Dear Shareholder,
 
 The booming economy of India passed through a challenging phase last
 year. The weak global economy, the European debt crisis and the
 continuing slowdown in the American economy impacted the hospitality
 industry.
 
 Inflation and high interest rates affected economic growth and COP
 forecasts have been revised downwards. While subdued room pricing and
 lower occupancy rates impacted overall revenues, I am confident that
 given India''s resilience and power it will only be a matter of time
 before the economy rebounds - the growth story must continue and only
 sustained and planned domestic reforms by the government will help in
 overcoming challenges.
 
 It has been a wonderful journey since 19B6 when the first Lee la hotel
 opened in Mumbai. In a short span of 25 years, we have grown from one
 to eight award-winning properties in prime urban and resort locations
 across India - Mumbai, Bangalore, Gurgaon, New Delhi Co a, KovaLam,
 Udaipur and Chennai opening very soon. We are preparing to open the
 326-room palace hotel, The Leela Palace Chennai, which will be an
 iconic landmark in the Chettinad style of palace architecture in one of
 the fastest-growing cities in India.
 
 I am pleased to inform you our hotels and resorts continue to gain
 recognition and accolades from the world''s most prestigious
 authorities on Luxury. This year, The Lee la Palace New Delhi was the
 only hotel in India to be named among the Best of the Best hotels
 in the world by Robb Report, USA, an honor that has placed the hotel
 amongst the most elite in the world. The Indian Green Building Council
 (tab), licensed by the internationally renowned U.S. Green Building
 Council conferred the LEED Platinum Certification on The Leela Palace
 New Delhi for excellence in sustainable design and world class best
 green practices.  Additionally, the hotel has also been selected to
 join the world''s Leading luxury travel network - virtuoso® - which
 encompasses 20 countries in North and South America, the Caribbean,
 Australia and New Zealand.  Tiffs by-invitation-only organization
 comprises more than 330 travel agencies with more than 7.200 elite
 travel advisors, and should have a positive impact on occupancy rates
 and driving incremental revenues. The Leela Palace New Delhi has also
 been specially chosen by American Express for their Fine Hotels &
 Resorts Program 2012.
 
 The Leela Palace Udaipur was named one of the best hotels for service
 in Asia by Condi Nast Traveller, UK and The Leela Palace Bangalore
 featured as one of the best hotel i:n India on the Gold List of Conde
 Nast Traveler, USA. Also, top media from the key markets were invited
 to experience the Leela and their positive reportage has successfully
 elevated the brand in the eyes of the affluent luxury travelers. We
 further strengthened our efforts to raise the brand''s visibility in
 international markets by placing strategic advertisements in selected
 high reach business and leisure publications in the primary USA and UK
 markets.
 
 We look forward to the successful Launch of The Leela Palace Chennai
 with additional developments in Jaipur, Bangalore, (near the
 International Airport) Agra and Lake Ashtamudi - all of which are
 moving forward rapidly. As we mature and expand, we Look forward to
 fostering new relationships and exceeding expectations.
 
 Acknowledgement
 
 For the many wonderful and outstanding comments of guesl experiences
 that we receive I thank the extraordinary people who make the mission
 of The Leela their own. I Look forward to their support for the growth
 we have chartered for ourselves in the years to come. I acknowledge all
 my associates in the group for their stellar contribution and am
 confident of their continued support and commitment, to ensure that we
 will surpass all expectations in the coming years. I also take this
 opportunity to extend my gratitude to aLL our shareholders and Board
 members for their support and good wishes.
 
 Capiain C. P. Krishnan Nalr,
 
 Chairman
 
 Hotel Leela venture Limited