The Board of Directors of your Company with immense pleasure present the Thirty FirstAnnual Report of your Company along with the Audited Balance Sheet Profit and LossAccount and Cash Flow Statement (Standalone and Consolidated) Schedules and Notes toAccounts for the year ended March 31 2017.
The Company's financial performance for the financial year ended March 31 2017 onstandalone and consolidated basis is summarized below:
|Financial Particulars ||As on March 31 2017 ||As on March 31 2016 |
| ||Consolidated ||Standalone ||Consolidated ||Standalone |
|Revenue from operations ||162.53 ||91.30 ||158.53 ||87.85 |
|Other Income ||7.06 ||8.25 ||4.36 ||5.61 |
|Total revenues ||169.59 ||99.55 ||162.89 ||93.46 |
|Food and beverages consumed ||20.23 ||11.78 ||20.75 ||12.04 |
|Employee Benefit Expenses ||38.66 ||19.28 ||36.88 ||18.35 |
|Finance Costs ||12.16 ||6.02 ||14.92 ||6.11 |
|Depreciation ||13.11 ||4.25 ||13.90 ||4.00 |
|Other Expenses ||83.24 ||48.27 ||80.56 ||46.80 |
|Total Expenses ||167.40 ||89.60 ||167.01 ||87.30 |
|Profit/(Loss) before exceptional items tax and minority interest ||2.19 ||9.95 ||(4.12) ||6.16 |
|Exceptional Item ||- ||- ||1.32 ||1.32 |
|Profit/(Loss) before tax and minority interest ||2.19 ||9.95 ||(2.80) ||7.48 |
|Tax expense ||0.78 ||0.04 ||0.84 ||- |
|Minority Interest ||(1.05) ||- ||(2.34) ||- |
|Profit/(Loss) for the year ||2.46 ||9.91 ||(1.30) ||7.48 |
Key Financial and Operational Highlights Standalone performance:
During the financial year 2016-17 the revenue from operations was `91.30 crores ascompared to `87.85 crore for the financial year 2015-16 thus marking a growth of 4% overthe previous year. The Company has generated net profit of `9.91 crores during the yearended March 31 2017 as Compared to `7.48 crores for the year ended March 31 2016 thusregistering a growth of 32% over the previous year. During the year the Company hasdeclared and paid an interim dividend of 10% i.e. Re. 1 per equity share of `10/-.
Consolidated/ Group performance:
During the financial year 2016-17 the consolidated revenue from operations was `162.53crores as compared to `158.53 crore for the financial year 2015-16 thus marking a growthof 2.5% over the previous year. The Company has generated consolidated net profit of `2.46crores during the year ended March 31 2017 as compared to net loss of `1.30 crores forthe year ended March 31 2016 thus registering a growth of 289% over the previous year.
Key Business Developments during the year
The Company continues to expand through asset light strategy' and building thebrand portfolio through Management Contracts and Franchise Contracts in various parts ofthe country and abroad. Royal Orchid Group has presence in 28 cities in 10states with 3159 Rooms and 1.24 Lakh Royal reward members. Most of thehotels in the group are present in Metro cities. ROHL has demonstrated the scalability ofkeys by establishing its presence in Tier I & Tier II cities. ROHL will continue tobring Luxury rooms at lower rates across country.
Details of new hotels Opened during the year are as follows:
Regenta Central Amritsar
Hotel Regenta Central is a well planned 4-star hotel and is considered as one of thebest hotels in Amritsar which is a bustling city located in Punjab. Amritsar is alsoconsidered as a heritage city by the Government of India. Owing to its strategic locationHotel Regenta Central is also an ideal accommodation option while considering hotels inAmritsar near Golden Temple.
The city of Amritsar is renowned for the Golden Temple which is a popular touristdestination and an important religious center of the Sikhs. Hotel Regenta Central is just5 minutes away from the Golden Temple ideally suited for any business or leisure travelersin the city. The hotel offers amazing luxurious rooms in various categories andstate-of-the-art halls to play host for various events. Sartaj Ballroom Season I Hall andSargun Season II Hall are all spacious and can serve any event from elegant weddings tohuge social events corporate events and other business functions.
Regenta Central Jhotwara Jaipur
Hotel Regenta Central Jhotwara Jaipur is located in the hub of industrial area and isin close proximity to the Jaipur airport and railway station. With state-of-the-artbanquet venues fine dining outlets and well-appointed rooms our hotel is indeed thebest choice of accommodation for all modern day travelers in the city. The pink cityoffers a multi-faceted world of tradition culture and business. This hotel is positionedto offer all that and more.
Regenta Central Deccan Chennai
Hotel Regenta Central Deccan offers 93 well-appointed rooms featuring three differentcategories like Superior rooms Luxury Suites and Deluxe suites and all the rooms arewell supported with modern amenities. The hotel also offers some of the best vegetarianrestaurants in Royapettah Chennai for delectable culinary tour. Its signature restaurantOlives' serve multi cuisines and L9 Mylai serves authentic South Indian cuisinesfor delighting every palate of the patrons. It's bar Downtown serves mouth-watering lightsnacks and refreshing beverages for an unforgettable experience in Chennai. The hotel hasa number of classy and well-equipped venues for hosting meetings and events and offerssome of the best banquet halls in Royapettah Chennai to organize seamless events.
Regenta Inn Larica Kolkata
Hotel Regenta Inn Larica is a prominent landmark in Rajarhat downtown Kolkata. Locatedat a distance of just 2 km from the domestic and international airport it is easilyaccessible from all major places of interest in the city. With adequate dining optionsclassy rooms and banqueting facilities Regenta Inn Larica Kolkata is an ideal choice ofaccommodation for any traveler in the city. Featuring 45 rooms including Premium RoomsExecutive Rooms and Suites Regenta Inn Larica Kolkata is ideal for both business andleisure travelers. With in-room dining facilities and complimentary toiletries theseelegant rooms and suites are well-equipped with all modern amenities to craft a wonderfulstay for you. These aesthetically pleasing rooms and suites exude a sheer sense of joy andcomfort at their very sight.
Regenta Inn Vadodara
Hotel Regenta Inn Vadodara is an excellent choice of accommodation for anyonetraveling to the city. Located adjoining Ved Transcube Mall a short walk from the CentralBus Station Railway Station and Sayaji Gardens. The Hotel features 94 well-appointedrooms classy banqueting facilities with pillar-less halls which can accommodate 500guests and a multi-cuisine restaurant Casablanca the perfect place where you cantantalize your taste buds with a wide assortment of cuisines from different parts of theworld.
Regenta Central Klassik Ludhiana
Hotel Regenta Central Klassik Ludhiana offers 75 classy accommodation choices in fourdifferent categories: Standard Rooms Club Rooms Deluxe Suites and Luxury Suites. If youare in the city on business or for leisure purposes we assure you that we offer the bestof stay experiences in the city. Our elegant rooms and suites with all modern amenitiesensure that you receive a peaceful slumber. The classy venues at our hotel have beendesigned to make your events the talk of the town. The strategic location of our hotelmakes us easily accessible from all the major places of interest in the city. Punjab isknown for its sumptuous cuisines and we at Hotel Regenta Central Klassik offer ampleopportunity to our guests to savour the taste of the land in our dining outlets and unwindat our bar and lounge.
Regenta Resort Tarika Jim Corbett
Regenta Resort Tarika Jim Corbett is located on the serene foothills of Kumaon. On oneside it is surrounded by the famous Corbett National Park and on the other the pristineKosi River. Its exotic locale makes it one of the best destinations to plan a much neededvacation. The resort is home to 45 aesthetically pleasing rooms and cottages withunparalleled amenities to help you rejuvenate with a fulfilling stay. Our resort is alsohome to a number of dining outlets that will definitely help you satiate your cravings.Regenta Resort Tarika Jim Corbett is also an ideal destination for weddings conferences& and any other events as it is home to state-of-the-art venues.
Regenta Orkos Haridwar
Hotel Regenta Orko's Haridwar is a popular choice of accommodation among the travelersvisiting the Devbhoomi' or the Land of Gods'. Located on the main Haridwar -Rishikesh highway and the railway station it is also home to a spa fitness center finedining outlets and a well-stocked library. The hotel can also offer non-vegetarian cuisinealong with some finely blended spirits. Our well-furnished and elegantly adorned roomshave been designed to soothe your senses and offer you a good night's sleep. Available inRoyal Club Rooms Executive Suites and Presidential Suite they promise only comfort andluxury. Apart from the high-end amenities that you get to enjoy in our rooms and suiteseach one of them are equipped with high-speed internet to help you stay connected.
Acquisition of Company:
The Company has acquired 24.9% shares in River Shore Developers Private Limited(Formerly known as Amar Tara Hospitality Private Limited) a subsidiary of Royal OrchidHotels Limited. Upon acquisition of shares River Shore Developers Private Limited hasbecome 100% subsidiary of Royal Orchid Hotels Limited.
Participation in major Exhibitions held during the year
Great India Travel Bazaar on April 19-21 2016 at the Jaipur Exhibition and ConferenceCentre
OTM 2017 on February 21-23 2017 at the Bombay Convention & Exhibition CentreMumbai
Changes in nature of Business
During the year under review there was no change in the nature of Company's business.
Share Capital of the Company and changes thereof
During the year under review the Company has granted 459000 Stock Options to theemployees of the Company under the Employee Stock Option Plan (ESOP) 2014. The Company hasnot issued any securities during the year.
Dividend and Transfers to Reserve
During the year 2016-17 the Board of Directors have declared and paid an InterimDividend of Re.1 (Rupee One) per equity share of ` 10/- each. (i.e. 10%) amounting to`27233965/- to its shareholders whose name was appearing in the register of members andstatement of beneficial year (closing hours) on March 03 2017 . Further during the yearunder review no amount has been transferred to reserve.
In terms of the provisions of Sections 73 and 74 of the Companies Act 2013 read withCompanies (Acceptance of Deposits by Companies) Rules 2014 the Company had no opening orclosing balances and during the year under review the Company has also not accepted anypublic deposits and as such no amount of principal or interest was outstanding as onMarch 31 2017.
Material Changes and commitments affecting financial position between the end offinancial year and date of report
There have been no material changes and commitments affecting the financial positionof the Company which occurred between the end of the financial year to which the financialstatements relate and the date of this report.
Revision in Financial Statements or Boards' Report under Section 131(1) of theCompanies Act 2013
In terms of Section 131 of the Companies Act 2013 the Financial Statements andBoard's Report are in compliance with the provisions of Section 129 or Section 134 of theCompanies Act 2013 and that no revision has been made during any of the three precedingfinancial years.
Management Discussion and Analysis Report
The Management's Discussion and Analysis Report on Company's performance industry trends and other material changes with respect to the Company and itssubsidiaries wherever applicable forms part of this Annual Report.
Subsidiaries Associates and Joint Ventures
The Consolidated Financial Statements of your Company and its Subsidiaries JointVentures and Associates prepared in accordance with the relevant Accounting Standards ofthe Institute of Chartered Accountants of India duly audited by the Statutory Auditorsform a part of the Annual Report and are reflected in the Consolidated Accounts.
As at March 31 2017 your Company has 13 Indian subsidiaries 1 Foreign Subsidiary and4 Joint Venture companies. Pursuant to Section 129 (3) of the Companies Act 2013 astatement containing salient features brief financial details of the Company'ssubsidiaries for the financial year ended March 31 2017 and their contribution to theconsolidated financials in Form AOC 1 is appended as Annexure I tothe Boards'
Report and in consolidated financials forming part of this Report. Theannual accounts of the Subsidiary Companies and the related information will be madeavailable to any Member of the Company seeking such information and are available forinspection by any Member of the Company at the Registered Office of the Company. Pursuantto Section 136 of the Companies Act 2013 the financial statements of your CompanyConsolidated Financial statements along with relevant documents and separate auditedaccounts in respect of subsidiaries are available on the website of your Company.
The names of the Promoters and entities comprising "group" (and theirshareholding) as defined under the Competition Act 2002 for the purposes of Section3(1)(e)(i) of SEBI (Substantial
Acquisition of Shares and Takeover) Regulations 2011 include the following:
|Sl. No. Name of Promoter including Persons Acting in Concert ||Total Shareholding as on March 31 2017 ||Percentage of Shareholding |
|1. Mr. Chander K. Baljee ||12001060 ||44.07 |
|2. Ms. Sunita Baljee ||226260 ||0.83 |
|3. Mr. Arjun Baljee ||275193 ||1.01 |
|4. Mr. Keshav Baljee ||803424 ||2.95 |
|5. Mr. Sunil Sikka ||30475 ||0.11 |
|6. Baljees Hotels and Real ||5714689 ||20.98 |
|Estates Private Limited || || |
|7. Hotel Stay Longer Private ||229337 ||0.84 |
|Limited || || |
Particulars of Contracts or Arrangements made with Related Parties under Section 188(1)and (2) of the Companies Act 2013
The particulars of contracts/arrangements with related parties referred to in Section188(1) and (2) of the Companies Act 2013 are provided in the prescribed Form AOC-2appended as Annexure II to this Boards' Report.
Development in Human Resources and Industrial Relations
The Company continues to maintain a very cordial and healthy relationship with itsworkforce across all its units. The total number of persons working in the group(permanent employees on rolls and contractual employees) as at March 31 2017 was 3418across all its units in the group. The Company is ensuring the best place to work toattract and retain good employees in the Company. The Company continued to strive towardsattracting retaining training multiskilling employees. With the increase in workforcedue to expansion in business envisaging the requirement of adequate on the job trainingacross the various levels of employees a major thrust to the training and development ofmulti-skilled certification programmes has been initiated through Presidency college ofHotel Management. Under the Hotel Royal Orchid Employees Welfare Trust' the Companycontinues to offer financial support for medical and educational needs of certain categoryof employees. The Human Resource Team carried out the following programs across the groupduring the year:
1. Online Hospitality Training Program
2. Food Festivals to make staff experience cuisines of multiple types
3. Plantation drive as an environmental awareness initiative.
4. Blood donation camp and staff health check up camps in collaboration with RotaryClub Columbia Asia Hospital & Manipal Hospitals
5. Many Employees were recognized and rewarded with financial benefits under servicebonus program. It helps in recognizing and rewarding key talent and resulting in qualitytalent retention The disclosure pursuant to Section 197 (12) of the Companies Act 2013read with Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 (as amended up to date) have been detailed in the Annexure -III to this Boards' Report.
Extract of Annual Return
The extract of Annual Return in Form MGT 9 as provided under Section 92 (3) ofthe Companies Act 2013 read with Rule 12 of the Companies (Management andAdministration) Rules 2014 is annexed hereto as Annexure - IV to this Boards'Report.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgoes
Your Company is continuously striving towards conservation of energy across all itsunits and has implemented various Energy Conservation programs and latest technology upgradation measures your Company also earned foreign currency in Financial Year 2016 2017 complete details of which has been disclosed in Annexure V tothis Boards' Report.
Particulars of Loans/Guarantees/Investments
During the year under review the Company has given a Corporate Guarantee of ` 18 Croreto SREI Infrastructure Finance Limited for Loan taken by subsidiary Company ICONHospitality Private Limited. The Company has not given any Inter Corporate Loans duringthe financial year 2016-17. Particulars relating to Investments have been detailed in theNotes to Financial Statements forming part of this Annual Report.
Your Company has been practising the principles of good corporate governance pursuantto Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 ("LODR") (applicable from December 1st2015) a detailed report on corporate governance is available as a separate section inthis Annual Report. A certificate of the Company Secretary in whole-time practiceregarding compliance with the conditions stipulated in the said clause and the LODR isprovided separately as an Annexure A to the Corporate Governance Report.
Board of Directors and changes thereof during Financial Year 2016-2017
As on March 31 2017 your Board has following Directors:
|Sl. No. Name ||DIN ||Category ||Designation |
|1 Mr. C. K. Baljee ||00081844 ||Executive ||Managing Director |
|2 Mr. Sunil Sikka ||00083032 ||Non-Executive ||Non - Independent Director |
|3 Ms. Sunita Baljee ||00080737 ||Non-Executive ||Non - Independent Director |
|4 Dr. Vivek Mansingh ||06903079 ||Non-Executive ||Independent Director |
|5 Mr. Vijay K. Rekhi ||00191298 ||Non-Executive ||Independent Director |
|6 Mr. Naveen Jain ||00051183 ||Non-Executive ||Independent Director |
During the financial year 2016-17 the following changes took place in the Board:
1. Mr. R.V.S. Rao's tenure as an Independent Director came to an end on October 012016.
2. Mr. K. Jairaj's tenure as an Independent Director came to an end on October 012017.
3. Mr. Vijay Rekhi was re-appointed as an Independent Director at the 30thAnnual General Meeting of the Company held on September 29 2016 for a period of one yeari.e. upto September 30 2017.
4. Dr. Vivek Mansingh was appointed as Independent Director for a period of 5 yearsw.e.f. August 12 2016 at the 30th Annual General Meeting of the Company heldon September 29 2016.
5. Mr. Naveen Jain was appointed as appointed Additional Director by the Board onOctober 25 2016. He is now proposed to be appointed as an Independent Director for aperiod of three years. His profile is given in the Annexure to the Notice calling the 31stAnnual General Meeting of the Company.
6. Ms. Sunita Baljee Director of the Company is retiring by rotation at the ensuingAnnual General Meeting and being eligible offers herself for re-appointment her briefprofile is disclosed in the Annexure to Notice calling 31st Annual GeneralMeeting of the Company.
Further during the year 2016-17 Dr. Ranabir Sanyal was appointed as the CompanySecretary and Compliance Officer of the Company w.e.f. August 26 2016.
Committees of the Board
As on March 31st 2017 your Board has following Statutory Committees: a)Audit Committee b) Nomination and Remuneration Committee c) Stakeholders RelationshipCommittee d) Corporate Social Responsibility Committee
The details of the composition meetings held during the year and attendance of themeetings and the terms of reference of the above Committees of the Board are provided inthe Corporate Governance Report.
Formal Annual Evaluation of Board
Pursuant to section 134 (3) (p) of the Companies Act 2013 and Rule 8(4) of Companies(Accounts) Rules 2014 it is mandatory to monitor and review the Board evaluationframework the Board has carried out peer evaluation of all Board members annualperformance evaluation of its own performance as well as the evaluation of the working ofthe Committees of Board as per the criteria laid down in the Nomination Remuneration andEvaluation policy. The said policy including above said criteria for the evaluation of theBoard individual directors including independent directors and the committee of the boardhas been laid down in the Corporate Governance Report which form part of this report.
Meetings of the Board held during the Year
During the year under review your Board met 5 (Five) times on 30.05.2016; 12.08.2016;25.10.2016; 04.02.2017 and 18.02.2017 all the Board Meetings were conducted in duecompliance with Companies Act 2013 and the Corporate Governance principles specified inthe LODR.
During the year under review the Ministry of Corporate Affairs vide their letternumber: SRN/C54697651/5/2015 CL.VII dated November 3rd 2015 hasapproved a total remuneration of ` 1.83 Crores to Mr. C. K. Baljee (DIN: 00081844)Managing Director of the Company for Financial Year 2016 2017 and your Companyhas not paid remuneration to the him in excess of the limit specified above.
Declaration by Independent Directors
As on March 31st 2017 your Company has following Independent Directors:
1. Dr. Vivek Mansingh
2. Mr. Vijay K. Rekhi
3. Mr. Naveen Jain
In pursuance of Section 149(7) of the Companies Act 2013 all the three IndependentDirectors of the Company have submitted a declaration under Section 149(6) of theCompanies Act 2013 and Regulation 16(1)(b) of the LODR that they meet the criteria ofindependence.
Familiarisation programme for Independent Directors
The Company has made a familiarisation programme for the Independent Directors whichhas been disclosed on Company's website atwww.royalorchidhotels.com/pdfs/familiarization-programmes.pdf.
Separate Meeting of Independent Directors and performance evaluation of Board by them
In due compliance with the provisions of Regulation 25(3) of the LODR a separatemeeting of Independent Directors was held in the previous calendar year 2016-17 tointer-alia consider and discuss the performance of Non-Independent Directors the Chairmanand to assess the quality quantity and timeliness of flow of information between themanagement and the listed entity and the Board in order to help Board to perform itsduties.
Audit Committee and its Recommendation(s)
In accordance with Section 177 of the Companies Act 2013 rules made there under andRegulation 18 of the LODR the Company has duly constituted the Audit Committee detailsof which has been disclosed in the Corporate Governance Report forming part of this AnnualReport and all recommendations made by the Audit Committee were accepted by the Board.
Nomination and Remuneration Committee
In accordance with Section 178 of Companies Act 2013 read with Rule 6 of Companies(Meetings of Board and its Powers) Rules 2014 and Regulation 19 of LODR the Company hasconstituted a Nomination and Remuneration Committee details of which has been disclosedin the Corporate Governance Report forming part of this Annual Report and also onCompany's website at www.royalorchidhotels.com and your Company has also formulated RoyalOrchid Nomination and Remuneration Policy extracts of which are hereunder:
1) The Nomination and Remuneration Committee shall identify potential candidates whoare qualified to become Directors and who may be appointed in senior management inaccordance with the criteria laid down recommend to the Board their appointment andremoval.
2) The Nomination and Remuneration Committee shall formulate the criteria fordetermining qualifications positive attributes and independence of a Director andrecommend to the Board a policy relating to the remuneration for the directors keymanagerial personnel and other Employees.
3) The Nomination and Remuneration Committee shall while formulating the policy ensurethat
a) the level and composition of remuneration is reasonable and sufficient toattract retain and motivate Directors of the quality required to run the Companysuccessfully;
b) relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and
c) remuneration to Directors key managerial personnel and senior management involves abalance between fixed and incentive pay reflecting short and long-term performanceobjectives appropriate to the working of the Company and its goals provided that suchpolicy shall be disclosed in the Board's Report.
4) Recommend nominees to various committees of the Board.
5) Approve and make recommendations to the Board of Directors in respect of Directors'fees salary structure and actual compensation (inclusive of performance based incentivesand benefits) of the Executive Directors including the Managing Director;
6) Recommending remuneration for Non-Executive Directors.
7) Ensuring that appropriate procedures are in place to assess Board's effectivenessand shall carry out evaluation of every Director's performance.
8) Developing an annual evaluation process of the Board and its Committees.
9) Assist the Board of Directors in ensuring that affordable fair and effectivecompensation philosophy and policies are implemented;
10) Review and approve the compensation and Employee Stock Option Plan("ESOP") to be granted to senior executives requiring approval from the Boardof Directors;
11) Review and approve the changes in terms and conditions of the ESOP;
12) Review and approve the overall budgetary increment proposals for annual increase ofcompensation and benefits for the Employees;
13) Criteria for selection and appointment of Non-Executive Directors; and
14) Review and approve any disclosures in the annual report or elsewhere in respect ofcompensation policies or Directors' compensation;
15) devising a policy on diversity of board of directors;
16) Whether to extend or continue the term of appointment of the independent directoron the basis of the report of performance evaluation of independent directors.
Stakeholders' Relationship Committee
In terms of Section 178 of the Companies Act 2013 read with Rule 6 of Companies(Meetings of Board and its Powers) Rules 2014 and Regulation 20 of LODR the Company hasconstituted a Stakeholders' Relationship Committee (erstwhile Shareholders' GrievanceCommittee) details of which along with terms of reference has been disclosed in theCorporate Governance Report forming part of this Annual Report and also on Company'swebsite at www.royalorchidhotels.com/pdfs/Composition-Various-committees.pdf.
Corporate Social Responsibility
Your Company has always been committed to Corporate Social Responsibility("CSR") and it is one of our commitments to the society. Our CSR activities areembedded around the vision of the Promoters of the Company. Baljee Foundation promoted byMr. C. K. Baljee Managing Director (Promoter) of the Company focuses on impartingEducation enhancing Employability and Skill Development of budding entrepreneurs inassociation with the Presidency Educational Trust. The Trust established PresidencyCollege for Hotel Management to focus on the education in the field of Hospitality andTourism sector. The academy is a unique institution where students are exposed to hoteloperations continuously as part of their academic curriculum. This is in addition to themandatory industrial training.
Your Company has signed a Memorandum of Understanding with National Skill DevelopmentCorporation (NSDC) a non-profit Company for a project called UDAAN a Special IndustryInitiative scheme for the State of Jammu and Kashmir with the aim to provide employment tothe youths of J & K by imparting them industry specific skills.
The Company has collaborated with American Hotel and Lodging Educational Institute(AHLEI) through Presidency College and Funds Operations Certification courses throughBaljee Trust. Under Baljee Foundation the Company continues to serve the well-being ofthe larger community in terms of assisting them to be self reliant by honing their skills.The Hotel Royal Orchid Employees Welfare Trust' continues to offer financial supportfor medical and educational needs of certain category of employees. In accordance withSection 135 of Companies Act 2013 read with Companies (Corporate Social ResponsibilityPolicy) Rules 2014 the Company has formulated a Corporate Social ResponsibilityCommittee details and composition of which has been disclosed in the Corporate GovernanceReport forming part of this report and also on Company's website atwww.royalorchidhotels.com/ pdfs/Composition-Various-committees.pdf and the Company hasalso adopted a Corporate Social Responsibility Policy (Royal Orchid Corporate SocialResponsibility Policy) in this respect extracts of which are hereunder: To define theGroup's corporate and social obligations as a responsible citizen and oversee its conductin the context of those obligations including as follows:
1) To oversee the creation of appropriate policies review the CSR policies from timeto time.
2) To approve a strategy for discharging the Group's corporate and socialresponsibilities.
3) To Monitor and Report the CSR activities to the Board.
4) To conduct an annual self-assessment of its performance and effectiveness includingits Terms of Reference and report conclusions and recommendations for change to theBoard.
The Company has established an effective Compliance Mechanism to mitigate the risk andwill be reviewed by the Board periodically. The Company has adopted Risk ManagementPolicy pursuant to the provision of Section 134 of the Act to identify and evaluatebusiness risks and approach for mitigation of such risks. The Company has identifiedvarious risks and also has mitigation plans for each risk identified and reviewedperiodically.
The Company in order to promote green initiative has sent electronic copies of theAnnual Report for Financial Year 2015 2016 along with the Notice of the 30thAnnual General Meeting are sent to all members whose email addresses are registered withthe Company / Registrar and Share Transfer Agent ("RTA"). For members who havenot registered their email addresses physical copies of the Annual Report 2015-2016 underSection 101 of the Companies Act 2013 are sent in the permitted mode. Members who havebeen sent Annual Report copies in electronic mode desirous to have physical copies of thesame can send a request in writing either to the Company or the RTA.
Insider Trading Regulations
Based on the requirements under SEBI (Prohibition of Insider Trading) Regulations 2015(erstwhile SEBI (Prohibition of Insider Trading) Regulations 1992) as amended tilldate the Code of Conduct for prevention of Insider Trading and the Code of fairdisclosure as approved by the Board from time to time are enforced by the Company. TheCompany has adopted a Code of Conduct to regulate monitor and report trading by insidersunder the SEBI (Prohibition of Insider Trading) Regulations 2015. This Code of Conductalso includes code for practices and procedures for fair disclosure of unpublished pricesensitive information and this is made available on the Company's websitewww.royalorchidhotels.com. The objective of this Code is to protect the interest ofStakeholders at large to prevent misuse of any price sensitive information and to preventany insider trading activity by dealing in shares of the Company by its DirectorsOfficers and Designated Employees. The Company also adopts the concept of Closure ofTrading Window to prevent its Directors Officers Designated Employees and otheremployees from trading in the securities of the Company at the time when there isunpublished price sensitive information.
The Statutory Auditors M/s Deloitte Haskins & Sells LLP Chartered Accountants(Firm Registration No. 117366W/ W-100018) were appointed as Statutory Auditors of theCompany in the 29th Annual General Meeting of the Company to hold office asStatutory Auditors until the conclusion of 34th Annual General Meeting of theCompany subject to ratification by the shareholders in each Annual General Meeting of theCompany the same has been proposed in the Notice calling 31st Annual GeneralMeeting of the Company.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hasappointed Mr. G. Shanker Prasad (ACS 6357) Practicing Company Secretary (CoP No. 6450)to undertake the Secretarial Audit of the Company for Financial Year 2016 - 2017.
There were no qualifications by the Auditor in their Secretarial Audit Report in FormMR-3 for the Financial Year ended March
31 2017 which is appended as Annexure VI to this Boards' Report.
Explanations or Comments by the Board on every qualification reservation or adverseremark or disclaimer made by the Statutory and Secretarial Auditors
There were no qualifications or adverse remark by either of the Auditors in theirrespective Reports.
1. The Company has been named as a defendant in two civil suits on small portion ofland taken on lease from the Karnataka State Tourism Development Corporation("KSTDC") for the operation of the Hotel Royal Orchid Bangalore which areadjacent to the hotel premises. One of the civil suit has been settled in favour of theCompany against which an appeal before the High Court of Karnataka is pending and in theother matter the Company has an injunction against the other party. Management believesthat these cases are not material and will not adversely affect its operations.
2. The Company has been named as a defendant in a suit filed in mid2008 by Kamat Hotels(India) Limited (the plaintiff') restraining the alleged use of the trademark of theCompany and a relief of a permanent injuction restraining the Company from using thetrademark Orchid'. The Company had filed an application seeking an interim injuctionwhile the above proceedings are pending. The Bombay High Court vide its interim orderdated April 05 2011 has allowed the Company to continue to operate its current hotels ason that date but has restrained the Company from opening new hotels under the said brand.However the Division bench of the Bombay High Court vide its order dated May 06 2011 haspartially stayed operation of the said Order and allowed opening of one of Company'sproposed hotels in Vadodara under the Royal Orchid' brand. During the year ended 31March 2014 the Company has obtained two favourable rulings from the Intellectual PropertyAppellate Board. Kamat had preferred to appeal the ruling of IPAB in Madras High Court.The Madras High Court has passed orders cancelling the registration in Class 42 and theCompany has filed an Special Leave Petition "SLP" in the Supreme Court in 2015.Reply to SLP was filed by Kamat in the form of Counter affidavit and the Company has fileda Rejoinder in the form of an affidavit. The matter was partly heard by the Supreme Courtin April and May of 2017 and has advised Kamat Hotels to consider the options forsettlement by displaying the disclaimers on the Websites regarding the disassociationbetween the two brands. The matter is yet to be completely heard by Supreme Court.
Based on an independent legal advise the management believes that the case will besettled in its favour and will not affect its current and future operations.
Details of significant and material orders passed by the regulators/ courts/ tribunalsimpacting the going concern status and the Company's operations in future
There were no significant material orders passed by the Regulators/Courts which wouldimpact the going concern status of the Company and its future operations.
Internal Financial Control Systems
The Company has adequate system of internal controls which ensures that all thetransactions are authorised recorded and reported correctly and assets are safeguardedand protected against loss from unauthorized use or disposition.
The Company has appointed an Independent Company of Professionals as its InternalAuditors who does concurrent internal audits and management reviews and supplements theprocess of internal control every month. The internal control system has been designed toensure that the financial and other records are reliable for preparing financial and otherstatements and for maintaining accountability of assets.
The Company also has an Audit Committee comprising of 3 (Three) professionallyqualified Independent Directors who interact with the Statutory Auditors InternalAuditors and Management in dealing with matters within its terms of reference. ThisCommittee mainly deals with accounting matters financial reporting and internal controls.
Vigil Mechanism and Whistle Blower Policy
The Board of Directors of your Company has adopted the Vigil Mechanism and WhistleBlower Policy in compliance with Section 177(9) and (10) of the Companies Act 2013 andregulations specified under LODR.
The Company has adopted a channel for receiving and redressing of employees'complaints. Under this policy we encourage our employees to report any reporting offraudulent financial or other information to the stakeholders any conduct that results inviolation of the Company's Code of Business Conduct. Likewise under this policy we haveprohibited discrimination retaliation or harassment of any kind against any employeeswho based on the employee's reasonable belief that such conduct or practice have occurredor are occurring. No individual in the Company has been denied access to the AuditCommittee or its Chairman. The Audit Committee periodically reviews the functioning ofthis mechanism. This meets the requirement under the said provisions above.
Directors' Responsibility Statement
Your Company's Directors make the following statement in terms of Section 134(5) of theCompanies Act 2013 which is to the best of their knowledge and belief and according tothe information and explanations obtained by them:
1) in the preparation of the Annual Accounts for the year ended March 31 2017 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;
2) 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 2017 and of the profit ofthe Company for the year ended on that date;
3) 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;
4) the Directors have prepared the annual accounts on a going concern basis';
5) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
6) the Directors have devised proper system to ensure compliances with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
Payment of Listing Fee and Custodial Fee
Your Company has paid the both Annual Listing Fee and Annual Custodial Fee for theFinancial Year 2016 2017 to the National Stock Exchange ("NSE") and theBombay Stock Exchange ("BSE") and to National Securities and DepositoriesLimited (NSDL) and Central Depository Services (India) Limited (CDSL) respectively.
Commission or Remuneration received from Holding or Subsidiary Companies
During the year under review no Commission or Remuneration was paid to the ExecutiveDirectors from Holding/Subsidiary Companies.
Disclosures as per the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013
The Company has zero tolerance for sexual harassment at its workplace and in line withthe provisions of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and the Rules there under your Board of Directors has approved andadopted a "Policy on Prevention of Sexual Harassment at Workplace" to provideequal employment opportunity and is committed to provide a work environment that ensuresevery woman employee is treated with dignity and respect and afforded equitable treatment.
During the year under review the Company has not received any complaints on sexualharassment. The Company has complied with the Information required under Sexual Harassmentof Women at Workplace (Prevention Prohibition & Redressal) Act 2013.
The Company's shares are available for dematerialization with both the Depositoriesviz. NSDL and CDSL. About 99.80% of the paid-up equity share capital of the Company hasbeen dematerialized as on March 31 2017.
Disclosure of Frauds in the Boards' Report under Section 143 of the Companies Act 2013
During the year under review your Directors do not observe any contract arrangementand transaction which could result in a fraud; your Directors hereby take responsibilityto ensure you that the Company has not been encountered with any fraud or fraudulentactivity during the Financial Year 2016 - 2017.
1) During the year under review the Company has not bought its own shares nor hasgiven any loans to it's employees (including Key Managerial Personnel) of the Company forpurchase of the Company shares.
2) Your Company provides e-voting facility to all its members to enable them to casttheir votes electronically on all resolutions set forth in the Notice. This is pursuant tothe Section 108 of the Companies Act 2013 and Rule 20 of the Companies (Management andAdministration) Amendment Rules 2015.
Your Directors place on record their deep sense of appreciation to all Employeessupport staff for adopting to the values of the Company viz. collaborative spiritunrelenting dedication and expert thinking to be an expertise led organization and theCompany's Customers for letting us deliver the Company's Mission statement to help thebusinesses and societies flourish. The Board also immensely thank all the ShareholdersInvestors Vendors Service Providers Bankers and all other Stakeholders for theircontinued and consistent support to the Company during the year.
Your Directors would like to make a special mention of the support extended by thevarious Banks Departments of Government of India the State Governments the TaxAuthorities the Ministry of Commerce Ministry of Tourism Government of India KarnatakaState Tourism Development Corporation (KSTDC) Ministry of Corporate Affairs Ministry ofFinance SEBI NSE and BSE and others and look forward to their continued support in allfuture endeavours.
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For and on behalf of the Board of Directors of
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Royal Orchid Hotels Limited
|Place : Bengaluru ||Chander K. Baljee ||S unita Baljee |
|Date: August 10 2017 ||Managing Director ||Director |
| ||(DIN: 00081844) ||(DIN: 00080737) |