Hotel Leela Venture

Dear Colleagues,
 
 Companies across the globe have entered a period of economic
 uncertainty following the financial crisis in the latter part of 2008,
 and we have witnessed events that posed real challenges and threats
 which will have ramifications on the travel patterns of corporations
 and individuals for years to come.
 
 I believe that India has the fortitude to withstand the turbulence and
 shall become stronger in the process. India is poised for growth in the
 long term and the results of the recent elections shall set a new era
 of hope and change in our country. The much needed airport
 infrastructure will soon be in place with new airports at Bangalore and
 Hyderabad, and the commissioning of the new terminals at Mumbai and
 Delhi expected soon. To alleviate the shortage of an estimated 150,000
 guestrooms in India which has limited the foreign tourist arrivals to
 just 5.30 million in 2008, this grant of infrastructure status has
 been sought for a long time by the hotel industry from the Government.
 It is expected that a grant of such status would provide the necessary
 incentives for the increase in guestroom capacity in the country.
 
 I am pleased to inform you of the encouraging results in the fiscal
 year 2008-2009.
 
 History has proven that for men of resilience, challenging times can be
 times of opportunity.  Hotel Leelaventure Ltd.  has a philosophy of
 carefully analyzing market challenges and implementing strict fiscal
 control and smart planning to keep the fluctuations in the short term
 cycles in perspective.
 
 Our emphasis is towards the long term. Our development goal is to
 expand pan India with the opening of Leela properties in Chennai and
 New Delhi in 2010, followed by Agra, Hyderabad and Pune. Challenge by
 the competition in the internatior tourism arena, we increased our
 market penetration with strategic marketing alliance partners; and we
 strengthened our sales, marketing and public relations activities in
 our global source markets.
 
 We entered North India in 2009 wi the opening of The Leela Gurgaon
 Hotel and Residences in January, of first hotel management contract
 with The Ambience Group; and we opened The I .eela Palace Udaipur i
 April 2009, our first hotel in the Indias golden triangle.
 
 The Leelas sales and marketing activities went into high gear in
 response to the economic downtur and the Nov. 26 tragedy. We adaptec
 market penetration strategies to ensure minimal loss of business an
 aggressively drove dynamic pricing incentives. We also converted to a
 single currency tariff system to me the long standing demand of
 international travelers.
 
 Weve strengthened our marketing alliance partnerships with our newt
 partner Preferred Hotel Group which increased our market penetration in
 the LSA and S. L. Asia in addition to Kempinski (Hotelier since 1897)
 and Global Hotel Alliance.
 
 Our first international image advertising campaign-Friends at The
 Leela - was launched in our primary international markets and this
 positioned The Leela as one of the finest hotel groups in India.
 
 Strategic PR activities resulted in increased awareness ot The Leelas
 dynamic growth and our corporate social responsibilit\ activities with
 high profile media worldwide. We were recognized with various accolades
 including The Best li.ee)- Friendly 5 Star Deluxe Hotel National
 Tourism Award conferred to The Leela Palace Bangalore by Mr. P.
 Chidambaram. Minister of Home, Government of India. 1 was also honored
 with the Five Star Diamond Lifetime Achievement Award tor
 Environmental Protection and Corporate Social Responsibility 1>\ the
 American Academy of Hospitalitv Sciences (AAHS) which is renowned for
 awarding excellence in global travel and luxury service sector.
 
 Given the global envirnmental challenges today We have increased our
 errorts towards longer term sustainabiliry. We will continue to assist
 in the protection of the environment and practice environment friendly
 management and technologies that generate savings. This will augment
 our business and provide a unique value addition to our guests... of
 being good to the environment by staying at The Leela.
 
 During the year, the Company has concluded a successful FCCB buyback
 programme and bought back one fourth of the Euro FCCB outstanding (Euro
 12.2 Mn out of Euro 51.4 Mn) due for expiry in 2010 and one third (US$
 33.6 Mn out of US$ 100 Mn) of the US$ FCCB maturing in 2012. All
 together, the Company has bought back Bonds worth US$ 50 Mn. This has
 immensely benefitted the Company with Rs. 68 crores of buyback profit
 being added to the current year profits.  The Company has also avoided
 the redemption premium to the extent of Rs.120 crores which would
 otherwise have been payable on maturity.
 
 We are forging ahead, committed to opening two more Leela Palace Hotels
 in Chennai and New Delhi by 2010. The construction of The Leela Palace
 New Delhi will be completed before October 2010, in time for the influx
 of visitors we expect the Commonwealth Games to bring to the capital.
 Other future developments will be activated after this time to
 strategically place The Leela in the popular Indian heritage circuit
 known as the Delhi-Agra- Jaipur-Udaipur golden triangle with the
 development of Agra, plus expand into Hyderabad and Pune to complete
 our pan India presence.
 
 We hold great importance to the contribution of our family of staff
 -the people who work so loyally to give intrinsic value to The Leela
 brand.  On behalf of myself and the Board members, I thank every share
 holder and valued patrons and The Leela team for sharing our vision and
 philosophy; and for the dedication and commitment at all levels to
 ensure that we remain in the forefront of our competitive industry as
 one of the finest Hotel Groups in India.
 
 Our current challenges have strengthened us and we can look towards the
 future with long term vision and justified confidence.
 
 
 Capt. C. P. Krishnan Nair
 Chairman
 Hotel Leelaventure Limited