DIRECTORS" REPORT TO THE MEMBERS OF CHL LIMITED 1. Your Directors have pleasure in presenting the 37th Annual Report of the Company along with the Audited Financial Statements for the Financial Year ended 31st March 2016. 2. ECONOMIC ENVIRONMENT AND BUSINESS REVIEW The Indian tourism and hospitality industry has emerged as one of the key drivers of growth among the service sectors in India. Tourism has now become a significant industry in India. It is an employment generator, a significant source of foreign exchange for the country. Tourism in India is the third largest foreign exchange earner of the country after gems, jewellery and readymade garments. The booming tourism industry has had a cascading effect on the hospitality sector with an increase in the occupancy ratios and average room rates. The long term outlook for the Indian hospitality business continues to be positive, both for the business and leisure segments with the potential for economies growth. The tourism and hospitality sector is among the top 15 sectors in India to attract the highest Foreign Direct Investment (FDI). The Indian Government has also taken several steps to make India a global tourism hub. The Government has initiated 'Project Mausam' under which it has proposed to establish cross cultural linkages and to revive histories maritime cultural and economic ties with 39 Indian Ocean countries. Further, the Government plans to cover 150 countries under e-visa scheme by the end of the year. Recently, the Indian Government has also released a fresh category of visa i.e. the Medical visa (M visa), to encourage medical tourism in India. The hotel industry in India thrives largely due to the growth in tourism and travel. Due to the increase in tourism with rising foreign and domestic tourists, hotel sector is bound to grow. India, after China, is considered as one of the most lucrative hotel markets in the world. The Indian economy has certainly performed creditably compared to most developed and emerging markets of the world in the past years. 3. DIVIDEND Your Company, due to inadequacy of profit, is not in a position to declare Dividend for the Financial Year 2015-16. 4. DIRECTORS Mr. A. K. Malhotra (00676603) and Ms. Kajal Malhotra (01319170J Directors who retire by rotation and being eligible, have offered themselves for re-appointment. The Board recommends their appointments. Mr. Alkesh Tacker (00513286) has been appointed as an Additional Director w.e.f. 15.03.2016 pursuant to Section 149(1) of the Companies Act, 2013. He has rich and vast experience in varied business fields. Pursuant to the Section 161(1) of the Companies Act, 2013, Mr. Alkesh Tacker holds office only upto the date of the forthcoming Annual General Meeting of the Company and is eligible for appointment as an Independent Director. The Board recommends his appointment. Mr. O.P. Bajaj (00570940) and Mr. D.V. Malhotra (00072040) resigned from the Board w.e.f. 16.11.2015. The Board placed on record its appreciation for their valuable services rendered by them. Pursuant to the provisions of Section 203 of the Act, the appointment of Dr. L. K. Malhotra, Chairman & Managing Director, Mr. Luv Malhotra, Joint Managing Director, Mr. Gagan Malhotra, Executive Director, Mr. N. K. Goel, Vice President (Finance)/Chief Financial Officer and Mr. G. J. Varadarajan, Company Secretary, are formalized as the Key Managerial Personnel of the Company. Ail Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and provisions of the Listing Regulations. The profile of the Independent Directors forms part of the Corporate Governance Report. 5. MANAGEMENT DISCUSSION AND ANALYSIS As required under the Listing Regulation with the Stock Exchange, the Management Discussion and Analysis Report is enclosed as a part of the Report. 6. RIGHT ISSUE In the Board Meeting held on 09.02.2016 a "Share Issuance Committee" was formed to augment fund resources. The Committee has decided to bring out a Right Issue in the ratio and at a premium in consultation with the Merchant Banker. 7. SUBSIDIARY COMPANY Our subsidiary, CHL International, a Joint Venture company in Dushanbe, Tajikistan has developed a Five-Star Hotel known as the Sheraton at Dushanbe, the capital of Tajikistan. This project has been financed by the Export Import Bank of India by way of a Term Loan aggregating to USD 32.50 million. The hotel has been in operation since 2015. Shri Narendra Modi, our Honourable Prime Minister visited Dushanbe in July 2015 for High-Level talks with the President of Tajikistan Mr. Emomali Rahmon. The main spheres of talks concerned defence cooperation, connectivity, investment, security, energy and agriculture. Your Chairman & Managing Director Dr. L.K. Malhotra and your Executive Director Mr. Gagan Malhotra were also present to welcome Shri Modi to Dushanbe. The Prime Minister appreciated the efforts undertaken by your company towards the construction and development of the hotel project as a visible sign of Indian investment in Tajikistan. Smt. Sushma Swaraj our erstwhile External Affairs Minister had also visited the hôtel while attending the 13th Annual summit of the Shanghai Cooperation organisations held in Dushanbe. There are no Associate Companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act"). Further there has been no material change in the nature of business of the subsidiary. In terms of proviso to sub section (3) of Section 129 of the Act, the salient features of the financial statement of the subsidiary is set out in the prescribed form AOC-1, which forms part of the Annual Report as Annexure B. Performance and financial position of the subsidiary company is separately given in the Annual Report. 8. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressed of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed there under. A complaint received in the previous year was settled by the Internal Complaints Committee. However, the parties preferred to go to Court. During the financial year 2015-16 no complaint was received on sexual harassment. 9. WHISTLE BLOWER /VIGIL MECHANISM In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for Directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.chl.co.in under investors/ Whistle Blower Policy link. 10. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure- A. 11. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. 12. CONSOLIDATION OF FINANACIAL STATEMENT As stipulated by regulation 33 of the Listing Regulations, the Consolidated Financial Statements have been prepared in accordance with the applicable Accounting Standards. The Audited Consolidated Financial Statements together with the Auditors' Report forms part of the Annual Report. Pursuant to Section 129(3) of the Companies Act, 2013, a statement containing the salient features of the Financial Statements of the subsidiary in the prescribed Form AOC-1 is annexed to this report at Annexure B. The Annual Accounts of the Subsidiary shall be kept for inspection by shareholders in the head office of the holding company and the subsidiary company. 13. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement of Section 134(5) of the Act, and based on the representations received from the management, the directors hereby confirm that: i. in the preparation of the annual accounts for the Financial Year 2015-16, the applicable accounting standards have been followed and there is no material departure; ii. they have selected such accounting policies and applied them 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 at the end of the Financial year and of the profit of the Company for the Financial year; iii. they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act. They confirm that there are adequate Systems and contrais for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv. they have prepared the annual accounts on a going concern basis; v. they have laid down Internal financial controls to be followed by the Company and that such Internal financial controls are adequate and operating properly; and vi. they have devised proper Systems to ensure compliance with the provisions of ail applicable laws and that such Systems were adequate and operating effectively. 14. CORPORATE GOVERNANCE Your Company has taken adequate steps to adhere ail the stipulations laid down in the Listing Regulation. A report on the Corporate Governance along with certificate from Practicing Company Secretary confirming the Compliance is included as part of the report. 15. LISTING WITH STOCK EXCHANGE The Company confirms that it has paid the Annual Listing Fee for the year 2016-17 to Bombay Stock Exchange Limited (BSE), where the Company's Shares are listed. 16. PARTICULARS OF EMPLOYEES Employees of the Company drawing remuneration above the limits specified under Section 197(12) of the Companies Act, 2013 read rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below: 17. DEMATERIALISATION OF SHARES The total paid up equity share capital of the Company is Rs. 109,636,580 comprising of 5,48,18,290 equity shares of Rs. 21- each. 5,00,43,870 (91.29%) Equity Shares of the Company stand dematerialized and balance 47,74,420 (8.71 %) equity shares are still in physical form. 18. AUDITORS' REPORT Auditors' observations are suitably explained in the Notes to the Accounts and are self explanatory. 19. AUDITORS Statutory Auditors Pursuant to the provisions of Section 139 of the Act and the rules framed thereunder, M/s G Rai & Co. Chartered Accountants, were appointed as Statutory Auditors of the Company from the conclusion of the 35th Annual General Meeting (AGM) of the Company held on 29th September, 2014 till the conclusion of the 38th AGM to be held in the year 2017, subject to ratification of their appointment at every AGM. M/s G Rai & Co., have expressed their willingness to their confirmation of appointment as the Statutory Auditors of the Company and has furnished a certificate of their eligibility and consent under Section 141 of the Companies Act, 2013 and the Rules framed there under. In terms of the Listing Agreement/Regulations the Auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the ICAI. His appointment is proposed for ratification in the ensuing Annual General Meeting. Internal Auditors M/s Gulvardhan Malik & Co., Chartered Accountants have been conducting periodic Internal Audit of ail the operations of the Company. Internal Audit Reports are regularly placed before the Audit Committee for their review and for recommendation to the Board. Secretarial Auditors According to the provision of section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s A. Chadha & Associates., Company Secretaries is continuing as Secretarial Auditor of the Company. 20. REMUNERATION RATIO OF THE DIRECTORS / KEY MANAGERIAL PERSONNEL (KMP) / EMPLOYEES: The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Companies (Particulars of Employees) Rules, 1975, in respect of employees of the Company and Directors is furnished hereunder: 21. INTERNAL CONTROL The information about Internal controls is set out in the Management Discussion $ Analysis report which is attached and forms part of this Report. 22. RISK MANAGEMENT The Risk Management is overseen by the Audit Committee of the Company on a continuous basis. The Committee oversees Company's process and policies for determining risk tolerance and review management's measurement and comparison of overall risk tolerance to established levels. Major risks identifiee) by the businesses and functions are systematically addressed through mitigating actions on a continuous basis. 23. DEPOSIT FROM PUBLIC The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet. 24. CORPORATE SOCIAL RESPONSIBILITY (CSR) As per section 135 and Schedule VII of the Companies Act, 2013, the Company is not required to constitute a Corporate Social Responsibility Committee and formulate policy as it does not fall within purview of Section 135(1) of the Companies Act, 2013. 25. RELATED PARTY TRANSACTIONS During the year under review, there is no related party transaction covered under Section 188(1) of the Companies Act, 2013. Other Related party transactions that were entered during the financial year were on an arm's length basis and were in the ordinary course of business. There were no materially significant related party transactions with the Company's Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act, 2013, the Rules there under and the Listing Agreement. This Policy was approved by the Board and has been uploaded on the website of the Company at www.chl.co.in under Related Party Policy link. 26. BOARD EVALUATION The performance evaluation of the Board, its Committees and Individual Directors was conducted and the same was based on questionnaire and feedback from ail the Directors on the Board as a whole, Committees and self-evaluation. Directors, who were designated, held separate discussions with each of the Directors of the Company and obtained their feedback on overall Board effectiveness as well as each of the other Directors. Based on the questionnaire and feedback, the performance of every Director was evaluated in the meeting of the Nomination and Remuneration Committee (NRC). The Meeting of NRC also reviewed performance of the Managing Director (qualitative). A separate meeting of the Independent Directors ("Annual ID meeting") was convened, which reviewed the performance of the Board (as a whole), the Non-Independent Directors and the Chairman & Managing Director. Post the Annual ID Meeting, the collective feedback of each of the Independent Directors was discussed by the Chairman of the NRC with the Board's Chairman covering performance of the Board as a whole; performance of the Non-Independent Directors and performance of the Board Chairman. Some of the key criteria for performance evaluation are as follows – Performance evaluation of Directors Attendance at Board or Committee meetings. Contribution at Board or Committee meetings. Guidance/support to management outside Board/Committee meetings. Performance evaluation of Board and Committees Degree of fulfillment of Key responsibilities Board structure and composition Establishment and delineation of responsibilities to committees. Effectiveness of Board processes, information and functioning. Board culture and dynamics. Quality of relationship between Board and Management. Efficacy of communication with external stakeholders. 27. PARTICULARS AS PER SECTION 134(4)(m) OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES 2014 Conservation of Energy Energy conservation continues to receive priority attention at ail levels. AH efforts are made to conserve and optimize use of energy with continuous monitoring, improvement in maintenance and distribution Systems and through improved operational techniques. To give thrust on energy conservation, "optimum utilization of natural light", is focused on and energy saving lighting solution such as light emitting diodes and solar panel and devices such as automated controls and sensors are fitted in wherever necessary and feasible. Technology Absorption The Company being in the hospitality industry, particulars on technological absorption or expenditure on research and development are not applicable. Foreign Exchange Earnings and Outgo During the year under review, your Company has eared Rs. 1628.31 Lacs Foreign Exchange (previous year Rs. 1446.46 Lacs) and used foreign exchange to the extent of Rs. 273.94 Lacs (previous year Rs. 334.80 Lacs). 28. ACKNOWLEDGEMENTS Your Directors wish to convey their appreciation to the business associates for their support and contribution during the year. Your Directors would also like to thank Central Government and State Government especially Department of Tourism, employees, shareholders, customers, suppliers, alliance partners and bankers for the continues support given by them to the Company and their confidence reposed in the management and the Company. For and on behalf of the Board Dr. L. K. Malhotra Chairman & Managing Director Place: New Delhi Date: 27th May, 2016 |