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Directors Report of Fomento Resorts & Hotels Ltd.

Mar 31, 2014

Dear members,

The Board of Directors of your Company takes pleasure in presenting the Forty Third Annual Report on business and operations of your company along with Audited Financial Statements and Statement of Cash Flow for the year ended March 31, 2014.

1. Financial Results and Appropriation

Particulars (Rs. in Lakhs) (Rs. in Lakhs)

For the year ended For the year ended 31/03/2014 31/03/2013

Income 5217.19 4949.00 Operating Expenses 3511.26 3343.49 Gross Operating Profit 1705.93 1605.51

Less: Interest and Financial Charges 22.02 21.83 Depreciation 372.04 354.42

Profit before tax 1311.87 1229.26

Less : Provision for tax

Current 507.56 402.97 Deferred (net) (11.40) (13.52)

Profit/(Loss) after tax 815.71 839.81

Add Surplus/ (Deficit) brought forward 3645.85 3077.22 from the previous year

Profit available for appropriation 4461.56 3917.03

Appropriations

a) General Reserve 81.57 83.98 b) Dividend 160.00 160.00 c) Tax on Dividend 27.19 27.19 d) Balance carried to Balance Sheet 4192.80 3645.86

Total 4461.56 3917.03

Earnings per share (Rs.) 5.10 5.25

2. Operations Review:

Your Directors are pleased to report that inspite of persistent inflation and steep competition, your Company achieved a higher turnover of Rs. 5217.19 lakhs as compared to Rs. 4949.00 lakhs in the previous year. On account of increased wedding events and increase in other revenue, the profit margin of the Company was improved. The Company earned a higher pre-tax profit of Rs. 1311.87 lakhs for the year under review as against Rs. 1229.26 lakhs in the previous year.

3. Dividend:

Your Directors have recommended for your consideration the payment of dividend of Re.1/- per share for the year ended March 31, 2014, (i.e. @ 10% on the paid up equity capital) to be paid, if approved by members at the Forty Third Annual General Meeting.

4. Directors'' Responsibility Statement

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Board hereby confirm that:

a) In the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departure;

b) The Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2014 and the profit of the Company for that period;

c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d) The Directors had prepared the annual accounts on a going concern basis.

5. Directors:

Consequent upon coming into force the provisions of Section 149 of the Companies Act, 2013 (effective April 1, 2014) "Act" and also amended clause 49 of the Listing Agreement (to be effective from 1.10.2014) "Listing Agreement", relating to appointment of Independent Directors, the Board of Directors of your Company had re-assessed the status of its Directors with a view to determine the qualification for classification as Independent Directors in terms of Section 146(6) of the Act and amended clause 49 of the Listing Agreement. Mr. Jamshed Delvadavala, Mr. Reyaz Mama and Mr. V. P. Raikar severally fulfils the criteria laid down in Section 149 of the Act and also amended clause 49 of the Listing Agreement. The said Section 149 of the Act and amended clause 49 of Listing Agreement also restricts the tenure of an Independent Director to two terms of upto ten years with a single term not exceeding five years. In compliance with the provisions of Section 149 of the Act and amended clause 49 of Listing Agreement it is proposed to appoint Mr. Jamshed Delvadavala ,Mr. Reyaz Mama and Mr. V. P. Raikar as Independent Director to hold office for consecutive five years for a term upto 31st March, 2019.

The Company has received notices in writing under the provision of Section 160 of the Act from members along with deposit of the prescribed amount signifying their intention to propose the appointment of Mr. Jamshed Delvadavala, Mr. Reyaz Mama and Mr. V P. Raikar as Independent Directors at the forthcoming Annual General Meeting.

To comply with the provisions of the Act and Articles of Association of the Company, Mr. Auduth Timblo shall retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment.

6. Management Discussion And Analysis Report

The Management Discussion and Analysis Report for the year under review, as stipulated under clause 49 of the Listing Agreement with the Stock Exchanges, is given separately and forms part of this Annual Report.

7. Corporate Governance

A report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. A Certificate from the Auditors of the Company, confirming compliance with the provisions of Corporate Governance, is attached to this Annual Report.

8. Statutory Auditors

The Auditors, M/s. H. K. Aparanji, Chartered Accountants, retire at the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept office, if re-appointed.

9. Stake Sale by Promoters pursuant to statutory requirements:

SEBI vide its circulars dated December 16, 2010 and February 8, 2012 and the amended Clause 40A of the Listing Agreement mandated the minimum public shareholding in any listed company at 25% and provided various methods to raise such public shareholding to the prescribed level of 25% before the time limit of June, 2013.

After the Offer for Sale in May, 2013 through Stock Exchange Mechanism of Bombay Stock Exchange Limited, 32,68,500 Equity Shares of one of the Promoter Mrs. Anju Timblo were sold, thereby reducing the total Promoters'' shareholding in the Company below the statutory ceiling.

10. Technology Absorption and Conservation of Energy

The Company is in hospitality industry and as such provision of Section 217(1)(e) of The Companies Act, 1956 regarding technology absorption is not applicable.

The Company constantly upgrades conserving energy equipments by installing solar panels, CFL and new LED products. This results in substantial saving in consumption of electricity. The Company is also upgrading its old machinery which is resulting in saving of energy.

12. Foreign Exchange Earnings and Outgo

Total foreign exchange earnings and outgo is stated in Notes forming part of the Financial Statements.

13. Employees

Relations between the management and the employees were cordial throughout the year. Your Directors are pleased to record their appreciation of the devotion and sense of commitment shown by all the employees in the organisation.

None of the employees are covered by the provisions contained under section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules, 1975.

14. Acknowledgements

Your Directors gratefully acknowledges the support and goodwill extended by the Government of Goa, Central Government, Other Regulatory Authorities, Company''s Bankers, Vendors, Tour Operators, Travel Agents, Valued Guests and Esteemed Shareholders.

For and on behalf of the Board of Directors

Anju Timblo V. P. Raikar Managing Director Director

Place: Vainguinim Beach - Goa Date : May 30, 2014


Mar 31, 2013

Dear Members,

The Directors are pleased to present the 42nd Annual Report and the Audited Accounts of the Company for the year ended 31st March 2013.

1. FINANCIAL RESULTS (Rs. in Lakhs) (Rs. in Lakhs) For the year ended For the year ended 31/03/2013 31/03/2012

Income 4949.00 4925.18

Operating Expenses 3343.49 3718.16

Gross Operating Profit 1605.51 1207.02

Less:

Interest and Financial Charges 21.83 65.60

Depreciation 354.42 321.80

Profit before tax 1229.26 819.62

Less : Provision for tax

Current 402.97 296.00

Deferred (net) (13.52) (36.89)

Profit/ (Loss) after tax 839.81 560.51

Add Surplus/(Deficit) brought forward 3077.22 2758.72 from the previous year

Profit available for appropriation 3917.03 3319.23

Appropriations

a) General Reserve 83.98 56.05

b) Dividend 160.00 160.00

c) Tax on Dividend 27.19 25.96

d) Balance carried to Balance Sheet 3645.86 3077.22

Total 3917.03 3319.23

Earnings per share (Rs.) 5.25 3.50

During the financial year under review, the Company''s total Revenue is Rs. 4949 Lakhs as against Rs. 4925 Lakhs in the previous year. Net profit after providing for depreciation and taxation stood at Rs. 840 Lakhs as against Rs. 561 Lakhs last year. This increase in profit is attributed as no major repair and maintenance undertaken as compared to previous year and also on account of decrease in expenses for salary and wages mainly due to excess turnover of staff in management and non management cadres.

1. OUTLOOK

Goa has registered guest arrival of 27.8 lakhs in 2012 - 13 including 4.5 lakhs foreigners as against 26.7 lakhs is 2011-12 including 4.45 lakhs foreigners showing growth of 4.4 % in the arrival.

More international brand hotels have come up in the 3 - 5 star levels increasing the room base. More hotels are likely to open around Panaji with a rise in the Casino business (off shore).

The premium (5-star and 5-star deluxe) hotels industry can experience tough times with profitability likely to suffer due to a fall in occupancy as well as room rates and rising costs of airfare and travels across India. Clients still find Asian and European destinations cheaper than Goa. Euro Zone crisis will continue to affect the foreign business. On other hand with dollar getting stronger there can be an increase in the domestic traffic.

Rising costs will add to the pressure on profitability. A shortage of personnel will increase employee costs, whereas energy costs are also expected to rise significantly.

There is a need for the Government to prioritise building infra- structure traffic and reduce fiscal burdens on tourism to raise the potential of Goan tourism business.

It will be a continuous endeavor from management to keep innovating to reduce costs and raise profit margins to keep the product upgraded, contemporary and people to be updated in their training skills.

Key Risks:

a) Terrorism acts: Due to the unrest all over the world on account of terrorism, many countries issued travel warnings to their citizens, advising them against traveling to India. Considering the elasticity of demand in this industry, such acts of terrorism impact the sentiments and inflow of tourists into the country.

b) Competition from South Asian countries: Many South Asian countries are now consciously trying to increase their tourism activities by offering world-class facilities at highly competitive prices. These destinations pose threat to the Goan leisure hotels.

c) Employees Hiring & Training: Because of high employee turnover, it becomes imperative to train the personnel to attain required skill. This is being continuous process, the Company expects lot of pressure on hiring & training human resource resulting into rise in cost.

2. DIVIDEND

Your Directors are pleased to recommend a dividend of 10% which is Re. 1/- per equity share on the face value of Rs. 10/- each.

3. AUDITORS

Auditors of the company, M/s. H. K. Aparanji, will retire as auditors of the Company and being eligible offers themselves for re-appointment.

4. FOREIGN EXCHANGE EARNINGS AND OUTGO

As required under Section 217(1) (e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosures of particulars in the report of Board of Directors) Rules 1988, the information relating to foreign exchange earnings and outgo is given in the Notes to the statement of Profit and Loss and Balance Sheet.

5. TECHNOLOGY ABSORPTION

The Company being in the hospitality industry, technology developments connected with industry are adopted.

6. CONSERVATION OF ENERGY

Solar Panels are used for generating hot water consumed by the Central kitchen thereby reducing the diesel consumption of the main boiler. Wherever feasible, the incandescent lamps have been replaced by CFL''s. We are also aiming at the next stage of going for LED Lighting in phases.

7. PARTICULARS OF EMPLOYEES

None of the employees are covered by the provisions contained under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

8. DIRECTORS

Mr. Shardul Thacker, Mr. P.G. Kakodkar and Mr. Auduth Timblo Directors retire by rotation and being eligible, offers themselves for reappointment at the ensuing Annual General Meeting.

9. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm that:

a) In the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departure;

b) The Directors had selected such accounting policies and applied them consistently and made judgment and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31s'' March, 2013 and the Profit of the company for that period;

c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d) The Directors had prepared the annual accounts on a going concern basis.

10. CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with Stock Exchanges a report on Corporate Governance along with Auditors Certificate on its compliance is annexed forming part of the Annual Report.

Clause 40Aof the Listing Agreement mandates minimum 25% Public share holding. In order to comply, promoters have communicated to the Company that they will be selling their holding through Stock Exchange. Transaction through Stock Exchange can be done only in dematerialisation format. Company has already taken steps to dematerialise its shares. Matter has been already taken up with NSDL and CDSL.

11. APPRECIATION FOR BANKS

The Company would like to express its appreciation for the support and assistance rendered during the year by the Banks namely IDBI Bank Ltd., HDFC Bank Ltd., ICICI Bank Ltd.

12. EMPLOYEES

Your Directors are pleased to record their appreciation of the devotion and sense of commitment shown by the employees in the organization.

13. ACKNOWLEDGEMENT

Board of Directors gratefully acknowledge the support and goodwill extended by Government of Goa, Central Government, Commercial Banks, Tour Operators, Travel Agents, Valued Guests and Esteemed Shareholders.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

Sd/- Sd/-

JAMSHED DELVADAVALA V. P. RAIKAR

DIRECTOR DIRECTOR

PLACE: MUMBAI

DATE: 29 MAY, 2013


Mar 31, 2010

The Directors are pleased to present the Thirty Ninth Annual Report and the Audited Accounts of the Company for the year ended 31st March, 2010.

1. FINANCIAL RESULTS

For the year ended For the year ended

31/03/10 31/03/09

(Rs. In 000) (Rs. In 000)

Income 424776 445299

Operating Expenses 289679 308277

Gross Operating Profit 135097 137022

Less :

Interest and Financial Charges 1886 2922

Depreciation 28509 26748

Profit before tax 104702 107352

Less : Provision for tax

Current 37080 38925

Deferred (net) (2152) (1128)

Profit / (Loss) after tax 69774 69555

Add Surplus / (Deficit) brought forward

From the previous year. 204048 16928

Profit available for appropriation 273822 239083 Appropriations

a) General Reserve 6977 6956

b) Dividend 24000 24000

c) Tax on Dividend 4079 4079

d) Balance Carried to Balance Sheet 238766 204048

273822 239083

During the Financial year under review, the Companys total revenue was Rs. 4248 lakhs which represents decrease of 5% compared to the previous year Rs. 4453 lakhs. The operating profit for the year is Rs.1351 lakhs as against Rs. 1370 lakhs previous year. The revenue is down by 203 lakhs profit has come down by 19 lakhs. This indicates overall better cost control.

OUTLOOK:

Overall business environment in the country has been changing. Along with this, the Goan hotel industry is also witnessing emergence of few key trends:

1. Domestic travellers: Domestic travellers have long been ignored by the hotels in Goa. With lower propensity to spend, they bargain hard. In the past few years, their perception of money is, however, undergoing a tectonic shift with rise in the educated, middle class with disposable incomes. This, in turn, is driving domestic tourism in Goa for the last two years and is likely to rise by 12% this year too. This segment will remain to be the best contributor of occupancies and average revenues.

2. Emerging MICE (Meeting, Incentives, Conferences & Exhibitions) and Destination weddings opportunity: Convention or meetings or destination weddings accounts for over 30% of our occupancies. A well planned strategy has been put in place to tap these clients. The average spend of these clients can sometimes be more than a FIT segment (Foreign Individual Travellers).

3. Key Risks

1. Terrorism acts: Following the event of 26/11, many countries issued travel warnings to their citizens, advising them against traveling to India. Considering the elasticity of demand in this industry, such acts of terrorism impact the sentiments and inflow of tourists into the country.

2. Competition from South Asian countries: Many South Asian countries are now consciously trying to increase their tourism activities by offering world-class facilities at highly competitive prices. These destinations pose threat to the Goan leisure hotels.

3. Employee cost: Employee cost is the largest cost component in the overall cost structure. With more 2 additional 5 star hotels in Goa (Hyatt and Radisson) we expect a lot of pressure on hiring and retaining trained manpower.

2 DIVIDEND

Your Directors are pleased to recommend a dividend of 15% which is Rs. 1.5 per equity share of the face value of Rs. 10/- each.

3. AUDITORS

Auditors of the company, M/s. H. K. Aparanji, will retire as auditors of the Company and being eligible offers themselves for re-appointment.

As regards comments of the Auditors in the annexure to their report, note 8 of notes forming part of Accounts is self explanatory.

4. FOREIGN EXCHANGE EARNINGS AND OUT GO

As required under Section 217 (1) (e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosures of particulars in the report of Board of Directors) Rules 1988, the information relating to foreign exchange earnings and outgo is given in the Notes to the Profit and Loss Account and Balance Sheet.

5. TECHNOLOGY ABSORPTION :

The Company being in the hospitality industry, technology developments connected with industry are adopted. Latest highly efficient centrifugal chiller for central air condi- tioning of the Hotel has been installed in 2009 replacing the earlier unit with high power consumption.

6. CONSERVATION OF ENERGY

Solar Panels are used for generating hot water consumed by the Central kitchen thereby reducing the diesel consumption of the main boiler.

Wherever feasible, the incandescent lamps have been replaced by CFLs. We are also aiming at the next stage of going for LED Lighting in phases.

7. PARTICULARS OF EMPLOYEES

None of the employees are covered by the provisions contained under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

8. DIRECTORS

Mr. V. P. Raikar, Mr. P. G. Kakodkar and Mr. Raghunandan Maluste, Directors retire by rotation and being eligible, offers themselves for reappointment at the ensuing Annual General Meeting.

9. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm that:

a. In the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departure;

b. The Directors had selected such accounting policies and applied them consistently and made judgment and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2010 and of the profit of the Company for the year ended 31st March, 2010.

c. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act,1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d. The Directors had prepared the annual accounts on a going concern basis.

10. CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreements with Stock Exchanges a report on Corporate Governance along with Auditors Certificate on its compliance is annexed forming part of the Annual Report. Clause 40A of Listing Agreement mandates minimum 25% Public Shareholding.

Issue of new shares is not in the interest of existing share holders as company does not have new project or expansion where funds generated by issue of new shares can be invested. In this process share base will increase and EPS and Dividend rate will be diluted. Thus it is not in the interest of existing public share holders. Therefore promoter / Company decided to follow Delisting Regulation 2009 and give exit opportunity to public shareholders by opting voluntary delisting.

1. As required under Regulation 8(1) (a) Board of Directors passed resolution giving approval for delisting.

2. Approval of the share holders of the Company by Special Resolution through postal ballot was obtained.

Votes cast by public shareholders in favour of the proposal are less than two times the votes cast against it.

Company sought guidance from Bombay Stock Exchange as to how the fair value can be paid to the share holders who are willing to exist and delist the company.

11. APPRECIATION FOR BANKS

The Company would like to express its appreciation for the support and assistance rendered during the year by the Banks namely:-

1.IDBI Bank Ltd.

2. HDFC Bank Ltd.,

3. ICICI Bank Ltd.,

12. EMPLOYEES

Your Directors are pleased to record their appreciation of the devotion and sense of commitment shown by the employees in the organization.

13. ACKNOWLEDGEMENT

Board of Directors gratefully acknowledge the support and goodwill extended by Government of Goa, Central Government, Commercial Banks, Tour Operators, Travel Agents, Valued Guests and esteemed Shareholders.



For and on behalf of the Board of Directors

ANJU TIMBLO V. P. RAIKAR

MANAGING DIRECTOR DIRECTOR

Place : Vainguinim Beach, Goa.

Date: 28th July, 2010

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