TO THE MEMBERS
Your Directors have pleasure in presenting the 36th Annual Report of the Companytogether with the Audited Statement of Accounts for the year ended 31st March 2016.
|Particulars ||2015-16 ||2014-15 |
|Segmentwise Turnover/Revenue || || |
|(a) Hotel Sales turnover ||510428128 ||423349874 |
|(b) Sale of Electricity ||60073470 ||40468781 |
|(c) Interest on Corporate loan/ deposits Received ||159614672 ||90980633 |
|(d) Rent Received on Commercial Spaces at Cessna Business Park ||119607090 ||116840412 |
|(e) Dividend/ Profit/(Loss) on sale of investments ||49690773 ||46029384 |
|Total ||899414133 ||717669084 |
|Profit before Depreciation Finance Cost & Tax || || |
|From Hotel Operations ||156074278 ||92864355 |
|From Investments other than the Hotel ||388986005 ||294295206 |
| ||545060283 ||387159561 |
|Less: Depreciation ||34725010 ||28344387 |
|Less: Finance Cost ||592154 ||812102 |
|Profit before Tax ||509743119 ||358003072 |
|From Hotel Operations ||120757114 ||63707866 |
|From Investments other than the Hotel ||388986005 ||294295206 |
| ||509743119 ||358003072 |
|Provision for tax for the year ||175726579 ||107884414 |
|Profit for the year ||334016540 ||250118658 |
|Add: Balance brought forward from the previous year ||196068515 ||171715493 |
|Amount available for Appropriation ||530085055 ||421834151 |
|APPROPRIATIONS || || |
|(i) General Reserves ||100000000 ||100000000 |
|(ii) Dividend: ||131010520 ||104808416 |
|iii) Corporate Dividend Tax ||26670659 ||20955517 |
|iv) Balance carried to Balance Sheet ||272403876 ||196070218 |
TRANSFER TO RESERVES
During the financial year 2015-16 an amount of Rs. 1000 lakhs (Rs.1000 lakhs last year)has been transferred to General Reserve out of amount available for appropriations.
The Board is pleased to inform that during the financial year 2015-16 the overallrevenue of the hotel was higher and with effective cost control & effective workingcapital management the Company enhanced its operating performance which has already beenhighlighted above and in the Management Discussion & Analysis Report.
The Board is pleased to inform you that during the financial year 2015-16 the totalrevenue of the company has increased to Rs.8994 lakhs as compared to Rs.7177 lakhs inthe previous year. However the hotel revenue has moderately increased. The profit aftertax for the year is Rs.3340 lakhs during the financial year 2015-16 compared to Rs.2501lakhs during financial year 2014-15. This increase has been mainly on account ofother income during the financial year. On the whole the overall performancefor the year has been higher with effective cost control other segments & businessand increase in business due to intensive efforts of marketing network. The Company hasbeen able to retain market share through conference on business summits out-door cateringand also continuing in its leading position in wedding related business in the city. Thissuccess has been achieved despite new entrants into the hospitality business and/orexpansion in the existing ones. As a result during the year new supply has hit themarket with increasing inventory of rooms thereby reflecting an increase of 50% ofinventory in the 5 star and 5 star deluxe segments in the city and is situated right inthe middle of the Companys key corporate catchment areas. To make the matter worsethere has been acute competition due to variable discount factors offered by many of themembers of the hotel industry.
The future of the hotel industry is facing tough times ahead in view of cost cuttingmeasure initiated by the corporate companies in the sluggish economy prevailing worldwide.Further availability of video conferencing and convenient airline facility are enablingthe business traveler to skip room bookings. In addition there is substantial increase insupply side of the five star hotels in Bengaluru resulting in low occupancy andundercutting of rates. However the Company is striving hard to get more business throughvarious marketing initiatives.
During the year under report the financial position of the Company has beenstrengthened despite the moderate increase in Hotel business. The Companysdiversification into electricity generation through Wind Turbine Generators and othersources of income from investments have helped pushing up the bottomline and the Companyis able to show higher net profit after income tax. The segment performance is furnishedelsewhere in the Annual Report.
As you aware the interim dividend of Rs.10 per Equity Share for the financial yearended March 31 2016 amounting to Rs.131010520/- was paid to the shareholders on 25thFebruary 2016. Hence your directors have not recommended final dividend for the financialyear ended as on 31st March 2016.
FOREIGN EXCHANGE EARNINGS AND OUTGO
Foreign Exchange Earnings during the year were Rs.1334/- lakhs which is 28% of theHotel Sales Turnover. The Foreign Exchange utilization during the year was Rs.227/- lakhs.
The Company has one subsidiary namely Airport Golfview Hotels & Suites Pvt. Ltd.Kochi a wholly owned and a non-material non-listed Indian Subsidiary.
In terms of proviso to sub section (3) of Section 129 of the Companies Act 2013 areport on the performance and financial position of the subsidiary of the Company is setout in the prescribed Form AOC-1 which forms a part of the Consolidated FinancialStatements.
DUES TO SMALL SCALE UNDERTAKINGS
There are no dues payable to small scale undertakings.
Members are aware that the Corporate Governance code has become a statutory requirementas per listing guidelines framed by the Stock Exchanges. Members will be happy to knowthat their Company is complying with the stipulations of the new code as on date. In linewith this requirement of the code a Corporate Governance Reports and a ManagementDiscussion and Analysis Report of the Company is furnished elsewhere in this AnnualReport.
Conservation of energy continues to be on top priority of the management. Theinformation on energy conservation is detailed herein below.
a) During the year under report the Company has generated 179 Lakh units green powerwhich is being utilized partially for captive consumption of the Hotel and the balanceunits generated is being sold to Govt. of Karnataka / third party consumers.
b) An effective key-tag system is in vogue in all guest rooms to switch off lights& power connections automatically.
c) Substantially switched over to LED lamps from conventional lamps with a view tosaving energy upto 60% on lighting.
d) Installed solar panels which are feeding hot water required for the guest rooms.
e) Imported and installed three highly fuel efficient screw chillers for our AC plant.
f) Replaced window with double glazed reflective glass with a view to save power an ACconsumption.
g) Installed two on load tap charger transformers for stabilizing voltage fluctuationsand thereby to save power and prevent damage to electric motors and other installations.
h) Thermostatic Controls Timers and Photo Cell Switches have been installed wherevernecessary to control power consumption.
i) Imported and installed two temperature control systems to reduce power consumption.
j) Constituted an energy conservation committee to monitor power consumption regularly.
In the opinion of the Board the required particular pertaining to technologyabsorption are not applicable as hotel forms part of the service industry and the Companydoes not have any significant manufacturing operations. However the management has beenadopting the latest technology like LCD TV systems high speed internet installed in allthe guest rooms latest high speed computers modern guest amenities best audio-videoequipment newest model transport vehicles for complimentary transport of hotel guestsvideo conferencing facility latest models of soundfree fridges in guest rooms and variouslatest hotel operational equipments. Further the Hotel has been conforming to thestringent Le Meridiens International Standards.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Pursuant to Section 149 of the Companies Act 2013 read with Clause 49 of the ListingAgreement with the Stock Exchanges a Woman Director should be a member of the Board ofDirectors of the Company. In accordance with the laws. Ms. Tanya Girdhar has beenappointed as an Independent Additional Director of the Company with effect from21.08.2015. Ms. Sangeeta C. Pardhanani resigned as director of the company with effectfrom 05.02.2016.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under Section 149(6)of the Companies Act 2013 and Clause 49 of the Listing Agreement with the StockExchanges.
The Board of Directors has carried out an annual evaluation of its own performanceBoard committees and individual directors pursuant to the provisions of the Companies Act2013 and corporate governance requirements as prescribed by SEBI under clause 49 of thelisting Agreements. The performance of the Board was evaluated by the Board on the basisof the criteria such as the Board composition and structure effectiveness of Boardprocess information and functioning etc. The performance of the committees was evaluatedby the Board on the basis of the criteria such as the composition of the committeeseffectiveness of committee meetings etc. The Board and Nomination and RemunerationCommittee reviewed the performance of the individual directors on the basis of thecriteria such as the contribution of individual director to the Board and committeemeetings like preparedness on the issue to be discussed meaningful and constructivecontribution and inputs in meetings etc. In a separate meeting of independent directorsperformance of non-independent director performance of the Board as a whole andperformance of Chairman was evaluated.
A diverse Board enables efficient functioning through differences in perspective andskill and also fosters differentiated thought processes at the back of varied industrialand management expertise gender knowledge and geographical background. Your Boardrecognizes the importance of a diverse composition and has adopted a Board DiversityPolicy which sets out the approach to diversity. The Board diversity policy is availableon our website maccharlesindia.com
NOMINATION & REMUNERATION POLICY
The Board of Directors on the recommendation of the Nomination & RemunerationCommittee framed a policy for selection and appointment of Directors Key ManagerialPersonnel Senior Management and their remuneration as required under Section 178 of theCompanies Act 2013 and Clause 49(IV) of the Listing Agreement with the Stock Exchanges.The Nomination & Remuneration Policy of the Company is annexed to this Report.
NOMINATION & REMUNERATION COMMITTEE
Nomination and Remuneration Committee consists of the following directors namely Mr.C.B. Pardhanani Chairman and Mr. P.B. Appiah Director.
Brief description of terms of reference:
- Identifying persons who are qualified to become directors and
- Identifying persons who may be appointed as Key Managerial Personnel seniormanagement in accordance with the criteria laid down and recommend to the Board for theirappointment and removal;
- Carry on the evaluation of every directors performance;
- Formulation of the criteria for determining qualifications positive attributes andindependence of a director;
- Recommend to the Board a policy relating to the remuneration of the directors keymanagerial personnel and other employees;
- Formulation of criteria for evaluation of Independent Directors and the Board.
- Devising a policy on Board diversity; and
- Any other matter as the Board may decide from time to time.
NOMINATION AND REMUNERATION POLICY
The objectives of the Policy
1) To lay down criteria and terms and conditions with regard to identifying person whoare qualified to become Directors (Executive and Non-Executive) and persons who may beappointed in Senior Management and Key Managerial positions and to determine theirremuneration.
2) To determine remuneration based on the Companys size and financial positionand trends and practices on remuneration prevailing in peer Companies.
3) To carry our evaluation of the performance of Directors.
4) To provide them reward linked directly to their effort performance dedication andachievement relating to the Companys operations.
5) To retain motivate and promote talent and to ensure long term sustainability oftalented managerial persons and create competitive advantage.
Your Company is committed to maintain the highest standards of Corporate Governance. Asrequired under Clause 49 of the Listing Agreement with the Stock Exchanges the report onManagement Discussion and Analysis Corporate Governance as well as the AuditorsCorporate Governance as well as the Auditors certificate on the compliance ofCorporate Governance are annexed and form part of the Annual Report.
RISK MANAGEMENT COMMITTEE
Pursuant to Clause 49 of the Listing Agreement the Company has constituted a RiskManagement committee. The details of the Committee and its terms of reference are set outin the Corporate Governance Report.
Risk Management Committee consists of the following persons namely Mr. C.B. PardhananiChairman Mr. P.B. Appiah Director of Le Meridien Bengaluru. Mr. M.S. Reddy V P Finance& Company Secretary acts as secretary to the committee.
The Company has a robust Risk Management framework to identify and evaluate businessrisks and opportunities. This framework seeks to create transparency minimize adverseimpact on business objective and enhance the Companys competitive advantage. Therisk framework defines the risk management approach across the enterprise at variouslevels including documentation and reporting.
The framework enables risks to be appropriately rated and graded in accordance withtheir potential impact and likelihood. The two key components of risks are the probability(likelihood) of occurrence if the risk occurs. Risk is analyzed by combining estimates ofprobability and impact in the context of existing control measures.
DIRECTORS RESPONSIBILITY STATEMENT
The Board of Directors acknowledges the responsibility for ensuring compliance with theprovisions of Section 134(3)(c) read with Section 134(5) of the Companies Act 2013 in thepreparation of the annual accounts for the year ended March 31st 2016 and states that:
a) In the preparation of the annual accounts for the year ended March 31st 2016 theapplicable accounting standards have been followed along with proper explanation relatingto materials departures if any;
b) The Directors have 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 underreview and of the profit or loss of the Company for that period:
c) The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detection fraud and other irregularities;
d) The directors have prepared the annual accounts on a going concern basis;
e) The directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
f) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
PARTICULARS OF EMPLOYEES
Information as per Rules 5(2) & (3) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2015 there are no employees drawing remuneration inexcess of the limits set out in the said rules.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
There were no contracts or arrangements entered into by the Company in accordance withthe Section 188 of the Companies Act 2013. However there were material related partytransactions in terms of Clause 49 of the Listing Agreements. All material related partytransactions that were entered by the Company during the financial year were in theordinary course of business and on an arms length basis. All related partytransactions are presented to the Audit Committee and the Board for approval. The policyon materiality of related party transactions and dealing with related party transactionsas approved by the Board can be accessed on the Companys website. The details of thetransactions with related party are provided in the accompanying financial statements.
AUDITORS REPORT ON CORPORATE GOVERNANCE
As required by Clause 49 of the Listing Agreement the Auditors Certificate isgiven as an annexure to Directors Report.
AUDITORS & AUDITORS REPORT
M/s. K.B. Nambiar & Associates Chartered Accountants Bengaluru Firm (FirmRegistration No. 002313S) was appointed as Statutory Auditors of the Company at the lastAnnual General Meeting held on 29th September 2015 to hold office upto the conclusion ofthe third consecutive Annual General Meeting subject to ratification by the members atevery Annual General Meeting. Therefore ratification of appointment of Statutory Auditorsis being sought from the members of the Company at the ensuing AGM. The notes on accountsreferred to in the Auditors Report are self-explanatory and therefore do not callfor any further comments. There are no frauds reported by the Auditors during theFinancial Year under report.
M/s. B.P. Rao & Company Internal Auditors have been conducting quarterly audits ofall operations of the Company and their findings have been reviewed regularly by the AuditCommittee. Your Directors note with satisfaction that no material deviations from theprescribed policy and procedures have been observed.
The Board has appointed B.Chandu Narayan Practicing Company Secretaries Bengaluru toconduct Secretarial Audit under the provisions of Section 204 of the Companies Act 2013for the financial year 2016-17. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark. The Secretarial Audit Report is annexedelsewhere in this Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges Report onManagement Discussion and Analysis and Corporate Governance and Compliance Certificate onCorporate Governance are annexed to this Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In line with the requirement of Section 135 of the Companies Act 2013 the CorporateSocial Responsibility Committee has been constituted by the Board of Directors of theCompany at its meeting held on 05.02.2016. The said Committee comprises of Mr. C.B.Pardhanani Chairman of the Company and Mr. P.B. Appiah the Chairman of the AuditCommittee.
As required under Section 135 of the Companies Act 2013 the Board of Directors at itsmeeting held on 05.02.2016 has devised a Corporate Social Responsibility Policy whichinteralia includes the constitution of the said committee and corporate socialresponsibility activities to be taken by the Company. The said policy may be referred atthe Companys website. The Annual Report on CSR activities is annexed to this Report.
INTERNAL FINANCIAL CONTROL POLICY AND ITS ADEQUACY
The Board has adopted an Internal Financial Control Policy to be followed by theCompany and such policies and procedures adopted by the Company for ensuring the orderlyand efficient conduct of its business including adherence to Companys policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information. The Audit Committee evaluates the internal financialcontrol system periodically. The observation and comments of the Audit Committee areplaced before the Board.
Your Board reviews and observes risk management and minimization procedures followed bythe Company which are adequate and operating effectively. Although risk management policyand risk management committee is not applicable to your Company under the purview of thelaw the system established in the Company to identify assess manage monitor andmitigate risk and control is considered sufficient and adequate. Risk Management is anintegral part of the Companys business process. In your Company risks are carefullymapped and a risk management framework is involved.
A) MEETINGS OF THE BOARD
Five (5) meetings of the Board of Directors were held during the year. The details ofthe Board Meeting and the attendance of the Directors are provided in the CorporateGovernance Report.
B) COMPOSITION OF AUDIT COMMITTEE
The Audit Committee comprises three (3) Directors amongst which two (2) are IndependentNon-Executive Directors namely Mr. P.B. Appiah and Mr. M.R.B. Punja and one (1) is Mr.C.B. Pardhanani Chairman of the Company. All the recommendations made by the AuditCommittee were accepted by the Board.
C) VIGIL MECHANISM/WHISTLE BLOWER POLICY
Pursuant to Section 177 of the Companies Act 2013 read with Clause 49(II)(F) of theListing Agreement with the Stock Exchanges the Board of Directors at its meeting held on05.02.2016 has adopted a vigil mechanism/whistle blower policy of the Company. The policyprovides a framework for directors and employees to report genuine concerns aboutunethical behavior actual or suspected fraud or violation of the Companys code ofconduct or ethics policy. Protected disclosures can be made by a whistle blower throughand email or to the Chairman of the Audit Committee. The vigil mechanism/whistle blowerpolicy can be accessed on the Companys website maccharlesindia.com
D) DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has zero tolerance towards sexual harassment at workplace and during theyear under review your Board has constituted on internal Complaints Committee to considerand redress complaints of sexual harassment & also adopted a policy on preventionprohibition and redressal of sexual harassment at workplace in line with the provisions ofSexual Harassment of women at Workplace (Prevention Prohibition and Redressal) Act 2013and the rules framed thereunder.
During the financial year 2015-16 the Company has received no complaints on sexualharassment.
E) PARTICULARS OF LOANS GIVEN INVESTMENT MADE GUARANTEES GIVEN AND SECURITY PROVIDED
Particulars of loans given investments made along with the purpose for which the loanis proposed to be utilized by the recipient are provided in the financial statements.
F) PARTICULARS OF REMUNERATION
Disclosure pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are not applicable company as none isdrawing in excess of the stipulated remuneration.
1. Details pertaining to remuneration and other details as required under section197(12) of the act read with rule 5 of the Companies (Appointment and Remuneration ofManagerial personnel) rules 2014 are not applicable as there is no remuneration paid toDirectors except sitting fees professional fees & 1% commission to the Non-executiveChairman. Further there was no increase in remuneration of Chief Finance Officer CompanySecretary & Chief Executive Officer in the financial 2015-16.
2. Declaration by the Chief Executive Officer affirming compliance with the code ofconduct is annexed elsewhere in this Annual Report.
3. There are no material changes and commitments made during the financial year.
4. There are no changes in the nature of business during the financial year.
5. There are no material variation of market capitalization during the financial year.
6. There are no demat suspense accounts / unclaimed suspense account during thefinancial year.
7. Necessary disclosures of Accounting Treatment have been made in the financialstatements. The Financial Statements of the Company have been prepared in accordance withthe Generally Accepted Accounting Principles in India (Indian GAAP) to comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
8. The extract of Annual Return is annexed elsewhere in this Annual Report.
Your directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Companies Act 2013.
2. Issue of equity shares with differential rights as to dividend voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme.
4. No significant or material orders were passed by the Regulators or Courts ofTribunals which impact the going concern status and Companys operations in future.
The equity shares of the Company have been admitted for dematerialization with both theDepositories viz. Central Depository Services (India) Limited (CDSL) and NationalSecurities Depository Limited (NSDL). The ISIN allotted to your Companys equityshares is INE435D01014.
Your Directors are grateful to the Shareholders for their support and co-operationextended to the Company for many years. The Directors also thank the Banks namely StateBank of India State Bank of Mysore and HDFC Bank for their co-operation and support. TheDirectors wish to place on record the support and encouragement received from theDepartment of Tourism Government of India Karnataka State Government and Foreigncollaborators M/s. Le Meridien / Starwood Hotels & Resorts. The Directors alsoacknowledge the dedicated services rendered by the officers and all the staff of thecompany.
| ||For and on behalf of the Board |
|Bengaluru ||C.B. Pardhanani |
|03 August 2016 ||Chairman |