TO THE MEMBERS OF CHL LIMITED
Your Directors have pleasure in presenting the 37th Annual Report of the Company alongwith the Audited Financial Statements for the Financial Year ended 31st March 2016.
1. FINANCIAL RESULTS AND OPERATIONAL PERFORMANCE
|S. No. Particulars ||2015-16 ||2014-15 |
|1. Gross Income ||6066.16 ||5852.54 |
|2. Less: Operating Expenses ||4930.45 ||4987.92 |
|3. Operating Profit before Depreciation and Finance Cost ||1135.71 ||864.62 |
|4. Less: Depreciation & Amortization expense ||211.97 ||412.17 |
|5. Less: Finance Cost ||648.50 ||404.90 |
|6. Earnings before Tax prior period and extra ordinary items ||275.24 ||47.55 |
|7. Prior Period Adjustment of tax ||- ||11.98 |
|8. Extra Ordinary Items ||(32.10) ||- |
|9. Profit before Tax ||243.14 ||59.53 |
|10. Less : Net Tax Expenses ||138.49 ||2.36 |
|11. Profit after Tax ||104.65 ||57.17 |
Sales and other incomes for the year under review at Rs. 6066.16 Lacs are higher by3.65% than that of the previous years sales and other income at Rs.5852.54 lacs.
Operating profit before depreciation interest and tax at Rs. 1135.71 Lacs for the yearunder review is higher by 31.35% as compared to Rs. 864.62 Lacs for the previous year.
Net Profit after providing tax for the year under review is Rs. 104.65 Lacs as comparedto Rs 57.17 Lacs for the previous year thus higher by 83% over the previous year.
2. ECONOMIC ENVIRONMENT AND BUSINESS REVIEW
The Indian tourism and hospitality industry has emerged as one of the key drivers ofgrowth among the service sectors in India. Tourism has now become a significant industryin India. It is an employment generator a significant source of foreign exchange for thecountry. Tourism in India is the third largest foreign exchange earner of the countryafter gems jewellery and readymade garments. The booming tourism industry has had acascading effect on the hospitality sector with an increase in the occupancy ratios andaverage room rates.
The long term outlook for the Indian hospitality business continues to be positiveboth for the business and leisure segments with the potential for economic growth. Thetourism and hospitality sector is among the top 15 sectors in India to attract the highestForeign Direct Investment (FDI).
The Indian Government has also taken several steps to make India a global tourism hub.The Government has initiated 'Project Mausam under which it has proposed toestablish cross cultural linkages and to revive historic maritime cultural and economicties with 39 Indian Ocean countries. Further the Government plans to cover 150 countriesunder e-visa scheme by the end of the year. Recently the Indian Government has alsoreleased a fresh category of visa i.e. the Medical visa (M visa) to encourage medicaltourism in India. The hotel industry in India thrives largely due to the growth in tourismand travel. Due to the increase in tourism with rising foreign and domestic touristshotel sector is bound to grow.
India after China is considered as one of the most lucrative hotel markets in theworld. The Indian economy has certainly performed creditably compared to most developedand emerging markets of the world in the past years.
Your Company due to inadequacy of profit is not in a position to declare Dividend forthe Financial Year 2015-16.
Mr. A. K. Malhotra (00676603) and Ms. Kajal Malhotra (01319170) Directors who retire byrotation and being eligible have offered themselves for re-appointment. The Boardrecommends their appointments.
Mr. Alkesh Tacker (00513286) has been appointed as an Additional Director w.e.f.15.03.2016 pursuant to Section 149(1) of the Companies Act 2013. He has rich and vastexperience in varied business fields. Pursuant to the Section 161(1) of the Companies Act2013 Mr. Alkesh Tacker holds office only upto the date of the forthcoming Annual GeneralMeeting of the Company and is eligible for appointment as an Independent Director. TheBoard recommends his appointment.
Mr. O.P. Bajaj (00570940) and Mr. D.V. Malhotra (00072040) resigned fromthe Board w.e.f. 16.11.2015. The Board placed on record its appreciation for theirvaluable services rendered by them.
Pursuant to the provisions of Section 203 of the Act the appointment of Dr. L. K.Malhotra Chairman & Managing Director Mr. Luv Malhotra Joint Managing Director Mr.Gagan Malhotra Executive Director Mr. N. K. Goel Vice President (Finance)/ChiefFinancial Officer and Mr. G. J. Varadarajan Company Secretary are formalized as the KeyManagerial Personnel of the Company.
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and provisionsof the Listing Regulations. The profile of the Independent Directors forms part of theCorporate Governance Report.
5. MANAGEMENT DISCUSSION AND ANALYSIS
As required under the Listing Regulation with the Stock Exchange the ManagementDiscussion and Analysis Report is enclosed as a part of the Report.
6. RIGHT ISSUE
In the Board Meeting held on 09.02.2016 a "Share Issuance Committee" wasformed to augment fund resources. The Committee has decided to bring out a Right Issue inthe ratio and at a premium in consultation with the Merchant Banker.
7. SUBSIDIARY COMPANY
Our subsidiary CHL International a Joint Venture company in Dushanbe Tajikistan hasdeveloped a Five-Star Hotel known as the Sheraton at Dushanbe the capital of Tajikistan.This project has been financed by the Export Import Bank of India by way of a Term Loanaggregating to USD 32.50 million. The hotel has been in operation since 2015.
Shri Narendra Modi our Honourable Prime Minister visited Dushanbe in July 2015 forHigh-Level talks with the President of Tajikistan Mr. Emomali Rahmon. The main spheres oftalks concerned defence cooperation connectivity investment security energy andagriculture. Your Chairman & Managing Director Dr. L.K. Malhotra and your ExecutiveDirector Mr. Gagan Malhotra were also present to welcome Shri Modi to Dushanbe. The PrimeMinister appreciated the efforts undertaken by your company towards the construction anddevelopment of the hotel project as a visible sign of Indian investment in Tajikistan.Smt. Sushma Swaraj our erstwhile External Affairs Minister had also visited the hotelwhile attending the 13th Annual summit of the Shanghai Cooperation organizations held inDushanbe.
There are no Associate Companies within the meaning of Section 2(6) of the CompaniesAct 2013 ("Act"). Further there has been no material change in the nature ofbusiness of the subsidiary.
In terms of proviso to sub section (3) of Section 129 of the Act the salient featuresof the financial statement of the subsidiary is set out in the prescribed form AOC-1 whichforms part of the Annual Report as Annexure B.
Performance and financial position of the subsidiary company is separately given in theAnnual Report.
8. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace in linewith the provisions of Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 and the rules framed there under. A complaint received in theprevious year was settled by the Internal Complaints Committee. However the partiespreferred to go to Court. During the financial year 2015-16 no complaint was received onsexual harassment.
9. WHISTLE BLOWER /VIGIL MECHANISM
In pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for Directors and employees to report genuine concerns has beenestablished. The Vigil Mechanism Policy has been uploaded on the website of the Company atwww.chl.co.in under investors/ Whistle Blower Policy link.
10. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 is annexedherewith as Annexure- A.
11. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.
12. CONSOLIDATION OF FINANACIAL STATEMENT
As stipulated by regulation 33 of the Listing Regulations the Consolidated FinancialStatements have been prepared in accordance with the applicable Accounting Standards. TheAudited Consolidated Financial Statements together with the Auditors Report formspart of the Annual Report.
Pursuant to Section 129(3) of the Companies Act 2013 a statement containing thesalient features of the Financial Statements of the subsidiary in the prescribed FormAOC-1 is annexed to this report at Annexure B.
The Annual Accounts of the Subsidiary shall be kept for inspection by shareholders inthe head office of the holding company and the subsidiary company.
13. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement of Section 134(5) of the Act and based on therepresentations received from the management the directors hereby confirm that:
i. in the preparation of the annual accounts for the Financial Year 2015-16 theapplicable accounting standards have been followed and there is no material departure;
ii. they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the Financial year and of the profitof the Company for the Financial year;
iii. they have taken proper and sufficient care to the best of their knowledge andability for the maintenance of adequate accounting records in accordance with theprovisions of the Act. They confirm that there are adequate systems and controls forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and operating properly; and
vi. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
14. CORPORATE GOVERNANCE
Your Company has taken adequate steps to adhere all the stipulations laid down in theListing Regulation. A report on the Corporate Governance along with certificate fromPracticing Company Secretary confirming the Compliance is included as part of the report.
15. LISTING WITH STOCK EXCHANGE
The Company confirms that it has paid the Annual Listing Fee for the year 2016-17 toBombay Stock Exchange Limited (BSE) where the Companys Shares are listed.
16. PARTICULARS OF EMPLOYEES
Employees of the Company drawing remuneration above the limits specified under Section197(12) of the Companies Act 2013 read rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are given below:
(A) Personnel who are in receipt of remuneration aggregating not less than Rs.6000000per annum and employed throughout the financial year
|Name ||Dr. L. K. Malhotra |
|Designation ||Chairman & Managing Director |
|Remuneration ||Rs. 84 Lacs Per Annum |
|Nature of Employment ||Permanent and subject to the provisions of Companies Act 2013 |
|Qualification ||Honorary Ph. D |
|Experience ||51 years |
|Date of Commencement of Present employment ||25.10.1980 |
|Age ||72 Years |
|Previous Employment ||M/s A. N. Malhotra & Sons Kuwait |
|% of Shares held in the company ||3.75 |
|Whether related to any director ||Related to |
| ||Mr. Luv Malhotra Joint Managing Director |
| ||Mr. A. K. Malhotra |
| ||Ms. Kajal Malhotra |
17. DEMATERIALISATION OF SHARES
The total paid up equity share capital of the Company is Rs. 109636580 comprising of54818290 equity shares of Rs. 21- each. 50043870 (91.29%) EquityShares of the Company stand demateriaiized and balance 4774420 (8.71 %) equity sharesare still in physical form.
Auditors observations are suitably explained in the Notes to the Accounts and areself explanatory.
Pursuant to the provisions of Section 139 of the Act and the rules framed thereunderM/s G Rai & Co. Chartered Accountants were appointed as Statutory Auditors of theCompany from the conclusion of the 35th Annual General Meeting (AGM) of the Company heldon 29th September 2014 till the conclusion of the 38th AGM to be held in the year 2017subject to ratification of their appointment at every AGM. M/s G Rai & Co. haveexpressed their willingness to their confirmation of appointment as the Statutory Auditorsof the Company and has furnished a certificate of their eligibility and consent underSection 141 of the Companies Act 2013 and the Rules framed there under. In terms of theListing Agreement/Regulations the Auditors have confirmed that they hold a validcertificate issued by the Peer Review Board of the ICAI. His appointment is proposed forratification in the ensuing Annual General Meeting.
M/s Gulvardhan Malik & Co. Chartered Accountants have been conducting periodicInternal Audit of all the operations of the Company. Internal Audit Reports are regularlyplaced before the Audit Committee for their review and for recommendation to the Board.
According to the provision of section 204 of the Companies Act 2013 read with Rule 9of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 M/sA. Chadha & Associates. Company Secretaries is continuing as Secretarial Auditor ofthe Company.
20. REMUNERATION RATIO OF THE DIRECTORS / KEY MANAGERIAL PERSONNEL (KMP) / EMPLOYEES:
The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and Companies(Particulars of Employees) Rules 1975 in respect of employees of the Company andDirectors is furnished hereunder:
|S.No. Name ||Designation ||Remuneration paid in FY 2015-16 ||Remuneration paid in FY 2014-15 ||Increase in remuneration from previous year ||Ratio/ Times per Median of employee remun eration |
|1. Dr. L. K. Malhotra ||Chairman & Managing Director ||84.00 ||84.00 ||Nil ||45.16 |
|2. Mr. Luv Malhotra ||Joint Managing Director ||42.00 ||42.00 ||Nil ||22.58 |
|3. Mr. Gagan Malhotra ||Executive Director ||42.00 ||42.00 ||Nil ||22.58 |
|4. Mr. N. K. Goel ||Vice President(Finance)/CFO ||21.75 ||21.75 ||Nil ||11.69 |
|5. Mr. G. J. Varadarajan ||Company Secretary ||07.86 ||07.49 ||0.37 ||04.23 |
21. INTERNAL CONTROL
The information about internal controls is set out in the Management Discussion $Analysis report which is attached and forms part of this Report.
22. RISK MANAGEMENT
The Risk Management is overseen by the Audit Committee of the Company on a continuousbasis. The Committee oversees Companys process and policies for determining risktolerance and review management's measurement and comparison of overall risk tolerance toestablished levels. Major risks identified by the businesses and functions aresystematically addressed through mitigating actions on a continuous basis.
23. DEPOSIT FROM PUBLIC
The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet. '
24. CORPORATE SOCIAL RESPONSIBILITY (CSR)
As per section 135 and Schedule VII of the Companies Act 2013 the Company is notrequired to constitute a Corporate Social Responsibility Committee and formulate policy asit does not fall within purview of Section 135(1) of the Companies Act 2013.
25. RELATED PARTY TRANSACTIONS
During the year under review there is no related party transaction covered underSection 188(1) of the Companies Act 2013. Other Related party transactions that wereentered during the financial year were on an arms length basis and were in theordinary course of business. There were no materially significant related partytransactions with the Companys Promoters Directors Management or their relativeswhich could have had a potential conflict with the interests of the Company.
The Board of Directors of the Company has on the recommendation of the AuditCommittee adopted a policy to regulate transactions between the Company and its RelatedParties in compliance with the applicable provisions of the Companies Act 2013 theRules there under and the Listing Agreement. This Policy was approved by the Board and hasbeen uploaded on the website of the Company at www.chl.co.in under Related Party Policylink.
26. BOARD EVALUATION
The performance evaluation of the Board its Committees and Individual Directors wasconducted and the same was based on questionnaire and feedback from all the Directors onthe Board as a whole Committees and self-evaluation. Directors who were designated heldseparate discussions with each of the Directors of the Company and obtained their feedbackon overall Board effectiveness as well as each of the other Directors. Based on thequestionnaire and feedback the performance of every Director was evaluated in the meetingof the Nomination and Remuneration Committee (NRC). The Meeting of NRC also reviewedperformance of the Managing Director (qualitative).
A separate meeting of the Independent Directors ("Annual ID meeting") wasconvened which reviewed the performance of the Board (as a whole) the Non-IndependentDirectors and the Chairman & Managing Director. Post the Annual ID Meeting thecollective feedback of each of the Independent Directors was discussed by the Chairman ofthe NRC with the Boards Chairman covering performance of the Board as a whole;performance of the Non-Independent Directors and performance of the Board Chairman.
Some of the key criteria for performance evaluation are as follows - Performanceevaluation of Directors
Attendance at Board or Committee meetings.
Contribution at Board or Committee meetings.
Guidance/support to management outside Board/Committee meetings.
Performance evaluation of Board and Committees
Degree of fulfillment of Key responsibilities
Board structure and composition
Establishment and delineation of responsibilities to committees.
Effectiveness of Board processes information and functioning.
Board culture and dynamics.
Quality of relationship between Board and Management.
Efficacy of communication with external stakeholders.
27. PARTICULARS AS PER SECTION 134(4)(m) OF THE COMPANIES ACT 2013 READ WITH RULE 8 OFTHE COMPANIES (ACCOUNTS) RULES 2014
Conservation of Energy
Energy conservation continues to receive priority attention at all levels. All effortsare made to conserve and optimize use of energy with continuous monitoring improvement inmaintenance and distribution systems and through improved operational techniques. To givethrust on energy conservation "optimum utilization of natural light" isfocused on and energy saving lighting solution such as light emitting diodes and solarpanel and devices such as automated controls and sensors are fitted in wherever necessaryand feasible.
The Company being in the hospitality industry particulars on technological absorptionor expenditure on research and development are not applicable.
Foreign Exchange Earnings and Outgo
During the year under review your Company has earned Rs. 1628.31 Lacs Foreign Exchange(previous year Rs. 1446.46 Lacs) and used foreign exchange to the extent of Rs. 273.94Lacs (previous year Rs. 334.80 Lacs).
Your Directors wish to convey their appreciation to the business associates for theirsupport and contribution during the year. Your Directors would also like to thank CentralGovernment and State Government especially Department of Tourism employees shareholderscustomers suppliers alliance partners and bankers for the continued support given bythem to the Company and their confidence reposed in the management and the Company.
| ||For and on behalf of the Board |
|Place: New Delhi ||Dr. L. K. Malhotra |
|Date: 27th May 2016 ||Chairman & Managing Director |