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Directors Report of Indian Hotels Company Ltd.

Mar 31, 2013

TO THE MEMBERS

The Directors have pleasure in presenting the 112th Annual Report of the Company together with its Audited Statement of Profit and Loss for the year ended March 31, 2013 and the Balance Sheet as on that date:

FINANCIAL RESULTS

2012-13 2011-12 Particulars Rs./crores Rs./crores

Total Income 1,924.79 1,864.72

Profit before Depreciation, Finance Costs and Tax 453.34 461.92

Less: Depreciation 125.02 113.90

Less: Finance Costs 105.20 111.99

Profit before Tax & Exceptional Item 223.12 236.03

Less: Exceptional Items 432.91 6.11

Profit/(Loss) before Tax (209.79) 229.92

Less: Provision for Tax 78.04 118.19

Add: MAT Credit - 33.62

Add: Excess Provision of Tax of earlier years (Net) 11.22 -

Profit/(Loss) after Tax (276.61) 145.35

Add: Balance brought forward from the previous year 422.67 380.13

Amount available for Appropriation 146.06 525.48

APPROPRIATIONS

(i) General Reserve - 14.54

(ii) Proposed Dividend: 64.60 75.95

Dividend of 80% i.e. Rs. 0.80/- per Ordinary Share was recommended by the Board of Directors on May 30, 2013.

(In respect of the previous year, a final dividend of 100% i.e. Rs. 1/- per Ordinary Share was declared and paid to the Members)

Tax on Dividend 10.59 12.32

(iii) Dividend paid for previous year 4.80 -

Tax on Dividend 0.78 -

(iv) Balance carried to Balance Sheet 65.29 422.67

146.06 525.48

INCOME

The total income for the year ended March 31, 2013 at Rs. 1,924.79 crores was higher than that of the previous year by 3%.

While Room Income was marginally higher than the previous year. Food & Beverage income increased by 7% over the previous year, aided by growth in banqueting income.

DEPRECIATION AND FINANCE COSTS

Depreciation for the year was higher on account of incremental depreciation charge on the Vivanta by Taj - Yeshwantpur, Bengaluru which was operational for the entire period in the current year and the on-going renovations at select hotels. Further, depreciation for the previous year was lower due to a one time reversal of excess depreciation charged on the damaged assets for the period, post the terror attack at Taj Mahal Palace, Mumbai.

Finance costs for the year ended March 31, 2013, net of currency swap gains, at Rs. 105.20 crores were lower than the finance costs of the preceding year by Rs. 6.79 crores due to retirement of debt during the year.

PROFIT BEFORE TAX & EXCEPTIONAL ITEM

Profit before Tax & Exceptional Item at Rs. 223.12 crores was lower than the previous year by 5% primarily on account of higher expenditure on Power & Fuel and higher depreciation.

EXCEPTIONAL ITEMS

Over a period of time the Company has made long term strategic investments, either directly orthrough its overseas subsidiaries, which are being carried at "cost" in its financial statements. Selectively, some of these investments have witnessed a decline in the fair value and consequent erosion in net worth on account of the global recessionary conditions that have continued unabated in recent years. Thus, it was considered prudent to recognize a diminution in the value of the investments, other than temporary, in select entities for an amount of Rs. 373 crores. This covers a diminution of Rs. 305 crores in the Company''s investment in Taj International Hotels (HK) Ltd. a Wholly Owned Subsidiary (WOS), which in turn holds investments in various international entities, including Orient-Express Hotels Ltd. In addition, a diminution other than temporary of Rs. 68 crores has been recognised in the Company''s investments in BJets Pte Ltd. The Company will continue to monitor the performance of these assets on a periodic basis.

The Company has created a provision of Rs. 27.55 crores, to satisfy the obligations of BJets Pte. Ltd, an associate company, currently under restructuring.

An amount paid of Rs. 23.11 crores (including interest Rs. 17.97 crores) has been accounted for towards a satisfactory settlement of a dispute that was under arbitration for over 25 years.

PROFIT/ (LOSS)

Due to the various Exceptional Items as explained above, Profit before Tax was at Rs. (209.79) crores as against Rs. 229.92 crores in the previous year. Similarly, Profit after Tax was at Rs. (276.61) crores as against Rs. 145.35 crores for the previous year.

CONSOLIDATED FINANCIAL RESULTS

The consolidated turnover of the Company for the year ended March 31, 2013 aggregated to Rs. 3,803.52 crores as against Rs. 3,514.90 crores for the previous year. The consolidated turnover increased by 8% due to improved turnover of the parent Company, full year impact of change in status of certain companies from associates to subsidiaries, improved turnover from certain domestic subsidiaries and the benefit of conversion of the revenues of overseas subsidiaries at a rupee rate higher than what was prevalent for the preceding year for the relevant currencies. Profit after Tax aggregated to Rs. (430.24) crores for the year as against the Profit after Tax of Rs. 3.06 crores for the previous year. The consolidated results for the year were impacted due to various Exceptional Items recognised during the year, as explained earlier. Moreover, the Company continued to face challenging environment not just in the domestic market but also across the key international markets wherein the Company owns / operates hotels.

The Company''s US hotels have shown marginal improvement in their turnover inspite of the continued challenges faced by the US economy. The Company is continuing on its focus to improve the profitability of its US operations on priority.

DIVIDEND

Your Directors are pleased to recommend a dividend of 80% or Rs. 0.80 per Ordinary Share for the year ended March 31, 2013.

EQUITY SHARE CAPITAL

During the financial year 2012-13, 4.80 crores Warrants issued to Tata Sons Limited aggregating to Rs. 497.47 crores have been converted into fully paid equity shares. Thus, the Company had received Rs. 373.10 crores, being the balance 75% of the aggregate exercise share price, and allotted 4.80 crores Equity Shares (at a price of Rs. 103.64 per share) against conversion of the Warrants into equity shares.

BORROWINGS

The total borrowings stood at Rs. 2,522.27 crores as at March 31, 2013 as against Rs. 2,679.38 crores as on March 31, 2012 for the standalone entity, a reduction of Rs. 157.10 crores.

CAPITAL EXPENDITURE

During the year under review, the Company incurred Rs. 142.41 crores towards capital expenditure, most part of which was incurred on the Company''s projects covering Vivanta by Taj hotels at Dwarka and at Guwahati, as also on the ongoing renovations at certain hotels of the Company.

BUSINESS OVERVIEW

Global economic recovery has been very gradual with the Eurozone volatility continuing during 2012, albeit at a lower intensity. The Eurozone countries continued to adopt austerity measures, as part of the fiscal adjustment.

The GDP growth in India during the year is estimated to have been around 5%. Inflation was at very high levels during the first half of the year, but has gradually come down to 7% by the end of the year. The Indian Rupee witnessed a seesaw against the US Dollar and hovered between Rs. 55 to 56/$ levels on the average. All the above factors went to weaken the overall economic mood of the country.

The International tourists arrival, worldwide, have grown to 1.035 billion in 2012, 4% above 2011 and are forecast to grow at a moderate pace in 2013. While emerging economies (constituting 47%) grew by 4.1%, the developed economies (constituting 53%) grew by 3.6%. .

The Foreign Tourist Arrivals, in India, during 2012 was 6.65 million, which translates to a 5.4% growth over the previous year. Foreign Exchange Earnings from tourism grew to Rs. 94,487 crores during 2012 from Rs. 77,591 crores in 2011, registering a growth of 21.8%.

The Taj Group launched 2 new Vivanta by Taj hotels during the year at Coorg and Gurgaon, respectively. The Group currently has a portfolio of 27 Ginger hotels with a room inventory of -2600 rooms (including 2 hotels under management contract). Projects for new Ginger hotels are at various stages of execution at Noida, Jaipur, Greater Noida, Chandigarh and Amritsar. The inventory of the Taj Group of Hotels now stands at 118 hotels with ~14,300 rooms.

Your Company continues to pursue the completion of on-going projects in a time bound manner, both in the domestic and international market, under various brands to achieve sustainable and profitable growth.

SUBSIDIARIES

The Ministry of Corporate Affairs vide their letter no. 5/12/2007-CL-lll dated February 8, 2011 has granted a general exemption under Section 212 (8) of the Companies Act, 1956 for publication of the Accounts of subsidiary Companies, subject to fulfilment of certain conditions. In view of the same, your Company is also exempted from publication of the Accounts of its subsidiaries under the provision of Section 212 of the Companies Act, 1956. The accounts of the subsidiary companies are not separately included in the Annual Report. However, the Consolidated Financial Statements of the Subsidiaries, Joint Ventures and Associates, in accordance with relevant Accounting Standards of the Institute of Chartered Accountants of India, duly audited by the Statutory Auditors, form a part of the Annual Report and are reflected in the consolidated accounts.

The Financial Statements of the subsidiary companies and other detailed information will be made available to the investors seeking such information at any point of time. The annual accounts of the subsidiary companies will also be available for inspection at the Registered Office of the Company as well as the respective Registered Offices of subsidiary companies.

LISTING

The Ordinary Shares of your Company are listed on the BSE Limited and National Stock Exchange of India Limited. The Global Depository Shares (GDS) issued by the Company are listed on the London Stock Exchange Pic.

DEBENTURES

The Company had issued the following Debentures listed on the National Stock Exchange of India Limited:

- 2,000 - 2% Unsecured Non-Convertible Debentures of the face value Rs. 10,00,000 each (Rupees Ten Lakhs only) issued on private placement basis on April 23, 2012 for an aggregate value of Rs. 200 crores (Rupees Two Hundred Crores) repayable at the end of five years from the date of allotment.

The Company had redeemed the following Debentures:

- Out of the 3,000 - 11.80% Secured Non-Convertible Debentures of the face value Rs. 10,00,000 each (Rupees Ten Lakhs only) issued on private placement basis, 50% of the face value was redeemed on December 18, 2011 for an aggregate value of Rs. 150 crores (Rupees One Hundred and Fifty Crores) and 30% of the face value was redeemed on December 18, 2012 for an aggregate value of Rs. 90 crores (Rupees Ninety Crores).

FIXED DEPOSITS

The outstanding amount of Fixed Deposits placed with your Company amounted to Rs. 0.60 crores (Previous years Rs. 286.00 crores) excluding Rs. 2.31 crores (Previous year Rs.1.75 crores), which remained unclaimed by depositors as on March 31, 2013. Your Company has stopped accepting and / or renewing Fixed Deposits from the general public and shareholders.

DIRECTORS

Mr. R. N. Tata retired as Director and Chairman of the Company, effective December 28, 2012, in accordance with the Tata Group guidelines on retirement. Mr. Tata is an iconic industrialist and an illustrious leader. He propelled the Company''s growth plans and aided it to expand the wings of the ''Taj'' Brand globally. Mr. Tata demonstrated exemplary courage & leadership during the unfortunate terrorist attack on the Taj Mumbai and provided tremendous support to the management whilst steering the Company successfully through its most trying times. The Board places on record its heartfelt appreciation for the stellar contribution made by Mr. R. N. Tata during his tenure as Chairman of the Company.

Mrs. A. R. Aga resigned as Director of the Company effective June 6, 2012, consequent upon her appointment as a Member of the Rajya Sabha. The Board places on record its appreciation for the contribution made by Mrs. A. R. Aga during her tenure as Director of the Company.

Mr. Cyrus P. Mistry was appointed as an Additional Director & Non Executive Chairman effective December 28, 2012. With Mr. Mistry taking over the mantle, the Company would benefit from his fresh perspective & dynamic leadership which would further consolidate the ''Taj'' as one of the most globally renowned brands. Mr. Guy Lindsay Macintyre Crawford was appointed as an Additional Director of the Company effective March 27, 2013. Mr. Mistry and Mr. Crawford both hold office upto the date of the forthcoming Annual General Meeting.

Mr. Raymond N. Bickson''s tenure as Managing Director ends on July 18, 2013. The Company has greatly benefited from his expertise and international experience. In view of the same, it is proposed to re-appoint Mr. Bickson as the Managing Director of the Company for a period of 5 years w.e.f. July 19, 2013. The Board commends his re-appointment as the Managing Director of the Company to the Members of the Company.

Mr. Anil P. Goel and Mr. Abhijit Mukerji''s tenure as Whole-time Directors ended on March 16, 2013. The Company has greatly benefited from their expertise and experience. In view of the same, it is proposed to re-appoint Mr. Anil P. Goel and Mr. Abhijit Mukerji as Whole-time Directors of the Company for a period of 3 years each w.e.f. March 17, 2013. The Board commends their re-appointment as Whole-time Directors of the Company to the Members of the Company.

In accordance with the Companies Act, 1956, and the Articles of Association of the Company, two of your Directors, viz., Mr. Shapoor Mistry and Mr. Deepak Parekh retire by rotation, and are eligible for re-appointment.

Your approval for their appointments as Directors has been sought in the Notice convening the Annual General Meeting of the Company.

CORPORATE GOVERNANCE

As required by Clause 49 of the Listing Agreement with the Stock Exchanges, the report on Management Discussion and Analysis, Corporate Governance as well as the Practising Company Secretary''s Certificate regarding compliance of conditions of Corporate Governance, form part of the Annual Report.

AUDITORS

At the Annual General Meeting, the Members will be requested to re-appoint M/s. Deloitte Haskins & Sells, Chartered Accountants (Firm No. 117366W), and M/s. PKF Sridhar & Santhanam, Chartered Accountants (Firm No. 003990S) as the Joint Auditors for the current year and authorise the Board of Directors to fix their remuneration.

FOREIGN EXCHANGE EARNINGS AND OUTGO

As required under Section 217(1)(e) of the Companies Act, 1956, read with Rule 2 of the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, the information relating to foreign exchange earnings and outgo is given in Notes 37, 38 and 39 of the Notes to the Accounts.

STAFF

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

The Directors express their appreciation for the contribution made by the employees to the operations of the Company and for the support received from all other stakeholders, including shareholders, customers, suppliers and business partners.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Board of Directors, based on the representations received from the Operating Management, hereby confirms that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

(ii) it has in the selection of the accounting policies, consulted the Statutory Auditors and has applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2013 and of the profit of the Company for that period;

(iii) it has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, to the best of its knowledge and ability. There are however, inherent limitations, which should be recognized while relying on any system of internal control and records; and

(iv) it has prepared the annual accounts on a going concern basis.

On behalf of the Board of Directors

Cyrus P. Mistry

Mumbai, May 30, 2013 Chairman

Registered Office:

Mandlik House

Mandlik Road

Mumbai 400 001


Mar 31, 2012

The Directors have pleasure in presenting the 111th Annual Report of the Company together with its Audited Statement of Profit and Loss for the year ended March 31, 2012 and the Balance Sheet as on that date:

FINANCIAL RESULTS

2011-12 2010-11 Particulars Rs crores Rs crores

Total Income 1,864.72 1,737.14

Profit before Depreciation, Finance Costs and Tax 461.92 482.13

Less: Depreciation 113.90 108.40

Less: Finance Costs 111.99 146.49

Profit before Tax & Exceptional Item 236.03 227.24

Less: Exceptional Items 6.11 5.79

Profit before Tax 229.92 221.45

Less: Provision for Tax 118.19 107.50

Add: MAT Credit 33.62 32.63

Less: Short Provision of Tax of earlier years (Net) - 5.33

Profit after Tax 145.35 141.25

Add: Balance brought forward from the previous year 380.13 454.58

Amount available for Appropriation 525.48 595.83

APPROPRIATIONS

(i) General Reserve 14.54 14.13

(ii) Dividend:

A dividend of 100% i.e. Rs 1/- per Ordinary Share was recommended by the Board of Directors on May 28, 2012

(In respect of the previous year, a final dividend of 100% i.e. Rs 1/- per Ordinary Share 75.95 75.95 was declared and paid to the Members)

Tax on Dividend 12.32 12.32

(iii) Transfer to Debenture Redemption Reserve - 113.30

(iv) Balance carried to Balance Sheet 422.67 380.13

525.48 595.83

INCOME

The total income for the year ended March 31, 2012, at Rs 1,864.72 crores was higher than that of the previous year by 7%. Room Income was higher than the previous year by 6%; Food & Beverage (F&B) income also increased by 11 % over the previous year, enabled by a similar growth in banqueting income.

DEPRECIATION AND FINANCE COSTS

Depreciation for the year was higher due to incremental depreciation on the newly opened Vivanta by Taj- Yeshwantpur, Bengaluru, as also on account of Taj Falaknuma Palace, Hyderabad, being operational for the full year and the ongoing renovations at the hotels.

Finance Costs for the year ended March 31, 2012, net of currency swap gains at Rs 111.99 crores were lower than the finance costs of the preceding year by Rs 34.50 crores resulting from interest rate restructuring and increase in capitalisation of interest on hotel projects under construction.

PROFITS

Profit before Tax at Rs 229.92 crores was higher than the previous year by 4%, whereas Profit after Tax at Rs 145.35 crores was higher by 3%.

CONSOLIDATED FINANCIAL RESULTS

The consolidated turnover of the Company for the year ended March 31, 2012 aggregated to Rs 3,503.65 crores as against Rs 2,932.20 crores for the previous year. Profit after Tax aggregated to Rs 3.06 crores for the year as against the Loss after Tax of Rs 87.26 crores for the previous year.

The consolidated turnover increased by 19% on account of launch of new hotels during the year by the Company, as also due to the change in status of certain companies from associates to subsidiaries. The Company, during the year, had increased its stake in Piem Hotels Limited, an associate; resultantly it has become a subsidiary with effect from May 25, 2011. The foregoing has also resulted in certain other companies' status being changed to subsidiary. Among the Company's domestic subsidiaries, Piem Hotels Limited and Roots Corporation Limited improved their turnover. The Company's subsidiary in the flight catering segment also reported growth in turnover as well. However, its profitability has been marginal due to the continued turbulence in the aviation sector and a highly competitive environment. The Company's US hotels have shown marginal improvement in occupancies and ARRs over the previous year, notwithstanding the continuing weakness in the US economy. The Company is putting all its endeavours to turnaround the US portfolio and make it profitable in the long term. The Company's UK subsidiary continued to register a good performance in line with the previous year.

DIVIDEND

Your Directors are pleased to recommend a dividend of 100% or Rs 1/- per Ordinary Share for the year ended March 31, 2012. Dividend at the same rate is also recommended to be paid on those Ordinary Shares that may be allotted by the Company on conversion of Warrants issued by the Company upto July 20, 2012, being the commencement date of the closure of the Company's Register of Members and Share Transfer Books.

EQUITY SHARE CAPITAL

During the financial year 2010-11, the Company had allotted 3.60 crores Equity Shares (at a price of Rs 103.64 per share) and 4.80 crores Warrants on preferential basis to Tata Sons Limited. Through the preferential allotment, the Company had raised Rs 373.10 crores towards Equity issue and a further sum of Rs 124.37 crores being 25% of the aggregate exercise price of the Warrants. The Company would further receive Rs 373.10 crores, if the Warrants are exercised by Tata Sons Limited at any time before June 23, 2012.

BORROWINGS

The total borrowings stood at Rs 2,679.38 crores as at March 31, 2012 as against Rs 2,341.44 crores as on March 31, 2011 for the standalone entity. The increase in debt in the standalone entity was primarily on account of the need to retire foreign currency debt in some of the Company's off shore subsidiaries through the Parent Company.

As on March 31, 2012, the gross consolidated debt stood at Rs 3,805.49 crores. This compared favourably to the consolidated gross debt ofRs 4,243.01 crores as on March 31, 2011.

CAPITAL EXPENDITURE

During the year under review, the Company incurred Rs 153.62 crores towards capital expenditure, most part of which was incurred on the Company's projects covering Vivanta by Taj Hotels at Dwarka and at Bengaluru as also due to the ongoing renovations.

BUSINESS OVERVIEW

Global economic recovery is losing traction due to continuing Euro zone debt crisis and the resultant austerity measures being taken by the Euro zone countries.

Domestically, the state of the economy is a matter of growing concern with slowing economy, persistently high inflation, uncertain political environment and depreciation of the Indian Rupee weakening the overall economic sentiment of the country.

The International tourists arrival worldwide has grown to 980 million in 2011, 4.4% above 2010 and is forecasted to grow at a moderate pace in 2012. Emerging economies of South Asia, South-East Asia and South America led the tourism growth with 12% increase in International tourists arrivals.

In the year 2011, the tourism sector in India witnessed a growth as compared to 2010. The Foreign Tourist Arrivals in India during 2011 were 6.29 million which translates to a 9% growth over the previous year. Foreign Exchange Earnings from tourism grew from Rs 64,889 crores during 2010 toRs 77,591 crores in 2011, registering a growth of 19.6%. The domestic tourist traffic is also estimated to have increased by approximately 9% to 804 million during 2011.

The Taj Group launched 5 new Vivanta by Taj hotels during the year at Srinagar, Yeshwantpur - Bengaluru, Coimbatore, Begumpet - Hyderabad and Bekal - Kerala. Ginger Hotels currently has a portfolio of 24 hotels with a room inventory of approximately 2345 rooms. Projects for new Ginger hotels are at various stages of construction in Bengaluru, Noida, Jaipur, Faridabad, Greater Noida, Chandigarh and Amritsar. The inventory of the Taj Group of Hotels now stands at 112 hotels with 13,629 rooms.

Your Company continues to pursue the completion of ongoing projects, both in the domestic and international market, under various brands to achieve sustainable and profitable growth.

SUBSIDIARIES

The Ministry of Corporate Affairs vide their letter no. 5/12/2007-CL-flI dated February 8, 2011, has granted a general exemption under Section 212 (8) of the Companies Act, 1956, for publication of the accounts of subsidiary companies, subject to fulfilment of certain conditions. In view of the same, your company is also exempted from publication of the accounts of its subsidiaries under the provision of Section 212 of the Companies Act, 1956. The accounts of the subsidiary companies are not separately included in the Annual Report. However, the Consolidated Financial Statements of the Subsidiaries, Joint Ventures and Associates, in accordance with relevant Accounting Standards of the Institute of Chartered Accountants of India, duly audited by the Statutory Auditor, forms part of the Annual Report and are reflected in the consolidated accounts.

During the year, the Company along with its wholly owned subsidiary TIFCO Holdings Limited had acquired an additional 5.36% stake in its associate company, Piem Hotels Limited (PHL) consolidating its total holdings to 51.57 %. Accordingly, PHL became a subsidiary of the Company, with effect from May 25, 2011. By virtue of this restructuring, additional 11 companies became subsidiaries (direct or indirect) of the Company.

The Financial Statements of the subsidiary companies and other detailed information will be made available to the investors seeking such information at any point of time. The annual accounts of the subsidiary companies will also be available for inspection at the Registered Office of the Company as well as the respective registered offices of subsidiary companies.

LISTING

The Ordinary Shares of your Company are listed on the BSE Limited and National Stock Exchange of India Limited. The Global Depository Shares (GDS) issued by the Company are listed on the London Stock Exchange.

DEBENTURES

The Company had issued the following Debentures listed on the National Stock Exchange of India Limited:

- 2,500 - 9.95% Secured Non-Convertible Debentures of the face value of Rs 10,00,000/- each (Rupees Ten Lakhs only) issued on private placement basis on July 27, 2011 for an aggregate value of Rs 250,00,00,000/- (Rupees Two Hundred and Fifty Crores) repayable at the end of ten years from the date of allotment.

- 3,000 - 10.10% Secured Non-Convertible Debentures of the face value of Rs 10,00,000/- each (Rupees Ten Lakhs only) issued on private placement basis on November 18, 2011 for an aggregate value of Rs 300,00,00,000/- (Rupees Three Hundred Crores) repayable at the end of ten years from the date of allotment.

- 1,360 - 9.90% Unsecured Non-Convertible Debentures of the face value of Rs 10,00,000/- each (Rupees Ten Lakhs only) issued on private placement basis on February 24, 2012 for an aggregate value ofRs 136,00,00,000/- (Rupees One Hundred and Thirty Six Crores) repayable at the end of five years from the date of allotment.

The Company had redeemed the following Debentures:

- 3,000 - 11.80% Secured Non-Convertible Debentures of the face value of Rs 10,00,000/- each (Rupees Ten Lakhs only) issued on private placement basis, of which 50% of the face value was redeemed on December 18,2011 for an aggregate value ofRs 150,00,00,000/- (Rupees One Hundred and Fifty Crores).

- 2,500 - 9.5% Secured Non-Convertible Debentures of the face value of Rs 10,00,000/- each (Rupees Ten Lakhs only) issued on private placement basis were redeemed on February 28, 2012 for an aggregate value of Rs 250,00,00,000/- (Rupees Two Hundred and Fifty Crores).

FIXED DEPOSITS

The outstanding amount of Fixed Deposits placed with your Company amounted to Rs 286.00 crores. (Previous year Rs 354.18 crores) excluding Rs 1.75 crores (previous year Rs 0.28 crores), which remained unclaimed by depositors as on March 31, 2012. Your Company has stopped accepting/renewing deposits from the general public and shareholders.

DIRECTORS

Mr. Mehernosh S. Kapadia was appointed as an Additional Director and as a Whole-time Director of the Company for a period of five years with effect from August 10, 2011. He holds office upto the date of the forthcoming Annual General Meeting of the Company. Taking into consideration his knowledge and experience, the Board commends his appointment as Whole-time Director of the Company to the Members of the Company. Members' approval for his appointment as Director and Whole-time Director has been sought in the Notice convening the Annual General Meeting of the Company.

In accordance with the Companies Act, 1956 and the Articles of Association of the Company, three of your Directors, viz., Mr. Jagdish Capoor, Mr. K. B. Dadiseth and Mr. Nadir Godrej retire by rotation, and are eligible for re-appointment.

CORPORATE GOVERNANCE

As required by Clause 49 of the Listing Agreement with the Stock Exchanges, the report on Management Discussion and Analysis, Corporate Governance as well as the Practising Company Secretary's Certificate regarding compliance of conditions of Corporate Governance, forms part of the Annual Report.

AUDITORS

At the Annual General Meeting, the Members will be requested to re-appoint M/s Deloitte Haskins & Sells, Chartered Accountants (Firm No. 117366W) and M/s. PKF Sridhar & Santhanam, Chartered Accountants (Firm No. 003990S) as the Joint Auditors of the Company for the current year and authorise the Board of Directors to fix their remuneration.

FOREIGN EXCHANGE EARNINGS AND OUTGO

As required under Section 217(1)(e) of the Companies Act, 1956, read with Rule 2 of the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, the information relating to foreign exchange earnings and outgo is given in Notes 38, 39 and 40 (Page 94) of the Notes to the financial statements.

STAFF

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

The Directors express their appreciation for the contribution made by the employees to the significant improvement in the operations of the Company and for the support received from all other stakeholders, including shareholders, customers, suppliers and business partners.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Board of Directors, based on the representations received from the Operating Management, hereby confirms that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

(ii) it has in the selection of the accounting policies, consulted the Statutory Auditors and has applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2012 and of the profit of the Company for that period;

(iii) it has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, to the best of its knowledge and ability. There are however, inherent limitations, which should be recognized while relying on any system of internal control and records; and

(iv) it has prepared the annual accounts on a going concern basis.

GLOBAL COMPACT

As part of the Tata Group, your Company had signed-up to promote the United Nations "Global Compact" which lays down ten key principles to specifically address issues in the areas of human rights, labour, corruption and the environment. Your Company continues to be an active member of the Global Compact. Your Company annually submits a 'Corporate Sustainability Report' detailing its economic, environmental and social performance.

On behalf of the Board of Directors

Ratan N. Tata

Chairman

Mumbai, May 28, 2012

Registered Office:

Mandlik House

Mandlik Road

Mumbai 400 001


Mar 31, 2011

TO THE MEMBERS

The Directors have pleasure in presenting the 110th Annual Report of the Company together with its Audited profit and Loss Account for the year ended March 31, 2011 and the Balance Sheet as on that date:

FINANCIAL RESULTS

Rs. crores

Particulars 2010-11 2009-10

Total Income 1724.92 1520.36

profit before Depreciation, Interest and Tax 471.40 427.38

Less: Depreciation 108.46 104.14

Less: Interest 122.85 152.90

profit before Tax & Exceptional Item 240.09 170.34

Less: Exceptional Items 17.14 (47.91)

profit before Tax 222.95 218.25

Less: Provision for Tax 109.00 62.46

Add : MAT Credit 32.63

Less: Short Provision of Tax of earlier years (Net) 5.33 2.69

profit after Tax 141.25 153.10

Add: Balance brought forward from the previous year 454.58 539.25

Amount available for Appropriation 595.83 692.35

APPROPRIATIONS

(i) General Reserve 14.13 15.31

(ii) Dividend:

A dividend of 100% i.e. Rs. 1/- per Ordinary Share was recommended by the Board of Directors on May 24, 2011.

(In respect of the previous year, a final dividend of 100% i.e. Rs. 1/- per Ordinary Share 75.95 72.35 was declared and paid to the Members)

Tax on Dividend 12.32 11.11

(iii) Transfer to Debenture Redemption Reserve 113.30 139.00

(iv) Balance carried to Balance Sheet 380.13 454.58

595.83 692.35

INCOME

The total income for the year ended March 31, 2011 at Rs. 1724.92 crores was higher than that of the previous year by 13%. Room Income was higher than the previous year by 19%. The Average Room Rate (ARR) increased by 9% over the previous year. Food & Beverage (F&B) income also increased by 19% over the previous year, enabled by a healthy growth in banqueting income, which grew by 22% over the previous year.

DEPRECIATION AND INTEREST

Depreciation for the year was higher due to incremental depreciation on the newly opened Taj Falaknuma Palace, Hyderabad, as also on account of capitalisation of the replaced assets at the Taj Mahal Palace, Mumbai and the ongoing renovations across select hotels.

The net interest cost for the year ended March 31, 2011 at Rs. 122.85 crores was lower than the net interest cost of the preceding year by Rs. 30.05 crores. The gross interest cost for the year decreased by Rs. 18.19 crores due to retirement of debt during the year and increase in capitalisation of interest on hotel projects under construction. Interest income for the year was higher due to currency swap gains earned on the Company's foreign currency loans.

PROFITS

profit before Tax at Rs. 222.95 crores was higher than the previous year by 2%. profit after Tax at Rs. 141.25 crores was lower by 8% over the previous year, mainly due to a higher incidence of tax on business profits.

CONSOLIDATED FINANCIAL RESULTS

The consolidated turnover of the Company for the year ended March 31, 2011 aggregated to Rs. 2914.90 crores as against Rs. 2562.53 crores for the previous year. Loss after Tax which aggregated to Rs. 87.26 crores for the year reduced in comparison with the Loss after Tax ofRs. 136.88 crores for the previous year.

The consolidated turnover increased by 14% with improved domestic tourism and corporate travel which favourably impacted ARRs and occupancies across not just the Company's hotel portfolio but also the hotels in its joint ventures, subsidiaries and associates. There was an improvement in the Management Fee income from hotels under operation. The restored Taj Mahal Palace, Mumbai, the full year impact of new inventory at Taj Lands End and the recently opened Taj Falaknuma Palace, Hyderabad contributed to improved results of the Company. Among the Company's domestic subsidiaries, the subsidiary in the economy hotels segment grew its hotel portfolio thus improving its turnover. The profitability of the Company's subsidiary in the flight catering segment continued to be impacted by the pressures being faced in the aviation sector. During the year, the Company exited from its investment in the frozen foods sector. Subsequent to the successful launch of The Gateway hotels brand in 2009/10, during the year the Company launched the Vivanta by Taj brand, the response to which from our guests and the trade has been very favourable. Effectively, the Company operates its portfolio of hotels now under 4 clear and well defined brands, namely Taj Luxury Hotels, Vivanta by Taj, The Gateway hotel and Ginger hotels, each addressing opportunities at varying price points and providing to our guests well defined and consistent products, services and experiences. The Company's US subsidiary continued to be impacted by the slower-than-expected recovery in the US economy. The losses from the US portfolio have reduced and all efforts are underway to turn the portfolio profitable in the near term. The re-opening of The Pierre after renovation has resulted in turnover growth which along with other US hotels has registered increasing occupancies, the pressure on ADRs notwithstanding. The Company's UK subsidiary continued to register a good performance in line with the previous year. The international joint venture with hotels in the Maldives registered improved performance taking the benefit of full year operations of the renovated Vivanta by Taj, Coral Reef, Maldives.

DIVIDEND

Your Directors, in anticipation of a turnaround in the business, are pleased to recommend a dividend of 100 % or Rs. 1/- per Ordinary Share for the year ended March 31, 2011.

EQUITY SHARE CAPITAL

During the year, the Company allotted 3.60 crores equity shares at a price of Rs. 103.64 per share and 4.80 crores warrants on preferential basis to Tata Sons Limited. Through the preferential allotment, the Company raised Rs. 373.10 crores towards equity issue and Rs. 124.37 crores being 25% of the aggregate exercise price of the warrants. The Company would further receive Rs. 373.11 crores, if the warrants are exercised by the Tata Sons Limited at any time after April 1, 2011 but before June 23, 2012.

BORROWINGS

The total borrowings stood atRs. 2338.67 crores as at March 31, 2011 as againstRs. 2650.55 crores as on March 31, 2010, a reduction ofRs. 311.88 crores.

CAPITAL EXPENDITURE

During the year under review, the Company incurred Rs. 307.46 crores towards capital expenditure. Major expenditure was incurred on the Company's projects covering the Taj Falaknuma Palace, Hyderabad, Vivanta by Taj Hotels at Dwarka, Bangalore and towards the restoration of Taj Mahal Palace, Mumbai.

BUSINESS OVERVIEW

Travel & Tourism in Asia Pacific grew very strongly in 2010 in line with the recovery from the global recession. All Asia Pacific sub-regions made strong gains in 2010, but the best growth was in South Asia, boosted by a visible recovery in India, Sri Lanka and the region.

In the year 2010, the tourism sector in India witnessed substantial growth as compared to 2009. The Foreign Tourist Arrivals (FTA) in India during 2010 were 5.58 million as compared to the FTAs of 5.17 million during 2009, showing a growth of 8.1%. The FTA growth rate during 2009 over 2008 was (2.2)%. Foreign Exchange Earnings (FEE) from tourism during 2010 were Rs. 64,889 crores as compared to Rs. 54,960 crores during 2009, registering a growth rate of 18.1%. The growth rate in FEE from tourism during 2009 over 2008 was 8.3%. The domestic tourist traffic is also estimated to have increased by approximately 15%.

The fully restored heritage block of the Taj Mahal Palace, Mumbai reopened its doors to guests on August 15, 2010. The spectacular Falaknuma Palace, another significant addition to the Company's Palaces portfolio was opened in November, 2010 and has been well received. Four new Ginger hotels at Manesar, Chennai, East Delhi and Indore commenced operations during the year. On the International front, Taj Cape Town, South Africa with an inventory of 155 rooms and 22 apartments opened with a grand launch event. The inventory of the Taj Group of Hotels now stands at 107 hotels with 12,849 rooms. Further details on the new properties launched, product upgradation, and expansion in domestic and international markets are provided under the section Management Discussion and Analysis.

Your Company continues to pursue the completion of ongoing projects, both in the domestic and international market, under various brands to achieve sustainable and profitable growth.

SUBSIDIARIES

The Ministry of Corporate Affairs vide their Letter no. 5/12/2007-CL-III dated February 8, 2011 has granted a general exemption under Section 212 (8) of the Companies Act, 1956 for publication of the Accounts of subsidiary companies, subject to fulfilment of certain conditions. In view of the same, your Company is also exempted from publication of the Accounts of its subsidiaries under the provision of Section 212 of the Companies Act, 1956. The accounts of the subsidiary companies are not separately included in the Annual Report. However, the Consolidated Financial Statements of the Subsidiaries, Joint Ventures and Associates, in accordance with relevant Accounting Standards of the Institute of Chartered Accountants of India, duly audited by the Statutory Auditors, form a part of the Annual Report and are reflected in the consolidated accounts.

Innovative Foods Limited is no longer a subsidiary of The Indian Hotels Company Limited with effect from February 11, 2011 due to the sale of stake by Residency Foods & Beverages Limited.

The Financial Statements of the subsidiary companies and other detailed information will be made available to the investors seeking such information at any point of time. The annual accounts of the subsidiary companies will also be available for inspection at the Registered Offi ce of the Company as well as the respective Registered offices of subsidiary companies.

LISTING

The Ordinary Shares of your Company are listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Global Depository Shares (GDS) issued by the Company are listed on the London Stock Exchange.

DEBENTURES

The Company had redeemed the following debentures:

(i) 3,000 - 9.86% Secured Non-Convertible Redeemable Debentures of the face value ofRs. 10,00,000/- each (Rupees Ten Lakhs only) issued on private placement basis were redeemed on September 7, 2010 for an aggregate value of Rs. 300,00,00,000 /- (Rupees Three Hundred Crores only).

(ii) 6,02,76,898 - 6% Secured Non-Convertible Redeemable Debentures of the face value of Rs. 100 /- each (Rupees Hundred only) issued on rights basis were redeemed on May 13, 2011 for an aggregate value ofRs. 602,76,89,800 /-(Rupees Six Hundred and Two Crores Seventy Six Lakhs Eighty Nine Thousand and Eight Hundred only).

FIXED DEPOSITS

Your Company's Fixed Deposit Scheme inviting deposits from the general public at a rate of 9.5% p.a. for a period of two years and 10% p.a. for a period of three years with a minimum amount of deposit being Rs. 25,000 was kept open until July 13, 2009. Your Company has since stopped accepting deposits from the general public and shareholders.

The outstanding amount of fixed deposits placed with your Company amounted to Rs. 354.18 crores (Previous year Rs. 357.49 crores) excluding Rs. 0.28 crores (Previous year Rs. 0.27 crores), which remained unclaimed by depositors as on March 31, 2011.

DIRECTORS

In accordance with the Companies Act, 1956, and the Articles of Association of the Company, three of your Directors, viz., Mr. Ratan N. Tata, Mr. R. K. Krishna Kumar and Mr. Deepak Parekh retire by rotation, and are eligible for re-appointment.

CORPORATE GOVERNANCE

As required by Clause 49 of the Listing Agreement with the Stock Exchanges, the report on Management Discussion and Analysis, Corporate Governance as well as the Auditors' Certificate regarding compliance of conditions of Corporate Governance, form part of the Annual Report.

AUDITORS

M/s N. M. Raiji & Co., Chartered Accountants, have not offered themselves for re-appointment as the Joint Auditors of the Company. The Board wishes to place on record its appreciation of the services rendered by M/s. N. M. Raiji & Co., to the Company during their tenure as Auditors of the Company.

At the Annual General Meeting, the Members will be requested to re-appoint M/s Deloitte Haskins & Sells, Chartered Accountants (Firm No. 117366W), and to appoint M/s. PKF Sridhar & Santhanam, Chartered Accountants (Firm No. 003990S) as the Joint Auditors for the current year and authorise the Board of Directors to fix their remuneration.

FOREIGN EXCHANGE EARNINGS AND OUTGO

As required under Section 217(1)(e) of the Companies Act, 1956, read with Rule 2 of the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, the information relating to foreign exchange earnings and outgo is given in Notes 22, 23 and 24 (Refer page 97) of the Notes to the Accounts.

STAFF

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

The Directors express their appreciation for the contribution made by the employees to the significant improvement in the operations of the Company and for the support received from all other stakeholders, including shareholders, customers, suppliers and business partners.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Board of Directors, based on the representations received from the Operating Management, hereby confirms that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

(ii) it has in the selection of the accounting policies, consulted the Statutory Auditors and has applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2011 and of the profit of the Company for that period;

(iii) it has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, to the best of its knowledge and ability. There are however, inherent limitations, which should be recognized while relying on any system of internal control and records; and

(iv) it has prepared the annual accounts on a going concern basis.

GLOBAL COMPACT

As part of the Tata Group, your Company had signed up to promote the United Nations "Global Compact" which lays down ten key principles to specifically address issues in the areas of human rights, labour, corruption and the environment. Your Company continues to be an active member of Global Compact. Your Company annually submits a 'Corporate Sustainability Report' detailing its economic, environmental and social performance.

On behalf of the Board of Directors

Ratan N. Tata Chairman

Mumbai, May 24, 2011

Registered office:

Mandlik House Mandlik Road Mumbai 400 001



 
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