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Aruna Hotels Ltd.

BSE: 500016 Sector: Services
NSE: ARUNASUGAR ISIN Code: INE957C01019
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Aruna Hotels Ltd. (ARUNASUGAR) - Director Report

Company director report

ARUNA HOTELS LIMITED ANNUAL REPORT 2007-2008 DIRECTORS' REPORT Your Directors have pleasure in presenting their Forty Sixth Annual Report, together with the Audited Accounts of the Company for the financial year 2007/2008 consisting of 12 months from 01-04-2007 to 31-03-2008. FINANCIAL RESULTS: During this financial year, your Company made a turnover of Rs. 703.45 lakhs including other income, and earned cash profit of Rs.49.82 lakhs. However, after providing for a sum of Rs. 137.68 lakhs towards depreciation and a sum of Rs. 3.25 lakhs towards Fringe Benefit Tax, there was a net loss of Rs.91.11 lakhs only. Rs. in lakhs 2007-08 2006-07 Gross Sales 573.39 758.28 Otherincome 130.05 114.76 Total Income 703.45 873.04 Less: - Mfg. & Other - Expenses 556.48 645.86 - Financial Charges 97.14 83.33 - Total Expenditure 653.62 729.19 Cash Profit 49.82 143.85 Less: Depreciation 137.68 131.33 Profit before Tax -87.86 12.52 Less: - Deferred Revenue - Fringe Benefit Tax 3.25 3.10 - Provision for tax 0.00 1.42 3.25 4.52 Net Profit / Loss (-) -91.11 8.00 DIVIDEND: Considering the financial results of the Company under review, the Board of Directors could not consider payment of any dividend to the shareholders. REVIEW OF OPERATIONS: HOTEL DIVISION:- During the year under review, the Hotel Division achieved an average occupancy of 33% and an ARR of Rs.2171/-. In order to take full advantage of the ongoing boom in the Hotel industry, we have finalized a renovation and modernization plan for our hotel. The total requirement of funds towards cost of renovation, acquisition of one additional floor in Annexe Building and augmentation of long-term working capital, has been assessed as Rs. 12.00 crores. Our Bankers, Punjab National Bank, have sanctionec' a term loan of Rs.16.50 crores on the condition that we should bring in Rs.5.50 crores as mairgin money. We have commenced the renovation work and we expect to complete the same by January 2009. Meanwhile, we shave entered into an arrangement with Fortune Park Hotels Limited, a wholly owned subsidiary of ITC Hotels Ltd., for branding, managing and marketing of our hotel. CURRENT YEAR'S PROSPECTS: The prospects of hotel industry in the country as a whole would continue to be exciting because of the overall improvement in the economic scenario and the various steps being daken by both the Central and State Government to give an impetus to the tourism industry. In Chennai city, particularly, the scenario is bright due to the boom in the various sectors such as IT, ITES, Automobile, Healthcare, etc. As already stated, the implementation of renovation of the Hotel and the arrangement with Fortune Park Hotels Limited for branding, marketing and managing the Hotel would help us also reap the benefits of the prevailing boom in the industry. FIXED DEPOSITS: As on 31-03-2008, no amount due to fixed deposit holders remained unclaimed. BOARD OF DIRECTORS: In accordance with the provisions of Companies Act, 1956 and the Articles of Association'of the company, Mr. M. Uttam Reddi retires by rotation at the 4611 Annual General Meeting and, being eligible, offers himself for re- appointment. Mr. T.K. Roy, who was the nominee director of General Insurance Corporation of India resigned from the Board of Directors and his resignation was accepted effective from 28.01.08. Mr. Kamal Babbar, who was appointed as an additional Director on 28.01.2008- would be holding office up to the date of this annual general meeting. The proposal to appoint him as a Director under the provisions of Sections 255, 256 & 257 of the Companies Act, 1956 is being placed before the Members for their approval. It is also proposed to appoint him as a wholetime director and this proposal is also being places before the Members for their approval. AUDITORS At the Annual General Meeting, the members have to appoint Auditors for the period from the conclusion of the 46th AGM till the conclusion of the 47th AGM. M/s. S. Viswanathan, Chartered Accountants, Chennai-600 006, the retiring Audtors are eligible for re-appointment and they confirmed that their re-appointment, if made, will be within the limits specified under Sectior 224 (1-B) of the Companies Act, 1956. CORPORATE GOVERNANCE: A report on Corporate Governance including Auditors' Certificate on compliance with the conditions of Corporate Governance under Clause 49 of the listing agreement is furnished with the Annual Report. BOARD COMMITTEES: The Company has two Board Committees:- Audit Committee and Investors' Grievances Committee, to assist the Board of Directors in effective discharge of its responsibilities. STATUTORY PARTICULARS: There were no employees in receipt of remuneration in excess of the limit specified in Section 217 (2-A) of the Companies Act, 1956. Particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo, have been given in Annexure-I. DIRECTORS' RESPONSIBILITY STATEMENT: Your Directors confirm: That in preparation of the annual Accounts, the applicable accounting standards have been followed along with proper explanation. That the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended on 31st March 2008 and of the loss or the Company for that year. That the Directors had taken proper and sufficient care for maintenance of adequate accounting records for the year ended 31st March 2008 in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for prevention of fraud and other irregularities. That the Directors had prepared the Annual Accounts on an ongoing basis. ACKNOWLEDGEMENT: Your Directors wish to take the opportunity to thank the Central & State Governments and Punjab National Bank for the help and support extended by them. Thanks are also due to our patrons for their continued patronage and the vendors for their co-operation. Your Directors also wish to thank the Members for the continued confidence they repose in the Management and the Employees for their sincere services and co-operation. BY ORDER OF THE BOARD For Aruna Hotels Limited Date : 01.07.2008 Dr. B.S. Adityan Place: Chennai-600 034 Chairman ANNEXURE -1 TO DIRECTORS' REPORT FORM A DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY/ ENERGY CONSERVATION: A POWER FUEL CONSUMPTION: CURRENT PREVIOUS YEAR YEAR 2007-08 2006-07 1 ELECTRICITY: a) Purchased Units 000 KWH 2415870 2592262 Amount Rs.in lakhs 157.23 167.14 Rate / Unit Rs. 6.51 6.48 b) Own Generation: i) Through Diesel Generator Units 000 KWH 11675 25945 Diesel oil bought 6380 16352 Price of diesel oil bought 215643 356468 Units per litre of diesel oil KWH 1.83 1.59 Cost / Unit Rs. 33.80 21.80 2 Coal Nil Nil 3 Furnace Oil: Quantity KL Nil Nil Total Amount Rs. in lakhs Average Rats Rs. 4 Others/Internal Generation Quantity (Agricultural Wastage) 000 MTS Nil Nil Total Amount Rs. in lakhs Nil Nil Average Rate Rs. Nil Nil B CONSUMPTION PER UNIT OF PRODUCTION: Not applicable, since no production is carried out in the Hotel, - II RESEARCH & DEVELOPMENT Nil III TECHNOLOGYABSORPTION & INNOVATGION Nil IV FOREIGN EXCHANGE EARNED & USED 2007-08 2006-07 1. Foreign Exchange Earned 0.02 7.72 2. Foreign Exchange used Nil Nil MANAGEMENT DISCUSSION & ANALYSIS REPORT 1. INDUSTRY STRUCTURE AND OUTLOOK: The Hotel Industry in India has been witnessing a boom for the last few years, thanks to the thriving economy and increased commercial and polities importance of the Country. The various steps taken by the Government to give a boost to the Tourism industry and the opening of aviation industry have given added fillip to the Hotel Industry. One unique feature of this development is the appreciable increase in the number of domestic travelers driven by rising middle class with increased disposable incomes. 2. SWOT ANALYSIS OF THE INDUSTRY: The strong point for the development of the Hotel Industry as a whole is the support being extended by both Central and State Governments. Another strong point has been increase in the share of India in international tourism and hospitality market, and this is expected to continue for quite some time. Lack of good infrastructure such as good roads, continuous power supply, comfortable modes of transport, etc. constitute a weakness for the industry. The development of various sectors of the economy and the increase in the number of both domestic and international tourists offer tremendous opportunities for the Hotel Industry. Increase in terrorist activities, which could have an impact on the international tourist inflow and rising inflation, which could have an impact on the domestic tourist traffic, are among the major threats. 3. SWOT ANALYSIS OF OUR HOTEL: Location of our hotel, availability of ample space for parking a good number of cars and the large size of our rooms are our strengths. Non-renovation of our hotel has been our major weakness, and to remove this, the Company has already undertaken a total renovation of the Hotel. Chennai, the southern gateway of India, is witnessing a surging development in various sectors such as- IT, ITES, Automobiles, Healthcare, Eduation, etc. This offers tremendous opportunities for the Hotel Industry in Chennai including our hotel. The competition is expected to increase from a large number of hotel projects under implementation and from increasing number of serviced apartments and posh guest- houses.

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