Sunday, July 21, 2024

NFRA ticks off Mahindra Holidays

NEW DELHI : The National Financial Reporting Authority has asked Mahindra Holidays Resorts India Ltd (MHRIL), which owns the group’s flagship brand, Club Mahindra, to review its accounting and disclosure policies, besides addressing the deficiencies that the audit watchdog has detected in its financial statements.

The company will have to review its accounting practices on segment reporting and revenue recognition from the contracts with its customers, and make necessary changes by the end of June, and report it back to the watchdog, NFRA said in an order.

In short, Mahindra Holidays has to take a granular approach to reporting its financials with respect to separate business segments, an issue that was raised by a member of the hospitality company.

A person in the know of the development said, seeking anonymity, that this will however not change the final figures of the financial statements.

A spokesperson for Mahindra Holidays said in a statement that the company has complied with all applicable accounting norms.

Mahindra Holidays’ “consolidated financial statements do not provide disaggregated segment reporting for the one distinct category at the customer-type level, that is, members”, NFRA said, calling it deficient application of an accounting standard.

It is also alleged that the consolidated financial statement do not take into account various segments sucha as food and beverages, which were reported as main products and services in the company’s statutory filings to the ministry of corporate affairs.

The company’s customer, or members have also alleged that it does not promise stay at a preferred resort, but instead, at a resort or location that is available, which isn’t always feasible.

The company’s auditor, BSR & Co. LLP Chartered Accountants, has also been asked to file a separate report, informing NFRA about the changes being carried out to Mahindra Holidays’ accounting policies and practices after conducting a self-review.

Subsequently, NFRA is expected to take further action under the Companies Act and the NFRA Rules based on its review of the two reports submitted by the company and its auditor, it added.

NFRA’s note on reviewing the accounting policies, follows a complaint by a member of the hospitality firm, who alleged that the firm failed to meet its ‘members-first’ policy for providing accommodation facility. In his complaint, the customer also said that he had evidence that though he did not get a booking as a member, he managed to get an accommodation as a free inward traveller , who are given accommodation only if there was no demand from members.

“Mahindra Holidays Resorts India holds the highest standards of governance and is in compliance with all applicable accounting standards. We were asked to review our accounting policies and practices in respect of segment reporting, as they relate to application of Indian Accounting Standard (Ind AS) 108 and also Ind AS 115. We will conduct the review as per the order,” a Mahindra Holidays spokesperson said in response to Mint’s queries.

The NFRA’s order is limited to accounting policies and it does not in any way affect the company’s business model or practices on offering services to members and non-members. said the person cited above. Club Mahindra members pay a one-time membership fee and annual fees to be eligible for a week’s stay at a Mahindra resort subject to availability. “Members always get a priority and they dominate our occupancy,” he added.

Mahindra Holidays has around 280,000 registered members.

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