1.  Nature of Operations:
 
 Bharat Hotels Limited, (the Company) is incorporated and engaged in
 the business of operating hotels. The company has properties in nine
 locations (including three under construction) and plans to open others
 either directly or through its subsidiaries and joint ventures.
 
 2.  Segmental Information
 
 Business segments:
 
 The Company operates primarily in the segment of Hotels operations
 (representing sale of rooms and apartments, food and beverages, banquet
 rentals and other services relating to hotel operations including
 telecommunication, laundry, business centre, health centre, etc.),
 Aircraft charter operations along with minor segments (representing
 renting of premises). Common allocable costs are allocated to each
 segment according to the relative contribution of each segment to the
 total common costs. All other costs and expenses are reflected in the
 corporate segment. Segments have been identified and reported based on
 the nature of the services, the risks and returns, the organization
 structure and the internal financial reporting system.
 
 3.  Related Party Disclosures:
 
 a) Name of related parties and their relationship:
 
 Subsidiary companies
 
 - Jyoti Limited
 
 - Udaipur Hotels Limited
 
 - Apollo Zipper India Limited
 
 - Prime Cellular Limited
 
 - Prima Buildwell Private Limited
 
 - Bharat Hotels (Thailand) Company Limited
 
 Key managerial personnel
 
 - Mrs. Jyotsna Suri, Chairperson cum Managing Director
 
 Relatives of the key managerial personnel
 
 - Ms. Deeksha Suri, daughter of Mrs. Jyotsna Suri
 
 - Ms. Divya Suri Singh, daughter of Mrs. Jyotsna Suri
 
 - Mr. Keshav Suri, son of Mrs. Jyotsna Suri
 
 Enterprises owned or significantly influenced by key management
 personnel or their relatives
 
 - Deeksha Holding Limited (DHL)
 - Deeksha Human Resource Initiatives Limited (DHRIL)
 - Jyotsna Holding Private Limited
 - Mercantile Capital & Financial Services Private Limited
 - Prima Telecom Limited
 - Prima Realtors Private Limited
 - Premium Farm Fresh Produce Limited
 - Premium Exports Limited
 - Responsible Builders Private Limited
 - Rohan Motors Limited
 - Special Protection Services Private Limited
 - Subros Limited
 - Premium Holdings Limited
 - Cavern Hotels and Resort FZCO.
 - FIBCOM India Limited
 
 b) Loans made to the subsidiaries are on mutually agreed terms.
 
 c) Transaction with above parties for sale, purchase of goods and fixed
 assets, rendering or availing of services are in ordinary course of
 business.
 
 d) The term loan (as discussed under Schedule 3) from banks availed by
 the company has been secured by way of a personal guarantee of
 Directors and corporate guarantee of Deeksha Holding Limited.
 
 e) The guarantees amounting to Rs.75,084,199 (previous year Rs.
 67,505,917) given by the Company for the related parties are given in
 normal course of business and related parties have provided counter
 guarantees for such guarantees.
 
 f) Udaipur Hotels Limited and Apollo Zipper India Limited have pledged
 their assets for loan taken by Bharat Hotels Limited.
 
 4.  Leases
 
 In case of assets taken on non cancellable lease
 
 Operating Lease:
 
 The Company has entered into Commercial leases for office premises and
 residence of its employees. The leases have a life of 1 year to 3
 years. There is no escalation clause in the lease agreements for the
 primary lease period. There are no restrictions imposed by the lease
 arrangement, and there are no sub-leases.
 
 The hotel premises at Bengaluru are on an operating lease. The lease
 rent is payable at 16.5 % of turnover (previous year: 16.5%) subject to
 a minimum payment which is increased by 20% after every 5 years. The
 lease term is for 30 years and renewable for further 30 years at the
 option of the Company. There are no restrictions imposed by lease
 arrangements. There are no subleases.
 
 5.  Contingent Liabilities not provided for:
 
 a) Income Tax matters:
 
 (i) While passing the orders for the income tax assessments, for
 Assessment year 1988-89 and thereafter, the Assessing Officer has
 enhanced the taxes payable on account of interest free refundable
 deposits for World Trade Centre and World Trade Tower by treating these
 as taxable receipts. This matter has been decided in favour of the
 Company by CIT (Appeals) and Income Tax Appellate Tribunal (ITAT).
 Income tax department has filed appeals against the orders in the High
 Court of Delhi.
 
 Total amount disputed (excluding interest and penalties) in the matter
 aggregates to Rs. 173,133,092 (previous year Rs. 173,133,092).
 
 (ii) For Assessment Years 1988-89 to 2002-03, the Assessing Officer has
 disallowed claims made by the Company in tax return relating to
 depreciation on increase in cost of assets due to exchange fluctuation,
 depreciation on foreign cars (except for AY 1999-00 and 2002-03) and
 plumbing and sanitary items, depreciation on Commercial building viz.
 World Trade Centre and World Trade Tower; treating loan received as
 deemed dividend and disallowance on late deposit of PF/ESI (except for
 AY 1999-00 and 2002-03). These matters have been decided in favour of
 the Company by CIT (Appeals) and the ITAT. The Income tax department
 has filed appeals against the orders in the High Court of Delhi.
 
 Total amount disputed (excluding interest and penalties) in the matter
 aggregates to Rs. 590,074,788 (Previous year Rs. 591,564,179).
 
 (iii) For the Assessment Year 2002-03, the Assessing Officer has
 disallowed commission paid for bank guarantees. CIT (Appeals) and the
 ITAT have upheld the order of the Assessing Officer. The Company has
 filed an appeal in the High Court of Delhi.
 
 Total amount disputed (excluding penal interest and penalties) in the
 matter is Rs. 2,034,900 (Previous year Rs. 2,034,900).
 
 (iv) For the assessment years 2003-04 to 2006-07, the Assessing Officer
 has disallowed certain claims i.e.  depreciation on Commercial
 buildings viz. World Trade Centre and World Trade Tower, treating loan
 as deemed dividend, disallowance on late deposit of PF/ESI, addition in
 respect of interest paid on loan, depreciation on foreign cars,
 addition on account of expenditure incurred for projects under
 construction, Commission paid on Bank Guarantees. Matters are pending
 at the level of ITAT
 
 Total amount disputed (excluding interest and penalties) in the matter
 aggregates to Rs. 27,291,182 (previous year Rs. 41,043,040).
 
 (v) For the assessment year 2007-08, the Assessing Officer has
 disallowed claim of depreciation on commercial buildings viz. World
 Trade Centre and World Trade Tower. The Company has filed appeal before
 the Commissioner of Income tax (Appeals) which is pending as on date.
 
 b) Guarantees
 
 c) Certain employees have filed cases in the courts/ legal forums
 against termination/ suspension and have sought relief. The liability,
 if any, with respect to these claims is not currently ascertainable and
 in the opinion of the management, would not have material effect on
 these financial statements.
 
 d) The Employees State Insurance Corporation, under section 85-B of
 the Employee State Insurance Act, 1948 had claimed damages from the
 Company for non-payment of the amount due in respect of contribution
 for the Airport Restaurant, Bengaluru, amounting to Rs. 84,109
 (previous year Rs. 84,109). The ESI Court has upheld the contention of
 the Company and repealed the claim. The ESI Corporation has filed an
 appeal before the Honble High Court of Bengaluru and the matter is
 pending for admission.
 
 e) Stamp duty and registration fee thereon on a property of the Company
 is pending final assessment before Revenue Commissioner, Madhya
 Pradesh. The assessing officer i.e. the District Collector, has
 assessed the duty & fee being Rs 18,928,453. Management has assessed
 the liability not to exceed Rs. 18,928,453 and made full provision
 there against and considers, based on expert analysis, that no further
 provision would be necessary at this stage.
 
 f) Amounts payable to a vendor are accounted for to the extent valid
 claims have been received together with underlying supporting
 documents, remaining unsupported claims, in managements view, do not
 require any provision at this stage.
 
 g) Shares of Bharat Hotels (Thailand) Company Limited held as
 investments partly paid and uncalled liability on such investment is
 Baht 323,958,000 (equivalent to Rs. 479,814,194) (previous year Nil).
 
 h) Demand by Custom Authorities against import of aircraft for Rs.
 66,805,372 (previous year Nil).
 
 i) The Company has entered into an arrangement with a vendor for
 purchase of an aircraft for Rs. 1,350,175,000 for which it has paid
 advance equivalent to 10% of the above value. Subsequent to this, in
 view of the present financial and economic crisis being experienced all
 over the world, the Company is negotiating for deferment of the
 existing payment terms and delivery schedule of the above arrangement.
 While the Company was negotiating it has also received a written notice
 of levy of liquidated damages equivalent to 15% of the value of the
 aircraft in terms of the above arrangement. It simultaneously received
 proposal for renegotiation of existing terms from the vendor. The
 Company is confident that it shall be able to resolve the matter and
 shall not be required to pay any liquidated damages.
 
 6.  Capital Commitments:
 
 Estimated amount of contracts remaining to be executed and not provided
 for aggregates to Rs. 1,977,447,071 (previous year Rs. 471,592,335).
 
 7. Investments:
 
 a) The audited financial statements of the wholly owned subsidiary of
 the Company, Jyoti Limited, having operations at Srinagar (Jammu &
 Kashmir) shows an accumulated loss of Rs. 37,453,105 as on March
 31,2009, which is more than the paid-up share capital of Rs. 6,300,400,
 resulting in complete erosion of net worth. The Company has an
 outstanding loan recoverable of Rs. 40,903,127 from the subsidiary.
 Considering the long term nature of the investment of Rs. 310,789,478,
 and value of assets held by Jyoti Limited, the Board of Directors of
 the Company consider that there is no diminution, other than temporary,
 in the value of investment and accordingly, no provision in these
 financial statements is considered necessary at present.
 
 b) The audited financial statements of the wholly owned subsidiary of
 the Company, Udaipur Hotels Limited, show accumulated losses of Rs.
 69,405,430 which is more than the shareholder funds of Rs. 41,669,690
 resulting in negative net worth as at March 31,2009. The Company has
 investments of Rs. 63,757,829 and loan of Rs. 97,219,422 as at March
 31,2009. Based on the forecasts of profitability of the operations and
 the value of assets held by Udaipur Hotels Limited, the Board of
 Directors of the Company consider that there is no diminution, other
 than temporary, in the value of investment and accordingly, no
 provision in these financial statements is considered necessary at
 present.
 
 c) The Company holds 90% of the equity capital of Apollo Zipper India
 Ltd (AZIL) for Rs. 521,308,409 and has provided a loan of Rs.
 536,697,857. AZIL has been vested with the assets of The Lalit Great
 Eastern Hotel in Kolkata. As at March 31,2009, AZIL has accumulated
 losses of Rs. 25,119,641, which is more than the paid-up share capital
 of Rs. 8,087,100. AZIL is expected to commence its operations next year
 and is currently engaged in the process of complete renovation /
 re-construction of the property in
 
 Kolkata. Considering the long term planning and prospects and value of
 assets held by the Subsidiary, the Board of Directors of the Company
 consider that there is no diminution, other than temporary, in the
 value of investment and accordingly, no provision in these financial
 statements is considered necessary at present.
 
 d) The Company has an investment of Rs. 398,400,000 and has extended
 Rs. 240,037,501 as loan to Prime Cellular Limited, a 99.6% subsidiary
 as at March 31, 2009. Considering Prime Cellular Limited has entered in
 to a Joint Venture for setting up a hotel property at Chandigarh,
 management is confident (accumulated losses being Rs.9,485,768) that
 diminution in value, if any, is temporary and accordingly, no provision
 is considered necessary at this stage.
 
 8.  a) The Company has taken land on license of 99 years from New
 Delhi Municipal Corporation with effect
 from March 11,1981. The Company has constructed Hotel and Commercial
 towers on the abovementioned land. The Company is paying annual license
 fee of Rs. 14,500,000 to the NDMC which is subject to revision after
 every 33 years. The Company has further sub- licensed the commercial
 towers and taken deposits (shown as deferred payment liabilities) from
 the tenants in World Trade Centre and World Trade Tower at New Delhi.
 These deposits amounting to Rs. 486,119,022 (Previousyear Rs.
 486,119,022) are refundable at the end of the license period which
 coincides with the end of the license period of Companys agreement
 with New Delhi Municipal Corporation and are due to be paid on March
 10,2080.
 
 b) Deferred payment liability amounting to Rs. 10,358,745 (Previous
 year Rs. Nil) includes provision for lease rent for extended moratorium
 period granted to Company in respect of lease of land for Bekal unit.
 
 9.  The Company had entered into a land lease agreement with New Okhla
 Industrial Development Authority (NOIDA) for a period of 90 years
 w.e.f. January 1,2007. The Company paid an initial premium amounting to
 Rs. 195,360,000 and incurred stamp duty and registration charges on
 land amounting to Rs. 20,793,650. The Secretary of the Industrial
 Development Authority, U.P. and the Chief Executive Officer, NOIDA
 subsequently issued orders dated August 1,2007 and August 3,2007,
 canceling allotment of the said land. The Company filed a writ petition
 in the Allahabad High Court against these orders and the High Court in
 its order dated May 13,2008 has quashed both the orders and has
 remanded back the matter to the State Government for taking a fresh
 decision in the case. The Company has now filed a special leave
 petition before the Honble Supreme Court of India challenging the
 above order of the High Court, which is pending before it for disposal.
 The cost of said land has been capitalized in these financial
 statements and the advance lease rent paid relating to the land of
 lease agreement has been accounted for considering that the lease is
 valid on the date of signing these financial statements.
 
 10.  The Company had acquired 90% of the equity capital of Apollo
 Zipper India Ltd. (AZIL) w.e.f. November 30, 2005. AZIL has been vested
 with the assets of The Great Eastern Hotel Kolkata. The Company vide
 non- disposal agreement dated November 30,2005 entered with the State
 Government of West Bengal in respect of investment in AZIL, cannot
 transfer the legal or beneficial ownership or any other rights and
 obligations for a period of three years. For this purpose the Company
 had pledged its investment of Rs. 521,308,409 in AZIL with State
 Government of West Bengal. Since the completion of the
 renovation/refurbishment of The Great Eastern Hotel Kolkata is still
 not complete. The Company is in process of extending the pledge of
 shares of AZIL to the State Government of West Bengal.
 
 11.  The Company during the year has been allotted additional land
 adjacent to the existing land in Ahmedabad.  The management is of the
 view, that with such allotment, it is in position to commence
 construction activity for its project. In view of this, the management
 does not anticipate any problem in obtaining revised timelines from the
 State Government of Gujarat for completion of the project.
 
 12.  The Company appointed Government Registered Estate Valuer to
 assess the fair market value of the land and building at Mumbai unit
 and accordingly revalued the book value of Land and building to Rs.
 2,338,256,110 and Rs. 1,632,130,500 compared to original value of Rs.
 307,820,000 and 1,194,299,191 respectively as at March 31,2009. This
 has resulted in creation of revaluation reserved aggregating Rs.
 2,468,267,419.
 
 13.  Previous year comparatives
 
 Previous year figures have been regrouped wherever necessary to conform
 to this years classification.