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Apollo Sindoori Hotels Ltd.

BSE: 532752 Sector: Services
NSE: APOLSINHOT ISIN Code: INE451F01024
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Apollo Sindoori Hotels Ltd. (APOLSINHOT) - Director Report

Company director report

Your Directors are pleased to present the Twentieth Annual Report on the business andoperation of the Company together with the Audited Financial Statements for the year endedMarch 31 2018

1. Corporate Overview

Apollo Sindoori is a leading hospitality service management and support servicescompany. We manage the entire gamut of hospitality services right from food services tokitchen planning and management. Apollo Sindoori has built its heritage by combining itscorporate and professional prowess with experience and expertise in catering andhospitality. We strive constantly to achieve "Excellence in Hospitality".

2. Operations / State of the Company's Affairs

Your Company's revenue from operation has increased from Rs.132.6 Crores to Rs.139.6Crores. This growth in challenging circumstances is a testimony to the robustness of yourCompany's business strategy and innovative service offerings that helped capture newmarkets.

Your Company's net profit before tax for 2017-18 is Rs.10.25 Crores as compared to2016-17 which was

Rs.10.45 Crores.

Particulars For the period 01.04.17 to 31.03.18 For the period 01.04.16 to 31.03.17
INCOME:
Revenue from operations 13992.60 13280.43
Other Income 117.22 31.81
Total Income 14109.82 13312.24
EXPENDITURE: 4029.21 4094.42
Employee benefit expense 7636.70 6587.41
Finance Cost 36.64 26.62
Depreciation and amortization expense 93.59 90.88
Other expenses 1368.55 1467.57
Total Expenses 13164.68 12266.91
Profit before exceptional and extraordinary items and tax 945.13 1045.33
Exceptional Items 80.00 --
Profit before extraordinary items and tax (V - VI) 1025.13 1045.33
Less: Extraordinary Items -- --
Profit before tax (VII - VIII) 1025.13 1045.33
Tax expense:
(1) (a) Current tax 385.00 350.00
(b) Previous year tax 22.51 13.24
(2) Deferred tax (85.07) 4.70
Net Profit(Loss) for the period 702.70 677.40
Other Comprehensive Income
(i) Items that will not be reclassified to profit or loss
Remeasurement of Defined Benefit Obligation (net of tax) (25.33) 96.01
Total Comprehensive Income for the period (XIII + XIV) 728.02 581.39
Earning per equity share:
Weighted average no. of shares outstanding during the period 1300200 1300200
Nominal Value per Equity Share (Rs) 10.00 10.00
Earnings per share before extra-ordinary item
- Basic & Diluted EPS (Rs) 54.05 52.10

3. Change in nature of business

During the year the Company has continued with its business and operation and nochanges in the business have taken place.

4. Dividend

Your Directors recommends Rs.5/- (Rupees Five) per share as final dividend to equityshareholders of the company for the financial year 2017-18 and is subject to approval ofthe members in the Annual General

Meeting. The Company has initially decided to recommend a dividend of Rs.3/- per sharesbut looking at overall profitabilityand with view to ensure the higher returns toshareholders have revised the same to Rs. 5/- per share.

5. Transfer to Reserves

The Company does not propose any amount to be transferred to General Reserves out ofthe current profits.

6. Fixed Deposits

The Company has not accepted any public deposits and as such no amount on account ofprincipal or interest on public deposits was outstanding as on the date of the balancesheet.

7. Listing

Your Company is listed on National Stock Exchange of India Limited Mumbai.

8. Share Capital

The paid up equity share capital as on March 31 2018 is Rs.13002000/- and nochanges has taken place during the year. During the year under review your Company hasnot issue any shares including shares with differential voting rights or sweat equity.

9. Significant or Material Orders Passed by Regulators/Courts

During the year under review there were no significant or material orders passed bythe regulators or courts or tribunals impacting the going concern status and Company'soperations in future.

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

There are no material changes and commitments affecting financial position of theCompany which has occurred between the end of the financial year of the Company i.e. March31 2018 and the date of this Directors' Report.

11. Corporate Social Responsibility

Your Company has developed and implemented Corporate Social Responsibility initiativesand has spent approximately Rs. 650000/- approved CSR projects during the period underreview. Report on Corporate Social Responsibility including details as Per Rule 8 ofCompanies (Corporate Social Responsibility Policy) Rules 2014 is enclosed with thisreport as Annexure A

12. Corporate Governance

Compliance with the provisions of Corporate Governance does not apply to your companyas paid up equity share capital is not exceeding Rs.10 Crores and Net Worth is notexceeding Rs.25 Crores as on the last day of the previous financial year as perRegulation 15(2) of SEBI (Listing Obligations &

Disclosures Requirement) Regulation 2015. Your Company shall comply with theprovisions on its applicability.

13. Joint venture Company/Associates

Your Company has a joint venture namely Faber Sindoori Management Services PrivateLimited. The joint has been entered based on MOU dated July 14 2006 with Faber Medi-ServeSDN. BHD ("FMS") whereby FMS and Apollo Sindoori Hotels have agreed to form ajoint venture company in Chennai for the purpose of setting up a project upon mutuallyagreed objectives in the domain of bio-medical engineering (maintenance) facilityengineering (maintenance) cleansing housekeeping janitorial services and hospitalsupport services (other than catering services) and management information services (otherthan patient information). Accordingly the joint ven ture company Faber SindooriManagement Services Private Limited has been incorporated on 27th August 2007 with FMSholding 51% and Apollo Sindoori Hotels holding 49%.- Details of the same is provided inAOC-1 under Annexure- B

14. Subsidiary

Your Company has no subsidiary as on date of this Balance Sheet.

15. Consolidation of Accounts

Your Company has prepared Consolidated Financial Statements in accordance with Ind ASprescribed under Section 133 of the Companies Act 2013 read with applicable rules. TheConsolidat ed Financial Statements reflect the financial position of the Company andAssociates. As required by Regulation 34 of the

Obligations and Disclosure Requirements) Regulations 2015 (hereinafter referred to as‘SEBI(LODR) Regulations 2015') the Audited Consolidated Financial Statementstogether with the Independent Auditor's Report thereon are annexed and form part of thisAnnual Report.

16. Related Party Transaction

All related party transactions entered into during the financial year are in theordinary course of business and on an arm's length basis and are on similar terms andconditions as applicable to non-related parties. All the related party transactions arepre-approved by the Audit Committee. Disclosure in form AOC-2 has been provided as Annexure-C to Directors Report.

The details of the transaction with Related Party are also provided in the accompanyingfinancial statements and may be treated as part of directors report.

17. Extracts of Annual Return

The Extracts of Annual Return forming part of Director's Report is annexed as Annexure‘D'.

18. Composition of Board

The Board comprised with optimum combination of Executive and Non-Executive Directors.Board has One Executive Director Three Non-Executive Director and Three IndependentDirector duly appointed as per the Provisions of the Companies Act 2013.

Name of the Director Designation Executive/Non-Executive / Independent
1 Mr. Pottipati Vijaykumar Reddy Director Non- Executive
2 Mrs. Sucharitha Reddy Managing Director Executive
3 Mrs. Suneeta Reddy Director Non- Executive
4 Mrs. Sindoori Reddy Director Executive
5 Mr. Venkatraman. G Director Independent & Non-Executive
6 Mr. George Eapen Director Independent & Non- Executive
7 Mr. Suresh Raj Madhok Director Independent & Non- Executive

19. Board Meetings and other Committee Meetings

The Board of Directors met four times during the financial year 2017 -18 on 11 th May2017 11th August 2017 14th November 2017 and 12th February 2018.

Audit Committee also met four times during the financial year 2017 -18 on 11 th May2017 11th August 2017 14th November 2017 and 12th February 2018. Meeting of Nomination& Remuneration Committee were held on 11th May 2017and 12th February 2018. Meeting ofStakeholders Relationship Committee were held on 11th May 2017 and Meeting of CSRCommittee were held on 11th August 2017. All members were present during the abovemeetings.

Details of attendance at the Board meetings and the last Annual General Meeting (AGM):

Name of the Director Attendance at Board meeting Attendance at last AGM Attendance at Audit committee
Held Attended Held Attended
Mr. Vijaykumar Reddy 4 1 No - -
Mrs. Sucharitha Reddy 4 1 No - -
Mrs. Suneeta Reddy 4 2 Yes - -
Mrs. Sindoori Reddy 4 2 No - -
Mr. Venkatraman. G 4 4 Yes 4 4
Mr. George Eapen 4 3 Yes 4 3
Mr. Suresh Raj Madhok 4 4 Yes 4 4

20. Composition of Audit Committee

Audit Committee of the Board of Directors is entrusted with the responsibility tosupervise the Company's internal controls and financial reporting process. Thecomposition quorum powers role and scope are in accordance with Section 177 of theCompanies Act 2013 and the provisions of Regulation 18 and Part C of Schedule

V of SEBI (LODR) Regulation 2015. All members of the Audit Committee are financiallyliterate.

Audit Committee comprises of Mr. G. Venkatraman as the Chairman and Mr. Suresh RMadhok Mr. George Eapen as the Members. All the members of the Committee are independentdirectors. More details about the Committee are given in Annexure ‘E'.

21. Disclosure of Information as required under section 134 (3) (m) of the CompaniesAct 2013 (ACT) read with the companies (Accounts) Rules 2014

(i) Conservation of Energy

The Company values the significance of conservation of energy and hence continuousefforts are made for judicious use of energy at all levels of operations by utilizingenergy efficient systems and processes. Towards achievement of this objective steps havebeen initiated including use of energy efficient LED lights and energy management systemsat our kitchen/offices.

Further certain initiatives are being implemented for optimization of electricity andLPG usage.Some of the actions planned for next year include replacement of energyintensive pumps with high efficiency replacement of energy intensive fans with energyefficient fans. Operational measures include close monitoring and control of energyconsumption and frequent energy audits by the hotel Engineering Department.

Your Company remains focused on giving importance towards conservation of energy whichresults in savings of electricity consumption a significant component of the energy costin an ongoing process.

(ii) Technical Absorption

The Company continues to absorb and upgrade modern technologies and advanced hotelmanagement techniques in various guest contact areas which includes wireless internetconnectivity in all the Guest House.

(iii) Foreign Exchange Earnings and outgo

As required under Section 134(3) (m) of the Companies Act 2013 read with rule 2 ofthe Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988the information relating to foreign exchange earnings and outgo is hereunder:

Particulars March 31 2018 (Rs.) March 31 2017 (Rs.)
Outgo 1765432 433392
Earned -- --

22. Insurance

All insurableinterestoftheCompanyincludingbuildingsfurniture fixturesand otherinsurable interest are adequate insured.

23. Auditors

(i) Statutory Auditors

M/s. P. Chandrasekhar Chartered Accountants Statutory Auditors of the Companyholdofficeuntil the conclu -sion of 24thAGM. Their appointment is being placed forratification before the AGM. Further due to changes in the Companies Act 2013 regardingdeletion of provisions related to ratification of appointment Company would not beseeking the ratification from next year onwards.

(ii) Internal Auditor

Pursuant to the provisions of Section 138 of the Companies Act 2013 and The Companies(Accounts) Rules 2014 the Company has appointed M/s. Viswanathan & Co CharteredAccountant as an Internal Auditors to undertake the Internal Audit of the Company.

(iii) Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. Gouri Shanker Mishra Company Secretary in Practice to undertake theSecretarial Audit of the Company. The Report of the Secretarial Auditor is attached.

24. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has an internal Control System commensurate with size scale andcomplexity of its operations.

The scope and authority of the internal Audit function is well defined in theorganization. To maintain its objectiv -ity and independence the internal Audit functionreports to the Chairman of the Audit Committee of the Board.

DIRECTORS SEEKING FOR RE-APPOINTMENT:

In terms of the provisions of Section 152 (6) (d) of the Companies Act 2013 Mr.Pottipati Vijaykumar Reddy Director of the Company retire by rotation at this AnnualGeneral Meeting as per the provisions of the Articles of Association of Company and beingeligible offer themselves for re-election.

The brief resume of these directors proposed to be appointed and re-appointed and otherrelevant information have been furnished in the Notice convening the AGM. Appropriateresolution for the appointment/re-appointment is being placed for approval of the membersat the AGM.

The board therefore recommends their re-appointment as Directors of the Company.

INDEPENDENT DIRECTORS DECLARATION:

All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013.

APPOINTMENT OF KEY MANAGERIAL PERSONNEL:

During the yearpursuant to resignation of earlier Company Secretary the Board hasappointed Mrs. Shuganya. K as Company Secretary of the Company with effect from 11th May2017. Further Mr. Meyyappan M.SP has been appointed as Chief Financial Officer of theCompany with effect from 11th August 2017. The appointments were made in compliance to theprovisions of section 203(1) of the Companies Act 2013.

25. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.

26. VIGIL MECHANISM / WHISTLE BLOWER POLICY

Pursuant to Section 177(9) and (10) of the Companies Act 2013 the Companyhasestablishedvigil mechanism for the directors and employees to report genuine concerns.

The Vigil (Whistle Blower) Mechanism aims to provide a channel to the Directors andemployees to report genuine concerns about unethical behaviour actual or suspected fraudor violation of the Codes of Conduct or policy.

The Company is committed to adhere to the highest standards of ethical moral and legalconduct of business operations and in order to maintain these standards the Companyencourages its employees who have genuine concerns about suspected misconduct to comeforward and express these concerns without fear of punishment or unfair treatment.

The mechanism provides for adequate safeguards against victimization of Directors andemployees to avail of the mechanism and also provide for direct access to the Chairman ofthe Audit Committee in exceptional cases. The said Whistle-Blower Policy has been hostedon the website of the Company at http://apollosindoori.com/ pdf/policy2.pdf

27. BOARD EVALUATION

As per provisions of the Companies Act 2013 and Regulation 17(10) of the ListingRegulations the evaluation process for the performance of the Board its committees andindividual Directors was carried out internally. Each Board member submitted a detailedevaluation form on the functioning and overall level of engagement of the Board and itsCommittees on parameters such as composition execution of specific duties qualityquantity and timeliness of flow of information deliberations at the meeting independenceof judgment decision making management actions etc.

A one-on-one meeting of the individual Directors with the Chairman of the Board wasalso conducted as a part of self-appraisal and peer group evaluation and the engagementand impact of individual Directors was reviewed on parameters such as contributionattendance decision making inter-personal relationship actions oriented externalknowledge etc. The Directors were also asked to provide their valuable feedback andsuggestions on the overall functioning of the Board and its committees and the areas ofimprovement for a higher degree of engagement with the management. The IndependentDirectors met on 11th May 2017 to review the performance evaluation ofNon–Independent Directors and the entire Board of Directors including the Chairmanwhile considering the views of the Executive and Non-Executive Directors. The IndependentDirectors were highly satisfied with the overall functioning of the Board its variouscommittees and with the performance of other

Non-executive and Executive Directors. The Board expressed its satisfaction with theEvaluation results which reflects the high degree of engagement of the Board and itscommittees with the company and its Management.

28. Compliance to Secretarial Standard

The company has complied with the Secretarial Standards issued by the Institute ofCompany Secretaries of India on Board Meetings and General Meetings.

29. Risk Management Policy

Risk Management is an integral part of the business process. The risk managementprocess inter alia provides for review of the risk assessment and mitigation procedureand timely report to the management and review of the identified risks at periodicalinterval to assess the progress of control measures.

The Audit committee of the Board reviews the risk management efforts periodically.TheCommittee had formulated a Risk Management Policy. Risk Management Policy of the Companyoutlines different kinds of risks and risk mitigating measures. The risks are reviewed forthe change in the nature and extent of major risks identified since the last assessment.It also provides control measures for risks and future action plans. Your Board issatisfied that there are adequate systems and procedures in place to identify assessmonitor and manage risks.

The Company believes that the overall risk exposure of present and future risks remainswithin risk capacity.

30. RECEIPT OF ANY COMMISSION BY MD / WTD FROM COMPANYOR SUBSIDIARY

The Company has not provided any commission to Managing Director/Whole Time Directorduring the year under review.

31. 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.

32. Comments on Auditors' Report

Statutory Auditors Report:

No Qualification / observation has given by Statutory Auditors in their Report.

33. Secretarial Auditors Report:

A detailed Secretarial Auditors Report is provided under Annexure- F

The reply to the observation provided in Secretarial Audit Report is as under:

1. The Company has complied with Secretarial Standards as applicable in relation toBoard and Committee meetings however due to oversight certain compliances in certaininstances has been missed out. Board has taken a note of it company will endeavor tocomply with all applicable related compliances of Secretarial Standards as applicable.

2. The observation regarding Related Party Transaction is as per the statement of factprovided by the Com pany owing the reason as majority of revenue of the company are fromrelated party. However all related party is charged competitive pricing and same conditionapplicable to any non related party and all transac- tions are in arms length and ordinarycourse of business.

3. Till the last financial year based on the capital and net worth company did not fellunder requirement of Corporate Governance as per Regulation 15(2) of SEBI (ListingObligations & Disclosures Requirement) Regulation 2015).

4. We understand the disposal of shares has happened Person Acting in Concern. We havebeen informed that they are in no way associated with present promoters or acting inconcert with them. As they are not connect- ed to promoters or PAC disposal of theirshares were not informed to us. They have also requested for re- classification underRegulation 31A and other relevant provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

34. Nomination & Remuneration Committee

The Company strongly believes that human resources which manage the other resourceshave infinite potential and therefore their development is the key to organizationaleffectiveness. We commit ourselves to integrate human resources with organizational growthand development for mutual benefit.The Nomination and R

Remuneration Policy has been formulated in compliance with Section 178 and otherapplicable provisions of the Companies Act 2013 read with the applicable rules thereto andthe provisions of SEBI (LODR) Regulation 2015.

Nomination and Remuneration Committee comprises of Suresh R Madhokas the Chairman andMr. G. Venkatraman Mr. George Eapen as the Members. All the members of the Committee areindependent directors. Details of the same is provided under Annexure- I

35. Managerial Remuneration

Disclosures pursuant to Rule 5 of Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 has been provided in Annexure D.

36. Particulars of Employees

The Company has about 3861 employees in its roll. Since employees contribute inachieving the goal of the Company periodical training programs are carried out to meetthe challenges in providing services to the best of Customer Satisfaction.

37. Disclosure on Establishment of a Vigil Mechanism

The Board of Directors have adopted Whistle Blower Policy. The Whistle Blower Policyaims for conducting the affairs in a fair and transparent manner by adopting higheststandards of professionalism honesty integrity and ethical behavior. Directors and allpermanent employees of the Company are covered under the Whistle Blower Policy. Amechanism has been established for directors/ employees to report concerns about unethicalbehavior actual or suspected fraud or violation of Code of Conduct and Ethics. It alsoprovides for adequate safeguards against the victimization of directors/ employees whoavail of the mechanism and allows direct access to the Chairperson of the audit committeein exceptional cases. A copy of the Whistle Blower Policy is also hosted on the website ofthe Company.

38. Sexual Harassment of Women at Workplace (prohibition prevention and redressal)Act 2013

The Company has a Policy on Prohibition Prevention and Redressal of Sexual Harassmentof Women at Work-place 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. During the year under review the Company has notreceived any complaints under the Policy.

Acknowledgement

Your Directors take this opportunity to thank the Company's customers shareholderssuppliers bankers financial institutions and the Central and State Governments for theirunstinted support. The Directors would also like to place on record their appreciation toemployees at all levels for their hard work dedication and commitment.

For and on Behalf of Board of Directors
Place: Chennai Sucharitha Reddy G. Venkatraman
Date: 28/05/2018 Managing Director Director