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Hotel Leela Venture Ltd.

BSE: 500193 Sector: Services
NSE: HOTELEELA ISIN Code: INE102A01024
BSE LIVE 15:29 | 23 Oct 19.25 -0.25
(-1.28%)
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19.10

HIGH

19.65

LOW

19.10

NSE 15:29 | 23 Oct 19.35 -0.15
(-0.77%)
OPEN

19.30

HIGH

19.70

LOW

19.20

OPEN 19.10
PREVIOUS CLOSE 19.50
VOLUME 37229
52-Week high 27.25
52-Week low 15.00
P/E
Mkt Cap.(Rs cr) 898
Buy Price 19.25
Buy Qty 300.00
Sell Price 19.30
Sell Qty 100.00
OPEN 19.10
CLOSE 19.50
VOLUME 37229
52-Week high 27.25
52-Week low 15.00
P/E
Mkt Cap.(Rs cr) 898
Buy Price 19.25
Buy Qty 300.00
Sell Price 19.30
Sell Qty 100.00

Hotel Leela Venture Ltd. (HOTELEELA) - Director Report

Company director report

DIRECTORS' REPORT

Dear Members

Your Directors present the 36th Annual Report on the business and operations of yourCompany together with the audited accounts for the year ended March 31 2017.

1. Financial Performance

The financial performance of the Company during the year under review is summarisedbelow:

Rs. lakhs

Particulars Financial Year Financial Year
2016-17 2015-16
Revenue from operations and other income 71378.84 67033.59
Operating and other expenses 52353.56 50777.57
Earnings before interest depreciation taxes and amortisation (EBIDTA) 19025.28 16256.02
Exceptional items - 21338.94
Interest 9044.19 8790.03
Depreciation 20231.98 23987.70
Profit from discontinuing operations & gain on disposal of assets attributable to discontinuing operations 19156.17
Profit/(Loss) before tax (10250.89) (18704.48)
Provision for taxes / deferred tax - (688.46)
Profit/(Loss) after tax for the year (10250.89) (18016.02)
Balance brought forward (89889.27) (99313.65)
Transferred from revaluation reserve 2897.96 26990.40
Transferred from debenture redemption reserve - 450.00
Amount available for appropriation (97242.21) (89889.27)
Appropriations - -
Balance carried to Balance Sheet (97242.21) (89889.27)
EPS - basic and diluted (in ' (2.20) (3.86)

2. Dividend

In view of losses the directors do not recommend any dividend for the financial yearended 31st March 2017.

3. Subsidiary Company its performance and financial position

Your Company has one Subsidiary viz. Leela Palaces and Resorts Limited (a wholly ownedsubsidiary or WOS). The WOS earned a profit of ' 0.30 lakhs during the financial year2016-17.

The WOS did not carry out any operations during the financial year 201617. The WOS isbeing proposed to be transferred by way of transfer of shares for which the approval ofthe Company's shareholders has already been obtained. The WOS has also initiated theprocess of renewal of relevant regulatory approvals for construction.

The Company has not attached the Balance Sheet Profit and Loss Account and otherdocuments of the WOS with the Annual Report of the Company in terms of general exemptioncircular notified by the Ministry of Corporate Affairs Government of India.

However the Company will make available these documents upon request by

PALACES HOTELS RESORTS

any member of the Company interested in obtaining the same. Further these documentswill also be available at the Registered Office of the Company for inspection by anymember of the Company.

A Statement containing the salient features of the financial statement of the WOS inForm AOC-I (pursuant to first proviso to sub-section (3) of section 129 read with rule 5of Companies (Accounts) Rules 2014) is attached to this report as Annexure-I. The auditedfinancial statements and related information of the WOS are also available on Company'swebsite at www. theleela.com.

The Audited Consolidated Financial Statements prepared in accordance with AccountingStandard 21 and Clause 34 of the SEBI (Listing Obligations and Disclosure Requirements)Regulation 2015 form part of this Annual Report.

4. Directors' Responsibility Statement

Pursuant to the requirement under Section 134 of the Companies Act 2013 thedirectors based on the information and representations received from the operatingmanagement hereby confirm that:

(a) in the preparation of the annual accounts for the financial year ending 31st March2017 the applicable accounting standards had been followed along with proper explanationrelating to material departures;

(b) the directors had 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 at the end of the financial year and ofthe profit and loss of the Company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) the directors had laid down internal financial controls to be followed by theCompany and such internal financial controls are adequate and were operating effectively;and

(f) the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and such systems were adequate and operating effectively.

5. Directors

Your Company has Nine (9) Directors consisting of Four (4) Independent Directors Three(3) Non-executive Directors and Two (2) Whole-time Directors as on March 312017.

In terms of the definition of ‘Independence' of Directors as prescribed underRegulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 and Section 149(6) of the Companies Act 2013 and based on theconfirmation/disclosures received from the Directors the following Non-ExecutiveDirectors are Independent Directors :-

(i) Mrs. Anna Malhotra

(ii) Mr. Vijay Amritraj

(iii) Mr. Ashok Rajani

(iv) Mr. Navnit Kulwantsingh Batheja Woman Director

In terms of the provisions of Section 149 of the Companies Act 2013 and Regulation 17of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 a companyshall have at least one Woman Director on the Board of the company. Your Company is incompliance of the same. Mrs. Anna Malhotra and Mrs. K. Hemalatha are the Woman Directorsas on 31st March 2017.

Whole-time Directors

Mr. Vivek Nair Chairman & Managing Director and Mr. Dinesh Nair CoChairman &Managing Director are the Whole-time Directors ofthe Company.

Appointments / Resignations from the Board of Directors Mr. Anil Harish IndependentDirector resigned with effect from November 17 2016. Mr. Madhavan Nambiar IndependentDirector resigned with effect from January 1 2017. Dr. K. U. Mada Independent Directorresigned with effect from January 23 2017. Mrs. Madhu Nair Non-executive Directorresigned with effect from February 10 2017.

The Board places on record their appreciation of the contributions made by them duringtheir tenure.

Mr. Navnit Kulwantsingh Batheja joined the Board with effect from February 10 2017 asan Additional Director and the Members approved his appointment as an independent directorthrough postal ballot held on April 112017.

In accordance with Section 152 of the Companies Act 2013 two thirds of the Boardexcluding independent directors should be directors retiring by rotation. The Company hasthree non-executive directors who are liable to retire by rotation and two executivedirectors who are not liable to retire by rotation in terms of their appointment.

Mr. V. P. Shetty being longest in office retires by rotation at the forthcomingAnnual General Meeting and has offered himself for re-appointment. The Board recommendshis re-appointment.

6. Number of Meetings of the Board

Regular meetings of the Board are held to discuss and decide on various businesspolicies strategies and other businesses. The schedule of the Board / Committee meetingsto be held in the forthcoming financial year are circulated to the Directors in advance toenable them to plan their schedule for effective participation in the meetings.

The Board met six (6) times during the FY 2016-17 viz. on 26th May 2016 8th July2016 1st August 2016 20th September 2016 11th November 2016 and 10th February 2017.Detailed information on the meetings of the Board is included in the report on CorporateGovernance which forms part of this Annual Report.

Additionally several committee meetings were held including Audit Committee meetingwhich met four (4) times during the financial year.

7. Committees of the Board

The Company has the following Committees:

(i) Audit Committee

(ii) Nomination and Remuneration Committee

(iii) Stakeholders' Relationship Committee

(iv) Finance Committee

(v) Assets Sale and Financial Restructuring Committee

The details with respect to the composition powers roles terms of reference etc. ofstatutory committees are given in detail in the ‘Report on Corporate Governance' ofthe Company which forms part of this Annual Report.

8. Performance Evaluation of the Board

Pursuant to the provisions of the Companies Act 2013 and Regulation 25 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board hascarried out an evaluation of its own performance and of the directors individually.

9. Key Managerial Personnel

Mr. Vivek Nair Chairman & Managing Director Mr. Dinesh Nair Co-Chairman &Managing Director Mr. Krishna Deshika Chief Financial Officer and Mr. Anandghan BohraCompany Secretary are the Key Managerial Personnel in terms of the provisions of theCompanies Act 2013.

10. Management's Discussion and Analysis

A detailed review of the operations performance and future outlook of the Company andits businesses is given in the Management's Discussion and Analysis which forms part ofthis Report.

11. Corporate Governance

A separate section on Corporate Governance standards followed by your Company asstipulated under Schedule V of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is enclosed as an Annexure to this report. The report on CorporateGovernance also contains certain disclosures as required under the Companies Act 2013.

A Certificate from M/s. V. Sundaram & Co. Practising Company Secretariesconfirming compliance with the conditions of Corporate Governance as stipulated underSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is annexed tothe Report on Corporate Governance.

12. Vigil Mechanism

The Company has implemented a Whistle Blower Policy pursuant to which whistle blowerscan raise concerns relating to Reportable Matters (as defined in the policy) such asfraud bribery corruption illegality health and safety environmental issues andwastage/ misappropriation of Company's funds/ assets etc. Further the mechanism adoptedby the Company encourages the whistle blower to report genuine concerns or grievances andprovides for adequate safeguards against victimization of the whistle blower who avail ofsuch mechanism. The vigil mechanism also provides direct access to the Members of theAudit Committee including the Chairman of the Audit Committee. The functioning of theVigil mechanism is reviewed by the Audit Committee from time to time.

None of the whistle blowers have been denied access to the Audit Committee of theBoard. The Whistle Blower Policy is available on the website of the Companyhttps://theleela.com/img/brand/investor-relations/corporate-governance-policies/whistle-blower-policy.pdf .

13. Risk Management Policy

The Board has approved a Risk Management Policy wherein all material risks faced bythe Company are identified and assessed. For each of the risks identified in the policycorresponding controls are assessed and policies and procedure are put in place formonitoring mitigating and reporting risk on a periodic basis.

14. Contracts or Arrangements with Related Parties

Your Company undertakes various transactions with related parties in the ordinarycourse of business. All Related Party Transactions entered into during the year were inthe ordinary course of business and on arm's length basis. No material related partytransactions i.e. transactions exceeding ten percent of the annual consolidated turnoveras stated in the last audited financial statements were entered into during the year byyour Company. Accordingly the disclosure of Related Party Transactions as required underSection 134(3) (h) of the Companies Act 2013 in Form AOC 2 is not applicable.

There were no materially significant related party transactions with the promotersdirectors and Key Managerial Personnel which may have a potential conflict with theinterest of the Company at large.

The Policy on materiality of related party transactions and also in dealing withrelated party transactions as approved by the Audit Committee and the Board is availableon the website of the Company at www.theleela.com/ investor-relations.

Your Directors draw attention of the members to Note No. 29.10 to the standalonefinancial statements which gives the related party disclosures.

15. Internal Financial Control Systems and their adequacy

The Company has laid down standards processes and structures which enableimplementation of internal financial control across the organisation and ensure that thesame are adequate and operating effectively.

The internal financial controls with reference to the Financial Statements arecommensurate with the size and nature of business operations of the Company.

16. Auditors

(a) Statutory Auditors and Auditors' Report

M/s. Picardo & Co. Chartered Accountants will retire at the conclusion of theforthcoming Annual General Meeting and are not eligible for reappointment as they havecompleted the maximum tenure of ten years permissible under the Companies Act 2013.

Hence the Board of Directors has recommended appointment of M/s. N. S. Shetty &Co. Chartered Accountants as the Statutory Auditors of the Company to hold office fromthe ensuing Annual General Meeting till the conclusion of the Annual General Meeting inthe year 2022 subject to ratification by the Members of the Company at every subsequentAnnual General Meeting. The Company has received the consent and confirmation to theeffect that they are not disqualified to be appointed as the Auditors of the Company interms of the provisions of the Companies Act 2013 and rules made thereunder.

During the period under review even though there is no audit qualification there areaudit observations on the financial statements. The explanation for the same has beenprovided in Note No.29.1 and 29.2 of the standalone Financial Statements. The said note isselfexplanatory and does not call for any further comments.

(b) Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 of the Companies Act 2013 the Company had appointed M/s. V.Sundaram & Co. Practicing Company Secretaries as its Secretarial Auditors to conductthe secretarial audit of the Company for the FY 2016-17. The report of Secretarial Auditorfor the FY 2016-17 is annexed to this report as Annexure - II. There is no AuditQualification in the Secretarial Audit Report.

17. Material Changes and Commitments affecting Financial Position of the Company

There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year of the Company i.e. 31stMarch 2017 and the date of the Directors' report i.e. 25th May 2017.

18. Employee Remuneration

(A) The ratio of the remuneration of each director to the median employee'sremuneration and other details in terms of sub-section 12 of Section 197 of the CompaniesAct 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 forms part of this report.

(B) The statement containing particulars of employees as required under Section 197(12)of the Companies Act 2013 read with Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 forms part of this report as AnnexureIII. In terms of Section 136 of the Companies Act 2013 the same is open for inspection atthe Registered Office of the Company. Copies of this statement may be obtained by theMembers by writing to the Company Secretary.

19. Corporate Social Responsibility (CSR)

In terms of Section 135 of Companies Act 2013 certain companies have to carry out CSRactivities as prescribed. Since the Company does not fall within the criteria of turnoverand/or profit due to continuous losses over the last five financial years the Companyhas not formed a CSR Committee. However the Company continues to undertake CSR activitiesfor the benefit of the local communities nearby its hotel properties the details of whichare disclosed separately in this Annual Report.

20. Fixed Deposits

The Company has not accepted any deposits from the public or from the shareholders.

21. Energy Conservation Technology Absorption Foreign Exchange Earnings and Outgo andOther Disclosures

(i) The disclosures to be made under sub-section (3) (m) of Section 134 of theCompanies Act 2013 read with Rule (8)(3) of the Companies (Accounts) Rules 2014 by yourCompany are furnished below:

(a) Conservation of Energy

Energy Conservation sustainability and efforts to make the properties more"Green" have been the main drive throughout the year. Major efforts/steps takentowards this are:

• Energy-efficient lighting and high efficiency HVAC systems used/retrofittedextensively in all hotels has reduced electrical consumption.

• Computerized Power Monitoring is implemented to monitor and control powerconsumption.

• Main chiller plants and steam boilers have been tuned for best efficiency toconserve energy.

• Hotels are equipped with solar geysers for generating hot water and the roomsare equipped with energy-saving devices during non-occupancy.

• STP treated water and Rain Water Harvesting has been implemented at four hotels.

• The Company has 23 windmills with a capacity of 13.5 MW power in the State ofMaharashtra (4.5 MW) Karnataka (5 MW) and Tamil Nadu (4 MW). Windmills continue toproduce renewable energy for use in own hotels.

• The Leela Palace Bangalore won National Energy Conservation and Certificate ofAppreciation from Ministry of Power.

• Boilers are being operated through bio diesel which is produced through usedkitchen oil.

• The Leela Palace Chennai and Leela Palace Delhi are LEED platinum ratedbuildings awarded by IGBC.

• Power is purchased at subsidized rate through open access in two hotels.

(b) Technology Absorption:

In the opinion of the Board the required particulars pertaining to technologyabsorption under Section 134 of the Companies Act 2013 read with Rule 8(B) of theCompanies (Accounts) Rules 2014 are not applicable as hotel is a service industry andthe Company does not have any significant manufacturing operations.

(c) Foreign Exchange Earnings and Outgo:

The foreign exchange earnings of the Company during the year stood at Rs. 30221.02lakhs (previous year Rs. 36521.95 lakhs) and foreign exchange outgo during the year stoodat Rs. 2489.89 lakhs (previous year Rs. 3621.34 lakhs).

(ii) No significant and material orders were passed by the regulators or courts ortribunals impacting the going concern status and the Company's operations in future.

(iii) Number of cases filed if any and their disposal under Section 22 of the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013:

Your Company has zero tolerance towards any action on the part of any employee whichmay fall under the ambit of ‘Sexual Harassment' at workplace and is fully committedto uphold and maintain the dignity of every woman employee in the Company. The Company'sPolicy provides

for protection against sexual harassment of women at workplace and for prevention andredressal of such complaints. During the year no such cases were reported.

22. Extract of Annual Return

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 oftheCompanies Act 2013 read with Rule 12 ofthe Companies (Management and Administration)Rules 2014 the extract of the Annual Return as at March 312017 forms part of this reportand the same is attached to this report as Annexure-IV.

23. Unclaimed / unexchanged Equity Shares in the Company

In compliance with the erstwhile clause 5A of the Listing Agreement the Company hastransferred 2598970 unclaimed equity shares belonging to 4330 shareholders lying withthe Company to "Unclaimed Share Suspense Account" in May 2015. The Company hasreleased 17000 shares pertaining to 16 shareholders from the suspense account during theyear. As on 31st March 2017 there are 2547950 shares pertaining to 4283 shareholdersin the suspense account.

The voting rights on the shares in the suspense accounts shall remain frozen till therightful owners of such shares claim the shares.

24. Acknowledgements

The Board wishes to place on record its appreciation for the assistance and supportreceived from the lenders government and regulatory authorities customers businessassociates and vendors.

Your directors take this opportunity to express their sincere thanks to all theshareholders and stakeholders for the faith and confidence reposed in the Company and themanagement.

Your directors attach immense importance to the contribution of the employees andsincerely thank "The Leela" team for sharing the Company's vision and philosophyand for the dedication and commitment in ensuring that the Company remains in theforefront as one of the finest hotel groups in India.

For and on behalf of the Board of Directors
Vivek Nair
Mumbai 25th May 2017 Chairman & Managing Director