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Notes to Accounts of Mahindra Holidays & Resorts India Ltd.

Mar 31, 2016

I) In accordance with the Guidance Note issued by the Institute of Chartered Accountants of India, the shares allotted to ESOP Trust including bonus shares but not exercised by the employees have been reduced from the share capital by Rs. 7,224,380 (previous year Rs. 7,546,050) and securities premium account reduced by Rs. 136,136,140 (previous year 145,180,792). The said shares will be added to the issued share capital as and when ESOP Trust issues the shares to the concerned persons on their exercising the option and till such shares are issued the amount received from ESOP Trust is disclosed under "other current liabilities".

ii) The Company has adopted the intrinsic value method in accounting for employee cost on account of ESOS for Grant I (ESOS 2006), Grant II (ESOS 2006), Grant III (ESOS 2006) and Grant V (ESOS 2006) and for all the other grants, the fair value method has been adopted. The intrinsic value of the shares granted under Grant I (ESOS 2006),Grant II (ESOS 2006), Grant III (ESOS 2006) and Grant V (ESOS 2006) based on the valuations obtained from an independent valuer is Rs. 16 per equity share as on 31st March, 2006, Rs. 52 per equity share as on 1st January 2007, 31st August 2008 and 1st November 2008, based on the Discounted Cash Flow Method. The fair value of the shares granted under Grant VI (ESOS 2006), Grant VII (ESOS 2006), Grant VIII (ESOS 2006), Grant IX (ESOS 2006) and Grant III (ESOS 2014) based on the fair value market price is Rs. 370, Rs. 323, Rs. 323, Rs. 253 and Rs. 370 per share respectively. As the difference between the intrinsic value/fair value and the exercise price per share is Rs. Nil, no employee compensation cost has been charged.

iii) In respect of the options granted under the Grant I (ESOS 2014) and Grant II (ESOS 2014) of Employee Stock Option Plan, in accordance with guidelines issued by SEBI, the accounting value of the options is accounted as deferred employee compensation, which is amortised on a straight line basis over the period between the date of grant of options and the date of vesting. Consequently, employee compensation cost include Rs. 1,745,456 (previous year Rs. 238,374) being the amortisation of deferred employee compensation.

iv) Fair Value of options based on Black Scholes option pricing model :

(a) The fair value of options based on the valuation of the independent valuer for Grant I (ESOS 2006), Grant II (ESOS 2006), Grant III (ESOS 2006) and Grant V (ESOS 2006) as of the respective dates of grant i.e. 15th July 2006, 30th March 2007, 1st November 2007 and 1st November 2008 is Rs. 4.28, Rs. 16.36, Rs. 16.55 and Rs. 16.04 respectively.

(b) "The fair value of options based on the valuation of the independent valuer as of the respective dates of grant i.e. 21st February 2012 is Rs. 113.81 for Grant VI (ESOS 2006), Rs. 129.93 for Grant VII (ESOS 2006), 21st February 2013 is Rs. 94.43 for Grant VIII (ESOS 2006), 29th January 2014 is Rs. 83.75 for Grant IX (ESOS 2006), 22nd January 2015 is Rs. 97.24 for Grant I (ESOS 2014), 27th October 2015 is Rs. 158.85 for Grant II (ESOS 2014), 18th February 2016 is Rs. 126.91 for Grant III (ESOS 2014)."

(D) Other matters under appeal:

i) Property Related:

(a) The Government of Kerala through the Sub Collector, District of Devikulam issued an Order dated July 3, 2007 cancelling the assignment of land underlying the Munnar resort and directed repossession of land on the ground that it is agricultural land and cannot be used for commercial purposes. The Company has fled an appeal before the Commissioner of Land Revenue, Trivandrum against the said Order stating that the Patta issued does not specify that the land should be used only for agricultural purpose. The Commissioner of Land Revenue, Trivandrum vide his Order dated November 22, 2007 dismissed the appeal fled by the Company and cancelled the assignment of land underlying the Munnar Resort and further directed repossession of land on the ground that it is agricultural land and cannot be used for commercial purposes. The Company has fled a writ petition before the Kerala High Court against the said Order and on December 13, 2007, the Court granted an interim stay of all further proceedings.

(b) With respect to the land underlying the resort at Tungi:

The Collector Pune, vide his order, has cancelled the Non-Agricultural ("NA") status of the land. Against this order, the Company has fled an appeal before the Additional Divisional Commissioner (ADC), Pune challenging the cancellation of the NA status of the land. The matter is pending for orders. The Company has also fled a Civil Suit at Civil Court, Pune against the State of Maharashtra and others, inter alia, seeking declaration that the proceedings and orders in respect of the cancellation of the NA status of the land underlying the resort property at Lonavala are not enforceable and sought other reliefs. An ad-interim stay has been granted against the State of Maharashtra and the Collector, Pune, not to give effect to the orders of NA cancellation and the matter is pending for further hearing;

In respect of certain claims of a neighboring property owner, the Company has fled a suit in the Civil Court, Pune seeking inter-alia permanent injunction against him disturbing the possession of the Company''s resort property at Lonavala, Maharashtra and obtained an ad-interim stay. In another development, notwithstanding these proceedings, the neighboring property owner obtained an order from the local Mamlatdar''s Court for alleged access to his property through the resort property. The Company obtained a stay against the said order of the Mamlatdar. All matters with respect to the neighboring property owner are currently pending before the Civil Court, Pune.

(c) Pursuant to a "public interest litigation" fled before the Gujarat High Court, the officials of the Forest and Revenue departments undertook an inspection of all resorts (including the Company''s resort) at Gir in March 2015. Consequently, the Forest Department has alleged certain irregularities and sealed some structures / rooms in April 2015. The Company has denied the alleged violations and made its representations before a Committee constituted by the Gujarat High Court and the matter is pending hearing.

None of the matters contained in (a) to (c) above affect the routine operations of the resorts.

ii) Others:

(a) The Company had engaged a building contractor for construction of a resort. As the construction did not proceed as per agreed timelines the Company terminated the contract. The contractor has claimed Rs. 125,614,668 as damages for termination of the Contract. The Company has made a counter claim of Rs. 200,356,002 towards liquidated damages and other losses. The matter is pending before the Arbitrator.

(b) The Regional Provident Fund Commissioner, Chennai had issued Summons initiating proceedings under Section 7A of the Employees Provident Fund Act for failing to remit contributions on allowances relating to employees for the period from March 2011 to Feb 2013 in respect of Indian employees and from April 2010 to Feb 2013 in respect of international employees. The PF Authorities have made a claim of Rs. 18,993,169. The Company has fled a Writ Petition No 2408/2014 before the Madras High Court and the Court has granted an Interim stay of the above proceedings.

(c) With respect to member complaints pending before various consumer for a and other matters: Estimated amount of claims Rs. 94,901,717/- (previous year: Rs. 82,650,033/-).

1. Employee Benefits:

1.1 Defined benefit plans

The Company has a funded Gratuity Scheme for its employees and gratuity liability has been provided based on the actuarial valuation done at the year end.

2. Segment Reporting:

The Company is primarily engaged in the business of sale of Vacation Ownership and other related services in India. As such, the Company operates in a single segment and there are no separate business and geographic reportable segments for the purpose of Accounting Standard 17 on Segment Reporting.

3. Expenditure on Corporate Social Responsibility:

As per Section 135 of the Companies Act, 2013, the Company needs to spend 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The Company has incurred CSR expenditure on activities specified in Schedule VII of the Companies Act, 2013.

a. Gross amount required to be spent by the Company during the year is Rs. 27,189,781/-

4. Details of Amalgamations and Arrangements:

In terms of the Scheme of Amalgamation and Arrangement, (''the Scheme''), erstwhile Competent Hotels Private Limited, Divine Heritage Hotels Private Limited and Holiday on Hills Resorts Private Limited, wholly owned subsidiaries of the Company (referred to as ''transferor companies''), engaged in the business of rendering resort facilities) have been merged with the Company (''Transferee Company''), upon which the entire business, including all assets, liabilities and reserves of the Transferor Companies stand transferred to and vested in the Transferee Company. The amalgamation has been accounted under the ''pooling of interest method''and the assets and liabilities transferred have been recorded at their book values as on the Appointed Date.

The Scheme fled by the Company has been approved by the Hon''ble High Courts of judicature at New Delhi, Rajasthan (Jaipur Bench), Himachal Pradesh (Shimla) and Chennai with an Appointed Date of April 1, 2015 and effective date of March 31, 2016 (''the Efective Date''), being the date on which all the requirements under the Companies Act, 2013 have been completed.

There was no allotment of shares to the Transferor Companies''equity shareholders since the Transferor Companies were wholly owned subsidiaries of the Company.

Details of Amalgamations and Arrangements during the previous year:

In terms of the Scheme of Amalgamation and Arrangement, (''the Scheme''), the erstwhile Bell Tower Resorts Private Limited (a wholly owned subsidiary of the Company)(referred to as ''Transferor Company''), had been merged with the Company (''Transferee Company''), upon which the entire business, including all assets and liabilities of the Transferor Company stood transferred to and vested in the Transferee Company. The amalgamation had been accounted under the ''pooling of interest method''and the assets and liabilities transferred were recorded at their book values as on the Appointed Date.

The Scheme fled by the Company had been approved by the Hon''ble High Court of Bombay at Goa on May 2,2014 and by the Hon''ble High Court of Madras on June 23, 2014 with the Appointed Date of April 1, 2013 and an effective date of July 31, 2014 (''the Effective Date''), being the date on which the copies of the orders of the Hon''ble High Court has been fled with the Registrar of Companies.

There was no allotment of shares to the Transferor Company''s equity shareholders since the Transferor Company was a wholly owned subsidiary of the Company.

5. The figures for the previous year have been regrouped/reclassified to correspond with the current year''s classification/ disclosure. The figures are not comparable with the previous year on account of the amalgamations that were given effect to in the current year.


Mar 31, 2015

1 a) Shares in the company held by each shareholder holding more than 5% shares specifying the number of shares held.

1 b) i) Under the Employee Stock Option Scheme (ESOS 2006) equity shares are allotted to the Mahindra Holidays & Resorts India Limited Employees'' Stock Option Trust (the trust) set up by the Company. The trust holds these shares for the benefit of the eligible Employees/Directors as defined under the scheme and transfers these shares to them as per the recommendation of the remuneration committee.

ii) During the year the Company formulated the Employee Stock Option Scheme (ESOS 2014), under which the company proposed to issue and allot the shares either directly or to the existing Mahindra Holidays & Resorts India Limited Employees'' Stock Option Trust (the trust). To the extent allotted, the trust would hold these shares for the benefit of the eligible Employees/Directors as defined under the scheme and would transfer the shares to them as per the recommendation of the remuneration committee.

iii) The details of the Employees'' Stock Option Schemes are as under:

Type of Arrangement :

ESOS 2006 - Equity settled option plan administered through Employee Stock Option Trust.

ESOS 2014 - Equity settled option plan issued directly/administered through Employee Stock Option Trust.

Method of Settlement :

By issue of shares at Exercise Price.

Note (a) 35%,30%,15%,10% and 10% on expiry of 12,24,36,48 and 60 months from the date of grant respectively. Note (b) Minimum of 100 and a miximum of all the options vested but not exercised till that date.

iv) Summary of Stock options (including bonus shares) Issued out of lapsed options. Out of the above 90,000 shares have been issued out of lapsed options. Out of the above 86,500 shares have been issued out of lapsed options.

v) In accordance with the Guidance Note issued by the Institute of Chartered Accountants of India, the shares allotted to the trust including bonus shares but not excercised by the employees have been reduced from the share capital by Rs. 7,546,050 and securities premium account reduced by Rs. 145,180,792. The said shares will be added to the issued share capital as and when the trust issues the shares to the concerned persons on their exercising the option and till such shares are issued the amount received from the trust is disclosed under "other current liabilities".

vi) The Company has adopted the intrinsic value method in accounting for employee cost on account of ESOS for Grant I (ESOS 2006), Grant II (ESOS 2006), Grant III (ESOS 2006) and Grant V (ESOS 2006) and for all the other grants fair value method adopted. The intrinsic value of the shares granted under Grant I (ESOS 2006),Grant II (ESOS 2006), Grant III (ESOS 2006) and Grant V (ESOS 2006) based on the valuations obtained from an independent valuer is Rs. 16 per equity share as on 31st March, 2006, Rs. 52 per equity share as on 1st January, 2007, 31st August, 2008 and 1st Novmeber 2008, based on the Discounted Cash Flow Method. The fair value of the shares granted under Grant VI (ESOS 2006),Grant VII (ESOS 2006), Grant VIII (ESOS 2006) and Grant IX (ESOS 2006) based on the fair value market price is Rs. 370, Rs. 323, Rs. 323 and Rs. 253 per share respectively. As the difference between the intrinsic value/fair value and the exercise price per share is Rs. Nil, no employee compensation cost has been charged.

vii) In respect of the options granted under the Grant I (ESOS 2014) of Employee Stock Option Plan, in accordance with guidelines issued by SEBI, the accounting value of the options is accounted as deferred employee compensation, which is amortised on a straight line basis over the period between the date of grant of options and the eligible dates for conversion into equity shares. Consequently, employee compensation cost include Rs. 238,374 (previous year nil) being the amortisation of deferred employee compensation.

viii) Fair Value of options based on Black Scholes option pricing model:

The fair value of options based on the valuation of the independent valuer for Grant I (ESOS 2006), Grant II (ESOS 2006), Grant III (ESOS 2006) and Grant V (ESOS 2006) as of the respective dates of grant i.e. 15th July 2006, 30th March 2007, 1st November 2007 and 1st November 2008 is Rs. 4.28, Rs. 16.36, Rs. 16.55 and Rs. 16.04 respectively.

The fair value of options based on the valuation of the independent valuer as of the respective dates of grant i.e. 21st February 2012 is Rs. 113.81 for Grant VI (ESOS 2006), Rs. 129.93 for Grant VII (ESOS 2006), 21st February 2013 is Rs. 94.43 for Grant VIII (ESOS 2006), 29th January 2014 is Rs. 83.75 for Grant IX (ESOS 2006) and 22nd January 2015 is Rs. 97.24 for Grant I (ESOS 2014).

Had the Company adopted the fair value method in respect of options granted, the total amount that would have been amortised over the vesting period is Rs. 167,679,000 and the impact on the financial statements would be:

Previous years'' figures have been regrouped to reflect the re-alignment of options granted between normal and bonus shares with consequential adjustments to Securities Premium Account, General Reserve Account and amounts due from ESOP Trust Account.

Trade payable are dues in respect of goods purchased and services rendered in the normal course of business.

The particulars regarding dues to Micro enterprises and small enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors. There are no dues payable to such parties as at the balance sheet date. * **

* There are no amounts due and outstanding to be transferred to Investor Education and Protection Fund as at March 31,2015.

** Other payables mainly represent the Commission payable to non-whole time directors, amounts received from ESOP Trust on issue of shares, provision for estimated cost of offers made to members on acquisition, deferred rent on rent equalization under AS-19, renovation and pre-opening expenses in respect of resorts.

a) The preference shares of Guestline Hospitality Management and Development Services Limited will be redeemed at par at the option of the investee at any time after five years but before twenty years from the date of allotment viz 14.01.2003 or at the option of the holder be convertible into fully paid equity shares of the face value of Rs. 10/- each anytime after thirty six months from the date of allotment.

b) On June 18, 2014, the Company acquired the entire share capital of Competent Hotels Private Limited (CHPL) from the existing shareholders and consequent to this, CHPL has become a wholly owned Subsidiary of the Company.

c) On June 26, 2014, the Company subscribed to the entire share capital of MHR Holdings (Mauritius) Limited (MHRML).

Others include outstanding for less than six months from the date they are due for payment and amounts due within one year from the date of Balance Sheet.

2.1 Pursuant to entitlement fee being recognised from the year of admission of each member as against from the year of entitlement, there has been an increase in revenue in current year amounting to Rs. 73,068,129. Also refer note no. 46 for adjustments relating to past periods.

2.2 These services have been rendered only upto October 31, 2014.

The company has been securitising amounts receivable including future interest receivable thereon. The excess of consideration received over the principal amounts of receivable from members (net of reversals in respect of cancelled members) is recognised as income from Securitisation.

3 Contingent Liabilities As at March 31st Particulars 2015 2014

(A) Receivables securitised, with recourse.

Certain specified Receivables have 1,867,971,631 2,689,790,487 been securitised with a bank for availing finance In case a member defaults in payment to the bank, the bank would have recourse to the company. In such cases, the company has recourse to the customer.

(B) Claims against the company not acknowledged as debts

1) Luxury tax claimed on members'' stay at 251,052,544 74,671,145 resorts (inclusive of penalty)

2) Service tax claimed on interest on 638,770,100 638,770,100 instalments and other items (inclusive of penalty where quantified in demand) Interest (estimated) [Rs 120,780,224 (2014: Rs 120,780,224)

3) Income tax matters in dispute

(a) Pertaining to Revenue Recognition 1,978,570,362 2,033,473,937 (timing differences)* Assessment Years 1998-99 to Assessment Year 2003-04 and Assessment Year 2005-06 to Assessment Year 2009-10 The matter has been decided in favour of the Company by the appellate authorities, the Department has filed an appeal before the Madras High Court; Tax (excluding interest)

Assessment Years 2004-05 and Assessment Year 2010-11 to Assessment Year 2012-13

Company''s appeal before the CIT(A) is 2,753,180,338 1,824,923,160 pending; Tax (including interest of Rs 716,762,503)

b) Pertaining to other matters (mainly timing differences)*

From Assessment Year 2004-05 onwards 324,338,723 283,720,946 Company''s appeal before Appellate authorities is pending; Tax (including interest of Rs 76,297,746)

* For matters pertaining to timing differences, if liability were to crystalise, there would be future tax benefits, except to the extent of tax rate differences and interest,if any.

Notes:

1) The above amounts are based on demands raised, which the Company is contesting with the concerned authorities. Outflows, if any, arising out of these claims would depend on the outcome of the decision of the appellate authorities and the company''s rights for future appeals. No reimbursements are expected.

2) In respect of above matters, it is not practicable for the Company to estimate the closure of these issues and the consequential timing of cash flows if any; the Company has also been legally advised that the consequential impact of matters referred in 1 and 2 above in respect of assessments remaining to be completed may not be material.

(C) Guarantees given by the company for subsidiaries Value in foreign currency

Amount of Guarantee given (EURO) 11,200,000 -

Outstanding amount against Guarantee (EURO) 10,924,562 -

Value in INR

Amount of Guarantee given 757,736,000 -

Outstanding amount against Guarantee 739,101,242 -

(D) Other matters under appeal

i) Property Related

(a) The Government of Kerala issued an Order dated July 3, 2007 cancelling the assignment of land underlying the Munnar resort and directed repossession of land on the grounds that it is agricultural land and cannot be used for commercial purposes. The Company has filed an appeal before the Commissioner of Land Revenue against the Order stating that the patta issued does not specify that the land should be used only for agricultural purpose and also obtained a Stay Order from the Kerala High Court against eviction from the property.

The Commissioner of Land Revenue, Trivandrum vide his Order dated November 22, 2007 dismissed the appeal filed by the Company against the Order of the Sub-Collector, District of Devikulam dated July 3, 2007 cancelling the assignment of land underlying the Munnar Resort and directing repossession of land on the grounds that it is agricultural land and cannot be used for commercial purposes. The Company filed a writ petition before the Kerala High Court against the said Order and on December 13, 2007, the Court granted an interim stay of all further proceedings.

(b) With respect to the land underlying the resort at Tungi, the Sub-Divisional Magistrate, Maval, vide order dated 6th June, 2014 suspended the boarding and lodging license of the resort. The Company has filed an appeal before the Collector, Pune, and obtained a stay against the suspension. The final order in respect of this matter is awaited. The Company also filed an appeal before the Additional Divisional Commissioner Pune, challenging the cancellation of the "Non Agricultural" status of the land and obtained a stay against the cancellation. The matter is pending hearing and disposal.

With respect to certain claims of a neighbouring property owner, the Company filed a suit in the Civil Court, Pune seeking inter-alia permanent injunction against him disturbing the possession of the Company and obtained an ad-interim stay. In another development, notwithstanding these proceedings, the neighbouring property owner obtained an order from the Mamlatdar''s Court for alleged access to his property through the resort property. The Company obtained a stay against the order aforesaid and all matters with respect to the neighbouring property owner are currently pending before the Civil Court, Pune.

(c) Pursuant to a "public interest litigation" filed before the Gujarat High Court, the officials of the Forest and Revenue departments undertook an inspection of all resorts (including the Company''s resort) at Gir in March 2015. Consequently, the Forest Department has alleged certain irregularities and sealed some structures / rooms in April 2015. The Company has denied the alleged violations and made its representations before a Committee constituted by the Gujarat High Court and the matter is pending hearing .

None of the matters contained in (a) to (c ) above affect the routine operations of the resorts.

(ii) The Company engaged a building contractor for construction of a resort. As the construction did not proceed as per agreed timelines the Company terminated the contract. The contractor has claimed Rs.12,56,14,668 as damages for termination of the Contract. The Company has made a counter claim of Rs.20,03,56,002 towards liquidated damages and other losses. The matter is pending before the Arbitrator.

(iii) The Regional Provident Fund Commissioner, Chennai had issued Summons initiating proceedings under Section 7A of the Employees Provident Fund Act for failing to remit contributions on allowances relating to employees for the period from March 2011 to Feb 2013 in respect of Indian employees and from April 2010 to Feb 2013 in respect of international employees. The PF Authorities have made a claim of Rs.1,89,93,169. The Company has filed a Writ Petition No 2408/2014 before the Madras High Court and the Court has granted an Interim stay of the above proceedings.

(iv) With respect to member complaints pending before various consumer fora and other matters: Estimated amount of claims Rs. 8,26,50,033 (previous year: Rs. 5,51,20,252).

4 (i) The company did not have material foreseeable losses on long-term contracts.

(ii) The company did not enter into any derivative contracts during the year.

During the year, pursuant to the notification of Schedule II to the Companies Act, 2013 with effect from April 1, 2014, the Company revised the estimated useful life of some of its assets to align the useful life with those specified in Schedule II. The details of previously applied depreciation method, rates / useful life are as follows:

Pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013, the Company has fully depreciated the carrying value of assets, net of residual value, where the remaining useful life of the asset was determined to be nil as on April 1, 2014, and has adjusted an amount of Rs. 102,610,025 (net of deferred tax Rs. 52,836,157) against the opening Surplus balance in the Statement of Profit and Loss under Reserves and Surplus.

The depreciation expense in the Statement of Profit and Loss for the year is higher by Rs. 219,172,670 consequent to the change in the useful life of the assets.

5 Employee Benefits

The following table sets out the funded status of the defined benefit scheme and amount recognised in the financial statements.

6 Segment Reporting:

The Company has a single reportable segment namely sale of Vacation Ownership and other services for the purpose of Accounting Standard 17 on Segment Reporting. Business segment is considered as the primary segment.

7 The Company has taken certain properties under operating lease and those leases are cancellable in nature. Accordingly, no disclosure has been given in this regard.

8 Related Party Transactions:

(i) Names of related parties and nature of relationship where control exists:

A. Holding Company : Mahindra & Mahindra Limited

B. Subsidiary Companies :

Mahindra Hotels & Residences India Limited

Divine Heritage Hotels Private Limited

Gables Promoters Private Limited

Holiday on Hills Resorts Private Limited

Competent Hotels Private Limited

Bell Tower Resorts Private Limited (till March 31, 2014)

Mahindra Holidays and Resorts USA Inc. (till May 19, 2014)

Heritage Bird (M) Sdn Bhd.

Infinity Hospitality Group Company Limited *

MH Boutique Hospitality Limited **

MHR Holdings (Mauritius) Limited Covington S.a.r.l***

C. Associate Companies : Holiday Club Resorts Oy

D. Fellow Subsidiaries with whom the company has transactions during the year :

Bristlecone Inc

Bristlecone India Limited

Defence Land Systems India Limited

EPC Industries Limited

Mahindra Automobile Distributor Private Limited

Mahindra Consulting Engineers Limited

Mahindra Defence Systems Limited

Mahindra Engineering Services Limited

Mahindra EPC Services Private Limited

Mahindra First Choice Services Limited

Mahindra First Choice Wheels Limited

Mahindra Integrated Township Limited

Mahindra Intergrated Business Solutions Private Limited

Mahindra Intertrade Limited

Mahindra Life Space Developers Limited

Mahindra Logistics Limited

Mahindra Navistar Automatives Limited

Mahindra Residential Developers Limited

Mahindra Retail Private Limited

Mahindra Reva Electric Vehicles Private Limited

Mahindra Shubhlabh Services Limited

Mahindra Solar One Private Limited

Mahindra Steel Services Centre Limited

Mahindra Two Wheelers Limited

Mahindra World City (Jaipur) Limited

Mahindra World City Developers Limited

Mahindra World School

Tech Mahindra Limited

E. Other entities under the control of the company :

Mahindra Holidays & Resorts India Limited Employees'' Stock Option Trust

F. Entity in which the company has joint control :

Arabian Dreams Hotels Apartments LLC

G. Key Management Personnel :

Mr. Rajiv Sawhney (Managing Director & CEO till March 31, 2014)

Mr. Kavinder Singh (Managing Director & CEO from November 3, 2014)

Mr. Dinesh Shetty (Company Secretary)

Mr. S Krishnan (Chief Financial Officer)

Mr. S Krishnan (Executive Director & Chief Financial Officer from January 22, 2015)

* By virtue of management control. Further MH Boutique Hospitality Limited holds balance 51% equity. ** By virtue of management control.

*** Step down subsidiary.

9 During the year, the Company incurred an aggregate amount of Rs. 30,397,176 towards corporate social responsibility in compliance of Section 135 of the Companies Act 2013 read with relevant schedule and rules made thereunder.

10 Scheme of Amalgamation and Arrangement

a i. In terms of the Scheme of Amalgamation and Arrangement, (''the Scheme''), the erstwhile Bell Tower Resorts Private Limited (a wholly owned subsidiary of the Company, which was engaged in the business of rendering resort facilities )(referred to as ''Transferor Company''), has been merged with the Company (''Transferee Company''), upon which the entire business, including all assets , liabilities and reserves of the Transferor Company stand transferred to and vested in the Transferee Company. The amalgamation has been accounted under the ''pooling of interest method'' and the assets and liabilities transferred have been recorded at their book values as on the Appointed Date .

The Scheme filed by the Company has been approved by the Hon''ble High Court of Bombay at Goa on May 2,2014 and by the Hon''ble High Court of Madras on June 23, 2014 with the Appointed Date of April 1, 2013 and an effective date of July 31, 2014 (''the Effective Date''), being the date on which the copies of the orders of the Hon''ble High Court has been filed with the Registrar of Companies.

The current year figures are to that extent not strictly comparable to those of previous year.

ii. There was no allotment of shares to the Transferor Company''s equity shareholders since the Transferor Company was a wholly owned subsidiary of the Company.

iii. Details of assets and liabilities and deficit in statement of profit and loss acquired on amalgamation and treatment of the difference between the Share capital of the transferror company and cost of investment in the books of the Transferee Company are listed below :

b The loss of the transferor company for the year ended March 31, 2014 has been adjusted against the Surplus in Statement of Profit and Loss at the beginning of the year.

11 Exceptional item represents a net debit of Rs. 218,797,194 written off consequent to adjustments relating to past periods, made to the balances carried forward under Receivables as at the year end, in the Deferred Service Tax Account, Deferred Interest Account and other accounts, aggregating to Rs. 737,373,047 (debit) and the Deferred Entitlement Fee Account amounting to Rs. 518,575,853 (credit). These adjustments are arising from the reconciliation exercise carried out by the company of these accounts necessitated, inter-alia, due to the migration of underlying data to the ERP system implemented in the previous financial years, and Management''s decision to recognize the entitlement fee commencing from the year of admission of each member as against from the year of entitlement.

12 On May 19 2014, Mahindra Holidays and Resorts USA Inc., wholly owned subsidiary of the company was dissolved voluntarily.

13 The figures for the previous year have been regrouped/reclassified to correspond with the current year''s classification/ disclosure.


Mar 31, 2014

1 Corporate Information

The company was incorporated on September 20, 1996, and is in the business of selling vacation ownership and providing holiday facilities.

Note 2 : Share Capital

a) Terms / rights attached to equity shares:

i) The company has only one class of shares referred to as equity shares having a par value of Rs. 10/-. Each holder of equity share is entitled to one vote per share.

ii) The dividends proposed by the Board of Directors is subject to approval of the shareholders in the Annual General Meeting.

iii) For the year ended March 31, 2014, the amount of dividend proposed to be distributed to equity shareholders is Rs. 355,123,424 at Rs. 4 per share (Previous year Rs. 355,123,424 at Rs. 4 per share).

iv) Repayment of capital will be in proportion to the number of equity shares held.

v) The fair value of options based on the valuation of the independent valuer for grants I to III and V as of the respective dates of grant i.e. 15th July 2006, 30th March 2007, 1st November 2007 and 1st November 2008 is Rs. 4.28, Rs. 16.36, Rs. 16.55 and Rs. 16.04 respectively.

The fair value of options based on the valuation of the independent valuer as of the respective dates of grant i.e. 21st February 2012 is Rs. 113.81 for grant VI and Rs. 129.93 for grant VII, 21st February 2013 is Rs. 94.43 for grant VIII, 29th January 2014 is Rs. 83.75 for grant IX.

3 Contingent Liabilities In Rs.

As at March 31,

2014 2013

(A) Receivables securitised, with recourse Certain specified Receivables have been securitised with a bank for availing 2,689,790,487 3,844,877,592 finance. In case a member defaults in payment to the bank, the bank would have recourse to the company. In such cases, the company has recourse to the customer.

(B) Claims against the company not acknowledged as debts

1) Luxury tax claimed on membership, room revenue and other services 74,671,145 72,350,714 provided to members, which has been disputed by the company.

2) Service tax demands for various years disputed by the company. 638,770,100 589,846,508

3) Income tax matters

(a) Time share income

i) The Income Tax Department''s appeal against the orders of the CIT(A) for the assessment years 1998-99 to 2003-04 and 2005-06 to 2009-10 in respect of issues relating to revenue recognition, was decided in favour of the Company by the Appellate Tribunal . Amount under dispute was Rs. 2,710,025,658 (including interest of Rs. 676,551,721).

ii) For the assessment years 2004-05, 2010-11 & 2011-12, the company''s appeal is pending with CIT(A). The amount of demand is Rs. 1,824,923,160/- (including interest of Rs. 475,881,114/-)

(b) Other matters disputed which are timing differences

Demand raised on account of disallowance of expenditure during construction, software expenses, website development expenses, renovation expenses and project design cost Rs. 160,641,473/- (including interest of Rs. 36,348,559/-). As at March 31, 2013 Rs. 142,707,705 (including interest of Rs. 32,469,862).

However even if these liabilities crystalise, there would be future tax benefits available on account of timing dif erences, except on the outcome of the appeals

(c) Other disallowances

Interest on other disallowces included in the contingent liability is 123,079,473 115,055,341 Rs. 30,254,625 (as at March 31, 2013 Rs. 26,616,570) The above are exclusive of consequential ef ect of similar matters in respect of the assessments remaining to be completed. The above amounts are based on demands raised, which the company is contesting with the concerned authorities. Outfl ows, if any, arising out of these claims would depend on the outcome of the decision of the appellate authorities and the company''s rights for future appeals. No reimbursements are expected.

(C) Other matters under appeal

(i) The Government of Kerala issued an Order dated July 3, 2007 cancelling the assignment of land underlying the Munnar resort and directed repossession of land on the grounds that it is agricultural land and cannot be used for commercial purposes. The Company has filed an appeal before the Commissioner of Land Revenue against the Order stating that the patta issued does not specify that the land should be used only for agricultural purpose and also obtained a Stay Order from the Kerala High Court against eviction from the property. The Commissioner of Land Revenue, Trivandrum vide his Order dated November 22, 2007 dismissed the appeal filed by the Company against the Order of the Sub-Collector, District of Devikulam dated July 3, 2007 cancelling the assignment of land underlying the Munnar Resort and directing repossession of land on the grounds that it is agricultural land and cannot be used for commercial purposes. The Company filed a writ petition before the Kerala High Court against the said Order and on December 13, 2007, the Court granted an interim stay of all further proceedings.

(ii) The Company engaged a building contractor for construction of a resort. As the construction did not proceed as per agreed timelines the Company terminated the contract. The contractor has claimed Rs. 12.56 Crores as damages for termination of the Contract. The Company has made a counter claim of Rs. 20.03 Crores towards liquidated damages and other losses. The matter is pending before the Arbitrator.

(iii) The Regional Provident Fund Commissioner, Chennai had issued Summons initiating proceedings under Section 7A of the Employees Provident Fund Act for failing to remit contributions on allowances relating to employees for the period from March 2011 to Feb 2013 in respect of Indian employees and from April 2010 to February 2013 in respect of international employees. The PF Authorities have made a claim of Rs. 1.89 Crores. The Company has filed a Writ Petition before the Madras High Court and the Court has granted an Interim stay of the above proceedings.

4 Employee benefits

The following table sets out the funded status of the defi ned benefit scheme and amount recognised in the financial statements.

5 In June 2009, the Company made an Initial Public Of er of 58,96,084 equity shares of Rs. 10 each for cash at a premium of Rs. 290 per equity share, aggregating to Rs. 17,688.25 lacs of which Rs. 16,242.51 lacs were utilised for construction of resorts and Rs. 1,445.74 lacs towards issue expenses.

6 On April 12, 2013, the Company allotted 41,41,084 equity shares of Rs. 10 each for cash at a premium of Rs. 245 per equity share aggregating to Rs. 10,559.76 lakhs, pursuant to shares issued under an Institutional Placement Programme (IPP). Out of the total proceeds, the Company has spent Rs. 308.78 lakhs towards issue expenses, Rs. 7,313.68 lakhs towards capital expenditure and the balance has been invested in debt schemes of mutual funds/Fixed Deposits with Bank/ lying in bank account.

7 The particulars regarding dues to Micro enterprises and small enterprises have been determined to the extent such parties have been identifi ed on the basis of information available with the Company. This has been relied upon by the auditors. There are no dues payable to such parties as at the balance sheet date.

8 Related Party Transactions:

(i) Names of related parties and nature of relationship where control exists:

A. Holding Company Mahindra & Mahindra Limited

B. Subsidiary Companies

Mahindra Holidays and Resorts USA Inc.

Mahindra Hotels & Residences India Limited

MHR Hotel Management GmbH (till 29th November, 2013)

Heritage Bird (M) Sdn Bhd.

Bell Tower Resorts Private Limited

BAH Hotelanlagen AG (till 29th November, 2013)

Divine Heritage Hotels Private Limited

Gables Promoters Private Limited

Holiday on Hills Resorts Private Limited

Infi nity Hospitality Group Company Limited *

MH Boutique Hospitality Limited **

C. Fellow Subsidiaries with whom the

company has transactions during the year

Mahindra Intertrade Limited

Mahindra Consulting Engineers Limited

Mahindra First Choice Wheels Ltd

Mahindra First Choice Services Limited

Mahindra Navistar Automotives Limited.

Mahindra Reva Electric Vehicles Private Limited

Mahindra Lifespace Developers Limited

Mahindra Retail Private Limited

Mahindra Two Wheelers Limited

Mahindra Vehicle Manufacturers Limited

Mahindra Shubhlabh Services Limited.

Mahindra Automobile Distributor Private Limited

Mahindra EPC Services Private Limited

Mahindra Engineering Services Limited

Mahindra Steel Service Centre Limited

Mahindra Logistics Limited

Bristlecone Inc.

Bristlecone India Limited.

Defence Land Systems India Private Limited

EPC Industries Limited

Mahindra Defence Systems Limited

Mahindra Integrated Township Ltd

Mahindra Integrated Business Solutions Private Limited

Mahindra Solar One P Ltd.

Mahindra Steel Services Centre Ltd

Mahindra World City (Jaipur) Ltd

Mahindra World City Developers Ltd

9 During the year, the Board of Directors at their Meeting held on 17th September, 2013 approved the Scheme of Amalgamation and Arrangement of Bell Tower Resorts Private Limited (wholly owned subsidiary) with the Company. The Scheme was approved by the share holders at the Court Convened Meeting held on 19th February 2014. The appointed date under the Scheme is 1st April, 2013 and the Scheme will be effective upon the filling of certified copies of the Orders of the High Court of Madras & High Court of Bombay at Goa with respective Registrar of Companies. The Company has obtained the approval of the High Court of Bombay at Goa,while the approval of High Court of Madras is awaited. Consequently no impact of the Scheme has been given in the financial statements for the year ended 31st March, 2014.

10 The Board of Directors at their Meeting held on 29th January, 2014 has resolved to liquidate by way of voluntary dissolution of its wholly owned subsidiary company in USA, Mahindra Holidays and Resorts USA Inc., subject to requisite approvals in USA. Accordingly, the subsidiary is in the process of completing the voluntary dissolution formalities and the impact on account of this on the operations of the Company is immaterial.

11 The figures for the previous year have been regrouped/reclassified to correspond with the current year''s classification/ disclosure.


Mar 31, 2013

1 Corporate information

The company was incorporated on September 20, 1996, and is in the business of selling vacation ownership and providing holiday facilities.

2 Securitisation

The company has been securitising amounts receivable including future interest receivable thereon. The excess of consideration received over the principal amounts of receivable from members (net of reversals in respect of cancelled members) is recognised as income from Securitisation.

3 Segment Reporting:

The Company has a single reportable segment namely sale of Vacation Ownership and other services for the purpose of Accounting Standard 17 on Segment Reporting. Business segment is considered as the primary segment.

4 In June 2009, the company made an Initial Public Offer of 5,896,084 equity shares of Rs. 10 each for cash at a premium of Rs. 290 per equity share, aggregating to Rs. 17,688.25 lakhs of which Rs. 16,205.68 lakhs have been spent towards the object of the issue (Rs 14,759.94 lakhs were utilised for construction of resorts and Rs. 1,445.74 lakhs towards issue expenses) and the balance has been invested in debt schemes of mutual funds.

5 The particulars regarding dues to Micro enterprises and small enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors. There are no dues payable to such parties as at the balance sheet date.

6 Related party Transactions:

(i) Names of related parties and nature of relationship where control exists:

A. Holding Company Mahindra & Mahindra Limited

B. Subsidiary Companies Mahindra Holidays and Resorts USA Inc.

Mahindra Hotels & Residences India Limited

MHR Hotel Management GmbH

Heritage Bird (M) Sdn Bhd.

Bell Tower Resorts Private Limited

BAH Hotelanlagen AG

Divine Heritage Hotels Private Limited

Gables Promoters Private Limited

Holiday on Hills Resorts Private Limited Infinity Hospitality Group Company Limited *

MH Boutique Hospitality Limited **

C. Fellow Subsidiaries with whom the company has transactions during the year

Mahindra Intertrade Limited

Mahindra Consulting Engineers Limited

Mahindra First Choice Wheels Ltd

Mahindra First Choice Services Limited

Mahindra Navistar Automotives Limited.

Mahindra Reva Electric Vehicles Private Limited

Mahindra Lifespace Developers Limited

Mahindra Retail Private Limited

Mahindra Two Wheelers Limited

Mahindra Vehicle Manufacturers Limited

Mahindra Shubhlabh Services Limited.

Mahindra Automobile Distributor Private Limited

Mahindra EPC Services Private Limited

Mahindra Engineering Services Limited

Mahindra Steel Service Centre Limited

Mahindra Logistics Limited

D. Other entities under the control of the company

Mahindra Holidays & Resorts India Limited Employees'' Stock Option Trust

E. Entity in which the company has joint control

Arabian Dreams Hotels Apartments LLC

F. Key Management Personnel Mr Ramesh Ramanathan (Managing Director) (upto April 30, 2011)

Mr Rajiv Sawhney (Managing Director & CEO) (since May 1, 2011)

* By virtue of management control. Further MH Boutique Hospitality Limited holds balance 51 % equity.

** By virtue of management control

7 On 12th April, 2013 the Company through an Institutional Placement Programme (IPP) allotted 4,141,084 equity shares of Rs. 10/- each at a premium of Rs. 245/- per share aggregating to Rs.10,559.76 lacs. The Net Issue Proceeds will be utilized for expansion/renovation of existing resorts, acquisition of new land parcels/properties, construction/development of new resorts and for general corporate purposes.

8 The figures for the previous year have been regrouped/reclassified to correspond with the current year''s classification/ disclosure.


Mar 31, 2012

1 a) The above includes 48,995,228 equity shares allotted as fully paid-up by way of Bonus shares by capitalisation of balance in Statement of Profit & Loss and General Reserve on November 24, 2007 in the ratio of 5 equity shares for every 3 shares held.

1 b) Terms / rights attached to equity shares:

i) The company has only one class of shares referred to as equity shares having a par value of Rs. 10/-. Each holder of equity share is entitled to one vote per share.

ii) The dividends proposed by the Board of Directors is subject to approval of the shareholders in the Annual General Meeting.

iii) For the year ended March 31, 2012, the amount of per share dividend proposed for equity shareholders is Rs. 4. The total dividend appropriation for the year ended March 31, 2012 amounted to Rs. 393,481,836 including tax on proposed dividend of Rs.54,922,748.

iv) Repayment of capital will be in proportion to the number of equity shares held.

1 c) Under the Employee Stock Option Scheme equity shares are allotted to the Mahindra Holidays & Resorts India Limited Employees' Stock Option Trust (the trust) set up by the company. The trust holds these shares for the benefit of the eligible employees/Directors as defined under the scheme and issues the shares to them as per the recommendation of the remuneration committee.

** Issued out of lapsed options.

# Out of the above 90,000 shares has been issued out of lapsed options.

## Out of the above 86,500 shares has been issued out of lapsed options.

iii) In accordance with the Guidance Note issued by the Institute of Chartered Accountants of India, the shares allotted to the trust including bonus shares but not allotted to the employees have been reduced from the share capital by Rs. 7,941,680 and securities premium account reduced by Rs. 145,676,908. The said shares will be added to the issued share capital as and when the trust issues the shares to the concerned persons on their exercising the option and till such shares are issued the amount received from the trust is disclosed under current liabilities

The General Reserve has been reduced by Rs. 1,314,290 for bonus shares issued on exercise of stock options during the year.

iv) The company has adopted the intrinsic value method in accounting for employee cost on account of ESOS for grant I to V. For grant VI and VII fair value method adopted. The intrinsic value of the shares granted under grant I to V based on the valuations obtained from an independent valuer is Rs. 16 per equity share as on March 31, 2006, Rs. 52 per equity share as on January 1, 2007, August 31, 2008 and November 1, 2008 based on the Discounted Cash Flow Method. The fair value of the shares granted under grant VI and VII is based on the fair value market price is Rs. 370 and Rs. 323 per share respectively. As the difference between the intrinsic value/fair value and the exercise price per share is Rs. Nil no employee compensation cost has been charged.

v) The fair value of options based on the valuation of the independent valuer as of the respective dates of grant i.e. July 15, 2006, March 30, 2007, November 1, 2007 and November 1, 2008 is Rs. 4.28, Rs. 16.36, Rs. 16.55 and Rs. 16.04 respectively.

The fair value of options based on the valuation of the independent valuer as of the respective dates of grant i.e. February 21, 2012 is Rs. 113.81 for grant VI and Rs. 129.93 for grant VII.

Had the company adopted the fair value method in respect of options granted, the total amount that would have been amortised over the vesting period is Rs. 10,383,964 and the impact on the financial statements would be :

1 d) As approved by the Board, the company has given an interest free loan of Rs. 132,000,000 without interest to Mahindra Holidays & Resorts India Limited Employees Stock Option Trust for the purchase of shares of the company under the employee stock option scheme.

NOTE:

a) The preference shares of Guestline Hospitality Management and Development Services Limited will be redeemed at par at the option of the investee at any time after five years but before twenty years from the date of allotment viz January 14, 2003

b) The preference shares of Guestline Hospitality Management and Development Services Limited shall at the option of the holder be convertible into fully paid equity shares of the face value of Rs. 10 each anytime after thirty six months from the date of allotment.

c) On December 21, 2011, the Company has acquired the entire share capital of Bell Tower Resorts Private Limited (BTRPL) from the existing shareholders and consequent to that BTRPL has become a wholly owned Subsidiary of the Company. This subsidiary has a 106 room resort in Goa.

2. Securitisation

The company has been securitising amounts receivable including future interest receivable thereon. The excess of consideration received over the principal amounts of receivable from members (net of reversals in respect of cancelled members) is recognised as income from Securitisation.

3. Contingent Liabilities

Rs As at As at Mar 31, 2012 Mar 31, 2011

(a) Receivables securitised, with recourse.

Certain specified receivables have been securitised with a bank 2,673,122,303 2,036,782,120 for availing finance. In case a member defaults in payment to the bank, the bank would have recourse to the company. In such cases, the company has recourse to the customer.

(b) Claims against the company not acknowledged as debts

Claims not acknowledged as debts represent luxury tax claimed 6,420,314 6,420,314 on room revenue and other services provided to members, which has been disputed by the company. The possibility of reimbursement depends on the outcome of the cases pending before the adjudicating authority.

(c) Income tax matters

i) The Income Tax Department's appeal against the orders of the CIT (A) for the assessment years 1998-99 to 2003-04, in respect of issues relating to revenue recognition, was decided in favour of the company by the appellate tribunal.

Amount involved was Rs 208,385,010 (including interest of Rs. 58,051,475).

For the assessment year 2004-05 & 2009-10 the company's appeal is pending with CIT(A) .

For the assessment years 2005-06 to 2008-09, the company has gone on appeal to the ITAT in respect of the same issue.

The amount involved, exclusive of consequential effect of similar matter in respect of the assessments remaining to be completed, is Rs. 2,550,307,954 (Including interest of Rs. 560,448,771); As at March 31, 2011, Rs. 1,925,645,407/- (Including interest of Rs. 382,089,632).

ii) Disallowance of expenditure during construction, software expenses, website development expenses, renovation expenses and Project design cost. Rs. 110,849,237/- (Including interest of Rs. 24,029,144); As at March 31, 2011 Rs. 43,935,275/- (Including interest of Rs. 7,384,579)

The above are exclusive of consequential effect of similar matter in respect of the assessments remaining to be completed.

However, even if these liabilities crystallise, there would be future tax benefits available on account of timing differences, except for interest and income tax rate differences. Cash outflows would depend on the outcome of the appeals.

iii) Other disallowances (including interest of Rs. 43,757,139) 193,408,965 166,844,896 (as at March 31, 2011 Rs. 9,909,258)

(d) Other matters under appeal

(i) The Government of Kerala issued an Order dated July 3, 2007 cancelling the assignment of land underlying the Munnar resort and directed repossession of land on the grounds that it is agricultural land and cannot be used for commercial purposes. The Company has filed an appeal before the Commissioner of Land Revenue against the Order stating that the patta issued does not specify that the land should be used only for agricultural purpose and also obtained a Stay Order from the Kerala High Court against eviction from the property.

The Commissioner of Land Revenue, Trivandrum vide his Order dated November 22, 2007 dismissed the appeal filed by the Company against the Order of the Sub-Collector, District of Devikulam dated July 3, 2007 cancelling the assignment of land underlying the Munnar Resort and directing repossession of land on the grounds that it is agricultural land and cannot be used for commercial purposes. The Company filed a writ petition before the Kerala High Court against the said Order and on December 13, 2007, the Court granted an interim stay of all further proceedings.

(ii) The Company had received a notice dated December 11, 2009 from Commissioner, Ooty Municipality seeking demolition of the unauthorised construction at Zest Danish Villa Resort situated at No.30, Sheddon Road, Ooty. The Company has filed a review petition before the Municipal Administration and Water Supply Department, Chennai and hearing is awaited.

(iii) The Company engaged a building contractor for construction of a resort. As the construction did not proceed as per agreed timelines the Company terminated the contract. The contractor has claimed Rs. 12.56 crores as damages for termination of the Contract. The Company has made a counter claim of Rs. 20.03 crores towards liquidated damages and other losses. The matter is pending before the Arbitrator.

h. In the absence of the relevant information from the actuary, the above details do not include the composition of plan assets / experience adjustments for certain years.

4. Segment Reporting:

The Company has a single reportable segment namely sale of Vacation Ownership and other services for the purpose of Accounting Standard 17 on Segment Reporting. Business segment is considered as the primary segment

5. In June 2009, the company made an Initial Public Offer of 5,896,084 equity shares of Rs. 10 each for cash at a premium of Rs. 290 per equity share, aggregating to Rs. 17,688.25 lakh of which Rs. 12,624.24 lakh have been spent towards the object of the issue (Rs. 11,178.50 lakh were utilised for construction of resorts and Rs. 1,445.74 lakh towards issue expenses) and the balance has been invested in debt schemes of mutual funds.

6. The particulars regarding dues to Micro enterprises and small enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors. There are no dues payable to such parties as at the balance sheet date.

7. Capital work in progress of Rs. 1,836,382,470 (Previous year Rs. 1,345,026,170) includes expenditure during Construction pending allocation of Rs.245, 428,002 (Previous year Rs. 151,593,864).

8. The Revised Schedule VI has become effective from April 1, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped/reclassified, wherever necessary, to correspond with the current year's classification/ disclosure.


Mar 31, 2011

1. Employees stock option scheme

Under the Employee Stock Option Scheme equity shares are allotted to the Mahindra Holidays & Resorts India Limited Employees Stock Option Trust (the trust) set up by the company. The trust holds these shares for the benefit of the eligible employees/Directors as defined under the scheme and issues the shares to them as per the recommendation of the remuneration committee.

In accordance with the Guidance Note issued by the Institute of Chartered Accountants of India, the shares allotted to the trust including bonus shares but not allotted to the employees have been reduced from the share capital by Rs. 6,240,940 and securities premium account reduced by Rs. 4,212,960. The said shares will be added to the issued share capital as and when the trust issues the shares to the concerned persons on their exercising the option and till such shares are issued the amount received from the trust is disclosed under current liabilities.

The General Reserve has been reduced by Rs. 1,731,680 for bonus shares issued on exercise of stock options during the year.

The company has adopted the intrinsic value method in accounting for employee cost on account of ESOS. The intrinsic value of the shares based on the valuations obtained from an independent valuer is Rs. 16 per equity share as on 31st March, 2006, Rs.52 per equity share as on 1st January, 2007, 31.08.2008 and 01.11.2008 based on the Discounted Cash Flow Method. As the difference between the intrinsic value and the exercise price per share is Rs. Nil no employee compensation cost has been charged.

The fair value of options based on the valuation of the independent valuer as of the respective dates of grant i.e. 15th July 2006, 30th March 2007, 1st November 2007 and 1st November 2008 is Rs. 4.28, Rs. 16.36, Rs.16.55 and Rs.16.04 respectively.

Had the company adopted the fair value method in respect of options granted, the total amount that would have been amortised over the vesting period is Rs.10,383,964 and the impact on the financial statements would be :

Mahindra Holidays & Resorts India Limited

2. Secured loans

Loans and advances from a bank are secured by an exclusive charge on inventories, receivables and other moveable assets.

3. contingent Liabilities

Rs.

As at As at March 31, 2011 March 31, 2010

(a) Receivables securitised, with recourse. 2,036,782,120 2,657,820,819 Certain specified Receivables have been securitised with a bank for availing finance. In case a member defaults in payment to the bank, the bank would have recourse to the company. In such cases, the company has recourse to the customer.

(b) Claims against the company not acknowledged as debts 6,420,314 9,668,526

Claims not acknowledged as debts represent luxury tax claimed on room revenue and other services provided to members, which has been disputed by the company. The possibility of reimbursement depends on the outcome of the cases pending before the adjudicating authority.

(c) Income tax matters

(i) The Income Tax Departments appeal against the orders of the CIT(A) for the assessment years 1998-99 to 2002-03, in respect of issues relating to revenue recognition, was decided in favour of the Company by the Appellate Tribunal in May 2010. Amount involved was Rs. 116,013,707 (including interest of Rs 58,051,475). For the assessment years 2003-04 to 2008-09, the Company has gone on appeal to the CIT(A) in respect of the same issue. The amount involved, exclusive of consequential effect of similar matter in respect of the assessments remaining to be completed, is Rs. 1925,645,407 (including interest of Rs. 382,089,632); As at 31st March, 2010, Rs. 1,315,373,266/- (including interest of Rs. 251,752,898).

(ii) Disallowance of expenditure during construction / Software expenses. Rs. 43,935,275/- (including interest of Rs. 7,384,579); As at 31st March, 2010 Rs. 35,484,928/- (including interest of Rs. 5,966,891)

The above are exclusive of consequential effect of similar matter in respect of the assessments remaining to be completed.

However, even if these liabilities crystallise, there would be future tax benefits available on account of timing differences, except for interest and income tax rate differences. Cash outflows would depend on the outcome of the appeals.

(iii) Other disallowances (including interest of Rs. 22,633,591) 166,844,896 78,537,507 (as at 31st March, 2010 Rs. 9,909,258)

(d) Other matters under appeal

(i) The Government of Kerala issued an Order dated 3rd July 2007 cancelling the assignment of land underlying the Munnar resort and directed repossession of land on the grounds that it is agricultural land and cannot be used for commercial purposes. The company has filed an appeal before the Commissioner of Land Revenue against the Order stating that the patta issued does not specify that the land should be used only for agricultural purpose and also obtained a Stay Order from the Kerala High Court against eviction from the property.

The Commissioner of Land Revenue, Trivandrum vide his Order dated November 22, 2007 dismissed the appeal filed by the Company against the Order of the Sub-Collector, District of Devikulam dated 3rd July 2007 cancelling the assignment of land underlying the Munnar Resort and directing repossession of land on the grounds that it is agricultural land and cannot be used for commercial purposes. The Company filed a writ petition before the Kerala High Court against the said Order and on December 13, 2007, the Court granted an interim stay of all further proceedings.

f. In the absence of the relevant information from the actuary, the above details do not include the composition of plan assets / experience adjustment in respect of actuarial losses / gains.

g. Estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotions, increments and other relevant factors such as supply and demand in the employment market

4. Segment Reporting:

The Company has a single reportable segment namely sale of Vacation Ownership and other services for the purpose of Accounting Standard 17 on Segment Reporting. Business segment is considered as the primary segment

5. Related party Transactions:

(i) Names of related parties and nature of relationship where control exists:

A. Holding Company Mahindra & Mahindra Limited

B. Subsidiary Companies Mahindra Holidays & Resorts U.S.A Inc.

Mahindra Hotels & Residences India Limited MHR Hotel Management GmbH Heritage Bird (M) Sdn Bhd. BAH Hotelanlagen AG

C. Fellow Subsidiaries with whom Mahindra Logisoft Business Solutions Limited the company has transactions Mahindra Intertrade Limited

Mahindra United Football Company Mahindra Navistar Automotives Limited Mahindra Shubhlabh Services Limited Mahindra & Mahindra Financial Services Limited Mahindra Lifespace Developers Limited Mahindra World City (Jaipur) Limited Mahindra World City Developers Limited Mahindra First choice Wheels Limited Mahindra First Choice Services Limited Mahindra Ugine Steel Company Limited Mahindra Logistics Limited Mahindra Retail Private Limited

D. Other entities under the control of the company Mahindra Holidays & Resorts India Limited ESOP Trust

E. Key Management Personnel Ramesh Ramanathan (Managing Director)

6. In June 2009, the company made an Initial Public Offer of 5,896,084 equity shares of Rs 10 each for cash at a premium of Rs 290 per equity share, aggregating to Rs 17,688.25 lacs of which Rs 11,139.20 lacs have been spent towards the object of the issue (Rs 9,693.46 lacs were utilised for construction of resorts and Rs 1,445.74 lacs towards issue expenses) and the balance has been invested in debt schemes of mutual funds.

7. The particulars regarding dues to Micro enterprises and small enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

8. Previous years figures have been regrouped / recast, wherever necessary, to conform to this years classification.

 
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