The Board of Directors of your Company with immense pleasure present the ThirtiethAnnual Report of your Company along with the Audited Balance Sheet Profit and LossAccount and Cash Flow Statement (Standalone and Consolidated) Schedules and Notes toAccounts for the year ended March 31 2016.
The Companys financial performance for the financial year ended March 31 2016on standalone and consolidated basis is summarized below:
| || || |
(Rs. in crores)
| ||As on March 31 2016 ||As on March 31 2015 |
|Financial Particulars ||Consolidated ||Standalone ||Consolidated ||Standalone |
|Revenue from operations ||158.54 ||87.85 ||147.75 ||84.62 |
|Other Income ||4.36 ||5.61 ||3.30 ||8.64 |
|Total revenues ||162.90 ||93.46 ||151.05 ||93.27 |
|Employee Benefit Expense ||36.77 ||18.34 ||35.25 ||19.67 |
|Finance Costs ||14.92 ||6.11 ||15.57 ||6.32 |
|Depreciation ||13.90 ||3.99 ||14.61 ||4.39 |
|Other Expenses ||101.43 ||58.84 ||93.41 ||55.91 |
|Total Expenses ||167.02 ||87.28 ||158.84 ||86.30 |
|(Loss)/Profit before exceptional items tax and minority interest ||(4.12) ||6.16 ||(7.79) ||6.97 |
|Exceptional Item ||1.32 ||1.32 ||2.00 ||2.00 |
|(Loss)/Profit before tax and minority interest ||(2.80) ||7.48 ||(5.79) ||8.97 |
|Tax expense/(credit) ||0.84 ||- ||0.99 ||- |
|Minority Interest ||(2.34) ||- ||(2.92) ||- |
|(Loss)/Profit for the year ||(1.30) ||7.48 ||(3.86) ||8.97 |
* The figures were regrouped for the purposes of accounting in respect of March 312016.
Key Financial and Operational Highlights
The total income of the Group for the year ended March 31 2016 was Rs.162.90 croresregistering a growth of 8% over the previous year.
The Revenue from Standalone operations during the year 2015 - 2016 is Rs. 87.85 croresas compared to Rs. 84.62 crores during the year 2014 2015. The Company on astandalone basis has earned a profit of Rs. 7.48 crores during the year 2015 - 2016 asagainst Rs. 8.97 crores during the year 2014 - 2015.
India has emerged as the fastest growing major economy in the world as per the CentralStatistics Organisation (CSO) and International Monetary Fund (IMF). According to theEconomic Survey 2015-16 conducted by IBEF the Indian economy will continue to grow morethan 7 per cent in 2016-17. The inflation during the year has moderated from 5.2% to 4.8%.Over 7.1 million foreign tourists arrived in 2015.
The Hospitality Industry has grown at a tremendous pace over the years and has emergedas one of the key drivers of growth of the services sector in India. The industry isseeing a cumulative annual growth rate of 11.7% every year and is expected to growfurther.
Online booking facilities social media advertisements and digital operations and ITenabled interactions with the customers have contributed significantly to improvehospitality industry.
However lack of adequate infrastructure inadequate talent pool and high attritionrates are still some of the teething problems in the hospitality industry.
Royal Orchid Hotels Limited continues to pursue asset light strategy wherein focusingon adding new Hotels under its Management Wing. The Company aims to cover all major citiesin India.
During the year under review the Company has renovated its main Hotels and foresees apromising year ahead with the renovated properties getting ready for business and additionof more rooms and services in some of the properties.
Key Business Developments during the year
Royal Orchid Hotels group currently operates 36 hotels in 25 popular destinations.Royal Orchid Hotels primarily operates 5 and 4 star hotels enabling it to target thediscerning business and leisure traveller.
The brand Regenta is another business-centric brand under the house of theRoyal Orchid Hotels group. It is designed for the corporate traveller whose watchword isvalue and convenience. Currently they are 15 hotels under this brand.
With Sales Offices at 11 locations across India like Bengaluru Delhi Mumbai ChennaiJaipur Goa Pune Mysuru Ahmedabad Kolkata and Hyderabad your Company is penetratingdeep into the market for a better market share and following an aggressivefeet-on-the-street approach to meet all potential clients in the corporate sector andtravel agents parallelly.
New Hotels opened during the year
1. Regenta Resort Vanya Mahal Ranthambore Rajasthan
Regenta Resort Vanya Mahal Ranthambore is a perfect blend of old world charm andcontemporary elegance with its great Rajasthani architecture that preserves the age oldtraditions combined with high-end amenities for those seeking tranquility and re-live thegrandeur of the Maharajas. The newly built resort offers 70 elegant guestrooms with thehighest levels of comfort and the largest banqueting facilities in town. Regenta ResortVanya Mahal Ranthambore is an ideal destination for special occasions like WeddingsConferences & Events where its architecture complements the beauty of the event.
2. Regenta Camellia Resort and Spa Santiniketan West Bengal
Regenta Camellia Resort & Spa Santiniketan is a perfect blend of comfort andluxury which is evident from its exquisite interiors beautiful architecture and high-endamenities. Our lavish resort is known for the personalized attention that we offer to ourguests. Its central location dining banqueting facilities and other recreationalfacilities make it an ideal stopover for any tourist in the town.
3. Regenta Inn Bengaluru
Regenta Inn offers quality accommodation and facilities to meet all the requirements ofa modern day traveler. The hotel is just a 5 minutes drive from airport. Its strategiclocation high-end amenities and its impeccable service standards makes it the idealstopover for any traveler in Bengaluru. With 40 well-appointed rooms and a multi-cuisinedining outlet ones stay in the city is bound to be a convenient one.
4. Regenta Resort Central Dandeli
Regenta Resort Century Dandeli offers 17 premium cottages with in-room dining servicesand many fun activities in the vicinty. It is the perfect destination for any nature loverto explore the frontiers at the Dandeli wildlife sanctuary adventure trills and birdwatching treks.
5. Regenta Almeida Zirakpur Chandigarh
Hotel Regenta Almeida is strategically located in the heart of the city which is why itis easily accessible from all major places of interest. With multiple dining options afull service spa a roof-top swimming pool fitness center in-room dining facilities andbanquet venues.
6. Regenta Orkos Kolkata
Kolkata the City Of Joy welcomes many travelers each year for business andleisure purposes and the hotel is a much sought after destination in the city. Thestrategic location dining options a roof top pool a fitness centre and banquetingfacilities is the preferred choice for all occasions.
The other particulars of some of the key business developments which took place duringthe financial year 2015-16 have also been detailed out under the sections: ManagementDiscussion & Analysis and Highlights 2015-2016 of this Annual Report.
Changes in nature of Business
During the year under review there was no change in the nature of Companysbusiness.
Share Capital of the Company and changes thereof
During the year under review the Company has neither issued shares nor granted stockoptions/sweat equity.
Dividend and Transfers to Reserve
The Company has entered a new phase of growth and is now undertaking the variousexpansions and renovation plans. To conserve resources and to fund new projects the Boardhas not recommended for any Dividend for the fiscal year 2015-2016.
Further during the year under review no amount has been transferred to reserve.
In terms of the provisions of Sections 73 and 74 of the Companies Act 2013 read withCompanies (Acceptance of Deposits by Companies) Rules 2014 the Company had no opening orclosing balances and during the year under review the Company has also not accepted anypublic deposits and as such no amount of principal or interest was outstanding as onMarch 31 2016.
Material Changes and commitments affecting financial position between the end offinancial year and date of report
There have been no material changes and commitments affecting the financial positionof the Company which occurred between the end of the financial year to which the financialstatements relate and the date of this report.
Revision in Financial Statements or Boards Report under Section 131(1) of theCompanies Act 2013
In terms of Section 131 of the Companies Act 2013 the Financial Statements andBoards Report are in compliance with the provisions of Section 129 or Section 134 ofthe Companies Act 2013 and that no revision has been made during any of the threepreceding financial years.
Management Discussion and Analysis Report
The Managements Discussion and Analysis Report on Companys performance industry trends and other material changes with respect to the Company and itssubsidiaries wherever applicable forms part of this Annual Report.
Subsidiaries Associates and Joint Ventures
The Consolidated Financial Statements of your Company and its Subsidiaries JointVentures and Associates prepared in accordance with the relevant Accounting Standards ofthe Institute of Chartered Accountants of India duly audited by the Statutory Auditorsform a part of the Annual Report and are reflected in the Consolidated Accounts.
As at March 31 2016 your Company has 13 Indian subsidiaries 1 Foreign Subsidiary and4 Joint Venture companies.
Pursuant to Section 129 (3) of the Companies Act 2013 a statement containing salientfeatures brief financial details of the Companys subsidiaries for the financialyear ended March 31 2016 and their contribution to the consolidated financials in FormAOC 1 is appended as Annexure I to the Boards Report and inconsolidated financials forming part of this Report. The annual accounts of the SubsidiaryCompanies and the related information will be made available to any Member of the Companyseeking such information and are available for inspection by any Member of the Company atthe Registered Office of the Company.
Pursuant to Section 136 of the Companies Act 2013 the financial statements of yourCompany Consolidated Financial statements along with relevant documents and separateaudited accounts in respect of subsidiaries are available on the website of your Company.
The names of the Promoters and entities comprising "group" (and theirshareholding) as defined under the Competition Act 2002 for the purposes of Section3(1)(e)(i) of SEBI (Substantial Acquisition of Shares and Takeover) Regulations 2011include the following:
|Sl. No. Name of Promoter including Persons Acting in Concert ||Total Shareholding as on March 31 2016 ||Percentage of Shareholding |
|1. Mr. Chander K Baljee ||12014560 ||44.12 |
|2. Mrs. Sunita Baljee ||226260 ||0.83 |
|3. Mr. Arjun Baljee ||301593 ||1.11 |
|4. Mr. Keshav Baljee ||803424 ||2.95 |
|5. Mr. Sunil Sikka ||15296 ||0.06 |
|6. Baljees Hotels and Real Estates Private Limited ||5714689 ||20.98 |
|7. Hotel Stay Longer Private Limited ||229337 ||0.84 |
Particulars of Contracts or Arrangements made with Related Parties under Section 188(1)and (2) of the Companies Act 2013
The particulars of contracts/arrangements with related parties referred to in Section188(1) and (2) of the Companies Act 2013 are provided in the prescribed Form AOC-2appended as Annexure II to this Boards Report.
Development in Human Resources and Industrial Relations
The Company continues to maintain a very cordial and healthy relationship with its workforce across all its units. Your Company participated in "Great Place to Work"Employee Satisfaction survey during 2015 and achieved 79 percentile Index scores; it wasconducted by "The Economic Times".
The disclosure pursuant to Section 197 (12) of the Companies Act 2013 read with Rule5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014(as amended up to date) have been detailed in the Annexure - III to this BoardsReport.
Extract of Annual Return
The extract of Annual Return in Form MGT 9 as provided under Section 92 (3) ofthe Companies Act 2013 read with Rule 12 of the Companies (Management andAdministration) Rules 2014 is annexed hereto as Annexure - IV to this BoardsReport.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgoes
Your Company is continuously striving towards conservation of energy across all itsunits and has implemented various Energy Conservation programs and latest technology upgradation measures your Company also earned foreign currency in Financial Year 2015 2016 complete details of which has been disclosed in Annexure V to thisBoards Report.
Particulars of Loans/Guarantees/Investments
Particulars relating to Inter-Corporate Loans Investments and Corporate Guarantee havebeen detailed in the Notes to Financial Statements forming part of this Annual Report.
Your Company has been practising the principles of good corporate governance. Pursuantto Clause 49 of the Listing Agreements with the Stock Exchanges (effective till November30th 2015) and Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 ("LODR") (applicable from December 1st 2015) adetailed report on corporate governance is available as a separate section in this AnnualReport.
A certificate of the Company Secretary in whole-time practice regarding compliance withthe conditions stipulated in the said clause and the LODR is provided separately as an Annexure A to the Corporate Governance Report.
Board of Directors and changes thereof during Financial Year 2015-2016
As on March 31 2016 your Board has following Directors:
|Sl. No. Name ||DIN ||Category ||Designation |
|1. Mr. C. K. Baljee ||00081844 ||Executive ||Managing Director |
|2. Mr. Sunil Sikka ||00083032 ||Non-Executive ||Non - Independent Director |
|3. Ms. Sunita Baljee ||00080737 ||Non-Executive ||Non - Independent Director |
|4. Mr. R. V. S. Rao ||00061599 ||Non-Executive ||Independent Director |
|5. Mr. Vijay K. Rekhi ||00191298 ||Non-Executive ||Independent Director |
|6. Mr. K. Jairaj ||01875126 ||Non-Executive ||Independent Director |
1. Dr. Vivek Mansingh (DIN: 06903079) who was appointed as Additional Director on theBoard on 12.08.2016 is now proposed to be appointed as Independent Director for a term of5 (Five) Years in the ensuing Annual General Meeting his brief profile is disclosed inthe Annexure to Notice calling 30th Annual General Meeting of the Company.
2. Mr. Vijay K. Rekhi (DIN: 00191298) Non-Executive Independent Director of theCompany is proposed to be reappointed for a second term of 1 (One) Year in the ensuingAnnual General Meeting his brief profile is disclosed in the Annexure to Notice calling30th Annual General Meeting of the Company.
3. Mr. Sunil Sikka (DIN: 00083032) who was holding the position of Whole Time Directorin the Company has resigned from the office of Whole Time Director w.e.f. 07.08.2015 andremained on the Board of Company in the capacity of Director.
4. Mr. Sunil Sikka (DIN: 00083032) Director of the Company is retiring by rotation atthe ensuing Annual General Meeting and being eligible offers himself for re-appointmenthis brief profile is disclosed in the Annexure to Notice calling 30th Annual GeneralMeeting of the Company.
Following are the details of Key Managerial Personnel (KMP) who were appointed or haveresigned or whose designation has been changed during the Year 2015 2016.
|Sl. No. Name of the KMP ||Designation ||Date of Appoint- ment ||Date of Change in designa- tion ||Date of Resigna- tion |
|1. Ms. Payal Sharma ||Company Secretary ||29.05.2014 ||- ||07.08.2015 |
|2. Mr. Sudhir Anand ||Company Secretary ||07.08.2015 ||- ||26.12.2015 |
Committees of the Board
As on March 31st 2016 your Board has following Committees:
a) Audit Committee
b) Nomination and Remuneration Committee
c) Stakeholders Relationship Committee
d) Corporate Social Responsibility Committee
The details of the composition meetings held during the year and attendance of themeetings and the terms of reference of the above Committees of the Board are provided inthe Corporate Governance Report.
Formal Annual Evaluation of Board
Pursuant to section 134 (3) (p) of the Companies Act 2013 and Rule 8(4) of Companies(Accounts) Rules 2014 it is mandatory to monitor and review the Board evaluationframework the Board has carried out peer evaluation of all Board members annualperformance evaluation of its own performance as well as the evaluation of the working ofthe Committees of Board as per the criteria laid down in the Nomination Remuneration andEvaluation policy. The said policy including above said criteria for the evaluation of theBoard individual directors including independent directors and the committee of the boardhas been laid down in the Corporate Governance Report which form part of this report.
Meetings of the Board held during the Year
During the year under review your Board met 4 (Four) times on 30.05.2015 07.08.201504.11.2015 and 28.01.2016 all the Board Meetings were conducted in due compliance withCompanies Act 2013 and the Corporate Governance principles specified in the LODR.
During the year under review the Ministry of Corporate Affairs vide their letternumber: SRN/C54697651/5/2015 CL.VII dated November 3rd 2015 has approved a totalremuneration of Rs.1.58 Crores to Mr. C. K. Baljee (DIN: 00081844) Managing Director ofthe Company for Financial Year 2015 2016 and your Company has not paidremuneration to the him in excess of the limit specified above.
Declaration by Independent Directors
As on March 31st 2016 your Company has following Independent Directors:
1. Mr. R. V. S. Rao (DIN: 00061599).
2. Mr. Vijay Rekhi (DIN: 00191298).
3. Mr. K. Jairaj (DIN: 01875126).
In pursuance of Section 149(7) of the Companies Act 2013 all the three IndependentDirectors of the Company have submitted a declaration under Section 149(6) of theCompanies Act 2013 and Regulation 16(1)(b) of the LODR that they meet the criteria ofindependence.
Familiarisation programme for Independent Directors
The Company has made a familiarisation programme for the Independent Directors whichhas been disclosed on Companys website atwww.royalorchidhotels.com/pdfs/familiarization-programmes.pdf.
Separate Meeting of Independent Directors and performance evaluation of Board by them
In due compliance with the provisions of Regulation 25(3) of the LODR a separatemeeting of Independent Directors was held
28.01.2016 to inter-alia consider and discuss the performance of Non-IndependentDirectors the Chairman and to assess the quality quantity and timeliness of flow ofinformation between the management and the listed entity and the Board in order to helpBoard to perform its duties.
Audit Committee and its Recommendation(s)
In accordance with Section 177 of the Companies Act 2013 rules made thereunder andRegulation 18 of the LODR the Company has duly constituted the Audit Committee detailsof which has been disclosed in the Corporate Governance Report forming part of this AnnualReport and all recommendations made by the Audit Committee were accepted by the Board.
Nomination and Remuneration Committee
In accordance with Section 178 of Companies Act 2013 read with Rule 6 of Companies(Meetings of Board and its Powers) Rules 2014 and Regulation 19 of LODR the Company hasconstituted a Nomination and Remuneration Committee details of which has been disclosedin the Corporate Governance Report forming part of this Annual Report and also onCompanys website at www. royalorchidhotels.com/pdfs/Composition-Various-committees.pdf and your Company has also formulated Royal Orchid Nomination and Remuneration Policyextracts of which are hereunder:
1) The Nomination and Remuneration Committee shall identify potential candidates whoare qualified to become Directors and who may be appointed in senior management inaccordance with the criteria laid down recommend to the Board their appointment andremoval.
2) The Nomination and Remuneration Committee shall formulate the criteria fordetermining qualifications positive attributes and independence of a Director andrecommend to the Board a policy relating to the remuneration for the directors keymanagerial personnel and other Employees.
3) The Nomination and Remuneration Committee shall while formulating the policy ensurethat-
a) the level and composition of remuneration is reasonable and sufficient to attractretain and motivate Directors of the quality required to run the Company successfully;
b) relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and
c) remuneration to Directors key managerial personnel and senior management involves abalance between fixed and incentive pay reflecting short and long-term performanceobjectives appropriate to the working of the Company and its goals provided that suchpolicy shall be disclosed in the Boards Report.
4) Recommend nominees to various committees of the Board.
5) Approve and make recommendations to the Board of Directors in respect ofDirectors fees salary structure and actual compensation (inclusive of performancebased incentives and benefits) of the Executive Directors including the ManagingDirector;
6) Recommending remuneration for Non-Executive Directors.
7) Ensuring that appropriate procedures are in place to assess Boardseffectiveness and shall carry out evaluation of every Directors performance.
8) Developing an annual evaluation process of the Board and its Committees.
9) Assist the Board of Directors in ensuring that affordable fair and effectivecompensation philosophy and policies are implemented;
10) Review and approve the compensation and Employee Stock Option Plan("ESOP") to be granted to senior executives requiring approval from the Boardof Directors;
11) Review and approve the changes in terms and conditions of the ESOP;
12) Review and approve the overall budgetary increment proposals for annual increase ofcompensation and benefits for the Employees;
13) Criteria for selection and appointment of Non-Executive Directors; and
14) Review and approve any disclosures in the annual report or elsewhere in respect ofcompensation policies or Directors compensation.
15) devising a policy on diversity of board of directors;
16) whether to extend or continue the term of appointment of the independent directoron the basis of the report of performance evaluation of independent directors.
Stakeholders Relationship Committee
In terms of Section 178 of the Companies Act 2013 read with Rule 6 of Companies(Meetings of Board and its Powers) Rules 2014 and Regulation 20 of LODR the Company hasconstituted a Stakeholders Relationship Committee (erstwhile ShareholdersGrievance Committee) details of which along with terms of reference has been disclosedin the Corporate Governance Report forming part of this Annual Report and also onCompanys website atwww.royalorchidhotels.com/pdfs/Composition-Various-committees.pdf.
Corporate Social Responsibility
Your Company has always been committed to Corporate Social Responsibility("CSR") and it is one of our commitments to the society. Our CSR activities areembedded around the vision of the Promoters of the Company. The CSR at Royal Orchidfocuses on imparting Education enhancing Employability and Skill Development of buddingentrepreneurs in association with the Presidency Educational Trust. The Trust establishedPresidency College for Hotel Management to focus on the education in the field ofhospitality and Tourism sector. The academy is a unique institution where students areexposed to hotel operations continuously as part of their academic curriculum. This is inaddition to the mandatory industrial training.
Your Company has signed a Memorandum of Understanding with National Skill DevelopmentCorporation (NSDC) a non-profit Company for a project called UDAAN a Special IndustryInitiative scheme for the State of Jammu and Kashmir with the aim to provide employment tothe youths of J & K by imparting them industry specific skills.
The Company has collaborated with American Hotel and Lodging Educational Institute(AHLEI) through Presidency College and funds Operations Certification courses throughBaljee Trust. Under Baljee Foundation the Company continues to serve the well-being ofthe larger community in terms of assisting them to be self reliant by honing their skills.The Hotel Royal Orchid Employees Welfare Trust continues to offer financialsupport for medical and educational needs of certain category of employees.
In accordance with Section 135 of Companies Act 2013 read with Companies (CorporateSocial Responsibility Policy) Rules 2014 the Company has formulated a Corporate SocialResponsibility Committee details and composition of which has been disclosed in theCorporate Governance Report forming part of this report and also on Companys websiteat www.royalorchidhotels.com/ pdfs/Composition-Various-committees.pdf and the Company hasalso adopted a Corporate Social Responsibility Policy (Royal Orchid Corporate SocialResponsibility Policy) in this respect extracts of which are hereunder:
To define the Groups corporate and social obligations as a responsible citizenand oversee its conduct in the context of those obligations including as follows:
1) To oversee the creation of appropriate policies review the CSR policies from timeto time.
2) To approve a strategy for discharging the Groups corporate and socialresponsibilities.
3) To Monitor and Report the CSR activities to the Board.
4) To conduct an annual self-assessment of its performance and effectiveness includingits Terms of Reference and report conclusions and recommendations for change to theBoard.
The Company has established an effective Compliance Mechanism to mitigate the risk andwill be reviewed by the Board periodically. The Company has adopted Risk ManagementPolicy pursuant to the provision of Section 134 of the Act to identify and evaluatebusiness risks and approach for mitigation of such risks. The Company has identifiedvarious risks and also has mitigation plans for each risk identified and reviewedperiodically.
The Company in order to promote green initiative has sent electronic copies of theAnnual Report for Financial Year 2015 2016 along with the Notice of the 30thAnnual General Meeting are sent to all members whose email addresses are registered withthe Company / Registrar and Share Transfer Agent ("RTA"). For members who havenot registered their email addresses physical copies of the Annual Report 2015-2016 underSection 101 of the Companies Act 2013 are sent in the permitted mode. Members who havebeen sent Annual Report copies in electronic mode desirous to have physical copies of thesame can send a request in writing either to the Company or the RTA.
Insider Trading Regulations
Based on the requirements under SEBI (Prohibition of Insider Trading) Regulations 2015(erstwhile SEBI (Prohibition of Insider Trading) Regulations 1992) as amended tilldate the Code of Conduct for prevention of Insider Trading and the Code of fairdisclosure as approved by the Board from time to time are enforced by the Company.
The Company has adopted a Code of Conduct to regulate monitor and report trading byinsiders under the SEBI (Prohibition of Insider Trading) Regulations 2015. This Code ofConduct also includes code for practices and procedures for fair disclosure of unpublishedprice sensitive information and this is made available on the Companys websitewww.royalorchidhotels.com.
The objective of this Code is to protect the interest of Stakeholders at large toprevent misuse of any price sensitive information and to prevent any insider tradingactivity by dealing in shares of the Company by its Directors Officers and DesignatedEmployees. The Company also adopts the concept of Closure of Trading Window to preventits Directors Officers Designated Employees and other employees from trading in thesecurities of the Company at the time when there is unpublished price sensitiveinformation.
The Statutory Auditors M/s Deloitte Haskins & Sells LLP Chartered Accountants(Firm Registration No. 117366W/ W-100018) were appointed as Statutory Auditors of theCompany in the 29th Annual General Meeting of the Company to hold office as StatutoryAuditors until the conclusion of 34th Annual General Meeting of the Company subject toratification by the shareholders in each Annual General Meeting of the Company the samehas been proposed in the Notice calling 30th Annual General Meeting of the Company.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board in itsmeeting held on May 30 2016 appointed Mr. G. Shanker Prasad (ACS 6357) PracticingCompany Secretary (CoP No. 6450) to undertake the Secretarial Audit of the Company forFinancial Year 2015 - 2016.
There were no qualifications by the Auditor in their Secretarial Audit Report in FormMR-3 for the Financial Year ended March 31 2016 which is appended as Annexure VIto this Boards Report.
Explanations or Comments by the Board on every qualification reservation or adverseremark or disclaimer made by the Statutory and Secretarial Auditors
There were no qualifications or adverse remark by either of the Auditors in theirrespective Reports.
The Company has been named as a defendant along with Cygnus Business Consulting &Research Private Limited in a suit filed in mid 2008 by Kamat Hotels (India) Limited(the plaintiff) restraining the alleged use of the trademark of the plaintiffby the Company since 1997. The plaintiff seeks a relief of a permanent injunctionrestraining the Company from using the trademark Orchid. The plaintiff hadfiled an application seeking an interim injunction while the above proceedings arepending. The Bombay High Court vide its interim order dated April 05 2011 has allowedthe Company to continue to operate its current hotels as on that date but has restrainedthe Company from opening new hotels under the said brand. However the Division bench ofthe Bombay High Court vide its order dated May 06 2011 has partially stayed operation ofthe said order and allowed opening of one of Companys proposed hotels in Vadodaraunder the royal orchid brand. During the year ended 31 March 2014 the Companyhas obtained favourable rulings from the intellectual property appellate board. The MadrasHigh Court has passed an order in February 2015 for cancellation of registration oftrademark against which the Company has filed an appeal before the Supreme Court and theappeal is yet to come up for hearing before Supreme Court.
Details of significant and material orders passed by the regulators/ courts/ tribunalsimpacting the going concern status and the Companys operations in future
There were no significant material orders passed by the Regulators/Courts which wouldimpact the going concern status of the Company and its future operations.
Internal Financial Control Systems
The Company has adequate system of internal controls which ensures that all thetransactions are authorised recorded and reported correctly and assets are safeguardedand protected against loss from unauthorized use or disposition.
The Company has appointed M/s K. P. Rao and Co. as its Internal Auditors who doesconcurrent internal audits and management reviews and supplements the process of internalcontrol every month. The internal control system has been designed to ensure that thefinancial and other records are reliable for preparing financial and other statements andfor maintaining accountability of assets.
The Company also has an Audit Committee comprises of 3 (Three) professionally qualifiedIndependent Directors who interact with the Statutory Auditors Internal Auditors andManagement in dealing with matters within its terms of reference. This Committee mainlydeals with accounting matters financial reporting and internal controls.
Vigil Mechanism and Whistle Blower Policy
The Board of Directors of your Company has adopted the Vigil Mechanism and WhistleBlower Policy in compliance with Section 177(9) and (10) of the Companies Act 2013Clause 49(F) (3) of Listing Agreements with Stock Exchanges and regulations specifiedunder LODR.
The Company has adopted a channel for receiving and redressing of employeescomplaints. Under this policy we encourage our employees to report any reporting offraudulent financial or other information to the stakeholders any conduct that results inviolation of the Companys Code of Business Conduct. Likewise under this policy wehave prohibited discrimination retaliation or harassment of any kind against anyemployees who based on the employees reasonable belief that such conduct orpractice have occurred or are occurring. No individual in the Company has been deniedaccess to the Audit Committee or its Chairman.
The Audit Committee periodically reviews the functioning of this mechanism. This meetsthe requirement under the said provisions above.
Directors Responsibility Statement
Your Companys Directors make the following statement in terms of Section 134(5)of the Companies Act 2013 which is to the best of their knowledge and belief andaccording to the information and explanations obtained by them:
1) in the preparation of the Annual Accounts for the year ended March 31 2016 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;
2) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2016 and of the profit ofthe Company for the year ended on that date;
3) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
4) the Directors have prepared the annual accounts on a going concernbasis;
5) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
6) the Directors have devised proper system to ensure compliances with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
Payment of Listing Fee and Custodial Fee
Your Company has paid the both Annual Listing Fee and Annual Custodial Fee for theFinancial Year 2015 2016 to the National Stock Exchange ("NSE") and theBombay Stock Exchange ("BSE") and to National Securities and DepositoriesLimited (NSDL) and Central Depository Services (India) Limited (CDSL) respectively.
Commission or Remuneration received from Holding or Subsidiary Companies
During the year under review no Commission or Remuneration was paid to the ExecutiveDirectors from Holding/Subsidiary Companies.
Disclosures as per the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013
The Company has zero tolerance for sexual harassment at its workplace and in line withthe provisions of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and the Rules there under your Board of Directors has approved andadopted a "Policy on Prevention of Sexual Harassment at Workplace" to provideequal employment opportunity and is committed to provide a work environment that ensuresevery woman employee is treated with dignity and respect and afforded equitable treatment.
During the year under review the Company has not received any complaints on sexualharassment. The Company has complied with the Information required to be provided underSexual Harassment of Women at Workplace (Prevention Prohibition & Redressal) Act2013.
The Companys shares are available for dematerialization with both theDepositories viz. NSDL and CDSL. About 99.79% of the paid-up equity share capital of theCompany has been dematerialized as on March 31 2016.
Disclosure of Frauds in the Boards Report under Section 143 of the Companies Act2013
During the year under review your Directors do not observe any contract arrangementand transaction which could result in a fraud; your Directors hereby take responsibilityto ensure you that the Company has not been encountered with any fraud or fraudulentactivity during the Financial Year 2015 - 2016.
1) During the year under review the Company has not bought its own shares nor hasgiven any loans to its employees (including Key Managerial Personnel) of the Companyfor purchase of the Company shares.
2) Your Company provides e-voting facility to all its members to enable them to casttheir votes electronically on all resolutions set forth in the Notice. This is pursuant tothe Section 108 of the Companies Act 2013 and Rule 20 of the Companies (Management andAdministration) Amendment Rules 2015.
Awards and Recognitions
1) Royal Orchid Hotels was awarded as one of the " Bengaluru s Hot 50Best Brands" at The Brand Summit and Awards for the years 2015 and 2014 which hasbeen organized by Paul Writer.
2) Trip Advisor Winner 2015 - Hotel Royal Orchid is awarded with Tripadvisor "Certificateof Excellence".
3) Rocheston Accreditation Institute New York has conferred the prestigious honour ofthe Distinguished Bar upon Geoffreys at Hotel Royal Orchid Bangalore2016.
4) Royal Orchid Metropole Mysore has been Awarded "The Best in HeritageHotel" Category Tourism Awards 2016 the by Federation of Karnataka Chambers ofCommerce & Industry (FKCCI) Bengaluru Karnataka.
5) Regenta Resort Varca- Goa won the "Best Debut Beach Resort" forIndia Hospitality Award (West & South) 2016.
6) Royal Orchid Beach Resort Goa was awarded for by the Goan" Best 5 star Fun& Fly Resort and the " Best Food & Bev. Manager in 5 star category(South) - Mr. Sujit Kushwaha" Hospitality award of Excellence 2016
Your Directors place on record their deep sense of appreciation to all Employeessupport staff for adopting/adapting to the values of the Company viz. collaborativespirit unrelenting dedication and expert thinking to be an expertise led organizationand the Companys Customers for letting us deliver the Companys Missionstatement to help the businesses and societies flourish.
The Board also immensely thank all the Shareholders Investors Vendors ServiceProviders Bankers and all other Stakeholders for their continued and consistent supportto the Company during the year.
Your Directors would like to make a special mention of the support extended by thevarious Banks Departments of Government of India the State Governments the TaxAuthorities the Ministry of Commerce Ministry of Tourism Government of India KarnatakaState Tourism Development Corporation (KSTDC) Ministry of Corporate Affairs Ministry ofFinance SEBI NSE and BSE and others and look forward to their continued support in allfuture endeavours.
| ||For and on behalf of the Board of Directors of || |
|Place : Bengaluru ||Chander K. Baljee ||R V S Rao |
|Date: August 12 2016 ||Managing Director ||Director |