HLV Limited Going Concern Depends on AAI Lease Dispute Resolution

HLV Limited prepared its financial results for the quarter and six months ended September 30, 2026 on a going-concern basis, assuming favourable judgments or settlements with Airports Authority of India, lease renewal and continued operations. The notes identify Rs 187.19 crore of disputed rent through September 30, 2026 and an Rs 807.05 crore AAI claim as central unresolved matters.

Why is HLV using a going-concern basis?

HLV is using a going-concern basis because it assumes favourable judgments and settlements in its Airports Authority of India (AAI) disputes, renewal of its lease and continuation of the business. Note 6 to the September 30, 2026 financial results explicitly makes those assumptions the basis for preparing the results.

HLV also continues to depreciate its Mumbai hotel building at the applicable rate on the assumption that the lease will be renewed. Depreciation and amortisation was Rs 6.30 crore in the quarter ended September 30, 2026, compared with Rs 4.85 crore in the corresponding quarter of 2025.

N.S. Shetty & Co., the limited-review auditor, drew attention to the disputed rentals, eviction proceedings, royalty claim and going-concern note in its October 30, 2026 report. The auditor said its conclusion was not modified in respect of these matters, while stating that a review has a narrower scope than an audit.

HLV identifies Hoteliering as its only reportable segment, making the Mumbai hotel lease relevant to its sole disclosed operating business. In the September 2026 quarter, total income was Rs 49.32 crore and the loss before tax was Rs 6.99 crore.

What are HLV's disputed AAI claims?

HLV is disputing increased rent for 18,000 square metres of Mumbai hotel land and a separate AAI demand concerning 11,000 square metres where a proposed hotel was not constructed. The company has not provided for either matter, although its reasons for non-provision differ between the two claims.

The first matter follows AAI's increase in lease rent effective October 1, 2014 for the 18,000-square-metre hotel site. The disputed charge was Rs 5.84 crore for the September 2026 quarter, while the cumulative disputed amount was Rs 187.19 crore through September 30, 2026.

The Rs 807.05 crore claim relates to rent and a minimum guarantee amount based on projected turnover, along with interest, for the 11,000-square-metre plot. HLV says it disputes that claim on several grounds and, based on legal opinion obtained, treats the liability as contingent rather than recording a provision.

The two amounts should not be read as claims measured on the same date. The disputed increased rent is stated through September 30, 2026, whereas the separate 11,000-square-metre demand is stated as of January 31, 2019.

What is the status of HLV's eviction and arbitration proceedings?

HLV says AAI unilaterally terminated the 18,000-square-metre lease and initiated eviction proceedings, while arbitration remains pending before an arbitrator. The Bombay High Court's June 9, 2025 order directed the Eviction Officer to proceed day to day in accordance with law and referred matters other than those before the officer to arbitration.

The Supreme Court, on an appeal against the June 2025 order, said both HLV and AAI could put their submissions before the adjudicating authority under the AAI Act. HLV notes that an adverse order of that authority may be appealed, but the filing does not disclose a decision on the underlying lease or rent disputes.

The Eviction Officer has begun the proceedings, although HLV challenged the officer's jurisdiction before the Bombay High Court. HLV says the High Court directed the officer to decide the settlement issue between the parties, and that the officer's hearing was in process as of the October 30, 2026 filing.

The disputes had earlier been referred to AAI's Settlement Advisory Committee, which recommended on March 18, 2021 that the parties settle. That recommendation did not conclude the matters, as the filing also records pending arbitration and the ongoing Eviction Officer process.

Has HLV renewed the Mumbai hotel lease?

HLV has not disclosed a completed renewal of the Mumbai hotel lease. AAI sent an offer letter dated December 1, 2023 for renewal of the 18,000-square-metre land lease, subject to specified terms and conditions.

HLV accepted the offer in principle, subject to reconsideration of certain terms and conditions, including issues relating to the 11,000-square-metre plot. AAI is reviewing HLV's representation, and HLV says it is following up while awaiting a response.

The renewal proposal is therefore linked to, but does not resolve, the rent and royalty disputes in Note 5. The company's going-concern assumption in Note 6 includes renewal of the lease, alongside favourable judgments or settlements in the disputed matters.

HLV reported property, plant and equipment of Rs 285.42 crore at September 30, 2026, compared with Rs 279.64 crore at March 31, 2026. The company also reported total equity of Rs 463.81 crore at September 30, 2026, down from Rs 471.03 crore at the preceding financial year-end.

How did HLV's September 2026 quarter compare with last year?

HLV narrowed its loss before tax to Rs 6.99 crore in the quarter ended September 30, 2026 from Rs 9.92 crore in the corresponding 2025 quarter. Total income increased to Rs 49.32 crore from Rs 38.92 crore, while total expenses rose to Rs 56.31 crore from Rs 47.72 crore.

Net sales and income from operations rose to Rs 45.78 crore from Rs 35.83 crore year on year. Employee-benefit expense increased to Rs 16.96 crore from Rs 14.76 crore, while other expenditure rose to Rs 28.89 crore from Rs 25.06 crore.

Finance costs declined to Rs 0.61 crore in the September 2026 quarter from Rs 0.83 crore a year earlier. The prior-year quarter included exceptional items of Rs 1.12 crore, while the September 2026 quarter did not list an exceptional item.

For the six months ended September 30, 2026, HLV reported net cash flow from operating activities of Rs 8.13 crore, compared with Rs 3.18 crore in the six months ended September 30, 2025. The company also said it made no tax provision because of accumulated losses from earlier years.

Conclusion

HLV's September 2026 disclosure places the AAI disputes at the centre of its continued-operation assumption. The company is relying on favourable outcomes or settlements, including lease renewal, while continuing to depreciate the Mumbai hotel building; the disclosed unprovided amounts include Rs 187.19 crore of increased rent and an Rs 807.05 crore contingent claim stated at different reporting dates.

The next matters to watch are the Eviction Officer's settlement-related hearing, the pending arbitration, any proceeding before the adjudicating authority under the AAI Act, and AAI's response to HLV's representation on the December 1, 2023 lease-renewal offer. HLV did not disclose a scheduled decision date or a final settlement for either the 18,000-square-metre or 11,000-square-metre disputes.