BOARD'S REPORT Dear Members, Your Directors are pleased to present the 28th Annual Report together with the Audited financial statement of the Company for the year ended 31st March, 2015. STATE OF COMPANY'S AFFAIRS The average occupancy level of The Orchid, Mumbai, was, around 69% as compared to 60% in the previous year. The average occupancy level of VITS Mumbai was around 72% as compared to 70% in the previous year. The Average Room Rate, during the year under review, was at Rs. 5,355/- at The Orchid, Mumbai as compared to Rs. 5,213/- in the previous year and at Rs. 3,284/- at VITS, Mumbai as compared to Rs. 3,148/- in the previous year. The total revenue of the Company for the year was recorded at Rs.13,930.63 lakhs (of which the revenue of Rs. 7,468.86 lakhs pertains to The Orchid, Mumbai, Rs. 2,348.37 lakhs to VITS, Mumbai and Rs.4,113.40 lakhs to other units) as against Rs. 15,679.06 lakhs in the previous year, a decrease of around 11.15% over the last year. The Company has registered loss after tax of Rs. 5,915.69 lakhs as compared to loss of Rs.23,260.69 lakhs in the previous year. FINANCE The Asset Sale Committee constituted by the CDR Lenders could not materialize sale of specified assets of the Company despite best efforts by the management, promoters and the Asset Sale Committee by the deadline, that is, 31st March, 2014 and therefore, the CDR Empowered Group communicated revocation of CDR mechanism as decided in the Joint Lenders Meeting. The Company has received loan recall notices and notices purportedly under Section 13(2) of SARFAESI Act, 2002 from some lenders and the matter is being dealt with by the Company appropriately. TFCI and L&T Infrastructure Finance Company Limited have, on 30.09.2014, assigned their respective debts/facility due from the Company together with securities interest/underlying rights, benefits & obligations to Asset Care & Reconstruction Enterprise Ltd (ACRE) and Edelweiss Asset Reconstruction Company Limited, acting as Trustee of EARC Trust SC105 respectively. During the year under review, the Company has entered in to Settlement Agreements with ACRE for settlement of its dues assigned from SBI and TFCI to ACRE on the terms and conditions contained in the said Settlement Agreements. Vijaya Bank has also assigned its debts due from the Company to Invent Assets Securitization & Reconstruction Private Limited. DIVIDEND In view of loss incurred by the Company during the year under review, the Board of Directors do not recommend any dividend for the financial year ended 31st March, 2015 (Previous year NIL SHARE CAPITAL During the year under review, no shares with differential voting rights, sweat equity shares or employee stock options were issued by the Company. During the year under review, there was no change in the Authorised or Paid up Share Capital of the Company. MATERIAL CHANGES AND COMMITMENTS There has been no material changes and commitment affecting the financial position of the Company during the financial year 2014-15. REPORT ON THE PERFORMANCE AND FINANCIAL POSITION OF THE SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES IN TERMS OF RULE 8(1) OF COMPANIES (ACCOUNTS) RULES, 2014 As on 31st March, 2015 the Company had the following subsidiaries /jointventures / associate companies: Subsidiary Companies: 1. Orchid Hotels Pune Private Limited 2. Fort Mahodadhinivas Palace Private Limited 3. Kamats Restaurants (India) Private Limited 4. Fort Jadhavgadh Hotels Private Limited 5. Green Dot Restaurants Private Limited Joint Venture Company /Associate Company: 1. Ilex Developers & Resorts Limited A report on the performance and financial position of each of the subsidiaries, associates and joint venture companies as per the Companies Act, 2013 is provided in form AOC 1 as at point no. 39 to the consolidated financial statement and hence not repeated here for the sake of brevity. DIRECTORS AND KEY MANAGERIAL PERSONNEL Mr. Vikram V. Kamat retires by rotation at the ensuing 28th Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his re-appointment. Mr. Vikram V. Kamat was re-appointed as an Executive Director of the Company at the 27th Annual General Meeting held on 10th September, 2014 for a period of 3 years from 1st October, 2014 subject to approval of the Central Government. The Board of Directors have relieved him from the office of Executive Director of the Company with effect from 20th December, 2014 since he had expressed his inability to continue as an Executive Director of the Company. He continues to be a director of the Company. Ms. Himali H. Mehta and Ms. Gayatri Devadiga were appointed as Additional Directors of the Company with effect from 20th December, 2014 pursuant to Section 161 of the Companies Act, 2013 to hold the office as Independent directors up to the date of 28th Annual General Meeting. It is proposed to appoint Ms. Himali H. Mehta as an Independent Director of the Company for a term commencing from the date of her appointment to 31st March, 2019. The Brief profile of Mr. Vikram V. Kamat and Ms. Himali H. Mehta, Directors of the Company is given in Annexure II to the Notice convening the ensuing 28th Annual General Meeting. During the year under review, Mrs. Rajyalakshmi Rao, Mr. Rohhan Divanji and Ms. Gayatri Devadiga, resigned from the office of Director of the Company with effect from 25th September, 2014, 21st November, 2014 and 21st January, 2015 respectively. The Board of Directors places on record its sincere appreciation for the valuable support and guidance given by Mrs. Rajyalakshmi Rao, Mr. Rohhan Divanji and Ms. Gayatri Devadiga to the Company during their tenure as Directors of the Company. DECLARATION BY INDEPENDENT DIRECTOR: Mr. D. D. Jadhav and Ms. Himali H. Mehta, Independent Directors of the Company have given their respective declaration as required under Section 149(7) of the Companies Act, 2013 to the effect that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 which were taken on record by the Board. FAMILIARISATION PROGRAMMES FOR INDEPENDENT DIRECTORS The Company has conducted Familiarisation Programmes to familiarize the Independent Directors of the Company. Details of the same are disclosed on the website of the Company and the weblink of the same is <http://www.khil.com/hospitality-management/Familiarization%20> Programmes.pdf EXTRACT OF ANNUAL RETURN An extract of Annual Return in Form MGT 9 as provided under sub-section (3) of Section 92 of the Companies Act, 2013 is enclosed as Annexure A forming part of the Board's Report NUMBER OF MEETINGS OF THE BOARD During the financial year 2014-15, five meetings of the Board of Directors were held. The dates of Board meetings are given in the Corporate Governance section, forming part of the Board's Report DIRECTORS' RESPONSIBILITY STATEMENT As required by Section 134 (5) of the Companies Act, 2013 the Directors hereby state that: 1 in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures; 2 selected accounting policies were applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the loss of the Company for the financial year ended on that date; 3 proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities to the best of the Directors' knowledge and ability; 4 the annual accounts have been prepared on a going concern basis; 5 Internal Financial Controls to be followed by the Company have been laid down, and the said Internal Financial Controls are adequate and are operating effectively and; 6 proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively. NOMINATION AND REMUNERATION POLICY In terms of Section 178 (3) of the Companies Act, 2013 and Clause 49 IV of the listing agreement entered into with the stock exchanges, a policy on Nomination and Remuneration of Directors and Senior Management Employees including, inter alia, criteria for determining qualifications, positive attributes, independence of directors and criteria for performance evaluation of director was formulated by the Nomination and Remuneration Committee and adopted by the Board of Directors at their respective meetings held on 22nd March, 2014 which was subsequently modified on 28th May, 2014 by inserting policy on Board Diversity in part B of the said policy. The said policy is annexed as Annexure B to the Board's Report. The said policy is also posted on the website of the Company www.khil.com and its weblink is <http://www.khil.com/hospitality-management/> NOMINATION%20AND%20REMUNERATION%20POLICY.pdf. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTY REFERRED TO IN SUB SECTION (1) OF SECTION 188 OF THE COMPANIES ACT, 2013 The Board of Directors of the Company had formulated a policy on related party transactions and materiality of Related Party Transactions on 28th May, 2014 and subsequently modified it on 8th November, 2014 in terms of Clause 49 VII and VIII of the listing agreement. The said policy is disclosed on the website of the Company, www.khil.com and its weblink is <http://www.khil.com/hospitality-management/POLICY%20ON%20> RELATED%20PARTY%20TRANSACTION%20AND%20MATERIALITY%20OF%20RELATED%20PARTY%20TRANSACTIONS.pdf. During the year under review, no Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements, were entered into by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Companies Act, 2013 in Form AOC 2 is not applicable. STATEMENT OF ANNUAL EVALUATION OF BOARD, COMMITTEES AND DIRECTORS AS PER SECTION 134(3) (p) READ WITH RULE 8(4) OF COMPANIES (ACCOUNTS) RULES, 2014 The Board of directors, at its meeting held on 14th February, 2015, evaluated its own performance and that of its committees and individual directors. The Board was evaluated based on factors like quality and duration of discussion, disclosure and transparency, discharge of the function of the Board and timeliness of the information, adhering to good corporate governance practice etc. The individuals were evaluated on factors like duties of the Directors u/s. 166 of the Companies Act, 2013 to promote the objects of the Company, leadership quality, attitude, initiatives and responsibility undertaken, decision making, commitmentand achievements during thefinancial year. The Independent Directors at their separate meeting held on 30th May, 2015 without the attendance of non- independent directors and members of the management, reviewed the performance of non independent directors including Executive Chairman and Managing Director and the Board as a whole. The meeting also assessed the quality, quantity and timeliness of flow of information between the company management and the board that is necessary for the board to effectively and reasonably perform its duties. AWARDS The Orchid, Mumbai Asia's first and only ISO 14001 certified Eco-friendly Five Star Hotel, continues to maintain the track record of winning prestigious awards. On 1st November, 2014, The Orchid, Mumbai was given Vocational Excellence Award - College of Club Leasers. Your Company has so far bagged 93 National and International Awards. Most of these awards have been won mainly because of the environmental awareness created by the flagship hotel, "The Orchid", Mumbai. VIGIL MECHANISM The Company has established a Vigil Mechanism for directors and employees to report genuine concerns. The vigil mechanism provide for adequate safeguards against victimization of person who use Vigil Mechanism and also provide for direct access to the Chairman of the Audit Committee in appropriate and exceptional cases. The Policy on Vigil Mechanism is displayed on the website of the Company www.khil.com and its weblink is <http://www.khil.com/hospitality->management/WHISTLE%20BLOWER%20POLICY%20-%20VIGIL%20MECHANISM.pdf. AUDIT COMMITTEE The composition of the Audit Committee as required to be disclosed under Section 177(8) of the Companies Act, 2013 is given in Corporate Governance Section (Annexure G) forming part of the Board's Report. During the year under review, there was no instance where the Board has not accepted any recommendation of the Audit Committee. RISK MANAGEMENT A quarterly review report on compliance with Risk Management policy of the Company is placed before the Audit Committee of the Company. During the year under review, no risk threatening the existence of the Company was identified. DISCLOSURE OF PECUNIARY RELATIONSHIP There was no pecuniary relationship or transactions of the non-executive directors vis-a-vis the company during the year. Also, no payment, except sitting fees, was made to any of the non-executive directors of the Company. No convertible instruments are held by any of the nonexecutive directors. DEPOSITS There was no deposit accepted by the Company within the meaning of Section 58A of the Companies Act, 1956 and Rules made there under at the beginning of the year. During the year under review, the Company has neither invited nor accepted any deposit under Section 73 of the Companies Act, 2013 and the rules made there under and no deposit was remaining unpaid or unclaimed as at the end of the year. SECRETARIAL AUDIT: In terms of Section 204 (1) of the Companies Act, 2013, a Secretarial Audit Report is annexed as Annexure C of the Board's Report. INFORMATION REQUIRED UNDER RULE 8 (3) OF THE COMPANIES (ACCOUNTS) RULES, 2014. a) Conservation of Energy: (i) the steps taken or impact on conservation of energy; (ii) the steps taken by the company for utilising alternate sources of energy; (iii) the capital investment on energy conservation equipments; The Company continued energy conservation efforts during the year. It has closely monitored power consumption and running hours on day to day basis, thus resulting in optimum utilization of energy. The hotel is fitted with energy saving devices to conserve energy in the long run. b) Technology Absorption: (i) the efforts made towards technology absorption: The activities of the Company at present do not involve technology absorption and research and development. (ii) the benefits derived like product improvement, cost reduction, product development or import substitution: N.A. (iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)- (a) the details of technology imported: N.A. (b) the year of import: N.A. (c) whether the technology been fully absorbed: N.A. (d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof: N.A. and (iv) the expenditure incurred on Research and Development: N.A. The activities of the Company at present do not involve technology absorption and research and development. c) Foreign exchange earnings and outgo: Earnings: Rs. 1,491.72 Lakhs (Previous Year Rs. 1,269.53 Lakhs). Utilization (including import of capital goods): Rs. 150.59 Lakhs (Previous Year Rs. 67.78 Lakhs). SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS During the period under review, no significant and material order was passed by any regulators/ courts or tribunals which have an effect on the going concern status of the Company and its operations. INTERNAL FINANCIAL CONTROLS The Company has adequate internal control systems relating to Purchase, Expense controls, Sales Recording and Audit and Internal Audit. A report on said systems is quarterly placed before the Audit Committee of the Company for its perusal and to determine its adequacy. Such control systems are adequate and commensurate with the size and nature of the business CORPORATE GOVERNANCE As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Management Discussion and Analysis and Corporate Governance Report together with a certificate from the Company's Auditors confirming compliance is given in Annexure "F" and "G"forming part of this report. IMPLEMENTATION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013. The Company has constituted Internal Complaints Committee at all the units of the Company under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. No instance of Sexual Harassment of Women under the said Act has been reported in any of the units of the Company. AUDITORS M/s. J. G. Verma & Co., Chartered Accountants, Mumbai retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. EXPLANATION AND COMMENTS BY THE BOARD ON MATTER OF EMPHASIS MADE IN THE AUDITORS' REPORT With regard to matter of emphasis no. 1 to 4 in the Auditor's report, the same are self explanatory and do not call for further explanation. EMPLOYEE RELATIONS The relations of the management with staff and workers remained cordial during the entire year. ACKNOWLEDGEMENTS The directors place on record their appreciation for the sincere and whole hearted co-operation extended by all the concerned persons, particularly Company's Bankers, Financial Institutions, Security Trustees, Stock Exchanges, Department of Tourism, Municipal authorities, the Government of Maharashtra, the Central Government, suppliers, clientele and the staff of the Company and look forward to their continued support. The Directors also thank the shareholders for continuing their support and confidence in the Company and its management. ON BEHALF OF THE BOARD OF DIRECTORS Dr. Vithal V. Kamat DIN 00195341 Executive Chairman & Managing Director Place : Mumbai Date : 30th May, 2015 |