Mar 31, 2018
DIRECTORSâ REPORT
Dear Members
The Directors present the 37th Annual Report on the business and operations of your Company, together with the audited accounts for the year ended March 31, 2018.
1. Financial Performance
The financial performance of the Company during the year under review is summarized below:
Rs,''lakhs
Particulars |
Financial Year 2017-18 |
Financial Year 2016-17 |
Total Income |
74,312.57 |
73,922.29 |
Profit before depreciation, finance costs, tax amortization and exceptional items |
21,881.37 |
21,613.01 |
(Less): Depreciation |
(12,542.43) |
(14,114.89) |
(Less): Finance costs |
(8,366.89) |
(9,044.19) |
Profit before tax and exceptional item |
972.05 |
(1,546.07) |
Add/(Less): Exceptional items |
(3,293.68) |
- |
Profit / (Loss) before tax |
(2,321.63) |
(1,546.07) |
Less: Provision for tax |
- |
- |
Profit / (loss) after tax |
(2,321.63) |
(1,546.07) |
Other comprehensive income / (loss) |
137.08 |
(172.95) |
Total comprehensive income |
(2,184.55) |
(1,719.02) |
Earnings per share - basic and diluted - '' |
(0.43) |
(0.33) |
2. Dividend
In view of losses, the Directors do not recommend any dividend for the financial year ended 31st March, 2018.
3. Share Capital
Change in Authorized Share capital
During the year, the Company, pursuant to the approval accorded by the members through a postal ballot held on 10th July, 2017, has increased its authorized share capital from Rs, 180,00,00,000 (Rupees one hundred eighty crores) consisting of 60,00,00,000 (Sixty Crores) equity shares of Rs,2 (Rupees two) each and 60,00,000 (Sixty lakhs) Redeemable Preference Shares of Rs,100 (Rupees one hundred) each to Rs, 260,00,00,000 (Rupees two hundred sixty crores) divided into 100,00,00,000 (One hundred crores) equity shares of face value of Rs, 2 (Rupees two) each and 60,00,000 (Sixty lakhs) Redeemable Preference Shares of Rs,100 (Rupees one hundred) each.
Change in paid up Share Capital pursuant to allotment of equity shares to JM Financial Asset Reconstruction Company Limited
During the year, the Company, pursuant to the approval accorded by the members at the Annual General Meeting held on 18th September, 2017, has allotted 16,39,43,459 (Sixteen crore thirty nine lakhs forty three thousand four hundred fifty nine) fully paid up equity shares of face value of Rs, 2 (Rupees two) each, at a price of Rs, 16.78 (Rupees sixteen and seventy eight paise) per equity share including premium of Rs, 14.78 (Rupees fourteen and seventy eight Paise) per equity share aggregating to Rs, 275.09 Crores (Rupees two hundred seventy five crores and nine lakhs) to JM Financial Asset
Reconstruction Company Limited towards conversion of debts. Accordingly, the issued and paid up share capital of the Company stands increased from Rs, 93,32,16,614 (Rupees ninety three crores thirty two lakhs sixteen thousand six hundred and fourteen) divided into 46,66,08,307 (forty six crores sixty six lakhs eight thousand three hundred and seven) Equity Shares of face value of Rs, 2 (Rupees two) each to Rs, 126,11,03,532 (Rupees one hundred twenty six crores eleven lakhs three thousand five hundred and thirty two) divided into 63,05,51,766 (sixty three crores five lakhs fifty one thousand seven hundred sixty six) Equity Shares of face value of Rs, 2 (Rupees two) each.
4. Indian Accounting Standards (IND AS)
Pursuant to the notification issued by the Ministry of Corporate Affairs (MCA) on 16th February, 2015, your Company is required to prepare the financial statements under Indian Accounting Standards (Ind AS) with effect from 1st April 2017, as prescribed under Section 133 of the Companies Act 2013 read with Rule 7 of Companies (Accounts) Rules, 2014. Accordingly, the Company has adopted Indian Accounting Standards (âInd ASâ) with effect from 1st April, 2017 with a transition date of 1st April, 2016 and the financial statements for the year ended 31st March, 2017 have been restated to conform to Ind AS.
5. Subsidiary Company, its performance and financial position
Your Company has one wholly owned Subsidiary (WOS), viz. Leela Palaces and Resorts Limited. The net loss for the FY 2017-18 was '' 0.03 lakhs, compared to profit of '' 0.30 lakhs in FY 2016-17. During the year under review, your Company has not incorporated or acquired any company.
The WOS neither carried out any operations during the year nor has there been any material change in the nature of its business. The WOS is being proposed to be transferred by way of transfer of shares, for which the approval of the Companyâs shareholders has already been obtained.
The Company has not attached the Balance Sheet, Profit and Loss Account and other documents of the WOS 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 the WOS 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 the WOS are also available on the Companyâs website at https://www.theleela.com/the-leela/about-the-leela/investor-relations. The Company has framed a policy for determining material subsidiary, which has also been uploaded on the companyâs website.
The Audited Consolidated Financial Statements, prepared in accordance with Accounting Standards (Ind AS) as applicable to your Company form part of this Annual Report.
6. Secured Non-Convertible Debentures
During the year under review, the Company has not issued/allotted any Non Convertible Debentures. In the financial year 2008-09, the Company had issued and allotted 12.50% Secured Redeemable Non-Convertible Debentures (NCD) of the face value '' 10,00,000 (Rupees ten lakhs) each on private placement basis aggregating to '' 90,00,00,000 (Rupees ninety crores) to LIC of India. The said NCDs are listed on the Wholesale Debt Market Segment of BSE Limited. The Company has paid installments towards redemption of principal amounting to Rs, 2,250 lakhs. The Company has not paid the third and fourth installments towards redemption of principal amount of Rs, 2,250 lakhs each on NCDs due since 30th September, 2016 and 30th September, 2017 respectively. The Company has also been in default in payment of interest on the aforesaid NCDs and the interest is overdue since March 2017. The total interest overdue as on 31st March, 2018 is Rs, 1,015.43 Lakhs.
The Companyâs operating cash flows are not sufficient to service its term loans and NCDs and the funds of the Company are escrowed with its lenders and the inflows and outflows are also monitored by the lenders. The Company can pay to LIC only on pro-rata basis. The Company is pursuing with LIC for Debt restructuring.
The Trustee for the aforesaid Debentures is Axis Trustee Services Limited. The Details pursuant to Clause 53(e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 [âSEBI (LODR)â] are given in the Report on Corporate Governance.
7. Directors and Key Managerial Personnel (KMP)
As on the date of this Report, the Company has Six (6) Directors consisting of Four (4) Independent Directors and Two (2) Whole-time Directors.
a) Disqualification of Directors
In terms of the provisions of section 164(2)(b) of the Companies Act 2013, any person who is or has been a Director of a Company, which has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures on the due date or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continues for one year or more, shall not be eligible to be re-appointed as a Director of that company or appointed in other company for a period of 5 years from the date of default. As explained in para 6 above, the Company has defaulted in payment of installments towards redemption of principal amounts due on Secured Redeemable Non-Convertible Debentures and also defaulted in payment of interest on the aforesaid Debentures. Accordingly, the disqualification under the aforesaid provision got triggered on 30th September, 2017 and is still continuing. Mr. Vivek Nair, Chairman & Managing Director, Mr. Dinesh Nair, Co-Chairman & Managing Director and Mrs. Anna Malhotra, Independent Director, are disqualified under section 164(2)(b) of the Companies Act 2013.
b) Appointment / Resignation from the Board of Directors
During the year, many of the Directors resigned to avoid disqualifications under Section 164(2)(b), as explained in para 6 and 7(a) above. The Company has been finding it difficult to get new Independent Directors, as the default and disqualification continues.
Airports Authority of India withdrew the nomination of Ms. K. Hemalatha, as its Nominee on the Board with effect from April 1,
2017. Mr. V. P. Shetty and Mr. Anil R. Bhatia, Nominees of JM Financial Asset Reconstruction Company Limited, resigned from the Board with effect from 18th September, 2017. Mr. Navnit Kulwantsigh Batheja, Independent Director, resigned from the Board with effect from 18th September, 2017. Mr. Ashok G. Rajani, Independent Director, resigned from the Board with effect from 19th September, 2017. Mr. Vijay Amritraj, Independent Director, resigned from the Board with effect from 29th September, 2017.
Mr. Vinay H. Kapadia was appointed as an Additional Director of the Company in the category of Independent Director by the Board of Directors with effect from 7th October, 2017. The Members, by way of
postal ballot on 25th January, 2018 have approved the appointment of Mr. Vinay Kapadia as an Independent Director for a period of five years upto 6th October, 2022.
Mr. Shereveer S. Vakil was appointed as an Additional Director of the Company in the category of Independent Director by the Board of Directors with effect from 14th February, 2018. However, he resigned from the Board with effect from 26th April, 2018.
Mr. Vijay Sharma was appointed as an Additional Director of the Company in the category of Independent Director by the Board of Directors with effect from 9th May, 2018 and holds office until the date of the ensuing Annual General Meeting. Your Company has received a notice under Section 160 of the Companies Act, 2013 from a shareholder of the Company, signifying his intention to propose the name of Mr. Vijay Sharma, for appointment as a Director of your Company. The proposal regarding the appointment of Mr. Vijay Sharma for a period of five years upto 8th May, 2023 is placed for your approval.
Ms. Saija Nair was appointed as an Additional Director of the Company in the category of Independent Director by the Board of Directors with effect from 30th May, 2018 and holds office until the date of the ensuing Annual General Meeting. Your Company has received a notice under Section 160 of the Companies Act, 2013 from a shareholder of the Company, signifying his intention to propose the name of Ms. Saija Nair, for appointment as a Director of your Company. The proposal regarding the appointment of Ms. Saija Nair for a period of five years upto 29th May, 2023 is placed for your approval.
Two Independent Directors resigned from the Board in January 2017 and three Independent Directors resigned from the Board in September 2017, to avoid disqualification under Section 164(2)(b) of the Companies Act, 2013 and the replacement by appointment of new Independent Directors took considerable time. The default to LIC and disqualification continues and the Company has been finding it difficult to get new Independent Directors. Even though the replacement could not be done before the date of the immediate next Board Meeting or 3 months from the date of such vacancies, whichever is later, as provided in Regulation 25 (6) of SEBI (LODR), the Company has been able to fill up the vacancies, with some delay. This also resulted in lack of availability of sufficient number of Independent Directors to broad base the Committees of the Board.
The Board places on record its appreciation for the valuable services rendered by Ms. K. Hemalatha, Mr. V. P. Shetty, Mr. Anil R. Bhatia, Mr. Navnit Kulwantsigh Batheja, Mr. Ashok G. Rajani, Mr. Vijay Amritraj and Mr. Shereveer S. Vakil during their respective tenure as Directors of the Company.
c) Directors retiring by rotation
In accordance with the provisions of Section 152 of the Companies Act, 2013 read with Section 149 of the said Act, at least 2/3rd of the total number of Directors, excluding Independent Directors, shall be liable to retire by rotation and out of the Directors liable to retire by rotation, at least 1/3rd of the Directors shall retire by rotation at every Annual General Meeting. In terms of Regulation 17 (1) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of the Company shall have an optimum combination of Executive and Non-Executive Directors with at least one woman Director and not less than 50% of the Board shall comprise of Non-Executive Directors (NED).
Mr. Vivek Nair, Chairman & Managing Director and Mr. Dinesh Nair, CoChairman & Managing Director, Executive Directors of the Company, are not liable to retire by rotation in terms of their appointment. The Board
of the Company does not have any Non-Independent, Non-Executive Director, who can be subjected to retire by rotation.
In view of the above, there are no Directors who are liable to retire by rotation at the ensuing Annual General Meeting.
d) Declaration by Independent Director
The Company has received necessary declaration from each of the Independent Directors, under Section 149(7) of the Companies Act, 2013, that he / she meets the criteria of Independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 16 of SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015.
e) Woman Director
In terms of the provisions of Section 149 of the Companies Act, 2013 and Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Company has complied with the requirement of having at least one Woman Director on the Board of the Company. Mrs. Anna Malhotra, Independent Director and Ms. Saija Nair, Independent Director are the two Women Directors of the Company.
f) Whole-time Directors
Mr. Vivek Nair, Chairman & Managing Director and Mr. Dinesh Nair, CoChairman & Managing Director are the Whole-time Directors of the Company.
g) Changes in KMP
The Company has appointed Mr. Rajiv Kaul, President of the Company, as a Key Managerial Personnel with effect from 9th February, 2018.
Mr. Anandghan Bohra, Company Secretary, resigned from the services of the Company with effect from 12th March, 2018 and Mr. Alen Ferns has been appointed as the Company Secretary of the Company with effect from 13th March, 2018.
Mr. Krishna Deshika resigned as the Chief Financial Officer of the Company with effect from 9th May, 2018 and Mr. Rajan Shah, who was working as Vice President-Finance was elevated and appointed as the Chief Financial Officer of the Company with effect from 10th May, 2018.
8. 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 are circulated to the Directors in advance to enable them to plan their time schedule for effective participation in the meetings.
The Board of Directors met 7 times during the year viz. on 25th May, 2017, 10th August, 2017, 8th September, 2017, 18th September, 2017, 7th December, 2017, 9th February, 2018 and 27th March, 2018. The intervening gap between two Meetings was within the period prescribed under the Companies Act, 2013 and Regulations 17 of the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulation, 2015. Detailed information on the meetings of the Board is included in the Report on Corporate Governance, which forms part of this Annual Report.
9. Audit Committee
The Audit Committee met four times during the year under review. The details with respect to the composition, powers, roles, terms of reference, etc. of the Audit Committee are given in detail in the âReport on Corporate Governanceâ of the Company which forms part of this Annual Report.
There are no recommendations of the Audit Committee which have not been accepted by the Board.
10. Nomination and Remuneration Committee
The Nomination and Remuneration Committee met four times during the year under review. As on the date of this Report, the Committee comprises of 5 Directors, i.e. four Independent Directors (NED) and the Chairman & Managing Director as a member.
As per provisions of Section 178 of the Companies Act, 2013 and Regulation 19 of the SEBI (LODR), the Nomination and Remuneration Committee should consist of 3 or more Non-Executive Directors out of which not less than one-half shall be Independent Directors. However, the Chairman of the Company can be a member, even if he is an Executive Director.
The Nomination and Remuneration Committee consisted of 2 Independent Directors and the Companyâs Chairman as a member for the period October 2017 to April 2018. However, the Board at its meeting held on 9th May, 2018 has re-constituted the said Committee with 3 Independent Directors and the Companyâs Chairman as the member.
The details with respect to the composition, powers, roles, terms of reference, etc. of the Nomination and Remuneration Committee are given in detail in the âReport on Corporate Governanceâ of the Company which forms part of this Annual Report.
11. Nomination and Remuneration Policy
The Company has formulated and adopted the Nomination and Remuneration Policy in accordance with the provisions of Companies Act, 2013 read with the Rules issued thereunder and the Listing Regulations.
The said Policy of the Company, provides that the Nomination and Remuneration Committee shall formulate the criteria for appointment of Executive, Non-Executive and Independent Directors and persons in the Senior Management of the Company, including criteria for determining qualifications, remuneration, positive attributes, independence of a Director and other matters as provided under sub-section (3) of Section 178 of the Companies Act, 2013.
The salient features of the Policy are set out in the Corporate Governance Report which forms part of this Annual Report. The Policy is also available on the website of the Company web-link: https://www.theleela.com/the-leela/about-the-leela/investor-relations.
12. Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 & 25 of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance and of the Independent Directors individually as well as the Committees of the Board. The performance evaluation of all the Directors was also carried out by the Nomination and Remuneration Committee. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Independent Directors.
13. Stakeholdersâ Relationship Committee
The Stakeholdersâ Relationship Committee met two times during the year under review. The details with respect to the composition, powers, roles, terms of reference, etc. of the Committee are given in detail in the âReport on Corporate Governanceâ of the Company which forms part of this Annual Report.
14. Other Committees of the Board
The Company has the following Non-mandatory Committees:
(i) Finance Committee.
(ii) Assets Sale and Financial
Financial Restructuring Committee.
15. Directorsâ 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 state and confirm that:
(a) in the preparation of the annual accounts for the financial year ending 31st March, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(b) they 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 at the end of the financial year and of the profit or loss of the Company for that period;
(c) they have 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) they have prepared the annual accounts on a going concern basis;
(e) they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively; and
(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.
16. Managementâs Discussion and Analysis
A detailed review of the operations, performance and future outlook of the Company and its businesses is given in the Managementâs Discussion and Analysis, which forms part of this Report.
17. Corporate Governance
A separate section on Corporate Governance standards followed by your Company, as stipulated under Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is enclosed as an Annexure to this report. The report on Corporate Governance also contains certain disclosures as required under the Companies Act, 2013.
A Certificate from Mr. Prashant S. Mehta, Practicing Company Secretary, regarding compliance with the conditions of Corporate Governance, as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is annexed to the Report on Corporate Governance.
18. Whistle Blower Policy/ 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 and safety, environmental issues and wastage/ misappropriation of Companyâs 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 the whistle blower who avails such mechanism. The vigil mechanism also provides direct access to the Members of the Audit Committee, including the Chairman 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 https://www.theleela.com/the-leela/about-the-leela/investor-relations.
19. Risk Management
The Board has approved a Risk Management Policy, wherein all material risks faced by the Company are identified and assessed. This framework seeks to create transparency, minimize adverse impact on business objective and enhance your Companyâs competitive advantage. 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.
20. 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 into during the year were in the ordinary course of business and on armâs 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 financial year 2017-18 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 such transactions as approved by the Audit Committee and the Board is available on the website of the Company at www.theleela.com/investor-relations. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and the Related Parties.
Your Directors draw attention of the members to Note No. 36.7 to the standalone financial statements, which give the related party disclosures.
21. Internal Financial Control Systems and their adequacy
Your Company has in place adequate internal financial controls with reference to financial statements, commensurate with the size, scale and complexity of its operations. The Company has laid down standards, processes and structures which enable implementation of internal financial control across the organization and ensure that the same are adequate and operating effectively.
Financial Controls are operative for all the business activities of the Company and no material weakness in the design or operation of any control was observed. During the year the internal financial controls as laid down are adequate and were operating effectively.
The Company has appointed M/s. DH Consultants Private Limited, Chartered Accountants, as Internal Auditors to review the internal control systems of the Company and to report thereon. The report of the Internal Auditors is reviewed by the Audit Committee.
22. Fixed Deposits
During the year under review, the Company has not accepted any deposits from the public or from the shareholders.
23. Material Changes and Commitments affecting Financial Position of the Company
There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company i.e. 31st March, 2018 and the date of the Directorsâ report i.e. 30th May, 2018.
24. Extract of Annual Return
Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extract of the Annual Return as at 31st March, 2018 forms part of this report and the same is attached to this report as Annexure-II.
25. Loans, Guarantees or Investments
The Company has not granted any loan or given guarantee or made any investments during the year under review.
26. 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 in the preceding financial years the Company is not required to form a CSR Committee nor required to contribute to the CSR activities as mandated under the provisions of section 135 of the Companies Act 2013.
However, the Company continues to undertake CSR activities for the benefit of the local communities nearby its hotel properties, the details of which are disclosed separately in this Annual Report.
27. Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Companyâs operations in future
No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and the Companyâs operations in future.
28. Disclosure 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 employee which may fall under the ambit of âSexual Harassmentâ at workplace, and is fully committed to uphold and maintain the dignity of every woman employee in the Company. The Companyâs policy provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year no complaints pertaining to sexual harassment were received.
29. Auditors
(a) Statutory Auditors and Auditorsâ Report
Pursuant to the provisions of section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, the Members, at the 36th Annual General Meeting of the Company held on 18th September, 2017, had appointed M/s. N. S. Shetty & Co., Chartered Accountants, as the Companyâs Statutory Auditors for a period of five years, from the conclusion of the 36th Annual General Meeting till the conclusion of the 41st Annual General Meeting of the Company, subject to ratification by the Members at every Annual General Meeting.
However, in accordance with the Companies Amendment Act, 2017, notified on 7th May, 2018 by the Ministry of Corporate Affairs, the appointment of Statutory Auditors is not required to be ratified at every Annual General Meeting.
As required under Section 139 of the Companies Act, 2013, the Company has obtained a written consent from the Auditors to their continued appointment and also a certificate from them to the effect that their existing appointment is in accordance with the conditions prescribed under the Companies Act, 2013 and the rules made thereunder.
During the period under review, even though there are no audit qualifications or adverse remarks, there are audit observations on the financial statements. The explanation for the same has been provided in Note No.36.1, 36.2, 36.3 and 36.11 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 the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Mr. Prashant S. Mehta, Practicing Company Secretary, as its Secretarial Auditor to conduct the secretarial audit of the Company for the FY 2017-18. The report of Secretarial Auditor for the FY 2017-18 is annexed to this report as Annexure - III.
The Secretarial Auditor has made certain observations in his report. Paras 6, 7a, 7b and 10 of the Board report gives details of disqualification of Directors, resignation of several Directors and the difficulties in filling up vacancies caused by such resignation of Directors. The Secretarial Auditorsâ observations read in the context of Paras 6, 7a, 7b and 10 of the Board Report explain the status and the same may also be treated as the response to the Secretarial Audit observations.
(c) Reporting of Frauds by Auditors
During the year under review, No frauds have been reported by the Auditors under Section 143(12) of the Companies Act, 2013 requiring disclosure in the Boardâs Report.
30. Employee Remuneration
The ratio of the remuneration of each Director to the median employeeâs 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, forms part of this report as Annexure-IV.
The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is open for inspection at the Registered Office of the Company during working hours. In terms of Section 136 of the Act, the Reports and Accounts are being sent to the Members and others entitled thereto, excluding the aforesaid particulars of employees. A copy of this statement may be obtained by the Members by writing to the Company Secretary.
31. Energy Conservation, Technology Absorption, Foreign Exchange Earnings and Outgo and Other Disclosures
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 âGreenâ 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 to monitor and control power consumption.
- Main chiller plants and steam boilers have been tuned for best efficiency, to conserve energy.
- 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.
- Boilers are being operated through bio diesel which is produced through used kitchen oil.
- The Leela Palace Chennai and Leela Palace Delhi are LEED platinum rated buildings awarded by IGBC.
- Power is purchased at subsidized rate through open access, in two 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(3) of the Companies (Accounts) Rules, 2014, are not applicable, as hotel is a 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 '' 28,590.96 lakhs (previous year '' 30,221.02 lakhs) and foreign exchange outgo during the year stood at '' 4,509.58 lakhs (previous year '' 2,489.89 lakhs).
32. Transfer of unclaimed dividend and Equity Shares to IEPF
Pursuant to applicable provisions of the Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, all unpaid or unclaimed dividends are required to be transferred by the Company to the Investors Education & Protection Fund (IEPF) established by the Central Government, after completion of 7 (seven) years. Further, according to the aforesaid Rules, shares in respect of which dividend has not been paid or claimed by the shareholders for 7 (seven) consecutive years or more shall also be transferred to the demat account created by the IEPF Authority.
As per the above provisions, all unclaimed dividend up to the financial year ended 31st March, 2010 has been transferred by the Company to the said Fund. Shares in respect of which dividend remained unclaimed for seven consecutive years or more have also been transferred to the IEPF Demat Account.
Members who have not yet encashed their dividend warrant(s) for the financial year ended 31st March, 2011 are requested to make their claims to the Company without any delay, to avoid transfer of their dividend/ shares to the IEPF Account.
It may be noted that unclaimed dividend for the financial year 2010-11 declared on 28 th June, 2011, can be claimed by the Members by 2nd August,
2018.
The details of the unclaimed Dividends are available on the Companyâs website at https://www.theleela.com/the-leela/about-the-leela/investor-relations and the Ministry of Corporate Affairs website (www.mca.gov.in).
The shares transferred to the IEPF can be claimed by the concerned members from the IEPF Authority after complying with the procedure prescribed under the IEPF Rules.
33. Other Disclosures / Reporting
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions pertaining to these items during the year under review:
(a) Details relating to deposits covered under Chapter V of the Act.
(b) Issue of equity shares with differential rights as to dividend, voting or otherwise.
(c) Issue of shares (including sweat equity shares) to employees of the Company under any scheme.
(d) Receipt of remuneration or commission from any of the subsidiaries by the Executive Directors of the Company.
34. Acknowledgements
The Board wishes to place on record its appreciation for the assistance and support received from 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 attach immense importance to the contribution of the employees and sincerely thank âThe Leelaâ team for sharing the Companyâs vision and philosophy and for the dedication and commitment in ensuring that the Company remains in the forefront as one of the finest hotel groups in India.
For and on behalf of the Board of Directors
Vivek Nair
Chairman & Managing Director
Mumbai, May 30, 2018
Mar 31, 2017
Dear Members,
The Directors present the 36th Annual Report on the business and operations of your Company, together with the audited accounts for the year ended March 31, 2017.
1. Financial Performance
The financial performance of the Company during the year under review is summarised below:
Rs. Lakhs
Particulars |
Financial Year 2016-17 |
Financial Year 2015-16 |
Revenue from operations and other income |
71,378.84 |
67,033.59 |
Operating and other expenses |
52,353.56 |
50,777.57 |
Earnings before interest, depreciation, taxes and amortisation (EBIDTA) |
19,025.28 |
16,256.02 |
Exceptional items |
- |
21,338.94 |
Interest |
9,044.19 |
8,790.03 |
Depreciation |
20,231.98 |
23,987.70 |
Profit from discontinuing operations & gain on disposal of assets attributable to discontinuing operations |
19,156.17 |
|
Profit/(Loss) before tax |
(10,250.89) |
(18,704.48) |
Provision for taxes / deferred tax |
- |
(688.46) |
Profit/(Loss) after tax for the year |
(10,250.89) |
(18,016.02) |
Balance brought forward |
(89,889.27) |
(99,313.65) |
Transferred from revaluation reserve |
2,897.96 |
26,990.40 |
Transferred from debenture redemption reserve |
- |
450.00 |
Amount available for appropriation |
(97,242.21) |
(89,889.27) |
Appropriations |
- |
- |
Balance carried to Balance Sheet |
(97,242.21) |
(89,889.27) |
EPS - basic and diluted (in Rs.) |
(2.20) |
(3.86) |
2. Dividend
In view of losses, the directors do not recommend any dividend for the financial year ended 31st March, 2017.
3. Subsidiary Company, its performance and financial position
Your Company has one Subsidiary, viz. Leela Palaces and Resorts Limited (a wholly owned subsidiary or WOS). The WOS earned a profit of Rs.0.30 lakhs during the financial year 2016-17.
The WOS did not carry out any operations during the financial year 201617. The WOS is being proposed to be transferred by way of transfer of shares, for which the approval of the Companyâs 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 WOS 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 the WOS 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 the WOS are also available on Companyâs website at www. theleela.com.
The Audited Consolidated Financial Statements, prepared in accordance with Accounting Standard 21 and Clause 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 form part of this Annual Report.
4. Directorsâ 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, 2017, 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 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. Directors
Your Company has Nine (9) Directors consisting of Four (4) Independent Directors, Three (3) Non-executive Directors and Two (2) Whole-time Directors as on March 31, 2017.
In terms of the definition of âIndependenceâ of Directors as prescribed under Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 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) Mr. Vijay Amritraj
(iii) Mr. Ashok Rajani
(iv) Mr. Navnit Kulwantsingh Batheja
Woman Director
In terms of the provisions of Section 149 of the Companies Act, 2013 and Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a company shall have at least one Woman Director on the Board of the company. Your Company is in compliance of the same. Mrs. Anna Malhotra and Mrs. K. Hemalatha are the Woman Directors, as on 31st March, 2017.
Whole-time Directors
Mr. Vivek Nair, Chairman & Managing Director and Mr. Dinesh Nair, Co Chairman & Managing Director are the Whole-time Directors of the Company.
Appointments / Resignations from the Board of Directors Mr. Anil Harish, Independent Director, resigned with effect from November 17, 2016. Mr. Madhavan Nambiar, Independent Director, resigned with effect from January 1, 2017. Dr. K. U. Mada, Independent Director, resigned with effect from January 23, 2017. Mrs. Madhu Nair, Non-executive Director, resigned with effect from February 10, 2017.
The Board places on record their appreciation of the contributions made by them, during their tenure.
Mr. Navnit Kulwantsingh Batheja joined the Board with effect from February 10, 2017 as an Additional Director and the Members approved his appointment as an independent director through postal ballot held on April 11, 2017.
In accordance with Section 152 of the Companies Act, 2013, two thirds of the Board, excluding independent directors, should be directors retiring by rotation. The Company has three non-executive directors, 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. V. P. Shetty, being longest in office, retires by rotation at the forthcoming Annual General Meeting and has offered himself for re-appointment. The Board recommends his re-appointment.
6. 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 are circulated to the Directors in advance to enable them to plan their schedule for effective participation in the meetings.
The Board met six (6) times during the FY 2016-17 viz. on 26th May, 2016, 8th July, 2016, 1st August, 2016, 20th September, 2016, 11th November, 2016 and 10th February, 2017. 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 financial year.
7. Committees of the Board
The Company has the following Committees:
(i) Audit Committee
(ii) Nomination and Remuneration Committee
(iii) Stakeholdersâ Relationship Committee
(iv) Finance Committee
(v) Assets Sale and Financial Restructuring Committee
The details with respect to the composition, powers, roles, terms of reference, etc. of statutory committees are given in detail in the âReport on Corporate Governanceâ of the Company which forms part of this Annual Report.
8. Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act, 2013 and Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, the Board has carried out an evaluation of its own performance and of the directors individually.
9. Key Managerial Personnel
Mr. Vivek Nair, Chairman & Managing Director, Mr. Dinesh Nair, Co-Chairman & Managing Director, Mr. Krishna Deshika, Chief Financial Officer and Mr. Anandghan Bohra, Company Secretary, are the Key Managerial Personnel in terms of the provisions of the Companies Act, 2013.
10. Managementâs Discussion and Analysis
A detailed review of the operations, performance and future outlook of the Company and its businesses is given in the Managementâs Discussion and Analysis, which forms part of this Report.
11. Corporate Governance
A separate section on Corporate Governance standards followed by your Company, as stipulated under Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is enclosed as an Annexure to this report. The report on Corporate Governance also contains certain disclosures as required under the Companies Act, 2013.
A Certificate from M/s. V. Sundaram & Co., Practising Company Secretaries, confirming compliance with the conditions of Corporate Governance, as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is annexed to the Report on Corporate Governance.
12. 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 and safety, environmental issues and wastage/ misappropriation of Companyâs 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 the whistle blower who avail of such mechanism. The vigil mechanism also provides direct access to the Members of the Audit Committee, including the Chairman 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 https://theleela.com/img/brand/investor-relations/corporate-governance-policies/whistle-blower-policy.pdf.
13. 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.
14. 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 into during the year were in the ordinary course of business and on armâs length basis. No material related party transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as stated in 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. 29.10 to the standalone financial statements, which gives the related party disclosures.
15. Internal Financial Control Systems and their adequacy
The Company has laid down standards, processes and structures which enable 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.
16. Auditors
(a) Statutory Auditors and Auditorsâ Report
M/s. Picardo & Co., Chartered Accountants, will retire at the conclusion of the forthcoming Annual General Meeting and are not eligible for reappointment as they have completed the maximum tenure of ten years permissible under the Companies Act, 2013.
Hence, the Board of Directors has recommended appointment of M/s. N. S. Shetty & Co., Chartered Accountants, as the Statutory Auditors of the Company to hold office from the ensuing Annual General Meeting till the conclusion of the Annual General Meeting in the year 2022, subject to ratification by the Members of the Company at every subsequent Annual General Meeting. 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.
During the period under review, even though there is no audit qualification, there are audit observations on the financial statements. The explanation for the same has been provided in Note No.29.1 and 29.2 of the standalone Financial Statements. The said note is self-explanatory and does 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 2016-17. The report of Secretarial Auditor for the FY 2016-17 is annexed to this report as Annexure - II. There is no Audit Qualification in the Secretarial Audit Report.
17. Material Changes and Commitments affecting Financial Position of the Company
There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company i.e. 31st March, 2017 and the date of the Directorsâ report i.e. 25th May, 2017.
18. Employee Remuneration
(A) The ratio of the remuneration of each director to the median employeeâs 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, forms part of this report.
(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 as Annexure III. 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.
19. 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 five financial years, the Company has not formed a CSR Committee. However, the Company continues to undertake CSR activities for the benefit of the local communities nearby its hotel properties, the details of which are disclosed separately in this Annual Report.
20. Fixed Deposits
The Company has not accepted any deposits from the public or from the shareholders.
21. 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 âGreenâ 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 to monitor and control power consumption.
- Main chiller plants and steam boilers have been tuned for best efficiency, to conserve energy.
- 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.
- The Leela Palace Bangalore won National Energy Conservation and Certificate of Appreciation from Ministry of Power.
- Boilers are being operated through bio diesel which is produced through used kitchen oil.
- The Leela Palace Chennai and Leela Palace Delhi are LEED platinum rated buildings awarded by IGBC.
- Power is purchased at subsidized rate through open access, in two 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 a 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.30,221.02 lakhs (previous year Rs.36,521.95 lakhs) and foreign exchange outgo during the year stood at Rs.2,489.89 lakhs (previous year Rs.3,621.34 lakhs).
(ii) No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and the Companyâs 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 employee which may fall under the ambit of âSexual Harassmentâ at workplace, and is fully committed to uphold and maintain the dignity of every woman employee in the Company. The Companyâs Policy provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints. During the year, no such cases were reported.
22. Extract of Annual Return
Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extract of the Annual Return as at March 31, 2017 forms part of this report and the same is attached to this report as Annexure-IV.
23. Unclaimed / un exchanged Equity Shares in the Company
In compliance with the erstwhile clause 5A of the Listing Agreement, the Company has transferred 25,98,970 unclaimed equity shares belonging to 4,330 shareholders, lying with the Company to âUnclaimed Share Suspense Accountâ in May, 2015. The Company has released 17,000 shares pertaining to 16 shareholders from the suspense account during the year. As on 31st March, 2017, there are 25,47,950 shares pertaining to 4,283 shareholders in the suspense account.
The voting rights on the shares in the suspense accounts shall remain frozen till the rightful owners of such shares claim the shares.
24. Acknowledgements
The Board wishes to place on record its appreciation for the assistance and support received from 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 attach immense importance to the contribution of the employees and sincerely thank âThe Leelaâ team for sharing the Companyâs vision and philosophy and for the dedication and commitment in ensuring that the Company remains in the forefront as one of the finest hotel groups in India.
For and on behalf of the Board of Directors
Vivek Nair
Chairman & Managing Director
Mumbai, 25th May, 2017
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
Mar 31, 2011
The Directors have pleasure in presenting the Thirtieth Annual Report
of the Company together with its Audited Statement of Accounts for the
year ended 31st March, 2011.
1. Financial Results
The CompanyÃs performance during the year under review is summarised
below:
(Rupees in crores)
Financial Year Financial Year
2010-11 2009-10
Income from Sales, Services
and other 553.35 478.38
Income
Operating, administrative and 369.68 320.94
other expenses (before
interest and depreciation)
Interest 57.62 24.47
Profit before Depreciation 126.05 132.97
Depreciation 68.43 68.33
Profit before Tax 57.62 64.64
Provision for Taxes / Deferred Tax 18.74 19.63
Profit after Tax for the year 38.88 45.01
Prior Period Adjustments à Net 1.04 3.99
Profit after Tax 37.84 41.02
Balance brought forward 312.80 287.74
Amount available for
Appropriation 350.64 328.76
Appropriations:
Dividend on Equity shares 5.82 7.56
Tax on proposed Dividend 0.94 1.25
Transfer to General Reserve - 1.15
Transfer to Capital Redemption 18.00 6.00
Reserve
Balance carried to Balance Sheet 325.88 312.80
EPS Basic (in Rs.) 0.99 1.09
EPS diluted (in Rs.) 0.93 0.92
2. Foreign Currency Convertible Bonds
During the year under review, the Company redeemed on maturity, Euro
Bonds of the face value of Euro 39.20 million together with premium, as
per the terms of the offer document.
As on the close the financial year, the Company has outstanding Dollar
Bonds of the face value of US$ 41.60 million, maturing in April, 2012.
These bonds are listed on Singapore Exchange Securities Trading
Limited.
3. Dividend on Equity Shares
Your Directors are pleased to recommended a dividend of Rs. 0.15 per
equity share of Rs.2 each (previous year Rs.0.20 Per share), subject to
the approval of the shareholders at the ensuing AGM. The dividend would
involve a cash outgo of Rs.5.82 crores (previous year Rs.7.56 crores)
towards dividend and Rs. 0.94 crores (previous year Rs.1.25 crores)
towards tax on dividend. In terms of the Provisions of Investor
Education and Protection Fund (Awareness and Protection of Investors)
Rules, 2001, the Company has transferred unpaid / unclaimed dividends
and principal / interest on debentures aggregating Rs. 21.99 lakhs to
the Investor Education and Protection Fund during the financial year
under review.
4. Review of Operations
The overall performance of the Company has improved during the year
under review, in line with the overall global economic recovery. The
total income stood at Rs. 553.35 crores, compared to Rs.478.38 crores
in the previous year.
5. Rating
The present rating assigned to the Company by Credit Analysis &
Research Limited (CARE) is "CARE A-" [Single A Minus] for long term
loans and NCDs and PR 2 (PR Two) for short term facilities. These
ratings are considered to offer adequate safety for timely servicing of
debt obligations and carry low credit risk.
6. Opening of The Leela Palace, New Delhi
The CompanyÃs most awaited and prestigious hotel "The Leela Palace, New
Delhi" had a soft launch in September, 2010 and a ceremonial opening on
17th April, 2011. This hotel has 260 oversized luxury guest rooms and
suites. The rooms and suites offer premium and distinct luxury
experience to the contemporary business travellers.
This hotel is situated in the exclusive Diplomatic Enclave, close to
the Prime MinisterÃs residence, Rashtrapathi Bhavan, the Secretariat,
as well as a number of historical monuments including the India Gate,
Raj Ghat, Qutab Minar, etc.
The hotel offers rooftop pool with magnificient views over Delhi, four
restaurants including the first Asian outpost of legendary restaurant
brand Le Cirque, Indian restaurant Jamavar, Japanese eatery Megu, with
International Cuisine available in The Qube. This hotel also has ESPA
spa spread over two levels offering ayurvedic and other treatments in
its seven treatment rooms and private spa suite.
Keeping in mind the Ãgreenà sensibilities, the Leela Palace New Delhi
has been designed to be sustainable. Gas turbine, water harvesting,
solar energy application and a sophisticated sewage treatment plant
have been built into the hotel, making it the first hotel in New Delhi
to be designed for Gold Leed certification.
7. Marketing and other Alliances
The Company has marketing alliances with Germany based Kempinski Group
of Hotels (Hoteliers since 1897) and US based Preferred Hotel Group and
is a member of Global Hotel Alliance based in Geneva, Switzerland.
Under the alliance with Kempinski, the Company has been receiving,
among others, international marketing services for the existing hotels,
technical and pre opening services for the proposed hotels in Chennai
as well as other hotels that the Company would operate in the future,
purchasing services, services related to IT and management information
systems, as well as personnel and operational support.
Preferred Hotel Group is 40 year old sales centric organization with
700 prestigious hotel groups across the world as its members. The
alliance with Preferred Hotel Group benefits the Company with
co-branding resulting in greater recognition of the CompanyÃs brand in
the USA as premium and luxury hotels. The Company also gets the
opportunity to leverage their seven Global Sales Offices in the USA, as
well as in Paris, Singapore, Hong Kong, Japan, Australia and others. In
addition, their technology powers the CompanyÃs website enabling the
Company to receive direct bookings. Their preferred relationship with
American Express allows the Company lower commissions on receipts
through American Express Credit Card, which
results in substantial savings and opportunities to participate in many
road shows in the CompanyÃs main source markets. The alliances also
assist the Company to get more international business and to enhance
its competitive positioning in the market.
Global Hotel Alliance is a collection of 12 upscale and luxury regional
hotel brands from across the world with a collection of over 300 hotels
in 47 countries. As a member of the alliance, the Company gets access
to preferred relationships with 15 International Airlines and three of
the largest Travel Management Companies, American Express, Carlson
Wagonlit and BCD, which help the Company to market its hotels globally.
The Company is also part of their newly launched recognition program,
GHA Discovery, which already has 1.4 million members and this helps the
Company to compete with other similar programs of global hotel chains.
As a GHA member, the Company derives substantial savings on its hotel
room management and reservations technology provided by Micros, as well
as avail technical support for the CompanyÃs planned independent GDS
code. Towards maintaining world-class standards, the Company has
engaged ESPA of London, one of the leading Spa management companies in
the world, to manage the CompanyÃs Spas at Mumbai, Goa, Udaipur and New
Delhi.
8. Expansion / Up-gradation Plans
Tourism industry is growing and bound to grow stronger in India owing
to its splendid historical architecture, rich heritage and ancient
culture along with beautiful beaches and rural tourism, and the
inherently rooted concept of hospitality in form of "Ãtithi Devo
Bhava".
Your Company owns and operates six hotels at the locations viz. New
Delhi, Mumbai, Bangalore, Goa, Kovalam and Udaipur, besides operating
another hotel at Gurgaon under Management Contract. The Company expects
to start operations of the hotel under construction in Chennai during
the current financial year.
The Company has acquired land in Agra and Ashtamudi in Kerala for
construction of hotels. These projects will be taken up in due course
after completion of the Chennai project.
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 for high end
residential use. Accordingly, the Company has already entered into
joint development agreement with a reputed builder in Pune. In
Hyderabad, the Company would either directly undertake development or
enter into joint development agreement with a reputed builder. The
Company also has about 2 acres of land next to Leela Palace, Bangalore
and is in discussions with reputed local builders for developing high
end residential buildings.
9. Audit Observation:
The explanation given in the Notes to Accounts is self explanatory.
10. Awards, Accolades and Recognitions:
(a) Recognition to the Chairman of the Company
One of the most prestigious luxury magazines of Dubai, Gulf
Connoisseur, awarded Capt. C.P. Krishnan Nair with the ÃThe Green
Hotelier of the Decadeà Award in November 2010, in Dubai.
(b) Recognition for the Hotels
- The Leela Palace New Delhi is named one of the best New City Hotels
in the Travel + LeisureÃs ÃItà List 2011, a compilation of the 50 best
new hotels in the world in the June 2011 issue.
- In November 2010, The Leela Palaces, Hotels & Resorts won the
prestigious TravTalk - World Travel Market Global Award in recognition
of its new standards of excellence in the luxury hotels market and
rapid expansion carried out while giving back to the local community.
- The Leela Palace Udaipur also received The ConnoisseurÃs award for
Best Exotic Resort.
- In October 2010, the World Travel Awards (WTA), Asia and Australia,
adjudged the iconic Leela Palace Bangalore as IndiaÃs Leading
Conference Hotel, and the GroupÃs beachfront property in
Kerala, The Leela Kovalam Beach, Kerala, was recognised as AsiaÃs
Leading Resort.
- Also in October 2010, Luxury Hotel Awards, recognised The Leela
Palace Bangalore as the Best Luxury City Hotel in India, while The
Leela Palace Udaipur was accorded the honour of the Best Luxury
Boutique Hotel in the world.
- In August 2010, the Vogue Beauty Awards awarded The Leela Goa for the
best Detox treatment offered.
- On 24 June, 2010, The Leela Group was conferred the WTC Award of
Honour by the World Trade Centre Mumbai for the groupÃs exceptional
contribution to international trade and commerce.
Conde Nast Traveller UK
- In the May 2011 issue, Conde Nast Traveller, UK, listed The Leela
Palace New Delhi as one of the 65 great new hotels of the world in its
Hot List.
- In March 2011, The Spa at The Leela Palace Bangalore came second in
the ÃHotel Spas of Asia and the Indian Subcontinentà category in Conde
Nast Traveller UKÃs Readersà Spa Awards 2011.
- In the January 2011 issue, Conde Nast Traveller, UK, listed The Leela
Palace Udaipur as one of the Best Hotels for Service in Asia.
Conde Nast Traveller USA
- In the January 2011 issue, Conde Nast Traveler, USA, listed The Leela
Palace Bangalore as the second best hotel within India in its Gold
List.
11. 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.
12. 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 they form part of this Annual Report.
As part of good Corporate Governance, the Company has voluntarily
obtained a Secretarial Compliance Certificate from a Practising Company
Secretary in respect of compliance of all rules, 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 also appended to
this report.
13. Changes in Directorate
The Board of Directors at their meeting held on 13th November, 2010 has
appointed Mr. Krishna Deshika as Director - Finance & CFO for a period
of 5 years with effect from 17th January, 2011. The Board of Directors
also at their meeting held on 29th January, 2011 has re-appointed Mr.
Vivek Nair as Vice Chairman & Managing Director, Mr. Dinesh Nair as
Joint Managing Director and Mr. Venu Krishnan as Deputy Managing
Director for a period of 5 years with effect from 1st April, 2011. The
above appointments have been approved by the members through a postal
ballot.
During year under review, Mr. V. L. Ganesh, Director - Finance & CFO
resigned with effect 13th November, 2010.
Further, in terms of provisions of Section 260 of the Companies Act,
1956, the Board of Directors on 29th January, 2011 has appointed Mr.
Indur Kirpalani as an Additional Director. Mr. Kirpalani holds office
up to the date of Annual General Meeting. The Company has received a
notice in writing under Section 257 of the Companies Act, 1956 for
appointment of Mr. Indur Kirpalani for the office of director liable
to retire by rotation.
Brief resume of the Directors proposed to be appointed / re-appointed
stating the nature of their expertise in specific functional areas,
their shareholding along with other relevant details are given at the
end of the Notice of the Annual General Meeting. The Board commends
their re-appointment by the members at the forthcoming Annual General
Meeting.
None of the directors of the Company are disqualified from being
appointed as directors as specified in section 274(1)(g) of the
Companies Act, 1956, as amended.
14. 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.
15. Particulars of Employees
Information in accordance with sub-section (2A) of Section 217 of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975, as amended, forms part of this Report. However, as per
provision of section 219(1)(b) (iv) of the Companies Act, 1956, the
reports and the accounts are being sent to all the shareholders of the
Company excluding the statement of particulars of employees. The
Company will make these details available upon request by any member of
the Company interested in obtaining them on writing to the Company
Secretary.
16. Wholly-owned Subsidiary Companies and Consolidated Financial
Statements
Pursuant to general exemption granted in terms of General Circular
No.2/2011 dated 8th February, 2011 issued by the Ministry of Corporate
Affairs, Government of India, regarding compliance with Section 212(8)
of the Companies Act, 1956, the Company has not attached Balance Sheet,
Profit and Loss Account and other documents of its two wholly owned
subsidiary companies with the Annual Report of the Company.
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. The relevant statement as required under Section 212 of
the Companies Act, 1956 about the two wholly-owned subsidiary companies
is also given elsewhere in this Annual Report.
17. Fixed Deposits
The Company has not accepted any deposits from the Public or from the
shareholders.
18. Directorsà 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, 2011 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 Ãgoing concern basisÃ.
19. 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" has 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 have been used to replace normal Halogen lamps in the two
properties at Mumbai and Bangalore. The process will continue in other
properties also. In addition, our upcoming project "The Leela Palace,
Chennai" will have LED lights for all its external lighting and all
major internal areas.
- Rain Water Harvesting is being implemented on an extensive scale.
Today Kovalam hotel collects an average of 43 c. mtr. of water on daily
basis and efforts are being made to increase the same so that we might
get our major requirement of water from this in future. The Leela
Palace, Chennai will also 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.
- Wind Mills continue to produce Renewable Energy for use in three of
our properties with study being done for other ones.
- Old equipments are being replaced with more efficient ones to reduce
our power consumption and improve efficiency.
(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 forms a part of the 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. 173.88 crores (previous year Rs. 171.23 crores) and foreign
exchange outgo during the year stood at Rs. 32.68 crores (previous year
Rs. 32.96 crores).
20. Acknowledgements
The Board wishes to place on record its appreciation for the continued
support and co-operation received from the Government of India,
especially the Ministry of Tourism, Airports Authority of India,
various Government regulatory authorities, State Governments of
Maharashtra, Goa, Karnataka, Kerala, Tamil Nadu, Rajasthan, Haryana,
Andhra Pradesh, Uttar Pradesh and Delhi and also the Kempinski Group of
Hotels, Preferred Hotel Group and Global Hotel Alliance and other
business and referral associates, Stock Exchanges, Financial
Institutions and Banks.
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.
Your directors attribute immense importance to the contribution of the
family of staff - the people who work so loyally to give intrinsic
values to "The Leela" brand and sincerely thank the Leela Team for
sharing the CompanyÃs 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.
On behalf of the Board of Directors
Capt. C. P. Krishnan Nair
Chairman
Mumbai, 23rd May, 2011
Mar 31, 2010
The Directors have pleasure in presenting the Twenty-Ninth Annual
Report of the Company together with its Audited Statement of Accounts
for the year ended 31st March, 2010.
1. Financial Results
The Companys performance during the year under review is summarised
below:
(Rupees in Crores)
For the
year ended For the
year ended
31st March
2010 31st March
2009
Income from Sales, Services and
other Income 463.02 582.16
Operating and other expenses
(before interest and depreciation) 305.58 296.58
Interest 24.47 27.20
Profit before Depreciation 132.97 258.84
Depreciation 68.33 65.39
Profit before Tax 64.64 193.45
Provision for Taxes / Fringe
Benefit Tax / Deferred Tax 19.63 47.58
Profit after Tax for the year 45.01 145.87
Prior Period Adjustments - Net 3.99 0.89
Profit after Tax 41.02 144.98
Balance brought forward 287.74 201.44
Amount available for Appropriation 328.76 346.42
Appropriations:
Dividend on Equity shares 7.56 15.11
Tax on proposed Dividend 1.25 2.57
Transfer to General Reserve 1.15 11.00
Transfer to Capital Redemption Reserve 6.00 30.00
Balance carried to Balance Sheet 312.80 287.74
EPS Basic (in Rs.) 1.09 3.84
EPS diluted (in Rs.) 0.92 3.13
2.Buy Back of Foreign Currency Convertible Bonds
During the financial year under review, the Reserve Bank of India
liberalized EC Guidelines enabling theCompanies to buy back their
outstanding Foreign Currency Bonds. Taking advantage of liberalization
n the policies governing premature buyback of Foreign Currency
Convertible Bonds by the Reserve Bank of India, during the financial
year under review, the Company managed to buy back outstanding Dollar
Bonds of the face value of US$ 25.40 million, which were issued by the
Company earlier, at a discounted price as compared to the issue price
and the book value of the Bonds. The Bonds, bought back under the
"Automatic Route", were cancelled as per guidelines issued by the
Reserve Bank of India. The particulars of the repurchase and position
of outstanding FCC Bonds as on 31st March, 2010 are summarized below:
Particulars Euro Bonds US$ Bonds
Face Value Outstanding Bonds
as on 1.4.2009 39.20 Million US$ 67 Million
Face Value of Bonds
repurchased - US$ 25.40 Million
Current Face Value of
Outstanding Bonds 39.20 Million US$ 41.60 Million
Maturity Sep. 2010 April 2012
3. Secured Redeemable Non-convertible Debentures
During the year under review, the Company prepaid Secured Redeemable
Non-convertible Debentures of Rs.60 crores, out of Rs.150 crores raised
during the preceding year on Private Placement Basis from Institutional
Investors / Banks for business needs. The NCDs have been listed on the
Wholesale Debt Market segment of the Bombay Stock Exchange Limited.
The NCDs are rated "CARE A" by Credit Analysis & Research Limited,
indicating adequate safety for timely servicing of debt obligations and
carry low risk.
4. Dividend on Equity Shares
Your Directors are pleased to recommended a dividend of Rs. 0.20 per
equity share of Rs.2/- each (previous year Rs.0.40 Per share), subject
to the approval of the shareholders at the ensuing AGM. The dividend
would involve a cash outgo of Rs.7.56 crores towards dividend and Rs.
1.25 crores towards tax on dividend.
In terms of the Provisions of Investor Education and Protection Fund
(Awareness and Protection of Investors) Rules, 2001, the Company has
transferred unpaid / unclaimed dividends and principal / interest on
debentures aggregating Rs. 3.04 lakhs to the IEPF during the financial
year under review.
5. Review of Operations
The overall performance of the Company has declined during the year
under review in line with the overall global economic slowdown. The
total income stood at Rs. 463.02 crores (including income from discount
on redemption of Bonds of Rs. 0.65 Crores) compared to Rs. 582.16
crores in the previous year.
The revenues of the Company from its various units are summarized as
under:
(Rupees in Crores)
Name of the Unit 2009-10 Percentage 2008-09 Percentage
of Revenue of Revenue
The Leela ,
Bangalore 142.27 36% 176.72 40%
The Leela, Mumbai 128.18 32% 147.67 34%
The Leela, Goa 66.87 17% 61.85 14%
The Leela, Kovalam 53.43 13% 54.35 12%
The Leela, Udaipur 9.74 2% NA NA
Total 400.49 100% 440.59 100%
The Average Room Rates in the city of Bangalore decreased by 32% and in
Mumbai by 25% during the year. Overall ARR of the company for 2009-10,
decreased by 20% as compared to 2008-09. However, as in the past, this
year also, the Company maintained its market dominance in terms of
revenue, ARR and Occupancy in Bangalore, Goa and Kovalam.
6. Product Enhancement
For the first time your company has entered in to a management contract
to operate a hotel. The Leela, Gurgaon, owned by Ambiance Hotels &
Resorts Limited and managed by our company under The Leela brand,
formally commenced business operations from April 2009. The business at
this property with 319 guest rooms and 90 service apartments, in first
year of operation, has been very successful and has secured Brand
Leela presence in North India. Our company earned fees of Rs. 11.84
crores in the year for managing the hotel.
The Leela Palace Udaipur with its breathtaking architecture and
opulence started operation in stages in this fiscal year. It has 80
rooms and spa managed by ESPA. Although business has taken time to pick
up in the first year of operation but the hotel has received excellent
feedback and accolades from both trade analysts and discerning
international travelers.
7. Marketing Alliances
The Company has marketing alliances with Germany based Kempinski Group
of Hotels (Hoteliers since 1897) and US based Preferred Hotel Group and
is a member of Global Hotel Alliance based in Geneva, Switzerland.
Under the alliance with Kempinski, the Company has been receiving,
among others, international marketing services for the existing hotels,
technical and pre-opening services for the proposed hotels in New Delhi
and Chennai as well as other hotels that the Company would operate in
the future, purchasing services, services related to IT and management
information systems used in our hotels, as well as personnel and
operational support.
This alliances with Preferred Hotel Group and Global Hotel Alliance,
amongst others, derives benefits for the Company of Preferred Hotels
and Resorts branding, greater recognition of brand in the USA as
premium and luxury hotels, opportunity to leverage additional 29 Global
Sales Offices in the USA, Singapore, Hong Kong, Japan and Australia;
preferred relationship with four of the largest consortia American
Express, CWT, BCD and Hogg Robinson, and also lower commission on
receipts through American Express Credit Card, which results in
substantial savings; opportunities to participate in many more road
shows in our main source markets. The alliances assist the Company to
acquire more international business and enhances our competitive
positioning in the market.
Towards maintaining world-class standards, the Company has engaged ESPA
of London, one of the leading Spa management companies in the world, to
manage the Companys Spas at Mumbai, Goa, Udaipur, and Delhi.
8. Expansion / Up-gradation Plans
India is one of the fastest growing tourist markets in the world owing
to its splendid historical architecture, rich heritage and ancient
culture along with beautiful beaches and rural tourism, and the
inherently rooted concept of hospitality in form
of "Ãtithi Devo bhava". In India, the tourism industry is bound to grow
stronger post the present recessionary trend.
At present, your Company operates six hotels at the locations viz.
Mumbai, Bangalore, Goa, Kovalam, Udaipur and Gurgaon comprising 1523
guest rooms and 90 serviced apartments.
Your companys new hotel "The Leela Palace, New Delhi" is expected to
commence operations in the Third quarter of calendar year 2010, with
approximately 260 guest rooms. The Companys other hotel "The Leela
Palace" at Chennai is expected to commence operations in the calendar
year 2011 with approximately 332 guest rooms.
The upcoming projects of the Company under various stages of
development are as follows:
The Leela IT Park, Chennai:
The IT Park with about 265,000 square feet of built area, being
developed by the Company in close proximity to the upcoming five-star
deluxe hotel in Chennai is expected to be completed shortly.
Other Projects
The Company has acquired seven acres of land in close proximity to the
historic Taj Mahal, Agra.
The projects in Agra, Hyderabad and Pune are expected to be taken up in
due course.
9. Audit Observation:
The explanation given in the Notes to Accounts is self explanatory.
10. Awards, Accolades and Recognitions:
A. Recognition for the Hotels:
- The Leela Palace Udaipur was presented the Ultimate in Luxury Award
at SATTE Achievers Award 2010.
- The Leela Palace Bangalore was voted as the Favourite Business Hotel
in India by the readers of Condé Nast Traveller, UK at the Condé Nast
Travellers Readers Travel Awards 2010.
Conde Nast Traveller (Goldlist - January 2010 Issue):
- The Leela Palace Bangalore featured as one of Worlds 681 Best Places
to Stay (USA Issue).
-The Leela Palace Udaipur featured as one of the Best New Entrants
among the Hotels in Asia. (UK Issue). Conde Nast Traveller (Hot List -
May 2010 Issue):
-The Leela Palace Udaipur featured as one of the Worlds 134 Top New
Hotels (USA Issue).
-Espa at The Leela Palace Udaipur featured as one of the Worlds Top
Sybaritic Spas (USA Issue).
-The Spa at The Leela Mumbai featured as one of the Worlds Top
Sybaritic Spas (USA Issue).
-The Leela Palace Udaipur featured in as one of the Best New Hotels in
the World (UK Issue).
B. Recognition to the chairman of the Company:
-Honble President of India, Smt. Pratibha Patil conferred the Padma
Bhushan to Capt. C.P. Krishnan Nair on 31st March 2010 in recognition
for his contribution to the industry.
-The Hotelier of the Century Award by International Hotel and
Restaurant Association (IH&RA), Geneva awarded to Capt. C. P. Krishnan
Nair at the IH&RA Annual Congress in Belgrade, Serbia for his
contribution to the hospitality industry.
-HVS Hotel Investment Conference South Asia (HICSA) honoured Capt. C.
P. Krishnan Nair with the Lifetime Achievement Award for redefining
the Indian hospitality landscape by creating new standards of
excellence in luxury services.
-The Hall of Fame Award was conferred on Capt. C. P. Krishnan Nair at
Hotel Investment Forum India (HIFI) 2010 for his exemplary business
practices and outstanding contribution to the hospitality sector.
-Giants International Award 2009 Excellence in Business and Industry
awarded to Capt. C.P. Krishnan Nair for his outstanding contribution to
the industry.
-CNBC Travel Awards 2009 Lifetime Achievement Award conferred upon
Capt. C.P. Krishnan Nair for his outstanding contribution to the Travel
and Tourism Industry.
11. 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.
12. 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 a Secretarial Compliance Certificate from a Practicing Company
Secretary in respect of compliance of all rules, 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 also appended to
this report.
13. Directors
In accordance with the provisions of the Companies Act, 1956 and the
Articles of Association of the Company, Mrs.Madhu Nair, Mr.Anil Harish,
Mr.A.K.Dasgupta and Mr.Vijay Amritraj, Directors of the Company, retire
by rotation at the forthcoming Annual General Meeting and being
eligible, offer themselves for re-appointment. Brief resume of the
Directors proposed to be re-appointed stating the nature of their
expertise in specific functional areas, their shareholding along with
other relevant details are given at the end of the Notice of the Annual
General Meeting. The Board commends their re- appointment by the
members at the forthcoming Annual General Meeting.
None of the directors of the Company are disqualified from being
appointed as directors as specified in section 274(1) (g) of the
Companies Act, 1956, as amended.
14. 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.
15. Particulars of Employees
Information in accordance with sub-section (2A) of Section 217 of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975, as amended, forms part of this Report. However, as per
provision of section 219(1)(b) (iv) of the Companies Act, 1956, the
reports and the accounts are being sent to all the shareholders of the
Company excluding the statement of particulars of employees. The
Company will make these details available upon request by any member of
the Company interested in obtaining them on writing to the Company
Secretary.
16. Wholly-owned Subsidiary Companies and Consolidated Financial
Statements
During the preceding year, the Company disposed off a non-operative
subsidiary for a consideration. The Company has two other subsidiaries,
which also did not carry out any operations.
The Company has applied to the Central Government seeking exemption
under Section 212(8) of the Companies Act, 1956 from attaching Balance
Sheet, Profit and Loss Account and other documents of the two wholly
owned subsidiary companies with the Annual Report of the Company.
Hence, the said documents of the subsidiary companies have not been
attached to the Annual Report of the Company. 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 approval, 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. The relevant statement as required under Section 212 of
the Companies Act, 1956 about the wholly-owned subsidiary companies is
also given elsewhere in this Annual Report.
17 Fixed Deposits
The Company has not accepted any deposits from the Public or from the
shareholders.
18 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
departure 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, 2010 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.
19. 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:
Efforts to make all of our properties more green as well as
Environmentally friendly in addition to our normal efforts at Energy
conservation continues to receive the highest priority throughout the
year. All efforts are made to monitor energy costs on daily basis,
compare review with previous patterns and take steps to see that
optimum use is made of energy and all natural resources.
Appropriate steps are taken to reduce the consumption through
efficiency, Preventive Maintenance Program, Introduction of latest
technology up-gradation of system and equipments wherever necessary in
a phased manner.
The Company has installed 23 wind mills with a capacity to generate
13.5 MW power (a non-conventional energy source) in the State of Tamil
Nadu, Maharashtra and Karnataka.
Major implementation & achievements taken at present are:
-Installation of VFD on Chilled water, condenser pumps and also
cooling towers and introduction of variable pumping plus control of
chiller system on daily basis plus scheduling of AHU operations,
resulting in around 11.5% plus reduction.
-Audit of complete steam system and elimination of losses and better
utilization of steam plus flash steam recovery resulting in drastically
reduced Natural Gas Consumption in Boilers
-Water savers installed in guest rooms and public areas.
-Use of STP water in Cooling towers and landscape areas.
-Solar Panels for hot water.
-Replacement of Halogen and other lights with CFL and LED lights in a
phased out manner.
Steps proposed for implementation in future:
-VFD controls on AHU, ventilation and exhaust fans in addition to
Building Management System.
-Full scale Rain Water Harvesting, resulting in direct usage of same
and also ground plus water aquifers recharging.
-Total revamp as well as replacement of Cooling Towers.
-Tri generation system for power generation as well as VAM for
air-conditioning through recovery of waste heat in exhaust Gas
-Total recycling and reuse of sewage and grey water in cooling towers,
guest room w/cs and landscaping.
-Collection and reuse of condensate from air-conditioning units.
(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 forms a part of the service industry and the
Company does not have any significant manufacturing operations.
(c) Foreign Exchange Earnings and Outgo:
The Company has a strong commitment towards international business and
continues to be a huge net contributor of foreign exchange. The
particulars of foreign exchange earnings and outgo are given in the
notes to accounts elsewhere in this annual report.
20. Acknowledgements
The Board wishes to place on record its appreciation for the continued
support and co-operation received from the Government of India,
especially the Ministry of Tourism, Ministry of Finance, Airports
Authority of India, various Government regulatory authorities, Stock
Exchanges, Financial Institutions, Banks, State Governments of
Maharashtra, Goa, Karnataka, Kerala, Tamil Nadu, Rajasthan, Haryana,
Andhra Pradesh, Uttar Pradesh, NCT Delhi and the Urban Development
Authority and also the Kempinski Group of Hotels, Preferred Hotel Group
and Global Hotel Alliance and other business and referral associates.
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.
Your directors attribute immense importance to the contribution of our
family of staff the people who work so loyally to give intrinsic values
to "The Leela" brand. On behalf of the Board, I thank The Leela Team
for sharing our vision and philosophy; and for the dedication and
commitment at all levels to ensure that we remain in the forefront of
our competitive industry as one of the finest Hotel Groups in India.
On behalf of the Board of Director
Capt. C. P. Krishnan Nair
Chairman
Mumbai
Date : 24th May, 2010