HOTEL CORPORATION OF INDIA LIMITED

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2 HOTEL CORPORATION OF INDIA LIMITED i

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4 CONTENTS Page No. 1. Board of Directors 1 2. Directors Report 2 3. Comments of the Comptroller & Auditor General of India 7 4. Statutory Auditor s Report 8 5. Balance Sheet as at 31 March Profit & Loss Account for the year ended 31 March Cash Flow Statement Notes forming part of the Financial Statements for the year ended 31 March Annexure to Annual Accounts Ten Years Statistics 39 iii

5 BOARD OF DIRECTORS (as on ) Shri Rohit Nandan Shri G. Asok Kumar Chairman Managing Director Smt. M. Sathiyavathy Shri S. Venkat Company Secretary Kum. Shyamala P Kunder Auditors Batliboi & Purohit, Chartered Accountants Solicitors M/s. M.V. Kini & Co. Bankers State Bank of India United Bank of India Axis Bank Limited Registered Office 1 st floor, Transport Annexe Building, Air India Complex, Old Airport, Santcurz (E), Mumbai

6 DIRECTORS REPORT The Directors have pleasure in presenting their Forty Second Annual Report and the Audited Accounts for the year ended 31 March (Rupees in lakhs) PARTICULARS Variance TOTAL REVENUE ( ) TOTAL OPERATING EXPENDITURE GROSS OPERATING (LOSS) ( ) ( ) INTEREST (41.52) CASH (LOSS) ( ) ( ) DEPRECIATION (20.45) NET (LOSS) BEFORE EXTRA ORDINARY ITEMS ( ) ( ) ( ) EXTRA ORDINARY ITEMS (0.47) (3.80) 3.33 PRIOR PERIOD ADJUSTMENTS (22.17) NET (LOSS) AFTER EXTRA ORDINARY ITEMS BUT BEFORE TAX ( ) ( ) Overview : During the year the total revenue has reduced to Rs lakhs as against Rs lakhs, a reduction of Rs lakhs (20%) over This is mainly on account of reduction in the total revenue of Centaur Delhi by Rs lakhs, mainly on account of reduction in occupancy from last year The total expenditure has increased to Rs lakhs, i.e. by Rs lakhs (3%) over previous year mainly on account of increase in the staff cost by Rs lakhs. In view of the above, the Gross Operating Loss is Rs lakhs as against Rs lakhs during the previous year. The Net Loss after extraordinary items is Rs lakhs as against Rs lakhs during the previous year. The Unit-wise performance of the Company is as under: CENTAUR HOTEL DELHI AIRPORT The Unit earned a revenue of Rs lakhs as compared to Rs lakhs in the previous year a decrease of 36 % over the previous year. This is mainly due to decrease in occupancy from 66% in the previous year to 53% in The total expenditure is Rs lakhs, as against Rs lakhs in the previous year. As a result, the Unit made an Operating Loss of Rs lakhs as compared to operating Profit of Rs lakhs in the previous year. After providing for interest and depreciation, the Unit made a Net Loss of Rs lakhs as compared to Rs lakhs in the previous year. After considering extra-ordinary items, the unit has incurred a Net Loss of Rs lakhs as against Rs lakhs in the previous year. CENTAUR LAKE VIEW HOTEL, SRINAGAR: The Unit earned a revenue of Rs lakhs as compared to Rs lakhs in the previous year i.e. an increase of 4% over the previous year. 2

7 The total expenditure is Rs lakhs as against Rs lakhs in the previous year. As a result, the Unit made an Operating Loss of Rs lakhs as against Rs lakhs in the previous year. After providing for interest and depreciation, the Unit incurred a Net Loss of Rs lakhs as compared to Rs lakhs in the previous year. After considering extra-ordinary items, the unit has incurred a Net Loss of Rs lakhs as against Rs lakhs in the previous year. CHEFAIR FLIGHT CATERING, MUMBAI The Unit earned a revenue of Rs lakhs as compared to Rs lakhs in the previous year i.e. an increase of 9% over the previous year. The total expenditure is higher at Rs lakhs as against Rs lakhs in the previous year. As a result, the Unit made an Operating Loss of Rs lakhs as against Rs lakhs in the previous year. After providing for interest and depreciation, the Unit incurred a Net Loss of Rs lakhs as compared to Rs lakhs. in the previous year. After considering extra-ordinary items, the unit has incurred a Net Loss of Rs lakhs as against Rs lakhs in the previous year. CHEFAIR FLIGHT CATERING, DELHI: The Unit earned a revenue of Rs lakhs as compared to Rs lakhs in the previous year i.e an increase of 10%. The total expenditure is Rs lakhs as against Rs lakhs in the previous year. As a result, the Unit made an Operating Loss of Rs.890 lakhs as against Rs lakhs in the previous year. After providing for interest and depreciation, the Unit incurred a Net Loss of Rs lakhs as against Rs lakhs. in the previous year. ANNUAL PLAN OUTLAY : The Government had approved an Annual Plan Outlay of Rs.10 crores for the financial year The actual outlay was Rs.10 crores. EMPLOYMENT OF EX-SERVICEMEN: The Company is following the Government directive received in this regard for employment of Ex-Servicemen. EMPLOYMENT OF SC, ST & OBC: Subsequent to the disinvestment of three out of six Units of HCI, there was a ban on recruitment and hence, no recruitment exercise was carried out. However, the Company continued to observe the Government directives for reservation of posts in promotions of SC, ST and OBC candidates. IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY: With regard to the implementation of Official Language Policy, the directives received from the Government from time to time were being followed. TRAINING & DEVELOPMENT: During the year under review, opportunities were provided to its employees at all levels to acquaint themselves with Modern Management, Technical Concept and latest innovation in the Hotel Industry through sponsoring them for various Seminars, Conferences and various short duration Refresher Courses organized by various agencies. VIGILANCE: During the year under report, periodic surprise checks and inspections were carried out at all units of HCI. Report to various agencies have been sent based on inputs received from the administrative department. During the year, procedural advice was rendered from time to time in matters pertaining to tender/ purchase procedures. Vigilance Awareness Week was observed from 20 October to 3 November

8 FOREIGN TOURS : The Company incurred nil expenditure under this head during the year under review. PERSONNEL: As on 31 March 2013 the Company had on its payroll a total of 1276 employees as against 1279 as on 31 March 2012 in the Head Office and various Units of the Company. The Management s relations with the employees continued to be good and cordial during the year under review. WAGE SETTLEMENT: The Wage settlement signed with the various Unions representing Unionsed category of employees of all the Units for the period 2002 to 2006 has already been executed and the new wage revision effective January 2007 is pending. PARTICULARS OF EMPLOYEES: There were no employees who were employed throughout the year who were in receipt of remuneration of Rs.5 lakhs per month or Rs.60 lakhs per annum. Therefore no statement has been enclosed in this regard. FOREIGN EXCHANGE EARNING & OUTGO: The Foreign Exchange earning during the year were Rs lakhs as against Rs lakhs in the previous year. The outgo of Foreign Exchange during the year was nil. CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION: Energy conservation continues to be given a high priority by the Company. Constant efforts are being made to reduce energy consumption. Energy conservation has been made possible due to automation and better controls. Particulars required under Form B of the relevant Rules pursuant to section 217(1) (e) of the Companies Act, 1956 have not been given since the Company has no Research and Development activity. The question of technology absorption, adaptation or innovation is not applicable to the Company, in view of it being a Service Industry. STATUS ON VARIOUS UNITS OF HCI : Chefair Flight Catering, Mumbai As per the decision of the Board of Air India Limited, assured business of 30% Catering business of Air India was granted to Chefair without following the tender procedure. Centaur Lake View Hotel, Srinagar : Subsequent to failure to offer the Unit of CLVH under Management Contract due to the intervention of the State Government of Jammu & Kashmir, the Board had directed the Management to continue running the hotel after carrying out necessary renovation for upgrading the unit. In the meanwhile, Government of India has sanctioned Rs.5 crores in its Annual Plan for CLVH, Srinagar, which can be spent for the renovation of the unit. Accordingly, steps are being taken to upgrade the unit to bring it at par with other star hotels of the State. Centaur Hotel Delhi & Chefair Delhi: With the approved Annual Plan of Rs.10 crore, efforts are being made to upgrade the Chefair Flight Catering, Delhi (CFCD) and Centaur Hotel Delhi Airport (CHDA) with the allocated fund of Rs.5 crore for these units out of the said Rs10 crore. While approving the Project Report, the Board had advised that, the government sector companies like Airports Authority of India (AAI) or other PSUs who had undertaken such projects of upgrading their existing properties be consulted. Accordingly, the renovation work is being carried out by AAI, on depositary work basis after following the laid down procedures. POST DISINVESTMENT ISSUES: The Arbitration Petition filed by M/s. Sahara Hospitality Limited against the Arbitration Award granted on the issue of settlement of Net Current Assets and other obligations with respect to Centaur Hotel Mumbai Airport (CHMA), is yet to come up on regular Board for hearing. 4

9 The settlement proceeding with regard to the dispute in the settlement of Net Current Assets subsequent to the sale of Centaur Hotel Juhu Beach (CHJB) to M/s Tulip Hospitality Services Limited (currently known as M/s V. Hotels Ltd.), several meetings were held between the parties and Director-Finance, Air India Ltd., the Mediator. An award has been finalized and the same is being put up to the Board for its final approval. Board of Directors : During the year , four Board Meetings were held. As on 31 March 2013 the Board consisted of the following members: Shri Rohit Nandan, CMD, Air India Ltd. - Chairman Shri S Machendranathan Addl..Secy & Fin.Advisor, MOCA - Director Shri (Dr.) Prabhat Kumar, - Director Joint Secretary, MOCA Shri N K Jain, Director-Personnel, Air India Ltd. - Managing Director As on 1 November 2013, the Board consisted of the following Members: Shri Rohit Nandan, CMD, Air India Ltd. - Chairman Shri Nikhil Kumar Jain, Director-Personnel, Air India Ltd. - Managing Director Shri S Machednranathan - Director Addl. Secy. & Fin. Advisor, MOCA Shri (Dr.) Prabhat Kumar, - Director Joint Secretary, MOCA DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors confirm that : in the preparation of the Annual Accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures. the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company as at 31 March 2013 and of the profit or loss of the Company for that period. the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities to the best of the knowledge and ability of the Directors. the Directors had prepared the Annual Accounts on a going concern basis. AUDIT COMMITTEE: During the year , the constitution of the Audit Committee was as follows: Additional Secretary & Financial Advisor, MOCA - Chairman Chairman & Managing Director-AIL - Member Joint Secretary MOCA - Member Ms. Shyamala P Kunder - Secretary The quorum for the meeting of Audit Committee would be 1/3rd of the total strength or 2 whichever is higher. During the year under report, there was one meeting held of the audit committee. 5

10 COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA The comments of the Comptroller and Auditor General of India under Section 619(4) of the Companies Act, 1956 on the accounts of the Company for the year ended 31 March 2013 is annexed to this report. AUDITORS: M/s. Batliboi & Purohit, Chartered Accountants, Statutory Auditors of the Company, will retire at the forthcoming Annual General Meeting of the Company. M/s. M.A.Parikh & Co., Chartered Accountants, have been appointed as the sole auditors of the Company for the financial year by the Comptroller & Auditor General of India in accordance with the provisions of the Section 619 of the Companies Act, ACKNOWLEDGEMENTS: The Directors wish to place on record their appreciation for the support and co-operation extended by the employees of the Company. The Board also wishes to acknowledge gratefully the support and guidance received from the Ministry of Civil Aviation and Air India Limited. The Directors wish to thank the Comptroller and Auditor General of India, Chairman and members of the Audit Board, Statutory Auditors and Banks. For and on behalf of the Board Place : New Delhi. Date : 20 January 2014 Sd/- (Rohit Nandan) Chairman 6

11 Comments of the comptroller and auditor general of india under section 619 (4) of the companies Act, 1956 on the accounts of hotel corporation of india limited for the year ended 31 march The preparation of financial statements of hotel Corporation of India Limited for the year ended 31 March 2013 in accordance with the financial reporting framework prescribed under the Companies Act, 1956 is the responsibility of the Management of the Company. The Statutory Auditors appointed by the Comptroller and Auditor General of India under Section 619 (2) of the the Companies Act, 1956 are responsible for expressing opinion on these financial statements under section 227 of the Companies Act, 1956 based on independent audit in accordance with the Standards on Auditing prescribed by their professional body, the Institute of Chartered Accountants of India. This is stated to have been done by them vide their Audit Report dated 30 January I, on the behalf of the Comptroller and Auditor General of India, have decided not to review the report of the Statutory Auditors on the accounts of Hotel Corporation of India Limited for the year ended 31 March 2013 and as such have no comments to make under section 619(4) of the Companies Act, For and on the behalf of the Comptroller and Auditor General of India Sd/- Parama Sen Principal Director of Commercial Audit & ex-officio Member Audit Board-II, Mumbai Place : Mumbai Date : 13 March

12 Report of the Auditors to the Members of Hotel Corporation of India Limited We have audited the accompanying financial statements of Hotel Corporation of India Limited ( the Company ), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ( the Act ). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material mis-statement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material mis-statement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material mis-statement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Basis for Qualified Opinion We Report that : 1. Sub Note No 28 of Note 4.21 to financial statements regarding the financial statements of Company having been prepared on a going concern basis, notwithstanding the fact that its net worth is completely eroded. The appropriateness of the said basis is inter-alia dependent on Company s ability to obtain equity from the Government (Air India Ltd., its Holding Company) for meeting its obligations and improved operational performances; 2. As stated in Sub Note No 5 of Note 4.21 to financial statements regarding Catering, Handling Revenue & Hi- Lift Charges of Chefair Flight Catering Delhi Unit amounting to Rs crore (excluding VAT & service tax) on provisional basis without any acceptance or confirmation from Air India Ltd and accordingly any further impact to the Statement of Profit & Loss cannot be ascertained; 3. As stated in Sub Note No 18(d) of Note 4.21 to financial statements and in addition to point no. 2 above, Rs crore received from Air India Ltd against Chefair Delhi business is accounted as an advance received on account of pendency of revision of agreement and billing and not as income; 4. As stated in Sub Note No 11 (a) of Note 4.21 to financial statement, no confirmation has been received for an amount Rs Lakhs shown as net receivable from Government of Jammu & Kashmir; 8

13 5. As stated in Sub Note No 11 (b) of Note 4.21 to financial statement, Rs crore pertaining to Company s share of cost of maintenance and unkeep of landscape and hall charges/skicc services availed by Centaur Lake View Hotel Srinagar since inception of the hotel from SKICC were not accounted as the same is disputed; 6. Counter claim of Rs crore made on Delhi International Airport Ltd as referred to the Sub Note No. 2 (b) (iii) of Notes 4.21 to financial statements; 7. As stated in Sub Note No 2 (b) of Note 4.21 to financial statement regarding non provision of lease rentals and turnover levy payable to Mumbai International Airport Ltd, Delhi International Airport Ltd and Airport Authority of India amounting to Rs Lakhs and liability on account of interest on delay in payments amounting to Rs Lakhs; 8. As stated in Sub Note No 6 (b) of Note 4.21 to financial statement, some part of land in respect of Housing Colony at Srinagar has been encroached by school for which the Company has filed a suit in the court. However, due to pending legal suit, nothing has been accounted in the financial statement; 9. As stated in Sub Note No 1 (d) of Note 4.21 to financial statements, the Company has preferred for appeal pertaining to below mentioned statutory dues: a) Income Tax - Rs Lakhs b) Sales Tax - Rs Lakhs c) Luxury Tax - Rs Lakhs d) Excise Duty - Rs Lakhs 10. Debit Balances in, Expenditure Tax Account, Sales Tax Account aggregating to Rs lakhs in the books of accounts of the Head Office, Mumbai Units and Delhi Units have been brought forward from earlier years; 11. During Financial Year , the Company has accounted Rs Lakhs as prior period expenditure which is arrived at after adjusting prior period income in its Profit & Loss Account; 12. As stated in Sub Note No 8 of Note 4.21 to financial statements, sundry creditors and loans and advances, other accounts including related parties, are subject to reconciliation / confirmation and consequential impact thereof if any, on financial statement remains unascertained; 13. As discussed in Sub Note No 9 of Note 4.21 to financial statements, sundry debtors include dues from related parties (Holding Company - Air India Ltd) Rs Lakhs is subject to reconciliation / confirmation and therefore consequential impact thereof if any, on financial statement remains unascertained; 14. As stated in Sub Note No 22 of Note 4.21 to financial statement, the Company is still in the process of conducting annual assessment of potential impairment of loss of assets as per Accounting Standard 28 Impairment of Assets therefore consequential impact thereof on the financial statement remains unascertained; 15. As stated in Sub Note No 1 (f) & 16 to Note 4.21 to financial statement, no provision has been made towards interest, penalty payable towards outstanding statutory dues like VAT, Service Tax, Luxury Tax, ESIC, TDS & LIC if any and impact thereof on financial statements cannot be ascertained; 16. As stated in Sub Note No. 27 to Note 4.21 to financial statement regarding claims for reimbursement from employees availing medical and other staff claims, claims for interest from suppliers / other parties are accounted on cash basis and not on accrual basis; 17. As stated in Sub Note No 12 to Note 4.21 to financial statement regarding non identification of Micro, Small or Medium Enterprises, parties having credit balance and not obtained confirmations, accordingly interest payable is not ascertainable; 18. As stated in Sub Note No. 14 to Note 4.21 to financial statement, regarding non filing of certain statutory returns and consequential liabilities on account of tax, interest, and penalties are not ascertainable (amount is not computed and provided in the books of accounts of the Company); 19. As stated in Sub Note No 8 to Note 4.21 to financial statement, fixed deposit balances are subject to reconciliation/confirmation and therefore consequential impact thereof if any on financial statement remains unascertained; 9

14 Opinion Subject to our comments stated above, in our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013; b) in the case of the Profit and Loss Account, of the loss for the year ended on that date; and c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. Report on Other Legal and Regulatory Requirements 1) As required by the Companies (Auditor s Report) Order, 2003 ( the Order ) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. 2) As required by section 227(3) of the Act, we report that: a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; b) in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of accounts; d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956; e) on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; f) since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company; For and on behalf of Batliboi & Purohit Chartered Accountants FRN :101048W Sd/- CA Raman D Hangekar (Senior Partner) M. No. : Place : Mumbai Date : 30 January

15 Annexure to Auditor s Report Referred to in Paragraph (3) of our report of even date. On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that: 1. (a) The Company is in the process of updating its Fixed Assets Records maintained with reference to full particulars, quantitative details and location thereof. The Company has not yet updated value of assets at certain locations and it is informed that it is in the process of updation. The reconciliation of Fixed Assets Register with financial records is stated to be in progress; (b) (c) All fixed assets have been physically verified by the management at the year end along with Internal Auditors, which in our opinion is reasonable, having regards to size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification; In our opinion and according to the information and explanations given to us, no major quantum of fixed asset has been disposed during the year and therefore it does not affect the going concern assumption; 2. (a) As explained to us, inventory items except spare items in inventory have been verified every month by the management. Spare items are physically verified at least once in a year by the management; (b) (c) In our opinion and according to the information and explanations given to us, the procedure for physical verification adopted by the management is reasonable. However, considering the size of the company and nature of its business, it needs to be strengthened further as inventory records are not properly maintained; In our opinion and on the basis of our examination of the records, the Company is not properly maintaining its records of inventories. Material discrepancies were noticed on physical verification of stocks by the management as compared to book records. The discrepancies noticed on physical verification of inventory, are in the process of reconciliation and adjustments subject to scrutiny by the concerned departments; 3. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, Consequently, the provisions of sub clauses (b), (c) and (d) of the order are not applicable to the Company; (b) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not taken loans from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, Thus sub clauses (f) & (g) are not applicable to the Company; 4. In our opinion and according to the information and explanations given to us, internal control procedures are not commensurate with the size of the Company and the nature of its business, for the purchase and sale of goods. The implementation of such controls needs to be strengthened. The Company is in the process of reconciling the sub ledgers in respect of inventory, sundry debtors, sundry creditors, staff advances and certain intermediary accounts. During the course of our audit, we have observed that there is continuing failure to correct major weaknesses in the internal controls of the Company; 5. (a) The Company has not entered into contracts or arrangements referred to in section 301 of the Act. Accordingly the provisions of sub clause (b) of clause 5 of the Order are not applicable; 11

16 6. The Company has not accepted any deposits from the public covered under section 58A and 58AA of the Act and Companies (Acceptance of Deposits) Rules, Accordingly the provisions of clause 6 of the Order are not applicable; 7. The Company has an internal audit system, the scope and coverage of which, in our opinion, requires to be further enhanced to be commensurate with its size and the nature of its business; 8. As per information & explanation given by the management, maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act in respect of Company s products. Accordingly provisions of the clause 8 of the Order are not applicable; 9. (a) According to the records of the Company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues, as applicable, have not been regularly deposited with the appropriate authorities and there have been significant delays in large number of cases; (b) Undisputed amounts payable in respect thereof, which were outstanding at the year-end for a period of more than six months from the date they became payable as follows: (Amount in Lakhs) Name of the Statute Nature of Dues Amount (Rs) Period of which the amount is related Due Date Date of Payment Employees Provident Fund & Miscellaneous Provisions Act, 1952 Provident Fund Refer note below 20 th of Subsequent Month Not yet remitted Employees State Insurance Act, 1948 Employees State Insurance 8.82 Refer note below 21 st of Subsequent Month and Value Added Tax of Respective States Value Added Tax Refer note below 20 th of Subsequent Month Not yet remitted Luxury Tax Act of Respective States Luxury Tax Refer note below 20 th of Subsequent Month Not yet remitted The Finance Act, 1994 Service Tax Refer note below 6 th of Subsequent Month Not yet remitted Note - all above statutory dues pertaining to various periods and accordingly reported and amount is as per the information and explanation provided to us (c) Disputed statutory dues which have not been deposited on account of disputed matter pending before appropriate authorities are as under: 12

17 (Amount in Lakhs) Name of the Statute Nature of Dues Amount in dispute (Rs.) Period of which the amount is related Forum where dispute is pending Income Tax Tax A.Y High Court C o v e r e d by refunds withheld by the tax authorities Sales Tax Tax Jt Commissioner of Sales Tax Appeals Penalty Mumbai Less : Paid Total 7.64 Sales Tax Tax Joint Commissioner of Sales Tax Appeals Interest 0.29 Penalty 0.02 Less : Paid Total 9.24 Sales Tax Tax Remanded back to Commissioner of Sales Tax Interest nd Appeal by MSTT Penalty Less : Paid Total Sales Tax Tax Remanded back to Commissioner of Sales Tax Interest nd Appeal by MSTT Penalty 1.00 Less : Paid Total VAT Tax st Appeal Interest Penalty Total VAT Tax st Appeal Interest Penalty Total

18 Luxury Tax Tax Joint Commissioner Sales Tax Interest Penalty Total 1.60 Luxury Tax Tax Addl. Commissioner Sales Tax Interest Penalty 0.08 Less : Paid 0.19 Total Luxury Tax Tax Commissioner of Sales Tax Interest Penalty 1.00 Total Luxury Tax Tax Commissioner of Sales Tax (Appeals), Interest New Delhi Penalty 2.84 Total Luxury Tax Tax (27.66) Commissioner of Sales Tax (Appeals), Interest New Delhi Penalty 3.15 Total Excise Duty Tax Commissioner of Central Excise- Appellate Tribunal, Mumbai 10. In our opinion, the Company s accumulated losses at the year end of the financial year is more than 50% its net worth. The Company has incurred cash losses during the year. In the preceding financial year also, the Company had incurred cash losses; 11. Based on our audit procedures and on the information and explanations given by the management, the Company did not have any borrowings from financial institution, bank or had not issued debentures. Thus, provisions of clause 11 of the Order are not applicable; 12. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities; 13. The Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provision of this clause of Order is not applicable to the Company; 14

19 14. According to information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures & other Investments. Accordingly, provisions of clause 14 of the Order are not applicable to the Company; 15. According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution. Accordingly, provisions of clause 15 of the Order are not applicable; 16. The Company did not have any term loans outstanding during the year. Accordingly, provisions of clause 16 of the Order are not applicable to the Company; 17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31 st March, 2013, we report that no funds raised on short-term basis have been used for long-term investment by the Company. 18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not made any preferential allotment of shares during the year. Accordingly, provisions of this clause of the Order are not applicable to the Company; 19. The Company has neither issued nor had outstanding debentures during the period under audit. Accordingly, provisions of clause 19 of the Order are not applicable to the Company; 20. The Company has not raised any money by public issue during the year. Accordingly, provisions of clause 20 of the Order are not applicable to the Company; 21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management. For and on behalf of Batliboi & Purohit Chartered Accountants FRN:101048W Sd/- CA Raman D Hangekar (Senior Partner) M. No. : Place : Mumbai Date : 30 January

20 BALANCE SHEET as at 31 March 2013 EQUITIES AND LIABILITIES 16 Particulars Notes March 31, 2013 March 31, 2012 Shareholders funds : Share capital ,000, ,000,000 Reserves and Surplus 4.2 (1,011,663,857) (655,510,394) (605,663,857) (249,510,394) Non-current liabilities : Long-term borrowings Other long-term liabilities ,262, ,835,758 Other Non current liabilities ,941, ,786,766 Trade payables ,897,610 4,195,396 Long-term provisions ,529, ,721,241 1,064,631, ,539,161 Current liabilities : Short-term borrowings Other short-term liabilities ,807,041 1,686,805 Trade payables ,897,241 93,343,986 Other current liabilities ,948, ,715,784 Short-term provisions ,979, ,069, ,632, ,816,505 TOTAL 923,599, ,845,272 ASSETS Non-current assets : Fixed assets Tangible assets ,633, ,308,615 Capital work-in-progress 1,014,395 1,014,395 Long-term loans and advances ,548, ,348,277 Trade receivables ,100,544 54,516, ,297, ,187,926 Current assets : Inventories ,530,826 22,190,818 Trade receivables ,628,624 72,118,175 Cash and Cash equivalents ,851,987 32,416,954 Short-term loans and advances ,290,778 97,931, ,302, ,657,346 TOTAL 923,599, ,845,272 Summary of significant accounting policies 4.20 The accompanying notes are an integral part of the financial statements As per our report of even date For and on behalf of Batliboi and Purohit Chartered Accountant FRN : W For and on behalf of the Board Sd/- Sd/- Sd/- Sd/- CA Raman D Hangekar Rohit Nandan G Asok Kumar Shyamala P Kunder (Senior Partner) Chairman Director Company Secretary M. No. : Place : Mumbai Place : Delhi Date : 30 January 2014 Date : 20 January 2014

21 STATEMENT OF PROFIT AND LOSS for the year ended 31 March 2013 Particulars Notes Continuing operations Income : Revenue from operations ,804, ,124,799 Other income ,836,922 28,185,317 Foreign Exchange fluctuation, net 4,519 88,862 Expenses : Total revenue 463,645, ,398,978 Cost of raw material consumed ,539,107 90,376,685 Employee Benefits ,535, ,939,466 Other Expenses ,562, ,567,935 Finance Cost ,628 4,353,540 Depreciation Expenses ,618,029 19,663,130 Total Expenses 811,457, ,900,756 Profit before Tax (347,811,916) (215,501,779) Exceptional Items : - VRS (47,850) (381,543) - Prior Period Adjustment (Net) 8,389,397 (2,216,713) Profit/(loss) for the year from continuing operations (A) (356,153,463) (212,903,523) Profit/(loss) before tax from discontinuing operations - - Tax expense of discontinuing operations - - Profit/(loss) after tax from discontinuing operations (B) - - Profit/(loss) for the year (A+B) (356,153,463) (212,903,523) Earnings per equity share Basic Computed on the basis of profit from continuing operations (87.72) (52.44) Computed on the basis of total profit for the year (87.72) (52.44) Diluted Computed on the basis of profit from continuing operations (87.72) (52.44) Computed on the basis of total profit for the year (87.72) (52.44) Summary of significant accounting policies 4.20 The accompanying notes are an integral part of the financial statements As per our report of even date For and on behalf of Batliboi and Purohit Chartered Accountant FRN : W For and on behalf of the Board Sd/- Sd/- Sd/- Sd/- CA Raman D Hangekar Rohit Nandan G Asok Kumar Shyamala P Kunder (Senior Partner) Chairman Director Company Secretary M. No. : Place : Mumbai Place : Delhi Date : 30 January 2014 Date : 20 January

22 CASH FLOW STATEMENT for the year ended 31 march 2013 Particulars A. CASH FLOW FROM OPERATING ACTIVITIES Profit before tax and prior period items (356,153,463) (212,903,523) Adjustment for Depreciation (net) 17,618,029 15,668,316 Interest Charged 202,628 4,353,540 (Profit)/Loss on Sale of Fixed Assets (22,999) - Provision for Doubtful Debts - 9,075 Interest Income (1,671,190) 10,276,162 Operating profit (Loss) before working capital changes (340,026,995) (182,596,430) Movement in working capital : Decrease/(Increase) in Trade and Other Receivables 2,850,071 (32,784,003) Decrease/(Increase) in Inventories (340,008) (550,491) (Decrease)/Increase in Trade and Other Paybles 324,907, ,933,568 Cash generated from operations (12,609,449) (99,997,356) Taxes paid 7,504,135 16,496,247 Net cash (used in)/ generated from operating activities - (A) (20,113,584) (116,493,603) B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (net) (919,943) 1,054,446 Interest Received 1,671,190 (10,276,162) Net cash used in from investing activities - (B) 751,247 (9,221,716) C. CASH FLOW FROM FINANCING ACTIVITIES Decrease/(Increase) in Cash Credits - (61,156,602) Interest Paid (202,628) (4,353,540) Net cash from financing activities - (C) (202,628) (65,510,142) Net increase/ (decrease) in cash or cash equivalents - (A+B+C) (19,564,966) (191,225,461) Cash and cash equivalents as at beginning of the year 32,416, ,642,414 Cash and cash equivalents as at the end of the year 12,851,987 32,416,953 As per our report of even date For and on behalf of Batliboi and Purohit Chartered Accountant FRN : W For and on behalf of the Board Sd/- Sd/- Sd/- Sd/- CA Raman D Hangekar Rohit Nandan G Asok Kumar Shyamala P Kunder (Senior Partner) Chairman Director Company Secretary M. No. : Place : Mumbai Place : Delhi Date : 30 January 2014 Date : 20 January

23 Notes forming part of Financial Statements NOTE 4.1 : Share capital Particulars March 31, 2013 March 31, 2012 Authorised Capital 41,00,000 Equity Shares of Rs 100/- each 410,000, ,000,000 Total 410,000, ,000,000 Issued, subscribed and fully paid-up Capital 40,60,000 Equity Shares of Rs 100/- each 406,000, ,000,000 Total 406,000, ,000, a. Reconciliation of the shares outstanding at the beginning and at the end of the reporting period March 31, 2013 March 31, 2012 No. of Shares Amount Rs. No. of Shares Amount Rs. At the beginning of the period 4,060, ,000,000 4,060, ,000,000 Issued during the period Bought back during the period Outstanding at the end of the period 4,060, ,000,000 4,060, ,000,000 The company has only one class of equity shares having a par value of Rs.100 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. During the year, the company has not proposed for any dividend payable to the share holders. In the event of Liquidation, Equity Share holders are entitled to receive the assets of the company remaining after distribution of all preferential amount, in proportion to the number of shares held by them. 4.1.b. Shares held by holding/ultimate holding company and/or their subsidiaries/associates Out of equity and preference shares issued by the company, shares held by its holding company, ultimate holding company and their subsidiaries/ associates are as below: Particulars March 31, 2013 March 31, 2012 The holding company Air India Limited 406,000, ,000, c. Bought back during the period of five years immediately preceding the reporting date Particulars March 31, 2013 March 31, 2012 Equity shares bought back by the Company

24 4.1.d. Details of shareholders holding more than 5% shares in the company Particulars March 31, 2013 March 31, 2012 No. of Shares % of Holding No. of Shares % of Holding Air India Limited and its nominees 4,060, % 4,060, % Note: As per records of the company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above share holding represents both legal and beneficial ownerships of shares. NOTE 4.2 : Reserves and Surplus Particulars March 31, 2013 March 31, 2012 Profit & Loss Account Surplus/(Deficit) in the Statement of Profit and Loss Balance as per last financial statements (655,510,394) (442,606,871) Profit/ (Loss) for the year (356,153,463) (212,903,523) Less: Appropriations Transfer to general reserve - - Total appropriations - - Net Surplus/(Deficit) in the Statement of Profit and Loss (1,011,663,857) (655,510,394) NOTE 4.3 : Long-term borrowings Particulars Non-current portion Current maturities Over Draft from Banks: The above amount includes March 31, 2013 March 31, 2012 March 31, 2013 March 31, 2012 Secured borrowings Unsecured borrowings Amount disclosed under the head Other Current Liabilities Net amount NOTE 4.4 : Other Liabilities Particulars Non-current Current portion March 31, 2013 March 31, 2012 March 31, 2013 March 31, 2012 Amount due to Related Party (1) 277,673, ,770, Deposit 9,589,352 34,064,992 26,807,041 1,686,805 TOTAL 287,262, ,835,759 26,807,041 1,686,805 Note: (1) It related to amount payable to Air India Limited, interest free and is subject to confirmation and reconciliation 20

25 NOTE 4.5 : Provisions Particulars Long-term Short-term March 31, 2013 March 31, 2012 March 31, 2013 March 31, 2012 Gratuity 272,724, ,951,972 38,186,307 35,552,411 Employees payable 107,408, ,993,160 64,543,140 50,799,946 Leave Encashment 83,641,464 75,547,043 20,250,000 15,717,573 VRS payable (Refer Sub-note no. 22 of Notes 4.21) 16,466,472 20,829, Provision for Fringe benefit tax 5,288,572 5,288, Provision for Wealth tax - 111, TOTAL 485,529, ,721, ,979, ,069,930 NOTE 4.6 : Trade Payables Trade payables Particulars Non-current Current portion - Total outstanding dues to micro enterprises and small enterprises (Refer Sub-note no 12 of Notes 4.21) - Total outstanding dues to creditors other than micro enterprises and small enterprises March 31, 2013 March 31, 2012 March 31, 2013 March 31, ,897,610 4,195,396 60,897,241 93,343,986 TOTAL 38,897,610 4,195,396 60,897,241 93,343,986 NOTE 4.7 : Other current liabilities Other Liabilities Particulars Long-term Short-term March 31, 2013 March 31, 2012 March 31, 2013 March 31, 2012 Statutory liabilities dues (6,718,817) 13,842, ,213,674 76,643,038 Lease Rental Payable 26,953,365 88,115, Turnover levy Payable 97,294,282 59,493, Lease Rental and Other Payable 46,116,267 44,547, Outstanding Liabilities ,935,511 28,275,750 Advance from customers ,799,199 7,982,963 Other payable 44,638, ,577-25,783,227 Other liabilities (a) 44,657, ,381-30,806 TOTAL 252,941, ,786, ,948, ,715,784 Note: (a) It relates to debtors and creditors unreconciled balances which the Company is in the process of reconciling. 21

26 Note 4.8 : Fixed Assets Tangible assets Land (Leasehold) Buildings (On leasehold land) Plant & Machinery Furniture & Fixtures Vehicles Object d Art Total Cost or valuation At 1 April ,708, ,963, ,090, ,566,281 27,495, , ,598,058 Additions , , ,352 Disposals At 31 March ,708, ,963, ,541, ,931,815 27,495, , ,415,407 Depreciation Land (Leasehold) Buildings (On leasehold land) Plant & Machinery Furniture & Fixtures Vehicles Object d Art Total At 1 April , ,782, ,180, ,785,568 16,870, , ,289,443 Charge for the year 27,500 4,562,630 7,598,067 3,160,273 2,269,559-17,618,029 Adjustments - (15,670) (1,250) (144,247) 35,575 - (125,591) At 31 March , ,329, ,777, ,801,594 19,175, , ,781,880 Impairment Loss Land (Leasehold) Buildings (On leasehold land) Plant & Machinery Furniture & Fixtures Vehicles Object d Art Total At 31 March At 31 March Charge for the year At 31 March Net Block At 31 March ,812, ,181,122 62,909,608 33,780,713 10,624, ,308,615 At 31 March ,785, ,634,162 55,764,609 31,130,221 8,319, ,633,529 Note: Buildings (on leasehold land) include Rs.500/- (2011: Rs.500/-) being the cost of 10 Equity Shares (2011:10 Equity Shares) in co-operative societies 22

27 NOTE 4.9 : Loans and advances Particulars Long-term Short-term March 31, 2013 March 31, 2012 March 31, 2013 March 31, 2012 Loans to Staff - - 1,559, ,645 Advance Income Tax (net of Provision for tax) 168,107, ,753, Receivable from Sahara Hospitality Limited (Refer Sub- note no.1(ii) & 10 of Notes 4.21) 18,895,920 18,895, Receivable from Tulip Hospitality Services 4,271,583 4,271, Limited (Refer Sub- note no.1(i) & 10 of Notes 4.21) Deposits 9,321,214 9,303, Receivable from Related Parties 26,532,166 19,333,165 2,500,000 4,000,000 Prepaid Expenses - - 3,256,627 3,870,785 Other advance receivable 14,930,248 14,275,553-1,830,298 Amount receivable from the Government 117,927, ,018, Other Loans and advances ,975,089 87,604,671 Less: Provision for doubtful advances (2,436,791) (2,503,089) - - The above amount is sub classified as: 357,548, ,348,277 94,290,778 97,931,399 Secured, considered good Unsecured, considered good 359,985, ,851,366 94,290,778 97,931,399 Doubtful (2,436,791) (2,503,089) - - TOTAL 357,548, ,348,277 94,290,778 97,931,399 NOTE 4.10 : Trade Receivables Particulars Non- Current Current Trade Receivables Outstanding for a period exceeding six months from the date they are due for payment March 31, 2013 March 31, 2012 March 31, 2013 March 31, 2012 Secured, considered good - - Unsecured, considered good 48,100,544 54,516,639-27,203,005 Doubtful 14,894,729 21,446, Other Receivables Secured, considered good Unsecured, considered good ,628,624 44,915,170 Doubtful ,995,274 75,962,764 64,628,624 72,118,175 Less: Provision for doubtful debts 14,894,729 21,446, TOTAL 48,100,544 54,516,639 64,628,624 72,118,175 23