India Tourism Development Corporation Ltd

1 CONTINGENT LIABILITIES
 
                                                   (Rs. in lakhs)
 (a)   Particulars                            Current Year   Previous Year
 
 (i)   Claims against the corporation not 
       acknowledged as debts (Includes for       35814.91       13309.98 
       property tax Rs 5489.81 lakh, 
       (Previous Year Rs. 5088.93 lakhs),
       demands from custom authority Rs. 
       21847.11 lakhs (Previous Year Rs. 
       59.78 lakhs) and are sub-judice].
 
 (II)  Estimated amount of contracts remai-
       ning to be executed on capital account      187.70         43.50 
       (net of advances and excluding 
       esclation in rates, if any) (on 
       completion, part of the work may 
       result as revenue expenditure).
 
 (III) Guarantees executed in favour of 
       various authorities, banks and
       financial institution                       186.98        348.79
       (Including guarantees provided 
       against loans obtained by 
       subsidiary companies, Rs. 80.00 
       lakhs (Previous year Rs.90.00 
       lakhs) and guarantees provided in
       respect of outstanding liabilities 
       of disinvested units Rs. NIL 
       (Previous year Rs. NIL lakhs)
 
 (IV)  Bonds executed by the Corporation in 
       favour of Custom Authorities in               0.00       5000.00
       compliance of Customs regulations for 
       warehousing of goods In respect of 
       duty free shops
 
 (v)   Income Tax matters in appeal (includes 
       appeals preferred by Income Tax             409.83        539.49
       Department Rs.25.72 lakhs (Previous 
       Year Rs.25.72 lakhs))
 
 (VI)  Sales Tax matters in appeal (includes 
       Rs. 2465.82 lakhs  (Previous Year Rs.      8875.34       8676.51
       2465.62 lakhs) in respect of Duty Free 
       Shop, Mumbai, appeals against which are
       pending before Maharastra Sales Tax 
       Tribunal / High Court],
 
 Note no (1) Contigent Liabilities at Sr. No.1(a)(i),1(a)(v) 41(a) (vi)
 are dependent upon court decision / out of court settlement / disposal
 of appeal etc.
 
 Note no. (2) : Above Includes (a) demands from the custom authorities
 (Mumbai) aggregating to Rs. 21791.58 lakhs which had been set aside In
 the previous year, assessed afresh in 2007-08 but excludes (b) Rs
 170.75 Lacs (P. Y. Rs 170.75 Lacs) for which hearings are yet to be
 commenced by the original authority.
 
 Note no (3): Amount Indicated as Contingent liability / claims against
 the corporation only reflect basic value. Legal and other costs being
 Indeterminable at this stage are not considered.
 
 2 CURRENT LIABILITIES AND PROVISIONS
 
 (a) M/s Airports Authority of lndla(AAl) and other private airport
 operators had levied service tax on their billings for licence
 fee/royalty for Duty Free Shops at various locations and Ashok Airport
 Restaurant w.e.f. 10.9.2004. However the Circular dated 17.9.2004
 issued by Government of India provides that the activity of renting,
 leasing out part of airport / civil enclave premises does not amount to
 rendering of services and the license fee / royalty payable In this
 regard is not sub|ect to service tax. Similar views on non levying of
 service tax on such licence fee / royalty have also been opined by tax
 consultants. The issue is also under consideration by the Director
 General or Central Excise Intelligence. Pending clarifications, no
 provision has been made for the estimated liability, towards service
 tax for the period from 10.9.2004 to 31.3.2008 for all the ten duty
 free shops, which works out to Ra.1779.49 lacs (Previous year-Rs.
 1685.11 lacs).
 
 (b) The Employees State Insurance Corporation (ESI) authorities had
 raised demands (Including Interest where applicable) totalling Rs.
 609.20 lakhs (Previous year Rs.539.54 lakhs) towards ESI dues in
 respect of five hotel units against which the corporation holds a
 deposit of Rs. 319.32 lakhs (Included in Loans and Advances) with the
 said authorities(made up of amounts withdrawn by the authorities after
 freezing bank accounts-Rs.302.22 lakhs and amount deposited Rs. 17.10
 lakhs). Against this the corporation holds a liability of RS194.43
 lakhs towards ESI dues. No provision has been made for the balance of
 Rs. 414.77 lakhs(Previous year Rs.344.92 lakhs) as the metier is
 sub-judice and pending finality in the matter, the same has been
 Included under Contingent Liabilities at SI. No. 1(a)(i) above.
 
 (c) The Corporation had taken a property on rent from the Custodian of
 Enemy Property In 1965. Subsequently the said property was released In
 favour of present owner by the Custodian. The owner had filed a suit
 for recovery of the possession of the said property. The Honble High
 Court decided the matter in favour of the owner and the Corporation was
 directed to vacate the property. The Honble high court also fixed the
 rent @ Rs.30,000/- for the month of January 1980 only on lumpsum/adhoc
 basis alongwith interest and also appointed a Local Commissioner to
 determine the amount of rent for the period from 1.2.1980 till date of
 handing over the possession of the property. Aggrieved by the decisions
 Special Leave Petition before the Honble Supreme Court was filed which
 was dismissed by the court & upheld the earlier judgement of the
 Honble High Court. Accordingly the premises was vacated 4. possession
 handed over to the owner on 28.02.2007. Pending determination by the
 Local Commissioner of the amount payable no provision ha* been made In
 the accounts.
 
 (d) Sundry creditors include unlinked receipts from customers etc., of
 Rs.64.85 lakhs (Previous year Rs.68.28 lakhs) which could not be linked
 to respective customer accounts, for want of adequate details.
 
 3 CAPITAL WORK-IN-PROGRESS
 
 (a) Capital work-in-progress includes expenditure attributable to
 projects, to be apportioned to various projects upon their completion.
 
 (b) The physical Inspection of the incomplete hotel project at Gulmarg
 since 1984-85 has been carried out during 2008-07 by the corporations
 engineers, who have opined that the expected realisable value of the
 assets will be more than the amount Invested up to 31.03.08 of Rs.
 208.29 lakh and consequently no provision for impairment of assets has
 been considered necessary.
 
 4 FIXED ASSETS
 
 (a) Terms of purchase / lease of land having not been finalised and
 registration of title deeds / execution of lease deeds having not been
 effected, liability towards cost / lease rent, ground rent
 and-registration fee, etc, has not been created in respect of Hotel
 Patliputra Ashok at Patna, Ashok Institute of Hospitality and Travel
 Management(AIHSTM) and Tennis Court at New Delhi.
 
 (b) Lease deeds/title deeds have not yet been executed in favour of the
 corporation In respect of land at Hotel Samrat and Office Premises in
 Scope at New Delhi.
 
 (c) Lease deed in respect of land of Ashok Hotel, New Delhi is
 registered in the name of erstwhile Ashoka Hotels Limited, which was
 merged with the corporation on 28th March, 1970.  
 
 (d) Registration of title deeds in favour of the corporation have not
 been effected in respect of:-
 
 I) Land and building of Taj Restaurant at Agra.
 
 II) Land at Gulmarg.
 
 (e) Pending finalisation of cost and adjustment thereof, capitalisation
 of Land, Building, Furniture & Fixtures and Equipment of retained
 Travellers Lodges, Restaurants and Hotel taken over from Ministry of
 Tourism, has been effected based on the payments made.
 
 (f) Pending receipt / scrutiny of final bills of the
 contractors/suppliers, settlement of the rates for extra Items and
 escalation etc., the capitalisation and / or charge to expenditure to
 the extent of Rs 755.79 lakhs has been accounted for based on
 certificates issued by Project Engineers for the work carried out at
 various projects (previous year Rs 248.63 lakhs). Adjustments, If any,
 to cost Is proposed to be carried out upon final settlement of the
 bills.
 
 (g) Premium paid on Leasehold Land at Hotel Samrat has not been
 amortlised in the absence of any tenure in terms of allotment.
 
 4. In respect of Ranchi Ashok Bihar Hotel Corporation Limited
 (Subsidiary corporation) whose property was attempted to be taken over
 by Financial Institutions during 1998-97, provision has been made for
 decrease in the value of investments and estimated lower realiabillity
 of debts and advances, amounting to Rs. 56.55 lakhs (Previous Year Rs.
 77.59 lakhs) (net after write back of Rs. 21.04 lakhs in the current
 year (Previous year Rs. 40.45 lakhs)].
 
 5 DISINVESTMENT OF HOTEL UNITS
 
 (a) At per Government of Indias policy of disinvestment, 10 hotel
 units of the corporation were disinvested in the year 2001-02 and 11
 more Hotel units were disinvested and handed oyer during the year
 2002-03. The entire exercise relating to disinvestment process was
 handled directly by Ministry of Disinvestment, Government of India. The
 salient features of the scheme of demerger between ITDC and respective
 newly incorporated companies for each disinvested hotel unit are as
 under:-
 
 i) With effect from appointed date, i.e. 31.3.2000, the disinvested
 units, pursuant to the provisions contained in section 394 of the
 Companies Act, 1956, were transferred to and vested in the transferee
 companies alongwith all assets, liabilities, debts and obligations
 pertaining to disinvested units.
 
 ii) The units got demerged w.e.f. 31.3.2000 and thereafter up to the
 date of handing over. ITDC is deemed to have carried on all business
 relating to disinvested units for and on account of and In trust for
 the transferee companies.
 
 iii) With effect from 31.3.2000 and up to the date of handing over on
 the date of signing of the share purchase agreements, all profits
 accruing to ITDC or losses arising or incurred by it relating to
 disinvested units were, for all purposes, to be treated as the profits
 or losses, as the case may be, of the
 
 (b) As per the Share Purchase Agreements between the purchasers,
 transferee companies and Government of Indie (Department of Tourism),
 the post closing adjustments are to be settled by the Department of
 Tourism with the respective purchasers on the basis of audited accounts
 of disinvested units as of 31.03.2001. Therefore the amount of Rs.
 1326.12 lakhs (Previous Year Rs.132S.12 lakhs) (comprising of transfer
 of funds from Corporate Office / remittances made and expenses Incurred
 by Headquarters and other units on behalf of disinvested units and net
 of other transactions) has been shown as recoverable from 15 transferee
 companies on account of carrying on the businesses of disinvested units
 for and on account of and In trust for transferee companies as per (a)
 above during the period from 1.4.2001 upto dates of handing over of the
 respective units and the same is Included in Loans & Advances. In case
 of 3 transfer companies (net of similar transactions) amounting to Rs.
 358.45 lakhs (Previous Year Rs. 358.45 lakhs) due to them, Is Included
 In Sundry Creditors. However no confirmation from respective transferee
 companies have been obtained.
 
 (c) Regarding the claim for the period from 1.4.2000 to 31.03.2001 -
 Rs. 3316.30 lakhs (Including Rs. 61.48 lakhs recoverable directly from
 a transferee company in respect of units at Bangalore, the share
 holding of which continues to be with Government and other existing
 shareholders), the claims have been lodged with the Department of
 Tourism, Government, of India and as the Government has not taken any
 decision till date on these claims, the same has not been accounted for
 as recoverable in accounts.
 
 6 Pending completion of the relevant formalities and allotment of
 shares an amount of Rs.73.00 crores received from the Govt, of India
 has been canted under share application money in the Balance Sheet.
 
 7 Rental agreement with Life Insurance Corporation of India (LIC)
 expired on 25.07.2005 and is pending renewal. Pending finalisation of
 terms and conditions and execution of new lease deed, the corporation
 has provided for rent payable to the Life Insurance Corporation of
 India, for premises under Its occupation @ Rs. 60/- per sq.feet as
 against Rs. 100/- per sq.feet originally indicated by the LIC. The
 difference between the amount indicated by the LIC and that provided by
 the Corporation has been included under Contingent Liabilities in para
 1 (a) (i).
 
 8 The Government of India, Ministry of Finance, Deptt. of Expenditure
 had Issued a notification dated 29th August, 2008 of the rules titled
 Central Civil Services (Revised Pay) Rules, 2008.These rules were
 deemed to have come into force to CPSE employees also, from the 1st
 January, 2006. In terms of the rules the benefit of pay revision is to
 be allowed only to employees of CPSEs which are not loss making and
 which are in a position to absorb the additional expenditure. Besides
 in terms of the memorandum dated 14.10.2008, the proposal (which is
 under preparation) prior to its Implementation was to be considered by
 the Board of the respective CPSEs and approved by the administrative
 Ministry / Department. Had the proposal been Implemented during the
 year, the estimated impact on the accounts for 2007-08 would have been
 Rs. 334.13 Lakhs and that for the period upto 2007 would be Rs.449.62
 Lakhs.  adjusting capital of Rs. 50,000) In connection with JV
 operations has been Included under advances.
 
 9. Previous years figures have been regrouped/rearranged wherever
 necessary.