficiency test was applicable, has completed the same.

COMMITTEES

Your Company has constituted the following Committees of the Board as per the requirements of the Act and the Listing Regulations:

- Audit Committee;

- Compensation, Nomination and Remuneration Committee;

- Corporate Social Responsibility and ESG Committee;

- Stakeholders' Relationship Committee; and

- Risk Management Committee.

The details of constitution, meetings held, attendance of the members and terms of reference of the said Committees, have been enumerated in the Corporate Governance Report which forms a part of the Annual Report.

Policy on Compensation, Nomination and Remuneration

Your Company had in compliance with the provisions of Section 178 of the Act and Regulation 19 of the Listing Regulations, adopted a Policy for Appointment of Directors and Remuneration of Directors and Senior Management. The salient features of the said Policy are outlined in the Corporate Governance Report. The same is available on the website of your Company viz. www.chalethotels. com/wordpress/wp-content/uploads/2023/11 /Policy- for-Appointment-of-Directors-Remuneration-of-Director- and-Senior-Management.pdf.

The Compensation, Nomination and Remuneration ('CNR') Committee of your Company, while formulating the above policy, has ensured that:

• the level and composition of remuneration be reasonable and sufficient to attract, retain and motivate Directors/employees of the quality required to run the Company successfully;

• relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

• remuneration to Directors, Key Managerial Personnel and Senior Management involves a balance between fixed and performance linked bonuses reflecting short and long term performance objectives appropriate to the working of the Company and its goals.

The remuneration / compensation / commission (including annual increments, if any) paid to Directors and Senior Management including KMP of the Company is determined by the CNR Committee and are as per the terms laid down in the said Policy. The Managing Director & CEO of your Company does not receive remuneration or commission from any of the subsidiaries of your Company.

Corporate Social Responsibility

Your Company had adopted a CSR Policy indicating the Company's broad philosophy and objectives, which is available on the website of your Company at www.chalethotels.com/wordpress/wp-content/ uploads/2021/09/CSR-Policy.pdf.

The annual report on CSR activities and details about the composition of CSR and ESG Committee along with the initiatives undertaken by the Company on CSR activities during the year under review is annexed as Annexure III to this Report.

EMPLOYEE STOCK OPTION SCHEME (ESOP)

Based on the recommendation of the CNR Committee at its meeting held on May 30, 2023, the Board of Directors at its meeting held on July 03, 2023 formulated the CHL Employee Stock Option Plan 2023 to create and grant upto a maximum of 10,00,000 Employee Stock Options, in one or more tranches, to the Eligible Employees from time to time. The same was also approved by the Members of the Company in the AGM by way of Special Resolution held on August 10, 2023.

During the year under review, the Company had the following ESOP Schemes:

- Chalet Hotels Limited - Employee Stock Option Plan 2018

- CHL Employee Stock Option Plan 2022

- CHL Employee Stock Option Plan 2023

The applicable disclosures as stipulated under Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 have been made available on the website of the Company at www. chalethotels.com/annual-reports/.

Further, a certificate from M/s. KDA & Associates, Secretarial Auditors of the Company, with respect to implementation of ESOP and confirming that the Scheme is in compliance with the relevant SEBI Regulations and the Members approval obtained; shall be available for inspection by Members of the Company.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

In line with the requirements of the Act and in accordance with the Listing Regulations, your Company has formulated a policy on dealing with Related Party Transactions ('RPTs') which is available on the website of the Company at www.chalethotels.com/wordpress/wp- content/ uploads/2022/12/CHL-Related-Party-Policy.pdf. During the year under review, the transactions / contracts/ arrangements entered into by the Company with related party(ies) as defined under the provisions of the Act and Listing Regulations, were in the Ordinary Course of Business at arms' length and were entered into with the prior approval of the Audit Committee and the Board of Directors of the Company. The disclosure in Form AOC-2 is not applicable to the Company for the Financial Year 2024 and hence does not form part of this Report. Approval of the Members was sought at the AGM held on August 10, 2023 in respect of material modification of a

Material Related Party Transaction for raising of additional funds from the Promoters of the Company upto an amount of Rs 1,000 million and an amount of Rs 700 million is outstanding as on March 31,2024.

All transactions with related parties are placed before the Audit Committee for its approval. Omnibus Approval is obtained on an each financial year basis, from the Audit Committee in respect of Related Party Transactions which are repetitive in nature or unforeseen, based on the criteria specified and approved by the Board upon recommendation of the Committee. The Committee and the Board reviews on a quarterly basis, all transactions entered into by your Company pursuant to the Omnibus Approvals so granted.

RISK MANAGEMENT

Your Company is faced with risks of different types, each of which needs varying approaches for mitigation. The risk management framework defines the risk management approach across the enterprise. The risk framework which seeks to create transparency, minimize adverse impact on business objective and enhance your Company's competitive advantage, is reviewed by the Risk Management Committee periodically. An impact analysis of the identified risks including risk mitigation approach and risk mitigation status is also done at regular intervals taking into consideration the changing business environment and additional steps taken by the Company to further mitigate the risks.

Your Company has adopted a Risk Management Policy, pursuant to the provisions of Section 134 of the Act, to identify and evaluate business risks and opportunities for mitigation of the same on a continual basis, which is available on the Company's website at www.chalethotels.com/wordpress/ wp-content/uploads/2021/12/Risk-Management-Policy- renamed-as-on-October-28-2021.pdf.

Details of the key risks faced by your Company and measures for mitigation have been provided on pages 65 to 68 of the Integrated Reporting section of the Annual Report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

Your Company has, in accordance with Section 177 of the Act and Regulation 22 of the Listing Regulations, formulated a Vigil Mechanism / Whistle Blower Policy for its Directors and Employees, to enable reporting of any wrongdoing within the Company / units that fall short of your Company's business principles on ethics and good business practices.

Your Company's Vigil Mechanism / Whistle Blower Policy provides a formal mechanism to the Directors, the employees and other stakeholders of the Company to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company's Code of

Conduct. The said policy is available on the Company's website at www.chalethotels.com/wordpress/wp- content/uploads/2023/05/Vigil-Mechanism-and-Whistle- Blower-Policy-Rev-May-09-2023.pdf.

The Policy provides adequate safeguards against victimization of Directors and employees who avail of the mechanism and have also provided them direct access to the Chairperson of the Audit Committee. Matters reported under the Vigil Mechanism are informed to the Audit Committee from time to time. It is affirmed that no personnel of the Company has been denied access to the Chairperson of the Audit Committee.

PREVENTION OF SEXUAL HARASSMENT

Your Company has complied with provisions relating to the constitution of Internal Complaints Committee in compliance with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 and the Rules framed thereunder in respect of the Corporate Office and various units. The policy in this regard is available on the Company's website at www.chalethotels.com/wordpress/ wp-content/uploads/2023/05/POSH-Policy Rev May-09- 2023.pdf.

During the year under review, five complaints on sexual harassment were received and six complaints including one from the previous year have been resolved. Appropriate actions were taken, wherever necessary. The Company also conducts workshops from time to time to promote awareness on the issue.

Your Company continues its strong stand against any kind of sexual harassment and has zero tolerance for sexual harassment at workplace.

HUMAN CAPITAL INITIATIVES AND PARTICULARS OF EMPLOYEES

Your Company focuses on building on its strength by developing the capability of its employees, through training and development and work life balance. During the year under review, your Company has undertaken various initiatives towards nurturing talent, keeping its people connected and taking various steps for maintaining the physical and emotional wellbeing of its employees.

Further, your Company has been listed as a Great Place to Work ? Certified, for the fifth time in a row and certified in the 2023 list of 'India's Best Workplaces™ for Women 2023 - Mid-size (Top 50).

The disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and

Remuneration of Managerial Personnel) Rules, 2014, is annexed to this Report as Annexure V.

Further, in terms of the provisions of Section 197(12) of the Act, read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules forms part of this Report.

Having regard to the provisions of the second proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the Members of the Company and others entitled thereto. Any Member interested in obtaining such information may write to the Company Secretary at companysecretary@chalethotels. com and the same will be furnished on request. The Annual Report including the aforesaid information is also available on the Company's website.

ENVIRONMENTAL INITIATIVES AND ENERGY MANAGEMENT

Your Company was the first Hospitality Company, globally, to join Climate Group's RE100, EP100 and EV100 initiatives and make commitments linked to renewable electricity, energy efficiency and electric mobility respectively and continues in its commitment towards the environment. The Company has undertaken various initiatives during the year under review to maintain a balance with the environment with a steady focus on sustainability. Detailed reporting on the aspects of ESG are covered in the Integrated Reporting Section of this Annual Report and the Business Responsibility and Sustainability Report. As required under Section 134 of the Act read with Rule 8 of Companies (Accounts) Rules, 2014, the information relating to conservation of energy is annexed as Annexure VI to this Report. The information relating to technology absorption is not given since the same is not applicable to the Company.

INTEGRATED REPORTING

Your Company has provided Integrated Report for the financial year under review, which encompasses both financial and non-financial information and stakeholders' relationships to enable well informed decisions and a better understanding of the Company's value creation model. The Report also touches upon aspects such as organization's strategy, governance framework, performance and prospects of value creation based on the six forms of capital viz. financial, manufactured, intellectual, human, social & relationship and natural capitals. The Integrated Report also includes ESG parameters and Company's performance vis-a-vis these.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS, COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE

There were no significant and material orders passed by Regulators, Courts or Tribunals impacting the Going Concern status and Company's operations in future.

MATERIAL CHANGES AND COMMITMENTS

The Company issued and allotted 12,626,263 Equity Shares under QIP to the Eligible Qualified Institutional Buyers on April 03, 2024 as detailed hereinabove.

Other than the one mentioned above, there have been no material changes and commitments affecting the financial position of your Company, which have occurred between the end of the Financial Year to which the Financial Statements relate and the date of this Report.

COMPLIANCE WITH SECRETARIAL STANDARDS

Your Company is in compliance with the applicable Secretarial Standards, issued by The Institute of Company Secretaries of India and approved by the Central Government under Section 118(10) of the Act.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these matters during the year under review:

- I ssue of Equity Shares with differential rights as to dividend, voting or otherwise

- Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except Employees' Stock Option Schemes referred to in this Report

- Payment of remuneration or commission to Managing Director & CEO of the Company from any of its subsidiaries

- Proceedings filed by or against the Company under the Insolvency and Bankruptcy Code, 2016

- Onetime settlement with any Bank or Financial Institution

ACKNOWLEDGEMENTS

Your Directors would like to express their deepest appreciation to the Members for their support received and their continued confidence in the Company's vision and endeavors. Your Directors extend their gratitude and sincerely appreciate the assistance and co-operation received from the Regulatory and Statutory Authorities, Government and its agencies, hotel & retail operating partners, Stock Exchanges, Depositories, lenders, legal advisors, Registrar & Share Transfer Agent, Auditors, vendors and other key stakeholders.

We are also immensely grateful to our Company's employees at all levels whose hard work, expertise, and commitment are the driving force behind our success.