Hotel Leela Venture
BSE: 500193 | NSE: HOTELEELA | ISIN: INE102A01024 | Hotels
- Directors Report
- Chairman's Speech
- Auditors Report
- Notes To Accounts
- Accounting Policy
- Finished Products
- Raw Materials
| Directors Report | Year End : Mar '08 |
The Directors take pleasure in presenting the Twenty-Seventh Annual
Report together with the Audited Statement of Accounts for the year
ended 31 st March, 2008.
1. Financial Results
Your Companys performance during the year under review is summarized
below:
(Rupees in Crores)
For the year ended For the year ended
31st March 2008 31st March 2007
Income:
Sales/ Services rendered
and other Income 589.10 421.19
Profit on Sale of Fixed Assets - 41 .57
Total 589.10 462.76
Expenditure:
Operating, Administrative
and other expenses 284.59 198.97
Interest 35.56 40.33
Loss on sale of Fixed Assets (0.31) -
320.46 239.30
Profit before Depreciation: 268.64 223.46
Depreciation 49.09 37.84
Less: Withdrawal from
Revaluation Reserve 3.75 4.08
45.34 33.76
PROFIT BEFORE TAX 223.30 189.70
PROVISION FOR TAX:
Current Year Tax 52.09 23.50
Fringe Benefit Tax 1.15 00.80
Deferred Tax 19.94 38.97
73.18 63.27
PROFIT AFTER TAX 150.12 126.43
Prior Period Adjustments (Net) (1.56) (0.19)
Profit of erstwhile
Kovalam Hotels Limited for
the year 2006-07 - 1.43
Balance brought forward 193.39 139.07
Loss of erstwhile Kovalam Hotels
Limited for
the Pre-amalgamation period - (30.83)
Amount Available for Appropriation 312.55 265.31
APPROPRIATIONS:
Dividend on Equity shares 18.89 16.66
Tax on Proposed Dividend 3.21 2.50
Transfer to General Reserve 89.01 14.00
Transfer to Capital
Redemption Reserve - 38.75
Balance carried forward to
Balance Sheet 201.44 193.40
EPS Basic (in Rs.) 3.97 3.41
EPS diluted (in Rs.) 3.11 3.00
(The figures are not strictly comparable because the current year
figures include the figures of Kovalam Resort, which was amalgamated
with the Company in terms of a Scheme of Arrangement.)
2. Issue of Shares and Foreign Currency Convertible Bonds
In April 2007, the Company successfully issued and allotted 1,000
Foreign Currency Convertible Bonds (FCCBs) of USD 1,00,000 each
aggregating USD 100 million. The Bonds, having a maturity period of 5
years and 1 day, are listed at the Singapore Stock Exchange. The
outstanding Bonds will mature for redemption on 25th April, 2012.
The Company had issued FCCBs of EURO 60 million on 15th September,
2005. Of the said issue, the Company received requests for conversion
of FCCBs aggregating EURO 6.55 million (previous year Euro 2.05
million) into Equity Shares. The Company allotted 75,21,907 Equity
Shares in January 2008 on conversion of the FCCBs (previous
year-17,90,615 Equity Shares). The Paid-up Equity Share Capital of the
Company, after conversion and allotment of Equity Shares as stated
above, stands increased from Rs.74.06 cores to Rs.75.56 crores as on
31.3.2008. The outstanding FCCBs of this issue stands at EURO 51.40
million.
3. Dividend on Equity Shares
The Board of Directors at the meeting held on 18th June, 2008,
recommended a dividend of 25% per equity share of Rs.2/- each, subject
to the approval of the shareholders. The dividend would involve a cash
outgo of Rs.22.10 Crores (previous year Rs. 19.16 crores). tax on
proposed dividend amounting to Rs. 3.21 Crores is being borne by the
Company.
In terms of the Provisions of Investor Education and Protection Fund
(Awareness and Protection of Investors) Rules, 2001, the Company has
transferred unpaid/unclaimed dividends and principal/ interest on
debentures aggregating Rs.6.66 lakhs to the IEPF during the financial
year.
4. Operations
The overall performance of the Company has shown a considerable
improvement as compared to the previous year. The total income has
grown 27% from Rs.462.76 Crores in the financial year 2006-07 to
Rs.589.10 Crores during 2007-08. The Company has posted an impressive
and improved performance on all fronts.
The revenues of the Company from various Units are summarized as under:
(Rupees in Crores)
Name of the Unit 2007-08 Percentage 2006-07 Percentage
of Revenue of Revenue
The Leela , Bangalore 215.49 43% 187.39 51%
The Leela, Mumbai 177.39 35% 128.06 34%
The Leela, Goa 60.94 12% 54.72 15%
The Leela, Kovalam 51.15 10% N.A. N.A.
Total 504.97 100% 370.17 100%
The growth in revenues from Goa and Bangalore units as stated above are
not strictly comparable with the previous year on account of increased
room inventory during the year. During the previous year, the Kovalam
Resort was a subsidiary of the Company. Hence, its revenues were not
part of the standalone revenues.
The Average Room Rates in the city of Bangalore came down by 12% during
the year. However, the Companys overall ARR increased by 8%. The
Company also maintained its market dominance in terms of revenue, ARR
and Occupancy in Bangalore, Goa and Kovalam.
5. Product Enhancement
During the year under review, 66 rooms were renovated at the Goa Resort
and 100 rooms were refurbished at the Bangalore Hotel. The Company also
upgraded the Banquet Hall and has set up a Beauty Salon at the Kovalam
Resort. Upgradation of public areas at the Mumbai Hotel also was
carried out during the year.
6. Marketing Alliances
The Company has entered into a strategic relationship with Global Hotel
Alliance, which is expected to enhance the global reach of sales and
marketing network.
The Company has also entered into an alliance with Preferred Hotels
which will give the company a greater recognition in USA and other
parts of the world as Preferred Hotels are renowned for up market and
luxury hotels in the world.
During the year, the Company has tied up with ESPA of London, one of
the leading Spa management companies in the world, to manage our spas
across all our properties.
The Company has also established marketing presence in New York to
support its overall sales and marketing strategy.
7. Expansion / Up-gradation Plans
India has been experiencing unprecedented economic growth with GDP
rising ahead with over 9 percent for the third successive year. The
growth rate for the Travel & Tourism Industry has also been good with
tourism growing by almost % over this period. As a result, the
buoyant economy, higher business and leisure travel, improved
infrastructure, and the enhanced Brand India image are further expected
to fuel demands for the hotel industry across the country. The forecast
for the Tourism Industry for the future looks optimistic with the
demand-supply mismatch continuing in major cities of the country. The
global economic slowdown is not expected to affect the hotel business
in India significantly.
The Company has expansion plans aggregating almost Rs.2,000 crores on
project expenditure for the next four years. The upcoming projects of
the Company under various stages of development are as follows:
Gurgaon, Delhi (NCR):
- The project in Gurgaon, Delhi (NCR) with 319 rooms and 90 service
residences is expected to be ready for operation by October 2008. The
Gurgaon property is owned by the Ambience Group and will be managed by
the Company under The Leela brand name.
Udaipur:
- In order to enter the Rajasthan market, the Company is constructing
The Leela Palace at Udaipur, situated on the bank of Lake Pichola
and is at an advanced stage of completion. The Resort is expected to
open in January 2009.
The Leela Business Park, Chennai:
- The Company is constructing The Leela Business Park, a world class
Business Park at MRC Nagar and next to the Companys upcoming Hotel in
Chennai. It is also at an advanced stage of completion. The Business
Park is expected to be operational by September 2008.
The Leela Palace, Chennai:
- The Company is constructing The Leela Palace hotel at MRC Nagar,
Chennai, facing the Bay of Bengal. The hotel is planned to have a soft
opening by September 2009.
The Leela Palace, New Delhi:
- In order to fulfill the long felt need to have a presence in the
National Capital, the Company purchased in April, 2007 a freehold plot
of land admeasuring 3 acres through bid put up by The National
Buildings Construction Corporation Ltd. (NBCC), a Government of India
Undertaking. The project is located in the prestigious diplomatic
enclave of Chanakyapuri, New Delhi. The construction activity is being
carried out in full swing. Every effort is being made to ensure a soft
opening by October, 2010 i.e. prior to the Commonwealth Games.
Other Projects
The projects in Hyderabad and Pune are expected to be taken up in due
course and are likely to be operational in 2011/12.
8. Audit Observation:
The explanation given in the Notes to Accounts is self explanatory.
9. Awards:
Conde Nast Readers voted The Leela Palace Kempinski, Bangalore as The
Worlds No.l Favourite Overseas Business Hotel in a survey conducted
amongst 30,000 readers in the U.K.
10. Management Discussion and Analysis (MDA):
As required by Clause 49 of the Listing Agreements with the Stock
Exchanges, Management Discussion and Analysis Report is appended
herewith and forms an integral part of this report.
11. Corporate Governance:
As required by Clause 49 of the Listing Agreements, a separate section
containing the Report on Corporate Governance together with the
Certificate on the compliance with the conditions of corporate
governance issued by a Practicing Company Secretary are appended hereto
and they form part of this Annual Report.
As part of good Corporate Governance, the Company has voluntarily
obtained a Secretarial Compliance Certificate from a Practicing Company
Secretary in respect of compliance of all rules, regulations under the
various applicable provisions of the Companies Act, 1956 and the
applicable regulations under the Listing Agreement entered into with
the Stock Exchanges. A copy of the said certificate is also appended to
this report.
12. Directorate
The Board of Directors at their meeting held on 21st June, 2007,
appointed Mr. A. K. Dasgupta as an Additional Director and his
appointment was approved at the last Annual General Meeting.
Further, the Board appointed Mr. V. L. Ganesh as an Additional Director
and re-designated him as Director - Finance and Chief Financial Officer
for a period of 3 years with effect from 31 stjanuary, 2008. Pursuant
to Section 257 of the Companies Act, 1956, a notice has been received
from a membertogether with prescribed amount proposing the appointment
of Mr. V. L. Ganesh to the Board of Directors of the Company. As an
additional director, Mr. V. L. Ganesh will hold office up to the date
of the ensuing Annual General Meeting.
In accordance with the provisions of the Companies Act, 1956 and the
Articles of Association of the Company, Mr. Vijay Amritraj, Capt. C. P.
Krishnan Nair, Mrs. Anna Malhotra and Dr. K. U. Mada, Directors of the
Company, retire by rotation at the forthcoming Annual General Meeting
and being eligible, offer themselves for re-appointment. Brief resume
of the Directors proposed to be appointed/re- appointed stating the
nature of their expertise in specific functional areas, their
shareholding along with other relevant details are given at the end of
the Notice of the Annual General Meeting. The Board recommends their
appointment/re-appointment by the members at the forthcoming AGM.
13. Auditors
M/s. Picardo & Co., Chartered Accountants, Statutory Auditors of the
Company, retire at the ensuing Annual General Meeting. They have
confirmed their eligibility and willingness for re-appointment. The
Board recommends their re-appointment as auditors.
14. Particulars of Employees
Information in accordance with sub-section (2A) of Section 217 of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975, as amended, forms part of this Report. However, as per
provision of section 219(1)(b) (iv) of the Companies Act, 1956, the
reports and the accounts are being sent to all the shareholders of the
Company excluding the statement of particulars of employees.
The Company will make these details available upon request by any
member of the Company interested in obtaining them on writing to the
Company Secretary.
15. Amalgamation, Subsidiary Companies and Consolidated financial
Statements
Kovalam Hotels Limited, a subsidiary of the Company, has been
amalgamated with the Company as per the Scheme of Arrangement
sanctioned by the Honble High Court of judicature at Bombay vide its
order dated 2nd November, 2007. The Scheme became effective on 4th
December, 2007 whereas the appointed date for the scheme was 1 st
April, 2006.
The Company has one existing subsidiary Amin Group Hotel Limited, the
accounts of which are attached to the Annual Report.
During the year under review, the Company has incorporated wholly-owned
subsidiaries. As the first accounting year of the said subsidiaries
will end on 31st March, 2009, their Annual Accounts are not attached to
the Annual Report of the Company. The relevant statement as required
under Section 212 of the Companies Act, 1956 about the subsidiaries is
given elsewhere in this Annual Report.
However, the Consolidated Accounts, prepared in accordance with the
applicable accounting standards, as required under Clause 32 of the
Listing Agreement and forming part of this Annual Report, include the
financial information of the Subsidaries.
16. Fixed Deposits
The Company has not accepted any deposits from the Public or from the
shareholders.
17. Directors Responsibility Statement
Pursuant to the provisions of Section 217(2AA) of the Companies Act,
1956, the Directors hereby confirm that:
(a) in the preparation of the annual accounts, the applicable
accounting standards have been followed and there are no material
departure from the same;
(b) the Directors had 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 as on 31st March, 2008 and of the profit of the Company
for that period;
(c) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
(d) they have prepared the annual accounts on a going concern basis.
18. Additional information in accordance with the provisions of
Section 217(1)(e) of The Companies Act ,1956 read with the Companies
(Disclosure of Particulars in the Report of the Board of Directors)
Rules, 1988
(a) Conservation of Energy and Water:
Energy conservation received the highest priority throughout the year.
The Company monitors energy costs and periodically reviews the
consumption of energy and water. It also takes appropriate steps to
reduce the consumption through efficiency in usage and timely
maintenance/ installation / upgradation of energy saving devices, like
building management system, dimmers, energy efficient pumps, and so on,
wherever necessary. The Company has already installed 11 wind mills to
generate power (a non-conventional energy source) in the state of Tamil
Nadu.
To conserve ground water, your Company has implemented appropriate
rainwater harvesting projects at its locations. The Company has also
encouraged and invested in systems for recycling and reuse of water.
(b) Technology Absorption:
In the opinion of the Board, the required particulars, pertaining to
technology absorption in terms of Rule 2 of the Companies (Disclosure
of Particulars in the Report of Board of Directors) Rules, 1988 are not
applicable as the hotel forms a part of the service industry and the
Company does not have any significant manufacturing operations.
(c) Foreign Exchange Earnings and Outgo:
The Company has a strong commitment towards international business and
is continuously exploring avenues for increasing its foreign exchange
earnings.
The Companys foreign Exchange earnings were Rs. 324.26 crores
(previous year Rs. 257.41 crores) whereas the outgo was only Rs. 51.45
crores (previous year was Rs. 52.49 crores). Thus, the Company
continues to be a huge net contributor of foreign exchange. The
relevant details are given in the notes to Accounts.
19. Acknowledgements
The Board wish to place on record its appreciation for the continued
support and co-operation received from the Government of India,
especially the Ministry of Tourism, the Airports Authority of India,
various Government regulatory authorities, Stock Exchanges, Financial
Institutions, Banks, State Governments of Maharashtra, Goa, Karnataka,
Kerala, Tamil Nadu, Rajasthan, Haryana NCT Delhi and The Kempinski
Group of Hotels and GHM (Mauritius) Ltd.
Your directors take this opportunity to express their sincere thanks to
all the investors, shareholders and stakeholders for the faith and
confidence they have reposed in the Company.
Your Directors wish to place on record their deep appreciation to the
employees for their hard work, commitment and dedication. The
enthusiasm and the unstinting efforts with which all the employees have
performed their duties and responsibilities at all levels have enabled
the Company to remain at the forefront of the hospitality industry.
For and on behalf of the Board
Mumbai Capt. C. P. Krishnan Nair
Date : 18th June, 2008 Chairman
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