Mar 31, 2018
Note C:
The Company has defaulted on payment of matured Non-convertible debentures of ''2,250 lakhs due on 30th September, 2017 and '' 2,250 lakhs due on 30th September, 2016 and the Company did not invest the required 15% of the amount of debentures so matured during the financial year in any of the prescribed mode by the Ministry of Corporate Affairs Circular No.04/2013 dated 11.02.2013.
1 These are the Companyâs first financial statements prepared in accordance with Ind AS.
The Company has adopted Indian Accounting Standards (Ind AS) notified by the Ministry of Corporate Affairs with effect from 1st April, 2017 with a transition date of 1st April, 2016. Consequently, in preparing these Ind AS financial statements, the Company has availed certain exemptions and complied with the mandatory exceptions provided in Ind AS 101 âFirst-time Adoption of Indian Accounting Standardsâ, as explained below. The resulting difference in the carrying values of the assets and liabilities as at the transition date between the Ind AS and Previous GAAP have been recognized directly in equity (retained earnings or other appropriate category of equity).
2 Exemptions and exceptions availed:
A Optional Exemptions:
a Deemed Cost
The Company has opted paragraph D7 AA and accordingly considered the carrying value of property, plant and equipment, investment property and intangible assets as deemed cost as at the transition date.
b Investments in subsidiary
The Company has opted para D14 and D15 and accordingly considered the Previous GAAP carrying amount of Investments as deemed cost subject to their impairment requirements under Ind AS 36 as at the transition date.
c Foreign currency monetary item translation difference account:
Till the date of transition to Ind AS, as per para 46 A of AS11 âThe Effects of Changes in Foreign Exchange ratesâ the 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, or reported in previous financial statements, in so far as they relate to acquisition of a depreciable capital asset, are added to or deducted from the cost of the asset and depreciated over the balance life of the asset, and in other cases are accumulated in âForeign Currency Monetary Item Translation Difference Accountâ and amortized over the balance period of such long-term asset/liability but not beyond 31st March, 2020, by recognizing income or expense in each of the periods except the exchange differences which are regarded as adjustment to interest costs in terms of paragraph 4(e) of Accounting Standard AS (16) Borrowing costs.
The Company has charged off unamortized foreign currency translation account as on the date of transition to retained earnings as per the option given in paragraph D13AA of IND AS 101 âFirst-time Adoption of Indian Accounting Standardsâ
B Ind AS mandatory exceptions:
a An entityâs estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP
b Fair value measurement of financial assets and financial liabilities at the initial recognition.
The fair value of the financial assets and the liabilities at the initial recognition is normally the transaction price i.e the fair value of the consideration given or received except for the following:
(i) Defined benefit plan
(ii) Security deposits under lease contracts
3 Revaluation reserves
On transition to Ind AS, the Company has elected to adopt the carrying value of the property, plant and equipment on the date of transition as its deemed cost. Hence revaluation reserve accounted under previous GAAP outstanding as on the date of transition to Ind AS amounting to ''41,281.96 lakhs is transferred to retained earnings.
Note 35 Reconciliation between previous GAAP and Ind AS : a Reconciliation of total equity as at 31 March, 2017 and 1 April, 2016
Note:
1 Foreign currency transactions
Under previous GAAP, the 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, or reported in previous financial statements, in so far as they relate to acquisition of a depreciable capital asset, are added to or deducted from the cost of the asset and are depreciated over the balance life of the asset, and in other cases are accumulated in âForeign Currency Monetary Item Translation Difference accountâ and amortized over the balance period of such long-term asset / liability but not beyond 31st March, 2020, by recognizing income or expense in each of the periods except the exchange differences which are regarded as adjustment to interest costs in terms of paragraph 4(e) of Accounting Standard AS (16) Borrowing costs.
On transition to Ind AS, the Company has charged off unamortized foreign currency translation account as on the date of transition to retained earnings as per the option given in paragraph D13AA of IND AS 101 âFirst- time Adoption of Indian Accountingâ.
2 Fair valuation of Financial Assets
Under the previous GAAP, interest free lease security deposit assets (that are refundable in cash on completion of the contract term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognized at fair value at initial recognition and subsequently at amortized cost. Accordingly, the Company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognized as prepaid rent. Prepaid rent is amortized over the tenure of the deposits, which is partially set off by the notional interest income recognized on such deposit.
3 Remeasurement of post-employment benefit obligations (net of Tax)
Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as âother comprehensive incomeâ includes remeasurements of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP. Accordingly, loss on remeasurements of post-employment benefit obligation has been reclassified to the Other Comprehensive Income for the period.
Additional information to the Financial Statements 36.1 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 about 95.6 % of the CDR debt assigned their debt to JM Financial Asset Reconstruction Company Limited (JMFARC) (formerly JM Financial Asset Reconstruction Company Private Limited) and 1 lender with exposure of about 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, 4,15,014 lakhs, which included Sacrifice amount of Rs, 26,315 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 ARCs have notified the Company that (i) interest and penal interest are applicable as per the rates contracted prior to admission to CDR; (ii) the finance cost on the debt for the year is Rs, 78,873 lakhs and till 31st March, 2018 is Rs, 3,03,145 lakhs; and (iii) the debt amount is Rs, 5,60,015 lakhs as against Rs, 2,56,870 lakhs accounted by the Company. The Company has been evaluating various options for a viable restructuring, including sale / monetization of non-core assets, sale of hotels, equity infusion and debt refinancing by investors, etc. The Company expects the restructuring to include certain waiver/concessions in interest and repayment terms. Pending this, the Company has classified the debt as non-current liabilities in the Balance Sheet and has not provided for interest at rates notified by ARCs. If interest provision was made in accordance with the intimation received from the ARCs, the finance cost and the loss for the year would have been higher by Rs, 78,873 lakhs (previous year Rs, 73,327 lakhs) and the interest liability till 31st March, 2018 would have been higher by Rs, 3,03,145 lakhs (previous year Rs, 2,24,272 lakhs).
36.2 Disputes with Airports Authority of India (AAI)
(a) The lease agreement with 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, which the Company had accepted. Pending execution of the lease agreement, AAI had been provisionally extending the lease for 3 to 6 months at a time and the latest extension was till 11th January, 2016. AAI has arbitrarily increased the lease rental payable for the Mumbai hotel, effective from 1st October, 2014 which increases the rental by Rs, 3,877 lakhs for the period upto 31st March, 2018 (upto 31st March, 2017 Rs, 2,659 lakhs). The Company has objected to this increase and has not provided for the same. AAI has unilaterally terminated the lease and commenced eviction proceedings and the Company is legally contesting the same. Depreciation on Mumbai hotel building is provided at the applicable rate, on the assumption that the lease will be renewed.
(b) The Company had entered into a lease agreement on 7th February, 1996 with the Airports Authority of India (AAI) in respect of a land admeasuring 11,000 sqm intended for the construction of a 150-room Hotel at Mumbai based on terms stipulated in it of Royalty on turnover with minimum guaranteed amounts (MG) to be mutually agreed and annual ground rent between the parties. The percentage of Royalty and MG was stipulated in the Supplemental Agreement dated 7th February, 1996. The MG was arrived at based on certain revenue projections.
The terms and stipulations specified in the supplemental agreement became impossible of performance for various reasons. Aggrieved by this, the Company opted arbitration proceedings. The sole Arbitrator appointed by AAI by his award dated 29th August, 2012 declared that the MG stipulated in the supplemental agreement has become impossible of performance with effect from 1st June, 2008. AAI challenged the award before the single judge of the Delhi High Court which set aside the award. On appeal by the Company, the Division Bench also affirmed the setting aside of the award. The Special Leave Petition filed by the Company before the Supreme Court was dismissed and the Review Petition has been filed by the Company but not yet heard. According to AAI the amount outstanding is Rs, 31,119 lakhs upto 31st July, 2017 (Previous year Rs, 28,538 lakhs upto 31st December, 2016), the Company has disputed their claim. Further, the Company vide letter dated 6th April, 2017 requested AAI to take over immediate physical possession of the land pending restoration of FSI by the Company. No Provision has been made for the cost of FSI as it is not ascertainable.
The Company has now received expert legal opinion from eminent councils that, without prejudice to its contention that the matter is pending before the Supreme Court, the entire proceedings before the Ld. Arbitrator is a ânullityâ in law and void ab initio, as disputes arising from a Lease Deed relating to property are not subject to arbitration; but the resolution of such disputes must be confined to the adjudication either of a Civil Court alone or, in case of any of the 2 parties drawing any special right under any special Act, before the judicial forum specially designated under such special Act and therefore the proceedings before the Ld. Arbitrator were âwithout jurisdictionâ and that consequently, the Company is not liable to pay the demand raised by AAI. The Company is considering filing appropriate proceedings before the City Civil Court, Mumbai. Based on the opinion, no provision has been made because the dispute is still pending.
36.3 For reasons explained in 36.1 and 36.2, the financial statements of the Company have been prepared on a going concern basis.
36.6 Employee benefit plans
Defined contribution plans
(i) The Company makes Provident Fund contributions to defined contribution plans for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions payable under 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:
Gratuity
The Company has a tie-up under Employeesâ Trust Deed Group Gratuity- cum-Life Assurance Scheme of the Life Insurance Corporation of India, and has partly funded the 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 daysâ salary payable for each completed year of service or part thereof in excess of six months subject to a limit of '' 20 lakhs. The unfunded portion as well as the amounts in excess of the limit are to be borne by the Company, as per policy. 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.
(ii) Compensated absence liabilities
Present value of compensated absence liabilities (unfunded) recognized in Balance Sheet as per actuarial valuation under Projected Unit Credit Method is Rs, 962.28 lakhs (Previous year Rs,1,089.93 lakhs), of which long term liability is Rs, 767.22 lakhs (Previous year Rs, 794.90 lakhs) and short term liability is Rs, 195.06 lakhs (Previous year Rs, 295.03 lakhs).
36.7 Related party transactions
(i) Details of related parties:
Subsidiary:
Leela Palaces and Resorts Ltd.
Associates:
Leela Lace Holdings Pvt. Ltd. Fransisco Hospitality Pvt. Ltd. LM Realtors Pvt. Ltd.
Leela Lace Software Solutions Pvt. Ltd. Leela Capital and Finance Ltd. LMV Associates Ltd.
Leela Fashions Pvt. Ltd. Leela Housing Pvt. Ltd. Genuine Hotels Facilities & Services Pvt. Ltd.
Rockfort Estate Developers Pvt. Ltd. Leela IT Projects Pvt. Ltd. Leela Palace (Bangalore) Pvt. Ltd.
Leela Hospitality Pvt. Ltd. Leela Lace Builders Pvt. Ltd. Leela Palace Chennai Pvt. Ltd.
Elegant Eateries Pvt. Ltd. Leela Lace Estates Pvt. Ltd. Leela Palace New Delhi Pvt. Ltd.
Emmel Real Estate Development Pvt. Ltd. Leela Realty Ltd. Season Apparels Pvt. Ltd.
Esteem Constructions Pvt. Ltd. Leela Villas Pvt. Ltd. Vibgyor Leasing Pvt. Ltd.
Key Management Personnel (KMP)
Mr. Vivek Nair Mr. Dinesh Nair Relative of KMP
Mrs. Madhu Nair (wife of Mr. Dinesh Nair)
1 The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale.
2 The following methods and assumptions were used to estimate the fair values:
a The fair value of trade receivables, trade payables and other current financial assets and liabilities are considered to be equal to the carrying amounts of these items due to their short-term nature. Where such items are non-current in nature, the same has been classified as Level 3.
b Company has invested in certain power generating Companies pursuant to the contract for procuring electricity supply at the hotel units. Investment in said Companies are not usually traded in the market. Considering the terms of the electricity supply contract and best information available, cost of investment is considered as fair value of these investments.
c The fair value of security deposits are calculated using effective interest rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs.
d The Company has been in evaluating various options for a viable restructuring, including sale / monetisation of non-core assets, sale of hotels, equity infusion and debt refinancing by an investor, etc. The restructuring would involve concessions in interest and repayment terms. Pending this, Company has not provided for interest on debt assigned by erstwhile CDR lenders and have therefore not computed the fair value of these borrowings in its financial statements. (Also refer Note 36.1)
e Considering the contracted rate of interest, the carrying amounts of all other term borrowings that are measured at fair value are reasonable approximation of fair value .
f For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to their fair values.
3 Analysis of fair value measurement:
a The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.
Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
b During the period under review, level 3 hierarchy is considered for determination of fair value for all the financial assets and liabilities which are measured at fair value.
Financial risk management objectives and policies:
The activities of the Company expose it to market risk, credit risk and liquidity risk.
The Companyâs principal financial liabilities comprise interest bearing loans including loans taken over by Asset Reconstruction Companies (ARCs), long term security deposits received, trade and other payables. The main purpose of these financial liabilities is for funding its expansion and also to finance operations. The group has trade and other receivables and cash and short term deposits that arrive directly from its operations. The Company has also paid long term lease deposits.
Risk management is carried out by the finance department under the policies approved by the Board of Directors. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarized below:
A Market Risk:
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in interest rates, foreign currency exchange rates and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency, payables and loans and borrowings.
The Company manages market
market risks through finance department, which evaluates and exercises independent control over the entire process of market risk management. The finance department recommends risk management objectives and policies which are approved by the finance committee and Audit Committee. The activities of the department includes management of cash resources, borrowing strategies and ensuring compliance with market risk limits and policies.
- Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk changes in the market interest rates relates primarily to the Companyâs long-term debt obligation. As detailed in note 36.1, the Company is pursuing with ARC for a viable restructuring package, with lower interest rate and longer repayment terms.
The Company has also availed foreign currency term loans with variable interest rates linked to LIBOR.
- Foreign currency risk
Foreign currency risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate due to the changes in the foreign exchange rates. The company is exposed to the effect of foreign exchange rate fluctuations because of its foreign currency linked revenue, foreign currency denominated expenses and other financial instruments. Due to this any volatility in foreign currency exchange rates will have an impact to the Company.
C Liquidity risk :
The Companyâs principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. Competitive intensity has adversely impacted revenue and consequent cash accruals during the year. This, coupled with current level of debt and imminent repayment obligations, has led to stress on liquidity profile. The Company closely monitors its liquidity position in consultation with its lenders to ensure that the operations of the Company are not affected adversely due to liquidity and is attempting to enhance its sources of funding by increasing cash flow generated from its operations and realizations from other proposed measures.
The table below summarizes the maturity profile of the Companyâs financial liabilities based on contractual obligations.
Mar 31, 2017
Note A : The Loans are secured by :
(a) First ranking pari passu charge on all of the fixed assets (both movable and immovable) of hotel properties at Mumbai, Udaipur, New Delhi and Chennai and the Windmills.
(b) Second ranking pari passu charge on the current assets of hotel properties at Mumbai, Udaipur, New Delhi and Chennai.
(c) Revenue from hotel properties at Mumbai, Udaipur, New Delhi and Chennai and receivables from Sale of Hyderabad Land and Joint Development at Bangalore.
(d) Pledge of Promotersâ shareholding, in the Company, subject to minimum of 51% of their holding.
(e) Personal guarantee of Promoters - Mr. Vivek Nair and Mr Dinesh Nair.
(f) Corporate guarantee of Leela Lace Holdings Private Limited.
(g) Negative lien on the non-core assets.
(h) To the extent of âexisting term debt provided by Bank of Baroda and Syndicate Bank under CDR documents and assigned to JM Financial Asset Reconstruction Co. Pvt Ltd, the security is second ranking pari passu charge on the fixed assets of the hotel properties at Mumbai, Udaipur, New Delhi and Chennai and the windmills, and as referred in clause (b) to (g) above.
(i) To the extent of working capital facility assigned by Bank of Baroda, Oriental Bank of Commerce, State Bank of India and Vijaya Bank, the security is first ranking pari passu charge on inventory, receivables and other current assets of the hotel properties at Mumbai, Udaipur, New Delhi and Chennai and second ranking pari passu charge on the fixed assets of the hotel properties at Mumbai, Udaipur, New Delhi and Chennai and the windmills, and as referred in clause (c) to (g) above.
(j) First pari passu charge on the immovable properties of the Leela Palace, Bangalore.
(k) Revenues from the Bangalore Hotel.
(l) Receivables from Pune Joint Development.
(m) Hypothecation of vehicles.
Note B :
(a) The loan will be converted to Rupee Term Loan on 1st August, 2018 and repayable in 5 annual instalments thereafter.
(b) The loan is repayable after the repayment of all the secured loans.
Reduction during the year Rs.2201.84 lakhs (Previous Year addition Rs.5607.92 lakhs) is on account of exchange variations in the long term foreign currency monetary items relating to non depreciable assets.
* Includes Rs.64.61 lakhs (previous year Rs.11.72 lakhs) with maturity of more than 12 months
âSpecified Bank Notes (SBN) held and transferred during the period 08.11.2016 to 30.12.2016 is provided in the table below:-
Note 1 Discontinuing Operations
Effective from 15th December 2015 , the Company has transferred Goa Hotel Undertaking on a slump sale basis. The results of the discontinued business until discontinuation were as under;
Note 2 Additional information to the Financial Statements
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 about 95.6 % of the CDR debt assigned their debt to JM Financial Asset Reconstruction Company Limited (JMFARC) (formerly JM Financial Asset Reconstruction Company Private Limited) and 1 lender with exposure of about 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.415014 lakhs, which included Sacrifice amount of Rs.26315 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 is pursuing with the ARC for a viable restructuring package, with certain concessions in interest and repayment terms and pending consideration of the same, has classified the debt as Noncurrent Liability in the Balance Sheet and has not provided for interest. The ARCs have 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.523140 lakhs (previous year Rs.460696 lakhs) and the impact of the non-provision is understatement of finance cost for the year to the extent of Rs.73327 lakhs (previous year Rs.72704 lakhs). The total finance cost not provided upto 31st March, 2017 is Rs.224272 lakhs (previous year Rs.150945 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.
(e) The net worth of the Company, after excluding revaluation reserves is negative to the extent of Rs.34181 lakhs as on 31st March 2017. Even though the net worth is negative, the same could again become positive, when the financial restructuring materialises.
4 Disputes with Airports Authority of India (AAI)
(a) The lease agreement with 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, which the Company had accepted. Pending execution of the lease agreement, AAI had been provisionally extending the lease for 3 to 6 months at a time and the latest extension was till 11th January, 2016. 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.3898 lakhs for the period upto 31st March 2017 (upto 31st March 2016 Rs.2241 lakhs). The Company has objected to this increase and has not provided for the same. AAI during the current year has unilaterally terminated the lease and commenced eviction proceedings and the Company is legally contesting the same. Depreciation on Mumbai hotel building is provided at the applicable rate on the assumption that the lease will be renewed.
(b) The Company invoked arbitration with respect to the Agreement for 11,000 sq. mts of land in Mumbai on the ground that the Supplementary Agreement setting out the minimum Royalty amounts payable to AAI became impossible of performance. The Sole Arbitrator by his award dated 29th August, 2012 declared that the Minimum Guaranteed Royalty stipulated in the Supplemental Agreement became impossible of performance with effect from 1st June, 2008. AAI challenged the Award before the single judge of Delhi High Court, which set aside the award. On appeal by the company, the Division Bench also reaffirmed the setting aside of the award. The Company has filed a Special Leave Petition before the Supreme Court and the matter is yet to come up for hearing. The amount in dispute according to AAI is Rs.28,538 lakhs and no provision has been made because the dispute is pending. Further, the Company has vide its letter dated 6th April 2017 requested AAI to take immediate physical possession of the land, pending restoration of FSI. No provision has been made for the FSI, as the cost is not ascertainable.
(c) The Company is confident of favourable judgement / settlement.
5 For reasons explained in note 29.1 and 29.2, the financial statements of the Company have been prepared on a going concern basis.
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.
7Loans and advances in the nature of loans given to subsidiaries, associates and others and investment in shares of the Company by such parties:
8 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.555.76 lakhs (previous year Rs.547.61 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 has a tie-up under Employeesâ Trust Deed Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, and has partly funded the 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 daysâ salary payable for each completed year of service or part thereof in excess of six months subject to a limit of Rs.10 lakhs. The unfunded portion as well as the amounts in excess of the limit are to be borne by the Company. 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 Companyâs 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.1089.93 lakhs (Previous year Rs.959.37 lakhs), of which long term liability is Rs.794.91 lakhs ( Previous year Rs.742.25 lakhs) and short term liability is Rs.295.03 lakhs ( Previous year Rs.195.16 lakhs).
9 Segment information
The Companyâs main business is hoteliering and there is no other reportable segment as defined under Accounting Standard 17 - âSegment Reportingâ (AS-17). Hence disclosure of segment wise information is not applicable.
10 The Company has not given loans to any directors or to entities in which directors are interested, but there are dues towards transactions, from Leela Hospitality Pvt. Ltd. and Leela Fashions Pvt. Ltd. as detailed in Note 29.10(ii). However, these companies have informed that they will clear the dues when Leela Lace Holdings Pvt. Ltd. and Leela Lace Software Solutions Pvt. Ltd. get payment from the Company towards their dues. The Company has not made payment to these two companies, in view of the restrictions from the lenders.
Note : Since there are no extraordinary items, the Basic and Diluted value of earnings per share excluding/including extraordinary items is the same.
11 (a) Cost of IT Park at Chennai and the Land at Hyderabad for which the Company has entered into an agreement 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.
12 Previous year figures have been regrouped or re-arranged wherever necessary.
Mar 31, 2016
Note 1. Share Capital
Note A : The Loans are secured by :
(a) First ranking pari passu charge on all of the fixed assets (both movable and immovable) of hotel properties at Mumbai, Udaipur, New Delhi and Chennai and the Windmills.
(b) Second ranking pari passu charge on the Current Assets of hotel properties at Mumbai, Udaipur, New Delhi and Chennai.
(c) Revenue from hotel properties at Mumbai, Udaipur, New Delhi and Chennai and receivables from Sale of Hyderabad Land and Joint Development at Bangalore.
(d) Pledge of Promoters'' shareholding, in the Company, subject to minimum of 51% of their holding.
(e) Personal guarantee of Promoters - Mr. Vivek Nair and Mr Dinesh Nair.
(f) Corporate Guarantee of Leela Lace Holdings Private Limited.
(g) Negative lien on the non-core assets.
(h) First ranking pari passu charge on all of the fixed assets (both movable and immovable) and the second ranking pari passu charge on the Current Assets of hotel property at Goa, till the date of sale.
(i) To the extent of ''existing term debt provided by Bank of Baroda and Syndicate Bank under CDR documents'' and assigned to JM Financial Asset Reconstruction Co. Pvt Ltd, the security is second ranking pari passu charge on the fixed assets of the hotel properties at Mumbai, Udaipur, New Delhi and Chennai and the windmills, and as referred in clause b to g above
(j) To the extent of working capital facility assigned by Bank of Baroda, Oriental Bank of Commerce, State Bank of India and Vjaya Bank, the security is first ranking pari passu charge on inventory, receivables and other current assets of the hotel properties at Mumbai, Udaipur, New Delhi and Chennai. and second ranking pari passu charge on the fixed assets of the hotel properties at Mumbai, Udaipur, New Delhi and Chennai and the windmills, and as referred in clause c to g above.
(k) First pari passu charge on the immovable properties of the Leela Palace, Bangalore.
(l) Receivables from Pune Joint Development.
(m) Hypothecation of vehicles.
Note B :
(a) The loan will be converted to Rupee Term Loan on 1st August, 2018 and repayable in 5 annual installments thereafter.
(b) The loan is repayable after the repayment of all the secured loans.
Note 2 Deferred tax (liabilities/assets)
Note 3 Additional information to the Financial Statements
4. 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 about 95.6 % of the CDR debt assigned their debt to JM Financial Asset Reconstruction Company Private Limited (JMFARC) and 1 lender with exposure of about 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 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 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. The ARCs have 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. 460696 lakhs (previous year Rs. 457572 lakhs) and the impact of the non-provision is understatement of finance cost for the year to the extent of Rs. 72704 lakhs (previous year Rs. 78241 lakhs). The total finance cost not provided upto 31st March, 2016 is Rs. 150945 lakhs (previous year Rs. 78241 lakhs).
(d) The Company has been evaluating various options for reduction of debt, including sale / monetization of non-core assets, sale of hotels and getting an equity partner for infusion of equity and refinancing of debt. The Company sold its Goa Hotel in December 2015, and the entire amount net of expenses was utilized for repayment of part of its debt to ARCs and other lenders.
(e) The net worth of the Company, after excluding revaluation reserves is negative to the extent of Rs. 27338 lakhs as on 31st March 2016. Even though the net worth has turned negative during the year, the same could again become positive, when the financial restructuring materializes.
(f) For reasons explained in note (a) to (e) above, the financial statements of the Company have been prepared on a going concern basis.
(e) As per the Business Transfer Agreement under which the Goa Hotel Undertaking has been sold, the Company is liable to indemnify the buyer, in case of certain contingent liabilities. However, the liability, if any, cannot be quantified at this stage.
(f) 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, 2016. Depreciation on building constructed thereon is provided at the applicable rate on the assumption that the lease will be renewed.
(g) 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. 2241 lakhs for the period up to 31st March 2016. The Company has objected to this increase and has not provided for the same.
(h) The Company invoked arbitration with respect to the Agreement for 11,000 sq. mts of land in Mumbai on the ground that the Supplementary Agreement setting out the Royalty amounts payable to AAI became impossible of performance. 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 including interest amount is Rs. 23281 lakhs as per AAI and no provision has been made because of the dispute.
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 recognized Rs. 547.61 lakhs (previous year Rs. 544.65 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 has a tie-up under Employees'' Trust Deed Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, and has partly funded the 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 subject to a limit of '' 10 lakhs. The unfunded portion as well as the amounts in excess of the limit are to be borne by the Company. 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 recognized in the Company''s financial statements
(ii) Compensated absence liabilities
Present value of compensated absence liabilities (unfunded) recognized in Balance Sheet as per actuarial valuation under Projected Unit Credit Method is Rs. 959.37 lakhs (Previous year Rs. 1129.30 lakhs), of which long term liability is Rs. 742.25 lakhs ( Previous year Rs. 932.67 lakhs) and short term liability is Rs. 195.16 lakhs ( Previous year Rs. 217.12 lakhs).
7 Segment information
The Company''s main business is hoteliering and there is no other reportable segment as defined under Accounting Standard 17 -â Segment Reportingâ (AS-17). Hence disclosure of segment -wise information is not applicable.
8. The Company has not given loans to any directors or to persons in which directors are interested, but there are dues towards transactions, from Leela Hospitality Limited and Leela Fashions Limited as detailed in Note 32.8 (ii). However, these companies have informed that they will clear the dues when Leela Lace Holdings Pvt. Ltd. and Leela Lace Software Solutions Pvt Ltd. get payment from the Company towards their dues. The Company has not made payment to these two companies, in view of the restrictions from the lenders.
Note : Since there are no extraordinary items, the Basic and Diluted value of earnings per share excluding/including extraordinary items is the same.
9. (a) Cost of IT Park at Chennai and the Land at Hyderabad for which the
Company has entered into an agreement 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.
10. Previous year figures have been regrouped or re-arranged wher
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, 2011
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, with a fixed rate of exchange on conversion of Rs. 54.33 for
one Euro. These bonds were listed on the Singapore Exchange Securities
Trading Ltd., Singapore. Subsequently, holders of 8,600 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. Further, the Company had
repurchased 12,200 Euro Bonds with a face value of Euro 12.20 million.
The outstanding Euro Bonds of the face value of 39.20 million Euros
together with redemption premium were redeemed by the Company on the
maturity date i.e. 15th September 2010.
(b) 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. Up to 31st March 2011,
none of the holders of these Bonds have exercised their right to
convert their holding into equity shares. Upto 31st March 2011, the
Company has repurchased 584 (Previous Year 584) Zero Coupon USD Bonds
with a face value of US $ 58.40 Million (Previous Year US$ 58.40
million). The repurchased USD Bonds have been extinguished. 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
to Rs. 9,000 Lakhs redeemable at par on 18th December 2013.
ii) Debenture Redemption Reserve is created in accordance with
applicable laws and guidelines.
b) Term Loans:
i) Foreign Currency Loans of Rs.19,646 lakhs and Rupee Term Loans of
Rs.6,136 lakhs from State Bank of India, Foreign Currency Loan of
Rs.11,163 lakhs and Rupee Term Loan of Rs.3,104 lakhs from State Bank
of Mysore, Foreign Currency Loan Rs.5,458 lakhs and Rupee Term Loan of
Rs. 527 lakhs from State Bank of Travancore, Rupee Term Loan of Rs.
4,850 lakhs from State Bank of Bikaner & Jaipur, Rs. 3,565 lakhs from
State Bank of Patiala, Rs. 3,880 lakhs from State Bank of Hyderabad,
Rs. 3,102 lakhs from Federal Bank and Rs. 19,807 lakhs from Bank of
India are secured by a pari passu charge on the fixed assets of The
Leela Palace, New Delhi.
ii) Rupee Term Loan of Rs. 47,897 lakhs from Syndicate Bank is secured
by 2nd charge on the Delhi and Chennai Hotel properties.
iii) Rupee Term Loan of Rs. 10,000 lakhs from Indian Overseas Bank is
to be secured by a pari passu charge on the fixed assets of The Leela
Palace, Chennai.
iv) Rupee Term Loan of Rs. 15,000 lakhs from State Bank of India is
secured by a pari passu charge on the fixed assets of The Leela Mumbai.
v) Rupee Term Loan of Rs. 15,000 lakhs from Bank of Baroda is secured
by 2nd pari passu charge on the fixed assets of The Leela, Mumbai.
vi) 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, Kovalam.
vii) Out of Foreign Currency Loan of Rs. 14,045 lakhs and Rupee Term
Loan of Rs. 7,889 lakhs from EXIM Bank, an amount of Rs. 10,840 lakhs
is secured by a 1st charge on the immovable properties of The Leela
Mumbai and Rs.7,094 lakhs is secured by a pari passu charge on the
fixed assets of the Leela Palace Udaipur and Rs. 4,000 lakhs is
secured by a Mortgage on Wind Mills as well as 1st Charge on The Leela
Mumbai.
viii) Foreign Currency Loan of Rs.76 lakhs and Rupee Term Loans of
Rs.450 lakhs from Union Bank of India are secured by a pari passu
charge on the fixed assets of The Leela Kovalam.
ix) Foreign Currency Loan of Rs.11,609 lakhs from State Bank of India,
Singapore is secured by a pari passu charge on The Leela Palace,
Bangalore.
x) Rupee Term loans aggregating to Rs. 64,957 lakhs from the Housing
Development Finance Corporation Limited are secured against pari passu
charge on the immovable properties of The Leela Palace, Bangalore.
xi) NCD of Rs. 9,000 lakhs from Life Insurance Corporation of India is
secured by a pari passu Charge on the fixed assets of The Leela Palace,
Udaipur.
xii) Term loan of Rs. 108 lakhs from HDFC Bank Limited and Rs. 889
lakhs from Kotak Mahindra Prime Limited are secured by hypothecation of
certain vehicles.
xiii) Term Loan of Rs. 1,088 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.
xiv) Term Loan of Rs.1,309 lakhs from Oriental Bank of Commerce is
secured by certain company owned flats.
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
CompanyÃs 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 Palace Kempinski, Udaipur
3) Fixed Assets:
a) Land (Leasehold) includes Development expenses, stamp duty and other
direct charges.
b) Projects-in-progress include Rs. 13,556.84 lakhs, (previous year Rs.
12,912.65 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
payable 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.
c) Additions to Fixed Assets/ Projects in progress includes,
capitalization of borrowing cost during the year under review amounting
to Rs 35,561.29 lakhs (previous year Rs. 23,497.53 lakhs ).
4) Contingent Liabilities not provided for:
a) Estimated amount of contracts remaining to be executed on capital
account not provided for- Rs. 25,543.31 lakhs (previous year Rs.
24,068.00 lakhs).
b) Claims against the Company not acknowledged as debts Rs. 7,478 Lakhs
(previous year Rs. 1,750 lakhs).
c) Disputed Statutory Liabilities not provided for Rs. 2,184.70 lakhs
(previous year Rs. 217.00 lakhs).
d) Letter of Credit open and outstanding Rs. 3,319.12 lakhs (previous
year 610.32 lakhs).
e) Counter guarantee given to banks in respect of guarantees given by
them on behalf of the Company Rs. 160.85 lakhs (previous year Rs.128.82
lakhs).
f) The Company has made provision for leave salary on actuarial
valuation basis. This being retirement benefit, an obligation to pay
this amount might arise at the time of separation of the employees. The
breakup of the same is as under:
(Rs. in lakhs)
Nature of The Carrying Additional Amounts Unused The
Obligation amount at the provisions incurred and amounts carrying
beginning of made during charged
against reversed amount at
the period the year the
provision during the the end of
during the
period period the period
Leave
Salary 565.66 292.18 93.59 1.37 762.88
Previous (527.39) (168.14) (75.39) (54.47) (565.67)
Year
5) Loans and advances include an amount of Rs 14,365.71 Lakhs (Previous
Year Rs 12,677.72 Lakhs) recoverable from HUDCO. 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.1,687.99 lakhs (previous year Rs.2,485.88 lakhs)
from HUDCO.
6) Land and Buildings includes land measuring 4.1330 hectares and
building known as Kovalam Palace and other structures. The Kovalam
Palace (Taking Over by Resumption) Act, 2005 taking over the building
known as Kovalam Palace, appurtenant land measuring 4.1330 hectares and
other structures standing thereon has been set aside by the Kerala High
Court. The Government of Kerala has filed an appeal before a division
bench of the Kerala High Court, which has been admitted and the parties
have been directed to maintain status quo until further orders. The
possession of the Palace building is presently with the Government of
Kerala, while that of the appurtenant land together with the other
structures standing thereon is with the Company. 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.
7) 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. 381.40 lakhs
(previous year Rs.355.47 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 Employeesà 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, an amount
equivalent to 15 daysà 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 CompanyÃs financial statements as at March
31, 2011:
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
CompanyÃs policy for plan asset management.
8) Related parties disclosures:
1. Relationships during the year:
(a) Subsidiaries:
Leela Realty Ltd (Formerly Amin Group Hotel Limited)
Leela Palaces and Resorts Ltd (Formerly Iskon Estates Pvt. Ltd.)
(b) Fellow subsidiaries:
None
(c) 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) Standard Precious Alloy Industries Pvt. Ltd.
7) Elegant Eateries Pvt. Ltd.
8) L. M. Realtors 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 Real Estate Developers Pvt. Ltd.
15) Leela Villas Pvt. Ltd.
16) Leela Lace Info Park Pvt. Ltd.
17) Leela Constates Pvt. Ltd.
18) Leela Hospitality Pvt. Ltd.
19) Leela Realcon Pvt. Ltd.
20) Kinfra International Apparel Parks Ltd.
21) Palakkad Infrastructure Pvt. Ltd.
22) Leela Lace Builders Pvt. Ltd.
23) Vibgyour Leasing Pvt. Ltd.
24) Zillion Hotels & Resorts Pvt. Ltd.
25) Leela Capital & Finance Limited
26) Mumbai International Convention and Exhibition Centre Limited
(d) Key Management Personnel:
Whole Time Directors
Mr. Vivek Nair
Mr. Dinesh Nair
Mr. Venu Krishnan
Mr. V. L. Ganesh upto 13th November, 2010
Mr. Krishna Deshika from 17th January, 2011
(e) Relatives of Key Management Personnel:-
Capt. C.P. Krishnan Nair
Mrs. Madhu Nair
Ms. Amruda Nair
Ms. Samyuktha Nair
Ms Aishwarya Nair
9) Segment Information:
The CompanyÃs main business is hoteliering and there is no other
reportable segment as defined under Accounting Standard 17 Ã "Segment
Reporting" (AS-17). Hence disclosure of segment-wise information is not
applicable.
10) Operating Leases:
iii) Lease rent paid / payable during the year towards employeesÃ
accommodation is charged as Employeesà related expenses in the Profit &
Loss Account, as the agreements are made for a period of 11 months,
11) Previous year figures have been regrouped and re-arranged wherever
necessary.
12) Figures in bracket relates to previous year.
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.