FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2017
Your Directors submit their Report for the financial year ended 31st March 2017.
The global economy continued to lose pace in 2016 growing by 3.1% compared to 3.4% in2015. The growth in US and the Euro Areas also slowed down and were in the range of 1.6%to 1.7%. However it is anticipated that the global economy will be stronger in 2017 andwill outpace the growth seen in 2015.
The Indian economy too witnessed another challenging year with the real GDP growth at7.1% a significant decline over 2015-16 (7.9%). The Industry and Services sectorsdecelerated further during the year recording the slowest growth over the last few years.However India still remains the fastest growing major economy in the world.
Inflation remained largely within the comfort zone of the RBI during the year. Whilegrowth in Wholesale Price Index (WPI) for 2016-17 stood at 1.7% compared to a decline of3.7% in 2015-16 this was mainly attributable to the base effect of low fuel and commodityprices. Consumer Price Index (CPI) for 2016-17 declined to 4.5% against 4.9% in 2015-16with Core CPI remaining stable at 4.7% in 2016-17 (4.6% in 2015-16).
During the year under review your Company earned license fees of Rs. 325.12 lakhs(previous year Rs. 348.53 lakhs). The other income at Rs. 186.67 lakhs showed an increasemainly due to fair valuation of current investments. Pre and post-tax profits declined toRs. 472.48 lakhs and Rs. 386.48 lakhs respectively.
Keeping in view the underlying strength of the business your Directors are pleased torecommend a dividend of Rs. 3.50 per equity share of Rs. 10/- each for the year ended 31stMarch 2017 thereby maintaining last year's dividend and involving a cash outflow of Rs.160 lakhs including Dividend Distribution Tax of Rs. 27 lakhs.
PROFITS DIVIDEND AND SURPLUS
The financial results of your Company summarised are as under:
| ||For the year ended ||For the year ended |
|Profits ||31st March 2017 ||31st March 2016 |
| ||(Rs. ) ||(Rs. ) |
|a. Profit Before Tax ||47247479 ||48659453 |
|b. Tax Expense || || |
|Current Tax ||11972888 ||12225327 |
|Deferred Tax ||(3373581) ||3890240 |
|c. Profit for the year ||38648172 ||32543886 |
|d. Other Comprehensive Income ||- ||- |
|e. Total Comprehensive Income ||38648172 ||32543886 |
|Statement of Retained Earnings || || |
|At the beginning of the year ||173180263 ||156591351 |
|Add: Profit for the year ||38648172 ||32543886 |
|Less: Others Comprehensive Income ||- ||- |
|(Net of Tax) || || |
|Dividend paid including || || |
|Income Tax on Dividend paid ||15954974 ||15954974 |
|At the end of the year ||195873461 ||173180263 |
The operating environment in the hospitality sector remained challenging during theyear. While second half initially indicated signs of pick-up in the Hotels industrycollateral impact on the economy on account of currency crunch limited the recovery.
Your Hotel WelcomHotel Vadodara licensed to ITC Limited recorded an income of Rs.2192.11 lakhs during the year as compared to Rs. 2352.01 lakhs in the previous year. Theoperational performance was impacted as certain projects in the vicinity of the city hadbeen deferred limiting the flow of long staying guests. W hile there was a marginalimprovement in average room rates occupancy remained under pressure as certain propertiesin the city were renovated and rebranded as members of international chains.
The food & beverage segment of your Company's Hotel continues to be a majorstrength. The Peshawri Restaurant and the Welcom Caf Cambay both retained their premiumleadership positions in the respective segments
Your Hotel also targets a continuous reduction in energy and water consumption andenhanced usage of renewable energy sources.
Your Company has filed a writ petition in the Gujarat High Court seeking that theGujarat State Government be directed to take action on your Company's application to havethe leasehold land of the Hotel converted to freehold and transferred to your Company asper the existing Government policy in this regard. The Honourable High Court passed anorder of status quo dated 24th December 2014 to be maintained in the matter and the writpetition is pending.
SUBSIDIARIES ASSOCIATES AND JOINT VENTURES
The Company does not have any subsidiary associate or joint venture.
INTERNAL FINANCIAL CONTROLS
Your Company's Financial Statements are prepared on the basis of the SignificantAccounting Policies that are carefully selected by management and approved by the AuditCommittee and the Board. Policies are reviewed and updated from time to time. These inturn are supported by a set of business specific policies and Standard OperatingProcedures (SOPs). Systems SOPs and controls are reviewed by management and audited byInternal Auditor whose findings and recommendations are reviewed by the Audit Committeeand tracked through to implementation.
Your Company maintains its Books of Account in electronic form. Your Company has inplace adequate internal financial controls with reference to the Financial Statements.
The Internal Auditors of the Company evaluates the adequacy and efficacy of suchinternal financial controls. Such controls have been tested during the year and noreportable material weakness in the design or operation was observed. Nonetheless yourCompany recognises that any internal financial control framework no matter how welldesigned has inherent limitations and accordingly regular audit and review processesensure that such systems are reinforced on an ongoing basis.
Your Company continues to focus on a system-based approach to business risk management.Backed by strong internal control systems the current Risk Management frame work consistsof the following key elements:
- The Board of your Company has clearly laid down the roles and responsibilities of theCompany in relation to risk management covering a range of responsibilities from thestrategic to the operational. These role definitions provide the foundation for yourCompany's Risk Management Policy that is endorsed by the Board and is aimed at ensuringformulation of appropriate risk management procedures their effective implementation andindependent monitoring and reporting by Internal Audit.
- A combination of policies and evolved procedures brings robustness to the process ofensuring that business risks are effectively addressed.
- Appropriate structures are in place to proactively monitor and manage the inherentrisks in businesses with unique / relatively high risk profiles.
- An Independent Internal Audit Firm carries out risk focused audits enablingidentification of areas where risk management processes may need to be strengthened.
- The Audit Committee of the Board reviews the Internal Audit findings and providesstrategic guidance on internal controls. The Chief Executive Officer closely monitors theinternal control environment within your Company including implementation of the actionplans emerging out of Internal Audit findings.
AUDIT AND SYSTEMS
Your Company believes that internal control is a necessary adjunct of the principle ofgovernance that freedom of management should be exercised within a framework ofappropriate checks and balances. Your Company remains committed to ensuring an effectiveinternal control environment that provides assurance and comfort on orderly and efficientconduct of operations security of assets prevention and detection of frauds / errorsaccuracy and completeness of accounting records and the timely preparation of reliablefinancial information.
Your Company's independent and robust Internal Audit processes provide assurance on theadequacy and effectiveness of internal controls compliance with operating systemsinternal policies and regulatory requirements.
The Internal Audit function consisting of an outsourced professional firm is resourcedto deliver high standards audit assurances.
The Audit Committee of your Board met four times during the year. The Terms ofReference of the Audit Committee included reviewing the adequacy and effectiveness of theinternal control environment monitoring implementation of the action plans emerging outof Internal Audit findings including those relating to strengthening of your Company'srisk management systems and discharge of statutory mandates.
HUMAN RESOURCE DEVELOPMENT
Your Company draws its strength from a highly engaged and motivated workforce whosecollective commitment has enabled your Company to maintain its steady performance. YourCompany strongly believes that human capital is the greatest asset and key differentiator.
With an undying commitment to render delightful services your Company's employeesconsistently work towards delivering flawless performance and are continuing to delightcustomers.
The Company provides a gender friendly workplace and no case of sexual harassment wasreported during the year. The Company has put in place a Grievance Redressal Procedure andan Internal Complaints Committee to ensure that grievances in this regard if any areeffectively addressed.
The Company's W histleblower Policy encourages Directors and employees to bring to theCompany's attention instances of unethical behavior actual or suspected incidents offraud or violation of the GHL Code of Conduct that could adversely impact the Company'soperations business performance and / or reputation. The Policy provides that the Companyinvestigates such incidents when reported in an impartial manner and takes appropriateaction to ensure that the requisite standards of professional and ethical conduct arealways upheld. It is the Company's Policy to ensure that no employee is victimised orharassed for bringing such incidents to the attention of the Company.
The practice of the Whistleblower Policy is overseen by the Audit Committee and noemployee has been denied access to the Committee. The Whistleblower Policy is available onthe Company's website at http://www.gujarathotelsltd.in/ Corporate Governance.html.
Your Company has not accepted any deposit from the public / members under Section 73 ofthe Companies Act 2013 (the Act) read with the Companies (Acceptance of Deposits) Rules2014 during the year.
Changes in Directors
During the period under review there was no change in the composition of the Board ofDirectors.
Retirement by Rotation
In accordance with the provisions of Section 152 of the Act read with Article 147 ofthe Articles of Association of the Company Mr Nakul Anand will retire by rotation at theensuing Annual General Meeting (AGM) of your Company and being eligible offers himselffor re-election. Your Board recommends his re-election.
Number of Board Meetings
During the year ended 31st March 2017 four meetings of the Board were held.
Attributes Qualifications & Independence of Directors and their Appointment
The Nominations and Remuneration Committee of the Board had approved the criteria fordetermining qualifications positive attributes and independence of Directors in terms ofthe Act and the Rules thereunder both in respect of Independent Directors and otherDirectors as applicable as reported last year. The criteria interalia requires thatDirectors shall possess appropriate skills experience and knowledge in one or more fieldsof finance law management sales marketing administration or other disciplines relatedto the Company's business.
The Board Diversity Policy of the Company requires the Board to have a balance ofskills experience and diversity of perspectives appropriate to the Company. The Articlesof Association of the Company provide that the strength of the Board shall not be fewerthan three nor more than twelve.
Directors are appointed / re-appointed with the approval of the members. All Directorsother than Independent Directors are liable to retire by rotation unless otherwiseapproved by the members. One-third of the Directors who are liable to retire by rotationretire every year and are eligible for re-appointment.
The Independent Directors of your Company have confirmed that they meet the criteria ofindependence as prescribed under Section 149 of the Act and Regulation 16 of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015.
The Company's Remuneration Policy aims at attracting and retaining high caliber talent.The Remuneration Policy therefore is market-led and takes into account the competitivecircumstances so as to attract and retain quality talent and leverage performancesignificantly.
The Policy on remuneration of Directors Key Managerial Personnel and other employeesof the Company is provided in the Annexure forming part of this Report.
The Nominations and Remuneration Committee has approved the Policy on Board EvaluationEvaluation of Board Committees' functioning and individual Director Evaluation. Boardperformance is assessed against the role and responsibilities of the Board as provided inthe Act and the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015. The parameters for Board performance evaluation have beenderived from the Board's core role of trusteeship to protect and enhance shareholder valueas well as fulfill expectations of other stakeholders through strategic supervision of theCompany. Evaluation of functioning of Board Committees is based on discussions amongstCommittee members and shared by each Committee Chairman with the Board. IndividualDirectors are evaluated in the context of the role played by each Director as a member ofthe Board at its meetings and in assisting the Board in realising its role of strategicsupervision of the functioning of the Company in pursuit of its purpose and goals.
While the Board evaluated its performance against the parameters laid down by theNominations and Remuneration Committee the evaluation of individual Directors was carriedout anonymously in order to ensure objectivity. The Board was briefed on functioning ofBoard Committees by the respective Committee Chairmen.
Key Managerial Personnel
Mr Muckth Dograa stepped down as the Chief Executive Officer of your Company witheffect from close of work on 27th October 2016. The Board on the recommendation of theNominations and Remuneration Committee appointed Mr Deependra Rana as Chief ExecutiveOfficer of your Company with effect from 25th January 2017.
Mr Rohan Singh stepped down as the Chief Financial Officer of your Company with effectfrom close of work on 27th December 2016. The Board on the recommendation of the AuditCommittee and the Nominations and Remuneration Committee appointed Mr Mayur Agarwal as theChief Financial Officer of the Company with effect from 25th January 2017.
AUDIT COMMITTEE & AUDITORS
The composition of the Audit Committee is provided under the section Board ofDirectors & Committees' in the Report and Accounts.
The Company's present Auditors Messrs Talati & Talati Chartered Accountants wereappointed with your approval at the Thirty Second AGM to hold such office for a period ofthree years till the conclusion of the Thirty-Fifth AGM i.e. the ensuing AGM.
Your Board on the recommendation of the Audit Committee has recommended theappointment of Messrs K C Mehta & Co. Chartered Accountants (KCM) as Auditors ofthe Company for a period of five years in accordance with section 139(1) of the Act. KCMhave given their consent and certificate for appointment as the Auditors of the Company.Appropriate resolution in respect of the above appears in the Notice convening the ensuingAGM of the Company.
Your Board appointed Messrs PB & Associates Company Secretaries to conduct thesecretarial audit of the Company for the financial year ended 31st March 2017. Theirreport is provided in the Annexure forming part of this Report in terms of Section 204 ofthe Act.
RELATED PARTY TRANSACTIONS
All contracts or arrangements entered into by the Company with its related partiesduring the financial year were in accordance with the provisions of the Act and theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015. All such contracts or arrangements have been approved by the AuditCommittee. No material contracts or arrangements with related parties were entered intoduring the year under review. Further the prescribed details of related partytransactions of the Company in Form No. AOC-2 in terms of Section 134 of the Act readwith Rule 8 of the Companies (Accounts) Rules 2014 is given in the Annexure to thisReport.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Act your Directors confirm having: -
a) followed in the preparation of the Annual Accounts the applicable AccountingStandards with proper explanation relating to material departures if any; b) selectedsuch accounting policies and applied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairsof your Company at the end of the financial year and of the profit of your Company forthat period;
c) taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of your Companyand for preventing and detecting fraud and other irregularities;
d) prepared the Annual Accounts on a going concern basis;
e) laid down internal financial controls to be followed by your Company and that suchinternal financial controls were adequate and operating effectively; and
f) devised proper systems to ensure compliance with the provisions of all applicablelaws and that such systems were adequate and operating effectively.
Compliance with conditions of Corporate Governance
In terms of Regulation 15(2) of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 compliance with the CorporateGovernance requirements is not mandatory for your Company. Hence certificate from theAuditors confirming compliance with the conditions of Corporate Governance has not beenobtained.
However a brief reports on Corporate Governance and Shareholder Information areprovided in the Annexures forming part of this report.
Going Concern Status
There is no significant or material order passed during the year by any regulatorcourt or tribunal impacting the going concern status of the Company or its futureoperations.
Extract of Annual Return
The information required under Section 134 of the Act read with Rule 12 of theCompanies (Management and Administration) Rules 2014 provided in the Annexure formingpart of this report.
Particulars of Loans Guarantees or Investments
During the year ended 31st March 2017 the Company has neither given any loan orguarantee nor has made any investment under the provisions of Section 186 of the Act.
Particulars relating to Conservation of Energy and Technology Absorption
Particulars as required under Section 134 of the Act relating to Conservation of Energyand Technology Absorption are provided below:
Conservation of Energy:
Steps taken on conservation of energy and impact thereof:
Sl. Description No.
1. Installation of heat pumps for hot water generation and air conditioning.
2. 4 water pumps replaced with energy efficient pumps.
3. Improved efficiency in lighting system by installation of 38 No's of 5 W & 35No's of 5.5 W LED in place of 20 W CFL.
4. Installation of energy efficient Fan Coil Units (FCU) for guest rooms.
5. Installation of Variable Frequency Drive (VFD) to optimise energy consumption.
6. Process improvement to enhance productivity and reduce specific energy consumption.
Steps taken by the Company for utilising alternate sources of energy: NIL
Capital investment on energy conservation equipment: NIL
i) Efforts in brief made towards technology absorption and benefits derived as aresult of the above efforts e.g. product improvement cost reduction productdevelopment import substitution etc.:
|Sl. ||Description ||Benefits |
|No. || || |
|1. ||Installation of chest freezer and bottler chiller. ||For product improvement. |
|2. ||Renovation of bathroom plumbing fixtures of 53 corporate rooms with basin tap mixers. ||For product up gradation |
|3. ||Installation of pizza cabinet machine. ||For product improvement |
|4. ||Replacement of Gym equipments with advanced treadmill rower and recumbent bike. ||For product improvement |
|5. ||Installation of WAN optimizer. ||For product up gradation |
|6. ||Installation of storage compactor and renovation of food store room. ||For hygiene and product improvement. |
ii) In case of imported technology (imported during the last 3 years reckoned from thebeginning of the financial year) following information may be furnished:
A) Details of technology imported - NIL B) Year of import - NIL
C) Whether the technology been fully absorbed - NIL D) If not fully absorbed areaswhere absorption has not taken place and the reasons therefore - NIL
iii) Expenditure incurred on research and development - NIL
FOREIGN EXCHANGE EARNINGS AND OUTGO
During the financial year 2016-17 foreign exchange earnings of the Hotel were Rs.9898 lakhs (previous year Rs. 1128 lakhs). During the year your Hotel's expenditure inforeign currency amounted to Rs. 22 lakhs (previous year Rs. 24.27 lakhs).
The total number of employees as on 31st March 2017 stood at 175.
There were no employees who were employed throughout the year and were in receipt ofremuneration aggregating Rs. 1.02 crores or more or were employed for part of the year andwere in receipt of remuneration aggregating Rs. 8.5 lacs per month or more during thefinancial year ended 31st March 2017. The information required under Section 197(12) ofthe Act read with the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is provided in the Annexure forming part of this Report.
This Report contains forward-looking statements that involve risks and uncertainties.When used in this Report the words anticipate' believe' estimate'expect' intend' will' and other similar expressions as they relate tothe Company and / or its businesses are intended to identify such forward-lookingstatements. The Company undertakes no obligation to publicly update or revise anyforward-looking statements whether as a result of new information future events orotherwise. Actual results performances or achievements could differ materially from thoseexpressed or implied in such forward-looking statements. Readers are cautioned not toplace undue reliance on these forward-looking statements that speak only as of theirdates. This Report should be read in conjunction with the financial statements includedherein and the notes thereto.
Your Directors view the long term growth prospects of the hotel industry withconfidence. The Central Government is continuing its efforts under the Make in Indiaprogramme and many positive signals have been received from various internationalmanufacturers indicating their willingness to set up manufacturing joint ventures inIndia. Business travel shall definitely pick up once these ventures see the light of day.Your Company is well poised to seize the unfolding growth opportunities.
| ||On behalf of the Board || |
|Place : New Delhi ||D R Choudhury ||J Singh |
|Date : 22nd April 2017 ||Director ||Director |