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Notes to Accounts of Indian Hotels Company Ltd.

Mar 31, 2014

Note 1 : Corporate information

The Indian Hotels Company Limited ("IHCL" or the "Company"), is a listed public limited company incorporated in 1902. It is promoted by Tata Sons Ltd., which holds a significant stake in the Company. The Company is primarily engaged in the business of owning, operating & managing hotels, palaces and resorts.

March 31, 2014 March 31, 2013 Rs. Crores Rs. Crores

Footnotes :

(i) provision for Contingencies include :

Opening Balance Addition / Closing Balance (Deletion) Rs.crores Rs.crores Rs.crores

Legal and Statutory matters 1.18 19.47 20.65

1.44 (0.26) 1.18

Contractual matters in the course of business 27.71 3.06 30.77

10.16 17.55 27.71

Employee related matters 1.23 - 1.23

1.23 - 1.23

Total 30.12 22.53 52.65

12.83 17.29 30.12

a) The above matters are under litigation / negotiation and the timing of the cash flows cannot be currently determined.

b) Figures in italics are in respect of previous year.

(a) on account of income Tax matters in dispute :

In respect of tax matters for which Company''s appeals are pending - Rs. 48.52 crores (Previous year - Rs. 60.12 crores).The said amounts have been paid / adjusted and will be recovered as refund if the matters are decided in favour of the Company.

(c) In respect of a plot of land provided to the Company under a license agreement, on which the Company has constructed a hotel, the licensor has made a claim of Rs. 229.70 crores to date, (13 times the existing annual rental) for increase in the rentals with effect from 2006-07. The Company believes these claims to be untenable. The Company has contested the claim, based upon legal advice, by filing a suit in the Honourable Bombay High Court on grounds of licensor''s inconsistent stand on automatic renewal of lease, levy of lease rentals and method of computing such lease rent, based on the existing license agreement as also a Supreme Court judgment on related matters. Even taking recent enactments into consideration, in the opinion of the Company, the computation cannot, under any stretch, be more than Rs. 48.56 crores (excluding interest / penalty), and this too is being contested by the Company on merit.

Further, a "Notice of Motion" has been issued by the Honourable Bombay High Court, inter alia, for a stay against any further proceedings by the licensor, pending a resolution of this dispute by the Honourable Bombay High Court. In view of this, and based on legal advice, the Company regards the likelihood of sustainability of the lessor''s claim to be remote and the amount of any potential liability, if at all, is indeterminate.

In some hotels, proposed revisions in property taxes are contested by the Company, amounts of which are indeterminate..

(d) Guarantees/Letter of Comfort given by the Company in respect of loans obtained by other companies and outstanding as on March 31, 2014 - Rs. 972.00 crores (Previous year - Rs. 868.68 crores).

Note 2 : Capital Commitments

Estimated amount of contracts remaining to be executed on capital account net of capital advances and not provided for is Rs. 125.92 crores (Previous year - Rs.173.75 crores).

Note 3 : other Commitments

(a) The Company owns 19.90% of the issued share capital of Lands End Properties Private Limited (LEPPL), a Company owning 67% interest in the erstwhile Sea Rock hotel property through its wholly-owned subsidiary, Sky Deck Properties & Developers Private Limited (SDPDPL). LEPPL has issued Zero coupon Non-Convertible Debentures aggregating to Rs. 521 crores, redeemable at a premium, having a yield to maturity of 10% per annum. LEPPL has a call option on this borrowing, and thus the right to early redemption of such Debentures on February 13, 2015 with an additional redemption premium of 0.15% of nominal value (principal value). In the event, this option of early redemption is not exercised by LEPPL, the obligation of LEPPL on such Debentures, on its maturity, would aggregate to Rs. 693.45 crores. However, the call option can only be exercised with prior written consent from the Company.

In respect of such debentures issued by LEPPL, the Company has:-

i. the first right to purchase the entire shareholding of SDPDPL held by LEPPL for an aggregate value of Rs. 693.45 crores; or

ii. the obligation to make good the value of the shortfall, if any, if lenders of LEPPL divest 100% of SDPDPL shares and realise an amount lower than the redemption amount, in case the right referred in (i) above is not exercised.

In addition, SDPDPL has availed of a secured zero coupon term loan of Rs. 508 crores from a financial institution for which the total repayment obligation on the maturity date (being January 28, 2016) would be Rs. 708.93 crores. This term loan has been secured by way of a pledge on all direct and indirect shareholding of ELEL.

In effect, the total future repayment obligation for LEPPL, on a consolidated basis, aggregates to Rs. 1402.38 crores covering the current outstanding debt obligations of LEPPL and SDPDPL, its underlying subsidiary.

(b) The Company had given an option to certain shareholders of ELEL Hotels & Investment Ltd. (ELEL), a company having an underlying lease of the Hotel Sea Rock Property as under:-

Shareholders holding 5,26,854 shares in ELEL would have had an option to sell these shares to the Company upon the achievement and fulfilment of certain conditions. The intent states that the option would have been exercisable by the shareholders at a predetermined price, based on the obligations actually fulfilled by the holders of these shares. The holders of these shares are entitled to exercise this Put option on January 1, 2014 (not exercised) or July 1, 2014. In parallel, the Company also has an option to purchase these shares at the same price on April 1, 2014 (not exercised) or September 1, 2014.

Given the non-fulfilment of conditions as at date as well as the uncertainty in achieving these conditions going forward, the resolution of this Put/ Call option with respect to timing, price and resultant liability remains indeterminate.

(c) The Company has given letters of support in case of select subsidiaries and associate companies during the year.

Note 4 : foreign Currency Monetary item Translation difference account

The Company has exercised the option granted vide notification No. G.S.R.225(E) dated March 31, 2009, issued by the Ministry of Corporate Affairs and subsequent Notification No G.S.R.378(E) (F.No17/133/2008-CLV) dated May 11, 2011 and Amendment Notification No G.S.R.914(E) dated December 29, 2011 incorporating the new paragraph 46(A) relating to Accounting Standard (AS) 11 "The Effects of Changes in Foreign Exchange Rates" and accordingly, the exchange differences arising on revaluation of long term foreign currency monetary items for the year ended March 31, 2014 have been accumulated in "Foreign Currency Monetary Item Translation Difference" and amortised over the balance period of such long term asset or liability, by recognition as income or expense in each of such periods. Foreign currency monetary items outstanding as at March 31, 2014 are accounted as per Company''s Policy on Transactions in Foreign Exchange (Refer Note 2(f), page 68).

Note 5 : employee Benefits

(b) The Company operates post retirement defined benefit plans as follows : - i. funded :

- Post Retirement Gratuity.

- P ension to Employees – Post retirement minimum guaranteed pension scheme for certain categories of employees, which is funded by the Company and the employees.

ii. Unfunded :

- P ension to Executive Directors and Employees – Post retirement minimum guaranteed pension scheme for certain retired executive directors and certain categories of employees, which is unfunded.

- Post Employment Medical Benefits to qualifying employees

- Post Employment Compensated Absence Benefit for certain categories of employees.

(c) pension scheme for employees :

The Company has formulated a funded pension scheme for certain employees. The actuarial liability arising on the above, after allowing for employees'' contribution is determined as at the year end, on the basis of uniform accrual benefit, with demographic assumptions taken as Nil.

Note 6 :

The Company, on a review of its foreign operations had, in the past, made voluntary disclosures to the appropriate regulator, of what it considered to be possible irregularities, in relation to foreign exchange transactions relating to the period prior to 1998. Arising out of such disclosures, the Company received show cause notices. The Company has replied to the notices and is waiting for the directorate to return its files, after which it will complete the replies. Adjudication proceedings are in progress.

Note 7 :

Deposits and Advances in the nature of loans to Subsidiaries, Jointly Controlled Entities and Associates : -

Note 8 :

The Company''s only business being hoteliering, disclosure of segment-wise information is not applicable under Accounting Standard 17 - ''Segmental Information'' (AS-17) notified by the Companies (Accounting Standards) Rules, 2006 (as amended). There is no geographical segment to be reported since all the operations are undertaken in India.

Note 9 :

In compliance with Accounting Standard 27 - ''Financial Reporting of Interests in Joint Ventures'' - (AS-27), notifed by the Companies (Accounting Standards) Rules, 2006 (as amended), the Company has interests directly or through its Subsidiaries in the following jointly controlled enttes:

Note 10:

The Company has regrouped / reclassified the previous year figures to conform to the current year''s presentation.


Mar 31, 2013

Note 1 : Corporate Information

The Indian Hotels Company Limited ("IHCL" or the "Company"), is a listed public limited company incorporated in 1902. It is promoted by Tata Sons Ltd., which holds a significant stake in the Company. The Company is primarily engaged in the business of owning, operating & managing hotels, palaces and resorts.

Note 2 : Contingent Liabilities (to the extent not provided for):

(a) On account of Income Tax matters in dispute :

In respect of tax matters for which Company''s appeals are pending - Rs. 60.12 crores (Previous year - Rs. 27.34 crores). The said amounts have been paid / adjusted and will be recovered as refund if the matters are decided in favour of the Company.

(b) On account of other disputes in respect of:

Particulars March 31, 2013 March 31, 2012 Rs. crores Rs. crores

Entertainment tax 0.03 0.53

Sales tax / VAT 7.70 7.37

Property tax 10.98 8.60

Stamp Duty 0.60 0.60

Service Tax 7.35 7.03

Others 1.96 1.83

The Company is a defendant in various legal actions and a party to claims which arose during the ordinary course of business. The Company''s management believes based on the facts presently known, that the results of these actions will not have a material impact on the Company''s financial statements.

(c) In a hotel on land under license agreement, there is a demand for increased lease rentals with effect from 2006-07 amounting to Rs. 194.85 crores (Previous year Rs. 161.26 crores) plus interest thereon. The Company has disputed this enhanced lease rental and filed a suit in the High Court and taken out a Notice of Motion, inter alia, for a stay against any further proceedings by the licensor pending resolution of dispute by the Court. The Company has been legally advised that the demand is not sustainable as it is not in accordance with the judgment of the Hon''ble Supreme Court. The Company does not expect any additional liability in this regard.

In some hotels, proposed revisions in property taxes are contested by the Company, amounts of which are indeterminate.

(d) Guarantees / Letter of Comfort given by the Company in respect of loans obtained by other companies and outstanding as on March 31, 2013 - Rs. 868.68 crores (Previous year - Rs. 670.05 crores).

Note 3 : Capital Commitments

Estimated amount of contracts remaining to be executed on capital account net of capital advances and not provided for is Rs. 173.75 crores (Previous year - Rs. 89.73 crores).

Note 4 : Other Commitments

(a) The Company owns 19.90% of the issued share capital of Lands End Properties Private Limited (LEPPL), a Company owning 67% interest in the Hotel Sea Rock Property through its wholly-owned subsidiary, Sky Deck Properties & Developers Private Limited (SDPDPL). During the year, LEPPL has refinanced loan of Rs. 400 crores and accrued premium by raising a fresh debt of Rs. 521 crores through issuance of Zero coupon Non-Convertible Debentures, redeemable at a premium having a yield to maturity of 10%. LEPPL has a call option on this borrowing to redeem such Debentures on February 13, 2014 or February 13, 2015 with an additional redemption premium of 0.5% and 0.15% of nominal value respectively. However, the call option can only be exercised with prior written consent from the Company. In respect of such debentures issued by LEPPL, the Company has : -

i. the first right to purchase the entire shareholding of SDPDPL held by LEPPL for an aggregate value of Rs. 693.45 crores; or

ii. the obligation to make good the value of the shortfall if lenders of LEPPL realise an amount lower than the redemption amount, on sale of the shares of SDPDPL in case the right referred in (i) above is not exercised.

(b) The Company had given an option to certain shareholders of ELEL Hotels & Investment Ltd. (ELEL), a company having an underlying lease of the Hotel Sea Rock Property as under: -

i. Shareholders holding 5,26,854 shares in ELEL would have had an option to sell these shares to the Company upon the achievement and fulfilment of certain conditions. The intent states that the option would have been exercisable by the shareholders at a predetermined price, based on the obligations actually fulfilled by the holders of these shares. The holders of these shares are entitled to exercise this Put option on July 1, 2013 or January 1, 2014 or July 1, 2014. In parallel, the Company also has an option to purchase these shares at the same price on September 1, 2013 or April 1, 2014 or September 1, 2014.

ii. Given the non-fulfilment of conditions as at date as well as the uncertainty in achieving these conditions going forward, the resolution of this Put/Call option with respect to timing, price and resultant liability remains indeterminate.

(c) The Company has given letters of support in case of select subsidiaries and associate companies during the year.

Note 5 : Operating Lease

The Company has taken certain vehicles, flats and immovable properties on operating lease. The total lease rent paid on the same is included under Rent and Licence Fees forming part of Other Expenses.(Refer Note 28 (ii). Page 86). The minimum future lease rentals payable in respect of non-cancellable leases entered into after April 1,2001 to the extent of minimum guarantee amount are as follows: -

Note 6: Derivative Instruments and Unhedged Foreign Currency Exposure:

The Company uses forward exchange contracts, interest rate swaps, currency swaps and options to hedge its exposure in foreign currency and interest rates. The information on derivative instruments is as follows : -

Note 7 : Foreign Currency Monetary Item Translation Difference Account

The Company has exercised the option granted vide notification No. G.S.R.225(E) dated March 31, 2009, issued by the Ministry of Corporate Affairs and subsequent Notification No G.S.R.378(E) (F.No17/133/2008-CL.V) dated May 11,2011 and Amendment Notification No G.S.R.914(E) dated December 29, 2011 incorporating the new paragraph 46(A) relating to Accounting Standard (AS-11) ''The Effects of Changes in Foreign Exchange Rates'' and accordingly, the exchange differences arising on revaluation of long-term foreign currency monetary items for the year ended March 31, 2013 have been accumulated in "Foreign Currency Monetary Item Translation Difference" and amortised over the balance period of such long-term asset or liability, by recognition as income or expense in each of such periods. Foreign currency monetary items outstanding as at March 31, 2013 are accounted as per Company''s Policy on Transactions in Foreign Exchange (Refer Note 2(f), Page 65).

Note 8 : Remittance in Foreign Currencies for dividend to non-resident shareholders

The Company has not remitted any amount in foreign currencies on account of dividend during the year and does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividend have been made by / on behalf of non-resident shareholders. The particulars of dividend paid to non-resident shareholders during the year, are as under:

Note 9 :

The Company, on a review of its foreign operations had, in the past, made voluntary disclosures to the appropriate regulator, of what it considered to be possible irregularities, in relation to foreign exchange transactions relating to the period prior to 1998. Arising out of such disclosures, the Company received show cause notices. The Company has replied to the notices and is waiting for the directorate to return its files, after which it will complete the replies. Adjudication proceedings are in progress.

Note 10:

Deposits and Advances in the nature of loans to Subsidiaries, Jointly Controlled Entities and Associates: -

Note 11:

The Company''s only business being hoteliering, disclosure of segment-wise information is not applicable under Accounting Standard 17 - ''Segmental Information'' (AS-17) notified by the Companies (Accounting Standards) Rules, 2006 (as amended). There is no geographical segment to be reported since all the operations are undertaken in India.

Note 12:

The Company has regrouped / reclassified the previous year figures to conform to the current year''s presentation.


Mar 31, 2012

Note 1 : Corporate Information

The Indian Hotels Company Limited ("IHCL" or the "Company"), is a listed public limited company incorporated in 1902. It is promoted by Tata Sons Ltd., which holds a significant stake in the Company. The Company is primarily engaged in the business of owning, operating & managing hotels, palaces and resorts.

(i) The Company has one class of equity shares having a par value of Rs 1/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

During the year ended March 31,2012, the amount of per share dividend recognised as distribution to equity shareholder was Rs 1/- (Previous year Rs 1/-).

(ii) The Company had allotted on preferential basis to Tata Sons Ltd, the Promoter, following securities on December 23, 2010 :

(a) 3,60,00,000 Ordinary Shares of the face value of Rs 1/- each at a premium of Rs 102.64 per share aggregating Rs 373.10 crores.

(b) 4,80,00,000 Warrants with an option to subscribe to one Ordinary Share of the face value ofRs 1/- each at a premium of f 102.64 per share for every warrant held. The option shall be exercisable after April 1, 2011, but not later than 18 months from the date of issue of the Warrants i.e June 23, 2012. Accordingly, the Company has received Rs 124.37 crores, as 25% advance against the warrants from the Promoter. In the event the warrants are not converted into shares within the said period, the Company is eligible to forfeit the amounts received towards the warrants.

(iii) 16,504 Ordinary Shares have been issued but not subscribed to as at the end of the respective years and have been kept in abeyance pending resolution of legal dispute.

Footnote :

With effect from April 1, 2011, the Company has adopted hedge accounting principles to account for hedging of loans extended to subsidiaries forming a part of the Company's net investment in non-integral foreign operations. Effectively, the Company had partially converted its rupee borrowings into foreign currency borrowings, using cross-currency swap derivative instruments, so as to cover the foreign currency fluctuations of its investments in overseas subsidiaries and the foreign currency borrowings. On application of the hedge accounting policy, the foreign currency translation differences of both, the hedging instrument (i.e. the borrowings) and the hedged item (i.e. the net investment in non-integral foreign operation), are recognised under Reserves and Surplus having due consideration to hedge effectiveness. Accordingly, the translation difference on the borrowings amounting to Rs 118.22 crores for year ended March 31, 2012, forming the effective portion of the hedge has been recognised in the Hedge Reserve Account in the Balance Sheet, whilst the corresponding translation differences of the net investment in non- integral foreign operation of Rs 183.05 crores for the year ended March 31, 2012, has been recognised under "Foreign Currency Translation Reserve Account" in the Balance Sheet. Had the Company chosen to amortise the foreign currency translation differences over the balance maturity period of such loans, the charge to the Statement of Profit and Loss for the year ended March 31, 2012, would have been higher by Rs 14.01 crores.

(ii) Secured Debentures indudes:

a) 3,000, 10.10% Secured Non-Convertible Debentures of Rs 10 lakhs each aggregating Rs 300 crores, are allotted on November 18, 2011 and repayable at par at the end of 10th year from the date of allotment i.e November 18, 2021.

b) 2,500, 9.95% Secured Non-Convertible Debentures of Rs 10 lakhs each aggregating Rs 250 crores, are allotted on July 27, 2011 and repayable at par at the end of 10th year from the date of allotment i.e July 27, 2021. The Company has entered into currency swap transactions with a view to convert these debentures into foreign currency borrowing, to hedge its foreign currency assets. Accordingly, the underlying borrowings are translated at the exchange rate prevailing at the Balance Sheet date.

c) 3,000, 2% Secured Non-Convertible Debentures of Rs 10 lakhs each aggregating Rs 300 crores, are allotted on March 22, 2010 and repayable in 3 annual instalments commencing at the end of 5th, 6th & 7th year from the date of allotment along with redemption premium of Rs 6.13 lakhs per debenture in the ratio of 20:30:50 so as to give a YTM of 9.5%. The Company has entered into currency swap transactions on Rs 200 crores with a view to convert these debentures into foreign currency borrowing, to hedge its foreign currency assets. Accordingly, the underlying borrowings to the extent of Rs 200 crores are translated at the exchange rate prevailing at the Balance Sheet date.

d) 3,000,11.80% Secured Non-Convertible Debentures ofRs 10 lakhs each aggregatingRs 300 crores, allotted on December 18, 2008 and repayable in 3 annual instalments in the ratio of 50:30:20 at the end of the 3rd year from the date of allotment. During the year, the Company has repaid the first instalment which was due on December 18, 2011, of Rs 150 crores.

e) 2,500, 9.50% Secured Non-Convertible Debentures of Rs 10 lakhs each aggregating Rs 250 crores, allotted on February 27, 2007, and repayable at the end of 5th year from the date of allotment. These debentures were fully redeemed by the Company during the year on its due date.

f) 6,02,76,898, 6% Secured Non-Convertible Debentures of Rs 100 each aggregating Rs 602.77 crores, allotted on May 13, 2008, for the period of 3 years which were repaid by the Company on May 13, 2011.

All the Secured Non-Convertible Debentures are rated, listed and secured by a pari passu first charge created on all the fixed assets of the Company, both present and future.

(iii) Unsecured Debentures includes:

a) 2,500, 2% Unsecured Non-Convertible Debentures of Rs 10 lakhs each, allotted on December 9, 2009, aggregating Rs 250 crores and repayable at the end of the 10th year, along with redemption premium of Rs 12.43 lakhs per debenture. The Company has entered into currency swap transactions with a view to convert these debentures into foreign currency borrowing, to hedge its foreign currency assets. Accordingly, the underlying borrowings are translated at the exchange rate prevailing at the Balance Sheet date.

b) 1,360,9.90% Unsecured Non-Convertible Debentures of Rs 10 lakhs each, allotted on February 24, 2012, aggregating Rs 136 crores and repayable at the end of the 5th year.

c) 1,500 2% Unsecured Non-Convertible Debentures of Rs 10 lakhs each, allotted on December 9, 2009, aggregating Rs 150 crores and repayable at the end of the 5th year, along with redemption premium of Rs 4.37 lakhs per debenture. The Company has entered into currency swap transactions with a view to convert these debentures into foreign currency borrowing, to hedge its foreign currency assets. Accordingly, the underlying borrowings are translated at the exchange rate prevailing at the Balance Sheet date.

(iv) The Company has taken interest bearing external commercial borrowing of US $ 95 million on November 23, 2011. The loan is repayable at the end of 50th, 60th, & 72nd month from November 23, 2011, in equal instalments to achieve the average maturity of 5.05 years.

(v) The Company has taken interest bearing external commercial borrowing of US $ 30 million on April 25, 2007. The loan is repayable at the end of 5th year from the date of borrowing.

(vi) The Company has taken Fixed Deposits from Public as well as Shareholders carrying interest @ 9.50% and 10% for 2 and 3 years respectively, with an additional interest @ 0.25% p.a. for senior citizens, shareholders and employees. The interests on these deposits are being paid on half-yearly basis and on maturity. Deposits from Shareholders includes deposit from a Director - Rs 0.60 crore.

(iii) The Company has investments and exposure aggregating Rs 1,462.85 crores (Previous year Rs 1,280.42 crores) in entities in which there has been a significant erosion of net-worth or decline in market value. While there exists a degree of uncertainty as to the final outcome, the Company regards the diminution to be temporary in nature considering the Company's strategic and long-term commitment to these investments and having regard to the factors given below:

a) The Company, through its wholly-owned subsidiaries, holds shares costing Rs 1,339.45 crores (US $ 262 million) (Previous year Rs 1,169.00 crores (US $ 262 million) in Orient-Express Hotels Ltd., ("Orient-Express") an entity whose shares are listed on the New York Stock Exchange. However the market value of these shares as at the Balance Sheet date has declined by Rs 960.00 crores (US $ 188 million) (previous year Rs 775.00 crores (US $ 174 million). There has been a noticeable improvement in the performance of Orient-Express and consequently, the Company expects improvement in the value of this investment in the future.

b) BJets Pte. Ltd., Singapore ("BJets''), in whose equity the Company has invested Rs 102.59 crores (Previous year Rs 102.59 crores) and given long-term advances through its wholly owned subsidiary of Rs 12.79 crores (Previous Year Rs Nil ), has a negative net worth as at March 31, 2012 (based on its unaudited financial statements). The Company is informed that BJets has entered into an alliance for marketing and maintenance of its aircraft as well as operational support with a local strategic partner as a part of its turnaround strategy and expects the performance of BJets to improve in the future.

c) The Company and its subsidiary have invested 10.50 crore (Previous year Rs 0.50 crore) and long-term advances with accrued interest aggregating Rs 7.52 crores (previous year Rs 8.33 crores), in Taj Karnataka Hotels and Resorts Ltd. ("Taj Karnataka"), an entity jointly controlled with the Government of Karnataka. Taj Karnataka's accumulated losses exceed its paid up capital and reserves. The Company is in discussion for a financial restructuring of the jointly controlled entity and is hopeful of a turnaround with its proposed initiatives.

(iv) Transfer of shares are restricted due to option granted for 10 years upto July, 2021 to Tata Realty and Infrastructure Ltd. for repurchase of the shares at par value. Tata Realty and Infrastructure Ltd. has deposited a sum of f 71.10 crores as Option Deposit, which shall be adjusted upon exercise of the option or refunded.

Note 2 : Contingent Liabilities (to the extent not provided for):

(a) On account of Income Tax matters in dispute :

In respect of tax matters for which Company's appeals are pending - Rs 27.34 crores (Previous year - Rs 14.25 crores). The said amounts have been paid / adjusted and will be recovered as refund if the matters are decided in favour of the Company.

(c) In a hotel on land under license agreement, there is a demand for increased rentals with effect from 2006-07 amounting to Rs 161.26 crores (Previous year Rs 129.55 crores) plus interest thereon. The Company has been legally advised that the demand is not sustainable as it is not in accordance with principles / guidelines laid down by the Honourable Supreme Court. The Company has contested the claim and does not expect any additional liability in this regard. In another hotel under licence agreement, the authorities have sought to revise licence fees with effect from 1986-87 amounting to Rs 25.95 crores (Previous year 124.24 crores) plus interest thereon due to a difference in interpretation. The Company has contested the same, but provided for a sum of Rs 10.00 crores and no additional liability is anticipated. In some hotels, proposed revisions in property taxes are contested by the Company, amounts of which are indeterminate.

(d) Guarantees given by the Company in respect of loans obtained by other Companies and outstanding as on March 31, 2012 - Rs 670.05 crores (Previous year - Rs 498.20 crores).

Note 3 : Capital Commitments

Estimated amount of contracts remaining to be executed on capital account net of capital advances and not provided for is Rs 89.73 crores (Previous year - Rs 110.41 crores).

Note 4 : Other Commitments

(a) The Company owns 19.90% of the issued share capital of Lands End Properties Private Limited (LEPPL), a Company owning 67% interest in the Hotel Sea Rock Property through its wholly-owned subsidiary. Sky Deck Properties & Developers Private Limited (SDPDPL). LEPPL has raised a debt of Rs 400 crores by issuance of zero coupon Non-Convertible Debentures, redeemable at a premium. In respect of the debentures issued by LEPPL, the Company has

i. the first right to purchase the entire shareholding of SDPDPL held by LEPPL for an aggregate value of Rs 525.65 crores; or

ii. the obligation to make good the value of the shortfall if the lenders of LEPPL realise an amount lower than the Redemption Amount on sale of the shares of SDPDPL in case the right referred in (i) above is not exercised.

(b) The Company has given an option to certain shareholders of ELEL Hotels & Investment Ltd., a company having an underlying lease of the Hotel Sea Rock Property as under:-

i. Shareholders holding 3,98,090 shares have an option to sell these shares to the Company. The option is exercisable at a price to be determined based on fulfilment of certain obligations by the holders of these shares on January 1, 2011 or July 1, 2011 or January 1, 2012 or July 1, 2012. Since the shareholders are yet to fulfil their obligations, the option has not been exercised.

ii. Shareholders holding 5,36,339 shares have an option to sell these shares to the Company. The option is exercisable at a price to be determined based on fulfilment of certain obligations by the holders of these shares at an agreed fixed return, payable from June 25, 2009 at a price so determined. The shareholders can exercise the option on January 1, 2013 or July 1, 2013 or January 1, 2014 or July 1, 2014. The Company also has an option to purchase these shares at the same price on April 1, 2013 or September 1, 2013 or April 1, 2014 or September 1, 2014.

Note 5 : Foreign Currency Monetary Item Translation Difference Account

The Company has exercised the option granted vide notification No. G.S.R.225(E) dated March 31, 2009, issued by the Ministry of Corporate Affairs and subsequent Notification No G.S.R.378(E) (F.No17/133/2008-CL.V) dated May 11, 2011 and Amendment Notification No G.S.R.914(E) dated December 29, 2011 incorporating the new paragraph 46(A) relating ! to Accounting Standard (AS) 11 "The Effects of Changes in Foreign Exchange Rates" and accordingly, the exchange differences arising on revaluation of long term foreign currency monetary items for the year ended March 31, 2012 have been accumulated in "Unamortised Foreign Currency Monetary Item Translation Difference" and amortised over the ; balance period of such long term asset or liability, by recognition as income or expense in each of such periods. Foreign currency monetary items outstanding as at March 31, 2012 are accounted as per Company's Policy on Transactions in | Foreign Exchange (Refer Note 2(f), Page 63).

(b) The Company operates post retirement defined benefit plans as follows

i Funded:

- Post Retirement Gratuity

- Pension to Employees - Post retirement minimum guaranteed pension scheme for certain categories of employees, which is funded by the Company and the employees.

ii Unfunded:

- Pension to Executive Directors and Employees - Post retirement minimum guaranteed pension scheme for certain retired executive directors and certain categories of employees, which is unfunded.

- Post Employment Medical Benefits to qualifying employees

(c) Pension Scheme for Employees:

The Company has formulated a funded pension scheme for certain employees. The actuarial liability arising on the above, after allowing for employees' contribution is determined as at the year end, on the basis of uniform accrual benefit, with demographic assumptions taken as Nil.

Note 6:

The Company, on a review of its foreign operations had, in the past, made voluntary disclosures to the appropriate regulator, of what it considered to be possible irregularities, in relation to foreign exchange transactions relating to the period prior to 1998. Arising out of such disclosures, the Company received show cause notices. The Company has replied to the notices and is waiting for the directorate to return its files, after which it will complete the replies. Adjudication proceedings are in progress.

Note 7:

The Company's only business being hoteliering, disclosure of segment-wise information is not applicable under Accounting Standard 17 - 'Segmental Information' (AS-17) notified by the Companies (Accounting Standards) Rules, 2006 (as amended). There is no geographical segment to be reported since all the operations are undertaken in India.

Note 8:

During the year ended March 31, 2012 the Revised Schedule VI notified under the Companies Act 1956, has become applicable for preparation and presentation of financial statements. The preparation of financial statements based on the Revised Schedule VI does not impact the recognition and measurement principles followed for preparation of the financial statements. However, it has significant impact on the presentation and disclosures made in the financial statements. The Company has regrouped / reclassified the previous year figures in accordance with the requirements applicable in the current year.


Mar 31, 2011

1. The Taj Mahal Palace in Mumbai was attacked by terrorist on November 26, 2008 amongst other targets in the city, due to which the heritage wing of the property was severely damaged. The entire hotel has since been restored back and is fully operational. The cost of reinstatement of damage will be recovered from the insurance company, subject to the adjustment on account of expected deductions from claim amounts. The fixed assets / facilities that have been put to use are capitalised at its carrying value on the date of the loss, increased for the expected deductions from claim amounts. The Company is also insured for Loss of profits to cover the period of interruption for up to 12 months from the date of incident against which it has recognised an amount of Rs. Nil (Previous Year Rs. 64.35 crores) towards loss of profi t due to business interruption on an estimated basis. The Company is in an advanced stage of finalisation of the claim with the insurers and has so far received Rs. 200 crores as advance payment towards claim settlement including Rs. 20 crores received during the current financial year.

2. Preferential Allotment

The Company has allotted on preferential basis to Tata Sons Ltd, the Promoter, following securities on December 23, 2010:

3,60,00,000 Ordinary Shares of the face value ofRs. 1/- each at a premium ofRs. 102.64 per share aggregating Rs. 373.10 crores.

4,80,00,000 Warrants with an option to subscribe to one Ordinary Share of the face value of Rs. 1/- each at a premium ofRs. 102.64 per share for every warrant held. The option shall be exercisable after April 1, 2011, but not later than 18 months from the date of issue of the Warrants i.e June 23, 2012. Accordingly, the Company has received Rs. 124.37 crores, as 25% advance against the warrants from the Promoter.

Consequently, the Share Capital of the Company increased from Rs. 72.35 crores to Rs. 75.95 crores on allotment of 3,60,00,000 Ordinary Shares.

As at March 31, 2011, Rs. 497.47 crores raised through the above issues, were temporarily parked as Deposits with Banks and in Units of Mutual Funds. These funds subsequent to the Balance Sheet date, i.e. on May 12, 2011 have been fully utilised for redemption of 6% Secured Non-Convertible Debentures.

3. The Company has entered into currency swap transactions with a view to convert its rupee borrowings into foreign currency borrowing, to hedge its foreign currency assets. Accordingly, the underlying borrowings are translated at the exchange rate prevailing at the Balance Sheet date.

4. Shareholder's Deposits placed with a subsidiary company include Rs. 273.99 crores (equivalent to USD 61.363 million) (previous yearRs. 276.99 crores, equivalent to USD 61.363 million) placed in earlier years, with the Company retaining the right to convert the said deposits into equity by December 31, 2012, as per the permission received from the Reserve Bank of India.

5. (a) The Company has given an undertaking to The Hongkong & Shanghai Banking Corporation in respect of borrowing by IHMS (Australia) Pty Limited, a wholly-owned subsidiary, for Australian Dollars 1.00 million (previous year Australian Dollar 1.00 million), that it will not dilute its shareholding in the subsidiary.

(b) Samsara Properties Limited, a wholly-owned subsidiary of the Company has taken a loan from ICICI Bank for US$ 177 million. The Bank has an option to sell / transfer the loan to the Company on the occurrence of an event of default under the loan agreement.

(c) The Company owns 19.90% of the issued share capital of Lands End Properties Private Limited (LEPPL), a company owning 67% interest in the Hotel Sea Rock Property through its wholly-owned subsidiary, Sky Deck Properties & Developers Private Limited (SDPDPL). LEPPL has raised a debt of Rs. 400 crores by issuance of zero coupon Non-Convertible Debentures, redeemable at a premium. In respect of the debentures issued by LEPPL, the Company has :-

i. the first right to purchase the entire shareholding of SDPDPL held by LEPPL for an aggregate value of Rs. 525.65 crores; or

ii. the obligation to make good the value of the shortfall if the lenders of LEPPL realise an amount lower than the Redemption Amount on sale of the shares of SDPDPL in case the right referred in (i) above is not exercised.

(d) The Company has given an option to certain shareholders of ELEL Hotels & Investment Ltd., a company having an underlying lease of the Hotel Sea Rock Property as under:-

i. Shareholders holding 3,98,090 shares have an option to sell these shares to the Company. The option is exercisable at a price to be determined based on fulfilment of certain obligations by the holders of these shares on January 1, 2011 or July 1, 2011 or January 1, 2012 or July 1, 2012. Since the shareholders are yet to fulfil their obligations, the option has not been exercised.

ii. Shareholders holding 5,36,339 shares have an option to sell these shares to the Company. The option is exercisable at a price to be determined based on fulfilment of certain obligations by the holders of these shares at an agreed fixed return, payable from June 25, 2009 at a price so determined. The shareholders can exercise the option on January 1, 2013 or July 1, 2013 or January 1, 2014 or July 1, 2014. The Company also has an option to purchase these shares at the same price on April 1, 2013 or September 1, 2013 or April 1, 2014 or September 1, 2014.

6. Estimated amount of contracts remaining to be executed on capital account net of capital advances and not provided for is Rs. 110.41 crores (previous year - Rs. 234.64 crores).

(b) Purchase of Food and Beverages is net of proceeds from sale of empties etc. - Rs. 0.92 crore (previous year - Rs. 0.76 crore).

(c) Dividend Income includes dividend from subsidiary companies - Rs. 2.01 crores (previous year - Rs. 3.35 crores).

(d) Dividend Income includes income on long term trade investments (including dividend from Subsidiary Companies referred in note (c) above) - Rs. 17.29 crores (previous year - Rs. 23.75 crores) and on current investments - Rs. 12.60 crores (previous year - Rs. 13.08 crores).

(e) Exchange gain includes gain on currency swap - Rs. 13.21 crores (previous year - gain of Rs. 6.25 crores included in Exchange Gain) and loss on foreign exchange transactions - Rs. 1.53 crores (previous year - loss of Rs.2.92 crores).

(f) Other expenses include Bad Debts written off - Rs. 1.35 crores (previous year - Rs. 4.73 crores) and contribution to Electoral Trust Rs. Nil (previous year - Rs. 1 crore) (The Objects of the Trust inter alia, include holding by the Trustees of "Distribution Funds" for distribution to political parties).

7. Exceptional Items amounting to Rs. 17.14 crores comprise of profit on sale of a Hotel Property - Rs. 4.29 crores, expenditure on a discontinued project charged off for commercial reasons - Rs. 5.20 crores and provision for diminution in the value of Investment in a Subsidiary - Rs. 16.23 crores. In respect of previous year, Exceptional Items ofRs. 47.91 crores includes a non- recurring profit on sale of investments - Rs. 39.16 crores, profit on exit from a development project - Rs. 6.83 crores and refund of annuity pension premium Rs. 1.92 crores.

8. Contingent Liabilities:

(a) On account of Income Tax matters in dispute :

i. In respect of matters which have been decided in the Company's favour by the Appellate Authorities, where the Income Tax Department has preferred an appeal - Rs. 16.28 crores (previous year - Rs. 13.03 crores).

ii. In respect of other matters for which Company's appeals are pending - Rs. 14.25 crores (previous year - Rs. 1.83 crores).

The said amounts have been paid / adjusted and will be recovered as refund if the matters are decided in favour of the Company.

(b) On account of other disputes in respect of :-

i. Luxury tax - Rs. 0.17 crore (previous year - Rs. 0.32 crore).

ii. Entertainment tax - Rs. 0.53 crore (previous year - Rs. 0.53 crore).

iii. Sales tax - Rs. 7.02 crores (previous year - Rs. 6.63 crores).

iv Property tax - Rs. 9.24 crores (previous year - Rs. 7.40 crores).

v. Stamp Duty - Rs. 2.34 crores (previous year - Rs. 2.34 crores).

vi. Others - Rs. 12.36 crores (previous year - Rs. 7.74 crores).

(c) Other claims against the Company not acknowledged as debt :

Rs. crores

Particulars Current Year Previous Year

Tax matters 1.12 1.12

Contractual matters in the course of business 24.24 21.64

Real Estate disputes and demands 130.17 99.07

Employee related matters 0.96 0.64

Total 156.49 122.47

Provision for Contingent Claims made in the books - Rs. 7.08 crores (previous year - Rs. 1.76 crores).

(d) Guarantees given by the Company in respect of deposits received and loans obtained by other companies and outstanding as on March 31, 2011 - Rs. 498.20 crores (previous year - Rs. 392.41 crores).

(e) In respect of a subsidiary, arbitration proceedings initiated to resolve a long standing dispute with the Airport Authority of India (AAI) for granting access through the subsidiary's land at Mumbai have been concluded in favour of the Company. As a result, the claim made by AAI on the Company amounting to Rs. 10.22 crores stands withdrawn. The revised claim pursuant to the award given by the arbitrator is awaited from the AAI. The Company does not expect any liability for the past period and should there be any liability crystallising on the subsidiary for any reason, the same is indemnifiable by the Company.

9. The Company had exercised the option granted vide notification F.No.17/33/2008/CL-V dated March 31, 2009, issued by the Ministry of Corporate Affairs and, accordingly, the exchange differences arising on revaluation of long term foreign currency monetary items for the year ended March 31, 2010 have been recognised over the shorter of the maturity period or March 31, 2011. The unamortised balances as at the year end are presented as "Foreign Currency Monetary Item Translation Difference Account" Foreign currency monetary items outstanding as at March 31, 2011 are accounted as per Company's Policy on Transaction in Foreign Exchange (Refer Note 1(f), page 83).

(b) The Company operates post retirement defined benefit plans as follows :-

i. Funded :

- Post Retirement Gratuity

- Pension to Employees - Post retirement minimum guaranteed pension scheme for certain categories of employees, which is funded by the Company and the employees.

ii. Unfunded :

- Pension to Executive Directors and Employees - Post retirement minimum guaranteed pension scheme for certain retired executive directors and certain categories of employees, which is unfunded.

(f) Provident Fund

In keeping with the Guidance on implementing Accounting Standard (AS) 15 (Revised) on Employee Benefits notified by the Companies (Accounting Standards) Rules, 2006, employer established provident fund trusts are treated as defined Benefit Plans, since the Company is obligated to meet interest shortfall, if any, with respect to covered employees. According to the Management, the Actuary has opined that actuarial valuation cannot be applied to reliably measure provident fund liabilities in the absence of guidance from the Actuarial Society of India. Accordingly, the Company is currently not in a position to provide other related disclosures as required by the aforesaid AS 15 read with the Accounting Standards Board Guidance. However, having regard to the position of the Fund (for covered employees) and confi rmation from the Trustees of such Fund, there is no shortfall as at the year-end.

The estimate of future salary increases, considered in actuarial valuation, takes into account inflation, seniority, promotions and other relevant factors. The above information has been Certified by the actuary and has been relied upon by the Auditors.

10. As the turnover of the Company includes sale of food and beverages, it is not possible to give quantitative details of the turnover and food & beverages consumed. The Company has been exempted from giving these particulars vide order no. 46/20/2008-CL-III dated May 23, 2008, issued by the Department of Company Affairs. The Ministry has also granted an exemption under General notification (No S. O. 301(E) dated February 8, 2011).

11. Remittance in Foreign Currencies for dividend to non-resident shareholders:

The Company has not remitted any amount in foreign currencies on account of dividend during the year and does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividend have been made by/on behalf of non-resident shareholders. The particulars of dividend paid to non-resident shareholders during the year, are as under:

12. The Company has an investment ofRs. 0.50 crore (previous year - Rs. 0.50 crore) and advances outstanding (including interest) of Rs. 8.33 crores (previous year - Rs. 8.76 crores) in a Joint Venture, Taj Karnataka Hotels and Resorts Limited (TKHRL). TKHRL has accumulated losses in excess of its paid-up capital and reserves. Considering the inherent value of TKHRL's assets, based on a valuation of the property and its proposed financial restructuring, for which the Company is in talks with the JV partner - the Government of Karnataka, the Management is of the view that there is no diminution, other than temporary, in the value of the investment and that the amount outstanding after the financial restructuring will be fully recovered.

13. The Company has an investment ofRs. 102.50 crores (previous year - Rs. 102.50 crores) in BJETS Pte. Ltd., and has provided advance of Rs. 2.75 crores (previous year - Nil). BJETS has incurred losses over the years and its net worth as on December 31, 2010 is Rs. 30.36 crores, based on Management accounts. During the year, BJETS has tied up with a renowned company in the aviation sector for operational support, maintenance and marketing of BJETS aircraft. In view of the business restructuring and new alliance, the Management is of the view that there is no diminution other than temporary in the value of its investment and that the advance outstanding will be fully recovered.

14. In respect of an investment of Rs.1,169 crores (USD 262 million); previous year Rs. 1,182 crores (USD 262 million) made by a wholly-owned subsidiary of the Company in Orient-Express Hotels Ltd., a company listed on the New York Stock Exchange, the market value of this investment as on the Balance Sheet date is Rs. 394 crores (USD 88 million); previous year Rs. 441 crores (USD 99 million), representing a diminution in the value of the investment in the company amounting to Rs. 795 crores (USD 174 million); previous year Rs. 741 crores (USD 163 million). In view of the strategic nature of the investment and the Company's long-term commitment and on a consideration of the valuation report of an independent valuer and other long-term strategies of the Company, in the opinion of the Management, there is no diminution, other than temporary in the value of the aforesaid investment.

15. The Company, on a review of its foreign operations had, in the past, made voluntary disclosures to the appropriate regulator, of what it considered to be possible irregularities, in relation to foreign exchange transactions relating to the period prior to 1998. Arising out of such disclosures, the Company received show cause notices. The Company has replied to the notices and is waiting for the directorate to return its files, after which it will complete the replies. Adjudication proceedings are in progress.

16. Previous year's figures have been regrouped, wherever necessary, to confirm to the current year's presentation.

 
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