The Directors hereby present the Forty Fifth Annual Report of the Company together withthe Financial Statement (Audited Statements of Account) for the year ended 31st March2016.
OPERATING AND FINANCIAL RESULTS
| ||(Rs. Lacs) ||(Rs. Lacs) |
| ||2015-16 ||2014-15 |
|Income ||5100.20 ||4824.06 |
|Gross Profit for the year ||1553.03 ||1693.01 |
|Less: Depreciation ||266.46 ||267.23 |
|Less: Interest ||- ||- |
|Profit before tax ||1286.57 ||1425.78 |
|Less: Provision for tax: || || |
|- Current Tax ||336.40 ||445.84 |
|-Deferred Tax ||538.18 ||57.77 |
|- Minimum Alternate Tax credit ||(269.44) ||- |
|- Earlier years Taxes ||(147.13) ||(0.45) |
|Net Profit ||828.56 ||922.62 |
|Add: Balance brought forward from previous year ||2622.49 ||2012.80 |
|Balance available for appropriations ||3451.05 ||2935.42 |
|APPROPRIATIONS : || || |
|(a) A dividend @ 200 % i.e. Rs.20/- per equity share (previous year 200% i.e. Rs. 20/- per equity share) on 1300000 Equity Shares which if approved by the Shareholders at the Annual General Meeting to be held on Friday August 12 2016 will be paid out of the provision for dividend ||260.00 ||260.00 |
|(b) Tax on Dividend ||52.93 ||52.93 |
|(c) Amount transferred to General Reserve || || |
|(d) Balance carried forward ||3138.12 ||2622.49 |
The Company registered 6% growth in revenues as compared to previous year. While roomrevenues were 10% higher than the previous year the F&B revenues decreased by 1 %.
The newly opened Gateway Hotel at Gondia Maharashtra in 2014 completed its first fullfinancial year of operations and registered increase in revenues. The directors hope thatthe Hotel's financial performance will continue to improve and the Hotel will be wellreceived in the market.
Owing to decrease in F&B revenues and increase in operating expenses the profitbefore taxes for the year was at Rs. 1287 Lacs i.e. 10% lower than the previous year.Your directors hope that the Company will register superior financial performance in thenext financial year i.e.2016-17.
Your Directors recommend the payment of dividend @200% (previous year dividend @ 200%)per equity share involving distribution of Rs. 260.00 lacs.
PARTICULARS OF EMPLOYEES
The Company had no employees during the year who were in receipt of remunerationaggregating to:
(a) Not less than Rs. 60.00 lacs for the year if employed throughout the financialyear or
(b) Not less than Rs. 5.00 lacs per month if employed for part ofthe financial year.
In accordance with the Companies Act 2013 and the Articles of Association of theCompany Mr. Rakesh Sarna Director of the Company is liable to retire by rotation andbeing eligible seeks reappointment.
KEY MANAGERIAL PERSONNEL
During the year under report Mr. Ahmar Siddiqui Chief Executive Officer (CEO) and Mr.P K Bhatia Company Secretary of the Company resigned w.e.f. June 29 2015 and March 282016 respectively. They were replaced by Mr. Ashwani Anand as CEO and Ms. Vanika Mahajanas the Company Secretary of the Company w.e.f. July 23 2015 and May 3 2016 respectively.In terms of Section 203 of Companies Act 2013 your Company has Mr. Ashwani Anand as theChief Executive Officer (CEO) Mr. Ravi Sharma as the Chief Financial Officer (CFO) andMs. Vanika Mahajan as the Company Secretary of the Company as the Key ManagerialPersonnel ofthe Company.
INFORMATION PURSUANT TO RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OFMANAGERIAL PERSONNEL) RULES 2014
The information pursuant to Rule 5 of The Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is given in Annexure 1.
The Company does not have any subsidiary company.
The Indian Hotels Company Limited (IHCL) is the Ultimate Holding Company of the Company
NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR
The Company had convened 4 (Four) Board Meetings during the financial year underreport.
AUDIT COMMITTEE AND VIGIL MECHANISM
In terms of Section 177 of the Companies Act 2013 your Company has an Audit Committeewith Mr. B.L. Passi Mr. Shriraman Mr. Rohit Khosla and Mrs. Rukmani Devi as its members.
Your Company has a Policy on vigil mechanism/ Whistleblower Policy to provide amechanism for the Directors and employees to report actual or suspected fraud or violationof your CompanyRs.s Code of Conduct. The provisions of this Policy are in line with theprovisions of Section 177 (9) of the Act and Clause 22 of the SEBI Listing Regulations.The Whistle Blower Policy can be accessed on your Company's websitewwwBenareshotelslimited.com.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
In terms of Section 135 of the Companies Act 2013 (the Act) your Company has theCorporate Social Responsibility Committee (CSR Committee) of the Board with Dr. AnantNarain Singh Mr. D.R. Kaarthikeyan and Mr. Rohit Khosla as the members of the Committee.The brief outline of the Corporate Social Responsibility (CSR) Policy of your Company andthe initiatives undertaken by your Company on CSR activities during the year are set outin "Annexure 2" of this report in the format prescribed in the Companies(Corporate Social Responsibility Policy) Rules 2014. The policy is available on thewebsite of your Company www.benareshotelslimited.com.
NOMINATION AND REMUNERATION COMMITTEE
In terms of Section 178(1) of the Companies Act 2013 (the Act) the Company has aNomination and Remuneration Committee (NRC) of the Board with Dr. Anant Narain Singh Mrs.Rukmani Devi and Mr. Shriraman as the members of the Committee. The Committee met thriceduring the year on 7th May 201523rd July 2015 and 15th March 2016.
In terms of the requirement of section 178(3) and Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 the Company hasa policy relating to the remuneration for the directors KMPs and other employees. The keyfeatures of the said policy are:
- Overall remuneration (sitting fees and Commission) should be reasonable andsufficient to attract retain and motivate directors aligned to the requirements of theCompany
- Overall remuneration practices should be consistent with recognized best practices
- Within the parameters prescribed under the law the payment of sitting fees andcommission will be recommended by NRC and approved by the Board.
- The aggregate commission payable to the Directors will be recommended by NRC to theBoard based on company performance profits return to investors shareholder valuecreation and any other significant qualitative parameters as may be decided by the Board.
- The quantum of commission for each director shall be recommended by NRC to the Boardbased upon the outcome of the evaluation process drive by various factors includingattendance and time spent in the Board and committee meetings individual contributions atthe meetings and contributions made by the Directors other than in meetings.
INTERNAL COMPLAINTS COMMITTEE
The Company has an 'Internal Complaints Committee' under The Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 for the prevention andredressal of complaints of sexual harassment and for the matters concerned connected orincidental thereto.
During the financial year 2015-16 the Company received one complaint from anindustrial trainee at The Gateway Hotel Ganges - Varanasi on sexual harassment. TheInvestigation for the same has been completed and accused employee has since resigned fromthe Company.
DECLARATION BY INDEPENDENT DIRECTORS
In terms of Section 149(7) of the Companies Act 2013 (the Act) the IndependentDirectors have given a declaration that they meet the criteria of independence as perSection 149(6) of the Act.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
In addition to the Corporate Governance Guidelines discussed and adopted by the Boardwhich inter alia included the role rights and responsibilities of independentdirectors the Company has an appropriate ongoing familiarisation programme with respectto the roles rights responsibilities in the Company nature of the industry in which theCompany operates business model of the Company etc. The details of the familiarisationprogramme are disclosed on the Company's website under the weblink:www.benareshotelslimited.com.
LOANS GUARANTEES AND INVESTMENTS MADE UNDER SECTION 186
During the year under report the Company has placed/renewed a sum of Rs. 4.00 croresas short term Inter Corporate Deposits with bodies corporate within the limits prescribedunder Section 186 of the Companies Act 2013.
In terms of Section 204(1) of the Companies Act 2013 M/s A K Bhayana &Associates Company Secretaries were appointed by the Company as the Secretarial Auditor.The secretarial audit report as obtained from them is attached to this Report as Annexure3. The report is self explanatory and does not call for any comments.
The extract of Annual Return pursuant to the provisions of Section 92 read with Rule 12of the Companies (Management and Administration) Rules 2014 is furnished in Annexure 4 tothis Report.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All related party transactions that were entered into during the financial year underreport were at armRs.s length basis and in the ordinary course of business.
The Company has developed a Related Party Transactions Framework under the Policy onRelated Party Transactions which policy is also available at CompanyRs.s websitewww.benareshotelslimited.com for the purpose of identification and monitoring of suchtransactions. Prior omnibus approval of the Board is obtained for transactions which areof a foreseen and repetitive nature. The transactions entered into pursuant to the omnibusapproval so granted and a statement giving details of all the related party transactionsis placed before the Audit Committee for its approval on a quarterly basis.
Other than transactions entered into in the normal course of business the Company hasnot entered into any materially significant related party transactions during the yearwhich could have a potential conflict of interest between the Company and its PromotersDirectors Management and/or relatives save and except that the transaction with theIndian Hotels Co. Ltd. the ultimate holding company during the year exceeded 10% of theannual gross turnover of the Company for the previous year the approval for which wastaken from the shareholders by way of a special resolution at the AGM held on August 212015.
As required by Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 the report on Management Discussion andAnalysis Corporate Governance as well as the Auditors' Certificate regarding complianceof conditions of Corporate Governance forms part of the Annual Report.
During the year under review there were no significant and material orders passed bythe regulators or courts or tribunals impacting the going concern status and the Company'sOperations.
Pursuant to the provisions of Section 134 of the Act your Company has a RiskManagement Policy to identify and evaluate business risks and opportunities. Thisframework seeks to create transparency minimize adverse impact on business objective andenhance the Company's competitive advantage. The risk framework defines the riskmanagement approach across the enterprise at various levels including documentation andreporting.
The framework enables risks to be appropriately rated and graded in accordance withtheir potential impact and likelihood. The two key components of risks are the probability(likelihood) of occurrence and the impact (consequence) of occurrence if the risk occurs.
Risk is analyzed by combining estimates of probability and impact in the context ofexisting control measures.
Existing control measures are evaluated against Critical Success Factors (CSFs) and KeyPerformance Indicators (KPIs) identified for those specific controls. Guiding principlesto determine the risk consequence (impact) probability of occurrence (likelihood factor)and mitigation plan effectiveness have been set out in Risk Register.
The Key business risks identified by the Company and its mitigation plans are as under:
Strategy Risks: Risk of erosion of market dominance by losing market share whichoriginates from the choices we make on markets resources and delivery models that canpotentially impact our competitive advantage in the medium and long term. Loss of F&Battractiveness on account of pricing/design/ competition.
Industry and Economic Risks: High dependence on US Europe and East Asian markets forforeign tourists arrival. The economic situation in these parts of the world has apotential impact on the entire tourism industry. Risks arising from the development in theregulatory environment that could impact the Hotel/Tourism Industry. Risks due togeographic concentration of business primarily in the city of Varanasi.
Operational Risks: High dependence on several technology platforms & systems tooperate business both Internal & External. Cost overruns/delays in completion ofprojects. Loss of critical/sensitive data due to leakage/loss/hacking. Increase in fixedcost elements beyond entity control. Highly litigious nature of the industry/adverseconsequences of litigation against company. Non-renewal of key licenses and NOCs.
Safety and Security Risks: Risks arising from factors such as Fire AccidentsElectricity mishaps etc. Business interruption on account of natural calamities/ acts ofGod/riots & strikes/political instability and terrorism.
Resources: Risks arising from sub-optimal succession planning and retention of talentpool. Inappropriate utilization of financial capital talent and infrastructure.
KEY RISKMANAGEMENT PRACTICES
Risk Identification and Impact Assessment: Risk assessment enables risks to beappropriately rated and graded in accordance with their potential impact and likelihood.The two key components of risks are the probability (likelihood) of occurrence and theimpact (consequence) if the risk occurs. Risk is analyzed by combining estimates ofprobability and impact in the context of existing control measures and included in theRisk Register. Apart from risk register internal audit findings also provide input forrisk identification and assessment which is carried out on an annual basis across allfunctions.
Operational risks are assessed primarily on three dimensions namely strength ofunderlying controls compliance to policies and business procedure effectiveness.
Risk reporting and Disclosure: Risks to the achievement of key business objectivestrend line of risk level impact and mitigation actions are reported risk level impactand mitigation action are reported and discussed. The escalation of risk information istimely accurate and gives complete coverage of the key risks to support managementdecision making at all levels.
Risk Mitigation and Monitoring: Each Manager creates a risk mitigation plan byemploying an effective system of internal controls & checks and balances to mitigatethe risks in the most effective manner including designating responsibilities andproviding for upward and onward communication of any significant issues that may meritattention or escalation. All employees actively engage in risk management within their ownareas of responsibility.
Integration with Strategy and Business Planning:
Identified risks to the business objectives in the near term medium term and long termare used as one of the key inputs for the development of strategy and annual businessplan. Key strategic initiatives are identified to mitigate specific risk.
At the Annual General Meeting the Members will be required to appoint the Auditors forthe current year and fix their remuneration.
CONSERVATION OF ENERGY
The Company has always been conscious of the need for conservation of energy and hasbeen sensitive in making progress towards this end. The Company has implemented followingenergy conservation initiatives at the hotel:
Installation of LED lights in lobby public areas and corridors in place of CFLlights.
Replacing oil based hot water generation with heat pump that also generatesuseful chilled water concurrently and reduces heat loss.
Converting primary and secondary pumping system into single variable primarysystem resulting in savings in electricity consumption.
Improving power factor and reducing line losses by installing suitablecapacitors.
The activities of the Company do not involve the absorption of technology as envisagedto be furnished pursuant to The Companies (Accounts) Rules 2014.
FOREIGN EXCHANGE EARNINGS AND OUTGO
In terms of the provisions of Section 134(3)(f)(m) of the Companies Act 2013 readwith Rule 8(3)(C) of The Companies (Accounts) Rules 2014 the Foreign Exchange earned interms of actual inflows during the year and the Foreign Exchange outgo during the year interms of actual outflows is furnished in Notes on Accounts (Refer Note 27 and 28 in Notesto Financial Statements).
The Board of Directors has made the annual evaluation of its own performance and thatof its committees and individual directors based on the review conducted by the Nomination& Remuneration Committee by assessing the questionnaires furnished by thedirectors/members of various committees in respect of their self assessment as well as theassessment of the Board/Committees followed by the discussions with the directors/ membersof the Committees.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope and authority of the Internal Audit function iswell defined in the organization. To maintain its objectivity and independence theInternal Audit function reports to the Chairman of the Audit Committee of the Board.
The Internal Audit Department monitors and evaluates the efficacy and adequacy ofinternal control systems in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of InternalAudit function process owners undertake corrective action in their respective areas andthereby strengthen the controls. Significant audit observations and corrective actionssuggested are presented to the Audit Committee of the Board.
DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors including audit of internal financial controls over financialreporting by the statutory auditor and the reviews performed by Management and therelevant Board Committees including the Audit Committee the Board is of the opinion thatthe Company's internal financial controls were adequate and effective during the financialyear 2015-16
Accordingly pursuant to Section 134(5) of the Companies Act 2013 the Board ofDirectors to the best of their knowledge and ability confirm that:
a) In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
b) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2016 and of the profit ofthe Company for that period;
c) The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) The Directors have prepared the annual accounts on a going concern basis;
e) The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
f) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
The Board desires to place on record its appreciation of the services rendered by theemployees of the Company during the year under review.
On behalf of the Board of Directors
Dr. Anant Narain Singh
Place : Mumbai
Date : 3rd May 2016