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Hotel Leela Venture
BSE: 500193|NSE: HOTELEELA|ISIN: INE102A01024|SECTOR: Hotels
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Explore Hotel Leela connections « Mar 10
Notes to Accounts Year End : Mar '11
1) Foreign Currency Convertible Bonds
 
 (a) The Company had allotted 1% Foreign Currency Convertible Bonds
 (Euro Bonds), of Euro 60 Million on 15th September, 2005 having
 maturity of 5 years and 1 day, convertible at any time up to 31st
 August, 2010 into equity shares of Rs.2 each at a conversion price of
 Rs. 46.65, with a fixed rate of exchange on conversion of Rs. 54.33 for
 one Euro. These bonds were listed on the Singapore Exchange Securities
 Trading Ltd., Singapore. Subsequently, holders of 8,600 Euro Bonds with
 aggregate face value of Euro 8.60 million have exercised their right
 and converted their holding into equity shares, resulting in the
 allotment of 93,12,522 Equity Shares. Further, the Company had
 repurchased 12,200 Euro Bonds with a face value of Euro 12.20 million.
 The outstanding Euro Bonds of the face value of 39.20 million Euros
 together with redemption premium were redeemed by the Company on the
 maturity date i.e. 15th September 2010.
 
 (b) The Company had allotted Zero Interest Foreign Currency Convertible
 Bonds (USD Bonds), of US $ 100 million on 24th April 2007 having
 maturity of 5 years and 1 day, convertible at any time up to 18th April
 2012 into equity shares of Rs.2 each at a conversion price of Rs.72
 (previous year Rs.72) with a fixed rate of exchange on conversion of
 Rs.41.945 for one US $. These bonds are listed on the Singapore
 Exchange Securities Trading Ltd., Singapore. Up to 31st March 2011,
 none of the holders of these Bonds have exercised their right to
 convert their holding into equity shares. Upto 31st March 2011, the
 Company has repurchased 584 (Previous Year 584) Zero Coupon USD Bonds
 with a face value of US $ 58.40 Million (Previous Year US$ 58.40
 million). The repurchased USD Bonds have been extinguished. The
 remaining US $ 41.60 Million USD Bonds, unless converted, redeemed or
 repurchased and cancelled, will be redeemed on 25h April 2012 at
 146.61% of the principal amount. The pro-rata premium payable on
 redemption (net of tax credits) is charged to Security Premium Account.
 
 2) Secured Loans:
 
 a) Redeemable Non-Convertible Debentures:
 
 i) The Company had issued on 19th December 2008, 12.5% Secured
 Redeemable Non-Convertible Debentures of Rs.10 Lakhs each, aggregating
 to Rs. 9,000 Lakhs redeemable at par on 18th December 2013.
 
 ii) Debenture Redemption Reserve is created in accordance with
 applicable laws and guidelines.
 
 b) Term Loans:
 
 i) Foreign Currency Loans of Rs.19,646 lakhs and Rupee Term Loans of
 Rs.6,136 lakhs from State Bank of India, Foreign Currency Loan of
 Rs.11,163 lakhs and Rupee Term Loan of Rs.3,104 lakhs from State Bank
 of Mysore, Foreign Currency Loan Rs.5,458 lakhs and Rupee Term Loan of
 Rs. 527 lakhs from State Bank of Travancore, Rupee Term Loan of Rs.
 4,850 lakhs from State Bank of Bikaner & Jaipur, Rs. 3,565 lakhs from
 State Bank of Patiala, Rs. 3,880 lakhs from State Bank of Hyderabad,
 Rs. 3,102 lakhs from Federal Bank and Rs. 19,807 lakhs from Bank of
 India are secured by a pari passu charge on the fixed assets of The
 Leela Palace, New Delhi.
 
 ii) Rupee Term Loan of Rs. 47,897 lakhs from Syndicate Bank is secured
 by 2nd charge on the Delhi and Chennai Hotel properties.
 
 iii) Rupee Term Loan of Rs. 10,000 lakhs from Indian Overseas Bank is
 to be secured by a pari passu charge on the fixed assets of The Leela
 Palace, Chennai.
 
 iv) Rupee Term Loan of Rs. 15,000 lakhs from State Bank of India is
 secured by a pari passu charge on the fixed assets of The Leela Mumbai.
 
 v) Rupee Term Loan of Rs. 15,000 lakhs from Bank of Baroda is secured
 by 2nd pari passu charge on the fixed assets of The Leela, Mumbai.
 
 vi) Rupee Term loan of Rs. 25,000 lakhs from Bank of India and Rs.
 23,000 lakhs from Union Bank of India are secured by a pari passu
 charge on the fixed assets, both present and future, of the Leela Goa
 and The Leela, Kovalam.
 
 vii) Out of Foreign Currency Loan of Rs. 14,045 lakhs and Rupee Term
 Loan of Rs. 7,889 lakhs from EXIM Bank, an amount of Rs. 10,840 lakhs
 is secured by a 1st charge on the immovable properties of The Leela
 Mumbai and Rs.7,094 lakhs is secured by a pari passu charge on the
 fixed assets of the Leela Palace Udaipur and Rs.  4,000 lakhs is
 secured by a Mortgage on Wind Mills as well as 1st Charge on The Leela
 Mumbai.
 
 viii) Foreign Currency Loan of Rs.76 lakhs and Rupee Term Loans of
 Rs.450 lakhs from Union Bank of India are secured by a pari passu
 charge on the fixed assets of The Leela Kovalam.
 
 ix) Foreign Currency Loan of Rs.11,609 lakhs from State Bank of India,
 Singapore is secured by a pari passu charge on The Leela Palace,
 Bangalore.
 
 x) Rupee Term loans aggregating to Rs. 64,957 lakhs from the Housing
 Development Finance Corporation Limited are secured against pari passu
 charge on the immovable properties of The Leela Palace, Bangalore.
 
 xi) NCD of Rs. 9,000 lakhs from Life Insurance Corporation of India is
 secured by a pari passu Charge on the fixed assets of The Leela Palace,
 Udaipur.
 
 xii) Term loan of Rs. 108 lakhs from HDFC Bank Limited and Rs.  889
 lakhs from Kotak Mahindra Prime Limited are secured by hypothecation of
 certain vehicles.
 
 xiii) Term Loan of Rs. 1,088 lakhs from The Jammu & Kashmir Bank
 Limited is secured by a pari passu charge on the immovable properties,
 both present and future, of the Club Suites at The Leela Goa.
 
 xiv) Term Loan of Rs.1,309 lakhs from Oriental Bank of Commerce is
 secured by certain company owned flats.
 
 c) Cash Credit:
 
 Cash Credit and other Working Capital facilities from a Consortium of
 Banks led by State Bank of India are secured by hypothecation of
 Company’s inventories of stores and provisions, other stocks including
 inventories in transit, and book debts (except the credit card
 receivables), both present and future, and further secured by a pari
 passu second charge on the Fixed Assets of The Leela Goa (excluding the
 club suites) and the Leela Palace Kempinski, Udaipur
 
 3) Fixed Assets:
 
 a) Land (Leasehold) includes Development expenses, stamp duty and other
 direct charges.
 
 b) Projects-in-progress include Rs. 13,556.84 lakhs, (previous year Rs.
 12,912.65 lakhs) incurred in setting up an independent tower at Mumbai
 adjacent to the existing hotel, held up on account of disputes with the
 Airports Authority of India (AAI) which includes royalty and interest
 payable till 30th June 2007 in terms of Award passed by the Sole
 Arbitrator on 17th May 2008. Computation of Royalty as Minimum
 Guaranteed amount payable to AAI subsequent to the above mentioned
 Award is referred to Arbitration and pending its determination, no
 provision is made in the accounts. The Company is confident of settling
 the dispute and completing the project.
 
 c) Additions to Fixed Assets/ Projects in progress includes,
 capitalization of borrowing cost during the year under review amounting
 to Rs 35,561.29 lakhs (previous year Rs. 23,497.53 lakhs ).
 
 4) Contingent Liabilities not provided for:
 
 a) Estimated amount of contracts remaining to be executed on capital
 account not provided for- Rs. 25,543.31 lakhs (previous year Rs.
 24,068.00 lakhs).
 
 b) Claims against the Company not acknowledged as debts Rs. 7,478 Lakhs
 (previous year Rs. 1,750 lakhs).
 
 c) Disputed Statutory Liabilities not provided for Rs. 2,184.70 lakhs
 (previous year Rs. 217.00 lakhs).
 
 d) Letter of Credit open and outstanding Rs. 3,319.12 lakhs (previous
 year 610.32 lakhs).
 
 e) Counter guarantee given to banks in respect of guarantees given by
 them on behalf of the Company Rs. 160.85 lakhs (previous year Rs.128.82
 lakhs).
 
 f) The Company has made provision for leave salary on actuarial
 valuation basis. This being retirement benefit, an obligation to pay
 this amount might arise at the time of separation of the employees. The 
 breakup of the same is as under:
 
                                                       (Rs. in lakhs)
 
 Nature of   The Carrying   Additional  Amounts     Unused     The
 Obligation  amount at the  provisions  incurred and amounts  carrying
             beginning of   made during charged 
                                        against   reversed    amount at
             the period     the year    the
                                        provision during the  the end of
                                        during the 
                                        period     period     the period
 
 Leave 
 Salary        565.66        292.18     93.59       1.37       762.88
 
 Previous    (527.39)      (168.14)   (75.39)    (54.47)     (565.67) 
 Year
 
 5) Loans and advances include an amount of Rs 14,365.71 Lakhs (Previous
 Year Rs 12,677.72 Lakhs) recoverable from HUDCO. The Division Bench of
 Delhi High Court has upheld the appeal filed by HUDCO against the order
 of the Execution Court confirming the method of computation adopted by
 the Company regarding interest receivable from HUDCO. The Special Leave
 Petition filed by the Company in the Supreme Court against this order
 of the Division Bench is pending, and the order of the Division Bench
 has been Stayed.The Company has during the year under review recognised
 interest income of Rs.1,687.99 lakhs (previous year Rs.2,485.88 lakhs)
 from HUDCO.
 
 6) Land and Buildings includes land measuring 4.1330 hectares and
 building known as Kovalam Palace and other structures. The Kovalam
 Palace (Taking Over by Resumption) Act, 2005 taking over the building
 known as Kovalam Palace, appurtenant land measuring 4.1330 hectares and
 other structures standing thereon has been set aside by the Kerala High
 Court.  The Government of Kerala has filed an appeal before a division
 bench of the Kerala High Court, which has been admitted and the parties
 have been directed to maintain status quo until further orders. The
 possession of the Palace building is presently with the Government of
 Kerala, while that of the appurtenant land together with the other
 structures standing thereon is with the Company. No provision has been
 made in the accounts, for the value of such land and building as the
 same is not separately ascertainable and also as per the Act, the
 Company is entitled to get compensation for improvements based on the
 report of Commissioner specially to be appointed for this purpose.
 
 7) Retirement benefit plans:
 
 a) Defined contribution plans
 
 The Company makes Provident Fund contribution to defined contribution
 retirement benefit plans for eligible employees. Under the schemes, the
 Company is required to contribute a specified percentage of the payroll
 costs to fund the benefits. The Company recognised Rs. 381.40 lakhs
 (previous year Rs.355.47 lakhs) for provident fund contributions in the
 profit and loss account. The contributions payable to these plans by
 the Company are at rates specified in the rules of the respective
 scheme.
 
 b) Defined benefit plans
 
 The Company makes annual contributions to the Employees’ Group
 Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of
 India, a funded defined benefit plan for eligible employees. The scheme
 provides for lump sum payment to eligible employees on retirement,
 death while in employment or on termination of employment, an amount
 equivalent to 15 days’ salary payable for each completed year of
 service or part thereof in excess of six months. Eligibility occurs
 upon completion of five years of service.
 
 The present value of the defined benefit obligation and current service
 cost were measured using the Projected Unit Credit Method, with
 actuarial valuations being carried out at each balance sheet date.  The
 following table sets out the funded status of the gratuity plan and the
 amounts recognised in the Company’s financial statements as at March
 31, 2011:
 
 The expected rate of return on plan assets is determined considering
 several applicable factors, mainly the composition of Plan assets held,
 assessed risks, historical results of return on plan assets and the
 Company’s policy for plan asset management.
 
 8) Related parties disclosures:
 
 1.  Relationships during the year:
 
 (a) Subsidiaries:
 
 Leela Realty Ltd (Formerly Amin Group Hotel Limited)
 
 Leela Palaces and Resorts Ltd (Formerly Iskon Estates Pvt. Ltd.)
 
 (b) Fellow subsidiaries:
 
 None
 
 (c) Associates:
 
 1) Leela Lace Software Solutions Pvt. Ltd.
 
 2) Leela Lace Holdings Pvt. Ltd.
 
 3) Leela Fashions Pvt. Ltd.
 
 4) Rockfort Estate Developers Pvt. Ltd.
 
 5) Season Apparels Pvt. Ltd.
 
 6) Standard Precious Alloy Industries Pvt. Ltd.
 
 7) Elegant Eateries Pvt. Ltd.
 
 8) L. M. Realtors Pvt. Ltd.
 
 9) Aushim Soft Pvt. Ltd.
 
 10) Leela Soft Pvt. Ltd.
 
 11) Armcess Engineering Pvt. Ltd.
 
 12) Zantho Pharmaceuticals Pvt. Ltd.
 
 13) Leela Lace Estate Pvt. Ltd.
 
 14) Emmel Real Estate Developers Pvt. Ltd.
 
 15) Leela Villas Pvt. Ltd.
 
 16) Leela Lace Info Park Pvt. Ltd.
 
 17) Leela Constates Pvt. Ltd.
 
 18) Leela Hospitality Pvt. Ltd.
 
 19) Leela Realcon Pvt. Ltd.
 
 20) Kinfra International Apparel Parks Ltd.
 
 21) Palakkad Infrastructure Pvt. Ltd.
 
 22) Leela Lace Builders Pvt. Ltd.
 
 23) Vibgyour Leasing Pvt. Ltd.
 
 24) Zillion Hotels & Resorts Pvt. Ltd.
 
 25) Leela Capital & Finance Limited
 
 26) Mumbai International Convention and Exhibition Centre Limited
 
 (d) Key Management Personnel:
 
 Whole Time Directors
 
 Mr. Vivek Nair
 
 Mr. Dinesh Nair
 
 Mr. Venu Krishnan
 
 Mr. V. L. Ganesh upto 13th November, 2010
 
 Mr. Krishna Deshika from 17th January, 2011
 
 (e) Relatives of Key Management Personnel:-
 
 Capt. C.P. Krishnan Nair
 
 Mrs. Madhu Nair 
 
 Ms. Amruda Nair 
 
 Ms. Samyuktha Nair 
 
 Ms Aishwarya Nair
 
 9) Segment Information:
 
 The Company’s main business is hoteliering and there is no other
 reportable segment as defined under Accounting Standard 17 – Segment
 Reporting (AS-17). Hence disclosure of segment-wise information is not
 applicable.
 
 10) Operating Leases:
 
 iii) Lease rent paid / payable during the year towards employees’
 accommodation is charged as Employees’ related expenses in the Profit &
 Loss Account, as the agreements are made for a period of 11 months,
 
 11) Previous year figures have been regrouped and re-arranged wherever
 necessary.
 
 12) Figures in bracket relates to previous year.
Source : Dion Global Solutions Limited
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