TO THE MEMBERS OF CHL LIMITED
Your Directors have pleasure in presenting the 38th Annual Report of the Company alongwith the Audited Financial Statements for the Financial Year ended 31st March 2017.
1. FINANCIAL RESULTS AND OPERATIONAL PERFORMANCE
(Rs. in Lacs)
|S. No. ||Particulars ||2016-17 ||2015-16 |
|1. ||Gross Income ||6480.09 ||6066.16 |
|2. ||Less: Operating Expenses ||4744.75 ||4930.45 |
|3. ||Operating Profit before Depreciation and Finance Cost ||1735.34 ||1135.71 |
|4. ||Less: Depreciation & Amortization expense ||222.50 ||211.97 |
|5. ||Less: Finance Cost ||453.84 ||648.50 |
|6. ||Earnings before Tax prior period and extra ordinary items ||1059.00 ||275.24 |
|7. ||Extra Ordinary Items ||- ||(32.10) |
|8. ||Profit before Tax ||1059.00 ||243.14 |
|9. ||Less : Net Tax Expenses ||368.23 ||138.49 |
|10. ||Profit after Tax ||690.77 ||104.65 |
Sales and other incomes for the year under review at Rs 6480.09 Lacs are higher by6.82% than that of the previous year's sales and other income at Rs. 6066.16 lacs.
Operating profit before depreciation and finance cost at Rs.1735.34 Lacs for the yearunder review is higher by 52.80% as compared to Rs. 1135.71 Lacs for the previous year.
Net Profit after providing tax for the year under review is Rs. 690.77 Lacs as comparedto Rs 104.65 Lacs for the previous year thus higher by 560.07% over the previous year.
2. ECONOMIC ENVIRONMENT AND BUSINESS REVIEW
The Indian tourism and hospitality industry has emerged as one of the key drivers ofgrowth among the services sector in India. Tourism in India has significant potentialconsidering the rich cultural and historical heritage variety in ecology terrains andplaces of natural beauty spread across the country. Tourism is also a potentially largeemployment generator besides being a significant source of foreign exchange for thecountry.
India's rising middle class and increasing disposable incomes has continued to supportthe growth of domestic and outbound tourism.
Domestic Tourist Visits (DTVs) to the States/Union Territories (UTs) grew by 15.5 percent y-o-y to 1.65 billion (provisional) during 2016 with the top 10 States/UTscontributing about 84.2 per cent to the total number of DTVs as per Ministry of Tourism.The Indian government has realised the country's potential in the tourism industry and hastaken several steps to make India a global tourism hub.
In the Union Budget 2017-18 the Government of India announced some initiatives to givea boost to the tourism and hospitality sector such as setting up of five special tourismzones special pilgrimage or tourism trains and worldwide launch of Incredible Indiacampaign among others.
Some of the major initiatives taken by the Government of India to give a boost to thetourism and hospitality sector of India are as follows:
The Central Government has taken a number of steps for smooth transitioning tocashless mode of payment to ensure that no hardship is faced by the tourists and thetourism industry remains unaffected from government's demonetization move.
The Ministry of Tourism has approved projects worth Rs 450 crore (US$ 67.10million) under the Swadesh Darshan scheme for the improvement and creation of tourisminfrastructure in Madhya Pradesh Uttarakhand Tamil Nadu Uttar Pradesh and Sikkim.
The Union Cabinet has approved a MoU between India and South Africa aimed atexpanding bilateral cooperation in the tourism sector through exchange of information anddata establishing exchange programmes and increasing investments in the tourism andhospitality sector.
The Union Cabinet has approved the signing of Memorandum of Understandingbetween the Ministry of Tourism of India and the Ministry of Trade Industry and Tourism ofColombia in order to boost cooperation in the field of tourism between the two countries.
India's travel and tourism industry has huge growth potential. The tourismindustry is also looking forward to the expansion of E-visa scheme which is expected todouble the tourist inflow to India. India is projected to be the fastest growing nation inthe wellness tourism sector in the next five years.
In view of the recalling of the entire loan of USD 32.50 Million along with interestand other outstanding by the Export Import Bank of India (EXIM Bank) from CHLInternational your Subsidiary Company your Company being a Corporate Guarantor to theaforesaid Loan has to seek prior permission from the EXIM Bank for declaration ofdividend. The EXIM Bank as per the normal practice would not agree to give priorpermission for it. Hence Your Company is not in a position to declare Dividend for theFinancial Year 2016-17.
Mr. A. K. Malhotra (00676603) and Ms. Kajal Malhotra (01319170) Directors whoretire by rotation and being eligible have offered themselves for re-appointment. TheBoard recommends their appointments.
Pursuant to the provisions of Section 203 of the Act the appointment of Dr. L. K.Malhotra Chairman & Managing Director Mr. Luv Malhotra Joint Managing Director Mr.Gagan Malhotra Executive Director Mr. N. K. Goel Vice President (Finance)/ ChiefFinancial Officer and Mr. G. J. Varadarajan Company Secretary are formalized as the KeyManagerial Personnel of 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.
5. 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.
6. SUBSIDIARY COMPANY
Your subsidiary CHL International a Joint Venture company in Dushanbe Tajikistan hasdeveloped a Five-Star Hotel known as the Sheraton at Dushanbe the capital of Tajikistan.This project 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.
The Export Import Bank of India (EXIM Bank) Mumbai recalled the entire loan of USD32.50 Million along with interest and other outstanding from CHL International yourSubsidiary Company due to non payment of interest since September 2016. According toinformation given by the EXIM Bank the account of CHL International has been classifiedas NPA in the books of accounts of EXIM Bank w.e.f. 01.01.2017 as per the directionsissued by Reserve Bank of India.
A case was filed in the Economic Court of Tajikistan by the Subsidiary Company CHLInternational and the aforesaid Court has passed an interim measure maintaining status quotill the final order of the Court. The case is pending before the Economic Court ofTajikistan. Further EXIM Bank called upon CHL Limited in the capacity of CorporateGuarantor and Dr. L. K. Malhotra CMD in the capacity of Personal Guarantor to pay toEXIM Bank an amount aggregating USD 2827030.13 as on April 3 2017 vide its letter dated7th April 2017.
There are no Associate Companies within the meaning of Section 2(6) of the CompaniesAct 2013 ("Act"). Further there has been no material change in the nature ofbusiness of the subsidiary.
In terms of proviso to sub section (3) of Section 129 of the Act the salient featuresof the Financial Statement of the subsidiary is set out in the prescribed form AOC-1which forms part of the Annual Report as Annexure B.
Performance and financial position of the subsidiary company is separately given in theAnnual Report.
7. 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 Year2016-17 no complaint was received on sexual harassment.
8. WHISTLE BLOWER /VIGIL MECHANISM
In pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for Directors and employees to report genuine concerns has beenestablished. The Vigil Mechanism Policy has been uploaded on the website of the Company atwww.chl.co.in under investors/ Whistle Blower Policy link.
9. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 is annexedherewith as Annexure- A.
10. 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.
11. CONSOLIDATION OF FINANACIAL STATEMENT
As stipulated by regulation 33 of the Listing Regulations the Consolidated FinancialStatements have been prepared in accordance with the applicable Accounting Standards. TheAudited Consolidated Financial Statements together with the Auditors' Report forms part ofthe Annual Report.
Pursuant to Section 129(3) of the Companies Act 2013 a statement containing thesalient features of the Financial Statements of the subsidiary in the prescribed FormAOC-1 is annexed to this report at Annexure B. The Annual Accounts of the Subsidiary shallbe kept for inspection by shareholders in the head office of the holding company and thesubsidiary company.
12. 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 2016-17 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. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
13. 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.
14. LISTING WITH STOCK EXCHANGE
The Company confirms that it has paid the Annual Listing Fee for the year 2017-18 toBSE Limited where the Company's Shares are listed.
15. PARTICULARS OF EMPLOYEES
Employees of the Company drawing remuneration above the limits specified under Section197(12) of the Companies Act 2013 read rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are given below:
(A) Personnel who are in receipt of remuneration aggregating not less than Rs.6000000per annum and employed throughout the financial year
|Name ||Dr. L. K. Malhotra |
|Designation ||Chairman & Managing Director |
|Remuneration ||Rs. 84 Lacs Per Annum |
|Nature of Employment ||Permanent and subject to the provisions of Companies Act 2013 |
|Qualification ||Honorary Ph. D |
|Experience ||52 years |
|Date of Commencement of ||25.10.1980 |
|Present employment || |
|Age ||73 Years |
|Previous Employment ||M/s A. N. Malhotra & Sons Kuwait |
|% of Shares held in the company ||3.75 |
|Whether related to any director ||Related to |
| ||Mr. Luv Malhotra Joint Managing Director |
| ||Mr. A. K. Malhotra |
| ||Ms. Kajal Malhotra |
16. DEMATERIALISATION OF SHARES
The total paid up equity share capital of the Company is Rs. 109636580 comprising of54818290 equity shares of Rs. 2/- each. 51720594 (94.35%) Equity Shares of theCompany stand dematerialized and balance 3097696 (5.65%) equity shares are still inphysical form.
17. AUDITORS' REPORT
Auditors' observations are suitably explained in the Notes to the Accounts and are selfexplanatory.
Pursuant to the provisions of Section 139 of the Companies Act 2013 and the rulesframed there under M/s G Rai & Co. Chartered Accountants were appointed as StatutoryAuditors of the Company from the conclusion of the 35th Annual General Meeting (AGM) ofthe Company held on 29th September 2014 till the conclusion of the 38th AGM to be held inthe year 2017 subject to ratification of their appointment at every AGM. As per theCompanies Act 2013 no Audit Firm can be appointed as Auditors of the Company for morethan two terms of five consecutive years and these provisions shall be complied withinthree years from the commencement of the Act.
Since M/s G. Rai & Co. completed the tenure under the Companies Act 2013 theirtenure cannot be further extended and hence we need to appoint a new Auditor in place ofM/s G. Rai Co. In the Board Meeting held on 26th May 2017 the Board ofDirectors recommended M/s DGA and Co. for appointment as Statutory Auditor of the Companyfor a period of two years to hold office from the conclusion of the 38th AnnualGeneral Meeting till the conclusion of the 40th Annual General Meeting subjectto ratification of the appointment at every Annual General Meeting. The Audit Committeehave also recommended to the Board for their appointment.
M/s DGA & Co. Chartered Accountants have expressed their willingness forappointment as the Statutory Auditors of the Company and has furnished a certificate oftheir eligibility and consent under Section 141 of the Companies Act 2013 and the Rulesframed there under. In terms of the Listing Agreement/Regulations M/s DGA & Co.Chartered Accountants have confirmed that they hold a valid certificate issued by the PeerReview Board of the ICAI.
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. REMUNERATION RATIO OF THE DIRECTORS / KEY MANAGERIAL PERSONNEL (KMP) / EMPLOYEES:
The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and Companies(Particulars of Employees) Rules 1975 in respect of Directors and employees of theCompany is furnished hereunder:
(Rs. in Lacs)
|Name ||Designation ||Remun- eration paid in FY 2016-17 ||Remun- eration paid in FY 2015-16 ||Increase in remun- eration from previous year ||Ratio/ Times per Median of employee remun- eration |
|1. Dr. L. K. Malhotra ||Chairman & Managing Director ||84.00 ||84.00 ||Nil ||40 |
|2. Mr. Luv Malhotra ||Joint Managing Director ||42.00 ||42.00 ||Nil ||20 |
|3. Mr. Gagan Malhotra ||Executive Director ||42.00 ||42.00 ||Nil ||20 |
|4. Mr. N. K. Goel ||Vice President(Finance)/CFO ||22.82 ||21.75 ||1.07 ||10.87 |
|5. Mr. G. J. Varadarajan ||Company Secretary ||8.48 ||7.86 ||0.62 ||4.04 |
20. 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.
21. 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.
22. DEPOSIT 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 the Company is notrequired to constitute a Corporate Social Responsibility Committee and formulate policy asit does not fall within purview of Section 135(1) of the Companies Act 2013. However yourCompany has contributed an amount of Rs. 11 Lacs to the Mataji Melan Devi Society (Regd.)under the Society Registration Act 1860.
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 AuditCommittee adopted a policy to regulate transactions between the Company and its RelatedParties in compliance with the applicable provisions of the Companies Act 2013 theRules there under and the Listing Agreement. This Policy was approved by the Board and hasbeen uploaded on the website of the Company at www.chl.co.in under Related Party Policylink.
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 which reviewed the performance of the Board (as a whole) the Non-IndependentDirectors and the Chairman & Managing Director. Post the Annual ID Meeting thecollective feedback of each of the Independent Directors was discussed by the Chairman ofthe NRC with the Board's Chairman covering performance of the Board as a whole;performance of the Non-Independent Directors and performance of the Board Chairman.
Some of the key criteria for performance evaluation are as follows
Performance evaluation 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 8 OFTHE COMPANIES
(ACCOUNTS) RULES 2014 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.
The Company being in the hospitality industry particulars on technological absorptionor expenditure on research and development are not applicable.
Foreign Exchange Earnings and Outgo
During the year under review your Company has earned Rs. 2197.59 Lacs Foreign Exchange(previous year Rs. 1628.31 Lacs) and used foreign exchange to the extent of Rs. 859.96Lacs (previous year Rs. 191.01 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. L. K. Malhotra |
|Date: 26th May 2017 ||Chairman & Managing Director |