1.  Nature of operations:
 
 U.P. Hotels Limited (''the Company'') is incorporated and engaged in the
 business of operating hotels. The Company has properties in four
 locations.
 
 2.  Basis of Preparation:
 
 i) The financial statements have been prepared to comply in all
 material aspects with the Notified Accounting Standards by Companies
 Accounting Standards Rules, 2006 and the relevant provisions of the
 Companies Act, 1956.
 
 ii) Financial statements are based on historical cost convention on
 accrual basis, except where impairment is made and revaluation is
 carried out.
 
 iii) Accounting policies have been consistently applied by the Company
 and are consistent with those used in the previous year except to the
 extent mention in Notes to the Accounts.
 
 3.  Use of Estimates:
 
 The preparation of financial statements are in conformity with
 generally accepted accounting principles that requires the management
 to make estimates and assumptions that affect the reported amount of
 assets and liabilities and disclosure of contingent liabilities at the
 date of financial statements and the reported amount of revenues and
 expenses during the reporting year end. Although these estimates are
 based upon management''s best knowledge of current events and actions,
 actual results could differ from these estimates.
 
 4.  Fixed Assets & Depreciation :
 
 i) Fixed Assets are stated at cost (or revalued amount as the case may
 be), less accumulated depreciation and impairment losses, if any. Cost
 comprises the purchase price/cost of acquisition including taxes,
 duties, freight and other incidental expenses related to acquisition,
 construction and installation to bring the asset to its working
 condition for its intended use. Borrowing costs that are directly
 attributable to acquisition, construction or production of a qualifying
 asset which take substantial period of time to get
 
 ready are also capitalized to the extent they relate to the period till
 such assets are ready to be put to use.
 
 Wherever assets are revalued, amount added on revaluation based on
 approved valuer''s report is disclosed separately as required by the
 Companies Act, 1956.
 
 ii) Capital work in progress includes cost of assets, expenditure
 incurred and interest on funds deployed.
 
 iii) No write off is made on leasehold land acquired on 99 years basis.
 Leasehold land acquired for a shorter period is amortised over the
 period of lease. Freehold land is not amortised.  iv) Depreciation on
 Fixed Assets is provided on Straight Line Method over the estimated
 useful life of the fixed assets which is in line with the corresponding
 rates prescribed under Schedule XIV of the Companies Act, 1956.
 Depreciation on additions is provided on pro-rata basis from the date
 on which the assets have been put to use and individual assets acquired
 for less than Rs. 5000 are depreciated @ 100% fully in the year of
 purchase / capitalization.
 
 v) The difference between depreciation calculated and provided on the
 revalued amount of fixed assets and depreciation calculated on the
 original cost of fixed assets has been recouped from Revaluation
 Reserve.
 
 vi) Grants from the Government are recognized when there is a
 reasonable assurance that the grant will be received and all attaching
 conditions will be complied with. Where the grant relates to a
 depreciable asset, its value is deducted from the gross value to arrive
 at the carrying amount of related asset.
 
 5.  Intangible Assets :
 
 Intangible assets are stated at cost of acquisition less accumulated
 depreciation. Trade marks are depreciated over a period of sixty
 months. Computer Software is amortised over a period of sixty months.
 Amortisation is done on the straight line method.
 
 6.  Impairment of Assets :
 
 The Company on an annual basis makes an assessment of any indication
 that may lead to impairment of assets. If any such indication exists,
 the Company estimates the recoverable amount of assets. If such
 recoverable amount is less than the carrying amount, then the carrying
 amount is reduced to its recoverable amount by treating the difference
 between them as impairment loss and is charged to the Profit & Loss
 Account. The impairment loss recognized in prior accounting period is
 reversed if there has been a change in the estimate of recoverable
 amount.
 
 7.  Investments :
 
 Investment that are ready realizable and intended to be held for sale
 are classified as Current Investment. All other investments are
 classified as long term investment. Current investments comprising
 investments in units of mutual funds are carried at lower of cost and
 fair value determined on individual investment basis. Long term
 investments are carried at cost. However, a provision for diminution in
 value is made to recognize a decline other than temporary in the value
 of investments.
 
 8.  Inventories :
 
 i) Inventories at the year end are as per the physical verification
 conducted by the management.
 
 ii) Inventories (comprising of provisions & beverages, wines & liquor,
 cigar & smokes, crockery, cutlery, chinaware, linen & other stores) in
 hand are stated at lower of cost and net realisable value after
 considering obsolescence. Cost is ascertained on weighted average basis
 except for in one unit where it is valued on First in First out basis.
 Net realizable value is the estimated selling price in the ordinary
 course of the business less estimated cost necessary to make the sale.
 Stock in transit is valued at cost.
 
 iii) Unserviceable / damaged / discarded inventories and shortages
 observed at the time of physical verification are charged to Profit &
 Loss Account.
 
 iv) Circulating stocks of crockery, cutlery, uniform, linen etc. and
 stock of printed stationery are charged off to Profit & Loss Account as
 consumption.
 
 9.  Sundry Debtors / Loans & Advances:
 
 Sundry Debtors, Loans & Advances are stated after adequate provisions
 and have a value on realisation at least equal to the amount stated.
 
 10.  Recognition of Income & Expenses :
 
 i) Revenue is recognized to the extent that it is probable that the
 economic benefits will flow to the Company and the revenue can be
 reliably measured.
 
 ii) Revenue from hotel operations comprises of sale of rooms, food &
 beverages, wines & liquors, cigar & smokes, telephone & telex, laundry
 and other services (swimming pool, health/Spa centre, vehicle hire,
 banquets hire, hire charges etc).  Revenue is recognized when the
 significant risks and rewards of ownership has passed to the buyer,
 which coincides with the rendering of services and are disclosed net of
 allowances.
 
 iii) Income from interest is credited to revenue in the year of its
 accrual on time proportion basis taking into account the amount
 deposited and rate of interest. The income is stated in full with the
 tax deducted thereon being accounted for under the head Tax refunds /
 payments. Dividend income is stated at gross and is recognized when
 rights to receive payment is established.
 
 iv) Shop license fee revenue is recognized over the period of contract
 on an equitable straight line basis.
 
 Amount collectible as maintenance / recovery of dues from shop license
 are recognized over the period of contract, on accrual basis.
 Corresponding costs are recorded as incurred.
 
 v) Expenditure incurred on renovation / improvement /replacements /
 repairs in or in relation to existing facility, structure, plant or
 equipment are charged off to revenue except in situation where these
 result in a long term economic benefit, in which case these are
 capitalized. Where there is extension to building or increase in
 capacity of equipment & plant, the amounts incurred thereon are
 capitalized.
 
 vi) Income / Sales exclude taxes, such as Value added tax, Luxury Tax,
 Service Tax etc.
 
 11.  Borrowing Costs:
 
 Borrowing costs include interest and commitment charges on borrowings,
 amortization of costs incurred in connection with the arrangement of
 borrowings and finance charges under leases. Costs incurred on
 borrowings, directly attributable to development projects, which take a
 substantial period of time to complete, are capitalized and all other
 borrowing costs are recognized in the Profit and Loss Account in the
 period in which they are incurred.
 
 12.  Employees Benefits :
 
 i) Defined Contribution Plans
 
 Company''s contribution paid / payable during the year to ESIC and
 Provident Fund are recognized in the Profit & Loss Account. Provident
 Fund and ESIC contributions are made to a government administered
 Provident /ESIC Fund towards which the company has no further
 obligation beyond its monthly contribution.
 
 ii) Defined Benefit Plans
 
 Company provides retirement benefits in the form of gratuity (funded)
 at all units except one unit and leave encashment (unfunded) which are
 measured using the Projected unit credit method with actuarial
 valuation being carried out at each valuation date.
 
 iii) Termination benefits are recognized as an expense as and when
 incurred.  iv) Actuarial gains / losses are immediately taken to Profit
 & Loss Account and are not deferred.
 
 v) Short term employee benefit is recognized as an expense in Profit &
 Loss Account of the year in which related service is rendered.
 
 13.  Foreign Currency Transaction:
 
 i) Initial Recognition: Foreign currency transactions are recorded in
 the reporting currency, by applying to the foreign currency amount the
 exchange rate between the reporting currency and the foreign currency
 at the date of the transaction.
 
 ii) Conversion : Foreign currency monetary items are reported using the
 closing rate. Non-monetary items which are carried in terms of
 historical cost denominated in a foreign currency are reported using
 the exchange rate at the date of the transaction, and non-monetary
 items which are carried at fair value on the similar valuation
 denominated in a foreign currency, are reported using the exchange
 rates that existed when the values were determined.
 
 iii) Exchange differences: Exchange differences arising on the
 settlement of monetary items or on reporting monetary items at rates
 different from those at which they were initially recorded during the
 year or reported in previous financial statement are recognized as
 income or as expenses in the year in which they arise.
 
 14.  Lease :
 
 i) In respect of assets acquired as finance lease on or after 1.4.2001,
 the same are capitalised at the lower of the fair value and present
 value of the minimum lease payments at the inception of the lease term.
 Lease payments are apportioned between finance charges and reduction of
 lease liabilities so as to achieve a
 
 constant rate of interest on the remaining balance of liability.
 Finance charges are charged to Profit & Loss Account.
 
 ii) Leases where the lessor effectively retains substantially all the
 risks and benefits of ownership of the leased assets are classified as
 operating leases. Operating lease payments are recognized as an expense
 in the profit & loss account on a straight-line basis over the lease
 term.
 
 15.  Earnings per share
 
 Basic earnings per share are calculated by dividing the net profit or
 loss for the year attributable to equity shareholders by the weighted
 average number of equity shares outstanding during the period. For the
 purpose of calculating diluted earnings per share, the net profit or
 loss for the year attributable to equity shareholders and the weighted
 average number of shares outstanding during the period are adjusted for
 the effects of all dilutive potential equity shares, if any.
 
 16.  Provision, Contingent Liabilities and Contingent Assets:
 
 Provision is recognized when the Company has a present obligation as a
 result of past event and it is probable that an outflow of resources
 will be required to settle the obligation and when a reliable estimate
 of the amount of the obligation can be made. Provisions are not
 discounted to its present value and are determined based on best
 estimate required to settle the obligation at the balance sheet date.
 Contingent liabilities are recognized only when there is possible
 obligation arising from the past events due to occurrence or non
 occurrence of one or more uncertain future events not wholly within the
 control of the Company or where any present obligation cannot be
 measured in terms of future outflow of resources or where a reliable
 estimate of the obligation cannot be made.  The obligations are
 reviewed at each balance sheet date and adjusted to reflect the current
 best estimates.  Contingent assets are not recognized in the financial
 statements.
 
 17.  Proposed Dividend :
 
 Dividend recommended by the Board of Directors is provided for in the
 Accounts, pending Shareholders'' approval.
 
 18.  Taxes on Income :
 
 Tax expenses comprises current tax (income tax & wealth tax) after
 taking into consideration benefits available under the provisions of
 Income tax Act, 1961 & Wealth tax Act, 1957 and deferred tax.
 
 The deferred tax charged or credit is recognised using current tax
 rates. Where there is unabsorbed depreciation or carried forward
 losses, deferred tax assets are recognised only if there is virtual
 certainty of realisation of such assets. Other deferred tax assets are
 recognised only to the extent there is a reasonable certainty of
 realisation in future. Deferred tax assets / liabilities are reviewed
 at each balance sheet date based on developments during the year and
 available case laws, to re-assess realisation /liabilities.
 
 19.  Prior period, Extra Ordinary items and Changes in Policies :
 
 Prior period and Extra – Ordinary items and Changes in Accounting
 Policies having material impact on the financial affairs of the Company
 are disclosed.
 
 20.  Events after the Balance Sheet date :
 
 Events occurring after the date of the Balance Sheet which affect the
 financial position to a material extent are taken into cognizance.