Board's Report (2014-15) Dear Shareholders, Your Directors have pleasure in presenting the 50th Annual Report together with the audited accounts of the Corporation for the year ended 31st March, 2015. Your Corporation has achieved a total turnover of Rs. 504.19 crore during the financial year 2014-15 as against Rs. 469.58 crore in the previous year 2013-14 indicating an overall increase by 7.37%. The increase in overall turnover has been achieved in all the commercial divisions except ATT Division. During the financial year 2014-15, the Corporation has recorded a Net Profit (before tax) of Rs. 38.95 crore as against Net Profit (before tax) of Rs. 11.93 crore in previous year 2013-14. Operating Ratio The Operating Ratio has decreased by 5.62% in the current year with the overall operating ratio of 89.75% as against 95.37% in the previous year 2013-14. Division wise Financial Performance The Division wise financial performance of the Corporation is summarized as under :- (i) Hotels Division has achieved turnover of Rs. 283.90 crore during the year as against Rs.262.88crorein theprevious yearindicating increase by 8% and earned the net profit of Rs. 10.81 crore as against the net loss of Rs. 4.58 crore in the previous year. (ii) The turnover of Ashok International Trade (AIT) Division has increased to Rs. 10.96 crore from Rs. 9.40 crore in the previous year. The AIT Division has earned Net Profit of Rs. 0.84 crore as compared to net loss of Rs. 1.59 crore. (iii) The turnover of Ashok Travels & Tours Division has slightly decreased to Rs. 119.70 crore from Rs. 123.08 crore in the previous year. The ATT Division has earned a Profit of Rs. 0.75 crore as against the net loss of Rs. 1.98 crore in the previous year. (iv) The turnover of Ashok Tourist Service Station has decreased to Rs. 11.73 crore from Rs. 12.96 crore in the previous year. The ATSS has suffered a net loss of Rs. 0.31 crore as against the net loss of Rs. 0.28 crore in the previous year. The unit had been constantly making losses in the past. Pursuant to decision of the ITDC Board in the meeting held on 20th October, 2014 the ATSS has been closed w.e.f 17-02-2015. (v) The turnover of the Ashok Creatives Division (including SEL Red Fort) has been recorded at Rs. 12.34 crore (previous year Rs. 7.89 crore) and has suffered a loss of Rs. 0.43 crore as against net loss of Rs. 1.57 crore. (vi) The Engineering Division has achieved a turnover of Rs. 8.09 crore during the year 2014-15 (previous year Rs. 6.91 crore) with net loss of Rs. 5.34 crore as against net loss of Rs. 6.84 crore in the last financial year. (vii) The turnover of Ashok Events Division has increased to Rs. 11.51 crore (previous year Rs. 10.99 crore) with net profit of Rs. 2.11 crore as against profit of Rs. 0.66 crore in the previous year. (viii) The Ashok Institute of Hospitality and Tourism Management (AIH&TM) has achieved turnover of Rs. 18.23 crore as against Rs. 8.71 crore in the previous year with net profit of Rs. 2.79 crore (previous year net profit of Rs. 1.35 crore). (ix) The Corporate Head Quarter being the administrative office has earned an income of Rs. 27.72 crore (previous year Rs. 26.76 crore) mainly consisting of income from Interest on short term deposits with banks from the surplus funds available with it. Capital Structure There is no change in authorized and paid-up share capital of the Corporation. The Authorized Share Capital of the Corporation is Rs. 150 crore and the paid-up Share Capital is Rs. 85.77 crore as on 31st March, 2015. Dividend The Board of Directors recommended a dividend of 20% for the financial year 2014-15 on the equity share capital of the company. Transfer to Reserve An amount of Rs. 14 crore has been transferred to the General Reserves. Rating of ITDC vis-à-vis MoU targets Performance of the Company for the year 2013-14 has been notified as 'Good' with Composite Score 3.466 by Department of Public Enterprises (DPE) in terms of the MoU signed with the Government of India. Management Discussion and Analysis The report on the Management Discussion and Analysis is placed at Annexure-I. Plan Schemes The Revised Capital Budget Estimates towards capital expenditure for 2014-15 was Rs. 26.15 crore which included Rs. 23.83 crore for renovation/improvement on existing hotels, catering units and other divisions. The capital expenditure during 2014-15 was Rs. 11.54 crore out of which Rs. 4.77 crore was capitalized and Rs. 6.77 crore was charged to revenue. The Plan outlay for the year 2015-16 is Rs. 45.64 crore out of which Rs. 42.47 crore relates to renovation/improvement in existing hotels, catering units, other divisions. Procurement from MSME During the financial year 2014-15, total procurement from MSME was Rs. 23 lakh approx. Implementation of Official Language Policy During the year 2014-15, the Company continued its efforts to give impetus to the use of Hindi in official work through motivation and training. Cash incentives were granted to employees on doing prescribed quantum of work in Hindi. Hindi workshops were organized to provide practical training of noting-drafting and other works in Hindi. Various Hindi competitions were also organized during Hindi Fortnight celebrations for giving impetus to the use of official language in day to day work. Hindi Kavigoshthi, Hindi Natya Manchan and Hindi Prize Distribution Event were also organized to encourage official language in the Corporation. Conservation of Energy & Technology Absorption Commitment towards energy conservation remains in the units at various stages of operations. Commercial considerations, energy conservation policies and practices play a vital role in the endeavours made in this direction. Since your Company's operations do not involve technology absorption, the particulars as per Rule 8(3)(B) of the Companies (Accounts) Rules 2014 regarding technology absorption, are not applicable. Foreign Exchange Earnings & Outgo The Direct Foreign Exchange Earnings during the year 2014-15 has decreased to Rs. 12.99 crore as against Rs. 15.87 crore in the previous year. Subsidiary Companies The Corporation has seven subsidiary companies viz. (i) Donyi Polo Ashok Hotel Corporation Ltd (ii) Assam Ashok Hotel Corporation Ltd (iii) MP Ashok Hotel Corporation Ltd (iv) Pondicherry Ashok Hotel Corporation Ltd v) Ranchi Ashok Bihar Hotel Corporation Ltd (vi) Utkal Ashok Hotel Corporation Ltd, (vii) Punjab Ashok Hotel Company Ltd. The Hotel Units were set up under the aforesaid subsidiary companies at Itanagar, Guwahati, Bhopal, Puducherry and Ranchi respectively. The operation of Hotel unit at Puri is closed since March, 2004 and the Hotel has been planned to be leased out. The Hotel project at Anandpur Sahib is incomplete. Besides, the Corporation has one Associate Company i.e. ITDC Aldeasa India Private Limited. The Annual Accounts of all the subsidiary companies have been audited and finalized and the Consolidated Annual Accounts have been prepared and presented in this Annual Report. A statement containing the salient features of the subsidiaries in the prescribed format AOC-1 forms part of the Consolidated Annual Accounts 2014-15. Vigil Mechanism and Whistle Blower Policy The Corporation has a Whistle Blower Policy which is posted on the website <http://> www.theashokgroup.com/Aboutus/rti . Being a Central Public Sector Enterprise, the Corporation has a Vigilance Department. Chief Vigilance Officer, the Head of the Vigilance Division, is under the direct control of the Central Vigilance Commission (CVC), an independent Govt. Agency. Board of Directors During the year, eight Board meetings were held to transact the business of the Company. During the year under review, Dr. Sameer Sharma (from 12.05.2014 to 09.12.2014) was appointed as Managing Director. Shri Girish Shankar, Govt. Nominee Director & Additional Secretary (Tourism) was given the additional charge of the Managing Director from 23.04.2013 to 11.05.2014 and the charge of the Chairman & Managing Director from 10.12.2014 to 23.04.2015. During the year under review, Dr. Sameer Sharma and Cmde (Retd.) R. K. Okhandiar ceased to be on the Board of Directors. Sh. Trinath Behera, Director (Finance) and Chief Financial Officer tendered three months notice of Resignation on 30th March, 2015. His resignation was accepted by the President of India, Ministry of Tourism vide letter dated 30th June, 2015 and accordingly he was relieved from the services of ITDC on 30th June, 2015. The Board appreciated the valuable services rendered by them during their tenure. The present composition of the Board is as under: i) Shri Umang Narula, Chairman & Managing Director w.e.f. 24.04.2015 ii) Shri Piyush Tiwari, Director (C&M) w.e.f. 28.05.2015 iii) Dr. (Ms.) T. Kumar, Govt. Nominee Director w.e.f. 04.09.2013 iv) Shri Girish Shankar, Govt. Nominee Director w.e.f. 24.04.2015 v) Shri Anugolu Venkata Ratnam, Independent Director w.e.f. 07.10.2013 vi) Dr. Usha Kiran Rai, Independent Director w.e.f. 10.12.2013 Pursuant to Article 61 of the Article of Association, Shri Girish Shankar, Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. Details of profile etc. as required under Clause 49 of the Listing Agreement in respect of Director liable to retire by rotation and seeking re-appointment and the Directors to be regularized in the ensuing AGM, has been given along with the Notice of AGM. Training Policy and the training imparted to the directors The Corporation has formulated a training policy for Board Members. As per the policy, ITDC offers training programmes organized by SCOPE and DPE to the Board Members. Further, on induction of non-official Directors, ITDC may also arrange training on the role and responsibilities of Directors from the professional institutes like ICAI, ICSI, ICMA, IIM etc. During the financial year 2014-15, Non-official Directors attended a half-day workshop for Capacity Building of non-official directors of CPSEs with the Institute of Chartered Accountants of India (ICAI) as the knowledge partner organized by the Department of Public Enterprises (DPE). Declaration by Independent Directors The Company has received necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Board Evaluation The evaluation of the Board as a whole and the Independent Directors was conducted on the basis of criteria and framework laid down by the Nomination & Remuneration Committee of the Board. Based on the evaluation criteria laid down by the Committee, the performance evaluation of the Board was measured in six areas. The performance evaluation of the Independent Directors was measured also in six areas based on questionnaire designed on a scale of 1 to 5. Independent Directors evaluated the performance of the non-independent directors in a separate meeting of the Independent Directors. None of the independent directors are due for re-appointment. Particulars of loans, guarantee or investments During the year under review, ITDC has given a loan of Rs. 7,32,320/- at a rate of interest of 12.5% per annum to M/s Utkal Ashok Corporation Ltd., a joint venture subsidiary of ITDC for meeting out statutory obligations and day-to-day expenditures. Corporate Governance As per the requirement of Clause 49 of the Listing Agreement, a detailed report on Corporate Governance together with the following is given in Annexure-II which forms part of this Report. (i) CEO/CFO Certificate [as per Clause 49(ix)]; and (ii) Certificate from the Company's Auditors [as per Clause 49 (xi)] along with the management reply to observations. Directors' Responsibility Statement Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, it is hereby confirmed :- • That in the preparation of the accounts for the financial year ended 31st March, 2015, the applicable accounting standards have been followed read along with proper explanation relating to departures; • That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of state of affairs of the Company at the end of the financial year and of the profit of the Company for the year under review; • That the Directors have taken proper and sufficient care 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; • That the Directors have prepared the accounts for the financial year ended 31st March, 2015 on a 'going concern' basis; • That the Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; • That the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Internal Financial Controls The Corporation has adequate internal control system commensurate to its nature of business. Board has laid down adequate policies and procedures such as Licensing Procedure, Purchase Procedures, Engineering & Works Manual, Delegation of Powers etc. for ensuring the orderly and efficient conduct of business. Professional services of Chartered Accountant Firms are availed to conduct Internal Audit of all units/verticals of ITDC. A detailed Internal Audit manual duly approved by the Board of Directors has been circulated to all the units. Internal Auditors monitor and evaluate the efficacy and adequacy of the internal checks & control systems. Quarterly Internal Audit Reports are submitted by Internal Auditors. Corrective actions, wherever required, are taken by the units/verticals. Significant observations, if any, are reported to the Audit Committee. Related Party Transactions There are no materially significant related party transactions reportable under Section 188 of the Companies Act, 2013. The Audit Committee and the Board has approved a policy on materiality of the related party transactions which is posted on the website of the company <http://www.theashokgroup.com/Aboutus/> Investorcorner. Report under Section 22 of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 There are no cases to be reported under Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Corporate Social Responsibility and Sustainable Development The CSR activity undertaken during the financial year 2014-15 was "Clean India", a pilot project at Qutab Minar under the patronage of the Ministry of Tourism and the construction of Toilet Blocks in the remote village area of Jharkhand State. Under "Clean India", ITDC has been entrusted with cleanliness and maintenance of Qutab Minar. ITDC constructed three toilets as under: 1. Balika Vidyalaya, Sindori Village, Daltanganj, Jharkhand 2. Balika Vidyalaya, Pubiidia Village, Jharkhand 3. Balika Vidyalaya, Kuchchu Village, Hundru, Angara Block, Jharkhand The construction of the above said toilet blocks was in progress as on 31.03.2015. The Annual Report on CSR Activities and the Report on the Sustainable Development Activities are annexed as Annexure III Section A and Section B respectively. Risk Management Policy and its implementation ITDC Board in its meeting held on 11th May, 2010 has laid down the Risk Management Policy laying down a sound process for identification and mitigation of risks. In accordance with the policy, the unit head of all strategic divisions have been nominated as Risk Manager and a committee namely Risk Management Compliance Committee (RMCC) presently headed by Director (C&M) has been constituted to oversee and ensure compliances with the Risk Management Policy of the Corporation. Company's specific risks as per the reports submitted by different units/divisions of ITDC are as under : Economic Risk : Dependence on one client Industrial Risk : Threat to market share Personnel Risk : Non-availability of adequate skill sets Political Risk : Threat to property safety Legal Risk : Contractual Risk & tax risk Auditors and Auditor's Report The Comptroller & Auditor General of India have appointed M/s V. K. Verma & Company, Chartered Accountants as Statutory Auditors of the Company and also various Branch Auditors for the year 2014-15 under Section 619(2) of the Companies Act, 1956/134(5) of the Companies Act, 2013. The Management's replies to the comments and observations of the Statutory Auditors on the accounts ( Standalone and the Consolidated) for the year 2014-15 are given in Annexures- IV,V & VI. Secretarial Auditor and Secretarial Audit Report ITDC Board in its meeting held on 20th October, 2014 has appointed M/s P.C. Jain & Co., Company Secretaries as the Secretarial Auditors for conducting the Secretarial Audit as required under Section 204 of the Companies Act, 2013. The Secretarial Audit Report is placed at Annexure-VII and Management replies to the comments and observation of the Secretarial Auditors on the Secretarial Audit Report for the year 2014-15 are given at Annexure-VIII. Extract of Annual Return In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return in the prescribed format is appended as Annexure-IX to the Board's Report. Significant and material orders There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operation in future. Comments of the Comptroller and Auditor General of India The comments of the Comptroller & Auditor General of India, under Section 134(6) of the Companies Act, 2013 on the Accounts of the Company for the financial year ended 31st March, 2015 are set out elsewhere in the Annual Report. Material changes and commitments affecting the financial position of the Company between the end of the Financial year and the date of the Report There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of the report. Acknowledgement i. The Board places on records its sincere appreciation towards the Company's customers/clients for the support and confidence reposed by them in the organization and look forward to the continuance of this relationship in future. ii. The Board also gratefully acknowledges the support and guidance received from various Ministries of the Government of India particularly the Ministry of Tourism, in Company's operations and developmental plans. The Board also wishes to record its deep gratitude to all the members of ITDC family whose enthusiasm, dedication and co-operation, put the Company on the path of progress. For and on behalf of Board of Directors sd/- (Umang Narula) Chairman & Managing Director Date: 14.08.2015 Place: New Delhi |