Your Directors present the 38th Annual Report on thebusiness and operations of your Company together with the audited accounts for the yearended 31st March 2019.
1. Financial Performance
The financial performance of the Company during the year under reviewis summarised below:
| || ||Rs. lakhs |
|Particulars ||Financial Year 2018-19 ||Financial Year 2017-18 |
|Continuing Operations: || || |
|Total income ||15852.79 ||14428.80 |
|Less: Expenses other than finance costs ||15669.14 ||14891.22 |
|and depreciation / amortisation || || |
|Less: Finance costs ||39.66 ||12.70 |
|Less: Depreciation and amortisation expenses ||957.52 ||1326.08 |
|Profit/(loss) before exceptional items and ||(813.52) ||(1891.20) |
|Tax || || |
|Exceptional items - Profit/(loss) (net) ||(2966.11) ||(3293.68) |
|Profit/(loss) before Tax ||(3779.63) ||(5184.88) |
|Tax expense ||- ||- |
|Profit/(loss) after Tax from continued operations (A) ||(3979.63) ||(5184.68) |
|Discontinued operations: || || |
|Profit/(loss) from discontinued operations ||(8109.85) ||2683.25 |
|Tax expense from discontinued operations ||- ||- |
|Profit/(loss) after Tax from discontinued operations (B) ||(8109.85) ||2863.25 |
|Profit after Tax (A + B) ||(11889.48) ||(2321.63) |
|Other comprehensive income / (loss) net of tax ||22.09 ||137.08 |
|Total comprehensive income for the year ||(11867.39) ||(2184.55) |
|EPS for continued operations ||(0.60) ||(0.96) |
|EPS for discontinued operations ||(1.29) ||0.53 |
|EPS for continued and discontinued operations ||(1.89) ||(0.43) |
In view of losses the Directors do not recommend any dividend for thefinancial year ended 31st March 2019.
3. Share Capital
There was no change in the share capital of the Company during theyear. The issued and paid up share capital of the Company stands at Rs. 1261103532(Rupees one hundred twenty six crores eleven lakhs three thousand five hundred thirty two)divided into 630551766 (sixty three crores five lakhs fifty one thousand seven hundredsixty six) Equity Shares of face value of Rs. 2 (Rupees two) each.
4. Fixed Deposits
During the year under review the Company has not accepted any depositsfrom the public or from the shareholders.
5. Subsidiary Company its performance and financial position
Your Company has one wholly owned Subsidiary (WOS) viz. Leela Palacesand Resorts Limited. The net loss for the FY 2018-19 was Rs.3.48 lakhs compared to lossof Rs. 0.03 lakhs in FY 2017-18. During the year under review your Company has notincorporated or acquired any company.
The WOS neither carried out any operations during the year nor hasthere been any material change in the nature of its business.
The Company has not attached the Balance Sheet Profit and Loss Accountand other documents of the WOS with the Annual Report of the Company in terms of generalexemption circular notified by the Ministry of Corporate Affairs Government of India.
However the Company will make available these documents upon requestby any member of the Company interested in obtaining the same. Further these documentswill also be available at the Registered Office of the Company for inspection by anymember of the Company.
A Statement containing the salient features of the financial statementof the WOS in Form AOC-I (pursuant to first proviso to sub-section (3) of section 129 readwith rule 5 of Companies (Accounts) Rules 2014) is attached to this report as Annexure-I.The audited financial statements and related information of the WOS are also available onthe Company's website athttps://www.theleela.com/the-leela/about-the-leela/investor-relations.
The said WOS is a material subsidiary of the Company as per thethreshold laid down under Regulation 24 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. The Board of Directors of the Company has approved aPolicy for determining material subsidiaries which is in line with the Listing Regulationsas amended from time to time. The Policy was revised effective from 1st April2019 in line with the amendments made to the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. The Policy has been uploaded on the Company'swebsite.
The Audited Consolidated Financial Statements prepared in accordancewith Accounting Standards (Ind AS) as applicable to your Company form part of this AnnualReport.
6. Secured Non-Convertible Debentures
During the year under review the Company has not issued/allotted anyNon-Convertible Debentures. In the financial year 2008-09 the Company had issued andallotted 12.50% Secured Redeemable Non-Convertible Debentures (NCD) of the face value Rs.1000000 (Rupees ten lakhs) each on private placement basis aggregating to Rs.900000000 (Rupees ninety crores) to LIC of India. The said NCDs are listed on theWholesale Debt Market Segment of BSE Limited.
The Company had paid two installments towards redemption of principalamounting to Rs. 2250 lakhs. The Company has not paid the third fourth and fifthinstallments towards redemption of principal amount of Rs. 2250 lakhs each on NCDs duesince 30th September 2016 30th September 2017 and 30thSeptember 2018 respectively. The Company has also been in default in payment of intereston the aforesaid NCDs and the interest is overdue since June 2017.
The total interest overdue as on 31st March 2019 is Rs.1667.37 Lakhs.
The Company's operating cash flows are not sufficient to serviceits debts and the funds of the Company are escrowed with its lenders and the inflows andoutflows are also monitored by the lenders. The Company can pay to LIC only on pro-ratabasis. The Company has entered into a binding agreement to sell its business undertakingsand pay its lenders out of the sale proceeds. Details of the binding agreement areexplained in para 7(A) below. The Company is seeking the debenture holders' approvalfor a one time settlement of its debt.
The Trustee for the aforesaid Debentures is Axis Trustee ServicesLimited. The Details pursuant to Clause 53(e) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 are given in the Report on CorporateGovernance.
7. Significant Events during the year
A. Sale of Business Undertakings to M/s. Brookfield
As the Members are aware the Company has been evaluating variousoptions for a viable restructuring including sale/ monetization of non-core assets saleof hotels equity infusion and debt refinancing by investors in order to reduce debts.
In this regard the Company has entered into a binding agreement withBSREP III India Ballet Pte. Ltd. ("Brookfield") for acquiring theCompany's hotel undertakings in Delhi Bengaluru Chennai and Udaipur as well as theCompany's business of hotel management operations as well as to purchase the 100%shareholdings of Leela Palaces and Resorts Limited (LPRL) which owns property and holdslicenses for the development of a hotel in Agra. It is a composite proposal for theacquisition of the aforementioned hotels and related assets as well as the "TheLeela" brand and other associated brands and intellectual property rights asmentioned herein. Brookfield through the Purchaser Entities will purchase and consummateall of what is mentioned herein simultaneously.
The proposed consideration of Rs. 395000 lakhs to be received from thetransaction would be used to repay the existing lenders of the Company by way of one timesettlement after which all borrowings from all banks and financial institutions wouldhave been repaid. Subsequent to the above transaction the Company will continue to haveand operate the hotel in Mumbai land in Hyderabad and the joint development project ofresidential apartments with Prestige Developers in Bengaluru.
The Audit Committee and the Board of Directors of the Company in itsmeeting held on 18th March 2019 have approved the transaction. The Members ofthe Company have approved the transaction through a postal ballot on 24thApril 2019.
However the Company is awaiting clearance and approval from thelenders and regulatory authorities for concluding the transaction.
B. Legal notices/applications against the Company
(i) JM Financial Asset Reconstruction Company Limited (JMFARC) hasfiled an application with National Company Law Tribunal (NCLT) Mumbai Bench against theCompany under Section 7 of the Insolvency and Bankruptcy Code 2016. In view of theproposed transaction with Brookfield the Company had sought time to enter intosettlement. The matter is pending before NCLT for admission / filing of the settlementagreement.
(ii) ITC Limited and its subsidiary shareholders of the Companyholding 8.72% of the equity share capital have on 22nd April 2019 filedagainst the Company a petition under Section 241 of the Companies Act 2013 foroppression and mismanagement along with 2 applications for urgent hearing and for waiverof the requirement of minimum threshold of 10% shareholding in relation to the proposedtransaction with BSREP III India Ballet Pte. Ltd. or its affiliates ("Brookfield").The matter is pending before NCLT.
(iii) Two minority shareholders i.e. ITC Limited and LIC have filedcomplaint with Securities Exchange Board of India (SEBI) against the aforesaid transactionwith Brookfield alleging violation of the provisions related to related partytransactions and oppression and mismanagement by the majority shareholders againstminority shareholders. The Company is contesting their claim.
(iv) Airport Authority of India (AAI) has filed a petition withHon'ble Mumbai City Civil Court seeking injunction restraining the Company fromalienating / creating any kind of third party right restructuring the assets till suchtime the vacant and peaceful possession of the leased land from AAI along with the FSI aswell as their dues are fully paid. The matter is being heard by the Hon'ble Court andthe order of the court is awaited.
8. Material Changes and Commitments affecting Financial Positionof the Company
There are no other material changes and commitments affecting thefinancial position of the Company which have occurred between the end of the financialyear i.e. 31st March 2019 and the date of the Directors' report i.e. 27thMay 2019 except those stated in Para No. 7A and 7B above.
9. Details of significant and material orders passed by theregulators or courts or tribunals impacting the going concern status and theCompany's operations in future
No significant and material orders have been passed by the regulatorsor courts or tribunals impacting the going concern status and the Company'soperations in future.
However attention of the Members is drawn to the legal proceedingspending against the Company as mentioned at Para No. 7B of this Board Report.
10. Directors and Key Managerial Personnel (KMP)
As on the date of this Report the Company has Five (5) Directorsconsisting of Three (3) Independent Directors and Two (2) Whole-time Directors.
a) Disqualification of Directors
In terms of the provisions of section 164(2)(b) of the Companies Act2013 any person who is or has been a Director of a Company which has failed to repay thedeposits accepted by it or pay interest thereon or to redeem any debentures on the duedate or pay interest due thereon or pay any dividend declared and such failure to pay orredeem continues for one year or more shall not be eligible to be re-appointed as aDirector of that company or appointed in other company for a period of 5 years from thedate of default. Moreover pursuant to section 167(1)(a) a director incurring thedisqualification under section 164(2) has to vacate his office of director in all othercompanies other than the company which is in default under that sub-section. As explainedin para 6 above the Company has defaulted in payment of installments towards redemptionof principal amounts due on Secured Redeemable Non-Convertible Debentures and alsodefaulted in payment of interest on the aforesaid Debentures. Accordingly thedisqualification under the aforesaid provision got triggered on 30th September2017 and is still continuing.
Hence all directors of the Company are disqualified under section164(2)(b) of the Companies Act 2013.
b) Appointment/Resignation from the Board of Directors
As mentioned in the previous Annual Report Mr. Shereveer S. VakilIndependent Director resigned from the Board with effect from 26th April 2018due to his other pre-occupation. Mr. Vijay Sharma and Ms. Saija Nair were appointed asDirectors of your Company at the previous Annual General Meeting for a period of fiveyears with effect from 9th May 2018 and 30th May 2018respectively.
During the year under review Mrs. Anna Malhotra Independent Directorpassed away on 17th September 2018 at the age of 91 years after a prolongedillness. She joined the Board of Directors of the Company on 14th June 1993and was Member of various Committees of the Board. The Board places on record a deep senseof appreciation for her efforts and contribution towards the Company.
Pursuant to Regulation 24 of the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 the Company isrequired to have an Independent Director of the Company on the Board of its unlistedmaterial subsidiary company i.e. Leela Palaces and Resorts Limited. Mrs. Anna Malhotrawas the Independent Director on the board of the said material subsidiary of the Companywith effect from 12th February 2015. Upon her death she ceased to be theDirector on the board of the said material subsidiary Company w.e.f. 17thSeptember 2018. The Company is unable to appoint an Independent Director of the Companyon the board of the said material subsidiary company since all the Independent Directorsare disqualified under section 164(2)(b) of the Companies Act 2013.
Pursuant to Regulation 17 of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 the Company isrequired to have minimum of six Directors with effect from 1st April 2019. Dueto the disqualification under section 164(2) (b) of the Companies Act 2013 gettingtriggered and still continuing the Company is unable to get an additional IndependentDirector on the Board of the Company.
c) Directors retiring by rotation
In accordance with the provisions of Section 152 of the Companies Act2013 read with Section 149 of the said Act at least 2/3rd of the total numberof Directors excluding Independent Directors shall be liable to retire by rotation andout of the Directors liable to retire by rotation at least 1/3rd of theDirectors shall retire by rotation at every Annual General Meeting. In terms of Regulation17 (1) of the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 the Board of the Company shall have an optimumcombination of Executive and Non-Executive Directors with at least one woman Director andnot less than 50% of the Board shall comprise of Non-Executive Directors (NED).
Mr. Vivek Nair Chairman & Managing Director and Mr. Dinesh NairCo-Chairman & Managing Director Executive Directors of the Company are not liable toretire by rotation in terms of their appointment. The Board of the Company does not haveany Non-Independent Non-Executive Director who can be subjected to retire by rotation.
In view of the above there are no Directors who are liable to retireby rotation at the ensuing Annual General Meeting.
d) Declaration by Independent Director
The Company has received necessary declaration from each of theIndependent Directors under Section 149(7) of the Companies Act 2013 that he / shemeets the criteria of Independence laid down in Section 149(6) of the Companies Act 2013and Regulation 16 of SEBI (Listing Obligations and Disclosure Requirement) Regulations2015. In the opinion of the Board the Independent Directors fulfill the conditions ofindependence specified in Section 149(6) of the Act and Regulation 16 of SEBI (ListingObligations and Disclosure Requirements) Regulation 2015. There has been no change in thecircumstances affecting their status as independent directors of the
Company. The Independent Directors have also confirmed that they havecomplied with the Company's Code of Business Conduct & Ethics.
e) Woman Director
In terms of the provisions of Section 149 of the Companies Act 2013and Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 your Company has complied with the requirement of having at least one IndependentWoman Director on the Board of the Company. Ms. Saija Nair Independent Director is theWomen Director of the Company.
f) Whole-time Directors
Mr. Vivek Nair Chairman & Managing Director and Mr. Dinesh NairCo-Chairman & Managing Director are the Whole-time Directors of the Company.
g) Key Management Personnel (KMP)
Mr. Vivek Nair Chairman & Managing Director Mr. Rajan Shah ChiefFinancial Officer and Mr. Alen Ferns Company Secretary are the Key Managerial Personnelof the Company in accordance with the provisions of Section 203 of the Companies Act 2013read with Companies (Appointment and Remuneration of Managerial Personnel) Rules-2014.
The Board has also appointed Mr. Rajiv Kaul President as the KeyManagerial Personnel of the Company.
11. Number of Meetings of the Board
Regular meetings of the Board are held to discuss and decide on variousbusiness policies strategies and other businesses. The schedule of the Board / Committeemeetings to be held in the forthcoming financial year are circulated to the Directors inadvance to enable them to plan their time schedule for effective participation in themeetings.
The Board of Directors met nine times during the year viz. on 9thMay 2018 30th May 2018 11th June 2018 3rd July2018 13th August 2018 12th November 2018 3rdJanuary 2019 12th February 2019 and 18th March 2019. Theintervening gap between two Meetings was within the period prescribed under the CompaniesAct 2013 and Regulations 17 of the Securities and Exchange Board of India (ListingObligation and Disclosure Requirements) Regulations 2015. Detailed information on themeetings of the Board is included in the Report on Corporate Governance which forms partof this Annual Report.
12. Audit Committee
The Audit Committee met nine times during the year under review. TheAudit Committee is constituted in accordance with the provisions of Section 177 of theCompanies Act 2013 and Regulation 18 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. As on the date of this Report the Committee comprises of4 Directors i.e. three Independent Directors and the Chairman & Managing Director asa member.
The details with respect to the composition roles terms of referenceetc. of the Audit Committee are given in detail in the Report on CorporateGovernance' of the Company which forms part of this Annual Report.
There are no recommendations of the Audit Committee which have not beenaccepted by the Board.
13. Nomination and Remuneration Committee
The Nomination and Remuneration Committee met five times during theyear under review.
As on the date of this Report the Committee comprises of 4 Directorsi.e. three Independent Directors and the Chairman & Managing Director as a member.
The details with respect to the composition roles terms of referenceetc. of the Nomination and Remuneration Committee are given in detail in the Reporton Corporate Governance' of the Company which forms part of this Annual Report.
14. Nomination and Remuneration Policy
The Company has formulated and adopted the Nomination and RemunerationPolicy in accordance with the provisions of Companies Act 2013 read with the Rules issuedthereunder and the Listing Regulations.
The said Policy of the Company provides that the Nomination andRemuneration Committee shall formulate the criteria for appointment of ExecutiveDirectors Non-Executive Directors Independent Directors Key Managerial Personnel andpersons in the Senior Management of the Company including criteria for determiningqualifications remuneration positive attributes independence of a Director and othermatters as provided under sub-section (3) of Section 178 of the Companies Act 2013 andthe Listing Regulations.
The salient features of the Policy are set out in the CorporateGovernance Report which forms part of this Annual Report. The Policy is also available onthe website of the Company web-link:https://www.theleela.com/the-leela/about-the-leela/investor-relations.
15. Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act 2013 and Regulation
17 & 25 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Board has carried out an annual performanceevaluation of its own performance and of the Independent Directors individually as well asthe Committees of the Board. The performance evaluation of all the Directors was alsocarried out by the Nomination and Remuneration Committee. The performance evaluation ofthe Chairman and the Non-Independent Directors was carried out by the IndependentDirectors.
16. Stakeholders' Relationship Committee
The Stakeholders' Relationship Committee met two times during theyear under review. As on the date of this Report the Committee comprises of 4 Directorsi.e. three Independent Directors and the Chairman & Managing Director as a member.
The details with respect to the composition roles terms of referenceetc. of the Committee are given in detail in the Report on CorporateGovernance' of the Company which forms part of this Annual Report.
17. Other Committees of the Board
The Company has the following Non-mandatory Committees:
(i) Finance Committee.
(ii) Assets Sale and Financial Restructuring Committee.
18. Directors' Responsibility Statement
Pursuant to the requirement under Section 134 of the Companies Act2013 the Directors based on the information and representations received from theoperating management hereby state and confirm that:
(a) in the preparation of the annual accounts for the financial yearending 31st March 2019 the applicable accounting standards have been followedalong with proper explanation relating to material departures;
(b) they have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the Company for that period;
(c) they have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
(d) they have prepared the annual accounts on a going concern basis;
(e) they have laid down internal financial controls to be followed bythe Company and such internal financial controls are adequate and were operatingeffectively; and
(f) they have devised proper systems to ensure compliance with theprovisions of all applicable laws and such systems were adequate and operatingeffectively.
19. Management's Discussion and Analysis
A detailed review of the operations performance and future outlook ofthe Company and its businesses is given in the Management's Discussion and Analysiswhich forms part of this Report.
20. Corporate Governance
A separate section on Corporate Governance standards followed by yourCompany as stipulated under Schedule V of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is enclosed as an Annexure to this report.
A Certificate from Mr. Prashant S. Mehta Practicing Company Secretaryregarding compliance with the conditions of Corporate Governance as stipulated under SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 is annexed to theReport on Corporate Governance.
21. Whistle Blower Policy/ Vigil Mechanism
The Company has implemented a Whistle Blower Policy in terms of Section177(9) &(10) of the Companies 2013 and the Listing Regulation pursuant to whichwhistle blowers can raise concerns relating to Reportable Matters (as defined in thepolicy) such as fraud bribery corruption illegality health and safety environmentalissues and wastage/ misappropriation of Company's funds/assets violation of theCompany's code of conduct etc. Further the mechanism adopted by the Companyencourages the whistle blower to report genuine concerns or grievances and provides foradequate safeguards against victimization of the whistle blower who avails such mechanism.The vigil mechanism also provides direct access to the Members of the Audit Committeeincluding the Chairman of the Audit Committee. The functioning of the Vigil mechanism isreviewed by the Audit Committee from time to time.
None of the whistle blowers have been denied access to the AuditCommittee of the Board. The Whistle Blower Policy is available on the website of theCompany https://www.theleela.com/the-leela/about-the-leela/investorrelations.
22. Risk Management
The Board has approved a Risk Management Policy wherein all materialrisks faced by the Company are identified and assessed. This framework seeks to createtransparency minimize adverse impact on business objective and enhance yourCompany's competitive advantage. For each of the risks identified in the policycorresponding controls are assessed and policies and procedure are put in place formonitoring mitigating and reporting risk on a periodic basis.
23. Contracts or Arrangements with Related Parties
Your Company undertakes various transactions with Related Parties inthe ordinary course of business. All Related Party Transactions entered into during theyear were in the ordinary course of business and on arm's length basis. No materialRelated Party transactions i.e. transactions exceeding ten percent of the annualconsolidated turnover as per the last audited financial statements were entered intoduring the financial year 2018-19 by your Company. Accordingly the disclosure of RelatedParty Transactions as required under Section 134(3) (h) of the Companies Act 2013 in FormAOC 2 is not applicable.
There were no materially significant related party transactions withthe promoters Directors and Key Managerial Personnel which may have a potential conflictwith the interest of the Company at large.
The Policy on materiality of Related Party transactions and also indealing with such transactions as approved by the Board is available on the website of theCompany at www.theleela.com/investorrelations. The Policy intends to ensure that properreporting approval and disclosure processes are in place for all transactions between theCompany and the Related Parties.
At the last Annual General Meeting held on 20th August2018 the Company had passed an ordinary resolution to sell/transfer 34102 sq mts of landunder Joint Development (JD) with M/s. Sky Realty Projects Private Limited owned by theCompany in Yerwada Pune to Leela Lace Holdings Pvt. Ltd a related party. The proposalcould not be concluded as M/s. Sky Realty Projects Private Limited JD partner did notprovide their NOC for the sale of the said land. Subsequently the said land was sold toM/s. Sky Realty Projects Private Limited JD partner an unrelated party as approved bythe Board at its meeting held on 3rd January 2019.
Your Directors draw attention of the members to Note No. 34.10 to thestandalone financial statements which give the related party disclosures.
24. Internal Financial Control Systems and their adequacy
Your Company has in place adequate internal financial controls withreference to financial statements commensurate with the size scale and complexity of itsoperations. The Company has laid down standards processes and structures which enableimplementation of internal financial control across the organization and ensure that thesame are adequate and operating effectively.
Financial Controls are operative for all the business activities of theCompany and no material weakness in the design or operation of any control was observed.During the year the internal financial controls as laid down are adequate and wereoperating effectively.
The Company has appointed M/s. Baker Tilly DHC Private LimitedChartered Accountants as Internal Auditors who review the internal control systems of theCompany and report thereon. The report of the Internal Auditors is reviewed by the AuditCommittee.
25. Extract of Annual Return
Pursuant to sub-section 3(a) of Section 134 and sub-section (3) ofSection 92 of the Companies Act 2013 read with Rule 12 of the Companies (Management andAdministration) Rules 2014 the extract of the Annual Return as at 31st March2019 is annexed as Annexure "II" to this Report and is also available on thewebsite of the Company at www.theleela.com/ investorrelations.
26. Loans Guarantees or Investments
The Company has not granted any loan or given guarantee or made anyinvestments during the year under review.
27. Corporate Social Responsibility (CSR)
In terms of Section 135 of Companies Act 2013 certain companies haveto carry out CSR activities as prescribed. Since the Company does not fall within thecriteria of turnover and/or profit due to continuous losses in the preceding financialyears the Company is not required to form a CSR Committee nor required to contribute tothe CSR activities as mandated under the provisions of section 135 of the Companies Act2013.
However the Company continues to undertake CSR activities for thebenefit of the local communities nearby its hotel properties the details of which aredisclosed separately in this Annual Report.
28. Disclosure under Section 22 of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013
Your Company has zero tolerance towards any action on the part of anyemployee which may fall under the ambit of Sexual Harassment' at workplace andis fully committed to uphold and maintain the dignity of every woman employee in theCompany. The Company's policy provides for protection against sexual harassment ofwomen at workplace and for prevention and redressal of such complaints. All employees(permanent contractual temporary trainees) are covered under this policy. During theyear no complaints pertaining to sexual harassment were received.
(a) Statutory Auditors and Auditors' Report
Pursuant to the provisions of section 139 of the Companies Act 2013read with the Companies (Audit and Auditors) Rules 2014 the Members at the 36thAnnual General Meeting of the Company held on 18th September 2017 hadappointed M/s. N. S. Shetty & Co. Chartered Accountants as the Company'sStatutory Auditors for a period of five years from the conclusion of the 36thAnnual General Meeting till the conclusion of the 41st Annual General Meetingof the Company.
As required under Section 139 of the Companies Act 2013 the Companyhas obtained a written consent from the Auditors to their continued appointment and also acertificate from them to the effect that their existing appointment is in accordance withthe conditions prescribed under the Companies Act 2013 and the rules made thereunder. TheStatutory Auditors were present at the last Annual General Meeting.
During the period under review even though there are no auditqualifications or adverse remarks there are audit observations on the financialstatements. The explanation for the same has been provided in Note No. 34.1 34.2 and 34.3of the standalone Financial Statements. The said notes are self-explanatory and do notcall for any further comments.
(b) Secretarial Auditors and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act 2013and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theCompany had appointed Mr. Prashant S. Mehta Practicing Company Secretary as itsSecretarial Auditor to conduct the secretarial audit of the Company for the FY 2018-19.The report of Secretarial Auditor for the FY 2018-19 is annexed to this report as Annexure- III.
The Secretarial Auditor has made certain observations in his report.Paras 6 10(a) 10(b) and 10(c) of the Board report gives details of disqualification ofDirectors non-appointment of an additional Independent Director and non-availability of adirector retiring by rotation. The Secretarial Auditors' observations read in thecontext of Paras 6 10(a) 10(b) and 10(c) of the Board Report explain the status and thesame may also be treated as the response to the Secretarial Audit observations.
(c) Reporting of Frauds by Auditors
During the year under review no frauds have been reported by theAuditors under Section 143(12) of the Companies Act 2013 requiring disclosure in theBoard Report.
30. Employee Remuneration
The ratio of the remuneration of each Director to the medianemployee's remuneration and other details in terms of sub-section 12 of Section 197of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 forms part of this report asAnnexure-IV.
The statement containing particulars of employees as required underSection 197(12) of the Companies Act 2013 read with Rule 5(2) and 5(3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is open for inspectionat the Registered Office of the Company during working hours. In terms of Section 136 ofthe Act the Reports and Accounts are being sent to the Members and others entitledthereto excluding the aforesaid particulars of employees. A copy of this statement may beobtained by the Members by writing to the Company Secretary.
31. Energy Conservation Technology Absorption Foreign ExchangeEarnings and Outgo and Other Disclosures
The disclosures to be made under sub-section (3) (m) of Section 134 ofthe Companies Act 2013 read with Rule (8)(3) of the Companies (Accounts) Rules 2014 byyour Company are furnished below:
(a) Conservation of Energy
Energy Conservation sustainability and efforts to make the propertiesmore "Green" have been the main drive throughout the year. Major efforts/stepstaken towards this are:
Energy-efficient lighting like LED and energy efficient electricalequipments are installed extensively in all hotels.
High efficiency HVAC systems used / retrofitted extensively in allhotels has reduced electrical consumption.
Computerized Power Monitoring is implemented to monitor and controlpower consumption. UTC carrier / Wipro energy conservation program is been implemented inThe Leela Palace Bangalore
Main chiller plants and steam boilers have been tuned for bestefficiency to conserve energy.
Hotels are equipped with solar geysers for generating hot water and therooms are equipped with energy-saving devices during non-occupancy.
STP treated water and Rain Water Harvesting has been implemented.
The company has 23 windmills with a capacity of 13.5MW power in theState of Maharashtra (4.5MW) Karnataka (5MW) and Tamil Nadu (4MW).Windmills continue toproduce renewable energy for use in own hotels.
The Leela Palace Delhi has installed the solar power generators on rooftop.
Boilers are being operated through Bio diesel which is produced throughused kitchen oil.
The Leela Palace Chennai and Leela Palace Delhi are LEED platinum ratedbuildings awarded by IGBC.
Power is purchased at subsidized rate through open access in twohotels.
Heat pump has been installed in The Leela palace Chennai.
Energy audit was conducted in The Leela Bangalore and The Leela Delhiand in progress for other hotels as well.
(b) Technology Absorption
In the opinion of the Board the required particulars pertaining totechnology absorption under Section 134 of the Companies Act 2013 read with Rule 8(3) ofthe Companies (Accounts) Rules 2014
are not applicable as hotel is a service industry and the Company doesnot have any significant manufacturing operations.
(c) Foreign Exchange Earnings and Outgo
The foreign exchange earnings of the Company (including that ofdiscontinued operations) during the year stood at Rs. 31652.54 lakhs (previous year Rs.28590.96 lakhs) and foreign exchange outgo (including that of discontinued operations)during the year stood at Rs. 3642.44 lakhs (previous year Rs. 4509.58 lakhs).
32. Transfer of unclaimed dividend and Equity Shares to IEPF
Pursuant to applicable provisions of the Education and Protection FundAuthority (Accounting Audit Transfer and Refund) Rules 2016 all unpaid or unclaimeddividends are required to be transferred by the Company to the Investors Education &Protection Fund (IEPF) established by the Central Government after completion of 7(seven) years. Further according to the aforesaid Rules shares in respect of whichdividend has not been paid or claimed by the shareholders for 7 (seven) consecutive yearsor more shall also be transferred to the demat account created by the IEPF Authority.
As per the above provisions all unclaimed dividend up to the financialyear ended 31st March 2011 has been transferred by the Company to the saidFund. The Company does not have any unclaimed dividend which needs to be transferred tothe said Fund. The Company has also transferred the shares in respect of which dividendremained unclaimed for seven consecutive years or more upto the financial year ended 31stMarch 2011 to the IEPF Demat Account. Since there is no unclaimed dividend lying with theCompany there would be no further transfer of shares to the IEPF Authority.
The shares transferred to the IEPF Authority can be claimed by theconcerned members from the IEPF Authority after complying with the procedure prescribedunder the IEPF Rules.
33. Other Disclosures / Reporting
Your Directors state that no disclosure or reporting is required inrespect of the following items as there were no transactions pertaining to these itemsduring the year under review:
(a) Details relating to deposits covered under Chapter V of the Act.
(b) Issue of equity shares with differential rights as to dividendvoting or otherwise.
(c) Issue of shares (including sweat equity shares) to employees of theCompany under any scheme.
(d) Receipt of remuneration or commission from any of the subsidiariesby the Executive Directors of the Company.
The Board wishes to place on record its appreciation for the assistanceand support received from the lenders government regulatory authorities customersbusiness associates and vendors.
Your Directors take this opportunity to express their sincere thanks toall the shareholders and stakeholders for the faith and confidence reposed in the Companyand the management.
Your Directors attach immense importance to the contribution of theemployees and sincerely thank "The Leela" team for sharing the Company'svision and philosophy and for the dedication and commitment in ensuring that the Companyremains in the forefront as one of the finest hotel groups in India.
| ||For and on behalf of the Board of Directors |
| ||Vivek Nair |
| ||Chairman & Managing Director |
|Mumbai May 27 2019 || |