TO THE MEMBERS
The Directors hereby present the Forty Seventh Annual Report of the Company togetherwith the Financial Statement (Audited Statements of Account) for the year ended 31stMarch 2018.
OPERATING AND FINANCIAL RESULTS
| ||(Rs. Lakhs) ||(Rs. Lakhs) |
| ||2017-18 ||2016-17 |
|Income ||4827.52 ||5113.62 |
|Gross Profit for the year ||1214.49 ||1538.19 |
|Less: Depreciation ||417.31 ||464.85 |
|Less: Interest ||12.32 ||- |
|Profit before tax ||784.85 ||1073.34 |
|Less: Provision for Tax: || || |
|- Current Tax ||301.30 ||491.77 |
|- Deferred Tax ||(157.00) ||(100.12) |
|- Provision of tax of earlier years (Net) ||(7.74) ||- |
|Profits after Taxes ||648.29 ||681.69 |
|Add: Other Comprehensive Income (Net of Taxes) ||1.07 ||(16.61) |
|Total Comprehensive Income ||649.36 ||665.08 |
|Add: Balance brought forward from previous year ||3818.17 ||3466.03 |
|Balance available for appropriations ||4467.54 ||4131.11 |
|Less: Dividend Paid ||195.00 ||260.00 |
|Less: Tax on Dividend ||39.70 ||52.93 |
|Less: Amount transferred to General Reserve || || |
|Balance Carried forward ||4232.84 ||3818.17 |
During the year the Revenue from Operations dropped by 4.3% as compared to previousyear as 55 rooms at The Gateway Hotel Varanasi were not available due to renovation forpart of the year. F&B revenues were almost at par with previous year though the roomrevenues decreased by 6% as compared with previous year.
While Nadesar Palace has improved its performance owing to decrease in Room revenue atThe Gateway Hotel Varanasi and the margins coming under pressure in The Gateway HotelGondia coupled with the drop in Interest income on account of utilization of funds for therenovation projects of Rooms and construction of new banquet hall the Gross OperatingProfit (EBIDTA) for the year was at Rs.1214.49 Lakhs as against Rs. 1538.19 Lakhs in theprevious year.
Accelerated depreciation amounting to Rs. 118.90 Lakhs (PY Rs. 187.04 Lakhs) inaccordance with provisions of schedule II of the Companies Act 2013 have been chargedduring the year. Consequently the profit before tax was at Rs. 784.85 Lakhs i.e. 26.88%lower than previous year.
A new banquet hall at The Gateway Hotel Varanasi has been commissioned and renovationof 55 rooms has also been completed which would help the Company to improve itsperformance in the coming years.
Keeping in view of the performance of the Company your Directors recommend the paymentof dividend @ 150% (previous year dividend @ 150%) per equity share involving distributionof Rs. 195 Lakhs.
PARTICULARS OF EMPLOYEES
The Company had no employees during the year who were in receipt of remunerationaggregating to:
(a) Not less than Rs. 102.00 Lakhs for the year if employed throughout the financialyear or
(b) Not less than Rs. 8.50 Lakhs per month if employed for part of the financial year.
During the year under report the office of Mr. B.L. Passi Director fell vacant w.e.f.July 21 2017 pursuant to Section 167 of the Companies Act 2013 and Mr. Rakesh SarnaDirector resigned from the Directorship of the Company w.e.f. September 30 2017. TheDirectors place on record their appreciation of the services rendered by Mr. Passi and Mr.Sarna during their tenure as Director of the Company.
In accordance with Section 149 of the Companies Act 2013 and SEBI (LODR) Regulations2015 (SEBI Listing Regulation) Mr. Giridhar Sanjeevi (DIN-06648008) and Mr. PuneetChhatwal (DIN-07624616) were appointed as Additional Directors of the Company with effectfrom January 25 2018 and May 10 2018 respectively on the recommendation of theNomination & Remuneration Committee. Mr. Sanjeevi has since resigned as a Directorw.e.f. May 16 2018 from the Directorship of the Company.
In terms of Section 161 of the Companies Act 2013 and Article 122 of the Articles ofAssociation of the Company Mr. Puneet Chhatwal holds office up to the date of the AnnualGeneral Meeting of the Company. It is proposed to appoint Mr. Chhatwal as a Director ofthe Company at the ensuing Annual General Meeting. The Board of Directors commends theappointment of Mr. Chhatwal as a Director of the Company.
In accordance with the Companies Act 2013 and the Articles of Association of theCompany Dr. Anant Narain Singh (DIN 00114728) Director of the Company is liable to retireby rotation and being eligible seeks reappointment.
KEY MANAGERIAL PERSONNEL
During the year under report Mr. Ravi Sharma Chief Financial Officer (CFO) resignedw.e.f.July 16 2017. He was replaced by Mr. Sopan Kedia as CFO of the Company w.e.f. July24 2017. Mr. Ashwani Anand Chief Executive Officer (CEO) resigned w.e.f. May 3 2018. Hewas replaced by Mr. Vijay Partap Shrikent as CEO of the Company w.e.f. May 10 2018.
In terms of Section 203 of Companies Act 2013 your Company has Mr. Vijay PartapShrikent as the Chief Executive Officer (CEO) Mr. Sopan Kedia as the Chief FinancialOfficer (CFO) and Ms. Vanika Mahajan as the Company Secretary of the Company as the KeyManagerial Personnel of the Company.
INFORMATION PURSUANT TO RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OFMANAGERIAL PERSONNEL) RULES 2014
The information pursuant to Rule 5 of The Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is given in Annexure 1.
The Company does not have any subsidiary company.
The Indian Hotels Company Limited (IHCL) is the Ultimate Holding Company of theCompany.
NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR
The Company held 4 (four) Board Meetings during the financial year under report.
AUDIT COMMITTEE AND VIGIL MECHANISM
In terms of Section 177 of the Companies Act 2013 your Company has an Audit Committeewith Mr. Shriraman Mr. Moiz Miyajiwala Mrs. Rukmani Devi and Mr. Rohit Khosla as itsmembers. During the year under report Mr. B.L. Passi and Mr. Giridhar Sanjeevi ceased tobe the members of the Audit Committee consequent to the vacation of office and resignationfrom the Directorship of the Company respectively.
Your Company has a policy on Vigil Mechanism/ Whistle blower Policy to provide a formalmechanism for the Directors and employees to report genuine concerns about any unethicalbehaviour actual or suspected fraud or violation of your Company's Code of Conduct orethics policy. The policy provides for adequate safeguards against victimization ofemployees who avail of the mechanism and also provide for direct access to the Chairman ofthe Audit Committee. It is affirmed that no personnel has been denied access to theChairman of the Audit Committee. The provisions of the policy are in line with theprovisions of Section 177(9) of the Act and Regulation 22 of the SEBI listing Regulations.The Whistle Blower Policy can be accessed on your Company's website:https://www.benareshotels limited.com/content/dam/thrp/benareshotelslimited/documents/policies/Whistle_Blower.pdf
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
In terms of Section 135 of the Companies Act 2013 (the Act) your Company has theCorporate Social Responsibility Committee (CSR) Committee of the Board with Dr. AnantNarain Singh Mrs. Rukmani Devi and Mr. Rohit Khosla as the members of the Committee. Thebrief outline of the CSR Policy of your Company and the initiatives undertaken by yourCompany on CSR activities during the year are set out in "Annexure 2'' of this Reportin the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules2014. The policy is available on the website of your Company:https://www.benareshotelslimited.com/content/dam/thrp/benareshotelslimited/documents/policies/CSR%20POLICY.pdf.
NOMINATION AND REMUNERATION COMMITTEE
In terms of Section 178(1) of the Companies Act 2013 (the Act) the Company has aNomination and Remuneration Committee (NRC) of the Board with Dr. Anant Narain Singh Mrs.Rukmani Devi and Mr. Shriraman as the members of the Committee. Mr. Giridhar Sanjeeviceased to be a member of the Nomination & Remuneration Committee consequent to theresignation from the Directorship of the Company. The Committee met four times during theyear on 8th May 2017 24th July 2017 25th January 2018 and 28th March 2018.
In terms of the requirement of section 178(3) and SEBI Listing Regulations the Companyhas a policy relating to the remuneration for the directors KMPs and other employees. Thekey features of the said policy are:
- Overall remuneration (sitting fees and Commission) should be reasonable andsufficient to attract retain and motivate directors aligned to the requirements of theCompany;
- Overall remuneration practices should be consistent with recognized best practices
- Within the parameters prescribed under the law the payment of sitting fees andcommission will be recommended by NRC and approved by the Board.
- The aggregate commission payable to the Directors will be recommended by NRC to theBoard based on company performance profits return to investors shareholder valuecreation and any other significant qualitative parameters as may be decided by the Board.
- The quantum of commission for each director shall be recommended by NRC to the Boardbased upon the outcome of the evaluation process drive by various factors includingattendance and time spent in the Board and committee meetings individual contributions atthe meetings and contributions made by the Directors other than in meetings.
INTERNAL COMPLAINTS COMMITTEE
The Company has an 'Internal Complaints Committee' under The Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 for the prevention andredressal of complaints of sexual harassment and for the matters concerned connected orincidental thereto. No case was reported during the year under review.
DECLARATION BY INDEPENDENT DIRECTORS
In terms of Section 149(7) of the Companies Act 2013 (the Act) the IndependentDirectors have given a declaration that they meet the criteria of independence as perSection 149(6) of the Act.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
In addition to the Corporate Governance Guidelines discussed and adopted by the Boardwhich inter alia included the role rights and responsibilities of independentdirectors the Company has an appropriate ongoing familiarization programme with respectto the roles rights responsibilities in the Company nature of the industry in which theCompany operates business model of the Company etc. The details of the familiarizationprogramme are disclosed on the Company's website:https://www.benareshotelslimited.com/content/dam/thrp/benareshotelslimited/documents/policies/Familiarization%20Programme%20-%20BHL.pdf
LOANS GUARANTEES AND INVESTMENTS MADE UNDER SECTION 186
The Company has not given any loans or guarantees nor has made any investments underSection 186 of the Act during the year under review.
During the year under report the Company has borrowed a sum of Rs. 500.00 Lakhs as ashort term Inter Corporate Deposit from a body corporate.
SECRETARIAL AUDIT REPORT
In terms of Section 204(1) of the Companies Act 2013 M/s A K Bhayana &Associates Company Secretaries were appointed by the Company as the Secretarial Auditor.The secretarial audit report as obtained from them is attached to this Report as Annexure3. The report does not contain any qualifications reservation or adverse remarks.
The extract of Annual Return pursuant to the provisions of Section 92 read with Rule 12of the Companies (Management and Administration) Rules 2014 is furnished in Annexure 4 tothis Report.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All related party transactions that were entered into during the financial year underreport were at arm's length basis and in the ordinary course of business. The Company hasdeveloped a Related Party Transactions Framework under the Policy on Related PartyTransactions which policy is also available at Company'swebsite:https://www.benareshotelslimited.com/content/dam/thrp/benareshotelslimited/documents/policies/RPT.pdf for the purpose of identification and monitoring of suchtransactions. Prior omnibus approval of the Board is obtained for transactions which areof a foreseen and repetitive nature. The transactions entered into pursuant to the omnibusapproval so granted and a statement giving details of all the related party transactionsis placed before the Audit Committee for its approval on a quarterly basis.
Other than transactions entered into in the normal course of business the Company hasnot entered into any materially significant related party transactions during the yearwhich could have a potential conflict of interest between the company and its promotersDirectors Management and/or relatives save and except that the transaction with TheIndian Hotels Co. Ltd. the ultimate holding company during the year exceeded 10% of theannual gross turnover of the Company for the previous year the approval for which wastaken from the shareholders by way of a special resolution at the AGM held on August 212015.
As required by SEBI Listing Regulations the report for the year 2017-18 on ManagementDiscussion and Analysis Corporate Governance as well as the Auditors' Certificateregarding compliance of conditions of Corporate Governance forms part of the AnnualReport.
During the year under review there were no significant and material orders passed bythe regulators or courts or tribunals impacting the going concern status and the Company'soperations.
RISK MANAGEMENT POLICY
Your Company has a Risk Management Policy pursuant to the provisions of Section 134 ofthe Act to identify and evaluate business risks and opportunities for mitigation of thesame on a continual basis. This framework seeks to create transparency minimize adverseimpact on business objective and enhance your Company's competitive advantage. The riskmanagement framework defines the risk management approach across the enterprise at variouslevels including documentation and reporting.
The framework enables risks to be appropriately rated and graded in accordance withtheir potential impact and likelihood. The two key components of risks are the probability(likelihood) of occurrence and the impact (consequence) of occurrence if the risk occurs.Risk is analyzed by combining estimates of probability and impact in the context ofexisting control measures.
Existing control measures are evaluated against Critical Success Factors (CSFs) and KeyPerformance Indicators (KPIs) identified for those specific controls. Guiding principlesto determine the risk consequence (impact) probability of occurrence (likelihood factor)and mitigation plan effectiveness have been set out in Risk Register.
The Key business risks identified by the Company and its mitigation plans are as under:
Strategy Risks: Risk of erosion of market dominance by losing market share whichoriginates from the choices we make on markets resources and delivery models that canpotentially impact our competitive advantage in the medium and long term. Loss of F&Battractiveness on account of pricing/ design/ competition.
Industry and Economic Risks: High dependence on US Europe and East Asian markets forforeign tourists arrival. The economic situation in these parts of the world has apotential impact on the entire tourism industry. Risks arising from the development in theregulatory environment that could impact the Hotel/Tourism Industry. Risks due togeographic concentration of business primarily in the city of Varanasi.
Operational Risks: High dependence on several technology platforms & systems tooperate business both Internal & External. Cost overruns/delays in completion ofprojects. Loss of critical/sensitive data due to leakage/loss/hacking. Increase in fixedcost elements beyond entity control. Highly litigious nature of the industry/adverseconsequences of litigation against the Company. non-renewal of key licenses and NOCs.
Safety and Security Risks: Risks arising from factors such as Fire AccidentsElectricity mishaps etc. Business interruption on account of natural calamities/ act ofGod/riots & strikes/political instability and terrorism.
Resources: Risks arising from sub-optimal succession planning and retention of talentpool. Inappropriate utilization of financial capital talent and infrastructure.
KEY RISK MANAGEMENT PRACTICES
Risk Identification and Impact Assessment: Risk assessment enables risks to beappropriately rated and graded in accordance with their potential impact and likelihood.The two key components of risks are the probability (likelihood) of occurrence and theimpact (consequence) if the risk occurs. Risk is analyzed by combining estimates ofprobability and impact in the context of existing control measures and included in therisk register. Apart from risk register internal audit findings also provide input forrisk identification and assessment which is carried out on an annual basis across allfunctions.
Operational risks are assessed primarily on three dimensions namely strength ofunderlying controls compliance to policies and business procedure effectiveness.
Risk reporting and Disclosure: Risks to the achievement of key business objectivestrend line of risk level impact and mitigation actions are reported risk level impactand mitigation action are reported and discussed. The escalation of risk information istimely accurate and gives complete coverage of the key risks to support managementdecision making at all levels.
Risk Mitigation and Monitoring: Each Manager creates a risk mitigation plan byemploying an effective system of internal controls & checks and balances to mitigatethe risks in the most effective manner including designating responsibilities andproviding for upward and onward communication of any significant issues that may meritattention or escalation. All employees actively engage in risk management within their ownareas of responsibility.
Integration with Strategy and Business Planning: Identified risks to the businessobjectives in the near term medium term and long term are used as one of the key inputsfor the development of strategy and annual business plan. Key strategic initiatives areidentified to mitigate specific risk.
PKF Sridhar & Santhanam LLP Chartered Accountants (Registration No. 003990S/S200018) the Statutory Auditors of the Company hold office till the conclusion of theensuing Annual General Meeting. The report of the Statutory Auditors along with the Notesto Schedules is enclosed to this Report and does not contain any qualificationsreservations or adverse remark or disclaimer.
The Board has recommended the appointment of PKF Sridhar & Santhanam LLP CharteredAccountants (Registration No. 003990S/S200018) as the Statutory Auditors of the Companyfor a term of five consecutive years from the conclusion of this AGM till the conclusionof the 52nd AGM of the Company to be held in the year 2023 for approval of the Members.
CONSERVATION OF ENERGY
The Company has always been conscious of the need for conservation of energy and hasbeen sensitive in making progress towards this end. The Company has implemented followingenergy conservation initiatives at the hotel:
- Replacement of old chiller plants with energy saving advance chiller plants includingpumps & cooling towers.
- Replacement of cold rooms in kitchen which are energy efficient.
- Installation of FCU and LED lights in renovated rooms with higher efficiency.
- Installation of LED lights in back office area in place of CFL.
The activities of the Company do not involve the absorption of technology as envisagedto be furnished pursuant to The Companies (Accounts) Rules 2014.
FOREIGN EXCHANGE EARNINGS AND OUTGO
In terms of the provisions of Section 134(3)(f)(m) of the Companies Act 2013 readwith Rule 8(3)(C) of The Companies (Accounts) Rules 2014 the foreign exchange earned interms of actual inflows during the year and the foreign exchange outgo during the year interms of actual outflows is furnished below:-a) Value of Imports
| ||31st March 2018 ||31st March 2017 |
| ||Rs. Lakhs ||Rs. Lakhs |
|Stores Supplies and Spare Parts for Machinery ||8.04 ||6.39 |
|Value of Imports (CIF) Capital Imports ||240.07 ||35.92 |
|b) Expenditure in Foreign Currency || || |
|Professional and Consultancy Fees ||11.73 ||16.24 |
|Other Expenditure in Foreign Currency ||22.48 ||48.98 |
|c) Earnings in Foreign Currency || || |
|Earnings in Foreign Exchange ||726.57 ||999.27 |
The Board of Directors has made the annual evaluation of its own performance and thatof its committees and individual directors based on the review conducted by the Nomination& Remuneration Committee by assessing the questionnaires furnished by thedirectors/members of various committees in respect of their self-assessment as well as theassessment of the Board/Committees followed by the discussions with the directors/ membersof the Committees.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company has an Internal Control System 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 Internal Audit Department monitors and evaluates the efficacy and adequacy ofinternal control systems in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of InternalAudit function process owners undertake corrective action in their respective areas andthereby strengthen the controls. Significant audit observations and corrective actionssuggested are presented to the Audit Committee of the Board.
DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of internal financial control and compliance systems establishedand maintained by the Company work performed by the internal statutory and secretarialauditors including audit of internal financial controls over financial reporting by thestatutory auditor and the reviews performed by the Management and the relevant BoardCommittees including the Audit Committee the Board is of the opinion that the Company'sinternal financial controls were adequate and effective during the financial year 2017-18.
Accordingly pursuant to Section 134(5) of the Companies Act 2013 the Board ofDirectors to the best of their knowledge and ability confirms that:
a). In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
b). 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 2018 and of the profit ofthe 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 Companyand that such internal financial controls are adequate and were operating effectively; and
f). The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
The Board desires to place on record its appreciation of the services rendered by theemployees of the Company during the year under review.
On behalf of the Board of Directors
Dr. Anant Narain Singh
Place : New Delhi
Date : 25th May 2018