The Directors have pleasure in presenting the Thirtieth Annual Report
 of the Company together with its Audited Statement of Accounts for the
 year ended 31st March, 2011.
 
 1.  Financial Results
 
 The Company’s performance during the year under review is summarised
 below:
 
                                                   (Rupees in crores)
 
                                  Financial Year      Financial Year
                                  2010-11             2009-10
 
 Income from Sales, Services 
 and other                          553.35             478.38 
 Income
 
 Operating, administrative and      369.68             320.94 
 other expenses (before
 interest and depreciation)
 
 Interest                            57.62              24.47
 
 Profit before Depreciation         126.05             132.97
 
 Depreciation                        68.43              68.33
 
 Profit before Tax                   57.62              64.64
 
 Provision for Taxes / Deferred Tax  18.74              19.63
 
 Profit after Tax for the year       38.88              45.01
 
 Prior Period Adjustments – Net       1.04               3.99
 
 Profit after Tax                    37.84              41.02
 
 Balance brought forward            312.80             287.74
 
 Amount available for 
 Appropriation                      350.64             328.76 
 
 Appropriations:
 
 Dividend on Equity shares            5.82               7.56
 
 Tax on proposed Dividend             0.94               1.25
 
 Transfer to General Reserve             -               1.15
 
 Transfer to Capital Redemption      18.00               6.00
 Reserve
 
 Balance carried to Balance Sheet   325.88             312.80
 
 EPS Basic (in Rs.)                   0.99               1.09
 
 EPS diluted (in Rs.)                 0.93               0.92
 
 2.  Foreign Currency Convertible Bonds
 
 During the year under review, the Company redeemed on maturity, Euro
 Bonds of the face value of Euro 39.20 million together with premium, as
 per the terms of the offer document.
 
 As on the close the financial year, the Company has outstanding Dollar
 Bonds of the face value of US$ 41.60 million, maturing in April, 2012.
 These bonds are listed on Singapore Exchange Securities Trading
 Limited.
 
 3.  Dividend on Equity Shares
 
 Your Directors are pleased to recommended a dividend of Rs. 0.15 per
 equity share of Rs.2 each (previous year Rs.0.20 Per share), subject to
 the approval of the shareholders at the ensuing AGM. The dividend would
 involve a cash outgo of Rs.5.82 crores (previous year Rs.7.56 crores)
 towards dividend and Rs. 0.94 crores (previous year Rs.1.25 crores)
 towards tax on dividend.  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. 21.99 lakhs to
 the Investor Education and Protection Fund during the financial year
 under review.
 
 4.  Review of Operations
 
 The overall performance of the Company has improved during the year
 under review, in line with the overall global economic recovery. The
 total income stood at Rs. 553.35 crores, compared to Rs.478.38 crores
 in the previous year.
 
 5.  Rating
 
 The present rating assigned to the Company by Credit Analysis &
 Research Limited (CARE) is CARE A- [Single A Minus] for long term
 loans and NCDs and PR 2 (PR Two) for short term facilities. These
 ratings are considered to offer adequate safety for timely servicing of
 debt obligations and carry low credit risk.
 
 6.  Opening of The Leela Palace, New Delhi
 
 The Company’s most awaited and prestigious hotel The Leela Palace, New
 Delhi had a soft launch in September, 2010 and a ceremonial opening on
 17th April, 2011. This hotel has 260 oversized luxury guest rooms and
 suites.  The rooms and suites offer premium and distinct luxury
 experience to the contemporary business travellers.
 
 This hotel is situated in the exclusive Diplomatic Enclave, close to
 the Prime Minister’s residence, Rashtrapathi Bhavan, the Secretariat,
 as well as a number of historical monuments including the India Gate,
 Raj Ghat, Qutab Minar, etc.
 
 The hotel offers rooftop pool with magnificient views over Delhi, four
 restaurants including the first Asian outpost of legendary restaurant
 brand Le Cirque, Indian restaurant Jamavar, Japanese eatery Megu, with
 International Cuisine available in The Qube. This hotel also has ESPA
 spa spread over two levels offering ayurvedic and other treatments in
 its seven treatment rooms and private spa suite.
 
 Keeping in mind the ‘green’ sensibilities, the Leela Palace New Delhi
 has been designed to be sustainable. Gas turbine, water harvesting,
 solar energy application and a sophisticated sewage treatment plant
 have been built into the hotel, making it the first hotel in New Delhi
 to be designed for Gold Leed certification.
 
 7.  Marketing and other Alliances
 
 The Company has marketing alliances with Germany based Kempinski Group
 of Hotels (Hoteliers since 1897) and US based Preferred Hotel Group and
 is a member of Global Hotel Alliance based in Geneva, Switzerland.
 Under the alliance with Kempinski, the Company has been receiving,
 among others, international marketing services for the existing hotels,
 technical and pre opening services for the proposed hotels in Chennai
 as well as other hotels that the Company would operate in the future,
 purchasing services, services related to IT and management information
 systems, as well as personnel and operational support.
 
 Preferred Hotel Group is 40 year old sales centric organization with
 700 prestigious hotel groups across the world as its members. The
 alliance with Preferred Hotel Group benefits the Company with
 co-branding resulting in greater recognition of the Company’s brand in
 the USA as premium and luxury hotels. The Company also gets the
 opportunity to leverage their seven Global Sales Offices in the USA, as
 well as in Paris, Singapore, Hong Kong, Japan, Australia and others. In
 addition, their technology powers the Company’s website enabling the
 Company to receive direct bookings. Their preferred relationship with
 American Express allows the Company lower commissions on receipts
 through American Express Credit Card, which
 
 results in substantial savings and opportunities to participate in many
 road shows in the Company’s main source markets. The alliances also
 assist the Company to get more international business and to enhance
 its competitive positioning in the market.
 
 Global Hotel Alliance is a collection of 12 upscale and luxury regional
 hotel brands from across the world with a collection of over 300 hotels
 in 47 countries. As a member of the alliance, the Company gets access
 to preferred relationships with 15 International Airlines and three of
 the largest Travel Management Companies, American Express, Carlson
 Wagonlit and BCD, which help the Company to market its hotels globally.
 The Company is also part of their newly launched recognition program,
 GHA Discovery, which already has 1.4 million members and this helps the
 Company to compete with other similar programs of global hotel chains.
 As a GHA member, the Company derives substantial savings on its hotel
 room management and reservations technology provided by Micros, as well
 as avail technical support for the Company’s planned independent GDS
 code.  Towards maintaining world-class standards, the Company has
 engaged ESPA of London, one of the leading Spa management companies in
 the world, to manage the Company’s Spas at Mumbai, Goa, Udaipur and New
 Delhi.
 
 8.  Expansion / Up-gradation Plans
 
 Tourism industry is growing and bound to grow stronger in India owing
 to its splendid historical architecture, rich heritage and ancient
 culture along with beautiful beaches and rural tourism, and the
 inherently rooted concept of hospitality in form of Ätithi Devo
 Bhava.
 
 Your Company owns and operates six hotels at the locations viz. New
 Delhi, Mumbai, Bangalore, Goa, Kovalam and Udaipur, besides operating
 another hotel at Gurgaon under Management Contract. The Company expects
 to start operations of the hotel under construction in Chennai during
 the current financial year.
 
 The Company has acquired land in Agra and Ashtamudi in Kerala for
 construction of hotels. These projects will be taken up in due course
 after completion of the Chennai project.
 
 The Company had purchased about 4.21 acres of land in Pune and 3.85
 acres of land in Hyderabad for building hotels in these locations.
 Since then, considerable capacity addition has taken place in these
 cities. Therefore, the Company has decided to use the land for high end
 residential use. Accordingly, the Company has already entered into
 joint development agreement with a reputed builder in Pune. In
 Hyderabad, the Company would either directly undertake development or
 enter into joint development agreement with a reputed builder. The
 Company also has about 2 acres of land next to Leela Palace, Bangalore
 and is in discussions with reputed local builders for developing high
 end residential buildings.
 
 9.  Audit Observation:
 
 The explanation given in the Notes to Accounts is self explanatory.
 
 10.  Awards, Accolades and Recognitions:
 
 (a) Recognition to the Chairman of the Company
 
 One of the most prestigious luxury magazines of Dubai, Gulf
 Connoisseur, awarded Capt. C.P. Krishnan Nair with the ‘The Green
 Hotelier of the Decade’ Award in November 2010, in Dubai.
 
 (b) Recognition for the Hotels
 
 - The Leela Palace New Delhi is named one of the best New City Hotels
 in the Travel + Leisure’s ‘It’ List 2011, a compilation of the 50 best
 new hotels in the world in the June 2011 issue.
 
 - In November 2010, The Leela Palaces, Hotels & Resorts won the
 prestigious TravTalk - World Travel Market Global Award in recognition
 of its new standards of excellence in the luxury hotels market and
 rapid expansion carried out while giving back to the local community.
 
 - The Leela Palace Udaipur also received The Connoisseur’s award for
 Best Exotic Resort.
 
 - In October 2010, the World Travel Awards (WTA), Asia and Australia,
 adjudged the iconic Leela Palace Bangalore as India’s Leading
 Conference Hotel, and the Group’s beachfront property in
 
 Kerala, The Leela Kovalam Beach, Kerala, was recognised as Asia’s
 Leading Resort.
 
 - Also in October 2010, Luxury Hotel Awards, recognised The Leela
 Palace Bangalore as the Best Luxury City Hotel in India, while The
 Leela Palace Udaipur was accorded the honour of the Best Luxury
 Boutique Hotel in the world.
 
 - In August 2010, the Vogue Beauty Awards awarded The Leela Goa for the
 best Detox treatment offered.
 
 - On 24 June, 2010, The Leela Group was conferred the WTC Award of
 Honour by the World Trade Centre Mumbai for the group’s exceptional
 contribution to international trade and commerce.
 
 Conde Nast Traveller UK
 
 - In the May 2011 issue, Conde Nast Traveller, UK, listed The Leela
 Palace New Delhi as one of the 65 great new hotels of the world in its
 Hot List.
 
 - In March 2011, The Spa at The Leela Palace Bangalore came second in
 the ‘Hotel Spas of Asia and the Indian Subcontinent’ category in Conde
 Nast Traveller UK’s Readers’ Spa Awards 2011.
 
 - In the January 2011 issue, Conde Nast Traveller, UK, listed The Leela
 Palace Udaipur as one of the Best Hotels for Service in Asia.
 
 Conde Nast Traveller USA
 
 - In the January 2011 issue, Conde Nast Traveler, USA, listed The Leela
 Palace Bangalore as the second best hotel within India in its Gold
 List.
 
 11.  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.
 
 12.  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 Practising 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 Practising 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.
 
 13.  Changes in Directorate
 
 The Board of Directors at their meeting held on 13th November, 2010 has
 appointed Mr. Krishna Deshika as Director - Finance & CFO for a period
 of 5 years with effect from 17th January, 2011. The Board of Directors
 also at their meeting held on 29th January, 2011 has re-appointed Mr.
 Vivek Nair as Vice Chairman & Managing Director, Mr. Dinesh Nair as
 Joint Managing Director and Mr. Venu Krishnan as Deputy Managing
 Director for a period of 5 years with effect from 1st April, 2011. The
 above appointments have been approved by the members through a postal
 ballot.
 
 During year under review, Mr. V. L. Ganesh, Director - Finance & CFO
 resigned with effect 13th November, 2010.
 
 Further, in terms of provisions of Section 260 of the Companies Act,
 1956, the Board of Directors on 29th January, 2011 has appointed Mr.
 Indur Kirpalani as an Additional Director. Mr. Kirpalani holds office
 up to the date of Annual General Meeting. The Company has received a
 notice in writing under Section 257 of the Companies Act, 1956 for
 appointment of Mr.  Indur Kirpalani for the office of director liable
 to retire by rotation.
 
 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 commends
 their re-appointment by the members at the forthcoming Annual General
 Meeting.
 
 None of the directors of the Company are disqualified from being
 appointed as directors as specified in section 274(1)(g) of the
 Companies Act, 1956, as amended.
 
 14.  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
 Company has received a certificate from the Statutory auditors to the
 effect that their re-appointment, if made, would be within the limits
 prescribed under section 224(1B) of the Companies Act, 1956.
 
 The Board commends their re-appointment as statutory auditors.
 
 15.  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.
 
 16.  Wholly-owned Subsidiary Companies and Consolidated Financial
 Statements
 
 Pursuant to general exemption granted in terms of General Circular
 No.2/2011 dated 8th February, 2011 issued by the Ministry of Corporate
 Affairs, Government of India, regarding compliance with Section 212(8)
 of the Companies Act, 1956, the Company has not attached Balance Sheet,
 Profit and Loss Account and other documents of its two wholly owned
 subsidiary companies with the Annual Report of the Company.
 
 The Company will make available these documents upon request by any
 member of the Company interested in obtaining the same. Further, these
 documents will also be available at the Registered Office of the
 Company for inspection by any member of the Company. As required under
 the aforesaid circular, a summarized statement of financial position of
 the subsidiaries has been appended to this Annual Report.
 
 The Consolidated Accounts, prepared in accordance with the Accounting
 Standard 21 and Clause 32 of the Listing Agreement form part of this
 Annual Report. The relevant statement as required under Section 212 of
 the Companies Act, 1956 about the two wholly-owned subsidiary companies
 is also given elsewhere in this Annual Report.
 
 17.  Fixed Deposits
 
 The Company has not accepted any deposits from the Public or from the
 shareholders.
 
 18.  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
 departures 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, 2011 and of the profit of the Company
 for the year;
 
 (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’.
 
 19.  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, sustainability and efforts to make the properties
 more Green has been the main drive for the Leela Group throughout the
 year. Major steps have been taken towards this. Some of the efforts
 are:
 
 - LED Lamps have been used to replace normal Halogen lamps in the two
 properties at Mumbai and Bangalore. The process will continue in other
 properties also. In addition, our upcoming project The Leela Palace,
 Chennai will have LED lights for all its external lighting and all
 major internal areas.
 
 - Rain Water Harvesting is being implemented on an extensive scale.
 Today Kovalam hotel collects an average of 43 c. mtr. of water on daily
 basis and efforts are being made to increase the same so that we might
 get our major requirement of water from this in future. The Leela
 Palace, Chennai will also collect water on a major scale from rain
 water harvesting.
 
 - Sewage Treatment Plants in all properties are being used extensively
 to treat and recycle all sewage and grey water for reuse within the
 property.
 
 - Extensive retrofitting is being done on HVAC plants in all properties
 to reduce power consumption, in addition to installation of VFD and
 variable pumping system, resulting in savings in power consumption.
 
 - Computerized Power Monitoring is being implemented in all properties
 on a gradual basis to monitor and control power consumption.
 
 - Wind Mills continue to produce Renewable Energy for use in three of
 our properties with study being done for other ones.
 
 - Old equipments are being replaced with more efficient ones to reduce
 our power consumption and improve efficiency.
 
 (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 foreign exchange earnings of the Company during the year stood at
 Rs. 173.88 crores (previous year Rs. 171.23 crores) and foreign
 exchange outgo during the year stood at Rs. 32.68 crores (previous year
 Rs. 32.96 crores).
 
 20.  Acknowledgements
 
 The Board wishes to place on record its appreciation for the continued
 support and co-operation received from the Government of India,
 especially the Ministry of Tourism, Airports Authority of India,
 various Government regulatory authorities, State Governments of
 Maharashtra, Goa, Karnataka, Kerala, Tamil Nadu, Rajasthan, Haryana,
 Andhra Pradesh, Uttar Pradesh and Delhi and also the Kempinski Group of
 Hotels, Preferred Hotel Group and Global Hotel Alliance and other
 business and referral associates, Stock Exchanges, Financial
 Institutions and Banks.
 
 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 attribute immense importance to the contribution of the
 family of staff - the people who work so loyally to give intrinsic
 values to The Leela brand and sincerely thank the Leela Team for
 sharing the Company’s vision and philosophy and for the dedication and
 commitment in ensuring that we remain in the forefront of our
 competitive industry as one of the finest Hotel Groups in India.
 
                                    On behalf of the Board of Directors
 
                                             Capt. C. P. Krishnan Nair
                                                              Chairman
 
 Mumbai, 23rd May, 2011