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Indian Hotels Co Ltd.

BSE: 500850 Sector: Services
BSE 00:00 | 26 Apr 145.80 0.20






NSE 00:00 | 26 Apr 146.80 0.70






OPEN 145.80
VOLUME 135629
52-Week high 160.60
52-Week low 101.41
P/E 127.89
Mkt Cap.(Rs cr) 17,340
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 145.80
CLOSE 145.60
VOLUME 135629
52-Week high 160.60
52-Week low 101.41
P/E 127.89
Mkt Cap.(Rs cr) 17,340
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Indian Hotels Co Ltd. (INDHOTEL) - Director Report

Company director report



The Directors have pleasure in presenting the 116th Annual Report of yourCompany together with its Audited Financial Statements for the financial year ended March31 2017.

Pursuant to the notification dated February 16 2015 issued by the Ministry ofCorporate Affairs the Company has adopted the Indian Accounting Standards (''Ind AS'')notified under the Companies (Indian Accounting Standards) Rules 2015 with effect fromApril 1 2016. As such financial statements for the year ended as at March 31 2016 havebeen restated to conform to Ind AS.

Standalone Consolidated
Particulars 2016/17 2015/16 2016/17 2015/16
Rs. crores Rs. crores Rs. crores Rs. crores
Total Income 2445.11 2374.12 4065.20 4122.78
Profit before Depreciation Finance Costs Tax and 574.49 528.58 664.56 651.92
Exceptional items
Less: Depreciation 151.29 126.02 299.37 284.82
Less: Finance Costs 197.86 242.78 323.83 375.59
Profit before Tax & Exceptional Item 225.34 159.78 41.36 (8.49)
Add/(Less): Exceptional Items 33.51 (6.89) (10.78) (82.68)
Profit / (Loss) before Tax 258.85 152.89 30.58 (91.17)
Less: Provision for Tax 116.91 68.74 113.74 90.63
Profit / (Loss) after Tax Non - controlling interest & share 141.94 84.15 (83.16) (181.80)
of Associates and Joint Ventures
Less: Non - controlling Interest - - (17.60) (27.87)
Add: Share of Profit / (Loss) of Associates and Joint Ventures - - 37.56 (21.41)
Profits / (Loss) after Tax 141.94 84.15 (63.20) (231.08)


The Indian economy grew by 7.0% year on year in the quarter ending December 2016slightly lower than the 7.4% year on year in the previous quarter. The growth in GDPduring 2016/17 is estimated at 7.1% as compared to the growth rate of 7.9% in 2015/16.

Consumer Inflation has moderated from 5.47% in April 2016 to 2.99% in April 2017. Thedecrease in inflation over the recent past is attributed to the demonetization drive whichcommenced in November 2016. The cash crunch combined with a decrease in demand led tothe fall in inflation. It is expected that sectors that depend mostly on cash will seesome disruption in the short term. Although increased activity in the rural economycoupled with pay revisions across public sector enterprises was expected to have afavourable impact on consumption these positives were more than offset by thedemonetization drive.

Looking ahead the growth of some sectors such as Information Technology / InformationTechnology Enabled Services may be constrained with several key macroeconomic events inFY16-17 such as Brexit continued increase in interest rates by the US Federal Reserve andprotectionist policies in the USA. However India's increased focus on digitalization andthe "Smart Cities" and ''Make in India" initiatives is expected to createopportunities which may counter any slowdown globally.


The Indian hospitality industry has been instrumental in contributing to the nation'seconomic growth. The introduction of e-visa for foreign tourists and the increaseddomestic travel have helped to contribute.

International travel and tourism arrivals increased by 3.9% to reach a total of 1235million in 2016 (January to December) 46 million more than for the calender year 2015 inthe same period. (Source: UNWTO) For India during the period January –December 2016 foreign tourists' arrivals were 88.90 lakh an increase of 10.7% as comparedto 80.27 lakh in the calendar year 2015. (Source: Ministry of Tourism Government ofIndia)

The facility of e-visa has been enhanced and is now available at 16 internationalairports to tourists arriving from 161 specified countries. In 2016 a total of 10.79 lakhtourists availed the facility as compared to 4.45 lakh in 2015 which represents a growthof 142.5%.

The growth in demand for rooms (6.2%) has been consistently outpacing the supply (3.1%)growth in India and this trends has been sustained over the recent past. This has resultedin occupancies to be sustained at over 60% across the industry. All key markets haveregistered growth in room demand and no key markets were lagging compared to the previousyear

(Source: STR reports)


The Taj Group opened one Luxury hotel in Amritsar and one Gateway hotel at Corbett. Theinventory of the Taj Group of Hotels now stands at 134 hotels with 16675 rooms. TheGroup's portfolio also include 35 hotels under the Ginger Brand which has an aggregateinventory of 3324 rooms. Your Company continues to pursue expansion both in the domesticand international market in a capital light manner to achieve sustainable and Profitablegrowth.


The Total Income for the year ended March 31 2017 at Rs. 2445.11 crores represents agrowth of 3% over the previous year. Within the overall revenue Room Revenue increased by8% driven by improved Average Rate Per Room (''ARR'') occupancies and incremental impactof full year operations of Taj Guwahati which commenced operations in April 2016. TheFood and Beverage Revenues increased marginally over the previous year aided by growth inrestaurant sales and banqueting income. Other Operating Income Management and OperatingFees were also higher compared to the previous year. Dividend and Interest Income werehowever lower as compared to the previous year as the Company had used surplus cash toredeem Non-Convertible Debentures of Rs. 521 crores (including premium on redemption) inthe latter half of 2015/16 which impacted the treasury income during the current year.

Depreciation and Finance Costs

Depreciation for the year was higher at Rs. 151.29 crores as compared to Rs. 126.02crores for the previous year due to additions to fixed assets on account of plannedrenovations carried out in Mumbai and Goa Hotels and the impact of full year of operationsof Taj Guwahati. Finance costs for the year ended March 31 2017 at Rs. 197.86 crores werelower than the previous year by Rs. _44.92 crores mainly due to retirement of high costdebt.

Profit Before Tax and Exceptional items

Profit before Tax and Exceptional Items stood at Rs. 225.34 crores which represents anincrease of 41% as compared to the previous year.

Exceptional Items

Exceptional Items include foreign exchange gain of Rs. 1.90 crores on long termborrowings/ assets exchange gain on change in Fair value of Cross currency swapderivative contracts Rs. 65.45 crores and provision for impairment due to losses in anoverseas subsidiary Rs. 64.33 crores.

Exceptional Items also include Recovery of costs on a surrendered project interestawarded by Arbitrator against claim raised on Karnataka Forest Development Corporation Rs.24.33 crores and Refund of Municipal Tax and interest of Rs. 6.16 crores previously paidunder protest.

In the previous year there was a net exchange gain of Rs. 3.29 crores and your Companyhad written off expenditure incurred on a project of Rs. 9.83 crores.


The total borrowings stood at Rs. 2048.98 crores as at March 31 2017 as against Rs.2157.65 crores as on March 31 2016 representing a decrease of Rs. 108.67 crores due torepayment & refinancing of debt.

Profit / (Loss) before and after tax

The Profit before Tax for the year was at Rs. 258.85 crores as compared to Rs. 152.89crores for the previous year. The Profit after Tax for the year was at Rs. 141.94 croresas compared to Rs. 84.15 crores for the previous year.


The consolidated income of your Company for the year ended March 31 2017 aggregatedRs. 4065.20 crores as against

Rs. 4122.78 crores for the previous year. The revenue from operations increased by 4%(on a same store basis without considering the results of Taj Boston which was divestedduring the year) from Rs. 3800.29 crores to Rs. 3933.89 crores largely due toimprovement in the performance of the domestic portfolio.

The Profit before Tax and Exceptional Items stood at Rs. 41.36 crores as compared toloss of Rs. (8.49) crores in the previous year. The Loss after Tax Minority interest andshare of associates/ joint ventures aggregating to Rs. (63.20) crores for the year hassignificantly reduced when compared to previous year of Rs. (231.08) crores.

The consolidated results for the current Financial Year are after considering the saleof Taj Boston and may therefore impact the comparison with the previous year.



On account of improved performance and Profit After Tax reported by your Company duringthe current year the Board of Directors recommend a dividend at Rs. 0.35 per share(previous year Rs. 0.30 per share). The dividend on Equity Shares if approved by theMembers would involve a cash payout of Rs. 41.67 crores including dividend tax. Pursuantto Regulation 43A of the SEBI (Listing Obligation and Disclosure Requirements)Regulations 2015 (''Listing Regulations'') the Company has adopted the DividendDistribution Policy which is attached as Annexure-I.


During the year your Company redeemed the following Debentures:

1. 1360 9.90% Unsecured Non-convertible Redeemable Debentures of face value Rs.1000000 each aggregating to

Rs. 136 crores were redeemed on February 24 2017.

2. 2% Secured Non-Convertible Debentures of the face value of_ Rs. 500000 eachaggregating to Rs. 150 crores along with redemption premium of Rs. 3.51 lakhs perdebenture were redeemed on March 22 2017.

During the year your Company had raised 7.85% Secured Non-convertible RedeemableDebentures of face value

Rs. 1000000 each aggregating to Rs. 495 crores.

Capital Expenditure

During the year under review your Company incurred Rs. 255.24 crores towards capitalexpenditure a majority of which was towards the upcoming hotel at Andamans and tocommission balance floors of Taj Guwahati project. Other areas of investment included newInformation Technology initiatives renovations and refurbishments of hotels.

Fixed Deposits

The outstanding amount of Fixed Deposits placed with your Company was Nil (Previousyear Nil) excluding Rs. 0.72 crore (Previous year Rs. 0.81 crore) which remainedunclaimed by depositors as at March 31 2017. Your Company does not accept and / or renewFixed Deposits from the general public and shareholders.

Loans Guarantees or Investments

Your Company is exempt from the provisions of Section 186 of the Companies Act 2013("Act") with regard to Loans and Guarantees. Details of Investments made aregiven in the notes to the Financial Statements.


Our strategic objective is to build a sustainable organization that remains committedto meet the expectations of our discerning customers while generating Profitable growthfor our shareholders and all other stakeholders. In this regard your Company has unveileda slew of strategic initiatives each of which is summarised in the Management Discussionand Analysis.

Amalgamation of International Hotel Management Services LLC (''IHMS'')

As part of the Company's restructuring plan at a meeting held on October 19 2015 theBoard of Directors had approved the amalgamation of IHMS (formerly known as InternationalHotel Management Services Inc.) a wholly held subsidiary into the Company by way of aScheme of Arrangement amongst the Company the Transferor Company and the respectiveshareholders and creditors (the "Scheme") as provided under Sections 391 to 394of the Companies Act 1956 read with Section 52 of the Act Section 78 and Sections 100 to103 of the Companies Act 1956. The Appointed Date for the Scheme was January 1 2016. Theamalgamation was approved by the Members at the meeting convened on May 4 2016 on thedirection of the Honourable High Court of Judicature at Bombay ("Bombay HighCourt") where the application seeking permission for the amalgamation was filed. TheBombay High Court vide its order dated August 12 2016 had approved the Schemewhich had been filed with the jurisdictional Registrar of Companies on September 15 2016.The other conditions to effectiveness of the Scheme as specified in Clause 18(a) of theScheme had subsequently been ful_lled including the receipt of the approval of theSecurities and Exchange Board of India (''SEBI'') in terms of the SEBI Scheme Circularsand the _ling of the "Certificate of Merger" with the office of the Secretary ofState of the State of Delaware both on September 29 2016. Accordingly the"Effective Date" of the Scheme is September 29 2016 being the last of thedates on which all the conditions and matters referred to in Clause 18(a) of the Schemehave been ful_lled in accordance with the Scheme. Pursuant thereto in accordance with theterms of the Scheme IHMS has amalgamated with the Company and has ceased to exist as aseparate legal entity as per the applicable law in the State of Delaware and is deemed tobe dissolved without winding up for the purposes of the Companies Act with effect from theAppointed Date i.e. January 1 2016. The necessary accounting entries have been passed inthe books of accounts of the Company to reflect the same.

Amalgamation of Lands End Properties Private Limited (''LEPPL'')

At a meeting held on October 19 2015 the Board of Directors of the Company hadapproved the amalgamation of LEPPL a wholly held subsidiary into the Company by way of aScheme of Arrangement amongst the Company the Transferor Company and the respectiveshareholders and creditors (the "Scheme") as provided under Sections 391 to 394of the Companies Act 1956 read with Section 52 of the Act section 78 and Sections 100 to103 of the Companies Act 1956. The Appointed Date for the Scheme is March 31 2016. Theamalgamation was approved by the Members of the Company at the meeting convened on May 42016 on the direction of the Honourable High Court of Judicature at Bombay ("BombayHigh Court") where the application seeking permission for the amalgamation has beenfiled. The Bombay High Court vide its order dated October 13 2016 has approved thescheme of arrangement between LEPPL and the Company. Pursuant thereto the High Courtorders were filed with the jurisdictional Registrar of Companies on December 7 2016 forreduction of capital of the Company and on December 9 2016 in respect of the Scheme. Theother conditions to effectiveness of the Scheme as specified in Clause 18(a) of the Schemewere subsequently ful_lled including receipt of approval/comments from the SEBI onDecember 19 2016 vide SEBI Letter dated December 15 2016 in terms of SEBI Circular No.CIR/CFD/DIL/5/2013 dated February 4 2013 read with SEBI Circular No. CIR/CFD/DIL/8/2013dated May 21 2013. Accordingly the "Effective Date" of the Scheme is December19 2016 being the last of the dates on which all the conditions and matters referred toin Clause 18(a) of the Scheme occur or have been ful_lled or waived in accordance with theScheme. Pursuant thereto in accordance with the terms of the Scheme LEPPL wasamalgamated with the Company with effect from the Appointed Date i.e. March 312016 and consequently LEPPL stands dissolved without winding up. The necessaryaccounting entries giving effect to the amalgamation have been passed in the books ofaccounts of the Company.

Divestment of IHMS (Boston) LLC – Taj Boston Hotel

The Board of Directors of the Company had at its meeting held on May 18 2016accorded its approval to United Overseas Holding Inc. (''UOH'') an indirect wholly ownedsubsidiary (''WOS'') of the Company incorporated in the United States of America topursue the option of divestment of the Taj Boston Hotel by way of sale/ disposal of itsentire issued and outstanding LLC interests in IHMS (Boston) LLC (a direct WOS of UOH) ata consideration not being lower than US$ 125 million (US$ One hundred and twenty fivemillion only) to an independent third party subject to negotiations and execution ofsuitable agreements and receipt of approval from its Members. The Company hadsubsequently obtained the Members approval for the same by a Special Resolution videPostal Ballot. Accordingly UOH effected on July 12 2016 the divestment of the Hotelthrough sale of the entire issued and outstanding LLC interests of IHMS (Boston) LLC heldby UOH to ‘AS Holdings LLC Boston' for an aggregate consideration of US$ 125million (US$ One hundred and twenty five million only).

Pursuant to the sale by UOH of its entire LLC interest in IHMS (Boston) LLC the owningcompany of the Hotel the Hotel continues to be operated and managed by IHMS (USA) LLC anindirect wholly held subsidiary of the Company. IHMS (USA) LLC has entered into aManagement Services Agreement with the new owning company thus ensuring continuity ofTaj's presence in the Boston market.


The brief outline of the Corporate Social Responsibility (''CSR'') Policy of yourCompany and the initiatives undertaken by your Company on CSR activities during the yearare set out in Annexure II of this report in the format prescribed under the Companies(Corporate Social Responsibility Policy) Rules 2014. The CSR policy is available on thewebsite of your Company.


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 organisation. 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 your Company its compliance with operating systemsaccounting procedures and policies at all locations of your Company. Based on the reportof the Internal Audit function process owners undertake corrective action in theirrespective areas and thereby strengthen the controls. Significant audit observations andcorrective actions suggested are presented to the Audit Committee of the Board. Theinternal financial controls as laid down are adequate and were operating effectivelyduring the year.

In addition during the year 2016/17 as required under Section 143 of the Act theStatutory Auditors have evaluated and expressed an opinion on the Company's internalfinancial controls over financial reporting based on an audit. In their opinion theCompany has in all material respects an adequate internal financial controls system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as at March 31 2017.


Your Company has adopted a Whistle Blower Policy to provide a mechanism for theDirectors and employees to report genuine concerns about any unethical behaviour actualor suspected fraud or violation of your Company's Code of Conduct. No person has beendenied access to the Chairman of the Audit Committee. The provisions of this policy are inline with the provisions of Section 177 (9) of the Act and Regulation 22 of the ListingRegulations. The Whistle Blower Policy can be accessed on your Company's website at thelink:


The details forming part of the extract of the Annual Return in form MGT-9 as perSection 92 (3) of the Act are given as Annexure III which forms part of this Report.


The details pertaining to the composition of the Audit Committee are included in theCorporate Governance Report which forms part of the Annual Report.


In line with the requirements of the Act and the Listing Regulations your Company hasformulated a policy on dealing with Related Party Transactions (''RPTs'') which can beaccessed on the Company's website under the link: Policy intends to ensure that proper reporting approval and disclosure processes arein place for all transactions between the Company and Related Parties.

Prior omnibus approval is obtained for RPTs which are of a repetitive nature andentered in the Ordinary Course of Business and are at Arm's Length. All RPTs are placedbefore the Audit Committee for review on a quarterly basis. All RPTs that were enteredinto during the Financial Year were in the Ordinary Course of Business and at Arm'sLength. The Company has nothing to report in Form AOC-2 hence the same is not annexed.


Although not mandatory your Company has constituted a Risk Management Committee as ameasure of good governance. The Risk Management Committee is tasked with theresponsibility to frame implement and monitor the risk management plan for the Company.The Committee is responsible for reviewing the risk management plan and ensuring itseffectiveness. The details of the Committee and its terms of reference are set out in theCorporate Governance Report.

Your Company has adopted a Risk Management Policy pursuant to the provisions ofSection 134 of the Act to identify and evaluate business risks and opportunities formitigation of the same on a continual basis. This framework seeks to create transparencyminimize adverse impact on business objective and enhance your Company's competitiveadvantage. The Risk Management framework defines the risk management approach across theenterprise at various levels including documentation and reporting.

Your Company is faced with risks of different types each of which need varyingapproaches for mitigation. Details of various risks faced by your Company are provided inthe Management Discussion and Analysis.


The Consolidated Financial Statements of your Company and its Subsidiaries JointVentures and Associates prepared in accordance with the relevant Accounting Standardsduly audited by the Statutory Auditors form a part of the Annual Report and are reflectedin the Consolidated Accounts.

Your Company has 25 Subsidiaries 8 Joint Ventures and 6 Associates as at March 312017. Pursuant to the provisions of Section 129(3) of the Act a statement containingsalient features of the Financial Statements of your Company's Subsidiaries Associatesand Joint Ventures in Form AOC-1 is attached to the Financial Statements of your Company.Pursuant to the provisions of Section 136 of the Act the Financial Statements of yourCompany Consolidated Financial Statements along with relevant documents and separateaudited accounts in respect of subsidiaries are available on the website of your Company.

During the year under review LEPPL and IHMS ceased to be subsidiaries of the Companypursuant to their amalgamation with the Company i.e. w.e.f from December 19 2016 andSeptember 29 2016 respectively. The appointed dates for the Scheme of Arrangement to beeffective were opening of the business hours of January 1 2016 for IHMS and close of thebusiness hours of March 31 2016 for LEPPL.

Apex Hotel Management Services (Australia) Pty Ltd ceased to be a subsidiary of theCompany w.e.f. March 31 2017. The policy for determining material subsidiaries can beaccessed on your Company's website under the link


During the year Mr. N. Chandrasekaran was appointed as an Additional Director of theCompany w.e.f. January 27 2017 and as Chairman of the Company w.e.f. February 22 2017.He holds office upto the date of the forthcoming Annual General Meeting (''AGM'') of theCompany.

In accordance with the Act and the Articles of Association of your Company Mr.Mehernosh S. Kapadia retires by rotation and being eligible offers himself forre-appointment.

The approval of the shareholders for their appointment / re-appointment as Directorshas been sought in the Notice convening the AGM of your Company.

The Independent Directors have submitted a declaration that each of them meet thecriteria for independence as provided in Section 149(6) of the Act and there has been nochange in the circumstances which may affect their status as an Independent Directorduring the year.

Retirement / Resignations

Mr. Anil P. Goel sought premature retirement from the services of the Company andstepped down as the Executive Director and Chief Financial Officer (''CFO'') w.e.f.October 15 2016. Mr. Goel served the Company for more than 15 years overseeing the TajGroup's Finance Mergers and Acquisitions Purchases and Information Technology functionsand brought in a unique understanding of fiscal responsibility to the Taj Group.

The following Directors also stepped down from the Board of the Company:

Dr. N. S. Rajan w.e.f. October 28 2016

Mr. Cyrus P. Mistry w.e.f. December 19 2016

Mr. K. B. Dadiseth w.e.f. April 7 2017.

Mr. Shapoor Mistry w.e.f. April 25 2017

The Board places on record its appreciation of the services rendered by these Directorsto the Company during their respective tenures.

Mr. Rakesh Sarna had expressed his desire to step down as the Managing Director &Chief Executive Officer (''MD & CEO'') of the Company upon completion of his threeyear tenure due to personal reasons vide his letter dated May 26 2017. The Board acceptedthe resignation of Mr. Sarna and requested him to continue as the MD & CEO of theCompany until September 30 2017 appreciating the contribution made by him to the Companyin its transformation to operational excellence which he agreed and accepted.

Changes in KMP

Pursuant to the provisions of Section 203 of the Act the KMPs of your Company are Mr.Rakesh Sarna MD & CEO Mr. Mehernosh S. Kapadia Executive Director – CorporateAffairs Mr. Giridhar Sanjeevi CFO and Mr. Beejal Desai Vice President – Legal& Company Secretary. Mr. Giridhar Sanjeevi was appointed as the CFO of the Companyw.e.f. May 4 2017 in place of Mr. Anil P. Goel. Mr. Giridhar Sanjeevi is a CharteredAccountant and holds an MBA degree from IIM –Ahmedabad.


During the year under review six Board Meetings were held and the intervening gapbetween the meetings did not exceed the period prescribed under the Act the details ofwhich are given in the Corporate Governance Report.


Your Company has adopted the Governance Guidelines which inter alia coveraspects related to composition and role of the Board Chairman and Directors Boarddiversity de_nition of independence Director's term retirement age and Committees ofthe Board. They also cover aspects relating to nomination appointment induction anddevelopment of Directors Director's remuneration subsidiary oversight Code of ConductBoard Effectiveness Review and mandates of Board Committees.

A. Boar d Evaluation

The Board of Directors has carried out an annual evaluation of its own performanceBoard committees and individual Directors pursuant to the provisions of the Act and thecorporate governance requirement as prescribed by the Listing Regulations.

The performance of the Board was evaluated by the Board after seeking inputs from theDirectors on the basis of specified criteria such as the Board Composition and structureseffectiveness of board processes information and functioning etc. The performance of theCommittees was evaluated by the Board after seeking inputs from the Committee members onthe basis of the criteria such as the composition of Committees effectiveness ofCommittee meetings etc. The Board and the Nomination and Remuneration Committee("NRC") reviewed the performance of the individual Directors on the basis of asthe contribution of the individual Director to the Board and Committee meetings based uponcriteria such as preparedness on the issues to be discussed meaningful and constructivecontribution and inputs in meetings etc. At a separate meeting of Independent Directorsperformance of Non-Independent Directors & performance of the Board as a whole wasevaluated taking into account the views of the Executive Directors and Non-ExecutiveDirectors. The same was discussed at the next Board meeting at which the performance ofthe Board its Committees and individual Directors was also discussed. Performanceevaluation of Independent Directors was done by the entire Board excluding theIndependent Director being evaluated.

B. Appointment of Directors and criteria for determining qualifications positiveattributes independence of a Director

The NRC is responsible for developing competency requirements for the Board based onthe industry and strategy of your Company. The NRC reviews and meets potential candidatesprior to recommending their nomination to the Board. At the time of appointment specificrequirements for the position including expert knowledge expected is communicated to theappointee.

The NRC has formulated the criteria for determining qualifications positive attributesand independence of Directors in terms of provisions of Section 178 (3) of the Act and theListing Regulations as stated under: Independence: A Director will be considered as an‘Independent Director' if he / she meets with the criteria for ‘Independence' aslaid down in the Act Regulation 16 of the Listing Regulations and the GovernanceGuidelines.

Competency: A transparent Board nomination process is in place that encouragesdiversity of thought experience knowledge perspective age and gender. It is ensuredthat the Board comprises a mix of members with different educational qualificationsknowledge and who possess adequate experience in banking and finance accounting andtaxation economics legal and regulatory matters consumer industry hospitality sectorand other disciplines related to the Company's businesses.

Additional Positive Attributes:

• The Directors should not have any other pecuniary relationship with yourCompany its subsidiaries associates or joint ventures and the Company's promotersexcept as provided under law.

• The Directors should maintain an Arm's Length relationship between themselvesand the employees of the Company as also with the directors and employees of itssubsidiaries associates joint ventures promoters and stakeholders for whom therelationship with these entities is material.

• The Directors should not be the subject of proved allegations of illegal orunethical behaviour in their private or professional lives.

• The Directors should have the ability to devote sufficient time to the affairsof your Company.

C. Remuneration Policy

Y our Company had adopted a Remuneration Policy for the Directors KMP and otheremployees pursuant to the provisions of the Act and the Listing Regulations.

The key principles governing your Company's Remuneration Policy are as follows:

Remuneration for Independent Directors and Non-Independent Non-Executive Directors

Independent Directors (''ID'') and Non-Independent Non-Executive Directors (''NINED'')may be paid sitting fees for attending the meetings of the Board and of Committees ofwhich they may be members and receive commission within regulatory limits as recommendedby the NRC and approved by the Board.

Overall remuneration should be reasonable and sufficient to attract retain andmotivate Directors aligned to the requirements of your Company taking into considerationthe challenges faced by your Company and its future growth imperatives.

Remuneration paid should be reflective of the size of your Company complexity of thesector / industry / Company's operations and your Company's capacity to pay theremuneration and be consistent with recognized best practices.

The aggregate commission payable to all the NINEDs and IDs will be recommended by theNRC to the Board based on Company performance Profits return to investors shareholdervalue creation and any other significant qualitative parameters as may be decided by theBoard. The NRC will recommend to the Board the quantum of commission for each Directorbased upon the outcome of the evaluation process which is driven by various factorsincluding attendance and time spent in the Board and Committee Meetings individualcontributions at the meetings and contributions made by Directors other than in meetings.

The remuneration payable to Directors shall be inclusive of any remuneration payablefor services rendered in any other capacity unless the services rendered are of aprofessional nature and the NRC is of the opinion that the Director possesses requisitequalification for the practice of the profession.

Remuneration for Managing Director (MD) / Executive Directors (ED) / Key ManagerialPersonnel (KMP) / rest of the Employees

The extent of the overall remuneration should be sufficient to attract and retaintalented and qualified individuals suitable for every role. Hence remuneration should bemarket competitive driven by the role played by the individual reflective of the size ofyour Company complexity of the sector / industry / Company's operations and yourCompany's capacity to pay consistent with recognized best practices and aligned to anyregulatory requirements.

Basic / fixed salary is provided to all employees to ensure that there is a steadyincome in line with their skills and experience. In addition your Company providesemployees with certain perquisites allowances and benefits to enable a certain level oflifestyle and to offer scope for savings. Your Company also provides all employees with asocial security net subject to limits which covers medical expenses and hospitalizationthrough re-imbursements or insurance cover and accidental death benefits etc. YourCompany provides retirement benefits as applicable with the Retirement Policy.

In addition to the basic / fixed salary benefits perquisites and allowances asprovided above your Company provides MD / EDs such remuneration by way of performancelinked bonus calculated with reference to the net Profits of your Company for theFinancial Year as may be determined by the Board subject to the overall limitsstipulated in Section 197 of the Act. The specific amount payable to the MD / EDs would bebased on performance as evaluated by the NRC and approved by the Board.

Your Company provides the rest of the employees a performance linked bonus. Theperformance linked bonus is driven by the outcome of the performance appraisal process andthe performance of your Company and the individual's contribution.

It is affirmed that the remuneration paid to Directors KMPs and all other employees isas per the Remuneration Policy of your Company.


During the year under review no significant material orders were passed by theRegulators or Courts or Tribunals impacting the going concern status and your Company'soperations.


Deloitte Haskins & Sells LLP Chartered Accountants (Firm Registration No.117366W/W-100018) the Statutory Auditors of the Company hold office till the conclusionof the 116th AGM of the Company. The Board has recommended the appointment ofBSR & Co LLP Chartered Accountants (Firm Registration No. 101248W/W-100022) as theStatutory Auditors of the Company in their place for a term of five consecutive yearsfrom the conclusion of this AGM till the conclusion of the 121st AGM of theCompany (subject to ratification of their appointment at every AGM if required under theAct) for approval of the Members.

The report of the Statutory Auditors along with the Notes to Schedules is enclosed tothis report and contains an Unmodified Opinion.


Pursuant to the provisions of the Section 204 of the Act and the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 your Company has appointed BNP& Associates Company Secretaries to undertake the Secretarial Audit of your Companyfor the Financial Year 2016-17. The Secretarial Audit Report is annexed herewith asAnnexure IV. The report does not contain any qualifications reservation or adverseremarks.


The details of conservation of energy are given in the Management Discussion andAnalysis Report.


As required under Section 134(3)(m) of the Act read with Rule 8 of the Companies(Accounts) Rules 2014 the information relating to foreign exchange earnings and expensesis set out in Notes 40 and 41 of the Notes to the Financial Statements.


The disclosure required to be furnished pursuant to Section 197 (12) read with Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isappended as Annexure V to this Report.

The statement containing names of top ten employees in terms of remuneration drawn andthe particulars of employees as required to be furnished pursuant to Section 197 (12) readwith Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 forms part of this Annual Report. However as per the provisions of Section136 (1) of the Act the reports and accounts are being sent to all the Members of yourCompany excluding the statement of particulars of employees. In terms of Section 136 ofthe Act the said annexure is open for inspection at the Registered Office of the Company.Any shareholders interested in obtaining a copy of the same may write to the CompanySecretary.

Disclosures as per the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013

Your Company has zero tolerance for sexual harassment at its workplace and has adopteda policy on prevention prohibition and redressal of sexual harassment at the workplace inline with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules thereunder for prevention and redressalof complaints of sexual harassment at workplace.

During the year under review your Company has received 19 complaints on sexualharassment and all the complaints have been resolved and appropriate action taken whereso necessary and no cases remain pending.


Based on the framework of internal financial controls and compliance systemsestablished and maintained by your Company work performed by the Internal Statutory andSecretarial Auditors including audit of internal financial controls over financialreporting by the Statutory Auditors and reviews performed by the Management and therelevant Board Committees including the Audit Committee the Board is of the opinion thatyour Company's internal financial controls were adequate and effective during theFinancial Year 2016-17.

Accordingly pursuant to Section 134(5) of the Act the Board of Directors to the bestof their knowledge and ability confirm that: (i) In the preparation of the accounts forthe year ended March 31 2017 the applicable accounting standards have been followed andthat there are no material departures; (ii) The Directors have selected such accountingpolicies and applied them consistently and made judgments and estimates that werereasonable and prudent in order to give a true and fair view of the state of affairs ofyour Company at the end of the financial year and of the Profit of your Company for thatperiod; (iii) The Directors have taken proper and sufficient care to the best of theirknowledge and ability for the maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of your Company and forpreventing and detecting fraud and other irregularities; (iv) They have prepared theFinancial Statements for the financial year ended March 31 2017 on a ‘going concern'basis; (v) The Directors have laid down internal financial controls for the company whichare adequate and are operating effectively; (vi) The Directors have devised proper systemsto ensure compliance with the provisions of all applicable laws and such systems areadequate and are operating effectively.


Your Company evolves and follows corporate governance guidelines and best practicessincerely not just to boost long-term shareholder value but also to respect minorityrights. We consider it our inherent responsibility to disclose timely and accurateinformation regarding our operations and performance as well as the leadership andgovernance of the Company.

During the second half of the year under review the Company witnessed leadershipchange at Tata Sons (our Promoter). During this period there were allegations maderegarding the ethics and governance of the Company. Clarifications were also sought by theregulators with respect to certain business decisions and governance processes. TheCompany would like to categorically deny the references and would like to impress upon youthat it has robust processes in place to ensure compliance to all regulatory requirements.The Company's Board exercises its independence both in letter and in spirit. The Directorshave always acted in the best interest of the Company and will continue to do so.

Further allegations were made in relation to certain acquisitions and divestments bythe Company and the financial condition of the Company. In this regard we wish tohighlight that the Company has made various strategic investments in properties bothoverseas and India with the aim of promoting the ‘Taj' brand and to expand thebusiness and operations of the Company. A number of these investments were made before theglobal downturn and financial crisis in 2008-09 when markets were buoyant. The‘black swan' event of collapse of the global markets in 2008-09 had an adverse impacton the hotel industry not just in India but globally and this led to decline in theunderlying asset values of the investments made by the Company. In some cases the Companywas therefore forced to sell the properties at a loss - such as in the case of OrientExpress Hotels (Belmond) and Taj Boston. In other cases where required the Company hastaken write downs on the relevant investments as per applicable accounting standards. Itshould also be noted that during this period the Company had also undertaken a divestmentof the Blue Sydney in Australia on which the Company realised a Profit. Allegations werealso made in relation to the terms of the lease obtained by the Company for The Pierre inNew York City. The Pierre is located at 5th Avenue and 61st Streetopposite Central Park a premier address in Manhattan. The hotel has one of the mostsought-after banquet venues in New York. Leasing of The Pierre was strategically importantfor the Company to establish its brand as well as visibility in the USA which is a keyfeeder market for the Taj Group's Indian operations. One should note that the lease termsof The Pierre have remained largely unchanged for a long period and the hotel was run andoperated on almost similar terms for the long time by earlier operators including FourSeasons and was thus available to the Company only on similar terms. Given the strategicvalue that would be added by addition of The Pierre in the Company's portfolio of hotelsthe Board of Directors of the Company had taken a considered decision to enter into thelease for The Pierre. In any event the Company reserves the option not to renew the leaseafter the initial period of ten years i.e. 2025. The Company has the right but not theobligation for two renewal options each for a ten years period up to June 30 2045.

Questions have also been raised about the acquisition of the Sea Rock property by theCompany. Acquisition of the Sea Rock property was of strategic importance to the Companydue to variety of reasons including the unique location of the property synergy with theexisting Taj Lands End Hotel and economies of scale. If a competitor were to acquire theSea Rock property then a competitor hotel across the road would have adverse impact on theannual turnover and Profitability of the marquee Taj Lands End property in addition toobstructing the view which the Taj Lands End Hotel currently enjoys. The timing of theacquisition of the Sea Rock property was just before the 26/11 terrorist attacks in Mumbaiand the collapse of the global markets in 2008/09. Prior to the latter two events themarkets were booming and the prices were buoyant. It could not be visualised that both theaforesaid events would occur in a short period post acquisition. Consequently takingcognizance of the changed business realities it was decided to insulate the acquisitionand incubate the asset in a separate company till such time the sector sentimentsimproved whilst pursuing with design development and residual approvals. The purchase ofthe Sea Rock hotel was put in a separate subsidiary as the transaction had not beencompleted. The original owner still has a 15% stake in the property and was responsiblefor getting all approvals. The Company originally planned to get an international partnerand for this reason this subsidiary was created. In any event since then the apexholding company for the Sea Rock property was made a 100% subsidiary and amalgamated intothe Company.

In the past the Company has taken write-offs on its investments as and when requiredby applicable accounting standards and policies. In spite of the write-offs taken by theCompany by and large the Company has maintained a healthy dividend record (barring twofinancial years viz. 2013-14 and 2014-15).

Your Board has closely monitored the events that unfolded during the leadershiptransition. The Audit Committee_of the Board ("Committee") reviewed theaforementioned issues including the correspondence between the Regulators and the Companyand the allegations made by Mr. Cyrus P. Mistry (both in public as well as in theproceedings before the National Company Law Tribunal initiated against our Promoter). TheCommittee also reviewed the Company's interventions the processes implemented andfollowed with respect to various compliances and disclosures and the rigours applied whensuch strategic investment decisions were taken. After due deliberations with relevantstakeholders and review of relevant documents the Committee expressed its con_dence inthe Company's processes to ensure compliance with the provisions of SEBI Regulations. TheCommittee noted that appropriate procedures were followed by your Company in preparing itsfinancial statements and addressing the business risk issues and that there has beencompliance with all legal requirements and corporate governance standards. It followstherefore that the aforesaid allegations by Mr. Cyrus P. Mistry in the variousproceedings representations and public statements against your Company and its governancewere incorrect and such statements were made without exercising proper care. As requiredby the Listing Regulations the report on Management Discussion and Analysis CorporateGovernance along with the Practising Company Secretary's Certificate regarding complianceof conditions of Corporate Governance and Business Responsibility Reporting form part ofthe Annual Report.


The Directors express their deep sense of appreciation for the contribution made by theemployees to the significant improvement in the operations of the Company.

The Directors also thank all the stakeholders including Members customers lendersvendors investors business partners and the Government of India for their continuedco-operation and support.

On behalf of the Board of Directors
N. Chandrasekaran
Mumbai May 26 2017 Chairman
Registered Office:
Mandlik House
Mandlik Road
Mumbai 400 001.
CIN: L74999MH1902PLC000183
Tel.: 022 66395515 Fax: 022 22027442