Home  »  Company  »  Hotel Leela Ven.  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of Hotel Leela Venture Ltd.

Mar 31, 2015

1. Additional information to the Financial Statements

The lease agreement with Airports Authority of India (AAI) relating to the Mumbai hotel was valid till 11th July 2012 and vide letter dated 31st March,2011, AAI had offered to extend the lease by another 30 years, subject to revised terms and the Company had accepted the revised terms. However the lease agreement is yet to be signed. Pending execution of the lease agreement, AAI has been provisionally extending the lease for 3 to 6 months at a time and the latest extension was till 11th January, 2015. However depreciation on building constructed thereon is provided at the applicable rate on the assumption that the lease will be renewed.

AAI has arbitrarily increased the lease rental payable for the Mumbai hotel and for the adjacent land, effective from 1st October 2014 which increases the rental by Rs. 717 lakhs for the period upto 31st March 2015. The Company has objected to this increase and has not provided for the same.

2. The Company had incurred Rs. 13805.08 lakhs towards foundation & civil works, lease rental, royalty, interest etc. which was accounted in earlier years as Capital Work in Progress for an independent tower at Mumbai adjacent to the existing hotel. The amount includes royalty paid till 30th June, 2007 in terms of Award passed by the Sole Arbitrator on 17th May, 2008. In a subsequent arbitration, the Sole Arbitrator by his award dated 29th August, 2012, has declared that the Minimum Guaranteed Royalty stipulated in the Supplemental Agreement became impossible of performance with effect from 1st June 2008. AAI has challenged the Award before the Delhi High Court, which is pending. The Minimum Guaranteed Royalty for the subsequent period is not provided for, because of the dispute. As the hotel construction has not commenced due to disputes with AAI, which is under protracted litigation, the Company has written off the amount of Rs. 13805.08 lakhs and included the same in Exceptional Items in the Profit and Loss account.

3. Debt Restructuring

a) The Corporate Debt Restructuring (CDR) Empowered Group, in their meeting held on 28th June 2014 declared that the account of the Company stands exited from CDR system on account of failure. Pursuant thereto, on 30th June 2014, 14 of the erstwhile CDR Lenders with exposure of 95.6 % of the CDR Debt assigned their debt to JM Financial Asset Reconstruction Company Private Limited (JMFARC) and 1 lender with exposure of 1% of the CDR debt, to Phoenix ARC Private Limited.

b) The total amount assigned by the erstwhile CDR lenders to Asset Reconstruction Companies (ARCs) was Rs. 415013.77 lakhs, which included Sacrifice amount of Rs. 26315.00 lakhs. The Company has not accounted the Sacrifice amount, as it reflects the difference in the NPV between the cash flows as per the contracted terms and the cash flows agreed by the lenders as per the CDR Package, for the duration of the loan.

c) The Company was liable to pay interest at 11% per annum, compounded monthly, to the CDR lenders and applying the same rate, the interest on Rs. 388698.77 lakhs for the period from the date of assignment upto 31st March 2015 works out to Rs. 33161 lakhs. The Company is pursuing with the ARC for a viable restructuring package, with certain concessions in interest and repayment terms and pending approval of the same, has classified the debt as Non-current Liability in the Balance Sheet and has not provided for the interest. Had the Company provided for the interest, the loss for the year would have been higher by Rs. 33161 lakhs. JMFARC has notified the Company that the interest and penal interest are applicable as per the rates contracted prior to admission to CDR and that the debt amount is Rs. 457572 lakhs and the impact of the non-provision is understatement of finance cost to the extent of Rs. 78241 lakhs.

d) The Company has been evaluating various options for reduction of debt, including sale / monetisation of non-core assets, sale of hotels and getting an equity partner for infusion of equity and refinancing of debt. The Company has received non-binding offers and is in discussions with the ARC to finalise a viable financial restructuring package for the Company.

e) Sale of some of the hotels is not the only option being considered for restructuring. Even if the final decision is to sell some hotels, there is no decision as on date on which hotel should be sold, as the same would be based on the offers being received. While the amount which the Company can realise from sale of one hotel may be less than the book value, the amount realised from sale of another hotel could be higher and the Company expects that there would be no impairment / loss on sale of assets as a whole and accordingly, no provision has been made for any impairment loss.

f) The net worth of the Company, after excluding revaluation reserves is negative to the extent of Rs. 38602.98 lakhs as on 31st March 2015. Even though the net worth has turned negative during the year, the same could again become positive, when the financial restructuring materialises.

g) For reasons explained in note (a) to (f) above, the financial statements of the Company have been prepared on a going concern basis.

4. Contingent liabilities and commitments (to the extent not provided for)

Rs. lakhs

Particulars 2014-15 2013-14

Contingent liabilities

(a) Claims against the Company 15,207.56 6,178.12 not acknowledged as debts

(b) Disputed Statutory Liabilities 5,624.56 2,674.40

Other Commitments Estimated amount of contracts 337.48 1,562.85 remaining to be executed on capital account and not provided for

5. The information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties had been identified on the basis of information available with the Company in this regard.

6. Employee benefit plans Defined contribution plans

The Company makes Provident Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 544.65 lakhs (Year ended 31 March, 2014 Rs. 629.57 lakhs) for Provident Fund contributions in the statement of profit & loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

Defined benefit plans

The Company offers the following employee benefit schemes to its employees:

(i) Gratuity

The Company makes annual contributions to the Employees' Group Gratuity-cum-Life Assurance Scheme ofthe Life Insurance Corporation of India, a funded defined benefit plan for eligible employees. The scheme provides for lump sum payment to eligible employees on retirement, death while in employment or on termination of employment, of an amount equivalent to 15 days' salary payable for each completed year of service or part thereof in excess of six months. Eligibility occurs upon completion of five years of service.

The present value of the defined benefit obligation and current service cost are measured using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date.

The following table sets out the funded status of the gratuity plan and the amount recognised in the Company's financial statements

(ii) Compensated absence liabilities

Present value of compensated absence liabilities (unfunded) recognised in Balance Sheet as per actuarial valuation under Projected Unit Credit Method is Rs.1129.30 lakhs (Previous year Rs.945.96 lakhs), of which long term liability is Rs. 932.67 lakhs (Previous year Rs. 800.63 lakhs) and short term liability is Rs. 196.63 lakhs (Previous year Rs. 145.34 lakhs).

7. Segment Information

The Company's main business is hoteliering and there is no other reportable segment as defined under Accounting Standard 17 - Segment Reporting (AS-17). Hence disclosure of segment wise information is not applicable.

8. Related party transactions

(i) Details of related parties:

Description of relationship Name of related parties

Subsidiaries

Leela Palaces and Resorts Ltd.

Leela Realy Ltd. (Subsidiary upto 31st Dec 2014)

Associates

1) Leela Lace Software Solutions Pvt. Ltd

2) Leela Lace Holdings Pvt. Ltd.

3) Leela Fashions Pvt. Ltd.

4) Rockfort Estate Developers Pvt. Ltd.

5) Season Apparels Pvt. Ltd.

6) Leela Innovation Centre Pvt. Ltd.

7) Elegant Eateries Pvt. Ltd.

8) Leela Housing Pvt Ltd

9) Aushim Soft Pvt. Ltd.

10) Leela Soft Pvt. Ltd.

11) Armcess Engineering Pvt. Ltd.

12) Zantho Pharmaceuticals Pvt. Ltd.

13) Leela Lace Estate Pvt. Ltd.

14) Emmel Realtors and Developers Pvt. Ltd.

15) Leela Villas Pvt. Ltd.

16) Leela Lace Info Park Pvt. Ltd.

17) Leela Constates Pvt. Ltd.

18) Leela Capital and Finance Limited.

19) Leela Realcon Pvt. Ltd.

20) Leela IT Projects Pvt. Ltd.

21) Palakkad Infrastructure Pvt. Ltd.

22) Leela Lace Builders Pvt. Ltd.

23) Vibgyor Leasing Pvt. Ltd.

24) Zillion Hotels & Resorts Pvt. Ltd.

25) Mumbai International Convention and Exhibition Centre Ltd

26) Leela Techno Parks Pvt. Ltd

27) Fransisco Hospitality Pvt. Ltd.

28) Leela Realty Ltd (Associate from 1st January 2015 )

29) L.M Realtors Pvt Ltd.

30) LMV Associates Limited

31) Leela Hospitality Pvt. Ltd.

Description of relationship Name of related parties

Key Management Personnel Mr. Vivek Nair (KMP) Mr. Dinesh Nair Mr. Venu Krishnan upto 31st July, 2014 Mr. Krishna Deshika

Relatives of KMP Mrs. Madhu Nair (wife of Mr. Dinesh Nair) Ms. Amruda Nair (daughter of Mr. Vivek Nair) Ms. Samyukta Nair(daughter of Mr. Dinesh Nair Ms. Aishwarya Nair (daughter of Mr. Vivek Nair)

Company in which KMP None / Relatives of KMP can exercise significant influence

9. Pursuant to the Companies Act, 2013 (a) The Company has provided depreciation for the year on the basis of the useful life of fixed assets as prescribed in the Schedule II of the Companies Act, 2013 except in respect of certain assets as disclosed in the Accounting Policy on Depreciation resulting in higher depreciation of ' 3342.97 lakhs for the year. (b) In respect of fixed assets whose useful life has ended prior to 31st March 2014 an amount of ' 2884.26 lakhs (net of deferred tax Rs. 1289.77 lakhs) has been adjusted to the opening balance of Profit and Loss account. (c) depreciation on the revalued portion is charged to profit and loss account instead of the earlier practice of withdrawing from the revaluation reserve resulting in higher depreciation of Rs. 1221.39 lakhs for the year.

10. (a) Cost of IT Park at Chennai and the Land at Hyderabad for which the Company has entered into agreements to sell are considered as assets held for sale.

(b) As a security for the advance paid by a party pursuant to an agreement to sell the IT park at Chennai, a deed of simple mortgage of the said property is executed in their favour.

11. Based on the estimated realisable value, Company has provided for impairment amounting to Rs. 3268.68 lakhs in respect of an asset held for sale.

12. The Company has made a provision for diminution in the value of long term investment in a subsidiary amounting to Rs. 1254 lakhs based on the estimated realisable value of assets of the subsidiary as the Company intends to sell the same.

13. Previous year figures have been regrouped or re-arranged wherever necessary.




Mar 31, 2014

Note 1 Additional information to the Financial Statements

1.1 Capital work-in-progress includes Rs. 13,805.08 lakhs, (previous year Rs. 13,805.08 lakhs) for an independent tower at Mumbai adjacent to the existing hotel, held up on account of disputes with the Airports Authority of India (AAI). The amount includes royalty and interest paid till 30th June, 2007 in terms of Award passed by the Sole Arbitrator on 17th May, 2008. In a subsequent arbitration, the Sole Arbitrator by his Award dated 29th August, 2012 has declared that the Minimum Guaranteed Amounts stipulated in the Supplemental Agreement became impossible of performance with effect from 1st June, 2008. AAI has challenged the Award before the Delhi High Court, which is pending.The Minimum Guaranteed Royalty for the subsequent period is not provided for, because of the dispute. The Company intends to resume the project after the dispute is settled and no provision is made for impairment considering the value in use after completion.

1.2 The Lease agreement with Airport Authority of India (AAI) relating to the Mumbai hotel was valid till 11th July, 2012. Pending the decision for renewal of lease by 30 years, AAI has been provisionally extending the lease for 3 to 6 months at a time and the latest extension was till 11th April, 2014. However depreciation on building constructed thereon is provided at the applicable rate on the assumption that the lease will be renewed.

1.3 Corporate Debt Restructuring (CDR)

1. The Company had applied for restructuring of its debts, under the

Corporate Debt Restructuring (CDR) mechanism. The proposal was to restructure all the debts other than the debt from HDFC Limited, ECB from SBI Singapore and the Vehicle Loans. The CDR Empowered Group approved the restructuring on 12th September, 2012 and the CDR Cell issued the Letter of Approval (LOA) 25th September, 2012. The Master Restructuring Agreement (MRA) incorporating the terms of the LOA was signed with the lenders on 28th September, 2012. The Company has also created security in favour of the Security Trustee for CDR lenders, on its pooled assets in place of the security earlier created on specific assets separately in favour of individual lenders.

2. In terms of the LOA and MRA, the Company''s debts have been restructured with longer repayment schedule stretching upto FY 2021- 22 and lower interest rates. The interest for the period from February 2012 to December 2013 was funded by the lenders, by way of Funded Interest Term Loans ( FITL). However, the CDR lenders would have a right of recompense, for their sacrifices, at the time of Company''s exit from CDR. The sacrifice amount for which the lenders have a right of recompense works out to Rs. 26,652 lakhs during the tenure of the CDR, of which the amount for the period upto 31st March, 2014 is Rs. 15,416 lakhs.

3. In terms of the CDR package, the Company is required to reduce its debts by Rs. 2031 crores by selling a Hotel in F. Y. 2013-14, and also by selling / monetising its non-core assets like the land in Hyderabad, land in Bangalore and IT Park in Chennai. While the sale/monetisation of non-core assets is taking place, the Company could not sell any Hotel during F. Y. 2013-14 due to the present economic environment. Consequently, the Company has also not been able to meet its debt service obligations. The Company is in discussions with the CDR lenders for extension of time for sale of hotels and for debt servicing.

4. In order to deleverage the balance sheet, the Company is planning to sell some of its Hotels and follow an Asset Light Strategy. Negotiations are on for sale, but the Company has not received any binding offers as on date. No provision is made for impairment, as the net realisable value from sale is not ascertainable.

1.4 Exceptional item Rs. Nil ( Previous year Rs. 329.35 lakhs) represents interest benefit relating to the previous year, net of expenses, under CDR mechanism.

1.5 Contingent liabilities and commitments (to the extent not provided for)

Rs. lakhs

Particulars 2013-14 2012-13

Contingent liabilities

(a) Claims against the Company not 6,178.12 7,594.63 acknowledged as debts

(b) Letters of credit open and - 653.07 Outstanding

(c) Disputed Statutory Liabilites 2,674.40 2,859.51

Other Commitments

Estimated amount of contracts 1,562.85 5,715.74 remaining to be executed on capital account and not provided for

1.6 The information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties had been identified on the basis of information available with the Company in this regard.

1.7 Employee benefit plans

Defined contribution plans:

The Company makes Provident Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 629.57 lakhs (Year ended 31 March, 2013 Rs. 512.06 lakhs) for Provident Fund contributions in the Statement of Profit & Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

Defined benefit plans

The Company offers the following employee benefit schemes to its employees:

i. Gratuity

The Company makes annual contributions to the Employees'' Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, a funded defined benefit plan for eligible employees. The scheme provides for lump sum payment to eligible employees on retirement, death while in employment or on termination of employment, of an amount equivalent to 15 days'' salary payable for each completed year of service or part thereof in excess of six months. Eligibility occurs upon completion of five years of service.

The present value of the defined benefit obligation and current service cost were measured using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date.

The following table sets out the funded status of the gratuity plan and the amount recognised in the Company''s financial statements.

ii. Compensated absence liabilities

Present value of compensated absence liabilities (unfunded) recognised in Balance Sheet as per actuarial valuation under Projected Unit Credit Method is Rs. 945.96 lakhs (Previous year Rs. 1,135.34 lakhs).

1.8 Segment Information

The Company''s main business is hoteliering and there is no other reportable segment as defined under Accounting Standard 17 - "Segment Reporting" (AS - 17). Hence disclosure of segment -wise information is not applicable.

1.9 Cost of IT Park at Chennai and the Land at Hyderabad for which the Company has entered into an agreement to sell is considered as asset held for sale.

1.10 The Company has received Rs. 3,500 lakhs from one promoter group entity towards Share application money to meet the debt service obligations. The Company proposes to allot shares after obtaining requisite approval from regulatory authority and the shareholders in the forthcoming Annual General Meeting at a price including such premium to be determined as per the SEBI (ICDR) regulations.

1.11 Previous year figures have been regrouped or re-arranged wherever necessary.


Mar 31, 2013

Note 1 Discontinuing Operations

During the previous year, pursuant to the scheme of arrangement approved by the Hon''ble High Court of Bombay on 24th February 2012, with appointed date of 1st September 2011 and effective date of 21st March 2012, the Company transferred the Kovalam Hotel Undertaking on a slump sale basis for a consideration of Rs. 50,000 lakhs. The results of the discontinued business until discontinuation were as under ;

Note 2 Additional information to the Financial Statements

2.1 Capital work-in-progress includes Rs.13,805.08 lakhs, (previous year Rs.13,805.08 lakhs) for an independent tower at Mumbai adjacent to the existing hotel, held up on account of disputes with the Airports Authority of India (AAI). The amount includes royalty and interest paid till 30th June 2007 in terms of Award passed by the Sole Arbitrator on 17th May 2008. The Minimum Guaranteed Royalty for the period beyond 30th June 2007 is not provided for as the same is under dispute. The company intends to resume the project after the dispute is settled.

2.2 The Lease agreement with Airport Authority of India (AAI) relating to Mumbai property was valid till 11th July 2012. AAI has temporarily extended the lease till 11th July 2013, pending approval by their competent authority for the Company''s proposal for extension by 30 years. However depreciation on building constructed thereon is provided at the applicable rate on the assumption that the lease will be renewed.

2.3 "Corporate Debt Restructuring (CDR)

1. The Company had applied for restructuring of its debts, under the Corporate Debt Restructuring (CDR) mechanism. The proposal was to restructure all the debts other than the debt from HDFC Limited, ECB from SBI Singapore and the Vehicle Loans. The CDR Empowered Group approved the restructuring on 12th September 2012 and the CDR Cell issued the Letter of Approval (LOA) 25th September 2012. The Master Restructuring Agreement (MRA) incorporating the terms of the LOA was signed with the lenders on 28th September 2012. The Company has also created security in favour of the Security Trustee for CDR lenders, on its pooled assets in place of the security earlier created on specific assets separately in favour of individual lenders.

2. In terms of the LOA and MRA, the Company''s debts have been restructured with longer repayment schedule stretching upto FY 2021- 22 and lower interest rates. A part of the interest for the period from February 2012 to December 2013 is being funded by the lenders, by way of Funded Interest Term Loans (FITL). However, the CDR lenders would have a right of recompense, for their sacrifices, at the time of Company''s exit from CDR. The sacrifice amount for which the lenders have a right of recompense works out to X 26,652 lakhs during the tenure of the CDR, of which the amount for the period upto 31st March 2013 is X 6,648 lakhs.

3. In terms of the CDR package, the Company is required to reduce its debts by selling a Hotel in FY 2013-14, and also by selling / monetising its non-core assets like the land in Hyderabad, land in Bangalore and IT Park in Chennai. The total amount to be repaid during FY 2013-14 is X1,44,883.83 lakhs, which is included under the head Other current liabilities (Note 10). Further, the FITL has been partly repaid in the current year and the balance will have to be repaid in FY 2013-14.

2.4 Exceptional item represents interest benefit relating to the previous year, net of expenses, under the CDR mechanism.

2.5 Contingent liabilities and commitments (to the extent not provided for)

Rs.lakhs

Particulars 2012-13 2011-12

Contingent liabilities

(a) Claims against the Company not 7,594.63 7,478.12 acknowledged as debts

(b) Letters of credit open and 653.07 521.65 outstanding

(c ) Disputed statutory liabilites 2,859.51 2,469.15

Other Commitments

Estimated amount of contracts 5,715.74 11,255.87 remaining to be executed on capital account not provided for

2.6 The information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties had been identified on the basis of information available with the Company in this regard.

2.7 Employee benefit plans

(a) Defined contribution plans:

The Company makes Provident Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 512.06 lakhs ( Previous year Rs. 447.53 lakhs) for Provident Fund contributions in the Statement of Profit & Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

(b) Defined benefit plans:

The Company offers the following employee benefit schemes to its employees:

i. Gratuity

The Company makes annual contributions to the Employees'' Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, a funded defined benefit plan for eligible employees. The scheme provides for lump sum payment to eligible employees on retirement, death while in employment or on termination of employment, of an amount equivalent to 15 days'' salary payable for each completed year of service or part thereof in excess of six months. Eligibility occurs upon completion of five years of service.

The present value of the defined benefit obligation and current service cost were measured using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date.

The following table sets out the funded status of the gratuity plan and the amount recognised in the Company''s financial statements.

The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risks, historical results of return on plan assets and the Company''s policy for plan asset management.

ii. Compensated absence liabilities

Present value of compensated absence liabilities (unfunded) recognised in Balance Sheet as per actuarial valuation under Projected Unit Credit Method is Rs.1,135.34 lakhs (Previous year Rs.914.66 lakhs).

2.8 Segment Information

The Company''s main business is hoteliering and there is no other reportable segment as defined under Accounting Standard 17 -" Segment Reporting"(AS-17). Hence disclosure of segment -wise information is not applicable.

2.9 Cost of IT Park at Chennai for which the Company has entered into an agreement to sell is considered as asset held for sale.

2.10 Previous year figures have been regrouped and re-arranged wherever necessary.


Mar 31, 2012

Foreign Currency Convertible Bonds

The Company had allotted Zero Coupon Foreign Currency Convertible Bonds (USD Bonds), of USD 1000 Lakhs on 24th April 2007 having maturity of 5 years and 1 day, convertible at any time up to 18th April 2012 into equity shares of Rs.2 each at a conversion price of Rs.72 per share with a fixed rate of exchange on conversion of Rs.41.945 for one USD. These bonds are listed on the Singapore Exchange Securities Trading Ltd., Singapore. Up to 31st March 2012, none of the holders of these Bonds have exercised their right to convert their holding into equity shares. Up to 31st March 2012, the Company has repurchased 584 (Previous Year 584) USD Bonds with a face value of US $ 584 lakhs (Previous Year US$ 584 lakhs). The repurchased USD Bonds have been extinguished. The remaining USD 416 lakhs USD Bonds which are due for redemption on 25th April 2012, at 146.61% of the principal amount have been redeemed on 25th May 2012. The pro-rata premium payable up to 31st March 2012 is charged to Security Premium Account.

In line with the option given by the Ministry of Corporate Affairs Notification No G.S.R 225(E) dated 31st March 2009, exchange differences arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period have been accounted as under :

(a) Rs. 5034.48 lakhs increase (Previous Year Rs. 391.66 lakhs reduction) on account of exchange variations in the long term foreign currency monetary items relating to depreciable assets are debited/(credited) to respective Fixed Assets/ Capital Work -in -progress account.

(b) Rs Nil (Previous Year Rs. 135.57 lakhs reduction) on account of exchange difference which are regarded as adjustment to interest costs in terms of Paragraph 4 (e) of Accounting Standards AS 16 "Borrowing Cost" is debited/ (credited) to fixed assets.

(c) Rs. 7325.91 lakhs increase (Previous year Rs. - Nil) on account of exchange variations in the long term foreign monetary items relating to non depreciable assets other than as referred in note (b) above, are debited to foreign currency monetary translation difference account.

(d) The balance in foreign currency translation difference account would be amortized over the balance period of the long term liability but not beyond 31st March 2020 by recognition as income or expenditure.

Note 1 Discontinuing Operations

During the year, pursuant to the scheme of arrangement approved by the Hon'ble High Court of Bombay on 24th February 2012, with the appointed date of 1st September 2011 and the effective date of 21st March 2012 , the Company has transferred the Kovalam Hotel Undertaking on a slump sale basis for a consideration of Rs 50,000 Lakhs. The results of the discontinued business during the year until discontinuation were as under :

Note 2 Additional information to the Financial Statements

2.1 Capital work-in-progress include Rs.13,805.08 lakhs, (previous year Rs. 13,556.84 lakhs) incurred in setting up an independent tower at Mumbai adjacent to the existing hotel, held up on account of disputes with the Airports Authority of India (AAI) which includes royalty and interest paid till 30th June 2007 in terms of Award passed by the Sole Arbitrator on 17th May 2008. Computation of Royalty as Minimum Guaranteed amount payable to AAI subsequent to the above mentioned Award is referred to Arbitration and pending its determination, no provision is made in the accounts. The Company is confident of settling the dispute and completing the project.

2.2 The information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties had been identified on the basis of information available with the Company in this regard.

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.

2.3 Loans and advances in the nature of loans given to subsidiaries, associates and others and investment in shares of the Company by such parties:

2.4 Employee benefit plans

Defined contribution plans

The Company makes Provident Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs. 477.53 lakhs (Year ended 31st March, 2011 Rs. 381.40 lakhs) for Provident Fund contributions in the Statement of Profit & Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

Defined benefit plans

The Company offers the following employee benefit schemes to its employees:

i. Gratuity

The Company makes annual contributions to the Employees' Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, a funded defined benefit plan for eligible employees. The scheme provides for lump sum payment to eligible employees on retirement, death while in employment or on termination of employment, of an amount equivalent to 15 days' salary payable for each completed year of service or part thereof in excess of six months. Eligibility occurs upon completion of five years of service.

The present value of the defined benefit obligation and current service cost were measured using the Projected Unit Credit Method, with actuarial valuations being carried out at each Balance Sheet date.

The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risks, historical results of return on plan assets and the Company's policy for plan asset management.

2.5 Segment Information

The Company's main business is hoteliering and there is no other reportable segment as defined under Accounting Standard 17 -" Segment Reporting" (AS-17). Hence disclosure of segment -wise information is not applicable.

2.6 Upto the year ended 31st March 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its Financial Statements. For the year ended 31st March 2012, the revised schedule VI notified under the Companies Act 1956, has become applicable to the Company. The Company has reclassified previous year figures to conform to this year's classification.


Mar 31, 2010

1) Foreign Currency Convertible Bonds:

(a) The Company had allotted 1% Foreign Currency Convertible Bonds (Euro Bonds), of Euro 60 Million on 15th September, 2005 having maturity of 5 years and 1 day, convertible at any time up to 31st August, 2010 into equity shares of Rs.2 each at a conversion price of Rs.46.65 (previous year Rs.46.65), with a fixed rate of exchange on conversion of Rs.54.33 for one Euro.These bonds are listed on the Singapore Exchange Securities Trading Ltd., Singapore.

(b) Up to 31st March 2010, holders of 8600 Euro Bonds (previous year 8600 Euro Bonds) with aggregate face value of Euro 8.60 million have exercised their right and converted their holding into equity shares, resulting in the allotment of 93,12,522 Equity Shares (previous year 93,12 ,522 Equity Shares)

(c) Upto 31st March 2010, the Company has repurchased 12,200 Euro Bonds with a face value of Euro 12.20 million. The repurchased Euro Bonds are extinguished. The pro-rata premium provided on the repurchased Euro Bonds is credited (net of tax ) to Security Premium Account.

(d) The remaining Euro 39.20 million Euro Bonds, unless converted, redeemed or repurchased and cancelled, will be redeemed on 16th September 2010 at 125.50% of the principal amount. The pro-rata premium payable on redemption (net of tax credits) is charged to Security Premium Account.

(e) The Company had allotted Zero Interest Foreign Currency Convertible Bonds (USD Bonds), of US $ 100 million on 24th April 2007 having maturity of 5 years and 1 day, convertible at any time up to 18th April 2012 into equity shares of Rs.2 each at a conversion price of Rs.72 (previous year Rs.72) with a fixed rate of exchange on conversion of Rs.41.945 for one US $. These bonds are listed on the Singapore Exchange Securities Trading Ltd., Singapore.

(f) Up to 31st March 2010, holders of these Bonds have not exercised their right to convert their holding into equity shares.

(g) Upto 31st March 2010, the Company has repurchased 584 (Previous Year 330) Zero Coupon USD Bonds with a face value of US $ 58.40 Million (Previous Year US $ 33.00 million). The repurchased USD Bonds have been extinguished. The pro-rata premium provided on the repurchased FCCBs has been credited (net of tax) to the Security Premium Account.

(h) The remaining US $ 41.60 Million USD Bonds, unless converted, redeemed or repurchased and cancelled, will be redeemed on 25h April 2012 at 146.61% of the principal amount. The pro-rata premium payable on redemption (net of tax credits) is charged to Security Premium Account.

2) Secured Loans:

a) Redeemable Non-Convertible Debentures:

i) The Company had issued on 19th December 2008, 12.5% Secured Redeemable Non-Convertible Debentures of Rs.10 Lakhs each aggregating Rs. 9,000 Lakhs redeemable at par on 18th December 2013.

ii) For the above issue, documentation relating to creation of security is under process.

iii) The Company had issued on 30th December 2008, 13% Secured Redeemable Non- Convertible Debentures of Rs.10 Lakhs each aggregating Rs.6, 000 Lakhs redeemable at par on 30th December 2013. These debentures are fully redeemed during the year under review.

iv) Debenture Redemption Reserve is created in accordance with applicable laws and guidelines.

b) Term Loans:

i) Term Loan of Rs.1,190 lakhs from The Jammu & Kashmir Bank Limited is secured by a pari passu charge on the immovable properties, both present and future, of the Club Suites at The Leela Goa.

ii) Term Loan of Rs.1,658 lakhs from Oriental Bank of Commerce is secured by certain company owned flats.

iii) Foreign Currency Loans of Rs.22,369 lakhs and Rupee Term loan of Rs.7,126 lakhs from State Bank of India, Foreign Currency Loan of Rs.11,285 lakhs and Rupee Term Loan of Rs.3,380 lakhs from State Bank of Mysore, Rupee Term Loan of Rs.5,000 lakhs from State Bank of Indore, Foreign Currency Loan Rs.5,519 lakhs and Rupee Term Loan of Rs.1,470 lakhs from State Bank of Travancore, Rupee Term Loan of Rs. 5,000 lakhs from State Bank of Bikaner & Jaipur, Rs.3,200 lakhs from State Bank of Patiala, Rs.5,000 lakhs from State Bank of Hyderabad, Rs.5,000 lakhs from Federal Bank and Rs.19,592 lakhs from Bank of India are secured by a pari passu charge on the fixed assets, both present and future, of the Delhi and Chennai properties.

iv) Rupee Term loan of Rs.25,000 lakhs from Bank of India and Rs.23,000 lakhs from Union Bank of India are secured by a pari passu charge on the fixed assets, both present and future, of the Leela Goa and The Leela Kempinski, Kovalam.

v) Out of Foreign Currency Loan of Rs.17,318 lakhs and Rupee Term Loan of Rs.8,693 lakhs from EXIM Bank, an amount of Rs. 13,321 lakhs is secured by a 1st charge on the immovable properties of The Leela Kempinski Mumbai and Rs.8,690 lakhs is secured by a pari passu charge on the fixed assets of the Udaipur property and Rs.4,000 lakhs is secured by a Mortgage on Wind Mills and 1st Charge on the The Leela Kempinski, Mumbai.

vi) Foreign Currency Loan of Rs.301 lakhs and Term loans of Rs.765 lakhs from Union Bank of India are secured by a pari passu charge on the fixed assets of The Leela Kempinski Kovalam.

vii) Foreign Currency Loan of Rs.11,736 lakhs from State Bank of India is secured by a pari passu charges on the The Leela Palace Kempinski, Bangalore.

viii) Term loan of Rs.365 lakhs from HDFC Bank Limited is secured by hypothecation of certain vehicles.

ix) Rupee Term loans aggregating to Rs.39,386 lakhs from the Housing Development Finance Corporation Limited are secured against a pari passu charge on the immovable properties of The Leela Palace Kempinski, Bangalore.

c) Cash Credit:

Cash Credit and other Working Capital facilities from a Consortium of Banks led by State Bank of India are secured by hypothecation of Companys inventories of stores and provisions, other stocks including inventories in transit, and book debts (except the credit card receivables), both present and future, and further secured by a pari passu second charge on the Fixed Assets of The Leela Goa (excluding the club suites) and the Leela Kempinski, Udaipur..

3) Deferred Tax:

a) The Company has accounted for deferred tax in accordance with Accounting Standard 22 Accounting for Taxes on Income issued by the Institute of Chartered Accountants of India. The deferred tax Liability comprises following components:

4) Fixed Assets:

a) Land (Leasehold) includes Development expenses, stamp duty and other direct charges.

b) Projects in progress:

(i) Projects-in-progress includes Rs.12,912.65 lakhs, (previous year Rs.11,760.43 lakhs) incurred in setting up an independent tower at Mumbai adjacent to the existing hotel, held up on account of disputes with the Airports Authority of India (AAI) which incl udes royalty and interest payable till 30th June 2007 in terms of Award passed by the Sole Arbitrator on 17th May 2008.

(ii) Computation of Royalty as Minimum Guaranteed amount payable to AAI subsequent to the above mentioned Award is referred to Arbitration, pending its determination, no provision is made in the accounts.

(iii) The Company is confident of settling the dispute and completing the project.

c) Additions to Fixed Assets/ Projects in progress includes, capitalization of borrowing cost during the year under review amounting to Rs. 23,497.53 lakhs (previous year Rs. 11,760 lakhs ).

5) Contingent Liabilities not provided for:

a) Estimated amount of contracts remaining to be executed on capital account not provided for- Rs. 20,917.95 lakhs (previous year Rs. 24,068.00 lakhs).

b) Claims against the Company not acknowledged as debts Rs. 1,750.00 lakhs (previous year Rs. 1,910.80 lakhs).

c) Disputed Statutory Liabilities not provided for Rs. 508.02 lakhs (previous year Rs. 132.00 lakhs).

d) Letter of Credit open and outstanding Rs. 610.32 lakhs (previous year Rs. 1,491.00 lakhs).

e) Counter guarantee given to banks in respect of guarantees given by them on behalf of the Company Rs. 128.82 lakhs (previous year Rs. 92.00 lakhs ).

6) In view of announcement made by the Institute of Chartered Accountants of India , as a matter of prudence the Company has provided an additional amount of Rs.76.94 lakhs in the profit and loss account (previous year Rs.30.00 lakhs ) towards probable losses in respect of outstanding derivative contracts .

7) The Division Bench of Delhi High Court has upheld the appeal filed by HUDCO against the order of the Execution Court confirming the method of computation adopted by the Company regarding interest receivable from HUDCO. The Special Leave Petition filed by the Company in the Supreme Court against this order of the Division Bench is pending, and the order of the Division Bench has been Stayed. The Company has during the year under review recognised interest income of Rs. 2,485.88 lakhs (previous year Rs. 4,115.70 lakhs) from HUDCO. The disputed amount recognised by the Company till 31st March 2010 amounted to Rs. 6,773.11 lakhs.

8) Land and Buildings includes land measuring 4.1330 hectares and building known as Kovalam Palace and other structures. The possession of the Palace Building is presently with the Government of Kerala. The Government of Kerala has passed an enactment called The Kovalam Palace (Taking Over by Resumption) Act, 2005. The legality of the said Act is challenged by the Company before the Kerala High Court, which is pending disposal. No provision has been made in the accounts, for the value of such land and building as the same is not separately ascertainable and also as per the Act, the Company is entitled to get compensation for improvements based on the report of Commissioner specially to be appointed for this purpose.

9) Sales and Services are stated net of discount and commission amounting to Rs. 1,964.61 lakhs (previous years Rs. 1,782.00 lakhs).

10) In terms of the option given in the Ministry of Corporate Affairs Notification No G.S.R.225 (E) dated 31st March 2009, differences arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period have been accounted as under:

(a) Rs Nil (Previous Year Rs. 2,274.17 lakhs) exchange gain recognised during the financial year ending 31st March 2008 is debited to general reserve account and credited to respective fixed asset account.

(b) Rs 9,176.55 lakhs reduction (Previous Year Rs.17, 735.00 lakhs increase) on account of exchange variations in the long term foreign currency monetary items relating to depreciable assets are credited (previous year debited) to respective fixed assets/ projects-in-progress account.

(c) Rs Nil (Previous Year Rs. 10,470.80 lakhs) on account of exchange variations relating to items other than non depreciable assets are debited to Foreign Currency Monetary Item Translation Difference Account. During the year under review Foreign Exchange gain amounting Rs. 5,562.13 lakhs is credited to this account and Rs. 3,861.59 lakhs exchange differences which are regarded as an adjustment to interest costs in terms of paragraph 4(e) of Accounting Standard AS (16) Borrowing costs is capitalized and Rs. Nil ( Previous Year Rs. 1,047.08 Lakhs) was amortised.

11) Retirement benefit plans:

a) Defined contribution plans The Company makes Provident Fund contribution to defined contribution retirement benefit plans for eligible employees. Under the schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs.355.47 lakhs (previous year Rs.288.00 lakhs) for provident fund contributions in the profit and loss account. The contributions payable to these plans by the Company are at rates specified in the rules of the respective scheme.

b) Defined benefit plans The Company makes annual contributions to the Employees Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, a funded defined benefit plan for eligible employees. The scheme provides for lump sum payment to eligible employees at retirement, death while in employment or on termination of employment, an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months. Eligibility occurs upon completion of five years of service.

The present value of the defined benefit obligation and current service cost were measured using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date.

The following table sets out the funded status of the gratuity plan and the amounts recognised in the Companys financial statements as at March 31, 2010:

The expected return on plan assets determined consulting several applicable factors mainly the compensation of the plan assets held, assesses risks of asset management, historical results of the return on plan assets and the Companys policy for plan asset management.

Change in the estimate relating to salary escalation resulted in lesser provision of Rs. Nil (Previous Year Rs. 202 lakhs) towards gratuity and Rs. Nil (Previous Year Rs .98.00 lakhs )towards leave salary during the year under review compared to the provisions made during the previous year.

The remuneration disclosed above excludes fees of Rs. 0.36 lakh (previous year Rs. 1.50 lakh ) for other professional services rendered by firm of accountants in which some partners of the firm of statutory auditors are partners.

12) The equity shares allotted on exercise of option to convert FCCBs would rank pari passu with the existing shareholders and consequently will be eligible to all rights and entitlements prospectively. Accordingly the proposed Dividend, recommended by the Directors and provided for, stands enhanced in favour of conversion effected since the close of the year to date, if any. However, as the Company is unable to estimate further conversion up to the record date set for determining the said liability i.e. (beginning of the conversion closure period), any further amounts required to be distributed as Dividend will be adjusted against the balance in the profit and loss account carried forward to the subsequent financial year.

13) Managerial Remuneration Rs.509.92 lakhs (previous year Rs.638.92 lakhs) includes Rs.181.00 lakhs (previous year Rs.310.00 lakhs) being commission payable to Managing and Joint Managing Director and Non Executive Directors.

14) Additional Information pursuant to the provisions of paragraphs 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956 :

(a) The Company has obtained exemption from giving quantitative details in compliance with Para 3(i)(a) of Part II, Schedule VI to the Companies Act, 1956 for a period of three years with effect from financial year 2007-08 vide order no. 46/74/2008-CL-III dated May 23, 2008 from the Department of Company Affairs, Ministry of Finance and Company Affairs, Government of India.

15) Cash at Bank in current account includes Rs. Nil (previous year Rs. 1,446.15 lakhs ) with Barclays Bank, London. Maximum amount held in that account during the year under review was Rs. 1,446.15 lakhs (previous year Rs. 10,880 lakhs).

16) Related parties disclosures:

1. Relationships during the year:

(a) Subsidiaries:

Amin Group Hotel Limited Iskon Estates Private Limited

(b) Fellow subsidiaries:

None (c) Associates: Leela Lace Holdings Private Limited Leela Lace Software Solutions Private Limited Rockfort Estate Developers Private Limited Leela Fashions Private Limited Mumbai International Convention & Exhibition Centre Limited Elegant Eateries Private Limited Vibgyor Leasing Private Limited Armcess Engineers Private Limited

Leela Housing Private Limited Standard Precision Alloy Industries Private Limited Aushim Soft Private Limited Leela Soft Private Limited Buena Vista Travels Private Limited Leela Capital & Finance Limited Leela Lace Real Estate Development Pvt. Limited L.M. Realtors Pvt. Limited Leela Lace Estates Pvt. Limited



(d) Key Management Personnel: (e) Relatives of Key Management Personnel:- Whole Time Directors Capt. C.P. Krishnan Nair Mr. Vivek Nair Mrs. Madhu Nair Mr. Dinesh Nair Ms. Amruda Nair Mr. Venu Krishnan Ms. Samyuktha Nair Mr. V. L. Ganesh Ms. Aishwarya Nair



17) Segment Information:

The Companys only business is hoteliering and hence disclosure of segment-wise information is not applicable under Accounting Standard 17 - "Segment Reporting" (AS-17). There is no geographical segment to be reported.

18) Earnings Per Share (EPS):

Earnings per share is calculated in accordance with Accounting Standard 20 - Earnings per share (AS-20) issued by the ICAI

iii) Lease rent paid /payable during the year towards employees accommodation is charged as Employee related expenses in the Profit & Loss account as the agreements are made for the period of 11 months, cancelable on mutual consent.

19) The provision for tax of Rs. 875.40 lakhs for the current year is after considering a reversal of excess provision of Rs. 238.15 lakhs relating to earlier years. (previous year provision for tax of Rs. 3,697.96 lakhs is after considering short provision of Rs. 192.95 lakhs relating to earlier years )

20) Donations made during the year includes donation of Rs. 45 lakhs to Bharatiya Janata Party and Rs. 20 lakhs to Goa Pradesh Congress Committee.

21) Previous year figures have been regrouped and re-arranged wherever necessary.



 
Subscribe now to get personal finance updates in your inbox!