Velan Hotels Reports Q1 FY2026 Results, Reappoints Executive Director Amid Ongoing Operational Suspension

2 min read Updated on 09 Aug 2025, 08:21 PM

Reviewed by

Jubin VScanX News Team

Overview

Velan Hotels Limited released Q1 FY2026 results, showing no revenue and a net loss of Rs. 11.90 crore due to suspended operations since March 2020. The company is relying on asset sales for debt repayment and has made partial payments towards statutory dues. M.R. Gautham was reappointed as Executive Director without remuneration. Auditors raised concerns about the company's ability to continue as a going concern.

*this image is generated using AI for illustrative purposes only.

Velan Hotels Limited , a hospitality company facing significant operational challenges, has released its unaudited financial results for the first quarter ended June 30, 2025. The company's board of directors approved these results during a meeting held on August 9, 2025.

Operational Status and Financial Performance

Velan Hotels has been grappling with a complete suspension of operations since March 24, 2020, which continues to impact its financial health severely. The company reported no revenue for the quarter, consistent with its non-operational status over the past few years.

The financial results paint a grim picture:

Metric	Q1 FY2026 (in crore Rs.)	Q4 FY2025 (in crore Rs.)	Change
Revenue	0.00	0.00	-
EBITDA	-0.40	-0.40	No change
Net Profit	-11.90	-11.90	No change
EPS (in Rs.)	-3.71	-4.01	7.48% improvement

The company's net loss remained stable at Rs. 11.90 crore compared to the previous quarter. However, the loss is significantly higher than the Rs. 0.40 crore loss reported in the same quarter of the previous year, indicating a deteriorating financial situation.

Debt Repayment and Asset Sales

Velan Hotels' ability to repay its debts is now critically dependent on the realization from asset sales. The company has made some progress in addressing its statutory obligations:

Paid Rs. 27.95 lakh towards Provident Fund, Sales Tax, and Tax Deducted at Source (TDS) dues.
Remitted Rs. 22.02 lakh for Goods and Services Tax (GST).

However, the company still faces delays in meeting other statutory obligations, with dues related to GST, Value Added Taxes, and Service Tax overdue by more than 12 months.

Corporate Governance and Management Changes

In a significant management decision, the board has reappointed Mr. Muthukumararamalingam Gautham (M.R. Gautham) as Executive Director for a period of one year, effective August 9, 2025. Notably, this reappointment comes without any managerial remuneration, reflecting the company's cost-cutting measures amid financial distress.

The board has also adopted a succession policy for board and senior management appointments, aiming to ensure leadership continuity and stability.

Auditor's Observations

The company's auditors, Krishaan & Co., have highlighted several concerns in their review report:

The company's ability to continue as a going concern is significantly impacted due to the suspension of operations and dependence on asset sales for debt repayment.
Impairment tests for assets tied to borrowings with RARE Asset Reconstruction Company have not been carried out, as only a portion of the debt has been extinguished through asset sales.
Delays in meeting statutory obligations persist, with some dues overdue by more than a year.

Looking Ahead

Velan Hotels faces a challenging road ahead as it navigates through its operational suspension and attempts to settle its financial obligations. The success of its asset sale strategy and the ability to resume operations will be crucial factors in determining the company's future viability.

Investors and stakeholders will be closely monitoring the progress of asset sales and any potential plans for operational revival in the coming quarters.

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