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The Company and certain of its Subsidiaries have incurred losses in the past.
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The company has substantial indebtedness which requires significant cash flows to service, and limits its ability to operate freely.
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The company is subject to a number of conditions and restrictions under its financing agreements. Any breach of the terms under its financing arrangements or its inability to meet the company obligations, including financial and other covenants under its financing arrangements could adversely affect its business and financial condition.
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Its recently acquired entity, CHPL, which is now the company wholly owned subsidiary, has witnessed delays in repayment of loans in the past and has accordingly undertaken strategic debt restructuring. Any inability of CHPL to meet the terms of restructuring could adversely affect its business, financial condition, cash flows and results of operations.
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A significant portion of its revenue from operations (90.48% in the six months ended September 30, 2023) is derived from three hotels/serviced apartments in Mumbai (Maharashtra) and New Delhi out of the portfolio of four hotels/serviced apartments of the Company, and any adverse developments affecting these hotels/serviced apartments or the regions in which they operate, could have an adverse effect on its business, results of operation, cash flows and financial condition.
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The company has witnessed negative operating cash flows in the past, and it is possible that its may experience negative cash flows in the future.
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Several expenses incurred in its operations are relatively fixed in nature, and the company`s inability to effectively manage such expenses may have an adverse effect on its business, results of operations, cash flows and financial condition.
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All its hotels and serviced apartments are currently operating under the Hyatt brands, on a non-exclusive basis. The company has entered into long term agreements with certain Hyatt entities for the operations and management of its hotels and usage of brands owned by Hyatt International Corporation. If these agreements are terminated or not renewed, its business, results of operations, cash flows and financial condition may be adversely affected.
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The equity valuation of the Company based on the Issue Price may be higher than the equity valuation ascribed to the Company prior to the Issue at the time of acquiring CHPL from its Corporate Promoters.
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The determination of the Price Band is based on various factors and assumptions and the Issue Price, market capitalization to total income ratio, the market capitalization to tangible assets ratio and the enterprise value ("EV") to EBITDA ratio, may not be indicative of the market price of the Equity Shares on listing or thereafter.
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The company had a large workforce of 1,993 employees as of September 30, 2023, deployed across its hotels and serviced apartments and may be exposed to service-related claims and losses or employee disruptions and work stoppages that could have an adverse effect on its business and reputation. The Company has also witnessed delays in payment of statutory dues linked to its employees in the past.
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Two of its hotels/serviced apartments (Andaz Delhi and Hyatt Delhi Residences) and one of its recently acquired hotels (Hyatt Place Hampi) are located on licensed / leased land. If the company is unable to comply with the terms of the lease or license agreements, renew its agreements or enter into new agreements on favorable terms, or at all, its business, results of operations and financial condition and cash flows may be adversely affected. Further, the licensor and lessor of such land parcels have the right to purchase its hotels under certain situations based on the agreements entered into with them which may not be at terms favourable to it.
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The Company and certain of its Subsidiaries have availed unsecured borrowings, certain of which may be recalled by the lender at any time, which may have an adverse impact on its cash flows, business and financial condition.
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A portion of the Net Proceeds from the Issue will be used to repay ECBs availed by the Company and one of its Subsidiaries, CHPL from certain of its Corporate Promoters, Two Seas Holdings Limited and Saraf Hotels Limited, respectively.
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Certain of its Promoters and Directors may have interest in entities, which are in businesses similar to its and this may result in conflict of interest with the company.
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Room revenues from customers under contracts` category with guaranteed room nights (comprising majorly of customers in the airline sector) have significant contribution to its total room revenue (13.90% of the total room revenue in the six months ended September 30, 2023).
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The company derives a portion of its revenue from leasing commercial and retail spaces and any inability to renew its commercial and retail leases on favorable terms or at all could adversely affect its business, results of operation, cash flows and financial condition.
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Customers also use online travel agents and intermediaries for hotel bookings. In the event such intermediaries continue to gain market share compared to its direct booking channels, or if its competitors negotiate more favorable terms with such agents and intermediaries, its business, cash flows and results of operations may be adversely affected.
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Changes in travellers` preferences due to increased use of telepresence equipment, cost of travel, spending habits, and other factors may adversely affect the demand for hotel rooms, thereby adversely impacting its business, results of operations, financial condition, and cash flows.
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If the company is unable to realize the anticipated growth opportunities and synergies from the assets its acquire, including from the acquisition of Chartered Hotels Private Limited which was acquired from its Corporate Promoters or any other acquisition that the company may undertake in the future, its business, financial condition, cash flows and results of operations may be adversely affected.
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Its business is capital intensive and may require additional financing to meet those requirements, which could have an adverse effect on its results of operations, cash flows and financial condition.
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Its inability to collect receivables in time or at all and default in payment from its customers could result in the reduction of the company profits and affect its cash flows.
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One of its Corporate Promoters, Two Seas Holdings Limited and one member of its Promoter Group, Hyatt Hotels Corporation, have provided guarantees to lenders for certain borrowings of the Company. Any failure of the Company to repay such borrowings could trigger repayment obligations on them.
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The hospitality industry is intensely competitive and its inability to compete effectively may adversely affect its business, results of operations, cash flows and financial condition.
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Its business is subject to seasonal and cyclical variations that could result in fluctuations in its results of operations and cash flows.
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Its operations are dependent on its ability to attract and retain qualified personnel which are in high demand in India, and any inability to retain qualified personnel could adversely affect its business, results of operations, cash flows and financial condition.
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Any failure to maintain the quality and hygiene standards of the food and beverages that its offer, will adversely affect its F&B Revenue, overall business and financial performance.
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There are certain instances of delays in and non-payment of statutory dues by it. Any further delay in and non-payment of statutory dues may attract financial penalties from the respective government authorities and in turn may have an adverse impact on its financial condition and cash flows.
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Its business operations are subject to foreign currency exposure risks and any exchange rate fluctuations may adversely affect its results of operations, cash flows and financial condition.
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Audit reports on its consolidated financial statements include certain emphasis of matters as of and for Fiscal 2021 and certain modifications in the annexure to report prescribed under the Companies (Auditor`s Report) Order, 2020 and Companies (Auditor`s Report) Order, 2016 as of and for the financial years ended March 31, 2023, March 31, 2022 and March 31, 2021.
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The company depends on the skills and experience of its Individual Promoter, Key Managerial Personnel, Senior Management and employees with technical expertise, and any inability to retain its Key Managerial Personnel and Senior Management could adversely affect its business, results of operations, cash flows and financial condition.
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The company has in the past entered into related-party transactions and may continue to do so in the future.
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One of its Corporate Promoters, Juniper Investments, is registered with RBI as an NBFC-ND and is exposed to the risks associated with such registration, including non-compliances, inspections, adverse observations and penalties by the RBI.
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A substantial portion of the Net Proceeds will be utilized for the repayment, prepayment and/or redemption of certain outstanding borrowings availed of by the Company and its recent acquisitions, namely CHPL and CHHPL. Any variation in the utilisation of the Net Proceeds would be subject to certain compliance requirements, including prior shareholders` approval. Further, its funding requirements and the proposed deployment of Net Proceeds have not been appraised by any bank or financial institution or any other independent agency and are based on internal management estimates based on current market conditions.
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The company is unable to trace some of its historical records including forms filed with the RoC. Further, the company has failed to make timely regulatory filings required to be made with the RBI under applicable law. The company cannot assure that regulatory proceedings or actions will not be initiated against it in the future and that the company will not be subject to any penalty imposed by the competent regulatory authority in this regard.
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Certain of its Subsidiaries and Group Companies have common pursuits as they are engaged in similar business or industry segments and may compete with the company.
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Negative customer experiences or negative publicity surrounding its hotel properties or the Hyatt brands could have an impact on ability to source customers. Thus, its may also incur higher expenses towards business promotion in the future, to source more customers which may have an adverse impact on its business and financial condition.
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Its business prospects and continued growth depends on the company`s ability to access financing at competitive rates and competitive terms, which amongst other factors is dependent on its credit rating. Any downgrade of its credit ratings may restrict its access to capital and thereby adversely affect the company`s business, cash flows and results of operations.
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There are outstanding litigation against the Company, Directors, Promoters and Subsidiaries. An adverse outcome in any of these proceedings may affect its reputation and standing and impact its future business and could have a material adverse effect on its business, financial condition, results of operations and cash flows.
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Existing or planned amenities and transportation infrastructure at or near its other hotels and serviced apartments could be closed, relocated, terminated, delayed or not completed at all. Disruptions of basic infrastructure such as electricity and water supply could adversely affect its operations.
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One of its subsidiaries, MHPL is currently not engaged in any business activity.
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The company depends on third parties for certain operations of its business. Any failure by such third parties to adequately perform their services could have an adverse impact on its business, results of operations, cash flows and financial condition.
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The company is subject to extensive government regulation with respect to safety, health, environment, real estate, food, excise, property tax and labor laws. Any non-compliance with or changes in regulations applicable to it or failure to obtain, maintain or renew its statutory and regulatory licenses, permits and approvals required to operate its business may adversely affect its business, results of operations, cash flows and financial condition.
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While the company currently have adequate insurance coverage, its insurance coverage in the future may not be sufficient or may not adequately protect it against all material hazards, which may adversely affect its business, results of operations, cash flows and financial condition.
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The company is required to comply with data privacy regulations and any non-compliance in the future may have an adverse impact on business, results of operations, cash flows and financial condition.
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The success of its business is dependent on its ability to anticipate and respond to customer requirements. Its business may be affected if the company is unable to identify and understand contemporary and evolving customer preferences or if its unable to deliver quality service as compared to its competitors.
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The company may be unable to successfully grow its business in new geographies in India, which may adversely affect its business prospects, results of operations, financial condition and cash flows.
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The company has certain contingent liabilities disclosed in its financial statements and its financial condition could be adversely affected if any of these contingent liabilities materialize.
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Its inability to protect or use the company intellectual property rights may adversely affect its business.
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The company is subject to a variety of risks relating to owning real estate assets including changes in local markets or neighbourhoods, lack of liquidity of real estate assets, uncertainty of market conditions, legal proceedings or regulatory actions by statutory authorities, which may have an adverse impact on its business and operations.
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Any failure of the information technology systems used in its operations could impair its ability to effectively provide services, which could damage its reputation and adversely affect its business and operations.
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Land ownership in India can be challenging to ascertain since the land records are not easily traceable as land records differs from state to state and the national digitization program has not been implemented in every state. Its may not be able to identify or correct defects or irregularities in title to due to creation of adverse third party rights in the land which its own, lease or intend to acquire in connection with the development or acquisition of new hotels or properties, which could have an adverse impact on its business and operations.
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Certain sections of this Red Herring Prospectus disclose information from the Horwath Report which has been prepared exclusively for the Issue and commissioned and paid for by it exclusively in connection with the Issue, and any reliance on such information for making an investment decision in the Issue is subject to inherent risks.
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An inability to establish and maintain effective internal controls could lead to an adverse effect on its business, results of operations, cash flows and financial condition.
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The company is exposed to risks associated with the ownership and development of its hotel properties. Delays in carrying out ongoing or proposed improvements or refurbishment of its properties may have an adverse effect on its business, results of operations, cash flows and financial condition.
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The company cannot assure payment of dividends on the Equity Shares in the future and its ability to pay dividends in the future will depends on its earnings, financial condition, cash flows, working capital requirements, capital expenditures and restrictive covenants of its financing arrangements and its may not be able to pay dividends in future.
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The COVID-19 pandemic affected its business and operations and any future pandemic or widespread public health emergency in the future, could affect its business, financial condition, cash flows and results of operations.
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Its Corporate Promoters will continue to retain significant shareholding in the Company after the Issue, which will allow it to exercise significant influence over it.
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The company is exposed to a variety of risks associated with safety, security and crisis management including risks associated with natural or man-made threats and accidents, which could cause an adverse impact on its business and operations.
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The company has in this Red Herring Prospectus included certain non-GAAP financial measures and certain other industry measures related to its operations and financial performance that may vary from any standard methodology that is applicable across the industry its operate.
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The company has issued Equity Shares during the preceding twelve months at a price which may be below the Issue Price.
