TO THE MEMBERS
Your Directors have pleasure in presenting the 40th Annual Report of the Company alongwith the Audited Financial Statements for the Financial Year ended 31st March 2019.
1. FINANCIAL RESULTS AND OPERATIONAL PERFORMANCE
| || || ||(Rs. in Lacs) |
|S.No. ||Particulars ||2018-19 ||2017-18 |
|1. ||Total Revenue ||7075.50 ||6433.58 |
|2. ||Less: Expenses ||5782.39 ||5110.76 |
|3. ||Profit before Tax ||1293.11 ||1322.82 |
|4. ||Less : Net Tax Expenses ||312.16 ||503.87 |
|5. ||Profit after Tax ||980.95 ||818.95 |
|6. ||Other Comprehensive Income ||5.89 ||4.22 |
|7. ||Total Comprehensive Income ||986.84 ||823.17 |
The gross revenue of the Company for the year under review at Rs.7075.50 Lacs washigher by 9. 98% than that of the previous year's gross revenue at Rs. 6433.58 lacs.
The Profit before tax after depreciation and finance cost at Rs. 1293.11 Lacs for theyear under review was lower by 2. 25% as compared to Rs. 1322.82 Lacs for the previousyear.
Net Profit after providing tax for the year under review was Rs. 980.95 Lacs ascompared to Rs 818.95 Lacs for the previous year thus higher by 19.78% over the previousyear.
2. FINANCIAL STATEMENTS
Standalone financial statements
The annexed financial statements comply in all material aspects with Indian AccountingStandards (Ind AS) notified under section 133 of the Companies Act 2013 (the Act)Companies (Indian Accounting Standards) Rules 2015 as amended from time to time andother relevant provisions of the Act.
Consolidated financial statements
The directors also present the audited consolidated financial statements incorporatingthe duly audited financial statements of the subsidiaries and as prepared in compliancewith the Companies Act 2013 applicable Accounting Standards and SEBI ListingRegulations 2015 as prescribed by SEBI.
Being a Corporate Guarantor to the Loan availed by your subsidiary Company CJSC CHLInternational from EXIM Bank your Company has to seek prior permission from the EXIM Bankfor declaration of Dividend. The EXIM Bank as per the normal practice would not agree togive prior permission for it in view of the pending adjudication in the Hon'ble SupremeCourt. Hence your Directors are constrained not to recommend any Dividend for the yearunder review.
4. APPOINTMENTS/ RE-APPOINTMENTS OF DIRECTORS
(a) Re-appointment of retiring Directors
Mr. Ashok Kumar Malhotra (DIN: 00676603) and Ms. Kajal Malhotra (DIN: 01319170)Directors who retire by rotation and being eligible have offered themselves forre-appointment. The Board recommends their appointments.
(b) Re-appointment of Independent Directors
(i) Pursuant to the provisions of Section 149 150 and 152 and other applicableprovisions if any of the Companies Act 2013 and rules made thereunder Mr. Lalit Bhasin(DIN: 00002114) holding the position of an Independent Director whose tenure comes to endw.e.f 28th Day of September 2019 is being re-appointment in the ensuing Annual GeneralMeeting of the Company . The Board recommends his re-appointment as an IndependentDirector of the Company w.e.f 29th Day of September 2019 for a further period of 5(Five)consecutive years not liable to retire by rotation or till such earlier date to conformwith the policy on retirement and as may be determined by any applicable statutes rulesregulations or guidelines.
(ii) Pursuant to the provisions of Section 149 150 and 152 and other applicableprovisions if any of the Companies Act 2013 and rules made thereunder and pursuant tothe Regulation 17 (1A) of the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 and other applicable Regulations asamended from time to time Mr. Subhash Ghai (DIN: 00019803) holding the position of anIndependent Director whose tenure comes to end w.e.f 28th Day of September 2019 is beingre-appointed in the ensuing Annual General Meeting of the Company. The Board recommendshis re-appointment as an Independent Director of the Company w.e.f 29th Day of September2019 for a further period of 5(Five) consecutive years not liable to retire by rotation ortill such earlier date to conform with the policy on retirement and as may be determinedby any applicable statutes rules regulations or guidelines.
(iii) Pursuant to the provisions of Section 149 150 and 152 and other applicableprovisions if any of the Companies Act 2013 and rules made thereunder and pursuant tothe Regulation 17 (1A) of the Securities and Exchange Board of India (Listing Obligationsand disclosure requirements) regulations 2015 and other applicable Regulations asamended from time to time Mr. Yash Kumar
Sehgal (DIN: 03641168) holding the position of an Independent Director whose tenurecomes to end w.e.f 28th Day of September 2019 is being re-appointment in the ensuingAnnual General Meeting of the Company . The Board recommends his re-appointment as anIndependent Director of the Company w.e.f 29th Day of September 2019 for a further periodof 5(Five) consecutive years not liable to retire by rotation or till such earlier date toconform with the policy on retirement and as may be determined by any applicable statutesrules regulations or guidelines.
(c) Continuation of holding the position of Independent Director
Pursuant to the Regulation 17(1A) of the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 which is effectivefrom April 1 2019 and other applicable Regulations as amended from time to time("Listing Regulations") and applicable provisions of the Companies Act 2013 asamended from time to time the Board recommends for continuation of holding of the Officeof Non-executive Independent Director of the Company for Mr. Ramesh Chandra Sharma (DIN:00023274) who is above the age of 75 (Seventy years) years till the end of his tenurei.e. 17.09.2020 or till such earlier date to conform with the policy on retirement and asmay be determined by any applicable statutes rules regulations or guidelines.
(d) Re-appointment / Re-designation of Executive Directors
(i) Mr. Gagan Malhotra (DIN: 00422762) Executive Director of the Company whose tenurehas expired on 31.03.2019 was reappointed as an Executive Director of the Company in theBoard Meeting held on 05.02.2019 subject to the approval of shareholders for a furtherperiod of three years w.e.f 01.04.2019 to 31.03.2022. The Board recommends hisre-appointment.
(ii) Subject to the approval of shareholders of the company Mr. Luv Malhotra (DIN:00030477) Joint Managing Director of the Company was re-designated as Managing Directorof the Company w.e.f 28.05.2019 in the Board Meeting held on 28.05.2019 till the end ofhis tenure 21.09.2019. In the same Board Meeting he was re-appointed as Managing Directorof the Company whose tenure is expiring on 21.09.2019 for a further period of three yearscommencing from 22.09.2019 to 21.09.2022. The Board recommends re-appointment of Mr. LuvMalhotra as Managing Director.
(iii) The present designation of Dr. Lalit Kumar Malhotra as Chairman and ManagingDirector of the Company was re-designated as Executive Chairman of the Company w.e.f28.05.2019 with the same Remuneration and other perquisites as approved in the 39th AnnualGeneral Meeting of the company till the end of his tenure i.e. 14.07.2021.
5. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Pursuant to the provisions of Section 203 of the Act Dr. Lalit Kumar MalhotraExecutive Chairman and Mr. Luv Malhotra Managing Director Mr. Gagan Malhotra ExecutiveDirector Mr. Narender Kumar Goel Vice President (Finance)/Chief Financial Officer andMr. G. J. Varadarajan Company Secretary are formalized as the Key Managerial Personnelof the Company.
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and provisionsof the Listing Regulations. The profile of the Independent Directors forms part of theCorporate Governance Report.
6. MANAGEMENT DISCUSSION AND ANALYSIS
As required under the Listing Regulation with the Stock Exchange the ManagementDiscussion and Analysis Report is enclosed as a part of the Report.
7. SUBSIDIARY COMPANY
Your subsidiary CJSCCHL International a Joint Venture company incorporated inTajikistan has developed a Five-Star Hotel at Dushanbe the capital of Tajikistan. Thisproject has been financed by the Export Import Bank of India by way of a Term Loanaggregating to USD 32.50 million. The hotel has been in operation since 2015. It wasoperating under the brand name "Sheraton Dushanbe".
CJSC CHL International our subsidiary company filed a case against the Export ImportBank of India (EXIM Bank) in respect of loan availed by it in the Economic Court ofDushanbe Tajikistan. The said case was decided by the Court vide its Order dated01/05/2018 wherein the claims made by CJSC CHL International were partly accepted and theCourt directed that the accounts between the borrower CJSC CHL International and thelender EXIM Bank should be reconciled and thereafter the loan agreements should beamended. The Company made various representations to EXIM Bank to comply with theaforesaid court Order but the Bank refused to consider to comply with the Court Order.Subsequently the EXIM Bank appealed to the Hon'ble Supreme Economic Court of the Republicof Tajikistan. The appeal was dismissed vide its Order dated 14th August 2018.
During the pendency of above case filed by CJSC CHL International in the Economic Courtof Tajikistan the EXIM Bank initiated the proceedings under Insolvency and BankruptcyCode 2016 before the Hon'ble National Company Law Tribunal (NCLT) against CHL Limitedbeing the Corporate Guarantor of the Loan. Vide its Order dated 11/01/2018 the NCLTdismissed the case filed by EXIM Bank. The Bank went ahead and filed an appeal beforeHon'ble Company Law Appellate Tribunal (NCLAT) that was also dismissed vide its Orderdated 16.01.2019 on the ground that there is no debt that is due and/or payable from theprincipal borrower i.e. CJSC CHL International hence the corporate guarantee provided byM/s CHL Limited to EXIM Bank cannot be invoked as on the date. Subsequently the EXIM Bankfiled Special Leave Petition (SLP) with the Hon'ble Supreme Court of India vide C.A. No.001671/2019 and it is pending adjudication.
Further the EXIM Bank filed a suit vide O.A. No. 1488/2018 for recovery of USD40330946.75 (Equivalent to Rs. 2809348890.14/-) before the Debt Recovery Tribunal I Delhi invoking the personal guarantee of Dr. Lalit Kumar Malhotra Chairman ofCHL Limited and it is pending adjudication.
There is no Associate Company within the meaning of Section 2(6) of the Companies Act2013 ("Act"). Further there has been no material change in the nature ofbusiness of the subsidiary.
In terms of provision to sub section (3) of Section 129 of the Act the salientfeatures of the Financial Statement of the subsidiary is set out in the prescribed formAOC-1 which forms part of the Annual Report 2018-19.
8. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace in linewith the provisions of Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 and the rules framed there under. During the financial year2018-19 no complaint was received on sexual harassment.
9. WHISTLE BLOWER /VIGIL MECHANISM
In pursuant to the provisions of Section 177(9) and (10) of the Companies Act 2013 aVigil Mechanism for Directors and employees to report genuine concerns has beenestablished. The Vigil Mechanism Policy is available on the website of the Company atwww.chl.co.in under investors/ Whistle Blower Policy link.
10. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 is annexedherewith.
11. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
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.
12 MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THECOMPANY
Your Directors would like to inform that no material changes and commitments haveoccurred between the end of the financial year under review and the date of this reportthat may adversely affect the financial position of the Company.
13. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement of Section 134(5) of the Act and based on therepresentations received from the management the Directors hereby confirm that:
i. In the preparation of the Annual Accounts for the Financial Year 2018-19 theapplicable accounting standards have been followed and there is no material departure;
ii. They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the Financial year and of the profitof the Company for the Financial Year;
iii. They have taken proper and sufficient care to the best of their knowledge andability for the maintenance of adequate accounting records in accordance with theprovisions of the Act. They confirm that there are adequate systems and controls forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
iv. They have prepared the Annual Accounts on a going concern basis;
v. They have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and operating properly; and vi. Theyhave devised proper systems to ensure compliance with the provisions of all applicablelaws and that such systems were adequate and operating effectively.
14. CORPORATE GOVERNANCE
Your Company has taken adequate steps to adhere all the stipulations laid down in theListing Regulation. A report on the Corporate Governance along with certificate fromPracticing Company Secretary confirming the Compliance is included as part of the report.
15. LISTING WITH STOCK EXCHANGE
The Company confirms that it has paid the Annual Listing Fee for the year 2019-20 toBSE Limited (BSE) where the Company's Shares are listed.
16. (a) PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The information pursuant to Section 197 (12) of the Act read with Rule 5(1) 5(2) and5(3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules2014 in respect of directors key managerial personnel and employees of the Company isgiven in Annexure and form part of the report. There are no employees drawing remunerationabove the limits specified under section 197 (12) of the Companies Act 2013 read withRule 5(2) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules2014.
(b) REMUNERATION RATIO OF THE KEY MANAGERIAL PERSONNEL
The information required pursuant to section 197 read with rule 5 of the Companies(Appointment and Remuneration of the managerial Personnel) Rules 2014 and Companies(Particulars of Employees) Rules 1975 in respect of employees of the Company andDirectors is furnished in extract of Annual Return MGT 9.
17. DEMATERIALISATION OF SHARES
The total paid up equity share capital of the Company is Rs. 109636580 comprising of54818290 equity shares of Rs. 2/- each. Out of the total equity shares 53612672(97.80%) Equity Shares of the Company stand dematerialized and balance 12 05 618 (2.20%)equity shares are still in physical form.
18. AUDITORS & AUDITORS' REPORT
Pursuant to the provisions of Section 139 of the Act and the rules framed there underM/s DGA & Co. Chartered Accountants New Delhi were appointed as Statutory Auditorsof the Company from the conclusion of the 38th Annual General Meeting (AGM) of the Companyheld on 18th September 2017 till the conclusion of the 40th AGM for a further period oftwo years. The Board recommends their appointments for a period of three years to holdoffice from the conclusion of 40th Annual General till the conclusion of the 43rd AnnualGeneral Meeting of the Company.
The Auditors' Report is unqualified. The notes to the Accounts referred to in theAuditors' Report are self-explanatory and therefore do not call for any furtherclarifications under section 134 of the Companies Act 2013.
M/s Gulvardhan Malik & Co. Chartered Accountants have been conducting periodicInternal Audit of all the operations of the Company. Internal Audit Reports are regularlyplaced before the Audit Committee for their review and for recommendation to the Board.
According to the provision of section 204 of the Companies Act 2013 read with Rule 9of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 M/sA. Chadha & Associates. Company Secretaries is continuing as Secretarial Auditor ofthe Company.
19. INTERNAL CONTROL
The information about internal controls is set out in the Management Discussion &Analysis report which is attached and forms part of this Report.
20. RISK MANAGEMENT
The Risk Management is overseen by the Audit Committee of the Company on a continuousbasis. The Committee oversees Company's process and policies for determining risktolerance and review management's measurement and comparison of overall risk tolerance toestablished levels. Major risks identified by the businesses and functions aresystematically addressed through mitigating actions on a continuous basis.
21. CHANGES IN THE NATURE OF BUSINESS
During the year under review there has been no change in the nature of business of theCompany. However a packaging unit is being set up at an initial investment ofapproximately Rs. 30 lacs at our site at Noida Special Economic Zone (NSEZ) pursuant tothe extension of Letter of Permission dated 28.04.2017 by the Ministry of Commerce andIndustry Department of Commerce (SEZ section) vide its Order dated 10.05.2018.
22. DEPOSITS FROM PUBLIC
The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet.
23. CORPORATE SOCIAL RESPONSIBILITY (CSR)
As per section 135 and Schedule VII of the Companies Act 2013 your Company hasalready constituted the Corporate Social Responsibility Committee of Board of Directors.The present members are Mr. Yash Kumar Sehgal Chairman Mr. Lalit Bhasin Member and Mr.Luv Malhotra Member. The CSR policy as approved by Board of Directors in pursuance ofsection 134 (3) (o) of the Act is annexed and form part of this report. Further theAnnual Report on CSR activity in pursuance of Rule 8 of the Companies (Corporate SocialResponsibility Policy) Rules 2014 describing inter-alia the initiatives taken by theCompany in implementation of its CSR Policy is annexed and forms part of this Report.
24. RELATED PARTY TRANSACTIONS
During the year under review there is no related party transaction covered underSection 188(1) of the Companies Act 2013. Other Related party transactions that wereentered during the financial year were on an arm's length basis and were in the ordinarycourse of business. There were no materially significant related party transactions withthe Company's Promoters Directors Management or their relatives which could have had apotential conflict with the interests of the Company.
The Board of Directors of the Company has on the recommendation of the Audit Committeeadopted a policy to regulate transactions between the Company and its Related Parties incompliance with the applicable provisions of the Companies Act 2013 the Rules there underand the Listing Agreement. This Policy was approved by the Board and is available on thewebsite of the Company at www.chl.co.in.
25. BOARD EVALUATION
The performance evaluation of the Board its Committees and Individual Directors wasconducted and the same was based on questionnaire and feedback from all the Directors onthe Board as a whole Committees and self-evaluation. Directors who were designated heldseparate discussions with each of the Directors of the Company and obtained their feedbackon overall Board effectiveness as well as each of the other Directors. Based on thequestionnaire and feedback the performance of every Director was evaluated in the meetingof the Nomination and Remuneration Committee (NRC). The Meeting of NRC also reviewedperformance of the Managing Director (qualitative).
A separate meeting of the Independent Directors ("Annual ID meeting") wasconvened on 05/02/2019 which reviewed the performance of the Board (as a whole) theNon-Independent Directors and the Chairman & Managing Director. Post the Annual IDMeeting the collective feedback of each of the Independent Director was discussed by theChairman of the NRC with the Board's Chairman covering performance of the Board as a wholeas well as performance of the Non-Independent Directors and performance of the BoardChairman.
Some of the key criteria for performance evaluation are as follows:Performanceevaluation of Directors
Attendance at Board or Committee meetings.
Contribution at Board or Committee meetings.
Guidance/support to management outside Board/Committee meetings.
Performance evaluation of Board and Committees
Degree of fulfillment of Key responsibilities
Board structure and composition
Establishment and delineation of responsibilities to committees.
Effectiveness of Board processes information and functioning.
Board culture and dynamics.
Quality of relationship between Board and Management.
Efficacy of communication with external stakeholders.
26. PARTICULARS AS PER SECTION 134(3) (m) OF THE COMPANIES ACT 2013 READ WITH RULE 8OF THE COMPANIES (ACCOUNTS) RULES 2014
(a) Conservation of Energy
Energy conservation continues to receive priority attention at all levels. All effortsare made to conserve and optimize use of energy with continuous monitoring improvement inmaintenance and distribution systems and through improved operational techniques. To givethrust on energy conservation "optimum utilization of natural light" isfocused on and energy saving lighting solution such as light emitting diodes and solarpanel and devices such as automated controls and sensors are fitted in wherever necessaryand feasible and it is being continuously adopted.
(b) Technology Absorption: Nil
(c) Foreign Exchange Earnings and Outgo
During the year under review your Company has earned Rs. 2778.15 Lacs foreign exchange(previous year Rs. 1535.55 Lacs) and used foreign exchange to the extent of Rs. 808.40Lacs (previous year Rs. 804.07 Lacs).
Your Directors wish to convey their appreciation to the business associates for theirsupport and contribution during the year. Your Directors would also like to thank CentralGovernment and State Government especially Department of Tourism employees shareholderscustomers suppliers alliance partners and bankers for the continued support given bythem to the Company and their confidence reposed in the management and the Company.
| ||For and on behalf of the Board |
|Place: New Delhi ||Dr. Lalit Kumar Malhotra |
|Date: 28th May 2019 ||Chairman |
FORM AOC 1
(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 ofCompanies (Accounts) Rules 2014) Statement containing salient features of the financialstatement of subsidiary
|1. ||Name of the subsidiary ||CJSC CHL International (Incorporated at Tajikistan) |
|2. ||Reporting period for the subsidiary concerned if different from the holding company's reporting period ||31.12.2018 |
|3. ||Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries ||Somoni |
| || ||(1 Somoni = Rs. 7.327 as on 31.03.2019) |
|4. ||Share capital ||Rs. 11441.68 Lacs |
|5. ||Other Equity ||(Rs 10597.84 Lacs) |
|6. ||Total assets ||Rs. 27403.86 Lacs |
|7. ||Liabilities (Total Liabilities minus(Share Capital+ Other Equity) ||Rs. 26560.02 Lacs |
|8. ||Investments ||Rs. 0.22 Lacs |
|9. ||Turnover (Including other income) ||Rs. 2258.87 Lacs |
|10. ||Profit/(Loss)before taxation ||(Rs. 2735.42 Lacs) |
|11. ||Provision for taxation ||Nil |
|12. ||Profit/(Loss) after taxation ||(Rs. 2735.42 Lacs) |
|13. ||Proposed Dividend ||Nil |
|14. ||% of shareholding ||60.66% |
There is no subsidiary which is yet to commence operation.
There is no subsidiary which has been liquidated or sold during the year.
|Place: New Delhi ||For and on behalf of the Board of Directors |
|Date: 28th May 2019 ||Dr. Lalit Kumar Malhotra |
| ||Chairman |