Asian Hotels (East) Ltd.
|BSE: 533227||Sector: Services|
|NSE: AHLEAST||ISIN Code: INE926K01017|
|BSE 00:00 | 18 Oct||179.00||
|NSE 00:00 | 18 Oct||179.05||
|Mkt Cap.(Rs cr)||206|
|Mkt Cap.(Rs cr)||206.39|
Asian Hotels (East) Ltd. (AHLEAST) - Director Report
Company director report
Your Board has pleasure in presenting the 11 thAnnual Report of the Company togetherwith the audited financial statements of the Company for the financial year ended 31stMarch 2018.
Your Company's performance for the financial year ended 31st March 2018 is summarisedas under:
TRANSFER TO RESERVES
During the financial year 2017-18 an amount of Rs. 150 lacs (Rs. 150 lacs last year)has been transferred to General Reserve out of amount available for appropriations.
The Board of Directors are pleased to recommend a dividend of Rs. 2.50 per equity share(previous year Rs. 2/- per equity share) on 11527797 equity shares of Rs. 10/ - each forthe year ended 31st March 2018. The total cost to the Company on account of dividendpayment will be Rs. 347.43 lacs including dividend distribution tax of Rs. 59.24 lacsresulting in a payout of 23.57% of the standalone profits after tax of the Company.
BUSINESS OVERVIEW AND OPERATING PERFORMANCE/ STATE OF COMPANY'S AFFAIRS
During the financial year 201 7-18 Hyatt Regency Kolkata (the hotel) has beensuccessful in securing major project-based business and could sustain its leading positionin wedding related business in the city. As weddings prop up revenue the hotel has beennearly successful in booking all the relevant wedding dates during the last year. Thehotel enhanced its rank on RevPAR level through innovative pricing technique which inturn did boost up the customer experience loyalty built up and achieving repeat revenue.Further with increased supply and competition customer retention and creatingexperiences for guests had been the focus for the year. Guest's satisfaction is measuredby hotel online surveys where the hotel over achieved its customer service goal for 2017by 8% and also achieved the Net Promoter score goal set for the year.
During the financial year 2017-18 there were no material changes and commitmentsaffecting financial position of the Company which have occurred between the end of thefinancial year of the Company to which the financial statements and the report relate.Further there has been no change in the nature of business of the Company.
The Company has two subsidiaries namely GJS Hotels Limited a wholly owned and amaterial non-listed Indian Subsidiary Regency Convention Centre and Hotels Limited awholly owned and a material non-listed Indian Subsidiary and one step-down subsidiarynamely Robust Hotels Private Limited. There has been no significant developments in thematters concerning the subsidiaries during the year under review.
With reference to GJS Hotels Limited the Company is awaiting sanction of drawingssubmitted to the Bhubaneswar Municipal Corporation and continues to engage in dialoguewith the Government of Odisha for extension of time to start construction and complete thehotel project at the site.
As regards Regency Convention Centre and Hotels Limited during the financial yearunder review your subsidiary continues to engage in dialogues with the parties concernedand has been exploring opportunities to settle the disputes amicably. Your Board ishopeful of a positive outcome.
Your subsidiary Robust Hotels Private Limited (Chennai) was adversely affected duringthe period commencing from April 2017 till August 2017 due to reasons beyond the controlof the management. The reasons include : liquor ban imposed by state government delay incompletion of metro rail work in front of the hotel and adverse market condition.
In spite of the above Hyatt Regency Chennai (Robust) managed to keep the Rev PAR atthe same level as in the previous year 2016-17.During the financial year under review theturnover was Rs. 88.43 crores as compared to 98.74 crores in the previous year and EBDITAwas Rs. 22.07 crores as compared to Rs. 26.09 crores in the previous year. Your directorsare hopeful of better performance of Robust in the current financial year.
In terms of proviso to sub section (3) of Section 129 of the Companies Act 2013 astatement containing salient features of the financial statement of each of thesubsidiaries of the Company in Form AOC-1 is annexed herewith marked as Annexure I to thisReport. The audited financial statement of each of the subsidiaries has also been uploadedon the website of the Company viz. www.ahleast.com
Neither of your subsidiary company has ceased to be subsidiaries during the financialyear nor any has become new subsidiary company during the financial year. Your Companydoes not have any joint venture company holding company and associate company during thefinancial year under review.
The Consolidated Financial Statements of the Company are prepared in accordance withIndian Accounting Standards notified under the Companies (Indian Accounting Standards)Rules 2015 (Ind AS') and forms an integral part of this report.
SCHEME OF ARRANGEMENT
The Company entered into a Scheme of Arrangement with GJS Hotels Limited Robust HotelsPrivate Limited and their respective shareholders ("the Scheme") as approved bythe Board Members on 10th February 2017. During the year under review an application wasfiled at the Hon'ble National Company Law Tribunal (NCLT) Kolkata Bench and Chennai Benchfor directing the meeting of the equity shareholders and unsecured creditors of theCompany pursuant to Section 230 to 232 of the Companies Act 2013 read with the Companies(Compromises Arrangements and Amalgamations) Rules 2016.
Pursuant to the NCLT order Kolkata Bench dated 21 st December 2017 as modified by anorder dated 4th January 2018 separate meetings of the equity shareholders and unsecuredcreditors of the Company was held on 21st February 2018 wherein the resolution for theScheme was passed by the requisite majority. The Company has already filed a petition forsanctioning of the Scheme before the Hon'ble NCLT Kolkata Bench on 28th March 2018 andis awaiting the final hearing on the same.
Further NCLT Chennai Bench on 26th March 2018 dispensed with meetings of theshareholders of the Company and the application was listed for hearing on 26th April2018. The order of the same has not been uploaded at the website of NCLT Chennai Benchas the Company is yet to receive the order.
AUDITORS & AUDITORS' REPORT
M/s. Singhi& Co. Chartered Accountants (Firm Registration No. 302049E) wasappointed as the Statutory Auditors of the Company at the Annual General Meeting (AGM)held on 28th July 2017 for a period of five (5) consecutive years. They have submitted acertificate confirming that their appointment is in accordance with Section 139 read withSection 141 of the Companies Act 2013.
The report of the Statutory Auditors along with the notes to accounts is enclosed tothis report and contains an Unmodified Opinion. The report does not contain anyqualification reservation adverse remark or disclaimer.
Pursuant to Section 138 of the Companies Act 2013 read with Rule 13 of the Companies(Accounts) Rules 2014 and other applicable provisions if any of the Companies Act2013 your Board based on the recommendation of the Audit Committee appointed M/s. S.S.Kothari Mehta & Co. to conduct internal audit for the financial year 2018-19.
Pursuant to the provisions of Section 204 of the Companies Act 2013 your Board hadappointed M/s. D. Raut & Associates Practicing Company Secretary to undertakeSecretarial Audit of your Company for the financial year 2018-19. The Secretarial AuditReport in Form MR-3 for the financial year ended 31st March 2018 is annexed herewithmarked as Annexure II to this Report. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Pursuant to the provisions of Section 152 of the Companies Act 2013 and Company'sArticles of Association Mr. Umesh Saraf (DIN:00017985) Director retires by rotation andbeing eligible offers himself for reappointment at the ensuing Annual General Meeting.The Board recommends his reappointment.
Pursuant to Section 149 of the Companies Act 2013 read with Regulation 25 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the term of office ofMr. Amal Chandra Chakrabortti (DIN : 00015622) Mr. Padam Kumar Khaitan (DIN : 00019700)and Mr. Rama Shankar Jhawar (DIN : 00023792) independent directors of the Companyappointed at the Annual General Meeting held on 30th July 2014 for a term of five (5)consecutive years expires on 31st March 2019.
Based on the recommendation of the Nomination and Remuneration Committee and Board ofDirectors of the Company members are requested to approve the reappointment of the abovedirectors for a second term of five (5) consecutive years commencing from 1st April 2019till 31st March 2024.
Further in terms of Regulation 17(1A) of the SEBI (Listing Obligations and DisclosureRequirements (Amendment) Regulations 2018 which is effective from 1st April 2019 thecontinuation of Directorship of Mr. Radhe Shyam Saraf (DIN : 00017962) NonExecutiveChairman Mr. Amal Chandra Chakrabortti and Mr. Rama Shankar Jhawar Non-ExecutiveIndependent Directors of the Company who have already attained the age of 75 years isrecommended for the approval of the Members by way of Special Resolution at theforthcoming Annual General Meeting.
No Director or Key Managerial Personnel was appointed or has resigned during thefinancial year 2017-18. Details of Directors seeking re-appointment as required underRegulation 36(3) of the SEBI (Listing Obligations &Disclosure Requirements)Regulations 2015 forms a part of the notice calling Annual General Meeting of theCompany.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under Section 149(6)of the Companies Act 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
BOARD EVALUATION AND NOMINATION AND REMUNERATION POLICY
Pursuant to Section 134(3)(p) Schedule IV (VIII) of the Companies Act 2013 andRegulation 17(10) and 19(4) of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations2015 (Listing Regulations)the Boardof Directors has carried out an annual evaluation of its own performance Board Committeesand individual directors as per the prescribed criteria adopted by the Board.
The performance of the Board was evaluated by the Board after seeking inputs from theDirectors on the basis of specified criteria such as the Board Composition and structureseffectiveness of board processes information and functioning etc. The performance of theCommittees was evaluated by the Board after seeking inputs from the Committee members onthe basis of the criteria such as composition of Committees effectiveness of CommitteeMeetings etc.
The Board and the Nomination and Remuneration Committee reviewed the performance of theindividual directors on the basis of contribution of the Directors at the Board andCommittee meetings in regard to preparedness on the issues to be discussed meaningful andconstructive contribution and inputs in meetings etc.
At a separate meeting of Independent Directors held on 7th March 2018 performance ofNon-Independent Directors the Board as a whole and the Chairman of the Company wasevaluated taking into account views of Executive and Non-Executive Directors. The samewas discussed at the next Board Meeting at which the performance of the Board itsCommittees and individual Directors was also discussed. Performance evaluation ofIndependent Directors was done by the entire Board excluding the Independent directorbeing evaluated. The Directors have expressed their satisfaction with the evaluationprocess and the performance results. The Policy on performance evaluation of Directors canbe accessed on the Company's website: www.ahleast.com Your Company had adopted aNomination & Remuneration Policy for the Directors KMP and other employees of theCompany as recommended by Nomination and Remuneration Committee at its meeting held on31st March 2017 which is annexed as Annexure III to this Report.
The Company recognizes and believes that a diverse Board will enhance the quality ofthe decisions made by the Board by utilizing different skills qualificationsprofessional experiences knowledge gender ethnicity background and other distinguishedqualities etc. of the members of the Board necessary for effective corporate governancesustainable and balanced development.
The Board recognizes the importance of a diverse composition and has adopted a BoardDiversity Policy which sets out the approach to diversity. The Board diversity policy isavailable on our website: www.ahleast.com DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with the provisions of Sections 134(3)(c) and 134(5) of the CompaniesAct 2013 for the preparation of the annual accounts for the financial year ended 31stMarch 2018 and based upon representations from the Management the Board states that:
a) in the preparation of the annual accounts for the year ended 31st March 2018 theapplicable accounting standards have been followed along with proper explanation relatingto material departures if any;
b) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates thatare reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year underreview and of the profit of the Company for that period;
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the annual accounts on a going concern basis;
e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls
are adequate and are operating effectively; and
f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
PARTICULARS OF ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGSAND OUTGO
The information required pursuant to Section 134(3)(m) of the Companies Act 2013 readwith Rule 8(3) of the Companies (Accounts) Rules 2014 pertaining to conservation ofenergy technology absorption and foreign exchanges earning and outgo to the extentpossible in the opinion of your Directors is annexed hereto being Annexure IV and formingpart of this Report. PARTICULARS OF EMPLOYEES
The information required under Section 197(12) read with Rule 5(2) & 5(3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are providedin Annexure V and forms a part of this Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All related party transactions that were entered by the Company during the financialyear under review were in the ordinary course of business and on arm's length basis. Therewere no contracts or arrangements entered into by the Company in accordance with theSection 188 of the Companies Act 2013 and there was no material related partytransactions in terms of Regulation 23 of the Listing Regulations. Thus disclosure asrequired in Form AOC-2 in terms of Section 134 of the Companies Act 2013 is not relevantto the Company at present. Prior omnibus approval was obtained for related partytransactions which are repetitive in nature and entered in the ordinary course of businessand are at arm's length. All related party transactions were placed before the AuditCommittee for review on a quarterly basis.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board can be accessed on the Company's website:www.ahleast.com .The policy intends to ensure that proper reporting approval anddisclosure processes are in place for all transactions between the Company and RelatedParties.
The details of the transactions with related parties are set out in Note nos. 43 &49 to the Standalone and Consolidated Financial Statements respectively pursuant to IndAS.
MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE
Pursuant to Schedule V of Regulation 34(3) of the Listing Regulations Report onManagement Discussion and Analysis as Annexure-VI and Corporate Governance Report as perRegulation 34(3) read with Schedule V of the SEBI (Listing Obligationsand DisclosureRequirements) Regulations 2015 as Annexure-VII and Compliance Certificate on CorporateGovernance from the Company's Auditors are annexed to this Report.
CORPORATE SOCIAL RESPONSIBILITY(CSR)
As required under Section 135 of the Companies Act 2013 during the financial year2017-18 your Company has spent Rs. 2658800/- slightly more than 2% of average netprofit of the Company made during three (3) immediately preceding financial years. Rs.58800/- (Rupees Fifty Eight Thousand Eight Hundred only) was contributed to M/s. IndianAssociation of Blood Cancer & Allied Diseases Kolkata and Rs. 2600000/- wascontributed to M/s. FCS Foundation a trust which has an established track record ofatleast 3 years in carrying on CSR activities in related areas and have recentlyundertaken some school and education projects. The Annual Report on CSR activities for thefinancial year 2017-18 is annexed and marked as Annexure-VIII to this report.
Besides the above the hotel has also been involved in many CSR activities under"Hyatt Thrive" umbrella. The focus area during the financial year 2017-18 wasintroducing new NGOs towards making a better tomorrow and extending the support fordiverse projects. Visiting Tolly Homes (Old Age Home) to add smile to the faces of thosesheltered there and helping LP4Y (Life Project for Youth) towards empowering the youth anddeveloping employability were initiatives undertaken to cover a wide range of age groups.Further the hotel also organized Handmade Jewellery Exhibition for the women of LittleBig Help providing them a platform to showcase their creativity and generate revenue. Ourteam members also participated in various Marathons during the year. The Team at theCompany created various energizing experiences by volunteering in social activities inaddition to monetary contribution in the entire financial year 2017-18.
The Company's CSR Policy formulated in accordance with Section 135 of the CompaniesAct 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014 isavailable on the Company's website : www.ahleast.com INTERNAL FINANCIAL CONTROL SYSTEMSAND ITS ADEQUACY
Your Company has an Internal Control System which commensurate with the size scale andcomplexity of its operations. The scope and authority of the Internal Audit function iswell defined in the organization. To maintain its objectivity and independence theInternal Audit function reports to the Chairman of the Audit Committee of the Board.
The Audit Committee monitors and evaluates the efficacy and adequacy of internalcontrol systems in your Company its compliance with operating systems accountingprocedures and policies of your Company. Based on the Internal Audit Report theManagement undertakes corrective action in their respective areas and thereby strengthenthe controls. Significant audit observations and corrective actions suggested arepresented to the Audit Committee of the Board. In the view of the Statutory Auditors ofthe Company the internal financial controls with respect to financial reporting wereadequate and operating effectively during the financial year.
Your Company has adopted a Risk Management Policy pursuant to the provisions ofSection 134 of the Companies Act 2013 to identify and evaluate business risks andopportunities for mitigation of the same on a continual basis. This framework seeks tocreate transparency minimize adverse impact on business objective and enhance yourCompany's competitive advantage. In your company risks are carefully mapped and a riskmanagement framework is involved.
Your Company is faced with risks of different types each of which need varyingapproaches for mitigation. Details of various risks faced by your Company and theirmitigation are provided in the Management Discussion and Analysis.
A) EXTRACT OF ANNUAL RETURN
The details forming part of the extract of Annual Return of the Company in form MGT-9as required under Section 92(3) of the Companies Act 2013 is annexed herewith asAnnexure-IX to this Report.
B) MEETINGS OF THE BOARD
During the financial year 2017-1 8 the Board of Directors had four (4) meetings. Thesewere held on 25th May 2017 28th July 2017 7th November 2017 and 28th January 2018.The details in relation to attendance at the meetings are disclosed in the CorporateGovernance section which forms a part of this report.
C) COMPOSITION OF AUDIT COMMITTEE
The Audit Committee comprises of three (3) Directors amongst which two (2) areIndependent Non-Executive Directors namely Mr. Amal Chandra Chakrabortti and Mr. RamaShankar Jhawar and one (1) is Joint Managing Director namely Mr. Umesh Saraf. There havebeen no instances during the financial year when recommendations made by the AuditCommittee were not accepted by the Board. The details of the Committees along with theircomposition number of meetings and attendance at the meetings are provided in theCorporate Governance Report.
D) SECRETARIAL STANDARDS OF ICSI
The Company is in compliance with the Secretarial Standards on Meetings of the Board ofDirectors (SS-1) and General Meetings (SS-2) issued by the Institute of CompanySecretaries of India and approved by the Central Government.
E) VIGIL MECHANISM/WHISTLE BLOWER POLICY
Your Company has adopted a Whistle Blower Policy to provide a mechanism for theDirectors and employees to report genuine concerns about any unethical behavior actualand suspected fraud or violation of your Company's Code of Conduct. No person has beendenied access to the Chairman of the Audit Committee. The provisions of the policy are inline with the provisions of Section 177 of the Companies Act 2013 read with Regulation 22of the Listing Regulations. The vigil mechanism/whistle blower policy can be accessed onthe Company's website: www.ahleast.com During the year under review the Company did notreceive any complaint under the policy.
F) DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has always shown concerns to each and every employee working in theorganization. It has zero tolerance towards sexual harassment at workplace and has anInternal Complaints Committee to consider and redress complaints of sexual harassment. TheCompany has also adopted a policy on prevention prohibition and redressal of sexualharassment at workplace in line with the provisions of Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 and the rules framedthereunder with the objective of providing safe working environment for the benefit of theemployees .
During the calendar year 2017 the Company has received no complaints on sexualharassment.
G) PARTICULARS OF LOANS GIVEN INVESTMENT MADE GUARANTEES GIVEN AND SECURITY PROVIDED
The particulars of loans guarantees and investments covered under Section 186 of theCompanies Act 2013 have been disclosed in the financial statements.
H) PARTICULARS OF REMUNERATION
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended are provided in Annexure-X tothis report.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the financial year2017-18 under review:
1. Details relating to deposits covered under Chapter V of the Companies Act 2013.
2. Issue of equity shares with differential rights as to dividend voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme.
4. The Joint Managing Directors of the Company did not receive any remuneration orcommission from any of its subsidiaries.
5. No significant or material orders were passed by the Regulators or Courts orTribunals which could impact the going concern status and Company's operations in future.
Your Board express their deep sense of appreciation for the contribution made by theemployees to the significant improvement in the operations of the Company.
The Directors also thank all associates including customers the Government of IndiaGovernment of West Bengal Government Agencies Hyatt Hotels Corporation U.S.A. BankersSuppliers Shareholders and others for their continuous co-operation and support.
For and on behalf of the Board of Directors