The Directors submit their Report for the financial year ended 31st
Buoyancy in foreign arrivals flowing from smart economic growth enabled
the hotels and tourism industry in India post robust growth in 2003-04.
Foreign tourist arrivals grew in 2003 by 15.3% and Foreign Exchange
earnings for the country crossed Rs.17,000 crores, representing a
growth of 23.3%. The recovery of the travel and tourism industry in
India during 2003 continued during the first three months of 2004, with
foreign tourist inflows growing by 20%. ITC-Welcomgroup, with its
world-class hoteliering capability and strong positioning in chosen
consumer segments consolidated its leadership in the locations where
Favourable market conditions, together with competitively superior
product and service offerings, enabled your Company earn Gross Income
of Rs. 168.72 crores for the year ended 31 st March, 2004, representing
a growth of 22% compared to the previous year. Profit before tax grew
substantially to Rs. 27.83 crores (previous year - Rs.1.44 crores).
Your Company posted a Profit after Tax of Rs. 20.16 crores for the year
ended 31 st March, 2004 against Rs. 0.57 crores in the previous year.
During the year under review, your Company earned foreign exchange of
Rs. 72.17 crores and utilized foreign exchange of Rs. 6.50 crores.
In view of the improved results and the positive outlook for the near
and the long term, your Directors are pleased to recommend a dividend
of Rs. 2/- (previous year - Nil) per equity share for the year ended
31st March, 2004.
The ITC-Welcomgroup hotel chain's foreign exchange earnings for the
year 2003-2004 amounted to Rs. 265.21 crores comprising Rs. 127.21
crores earned by the hotel properties of ITC Limited Rs. 72.17 crores
earned by the hotels owned and licensed by ITC Hotels Limited and Rs.
65.83 crores by the other properties of the chain.
INDUSTRY SCENARIO AND HOTEL OPERATIONS
According to a recent report of the World Travel and Tourism Council,
India is set to become the world's second fastest growing travel
economy in the coming decade, after Turkey. Similar outlook is also
contained in acclaimed publications like the `Conde Nast Traveller' and
the `Lonely Planet', which have declared India as one of the world's
most favoured tourist destinations.
Realising the significance of the Tourism and Hotels sector in
contributing to economic growth and to employment generation and
foreign exchange earnings in particular, a number of policy level
initiatives have been announced further to those contained in the Union
Budget 2003 and the Exim policy thereafter. The Government has
earmarked Rs. 2,500 crores for setting up world-class convention
centres. Apart from cheaper domestic air travel, an open sky policy for
all ASEAN countries is being contemplated, supplemented with planned
outlays towards upgradation of airport infrastructure. Earnings from
incoming tourists is targeted at Rs. 22,000 crores for 2004 - a growth
of nearly 30%. Even at these levels, travel and tourism would
constitute barely 2% of India's GDP, well below the world average of
Despite an overall slowdown in investment over the last few years, a
recent study indicated that growth in hotel room supply roughly
mirrored the growth in GDP. In line with this trend, even at
conservative GDP growth assumptions, the current room supply of
approximately 90,000 rooms would need to increase to at least 130,000
rooms by 2008 to service growth even at minimum levels. Your Company
has always maintained that the hotels sector represents essential
infrastructure for the growth of tourism, trade and commerce. Prospects
of high rates of economic growth therefore present attractive growth
opportunities in the accommodation sector.
Successful execution of your parent company's ambitious investment
programme over the last seven years enabled ITC-Welcomgroup regain its
position as the fastest growing premium hotel chain in the country. The
initial objective of completing the ITC-Welcomgroup chain in the super
deluxe segment in all the six key locations has been accomplished. The
ITC Grand Central is slated to open by end 2004. Peaking at a height of
127 meters, this super deluxe hotel will be one of the tallest hotels
in India. Investments also continue to be directed by your Company at
providing enhanced value addition to guests and at keeping properties
contemporary through renovation and refurbishment.
A major source of competitive advantage for ITC-Welcomgroup is the
chain's Food and Beverage excellence expressed through trusted brands
enjoying enviable consumer franchise: Bukhara, Peshawri, DumPukht,
Dakshin and PanAsian. Your Company's unwavering commitment to
excellence spanning cuisine, accommodation, safety and security is
manifest across 55 properties in 43 locations. Your Company's superior
service and product offering continue to render your hotels the
preferred destination of several world leaders including the Prime
Ministers of Hungary, Brazil, Switzerland and Mauritius, the US
Secretary of State Mr. Colin Powell, Ms. Madelene Albright and
The Company also seeks to capture the attractive growth opportunities
arising from the increase in budget travel. Towards this end, your
Company supported the growth strategy of its subsidiary Fortune Park
Hotels in adding three Fortune Park hotels in Gurgaon, Chennai and
Vijayawada. These mid-market hotels are expected to commence operations
by end of 2004, thereby enhancing presence in this segment to 1515
rooms across 18 locations.
The service edge of your Company, together with its parent's financial
resources and land bank in future growth markets like Bangalore and
Chennai, represent formidable assets that strengthen your Company's
capability in addressing growth challenges. Your Company is therefore
well positioned to sustain leadership in this infrastructure industry,
the growth of which is one of the best indicators of the nation's
AWARDS, RECOGNITION AND ACCREDITATIONS
In a tribute to the globally benchmarked standards of operations in the
ITC-Welcomgroup chain, ITC Hotel Sonar Bangia Sheraton & Towers in
Kolkata was declared one of the Best Hotels of the World by ABTA
Travelspirit (Association of British Travel Agents). The commitment to
consistent high quality standards continues to earn worldwide
accolades. The world famous Bukhara restaurant was once again voted the
`Best Indian Eatery' by the internationally renowned `Restaurant'
magazine. Dublin, the Irish pub at ITC Hotel Maurya Sheraton & Towers
in Delhi has been adjudged one of World's best 25 bars by ABTA
The Company continues to contribute towards sustainable development
through a host of initiatives in the areas of environment preservation,
water and energy conservation and safety. Eight hotels in the chain are
currently accredited with ISO 14001 certification for Environment
Management Systems. ITC Hotel Maurya Sheraton & Towers, New Delhi won
the Gold category Greentech Foundation Safety Award. ITC Hotel Windsor
Sheraton & Towers, Bangalore won the Golden Peacock Environment award
for the Year 2003-04. WelcomHotel Mughal Sheraton and WelcomHotel
Rajputana Palace Sheraton won Greentech Foundation Environment Awards.
ITC Hotel Grand Maratha Sheraton & Towers, Mumbai won the 5 Star rating
of the British Safety Council.
a) Srinivasa Resorts Limited
During the year 2003-04, ITC Hotel Kakatiya Sheraton and Towers
maintained its leadership position in Hyderabad with a turnover of
Rs. 43.16 crores (previous year - Rs. 35.27 crores) and a profit before
tax of Rs. 13.04 crores (previous year - Rs. 7.19 crores). Net profit
stood at Rs. 8.31 crores (previous year - Rs. 3.94 crores) after
providing for income tax of Rs. 4.73 crores (previous year - Rs. 3.25
crores). The Board of Directors of the Company recommended a dividend
of Re. 1.00 per equity share for the year ended 31st March, 2004.
b) Fortune Park Hotels Limited
During the year 2003-04, the Company registered a turnover of Rs.
236.50 lacs (previous year - Rs. 149.96 lacs) and a net profit of Rs.
47.19 lacs (previous year - Rs. 15.61 lacs) after providing for income
tax of Rs. 26.37 lacs (previous year - Rs. 9.92 lacs). The Board of
Directors of the Company recommended a dividend of Re. 1.00 per equity
share for the year ended 31st March, 2004. The Company, which caters to
the mid market segment, manages thirteen operating hotels. Five more
hotels are currently in various stages of development.
c) Bay Islands Hotels Limited
During the year 2003-04, the Company earned an income of Rs. 46.10 lacs
(previous year - Rs. 36.73 lacs) and a net profit of Rs. 23.91 lacs
(previous year - Rs. 19.50 lacs) after providing for income tax of Rs.
17.13 lacs (previous year - Rs. 12.18 lacs). The Board of Directors of
the Company recommended a maiden dividend of Rs. 20.00 per equity share
of Rs. 10O/- each for the year ended 31 st March, 2004.
MAHARAJA HERITAGE RESORTS LIMITED
Maharaja Heritage Resorts Limited, a joint venture with Marudhar Hotels
Private Limited currently has 31 properties operating under the
WelcomHeritage brand. During the year under review, the Company has
increased its paid-up share capital from Rs.10 lacs to Rs.1.80 crores.
ANSAL HOTELS LIMITED
The Company holds 48% equity in Ansal Hotels Limited which owns the
Marriott WelcomHotel at Saket, New Delhi, managed by your Company under
an Operating Services Agreement. During the year under review, the
hotel's income increased by 24% to Rs. 36.76 crores. The Company is in
receipt of approval from the Company Law Board for issuance of equity
shares of Rs. 10/- each at a discount of 35% per share, as fully
paid-up to ITC Limited by way of conversion of ITC's outstanding loan
as at 31st May, 2004 amounting to Rs.164.43 crores. Accordingly,
25,29,65,339 equity shares of Rs. 10/- each will be issued and allotted
to ITC Limited subject to the approval of its members. Consequently,
the equity holding of your Company would reduce to 9% in Ansal Hotels
HUMAN RESOURCE DEVELOPMENT
The Company continues to invest in the upgradation of the quality of
human resource, which makes the decisive difference in this service
industry. ITC-Welcomgroup's recruitment and training programmes are
recognised as benchmarks in the industry.
The Company continued its focus on quality of life for its employees
at all locations, particularly through the creation of quality
accommodation. The housing project at Upper Worli in Mumbai has been
completed, and similar initiatives are in progress at Kolkata, Agra and
Industrial Relations throughout the chain continued to remain cordial.
During the year four Long Term Agreements were successfully concluded
with employee unions at various locations. Your Company's total
manpower strength currently stands at 4100.
CONSERVATION OF ENERGY
The thrust on energy conservation continues resulting in substantial
savings in the cost of electrical energy.
The Company's securities are listed with The Delhi Stock Exchange
Association Limited, New Delhi, The Stock Exchange, Mumbai, The
Calcutta Stock Exchange Association Limited, Kolkata and The National
Stock Exchange of India Limited, Mumbai. The Company is regular in
paying the listing fees. The addresses of the said Stock Exchanges are
stated elsewhere in this Annual Report.
Mr. S.S.H. Rehman stepped down as Director and Managing Director of the
Company on 30th July, 2003. The Board of Directors at their meeting
held on 30th July, 2003 appointed Mr. Nakul Anand, Executive Director
and Chief Operating Officer, as the Managing Director of the Company
for a period of three years effective 30th July, 2003. The Board of
Directors at the said meeting appointed Mr. Rehman as an Additional
Non-Executive Director of the Company. By virtue of the provisions of
Section 260 of the Companies Act, 1956 read with Article 130 of the
Articles of Association of the Company, Mr. Rehman will vacate office
at the forthcoming Annual General Meeting. Notice has been received
from a Member of the Company under Section 257 of the Companies Act,
1956 for appointment of Mr. Rehman as Director. Mr. S.S.H. Rehman has
filed his consent to act as Director of the Company, if appointed.
Appropriate resolutions seeking your approval for the appointment of
Mr. S.S.H. Rehman and Mr. Nakul Anand are included in the notice
convening the 31st Annual General Meeting of the Company.
The Board of Directors at their meeting held on 14th May, 2004
re-appointed Mr. S.C. Sekhar as a Wholetime Director of the Company
effective 28th March, 2004 for a further period of three years. An
appropriate resolution seeking your approval for the re-appointment of
Mr. S.C. Sekhar is included in the notice convening the 31st Annual
In accordance with the provisions of Article 143 of the Articles of
Association of the Company, M/s. Y.C. Deveshwar, Nakul Anand and S.C.
Sekhar will retire by rotation at the forthcoming Annual General
Meeting, and being eligible, offer themselves for re-appointment.
The Auditors of your Company, Messrs. Lovelock & Lewes, will retire at
the forthcoming Annual General Meeting and being eligible, offer
themselves for re-appointment.
Particulars of employees required to be disclosed in accordance with
the provisions of Section 217(2A) of the Companies Act, 1956 and the
certificate of the Auditors, Messrs. Lovelock & Lewes confirming
compliance of conditions of Corporate Governance as stipulated under
Clause 49 of the Listing Agreement, are annexed to this Report.
The Audit Committee of the Company reviewed the financial statements
for the year under review at its meeting held on 14th May, 2004 and
recommended the same for the approval of the Board of Directors.
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors
state that :
a) in the preparation of annual accounts under review, the applicable
accounting standards had been followed, b) appropriate accounting
policies were selected and applied consistently and reasonable and
prudent judgements and estimates were made so as to give a true and
fair view of the state of affairs of the Company at the end of the
financial year under review and of the profit or loss of the Company
for that period, c) proper and sufficient care was taken 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, d) the annual accounts are prepared on a going concern
basis. The required disclosures and the significant accounting policies
followed are set out in Schedules 21 and 22 respectively, to the annual
The Company believes that the long term prospects for the travel and
tourism industry in India are attractive. Your Directors look forward
to the future with confidence.
On behalf of the Board
Place: Kolkata K. VAIDYANATH NAKUL ANAND
Date : 14th May, 2004 Director Managing Director