Board's Report (2016-17)
Your Directors have pleasure in presenting the 52nd Annual Report together with theaudited accounts of the Corporation for the year ended 31st March 2017.
Turnover and Profitability
Your Corporation has achieved a total turnover of Rs. 495.14 crore during the financialyear 2016-17 as against Rs. 465.69 crore in the previous year 2015-16.Duringthefinancialyear 2016-17 the Corporation has recorded a Net Profit (before tax) ofRs. 17.52 crore as against
Net Profit (before tax) of Rs. 32.42 crore in previous year 2015-16.
The highlights of the financial results of the Corporation (Standalone) are givenbelow:
| || ||( Rs. in crore) |
|Particulars ||Audited ||Audited |
| ||2016-17 ||2015-16 |
|Income from Operations ||473.15 ||437.13 |
|Operating Expenses ||457.65 ||415.08 |
|Operating Profit/Loss ||15.50 ||22.05 |
|Other Income ||21.99 ||28.56 |
|Profit / Loss before || || |
|Depreciation Finance || || |
|Cost Exceptional Items || || |
|and Prior Period || || |
|Adjustments ||37.49 ||50.61 |
|Depreciation ||7.87 ||8.03 |
|Finance Cost ||0.20 ||0.43 |
|Profit / Loss before || || |
|Exceptional Items and || || |
|Prior Period Adjustments ||29.42 ||42.15 |
|Exceptional Items ||10.71 ||8.10 |
|Profit / Loss before Prior || || |
|Period Adjustments ||18.71 ||34.05 |
|Prior Period Adjustments ||1.19 ||1.63 |
|Profit / Loss before Tax ||17.52 ||32.42 |
|Provision for Income Tax ||9.80 ||12.30 |
|Deferred Tax ||(4.31) ||(2.43) |
|Provision for Income Tax || || |
|for earlier years || || |
|written back ||(0.02) ||- |
|Profit / Loss after Tax ||12.05 ||22.55 |
|Equity Capital ||85.77 ||85.77 |
|Capital Employed ||286.76 ||282.94 |
|Rate of Return on || || |
|Capital:- || || |
|Before Tax ||20% ||38% |
|After Tax ||14% ||26% |
|Rate of Return on || || |
|Capital Employed:- || || |
|Before Tax ||6.11% ||11% |
|After Tax ||4.20% ||8% |
The Operating Ratio has marginally increased by 3.72% in the current year with theoverall operating ratio of 94.59% as against 90.87% in the previous year 2015-16.
Division wise Financial Performance
The Division wise financial performance of the Corporation is summarized as under :
(i) Hotels Division has achieved a turnover of Rs. 282.51 crore during the year asagainst Rs. 277.55 crore in the previous year and earned the net profit of Rs. 34.47 croreas against the net profit of Rs. 38.90 crore in the previous year.
ii) The turnover of AIT Division has increased to Rs. 18.36 crore from Rs. 16.23 crorein the previous year. During the year 2016-17 there are 11 Duty Free Shops in operationi.e. at Goa Seaport Coimbatore Haldia Port Kolkata Port Chennai Port and MangalorePort Visakhapatnam Mumbai Seaport Paradip Sea Port Kakinada Krishnapatnam. The
AIT Division has earned a Net Profit Rs. 3.31 crore as compared to Net Profit Rs. 2.37crore in the previous year.
iii) Further the turnover of ATT Division has increased to Rs. 123.06 crore from Rs.104.37 crore in the previous year an increase by 17.91 %. The ATT Division has incurred aloss of Rs. 18.08 crore as against the Net Loss of Rs. 10.37 crore in the previous year.The loss is due to the deposit of demand of Rs. 14.99 crore in the L' Block propertycase where the appeal of ITDC before the High Court has been dismissed and the demand hasbeen paid in full.
iv) The turnover of the Ashok Events Division been recorded at Rs. 36.38 crore(previous year Rs. 23.66 crore) and has earned a Profit of Rs. 6.00 crore as against netprofit of Rs. 4.01 crore during FY 2015-16.
v) The Engineering Division Including SEL Projects has achieved a turnover of Rs. 11.04crore during the year 2016-17 (previous year Rs. 15.31 crore) with net loss of Rs.2.97crore as against net loss of Rs. 2.84 crore in the last financial year.
vi) The Ashok Institute of Hospitality and Tourism Management (AIH&TM) has achieveda turnover of Rs. 2.99 crore as against Rs. 3.28 crore in the previous year with net Lossof Rs. 0.21 crore (previous year net loss of Rs. 1.54 crore).
vii) The Corporate HQ being the administrative office has earned an income of Rs. 20.81ofcrore (previous year Rs. 25.30 crore) mainly constituting of income from interest onshort term deposits with banks from the surplus funds available with it.
There is no change in authorized and paid-up share capital of the Corporation. TheAuthorized Share Capital of the Corporation is Rs. 150 crore and the paid-up Share Capitalis Rs. 85.77 crore as on 31st March 2017.
The Board of Directors recommended a dividend of 13.30% for the financial year 2016- 17on the equity share capital of the Company
Transfer to Reserve
No amount has been transferred to the General Reserves.
Rating of ITDC vis--vis MoU targets
Performance of the Company for the year 2015-16 has been notified as Good' with
Composite Score 55.53 by Department of Public Enterprises (DPE) in terms of the MoUsigned with the Government of India.
Management Discussion and Analysis
The report on the Management Discussion and Analysis is placed at Annexure-I.
Procurement from MSME
The Corporation has partly complied with guidelines issued by DPE in this regard.
Implementation of Official Language Policy
During the year 2016-17 the Company continued its efforts to give impetus to the useof Hindi in official work through motivation and training. Cash incentives were granted toemployees on doing prescribed quantum of work in Hindi. Hindi workshops were organized toprovide practical training of noting-drafting and other works in Hindi. Various Hindicompetitions were also organized during Hindi Fortnight celebrations for giving impetus tothe use of official language in day to day work. Hindi
Kavigoshthi Hindi Natya Manchan and Hindi Prize Distribution Event were also organizedto encourage official language in the Corporation.
A cultural program was organized at Hotel the Ashok on 28th September 2016 tocelebrate "Hindi Pakhwada" which included performances by prominent Hindi Poetsas well as various performances like songs drama etc. by ITDC's own employees.
Conservation of Energy & Technology Absorption
Commitment towards energy conservation remains in the units at various stages ofoperations. Commercial considerations energy conservation policies and practices play avital role in the endeavors made in this direction. Hotel The Ashok was awarded withprestigious LEED's gold certificate in the month of January 2017.
Since your Company's operations do not involve technology absorption the particularsas per Rule 8(3)(B) of the Companies (Accounts) Rules 2014 regarding technologyabsorption are not applicable.
Foreign Exchange Earnings & Outgo
The Direct Foreign Exchange Earnings during the year 2016-17 has decreased to Rs. 15.19crore from Rs. 17.95 crore in the previous year.
The Corporation has seven subsidiary companies as on 31.03.2017 viz. (i) Donyi PoloAshok Hotel Corporation Ltd. (ii) Assam Ashok Hotel Corporation Ltd. (iii) MP Ashok HotelCorporation Ltd. (iv) Pondicherry Ashok Hotel Corporation Ltd. (v) Ranchi Ashok BiharHotel Corporation Limited (vi) Utkal Ashok Hotel Corporation Ltd. (vii) Punjab Ashok HotelCompany Ltd. The Hotel Units were set up under the aforesaid subsidiary companies atItanagar Guwahati Bhopal Puducherry and Ranchi respectively. The operation of Hotelunit at Puri is closed since March 2004 and the Hotel has been planned to be leased out.The Hotel project at Anandpur Sahib is incomplete. Besides the Corporation has oneAssociate Company i.e. ITDC Aldeasa India Private Limited which is under process ofstriking off.
The Annual Accounts of all the subsidiary companies have been audited and finalized andthe Consolidated Annual Accounts have been prepared and presented in this Annual Report. Astatement containing the salient features of the subsidiaries in the prescribed formatAOC-1 forms part of the Consolidated Annual Accounts 2016-17.
Vigil Mechanism and Whistle Blower Policy
The Corporation has a Whistle Blower Policy which is posted on the website http://www.theashokgroup.com/Aboutus/rti. Being a Central Public Sector Enterprise theCorporation has a Vigilance Department. Chief Vigilance
Officer the Head of the Vigilance Division is under the direct control of the CentralVigilance Commission (CVC) an independent Govt. Agency.
Board of Directors
During the year eight Board Meetings were held to transact the business of theCompany.
The Board presently comprises of seven Directors i.e. Chairperson & ManagingDirector Director (C&M) Director (Finance) two Government Nominee Directors and two
Independent Directors as under:
A) Executive Directors
1. Smt. Ravneet Kaur (IAS) has been appointed as Chairperson & Managing Directorw.e.f. 24.07.2017
2. Shri Piyush Tiwari Director (C&M)
3. Shri Pradip Kumar Das Director (Finance)
B) Non-Executive Directors
(a) Part-time Government Nominee Directors:
1. Smt Meenakshi Sharma (IA&AS) from 11.07.2016
2. Smt. Leena Nandan (IAS) from 14.08.2017
(b) Independent Part time Directors:
1. Shri Ajay Swarup from 08.08.2016
2. Shri Patel Karsanbhai Bhikhabhai from 08.08.2016
As per disclosure received from the Directors the Directors are not related to oneanother.
Pursuant to Article 61 of the Article of Association Shri Piyush Tiwari and ShriPradip Kumar Das retire by rotation at the ensuing Annual General Meeting and beingeligible offer themselves for re-appointment. Details of profile etc. as required underRegulation 36(3) of SEBI (LODR) Regulations 2015 in respect of Directors liable to retireby rotation and seeking re-appointment have been given at the end of the notice of AGM.
Training Policy and the training imparted to the Directors
The Corporation has formulated a training policy for Board Members. As per the policyITDC offers training programmes organized by SCOPE and DPE to the Board Members. Furtheron induction of non-official Directors ITDC may also arrange training on the role andresponsibilities of Directors from the professional institutes like ICAI ICSI ICMA IIMetc.
During the financial year 2016-17 Non-official Directors participated in one trainingprogramme organized by DPE.
Declaration by Independent Directors
The Company has received necessary declaration from each independent director underSection 149(7) of the Companies Act 2013 that he/she meets the criteria of independencelaid down in Section 149(6) of the Companies Act 2013 and Regulation 25 of SEBI (LODR)Regulations 2015.
The evaluation of the Board as a whole and the Independent Directors is exempt forGovernment Companies vide MCA Notification dated June 05 2015.
Particulars of loans guarantee or investments
During the year under review ITDC released loan of Rs. 1350000/- on 08.04.2016 at arate of interest of 12.5% per annum to M/s Utkal Ashok Hotel Corporation Ltd. a jointventure subsidiary of ITDC for meeting out payment of outstanding salaries of staffstatutory obligations and day-to-day expenditures.
As per the requirement of Clause C of Schedule V to SEBI (LODR) Regulations 2015 adetailed report on Corporate Governance together with the following is given in Annexure-IIwhich forms part of this Report.
(i) CEO/CFO Certificate [as per Regulation 17(8) of SEBI (LODR) Regulations 2015 ];and
(ii) Certificate from the [Clause E to Schedule V to SEBI (LODR) Regulations 2015]along with the management reply to observations.
Directors' Responsibility Statement
Pursuant to the requirement under Section 134(5) of the Companies Act 2013 it ishereby confirmed:-
that in the preparation of the accounts for the financial year ended 31st March2017 the applicable accounting standards have been followed read along with properexplanation relating to departures;
that the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that were reasonable and prudent so as togive a true and fair view of state of affairs of the Company at the end of the financialyear and of the profit of the Company for the year under review;
that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
that the Directors have prepared the accounts for the financial year ended 31stMarch 2017 on a going concern' basis;
that the Directors had laid down internal financial controls to be followed bythe company and that such internal financial controls are adequate and were operatingeffectively;
that the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
Internal Financial Controls
The Corporation has adequate internal control system commensurate to its nature ofbusiness. Board has laid down adequate policies and procedures such as LicensingProcedure
Purchase Procedures Engineering & Works Manual Delegation of Powers etc. forensuring the orderly and efficient conduct of business.
Professional services of Chartered Accountant Firms are availed to conduct InternalAudit of all units/verticals of ITDC. A detailed Internal Audit manual duly approved bythe Board of Directors has been circulated to all the units.
Internal Auditors monitor and evaluate the efficacy and adequacy of the internal checks& control systems. Quarterly Internal Audit Reports are submitted by InternalAuditors. Corrective actions wherever required are taken by the units/verticals.Significant are reported to the Audit Committee.
Related Party Transactions
There are no materially significant party transactions reportable under Section 188 ofthe Companies Act 2013. The Audit Committee and the Board has approved a policy onmateriality of the related party transactions which is posted on the website of thecompany http://www.theashokgroup.com/Aboutus/ Investorcorner.
ReportunderSection22ofTheSexualHarassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 During 2016-17 no case was filed.
Corporate Social Responsibility and Sustainable Development
The CSR activities undertaken during the financial year 2016-17 are as follows:
(i) Red Fort and Old Fort were adopted in addition to Qutub Minar under CSR activitiesto maintain cleanliness and to educate visitors about importance of cleanliness.
(ii) Contribution to Swachh Bharat Kosh.
The Annual Report on CSR Activities and the Report on the Sustainable DevelopmentActivities are annexed as Annexure III.
Risk Management Policy and its Implementation
ITDC Board in its meeting held on 11th May 2010 has laid down the Risk ManagementPolicy laying down a sound process for identification and mitigation of risks. Inaccordance with the policy the unit head of all strategic divisions have been nominatedas Risk Manager and a committee namely Risk Management Compliance Committee (RMCC)presently headed by Director (C&M) has been constituted to oversee and ensurecompliances with the Risk Management Policy of the Corporation.
Company's specific risks as per the reports submitted by different units/divisions ofITDC during 2016-17 are as under:
Economic Risk: More dependence on one segment of clients i.e. Government
Industrial Risk: Threat to market share due to new players with wider facilities
Personnel Risk: Non-availability of adequate skill sets and depleting manpower inKey positions.
Legal Risk: Contractual risk & tax risk
Operational Risk: Ageing properties of Hotels
Others: Disinvestment/ Divestment of ITDC properties
Auditors and Auditor's Report
The Comptroller & Auditor General of India have appointed M/s Kishore &Kishore Chartered Accountants as Statutory Auditors of the Company and also variousBranch Auditors for the year 2016-17 under Section 134(5) of the Companies Act 2013. TheManagement's replies to the comments and observations of the Statutory Auditors on theaccounts (Standalone and the Consolidated) for the year 2016-17 are given in AnnexureIV & V(i) and V(ii).
Secretarial Auditor and Secretarial Audit Report
ITDC Board in its meeting held on February 14 2017 has appointed M/s Chandradip Bharti& Associates Company Secretaries as the Secretarial Auditors for conducting theSecretarial Audit as required under Section 204 of the Companies Act 2013. TheSecretarial Audit Report is placed at Annexure-VI and Management replies to thecomments and observation of the Secretarial Auditors on the Secretarial Audit Report forthe year 2016-17 are given at Annexure-VII.
Extract of Annual Return
In accordance with Section 134(3)(a) of the Companies Act 2013 an extract of theannual return in the prescribed format is appended as Annexure-VIII to the Board'sReport.
Significant and Material Orders
There are no significant orders passed by the regulators or courts or tribunalsimpacting the going concern status and company's operation in future.
Comments of the Comptroller and Auditor General of India
The comments of the Comptroller & Auditor General of India under Section 134(6) ofthe Companies Act 2013 on the Accounts of the Company for the financial year ended 31st
March 2017 are set out elsewhere in the Annual Report.
Material changes and commitments affecting the financial position of the Companybetween the end of the Financial year and the date of the Report
Status of Disinvestment / Divestment of properties of ITDC and its JV Subsidiaries:
As per decision dated May 24 2017 of the Cabinet Committee of Economic Affairsproperty of Hotel Janpath is to be handed back to the Ministry of Urban Development. ITDCis to be compensated for loss of business opportunity with disputed liability to be sortedout. The exact financial implication of the project would be worked out in accordance withall stakeholders including the Ministry of Tourism Ministry of Urban Development NDMCand L&DO etc.
As per MoU signed on April 27 2017 Hotel Bharatpur Ashok being a managed andmaterial property of ITDC was transferred to Rajasthan Government on April 30 2017(Transfer Agreement is to be executed shortly). The carrying amount of assets as on31.03.2017 of Hotel Bharatpur Ashok was Rs. 55.51 lakh liabilities of Rs. 76.69 lakhRevenue of Rs. 110.10 lakh and net loss of Rs. 21.17 lakh.
ITDC has transferred its Non Current Investments - Equity Shares of SubsidiaryCompanies -AssamAshok Hotel Corporation Limited (AAHCL 51% Equity) and Madhya PradeshAshok Hotel Corporation Limited (MPAHCL 51% Equity) on June 29 2017 to their respectiveState Government. The Investments have been transferred at a consideration of: AAHCL Rs.214.00 lakh (Profit Rs. 163.00 lakh) and MPAHCL Rs. 1259.00 lakh (Profit Rs. 1177.40lakh).
The process of disinvestment is going on in respect of: Hotel Pondicherry Ashok
Hotel Jaipur Ashok Hotel Lalitha Mahal Palace Hotel Kalinga Ashok Hotel Donyi PoloAshok Hotel Patliputra Ashok Hotel Ranchi Ashok Hotel Nilachal Ashok and incompleteHotel Projects - Hotel Anandpur Sahib and Hotel Gulmarg Ashok.
Registrar of Companies has issued a public notice dated 27.04.2017 pursuant to section248 of Companies Act 2013 proposing to remove /strike off the name of Joint Venture"ITDC Aldeasa India Private Limited" from the Register of Companies. ITDC as aJoint Venture partner has submitted to the Registrar of Companies that the company i.e."ITDC Aldeasa India Private Limited" is not doing any business.
i. The Board places on records its sincere appreciation towards the Company'scustomers/clients for the support and confidence reposed by them in the organization andlook forward to the continuance of this relationship in future.
ii. The Board also gratefully acknowledges the support and guidance received fromvarious Ministries of the Government of India particularly the Ministry of Tourism inCompany's operations and developmental plans. The Board also wishes to record its deepgratitude to all the members of ITDC family whose enthusiasm dedication and co-operationput the Company on the path of progress.
For and on behalf of Board of Directors
| ||Sd/- |
| ||(Ravneet Kaur) |
|Date: 28.08.2017 ||Chairperson & |
|Place: New Delhi ||Managing Director |