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Directors Report of Hotel Leela Venture Ltd.

Mar 31, 2015

Dear Members,

The Directors present the 34th Annual Report on business and operations of your Company, together with the audited accounts for the year ended March 31,2015.

1. Financial Performance

The financial performance of the Company during the year under review is summarised below:

Rs. Lakhs

Financial Year Financial Year 2014-15 2013-14

Revenue from operations and other 76,200.72 76,817.62 income

Operating and other expenses 61,122.72 57,323.95

Earnings before interest, 15,078.00 19,493.67 depreciation, taxes and amortisation (EBIDTA)

Exceptional items 18,327.76 -

Interest 19,757.65 50,163.00

Depreciation 24,009.69 18065.31

Profit/(Loss) before tax (47,017.10) (48,734.64)

Provision for taxes / deferred tax (5,429.36) (4587.45)

Profit/(Loss) after tax for the year (41,587.74) (44,147,19)

Balance brought forward (54,841.65) (10,694.46)

Amount available for appropriation (96,429.39) (54,841.65)

Appropriations - -

Balance carried to Balance Sheet (96,429.39) (54,841.65)

EPS - basic and diluted (in Rs. (9.06) (10.15)

2. Dividend

In view of losses, the directors do not recommend any dividend for the financial year ended 31st March, 2015

3. Subsidiary Companies, their performance and financial position

During the financial year, the Company transferred Leela Realty Limited, a small non-material subsidiary, to a promoter group company, viz. Leela Lace Holdings Private Limited for a consideration, determined on the basis of the net-worth of the subsidiary as on 1st January, 2015.

As on March 31,2015, your Company has one Subsidiary, viz. Leela Palaces and Resorts Limited (a wholly owned subsidiary or WOS). The WOS incurred a loss of Rs. 8.51 lakhs during the financial year 2014-15.

The WOS did not carry out any operations during the financial year 2014-15. The outstanding advances / loans of the Company of Rs. 5,702.82 lakhs has been converted into the equity shares after due approvals. The WOS is being proposed to be transferred by way of transfer of shares, for which the approval of the Company's shareholders has already been obtained. The WOS has also initiated the process of renewal of relevant regulatory approvals for construction.

The Company has not attached the Balance Sheet, Profit and Loss Account and other documents of the above subsidiary company with the Annual Report of the Company in terms of general exemption circular notified by the Ministry of Corporate Affairs, Government of India.

However, the Company will make available these documents upon request by any member of the Company interested in obtaining the same. Further, these documents will also be available at the Registered Office of the Company for inspection by any member of the Company.

A Statement containing the salient features of the financial statement of subsidiaries in Form AOC-I (pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014) is attached to this report as Annexure-I. The audited financial statements and related information of subsidiaries are also available on Company's website at www. theleela.com.

The Audited Consolidated Financial Statements, prepared in accordance with the Accounting Standard 21 and Clause 32 of the Listing Agreement, form part of this Annual Report.

4. Directors' Responsibility Statement

Pursuant to the requirement under Section 134 of the Companies Act, 2013, the Directors, based on the information and representations received from the operating management, hereby confirm that:

(a) in the preparation of the annual accounts for the financial year ending 31st March, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss 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 this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

5. Amendment of Memorandum and Articles of Association

During the financial year under review, the Company has amended its Main Object Clause of the Memorandum of Association pursuant to the approval granted by the shareholders through a postal ballot, to enable the Company to carry on the additional business of building serviced residences, mixed use complexes with hotels, commercial, retail and residential properties, etc. The Company proposes to follow this strategy in some of the hotels that may be built in future and also in the Leela Palace, Delhi where additional FAR is available. Some of the developers of residential properties have approached the Company for the Company's association with such projects and also for branding such residences with "the Leela" name and the Company is evaluating such proposals.

To meet the requirements under the Section 4(1)(c) of the Companies Act, 2013, some of the clauses in Memorandum of Association of the Company were also amended, consolidated and renumbered wherever deemed necessary. The Company has also adopted new Articles of Association in compliance with Table "F" of Schedule I of the Companies Act, 2013, pursuant to the approval granted by the shareholders through a postal ballot.

6. Directors

Your Company has Fourteen (14) Directors consisting of Seven (7) Independent Directors, Four (4) Non-executive Directors and Three (3) Whole-time Directors as on March 31,2015.

Independent and Non-Independent

In terms of the definition of 'Independence' of Directors as prescribed under Clause 49 of the Listing Agreement entered with Stock Exchanges and Section 149(6) of the Companies Act, 2013 and based on the confirmation / disclosures received from the Directors, the following Non-Executive Directors are Independent Directors:-

(i) Mrs. Anna Malhotra

(ii) Dr. K. U. Mada

(iii) Mr. Vijay Amritraj

(iv) Mr. Anil Harish

(v) Mr. M. Madhavan Nambiar

(vi) Mr. R. Venkatachalam

(vii) Mr. Vikram Singh Mehta

Woman Director

In terms of the provisions of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a company shall have at least one Woman Director on the Board of the company. Your Company is in compliance of the same.

Whole-time Directors

The present tenure of Mr. Vivek Nair, Chairman & Managing Director, Mr. Dinesh Nair, Co-Chairman & Managing Director shall expire on 31st March, 2016 and the tenure of Mr. Krishna Deshika, Director - Finance & CFO shall expire on 16th January, 2016.

The Board of Directors of the Company at their meeting held on 27th May, 2015 has unanimously approved their re-appointment and remuneration subject to the approval of the shareholders. Accordingly, the approval of shareholders is being sought for their re-appointment and remuneration for a period of 5 years.

Appointments / Resignations from the Board of Directors

Mr. Venu Krishnan, Deputy Managing Director, resigned from the services of the Company with effect from 31st July, 2014. He had been with the Leela Group since 1987 and with the Company from April 2007. The Board places on record the valuable contributions rendered by Mr. Venu Krishnan during his tenure with the Company.

Mr. Indur Kirpalani retired by rotation at the last Annual General Meeting held on 18th September, 2014. The Board places on record their appreciation of the contributions made by him.

Upon assigning of debts to Asset Reconstruction companies by the CDR lenders, State Bank of India and Syndicate Bank withdrew their nominees from the Board of the Company. Accordingly, Mrs. Uttara Dasgupta, Nominee of State Bank of India and Mr. T. Ravindranath, nominee of Syndicate Bank, resigned from the Board with effect from 11th August, 2014. The Board places on record the valuable contributions rendered by Mrs. Uttara Dasgupta and Mr. T. Ravindranath during their tenure with the Company.

Mr. V. P. Shetty and Mr. Anil R. Bhatia joined the Board as nominees of JM Financial Asset Reconstruction Company Private Limited with effect from 11th August, 2014 and their appointments have been approved by the Members at the last Annual General Meeting.

In terms of Section 149 of the Companies Act, 2013, the Members at the last Annual General held on 18th September, 2014 have appointed Mrs. Anna Malhotra, Dr. K. U. Mada, Mr. Vijay Amritraj, Mr. Anil Harish and Mr. M. Madhavan Nambiar as Independent Directors for a term of five consecutive years, upto 31st March, 2019 and Mr. Vikram Singh Mehta and Mr. R. Venkatachalam, who joined the Board as independent Directors with effect from 11th August, 2014 for a term of five years upto 10th August, 2019. The Company has received confirmation from the independent directors that they continue to meet the criteria to be independent directors of the Company. They are not liable to retire by rotation.

Directors Retiring by Rotation

In accordance with the Section 152 of the Companies Act, 2013, two thirds of the Board, excluding independent directors, should be of directors retiring by rotation. The Company has four non-executive directors and one executive Director who are liable to retire by rotation and two executive directors who are not liable to retire by rotation in terms of their appointment.

Mr. Krishna Deshika, being longest in the office, retires by rotation at the forthcoming Annual General Meeting and has offered himself for reappointment. The Board recommends his re-appointment.

7. Number of Meetings of the Board

Regular meetings of the Board are held to discuss and decide on various business policies, strategies and other businesses. The schedule of the Board/ Committee meetings to be held in the forthcoming financial year is being circulated to the Directors in advance to enable them to plan their schedule for effective participation in the meetings.

The Board met five (5) times during the FY 2014-15 viz. on 27th May, 2014, 11th August, 2014, 18th September, 2014, 5th November, 2014 and 12th February, 2015. Detailed information on the meetings of the Board is included in the report on Corporate Governance, which forms part of this Annual Report.

Additionally, several committee meetings were held including Audit Committee meeting, which met four (4) times during the year.

8. Committees of the Board

The Company has several committees, which have been established as a part of the good corporate governance practices and in compliance with the requirements of the relevant provisions of applicable laws and statutes. The Company has following Committees of the Board:

(i) Audit Committee

(ii) Nomination and Remuneration Committee

(iii) Stakeholders Relationship Committee

(iv) Finance Committee

(v) Assets Sale Committee

The details with respect to the compositions, powers, roles, terms of reference, etc. of statutory committees are given in details in the 'Report on Corporate Governance' of the Company which forms part of this Annual Report.

9. Performance Evaluation of the Board

The Nomination and Remuneration Committee at its meeting held on 12th February, 2015 and the Board of Directors at its meeting held on the same day, had laid down criteria for performance evaluation of Directors, Executive Directors and Key Management Personnel and Board Level Committees and Board as a whole and also the evaluation process for the same.

10. Key Managerial Personnel

Mr. Vivek Nair, Chairman & Managing Director, Mr. Dinesh Nair, Co-Chairman & Managing, Mr. Krishna Deshika, Director - Finance & CFO and Mr. Dinesh Kalani, Company Secretary of the Company are the Key Managerial Personnel as per the provisions of the Companies Act, 2013 and were already in office before the commencement of the Companies Act, 2013

11. Management's Discussion and Analysis

A detailed review of the operations, performance and future outlook of the Company and its businesses is given in the Management's Discussion and Analysis, which forms part of this Report as Annexure.

12. Corporate Governance

Your Company is committed to achieve the highest standards of Corporate Governance and adheres to the Corporate Governance requirements set by the Regulators/applicable laws. Accordingly, your Board functions as trustees of the shareholders and seeks to ensure that the long term economic value for its shareholders is achieved while balancing the interest of all the stakeholders.

A separate section on Corporate Governance standards followed by your Company, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is enclosed as an Annexure to this report. The report on Corporate Governance also contains certain disclosures required under the Companies Act, 2013.

A Certificate from M/s. V. Sundaram & Co., Practicing Company Secretaries, confirming compliance to the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement, is annexed to the Report on Corporate Governance.

13. Vigil Mechanism

The Company has implemented a Whistle Blower Policy pursuant to which Whistle Blowers can raise concerns relating to Reportable Matters (as defined in the policy) such as fraud, bribery, corruption, illegality, health & safety, environmental issues and wastage/ misappropriation of Company funds/ assets, etc. Further, the mechanism adopted by the Company encourages the Whistle Blower to report genuine concerns or grievances and provides for adequate safeguards against victimization of Whistle Blower who avail of such mechanism. The vigil mechanism also provides direct access to the Members of the Audit Committee, including the Chairperson of the Audit Committee. The functioning of the Vigil mechanism is reviewed by the Audit Committee from time to time.

None of the Whistle Blowers have been denied access to the Audit Committee of the Board. The Whistle Blower Policy is available on the website of the Company (www.theleela.com/investor-relations).

14. Risk Management Policy

The Board has approved a Risk Management Policy, wherein all material risks faced by the Company are identified and assessed. For each of the Risks identified in the policy, corresponding controls are assessed and policies and procedure are put in place for monitoring, mitigating and reporting risk on a periodic basis.

15. Contracts or Arrangements with Related Parties

Your Company undertakes various transactions with related parties in the ordinary course of business. All Related Party Transactions entered during the year were in Ordinary Course of the Business and on Arm's Length basis. No Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements, were entered into during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Companies Act, 2013 in Form AOC 2 is not applicable.

There were no materially significant related party transactions with the Promoters, Directors and Key Managerial Personnel, which may have a potential conflict with the interest of the Company at large.

The Policy on materiality of related party transactions and also in dealing with related party transactions as approved by the Audit Committee and the Board is available on the website of the Company at www.theleela.com/ investor-relations.

Your Directors draw attention of the members to Note No.31.10 to the standalone financial statements, which set out related party disclosure.

16. Internal Financial Control Systems and their adequacy

The Company had laid down a set of standards, processes and structure which enables implementation of internal financial control across the organisation and ensure that the same are adequate and operating effectively.

The internal financial controls with reference to the Financial Statements are commensurate with the size and nature of business operations of the Company.

17. Auditors

(a) Statutory Auditors and Auditors' Report

M/s. Picardo & Co., Chartered Accountants, will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for reappointment. The Company has received the consent and confirmation to the effect that they are not disqualified to be appointed as the Auditors of the Company in terms of the provisions of the Companies Act 2013 and rules made thereunder. Accordingly, the Board of Directors has recommended the re-appointment of M/s. Picardo & Co., Chartered Accountants, as the Statutory Auditors of the Company to hold office from the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting.

During the period under review, even though there is no audit qualification, there is an audit observation in the financial statements. The explanation for the same has been provided in Note no 31.3 of the standalone Financial Statements. The said notes are self-explanatory and do not call for any further comments.

(b) Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 of the Companies Act 2013, the Company had appointed M/s. V. Sundaram & Co., Practicing Company Secretaries, as its Secretarial Auditors to conduct the secretarial audit of the Company for the FY 2014-15. The Report of Secretarial Auditor for the FY 2014-15 is annexed to this report as Annexure - II. There is no Audit Qualification in the Secretarial Audit Report.

18. Material Changes and Commitment affecting Financial Position of the Company

There are no material changes and commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company i.e. 31st March, 2015 and the date of the Directors' report i.e. 27th May, 2015.

19. Employee Remuneration

(A) The ratio of the remuneration of each director to the median employee's remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are furnished in Annexure forming part of this report as Annexure III.

(B) The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report. In terms of Section 136 of the Companies Act, 2013 the same is open for inspection at the Registered Office of the Company. Copies of this statement may be obtained by the members by writing to the Company Secretary.

20. Corporate Social Responsibility (CSR)

In terms of Section 135 of Companies Act, 2013, certain companies have to carry out CSR activities as prescribed. Since the Company does not fall within the criteria of turnover and/or profit, due to continuous losses over the last three financial years, the Company has not formed a CSR Committee.

However, the Company continues to undertake CSR activities in a consistent manner for the benefit of the local communities near to its hotel properties and the details of such initiatives are disclosed separately in this Annual Report.

21. Fixed Deposits

During the year, the Company has not accepted any deposits from the public or from the shareholders.

22. Energy Conservation, Technology Absorption, Foreign Exchange Earnings and Outgo and Other Disclosures

(i) The disclosures to be made under sub-section (3) (m) of Section 134 of the Companies Act 2013 read with Rule (8)(3) of the Companies (Accounts) Rules, 2014 by your Company are furnished below:

(a) Conservation of Energy

Energy Conservation, sustainability and efforts to make the properties more "Green" have been the main drive throughout the year. Major efforts/steps taken towards this are:

* Energy efficient lighting and high efficiency HVAC systems used / retrofitted extensively in all hotels, has reduced electrical consumption.

* Computerized Power Monitoring is implemented in all properties on gradual basis to monitor and control power consumption.

* Main chiller plants and steam boilers have been tuned for best efficiency to conserve energy.

* Building management system installation and electricity distribution systems equipped with power factor correction panel monitors that controls energy wastage of equipment.

* Hotels are equipped with solar geysers for generating hot water and the rooms are equipped with energy saving devices during non-occupancy.

* STP treated water and Rain Water Harvesting has been implemented at four hotels.

* The Company has 23 windmills with a capacity of 13.5 MW power, in the State of Maharashtra (4.5 MW), Karnataka (5 MW) and Tamil Nadu (4 MW). Windmills continue to produce renewable energy for use in own hotels.

(b) Technology Absorption:

In the opinion of the Board, the required particulars pertaining to technology absorption under Section 134 of the Companies Act, 2013 read with Rule 8(B) of the Companies (Accounts) Rules, 2014, are not applicable, as hotel is service industry and the Company does not have any significant manufacturing operations.

(c) Foreign Exchange Earnings and Outgo:

The foreign exchange earnings of the Company during the year stood at Rs. 33,937.37 lakhs (previous year Rs. 27,525.59 lakhs) and foreign exchange outgo during the year stood at Rs. 3,386.60 lakhs (previous year Rs. 3,962.63 lakhs).

(ii) No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

(iii) Number of cases filed, if any, and their disposal under Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

Your Company has zero tolerance towards any action on the part of any executive which may fall under the ambit of 'Sexual Harassment' at workplace, and is fully committed to uphold and maintain the dignity of every women employee working in the Company. The Company's Policy provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints. During the year, no scuh cases were reported.

23. Extract of Annual Return

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 ofthe Companies Act 2013, read with Rule 12 ofthe Companies (Management and Administration) Rules, 2014 the extract of the Annual Return as at March 31,2015 forms part of this report and the same is attached to this report as Annexure-lV.

24. Unclaimed / unexchanged Equity Shares in the Company

In compliance with the Clause 5A, the Company has transferred 25,98,970 unclaimed equity shares belonging to 4330 shareholders lying with the Company to "Unclaimed Share Suspense Account" in May, 2015.

The voting rights on the shares in the suspense accounts shall remain frozen till the rightful owners of such shares claim the shares.

25. Acknowledgements

The Board wishes to place on record its appreciation for the assistance and support received from all the lenders, government and regulatory authorities, customers, business associates and vendors.

Your directors take this opportunity to express their sincere thanks to all the shareholders and stakeholders for the faith and confidence reposed in the Company and the management.

Your directors attribute immense importance to the contribution of the family of staff and sincerely thank "The Leela" team for sharing the Company's vision and philosophy and for the dedication and commitment in ensuring that the Company remains in the forefront of competitive industry as one of the finest Hotel Groups in lndia.

For and on behalf of the Board of Directors

Vivek Nair Chairman & Managing Director

Mumbai, 27th May, 2015


Mar 31, 2014

Dear Members,

The Directors hereby present the 33rd Annual Report of the Company, along with Audited Accounts for the financial year ended 31st March, 2014.

1. Financial Results

The financial performance during the year under review is summarised below:

Rs.Lakhs

Financial Year Financial Year 2013-14 2012-13

Revenue from operations and other 76,817.62 65,140.65 income

Operating and other Expenses 57,323.95 53,790.07

Earnings before interest, Depreciation, 19,493.67 12,264.68 Taxes and Amortisation (EBIDTA)

Interest 50,163.00 40,534.25

Depreciation 18,065.31 13,867.33

Profit/(Loss) before tax (48,734.64) (42,136.90)

Provision for taxes / deferred tax (4,587.45) 1,208.91

Profit/(Loss) after tax for the year (44,147,19) (43,345.81)

Balance brought forward (10,694.46) 32,651.35

Amount available for appropriation (54,841.65) (10,694.46) Appropriations

Balance carried to Balance Sheet (54,841.65) (10,694.46)

EPS - basic and diluted (in Rs.) (10.15) (10.82)

2. Dividend and Transfer of amounts to Investor Education and Protection Fund

In view of losses, the directors do not recommend any dividend for the financial year ended 31st March, 2014.

During the year under review, the Company has credited Rs. 7.02 lakhs, lying in the unpaid / unclaimed dividend accounts for the financial year 2005-06, to the Investor Education and Protection Fund (IEPF) pursuant to Section 205C of the Companies Act, 1956 read with the Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001.

Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company on the website of the Ministry of Corporate Affairs.

3. Corporate Debt Restructuring

The Company had restructured its debts under the Corporate Debt Restructuring (CDR) mechanism. The status of implementation is explained in the relevant section in the Management''s Discussion and Analysis Report.

4. Credit Rating

The last Credit Rating issued to the Company by CARE Limited was on 25th April, 2012. However, the credit rating is under suspension at present, as the Company is under Corporate Debt Restructuring.

5. Changes in Paid up Capital

In terms of the approval accorded by the shareholders of the Company at the last Annual General Meeting held on 20th September, 2013, the Company has allotted 329,61,460 fully paid up equity shares of Rs. 2 each, at a price of Rs. 19.72 per equity share (including premium of Rs. 17.72 per equity share) aggregating to Rs. 65 crores to a promoter group company during the year under review.

With the aforesaid allotment, the paid up share capital of the Company stands increased from Rs. 83,73,02,264 divided into 41,86,51,132 equity shares of the face value of Rs. 2 each to Rs. 90,32,25,184 divided into 45,16,12,592 equity shares of the face value Rs. 2 each.

6. Expansion / up-gradation Plans

Your Company owns and operates six hotels in Mumbai, Goa, Bangalore, Udaipur, New Delhi and Chennai, besides operating two hotels in Gurgaon and Kovalam under Management Contract. The total room inventory stands at 2,213 guest rooms including those under Management.

7. Monetisation of non-core Assets

The status of sale / monetization of non-core assets is as follows:

The joint development project on 4.21 acres of land in Pune for construction of high end residential flats has received the requisite approvals and the work has commenced.

The joint development project on 2 acres of land next to The Leela Palace, Bangalore for developing high-end residences is in the process of getting the requisite approvals.

The Company has entered into an agreement for sale of Chennai I. T. Park. The sale is expected to be completed during the current financial year.

The Company has entered into an MOU to sell its land in Hyderabad and the deal is expected to be concluded by December 2014.

8. Management''s Discussion and Analysis (MDA)

As required by Clause 49 of the Listing Agreements with the Stock Exchanges, Management''s Discussion and Analysis Report for the year under review is appended herewith and forms part of this report.

9. Report on Corporate Governance

As required by Clause 49 of the Listing Agreements, a separate section containing the Report on Corporate Governance together with the Certificate on compliance with the conditions of Corporate Governance, issued by a Practising Company Secretary, is appended hereto and forms part of this Annual Report.

As part of good Corporate Governance practice, the Company has voluntarily obtained Secretarial Audit Report from a Practising Company Secretary with regard to compliance of rules and regulations under the applicable provisions of the Companies Act and the Listing Agreements entered into with the Stock Exchanges. A copy of the said report is appended to this report.

10. Changes in Directorate

Mr. M. Narasimham, Director, resigned from the Board with effect from 13th February, 2014 due to health reasons. The Board places on record its deep sense of appreciation for the valuable contributions during his long tenure with the Company.

Mr. Indur Kirpalani, who retires by rotation, has conveyed that he is not seeking re-appointment at the ensuing Annual General Meeting. The Board has decided not to fill the vacancy. The Board places on record their appreciation of the valuable contributions made by him.

In terms of Section 149 of the Companies Act, 2013, it is proposed to appoint Mrs. Anna Malhotra, Dr. K. U. Mada, Mr. Vijay Amritraj, Mr. Anil Harish and Mr. M. Madhavan Nambiar as Independent Directors for a term of five consecutive years, upto 31st March, 2019. Details of the proposal for their appointment are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 of the Notice of the 33rd Annual General Meeting.

Mrs. Madhu Nair, Non-Executive Director, retires by rotation at the forthcoming Annual General Meeting and has offered herself for re-appointment.

The Board recommends the above appointments / re-appointments.

11. Auditors and Auditors'' Report

M/s. Picardo & Co., Chartered Accountants, Statutory Auditors of the Company, retire at the ensuing Annual General Meeting. They have confirmed their eligibility and willingness to accept office, if re-appointed. The Company has received a certificate from the Statutory Auditors to the effect that their re-appointment, if made, would be within the limits prescribed and that they are not disqualified for re-appointment. Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the rules framed thereunder, it is proposed to re-appoint M/s. Picardo & Co. as the Statutory Auditors of the Company from the conclusion of the forthcoming Annual General Meeting till the conclusion of the next Annual General Meeting of the Company.

Without qualifying their report, the Auditors have observed in their report that (a) the impairment loss, if any, on sale of assets to be disposed of for deleveraging the Balance Sheet cannot be ascertained in the absence of binding offers and (b) impairment loss relating to a project in Mumbai held up for a substantial period amounting to Rs. 13,805 lakhs, has not been recognised.

Management''s Response on their observations is as follows:

The Management is confident of successfully implementing the asset disposal plans and meeting its liabilities. Regarding the impairment loss, if any, on sale of assets, the Management is confident that while there could be loss on sale of some assets, there would be profit on sale of other assets and hence no impairment is expected on the sale as a whole. Regarding the property in Mumbai, the Management is confident of an amicable settlement and implementation of the Project.

The notes on Financial Statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments.

12. Particulars of Employees

The particulars of employees required to be furnished under Section 217(2A) of the Companies Act, 1956, read with the Rules thereunder, form part of this Report.

However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Report is being sent to the members of the Company excluding the statement of particulars of employees. Any Shareholder interested in obtaining such particulars may write to the Company Secretary of the Company.

13. Subsidiary Companies and Consolidated Financial Statements

The Company has two non-operative subsidiary companies, Leela Realty Limited and Leela Palaces and Resorts Limited.

The Company has not attached the Balance Sheet, Profit and Loss Account and other documents of the above subsidiary companies with the Annual Report of the Company in terms of general exemption circular notified by the Ministry of Corporate Affairs, Government of India.

However, the Company will make available these documents upon request by any member of the Company interested in obtaining the same. Further, these documents will also be available at the Registered Office of the Company and its subsidiaries for inspection by any member of the Company. As required under the aforesaid circular, a summarized statement of financial position of the subsidiaries has been appended to this Annual Report. The audited financial statements and related information of subsidiaries are also available on our website,www.theleela.com .

The Audited Consolidated Financial Statements, prepared in accordance with the Accounting Standard 21 and Clause 32 of the Listing Agreement, form part of this Annual Report.

14. Fixed Deposits

During the year, the Company has not accepted any deposits from the public or from the shareholders.

15. Directors'' Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, the Directors, based on the information and representations received from the operating management, hereby confirm that:

(a) in the preparation of the Annual Accounts for the year ended March 31, 2014, the applicable accounting standards read with requirements set out under Schedule VI to the Companies Act, 1956, have been followed and there are no material departures from the same;

(b) the Directors had selected such accounting policies and applied them consistently and made judgments 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 March 31, 2014 and of the loss of the Company for the year ended on that date;

(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 of the Company on a ''going concern basis''.

16. Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars as required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, are as follows:

(a) Conservation of Energy and Water:

Energy Conservation, sustainability and efforts to make the properties more "Green" have been the main drive throughout the year. Major efforts / steps taken towards this are:

Energy efficient lighting and high efficiency HVAC systems used / retrofitted extensively in all hotels, has reduced electrical consumption.

Computerized Power Monitoring is implemented in all properties on gradual basis to monitor and control power consumption.

Main chiller plants and steam boilers have been tuned for best efficiency to conserve energy.

Building management system installation and electricity distribution systems equipped with power factor correction panel monitors that controls energy wastage of equipment.

Hotels are equipped with solar geysers for generating hot water and the rooms are equipped with energy saving devices during non-occupancy.

STP treated water and Rain Water Harvesting has been implemented at four hotels.

The Company has installed 23 windmills with a capacity to generate 13.5 MW power, a renewable energy source in the State of Maharashtra (4.5MW), Karnataka (5 MW) and Tamil Nadu (4 MW). Windmills continue to produce renewable energy for use in own hotels.

(b) Technology Absorption:

In the opinion of the Board, the required particulars pertaining to technology absorption in terms of Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are not applicable, as hotel is service industry and the Company does not have any significant manufacturing operations.

(c) Foreign Exchange Earnings and Outgo:

The foreign exchange earnings of the Company during the year stood at Rs. 27,525.59 lakhs (previous year Rs. 29,370.54 lakhs) and foreign exchange outgo during the year stood at Rs. 3,962.63 lakhs (previous year Rs. 5,216.88 lakhs).

17. Acknowledgements

The Board wishes to place on record its appreciation for the assistance and support received from all the lenders, Government and regulatory authorities, customers, business associates and vendors.

Your directors take this opportunity to express their sincere thanks to all the shareholders and stakeholders for the faith and confidence they have reposed in the Company and the management.

Your directors attribute immense importance to the contribution of the family of staff and sincerely thank "The Leela" team for sharing the Company''s vision and philosophy and for the dedication and commitment in ensuring that the Company remains in the forefront of competitive industry as one of the finest Hotel Groups in India.

For and on behalf of the Board of Directors

Vivek Nair Chairman & Managing Director

Mumbai, 27th May, 2014


Mar 31, 2013

Dear Members,

The Directors hereby present the Thirty Second Annual Report of the Company together with its Audited Statement of Accounts for the financial year ended 31st March, 2013.

1. Financial Results

The financial performance during the year under review is summarised below:

Rs.Lakhs

Financial Year Financial Year 2012-13 2011-12

Revenue from operations and other 66,054.75 58,843.97 income

Operating and other Expenses 53,790.07 55,326.51

Earnings before Interest, Depreciation, 12264.68 3517.46 Taxes and Amortisation (EBIDTA)

Interest 40,534.25 32,125.06

Depreciation 13,867.33 10,223.54

Profit from discontinuing operations & 41,766.36 gain on disposal of assets relating to discontinuing operations

Profit/(Loss) before Tax (42,136.90) 2,935.22

Provision for Taxes / Deferred Tax 1,208.91 1,072.05

Profit/(Loss) after Tax for the year (43,345.81) 1,863.17

Balance brought forward 32,651.35 32,588.18

Amount available for appropriation (10,694.46) 34,451.35

Appropriations:

Transfer to Debenture Redemption 1,800.00

Reserve Balance carried to Balance Sheet (10,694.46) 32,651.35

EPS Basic (in Rs.) (10.82) 0.48

EPS diluted (in Rs.) (10.82) 0.48

2. Dividend and Transfer of amounts to Investor Education and Protection Fund

In view of losses, the directors do not recommend any dividend for the financial year ended 31st March, 2013.

During the year under review, the Company has credited Rs. 2.17 lakhs, lying in the unpaid / unclaimed 2nd interim dividend for the financial year 2004-05, to the Investor Education and Protection Fund (IEPF) pursuant to Section 205C of the Companies Act, 1956 read with the Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001.

Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 20th September, 2012 (date of last Annual General Meeting) on the website of the Ministry of Corporate Affairs.

3. Corporate Debt Restructuring

The Company has restructured its debts under the Corporate Debt Restructuring (CDR) mechanism. Please refer to the relevant section in the Management''s Discussions and Analysis Report for further details.

4. Rating

The last Credit Rating issued to the Company by CARE Limited was on 25th April, 2012. However, the credit rating is under suspension at present as the Company is under Corporate Debt Restructuring.

5. Change in Paid up Capital

In terms of the approval accorded by the Shareholders of the Company at the last Annual General Meeting held on 20th September, 2012, the Company has allotted 308,26,140 fully paid up Equity Shares of Rs. 2 each, at a price of Rs. 32.44 per Equity Share (including premium of Rs. 30.44 per Equity Share) aggregating to Rs. 100 Crores to a promoter group company during the year under review and the same has been listed on the stock Exchanges.

6. Foreign Currency Convertible Bonds

As on 31st March, 2012, the Company had outstanding US Dollar Foreign Currency Convertible Bonds of the face value of US$ 41.60 million, due for redemption on 25th April, 2012. The bonds have been redeemed on 25th May, 2012 in full.

7. Opening of The Leela Palace Chennai

The Company''s prestigious hotel "The Leela Palace Chennai" was formally opened to guests on 11th January, 2013. The Hotel is developed on a 4.8 acre plot, which faces the Bay of Bengal and Adyar River. Drawn from the inspiration of Chettinad Dynasty, the architecture of the Palace Hotel exudes the regal and opulent style, the 11-storeyed hotel features 326 rooms and suites and is equipped with world-class amenities.

8. Expansion / Up-gradation Plans

Your Company owns and operates six hotels at New Delhi, Mumbai, Bangalore, Goa, Udaipur and Chennai, besides operating two hotels at Gurgaon and Kovalam under Management Contracts. With the opening of the Chennai hotel, the total room inventory stands at 2,211 guest rooms including those under Management.

The Company is adopting an "Asset Light Strategy" for future growth. Pursuant to this strategy, the Company plans to operate hotels through Management Contracts, instead of owning the hotels. The Company has executed a Memorandum of Understanding with Bhartiya City Developers Private Limited, which is constructing a luxury hotel with 250 guest rooms, Residences and a Convention Centre in Bangalore. The Company has also executed a Memorandum of Understanding with Supertech Realtors Private Limited, to manage a Palace Hotel in Noida with 250 guest rooms and Residences. These hotels are expected to be operational within next 3 to 4 years.

The Company, through its subsidiary / associates, had earlier acquired land in Agra for constructing a hotel facing the Taj Mahal and also land near Lake Ashtamudi, Kerala for construction of a backwater resort. The Company is planning to enter into joint venture with investors who can build hotels without further investment by the Company so that the Company can manage and operate these hotels under long term management contracts.

9. Monetisation of Non-core Assets

The Company is taking steps to monetise certain non-core assets in terms of the Corporate Debt Restructuring package being implemented by the Company.

The Company''s joint development project on 4.21 acres of land in Pune for construction of high end residential flats has received the requisite approvals and the work has commenced.

The Company''s joint development project on 2 acres of land next to The Leela Palace, Bangalore for developing high-end Residences is in the process of getting the requisite approvals.

The Company has entered into an agreement for sale of Chennai I. T. Park for Rs. 170.17 Crores and has received advance of Rs. 120.17 Crores. The sale is expected to be completed by September 2013.

The Company plans to sell its 3.84 acres land in Hyderabad during the current year.

10. Management''s Discussion and Analysis (MDA)

As required by Clause 49 of the Listing Agreements with the Stock Exchanges, Management''s Discussion and Analysis Report for the year under review is appended herewith and forms part of this report.

11. Report on Corporate Governance

As required by Clause 49 of the Listing Agreements, a separate section containing the Report on Corporate Governance together with the Certificate on the compliance with the conditions of Corporate Governance issued by a Practising Company Secretary are appended hereto and form part of this Annual Report.

As part of good Corporate Governance practice, the Company has voluntarily obtained Secretarial Audit Report from a Practising Company Secretary in respect of compliance of all rules and regulations under the various applicable provisions of the Companies Act, 1956 and the applicable regulations under the Listing Agreement entered into with the Stock Exchanges. A copy of the said report is appended to in this report.

12. Changes in Directorate

Capt. C. P. Krishnan Nair, Founder Chairman, resigned from the Board with effect from 7th February, 2013. The Board of Directors appointed Capt. Nair as the "Chairman Emeritus and Founder Chairman" in recognition of his founding the Company, nurturing the organization and providing invaluable services for over three decades. We place on record our deep appreciation for the invaluable contributions made by Capt. C. P. Krishnan Nair to the Company during the tenure as Chairman of the Company.

Consequent to the resignation of Capt. Nair, Mr. Vivek Nair, earlier Vice Chairman & Managing Director, has been elevated to the position of Chairman and Managing Director (CMD) and Mr. Dinesh Nair, earlier Joint Managing Director, has been elevated to the position of Co-Chairman & Managing Director (CCMD) with effect from 7th February, 2013.

Mr. R. Venkatachalam and Mr. C. K. Kutty decided not to opt for reappointment when they retired by rotation at the previous annual general meeting held on 20th September, 2012. Mr. Pawan Kumar Nagpal, the earlier nominee of Airports Authority of India (AAI), was replaced with Mr. Anil Kumar Sharma by AAI and the appointment became effective from 21st September, 2012. We place on record our appreciation for the valuable contributions made by Mr. R. Venkatachalam, Mr. C. K. Kutty and Mr. Pawan Kumar Nagpal to the Company during their tenure as Board members.

Mr. Anil Kumar Sharma holds office up to the date of the forthcoming Annual General Meeting. The Company has received notice in writing under Section 257 of the Companies Act, 1956 proposing his candidature for the office of director. A brief resume of Mr. Sharma is given in the explanatory statement to the Notice convening the Annual General Meeting.

State Bank of India has nominated Mrs. Uttara Dasgupta as its nominee Director on the Board of the Company and the same has been taken on record by the Board w. e. f. 20th May, 2013 by appointing her as a director, not liable to retire by rotation.

In accordance with the provisions of the Companies Act, 1956 and the Articles of association of the Company, Mr. A. K. Dasgupta, Mr. Vijay Amritraj and Mrs. Anna Malhotra retire by rotation at the forthcoming Annual General Meeting.

Mr. A. K. Dasgupta, retiring by rotation, has conveyed that he is not seeking re-appointment at the ensuing Annual General Meeting. The Board wish to place on record their appreciation of the valuable contribution made by Mr. A. K. Dasgupta.

Mr. Vijay Amritraj and Mrs. Anna Malhotra, retiring by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for reappointment.

The Board commends the appointment/ reappointments by the members at the forthcoming Annual General Meeting.

None of the directors of the Company are disqualified from being appointed / re-appointed as directors as specified in section 274(1)(g) of the Companies Act, 1956, as amended.

13. Auditors and Auditors'' Report

M/s. Picardo & Co., Chartered Accountants, statutory auditors of the Company, retire at the ensuing Annual General Meeting. They have confirmed their eligibility and willingness for re-appointment. The Company has received a certificate from the statutory auditors to the effect that their re-appointment, if made, would be within the limits prescribed under section 224(1B) of the Companies Act, 1956 and that they are not disqualified for re-appointment within the meaning of Section 226 of the said Act. The Board commends their re-appointment as statutory auditors.

The Notes on Financial Statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments.

14. Particulars of Employees

The particulars of employees required to be furnished under Section 217 (2A) of the Companies Act, 1956, read with the Rules thereunder, forms part of this Report. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act,1956, the reports and accounts are being sent to all the Shareholders of the Company excluding the statement of particulars of employees. Any Shareholder interested in obtaining a copy may write to the Company Secretary at the Registered Office of the Company.

15. Subsidiary Companies and Consolidated Financial Statements

The Company has not attached Balance Sheet, Profit and Loss Account and other documents of its two subsidiary companies with the Annual Report of the Company in terms of general exemption notified by the Ministry of Corporate Affairs, Government of India vide General Circular No.2/2011 dated 8th February, 2011 regarding compliance with Section 212(8) of the Companies Act, 1956.

The Company will make available these documents upon request by any member of the Company interested in obtaining the same. Further, these documents will also be available at the Registered Office of the Company for inspection by any member of the Company. As required under the aforesaid circular, a summarized statement of financial position of the subsidiaries has been appended to this Annual Report.

The Audited Consolidated Financial Statements, prepared in accordance with the Accounting Standard 21 and Clause 32 of the Listing Agreement forms part of this Annual Report.

16. Fixed Deposits

The Company has not accepted any deposits from the Public or from the shareholders.

17. Directors'' Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

(a) in the preparation of the annual accounts for the year ended March 31, 2013, the applicable accounting standards read with requirements set out under Schedule VI to the Companies Act, 1956, have been followed and there are no material departures from the same;

(b) the Directors have selected such accounting policies and applied them consistently and made judgments 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 March 31, 2013 and of the loss of the Company for the year ended on that date;

(c) the Directors have 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 have prepared the annual accounts of the Company on a ''going concern basis''.

18. Additional information in accordance with the provisions of Section 217(1)

(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988

(a) Conservation of Energy and Water:

Energy Conservation, sustainability and efforts to make the properties more "Green" have been the main drive for the Leela Group throughout the year. Major efforts/steps taken towards this are:

LED Lamps, CFL and energy saving lights have been used across all hotel properties. Dimmers and timers have been provided on various lighting system to control wastage.

Extensive retrofitting of HVAC plants and installation ofVFD and variable pumping system at all properties has reduced power consumption.

Computerized Power Monitoring is being implemented in all properties on gradual basis to monitor and control power consumption.

Old equipments are being replaced with more efficient ones to reduce power consumption and improve efficiency.

Main chiller plants and steam boilers have been tuned for best efficiency to conserve energy.

Building management system monitors and controls energy wastage of engineering equipments.

Power distribution systems are equipped with power factor correction panels and automatic voltage regulators.

The Delhi hotel is equipped with solar geysers for generating hot water and the rooms are equipped with energy saving devices during non-occupancy.

Solar systems are used to provide pre hot water to the hot water system.

Rain Water Harvesting has been implemented at four hotels.

Sewage Treatment Plants in all properties are being used extensively to treat and recycle all sewage and grey water for reuse within the property.

The hotels use water efficient dish washers, aerating tap, pressure jet cleaners, etc. to reduce water consumption.

The Company has installed 23 windmills with a capacity to generate 13.5 MW power (a non-conventional energy source) in the State of Maharashtra (4.5 MW), Karnataka (5MW) and Tamil Nadu (4 MW). Windmills continue to produce renewable energy for use in our Hotels.

(b) Technology Absorption:

In the opinion of the Board, the required particulars, pertaining to technology absorption in terms of Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are not applicable, as hotel is service industry and the Company does not have any significant manufacturing operations.

(c) Foreign Exchange Earnings and Outgo:

The foreign exchange earnings of the Company during the year stood at X 29,371 lakhs (previous year X 19,436 lakhs) and foreign exchange outgo during the year stood at X 5,216 lakhs (previous year X 4,658 lakhs).

19. Acknowledgements

The Board wishes to place on record its appreciation for the assistance and support received from all the lenders, Government authorities, customers and vendors.

Your directors take this opportunity to express their sincere thanks to all the investors, shareholders and stakeholders for the faith and confidence they have reposed in the Company and the management.

Your directors attribute immense importance to the contribution of the family of staff and sincerely thank "The Leela" team for sharing the Company''s vision and philosophy and for the dedication and commitment in ensuring that we remain in the forefront of our competitive industry as one of the finest Hotel Groups in India.

For and on behalf of the Board of Directors Vivek Nair Chairman & Managing Director

Mumbai, 20th May, 2013


Mar 31, 2012

The Directors hereby present the thirty first Annual Report of the Company together with its Audited Statement of Accounts for the year ended 31st March, 2012.

1. Financial Results

The Company's performance during the year under review is summarized below:

(Rupees in Lakhs) Financial Year Financial Year 2011-12 2010-11

Revenue from Operations and Other 58,766.13 49,100.13

Income

Operating and other Expenses 55,248.68 33,415.18

Interest 32,125.06 5,608.31

Depreciation 10,223.53 6,295.92

Profit from discontinuing operations & 41,766.36 1,854.12 gain on disposal of assets relating to discontinuing operations

Profit before Tax 2,935.22 5,634.84

Provision for Taxes / Deferred Tax 1,072.05 5.634.84

Profit after Tax for the year 1,863.17 3,783.85

Balance brought forward 32,588.18 31,280.44

Amount available for Appropriation 34,451.35 35,064.29 Appropriations:

Dividend on Equity shares - 581.74

Tax on proposed Dividend - 94.37

Transfer to General Reserve - -

Transfer to Debenture Redemption 1,800.00 1,800.00

Reserve

Balance carried to Balance Sheet 32,651.35 32,588.18

EPS Basic (in Rs.) 0.48 0.99

EPS diluted (in Rs.) 0.48 0.93

2. Dividend

In the absence of adequate profits and cash flows, the directors do not recommend any dividend for the financial year ended 31st March, 2012. During the year under review, the Company has credited Rs.13.7 lakhs, lying in the unpaid / unclaimed dividend and redemption account of debentures, to the Investor Education and Protection Fund (IEPF) pursuant to Section 205C of the Companies Act, 1956 read with the Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001.

3. Corporate Debt Restructuring

The Company has applied for restructuring of its debts under the Corporate Debt Restructuring (CDR) mechanism. Please refer to the "Management Discussions and Analysis" for further details.

4. Foreign Currency Convertible Bonds

As on 31st March, 2012, the Company had outstanding US Dollar Foreign Currency Convertible Bonds of the face value of US$ 41.60 million, due for redemption on 25th April, 2012. The bonds have been redeemed on 25th May, 2012 along with redemption premium and interest for the delayed period.

5. Transfer of Kovalam Hotel Undertaking

The Company has sold its Kovalam Hotel undertaking for Rs.50,000 Lakhs by way of a slump sale through a Scheme of Arrangement sanctioned by the Hon'ble Bombay High Court vide its Order dated 24th February, 2012. The Company has entered into a long term management contract with the new owner of the said hotel for managing the hotel under The Leela brand name. The scheme became effective on 21st March 2012 with 1st September, 2011 as the Appointed Date.

6. Expansion / Up-gradation Plans

Your Company owns and operates five hotels at New Delhi, Mumbai, Bangalore, Goa, and Udaipur, besides operating two hotels at Gurgaon and Kovalam under Management Contract. The Company expects to start operations of the hotel under construction in Chennai during the current financial year. During the financial year ended 31st March, 2012, the Company added 20 guest rooms at its Goa hotel property, resulting an increase of total room inventory to 1890 including those under Management.

The Company, through its subsidiary / associates, has acquired land in Agra for a hotel facing the Taj Mahal and in Lake Ashamed, Kerala for a backwater resort.

The Company had purchased about 4.21 acres of land in Pune and 3.85 acres of land in Hyderabad for building hotels in these locations. Since then, considerable capacity addition has taken place in these cities. Therefore, the Company has decided to use the land in Pune for high end residential use and has entered into joint development agreement with a reputed builder in Pune. In Hyderabad, the Company is planning an outright sale of land. The Company also has about 2 acres of land next to The Leela Palace, Bangalore and the Company has entered into a joint development agreement with a reputed builder for developing high-end Serviced Residences.

7. Management Discussion and Analysis (MDA)

As required by Clause 49 of the Listing Agreements with the Stock Exchanges, Management Discussion and Analysis Report is appended herewith and forms an integral part of this report.

8. Corporate Governance

As required by Clause 49 of the Listing Agreements, a separate section containing the Report on Corporate Governance together with the Certificate on the compliance with the conditions of corporate governance issued by a Practicing Company Secretary are appended hereto and they form part of this Annual Report.

As part of good Corporate Governance, the Company has voluntarily obtained Secretarial Compliance Certificate from a Practising Company Secretary in respect of compliance of all rules and regulations under the various applicable provisions of the Companies Act, 1956 and the applicable regulations under the Listing Agreement entered into with the Stock Exchanges. A copy of the said certificate is appended elsewhere in this report.

9. Changes in Directorate

Mr. P. C. D. Nambiar passed away on 27th May, 2012. The Board wish to place on record the valuable contribution made by Mr. Nambiar to the Company and to the deliberations of the Board and its Committees. The Board has decided not to fill the vacancy caused by his death for the time being. Pursuant to the provisions of Section 260 of the Companies Act, 1956, the Board of Directors at their meeting held on 21st December, 2011 appointed Mr. M. Madhavan Nambiar as an additional Director and Mr. Pawan Kumar Nagpal as a nominee director of Airports Authority of India. Mr. Nambiar and Mr. Nagpal hold office up to the date of the forthcoming Annual General Meeting. The Company has received notices in writing under Section 257 of the Companies Act, 1956 proposing their candidature for the office of director. A brief resume of the said directors is given in the explanatory statement. The Board commends their appointments by the members at the forthcoming Annual General Meeting.

In accordance with the provisions of the Companies Act, 1956 and the Articles of association of the Company, Mr. C. K. Kutty, Mr. R. Venkatachalam, Mrs. Madhu Nair and Mr. Anil Harish retire by rotation at the forthcoming Annual General Meeting.

Mr. C. K. Kutty and Mr. R. Venkatachalam, who retire by rotation, have conveyed that they are not seeking re-appointment at the ensuing Annual General Meeting. The Board has decided not to fill these vacancies. The Board wish to place on record their appreciation of the valuable contribution made by them.

Mrs. Madhu Nair and Mr. Anil Harish, retiring by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for reappointment.

None of the directors of the Company are disqualified from being appointed / re-appointed as directors as specified in section 274(1)(g) of the Companies Act, 1956, as amended.

10. Auditors

M/s. Picardo & Co., Chartered Accountants, Statutory Auditors of the Company, retire at the ensuing Annual General Meeting. They have confirmed their eligibility and willingness for re-appointment. The Company has received a certificate from the Statutory auditors to the effect that their re-appointment, if made, would be within the limits prescribed under section 224(1B) of the Companies Act, 1956.

The Board commends their re-appointment as statutory auditors.

11. Particulars of Employees

As required by the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the Annexure to the Directors' Report.

12. Subsidiary Companies and Consolidated Financial Statements

The Company has not attached Balance Sheet, Profit and Loss Account and other documents of its two subsidiary companies with the Annual Report of the Company in terms of general exemption notified by the Ministry of Corporate Affairs, Government of India vide General Circular No.2/2011 dated 8th February, 2011 regarding compliance with Section 212(8) of the Companies Act, 1956.

The Company will make available these documents upon request by any member of the Company interested in obtaining the same. Further, these documents will also be available at the Registered Office of the Company for inspection by any member of the Company. As required under the aforesaid circular, a summarized statement of financial position of the subsidiaries has been appended to this Annual Report.

The Consolidated Accounts, prepared in accordance with the Accounting Standard 21 and Clause 32 of the Listing Agreement form part of this Annual Report.

13. Fixed Deposits

The Company has not accepted any deposits from the Public or from the shareholders.

14. 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 and there are no material departures from the same;

(b) the Directors had selected such accounting policies and applied them consistently and made judgments 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 31st March, 2012 and of the profit of the Company for the year;

(c) they have 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) they have prepared the annual accounts on a "going concern basis'.

15. Additional information in accordance with the provisions of Section 217(1)

(e) of The Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988

(a) Conservation of Energy and Water:

Energy Conservation, sustainability and efforts to make the properties more "Green" have been the main drive for the Leela Group throughout the year. Major steps have been taken towards this. Some of the efforts are:

- LED Lamps, CFL and energy saving lights have been used across all hotel properties.

- Rain Water Harvesting has been implemented at Mumbai, Delhi and Kovalam hotels. The Leela Palace, Chennai will collect water on a major scale from rain water harvesting.

- Sewage Treatment Plants in all properties are being used extensively to treat and recycle all sewage and grey water for reuse within the property.

- Extensive retrofitting is being done on HVAC plants in all properties to reduce power consumption, in addition to installation of VFD and variable pumping system, resulting in savings in power consumption.

- Computerized Power Monitoring is being implemented in all properties on a gradual basis to monitor and control power consumption.

- Old equipments are being replaced with more efficient ones to reduce power consumption and improve efficiency.

- Main chiller and steam boilers have been tuned for best efficiency to conserve energy.

- Hotels are equipped with building management system to monitor and control energy wastage of engineering equipments.

- Power distribution systems are equipped with power factor correction panels and automatic voltage regulators.

- Delhi hotel is equipped with solar geysers for generating hot water and the rooms are equipped with energy saving devices during non-occupancy.

- Wind Mills continue to produce Renewable Energy for use in two of the hotels.

(b) Technology Absorption:

In the opinion of the Board, the required particulars, pertaining to technology absorption in terms of Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are not applicable, as the hotel is service industry and the Company does not have any significant manufacturing operations.

(c) Foreign Exchange Earnings and Outgo:

The foreign exchange earnings of the Company during the year stood at Rs. 19,436 lakhs (previous year Rs. 17,388 lakhs) and foreign exchange outgo during the year stood at Rs. 4,658 lakhs (previous year Rs. 3,034 lakhs).

16. Acknowledgements

The Board wishes to place on record its appreciation for the assistance and support received from the lenders, Government authorities, customers and vendors.

Your directors take this opportunity to express their sincere thanks to all the investors, shareholders and stakeholders for the faith and confidence they have reposed in the Company and the management.

Your directors attribute immense importance to the contribution of the family of staff and sincerely thank the Leela Team for sharing the Company's vision and philosophy and for the dedication and commitment in ensuring that we remain in the forefront of our competitive industry as one of the finest Hotel Groups in India.

For and on behalf of the Board of Directors

Capt. C. P. Krishnan Nair

Chairman

Mumbai, 29th May, 2012

 
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