1.  Background
 
 Royal Orchid Hotels Limited (''the Company'') was incorporated on 3rd
 January 1986 as Universal Resorts Limited to carry on the business and
 management of hotels/holiday resorts and related services. The name of
 the Company was changed to Royal Orchid Hotels Limited on 10 April
 1997. The Company currently operates the following hotel properties -
 Royal Orchid Hotel, Bangalore, Ramada, Bangalore, Royal Orchid
 Metropole, Royal Orchid Brindavan Gardens, Royal Orchid Central, Pune
 and Royal Orchid Central Kireeti, Hospet. Additionally the Company has
 also entered into an agreement to manage and operate hotels for Royal
 Orchid Golden Suites, Pune and Royal Orchid Golden Suites, Bangalore.
 
 2.  Leases
 
 Operating leases
 
 The key operating lease arrangements entered into by the Company are
 summarised below:
 
 Hotel Royal Orchid
 
 The Company has entered into various non-cancellable tri-partite
 agreements along with its Managing Director and the Kamataka State
 Tourism Development Corporation (''KSTDC'') to lease lands on which the
 hotel premises has been constructed and adjacent areas. The primary
 lease periods for these agreements is 30 years and are further
 extendable by a period between 10 to 30 years at the option of the
 Company and carry an escalation provision for the increase in annual
 rent by 15 % every 10 years thereafter.
 
 Additionally, the Company has also entered into an agreement with its
 managing director for the use of his 50 % interest in the leased lands
 with the value of this consideration being determined at 7 60 million,
 payable as an interest free security deposit repayable on the
 termination of the lease with KSTDC. This consideration could be
 discharged either in cash or through the issue of equity shares of the
 Company. The Company discharged this consideration through the
 allotment of 6 million equity shares at par through July 1999.
 
 Ramada
 
 Effective July 2002, the Company entered into a tri-partite agreement
 with Hotel Stay Longer Private Limited and Baljee Hotels and Real
 Estates Private Limited, companies under the same management, to lease
 the hotel premises and related assets at Ramada. This agreement was for
 an initial period of 11 months, renewable at the option of the Company
 and it has deposited an interest-free security deposit of Rs. 10
 million with Baljee Hotels and Real Estate Private Limited which is
 repayable on the termination of the lease agreement.
 
 This agreement has been revised effective 1 August 2008 for a period of
 eleven months with an option to renew for a further 3 terms of 11
 months each. As per the agreement, the Company is required to make
 annual payments at a specified percentage of the gross room revenues or
 a minimum committed amount, whichever is higher. This lease charge is
 paid to Hotel Stay Longer Private Limited and Baljee Hotels and Real
 Estate Private Limited at a pre- determined ratio.
 
 Royal Orchid Metropole
 
 In May 2004, the Company entered into a lease agreement with Jungle
 Lodges and Resorts Limited (''JLR''), a Government of Kamataka
 Undertaking for the use of the land and building representing Royal
 Orchid Metropole at Mysore for a non-cancellable period of 15 years. As
 a consideration, the Company is required to pay an annual amount
 comprising a fixed charge per annum and a revenue share of the annual
 revenues in excess of a specified limit.
 
 Royal Orchid Brindavan
 
 In March 2006, the Company entered into a lease agreement with Jungle
 Lodges and Resorts Limited (''JLR''), a Government of Kamataka
 Undertaking for the use of the land and building representing Hotel
 Krishna Raja Sagar at Mysore for a non-cancellable period of 15 years
 commencing from the readiness date. As a consideration, the Company is
 required to pay an annual amount comprising a fixed charge per annum
 and a revenue share of the annual revenues in excess of a specified
 limit.
 
 Royal Orchid Central, Pune
 
 In July 2006, the Company entered into an agreement for the use of land
 and building representing the hotel property for a non-cancellable
 lease period of 5 years. The lease term for the said property is 10
 years and extendable by another 10 years subject to conditions as
 perthe agreement.
 
 As a consideration for the property the Company is required to pay a
 minimum guaranteed lease rent escalated at 15% at an interval of every
 3 years or increasing percentage of Net Room Revenue (NRR) whichever is
 higher.
 
 Hospef
 
 In May 2010, the Company entered into lease agreement with Ennoble
 Hotels International Limited for the use of land and building
 representing the hotel property for a cancellable lease period of 3
 years. The lease period is extendable for a further period of 5 years
 subject to other conditions. As per the agreement, the Company is
 required to make monthly payments at a specified percentage of sales
 revenue.
 
 Corporate Office
 
 The Company has entered into a lease agreement for the corporate office
 premises and related assets. The agreement is for an initial period of
 36 months, renewable at the option of the lessor or the Company. As a
 consideration for the property the Company is required to pay a minimum
 guaranteed lease rent escalated at 15% at an interval of every 3 years.
 
 Lease expenses
 
 The lease expense for cancellable and non-cancellable operating leases
 during the year ended 31 March 2011 was Rs. 86,383,168 (31 March 2010-
 Rs. 86,031,538).
 
 3.  Commitments and contingencies
 
 a) Litigations
 
 i) The Company has been named as a defendant in two civil suits filed
 restraining the Company from using certain parts of land taken on lease
 from the KSTDC for the operation of the Royal Orchid Hotel, which are
 adjacent to the hotel premises. Consequently, these lands are currently
 not being utilised by the Company. These cases are pending with the
 Civil Courts and scheduled for hearings shortly. Management believes
 that these cases will be settled in its favour and will not adversely
 affect its operations.
 
 ii) During the year ended 31 March 2008, the Company filed a legal suit
 on a lessor for a property taken on lease which is currently under
 construction and assigned to its subsidiary Royal Orchid Hyderabad
 Private Limited. The Company had injunctive relief to restrain the
 lessor from selling or mortgaging the property or carrying out the
 business of a hotel without the consent of the Company. The Company has
 paid Rs. 10,000,000 as a refundable security deposit under this lease
 agreement. During the year the Company has obtained the award from the
 Arbitrator for the refund of the deposit along with interest from the
 lessor which has been challenged by the lessor in the High court. The
 management believes that the case will be settled in their favour and
 hence will not affect its operations.
 
 iii) The Company has been named as a defendant along with Cygnus
 Business Consulting & Research Private Limited in a suit filed around
 July 2008 by Kamat Hotels (India) Limited (''the plaintiff) restraining
 the alleged use of the trademark of the plaintiff by the Company since
 1997. The plaintiff seeks a relief of a permanent injuction restraining
 the Company from using the trademark ''Royal Orchid''. The plaintiff had
 filed an application seeking an interim injuction during the pendency
 of the above proceedings. The Bombay High Court vide its interim order
 dated April 05, 2011, has allowed the Company to continue to operate
 its current hotels as on that date but at the same time restraining the
 Company from opening new hotels under the said brand. However, the
 Division bench of the Bombay High court vide its order dated May
 06,2011 has partially stayed operation of the said order and allowed
 opening of one of Company''s proposed hotels in Vadodara under the
 ''Royal Orchid'' brand. Based on a independent legal advise the
 management believes that the case will be settled in its favour and
 will not affect its current and future operations.
 
 b) Guarantees
 
 The Company has given guarantees to banks for loans sanctioned to
 subsidiary and joint ventures amounting to Rs.2,200,000,000 (31 March
 2010- Rs. 1,250,000,000). The loans availed and outstanding as at 31
 March2011- Rs. 1,111,699,985 (31 March 2010- Rs. 489,893,499)
 
 c) Capital commitments
 
 Estimated amount ofcontracts remaining to be executed on capital
 account and not provided for is Rs. 408,806,124 (31 March 2010- Rs.
 296,286,302)
 
 d) Export obligation
 
 The Company has received various Export Promotion Capital Goods
 (''EPCG'') licenses which entitles it to import capital goods at a
 concessional rate of duty. Against these imports the Company has an
 export obligation equal to eight times the duty amount saved. The
 Company''s export turnovertill date is in excess of this obligation.
 
 4.  Related party transactions
 
 i. Parties where control exists includes:
 
 Name of party Nature of relationship
 
 Icon Hospitality Private Limited Subsidiary
 
 Maruti Comforts and Inn Private Limited Subsidiary
 
 Royal Orchid Hyderabad Private Limited.  Subsidiary
 
 Royal Orchid Jaipur Private Limited Subsidiary
 
 A B Holdings Private Limited Subsidiary
 
 Royal Orchid East Private Limited Subsidiary (subsidiary of A B
 Holdings Private Limited)
 
 Royal Orchid South Private Limited Subsidiary
 
 Royal Orchid Shimla Private Limited Subsidiary
 
 Royal Orchid Goa Private Limited Subsidiary
 
 Royal Orchid Maharashtra Private Limited Subsidiary
 
 Royal Orchid Mumbai Private Limited Subsidiary
 
 Multihotels Limited Subsidiary
 
 Royal Orchid Ahmedabad Private Limited Subsidiary
 
 Amartara Hospitality Private Limited Subsidiary
 
 Chander K. Baljee Managing Director and Key Management Personnel
 
 Relatives of key management personnel (KMP)
 
 Sunil Sikka Arjun Baljee Keshav Baljee Sunita Baljee
 
 Hi.  Entities controlled by KMP
 
 Harsha Farms Private Limited
 
 Royal Orchid West Private Limited
 
 Baljee Hotels and Real Estate Private Limited
 
 Hotel Staylonger Private Limited
 
 Royal Orchid Resorts Private Limited
 
 Trans Himalayan Power Private Limited
 
 B. Defined contribution plan
 
 The Company makes contribution to the statutory provident fund as per
 Employees Provident Fund and Miscellaneous Provision Act, 1952.
 Contribution made during the year ended 31 March 2011 is Rs. 6,013,112
 (31 March 2010 - Rs. 4,592,039)
 
 5. Stock based compensation
 
 The Royal Orchid Hotels Limited Employee Stock Option Plan 2006 was
 approved in the Annual General Meeting of the members held on 13
 September 2006. Subsequently at the Annual General Meeting held on 8
 August 2007 the aforesaid scheme was amended to include the employees
 of the subsidiaries of the Company and to increase the period available
 to exercise the options.
 
 The plan provides for the issuance of stock options to eligible
 employees (including directors of the Company) with the total options
 issuable under the Plan not to exceed 2,723,300 options (being 10% of
 the issued and paid up capital) and includes a limit for the maximum
 number of options that may be granted to each employee. Under the plan,
 these options vest over a period of three years after the date of grant
 and can be exercised within a period of one year from the date of
 vesting. As per the ESOP scheme of the Company, all the taxes, are to
 be borne by the employees and hence will not have an impact on the
 profit and loss account of the Company.
 
 At the Annual General Meeting held on 24 September 2010 the
 shareholders authorised the Board to fix the exercise price based on
 the prevailing market price and to amend the validity period for
 exercise of options.
 
 The weighted average exercise price of the options outstanding at 31
 March 2011 is Rs. 165 and they had weighted average remaining
 contractual life of Nil (31 March 2010: 9.33 months).
 
 6. Segmental Information
 
 The Company''s business comprises of operation of hotels and allied
 services, which represent one business segment as they are subject to
 risks and returns that are similar to each other. Further the Company
 derives its entire revenues from services rendered in India.
 Consequently, the disclosure of business and geographic segment - wise
 information is not applicable to the Company.
 
 b. During the year ended 31 March 2010, the Company has paid
 remuneration payable to Managing director (''MD'') in excess of the
 limits defined in Schedule XIII of Companies Act, 1956 amounting to Rs.
 9,600,000.  These amounts have been approved by the shareholders of the
 Company. The Company had provided for the remuneration payable in
 excess of the limits defined in the approvals from Central Government
 as recoverable from the MD. During the year ended 31 March 2011, the
 Company has obtained the necessary approvals for the said remuneration
 and the receivable of Rs. 9,600,000 has been charged to the Profit and
 loss Account. The amount disclosed in the schedule above does include
 the said amount.
 
 7.  The Ministry of Corporate Affairs vide its Notification no.
 S.O.301(E) dated 8th February 2011 has exempted Hotel Companies from
 disclosing the quantitative information as required under paragraphs
 3(i)(a) and 3(ii)(d) of Part II of Schedule VI of the Companies Act,
 1956 and accordingly, the same are not furnished
 
 8.  Prior year comparatives
 
 Prior year figures have been regrouped / reclassified wherever
 necessary to conform to the current year''s presentation.