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Notes to Accounts of EIH Ltd.

Mar 31, 2014

1. (A) Contingent Liabilities and commitments (to the extent not provided) -

(i) Claims against the Company pending appellate/judicial decisions not acknowledged as debts :

(a) Value Added tax Rs. 38.76 Million (2013 - Rs. 20.08 Million)

(b) Income-tax Rs. 717.50 Million (2013 - Rs. 603.90 Million)

(c) tax deducted at source Rs. 28.87 Million (2013 - Rs. 14.16 Million)

(d) service tax Rs. 132.60 Million (2013 - Rs. 103.71 Million)

(e) property tax Rs. 50.43 Million (2013 - Rs. 5.93 Million)

(f) entertainment tax Rs. 4.31 Million (2013 - Rs. 10.45 Million)

(g) Customs duty Rs. 429.66 Million (2013 - Rs. 429.66 Million)

(h) employees state Insurance dues Rs. nil (2013 - Rs. 1.57 Million) (i) excise duty Rs. 99.07 Million (2013 - Rs. 99.07 Million) (j) others Rs. 13.48 Million (2013 - Rs. 15.36 Million)

(ii) Guarantees :

a. Guarantees given to Banks & Financial Institutions for Rs. 1,199.19 Million (2013 - Rs. 1,086.89 Million) against financial facilities availed by the subsidiary companies.

b. Counter guarantees issued to banks and remaining outstanding Rs. 199.45 Million (2013 - Rs. 32.72 Million).

(B) Commitments:

a. the estimated amount of contracts remaining to be executed on capital account and not provided for net of advances Rs. 581.64 Million (2013 - Rs. 602.23 Million).

b. Investment commitment in subsidiary and joint venture companies Rs. 365.63 Million (2013 - Rs. 424.63 Million)

2. the Company sold part of its shareholding in Mercury Car rentals Limited (MCrL) to the other joint venture partner on 30.09.2013. the profit arising from this sale has been shown as exceptional item during the year ended 31.03.2014. As a result of this sale Company''s ownership interest in MCrL was reduced from 66.67% to 40% and MCrL ceased to be a subsidiary of the Company with effect from 30.09.2013. subsequently, with effect from 17.01.2014 MCrL was converted to a private limited company.

3. details of dues to Micro enterprises and small enterprises as Defined under Micro, small & Medium enterprises development Act, 2006 are given below. this is based on information made available to the Company.

4. (a) Freehold/Leasehold Land of perpetual nature and Buildings at some locations were revalued on 31st March, 1982 and 31st March, 1993 resulting in a surplus of Rs. 2,863.88 Million which is included in the original cost. the valuation was carried out by an approved valuer on the basis of depreciated replacement cost. the surplus was transferred to revaluation reserve.

(b) Buildings include construction cost of 850 car parking spaces amounting to Rs. 292.81 Million which as per the lease agreement dated 4th May, 2001 with MMrd Authority will have to be transferred to the said Authority through a licence agreement for a licence fee of re.1 per annum as a condition precedent to the lease of the land for the Company''s hotel in Mumbai known as trident, Bandra Kurla.

(c) By virtue of West Bengal estate Land Acquisition Act, 1953, the Company became the owner of Leasehold Land of erstwhile the oberoi, Mount everest at darjeeling which has been included in Freehold Land during the year at a nominal value.

5. (a) depreciation has been provided for in the Accounts on "straight Line Method" at the rates prescribed in schedule XIV to the Companies Act, 1956 except for Specific assets which are depreciated over the useful lives of the assets, which are not less than those prescribed under the Companies Act, 1956.

(b) depreciation for the year as per Fixed Assets schedule (note-12) includes Rs. 29.99 Million (2013 - Rs. 29.99 Million) being depreciation on the increased value of building due to the effect of revaluation and, accordingly, the same has been adjusted from revaluation reserve Account.

6. Fixed Assets acquired under finance lease amounted to Rs. 369.20 Million (2013 - Rs. 391.32 Million) being assets acquired between 1st April, 2001 to 31st March, 2014. these include an amount of Rs. 26.03 Million (2013 - Rs. 32.74 Million) being assets acquired during the year under finance lease and capitalised in line with the requirements of Accounting standard (As-19). depreciation for the year includes an amount of Rs. 84.45 Million (2013 - Rs. 120.93 Million) being depreciation charged on these assets.

7. disclosures in respect of Company''s operating lease arrangements entered on or after 1st April, 2001 under Accounting standard (As-19) on Leases.

8. In the case of Mashobra resort Limited ("MrL"), several disputes with the Government of Himachal pradesh, the joint venture partner, were referred by the High Court of Himachal pradesh on 17th december, 2003 to an arbitral tribunal consisting of a single arbitrator whose award has been challenged by both the Company and MrL, amongst others. the operation of the arbitration award has been stayed pending substantive hearing of the applications by the High Court. Consequently, the status quo ante of the entire matter stands restored to the position as on 17th december, 2003 and the hotel is being operated by MrL accordingly. the Company vide its letter dated 4th April, 2012 requested MrL to account for the entire amount of Rs. 1,361.93 Million provided to MrL upto 31st March, 2012 as ''Advance towards equity'', including Rs. 130.00 Million being the opening balance of ''Advance towards equity''. In view of the above, the Company has shown the said amount of Rs. 1,361.93 Million as ''Advance towards equity'' in its books.

An extraordinary general meeting of MrL was called on 14.10.2010 to pass a resolution for issue and offer of equity shares of MrL to the Company against the above advance for shares. the Government of Himachal pradesh obtained a stay order from the High Court of Himachal pradesh and the passing of the said resolution was deferred by the High Court. Consequently the issue of equity shares against the said advance has become subjudice and dependent upon the resolution of the legal cases.

ML is earning profits in the last couple of years and has proposed dividend for the year 2013-14. It also has accumulated funds of Rs. 310.48 Million in fixed deposit pursuant to Court direction.

9. (a) Inventory of provision, Wines & others includes stock of paper, Ink etc. at year end Rs. 69.66 Million (2013 - Rs. 56.92 Million) (b) Consumption of provisions, Wines and others includes consumption of paper, Ink etc. Rs. 356.74 Million (2013 - Rs. 325.62 Million)

10. segment reporting :

There are no reportable segments other than hotels as per Accounting standard (As-17) on segment reporting.

11. the previous year''s figures have been regrouped, rearranged and reclassified wherever necessary. Amounts and other disclosures for the preceding year are included as an integral part of the current financial statements and are to be read in relation to the amounts and other disclosures relating to the current year.


Mar 31, 2013

1 EXTRAORDINARY ITEMS

L&T Bangalore Airport Hotel Limited (BAHL), a joint venture with L&T Urban Infrastructure Limited started construction of a hotel on the land alloted by Bangalore International Airport Limited (BIAL) pursuant to the Framework Agreement with them. The same had to be abandoned due to extraordinary circumstances involving refusal by Airport Authority of India (AAI) to permit the agreed height of the building as per Framework Agreement. BIAL also failed to honour their commitment to give additional land to compensate the reduction in height. BAHL went for arbitration proceedings and the Arbitral Tribunal gave the award directing BIAL to take over the incomplete building and pay compensation fixed by the Tribunal. BAHL has accounted for the award and the resultant loss in its account for the year ended 31.03.13. Consequently, there is a diminution in value of Company''s investments to the extent of Rs. 116.96 million, being loss due to extraordinary unusual events.

2. Contingent Liabilities and commitments (to the extent not provided)

(A) Contingent Liabilities not provided for in respect of :

(i) Claims against the Company pending appellate/judicial decisions not acknowledged as debts :

(a) Value Added Tax Rs. 20.08 Million (2012 - Rs. 25.92 Million)

(b) Income Tax Rs. 603.90 Million (2012 - Rs. 528.18 Million)

(c) Tax Deducted at Source Rs. 14.16 Million (2012 - Rs. 25.88 Million)

(d) Service Tax Rs. 103.71 Million (2012 - Rs. 64.03 Million )

(e) Property Tax Rs. 5.93 Million (2012 - Rs. 75.36 Million)

(f) Entertainment Tax Rs. 10.44 Million (2012 - Rs. 11.62 Million)

(g) Customs Duty Rs. 429.66 Million (2012 - Rs. 429.66 Million)

(h) Employees State Insurance dues Rs. 1.57 Million ( 2012 - Rs. 12.61 Million)

(i) Excise Duty Rs. 99.07 Million (2012 - Rs. 99.07 Million)

(j) Others Rs. 15.36 Million (2012 - Rs. 22.45 Million)

(ii) Guarantees :

a. Guarantees given to Banks & Financial Institutions for Rs. 1,089.89 Million (2012 - Rs. 1,591.00 Million) against financial facilities availed by the subsidiary companies.

b. Counter guarantees issued to banks and remaining outstanding Rs. 32.72 Million (2012 - Rs. 30.31 Million).

(B) Commitments:

a. The estimated amount of contracts remaining to be executed on capital account and not provided for net of advances Rs. 602.23 Million (2012 - Rs. 340.23 Million).

b. Investment commitment in subsidiary companies Rs. 424.63 Million (2012 - Rs. 353.92 Million)

3. Details of dues to Micro Enterprises and Small Enterprises as defined under Micro, Small & Medium Enterprises Development Act, 2006 are given below. This is based on information made available to the Company.

4. (a) Freehold/Leasehold Land of perpetual nature and Buildings at some locations were revalued on 31st March, 1982 and 31st March, 1993 resulting in a surplus of Rs. 2,863.88 Million which is included in the original cost. The valuation was carried out by an approved valuer on the basis of depreciated replacement cost. The nature of indices was not mentioned in the report. The surplus was transferred to Revaluation Reserve.

(b) Buildings include construction cost of 850 car parking spaces amounting to Rs. 292.81 Million which as per the lease agreement dated 4th May, 2001 with MMRD Authority will have to be transferred to the said Authority through a licence agreement for a licence fee of Rs. 1 per annum as a condition precedent to the lease of the land for the Company''s hotel in Mumbai known as Trident, Bandra Kurla.

5. (a) Depreciation has been provided for in the Accounts on "Straight Line Method" at the rates prescribed in Schedule XIV to the Companies Act, 1956 except for specific assets which are depreciated over the useful lives of the assets, which are not less than those prescribed under the Companies Act, 1956.

(b) Depreciation for the year as per Fixed Assets Schedule (Note-12) includes Rs. 29.99 Million (2012 - Rs. 29.99 Million) being depreciation on the increased value of building due to the effect of revaluation and, accordingly, the same has been adjusted from Revaluation Reserve Account.

6. Fixed Assets acquired under finance lease amounted to Rs. 391.32 Million (2012 - Rs. 390.41 Million) being assets acquired between 1st April, 2001 to 31st March, 2013. These include an amount of Rs. 32.74 Million (2012 - Rs. 44.32 Million ) being assets acquired during the year under finance lease and capitalised in line with the requirements of Accounting Standard (AS-19). Depreciation for the year includes an amount of Rs. 120.93 Million (2012 - Rs. 103.43 Million) being depreciation charged on these assets.

7. Disclosures in respect of Company''s operating lease arrangements entered on or after 1st April, 2001 under Accounting standard (As-19) on Leases.

a) The Company gives shops located at various hotels on operating lease arrangements. These leases are generally not non- cancellable in nature and may generally be terminated by either party by serving a notice. some shops have been given under non-cancellable operating lease, the future minimum lease payments recoverable by the company are as under:-

b) The Company has entered into operating lease arrangements primarily for office premises, site offices, airport/flight services and residential premises for its employees. these leases are generally not non-cancellable in nature and may generally be terminated by either party by serving a notice. the future minimum lease payments payable by the company for office space taken under non-cancellable operating lease, are as under:-

8. In the case of Mashobra Resort Limited ("MRL"), several disputes with the Government of Himachal Pradesh, the joint venture partner, were referred by the High Court of Himachal Pradesh on 17th December, 2003 to an arbitral tribunal consisting of a single arbitrator whose award has been challenged by both the Company and MRL, amongst others. The operation of the arbitration award has been stayed pending substantive hearing of the applications by the High Court. Consequently, the status quo ante of the entire matter stands restored to the position as on 17th December, 2003 and the hotel is being operated by MRL accordingly. The Company vide its letter dated 4th April, 2012 requested MRL to account for the entire amount of Rs. 1,361.93 Million provided to MRL upto 31st March, 2012 as ''Advance Towards Equity'', including Rs. 130.00 Million being the opening balance of ''Advance Towards Equity''. In view of the above, the Company has shown the said amount of Rs. 1,361.93 Million as ''Advance Towards Equity'' in its books.

An extraordinary general meeting of MRL was called on 14.10.2010 to pass a resolution for issue and offer of equity shares of MRL to the Company against the above advance for shares. The Government of Himachal Pradesh obtained a stay order from the High Court of Himachal Pradesh and the passing of the said resolution was deferred by the High Court. Consequently the issue of equity shares against the said advance has become subjudice and dependent upon the resolution of the legal cases.

MRL is earning profits in the last couple of years and has accumulated funds of Rs. 247.51 Million in fixed deposit pursuant to Court direction.

9. The Company has calculated its tax liability after considering Minimum Alternate Tax (MAT). MAT credit entitlement has been shown under Long Term Loans & Advances.

10. (a) Inventory of Provision, Wines & Others includes Stock of Paper, Ink etc. at year end Rs. 56.92 Million (2012 - Rs. 58.42 Million)

(b) Consumption of Provisions, Wines and Others includes consumption of Paper, Ink etc. Rs. 325.62 Million (2012 - Rs. 355.60 Million)

11. segment Reporting :

There is no reportable segment other than hotel as per Accounting standard (As-17) on segment Reporting.

a) Contingent liability that EIH Limited has incurred in relation to its interests in joint ventures and its share in each of the contingent liabilities which have been incurred jointly with other venturers :-

Guarantees given to Banks & Financial Institutions for Rs. nil (2012 - Rs. 610.00 Million) against financial facilities availed by the jointly controlled entities.

b) EIH Limited''s share of the contingent liabilities of the joint ventures themselves: Rs. 141.55 Million (2012 - Rs. 12.98 Million)

c) EIH Limited is not liable for the liabilities of the other venturers of any joint venture.

d) EIH Limited has a capital commitment for Rs. 260.20 Million (2012 - Rs. nil) in relation to its interest in joint ventures and there are no other capital commitments that have been incurred jointly with other venturer.

e) EIH Limited''s share of capital commitments of the joint ventures themselves amounts to Rs. 171.05 Million (2012 - Rs. 162.18 Million).

12. The previous year''s figures have been regrouped, rearranged and reclassified wherever necessary. Amounts and other disclosures for the preceding year are included as an integral part of the current financial statements and are to be read in relation to the amounts and other disclosures relating to the current year.

 
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