DIRECTORS' REPORT TO THE MEMBERS, Your Directors have pleasure in presenting the 9th Annual Report of the Company together with the audited financial statements of the Company for the financial year ended 31st March, 2016. TRANSFER TO RESERVES During the financial year 2015-16 an amount of Rs. 150 lacs (Rs. 150 lacs last year) has been transferred to General Reserve out of amount available for appropriations. DIVIDEND The Board of Directors are pleased to recommend a dividend @ 20%, i.e. Rs. 2/- per equity share (previous year Rs. 2/- per equity share) on 1,14,40,585 equity shares of Rs. 10/- each for the year ended 31st March, 2016. The total cost to the Company on account of dividend payment will be Rs. 275.65 lacs including dividend distribution tax of Rs. 46.84 lacs resulting in a payout of 33.65 % of the standalone profits after tax of the Company. BUSINESS OVERVIEW AND OPERATING PERFORMANCE During the financial year 2015-16, Hyatt Regency Kolkata (the hotel) has been successful in securing major project based business and could sustain its leading position in wedding related business in the city. Major achievement has been in the field of medical conferences held during the year. Further your hotel could secure long staying projects business from the service sector, repeated relating business of Indian Super League (ISL) and outdoor catering business New hotels opening in the city had a major impact on the pricing policies of your hotel as their pricing strategy in the beginning was very aggressive and put all the existing hotels in Kolkata under pressure. Considering the influx in supply which your Company is anticipating in the year 2016-17, adding value to our customer experience is becoming crucial. This is measured by the hotel online surveys, where the hotel could achieve in 2015-16 at 47.8% in Net Promoter Score. Satisfaction of the hotel's customers was the satisfaction index for the hotel which was at a very high rate with 4.69% for two years measured by Gallup and also for the "Great places to work" resulted in Hyatt Regency, Kolkata achieving together with Hyatt India a ranking under the top 10. There were no material changes and commitments affecting financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements and this report relate. However, the Company has repaid in full the short term loan of Rs. 165 crores to ICICI Bank Ltd. and accordingly as on the date of this Report, there is no outstanding loan of the Company. SUBSIDIARY COMPANIES The Company has two subsidiaries, namely, GJS Hotels Limited, a wholly owned and a material non-listed Indian Subsidiary, Regency Convention Centre and Hotels Limited and one step-down subsidiary, namely Robust Hotels Private Limited. There has been no significant developments in the matters concerning the subsidiaries during the year under review. With reference to GJS Hotels Limited, your Board is exploring various options to build a luxury 5 star deluxe hotel at Bhubaneswar, Odisha. Present plot of land at Bhubaneswar is not suitable for such hotel. Feasibility study findings are being reviewed to explore various possibilities. During the year, the loan amount invested in Robust Hotels Private Limited, Chennai through GJS Hotels Limited was repaid in full out of the redemption proceeds of the mutual funds of the Company. With reference to Regency Convention Centre and Hotels Limited, during the year, your subsidiary has entered into an agreement with Mumbai International Airport Pvt. Limited (MIAL) for alternate pocket of land admeasuring 9775.95 sq. mtrs. at CSI Airport, Mumbai. Your Board is hopeful of a positive outcome. Robust Hotels Private Limited (Robust) at Chennai has shown improved performance during the year under review. Revenue has increased to Rs.95.07 crores as against Rs.89.34 crores in the previous year. Room occupancy has increased to 67% as compared 59% in the previous year. EBDITA has increased to Rs. 25.18 crores from Rs.21.50 crores. Robust could meet the principal re-payment of the lender amounting to Rs.4.70 crores out of internal accruals during the year. Robust has for the first time since commencing business made cash profit (PBDT) of Rs.2.92 crores. Your directors are hopeful of better performance of Robust in the current financial year also. In terms of proviso to sub section (3) of Section 129 of the Companies Act, 2013, a report on the performance and financial position of each of the subsidiaries of the Company is annexed herewith marked as Annexure I to this Report. None of your subsidiary company has ceased to be subsidiaries during the year and no company has become the new subsidiary company during the financial year. AMALGAMATION In respect of the Scheme of Amalgamation (the Scheme) of Forex Finance Private Limited with your Company pursuant to the Sections 391-394 of the Companies Act, 1956, the Scheme is pending before the High Court at Calcutta for sanction. Your Board is hopeful that during the current financial year 2016-17, the Scheme would be sanctioned by the Court. AUDITORS & AUDITORS' REPORT M/s S.S. Kothari Mehta & Co., Chartered Accountants, Kolkata, (Firm Registration No. 000756N) was appointed as Statutory Auditors of the Company at the Annual General Meeting held on 30th July, 2014 for 3 consecutive years subject to ratification in every annual general meeting by way of passing of an ordinary resolution. Their appointment was ratified at the Annual General Meeting held on 31st July, 2015. Therefore, ratification of appointment of Statutory Auditors is being sought from the members of the Company at the ensuing Annual General Meeting. INTERNAL AUDITOR M/s KSMN & Co., Chartered Accountants, has expressed its unwillingness to be appointed as an Internal Auditor of the Company for the financial year 2016-17. Your Board is looking for new internal auditors for the financial year 2016-17. Your Board appreciated the service rendered by M/s. KSMN & Co., Chartered Accountants as the internal auditor of the Company during its tenure. SECRETARIAL AUDITOR The Board has appointed M/s. D. Raut & Associates, Practicing Company Secretaries, to conduct Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2015-16. The Secretarial Audit Report for the financial year ended 31st March, 2016 is annexed herewith marked as Annexure II to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. DIRECTORS AND KEY MANAGERIAL PERSONNEL Mr. Radhe Shyam Saraf (DIN No. 00017962), Director retires by rotation and being eligible, offers himself for reappointment at the ensuing Annual General Meeting. No Director or Key Managerial Personnel was appointed or resigned during this year except Ms. Rita Bhimani whose appointment was regularised at Annual General Meeting held on 31st July, 2015 as an Independent Director. Details of Directors seeking re-appointment as required under Regulation 36(3) of SEBI (Listing Obligations & Disclosure Requirements) Regulation, 2015 are given in the notice calling Annual General Meeting of the Company. The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013. BOARD EVALUATION AND NOMINATION & REMUNERATION POLICY During the year, pursuant to Section 134(3)(p), Schedule IV (VIII) of the Companies Act, 2013 and Regulation 17(10) and 19(4) of the Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations, 2015 (Listing Regulations) the performance evaluation of Directors, Board and Committee was done at three levels by the Independent Directors at a separate meeting, Nomination and Remuneration Committee and Board. Firstly, the independent directors of the Company at their meeting held on 10th March, 2016, had already carried out the evaluation of performance of the non-independent directors, the Board and the Chairman of the Company as per the prescribed criteria adopted by the Board at its meeting held on 30th October, 2015. Secondly, the Nomination and Remuneration Committee carried out evaluations, as appropriate and whenever required as per the prescribed criteria adopted by the Board. Lastly, the Board of Directors has carried out an annual evaluation of performance of independent directors, its own, the Committees and individual directors based on the evaluation marking by the Directors. The performance was evaluated by the Board on the basis of the criteria such as the composition of Board and Committee and structure, effectiveness of Board and committee processes, information and functioning. The performance was considered satisfactory. The Policy on performance evaluation of Directors can be accessed on the Company's website: www.ahleast.com. The Nomination & Remuneration Policy of the Company is annexed herewith and marked as Annexure III to this Report. BOARD DIVERSITY A diverse Board enables efficient functioning through differences in perspective and skill, and also fosters differentiated thought processes at the back of varied industrial and management expertise, gender, knowledge and geographical background. Your Board recognises the importance of a diverse composition and has adopted a Board Diversity Policy which sets out the approach to diversity. The Board diversity policy is available on our website www.ahleast.com DIRECTORS' RESPONSIBILITY STATEMENT The Board of Directors acknowledges the responsibility for ensuring compliance with the provisions of Sections 134(3)(c) and 134(5) of the Companies Act, 2013 in the preparation of the annual accounts for the financial year ended 31st March, 2016 and state that: a) in the preparation of the annual accounts for the year ended 31st March, 2016, the applicable accounting standards have been followed along with proper explanation relating to materials departures, if any; b) the Directors 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 under review and of the profit or loss of the Company for that period; c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) the Directors have prepared the annual accounts on a going concern basis; e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information required pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, pertaining to conservation of energy, technology absorption and foreign exchanges earning and outgo to the extent possible in the opinion of your Directors, is annexed hereto being Annexure IV and forming part of this Report. The Company's earnings and outgo in foreign exchange for the year under review were Rs. 2489.96 lacs/Rs. 987.38 lacs respectively. PARTICULARS OF EMPLOYEES As per Rules 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided as Annexure V and forming part of this Report. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES There were no contracts or arrangements entered into by the Company in accordance with the Section 188 of the Companies Act, 2013 and no material related party transactions in terms of Regulation 23 of the Listing Regulations. All related party transactions that were entered by the Company during the financial year were in the ordinary course of business and on arm's length basis. All related party transactions are presented to the Audit Committee and the Board for approval. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board can be accessed on the Company's website : www.ahleast.com The details of the transactions with related parties are provided in the accompanying financial statements. MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE Pursuant to Schedule V of Regulation 34(3) of the Listing Regulations, Report on Management Discussion and Analysis as Annexure- VI and Corporate Governance as Annexure-VII and Compliance Certificate on Corporate Governance are annexed to this Report. CORPORATE SOCIAL RESPONSIBILITY (CSR) As required under Section 135 of the Companies Act, 2013, during the financial year 2015-16, your Company has spent Rs. 50 lacs being 2% of average net profit of the Company made during three (3) immediately preceding financial years on the Superspeciality Hospital Project at Dehradun, Uttarakhand undertaken by a registered society. The Annual Report on CSR activities is annexed and marked as Annexure -VIII to this report. The same is also displayed on the Company's website : www.ahleast.com Besides the above, Hyatt Regency Kolkata (the hotel) has also been involved in many CSR activities under our "Hyatt Thrive" umbrella. The focus area during the year under review has been the immediate community area of your hotel and Kathmandu, Nepal for the earthquake. Also the hotel is continuously involved with "Ek Tara", a girls education and women empowerment initiative, where your hotel explain and offer some of the women the "Hunar se rozgar" program to get an introduction to hospitality and for possible future employment. Further your hotel has organized a blood donation Camp with the Lions Club and also helped the start of a new slum school in Salt Lake "Hope Center" run by an Australian couple and provided support as and when required. Also during the Christmas time, the hotel first time supported the 'Jungle Crows", a NGO working with children and teenagers teaching them Rugby, a team sport which educates social skills and confidence. As a part of community service, the hotel continues to support "Tiljala Shed" with "Clothes for a Cause", in collaboration with its corporate clients. INTERNAL FINANCIAL CONTROL POLICY AND ITS ADEQUACY The Board has adopted an Internal Financial Control Policy to be followed by the Company and such policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. The Audit Committee evaluates the internal financial control system periodically. The observation and comments of the Audit Committee are placed before the Board. RISK MANAGEMENT Your Board reviews and observes risk management and minimization procedures followed by the Company which are adequate and operating effectively. Although risk management policy and risk management committee is not applicable to your Company under the purview of the law, the system established in the Company to identify, assess, manage, monitor and mitigate risk and control is considered sufficient and adequate. Risk Management is an integral part of the Company's business process. In your Company, risks are carefully mapped and a risk management framework is involved. DISCLOSURES: A) EXTRACT OF ANNUAL RETURN Extract of Annual Return of the Company is annexed herewith as Annexure-IX to this Report. B) MEETINGS OF THE BOARD During the financial year 2015-16, the Board of Directors had four (4) meetings. These were held on 28th May, 2015, 31st July, 2015, 30th October, 2015 and 4th February, 2016. C) COMPOSITION OF AUDIT COMMITTEE The Audit Committee comprises of three (3) Directors amongst which two (2) are Independent Non-Executive Directors, namely Mr. A. C. Chakrabortti and Mr. Rama Shankar Jhawar and one (1) is Joint Managing Director namely Mr. Umesh Saraf. All the recommendations made by the Audit Committee were accepted by the Board. D) VIGIL MACHANISM/WHISTLE BLOWER POLICY Pursuant to Section 177 of the Companies Act, 2013 read with Regulation 22 of the Listing Regulations, the Board of Directors at its meeting held on 30th October, 2015 has adopted a vigil mechanism/whistle blower policy of the Company. The policy provides a framework for directors and employees to report genuine concerns about unethical behavior, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. Protected disclosures can be made by a whistle blower through an email or to the Chairman of the Audit Committee. The vigil mechanism/whistle blower policy can be accessed on the Company's website : www.ahleast.com E) DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has zero tolerance towards sexual harassment at workplace and has an Internal Complaints Committee to consider and redress complaints of sexual harassment & also adopted a policy on prevention, prohibition and redressal 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. During the financial year 2015-16, the Company has received no complaints on sexual harassment. F) PARTICULARS OF LOANS GIVEN, INVESTMENT MADE, GUARANTEES GIVEN AND SECURITY PROVIDED The particulars of loans, guarantees and investments have been disclosed in the financial statements. G) PARTICULARS OF REMUNERATION Disclosures pertaining to managerial remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided as Annexure-X to this report. H) GENERAL Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the financial year 2015-16 under review: 1. Details relating to deposits covered under Chapter V of the Companies Act, 2013. 2. Issue of equity shares with differential rights as to dividend, voting or otherwise. 3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme. 4. The Joint Managing Directors of the Company did not receive any remuneration or commission from any of its subsidiaries. 5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impacted the going concern status and Company's operations in future. ACKNOWLEDGEMENT Your Directors wish to place on record their appreciation towards all associates including customers, the Government of India, Government of West Bengal, Government Agencies, Hyatt Hotels Corporation, USA, Bankers, Suppliers, Shareholders, Employees and others who have reposed their confidence in the Company. For and on behalf of the Board of Directors Umesh Saraf Joint Managing Director Rama Shankar Jhawar Director Place: Kolkata Date : 24th May 2016 |