Home  »  Company  »  Velan Hotels Lim  »  Quotes  »  Directors Report
Enter the first few characters of Company and click 'Go'

Directors Report of Velan Hotels Ltd.

Mar 31, 2015

DEAR MEMBERS,

The Directors have pleasure in presenting their 25th Annual Report together with the Audited Accounts of the Company for the year ended 31st March, 2015.

FINANCIAL HIGHLIGHTS (Rs. in lakhs)

PARTICULARS 2014-15 2013-14

Profit before Interest and Depreciation and Tax 238.09 403.72

Less: Interest 1438.70 224.70

Profit/Loss Before Depreciation & Tax (1200.61) 179.02

Less : Depreciation 220.75 118.47

Add : Exceptional Item 6.74 6.99

Profit/Loss Before Tax [PBT] (1414.62) 67.55

Less : Tax Expenses

a. Current Tax -- 12.75

b. Mat Entitlement -- (12.75)

c. Deferred Tax 23.33 3.69

Profit / Loss After Tax (1391.30) 63.86

Balance b/f from previous years 374.98 311.12

Balance to be carried over to Balance sheet (1016.32) 374.98

OPERATIONAL REVIEW:

During the year under review, your Company's hotels operations and finances were severely affected. The primary drivers of loss are borrowing cost for various components of the stalled projects and no income generated from them. Gross revenues decreased to Rs.1493.31 Lacs against Rs. 1575.43 Lacs in the previous year. Profit Before Interest, Depreciation and Taxation was Rs. 238.09 lacs against Rs. 403.72 Lacs in the previous year. After providing for Interest, Depreciation and Taxation of Rs.1438.70 Lacs & Rs. 220.75 Lacs respectively, the Net Loss of the Company for the year under review was placed at Rs.1391.30 Lacs as against Net Profit of Rs.63.86 Lacs in the previous year.

According to Accounting Standard 16, a Company should suspend capitalization of borrowing costs during extended periods in which it suspends active development of a qualifying asset i.e. project assets and such costs are costs of holding partially completed assets and do not qualify for capitalization. In view of the above, the entire borrowing cost incurred for all the components of the projects, which are stalled owing to paucity of funds, has been treated as expense and debited in the profit and loss account.

During the year under review, the pending receivables such as lease rentals, electricity charges, air conditioning charges and other operation charges from the tenants of the Shopping Mall have now been written-off.

STATE OF THE COMPANY'S AFFAIRS

The members are aware that the Company is implementing diversification cum expansions projects in a phased manner namely Shopping Mall, Multiplex Theater, 2.7 MW Bio-mass based co-gen power generation plant, Biomass Plantation, Convention Center and additions & renovation of existing hotels properties for which the Company was initially sanctioned credit facilities by both Allahabad Bank, Tirupur and Andhra Bank, Coimbatore. The Company subsequently was not extended timely support by the Banks, both in terms of additional debt funding required as well as alteration in the terms of the existing loans.

The original project cost for the entire development was Rs.124.42 crore for the above components. During the course of construction and subsequent discussions with the technical consulting agencies, it was realized that the project required substantial up-gradation thereby increasing the scope of overall project accordingly. This has necessitated significant and substantial addition of buildings and equipments for the project. All these have resulted in a thorough revision of the components of the project (including component of Bio Mass cultivation) resulting in a total project cost of Rs. 204.15 Crore (Rs.162.06 Crore in July 2012) in place of Rs.124.42 Crore as originally envisaged. Hence, the company was in need of further funding in respect of revision in the components of the project and slowed in the construction of the Projects due to change in scope of work primarily for the Renewable Energy Power Plant and the Hyper-mart and Multiplex.

* The shopping mall was formally launched in December, 2013. The most of occupants at the Mall either downed their shutters temporarily or withdrawn from their agreements entirely due to delays in the completion of the Multiplex and the Food Court. As a result, the occupants of the Mall declined to make payments their rentals, electricity charges and other operational charges.

* The construction of the Renewable Energy Power Plant has been completed. All the major equipments including the Gasifiers and Gensets have been installed. The balance works include the plant integration and automation. Due to the use of superior technology, this Renewable Energy Power Plant will have an effective output of 4.1 MW in Co-Gen.

* The Hyper-mart / Multiplex has been partially constructed. There have been significant changes in scope of work for this building. These changes are required to achieve a better construction quality and durability.

Owing to some changes in scope of work for the Renewable Energy Power Plant and the Hyper-mart and Multiplex primarily due to technical up-gradation, the Company approached the existing bankers for an additional financial assistance. Even though, the company was sanctioned the additional loan facility, there has been unexplained delay in the disbursement of loan and hence the cost of project escalated further. Moreover, apart from the delay, the major portion of amount of additional term loan was said to have been adjusted towards the dues of the Company. This has resulted in the deferring of completion and commissioning of these projects further.

The Company has provided a letter to the existing bankers during March, 2014 summarizing the situation and requesting to restructure its accounts as per certain guidelines issued by Reserve Bank of India for formation of Joint Lender Forum (JLF) for considering Corporate Debt Restructuring (CDR). The Company has made representation to the existing bankers on this aspect to invoke the said provision and undertake the restructuring of the debts to enable the interests of the banks and of the company for the project to be safeguarded. Despite, the restructure plan being very reasonable, there was no proper response but, however, there was an attempt to recall the entire loan in lump sum by treating the Company's account as one which became NPA (Non Performing Asset) and to recall the entire account from the existing banks invoking the Securitization Act under Section 13(2).

Your Company had received Notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI ACT") issued jointly by Allahabad Bank and Andhra Bank calling upon your Company to discharge the alleged outstanding liability together with interest and all other incidental expenses, to the Lender Banks within 60 (Sixty) days from the date of the Notice, failing which the Banks would exercise its rights under Section 13(4) of the SARFAESI Act with respect to the secured assets of the Company. The Guarantors for the above terms loans were also served the same notice. The Company's immovable properties are subject to matter of Notice of Possession issued by Banks then. Your Company has challenged the legality and validity of these notices and filed the stay petition before the Debt Recovery Tribunal ("DRT") at Coimbatore. The Company is in consultation with its legal advisers to take other steps as may be advised by the legal advisors to protect your Company's interests in these proceedings.

DIVIDEND:

In view of operating losses incurred during the year, your Directors do not recommend payment of any dividend. SHARE CAPITAL:

The paid up equity capital as on March 31, 2015 was Rs.3196.41 Lakhs. During the year under review, the company has not issued shares with differential voting rights nor granted stock options nor sweat equity.

TRANSFER OF AMOUNT TO RESERVE

As the company reported Loss after tax, the company does not propose to transfer any amount to reserves.

FIXED DEPOSITS

Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company has not given any loans or guarantees covered under the provisions of Section 186 of the Companies Act, 2013. During the year under review, the Company has not made any investments as well.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to the Managing Director.

The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, corrective action is taken in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

Since the Company does not come under "Corporate Social Responsibility" (CSR), applicability of the Annual Report on CSR activities is not annexed.

CONSERVATION OF ENERGY

a) The operations of the Company are not energy intensive. However, the Company ensures that all the operations are conducted in the manner whereby optimum utilisation and maximum possible savings of energy is achieved.

b) No specific investment has been made in reduction in energy consumption.

c) As the impact of measures taken for conservation and optimum utilisation of energy are not quantitative, its impact on cost cannot be stated accurately.

d) Since the Company does not fall under the list of industries, which should furnish this information in Form A annexed to the aforesaid Rules, the question of furnishing the same does not arise.

TECHNOLOGY ABSORPTION

The Company has no technical collaboration arrangement with any organization. The Company continues to absorb and upgrade modern technologies and advanced hotel management techniques in various guest contact areas, which includes wireless internet connectivity in the hotel.

FOREIGN EXCHANGE EARNINGS AND OUT-GO (Rs jn |akhs)

Foreign Exchange Earnings And Outgo Current Year Year

2014-15 2013-14

1. Earnings 373.01 328.53

2. Expenditure in Foreign Currency Nil Nil

INDUSTRIAL RELATIONS

During the year under review, your Company enjoys cordial relationship with workers and employees at all levels. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Whole-Time Directors Sri. M. R. Gautham and Sri. B. A. Madhusudhan retire by rotation and, being eligible, offer themselves for re appointment. The Directors recommend Sri. M. R. Gautham and Sri. B. A. Madhusudhan for re-appointment. If they are re-appointed as a director, immediately on retirement by rotation, they shall continue to hold office of Whole-time Directors and such re-appointment as director shall not be deemed to constitute break in their appointment as a Whole-time Director.

During the year under review, Smt. R. Lalitha, AGM - Finance & Accounts was promoted / appointed as Chief Financial Officer of the Company. In addition, Sri. E. V. Muthukumara Ramalingam, Managing Director, Sri. M. R. Gautham, Executive Director, Sri. B. A. Madhusudhan, Whole-time Director and Sri. M. Srinivasan, Company Secretary, are other KMPs as per the provisions of the Act and were already in office before the commencement of the Act. None of the KMPs resigned during the year.

All independent directors have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and clause 49 of the Listing Agreement.

CHANGE IN THE NATURE OF BUSINESS

There is no change in the nature of business of the Company.

BOARD EVALUATION

Pursuant to the provisions of the Act and Clause 49 of the Listing Agreement, evaluation of every Director's performance was done by Nomination and Remuneration Committee. The performance evaluation of Non-Independent Directors and the Board as a whole, Committees thereof and Managing Director of the Company was carried out by the Independent Directors. Evaluation of Independent Directors was carried out by the entire Board of Directors excluding the Director being evaluated. A structured questionnaire was prepared after circulating the draft forms, covering various aspects of the evaluation such as adequacy of the size and composition of the Board and Committee thereof with regard to skill, experience, independence, diversity; attendance and adequacy of time given by the Directors to discharge their duties; Corporate Governance practices etc. The Directors expressed their satisfaction with the evaluation process.

The Policy on appointment of Directors and Senior Management, Policy on Remuneration of Directors and Policy on Remuneration of Key Managerial Personnel and Employees is stated in the Corporate Governance Report.

MEETINGS

A calendar of Meetings is prepared and circulated in advance to the Directors.

During the year 6 Board Meetings and 4 Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

DIRECTOR'S RESPONSIBILITY STATEMENT:

In terms of Section 134 (3) ( c ) read with 134 (5) of the Companies Act, 2013, the Directors would like to state that:

i) In the preparation of the annual accounts, all the applicable Accounting Standards have been followed.

ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for the year under review.

iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The Directors have prepared the Annual accounts on a going concern basis.

v) The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

vi) The Directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system is adequate and operating effectively.

RELATED PARTY TRANSACTIONS:

During the year, the Company did not enter into any material transaction with related parties, under Section 188 of the Companies Act, 2013. All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of the business. There are no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the Company at large.

All the related party transactions entered into by the Company in the ordinary course of business and were on an arm's length basis. The requirement of disclosure in the prescribed Form AOC-2 is reported in the Annexure-C1. Further, the Company's policy on Related Party Transactions is attached as part of this report vide Annexure C2, as required under the clause of the listing agreement as revised.

A resolution for a proposal for related party transaction with related party is placed before this Annual General Meeting for approval of members of the Company. The details of same are reported in the explanatory statement annexed to the notice of AGM.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN MARCH 31,2015 AND MAY 28, 2015 (DATE OF THE REPORT)

There were no significant material changes and commitments affecting the financial position of the Company between the end of financial year and the date of the Report (May 28, 2015)

SUBSIDIARY COMPANIES

The Company does not have any subsidiary.

CODE OF CONDUCT

The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the Company. The Company believes in "Zero Tolerance" against bribery, corruption and unethical dealings / behaviours of any form and the Board has laid down the directives to counter such acts.

The Code lays down the standard procedure of business conduct which is expected to be followed by all the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders.

All the Board Members and the Senior Management personnel have confirmed compliance with the Code. All Management Staff have been given appropriate training in this regard.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a vigil mechanism named Fraud and Risk Management Policy to deal with instance of fraud and mismanagement, if any.

The Company has a Fraud Risk and Management Policy to deal with instances of fraud and mismanagement, if any. The FRM Policy ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination will be meted out to any person for a genuinely raised concern.

A high level Committee has been constituted which looks into the complaints raised. The Committee reports to the Audit Committee and the Board.

PREVENTION OF INSIDER TRADING:

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code.

All Board Directors and the designated employees have confirmed compliance with the Code.

AUDITOR'S REPORT/ SECRETARIAL AUDIT REPORT

The observation made in the Auditors' Report read together with relevant notes thereon are self explanatory and hence, do not call for any further comments under Section 134 of the Companies Act, 2013.

As required under section 204 (1) of the Companies Act, 2013 the Company has obtained a Secretarial Audit Report. Certain observation made in the report with regard to non- compliance with the requirement of Minimum Public Shareholding (MPS) under 40A of Listing agreement and SEBI Act, 1992 read with Section 12A of the Securities Contracts (Regulation) Act, 1956. The SEBI had passed an interim order during June 2013 with respect to the listed companies including our company who did not comply with requirement of the MPS. The Company made various correspondence and proper representation with SEBI to seek extension of time to comply with Clause 40A of the listing agreement and MPS norms on grounds that no revenue to be generated from the stalled projects owing to paucity of funds. The Company, in view of the said circumstances, requested SEBI to remove the sanctions imposed vide the said interim order. However, SEBI issued an ORDER dated 27th February, 2015 confirming the directions issued vide the Interim Order against the Company, its directors and promoters / promoters group. The Company / Promoters would ensure in future that all the provisions with regard to 40A of the Listing agreement and MPS norms are complied to the fullest extent.

AUDITORS

P. S. Krishnan & Co, Chartered Accountants, retire at the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints were received during the year 2014-15.

SECRETARIAL AUDIT

Pursuant to provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the company has appointed Sri. S. R. Baalaji, Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit report is annexed herewith as "Annexure A"

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as" Annexure B".

BUSINESS RISK MANAGEMENT

Pursuant to section 134 (3) (n) of the Companies Act, 2013 & Clause 49 of the listing agreement, the company has constituted a business risk management committee. The details of the committee and its terms of reference are set out in the corporate governance report forming part of the Boards report.

At present the company has not identified any element of risk which may threaten the existence of the Company, except high interest cost of borrowing.

STATEMENT UNDER COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

The information required pursuant to Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is provided in Annexure-D.

As there are no employees drawing remuneration of more than Rs.60 Lacs per annum or drawing remuneration of Rs.5 lacs per month if employed part of the year as required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) rules 2014, no such information is reported.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORTS

The Corporate Governance and Management Discussion & Analysis Report, which form an integral part of this Report, are set out as separate Annexures, together with the Certificate from the Auditors of the Company regarding compliance with the requirements of Corporate Governance as stipulated in Clause 49 of the Listing Agreement.

ACKNOWLEDGEMENTS

Your Company and its Directors wish to extend their sincerest thanks to the Members of the Company, Bankers, Professionals, State Government, Local Bodies, Customers, Suppliers, Executives, Staff and workers at all levels for their continuous co-operation and assistance.

For and on behalf of the Board E. V. Muthukumara Ramalingam Managing Director &

Place : TIRUPUR M. R. Gautham Date : 28.05.2015 Executive Director


Mar 31, 2014

Dear Members,

The Directors have great pleasure in presenting the 24th Annual Report of the Company together with its Audited Profit and Loss Account for the year ended 31st March, 2014 and the Balance Sheet as on that date.

FINANCIAL RESULTS ( Rs. In lakhs )

PARTICULARS 2013-14 2012-13 Profit Before Interest, Depreciation and Tax 403.72 271.23

Less : Interest 224.70 81.28

Profit Before Depreciation & Tax 179.02 189.94

Less : Depreciation 118.47 91.56

Add : Exceptional Item 6.99 6.99

Profit Before Tax [PBT] 67.55 105.37

Less : Tax Expenses

a. Current Tax 12.75 21.10

b. Tax relating to prior years - 4.23

c. Mat Entitlement (12.75) 4.93

d. Deferred Tax 3.69 14.02

Profit After Tax 63.86 61.09

Balance b/f from previous years 311.12 250.03

Balance to be carried over to Balance sheet 374.98 311.12

ECONOMY OVERVIEW AND OPERATING RESULTS

The year 2013 was a mixed bag for the hospitality industry in the country considering the devaluation of the rupee against the US dollar, taxation issues and announcements at the policy level. Growth in gross domestic product softened to less than 5% in fiscal 2013 and 2014, after expanding at near-double digit pace for several years which is visible in the pressure witnessed on hotel occupancy and average room rates. The year started with despondency and ended with frustration.

During the year 2013-14 your Company''s turnover increased by 11.40% from Rs.1446 Lakh to Rs.1611 lakh. The gross operating profit (PBDIT) was higher by 48.85% at Rs.403 lakh from the previous year''s Rs.271 lakh and the net profit was higher by 4.52 % in the current year at Rs.63.86 lakh compared to Rs.61.09 lakh of the previous year.

DIVIDEND:

The board of directors is intending to utilize the available surplus in project completion activities. So they propose not to recommend any dividend this year.

VELAN ESPLANADE - SHOPPING MALL :

The Board of Directors is glad to inform that the Velan Esplanade - Shopping Mall, the first environment friendly Green Mall in the country deriving its 100% energy out of renewable, commenced its commercial operation on 06th December, 2013. However, the entire revenue from this segment is expected to be generated from the current financial year onwards as major tenants started their fit-outs gradually and expected to be completed in the current financial year.

STATUS OF OTHER PROJECTS

Construction of the Multiplex building is commenced but slowed down due to paucity of funds. The Renewable Energy Co-generation plant operating on world class GE technology based on bio mass fuel was soft launched on 12th December 2012 and Air conditioning supply from the plant was started on the same day and entire power generation is expected from the current financial year and remaining work in both segments will be completed as soon as the funding is sorted out.

CORPORATE GOVERNANCE

Pursuant to the requirements of Listing Agreement with the Stock Exchange, your Directors are pleased to annex the following:

1. Management Discussion and Analysis Report

2. A Report on Corporate Governance

3. Auditor''s certificate regarding compliance of conditions of Corporate Governance.

INFORMATION REQUIRED UNDER SECTION 217 (1) (e) OF THE COMPANIES ACT, 1956.

The information required under Section 217(1) (e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is furnished hereunder:

I. CONSERVATION OF ENERGY:

a. The operations of the Company are not energy intensive. However the Company has taken all possible measures to control and reduce consumption of energy. The Company is making continuous efforts to conserve and optimize energy wherever practicable by economizing on fuel and power.

b. Since the activity of the Company is not covered under the list of specified Industries under the Schedule to the said Rules, the information to be reported in Form-A, the form for Disclosure of Particulars with respect to Conservation of Energy is not furnished.

II. TECHNOLOGY ABSORPTION:

The Company has no technical collaboration arrangement with any organization.

III. FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign Exchange Current Year 2013-14 Previous Year 2012-13 Earnings And Outgo [Rs.in lakhs] [Rs.in lakhs]

1. Earnings 328.53 301.80

2. Expenditure in Nil Nil Foreign Currency

INFORMATION REQUIRED UNDER SECTION 217 (2A) OF THE COMPANIES ACT, 1956.

None of employee of the Company was in receipt of remuneration, which in the aggregate exceeded the limits prescribed under sub-section (2A) of Section 217 of the Companies Act, 1956, during the year.

DIRECTORS'' RESPONSIBILITY STATEMENT UNDER SECTION 217 (2AA) OF THE COMPANIES (AMENDMENT ACT) 2000

The Board of Directors Report that:

i) Your Directors have followed the applicable accounting standards, in the preparation of annual accounts.

ii) your Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 31st March, 2014 and of the Profit of the Company for that period.

iii) your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities and

iv) Your Directors have prepared the annual accounts on a ''going concern'' basis.

v) The financial statements have been audited by M/s.P.S.Krishnan & Co., Chartered Accountants, the Statutory Auditors.

vi) The Audit Committee meets periodically with internal auditor and the statutory auditors to review the manner in which the auditors are discharging their responsibilities, and to discuss auditing, internal control and financial reporting issues. To ensure complete independence, the statutory auditors and the internal auditors have full and free access to the members of the Audit Committee to discuss any matter of substance.

DEPOSITS

Your Company has neither invited nor accepted any fixed deposits from the public as per the provisions of Section 58A of the Companies Act, 1956 during the year.

DIRECTORS

The Companies Act, 2013 provides for appointment of independent directors. The provision of retirement by rotation as defined in the Act shall not apply to such Independent Directors. Sub- Section (10) of Section 149 of the Companies Act, 2013 provides that independent directors shall hold office a term of upto five consecutive years on the Board of Directors of the Company and shall be eligible for re-appointment on passing a special resolution by the shareholders of the company. In the transition to the Companies Act, 2013, those Independent Directors who have already served for ten or more years will serve for a maximum period of one term of five years. This is consistent with the provisions of Companies Act, 2013. In effect, the transition will be managed by re-appointing such Independent Directors for a period of one more term that does not exceed five years.

Impending notification of Section 149 and other applicable provisions of the Companies Act, 2013, your Directors are seeking re-appointment of Sri.P.Ganesan, and Sri.Giri Balasubramanian as Independent Directors for five consecutive years for a term upto 28th September, 2019. Details of the proposal for re-appointment of the above Directors are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 of the Notice of the 24th Annual General Meeting.

Dr.Namasivayam Karthikeyan retires by rotation at the forthcoming Annual General Meeting and expressed his intention not to seek re-appointment. The Board conveys its deep sense of appreciation for the service rendered by him during his tenure as Member of the Board and other Committees.

The Company has in terms of provisions of Section 160 of the Companies Act, 2013 received a Notice in writing from a member, proposing Sri.S.P.Sivanandam''s candidature for the office of a Director of the Company. We seek your support in confirming his appointment as a Director not liable to retire by rotation.

Sri.K.Balasubramanian and Smt.M.Sasikala Non-Executive-Non-Independent retire at the forthcoming Annual General Meeting and being eligible offers himself for re-appointment.

POSTAL BALLOT

During the year under review, an ordinary resolution has been passed under the provisions of Section 293(1)(a) of the erstwhile Companies Act, 1956 authorizing to sell / transfer or otherwise dispose off by way of slump sale or otherwise one of the Undertaking of the Company, viz. Velan Hotel, Bedford, Coonoor through Postal Ballot.

AUDITORS

M/s. P.S.Krishnan & Co., Company''s present Auditors retire at the ensuing Annual General Meeting and being eligible for reappointment, they have consented to continue to be the Auditors of the Company.

BANKERS

M/s.Allahabad Bank, M/s.Andhra Bank, M/s.AXIS Bank and M/s.Union Bank of India are bankers to the Company and your Directors place on record their appreciation for their co-operation and services.

SAFETY AND SECURITY

Hotels have become vulnerable to terror attacks on account of their high profile guests that include foreign tourists. Keeping in mind the security threats to the hospitality industry in India, the company has stepped up its efforts to ensure an environment of well being, safety and security for all its guests and co-workers. The company''s guest floors as well as all public areas are well equipped with closed circuit cameras. Movement of all vehicles, employees, vendors and guests is monitored and scanned.

ACKNOWLEDGEMENT

Your Directors would like to express their sincere appreciation and gratitude for the cooperation and assistance from its shareholders, bankers, regulatory bodies, Statutory Auditors / Professionals and other business constituents during the year under review.

Your Directors also wish to place on record their deep sense of appreciation for the contribution and commitments displayed by Executives, Staff and Employees of the Company.

For and on behalf of the Board E.V.Muthukumara Ramalingam Chairman of the Meeting and Managing Director

Place : Tirupur Date : 30/05/2014


Mar 31, 2013

To The Shareholders, Velan Hotels Limited

Ladies and Gentlemen,

The Directors have great pleasure in presenting the 23rd Annual Report of the Company together with its Audited Profit and Loss Account for the year ended 31st March, 2013 and the Balance Sheet as on that date.

FINANCIAL RESULTS

(Rs. in lakhs) PARTICULARS 2012-13 2011-12

Profit Before Interest, Depreciation and Tax 271.23 330.26

Less : Interest 81.28 90.99

Profit Before Depreciation & Tax 189.94 239.28

Less : Depreciation 91.56 89.86

Add : Exceptional Item 6.99 6.99

Profit Before Tax [PBT] 105.37 156.40.

Less : Tax Expenses

a) Current Tax 21.10 31.30

b) Tax relating to prior years 4.23 9.28

c) Mat Entitlement 4.93 22.49

d) Deferred Tax 14.02 (0.50)

Profit After Tax [PAT] 61.09 93.83

Balance b/f from previous years 250.03 156.20

Profit Available for appropriation 311.12 250.03

Less : Proposed Dividend --- ---

Less : Tax on proposed Dividend --- ---

Balance to be carried over to Balance sheet 311.12 250.03

ECONOMY OVERVIEW AND OPERATING RESULTS

The year 2012-13 was another challenging and tough year owing to moderate growth in global economy due to the shock of the Eurozone crisis which has affected trade across industries and geographies. Global risk aversion led to a decrease in exports by India, which in turn exerted downward pressure on the economy by widening the current account deficit in the fiscal year 2012/13. The slow down in tourist arrivals as well as rise in room inventory affected the hotel industry too. In 2012-13, the growth in foreign tourist arrivals to India slowed down to 2.33 per cent versus 5.09 per cent in 2011-12.

The most serious challenge faced the Indian economy was inflation. Supply-side constraints, logistical issues and poor agricultural performance due to erratic monsoon have led to a sharp increase in food prices, a crucial determinant of inflation. Rising fuel prices and the move to more expensive sources of fuel have raised the level of public expenditure. Coupled with falling export demand, this has stoked inflationary pressures through currency depreciation.

During the year 2012-13 your Company''s turnover decreased by 2.37% from Rs.1481 lakh to Rs.1446 Lakh. The gross operating profit (PBDIT) was lower by 17.87% at Rs.271 lakh from the previous year''s Rs.330 lakh and the net profit was lower by 34.89 % in the current year at Rs.61 lakh compared to Rs.94 lakh in the previous year. The increase in operating costs are mainly due to increase in power, fuel expenses and repairs and maintenance costs. As being in the hotel industry, it is necessary to maintain items should be made available irrespective of guest actual occupancy level.

Repairs and maintenance increases is due to renovation of all items of small value that increase the guest conveniences.

As the Biomass plant project activities are almost completed and will be ready for commissioning during the year 2013-14, the Company will save the power cost which constitutes almost 25% of total operating cost and thereby will increase the profitability in the ensuing years.

As the total income decreased by 2.37% from last year, as the Garments and Knitting Industries in Tirupur are reeling under recessionary trend due to various economic factors.

DIVIDEND:

The Board of Directors are happy to declare that the various expansion activities are at various stages nearing completion. The Board of Directors are intending to utilize the available surplus in project completion activities. So they propose not to recommend any dividend this year.

FUTURE PROSPECTS AND EXPANSION:

The Board is highly optimistic that all the project expansion activies are nearing completion and the asset base of the Company is increasing due to addition of expansion components with the Company. Once these activities are completed, the Board is expecting the increase in income as well in profits.

As the expansion projects activities are finalized and subsequently upgraded in technological and increased in scope to make it world class, state-of-art facility, the total project cost increased from Rs.124 crores to Rs.162 crores and this cost includes the land acquisition for biomass growing land and working capital requirement for the power generation plant.

VELAN ESPLANADE - SHOPPING MALL

The Velan Esplanade (Mall & Multiplex) is the first environment friendly Green Mall in the country deriving its 100% energy out of renewable. The project is in a very high strategic location and is the first and only mall of Tirupur. The Velan Esplanade is fully completed and handed over to the tenants for fit-outs. The mall would house around 32-34 retail outlets apart from the food court, Cash''n carry and the 6-screen Multiplex. The mall was inaugurated (Soft launch) on 12th December, 2012. The commencement of commercial operation of Shopping Mall is expected to start earning in Q2.

VELAN ESPLANADE - MULTIPLEX

The Multiplex would be operated by Satyam Cinemas and the 45,000 sq ft Cash''n Carry is leased to Reliance Fresh. The Multiplex is under construction and is expected to be given for fit-outs and expected to be operational by during the year 2013-14.

BIO-MASS BASED RENEWABLE ENERGY PLANT

The Renewable Energy Co-generation plant operating on world class GE Technology based on Bio-mass fuel (a technology presently employed in the hotel already) will bring down the cost of power now and in future. The surplus power will be sold at market rates. The by-product of chilled water will meet the entire air-conditioning requirement of the hotel and The Velan Esplanade thereby reducing the operating costs. The charcoal recovered can also be sold which will shore up the top-line. The plant is also eligible for Renewable Energy Certificate and Carbon Credits, which will also yield significant revenues. This plant that used a technology approved by UNFCCC for meeting CDM benefits was launched (soft launch) on 12th December 2012 and Air conditioning supply from the plant was started on 12th December, 2012 and Power generation will be available from the year 2013-14.

BIO-MASS PLANTATIONS

The Company is convinced that there is a need to go in for bio-mass cultivation as a backward integration for the power plant, to ensure regular supply of bio-mass, which will also reduce the raw material cost.

The Renewable Energy Plant will operate on Wood (Prosopsis Julie Flora/Melia Dubia). The Company has identified 800 acres of land in South Tamil Nadu. The Company would develop the land with the required plant & machinery, farm equipments and bare Irrigation/Fertilisation systems required for captive cultivation of Prosopsis Julie Flora/Melia Dubia. The Bio-Mass Plantation will give us the existing crop for immediate use. Hence, the bio-mass requirement for our plant would be met by our own plantation.

CONVENTION CENTRE

The Velan Hotel- Greenfields at Tirupur is well known to house its conventions in the existing two large halls and the open landed area in the Velan property by erecting further temporary structures.

The company after understanding the demand for good convention halls in Tirupur, intends to add a third large hall. The proportional land costing has already been brought in to the Company. The civil works will start soon and will be ready in the year of 2013-14.This income will add profitbility to the Company considerably.

ADDITIONS / RENOVATION

It becomes necessary to update and modernise the existing hotel property and its facilities to keep the hotel competitive worth. The planned additions and renovations at the existing hotels at Tirupur and Coonoor have been completed, which resulted in up-gradation of rooms, the spa at Tirupur hotel, the food and beverage outlets at Tirupur (signature restaurant and bar).

The Management is taking effective steps for completion of the projects at stipulated date. Your Company continues to pursue the completion of on-going projects to achieve sustainable and profitable growth.

CORPORATE GOVERNANCE

Pursuant to the requirements of Listing Agreement with the Stock Exchange, your Directors are pleased to annex the following:

1. Management Discussion and Analysis Report

2. A Report on Corporate Governance

3. Auditor''s certificate regarding compliance of conditions of Corporate Governance.

INFORMATION REQUIRED UNDER SECTION 217 (1) (e) OF THE COMPANIES ACT, 1956.

The information required under Section 217(1) (e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is furnished hereunder:

I. CONSERVATION OF ENERGY:

a. The operations of the Company are not energy intensive. However the Company has taken all possible measures to control and reduce consumption of energy. The Company is making continuous efforts to conserve and optimize energy wherever practicable by economizing on fuel and power.

b. Since the activity of the Company is not covered under the list of specified Industries under the Schedule to the said Rules, the information to be reported in Form-A, the form for Disclosure of Particulars with respect to Conservation of Energy is not furnished.

II. TECHNOLOGY ABSORPTION:

The Company has no technical collaboration arrangement with any organization.

INFORMATION REQUIRED UNDER SECTION 217 (2A) OF THE COMPANIES ACT, 1956.

None of employee of the Company was in receipt of remuneration, which in the aggregate exceeded the limits prescribed under sub-section (2A) of Section 217 of the Companies Act, 1956 during the year.

DIRECTORS'' RESPONSIBILITY STATEMENT UNDER SECTION 217 (2AA) OF THE COMPANIES (AMENDMENT ACT) 2000

The Board of Directors Report that:

i) Your Directors have followed the applicable Accounting Standards, in the preparation of annual accounts.

ii) your Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 31st March, 2013 and of the Profit of the Company for that period.

iii) your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities and

iv) Your Directors have prepared the annual accounts on a ''going concern'' basis.

v) The financial statements have been audited by M/s.P.S.Krishnan & Co., Chartered Accountants, the Statutory Auditors.

vi) The Audit Committee meets periodically with Internal Auditor and the Statutory Auditors to review the manner in which the auditors are discharging their responsibilities, and to discuss auditing, internal control and financial reporting issues. To ensure complete independence, the Statutory Auditors and the Internal Auditors have full and free access to the members of the Audit Committee to discuss any matter of substance.

DEPOSITS

Your Company has neither invited nor accepted any fixed deposits from the public as per the provisions of Section 58A of the Companies Act, 1956 during the year.

DIRECTORS

Sri.T.Gopalakrishnan retires by rotation at the forthcoming Annual General Meeting. Sri.T.Gopalakrishnan has expressed his intention not to seek re-appointment. The Members of the Board place on record their deep sense of appreciation for the services rendered by Sri.T.Gopalakrishnan during his tenure as Member of the Board and other Committees.

Directors Sri.K.Subramaniam and Smt.M.Sasikala retire by rotation at the forthcoming Annual General Meeting and being eligible for re-election, offer themselves for re-appointment.

The Company has in terms of provisions of Section 257 of the Companies Act, 1956 received a Notice in writing from a member, proposing Sri.Giri Balasubramanian''s candidature for the office of a Director of the Company. We seek your support in confirming his appointment as a Director liable to retire by rotation.

AUDITORS

M/s. P.S.Krishnan & Co., Company''s present Auditors retire at the ensuing Annual General Meeting and being eligible for reappointment, they have consented to continue to be the Auditors of the Company.

BANKERS

M/s.Allahabad Bank, M/s.Andhra Bank, M/s.AXIS Bank and M/s.Union Bank of India are bankers to the Company and your Directors place on record their appreciation for their co-operation and services.

SAFETY AND SECURITY

Hotels have become vulnerable to terror attacks on account of their high profile guests that include foreign tourists. Keeping in mind the security threats to the hospitality industry in India, the company has stepped up its efforts to ensure an environment of well being, safety and security for all its guests and co-workers. The company''s guest floors as well as all public areas are well equipped with closed circuit cameras. Movement of all vehicles, employees, vendors and guests is monitored and scanned.

ACKNOWLEDGEMENT

Your Directors would like to express their sincere appreciation and gratitude for the cooperation and assistance from its shareholders, bankers, regulatory bodies, Statutory Auditors / Professionals and other business constituents during the year under review.

Your Directors also wish to place on record their deep sense of appreciation for the contribution and commitments displayed by Executives, Staff and Employees of the Company.

For and on behalf of the Board

Place : Tirupur E.V. Muthukumara Ramalingam

Date : 30.05.2013 Managing Director and Chairman of the Meeting


Mar 31, 2012

The Directors have great pleasure in presenting the 22nd Annual Report of the Company together with its Audited Profit and Loss Account for the year ended 31st March, 2012 and the Balance Sheet as on that date.

FINANCIAL RESULTS (Rs. in lakhs)

PARTICULARS 2011-12 2010-11

Profit Before Interest, Depreciation and Tax 342.20 382.83

Less : Interest 102.92 92.07

Profit Before Depreciation & Tax 239.28 290.76

Less : Depreciation 89.86 88.92

Add : Exceptional Item 6.99 (15.07)

Profit Before Tax (PBT) 156.40 186.76

Less : Tax Expenses

a) Current Tax 31.30 37.00

b) Tax relating to prior years 9.28 3.23

c) Mat Entitlement 22.49 1.90

d) Deferred Tax (0.50) 27.99

Profit After Tax 93.83 116.64

Balance b/f from previous years 156.20 107.11

Profit Available for appropriation 250.03 223.75

Less : Proposed Dividend - 58.13

Less : Tax on proposed Dividend - 9.43

Balance to be carried over to Balance sheet 250.03 156.20

OPERATING RESULTS AND OVERVIEW

2011-12 has been a bit of a flat year for all sectors in general and hospitality in particular as the global economy has severely been buffeted by various natural, social and economic headwinds; the earthquake in Japan, the floods in Thailand, high interest rates, spiraling inflation, the civil unrest in the Arab countries and ongoing sovereign debt crisis in Europe Region. The Indian economy has also been severely affected by, but has withstood the turbulence caused by global economics in the past years. Vital to the performance of the hospitality sector is the economic scenario of world and domestic economy.

Due to overall slowdown, your Company's financial performance was affected significantly compared to last year. However, with patronage of loyal customers of the hotel, your Company could manage the profit margin this year as well. The Company registered a revenue of Rs. 1481 lakhs compared to Rs. 1480 Lakhs in 2010-11. Profit Before Depreciation, Interest and Tax was Rs. 342.20 Lakhs compared to Rs. 382.83 Lakhs in 2010-11 and Profit Before Tax was Rs. 156.40 Lakhs compared to Rs. 186.76 lakhs in 2010-11.

DIVIDEND:

As the surplus generated is being deployed towards executing the various projects, your Directors prefer not to recommend any dividend on share capital of the Company for the year under report.

FUTURE PROSPECTS AND EXPANSION:

Your Company is progressing in the diversification cum expansion on projects on adjoining land of existing hotel building. Due to the vast opportunities and prospects of growth in Tirupur which is hub of textile exports, the Company has already started to set up shopping and entertainment malls - India's first 100 percent Green Shopping Mall - in the City. To meet the energy requirement of the Company, a bio-mass based energy plant that used a technology approved by UNFCCC for meeting CDM benefits is being setup. The Management is taking effective steps for completion of the projects at stipulated date. Your Company continues to pursue the completion of on-going projects to achieve sustainable and profitable growth.

RIGHTS ISSUE

In order to meet the cost of funding of the various projects undertaken by the Company, the Company has raised equity share capital on Rights basis in the ratio of sixty nine equity shares at a price of Rs. 23/- per share for every twenty equity shares held. The Rights issue opened on August 24, 2011 and closed on September 22, 2011. 2,42,14,119 equity shares were allotted to eligible shareholders, in consultation with the BSE Limited (Designated Stock Exchange) on November 4, 2011. Such equity shares became eligible for trading on BSE effective from November 11, 2011.

Consequent to allotment of the aforesaid shares, the Paid-Up Equity Share Capital of the Company stands increased from Rs. 775 lakhs to Rs. 3196.41 lakhs with effect from November 4, 2011.

FINANCE

Your Company is executing various projects through its equity, internal accruals and borrowings from Andhra Bank and Allahabad Bank. The total borrowings from the financial institutions as on 31st March, 2012 are Rs. 58.21 crores.

CORPORATE GOVERNANCE

Pursuant to the requirements of Listing Agreement with the Stock Exchange, your Directors are pleased to annex the following:

1. Management Discussion and Analysis Report

2. A Report on Corporate Governance

3. Auditor's certificate regarding compliance of conditions of Corporate Governance.

INFORMATION REQUIRED UNDER SECTION 217 (1) (e) OF THE COMPANIES ACT, 1956.

The information required under Section 217(1) (e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is furnished hereunder:

I. CONSERVATION OF ENERGY:

a. The operations of the Company are not energy intensive. However, the Company has taken all possible measures to control and reduce consumption of energy. The Company is making continuous efforts to conserve and optimize energy wherever practicable by economizing on fuel and power.

b. As the activity of the Company is not covered under the list of specified Industries under the Schedule to the said Rules, the information to be reported in Form-A, the form for Disclosure of Particulars with respect to Conservation of Energy is not furnished.

II. TECHNOLOGY ABSORPTION:

The Company has no technical collaboration arrangement with any organization.

INFORMATION REQUIRED UNDER SECTION 217 (2A) OF THE COMPANIES ACT, 1956.

None of employee of the Company was in receipt of remuneration, which in the aggregate exceeded the limits prescribed under sub-section (2A) of Section 217 of the Companies Act, 1956 during the year.

DIRECTORS' RESPONSIBILITY STATEMENT UNDER SECTION 217 (2AA) OF THE COMPANIES (AMENDMENT ACT) 2000

The Board of Directors Report that:

i) Your Directors have followed the applicable accounting standards, in the preparation of Annual Accounts.

ii) Your Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 31st March, 2012 and of the Profit of the Company for that year.

iii) Your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities and

iv) Your Directors have prepared the annual accounts on a 'going concern' basis.

v) The financial statements have been audited by M/s. P. S. Krishnan & Co., Chartered Accountants, the Statutory Auditors.

vi) The Audit Committee meets periodically with internal auditor and the statutory auditors to review the manner in which the auditors are discharging their responsibilities and to discuss auditing, internal control and financial reporting issues. To ensure complete independence, the statutory auditors and the internal auditor have full and free access to the Members of the Audit Committee to discuss any matter of substance.

DEPOSITS

Your Company has neither invited nor accepted any fixed deposits from the public as per the provisions of Section 58A of the Companies Act, 1956 during the year.

DIRECTORS

With profound grief and sorrow we inform you that Mr. R. V. E. Venkatachalam, who was the Chairman of the Company, passed away on July 26, 2011. We sincerely place on record his contribution to the growth of the Company during his tenure as Chairman.

The Board had appointed Smt. M. Sasikala and Sri K. Subramaniam as members of the Board in the capacity of Non-Executive Directors and Sri B. A. Madhusudhan as Member of the Board in the capacity of Whole-Time Director. The said Directors have been inducted as Additional Directors pursuant to the provisions of Section 260 of the Companies Act, 1956 to hold office till the conclusion of this Annual General Meeting. Mr. B. A. Madhusudhan, Smt. M. Sasikala and Mr. K. Subramaniam are proposed to be appointed as Directors in this Annual General Meeting scheduled to take place on 12/09/2012 and notice under Section 257 of the Companies Act 1956 have been received from a Member proposing their appointments. The brief profiles of said Director's are reported elsewhere in the Annual Report for the reference of Members.

Sri P.Ganesan and Dr. Namasivayam Karthikeyan retire by rotation at the forthcoming Annual General Meeting and being eligible for re-election, offer themselves for re-appointment.

AUDITORS

M/s. P. S. Krishnan & Co., Company's present Auditors are to retire at the ensuing Annual General Meeting and being eligible for reappointment, they have consented to continue to be the Auditors of the Company.

BANKERS

M/s. Allahabad Bank, M/s. Andhra Bank, M/s. AXIS Bank, M/s. State Bank of India and M/s. Union Bank of India are bankers to the Company and your Directors place on record their appreciation for their co- operation and services.

SAFETY AND SECURITY

Hotels have become vulnerable to terror attacks on account of their high profile guests that include foreign tourists. Keeping in mind the security threats to the hospitality industry in India, the company has stepped up its efforts to ensure an environment of well being, safety and security for all its guests and co-workers. The company's guest floors as well as all public areas are well equipped with closed circuit cameras. Movement of all vehicles, employees, vendors and guests is monitored and scanned.

ACKNOWLEDGEMENT

Your Directors would like to express their sincere appreciation and gratitude for the cooperation and assistance from its shareholders, bankers, regulatory bodies, Statutory Auditors/Professionals and other business constituents during the year under review.

Your Directors also wish to place on record their deep sense of appreciation for the contribution and commitments displayed by Executives, Staff and Employees of the Company.

For and on behalf of the Board

E. V. Muthukumara Ramalingam Managing Director Place : Tirupur Date : 30.05.2012


Mar 31, 2011

The Shareholders, Velan Hotels Limited

Ladies and Gentlemen,

The Directors have great pleasure in presenting the 21s1 Annual Report of the Company together with its Audited Profit and Loss Account for the year ended 31st March, 2011 and the Balance Sheet as on that date.

FINANCIAL RESULTS (Rs.in lakhs)

PARTICULARS 2010-11 2009-10

Profit Before Interest, Depreciation and Tax 349.34 329.49

Less : Interest 80.64 83.51

Profit Before Depreciation & Tax 268.70 245.98

Less: Depreciation 81.94 70.54

Profit Before Tax [PBT] 186.76 175.44 Less :Tax Liability 66.89 61.81

Prior Year Adjustment 3.23 1.27

Profit After Tax 116.64 112.36

Balance b/f from previous years 107.11 62.52

Profit Available for appropriation 223.75 174.88

Less: Proposed Dividend 58.13 58.13

Less: Tax on proposed Dividend 9.43 9.65

Balance to be carried over to Balance sheet 156.20 107.11

OPERATING RESULTS AND OVERVIEW

2010 for the Hotel and Tourism Industry would be remembered as a year in which the market had a positive turning point ending two consecutive years of declining performance levels and profitability. Indian economy recovered quickly and rapidly, leading to a return of international business travel to back sustained domestic travel. India's hotel industry posted performance improvements in 2010 compared to the year prior. Increases in occupancy have generally outweighed the falls in average daily rate (ADR), resulting in improved revenue per available room. RevPAR for India as a whole was up 6.2 percent during the year 2010 compared with the year 2009.

During the year under review, the Company's Average Room Rentals (ARR) was marginally higher at 6.97% compared to the previous year. Your company's total income grew by 11.00% from Rs. 1333.63 lakhs to Rs.1479.57 lakhs in 2010-11. Profit Before Taxes (PBT) increased by 6.45% from Rs.175.44 lakhs to Rs. 186.76 lakhs in 2010-11 and Profit After Tax (PAT) increased by 4.61% from Rs. 112.36 to Rs. 116.64 lakhs in 2010-11.

DIVIDEND:

Your Directors are pleased to recommend a dividend of Rs.0.75 per equity share for the year ended 31st March, 2011

FUTURE PROSPECTS AND EXPANSION:

The company has started diversifying its activities into Mall, Multiplex and Convention Centre construction, marketing and maintenance as well as the setting up of a renewable energy plant to contribute to the high energy consuming retail and screening space.

The company's 20-year existence and goodwill has helped in attracting the experienced personnel required to implement the projects. The company is also geared up to successfully operate and manage the new business units which would be commissioned in the next 12-15 months.

The company's hotel facilities have been updated continuously over the past 8-10 years but a full-scale revamping is currently under process. This exercise will ensure that your company's flagship hotel property at Tirupur will remain the best hotel in Tirupur attracting the creme of the overseas and high net worth visitors coming into Tirupur for business purposes primarily. The company's hotel property at Coonoor is also being revamped to ensure that the day-to-day operations are able to handle the stiff competition in the tourism sector and also to cope with the ever-changing dynamics of the Nilgiris tourism market.

The company has so far relied on the hosiery-oriented Tirupur market for its business. The flagship hotel's design with its high standards of operations has helped attract and retain a good clientele base. Your company is now keenly looking at other upcoming destinations in the Tamilnadu / Kerala / Pondicherry region to expand its hotel operations in the 3-star category.

SHARE CAPITAL

Your company has undertaken various projects and proposed to issue equity shares on Rights basis. Considering the future prospects of the Company, there may be a need for more funds in the growth of the business. Hence, the Company has enhanced its Authorised Share Capital from Rs. 15.50 crores to Rs.35.00 crores at the 20th Annual General Meeting of the Company held on 06th September, 2010. Further, your company proposes now to enhance its Authorised Share Capital from Rs.35 Crores to Rs.50 Crores for its future needs.

EXTRA-ORDINARY GENERAL MEETING

Members of the Company at Extra-Ordinary General Meeting held on 12th June, 2010 approved the enhancement in Authorised Share Capital of the Company upto Rs. 15.50 crores and borrowing power of the Company upto Rs.75 Crores. Members also approved commencement of new business, altering the capital clause of Memorandum and Articles of the Association of the Company and charging and mortgaging of the Company's assets under Section 293(1)(a) of the Companies Act, 1956 for securing term loans sanctioned by the Banks / Financial Institutions.

RIGHTS ISSUE

Your company proposes to increase the paid up share capital by issue of equity shares on rights basis for an amount not exceeding Rs.65 crores including premium which will be utilized to part finance the cost of funding of the various projects undertaken by the Company. After completing the due diligence conducted by various intermediaries, your company has obtained in-principle approval from the Bombay Stock Exchange Ltd and permission from Securities and Exchange Board of India. Your company has started the process to complete the Rights Issue before the quarter ending 30th September, 2011.

FINANCE

During the year, your company has been sanctioned term loans and bank guarantee including take over of foreign currency term loan of Bank of Bahrain & Kuwait BSC by Allahabad Bank and Andhra Bank on multiple banking amounting to Rs.75.92 crores for part financing the integrated project of constructing Shopping Mall, Multiplex with service apartments, Convention Hall, Bio-Mass based Co-Generation plant and renovation work at Tirupur and Coonoor Hotels.

The company has started to avail term loans from both banks and deployed into its on-going projects.

CORPORATE GOVERNANCE

Pursuant to the requirements of Listing Agreement with the Stock Exchange, your Directors are pleased to annex the following:

1. Management Discussion and Analysis Report

2. A Report on Corporate Governance

3. Auditor's certificate regarding compliance of conditions of Corporate Governance.

INFORMATION REQUIRED UNDER SECTION 217(1) (e) OF THE COMPANIES ACT, 1956.

The information required under Section 217(1) (e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is furnished hereunder:

I. CONSERVATION OF ENERGY:

a. The existing hotel operations of the Company are not energy intensive. But, the upcoming mall and multiplex projects are highly energy intensive. Hence, the decision to go in for the renewable energy co-gen plant. Further, the Company has taken all possible measures to control and reduce consumption of energy. The Company is making continuous efforts to conserve and optimize energy wherever practicable by economizing on fuel and power.

b. Since the activity of the Company is not covered under the list of specified Industries under the Schedule to the said Rules, the information to be reported in Form-A, the form for Disclosure of Particulars with respect to Conservation of Energy is not furnished.

II. TECHNOLOGYABSORPTION:

The Company has no technical collaboration arrangement with any organization.

III. FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign Exchange Earnings Current Year Previous Year And Outgo 2010-11 2009-10 [Rs.in lakhs] [Rs.in lakhs]

1. Earnings 490.12 538.91

2. Expenditure in Foreign Currency a) Interest on Foreign 48.52 28.86 Currency Term Loan b) Repayment of the above 783.55 51.88 Term Loan fully

INFORMATION REQUIRED UNDER SECTION 217 (2A) OF THE COMPANIES ACT, 1956.

None of employee of the Company was in receipt of remuneration, which in the aggregate exceeded the limits prescribed under sub-section (2A) of Section 217 of the Companies Act, 1956, during the year.

DIRECTORS' RESPONSIBILITY STATEMENT UNDER SECTION 217 (2AA) OF THE COMPANIES (AMENDMENT ACT) 2000

The Board of Directors Report that:

i) Your Directors have followed the applicable accounting standards, in the preparation of annual accounts.

ii) your Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 31st March, 2011 and of the Profit of the Companyforthat year.

iii) your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities and

iv) Your Directors have prepared the annual accounts on a 'going concern' basis.

v) The financial statements have been audited by M/s.P.S.Krishnan & Co., Chartered Accountants, the Statutory Auditors.

vi) The Audit Committee meets periodically with internal auditor and the statutory auditors to review the manner in which the auditors are discharging their responsibilities, and to discuss auditing, internal control and financial reporting issues. To ensure complete independence, the statutory auditors and the internal auditors have full and free access to the members of the Audit Committee to discuss any matter of substance.

DEPOSITS

Your Company has neither invited nor accepted any fixed deposits from the public as per the provisions of Section 58Aof the Companies Act, 1956 during the year.

DIRECTORS

Sri.R.V.E.Venkatachalam and Sri.TGopalakrishnan retire by rotation at the forthcoming Annual General Meeting and being eligible for re-election, offer themselves for re-appointment.

AUDITORS

M/s. P.S.Krishnan & Co., Company's existing Auditors are to retire at the ensuing Annual General Meeting and being eligible for reappointment, they have consented to continue to be the Auditors of the Company.

BANKERS

M/s.Allahabad Bank, M/s.Andhra Bank, M/s.AXIS Bank, M/s.State Bank of India and M/s.Union Bank of India are bankers to the Company and your Directors place on record their appreciation for their co- operation and services.

ACKNOWLEDGEMENT

Your Directors would like to express their sincere appreciation and gratitude for the cooperation and assistance from its shareholders, bankers, regulatory bodies, Statutory Auditors and other business constituents during the year under review.

Your Directors also wish to place on record their deep sense of appreciation for the contribution and commitments displayed by Executives, Staff and Employees of the Company.

For and on behalf of the Board

R.V.E. Venkatachalam Chairman

Place : Tirupur Date : 28.06.2011


Mar 31, 2010

The Directors have great pleasure in presenting the 20th Annual Report of the Company together with its Audited Profit and Loss Account for the year ended 31st March, 2010 and the Balance Sheet as on that date.

FINANCIAL RESULTS

PARTICULARS 2009-10 2008-09

Profit Before Interest, Depreciation and Tax 329.49 295.34

Less : Interest 83.51 70.95

Profit Before Depreciation & Tax 245.97 224.39

Less : Depreciation 70.54 61.64

Profit Before Tax [PBT] 175.44 162.75

Less :Tax Liability 63.07 56.61

Profit After Tax 112.36 106.14 Balance b/f from previous years 62.52 1.12

Profit Available for appropriation 174.88 107.26

Less : Proposed Dividend 58.13 38.75

Less : Tax on proposed Dividend 9.65 5.99

Balance to be carried over to Balance sheet 107.11 62.52

OPERATING RESULTS AND OVERVIEW

2009 has gone into the history books as one of the worst for all sectors in general, the hotel industry in particular. Revenue per average room (RevPAR) practically collapsed as travelers stayed away. Companies reined in travel expenditure and potential tourists stayed at home. With the global economic machinery almost shuttering to a halt, the corporate world has engaged in cost cutting via drastic cutbacks on non-essential expenses. The resultant drop in corporate travel, coupled with travel advisories issued following the November, 2008 terror attacks, led to an adverse effect on the industry performance.

Headline wholesale price index inflation accelerated from 1.5 % in October, 2009 to 9.9% by March, 2010 whereas food articles inflation accelerated to 16.65 % on y-o-y basis mainly on account of deficient monsoon, cost of imports went up due to weakening rupee, mismatch in demand / supply situation of agricultural products in India and unstable international crude oil prices. The profit margin of Food & Beverage of your hotel business was affected due to higher inflation in food articles. The F & B revenue accounts over 35% of the total revenue of the Hotel.

Despite these unfavourable happenings, your Company did reasonably well during the year under review. Your companys total income grew by 12.49% from Rs.1184.64 lakhs to Rs.1333.63 lakhs in 2009-10. Profit Before Taxes (PBT) increased by 7.79% from Rs.162.75 lakhs to Rs.175.44 lakhs in 2009-10 and Profit After Tax (PAT) increased by 5.86% from Rs.106.14 to Rs.112.36 lakhs in 2009-10. The increase in expenses of consumption of provision and supplies due to higher inflation, Employee cost, Interest Cost and general administrative expenses led to a severe squeeze in operating margins.

Therefore, the Companys overall performance has to be viewed from the above perspective.

DIVIDEND:

Your Directors are pleased to recommend a dividend of Rs.0.75 per equity share for the year ended 31st March, 2010 higher than Rs.0.50 per share distributed as dividend in the previous year.

FUTURE OUTLOOK

In the year 2008, the company started work on a multi-tier food outlet at the centrally located area of Ram Nagar in Coimbatore. This four format restaurants outlet was commenced in 2009.

In 2009, the company has relocated Velan Uthara to a larger space to cope with the increase in footfalls.

In the year 2009, 6 new deluxe rooms were added to Velan Hotel, Coonoor to meet the increased seasonal demand at this tourist destination which has also been adopted by national level athletes for high-altitude training.

The company has identified an opportunity in the entertainment business at Tirupur. Hence, The Velan Esplanade has been planned as a mall and multiplex complex. The 300,000 sq ft development is planned to be leased out with large corporates in the retail industry signing up for spaces. The superstructure work at the velan esplanade site is near completion. Within this development, your company plans to add 20 serviced apartments to add to the 60 luxury rooms and 10 suites that are already available at your Tirupur Hotel Property.

The Velan Hotel Greenfields at Tirupur attracts a large number of overseas guests and hence contributes to the foreign exchange earnings of the country. To add variety to the existing facilities offered at your Tirupur hotel, a new barbecue restaurant and a new sports bar is being added and should be operational in the current year. The luxury rooms at the Tirupur hotel has been maintained very well and, in the current year also, 18 more rooms will be modernised to meet the ever-growing demands of the business travellers at Tirupur.

The Velan Hotel, Coonoor has attracted the Sports Authority of India (SAI) to set up their high altitude training facilities there. The athletes with their coaching staff and their support team have been staying on and off at your Coonoor hotel property. To meet the growing demands of the SAI and the tourists at Coonoor, few more rooms / cottages are planned to be added this year. Further, 10 existing deluxe rooms will be modernised in the current year to maintain the quality standards expected of the Velan brand.

Also, the Velan Hotels, having a strong food & beverage base and convention facilities in the US$6 Billion export district headquarters of Tirupur is facing strong demand for space in the fair and convention market. Hence, a larger air-conditioned hall to house even larger sized machinery is required to meet the demands of the exhibitors.

The planned development of the mall / multiplex / convention centre added to the existing hotel implies a large requirement of energy in the form of electricity and chilling. To meet the energy requirement of the company, a BioMass plant is underway to ensure the electricity needs and the chilling requirement, with the excess produce of electricity being planned to be supplied to the TNEB grid.

SHARE CAPITAL

Your company is in need of money primarily for its projects and working capital requirement. In this regard, the Company has enhanced its Authorised Share Capital from Rs.8.50 crores to Rs.15.50 crores for which the Extra-ordinary General Meeting has been conducted on 12th June, 2010 for enhancing its authorized share capital. In addition to the above, your Company proposes to enhance its Authorised Share Capital from Rs.15.50 Crores to Rs.35 Crores. Your company is in process of raising share capital through various options subject to all applicable laws, rules, regulations and guidelines.

POSTAL BALLOT

Your company conducted Postal Ballot in connection with the alteration of Object Clause of Memorandum of Association of the Company by inserting new activities relating to power generation and realty development in accordance with the provisions of Section 17 of the Companies Act, 1956 which has been approved by the Shareholders of the Company by way of Special Resolution through Postal Ballot in terms of Section 192A of the Companies Act, 1956 read with the Companies ( Passing of Resolution by Postal Ballot) Rules, 2001 on 12-06-2010 with requisite majority.

FINANCE

The revenue from foreign currency contributed over 45% of total revenues of the Company. To mitigate loss in exchange fluctuations, your company has availed Foreign Currency Term Loan of US $ 1,600,000 and a Bank Guarantee Limit of US$ 125,000 for the purpose of retiring existing high cost loans in INR from State Bank of India. The pricing of term loan is at LIBOR +550 bps with a floor price of 8.40% per annum and Bank Guarantee is in the range of 2% to 3% per annum. Besides, the loans are repayable in foreign currency with an advantage of difference in dollar and rupee fluctuations.

CORPORATE GOVERNANCE

Pursuant to the requirements of Listing Agreement with the Stock Exchange, your Directors are pleased to annex the following:

1. Management Discussion and Analysis Report

2. A Report on Corporate Governance

3. Auditors certificate regarding compliance of conditions of Corporate Governance.

INFORMATION REQUIRED UNDER SECTION 217 (1) (e) OF THE COMPANIES ACT, 1956.

The information required under Section 217(1) (e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is furnished hereunder:

I. CONSERVATION OF ENERGY:

a. The operations of the Company are not energy intensive. However the Company has taken all possible measures to control and reduce consumption of energy. The Company is making continuous efforts to conserve and optimize energy wherever practicable by economizing on fuel and power. As a step towards energy conservation, the Company had installed solar water heating systems at Hotel Premises to reduce power consumption and also initiated several other measures such as wood-fired boilers has been installed in stead of diesel-fired boilers, the former is environment friendly and cost effective. These measures are to derive maximum benefit in terms of reduction in the consumption of energy and reduce the power cost in the long run.

b. Since the activity of the Company is not covered under the list of specified industries under the Schedule to the said Rules, the information to be reported in Form-A, the form for Disclosure of Particulars with respect to Conservation of Energy, is not furnished.

II. TECHNOLOGY ABSORPTION:

The Company has no technical collaboration / arrangement with any organization.

III. FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign Exchange Earnings And Outgo Current Year 2009-10 Previous Year 2008-09 [Rs.in lakhs] [Rs.in lakhs]

1. Earnings 538.91 501.38

2. Expenditure in Foreign Currency

a) Term loan interest 29.51 NIL

b) Repayment of Term Loan 80.74

INFORMATION REQUIRED UNDER SECTION 217 (2A) OF THE COMPANIES ACT, 1956.

None of the employees of the Company is in receipt of remuneration, which in the aggregate exceeded the limits prescribed under sub-section (2A) of Section 217 of the Companies Act, 1956, during the year.

DIRECTORS RESPONSIBILITY STATEMENT UNDER SECTION 217 (2AA) OF THE COMPANIES (AMENDMENT ACT) 2000

The Board of Directors Report that:

i) Your Directors have followed the applicable accounting standards, in the preparation of annual

accounts.

(ii) Your Directors have adopted such accounting policies and applied them consistently and made

judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state

of affairs of the Company at the end of the financial year 31st March, 2010 and of the Profit of the Company for that year.

(iii) Your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities and

(iv) Your Directors have prepared the annual accounts on a going concern basis.

DEPOSITS

Your Company has neither invited nor accepted any fixed deposits from the public as per the provisions of Section 58A of the Companies Act, 1956 during the year.

DIRECTORS

Sri.P.Ganesan and Dr.Namasivayam Karthikeyan are retiring by rotation at the forthcoming Annual General Meeting and being eligible for re-election, offer themselves for re-appointment.

AUDITORS

M/s. P.S.Krishnan & Co., Companys Auditors are to retire at the ensuing Annual General Meeting and are eligible for reappointment.

BANKERS

Bank of Bahrain & Kuwait BSC Hyderabad & Mumbai and AXIS Bank, Coimbatore & Tirupur Branches State Bank of India, Tirupur, Union Bank of India, Coonoor and ING Vysya Bank, Tirupur to continue to be the bankers to the Company and your Directors place on record their appreciation for their services.

ACKNOWLEDGEMENT

Your Directors would like to express their sincere appreciation and gratitude for the cooperation and assistance from its shareholders, bankers, regulatory bodies and other business constituents during the year under review.

Your Directors also wish to place on record their deep sense of appreciation for the contribution and commitments displayed by Executives, Staff and Employees of the Company.

For and on behalf of the Board

Place : Tirupur R.V.E. Venkatachalam

Date : 23.07.2010 Chairman

 
Subscribe now to get personal finance updates in your inbox!