CHL Ltd’s record is defined by a single unresolved guarantee: a USD 32 million corporate guarantee on a defaulted EXIM Bank loan has been crystallised at USD 34 million under a one‑time settlement that is under implementation, yet the underlying litigation remains live in the Supreme Court, the DRT and the DRAT. The auditor has signed unqualified opinions every year, but each report carries an Emphasis of Matter on that litigation and a recurring audit‑trail exception. A revaluation of a foreign subsidiary’s building has created a large equity reserve with no profit‑and‑loss impact, while the company has repeatedly asserted it had no material related‑party transactions despite funnelling loans and a guarantee to that same subsidiary.
Key findings
- The company funnelled loans and a USD 32 million guarantee to its subsidiary while asserting no material related‑party transactions
Major- The standalone CARO report for FY2025‑26 confirms a year‑end loan of ₹1,482.52 lacs to subsidiary CHL International and a corporate guarantee of USD 32 million outstanding for the subsidiary’s EXIM Bank loan. Shareholders had authorised the board in FY2023‑24 to advance up to ₹300 crore to subsidiaries or interested persons. Yet the Board’s Report for FY2025‑26 states that no material contracts under Section 188 were entered into and that Form AOC‑2 is not applicable, a statement repeated in every annual report from FY2019‑20 through FY2024‑25. - A single loss‑making foreign subsidiary anchors the consolidated position, with a static minority interest inside it
Minor- CHL Ltd has only one subsidiary, CJSC CHL International in Tajikistan, which operates a five‑star Hilton hotel. The subsidiary was audited by another auditor each year, and the principal auditor relied solely on that other auditor’s report for the consolidated opinion. Its total deficit widened from ₹2,431.40 lac in FY2021 to ₹5,182.00 lac in FY2023 before narrowing to ₹3,153.23 lac in FY2025, while a minority interest held by Malbros Investments Inc remained static at ₹4,422.21 lac between 31 March 2019 and 31 March 2020. - Promoter family members hold key roles, with remuneration approved by a near‑unanimous promoter vote
Minor- Promoter shareholding stood at 72.84% with zero pledge, and Malbros Investments Inc held 58.90% of shares as at 31 March 2026. Mr. Luv Malhotra serves as Managing Director and his sister Ms. Kajal Malhotra as Non‑Executive Director, while their father, the founding chairman, moved to a paid advisory role after resigning as director on 1 October 2020. All shareholder resolutions on director reappointments and advisory fees passed with 99.99% votes in favour across FY2020‑21 to FY2025‑26, with promoter votes cast 100% in favour. - Operating cash flow consistently exceeds weak profit, and capex is funded internally with no dividends paid
Clean- Cash flow from operating activities was ₹19.46 crore in FY2026 and ₹34.77 crore in FY2025, while profit after tax was ₹0.42 crore in FY2026. The company paid no dividend in any of those years, citing inadequate profit, and funded property, plant and equipment purchases of ₹16.58 crore in FY2026 and ₹7.22 crore in FY2025 from operating cash.
What to watch
- Supreme Court proceedings. EXIM Bank’s Civil Appeal No. 1671/2019 against the dismissal of its insolvency petition was pending as of 31 March 2026.
- DRT claim. EXIM Bank’s TA No. 224/2022 claiming USD 44,611,207 plus interest remained pending adjudication as of 31 March 2026.
- Audit trail exception. Whether the third‑party service provider’s controls are addressed in the audit for the year ending 31 March 2027.
Bottom line: This is a disclosed and audited record in which operating cash flow covers weak earnings and capex is funded internally. The risk is concentrated in one place: a USD 32 million guarantee settlement that is being paid down but whose underlying litigation is still alive across three forums. The recurring assertion of no material related‑party transactions, despite a large loan and guarantee to the subsidiary, adds a layer that deserves scrutiny. Watch the pace of the EXIM Bank settlement and whether the audit trail exception clears in the next report.