hotel corporation of india limited · hotel corporation of india limited. ii. hci iii contents page...

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HOTEL CORPORATION OF INDIA LIMITED

HCI

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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 2013 16

6. Profit&LossAccountfortheyearended31March2013 17

7. Cash Flow Statement 18

8. Notes forming part of the Financial Statements for the year ended 31 March 2013 19

9. Annexure to Annual Accounts 38

10. Ten Years Statistics 39

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BOARD OF DIRECTORS (AS ON 31.03.2014)

Shri Rohit Nandan Chairman

Shri G. Asok Kumar 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

AxisBankLimited

Registered Office

1stfloor,TransportAnnexeBuilding, Air India Complex, Old Airport, Santcurz (E), Mumbai-400 029.

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DIRECTORS’ REPORT

The Directors have pleasure in presenting their Forty Second Annual Report and the Audited Accounts for the year ended 31 March 2013.

(Rupees in lakhs)

PARTICULARS 2012-13 2011-12 Variance

TOTALREVENUE 4636.45 5773.99 (1137.54)

TOTALOPERATINGEXPENDITURE 7936.36 7688.81 247.55

GROSSOPERATING(LOSS) (3299.91) (1914.82) 1385.09

INTEREST 2.03 43.55 (41.52)

CASH(LOSS) (3301.94) (1958.37) 1343.57

DEPRECIATION 176.18 196.63 (20.45)

NET(LOSS)BEFOREEXTRAORDINARYITEMS (3478.12) (2155.00) (1323.12)

EXTRAORDINARYITEMS (0.47) (3.80) 3.33

PRIOR PERIOD ADJUSTMENTS 83.88 (22.17) 77.01

NET(LOSS)AFTEREXTRAORDINARY ITEMSBUTBEFORETAX

(3561.53) (2129.03) 1432.50

OVERVIEw :

l During the year the total revenue has reduced to Rs. 4636.45 lakhs as against Rs 5773.99 lakhs, a reduction of Rs. 1137.54 lakhs (20%) over 2011-12. This is mainly on account of reduction in the total revenue of Centaur Delhi by Rs 1150.27 lakhs, mainly on account of reduction in occupancy from last year 2011-12.

l The total expenditure has increased to Rs.7936.36 lakhs, i.e. by Rs.247.55 lakhs (3%) over previous year mainly on account of increase in the staff cost by Rs 245.98 lakhs.

l Inviewof theabove, theGrossOperatingLoss isRs.3299.91 lakhsasagainstRs.1914.82 lakhsduring theprevious year.

l TheNetLossafterextraordinary items isRs.3561.53 lakhsasagainstRs.2129.03 lakhsduring thepreviousyear.

The Unit-wise performance of the Company is as under:

CENTAUR HOTEL DELHI AIRPORT

The Unit earned a revenue of Rs.2036.86 lakhs as compared to Rs.3187.13 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 2012-13.

The total expenditure is Rs.3024.92 lakhs, as against Rs.3164.54 lakhs in the previous year. As a result, the Unit made anOperatingLossofRs.988.06lakhsascomparedtooperatingProfitofRs.22.59lakhsinthepreviousyear.Afterprovidingforinterestanddepreciation,theUnitmadeaNetLossofRs.1085.29lakhsascomparedtoRs.95.72lakhsin the previous year.

Afterconsideringextra-ordinaryitems,theunithasincurredaNetLossofRs.1100.74lakhsasagainstRs.73.15lakhsin the previous year.

CENTAUR LAKE VIEw HOTEL, SRINAGAR:

The Unit earned a revenue of Rs.1011.29 lakhs as compared to Rs.973.94 lakhs in the previous year i.e. an increase of 4% over the previous year.

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The total expenditure is Rs.1342.13 lakhs as against Rs.1141.70 lakhs in the previous year. As a result, the Unit made anOperatingLossofRs.330.84lakhsasagainstRs.167.76lakhsinthepreviousyear.Afterprovidingforinterestanddepreciation,theUnitincurredaNetLossofRs.355.60lakhsascomparedtoRs.192.87lakhsinthepreviousyear.

Afterconsideringextra-ordinaryitems,theunithasincurredaNetLossofRs.360.80lakhsasagainstRs.197.25lakhsin the previous year.

CHEFAIR FLIGHT CATERING, MUMBAI

The Unit earned a revenue of Rs.720.92 lakhs as compared to Rs.661.76 lakhs in the previous year i.e. an increase of 9% over the previous year.

The total expenditure is higher at Rs.1826.32 lakhs as against Rs.1645.20 lakhs in the previous year.

Asaresult,theUnitmadeanOperatingLossofRs.1105.40lakhsasagainstRs.983.44lakhsinthepreviousyear.Afterprovidingforinterestanddepreciation,theUnit incurredaNetLossofRs.1136.67lakhsascomparedtoRs.1034.70lakhs. in the previous year.

Afterconsideringextra-ordinaryitems,theunithasincurredaNetLossofRs.1204.35lakhsasagainstRs.1037.26lakhs in the previous year.

CHEFAIR FLIGHT CATERING, DELHI:

The Unit earned a revenue of Rs.336.16 lakhs as compared to Rs.306.34 lakhs in the previous year i.e an increase of 10%. The total expenditure is Rs.1226.16 lakhs as against Rs.1183.40 lakhs in the previous year.

Asaresult,theUnitmadeanOperatingLossofRs.890lakhsasagainstRs.877.06lakhsinthepreviousyear.Afterprovidingforinterestanddepreciation,theUnitincurredaNetLossofRs.912.31lakhsasagainstRs.919.78lakhs.inthe previous year.

ANNUAL PLAN OUTLAY 2011-12:

TheGovernmenthadapprovedanAnnualPlanOutlayofRs.10croresforthefinancialyear2012-13.Theactualoutlaywas 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:

WithregardtotheimplementationofOfficialLanguagePolicy,thedirectivesreceivedfromtheGovernmentfromtimetotime 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 2013.

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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 intheHeadOfficeandvariousUnitsoftheCompany.TheManagement’srelationswiththeemployeescontinuedtobegood 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.29.46 lakhs as against Rs.64.02 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

AsperthedecisionoftheBoardofAirIndiaLimited,assuredbusinessof30%CateringbusinessofAirIndiawasgrantedto 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 StateGovernment 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 initsAnnualPlan2012-13forCLVH,Srinagar,whichcanbespentfortherenovationoftheunit.Accordingly,stepsarebeing 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 2012-13 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:

l TheArbitrationPetitionfiledbyM/s.SaharaHospitalityLimitedagainsttheArbitrationAwardgrantedontheissueof 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.

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l The settlement proceeding with regard to the dispute in the settlement of Net Current Assets subsequent to thesaleofCentaurHotelJuhuBeach(CHJB)toM/sTulipHospitalityServicesLimited(currentlyknownas M/s V. Hotels Ltd.), several meetings were held between the parties and Director-Finance,Air IndiaLtd., theMediator. Anawardhasbeen finalizedand thesame isbeingputup to theBoard for its finalapproval.

BOARD OF DIRECTORS :

During the year 2012-13, four Board Meetings were held. As on 31 March 2013 the Board consisted of the following members:

ShriRohitNandan,CMD,AirIndiaLtd. - ChairmanShri S Machendranathan Addl..Secy & Fin.Advisor, MOCA - DirectorShri (Dr.) Prabhat Kumar, - Director Joint Secretary, MOCAShriNKJain,Director-Personnel,AirIndiaLtd. - ManagingDirector

As on 1 November 2013, the Board consisted of the following Members:

Shri RohitNandan,CMD,AirIndiaLtd. - ChairmanShriNikhilKumarJain,Director-Personnel,AirIndiaLtd. - ManagingDirectorShri S Machednranathan - DirectorAddl. Secy. & Fin. Advisor, MOCA Shri (Dr.) Prabhat Kumar, - DirectorJoint Secretary, MOCA

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to theprovisionsofSection217(2AA)oftheCompaniesAct,1956,theDirectorsconfirmthat:

l in the preparation of the Annual Accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures.

l 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 asat31March2013andoftheprofitorlossoftheCompanyforthatperiod.

l the Directors had taken proper and sufficient care for the maintenance of adequate accounting records inaccordance 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.

l the Directors had prepared the Annual Accounts on a going concern basis.

AUDIT COMMITTEE:

During the year 2012-13, the constitution of the Audit Committee was as follows:

Additional Secretary & Financial Advisor, MOCA - Chairman

Chairman&ManagingDirector-AIL - MemberJoint 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.

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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 thesoleauditorsoftheCompanyforthefinancialyear2013-14bytheComptroller&AuditorGeneralofIndiainaccordance with the provisions of the Section 619 of the Companies Act, 1956.

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 MinistryofCivilAviationandAirIndiaLimited.TheDirectorswishtothanktheComptrollerandAuditorGeneralofIndia, Chairman and members of the Audit Board, Statutory Auditors and Banks.

For and on behalf of the Board

Sd/-(Rohit Nandan)

Chairman

Place : New Delhi. Date : 20 January 2014

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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 2013.

ThepreparationoffinancialstatementsofHotel Corporation of India Limited for the year ended 31 March 2013 in accordancewiththefinancialreportingframeworkprescribedundertheCompaniesAct,1956istheresponsibilityofthe Management of the Company. The Statutory Auditors appointed by the Comptroller and Auditor General of India underSection619(2)of the theCompaniesAct,1956areresponsible forexpressingopinionon thesefinancialstatements 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 2014.

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, 1956.

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 2014

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REPORT OF THE AUDITORS TO THE MEMBERS OF HOTEL CORPORATION OF INDIA LIMITED

We have audited the accompanyingfinancialstatementsofHotelCorporationofIndiaLimited(“theCompany”),whichcomprisetheBalanceSheetasatMarch31,2013,andtheStatementofProfitandLossandCashFlowStatement 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 ofthe financial position, financial performanceand cash flowsof theCompany in accordancewith theAccountingStandardsreferredtoinsub-section(3C)ofsection211oftheCompaniesAct,1956(“theAct”).Thisresponsibilityincludes the design, implementation and maintenance of internal control relevant to the preparation and presentation ofthefinancialstatementsthatgiveatrueandfairviewandarefreefrommaterialmis-statement,whetherduetofraud or error.

Auditors’ Responsibility

Our responsibility is toexpressanopinionon thesefinancialstatementsbasedonouraudit.Weconductedouraudit 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 assuranceaboutwhetherthefinancialstatementsarefreefrommaterialmis-statement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of materialmis-statementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheCompany’spreparationandfairpresentationofthefinancialstatements 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 madebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.

We believe that the audit evidencewe have obtained is sufficient and appropriate to provide a basis for our auditopinion.

Basis for Qualified Opinion

We Report that :

1. SubNoteNo28ofNote4.21tofinancialstatementsregardingthefinancialstatementsofCompanyhavingbeen 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 theGovernment (Air IndiaLtd., itsHoldingCompany) formeeting itsobligationsand improvedoperationalperformances;

2. Asstated inSubNoteNo5ofNote4.21 tofinancialstatements regardingCatering,HandlingRevenue&Hi-LiftChargesofChefairFlightCateringDelhiUnitamountingtoRs.2.72crore(excludingVAT&servicetax)onprovisionalbasiswithoutanyacceptanceorconfirmationfromAirIndiaLtdandaccordinglyanyfurtherimpacttotheStatementofProfit&Losscannotbeascertained;

3. AsstatedinSubNoteNo18(d)ofNote4.21tofinancialstatementsandinadditiontopointno.2above,Rs.4.90crorereceivedfromAirIndiaLtdagainstChefairDelhibusinessisaccountedasanadvancereceivedonaccountof pendency of revision of agreement and billing and not as income;

4. AsstatedinSubNoteNo11(a)ofNote4.21tofinancialstatement,noconfirmationhasbeenreceivedforanamountRs.732.89LakhsshownasnetreceivablefromGovernmentofJammu&Kashmir;

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5. As stated in Sub Note No 11 (b) of Note 4.21tofinancialstatement,Rs.4.90crorepertainingtoCompany’sshareofcostofmaintenanceandunkeepoflandscapeandhallcharges/SKICCservicesavailedbyCentaurLakeViewHotel Srinagar since inception of the hotel from SKICC were not accounted as the same is disputed;

6. CounterclaimofRs.6.50croremadeonDelhiInternationalAirportLtdasreferredtotheSubNoteNo.2(b)(iii)ofNotes4.21tofinancialstatements;

7. AsstatedinSubNoteNo2(b)ofNote4.21tofinancialstatementregardingnonprovisionofleaserentalsandturnover levy payable toMumbai InternationalAirport Ltd,Delhi InternationalAirport Ltd andAirportAuthorityofIndiaamountingtoRs.2476.19Lakhsandliabilityonaccountofinterestondelayinpaymentsamountingto Rs.2846.09Lakhs;

8. AsstatedinSubNoteNo6(b)ofNote4.21tofinancialstatement,somepartoflandinrespectofHousingColonyatSrinagarhasbeenencroachedbyschoolforwhichtheCompanyhasfiledasuitinthecourt.However,duetopendinglegalsuit,nothinghasbeenaccountedinthefinancialstatement;

9. As stated inSubNoteNo1 (d) ofNote4.21 to financial statements, theCompanyhaspreferred for appealpertaining to below mentioned statutory dues:

a) IncomeTax-Rs.624.03Lakhs b) SalesTax-Rs.1193.99Lakhs c) LuxuryTax-Rs.280.51Lakhs d) ExciseDuty-Rs.197.28Lakhs

10. Debit Balances in, Expenditure Tax Account, Sales Tax Account aggregating to Rs. 72.06 lakhs in the books of accountsoftheHeadOffice,MumbaiUnitsandDelhiUnitshavebeenbroughtforwardfromearlieryears;

11. DuringFinancialYear2012-13,theCompanyhasaccountedRs.83.89LakhsaspriorperiodexpenditurewhichisarrivedatafteradjustingpriorperiodincomeinitsProfit&LossAccount;

12. AsstatedinSubNoteNo8ofNote4.21tofinancialstatements,sundrycreditorsandloansandadvances,otheraccountsincludingrelatedparties,aresubjecttoreconciliation/confirmationandconsequentialimpactthereofifany,onfinancialstatementremainsunascertained;

13. AsdiscussedinSubNoteNo9ofNote4.21tofinancialstatements,sundrydebtorsincludeduesfromrelatedparties(HoldingCompany-AirIndiaLtd)Rs.275.82Lakhsissubjecttoreconciliation/confirmationandthereforeconsequentialimpactthereofifany,onfinancialstatementremainsunascertained;

14. AsstatedinSubNoteNo22ofNote4.21tofinancialstatement,theCompanyisstillintheprocessofconductingannual assessment of potential impairment of loss of assets as perAccounting Standard 28 “Impairment ofAssets”thereforeconsequentialimpactthereofonthefinancialstatementremainsunascertained;

15. Asstated inSubNoteNo1(f)&16toNote4.21tofinancialstatement,noprovisionhasbeenmadetowardsinterest,penaltypayabletowardsoutstandingstatutorydueslikeVAT,ServiceTax,LuxuryTax,ESIC,TDS&LICifanyandimpactthereofonfinancialstatementscannotbeascertained;

16. As stated inSubNoteNo. 27 toNote 4.21 to financial statement regarding claims for reimbursement fromemployees availing medical and other staff claims, claims for interest from suppliers / other parties are accounted on cash basis and not on accrual basis;

17. AsstatedinSubNoteNo12toNote4.21tofinancialstatementregardingnonidentificationofMicro,SmallorMediumEnterprises,partieshavingcreditbalanceandnotobtainedconfirmations,accordinglyinterestpayableis not ascertainable;

18. AsstatedinSubNoteNo.14toNote4.21tofinancialstatement,regardingnonfilingofcertainstatutoryreturnsand 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 toreconciliation/confirmationandthereforeconsequentialimpactthereofifanyonfinancialstatementremainsunascertained;

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Opinion

Subject to our comments stated above, in our opinion and to the best of our information and according to the explanations giventous,thefinancialstatementsgivetheinformationrequiredbytheActinthemannersorequiredandgiveatrueand 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) inthecaseoftheProfitandLossAccount,ofthelossfortheyearendedonthatdate;andc) inthecaseoftheCashFlowStatement,ofthecashflowsfortheyearendedonthatdate.

Report on Other Legal and Regulatory Requirements

1) AsrequiredbytheCompanies(Auditor’sReport)Order,2003(“theOrder”)issuedbytheCentralGovernmentofIndia in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specifiedinparagraphs4and5oftheOrder.

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) theBalanceSheet,StatementofProfitandLoss,andCashFlowStatementdealtwithbythisReportareinagreement with the books of accounts;

d) inouropinion,theBalanceSheet,StatementofProfitandLoss,andCashFlowStatementcomplywiththeAccounting 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 recordby theBoardofDirectors,noneof thedirectors isdisqualifiedasonMarch31,2013, frombeingappointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

f) since theCentralGovernment has not issued any notification as to the rate atwhich the cess is to bepaid 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 AccountantsFRN :101048W

Sd/-CA Raman D Hangekar

(Senior Partner) M. No. : 30615

Place : Mumbai Date : 30 January 2014

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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) All fixedassets havebeenphysically verifiedby themanagement at the year endalongwith InternalAuditors, which in our opinion is reasonable, having regards to size of the Company and the nature of its assets.Nomaterialdiscrepancieswerenoticedonsuchphysicalverification;

(c) Inouropinionandaccordingtotheinformationandexplanationsgiventous,nomajorquantumoffixedasset 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) In our opinion and according to the information and explanations given to us, the procedure for physical verificationadoptedbythemanagementisreasonable. 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;

(c) 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, firmsorotherpartieslistedintheregistermaintainedunderSection301oftheCompaniesAct,1956.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 booksofaccount,theCompanyhasnottakenloansfromcompanies,firmsorotherpartieslistedintheregister maintained under Section 301 of the Companies Act, 1956. 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;

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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, 1975. 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 481.45 Refer note below

20th of Subsequent

Month

Not yet remitted

Employees State Insurance Act, 1948

Employees State Insurance

8.82 Refer note below

21st of Subsequent

Month

14.06.2013 and

28.06.2013

Value Added Tax of Respective States

Value Added Tax

69.14 Refer note below

20th of Subsequent

Month

Not yet remitted

Luxury Tax Act of RespectiveStates

LuxuryTax 218.86 Refer note below

20th of Subsequent

Month

Not yet remitted

The Finance Act, 1994 Service Tax 104.41 Refer note below

6th 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:

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(AmountinLakhs)

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 624.03

C o v e r e d by refunds withheld by the tax authorities

A.Y.2003 - 04 High Court

Sales Tax Tax 14.34 1993 - 94 Jt Commissioner of Sales Tax Appeals MumbaiPenalty 12.12

Less:Paid 18.82

Total 7.64

Sales Tax Tax 18.93 2000 - 01 Joint Commissioner of Sales Tax Appeals

Interest 0.29

Penalty 0.02

Less:Paid 10.00

Total 9.24

Sales Tax Tax 264.57 2001 - 02 Remanded back to Commissioner of Sales Tax 2nd Appeal by MSTTInterest 169.41

Penalty 15.82

Less:Paid 25.00

Total 424.80

Sales Tax Tax 216.63 2002 - 03 Remanded back to Commissioner of Sales Tax 2nd Appeal by MSTTInterest 167.89

Penalty 1.00Less:Paid 20.00Total 365.51

VAT Tax 65.52 2005 - 06 1st AppealInterest 69.61Penalty 65.52Total 200.65

VAT Tax 43.84 2008 - 09 1st AppealInterest 24.66Penalty 43.84Total 112.34

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LuxuryTax Tax 1.35 1996 - 97 Joint Commissioner Sales TaxInterest 0.21 1997 - 98Penalty 0.04 1999 - 00Total 1.60

LuxuryTax Tax 65.05 2000 - 01 Addl. Commissioner Sales TaxInterest 93.32Penalty 0.08Less:Paid 0.19Total 158.45

LuxuryTax Tax 19.84 2002 - 03 Commissioner of Sales Tax

Interest 20.76

Penalty 1.00

Total 41.60

LuxuryTax Tax 27.66 2009 - 10 Commissioner of Sales Tax (Appeals), New DelhiInterest 11.20

Penalty 2.84

Total 41.70

LuxuryTax Tax (27.66) 2010 - 11 Commissioner of Sales Tax (Appeals), New DelhiInterest 61.67

Penalty 3.15

Total 37.16

Excise Duty Tax 197.28 2005 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 didnothaveanyborrowingsfromfinancialinstitution,bankorhadnotissueddebentures.Thus,provisionsofclause 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. TheCompanyisnotachitfundoranidhi/mutualbenefitfund/society.Therefore,theprovisionofthisclauseofOrder is not applicable to the Company;

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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 31st 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 AccountantsFRN:101048W

Sd/-CA Raman D Hangekar

(Senior Partner) M. No. : 30615

Place : Mumbai Date : 30 January 2014

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BALANCE SHEET AS AT 31 MARCH 2013(Amount in Rupees)

Particulars Notes As at March 31, 2013 As at March 31, 2012EQUITIES AND LIABILITIESShareholders’ Funds :Share capital 4.1 406,000,000 406,000,000 Reserves and Surplus 4.2 (1,011,663,857) (655,510,394)

(605,663,857) (249,510,394)Non-current Liabilities : Long-Term Borrowings 4.3 - - Other Long-Term Liabilities 4.4 287,262,571 196,835,758 Other Non Current Liabilities 4.7 252,941,329 206,786,766 Trade Payables 4.6 38,897,610 4,195,396 Long-Term Provisions 4.5 485,529,524 460,721,241

1,064,631,035 868,539,161 Current liabilities : Short-term borrowings 4.3 - - Other short-term liabilities 4.4 26,807,041 1,686,805 Trade payables 4.6 60,897,241 93,343,986 Other current liabilities 4.7 253,948,384 138,715,784 Short-term provisions 4.5 122,979,447 102,069,930

464,632,114 335,816,505 TOTAL 923,599,292 954,845,272

ASSETS Non-current assets : Fixed assets Tangible assets 4.8 322,633,529 339,308,615 Capital work-in-progress 1,014,395 1,014,395 Long-termloansandadvances 4.9 357,548,608 335,348,277 Trade receivables 4.10 48,100,544 54,516,639

729,297,077 730,187,926 Current assets : Inventories 4.11 22,530,826 22,190,818Trade receivables 4.10 64,628,624 72,118,175 Cash and Cash equivalents 4.12 12,851,987 32,416,954 Short-term loans and advances 4.9 94,290,778 97,931,399

194,302,215 224,657,346 TOTAL 923,599,292 954,845,272

Summaryofsignificantaccountingpolicies 4.20

The accompanying notes are an integral part of the Financial StatementsAs per our report of even date

For and on behalf of For and on behalf of the Board Batliboi and Purohit Chartered Accountant FRN : 101048W

Sd/- Sd/- Sd/- Sd/- CA Raman D Hangekar Rohit Nandan G Asok Kumar Shyamala P Kunder (Senior Partner) Chairman Director Company Secretary M. No. : 30615

Place : Mumbai Place : Delhi Date : 30 January 2014 Date : 20 January 2014

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STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31 MARCH 2013 (Amount in Rupees)

Particulars Notes 2012-13 2011-12Continuing operationsIncome : Revenue from Operations 4.13 452,804,289 549,124,799

Other Income 4.14 10,836,922 28,185,317 ForeignExchangefluctuation,net 4,519 88,862

TOTAL REVENUE 463,645,730 577,398,978 Expenses : Cost of raw material consumed 4.15 85,539,107 90,376,685 EmployeeBenefits 4.16 533,535,768 508,939,466 Other Expenses 4.17 174,562,114 169,567,935 Finance Cost 4.18 202,628 4,353,540 Depreciation Expenses 4.19 17,618,029 19,663,130

TOTAL EXPENSES 811,457,645 792,900,756 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)beforetaxfromdiscontinuingoperations - - 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 shareBasicComputedonthebasisofprofitfromcontinuingoperations (87.72) (52.44)Computedonthebasisoftotalprofitfortheyear (87.72) (52.44)DilutedComputedonthebasisofprofitfromcontinuingoperations (87.72) (52.44)Computedonthebasisoftotalprofitfortheyear (87.72) (52.44)

Summaryofsignificantaccountingpolicies 4.20





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CASH FLOw STATEMENT FOR THE YEAR ENDED 31 MARCH 2013 (Amount in Rupees)

Particulars 2012-13 2011-12A. 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)/LossonSaleofFixedAssets (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 324,907,483 115,933,568 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 32,416,953 223,642,414 CASH AND CASH EQUIVALENTS AS AT THE END OF THE YEAR 12,851,987 32,416,953

As per our report of even date




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NOTES FORMING PART OF FINANCIAL STATEMENTS

NOTE “4.1” : SHARE CAPITAL (Amount in Rupees)

Particulars As at March 31, 2013 As at March 31, 2012

Authorised Capital

41,00,000 Equity Shares of Rs 100/- each 410,000,000 410,000,000

TOTAL 410,000,000

410,000,000

Issued, Subscribed and Fully Paid-up Capital

40,60,000 Equity Shares of Rs 100/- each 406,000,000 406,000,000

Total 406,000,000 406,000,000

(Amount in Rupees)

4.1.a. Reconciliation of the shares outstanding at the beginning and at the end of the reporting period

As at March 31, 2013 As at March 31, 2012

No. of Shares Amount Rs. No. of Shares Amount Rs.

At the beginning of the period 4,060,000 406,000,000 4,060,000 406,000,000

Issued during the period - - - -

Bought back during the period - - - -

Outstanding at the end of the period 4,060,000 406,000,000 4,060,000 406,000,000

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 ofLiquidation,EquityShareholdersareentitledtoreceivetheassetsofthecompanyremainingafterdistributionofall 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:

(Amount in Rupees)


The holding company

AirIndiaLimited 406,000,000 406,000,000

4.1.c. Bought back during the period of five years immediately preceding the reporting date (Amount in Rupees)


Equity shares bought back by the Company - -

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4.1.d. Details of shareholders holding more than 5% shares in the company(Amount in Rupees)


No. of Shares % of Holding No. of Shares % of Holding

AirIndiaLimitedanditsnominees 4,060,000 100% 4,060,000 100%

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(Amount in Rupees)

Particulars As at March 31, 2013 As at March 31, 2012Profit & Loss Account surplus/(deficit) in the statement of Profit and Loss Balanceasperlastfinancialstatements (655,510,394) (442,606,871)Profit/(Loss)fortheyear (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(Amount in Rupees)

Particulars Non-current portion Current maturitiesAs at

March 31, 2013As at

March 31, 2012As at

March 31, 2013As at

March 31, 2012Over Draft from Banks: The above amount includes Secured borrowings - - - - Unsecured borrowings - - - - Amountdisclosedunderthehead“OtherCurrentLiabilities”

- - - -

Net amount - - - -

NOTE “4.4” : OTHER LIABILITIES

(Amount in Rupees)

Particulars Non-current Current portion As at

March 31, 2013As at

March 31, 2012As at

March 31, 2013As at

March 31, 2012

Amount due to Related Party (1) 277,673,220 162,770,767 - -

Deposit 9,589,352 34,064,992 26,807,041 1,686,805

TOTAL 287,262,571 196,835,759 26,807,041 1,686,805

Note:(1)ItrelatedtoamountpayabletoAirIndiaLimited,interestfreeandissubjecttoconfirmationandreconciliation

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NOTE “4.5” : PROVISIONS(Amount in Rupees)

Particulars Long-term Short-term As at

March 31, 2013As at

March 31, 2012As at

March 31, 2013As at

March 31, 2012

Gratuity 272,724,405 244,951,972 38,186,307 35,552,411

Employees payable 107,408,612 113,993,160 64,543,140 50,799,946 LeaveEncashment 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 20,829,013 - -

Provision for Fringe BenefitTax 5,288,572 5,288,572 - - Provision for Wealth Tax - 111,481 - -

TOTAL 485,529,524 460,721,241 122,979,447 102,069,930

NOTE “4.6” : TRADE PAYABLES(Amount in Rupees)

Particulars Non-current Current portion As at

March 31, 2013As at

March 31, 2012As at

March 31, 2013As at

March 31, 2012Trade payables - 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

38,897,610 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(Amount in Rupees)

Particulars Long-term Short-term As at

March 31, 2013As at

March 31, 2012As at

March 31, 2013As at

March 31, 2012Other Liabilities Statutory liabilities dues (6,718,817) 13,842,811 134,213,674 76,643,038 LeaseRentalPayable 26,953,365 88,115,914 - - Turnover Levy Payable 97,294,282 59,493,577 - - LeaseRentalandOtherPayable 46,116,267 44,547,506 - - OutstandingLiabilities - - 67,935,511 28,275,750 Advance from customers - - 51,799,199 7,982,963 Other Payable 44,638,522 131,577 - 25,783,227 Other Liabilities (a) 44,657,710 655,381 - 30,806

TOTAL 252,941,329 206,786,766 253,948,384 138,715,784

Note: (a) It relates to debtors and creditors unreconciled balances which the Company is in the process of reconciling.

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NOTE “4.8” : FIXED ASSETS

(Amount in Rupees)

Tangible Assets Land (Leasehold)

Buildings (On leasehold

land)

Plant & Machinery

Furniture & Fixtures

Vehicles Object d’ Art

Total

Cost or valuation

At 1 April 2012 2,708,800 334,963,420 268,090,015 173,566,281 27,495,291 774,250 807,598,058

Additions - - 451,818 365,534 - - 817,352

Disposals - - - - - - -

At 31 March 2013 2,708,800 334,963,420 268,541,833 173,931,815 27,495,291 774,250 808,415,407

Depreciation Land (Leasehold)


land)

Plant & Machinery



Total

At 1 April 2012 896,090 104,782,298 205,180,407 139,785,568 16,870,840 774,240 468,289,443

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 2013 923,590 109,329,258 212,777,224 142,801,594 19,175,974 774,240 485,781,880

Impairment Loss Land (Leasehold)


land)

Plant & Machinery



Total

At 31 March 2012 - - - - - - -

At 31 March 2013 - - - - - - -

Charge for the year - - - - - - -

At 31 March 2013 - - - - - - -

Net Block

At 31 March 2012 1,812,710 230,181,122 62,909,608 33,780,713 10,624,451 10 339,308,615

At 31 March 2013 1,785,210 225,634,162 55,764,609 31,130,221 8,319,317 10 322,633,529

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

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NOTE “4.9” : LOANS AND ADVANCES(Amount in Rupees)

Particulars Long-term Short-term

As at March 31, 2013




LoanstoStaff - - 1,559,061 625,645 Advance Income Tax (net of Provision for tax) 168,107,186 159,753,728 - - ReceivablefromSaharaHospitalityLimited(Refer Sub- note no.1(ii) & 10 of Notes 4.21)

18,895,920 18,895,920 - -

Receivable from Tulip Hospitality Services Limited(ReferSub-noteno.1(i)&10ofNotes4.21)

4,271,583 4,271,583 - -

Deposits 9,321,214 9,303,214 - - 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 117,927,083 112,018,203 - - OtherLoansandadvances - - 86,975,089 87,604,671 Less:Provisionfordoubtfuladvances (2,436,791) (2,503,089) - - 357,548,608 335,348,277 94,290,778 97,931,399 Theaboveamountissubclassifiedas: Secured, considered good - - - - Unsecured, considered good 359,985,399 337,851,366 94,290,778 97,931,399 Doubtful (2,436,791) (2,503,089) - -

TOTAL 357,548,608 335,348,277 94,290,778 97,931,399

NOTE “4.10” : TRADE RECEIVABLES(Amount in Rupees)

Particulars Non- Current CurrentAs at

March 31, 2013As at

March 31, 2012As at

March 31, 2013As at

March 31, 2012Trade Receivables Outstanding for a period exceeding six months from the date they are due for payment

Secured, considered good - - Unsecured, considered good 48,100,544 54,516,639 - 27,203,005 Doubtful 14,894,729 21,446,125 - -

Other Receivables Secured, considered good - - - -Unsecured, considered good - - 64,628,624 44,915,170 Doubtful - - - - 62,995,274 75,962,764 64,628,624 72,118,175 Less:Provisionfordoubtfuldebts 14,894,729 21,446,125 - -

TOTAL 48,100,544 54,516,639 64,628,624 72,118,175

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NOTE “4.12” : CASH AND CASH EQUIVALENTS(Amount in Rupees)


Balances with Bank: On Current Account 3,625,394 22,229,457 On Fixed Deposits with Bank 4,773,152 9,972,184 Cheques on Hand / in Transit 4,302,437 -

Cash on Hand 151,004 215,312 TOTAL 12,851,987 32,416,953

NOTE “4.11” : INVENTORIES(Amount in Rupees)


Operating Supplies 13,737,305 15,863,980 Stores 6,135,129 4,127,091 Food and Beverages 2,658,392 2,199,747

TOTAL 22,530,826 22,190,818

NOTE “4.13” : REVENUE FROM OPERATIONS(Amount in Rupees)

Particulars 2012-13 2011-12

Revenue from Hotels and Flight Kitchen -

Rooms - Guest Accommodation 208,114,429 281,544,599

Food, Cigars and Cigarettes 198,006,896 221,243,130

Other Services 26,117,172 27,883,334

LicencefeesforShopsandOffices 18,236,290 15,913,639

Beverages(WineandLiquor) 1,967,388 2,300,700

Telex and Telephone 362,115 239,397

452,804,289 549,124,799

Less:Exciseduty - -

TOTAL 452,804,289 549,124,799

NOTE “4.14” : OTHER INCOME(Amount in Rupees)


Interest Income 1,671,190 10,276,162

Profitonsaleofasset,net 22,999 -

Excess provision written back 5,942,228 13,278,395

Scrap sale 3,200,505 4,630,761

TOTAL 10,836,922 28,185,317

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NOTE “4.15” : COST OF RAw MATERIAL CONSUMED(Amount in Rupees)


Food Consumed (Including Cigars and Cigarettes)

Opening stock 1,723,375 1,579,155

Add: Purchases 80,640,567 87,407,666

Closing stock 1,725,049 1,723,375

80,638,893 87,263,446

Beverages (wine and Liquor)

Opening Stock 462,256 386,699

Add: Purchases 320,157 458,229

Closing stock 350,775 462,256

431,638 382,672

Consumption of Stores and Supplies

Opening Stock 8,501,676 7,619,393

Add: Purchases 5,508,665 3,158,820

14,010,341 10,778,213

Closing Stock 9,541,766 8,047,645

4,468,575 2,730,568

Cost of Raw material consumed TOTAL 85,539,106 90,376,685

NOTE “4.16” EMPLOYEE BENEFITS(Amount in Rupees)


Salaries,Wagesandotherbenefits 403,398,057 384,572,365

Gratuity 53,754,979 47,702,494

LeaveEncashment 17,255,955 19,623,759

Contribution to Provident Fund and Other Fund 42,199,223 36,636,152

Staff Welfare Expenses 16,037,632 19,462,516

Bonus 889,922 942,180

TOTAL 533,535,768 508,939,466

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NOTE “4.18” FINANCE COSTS(Amount in Rupees)

Particulars 2012-13 2011-12Interest Expense

- Interest on secured loan - 4,138,093 - Interest on Other 202,628 215,447

TOTAL 202,628 4,353,540

NOTE “4.17” : OTHER EXPENSES(Amount in Rupees)

Particulars 2012-13 2011-12Power & Fuel 93,680,972 85,795,079 RentandLicencesFee 24,670,650 21,308,210 Security Charges 10,968,084 12,638,661 Repairs & Maintenances:

Building 4,427,992 9,282,781 Plant and Machinery 6,385,370 3,760,747 Other 5,816,409 5,611,520

Miscellaneous Expense 7,936,600 8,169,134 Travelling & Conveyance:

Travelling 259,397 149,798 Conveyance 962,732 1,350,711 Vehicle Expense 2,760,890 4,266,138

Soft Furnishing 1,959,627 3,711,945 Rates and Taxes 5,082,913 3,672,885 Printing and Stationery 1,774,011 2,389,844 LegalandProfessionalCharges 1,493,184 1,818,580 Communication costs 1,508,464 1,666,490 Insurance 1,061,596 1,694,896 Guest Transportation Expenses 2,290,844 1,332,307 Advertisement and Publicity 433,977 444,740 Commission 313,076 337,396 Payment to Auditor (refer note below) 376,847 157,000 Provision for Doubtful debts - 9,075 Bad Debts 398,480 -

TOTAL 174,562,114 169,567,935 Payment to Auditor For Audit 176,405 157,000 For Other services 114,180 - For Reimbursement of expenses 86,262 -

TOTAL 376,847 157,000

NOTE “4.19” : DEPRECIATION EXPENSES(Amount in Rupees)


Depreciation on Tangible assets 17,618,029 19,663,130

TOTAL 17,618,029 19,663,130

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NOTE “4.20” : SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1 GENERAL The accounts are prepared in accordance with the generally accepted accounting principles under the historical

cost convention on the basis of a going concern.

2 INCOME & EXPENDITURE RECOGNITION

2.1 Income & Expenditure are accounted on the accrual basis except income from Health Club which is accounted on cash basis.

2.2 Sales represent the amount of Invoices to customers, net of trade discounts.

3 FIXED ASSETS

3.1 Fixed Assets are stated at historical cost. 3.2 Incaseofcontractsextendingoveryears,revisionincostestimatesarereflectedintheAccountingperiod

in which the revisions crystalise. 3.3 Leaseholdlandisamortisedovertheperiodoflease.

4 DEPRECIATION

4.1 Depreciationonfixedassets isprovided, irrespectiveof the leaseperiod,at therates& in themannerprescribedinScheduleXIVtotheCompaniesAct,1956ontheStraightLineMethodonproratabasisfromthe month of addition except in the case of the following assets:

a In respect of assets acquired prior to 1 April 1982, at rates on the estimated useful life of the Fixed Asset.

b In respect of the assets acquired from 1 April 1982 to 2 April 1987 at the rates prescribed under the Income Tax Act,1961 and rules there under.

4.2 Assets purchased/installed during the year having cost less than Rs. 5,000/- each are being fully depreciated in the year of purchase.

5 AMORTISATION

5.1 Kitchenutensilspurchasedforthefirsttimeforanewunitarewrittenoffequallyinfouryears.Anyadditionsin the subsequent years are written off in the year of purchase.

5.2 Carpets purchased initially for a new unit/major renovation are capitalised as Fixed Assets in the year of purchaseanddepreciatedontheStraightLineMethodasspecifiedinpara4above.Carpetspurchasedinthe subsequent years are being written off as Soft furnishings in the year of purchase.

5.3 Heavy curtains are written off in the year of issue.

6 TREATMENT OF EXPENDITURE DURING CONSTRUCTION PERIOD

All revenue expenses directly attributable to ongoing projects are set apart as expenses during construction and capitalised on the basis of value of work completed during the year in which the asset is put to use.

7 FOREIGN EXCHANGE TRANSACTION

7.1 Foreign Currency balances are valued on the basis of exchange rates prevailing as on the date of the Balance Sheet.

7.2 Theexchangedifferencepertaining to theCurrentAssetsandCurrentLiabilitiesare transferred to theStatementofProfitandLoss.

7.3 Collection transaction in Foreign Currencies are translated into rupees at the rate of exchange ruling at the date of deposit with the Bank.

8 VALUATION OF INVENTORIES Stock is valued at cost after making allowance for spoilage, except in case of linen, cutlery & crockery in rooms and

outlets which are being valued at cost irrespective of the period of use.

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9 RETIREMENT BENEFITS

9.1 GratuityandLeaveEncashmentareprovidedonthebasisofActuarialValuationasattheBalanceSheetdate.

9.2 Voluntary Retirement Scheme is accounted for in the year of announcement of scheme by the Company and acceptance of the same by the employees.

10 INVESTMENTS

Long term investments, ifany,arestatedatcost, lesspermanentdiminution invalue.Current investmentsarevalued at lower of the cost or fair market value.

11 LIABILITIES & PROVISIONS

11.1 TheCompanyconsidersclaimsunderarbitrationasContingentLiability. 11.2 The effect of arbitration awards decided against the Company for which Appeals have been preferred, are

accountedintheyearoffinaldisposal. 11.3 ShowCauseNoticesreceivedfromvariousauthorities/partiesarenotconsideredasContingentLiabilities.

However, when Demand Notices are raised against the same, those demands are either paid or treated asLiabilities, if acceptedby theCompany,andare treatedasContingentLiabilities if disputedby theCompany.

11.4 Outstanding current liabilities are reviewed periodically and those over three years, if not considered payable are transferred to other Income.

12 PRIOR PERIOD ADJUSTMENTS Expenditure/Incomepertainingtoprioryear(s)isclassifiedasPriorPerioditems,onlyincaseswheretheamount

exceeds Rs. 25,000/- per transaction.

13 ACCOUNTING FOR DOUBTFUL DEBTS

Debts pertaining to the Government, Government Departments and Public Sector Undertakings are provided for onlywhenspecificallyknowntobedoubtful.Allotherdebtsareprovidedfor,iftheyareeithermorethan3yearsoldorspecificallyknowntobedoubtful.

14 ACCOUNTING FOR TAXATION

14.1 Current tax is determined as the amount of tax payable in respect of taxable income for the period.

14.2 Deferred tax is recognised on timing differences, between taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods. Deferred Tax Assets, subject to consideration of prudence, are recognised and carried forward only to the extent that there is a reasonablecertaintythatsufficientfuturetaxableincomewillbeavailableagainstwhichsuchdeferredtaxassetscanberealised.ThisisinaccordancewithAS-22“AccountingfortaxesonIncome.”

15 USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requiresestimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financialstatementsand reportedamountsof revenuesandexpensesduring the reportingperiod.Differencesbetween actual results and estimated are recognized in the period which the result are materialized.

16 IMPAIRMENT OF FIXED ASSETS

Attheendoftheyear,theCompanydetermineswhereaprovisionshouldbemadeforimpairmentlossonfixedassets by considering the indication that an impairment loss may have occurred in accordance with Accounting Standards 28 on Impairment of Assets prescribed by Companies (Accounting Standard) Rules, 2006 where the recoverableamountofanyfixedassetsislowerthanitscarryingamount,aprovisionforimpairmentlossonfixedassets is made for the difference.

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NOTE 4.21 : NOTES FORMING PART OF FINANCIAL STATEMENTS

(Amount in Rupees)

Sr. No.


1 ContingentLiabilitiesinrespectof:

a) Claims against the Company not acknowledged as debts 19,017,000 30,357,000

b) Claims under Arbitration :

i) a) CounterClaimmadebyM/sTulipHospitalityServicesLtd.thebuyer of Centaur Hotel Juhu Beach for Rs. 3.33 crores towards Net Current Assets, has been disputed by the Company as the Net Current Assets and other obligations of the buyers were to be settled in terms of the Agreement to Sell dated 11.03.2002 and on this issue as per the said Agreement, a sum of Rs. 0.43 crore ispayablebythebuyersandaccordinglyreflectedasreceivableon account of Net Current Assets. Since there was no consensus on some issues, the same was referred for adjudication to the Ministry of Civil Aviation. Under their advice, the matter is being amicablyresolvedbetweentheCompany&M/sV.HotelsLtd.(PreviouslyknownasM/sTulipHospitalityServicesLtd.).Therehave been series of meetings held between the Company and M/sV.HotelsLtdandthenegotiationareinitsfinalstage.

b) Subsequent to the sale of Centaur Hotel Juhu Beach in 2002, State Govt. of Maharashtra put a claim for premium payable on the transfer of 1810 sq. mtr. of land attached to the hotel property which was on lease from the State Govt. is to be kept open to the sky and can be used only as garden. The premium amount claimed is Rs. 4.48 Crores and the same has been disputed by the Company.

ii) Counter Claim of Rs. 2.36 crores by M/s Sahara Hospitality Ltd.(formerly known as M/s Batra Hospitality Pvt. Ltd.), the buyer ofCentaur Hotel in Mumbai Airport, towards Net Current Assets which was disputed by the Company, as the Net Current Assets and other obligations of the buyer were to be settled in terms of the Agreement to Sell dated 18.4.2002. On this issue, as per the Agreement, a sum of Rs.2.98 crores was payable by the buyer on account of Net Current Assets and Rs. 0.11 crores against other dues and accordingly was reflectedasreceivableinthebooksofaccounts.Inthepreviousyear,the Hon’ble Arbitral Tribunal published their award under which the buyerhad to finallypayanamountofRs.1.88croresand interestthereon along with legal costs of Rs. 0.40 crores. However, the buyers preferred an appeal in the Hon’ble High Court of Bombay against the award,whichisstillpendingforfinalhearing.Noeffecthasbeengivenfor legal costs and interest receivable which would be accounted for onfinaldisposaloftheappealbytheHon’bleHighCourt.

HCI

3030

iii) The Company had entered into an Agreement with M/s. Gulraj Engineering for renovation of 60 guest rooms and additional 60 guest rooms together with connected shafts and corridors at Centaur Hotel, Mumbai Airport. Certain disputes and differences arose with the said Party and the amount was not settled. Accordingly, invoked arbitration clause claiming an amount of Rs.1.03 crores. On 14.01.2009, the Arbitrator’s award was received for Rs. 5.81 lakhs, which was duly paid to the party. Thereafter, the party challenged the said award before the Hon’ble High Court. The award was set aside and remanded back to the Sole Arbitrator. Proceedings commenced.

9,718,776

-

iv) The Management Contract Agreement executed on 15.9.2010 with M/s B.D. & P Hotels (India) Pvt Ltd. and an interest free SecurityDeposit of Rs.10 crores and proportionate Minimum Guaranteed Amount of Rs. 1.08 crores was deposited by the party. However, before the hotel could be handed over under Management Contract, instructions were received from the Ministry of Civil Aviation and as per Committee of Secretaries, Government of India, the J&K State Government had indicated that since the land was leased to the Company by J&K Government, the Management Contract was not feasible. Hence, after approval of the Board of Directors, Management Contract Agreement was terminated effective 26.09.2011 and the Security deposit and Minimum Guaranteed amount were returned to theparty.Thereafter,partyfiledawritintheHighCourtofBombayforinvoking arbitration. The Hon’ble High Court has granted the appeal of the party and arbitrator is being appointed.

v) Awards that have gone against the Company for which appeals are preferred and pending disposal.

1,062,000 1,062,000

c) Guarantees given to Customs Authorities 300,000 300,000

d) i) Claims of Income Tax Authorities for which the department has preferred an appeal

- 2,909,000

ii) Claims of Income Tax Authorities for which the Company has preferred an appeal with various authorities from Income Tax Departmentforthefinancialyear2002-03(AY2003-04)regardthe capital gain on sale of 2 properties i.e. Centaur Hotel Mumbai Airport & Centaur Hotel Juhu Beach, disputed by the company in Tribunal, covered by refunds withheld by the Income Tax authorities

62,403,000 154,222,000

iii) Disputed Sales Tax/VAT Liability for which the Company haspreferred an appeal with various authorities (includes demand ofSalesTaxon“slumpsale”forthesaleof2propertiesin2002-03 i.e. Centaur Hotel Mumbai Airport & Centaur Hotel Juhu Beach) (against which Company has deposited Rs. 73,82,000/- previous year Rs. 73,82,000/-).

119,399,241 240,939,000

iv) Claimsof LuxuryTax authorities, forwhich theCompany haspreferred an appeal with various authorities (includes demand of LuxuryTaxfor2propertiesin2002-03i.e.CentaurHotelMumbaiAirport and Centaur Hotel Juhu Beach) (against which Company has deposited Rs.19,000/- previous year Rs. 19,000/-).

28,051,000 20,165,000

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3131

v) Expenditure tax for the assessment year 1997-98 for which the Company has preferred an appeal.

- 374,000

vi) Claim of excise duty, for which the Company has preferred an appeal.

19,728,246 19,728,246

e) Claims made by employees Amount Indeterminate

Amount Indeterminate

f ) PenaltyonaccountofnonfilingofServiceTax Returns Amount Indeterminate

Amount Indeterminate

2 a) Duringtheyear,provisionhasbeenmadeintheStatementofProfitandLossforleaserentalsattherateofRs.163/-persquaremeterandturnover levy payable to :

i) Mumbai International Airport Ltd. (MIAL) for Chefair FlightCatering, Mumbai.

4,811,255 4,723,046

ii) Delhi InternationalAirport Ltd. (DIAL) for Centaur Hotel DelhiAirport & Chefair Flight Catering, Delhi.

14,983,206 15,519,677

b) No provision has been made for the following:

i) LeaserentalsandturnoverlevypayabletoAirportsAuthorityofIndia upto 2 May 2006.

202,766,494 202,766,494

ii) LeaserentaldifferentialpayabletoMumbaiInternationalAirportLtd.(MIAL)forChefairFlightCatering,Mumbai,effective3May2006.

7,319,685 6,191,501

iii) Lease rental differential payable to Delhi International AirportLtd. (DIAL) for Centaur Hotel DelhiAirport and Chefair FlightCatering, Delhi, effective 3 May 2006 (A counter claim for Rs.6.50croreshasbeenlodgedbytheCompanywithDIALforlossofbusinessrevenueduringtheconstructionactivitybyDIALin front of the hotel in the year 2009-10).

37,532,470 30,215,986

iv) Interest on above:

a) payable to AAI 168,178,228 116,633,735

b)payabletoMIAL 26,858,851 18,864,514

c)payabletoDIAL 89,572,094 59,235,325

3 Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of mobilisation advance)

1,405,000 1,405,000

4 As per the approval of the Ministry of Civil Aviation, wage negotiations for all the unionized category of employees effective 01.01.2002 for Centaur Hotel Delhi, Chefair Delhi & Centaur Hotel Srinagar & effective 15.11.2002 for Chefair Mumbai were concluded. Against a total estimated provision of Rs. 21.98 crores for all the units made in the books of accounts, the Company has since fully disbursed and settled liability amounting to Rs. 11.53 crores for Centaur Delhi and Srinagar. Out of total arrears of Rs. 10.45 crores for Chefair Mumbai, Chefair Delhi and Dining Facility Centre, Mumbai, a balance of Rs. 2.02crores(previousyearRs.2.04Crores),beingthefinal instalment, isyet to be disbursed.

20,248,129 20,376,841

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3232

5 During the year 2012-13, Catering and Handling revenue for Chefair Flight Catering, Delhi amounting to Rs. 2.72 crores (previous year Rs. 3.03 crores), has been booked on provisional basis since 25 May 2009 as the new rates have still notbeenfinalisedwiththeairline.

27,252,000 30,258,641

6 a) Buildings (on leasehold land) include value of ownership flats - Rs. 0.09 crores (at cost) (previous year - Rs.0.09 crores) Conveyance deeds/agreements in respect thereof are pending execution since matter is subjudice.

b) Mutation in respect of the property of housing colony at Srinagar is not required since records of rights has been obtained in favour of the Company from the concerned Naib Tehsildar. Some part of the land has beenencroachedbyaschoolforwhichtheCompanyhasfiledasuitinthe Court.

7 The Flight Catering units at Delhi and Mumbai were commissioned in the new premises during 1983 and 1986 respectively. In accordance with the accounting policy prevalent, depreciation was provided on the buildings thereon as per the rates provided under the Income Tax Act, 1961, whereby the cost of the building gets depreciated in 59 years. However, in view of the disinvestment process for the flight catering units, fresh lease agreementswere signed with the Airports Authority of India effective 1 April 2002, for a period of 30 years, extendable for another 30 years.

In certain cases of fixed assets, the residual life of assets has to be reworked and accordingly depreciation will be charged as per Schedule XIV of theCompanies Act 1956. The effect of the same will be ascertained after due reconciliation of records, which is in progress.

8 BalanceofSundryDebtors,SundryCreditors,LoansandAdvancesincludingRelated Parties, Deposit and few bank accounts, if any are as per their respective ledger accounts and subject to confirmation and reconciliation.Consequent impact thereof, if any, will be considered as and when determined.

9 Sundry Debtors includes dues from Related Party [Holding Company - Air India Limited] Rs. 2.76 crores (previous year Rs. 6.46 crores) (net of advance of Rs. 4.90 crores against Chefair Delhi billing) is subject to reconciliation and confirmation

27,581,849 64,598,471

10 During 2002-03, the Company has accounted for Rs. 0.43 crores and Rs.2.98 croresas receivable fromM/sTulipHospitalityServicesLtdandM/sSaharaHospitalityLtd. respectivelyonaccountofNetCurrentAssetstransferred to the respective buyers of the two units viz. Centaur Hotel Juhu Beach and Centaur Hotel Mumbai Airport. Both the buyers M/s Tulip Hospitality Ltd. andM/s Sahara Hospitality Ltd. have disputed the same.Based on theArbitration award in case ofM/sSaharaHospitality Ltd theamount receivable is Rs. 1.88 crores plus legal costs Rs. 0.40 crores. The accounts have been suitably adjusted to the extent of award amount of Rs. 1.88 crores. In the opinion of the Management, both claims are receivable and considered good. Therefore, the same have been accounted for and disclosed accordingly.

HCI

3333

11 a) ThemattersrelatingtocostofconstructionofCentaurLakeViewHotel, Srinagar and the cost sharing arrangement between the hotel and Sher-e-Kashmir Convention Centre (SKICC) between the Company and Government of Jammu & Kashmir (J&K) had been agreed by both the parties in a joint meeting held on 15 October 2004 and all the matters of divergent views were settled. The net amount receivable from the Government of J&K on this issue is Rs. 7.33 crores (Previous year Rs. 6.75 crores) and the same has been accounted in the books of accounts.

b) TheabovedoesnotincludeanamountofRs.4.90croresreflectedintheconfirmationofbalancesreceivedfromSKICCastheCompany’sshare of cost of maintenance and upkeep of landscape and hall charges /SKICCservicesavailedbyCentaurLakeViewHotel,Srinagarsinceinception of the hotel. This has not been accounted by the Company as the same has been disputed for want of details.

12 ThenameoftheMicro,SmallandMediumEnterprisessuppliersdefinedunder“TheMicroSmallandMediumEnterprisesDevelopmentAct2006”couldnotbeidentified,asthenecessaryevidenceisnotinthepossessionoftheCompany.

13 In the opinion of theCompany, theCurrentAssets and Loans andAdvances(except those considered doubtful) have been stated at a value realizable in the ordinary course of the business and provision for the year is adequate and not in excess of the amount reasonably necessary.

14 TheCompany is in theprocessoffilingcertainmandatory returns required tobefiledundervariousfiscalstatutes.However, theactualamountof liability ispresently not ascertainable.

15 employee Benefits

defined Benefit Plan- Gratuity (unfunded)

a) change in Benefit Obligation:

Presentvalueofbenefitobligationasatthebeginningofthecurrentperiod 280,504,383 251,221,938

Interest cost 23,842,873 20,097,755

Current service cost 9,036,692 8,539,010

Pastservicecost-Nonvestedbenefit - -

Pastservicecost-Vestedbenefit - -

Liabilitytransferredin - -

(Liabilitytransferredout) - -

(Benefitpaid) (6,660,613) (10,700,555)

Actuarial (gain)/ loss on obligations 4,187,377 11,346,235

Present value of benefit obligation as at the end of the current period 310,910,712 280,504,383

b) Recognition of Transitional Liability:

Unrecognized transitional liability at the start of the period - -

Transitional liability recognized during the period - -

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3434

Unrecognized transitional liability at the end of the period - -

c) Amount Recognized in the Balance Sheet:

Fair value of plan assets at the end of the period - -

Presentvalueofbenefitobligationasattheendoftheperiod 310,910,712 280,504,383

Funded status - -

Unrecognized past service cost at the end of the period - -

Unrecognized transitional liability at the end of the period - -

Net Liability Recognized in the Balance Sheet 310,910,712 280,504,383

d) ExpensesRecognizedintheStatementofProfitandLoss

Current service cost 9,036,692 8,539,010

Interest cost 23,842,873 20,097,755

Actuarial(Gain)/Loss 4,187,377 11,346,235

Pastservicecost-Nonvestedbenefitrecognizedduringtheperiod - -

Pastservicecost-Vestedbenefitrecognizedduringtheperiod - -

Transitional liability recognized during the period - -

expenses Recognized in the statement of Profit and Loss 37,066,942 39,983,000

e) Balance Sheet Reconciliation:

Opening net liability 280,504,383 251,221,938

Expense as above 37,066,942 39,983,000

Net transfer in - -

Net transfer out - -

Employer’s contribution (6,660,613) (10,700,555)

Net Liability Recognized in the Balance Sheet 310,910,712 280,504,383

f) Assumptions:

Discount rate previous 8.50% 8.00%

Salary escalation previous 5.00% 5.00%

Attrition rate previous 2.00% 2.00%

Discount rate current 8.00% 8.50%

Salary escalation current 5.00% 5.00%

Attrition rate current 2.00% 2.00%

16 The Company has unpaid statutory dues & Provident Fund, LuxuryTax, VATand Service Tax for Centaur Delhi totalling to Rs. 594.01 lakhs (Previous year - Rs. 231.53 lakhs), Provident Fund,ServiceTax,TDSandLICforChefairDelhitotalling to Rs. 224.84 lakhs (Previous year - Rs. 80.04 lakhs) and for Chefair Mumbai for Provident Fund & ESIC totalling to Rs. 63.82 lakhs (previous year VAT, ESIC and Service Tax - Rs. 48.97 lakhs). Interest & penalty payable on these outstandings will be accounted for in the year of assessment by the concerned authorities.

88,266,595 36,053,311

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3535

17 The company is required to present segment reporting based on its business segments as per the AS 17 prescribed under the Companies (Accounting Standards) Rules, 2006. In accordance with that, the segment reporting is disclosed as per Annexure “ I “

- -

18 Related Party Transaction:

Disclosure as regard Related Party relationship and transactions with State Controlled Enterprise are not required to be disclosed as mentioned in Clause 9 of AS-18 prescribed under the Companies (Accounting Standards) Rules, 2006.

a. Key Managerial Personnel & Relatives

b. Related Party Transactions.

1 There are no transactions with key managerial personnel

2 No remuneration and perquisite to relatives of Managing Director have been paid

c. Noloansorcredittransactionswereoutstandingwithdirectorsorofficersofthe Company or their relatives at the end of the year which are required to be disclosed in accounts under the Companies Act,1956.

d. HoldingCompany-AirIndiaLimited

Transactions during the year:

Sales 285,885,742 234,352,098

Other payables - 80,711,479

Closing Balance:

Debtors (net of advance received Rs. 4.90 crores against CFCD future billing)

27,581,849 64,598,471

Due to 277,673,220 162,770,767

Others (subsidy receivable) 29,032,166 23,333,165

19 The Accounting for taxes on income in pursuance of AS-22 prescribed under the Companies (Accounting Standards) Rules, 2006 is applicable. There is a Deferred Tax Asset for the year 2011-12 arising on unabsorbed losses. The Deferred Tax Asset is subject to consideration of prudence and are recognised onlytotheextentthatthereissufficientfuturetaxableincomeavailable.Thecompany does not consider that its future taxable income may be available and as such there is no virtual certainty. Hence, Deferred Tax Asset net is not recognised in the books of accounts.

20 Earnings per share:

i) NetProfit/(Loss)fortheyear (356,153,463) (212,903,523)

ii) No. of Equity Shares 4,060,000 4,060,000

iii) Nominal value per equity share (Rs.) 100 100

iv) Basic and Diluted EPS (Rs.) per share (87.72) (52.44)

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3636

21 During the year,

a) Out of 15 employees remaining to be released on VRS (out of the earlier 378 employees), none released on VRS during the year

b) VRSamounting toRs.47,850/-credited toStatementofProfitandLoss(previous year Rs. 3,81,542/-) represents amount of provisions adjusted.

22 The Company is in the process of conducting annual assessment of potential impairment loss of assets as per the compliance of Accounting Standards (AS-28) ‘Impairment of Assets’.

23 Asperthelaiddownpolicyonphysicalverificationoffixedassets,thecompanyisintheprocessofcompletingtheverificationofeachassetonceintwoyearsand reconciling the differences noticed. In the opinion of the management, overall impact is not considered to be material.

24 Chefair Flight Catering, Mumbai (CFCM) is situated on land leased from Airports Authority of India, now Mumbai International Airport Ltd. (MIAL). MIAL hasindicated that they require the land for airport expansion and they would provide alternate space as per the Agreement.

25 The company is in the process of streamlining the inventory reporting system in terms of generation of reports towards movement of item-wise store records and configuring of the stores ledger. Efforts are also being made to ensure at the year end that consumption as per the stores records is fully reconciled with the financial records and adjustments are duly accounted for. Goods in Transit account is also under the process of reconciliation.

26 The Company is in the process of strengthening the internal audit process in the company so as to ensure the coverage of all the areas and ensure effective internal controls at all units of the Company.

27 a) Claims for reimbursements from employees availing medical, and other staff claims, claims of interest from suppliers/ other parties are accounted for on cash basis due to uncertainties involved consistently.

b) Certain purchases at Mumbai units are being made on short term basisinsteadofyearlycontractsduetononfinalisationofcorporateorders

28 Going Concern :

The company has been facing severe liquidity crunch due to various factors likeoperational lossesand itsfinancialandoperatingperformancehasbeenaffected in recent years due to a number of external and internal factors. The accumulated losses have exceeded the net worth of the company. The company has experienced delayed payments to the lenders, creditors. and its employees.

However, the management of the company with the support of the Government has committed to the complete revival of the company by putting in place a Turn Around Plan/FRP. Various initiatives have been taken by the management for improving the operational performance of the company and implementing afinancial restructuringplan, improvement in thefinancialperformance.Also to upgrade all the properties of the company, during the 12th Fiver Year Plan (2012-17), the company has proposed a capital expenditure of Rs.75 crores to the GOI. It has been proposed that the said expenditure would be funded from the plan funds allocated by the Planning Commission.

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3737




Place : Mumbai Place : Delhi Date : 30 January, 2014 Date : 20 January, 2014

Further, as informed to the company, the parent companyAir India Ltd. hasalso maintained that HCI is a going Concern. In view, of the above the present accountshavebeenpreparedona“GoingConcernBasis”sinceintheopinionof the management, there is no foreseeable situation of the company being otherwise.

29 DuringthepreviousyearanadvanceofRs.1crorewaspaidbyAirIndiaLtd.to Chefair Delhi for undertaking capital expenditure for the lounge at Terminal 3atIGIAirport,NewDelhi.However,inviewofnon-paymentofLuxuryTaxdues by Centaur Delhi, the authorities froze the bank accounts of both Delhi units and an amount of Rs. 98,45,055 was adjusted against the statutory liability.

30 Earnings and Expenditure in foreign currency (Accrual basis)

Earnings in foreign currency 2,946,000 6,402,000

Expenditure in foreign currency - -

31 Previous year figures

Till the year ended 31 March 2011, the company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of itsfinancialstatements.During theyearended31March2012, the revisedScheduleVInotifiedundertheCompaniesAct1956,hasbecomeapplicabletothecompany.Thecompanyhasreclassifiedpreviousyearfigurestoconformto this year’s classification. However, it significantly impacts presentationanddisclosuresmadeinthefinancialstatements,particularlypresentationofbalance sheet.

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3838

ANNEXURE - ISegmentwise Reporting for The Year 2012-13

Hotels Flight Kitchens Others Total1 Segment Revenue (a) Room Sales 208,114,429 - - 208,114,429

(281,544,599) - - (281,544,599)

(b) F & B Sales 62,906,219 137,068,064 - 199,974,283

(86,179,961) (137,363,869) - (223,543,830)

Other Services 9,903,079 16,576,207 - 26,479,287 (13,895,251) (14,227,480) - (28,122,731)

Misc Income 23,891,876 3,989,888 1,195,967 29,077,731 (34,486,647) (844,812) (8,856,359) (44,187,818)

Total Revenue 304,815,603 157,634,159 1,195,967 463,645,729 (416,106,458) (152,436,161) (8,856,359) (577,398,978)

2 Total Revenue of each segment 66 34 0 100 as a percentage of total revenue (72) (26) (2) (100) of all segments 3 Segment Result Combined Result of all Segments (146,154,336) (211,195,094) 1,195,967 (356,153,463) in loss (27,040,124) (194,719,760) 8,856,361 (212,903,523)

4 Segment Result 41 59 (0) 100 (13) (91) (-4) (100)

5 Segment Assets Fixed Assets 294,955,131 25,705,106 2,987,687 323,647,924

(308,216,203) (28,923,139) (3,183,671) (340,323,011)

Current Assets 217,349,124 169,974,354 212,627,889 599,951,368 (229,008,583) (173,330,477) (212,183,197) (614,522,257)

Investment - - TOTAL ASSETS 512,304,256 195,679,460 215,615,576 923,599,292

(537,224,786) (202,253,616) (215,366,868) (954,845,270)

6 Segment assets as a percentage 56 21 23 100 of total assets of all segments. (56) (21) (23) (100)

7 Segment Liabilities TotalLiability 618,466,528 621,061,632 289,734,989 1,529,263,148

(511,569,114) (519,143,177) (579,643,376) (1,610,355,667)

8 Segment liabilities as a percentage 40 41 19 100 of total liabilities of all segments. (32) (32) (36) (100)

9 Total Capital Expenditure 482,339 335,000 - 817,339 (1,133,900) (2,439,518) - (3,573,418)

10 Segment capital expenditure as a 59 41 - 100 percentage of all segments. (32) (68) - (100)

11 Total Depreciation 13,743,415 3,617,927 256,687 17,618,029 (13,929,839) (5,460,752) (272,539) (19,663,130)

Figures in brackets indicates previous year.

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3939

TEN YEAR HIGHLIGHTSParticulars 2012-13 2011-2012 2010-2011 2009-2010 2008-2009 2007-2008 2006-2007 2005-2006 2004-2005 2003-2004

Operating Results At A Glance

Total Revenue 4,636.46 5,773.99 5,357.63 4,128.51 4,905.23 6,128.07 6,650.34 5,856.77 4,921.25 4,074.92

Total Operating Cost 7,936.37 7,688.84 7,880.83 6,690.58 6,494.58 7,544.16 7,723.36 5,804.69 5,122.56 4,758.69

GrossOperatingProfit (3,299.91) (1,914.85) (2,523.20) (2,562.07) (1,589.35) (1,416.09) (1,073.02) 52.08 (201.31) (683.77)

Depreciation 176.18 196.63 196.63 232.09 220.49 162.37 146.50 142.82 139.67 144.59

Interest 2.03 43.54 42.74 30.77 - - 0.10 184.77 333.34 181.51

Adjustment of Prior Years - - - - - - 13.48 70.23 439.85

Prior Period & Other Adjust 83.42 (25.98) (91.54) 86.20 39.25 905.02 27.44 (14.95) 11.21 (31.73)

Adjustment of Income Tax/Fbt - - - - 12.31 13.18 23.32 - 19.96 26.33

Net Sale Proceeds of Units - - - - - - - - - -

Profit/(Loss)BeforeTax (3,561.54) (2,129.04) (2,671.01) (2,911.13) (1,861.40) (2,496.66) (1,270.38) (303.94) (775.72) (1,507.78)

Provision for Tax - - - - - - - - - -

Foreign Exchange Earnings Reserves

- - - - - - - - - -

Profit/(Loss)AfterTax (3,561.54) (2,129.04) (2,671.01) (2,911.13) (1,861.40) (2,496.66) (1,270.38) (303.94) (775.72) (1,507.78)

Appropriation

Transfer to General Reserve - - - - - - - - - -

Dividend - - - - - - - - - -

Retained Earnings

Share Capital 4,060.00 4,060.00 4,060.00 4,060.00 4,060.00 4,060.00 4,060.00 4,060.00 4,060.00 4,060.00

Reserves & Surplus (10,116.64) (6,555.10) (4,426.07) - 1,156.07 3,017.47 5,514.13 6,784.51 7,088.45 7,864.19

Net Worth (6,056.64) (2,495.10) (366.07) 2,304.94 5,216.07 7,077.47 9,574.13 10,844.51 11,148.45 11,924.17

Borrowings - - - 520.26 - - - - 4,326.49 3,436.56

Gross Block 8,084.15 8,075.98 8,040.25 8,269.54 8,181.52 7,232.53 6,866.48 6,825.39 6,758.46 6,700.20

Depreciation 4,857.82 4,682.89 4,490.48 4,576.08 4,347.62 4,127.14 4,058.37 3,938.88 3,828.75 3,721.94

Net Block 3,226.33 3,393.09 3,549.77 3,693.46 3,833.90 3,105.39 2,808.11 2,886.51 2,929.71 2,978.26

Capital Work in Progress 10.14 10.14 20.69 20.71 109.10 150.29 1.19 1.19 1.19 1.19

Current Assets 5,999.51 6,145.22 7,559.17 5,868.00 7,189.26 9,717.00 11,835.85 10,855.69 3,742.07 3,281.14

CurrentLiabilities 15,292.63 12,043.56 10,884.13 6,757.43 5,916.66 5,895.68 5,071.49 2,899.35 2,698.50 2,400.33

Net Current Assets (9,293.12) (5,898.34) (3,324.96) (889.43) 1,272.60 3,821.32 6,764.36 7,956.34 1,043.57 880.81

Capital Employed (6,066.79) (2,505.25) 224.81 2,804.03 5,106.50 6,926.71 9,572.47 10,842.85 3,973.28 3,859.07

Operational Statistics

Average Occupancy:

Centaur Hotel - Delhi % 53 66 57 33 46 73 76 67 74 39

CentaurLakeView Hotel-Srinagar %

51 48 45 48 47 46 48 27 58 36

Total No of Guests

Centaur Hotel - Delhi 53,356 54,399 48,522 29,344 39,053 62,201 65,778 56,158 54,020 45,151

CentaurLakeView Hotel-Srinagar

54,438 37,561 34,525 36,957 35,632 32,525 31,176 33,727 36,000 32,500

Earnings In Foreign Exchange

(RsInLakhs) 29.46 64.02 89.06 91.71 114.05 172.72 217.08 250.06 217.86 154.75

No.of Employees (Year End) 1,273 1,279 1,325 1,381 1,439 1,486 1,664 1,695 1,715 1,789

Employees’ Remmuneration Benefits(RsInLakhs)

5,335.37 5,089.39 5,309.06 4,298.43 4,225.85 4,821.02 5,510.15 3,549.81 3,292.57 3,398.94

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