ARUNA HOTELS LIMITED
ANNUAL REPORT 2007-2008
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.
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
Gross Sales 573.39 758.28
Otherincome 130.05 114.76
Total Income 703.45 873.04
- 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
- Deferred Revenue
- Fringe Benefit Tax 3.25 3.10
- Provision for tax 0.00 1.42
Net Profit / Loss (-) -91.11 8.00
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:
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
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.
As on 31-03-2008, no amount due to fixed deposit holders remained
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-
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.
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.
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.
The Company has two Board Committees:-
Audit Committee and Investors' Grievances Committee, to assist the Board of
Directors in effective discharge of its responsibilities.
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
That the Directors had prepared the Annual Accounts on an ongoing basis.
Your Directors wish to take the opportunity to thank the Central & State
Governments and Punjab National Bank for the help and support extended by
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
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
DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY/ ENERGY
A POWER FUEL CONSUMPTION:
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
Lack of good infrastructure such as good roads, continuous power supply,
comfortable modes of transport, etc. constitute a weakness for the
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.