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Indian Hotels Company Ltd.

BSE: 500850 | NSE: INDHOTEL |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE053A01029 | SECTOR: Hotels

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Annual Report

For Year :
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Director’s Report

TO THE MEMBERS The Directors have pleasure in presenting the 114th Annual Report of the Company together with its Audited Statement of Profit and Loss for the year ended March 31, 2015 and the Balance Sheet as on that date: FINANCIAL RESULTS Standalone Consolidated Particulars 2014-15 2013-14 2014-15 2013-14 Rs. crores Rs. crores Rs. crores Rs. crores Total Income 2,103.60 1,977.33 4,287.35 4,125.94 Profit before Depreciation, Finance Costs and Tax 437.89 437.28 587.29 619.32 Less: Depreciation 117.85 122.26 291.29 308.13 Less: Finance Costs 89.46 98.82 175.57 168.51 Profit before Tax & Exceptional Item 230.58 216.20 120.43 142.68 Less: Exceptional Items 228.70 737.10 352.91 554,84 Profit/(Loss) before Tax 1.88 (520.90) (232.48) (412.16) Less: Provision for Tax 125.27 74.43 159.59 136.38 Add : MAT Credit 41.37 - 42.94 0.59 Add: Excess Provision of Tax of earlier years (Net) - 4.84 2.05 24.84 Loss after Tax (82.02) (590.49) (347.08) (523.11) Profit/(Loss) attributable to Minority Interest - - (30.98) (17.49) Share of Profit/ (Loss) of Associates - - (0.04) (13.25) Loss after Tax, Minority Interest & Share of Associates (82.02) (590.49) (378.10) (553.85) Add: Balance brought forward from the previous year (389.48) 65.29 (1,294.54) (862.50) Add: Transfer from Debenture Redemption Reserve - 135.00 - 135.00 Less: Transfer to General Reserve - - (1.65) (3.45) Less: Transfer to Reserve Fund - - (3.00) (2.50) Add: Tax credit for Dividend Distribution Tax - 0.72 - - Amount available for Appropriation (471,50) (389.48) (1,677.29) (1,287.30) APPROPRIATIONS Tax on Dividend - - 3.53 7.24 Balance carried to Balance Sheet (471,50) (389.48) (1,680.82) (1,294,54) (471.50) (389.48) (1,677.29) (1,287.30) STATE OF AFFAIRS OF THE COMPANY /BUSINESS OVERVIEW GDP growth in India during the year is estimated at 7.4%. Inflation has decreased significantly from as high as 11.2% in November, 2013 to 5.2% in March, 2015. Inflation expectation in the future has softened to single digit. The Indian Rupee was relatively stable against the US Dollar and from 59/$ as at the beginning of the year, the exchange rate hovered around 61/$ levels on the average and closed at 62/$ at the year end. All the above factors have led the Indian Economy on a recovery and growth path. International tourist arrivals, worldwide, have grown to 1.14 billion in 2014, 4.7% above 2013 and are likely to grow 3% to 4% in 2015. Foreign Tourist Arrivals, in India, during 2014 was 7.46 million, which translates to a 7.1% growth over the previous year. Foreign Exchange Earnings (FEEs) have grown by 6.6% at US$ 19.65 billion for the year. Taj Group launched one new Vivanta by Taj hotel during the latter part of the year at Dwarka, New Delhi, besides three new Gateway hotels at Raipur, Gondia and Gurgaon, respectively. The Group also entered into a new management contract for a new Taj at Downtown, Dubai (296 rooms). Also, the Taj Group exited two of its international properties at Marrakech and Sydney, respectively. The Group currently has a portfolio of 33 Ginger hotels with an inventory of 3,038 rooms (including 5 hotels under management contract and one transit guest house). The inventory of the Taj Group of Hotels now stands at 131 hotels with 15,751 rooms. Your Company continues to pursue expansion both in the domestic and international market, under various brands to achieve sustainable and profitable growth. INCOME Total Income for the year ended March 31, 2015 at Rs. 2,103.60 crores was higher than previous year by 6%. While Room Income was higher by 3% than the previous year due to improved ARR, Food & Beverage income increased by 5% over the previous year, aided by growth in restaurant sales and banqueting income. DEPRECIATION AND FINANCE COSTS Depreciation for the year was lower at Rs. 117.85 crores as compared to Rs. 122.26 crores for the previous year. Finance costs for the year ended March 31, 2015, net of currency swap gains, at Rs. 89.46 crores were lower than the finance costs of the preceding year by Rs. 9.36 crores due to retirement of debt during the year out of the Rights Issue proceeds. PROFIT BEFORE TAX & EXCEPTIONAL ITEM Profit before Tax & Exceptional Item at Rs. 230.58 crores was higher than the previous year by 7%. EXCEPTIONAL ITEMS Exceptional Items includes foreign exchange loss of Rs. 24.75 crores pertaining to amortization of the exchange loss on the year end revaluation of the US$ 95 million External Commercial Borrowing (ECB) that is due to be retired commencing January 22, 2016. Performance of long-term investments are being monitored by the Company on a continuous basis and based on review undertaken on any adjustments necessary to the carrying value of these investments, the Company, during the quarter ended March 31, 2015 has recognised a diminution, other than temporary of Rs. 213.49 crores. Diminution, other than temporary of Rs. 150 crores has been recognised in the Company''s investment in Taj International Hotels (H.K.) Ltd (a wholly owned subsidiary) which in turn holds investments in the Company''s various international entities, one of which holds its investment in Belmond Ltd (previously Orient-Express Hotels Limited), Rs. 57.09 crores in the investment held in IHMS Hotels (SA) Proprietary Ltd (a jointly controlled entity) and T 6.40 crores in the investment held in Taj Safaris Limited (a jointly controlled entity). < During the year, the Company has divested its investments in the following non-operating subsidiaries to an associate: - Ideal Ice and Cold Storage Co. Ltd. - Residency Food and Beverages Ltd. - Taj Rhein Shoes Co. Ltd. The objective of the foregoing was to simplify the Company''s operating structure. Consequent to the above, a loss on sale of investments, to the tune of f 2.02 crores, has been booked. The Company has written back provision of Rs. 11.56 crores earlier carried towards an obligation of an associate company, that is now no longer required. BORROWINGS Total borrowings (excluding Compulsorily Convertible Debentures) stood at Rs. 2,209.08 crores at March 31, 2015 against Rs. 2,690.60 crores on March 31, 2014 for the Standalone entity; a decrease of Rs. 481.52 crores due to repayment of debt out of Rights Issue proceeds. PROFIT/ (LOSS) Profit before Tax for the year was at Rs. 1.88 crores, as compared to the previous year''s Loss of T (520.90) crores. The Loss after Tax for the year was at Rs. (82.02) crores, as compared to previous year''s Loss of Rs. (590.49) crores. CONSOLIDATED FINANCIAL RESULTS Consolidated turnover of the Company for the year ended March 31, 2015, aggregated to Rs. 4,287.35 crores against Rs. 4,125.94 crores for the previous year. Consolidated turnover increased by 4% due to improved turnover of the Parent Company and new hotels made operational during the year. Profit before Tax and Exceptional Items of Rs. 120.43 crores declined over the corresponding profit for the preceding year by 16%. However, Loss after Tax aggregated to Rs. (378.10) crores for the year against Loss after Tax of Rs. (553.85) crores for the previous year. Consolidated financial results were impacted due to Exceptional Items recognised, aggregating to Rs. 352.91 crores, which includes the settlement of a financial exposure of Taj International Hotels (H.K) Limited, a Wholly Owned Subsidiary (WOS) of Rs. 25.85 crores, diminution in value of long term investments of Rs. 306.51 crores which comprises mainly diminution in investment held by Samsara Properties Limited (a WOS) , impairment of goodwill by IHMS Hotels (SA)(Pty) Ltd (a jointly controlled entity) of Rs. 16.00 crores, exchange loss on long term borrowings / assets of Rs. 51.07 crores, profit on sale of the Blue Hotel, Sydney of Rs. 27.97 crores and profit on sale of investments arising out of divestment of certain domestic subsidiaries of Rs. 18.55 crores. During the year, the Company continued to face a challenging environment, not just in the domestic market, but also across key international markets wherein the Company owns / operates hotels. The Company''s hotels in the US have reported relatively flat turnover and EBITDA compared to the previous year. The renovations undertaken at Sri Lanka and Maldives in recent years have been well received by the guests, as is evident from the improved performances. CAPITAL EXPENDITURE During the year under review, the Company incurred Rs. 137.65 crores towards capital expenditure, most part of which was incurred on the Company''s projects covering Vivanta by Taj hotels at Dwarka, Guwahati and new IT initiatives. DIVIDEND On account of the Loss After Tax reported by the Company during the current year, resultant of the recognition of the other than temporary, diminution in the value of some of the investments, the Board of Directors did not recommend any dividend for the year 2014-15 (previous year Nil). FIXED DEPOSITS The outstanding amount of Fixed Deposits placed with your Company was Nil (Previous year Nil) excluding;Rs. 1.04 crores (Previous year Rs. 1.75 crores), which remained unclaimed by depositors as on March 31, 2015. Your Company has stopped accepting and/or renewing Fixed Deposits from the general public and shareholders. LOANS, GUARANTEES OR INVESTMENTS The Company is exempt from the provisions of Section 186 of the Companies Act, 2013 (Act) with regard to Loans & Guarantees. Details of Investments made are given in the notes to the Financial Statements. CORPORATE SOCIAL RESPONSIBILITY A brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure I of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy is available on the website of the Company. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is well defined in the organisation. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of Internal Audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions suggested are presented to the Audit Committee of the Board. VIGIL MECHANISM / WHISTLE BLOWER POLICY The Company has adopted a Whistle Blower Policy to provide a mechanism for the Directors and employees to report genuine concerns about any unethical behaviour, actual or suspected fraud or violation of the Company''s Code of Conduct. The provisions of this policy are in line with the provisions of Section 177 (9) of the Act and the revised Clause 49 of the Listing Agreement. The Whistle Blower Policy can be accessed on the Company''s website at the link: http://www.tajhotels. com/tajcorporate/pdf/whistle blower policy and vigil mechanism.pdf. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure II. AUDIT COMMITTEE Details pertaining to the composition of Audit Committee are included in the Corporate Governance Report, which forms part of the Annual Report. RELATED PARTY TRANSACTIONS All Related Party Transactions (RPTs) that were entered into during the financial year were on an arm''s length basis and in the ordinary course of business. For one RPT, where the Company divested its entire stake, along with that of its other subsidiaries in Ideal Ice and Cold Storage Co Ltd, Residency Food and Beverages Ltd and Taj Rhein Shoes Co Ltd in favour of Taida Trading and Industries Limited, a Related Party at a price determined through a third party valuation, it being not in the ordinary course of business, the requisite approval of the Audit Committee and the Board was obtained. There were no materially significant RPTs entered into by the Company during the year. The Company has formulated a policy on dealing with RPTs which can be accessed on the Company''s website under the link:http://www.tajhotels.com/ tajcorporate/pdf/policv on related party transactions.pdf. RISK MANAGEMENT Although not mandatory, the Company has constituted a Risk Management Committee as a measure of good governance. The details of the Committee and its terms of reference are set out in the Corporate Governance Report. The Company has adopted a Risk Management Policy, pursuant to the provisions of Section 134 of the Act, which has a robust Risk Management framework to identify and evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on business objective and enhance the Company''s competitive advantage. The risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. '' The framework enables risks to be appropriately rated and graded in accordance with their potential impact and likelihood. The two key components of risks are the probability (likelihood) of occurrence and the impact (consequence) of occurrence, if the risk occurs. Risk is analyzed by combining estimates of probability and impact in the context of existing control measures. Existing control measures are evaluated against Critical Success Factors and Key Performance Indicators identified for those specific controls. Guiding principles to determine the risk consequence (impact), probability of occurrence (likelihood factor) and mitigation plan effectiveness have been set out in Risk Register. Your Company is faced with risks of different types all of which need different approaches for mitigation. Details of various risks faced by your Company are provided in the Management Discussion & Analysis. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES The Consolidated Financial Statements of the Company and its Subsidiaries, Joint Ventures and Associates, prepared in accordance with the relevant Accounting Standards of the Institute of Chartered Accountants of India, duly audited by the Statutory Auditors, form a part of the Annual Report and are reflected in the Consolidated Accounts. The Company has 23 subsidiaries, 8 Joint Ventures and 6 associates as on March 31, 2015. Pursuant to the provisions of Section 129(3) of the Act, a statement containing salient features of the financial statements of the Company''s subsidiaries in Form AOC-1 is attached to the financial statements of the Company. Pursuant to the provisions of Section 136 of the Act, the financial statement of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries are available on the website of the Company. During the year under review, the Company divested its investments, along with that of its subsidiaries in some of its existing subsidiaries viz. Ideal Ice and Cold Storage Co Ltd, Residency Food and Beverages Ltd, Taj Rhein Shoes Co Ltd and Tifco Security Services Ltd in favour of Taida Trading and Industries Limited. Accordingly, they ceased to be subsidiaries of the Company with effect from March 30, 2015. During the year under review, Samsara Properties Limited, an offshore wholly owned subsidiary of the Company, divested its entire shareholding in IHMS (Australia) Pty Limited which owned The Blue Hotel, in Sydney. Accordingly, IHMS (Australia) Pty Limited ceased to be a subsidiary of the Company with effect from October 31, 2014. Apex Hotels Management Services Australia (Pte) Limited, a Company incorporated under the laws of Australia was created as a subsidiary of the Company with effect from October 2, 2014. The policy for determining material subsidiaries can be accessed on the Company''s website under the link http://www. taihotels.com/taicorporate/pdf/policv-for-determinina-material- subsidiaries.pdf. RIGHTS ISSUE The Company, vide its Letter of Offer dated July 16, 2014, had offered up to 18,18,18,181 Compulsorily Convertible Debentures (CCDs) of face value of Rs. 1 each, at a price of Rs. 55 per CCD, for an amount aggregating up to Rs. 1000 crores, on Rights basis, in the ratio of 9 CCDs for every 40 equity shares held by the equity shareholders. The issue had opened on August 4, 2014 and closed on August 20, 2014. Consequently, on September 1, 2014, the Company allotted 18,18,01,228 CCDs of Rs. 55 each aggregating to Rs. 999.91 crores. Each CCD is convertible into 1 equity share of Rs.1 each at a premium of Rs. 54 per share after 18 months from the date of allotment of the CCD i.e. on March 1, 2016. DEBENTURES During the year, the Company had redeemed the following Debentures: - 1,500- 2% Unsecured Non-Convertible Debentures of the face value Rs. 10,00,000 (Rupees Ten lakhs only) each, allotted on December 9, 2009 aggregating Rs. 150 crores and repayable at the end of the 5th year, along with redemption premium of 4.37 lakhs per debenture. - Out of the 3000, 2% Secured Non-Convertible Debentures of the face value of Rs. 10,00,000 (Rupees Ten lakhs only) issued on a private placement basis aggregating to Rs. 300 crores (Rupees Three Hundred Crores), first instalment for 20% of the face value was redeemed on March 23, 2015 for an aggregate value of Rs. 60 crores (Rupees Sixty Crores), along with redemption premium of Rs. 6.13 lakhs per debenture. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP) Appointments In terms of Section 149 of the Act, the Members at their meeting held on August 27, 2014, had appointed Mr. K. B. Dadiseth, Mr. Deepak Parekh, Mr. Nadir Godrej and Ms. Ireena Vittal as Independent Directors of the Company for a period of five years or upto their date of retirement, whichever was earlier. Ms. Vibha Paul Rishi and Mr. Gautam Banerjee were appointed as Additional Directors of the Company effective September 10, 2014 and they hold office upto the date of the forthcoming Annual General Meeting and are further proposed to be appointed as Independent Directors of the Company for a period of five years commencing from September 10, 2014 . The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed both under the Act and Clause 49 of the Listing Agreement with the Stock Exchanges. Mr. Rakesh Sarna was appointed as Managing Director and Chief Executive Officer of the Company for a period of 5 years with effect from September 1, 2014, vide Members approval dated March 13, 2015. Mr. Sarna is a hospitality industry veteran, having spent over three decades with Hyatt Hotels Corporation. He was previously Group President of Americas and Executive Vice-President at Hyatt Hotels Corporation. In accordance with the Act and the Articles of Association of the Company, Mr. Shapoor Mistry retires by rotation, and is eligible for re-appointment. Your approval for their appointments / re-appointment as Directors has been sought in the Notice convening the Annual General Meeting of the Company. In terms of Section 203 of the Act the following were designated as KMP of your Company by the Board: - Mr. Rakesh Sarna, Managing Director and Chief Executive Officer - Mr. Anil P. Goel, Executive Director and Chief Financial Officer - Mr. Mehernosh S. Kapadia, Executive Director - Corporate Affairs - Mr. Beejal Desai, Vice President - Legal & Company Secretary Retirement / Resignations Mr. Raymond N. Bickson stepped down as the Company''s Managing Director with effect from August 31, 2014 to pursue his professional interests elsewhere. During Mr. Bickson''s tenure, Taj expanded its footprint across India and around the world and grew from a portfolio of 62 hotels into a multi brand chain of 127 hotels, worldwide. Mr Bickson steered the brand architecture within the Company, as per which the Company moved away from umbrella branding to managing its portfolio under Taj Groups four brands i.e. Taj Hotels Resorts and Palaces, Vivanta by Taj, Gateway Hotels and Ginger Hotels. Mr. Abhijit Mukerji stepped down as the Company''s Executive Director - Hotel Operations with effect from April 13, 2015. Mr. Mukerji served the Company for more than thirty years and held many positions of increasing responsibility. His keen focus on attention to detail and process discipline improved the quality of our hotel operations to meet world class standards. In accordance with the Tata Group guidelines on retirement age, Mr. Jagdish Capoor retired as a Director of the Company, effective July 1, 2014. Mr. Guy Crawford resigned as a Director of the Company effective September 8, 2014. The Board places on record its appreciation of the services rendered and the enormous contribution made by Mr. Raymond N. Bickson, Mr. Abhijit Mukerji, Mr. Jagdish Capoor and Mr. Guy Crawford, to the Company during their respective tenures. BOARD MEETINGS During the year under review, 5 Board Meetings were held and the intervening gap between the meetings did not exceed the period prescribed under the Act, the details of which are given in the Corporate Governance Report. BOARD EFFECTIVENESS The Company has adopted the Governance guidelines which, inter alia, cover aspects related to composition and role of the Board, Chairman and Directors, Board diversity, definition of independence. Director''s term, retirement age and Committees of the Board. It also covers aspects relating to nomination, appointment, induction and development of Directors, Director remuneration, subsidiary oversight. Code of Conduct, Board Effectiveness Review and mandates of Board Committees. A. Board Evaluation The Board of Directors has carried out an annual evaluation of its own performance. Board Committees and individual Directors pursuant to the provisions of the Act and the corporate governance requirement as prescribed by Securities Exchange Board of India (SEBI) under Clause 49 of the Listing Agreement. The performance of the Board was evaluated by the Board after seeking inputs from the Directors on the basis of the criteria such as the Board Composition and structures, effectiveness of board processes, information and functioning, etc. . The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc. The Board and the Nomination and Remuneration Committee (NRC) reviewed the performance of the individual Directors on the basis of the criteria such as the contribution of the individual Director to the Board and Committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspect of his role. In a separate meeting of Independent Directors, performance of Non-Independent Directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of the Executive Directors and Non-Executive Directors. The same was discussed in the Board meeting that followed the meeting of the Independent Directors, at which the performance of the Board, its committees and individual Directors was also discussed. B. Appointment of Directors and Criteria for determining qualifications, positive attributes, independence of a Director The NRC is responsible for developing competency requirements for the Board based on the industry and strategy of the Company. The NRC reviews and meets potential candidates, prior to recommending their nomination to the Board. At the time of appointment, specific requirements for the position, including expert knowledge expected, is communicated to the appointee The NRC has formulated the criteria for determining qualifications, positive attributes and independence of Directors in terms of provisions of Section 178 (3) of the Act and Clause 49 of the Listing Agreement as stated under: Independence: A Director will be considered as an ''Independent Director'' if he/ she meets with the criteria for ''Independence'' as laid down in the Act, Clause 49 of the Listing Agreement and the Tata Governance guidelines. Competency: A transparent Board nomination process is in place that encourages diversity of thought, experience, knowledge, perspective, age and gender. It is ensured that the Board has a mix of members with different educational qualifications, knowledge and with adequate experience in banking and finance, accounting and taxation, economics, legal and regulatory matters, consumer industry, hospitality sector and other disciplines related to the Company''s businesses. Additional Positive Attributes: - The Directors should not have any other pecuniary relationship with the Company, its subsidiaries, associates or joint ventures and the Company''s promoters, except as provided under law. - The Directors should maintain an arm''s length relationship between themselves and the employees of the Company, as also with the Directors and employees of its subsidiaries, associates, joint ventures, promoters and stakeholders for whom the relationship with these entities is material. - The Directors should not be the subject of proved allegations of illegal or unethical behaviour, in their private or professional lives. - The Directors should have the ability to devote sufficient time to the affairs of the Company. < C. Remuneration Policy The Company had adopted a Remuneration Policy for the Directors, KMP and other employees, pursuant to the provisions of the Act and Clause 49 of the Listing Agreement. The key principles governing the Company''s Remuneration Policy are as follows: Remuneration for Independent Directors and Non-Independent Non-Executive Directors - Independent Directors (ID) and Non-Independent Non-Executive Directors (NINED) may be paid sitting fees for attending the meetings of the Board and of Committees of which they may be members, and receive commission within regulatory limits, as recommended by the NRC and approved by the Board. - Overall remuneration should be reasonable and sufficient to attract, retain and motivate Directors aligned to the requirements of the Company, taking into consideration the challenges faced by the Company and its future growth imperatives. - Remuneration paid should be reflective of the size of the Company, complexity of the sector/ industry/Company''s operations and the Company''s capacity to pay the remuneration and be consistent with recognized best practices. - The aggregate commission payable to all the NEDs and IDs will be recommended by the NRC to the Board based on Company performance, profits, return to investors, shareholder value creation and any other significant qualitative parameters as may be decided by the Board. The NRC will recommend to the Board the quantum of commission for each Director based upon the outcome of the evaluation process which is driven by various factors including attendance and time spent in the Board and Committee Meetings, individual contributions at the meetings and contributions made by Directors other than in meetings. - The remuneration payable to Directors shall be inclusive of any remuneration payable for services rendered in any other capacity, unless the services rendered are of a professional nature and the NRC is of the opinion that the Director possesses requisite qualification for the practice of the profession. Remuneration for Managing Director (MD)/ Executive Directors (ED)/ Key Managerial Personnel (KMP)/ rest of the Employees - The extent of overall remuneration should be sufficient to attract and retain talented and qualified individuals suitable for every role. Hence remuneration should be market competitive, driven by the role played by the individual, reflective of the size of the Company, complexity of the sector/ industry/ Company''s operations and the Company''s capacity to pay, consistent with recognized best practices and aligned to any regulatory requirements. - Basic/ fixed salary is provided to all employees to ensure that there is a steady income in line with their skills and experience. In addition, the Company provides employees with certain perquisites, allowances and benefits to enable a certain level of lifestyle and to offer scope for savings. The Company also provides all employees with a social security net subject to limits, by covering medical expenses and hospitalization through re-imbursements or insurance cover and accidental death etc. The Company provides retirement benefits as applicable. - In addition to the basic / fixed salary, benefits, perquisites and allowances as provided above, the Company provides MD/ EDs such remuneration by way of commission, calculated with reference to the net profits of the Company in a particular financial year, as may be determined by the Board, subject to the overall ceilings stipulated in Section 197 of the Act. The specific amount payable to the MD/ EDs would be based on performance as evaluated by the NRC and approved by the Board. - The Company provides the management employees a performance linked bonus. The performance linked bonus would be driven by the outcome of the performance appraisal process and the performance of the Company. It is affirmed that the remuneration paid to Directors, KMP and all other employees is as per the Remuneration Policy of the Company. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS During the year under review, no significant material orders were passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operations. STATUTORY AUDITORS At the Annual General Meeting, the Members will be requested to ratify the re-appointment of Deloitte Haskins & Sells LLP, (DHS LLP) Chartered Accountants (Firm No. 117366W/W-100018), and PKF Sridhar & Santhanam LLP, (PKF LLP) Chartered Accountants (Firm No. 003990S/ S200018) as the Joint Auditors for the current year and authorise the Board of Directors to fix their remuneration. The Company had received an intimation from PKF LLP stating that PKF Sridhar & Santhanam had been converted into a Limited Liability Partnership (LLP) under the provisions of the Limited Liability Partnership Act, 2008 with effect from April 21, 2015. The Board of Directors of the Company have taken due note of this change. The report of the Statutory Auditors along with the notes to Schedules is enclosed to this report and does not contain any qualification, reservation or adverse remark or disclaimer. SECRETARIAL AUDIT Pursuant to the provisions of the Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s P.K.Pandya and Associates to undertake the Secretarial Audit of the Company for the financial year 2014-15. The Secretarial Audit Report is annexed herewith as Annexure III. The report does not contain any qualifications, reservation or adverse remarks. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION The details of conservation of energy are given in the Management Discussion and Analysis Report. FOREIGN EXCHANGE EARNINGS AND OUTGO As required under Section 134(3)(M) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, the information relating to foreign exchange earnings and outgo is given in note 40 and 41, page 122 of the Notes to the financial statements. PARTICULARS OF EMPLOYEES / HUMAN RESOURCES The disclosure required to be furnished pursuant to Section 197 (12) read with Rule 5 (1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is appended as Annexure IV to this report. The particulars of employees required to be furnished pursuant to Section 197 (12) read with Rule 5 (2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Annual Report. However, as per the provisions of Section 136 (1) of the Act, the reports and accounts are being sent to all the Members of the Company excluding the statement of particulars of employees. Any Member interested in obtaining a copy may write to the Company Secretary at the Registered Office of the Company. The full Annual Report including the aforesaid information is available on the Company''s website. Disclosures as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 The Company has zero tolerance for sexual harassment at its workplace and has adopted a Policy on prevention, prohibition and redressal of sexual harassment at the workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder for prevention and redressal of complaints of sexual harassment at workplace. During the year under review the Company has received 17 complaints on sexual harassment and all the complaints have been disposed of and appropriate action taken and no cases remain pending. DIRECTORS'' RESPONSIBILITY STATEMENT Based on the existing system of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal and secretarial auditors and representation made by the Management to the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during the financial year 2014-15. Accordingly, pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of its knowledge and ability, confirms that: (i) In the preparation of the accounts for the year ended March 31, 2015, the applicable accounting standards have been followed and that there are no material departures; (ii) That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for that period; (iii) That the Directors have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) That they have prepared the accounts for the year ended March 31, 2015 on a ''going concern'' basis; (v) The Directors have laid down internal financial controls for the Company which are adequate and are operating effectively; (vi) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and are operating effectively. CORPORATE GOVERNANCE As required by Clause 49 of the Listing Agreement with the Stock Exchanges, the report on Management Discussion and Analysis, Corporate Governance as well as the Practising Company Secretary''s Certificate regarding compliance of conditions of Corporate Governance, form part of the Annual Report. ACKNOWLEDGEMENT The Directors express their deep sense of appreciation for the contribution made by the employees to the significant improvement in the operations of the Company. The Directors also thank all their global stakeholders including Members, customers, lenders, vendors, business partners, the Government of India for their continued co-operation and support. On behalf of the Board of Directors Cyrus P. Mistry Chairman Mumbai, May 29, 2015 Registered Office: Mandlik House, Mandlik Road, Mumbai 400 001. CIN: L74999MH1902PLC000183 Tel.: 022 66395515 Fax: 022 22027442 Email: investorrelations@taihotels.com Website: www.tajhoteIs.com

Director’s Report