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Mahindra Holidays & Resorts India Ltd.

BSE: 533088 Sector: Services
NSE: MHRIL ISIN Code: INE998I01010
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VOLUME 5650
52-Week high 469.00
52-Week low 257.37
P/E 35.31
Mkt Cap.(Rs cr) 4,686
Buy Price 0.00
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Sell Price 0.00
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OPEN 359.60
CLOSE 358.15
VOLUME 5650
52-Week high 469.00
52-Week low 257.37
P/E 35.31
Mkt Cap.(Rs cr) 4,686
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Mahindra Holidays & Resorts India Ltd. (MHRIL) - Director Report

Company director report

Dear Shareholders

Your Directors are pleased to present their Twentieth Report together with the auditedfinancial statements of your Company for the year ended March 31 2016.

1. Operations and Financial Overview

During 2015-16 your Company performed creditably in spite of a subdued consumersentiment especially towards high-value discretionary spend categories. It addedaround 16200 new members to its vacation ownership business taking the total membershipto close to two lakh at the end of the year. The new member addition was higher ascompared to the previous year and reflects the successful execution of Company’sstrategy to focus on high quality leads from pull-based channels such as referrals anddigital. During the year the Company added 87 new room units taking the total inventoryto 2879 units as of March 31 2016.

The Company during the month of September 2015 had increased its stake in HolidayClub Resorts Oy Finland (HCR) from 23.3 per cent to 85.6 per cent resulting in HCRbecoming a subsidiary company of the Company.

Your Company’s total income (including other income) grew from Rs 80756 lakh in2014-15 to Rs 96261 lakh in 2015-16. Profit after taxes (PAT) grew from Rs 7902 lakh in2014-15 to Rs 11735 lakh in 2015-16. Diluted earnings per share (EPS) for 2015-16 stoodat Rs 13.29 up from Rs 8.98 in the previous year.

Your Company’s consolidated total income (including other income) during 2015-16was Rs 160382 lakh. The consolidated PAT was Rs 9906 lakh and the diluted EPS was Rs11.22. The consolidated numbers include results of HCR subsequent to its becoming asubsidiary of your Company.

There are no audit qualifications in the standalone or in the consolidated financialstatements by the Statutory Auditors for the year under review.

2. Financial Highlights (Standalone)

( Rs Lakh)
2016 2015
Income:
Income from sale of Vacation Ownership and other services 95153 79485
Other Income 1108 1271
Total Income 96261 80756
Expenditure:
Less: Employee Cost & other expenses (71911) (61506)
Profit before Depreciation Interest and Taxation 24350 19250
Less: Depreciation (7133) (6541)
Interest (8) (25)
Profit for the year before Exceptional Item and Tax 17209 12684
Less: Exceptional Item (pre-tax) - (2188)
Profit for the year before Tax 17209 10496
Less: Provision for Tax – Current Tax (4984) (1920)
– Deferred tax (net) (490) (674)
Net Profit for the year after tax 11735 7902
Balance brought forward from earlier years 34070 37688
Less: Adjustment on Amalgamation (1516) (4560)
Less: Loss of Bell Tower Resorts Private Limited erstwhile wholly owned subsidiary for the year 2013-14 - (870)
Less: Depreciation adjustment consequent to transition to Schedule II of the Companies
Act 2013 net of deferred tax of Rs 528 lakh - (1026)
44289 39134
Appropriations:
General Reserve (1170) (790)
Proposed Dividend on Equity Shares (4439) (3551)
Income Tax on Proposed Dividend (904) (723)
Surplus carried to Balance Sheet 37776 34070

3. Dividend

Your Directors are pleased to recommend a dividend of Rs 5/- per equity share of facevalue Rs 10/- each for the financial year ended March 31 2016. The dividend if approvedat the ensuing Annual General Meeting will be paid to the shareholders whose names appearon the register of members of the Company as on the Book Closure Date. The equity dividendoutgo for 2015-16 inclusive of tax on distributed profits would absorb a sum of Rs5343 lakh (as compared to Rs 4274 lakh comprising the dividend of Rs 4/- per equityshare and tax on distributed profits paid for the previous financial year).

4. Transfer to Reserve

The Board of Directors proposes to transfer Rs 1170 lakh to the General Reserverepresenting around 10 per cent of the profit for the year. The balance is proposed to beretained in the Profit & Loss Account.

5. Share Capital

The paid up equity share capital as on March 31 2016 was Rs 8878 lakh. Duringthe year under review your Company did not issue shares with differential voting rights /sweat equity except fresh grant issued under the Company’s Employee Stock OptionScheme 2014 discussed later in this report. Details of Directors’ shareholding as onMarch 31 2016 are mentioned in the Corporate Governance Report which forms a part ofthis Annual Report.

6. Scheme of Amalgamation and Arrangement pertaining to Competent Hotels PrivateLimited Divine Heritage Hotels Private Limited and Holiday on Hills Resorts PrivateLimited wholly owned subsidiary companies

During the year under review Competent Hotels Private Limited (CHPL) DivineHeritage Hotels Private Limited (DHHPL) and Holiday on Hills Resorts Private Limited(HHRPL) wholly owned subsidiary companies of the Company were amalgamated with theCompany with effect from March 31 2016 being the date of filing the Order ofHon’ble High Court of Madras with the Registrar of Companies at Chennai. TheAppointed Date fixed for the amalgamation was April 1 2015 and the respectiveSchemes of the Amalgamation and Arrangement ("the Scheme") were approved by theHon’ble High Courts of Chennai Delhi Jaipur and Himachal Pradesh on January 292016 February 29 2016 February 19 2016 and February 25 2016 respectively.

Consequent to the above CHPL DHHPL and HHRPL ceased to be subsidiaries of the Companyand the entire business all the assets and liabilities duties and obligations of CHPLDHHPL and HHRPL have been transferred to and vested in the Company pursuant to the Schemewith effect from April 1 2015 ("the Appointed Date"). There was noallotment of shares to the equity shareholders of CHPL DHHPL and HHRPL since they werewholly owned subsidiaries of the Company. The amalgamation has been accounted under the‘pooling of interest method’ referred in Accounting Standard 14 and the assetsand liabilities transferred have been recorded at their book values as on the AppointedDate. Further difference of Rs 9317 lakh between value of assets and liabilitiesacquired at their book value at the Appointed Date as reduced by carrying value ofinvestment in the books of the Company was adjusted in the "Amalgamation and ReserveAccount" and the same was transferred to "Securities Premium Account" onthe Appointed Date as per the approved Scheme.

7. Related Party Transactions

Your Company undertakes various transactions with related parties in the ordinarycourse of business. All transactions entered with related parties during the year underreview are on arm’s length basis and in the ordinary course of business and that theprovisions of the Section 188 of the Companies Act 2013 ("the Act") are notattracted.

During the year under review your Company has provided corporate guarantee on behalfof MHR Holdings (Mauritius) Limited (MHR Holdings) wholly owned subsidiary of theCompany in respect of funds raised by it in Mauritius in order to further invest inHoliday Club Resorts Oy Finland (HCR). This investment in HCR by MHR Holdings were madethrough its wholly owned subsidiary Covington S..r.l Luxembourg (Covington). YourDirectors confirm that this transaction with MHR Holdings is in the ordinary course ofbusiness and at arm’s length as per the transfer pricing guidelines.

Apart from the above transaction with MHR Holdings your Company had not entered intoany contracts / arrangements / transactions with related parties which could be consideredmaterial in accordance with the policy of the Company i.e. Policy on Materiality of andDealing with Related Party Transactions (RPT Policy). The details of the above materialrelated party transactions with MHR Holdings at an aggregate level for the year endedMarch 31 2016 is annexed to this report as Annexure 1.

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

The RPT Policy as approved by the Audit Committee and the Board is available on thewebsite of the Company at the following link: http://www.clubmahindra.com/sites/default/files/Policy_on_RPT.pdf.

Your Directors draw attention of the members to Note No. 44 to the standalone financialstatements which sets out related party disclosure.

8. Particulars of Loans and Advances Guarantees or Investments

As your Company is engaged in the business of providing infrastructural facilities theprovisions of Section 186 of the Act related to loans made guarantees given or securitiesprovided are not applicable to the Company. However the details of such loans made andguarantees given to / on behalf of subsidiary companies / JV company are provided in thestandalone financial statement at Note No.44 to the standalone financial statements. Theseloans and guarantees for which loans are provided are proposed to be utilised by therespective recipients for their business purposes.

The details of loans and advances which are required to be disclosed in the annualreport of the Company pursuant to Regulation 34(3) read with Schedule V of the Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 ("SEBI Listing Regulations") are furnished separately as Annexure 2 to thisreport.

Particulars of investments made by the Company are provided in the standalone financialstatements at Note Nos. 13 and 16.

9. Significant and Material Orders passed by the Regulators or Courts

There are no significant and material orders passed by the Regulators/Courts/Tribunalwhich would impact the going concern status of the Company and its operations in future.

10. Corporate Social Responsibility

Corporate Social Responsibility (CSR) activities of the Company are guided by its CSRPolicy which is framed and approved by the Board. These are discussed in detail in theManagement Discussion and Analysis Report which forms a part of this Annual Report. Thestatutory disclosure with respect to CSR activities forms part of this report and isannexed herewith as Annexure 3.

11. Sustainability

In line with the philosophy of the Mahindra Group your Company is committed tofollowing sustainable practices in its operations. The details of the initiatives taken byyour Company in this regard are discussed in the section on Sustainability in theManagement Discussion and Analysis Report which forms a part of this Annual Report.

12. Corporate Governance Report

A Report on Corporate Governance along with a certificate from the statutory auditorsof the Company regarding the compliance of conditions of corporate governance asstipulated under Schedule V of the SEBI Listing Regulations forms a part of this AnnualReport.

13. Management Discussion and Analysis Report

A detailed analysis of the Company’s operational and financial performance as wellas the initiatives taken by the Company in key functional areas such as Resort OperationsMember Relations Quality and Information Technology are separately discussed in theManagement Discussion and Analysis Report which forms a part of this Annual Report.

14. Whistle Blower Policy & Vigil Mechanism

The details of the Whistle Blower Policy and Vigil Mechanism have been disclosed in theCorporate Governance Report which forms a part of this Annual Report.

15. Employees’ Stock Option

Employees Stock Options represent a reward system based on performance. It helpscompanies attract retain and motivate the best available talent. This also provides anopportunity to employees to participate in the growth of the Company besides creatinglong term wealth in their hands. In line with this the Company formulated the employeesstock option scheme called Mahindra Holidays & Resorts India Limited Employees’Stock Option Scheme 2006 ("MHRIL ESOS 2006") and was approved by theshareholders at the Annual General Meeting of the Company held on May 17 2006. Furthersubsequent to the initial public offer the MHRIL ESOS 2006 was ratified by theShareholders by way of postal ballot on December 23 2009. The MHRIL ESOS 2006 will remainin operation till the exercise of Options granted under this scheme.

In addition to above and continue to reward the employees the Board of Directors ofyour Company have introduced new employee stock option scheme namely "MahindraHolidays & Resorts India Limited Employees’ Stock Option Scheme 2014"("MHRIL ESOS 2014") and approved by the shareholders by way of postal ballot onDecember 26 2014 in accordance with the Securities and Exchange Board of India(Share Based Employee Benefits) Regulations 2014 (‘SEBI ESOP Regulations’).

Further the balance shares available under MHRIL ESOS 2006 together with any othershares represented by Options that may lapse for any reason thereat will also beavailable for issuing/granting Options to the Employees under MHRIL ESOS 2014.

During the year under review on the recommendation of the Nomination and RemunerationCommittee a total of 310000 new options were granted (Grant II & III) under the MHRILESOS 2014. Details required to be provided under the under Regulation 14 of SEBI ESOPRegulations is available on the Company’s websitehttp://www.clubmahindra.com/about-us/ investor-relations.

A certificate from the Statutory Auditors of the Company confirming that the MHRIL ESOS2006 and MHRIL ESOS 2014 have been implemented in accordance with the SEBI ESOPRegulations and the resolution passed by the shareholders will be placed at the ensuingAnnual General Meeting for inspection by members.

16. SubsidiariesJointVentureandAssociate Companies

During the year under review and as reported earlier in this report Competent HotelsPrivate Limited (CHPL) Divine Heritage Hotels Private Limited (DHHPL) and Holiday onHills Resorts Private Limited (HHRPL) ceased to be subsidiaries of your Companyconsequent to amalgamation of CHPL DHHPL and HHRPL with the Company with effect fromMarch 31 2016. Further the Company has increased its equity investment in GablesPromoters Private Limited (GPPL) a wholly owned subsidiary by conversion of theunsecured Inter Corporate Deposits amounting to Rs 364786000/- given to GPPL into36478600 Equity Shares of Rs 10/- each at par. As reported earlier in this report yourCompany through its subsidiary Covington S..r.l Luxemburg (Covington) increased itsequity stake from 23.3% to 85.6% in September 2015 in Holiday Club Resorts Oy Finland(HCR). Consequently HCR became subsidiary company of Covington and in turn subsidiarycompany of the Company with effect from September 2 2015.

Also your Company through its subsidiary Covington increased its equity stake from18.7% to 100% in HCR Management Oy Finland (HCRM) with effect from September 22015. Consequently HCRM became wholly subsidiary company of Covington and in turnsubsidiary company of the Company. Covington is the holding company for investments in HCRand HCRM.

In addition to the above Holiday Club Sweden Ab Ownership Service Sweden AB HolidayClub Canarias Investment S.L.U Holiday Club Canarias Sales & Marketing S.L.U HolidayClub Canarias Resort Management S.L.U Holiday Club Rus Resorts LLC SuomenVapaa-aikakiinteistt Oy KiinteistOy Himos Gardens Kiinteist Oy Himoksen Thti 2 OyKiinteist

Oy Tunturinrivi Kiinteist Oy Vanha YkkstiiKiinteist Oy Katinnurkka KiinteistOy Tenetinlahti Kiinteist Oy MllsniemiKiinteist Oy Rauhan Ranta 1 KiinteistOy Rauhan Ranta 2 Kiinteist Oy Tiurunniemi Saimaa GardensArena Oy (associate company till January 18 2016) KiinteistOy Rauhan Liikekiinteistt 1 Supermarket Capri Oy Kiinteist Oy Kylpylntorni 1 Kiinteist Oy SpaLofts 2 Kiinteist Oy Spa Lofts 3 Kiinteist Oy Kulennoinen Kiinteist Oy KuusamonPulkkajrvi 1 Caribia Service Oy Holiday Club Sport and Spahotel AB Are Semesterby AAB Are Semesterby B AB Are Semesterby C AB Are Semesterby D AB Are Villa 1 AB and AreVilla 2 AB became subsidiary companies of your Company during the year under review.

Further Kiinteist Oy Jalomella Kiinteist Oy Outapalas Kiinteist Oy UlkuvuomaKiinteist Oy Lappeenrannan Saimaan Kreivi SallanTunturipalvelut Oy Kiinteist Oy Katinkullan Villas ParkkiHoliday Club Golf Saimaa Oy Saimaa Action Park Oy KiinteistOy Kulennoinen Kongressi- ja Kylpylhotelli Caribia Oy Saariselk Resort Oy HimosHillside Golf Oy Kiinteist Oy Pisterinniementie 2 HolidayClub Katinkullan Villas Oy Kiinteist Oy KatinpalstaKiinteist Oy Rauhan Ranta 6 KiinteistOy Rauhan Parkki Saimaan Palvelukiinteistt Oy Kiinteist Oy Paviljongin Pyskinti andKiinteist Oy Hakan Perusyhti 79which became subsidiary companies of your Company during the year under reviewsubsequently ceased to be subsidiaries of your Company during the year under review.

As of March 31 2016 your Company has 41 subsidiaries (including 36 indirectsubsidiaries) 1 JV company and 4 associate companies (including 3 indirect associates).

17. Performance of Subsidiaries

Domestic Subsidiaries

Gables Promoters Private Limited (GPPL) is the wholly owned subsidiary company of theCompany. GPPL is currently developing a resort property of around 120 rooms at NaldheraShimla Himachal Pradesh and the construction of the same is at an advanced stage. GPPL isyet to commence operation.

Mahindra Hotels and Residences India Limited (MHARIL) is the wholly owned subsidiarycompany of the Company. MHARIL did not have any operation during the year under review.

Foreign Subsidiaries

Heritage Bird (M) Sdn. Bhd Malaysia (Heritage Bird) is the wholly owned subsidiarycompany of the Company. Heritage Bird’s principal activities are holding ofinvestment and leasing of properties. Heritage Bird has rooms/units in apartmentproperties in a well-known location at Kuala Lumpur Malaysia.

MH Boutique Hospitality Limited Thailand (MH Boutique) in which your Company holdsforty nine per cent of equity stake is the subsidiary of the Company by virtue of controlon the composition of the Board of MH Boutique and it mainly holds investments in InfinityHospitality Group Company Limited Thailand.

Infinity Hospitality Group Company Limited Thailand (Infinity) is the subsidiarycompany of MH Boutique and by virtue of the same is also subsidiary of the Company.Infinity own and operate a hotel/apartment property at Bangkok Thailand. Your Companyavails rooms in the hotel property of Infinity for usage of its guests and vacationownership members.

MHR Holdings (Mauritius) Limited Mauritius (MHR Holdings) is a wholly ownedsubsidiary company of the Company. The principal activity of MHR Holdings is to holdinvestments. Currently it hold investment in Covington S..r.l Luxembourg. CovingtonS..r.l Luxemburg (Covington) is a wholly owned subsidiary of MHR Holdings and in turn asubsidiary of your Company. Further as reported earlier in this report Covington duringthe year under review had increased its stake in Holiday Club Resorts Oy Finland (HCR)and HCR Management Oy Finland (HCRM) by acquiring shares from their respectiveshareholders. Consequent to these investments HCR and HCRM became subsidiaries ofCovington and in turn of the Company with effect from September 2 2015. Further postincrease in its stake Covington had also made fresh investment in share capital of HCRduring September 2015.

HCR subsidiary of Covington in turn of the Company is a leading weekly timesharecompany in Europe and a significant operator in the fields of holiday housing and tourism.As of March 31 2016 HCR has 31 resorts of which 23 are located in Finland 2 in Swedenand 6 in Spain. Further out of these 7 resorts in Finland and 1 resort in Sweden have aspa hotel attached. HCR operates 1159 hotel rooms and 2173 holiday homes (Time shareunits and villa units). HCRM which became wholly owned subsidiary of Covington in turn ofthe Company during the year is primarily engaged in the sale and trade of real estatesproperty management investment activities and dealing in securities. HCRM hold investmentin the share capital of HCR.

Joint Venture

Arabian Dreams Hotel Apartments LLC Dubai (Arabian Dreams) a Joint Venture company ofthe Company operates 75 room hotel property in Dubai (UAE) taken on lease basis. YourCompany avails rooms/apartments in the hotel property of Arabian Dreams for usage of itsguests and vacation ownership members.

Associate Companies

Guestline Hospitality Management & Development Services Limited (Guestline) is anassociate company of your Company pursuant to the provisions of the Act as the Company isholding more than 20 per cent of total share capital which includes preference sharecapital. Guestline did not have any operations during the year under review.

During the year under review Kiinteist Oy Seniori-SaimaaSaimaa Adventures Oy and Kiinteist Oy Sallan Kylpylassociate companies of HCR became associate companies of your Company.

A report on the performance and financial position of each of the subsidiariesassociates and joint venture company as per the Act is provided as Annexure to theconsolidated financial statements and hence not repeated here for the sake of brevity. Thepolicy for determining material subsidiaries as approved by the Board may be accessed onthe Company’s website at the link: http://www.clubmahindra.com/sites/default/files/Policy_For_Determining_Material_Subsidiaries.pdf.

In accordance with the third proviso to Section 136(1) of the Act the Annual Report ofthe Company containing therein its standalone and the consolidated financial statementsare available on Company’s website www.clubmahindra.com. Further as per fourthproviso to the said Section the audited annual accounts of each of the said subsidiarycompanies of the Company are also available in the Company’s website www.clubmahindra.com.Any shareholder who may be interested in obtaining a copy of the aforesaid documents maywrite to the Company Secretary at the Company’s Registered Office. Further the saiddocuments will be available for examination by the shareholders of the Company at itsRegistered Office during all working days except Saturday Sunday Public Holidays andNational Holidays between 11.00 AM to 1.00 PM.

18. Directors

As on March 31 2016 your Company had 10 Directors which include 5 IndependentDirectors (IDs) 3 Non-Executive Directors (NEDs) and 2 Executive Directors (EDs).

19. Retirement by Rotation

In terms of the Articles of Associations of the Company and as per Section 152(6) ofthe Act Mr. Arun Kumar Nanda being longest in the office shall retire by rotation atthe ensuing Annual General Meeting and being eligible offers himself for re-appointment.

20. Declaration by Independent Directors

The Company has received necessary declaration from each Independent Director underSection 149(7) of the Act that he / she meets the criteria of independence laiddown in Section 149(6) of the Act and Regulation 16 of SEBI Listing Regulations.

21. Key Managerial Personnel (KMPs)

Mr. Kavinder Singh Managing Director & Chief Executive Officer Mr. S KrishnanChief Financial Officer & Executive Director and Mr. Dinesh Shetty General Counsel& Company Secretary are the KMPs as per the provisions of the Act. None of the KMPsresigned during the year.

22. Board Evaluation

The Board has conducted annual evaluation of the performance of all it's DirectorsCommittees of the Board and that of it's Non-Executive Chairman in terms of the releventprovisions of the Act Rules made thereunder and SEBI Listing Regulations. The manner inwhich the evaluation was conducted by the Company has been explained in the CorporateGovernance Report which forms a part of this Annual Report.

The Policy on appointment of Directors and Senior Management Policy on Remuneration ofDirectors and Policy on Remuneration of Key Managerial Personnel and Employees areattached herewith and marked as Annexure 4 Annexure 5A and Annexure 5B respectively.

The Managing Director & CEO and Chief Financial Officer & Executive Director donot receive remuneration or commission from any of its subsidiaries and draw remunerationonly from the Company.

23. Number of Board Meetings

During the year under review the Board of Directors met Six times. The detailsof Board Meetings and attendance of Directors are provided in the Report on CorporateGovernance which forms a part of this Annual Report.

24. Composition of Audit Committee

The Board has constituted the Audit Committee with Mr. Sridar Iyengar as itsChairman and Mr. Cyrus Guzder Mr. Rohit Khattar Mr. Sanjeev Aga and Mr. V SParthasarathy as its other members. Further details are provided in the Report onCorporate Governance which forms a part of this Annual Report.

25. Directors’ Responsibility Statement

Pursuant to Section 134(3)(c) of the Act your Directors state that: a) in thepreparation of the annual accounts for the year ended March 31 2016 the applicableAccounting Standards had been followed and there is no material departure; b) they haveselected such accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at March 31 2016 and of the profit of the Company for theyear ended on that date; c) they have taken proper and sufficient care for the maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; d) the annual accounts have been prepared 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 were operating effectively; and f)the directors have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

26. Internal Financial Controls and Their Adequacy

Your Company has an adequate internal control system commensurate with the size andnature of its business. The system is supported by documented policies guidelines andprocedures to monitor business and operational performance which are aimed at ensuringbusiness integrity and promoting operational efficiency. Further details are provided inthe Management Discussion and Analysis Report which forms a part of this Annual Report.

27. Consolidated Financial Statements

The Consolidated Financial Statements of the Company and it's subsidiaries prepared inaccordance with the Act and applicable Accounting Standards forms part of this AnnualReport. The Consolidated Financial Statements presented by the Company includes thefinancial results of it's subsidiary companies associates and joint venture company.

28. Risk Management

Your Company has a well-defined risk management framework to identify and evaluateelements of business risk. These are discussed in detail in the Management Discussion andAnalysis Report forming part of this Annual Report.

29. Auditors

A) Statutory Auditors

Messrs Deloitte Haskins & Sells Chartered Accountants Chennai statutory auditorsof the Company hold office till the conclusion of the ensuing Annual General Meeting andare eligible for re-appointment.

As required under the provisions of section 139(1) of the Companies Act 2013 theCompany has received a written consent from Messrs Deloitte Haskins & Sells CharteredAccountants Chennai to their re-appointment and a Certificate to the effect that theirre-appointment if made would be in accordance with the Companies Act 2013 and the Rulesframed thereunder and that they satisfy the criteria provided in section 141 of the Act.

B) Secretarial Auditors

Pursuant to the provisions of Section 204 of the Act and Rules thereunder the Companyhas appointed Mr. Mukesh Siroya Practicing Company Secretary to undertake the secretarialaudit of the Company. The Report of the secretarial auditors is annexed herewith asAnnexure 6.

There are no qualifications reservations or adverse remarks made by Mr. Mukesh SiroyaPractising Company Secretaries secretarial auditors of the Company in their secretarialaudit report.

30. Deposits

Your Company has not accepted any deposits from public or its employees and as such noamount on account of principal or interest on deposit were outstanding as of the BalanceSheet date.

31. Material Changes and Commitment Affecting Financial Position of the Company

There are no material changes and commitments affecting financial position of theCompany which have occurred between the end of the financial year of the Company i.e.March 31 2016 and the date of the Directors’ Report.

32. Extract of Annual Return

An extract of the Annual Return as of March 31 2016 pursuant to the sub section (3) ofSection 92 of the Act in form MGT 9 is annexed herewith as Annexure 7.

33. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo

Your Company continuously strives to conserve energy adopt environment friendlypractices and employ technology for more efficient operations. Some of these initiativesare discussed in the section on Sustainability in the Management Discussion and AnalysisReport which forms a part of this Annual Report.

The particulars relating to the energy conservation technology absorption and foreignexchange earnings and outgo as required under Section 134(3)(m) of the Act and Rule8(3)of the Companies (Accounts) Rules 2014 are given in the Annexure 8 to this report.

34. Human Resources

Your Company takes pride in the commitment competence and dedication shown by itsemployees in all areas of its business. It considers people as its biggest assets. It hasput concerted efforts in talent management and succession planning practices strongperformance management and learning and training initiatives to ensure that your Companyconsistently develops inspiring strong and credible leadership. Your Company has astructured induction process at all its locations and management development programs toupgrade skills of managers. These are discussed in detail in the Management Discussion andAnalysis Report forming part of this Annual Report.

The Company has a Policy on Prohibition Prevention and Redressal of Sexual Harassmentof Women at Workplace and matters connected therewith or incidental thereto covering allthe aspects as contained under The Sexual Harassment of Women at Workplace (ProhibitionPrevention and Redressal) Act 2013. There was no complaint pending at the beginning ofthe year. During the year under review the Company received two complaints under thePolicy while one complaint was disposed off during the year and other one was disposedoff in the month of April 2016. Further there were no complaints pending for more than 90days during the year.

35. Particulars of Employees

The ratio of the remuneration of each director to the median employees’remuneration and other details in terms of Section 197(12) of the Act read with Rule 5(1)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014("the Rules") forms a part of this report as Annexure 9. The Company had 8(Eight) employees who were employed throughout the year and were in receipt ofremuneration more than Rs 60 lakh per annum and 3 (Three) employees were employed for partof the year and were in receipt of remuneration of more than Rs 5 lakh per month. In termsof Section 136 of the Act the copy of the financial statements of the Company includingthe consolidated financial statements the auditor’s report and relevant annexures tothe said financial statements and reports are being sent to the Members and other personsentitled thereto excluding the information in respect of the said employees containingthe particulars as specified in Rule 5(2) of the said Rules which is available forinspection by the Members at the Company’s Registered Office during all working daysexcept on Saturday Sunday Public Holidays and National Holidays between 11.00 AM to1.00 PM. up to the date of the ensuing Annual General Meeting. If any Member is interestedin obtaining a copy thereof he may write to the Company Secretary of the Company at itsRegistered Office. The financial statements reports etc. of the Company are available onthe website of the Company www.clubmahindra.com.

36. Acknowledgement and Appreciation

Your Directors take this opportunity to thank the Company’s customersshareholders suppliers bankers financial institutions and the Central and StateGovernments for their unstinted support. The Directors would also like to place on recordtheir appreciation to employees at all levels for their hard work dedication andcommitment.

For and on behalf of the Board
ARUN KUMAR NANDA
Place: Mumbai Chairman
Date: May 17 2016 DIN: 00010029

ANNEXURE 1 TO THE DIRECTORS' REPORT FOR THE YEAR ENDED MARCH 31 2016

Form No. AOC – 2

(Pursuant to clause (h) of sub-section (3) of Section 134 of the Companies Act 2013("the Act") and Rule 8(2) of the Companies (Accounts) Rules 2014)

Form for disclosure of particulars of contracts/arrangements entered into by theCompany with related parties referred to in sub-section (1) of Section 188 of theAct including certain arm’s length transactions under third proviso thereto

1. Details of contracts or arrangements or transactions not at arm’s lengthbasis: None

2. Details of material contracts or arrangement or transactions at arm’slength basis:

(a) Name(s) of the related party Nature of relationship MHR Holdings (Mauritius) Limited (MHR Holdings) Wholly owned subsidiary of the Company
(b) nature of contracts / arrangements / transactions Corporate Guarantee (‘Guarantee’) Commission on Corporate Guarantee Inter Corporate Deposits (ICD)
(c) Duration of the contracts / arrangements / transactions 5 Years NA One year
(d) Salient terms of the contracts or arrangements or transactions including the value if any: Guarantee given on behalf of MHR Holdings by the Company guaranteeing repayments of foreign currency loans to a Bank raised by MHR Holdings. Period of the Guarantee is 5 years. Aggregate Value of the guarantee given is Euro 50 million (equivalent to Rs 37485 lakh as on March 31 2016) Commission on Corporate Guarantee granted by the Company amounting to Rs 121.37 lakh for the year ended March 31 2016. ICD given to MHR Holdings by the Company for an amount of Euro 250000 (equivalent to Rs 187.42 lakh as on March 31 2016)
(e) Date(s) of approval by the Board if any: NA NA NA
(f) Amount paid as advances if any; Nil Nil Nil

The above mentioned transactions were entered into by the Company in its ordinarycourse of business.

For and on behalf of the Board
ARUN KUMAR NANDA
Place: Mumbai Chairman
Date: May 17 2016 DIN: 00010029

ANNEXURE 2 TO THE DIRECTORS' REPORT FOR THE YEAR ENDED MARCH 31 2016

Loans and Advances as per Regulation 34(3) read with Part A of Schedule V of Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 ("SEBI Listing Regulations"):

Particulars of loans and advances to subsidiaries associates etc. as required to bedisclosed in the annual report of the Company pursuant to Regulation 34(3) read with PartA of Schedule V of SEBI Listing Regulations:

Loans and advances in the nature of loans to subsidiaries:

(Rs in lakh)
Name of the Company Balance as on March 31 2016 Maximum outstanding during the year
Heritage Bird (M) Sdn Bhd. 767 777
Infinity Hospitality Group Company Limited 2589 2589
MH Boutique Hospitality Limited 529 529
Gables Promoters Private Limited 250 3748
MHR Holdings (Mauritius) Limited 187 187
Mahindra Hotels and Residences India Limited 8 8

 

For and on behalf of the Board
ARUN KUMAR NANDA
Place: Mumbai Chairman
Date: May 17 2016 DIN: 00010029

ANNEXURE 3 TO THE DIRECTORS’ REPORT FOR THE YEAR ENDED MARCH 31 2016

ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES

1. A brief outline of the company’s CSR policy including overview ofprojects or programs proposed to be undertaken and a reference to the web-link to the CSRpolicy and projects or programs:

The Company's CSR activities were undertaken through its own CSR department. TheCompany through (i) its active involvement of employees under ESOPs (Employee SocialOptions Program) which is the employees volunteering program in the near by areas ofCompany's Resorts across India; (ii) It also does through partnerships with CorporateFoundations namely: the Mahindra Foundation The K C Mahindra Education Trust whichpromotes girl child education through Nanhi Kali programme; and (iii) through partnershipswith other reputed Not for Profit Organizations having an established track record of atleast 3 years in carrying on the specific CSR activity.

The Company’s CSR initiatives are mostly in the areas of education public healthenvironment and rural development. CSR initiatives taken up by the Company reflects inMahindra Group’s ‘Core Purpose’ to "challenge conventional thinkingand innovatively use all our resources to drive positive change in the lives of ourstakeholders and communities across the world to enable them to Rise". During theyear the Company has spent Rs 280.15 lakh on CSR activities. The amount equal to 2% ofthe average net profit for the past three Financial Years is Rs 280 lakh.

The Company's CSR Policy is available under it's website:http://www.clubmahindra.com/sites/default/files/MHRIL_CSR_ Policy.pdf

2. The composition of the CSR Committee of the Board of Directors as on March31 2016:

Mr. Arun Kumar Nanda - Chairman
Mr. Cyrus Guzder - Member
Mr. V.S. Parthasarathy - Member
Mr. Kavinder Singh - Member

3. Average net profit of the company for last three financial years : Rs13594 lakh.

4. Prescribed CSR Expenditure (two per cent of the amount as in item 3 above) : Rs280 lakh

5. Details of CSR spent during the financial year:

(a) Total amount to be spent for the financial year : Rs 280 lakh
(b) Amount unspent if any : Nil

(c) Manner in which the amount spent during the financial year is detailed below :

(1) (2) (3) (4) (5) (6) (7)
CSR project / activity identified Sector in which the project is covered Projects or programs (1) Local area or other (2) Specify the State and district where projects or programs was undertaken Amount outlay (budget) project or programs wise Amount spent on the projects or programs Sub heads : (1) Direct expenditure on projects or programs (2) Overhead Cumulative expenditure upto the reporting period Amount spent: Direct or through implementing agency
( Rs in lakh) ( Rs in lakh) ( Rs in lakh)
Conservation of natural resources Swachh Bharat Ecological balance – renewable energy Ensuring Environmental Sustainability Pan India where Company has resort operations [Munnar Kumarakom Poovar (Kerala) Corbett Naukuchiatal (Uttarakhand) Shimla Mashobra (Himachal Pradesh) Mahabaleshwar (Maharashtra) Ooty (Tamil Nadu) Virajpet (Karnataka)] and Mumbai (Maharashtra). 34.74 33.19 33.19 Direct and alongwith Grow Trees
Health Care including preventive health care Health Care Pan India where Company has resort operations [Puducherry Gir (Gujarat) Poovar (Kerala) Dharamshala (Himachal Pradesh)] and Chennai (Tamil Nadu) Mumbai (Maharashtra) and Bangalore (Karnataka). 22.48 22.55 55.74 Direct and alongwith REACH Cancer Patients Aid Association and Bangalore Schools Sports Foundation
Conservation & renovation of school buildings and classrooms Promotion of Education Pan India where Company has resort operations [Coorg (Karnataka) Kandaghat Shimla (Himachal Pradesh) Musoorie Corbett (Uttarakhand) Cherai Poovar (Kerala) Ooty (Tamil Nadu) Tungi (Maharashtra) Jaisalmer (Rajasthan) Kanha (Madhya Pradesh) Puducherry] and Mumbai (Maharashtra) 205.30 200.00 255.74 Direct and alongwith Opportunity School Kodagu Valley school Hejamadi Foundation K.C Mahindra Trust and Vidya Sagar
Rural Development Rural Development Pan India where Company has resort operations [Kumbhalgarh (Rajasthan) Ashtamudi Thekkady (Kerala) Tungi (Maharashtra)] and Chennai (Tamil Nadu). 24.84 24.40 280.15 Direct alongwith Parishar Asha
Total 280.00 280.15

6. In case the company has failed to spend the two per cent of the average netprofit of the last three financial years or any part thereof the company shall providethe reasons for not spending the amount in its Board report :

The Company has spent all the amount reserved for CSR activities i.e. 2% of average netprofit for the last three financial years.

7. The implementation and monitoring of CSR policy is in compliance with CSRobjectives and Policy of the Company.

Kavinder Singh Arun Kumar Nanda
Managing Director & CEO Chairman of Corporate Social Responsibility Committee
DIN: 06994031 DIN: 00010029
Mumbai May 17 2016

ANNEXURE 4 TO THE DIRECTORS' REPORT FOR THE YEAR ENDED MARCH 31 2016

Policy on Appointment of Directors and Senior Management Appointment of Directors

The Nomination and Remuneration Committee (NRC) reviews and assesses Board compositionand recommends the appointment of new Directors. In evaluating the suitability ofindividual Board member the NRC shall take into account the following criteria regardingqualifications positive attributes and independence of director:

1. All Board appointments will be based on merit in the context of the skillsexperience independence and knowledge for the Board as a whole to be effective.

2. Ability of the candidates to devote sufficient time and attention to his / herprofessional obligations as Independent Director for informed and balanced decisionmaking.

3. Adherence to the Code of Conduct and highest level of Corporate Governance in letterand in sprit by the Independent Directors.

Based on recommendation of the NRC the Board will evaluate the candidate(s) and decideon the selection of the appropriate member. The Board through the Chairman will interactwith the new member to obtain his / her consent for joining the Board. Upon receipt of theconsent the new Director will be co-opted by the Board in accordance with the applicableprovisions of the Companies Act 2013 and Rules made thereunder.

Removal of Directors

If a Director is attracted with any disqualification as mentioned in any of theapplicable Acts Rules and Regulations thereunder or due to non - adherence to theapplicable policies of the Company the NRC may recommend to the Board with reasonsrecorded in writing removal of a Director subject to the compliance of the applicablestatutory provisions.

Senior Management Personnel

The NRC shall identify persons who are qualified to become directors and who may beappointed in senior management cadre in accordance with the criteria laid down above.Senior Management personnel are appointed or promoted and removed / relieved with theauthority of Managing Director & CEO based on the business need and the suitability ofthe candidate. The details of the appointment made and the personnel removed / relievedamongst the Leadership Team during a quarter shall be presented to the Board.

For and on behalf of the Board
ARUN KUMAR NANDA
Place: Mumbai Chairman
Date: May 17 2016 DIN: 00010029

ANNEXURE 5A TO THE DIRECTORS' REPORT FOR THE YEAR ENDED MARCH 31 2016

Policy on Remuneration of Directors

This Policy shall be effective from the financial year 2014 - 15.

Objective

The objective of the Remuneration Policy of Directors of Mahindra Holidays &Resorts India Limited ("the Company") is to focus on enhancing the value toattract retain and motivate Directors for achieving objectives of the Company and toplace the Company in leading position.

The Nomination and Remuneration Committee (NRC) of the Board shall while formulatingthe policy ensure that —a) the level and composition of remuneration is reasonableand sufficient to attract retain and motivate Directors of the quality required to runthe Company successfully; b) relationship of remuneration to performance is clear andmeets appropriate performance benchmarks; and c) remuneration to Directors key managerialpersonnel and senior management involves a balance between fixed and incentive payreflecting short and long-term performance objectives appropriate to the working of theCompany and its goals.

While deciding the policy on remuneration of Directors the Committee may consideramongst other things the duties and responsibilities cast by the Companies Act 2013 theListing Agreement various Codes of Conduct Articles of Association restrictions on theremuneration to Directors as also the remuneration drawn by Directors of other companiesin the industry the valuable contributions and inputs from Directors based on theirknowledge experience and expertise in shaping the destiny of the Company etc. The Policyis guided by a reward framework and set of principles and objectives as more fully andparticularly envisaged under Section 178 of the Companies Act 2013 and principlespertaining to qualifications positive attributes integrity and independence ofDirectors etc.

Directors

The Managing Director & Chief Executive Officer is an executive of the Company anddraws remuneration from the Company. The Non-Executive Chairman and Independent Directorsreceive sitting fees for attending the meeting of the Board and the Committees thereof asfixed by the Board of Directors from time to time subject to statutory provisions. The Non-ExecutiveChairman and Independent Directors would be entitled to the remuneration under theCompanies Act 2013. A Non-Executive Non-Independent Director who receives remunerationfrom the holding company is not paid any sitting fees or any remuneration. In addition tothe above the Directors are entitled for reimbursement of expenses incurred in dischargeof their duties.

Pursuant to Employee Stock Option Scheme 2006 (ESOS 2006) the Company has grantedStock Options to Directors including Independent Directors. The vesting and exercise ofthese Options shall continue to be governed by ESOS 2006 and terms of grant. However asper Section 149(9) of the Companies Act 2013 henceforth the Independent Directors willnot be entitled to fresh grant of any Stock Options. The NRC while designing theremuneration shall ensure that the level and composition of remuneration to be reasonableand sufficient to attract retain and motivate the person to ensure the quality requiredto run the Company successfully. While considering a remuneration the NRC shall alsoensure a balance between fixed and performance linked variable pay reflecting short andlong term performance objectives appropriate to the working of the Company and its goals.The NRC shall consider that a successful Remuneration Policy must ensure that some part ofthe remuneration is linked to the achievement of corporate performance targets.

Managing Director and Executive Directors

The term of office and remuneration of Managing Director and Executive Directors aresubject to the approval of the Board of Directors shareholders and Central Governmentas may be requiredandthelimitslaiddownundertheCompaniesAct2013 from time to time.

If in any financial year the Company has no profits or its profits are inadequatethe Company shall pay subject to the requisite approvals remuneration to its ManagingDirector and Executive Directors in accordance with the provisions of Schedule V of theCompanies Act 2013.

If any Managing Director and Executive Directors draws or receives directly orindirectly by way of remuneration any such sums in excess of the limits prescribed underthe Companies Act 2013 or without the prior sanction of the Central Government whererequired he / she shall refund such sums to the Company and until such sum is refundedhold it in trust for the Company. The Company shall not waive recovery of such sumrefundable to it unless permitted by the Central Government.

Remuneration of the Managing Director and Executive Directors reflects the overallremuneration philosophy and guiding principle of the Company. While considering theappointment and remuneration of Managing Director and Executive Directors the NRC shallconsider the industry benchmarks merit and seniority of the person and shall ensure thatthe remuneration proposed to be paid is commensurate with the remuneration packages paidto similar senior level counterpart(s) in other companies.

Remuneration for Managing Director and Executive Directors are designed subject to thelimits laid down under the Companies Act 2013 to remunerate them fairly and responsibly.The remuneration to the Managing Director and Executive Directors comprises of salaryperquisites and performance based incentive apart from retirement benefits like P.F.Superannuation Gratuity Leave Encashment etc. as per Rules of the Company. Salary ispaid within the range approved by the Shareholders. Annual increments are effective from1st April each year as recommended / approved by the Remuneration Committee / Board.

The fixed component of remuneration will have a flexible component with a bouquet ofallowances to enable the Managing Director and Executive Directors to choose theallowances as well as the quantum based on laid down limits as per Company policy. Theflexible component can be varied only once annually after the salary increment exercise.The actual pay-out of variable component of the remuneration will be a function ofindividual performance as well as business performance. Business performance is evaluatedusing a Balanced Score Card (BSC) while individual performance is evaluated on Key ResultAreas (KRA). Both the BSC and KRAs are evaluated at the end of the fiscal to arrive at theBSC rating of the business and performance rating of the individual. Remuneration alsoaims to motivate personnel to deliver Company’s key business strategies create astrong performance-oriented environment and reward achievement of meaningful targets overthe short and long-term.

The Managing Director and Executive Directors are entitled to customary non-monetarybenefits such as company cars health care benefits leave travel communicationfacilities etc. as per policies of the Company. The Managing Director and ExecutiveDirectors are entitled for grant of Stock Options as per the approved Stock OptionsSchemes of the Company from time to time.

Non-executive Directors

The Non-Executive Directors (NEDs) are paid remuneration by way of Commission andSitting Fees. In terms of the shareholders’ approval the Commission is paid at arate not exceeding 1% (one percent) per annum of the profits of the Company computed inaccordance with the applicable provisions of the Companies Act 2013. The distribution ofCommission amongst the NEDs shall be placed before the Board.

At present the Company pays sitting fees to the NEDs for attending the meetings of theBoard and the Committees constituted by the Board from time to time.

The Directors who are members of the Corporate Social Responsibility (CSR) Committee ofthe Board have voluntarily waived the receipt of sitting fees for attending the CSRCommittee meetings.

Disclosures

Information on the total remuneration of members of the Company’s Board ofDirectors Managing Director and Executive Directors and KMP/senior management personnelmay be disclosed in the Board’s report and the Company’s annual report / websiteas per statutory requirements in this regard.

For and on behalf of the Board
ARUN KUMAR NANDA
Place: Mumbai Chairman
Date: May 17 2016 DIN: 00010029

ANNEXURE 5B TO THE DIRECTORS' REPORT FOR THE YEAR ENDED MARCH 31 2016

POLICY ON REMUNERATION FOR KEY MANAGERIAL PERSONNEL AND EMPLOYEES

Applicability

This Policy shall be effective from the financial year 2014 - 15.

Objective

To establish guidelines for remunerating employees fairly and in keeping with Statutes.

Standards

- All employees irrespective of contract are to be remunerated fairly and theremuneration is to be externally competitive and internally equitable. The remunerationwill be paid in accordance with the laid down Statutes.

- Remuneration for on-roll employees will include a fixed or guaranteed componentpayable monthly; and a variable component for eligible employees which is based onperformance and paid annually.

- The fixed component of remuneration will have a flexible component with a bouquet ofallowances based on laid down limits as per Company policy. The flexible component can bevaried only once annually.

- The variable component of the remuneration for eligible employees will vary from 15%to 25% of the Cost-to-Company (CTC) and will be a function of the employee’s grade.

- The actual pay-out of variable component of the remuneration will be a function ofindividual performance as well as business performance. Business performance is evaluatedusing a Balanced Score Card (BSC) while individual performance is evaluated on Key ResultAreas (KRA). Both the BSC and KRAs are evaluated at the end of the fiscal to arrive at theBSC rating of the business and Performance rating of the individual.

An annual compensation survey is carried out to ensure that the Company’scompensation is externally competitive and is around 60th percentile. Based on thefindings of the survey and the business performance the CEO along with the CHRO & CFOdecides: o The increment that needs to be paid for different performance ratings as wellas grades. o The increment for promotions and the total maximum increment. o The maximumincrease in compensation cost in % and absolute.

Compensation corrections are made in few relevant cases to keep it in tune with themarket.

Mid-term compensation correction if any are made on a case-to-case basis.

Remuneration to the Managing Director/CEO Whole-time Directors & KMP’sare subject to the approval of the Remuneration Committee/Board.

For and on behalf of the Board
ARUN KUMAR NANDA
Place: Mumbai Chairman
Date: May 17 2016 DIN: 00010029

ANNEXURE 6 TO THE DIRECTORS' REPORT FOR THE YEAR ENDED MARCH 31 2016

Form No. MR-3

SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED MARCH 31 2016

[Pursuant to Section 204(1) of the Companies Act 2013 and Rule No.9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014]

To

The Members

Mahindra Holidays & Resorts India Limited

We have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by Mahindra Holidays &Resorts India Limited (hereinafter called "the Company"). Secretarial Audit wasconducted in a manner that provided us a reasonable basis for evaluating the corporateconducts/statutory compliances and expressing our opinion thereon.

Based on our verification of the Company’s books papers minute books forms andreturns filed and other records maintained by the Company and also the informationprovided by the Company its officers agents and authorized representatives during theconduct of secretarial audit we hereby report that in our opinion the Company hasduring the audit period covering the financial year ended on March 31 2016complied with the statutory provisions listed hereunder and also that the Company hasproper Board-processes and compliance-mechanism in place to the extent in the manner andsubject to the reporting made hereinafter: We have examined the books papers minutebooks forms and returns filed and other records maintained by the Company for thefinancial year ended on March 31 2016 according to the applicable provisions of:

(i) The Companies Act 1956 (the 1956 Act) and the Rules made thereunder;

(ii) The Companies Act 2013 (the Act) and the Rules made thereunder;

(iii) The Securities Contracts (Regulation) Act 1956 (‘SCRA’) and the rulesmade thereunder;

(iv) The Depositories Act 1996 and the Regulations and Bye-laws framedthereunder;

(v) Foreign Exchange Management Act 1999 and the Rules and Regulations made thereunderto the extent of Foreign Direct Investment and Overseas Direct Investment. There is noExternal Commercial Borrowing in the Company; and

(vi) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (‘SEBI Act’):-

(a) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009;

(b) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;

(c) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 1992 and The Securities and Exchange Board of India (Prohibition of InsiderTrading) Regulations 2015;

(d) The Securities and Exchange Board of India (Share Based Employee Benefits)Regulations 2014;

(e) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client;and

(f) Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 (w.e.f. December 1 2015)

(vii) As confirmed by the Company it is operating in the Leisure Hospitality Industryand mainly in the business of vacation ownership and there are no laws which arespecifically applicable in relation to the main business of the Company.

Based on the representation made by the Company and its officers the Company hasproper system and process in place for compliance under the other applicable Laws ActsRules Regulations and Guidelines. Major heads/groups of Acts Laws Rules RegulationsGuidelines and Standards as applicable to the Company are given below:

(a) Labour Laws and other incidental laws related to labour and employees appointed bythe Company either on its payroll or on contractual basis as related to wages gratuityprovident fund ESIC compensation etc.;

(b) Acts as prescribed under Direct Tax and Indirect Tax;

(c) Acts prescribed under prevention and control of pollution;

(d) Acts prescribed under environmental protection;

(e) Land Revenue laws of respective States;

(f) Labour Welfare Act of respective States; and

(g) Local laws as applicable to various offices / resorts of the Company.

We have also examined compliance with the applicable clauses of the following:

(i) The Equity Listing Agreements entered into by the Company with BSE Limited andNational Stock Exchange of India Limited upto November 30 2015; and

(ii) Secretarial Standards issued by the Institute of Company Secretaries of Indiaw.e.f. July 1 2015.

During the period under review the Company has complied with the provisions of the Actthe 1956 Act Rules Regulations Guidelines Standards etc. mentioned above.

We further report that the Board of Directors of the Company is duly constituted withproper balance of Executive Directors Non-Executive Directors and Independent Directorssubject to what is stated herein before. There were no changes in the composition of theBoard of Directors during the period under review.

Adequate notice is given to all Directors to schedule the Board Meetings agenda anddetailed notes on agenda were sent at least seven days in advance except for theUnpublished Price Sensitive Information which were pursuant to clause no. 1.3.7 ofSecretarial Standard 1 ("SS 1") circulated separately or placed at the Meetingsof the Board and the Committees after due compliance with the SS 1 and a system existsfor seeking and obtaining further information and clarifications on the agenda itemsbefore the meeting and for meaningful participation at the meeting.

Majority decisions were carried through at the meetings of the Board of Directors ofthe Company. There were no dissenting views by any Member of the Board of Directors duringthe period under review.

We further report that there are adequate systems and processes in the Companycommensurate with the size and operations of the company to monitor and ensure compliancewith applicable laws rules regulations and guidelines.

We further report that during the audit period the Company has undertaken followingmajor corporate events/actions having a bearing on the Company’s affairs in pursuanceof the above referred Laws Rules Regulations Guidelines Standards etc. referred toabove:

(i) The members at their Annual General Meeting held on July 28 2015 inter-aliaapproved the declaration of dividend @ Rs 4 per Equity Share of Rs 10 each; Appointment ofMr. S Krishnan as Whole Time Director designated as CFO & Executive Director; Paymentof remuneration by way of commission to Non-executive directors; and Adoption of new setof Articles of Association;

(ii) Corporate Guarantees upto an aggregate sum not exceeding Euro 54 Million weregranted for and on behalf of overseas subsidiary companies MHR Holdings (Mauritius) LtdMauritius and Covington S..r.l Luxembourg (Wholly Owned Subsidiaries);

(iii) Covington S..r.l Luxembourg (Covington) had increased its equity stake from23.3% to 85.6% in September 2015 in Holiday Club Resorts Oy Finland (HCR). FurtherCovington had also increased its equity stake from 18.7% to 100% in HCR Management OyFinland (HCRM) in September 2015. Consequently HCR and HCRM became subsidiarycompanies of Covington and in turn subsidiary company of the Company with effect fromSeptember 2 2015;

(iv) The Company has increased its equity investment in Gables Promoters PrivateLimited (Gables) a wholly owned subsidiary by way of conversion of the unsecured InterCorporate Deposits amounting to Rs 364786000/- availed by Gables into 36478600Equity Shares of Rs 10/- each at par; and

(v) Competent Hotels Private Limited (CHPL) Divine Heritage Hotels Private Limited(DHHPL) and Holiday on Hills Resorts Private Limited (HHRPL) wholly owned subsidiarieswere amalgamated with the Company (Appointed Date April 1 2015) pursuant to the orders ofthe Hon’ble High Court of Delhi Hon’ble High Court of Rajasthan Hon’bleHigh Court of Himachal Pradesh and Hon’ble High Court of Chennai sanctioning therespective Scheme of Amalgamation and Arrangement. Consequently CHPL DHHPL and HHRPLceased to be subsidiaries of the Company with effect from March 31 2016.

For M Siroya and Company
Company Secretaries
Mukesh Siroya
Proprietor
Date: May 17 2016 FCS No.: 5682
Place: Mumbai CP No.: 4157

This report is to be read with our letter of even date which is annexed as Annexure Aand forms an integral part of this report.

‘Annexure A’

To

The Members

Mahindra Holidays & Resorts India Limited

Our report of even date is to be read along with this letter.

1. Maintenance of secretarial record is the responsibility of the management of theCompany. Our responsibility is to express an opinion on these secretarial records based onour audit.

2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the Secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices we followed provide areasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the Company.

4. Wherever required we have obtained the Management’s representation about thecompliance of Laws Rules and Regulations and happening of events etc.

5. The compliance of the Corporate and other applicable Laws Rules RegulationsStandards is the responsibility of the management. Our examination was limited to theverification of the procedures on test basis.

6. The Secretarial Audit report is neither an assurance as to the future viability ofthe Company nor of the e_cacy or effectiveness with which the management has conducted theaffairs of the Company.

For M Siroya and Company
Company Secretaries
Mukesh Siroya
Proprietor
Date: May 17 2016 FCS No.: 5682
Place: Mumbai CP No.: 4157

ANNEXURE 8 TO THE DIRECTORS’ REPORT FOR THE YEAR ENDED MARCH 31 2016

A) Conservation of energy:

(i) The steps taken or impact on conservation of energy: The operations of your companyare not energy intensive. However adequate measures have been initiated to reduce energyconsumption further

Installation of Solar heating at the resorts

Installation of energy efficient LED lighting at the resorts

Replacement of fluorescent lamps by LED tubes in resorts

Installation of low energy efficient variable refrigerator volume in resort

Using Nano Thermo technology to reduce energy consumption in boiler (ii) The stepstaken by the company for utilizing alternate sources of energy: Solar heating (iii) Thecapital investment on energy conservation equipment: Rs 150 Lakhs

(B) Technology absorption:

(i) The efforts made towards technology absorption: The Company has not carried out anytechnology absorption

(ii) The benefits derived like product improvement cost reduction product developmentor import substitution: Not Applicable (iii) In case of imported technology (importedduring the last three years reckoned from the beginning of the financial year) :NotApplicable (a) The details of technology imported; (b) The year of import; (c) Whether thetechnology been fully absorbed; (d) If not fully absorbed areas where absorption has nottaken place and the reasons thereof; and (iv) The expenditure incurred on Research andDevelopment: Not Applicable

(C) Foreign Exchange earnings and outgo:

Particulars with regard to Foreign Exchange Outgo & Earnings are provided inNote Nos. 32 & 33 to the standalone financial statements.

For and on behalf of the Board
ARUN KUMAR NANDA
Place: Mumbai Chairman
Date: May 17 2016 DIN: 00010029

ANNEXURE 9 TO THE DIRECTORS' REPORT FOR THE YEAR ENDED MARCH 31 2016

Disclosures required with respect to Section 197(12) of the Companies Act 2013("the Act") read with Rule 5(1) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014

1. The ratio of the remuneration of each director to the median employeesremuneration for the Financial Year:

Name of the Directors Ratio to median remuneration
Non-Executive Directors*
Mr. Arun Kumar Nanda 30:1
Mr. Cyrus Guzder 9:1
Mr. Sridar Iyengar 9:1
Mr. Sanjeev Aga 9:1
Mr. Rohit Khattar 6:1
Ms. Radhika Shastry 5:1
Mr. V S Parthasarathy NA
Mr. Vineet Nayyar NA
Executive Directors
Mr. Kavinder Singh 132:1
Mr. S Krishnan 81:1

*The remuneration of Non-Executive Directors covers sitting fee and commission.

2. The percentage increase in remuneration of each Director Chief FinancialOfficer Chief Executive Officer Company Secretary or Manager if any in the financialyear:

Name of the Directors Chief Financial Officer and Company Secretary Percentage increase in remuneration
Mr. Arun Kumar Nanda (-)6.2%
Mr. Cyrus Guzder 14.0%
Mr. Sridar Iyengar 18.4%
Mr. Sanjeev Aga 14.9%
Mr. Rohit Khattar 4.1%
Ms. Radhika Shastry@ 148.8%
Mr. V S Parthasarathy NA
Mr. Vineet Nayyar NA
Mr. Kavinder Singh Managing NA
Director & CEO#
Mr. S Krishnan Chief Financial 20.0%
Officer & Executive Director
Mr. Dinesh Shetty General 12.0%
Counsel & Company Secretary

@ became director with effect from August 27 2014

# appointed w.e.f. November 3 2014

3. The Percentage increase in the median remuneration of employees in thefinancial year:

The percentage increase in the median remuneration of the employees in the financialyear was around 13%. The calculation of percentage increase in median remuneration is donebased on comparable employees and for this purpose we have excluded employees who werenot eligible for any increment.

4. The number of permanent employees on the rolls of the Company: 3784

5. The explanation on the relationship between average increase in remunerationand company performance:

On an average employees received an annual increase of around 10.37%. Whilerecommending the increase in remuneration of its employees the Company considered overallorganisation performance industry benchmarking cost of living adjustment/inflation apartfrom individual performance on the basis of Balanced Scorecard approach.

The total compensation is a prudent mix of fixed and variable pay in the form ofperformance pay. The proportion of variable pay to total compensation is higher at seniorlevel and lower at middle level.

The increase in remuneration is a function of the factors outlined above. Theperformance of the Company has bearing on the quantum of variable pay declared foremployees across senior and middle levels.

6. Comparison of the remuneration of the Key Managerial Personnel against theperformance of the company:

The Total remuneration of Key Managerial Personnel in the FY 2015-2016 was at Rs 507lakh which represent 0.53 % of the Total Income of the Company and 2.95% of the ProfitBefore Tax (PBT) for the year ended March 31 2016.

7. Variations in the market capitalization of the company price earnings ratioas at the closing date of the current financial year and previous financial year andpercentage increase or decrease in the market quotations of the shares of the company incomparison to the rate at which the company came out with the last public offer:

The Market capitalization of the Company was increased from Rs 228877 lakh as ofMarch 31 2015 to Rs 343182 lakh as of March 31 2016. Over the same period the Priceto Earnings Ratio moved from 28.71 to 28.99. The Company’s stock price as at March31 2016 was increased by 51.59% to Rs 386.55 over the last public offering i.e.Institutional Placement Programme (IPP) in April 2013 at the price of Rs 255 per share.

8. Average percentile increase already made in the salaries of employees otherthan the managerial personnel in the last financial year and its comparison with thepercentile increase in the managerial remuneration and justification thereof and anyexceptional circumstances for increase in the managerial remuneration:

The average percentage increase made in the salaries of total employees other than theKey Managerial Personnel during the FY2015-16 was around 10.17% while the averageincrease in the remuneration of the Key Managerial Personnel was around 17.7%. For

Mr. Kavinder Singh there was no increase applicable as he joined the Company duringthe third quarter of the previous financial year. Increase in Key Managerial Personnelremuneration is in line with the factors outlined in point (5) above.

9. Comparison of the remuneration of each of the Key Managerial Personnelagainst the performance of the company:

The comparison of remuneration paid of each of the Key Managerial Personnel against theperformance of the Company is as under

Designation % of PBT for the year ended March 31 2016
Managing Director & Chief 1.59%
Executive Officer
Chief Financial Officer & 0.98%
Executive Director
General Counsel & Company 0.37%
Secretary

10. The key parameters for any variable component of remuneration availed by thedirectors:

In respect of Non-Executive Directors (NED) the shareholders at the 19th AGM held onJuly 28 2015 have approved the payment of commission upto celling of 1% of the netprofits of the Company as computed under the provisions of the Act. The said commission isdecided each year by the Board of Directors and distributed amongst the NEDs consideringthe various factors as well as the time spent on strategic matters other than at Meetings.

The following are the broad factors and guidelines considered for the Variable Pay inrespect of whole-time Directors: a. Overall Organisation performance including revenuegrowth and profitability of the Company; and b. Annual Performance Review based on theCompany's Balanced Scorecard.

11. The ratio of the remuneration of the highest paid director to that of the employeeswho are not directors but receive remuneration in excess of the highest paid directorduring the year:

Not Applicable

12. Afirmation that the remuneration is as per the remuneration policy of the Company.

It is hereby afirmed that the remuneration paid is as per the policy for Remunerationof the Directors Key Managerial Personnel and Employees.

For and on behalf of the Board
ARUN KUMAR NANDA
Place: Mumbai Chairman
Date: May 17 2016 DIN: 00010029