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Mac Charles (India) Ltd.

BSE: 507836 Sector: Services
NSE: N.A. ISIN Code: INE435D01014
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NSE 05:30 | 01 Jan Mac Charles (India) Ltd
OPEN 355.00
PREVIOUS CLOSE 360.00
VOLUME 743
52-Week high 549.95
52-Week low 295.65
P/E 20.48
Mkt Cap.(Rs cr) 472
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 355.00
CLOSE 360.00
VOLUME 743
52-Week high 549.95
52-Week low 295.65
P/E 20.48
Mkt Cap.(Rs cr) 472
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Mac Charles (India) Ltd. (MACCHARLESI) - Director Report

Company director report

Your Directors have pleasure in presenting the 37th Annual Report of the Companytogether with the Audited Statement of Accounts for the year ended 31st March 2017.

FINANCIAL RESULTS

(Rs. in millions)

Particulars 2016-17 2015-16
Segmentwise Turnover/Revenue
(a) Hotel Sales turnover 479.80 497.81
(b) Sale of Electricity 83.38 60.07
(c) Interest on Corporate loan/ deposits Received 91.31 160.09
(d) Rent Received on Commercial Spaces at Cessna Business Park 128.59 125.82
(e) Others 16.89 92.71
Total 799.97 936.50
Profit before Depreciation Finance 436.37 585.02
Cost & Tax
From Hotel Operations 133.09 239.04
From Segments other than the Hotel 303.28 345.98
436.37 585.02
Less : Depreciation 50.32 50.33
Less : Finance Cost 6.71 7.93
Profit before Tax 379.34 526.76
Provision for tax for the year 95.36 182.63
Profit for the year 283.98 344.13

TRANSFER TO RESERVES

During the financial year 2016-17 an amount of Rs.50/- millions

(Rs.100 millions last year) has been transferred to General Reserve out of amountavailable for appropriations.

HOTEL OPERATIONS

The Board is not happy to inform that during the financial year 2016-

17 the overall revenue of the hotel was lower and with effective cost control &effective working capital management the Company tried its best to maintain its operatingperformance which has been highlighted above and in the Management Discussion &Analysis Report.

During the financial year 2016-17 the total revenue of the company has decreased toRs.800 millions as compared to Rs.936 millions in the previousyear.Theprofit after tax forthe year is Rs.284 millions during the financial year 2016-17 as compared to Rs.344millions during financial year 2015-16. This decrease has been mainly on account of lowerHotel revenue & ‘other income' during the financial year. On the whole theoverall performance for the year has been lower. The Company has been able to retainmarket share through conference on business summits out-door catering and also continuingin its leading position in wedding related business in the city. This performance has beenachieved despite new entrants into the hospitality business and/or expansion in theexisting ones. As a result during the year new supply as especially in our neighborhoodhas hit the market with increasing inventory of rooms thereby reflecting an increase of50% of inventory in the 5 star and 5 star deluxe segments in the city and is situatedright in the middle of the Company's key corporate catchment areas. To make the matterworse there has been acute competition due to variable discount factors offered by manyof the members of the hotel industry.

FUTURE PROSPECTS

The future of the hotel industry is facing tough times ahead in view of cost cuttingmeasure initiated by the corporate companies in the competitive economy prevailingworldwide. Further availability of video conferencing and convenient airline facility areenabling the business traveler to skip room bookings. In addition there is substantialincrease in supply side of the five star hotels in Bengaluru especially in theneighborhood resulting in low occupancy and undercutting of rates. The liquor sale hasbeen banned as the Hotel is situated on the National Highway. However the Company isstriving hard to get more business through various marketing initiatives.

FINANCE

During the year under report the financial position of the Company has beenstrengthened despite the moderate decrease in Hotel business. The Company'sdiversification into electricity generation through Wind Turbine Generators and othersources of income from investments have helped pushing up the bottomline and the

Company is able to show higher net profit segment performance is furnished elsewhere inthe Annual Report.

DIVIDEND

Your Directors have recommended the dividend of Rs.10/- per Equity Share for thefinancial year ended March 31 2017.

FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign Exchange Earnings during the year were Rs.138 millions which is 29% of theHotel Sales Turnover. The Foreign Exchange utilization during the year was Rs.18.98millions.

SUBSIDIARY COMPANIES

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 ofproviso to sub section (3) of Section 129 of the Companies.

DEBT

During the year under report the Company has entered into facility arrangement withHDFC Bank Ltd for its borrowing facilities. The Company was sanctioned borrowingfacilities aggregating to Rs.92 crores from the HDFC Bank Ltd. The outstanding debt as onMarch 31 2017 was Rs.40 Crore. The above borrowing are within the powers of the Board ofDirectors of the Company.

DUES TO SMALL SCALE UNDERTAKINGS

There are no dues payable to small scale undertakings.

CORPORATE GOVERNANCE

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.

ENERGY CONSERVATION

Conservation of energy continues to be on top priority of the management. Theinformation on energy conservation is detailed herein below. a) During the year underreport the Company has generated 190 Lakh units green power which is being utilizedpartially for captive consumption of the Hotel & group company and the balance unitsgenerated is being sold to Govt. of Karnataka / third party consumers. b) An effectivekey-tag system is in vogue in all guest rooms to switch off lights & power connectionsautomatically. c) Substantially switched over to LED lamps from conventional lamps with aview to saving energy upto 60% on lighting. d) Installed solar panels which are feedinghot water required for the guest rooms. e) Imported and installed three highly fuelefficient screw chillers for our AC plant. f) Replaced window with double glazedreflective glass with a view to save power an AC consumption. g) Installed two on load tapcharger transformers for stabilizing voltage fluctuations and thereby to save power andprevent damage to electric motors and other installations. h) Thermostatic ControlsTimers and Photo Cell Switches have been installed wherever necessary to control powerconsumption. i) Imported and installed two temperature control systems to reduce powerconsumption. j) Constituted an energy conservation committee to monitor power consumptionregularly.

TECHNOLOGY ABSORPTION

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 sound free fridges in guest rooms andvarious latest hotel operational equipments. Further the Hotel has been conforming to thestringent Le Meridien's International Standards.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. P.R. Ramakrishnan and Mr. Aditya Virwani have been appointed as AdditionalDirectors with effect from 01.12.2016 till the ensuing Annual General Meeting of theCompany from the Embassy Group consequent to their acquisition of 73.4% equity shares ofthe

Company.

The Company has received declarations from all the Independent

Directors of the Company confirming that they meet the criteria of independence asprescribed under Section 149(6) of the Companies Act 2013 and Clause 49 of the ListingAgreement with the Stock

Exchanges.

BOARD 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 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 basis of thecriteria such as the Board composition and structure effectiveness of Board processinformation and functioning etc. The performance of the committees was evaluated by theBoard on the basis of the criteria such as the composition of the committees effectivenessof committee meetings etc. The Board and Nomination and Remuneration Committee reviewedthe performance of the individual directors on the basis of the criteria such as thecontribution of individual director to the Board and committee meetings like preparednesson the issue to be discussed meaningful and constructive contribution and inputs inmeetings etc. In a separate meeting of independent directors performance ofnon-independent director performance of the Board as a whole and performance of Chairmanwas evaluated.

BOARD DIVERSITY

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

& Remuneration Committee framed a policy for selection and appointment ofDirectors Key Managerial Personnel Senior Management and their remuneration as requiredunder Section 178 of the Companies Act 2013 and Clause 49(IV) of the Listing Agreementwith the Stock Exchanges. The Nomination & Remuneration Policy of the Company isannexed 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 director's 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 be appointed in Senior Management andKey Managerial positions and to determine their remuneration.

2) To determine remuneration based on the Company's size and financial position andtrends 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 Company's operations.

5) To retain motivate and promote talent and to ensure long term sustainability oftalented managerial persons and create competitive advantage.

CORPORATE GOVERNANCE

Your Company is committed to maintain the highest standards of

Corporate Governance. As required under Clause 49 of the Listing

Agreement with the Stock Exchanges the report on Management Discussion and AnalysisCorporate Governance as well as the

Auditors' Corporate Governance as well as the Auditors' certificate on the complianceof Corporate Governance are annexed and form part of the Annual Report.

RISK MANAGEMENT

Pursuant to section 134 (3)(n) of the Companies Act 2013 & regulation 17 of theListing Regulations the Company has constituted a Risk Management Committee. As part ofthe risk assessment and minimization procedures the Company had identified certain riskareas with regard to the operations of the Company and initiated steps wherever possiblefor risk minimization. The Company's Board is conscious of the need to review the riskassessment and minimization procedures on regular intervals. During the year under reviewthe Company has not received any order passed by the regulators/ courts/ tribunals whichimpacted the going concern status and Company's operation in future.

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 2017 and states that: a)In the preparation of the annual accounts for the year ended March 31 2017 theapplicable accounting standards have been followed along with proper explanation relatingto materials departures if any; b) The Directors have selected such accounting policiesand applied them consistently and made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company at theend of the financial year under review and of the profit or loss of the Company for thatperiod: c) The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets 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) Thedirectors have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively; and f)The Directors have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 197(12) of the Companies Act 2013 read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 a statement showing the names and other particulars of theemployees drawing remuneration in excess of the limits set out in the said Rules areprovided in the Annexure forming part of the Annual Report.

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 arm's length basis. All related party transactionsare presented to the Audit Committee and the Board for approval. The policy on materialityof related party transactions and dealing with related party transactions as approved bythe Board can be accessed on the Company's website. The details of the transactions withrelated party are provided in the accompanying financial statements.

AUDITORS' REPORT ON CORPORATE GOVERNANCE

As required by Clause 49 of the Listing Agreement the Auditor's Certificate is givenas 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 2016 to hold office upto theconclusion of the ensuing

Annual General Meeting of the company and are liable to retire by rotation on theensuing AGM date. The notes on accounts referred to in the Auditors' Report are self-explanatory and therefore do not call for any further comments. There are no fraudsreported by the Auditors during the Financial Year under report.

INTERNAL AUDITORS

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.

SECRETARIAL AUDITOR

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 2017-18. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark. The Secretarial

Audit Report is annexed elsewhere in this Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock

Exchanges Report on Management Discussion and Analysis and

Corporate Governance and Compliance Certificate

Governance is 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 ofDirectors at its meeting held on 05.02.2016 has devised a Corporate Social ResponsibilityPolicy which interalia includes the constitution of the said committee and corporatesocial responsibility activities to be taken by the Company. The said policy may bereferred at the Company's website. The Annual Report on CSR activities is annexed to thisReport.

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 Company's 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.

DISCLOSURES:

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 four (4) Directors amongst which two (2) are IndependentNon-Executive Directors namely

Mr. P.B. Appiah and Mr. M.R.B. Punja one (1) Non-executive director namely Mr. P.R.Ramakrishnan and one (1) is Mr. C.B. Pardhanani Chairman of the Company. All therecommendations made by the Audit Committee 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 the Listing Agreement with the Stock Exchanges the Board ofDirectors at its meeting held on 05.02.2016 has adopted a vigil mechanism/whistle blowerpolicy of the Company. The policy provides a framework for directors and employees toreport genuine concerns about unethical behavior actual or suspected fraud or violationof the Company's code of conduct or ethics policy. Protected disclosures can be made by awhistle blower through and email or to the Chairman of the Audit Committee. The vigilmechanism/whistle blower policy can be accessed on the Company's websitemaccharlesindia.com

D) GREEN INITIATIVES

Electronic copies of the Annual Report and notice of the ensuringon Corporate AGM aresent to all the members whose email address are registered with the Company /DepositoryParticipant(s). For members who have not registered their email addresses physical copiesof the Annual Report and the notice of ensuing AGM are sent in the permitted mode. Membersrequiring physical copies can send a request to the Company Secretary. The Company isproviding e-voting facility to all members to enable them to cast their voteselectronically on all resolutions set forth in Notice. The instructions for e-voting areprovided in the Notice.

E) DISCLOSURE AS PER SEXUAL HARASSMENT

OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION AND 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 2016-17 the

Company has received no complaints on sexual harassment.

F) 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.

G) 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 attached elsewhere in this report.

H) DISCLOSURES

1. Declaration by the Chief Executive Officer affirming compliance with the code ofconduct is annexed elsewhere in this Annual Report.

2. There are no material changes and commitments made during the financial year.

3. There are no changes in the nature of business during the financial year.

4. There are no material variation of market capitalization during the financial year.

5. There are no demat suspense accounts / unclaimed suspense account during thefinancial year.

6. Necessary disclosures of Accounting Treatment have been made in the financialstatements. The Financial Statements of the

Company have been prepared in accordance with the INDAS to comply with the AccountingStandards specified under Section

133 of the Act read with Rule 7 of the Companies (Accounts)

Rules 2014.

7. The extract of Annual Return is annexed elsewhere in this Annual Report.

I) GENERAL

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 Courts of Tribunals which impact the going concern status andCompany's operations in future.

DEMATERIALIZATION

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 Company's equity shares isINE435D01014.

ACKNOWLEDGEMENTS

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 and HDFC Bank for their co-operation and support. The Directors wish toplace on record the support and encouragement received from the Department of TourismGovernment of India Karnataka State Government and Foreign collaborators M/s. Le Meridien/ Marriott International. The Directors also acknowledge the dedicated services renderedby the officers and all the staff of the company.

For and on behalf of the Board
Bengaluru C.B. Pardhanani
8 August 2017 Chairman