15.11.2012 Views

Scheduleforming part of the Balance Sheet - Domain-b

Scheduleforming part of the Balance Sheet - Domain-b

Scheduleforming part of the Balance Sheet - Domain-b

SHOW MORE
SHOW LESS

Create successful ePaper yourself

Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.

107th ANNUAL REPORT 2007-08


“The Year <strong>of</strong> <strong>the</strong> Associate has pertinent, focused initiatives, which have <strong>the</strong> ability to<br />

capture <strong>the</strong> minds, hearts, and <strong>the</strong> spirit <strong>of</strong> our Internal Customers”<br />

Announcing 2008: Year <strong>of</strong> The Associate<br />

For over a century we have been known for our<br />

single-minded dedication to delighting our guests<br />

with our warmth and fine hospitality. With <strong>the</strong><br />

objective <strong>of</strong> creating unique experiences for our guests,<br />

your company is sharply differentiating our brands so<br />

that <strong>the</strong>y can be <strong>the</strong> benchmarks in <strong>the</strong> segments <strong>the</strong>y<br />

operate. In order to better serve our guests, it is<br />

essential to develop sustainable approaches that<br />

enable our colleagues to perform <strong>the</strong>ir duties to <strong>the</strong><br />

best <strong>of</strong> <strong>the</strong>ir abilities.<br />

We have always treasured our most valuable asset -<br />

our people. To celebrate our people and to re-affirm<br />

our commitment to becoming <strong>the</strong> top global<br />

hospitality player, we are launching <strong>the</strong> ‘Year <strong>of</strong> The<br />

Associate’ 2008-09 campaign. As we unveil <strong>the</strong> ‘Year <strong>of</strong><br />

The Associate’, it is important to highlight that we see<br />

this as a continued thrust in enabling people<br />

processes to achieve our goals well beyond 2008-09.<br />

Celebrating <strong>the</strong> ‘Year <strong>of</strong> The Associate’ aligns with<br />

our strategic thrust <strong>of</strong> creating and streng<strong>the</strong>ning our<br />

brands, in line with our People Philosophy. Our 5<br />

success factors manifest our tenets <strong>of</strong> success, where<br />

leveraging our collective strength as <strong>the</strong> 5th success<br />

factor is <strong>the</strong> foundation from which all o<strong>the</strong>r strategic<br />

thrusts can be leveraged. Only by unleashing People<br />

Power and enabling our people and enhancing<br />

engagement, will we be able to leverage our collective<br />

strengths (factor 5) that will help us enhance our<br />

relationships—internally and externally (factor 4),<br />

which in turn will enable us to achieve operational<br />

excellence (factor 3), <strong>the</strong>reby creating differentiations<br />

(factor 2), to help enhance our brand and value<br />

proposition in our brands, enabling us to exceed<br />

customer expectations (factor 1).<br />

We, <strong>the</strong>refore, see unleashing People Power as an<br />

essential <strong>part</strong> <strong>of</strong> our HR strategy, which is enhancing<br />

and streng<strong>the</strong>ning people - related processes and<br />

taking specific initiatives to empower associates and<br />

improve factors that enhance our ability to leverage<br />

our collective strengths.<br />

We believe that our effort <strong>the</strong>refore should be to<br />

enhance our Internal Customer Focus to play a<br />

winning game.<br />

The ‘Year <strong>of</strong> The Associate’ will have a series <strong>of</strong><br />

pertinent, focused initiatives, which have <strong>the</strong> ability to<br />

capture <strong>the</strong> minds, hearts, and <strong>the</strong> spirit <strong>of</strong> our<br />

Internal Customers to instil an intrinsic desire and<br />

passion for excellence. The various initiatives aim to<br />

engage Associates at all levels and encourage creativity<br />

and <strong>part</strong>icipation for new ideas, innovation and<br />

continuous improvement.<br />

The ‘Year <strong>of</strong> The Associate’ initiative aspires to<br />

streng<strong>the</strong>n our connect, emotionally, socially, and<br />

even spiritually, to <strong>the</strong> organizational mission, vision,<br />

and purpose.<br />

Thank you,<br />

Raymond N. Bickson


Annual The Indian Report Hotels 2007-2008 Company Limited<br />

Annual Report 2007-2008<br />

Contents<br />

Highlights 3<br />

Notice 4 -13<br />

Directors’ Report 14 - 25<br />

Management Discussion & Analysis 26 - 44<br />

Corporate Governance 45 - 63<br />

Community Initiatives 64 - 65<br />

Break-up <strong>of</strong> Total Income 66<br />

Auditors’ Report 67 - 71<br />

<strong>Balance</strong> <strong>Sheet</strong> 72<br />

Pr<strong>of</strong>it and Loss Account 73<br />

Cash Flow Statement 74<br />

Schedules to Accounts 75 - 89<br />

Notes to <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account 90 - 112<br />

<strong>Balance</strong> <strong>Sheet</strong> Abstract and Company’s General Pr<strong>of</strong>ile 113<br />

Statement pursuant to Section 212 114 - 115<br />

Summary <strong>of</strong> Financial Information <strong>of</strong> Subsidiary Companies 116<br />

Financial Statistics 117<br />

Consolidated Financial Statements 118 - 148<br />

1


The Indian Hotels Company Limited<br />

2<br />

Board <strong>of</strong> Directors<br />

Ratan N. Tata Chairman<br />

R. K. Krishna Kumar Vice Chairman<br />

N. A. Soonawala<br />

S. K. Kandhari<br />

K. B. Dadiseth<br />

Deepak Parekh<br />

Jagdish Capoor<br />

Shapoor Mistry<br />

Raymond N. Bickson Managing Director<br />

Anil P. Goel Executive Director – Finance<br />

(w.e.f March 17, 2008)<br />

Abhijit Mukerji Executive Director – Hotel Operations<br />

(w.e.f March 17, 2008)<br />

Committees <strong>of</strong> <strong>the</strong> Board<br />

Audit Committee<br />

S. K. Kandhari Chairman<br />

Deepak Parekh<br />

Jagdish Capoor<br />

Remuneration Committee<br />

Jagdish Capoor Chairman<br />

R. N. Tata<br />

R. K. Krishna Kumar<br />

N. A. Soonawala<br />

Shareholders’/ Investor<br />

Grievance Committee<br />

N. A. Soonawala Chairman<br />

R. K. Krishna Kumar<br />

Raymond N. Bickson<br />

Registered Office<br />

Mandlik House, Mandlik Road,<br />

Mumbai 400 001<br />

Tel: 6639 5515<br />

Fax: 2202 7442<br />

Share De<strong>part</strong>ment<br />

Mandlik House, Mandlik Road,<br />

Mumbai 400 001.<br />

Tel: 6639 5515<br />

Fax: 2202 7442<br />

Email: shares.dept@tajhotels.com<br />

Solicitors<br />

Mulla & Mulla & Craigie Blunt & Caroe<br />

Udwadia and Udeshi<br />

Auditors<br />

S. B. Billimoria & Company<br />

N. M. Raiji & Company<br />

Bankers<br />

The Hongkong and Shanghai Banking Corporation Ltd.<br />

Standard Chartered Grindlays Bank<br />

Citibank N.A.<br />

HDFC Bank<br />

Website: www.tajhotels.com<br />

Management<br />

Raymond N. Bickson Managing Director<br />

Anil P. Goel Executive Director - Finance<br />

Abhijit Mukerji Executive Director - Hotel Operations<br />

Ajoy K. Misra Sr. Vice President - Sales & Marketing<br />

H. N. Shrinivas Sr. Vice President - Human Resources<br />

Prakash Shukla Sr. Vice President - Technology & CIO<br />

Rajiv Gujral Sr. Vice President & Chief Operating Officer -<br />

Mergers, Acquisitions & Development<br />

Franz Zeller Sr. Vice President & Chief Operating Officer<br />

Luxury Hotels - (International)<br />

Yannick Poupon Chief Operating Officer - Luxury Hotels (India)<br />

Jyoti Narang Chief Operating Officer - Gateway Hotels<br />

Jamshed S. Daboo Chief Operating Officer - Premium Hotels<br />

P. Sanker Vice President - Legal & Company Secretary<br />

Sumit Guha Vice President - Projects & Business Development


Annual Report 2007-2008<br />

Financial Highlights<br />

2007-08 2006-07<br />

Rupees Rupees<br />

(In Crores) (In Crores)<br />

Gross Revenue 1823.16 1617.31<br />

Pr<strong>of</strong>it Before Tax 580.47 474.64<br />

Pr<strong>of</strong>it After Tax 377.46 322.39<br />

Dividend 114.54 96.46<br />

Retained Earnings 328.93 300.97<br />

Funds Employed 3332.22 2891.26<br />

Net Worth 2035.10 1797.30<br />

Borrowings 1134.18 941.90<br />

Debt : Equity Ratio 0.55:1 0.52:1<br />

Net Worth Per Ordinary Share <strong>of</strong> Re. 1/- each 33.76 29.81<br />

Earnings per Ordinary Share (Basic) - In Rupees 6.26 5.35<br />

Earnings Per Ordinary Share (Diluted) - In Rupees 6.26 5.35<br />

Dividend Per Ordinary Share 1.90 1.60<br />

Dividend % 190% 160%<br />

3


The Indian Hotels Company Limited<br />

4<br />

Notice<br />

NOTICE is hereby given that <strong>the</strong> HUNDRED AND SEVENTH ANNUAL GENERAL MEETING <strong>of</strong> THE INDIAN HOTELS<br />

COMPANY LIMITED will be held at <strong>the</strong> Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, Mumbai 400 020, on<br />

Thursday, August 14, 2008, at 3.30 p.m to transact <strong>the</strong> following business:<br />

ORDINARY BUSINESS:<br />

1. To receive, consider and adopt <strong>the</strong> Audited Pr<strong>of</strong>it and Loss Account for <strong>the</strong> year ended March 31, 2008, and <strong>the</strong> <strong>Balance</strong><br />

<strong>Sheet</strong> as at that date toge<strong>the</strong>r with <strong>the</strong> Report <strong>of</strong> <strong>the</strong> Board <strong>of</strong> Directors and <strong>the</strong> Auditors <strong>the</strong>reon.<br />

2. To confirm <strong>the</strong> declaration and payment <strong>of</strong> an interim dividend on ordinary shares.<br />

3. To appoint a Director in <strong>the</strong> place <strong>of</strong> Mr. R. K. Krishna Kumar who retires by rotation and is eligible for re-appointment.<br />

4. To appoint a Director in <strong>the</strong> place <strong>of</strong> Mr. Shapoor Mistry who retires by rotation and is eligible for re-appointment.<br />

5. To appoint a Director in <strong>the</strong> place <strong>of</strong> Mr. K. B. Dadiseth who retires by rotation and is eligible for re-appointment.<br />

SPECIAL BUSINESS:<br />

6. Re-appointment <strong>of</strong> Mr. Raymond N. Bickson as <strong>the</strong> Managing Director <strong>of</strong> <strong>the</strong> Company.<br />

To consider and, if thought fit, to pass with or without modification, <strong>the</strong> following resolution as an Ordinary Resolution:<br />

“RESOLVED THAT pursuant to <strong>the</strong> provisions <strong>of</strong> Sections 198, 269, 309, 311 and such o<strong>the</strong>r applicable provisions, if<br />

any, <strong>of</strong> <strong>the</strong> Companies Act, 1956, read with Schedule XIII, <strong>the</strong> Company hereby approves <strong>the</strong> re-appointment and terms<br />

<strong>of</strong> remuneration <strong>of</strong> Mr. Raymond N. Bickson, as <strong>the</strong> Managing Director <strong>of</strong> <strong>the</strong> Company for a period <strong>of</strong> five years with<br />

effect from 19 th July, 2008, upon <strong>the</strong> terms and conditions, including those relating to remuneration as set out in <strong>the</strong><br />

Explanatory Statement annexed to <strong>the</strong> Notice convening this meeting, including <strong>the</strong> remuneration to be paid in <strong>the</strong><br />

event <strong>of</strong> loss or inadequacy <strong>of</strong> pr<strong>of</strong>its in any financial year, with liberty to <strong>the</strong> Directors to alter and vary <strong>the</strong> terms and<br />

conditions <strong>of</strong> <strong>the</strong> said re-appointment in such manner as may be agreed to between <strong>the</strong> Directors and Mr. Raymond<br />

Bickson, subject to such statutory approvals as may be necessary”<br />

7. Appointment <strong>of</strong> Mr. Anil P. Goel as a Director <strong>of</strong> <strong>the</strong> Company.<br />

To appoint a Director in place <strong>of</strong> Mr. Anil P. Goel who was appointed as an Additional Director <strong>of</strong> <strong>the</strong> Company with<br />

effect from March 17, 2008, by <strong>the</strong> Board <strong>of</strong> Directors and who holds <strong>of</strong>fice upto <strong>the</strong> date <strong>of</strong> <strong>the</strong> forthcoming Annual<br />

General Meeting <strong>of</strong> <strong>the</strong> Company under Section 260 <strong>of</strong> <strong>the</strong> Companies Act, 1956 (<strong>the</strong> Act) but who is eligible for<br />

appointment and in respect <strong>of</strong> whom <strong>the</strong> Company has received a Notice in writing under Section 257 <strong>of</strong> <strong>the</strong> Act along<br />

with <strong>the</strong> prescribed deposit from a Member <strong>of</strong> <strong>the</strong> Company proposing his candidature, for <strong>the</strong> <strong>of</strong>fice <strong>of</strong> <strong>the</strong> Director <strong>of</strong><br />

<strong>the</strong> Company.<br />

8. Appointment <strong>of</strong> Mr. Anil P. Goel as a Whole-time Director <strong>of</strong> <strong>the</strong> Company.<br />

To consider and, if thought fit, to pass with or without modification, <strong>the</strong> following resolution as an Ordinary Resolution:<br />

“RESOLVED THAT pursuant to <strong>the</strong> provisions <strong>of</strong> Sections 198, 269, 309 and such o<strong>the</strong>r applicable provisions, if any,<br />

<strong>of</strong> <strong>the</strong> Companies Act, 1956, read with Schedule XIII <strong>the</strong> Company hereby approves <strong>the</strong> appointment and terms <strong>of</strong><br />

remuneration <strong>of</strong> Mr. Anil P. Goel, as a Whole - time Director <strong>of</strong> <strong>the</strong> Company for a period <strong>of</strong> five years with effect from<br />

March 17, 2008, upon <strong>the</strong> terms and conditions, including those relating to remuneration as set out in <strong>the</strong> Explanatory<br />

Statement annexed to <strong>the</strong> Notice convening this meeting, including <strong>the</strong> remuneration to be paid in <strong>the</strong> event <strong>of</strong> loss or


Annual Report 2007-2008<br />

inadequacy <strong>of</strong> pr<strong>of</strong>its in any financial year, with liberty to <strong>the</strong> Directors to alter and vary <strong>the</strong> terms and conditions <strong>of</strong> <strong>the</strong><br />

said appointment in such manner as may be agreed to between <strong>the</strong> Directors and Mr. Anil P. Goel, subject to such<br />

statutory approvals as may be necessary”<br />

9. Appointment <strong>of</strong> Mr. Abhijit Mukerji as a Director <strong>of</strong> <strong>the</strong> Company.<br />

To appoint a Director in place <strong>of</strong> Mr. Abhijit Mukerji who was appointed as an Additional Director <strong>of</strong> <strong>the</strong> Company with<br />

effect from March 17, 2008, by <strong>the</strong> Board <strong>of</strong> Directors and who holds <strong>of</strong>fice upto <strong>the</strong> date <strong>of</strong> <strong>the</strong> forthcoming Annual<br />

General Meeting <strong>of</strong> <strong>the</strong> Company under Section 260 <strong>of</strong> <strong>the</strong> Companies Act, 1956 (<strong>the</strong> Act) but who is eligible for<br />

appointment and in respect <strong>of</strong> whom <strong>the</strong> Company has received a Notice in writing under Section 257 <strong>of</strong> <strong>the</strong> Act along<br />

with <strong>the</strong> prescribed deposit from a Member <strong>of</strong> <strong>the</strong> Company proposing his candidature, for <strong>the</strong> <strong>of</strong>fice <strong>of</strong> <strong>the</strong> Director <strong>of</strong><br />

<strong>the</strong> Company.<br />

10. Appointment <strong>of</strong> Mr. Abhijit Mukerji as a Whole-time Director <strong>of</strong> <strong>the</strong> Company.<br />

To consider and, if thought fit, to pass with or without modification, <strong>the</strong> following resolution as an Ordinary Resolution:<br />

“RESOLVED THAT pursuant to <strong>the</strong> provisions <strong>of</strong> Sections 198, 269, 309 and such o<strong>the</strong>r applicable provisions, if any,<br />

<strong>of</strong> <strong>the</strong> Companies Act, 1956, read with Schedule XIII <strong>the</strong> Company hereby approves <strong>the</strong> appointment and terms <strong>of</strong><br />

remuneration <strong>of</strong> Mr. Abhijit Mukerji, as a Whole - time Director <strong>of</strong> <strong>the</strong> Company for a period <strong>of</strong> five years with effect from<br />

March 17, 2008, upon <strong>the</strong> terms and conditions, including those relating to remuneration as set out in <strong>the</strong> Explanatory<br />

Statement annexed to <strong>the</strong> Notice convening this meeting, including <strong>the</strong> remuneration to be paid in <strong>the</strong> event <strong>of</strong> loss or<br />

inadequacy <strong>of</strong> pr<strong>of</strong>its in any financial year, with liberty to <strong>the</strong> Directors to alter and vary <strong>the</strong> terms and conditions <strong>of</strong> <strong>the</strong><br />

said appointment in such manner as may be agreed to between <strong>the</strong> Directors and Mr. Abhijit Mukerji, subject to such<br />

statutory approvals as may be necessary”<br />

11. To appoint Auditors and fix <strong>the</strong>ir remuneration.<br />

NOTES:<br />

To consider and, if thought fit, to pass with or without modification, <strong>the</strong> following resolution as a Special Resolution:<br />

“RESOLVED THAT pursuant to <strong>the</strong> provisions <strong>of</strong> Section 224, 224A, 225 and o<strong>the</strong>r applicable provisions, if any, <strong>of</strong> <strong>the</strong><br />

Companies Act, 1956, M/s. Deloitte Haskins & Sells, Chartered Accountants and M/s. N. M. Raiji & Company, Chartered<br />

Accountants, be and are hereby appointed / re-appointed respectively as Joint Auditors <strong>of</strong> <strong>the</strong> Company, to hold <strong>of</strong>fice<br />

from <strong>the</strong> conclusion <strong>of</strong> this meeting until <strong>the</strong> conclusion <strong>of</strong> <strong>the</strong> next Annual General Meeting <strong>of</strong> <strong>the</strong> Company to audit<br />

<strong>the</strong> Books <strong>of</strong> Account <strong>of</strong> <strong>the</strong> Company for <strong>the</strong> financial year 2008-09 on such remuneration as may be mutually agreed<br />

upon between <strong>the</strong> Board <strong>of</strong> Directors <strong>of</strong> <strong>the</strong> Company and <strong>the</strong> Auditors, plus reimbursement <strong>of</strong> service tax, out-<strong>of</strong>pocket<br />

and travelling expenses actually incurred by <strong>the</strong>m in connection with <strong>the</strong> audit.”<br />

1. The relative Explanatory Statement, pursuant to Section 173 <strong>of</strong> <strong>the</strong> Companies Act, 1956, in respect <strong>of</strong> <strong>the</strong> business<br />

under Item Nos. 6 to 11 is annexed hereto.<br />

2. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO<br />

ATTEND AND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY.<br />

3. The Register <strong>of</strong> Members and <strong>the</strong> Share Transfer Books <strong>of</strong> <strong>the</strong> Company will remain closed from Monday, August 11,<br />

2008, to Thursday, August 14, 2008, both days inclusive.<br />

4. Members / Proxies should bring <strong>the</strong> Attendance Slip sent herewith duly filled in for attending <strong>the</strong> Meeting.<br />

5


The Indian Hotels Company Limited<br />

6<br />

5. Pursuant to Sections 205A and 205C <strong>of</strong> <strong>the</strong> Companies Act, 1956, all dividends remaining unclaimed for seven years<br />

from <strong>the</strong> date <strong>the</strong>y first became due for payment are now required to be transferred to <strong>the</strong> “Investor Education and<br />

Protection Fund” (IEPF) established by <strong>the</strong> Central Government under <strong>the</strong> amended provisions <strong>of</strong> <strong>the</strong> Companies Act,<br />

1956. Members shall not be able to claim any unpaid dividend from <strong>the</strong> said Fund nor from <strong>the</strong> Company <strong>the</strong>reafter. It<br />

may be noted that unpaid dividend for <strong>the</strong> financial year ended March 31, 2001 is due for transfer to <strong>the</strong> IEPF on<br />

November 5, 2008.<br />

6. Members are requested to kindly notify <strong>the</strong> Company <strong>of</strong> any change in <strong>the</strong>ir addresses so as to enable <strong>the</strong> Company to<br />

address future communication to <strong>the</strong>ir correct addresses.<br />

7. Pursuant to Clause 49 <strong>of</strong> <strong>the</strong> Listing Agreement, <strong>the</strong> <strong>part</strong>iculars <strong>of</strong> Directors seeking appointment / re-appointment at<br />

<strong>the</strong> meeting are annexed.<br />

8. Members desiring any information as regards <strong>the</strong> Accounts are requested to write to <strong>the</strong> Company Secretary at an early<br />

date so as to enable <strong>the</strong> Management to reply at <strong>the</strong> Meeting.<br />

9. Members are requested to kindly bring <strong>the</strong>ir copies <strong>of</strong> <strong>the</strong> Annual Report to <strong>the</strong> Meeting.<br />

Mumbai, Dated: June 23, 2008<br />

Registered Office :<br />

Mandlik House,<br />

Mandlik Road,<br />

Mumbai 400 001.<br />

By Order <strong>of</strong> <strong>the</strong> Board <strong>of</strong> Directors<br />

P. Sanker<br />

Vice President – Legal & Company Secretary


Annual Report 2007-2008<br />

Explanatory Statement<br />

As required by Section 173 <strong>of</strong> <strong>the</strong> Companies Act, 1956 (<strong>the</strong> Act)<br />

1. The following Explanatory Statement sets out <strong>the</strong> material facts relating to <strong>the</strong> business under Item Nos. 6 to 11 mentioned in<br />

<strong>the</strong> accompanying Notice dated June 23, 2008.<br />

Item Nos. 6 to 10<br />

2. At <strong>the</strong> Annual General Meetings held on September 4, 2003, August 9, 2004 and August 3, 2007 respectively, <strong>the</strong> Members <strong>of</strong><br />

<strong>the</strong> Company had approved <strong>of</strong> <strong>the</strong> appointment and <strong>the</strong> terms <strong>of</strong> remuneration <strong>of</strong> Mr. Raymond N. Bickson, Managing<br />

Director <strong>of</strong> <strong>the</strong> Company. The present tenure <strong>of</strong> Mr. Raymond N. Bickson, as <strong>the</strong> Managing Director <strong>of</strong> <strong>the</strong> Company ends on<br />

July 18, 2008. Mr. Bickson studied at <strong>the</strong> Goe<strong>the</strong> Institute in Berlin, <strong>the</strong> Alliance Française in Paris, <strong>the</strong> Université de Sorbonne<br />

in Paris, L’école Hôtellière Lausanne, and Cornell University in New York. He is a graduate <strong>of</strong> <strong>the</strong> Advanced Management<br />

Program at Harvard Business School in Boston and has extensive language, managerial and hoteliering skills, acquired over<br />

thirty years in various luxury hotels throughout Europe, North America, Australia and Asia. Mr. Bickson was <strong>the</strong> General<br />

Manager <strong>of</strong> The Mark, New York, for fifteen years, formerly <strong>the</strong> New York flagship <strong>of</strong> The Rafael Group Hotels and now owned<br />

by <strong>the</strong> Mandarin Oriental Hotel Group.<br />

3. The Board <strong>of</strong> Directors is <strong>of</strong> <strong>the</strong> opinion that it is in <strong>the</strong> interests <strong>of</strong> <strong>the</strong> Company that Mr. Raymond N. Bickson be reappointed<br />

as Managing Director <strong>of</strong> <strong>the</strong> Company from July 19, 2008 upto July 18,2013. Accordingly <strong>the</strong> Board <strong>of</strong> Directors<br />

had at <strong>the</strong>ir meeting held on June 23, 2008, subject to <strong>the</strong> approval <strong>of</strong> <strong>the</strong> Members, re-appointed Mr. Bickson as <strong>the</strong><br />

Managing Director <strong>of</strong> <strong>the</strong> Company.<br />

4. Mr. Anil P. Goel was appointed as an Additional Director <strong>of</strong> <strong>the</strong> Company with effect from March 17, 2008 by <strong>the</strong> Board <strong>of</strong><br />

Directors under Section 260 <strong>of</strong> <strong>the</strong> Act and Article 132 <strong>of</strong> <strong>the</strong> Articles <strong>of</strong> Association <strong>of</strong> <strong>the</strong> Company. In terms <strong>of</strong> Section 260<br />

<strong>of</strong> <strong>the</strong> Companies Act, 1956, Mr. Goel holds <strong>of</strong>fice only up to <strong>the</strong> date <strong>of</strong> <strong>the</strong> forthcoming Annual General Meeting <strong>of</strong> <strong>the</strong><br />

Company but is eligible for appointment as Director. A notice pursuant to Section 257 <strong>of</strong> <strong>the</strong> Act, has been received from a<br />

Member toge<strong>the</strong>r with <strong>the</strong> requisite deposit signifying intention to propose Mr. Goel as a Director. The Board had also<br />

appointed Mr. Goel as a Whole Time Director <strong>of</strong> <strong>the</strong> Company for a period <strong>of</strong> 5 years with effect from March 17, 2008, subject<br />

to <strong>the</strong> approval <strong>of</strong> <strong>the</strong> Members.<br />

5. Mr. Anil P. Goel has been with <strong>the</strong> Tata Group since 1982 and has held several financial positions including Chief Financial<br />

Officer <strong>of</strong> Tata Tea Limited and <strong>the</strong> last being <strong>the</strong> Chief Financial Officer <strong>of</strong> our Company. He is a Chartered Accountant and<br />

graduated from <strong>the</strong> Shri Ram College <strong>of</strong> Commerce, Delhi. Mr. Goel is charged with <strong>the</strong> task <strong>of</strong> overseeing <strong>the</strong> Taj Group’s<br />

Finance, Mergers and Acquisitions, Purchase and Legal & Secretarial functions. With over 25 years <strong>of</strong> experience in <strong>the</strong> Tata<br />

Group in various financial roles, he brings a unique understanding <strong>of</strong> fiscal responsibility to Taj. He is a Director on <strong>the</strong> Board<br />

<strong>of</strong> several Taj Group Companies.<br />

6. Mr. Abhijit Mukerji was appointed as an Additional Director <strong>of</strong> <strong>the</strong> Company with effect from March 17, 2008 by <strong>the</strong> Board <strong>of</strong><br />

Directors under Section 260 <strong>of</strong> <strong>the</strong> Act and Article 132 <strong>of</strong> <strong>the</strong> Articles <strong>of</strong> Association <strong>of</strong> <strong>the</strong> Company. In terms <strong>of</strong> Section 260<br />

<strong>of</strong> <strong>the</strong> Companies Act, 1956, Mr. Mukerji holds <strong>of</strong>fice only up to <strong>the</strong> date <strong>of</strong> <strong>the</strong> forthcoming Annual General Meeting <strong>of</strong> <strong>the</strong><br />

Company, but is eligible for appointment as Director. A notice pursuant to Section 257 <strong>of</strong> <strong>the</strong> Act, has been received from a<br />

Member toge<strong>the</strong>r with <strong>the</strong> requisite deposit signifying intention to propose Mr. Mukerji’s appointment as a Director. The<br />

Board had also appointed Mr. Mukerji as a Whole Time Director <strong>of</strong> <strong>the</strong> Company for a period <strong>of</strong> 5 years with effect from March<br />

17, 2008, subject to <strong>the</strong> approval <strong>of</strong> <strong>the</strong> Members.<br />

7. Mr. Abhijit Mukerji has held many management roles in <strong>the</strong> Taj Group over <strong>the</strong> past 25 years. He holds a degree from <strong>the</strong> Ecole<br />

Superieure des Sciences Economiques et Commerciales (Cornell E.S.S.E.C., France), Harvard Business School – General<br />

Management Program (GMP) and is a Certified Hotel Administrator (CHA) from <strong>the</strong> Educational Institute <strong>of</strong> <strong>the</strong> American<br />

7


The Indian Hotels Company Limited<br />

8<br />

Hotel and Motel Association. He is a member <strong>of</strong> <strong>the</strong> Management Committee <strong>of</strong> <strong>the</strong> Federation <strong>of</strong> Hotel and Restaurant<br />

Associations <strong>of</strong> India (FHRAI), Eastern India Chapter, was on The Bengal Chamber <strong>of</strong> Commerce & Industry and has served<br />

as <strong>the</strong> Chairman <strong>of</strong> its Tourism Sub-Committee.<br />

8. The principal terms and conditions <strong>of</strong> re-appointment <strong>of</strong> Mr. Raymond N. Bickson as Managing Director and appointment <strong>of</strong><br />

Mr. Anil P. Goel and Mr. Abhijit Mukerji respectively as Whole Time Directors are as under:<br />

Mr. Raymond N. Bickson<br />

i) Period: For a period <strong>of</strong> five years commencing from July 19, 2008 to July 18, 2013.<br />

ii) Nature <strong>of</strong> Duties: Mr. Bickson shall devote his whole time and attention to <strong>the</strong> business <strong>of</strong> <strong>the</strong> Company and carry out<br />

such duties as may be entrusted to him by <strong>the</strong> Board from time to time and separately communicated to him and exercise<br />

such powers as may be assigned to him, subject to superintendence, control and directions <strong>of</strong> <strong>the</strong> Board in connection<br />

with and in <strong>the</strong> best interests <strong>of</strong> <strong>the</strong> business <strong>of</strong> <strong>the</strong> Company and <strong>the</strong> business <strong>of</strong> any one or more <strong>of</strong> its associated<br />

companies and/ or subsidiaries, including performing duties as assigned by <strong>the</strong> Board from time to time by serving on<br />

<strong>the</strong> boards <strong>of</strong> such associated companies and / or subsidiaries or any o<strong>the</strong>r executive body or any committee <strong>of</strong> such a<br />

company.<br />

iii) (a) Remuneration: Basic salary within <strong>the</strong> maximum scale upto USD. 50,000/- per month with annual increments which<br />

will be effective 1 st April each year as may be decided by <strong>the</strong> Board, based on merit and taking into account<br />

Company’s performance; incentive remuneration, if any, and /or commission based on certain performance criteria<br />

to be laid down by <strong>the</strong> Board; benefits, perquisites and allowances including expatriate allowance, as may be<br />

determined by <strong>the</strong> Board from time to time.<br />

(b) Minimum Remuneration: Notwithstanding anything to <strong>the</strong> contrary herein contained, where in any financial year<br />

during <strong>the</strong> currency <strong>of</strong> <strong>the</strong> tenure <strong>of</strong> Mr. Bickson, <strong>the</strong> Company has no pr<strong>of</strong>its or its pr<strong>of</strong>its are inadequate, <strong>the</strong><br />

Company will pay to Mr. Bickson remuneration by way <strong>of</strong> basic salary, benefits, perquisites, allowances and<br />

incentive remuneration as above.<br />

Mr. Anil P. Goel<br />

i) Period: For a period <strong>of</strong> 5 years commencing from March 17, 2008 to March 16, 2013<br />

ii) Nature <strong>of</strong> Duties: Mr. Goel shall devote his whole time and attention to <strong>the</strong> business <strong>of</strong> <strong>the</strong> Company and carry out such<br />

duties as may be entrusted to him by <strong>the</strong> Managing Director and / or Board from time to time and separately communicated<br />

to him and exercise such powers as may be assigned to him, subject to superintendence, control and directions<br />

<strong>of</strong> <strong>the</strong> Board in connection with and in <strong>the</strong> best interests <strong>of</strong> <strong>the</strong> business <strong>of</strong> <strong>the</strong> Company and <strong>the</strong> business <strong>of</strong> any one<br />

or more <strong>of</strong> its associated companies and / or subsidiaries, including performing duties as assigned by <strong>the</strong> Board from<br />

time to time by serving on <strong>the</strong> boards <strong>of</strong> such associated companies and / or subsidiaries or any o<strong>the</strong>r executive body<br />

or any committee <strong>of</strong> such a company.<br />

iii) (a) Remuneration: Basic salary within <strong>the</strong> maximum scale upto Rs. 4,00,000/- per month with annual increments<br />

which will be effective 1 st April each year as may be declared by <strong>the</strong> Board, based on merit and taking<br />

into account Company’s performance; incentive remuneration, if any, and /or commission based on<br />

certain performance criteria to be laid down by <strong>the</strong> Board; benefits, perquisites and allowances, as<br />

may be determined by <strong>the</strong> Board from time to time.<br />

(b) Minimum Remuneration: Notwithstanding anything to <strong>the</strong> contrary herein contained, where in any financial year<br />

during <strong>the</strong> currency <strong>of</strong> <strong>the</strong> tenure <strong>of</strong> Mr. Goel, <strong>the</strong> Company has no pr<strong>of</strong>its or its pr<strong>of</strong>its are inadequate, <strong>the</strong><br />

Company will pay to Mr. Goel remuneration by way <strong>of</strong> basic salary, benefits, perquisites, allowances and incentive<br />

remuneration as above.


Annual Report 2007-2008<br />

Mr. Abhijit Mukerji<br />

i) Period: For a period <strong>of</strong> 5 years commencing from March 17, 2008 to March 16, 2013.<br />

ii) Nature <strong>of</strong> Duties: Mr. Mukerji shall devote his whole time and attention to <strong>the</strong> business <strong>of</strong> <strong>the</strong> Company and carry out<br />

such duties as may be entrusted to him by <strong>the</strong> Managing Director and / or Board from time to time and separately<br />

communicated to him and exercise such powers as may be assigned to him, subject to superintendence, control and<br />

directions <strong>of</strong> <strong>the</strong> Board in connection with and in <strong>the</strong> best interests <strong>of</strong> <strong>the</strong> business <strong>of</strong> <strong>the</strong> Company and <strong>the</strong> business <strong>of</strong><br />

any one or more <strong>of</strong> its associated companies and / or subsidiaries, including performing duties as assigned by <strong>the</strong> Board<br />

from time to time, by serving on <strong>the</strong> boards <strong>of</strong> such associated companies and / or subsidiaries or any o<strong>the</strong>r executive<br />

body or any committee <strong>of</strong> such a company.<br />

iii) (a) Remuneration: Basic salary within <strong>the</strong> maximum scale upto Rs. 4,00,000/- per month with annual increments which<br />

will be effective 1 st April each year, as may be decided by <strong>the</strong> Board, based on merit and taking into account <strong>the</strong><br />

Company’s performance; incentive remuneration, if any, and /or commission based on certain performance criteria<br />

to be prescribed by <strong>the</strong> Board; benefits, perquisites and allowances, as may be determined by <strong>the</strong> Board from time<br />

to time.<br />

(b) Minimum Remuneration: Notwithstanding anything to <strong>the</strong> contrary herein contained, where in any financial year<br />

during <strong>the</strong> currency <strong>of</strong> <strong>the</strong> tenure <strong>of</strong> Mr. Mukerji, <strong>the</strong> Company has no pr<strong>of</strong>its or its pr<strong>of</strong>its are inadequate, <strong>the</strong><br />

Company will pay to Mr. Mukerji remuneration by way <strong>of</strong> basic salary, benefits, perquisites, allowances and<br />

incentive remuneration as above.<br />

9. The Directors are <strong>of</strong> <strong>the</strong> view that <strong>the</strong> re-appointment <strong>of</strong> Mr. Bickson as Managing Director and <strong>the</strong> appointment <strong>of</strong> Mr. Goel<br />

and Mr. Mukerji respectively as Whole Time Directors <strong>of</strong> <strong>the</strong> Company, will greatly benefit <strong>the</strong> operations <strong>of</strong> <strong>the</strong> Company<br />

and <strong>the</strong> remuneration payable to <strong>the</strong>m is commensurate with <strong>the</strong>ir abilities and experience.<br />

10. The terms and conditions <strong>of</strong> appointment <strong>of</strong> Mr. Bickson, Mr. Goel and Mr. Mukerji (hereinafter referred to as ‘<strong>the</strong> Appointees’)<br />

also include <strong>the</strong> following principal clauses among o<strong>the</strong>rs:<br />

i) Adherence with <strong>the</strong> Tata Code <strong>of</strong> Conduct, no conflict <strong>of</strong> interest with <strong>the</strong> Company, intellectual property and maintenance<br />

<strong>of</strong> confidentiality.<br />

ii) The Appointees shall not become interested or o<strong>the</strong>rwise concerned, directly or through <strong>the</strong>ir respective spouse and/<br />

or children, in any selling agency <strong>of</strong> <strong>the</strong> Company.<br />

iii) These appointments may be terminated by ei<strong>the</strong>r <strong>part</strong>y by giving to <strong>the</strong> o<strong>the</strong>r <strong>part</strong>y six months’ notice <strong>of</strong> such termination<br />

or <strong>the</strong> Company paying six months’ remuneration in lieu <strong>of</strong> <strong>the</strong> notice.<br />

iv) The employment <strong>of</strong> <strong>the</strong> Appointees may be terminated by <strong>the</strong> Company without notice or payment in lieu <strong>of</strong> notice:<br />

(a) If <strong>the</strong> Appointees are found guilty <strong>of</strong> any gross negligence, default or misconduct in connection with or affecting<br />

<strong>the</strong> business <strong>of</strong> <strong>the</strong> Company or any subsidiary or associated company to which <strong>the</strong>y are required by <strong>the</strong> Agreement<br />

to render services; or<br />

(b) In <strong>the</strong> event <strong>of</strong> any serious or repeated or continuing breach (after prior warning) or non-observance by <strong>the</strong><br />

Appointees <strong>of</strong> any <strong>of</strong> <strong>the</strong> stipulations contained in <strong>the</strong> Agreement to be executed between <strong>the</strong> Company and <strong>the</strong><br />

Appointees; or<br />

(c) In <strong>the</strong> event <strong>the</strong> Board expresses its loss <strong>of</strong> confidence in <strong>the</strong> Appointees.<br />

v) In <strong>the</strong> event <strong>the</strong> Appointees are not in a position to discharge <strong>the</strong>ir <strong>of</strong>ficial duties due to any physical or mental<br />

incapacity, <strong>the</strong> Board shall be entitled to terminate <strong>the</strong>ir contracts on such terms as <strong>the</strong> Board may consider appropriate<br />

in <strong>the</strong> circumstances.<br />

9


The Indian Hotels Company Limited<br />

10<br />

vi) Upon <strong>the</strong> termination by whatever means <strong>of</strong> <strong>the</strong> Appointees’ employment:<br />

(a) The Appointees shall immediately tender <strong>the</strong>ir resignation from <strong>of</strong>fices held by <strong>the</strong>m in any subsidiaries and<br />

associated companies and o<strong>the</strong>r entities without claim for compensation for loss <strong>of</strong> <strong>of</strong>fice and in <strong>the</strong> event <strong>of</strong> <strong>the</strong>ir<br />

failure to do so <strong>the</strong> Company would be irrevocably authorised to appoint some person in <strong>the</strong>ir name and on <strong>the</strong>ir<br />

behalf to sign and deliver such resignation or resignations to <strong>the</strong> Company and to each <strong>of</strong> <strong>the</strong> subsidiaries and<br />

associated companies <strong>of</strong> which <strong>the</strong>y are, at <strong>the</strong> material time, Director or o<strong>the</strong>r <strong>of</strong>ficer.<br />

(b) The Appointees shall not without <strong>the</strong> consent <strong>of</strong> <strong>the</strong> Company at any time <strong>the</strong>reafter represent <strong>the</strong>mselves as<br />

connected with <strong>the</strong> Company or any <strong>of</strong> <strong>the</strong> subsidiaries or associated companies.<br />

vii) The Appointees are appointed as Directors by virtue <strong>of</strong> <strong>the</strong>ir employment in <strong>the</strong> Company and <strong>the</strong>ir appointments shall<br />

be subject to <strong>the</strong> provisions <strong>of</strong> Section 283(1)(l) <strong>of</strong> <strong>the</strong> Act.<br />

viii) If and when <strong>the</strong> Agreements expire or are terminated for any reason whatsoever, <strong>the</strong> Appointees will cease to be <strong>the</strong><br />

Managing Director/ Whole Time Directors, as <strong>the</strong> case may be and also cease to be Directors. If at any time, <strong>the</strong><br />

Appointees cease to be Directors <strong>of</strong> <strong>the</strong> Company for any reason whatsoever, <strong>the</strong>y shall cease to be <strong>the</strong> Managing<br />

Director/ Whole Time Directors, as <strong>the</strong> case may be, and <strong>the</strong> Agreements shall forthwith terminate. If at any time, <strong>the</strong><br />

Appointees cease to be in <strong>the</strong> employment <strong>of</strong> <strong>the</strong> Company for any reason whatsoever, <strong>the</strong>y shall cease to be <strong>the</strong><br />

Directors and Managing Director/ Whole Time Directors, <strong>of</strong> <strong>the</strong> Company, as <strong>the</strong> case may be.<br />

ix) The terms and conditions <strong>of</strong> <strong>the</strong> appointments may be altered or varied by <strong>the</strong> Board <strong>of</strong> Directors, as it may in its<br />

discretion deem fit, irrespective <strong>of</strong> <strong>the</strong> limits stipulated under Schedule XIII to <strong>the</strong> Act or any amendments made<br />

hereafter in this regard, subject to such approvals as may be required.<br />

11. In compliance with <strong>the</strong> provisions <strong>of</strong> Sections 198, 269, 309, 311 and o<strong>the</strong>r applicable provisions <strong>of</strong> <strong>the</strong> Act read with Schedule<br />

XIII to <strong>the</strong> Act, <strong>the</strong> terms <strong>of</strong> remuneration specified above are now being placed before <strong>the</strong> Members for <strong>the</strong>ir approval.<br />

12. This may also be treated as an abstract <strong>of</strong> <strong>the</strong> terms <strong>of</strong> <strong>the</strong> contracts <strong>of</strong> Mr. Raymond N. Bickson, Mr. Anil P. Goel and<br />

Mr. Abhijit Mukerji, respectively, pursuant to Section 302 <strong>of</strong> <strong>the</strong> Companies Act, 1956.<br />

13. Mr. Bickson, Mr. Goel and Mr. Mukerji are concerned or interested in <strong>the</strong> Resolutions at Item Nos. 6 to 10 <strong>of</strong> <strong>the</strong> accompanying<br />

Notice related to <strong>the</strong>ir individual appointments.<br />

14. The Board commends <strong>the</strong> resolutions at Item Nos. 6 to 10 <strong>of</strong> <strong>the</strong> accompanying Notice for acceptance by <strong>the</strong> Members.<br />

Item No. 11<br />

15. M/s S.B. Billimoria & Company, <strong>the</strong> retiring Auditors, have by <strong>the</strong>ir letter dated May 29, 2008 informed <strong>the</strong> Company <strong>of</strong> <strong>the</strong>ir<br />

decision not to seek re -appointment as Joint Auditors <strong>of</strong> <strong>the</strong> Company. The Board <strong>of</strong> Directors at <strong>the</strong>ir meeting held on June<br />

23, 2008 have recommended <strong>the</strong> appointment <strong>of</strong> M/s Deloitte Haskins & Sells and re-appointment <strong>of</strong> M/s N.M. Raiji &<br />

Company as Joint Auditors. The Company has received a special notice from a Member <strong>of</strong> <strong>the</strong> Company, in terms <strong>of</strong> Section<br />

224, 225 and o<strong>the</strong>r applicable provisions <strong>of</strong> <strong>the</strong> Act, signifying its intention to propose <strong>the</strong> appointment <strong>of</strong> M/s Deloitte<br />

Haskins & Sells as <strong>the</strong> Joint Auditors <strong>of</strong> <strong>the</strong> Company from <strong>the</strong> conclusion <strong>of</strong> this Annual General Meeting till <strong>the</strong> conclusion<br />

<strong>of</strong> <strong>the</strong> next Annual General Meeting. M/s Deloitte Haskins & Sells have expressed <strong>the</strong>ir willingness to act as Auditors <strong>of</strong> <strong>the</strong><br />

Company, if appointed and have confirmed that <strong>the</strong> said appointment would be in conformity with <strong>the</strong> provisions <strong>of</strong> Section<br />

224(1B) <strong>of</strong> <strong>the</strong> Act.<br />

16. Section 224A <strong>of</strong> <strong>the</strong> Act, provides that in <strong>the</strong> case <strong>of</strong> a public company, in which not less than 25% <strong>of</strong> <strong>the</strong> subscribed share<br />

capital <strong>of</strong> <strong>the</strong> company, is held, whe<strong>the</strong>r singly or in any combination by Financial Institutions, Nationalised Banks, Insurance<br />

Companies and o<strong>the</strong>r Bodies specified in that Section, <strong>the</strong> appointment <strong>of</strong> Auditors is to be made by way <strong>of</strong> a Special<br />

Resolution.


Annual Report 2007-2008<br />

17. The shareholdings <strong>of</strong> <strong>the</strong> Financial Institutions, Nationalised Banks, etc. as on <strong>the</strong> date <strong>of</strong> <strong>the</strong> accompanying Notice is close<br />

to 25% <strong>of</strong> <strong>the</strong> subscribed share capital <strong>of</strong> <strong>the</strong> Company and it may, by <strong>the</strong> date <strong>of</strong> <strong>the</strong> Annual General Meeting, exceed 25%<br />

<strong>of</strong> <strong>the</strong> subscribed share capital <strong>of</strong> <strong>the</strong> Company. Hence, <strong>the</strong> resolution for appointment <strong>of</strong> <strong>the</strong> Auditors ‘M/s. Deloitte<br />

Haskins & Sells’ and re-appointment ‘M/s N. M. Raiji & Company’, is being proposed as a Special Resolution. As required<br />

under Section 224 <strong>of</strong> <strong>the</strong> Act, certificates have been received from <strong>the</strong> Auditors to <strong>the</strong> effect that <strong>the</strong>ir appointments if made,<br />

will be in accordance with <strong>the</strong> limits specified under Section 224(1B) <strong>of</strong> <strong>the</strong> Act.<br />

18. The Members’ approval is also being sought to authorise <strong>the</strong> Board <strong>of</strong> Directors on <strong>the</strong> recommendation <strong>of</strong> <strong>the</strong> Audit<br />

Committee to determine <strong>the</strong> remuneration payable to <strong>the</strong> Auditors in consultation with <strong>the</strong>m. The Board commends <strong>the</strong><br />

Special Resolution for approval by <strong>the</strong> Members.<br />

19. None <strong>of</strong> <strong>the</strong> Directors <strong>of</strong> <strong>the</strong> Company is in any way, concerned or interested in <strong>the</strong> Resolution at Item No. 11 <strong>of</strong> <strong>the</strong><br />

accompanying notice.<br />

Mumbai, Dated: June 23, 2008<br />

Registered Office:<br />

Mandlik House,<br />

Mandlik Road,<br />

Mumbai 400 001.<br />

By Order <strong>of</strong> <strong>the</strong> Board <strong>of</strong> Directors<br />

P. Sanker<br />

Vice President -Legal & Company Secretary<br />

11


The Indian Hotels Company Limited<br />

12<br />

Details <strong>of</strong> Directors seeking appointment / re-appointment at <strong>the</strong> forthcoming Annual General Meeting<br />

<strong>of</strong> <strong>the</strong> Company (Pursuant to Clause 49 <strong>of</strong> <strong>the</strong> Listing Agreement with <strong>the</strong> Stock Exchanges)<br />

NAME OF DIRECTOR Mr. R. K. Krishna Kumar Mr. Shapoor Mistry Mr. K. B. Dadiseth<br />

Date <strong>of</strong> Birth July 18, 1938 September 6, 1964 December 20, 1945<br />

Date <strong>of</strong> Appointment August 29, 1997 April 17, 2003 May 9, 2000<br />

Expertise in specific<br />

functional areas<br />

Management Management Finance & Management<br />

Qualifications<br />

Details <strong>of</strong> shares held<br />

M.A B.A. (England)<br />

Business & Economics<br />

B. Com, F.C.A<br />

in <strong>the</strong> Company - - -<br />

List <strong>of</strong> Companies in Tata C<strong>of</strong>fee Ltd. Shapoorji Pallonji & Company Britannia Industries Limited<br />

which outside Tata Tea Ltd. Limited ICICI Prudential Life Insurance<br />

Directorships held as Tata Industries Limited Afcons Infrastructure Limited Company Limited<br />

on 31.03.2008 Tata Sons Limited Cyrus Investments Limited Nicholas Piramal India Limited<br />

(excluding private & Oriental Hotels Limited Eureka Forbes Limited Siemens Limited<br />

foreign companies) Piem Hotels Limited Forbes Gokak Limited Godrej Properties Limited<br />

Ewart Investments Limited Forbes Bumi Armada Limited ICICI Prudential Trust Limited<br />

Tata Housing Development Forvol International<br />

Company Limited Services Limited<br />

INFINITI Retail Limited Gokak Textiles Limited<br />

Tata Realty & Infrastructure Shapoorji Pallonji Finance<br />

Limited Limited<br />

Tata International Limited Shapoorji Pallonji Infrastructure<br />

Capital Company Limited<br />

Shapoorji Pallonji Power<br />

Company Limited<br />

United Motors (India) Limited<br />

Chairman / Member <strong>of</strong> Audit Committee Audit Committee Audit Committee<br />

<strong>the</strong> *Committees <strong>of</strong> Tata Tea Limited United Motors (India) Limited Britannia Industries Limited<br />

o<strong>the</strong>r Companies on Forbes Gokak Limited Siemens Limited<br />

which he is a Director Godrej Properties Limited<br />

as on 31.03.2008 Shareholders’ / Investor Grievance<br />

Shareholders’ / Investor Committee<br />

Grievance Committee United Motors (India) Limited<br />

Tata C<strong>of</strong>fee Limited Forbes Gokak Limited<br />

*The Committees include <strong>the</strong> Audit Committee and <strong>the</strong> Shareholders’ / Investor Grievance Committee.


Annual Report 2007-2008<br />

Details <strong>of</strong> Directors seeking appointment / re-appointment at <strong>the</strong> forthcoming Annual General Meeting<br />

<strong>of</strong> <strong>the</strong> Company (Pursuant to Clause 49 <strong>of</strong> <strong>the</strong> Listing Agreement with <strong>the</strong> Stock Exchanges)<br />

NAME OF DIRECTOR Mr. Raymond N. Bickson Mr. Anil P. Goel Mr. Abhijit Mukerji<br />

Date <strong>of</strong> Birth December 16, 1955 May 20, 1957 September 11, 1962<br />

Date <strong>of</strong> Appointment January 9, 2003 March 17, 2008 March 17, 2008<br />

Expertise in specific Hoteliering Finance Hoteliering<br />

functional areas<br />

Qualifications Advanced Management ACA<br />

Program at Harvard<br />

Business School in<br />

Boston. Also studied at<br />

<strong>the</strong> Goe<strong>the</strong> Institute in<br />

Berlin, <strong>the</strong> Alliance<br />

Française in Paris,<br />

<strong>the</strong> Université de<br />

Sorbonne in Paris,<br />

L’école Hôtellière<br />

Lausanne, and Cornell<br />

University in New York.<br />

Details <strong>of</strong> shares held - - -<br />

in <strong>the</strong> Company<br />

List <strong>of</strong> Companies in Taj Trade & Transport Taj SATS Air Catering Limited United Hotels Limited<br />

which outside Company Limited Oriental Hotels Limited<br />

Directorships held as Taj GVK Hotels & Resorts Taj GVK Hotels & Resorts Limited<br />

on 31.03.2008 Limited Piem Hotels Limited<br />

(excluding private & Piem Hotels Limited Roots Corporation Limited<br />

foreign companies) Roots Corporation Limited Taj Investment & Finance<br />

Oriental Hotels Limited Company Limited<br />

United Hotels Limited Taj Kerala Hotels & Resorts<br />

Taj SATS Air Catering Limited Limited<br />

Taj Safaris Limited<br />

Benares Hotels Limited<br />

Chairman / Member <strong>of</strong> Audit Committee Audit Committee Audit Committee<br />

<strong>the</strong> *Committees <strong>of</strong> Taj GVK Hotels & Resorts Piem Hotels Limited United Hotels Limited<br />

o<strong>the</strong>r Companies on Limited Roots Corporation Limited<br />

which he is a Director Piem Hotels Limited Taj GVK Hotels & Resorts<br />

as on 31.03.2008 Roots Corporation Limited Limited<br />

Oriental Hotels Limited Taj SATS Air Catering Limited<br />

Taj SATS Air Catering Limited<br />

United Hotels Limited<br />

*The Committees include <strong>the</strong> Audit Committee and <strong>the</strong> Shareholders’ / Investor Grievance Committee.<br />

Degree from <strong>the</strong> Ecole<br />

Superieure des Sciences<br />

Economiques et<br />

Commerciales (Cornell<br />

E.S.S.E.C., France),<br />

Harvard Business School<br />

– General Management<br />

Program (GMP) and is a<br />

Certified Hotel<br />

Administrator (CHA) from<br />

<strong>the</strong> Educational Institute<br />

<strong>of</strong> <strong>the</strong> American Hotel and<br />

Motel Association.<br />

13


The Indian Hotels Company Limited<br />

14<br />

DIRECTORS’ REPORT<br />

TO THE MEMBERS<br />

The Directors have pleasure in presenting <strong>the</strong> 107 th Annual Report <strong>of</strong> <strong>the</strong> Company toge<strong>the</strong>r with its Audited Pr<strong>of</strong>it and Loss<br />

Account for <strong>the</strong> year ended March 31, 2008 and <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> as on that date:<br />

FINANCIAL RESULTS<br />

Particulars 2007/08<br />

Rs/Crores<br />

2006/07<br />

Total Income 1823.16 1617.31<br />

Pr<strong>of</strong>it before Depreciation, Interest and Tax 760.23 637.97<br />

Less: Depreciation 85.48 91.44<br />

Less: Interest 94.28 71.89<br />

Pr<strong>of</strong>it before tax 580.47 474.64<br />

Less: Provision for tax 198.91 152.25<br />

Less: Short Provision <strong>of</strong> Tax <strong>of</strong> earlier years (Net) 4.10 -<br />

Pr<strong>of</strong>it after tax 377.46 322.39<br />

Add: <strong>Balance</strong> brought forward from <strong>the</strong> previous year 331.33 156.80<br />

Pr<strong>of</strong>it before Appropriations<br />

APPROPRIATIONS<br />

708.79 479.19<br />

(i) General Reserve 38.00 35.00<br />

(ii) Dividend:<br />

An interim dividend <strong>of</strong> 190% i.e. Re. 1.90/- per Ordinary Share<br />

was declared by <strong>the</strong> Board <strong>of</strong> Directors on 15th April, 2008<br />

and paid to Members on <strong>the</strong> Record date ‘April 23, 2008’.<br />

(In respect <strong>of</strong> <strong>the</strong> previous year, a dividend <strong>of</strong> 160% i.e.<br />

Re. 1.60/- per Ordinary Share was declared and paid to <strong>the</strong> Members) 114.54 96.46<br />

Tax on Dividend 19.47 16.40<br />

(iii) <strong>Balance</strong> carried to <strong>Balance</strong> <strong>Sheet</strong> 536.78 331.33<br />

708.79 479.19<br />

INCOME<br />

The total income for <strong>the</strong> year ended March 31, 2008 at Rs. 1,823.16 crores was higher than that <strong>of</strong> <strong>the</strong> previous year by 13%.<br />

Room Income was higher than <strong>the</strong> previous year by 16%. The Average Room Rate (ARR) increased by 16% over <strong>the</strong> previous<br />

year, contributing significantly to <strong>the</strong> total increase in room income.<br />

Food & Beverage (F&B) income was 12% higher than <strong>the</strong> previous year. Banquets income grew by 16% over <strong>the</strong> previous year.<br />

INTEREST AND DEPRECIATION<br />

Interest cost was higher at Rs. 94.28 crores for <strong>the</strong> year ended March 31, 2008 as compared to Rs. 71.89 crores in <strong>the</strong> previous year<br />

consequent to complete utilization <strong>of</strong> FCCB proceeds and incremental debt to fund acquisition <strong>of</strong> Campton Place in San Francisco,<br />

USA.<br />

Depreciation for <strong>the</strong> year was lower due to one time charge on leased assets taken in <strong>the</strong> previous year.


Annual Report 2007-2008<br />

PROFITS<br />

Pr<strong>of</strong>it before Tax at Rs. 580.47 crores was higher than <strong>the</strong> previous year by 22%. Pr<strong>of</strong>it after Tax at Rs. 377.46 crores was also<br />

higher by 17% over <strong>the</strong> previous year.<br />

DIVIDEND<br />

Your Directors declared an interim dividend <strong>of</strong> 190% (Rs.1.90/- per Ordinary Share), involving an outflow <strong>of</strong> Rs. 134.01 crores<br />

including dividend tax. The interim dividend was paid in April, 2008. No fur<strong>the</strong>r dividend is proposed to be paid for <strong>the</strong> year ended<br />

March 31, 2008.<br />

FCCB ISSUE<br />

During <strong>the</strong> year under review, all outstanding Foreign Currency Convertible Bonds (FCCBs) have been converted by <strong>the</strong> Company.<br />

Consequently, <strong>the</strong>re are no outstanding FCCBs.<br />

RIGHTS ISSUE<br />

During <strong>the</strong> year, your Company raised an aggregate <strong>of</strong> Rs. 1447 crores through a simultaneous but unlinked Rights Issue <strong>of</strong><br />

Equity Shares in <strong>the</strong> ratio <strong>of</strong> 1:5 at a price <strong>of</strong> Rs. 70/- per Equity Share raising Rs. 844 crores and 6% Non Convertible Debentures<br />

(NCDs) with Detachable Warrants in <strong>the</strong> ratio <strong>of</strong> 1:10 <strong>of</strong> <strong>the</strong> face value <strong>of</strong> Rs. 100/- each raising Rs. 603 crores. Each Detachable<br />

Warrant can be converted into 1 Equity Share at a price <strong>of</strong> Rs. 150/- in September 2009. The Rights Issue opened on March 14,<br />

2008 and closed on April 24, 2008. The Equity Shares portion was subscribed 1.22 times while <strong>the</strong> NCDs was only <strong>part</strong>ly<br />

subscribed. The Promoters pursuant to <strong>the</strong>ir undertaking subscribed to <strong>the</strong> unsubscribed portion <strong>of</strong> <strong>the</strong> NCD issue. The allotment<br />

<strong>of</strong> NCD with Detachable Warrants was made on May 13, 2008 and Equity Shares on May 23, 2008 and all <strong>the</strong> three instruments<br />

namely NCDs, Detachable Warrants and Equity Shares have been listed and are being traded on <strong>the</strong> Bombay Stock Exchange and<br />

National Stock Exchange.<br />

BORROWINGS<br />

The total borrowings stood at Rs. 1134.18 crores as at March 31, 2008 as against Rs. 941.90 crores as on March 31, 2007.<br />

NON CONVERTIBLE DEBENTURES<br />

During <strong>the</strong> year, in addition to <strong>the</strong> Rights Issue <strong>of</strong> NCDs, <strong>the</strong> Company also privately placed secured Non-Convertible Redeemable<br />

Debentures for Rs. 300 crores repayable at <strong>the</strong> end <strong>of</strong> <strong>the</strong> third year from <strong>the</strong> date <strong>of</strong> allotment.<br />

CAPITAL EXPENDITURE<br />

During <strong>the</strong> year under review, <strong>the</strong> Company incurred Rs. 105.07 crores towards capital expenditure. Major expenditure was<br />

incurred on Taj Mahal Hotel, Mumbai, Taj Lands End, Mumbai,Taj Palace Hotel, New Delhi, Taj Mahal Hotel, New Delhi, Taj West<br />

End, Bangalore and Gateway on Residency Road, Bangalore.<br />

BUSINESS OVERVIEW<br />

Global tourism continued to move upward during 2007-08 with <strong>the</strong> number <strong>of</strong> international tourist arrivals worldwide reaching<br />

about 1,000 million (UNWTO estimates) and international tourism receipts scaling US$ 900 billion in <strong>the</strong> year. Despite continuing<br />

challenges, 2007-08 proved to be ano<strong>the</strong>r excellent year for travel and tourism – <strong>the</strong> fourth consecutive year <strong>of</strong> healthy growth,<br />

in fact. World travel and tourism is expected to contribute nearly US$5,890 billion to global GDP in 2008, rising to approximately<br />

US$10,855 billion over <strong>the</strong> next ten years, according to <strong>the</strong> latest tourism satellite accounting (TSA) research from <strong>the</strong> World<br />

Travel & Tourism Council (WTTC). In terms <strong>of</strong> regional performance, Africa, Asia Pacific and <strong>the</strong> Middle East are experiencing<br />

higher growth rates than <strong>the</strong> world average, in terms <strong>of</strong> total Travel & Tourism Demand, at 5.9%, 5.7% and 5.2% respectively,<br />

while <strong>the</strong> matured markets – most notably <strong>the</strong> Americas and Europe – are falling below <strong>the</strong> world average with growth <strong>of</strong> 2.1% and<br />

2.3% respectively.<br />

The Indian Tourism and Hospitality Industry driven by <strong>the</strong> huge surge in both business and leisure travel by domestic and<br />

foreign tourists as per <strong>the</strong> World Travel & Tourism Council (WTTC) is expected to generate approximately USD 100 billion in<br />

2008. The flow <strong>of</strong> foreign tourist arrivals recorded a growth rate <strong>of</strong> 11.9% in 2007 over 2006 and was 4.9 million in 2007. The first<br />

4 months <strong>of</strong> 2008 recorded a growth rate <strong>of</strong> 11.9 % (in tourist arrivals) over <strong>the</strong> corresponding arrivals in 2007 receiving 2.02 million<br />

15


The Indian Hotels Company Limited<br />

16<br />

in foreign tourist arrivals. According to <strong>the</strong> WTTC, Indian tourism demand is estimated to grow at an average <strong>of</strong> 8.8% between<br />

2004 to 2013 making India <strong>the</strong> world’s third fastest growing tourist market.<br />

The booming tourism industry has had a cascading effect on <strong>the</strong> hospitality sector with an increase in <strong>the</strong> occupancy ratio and<br />

average room rates. While occupancy ratio is 75-80%, <strong>the</strong> average increase in <strong>the</strong> room rates has been hovering around 22-25%<br />

per annum. The Government’s move to declare <strong>the</strong> Tourism industry as a high priority sector with a provision for 100% FDI has<br />

provided a fur<strong>the</strong>r impetus in attracting investments to this industry. Government has also taken various initiatives for <strong>the</strong><br />

development in this sector.<br />

� Launch <strong>of</strong> Incredible India campaign to promote tourism both in domestic and international markets.<br />

� Recognition <strong>of</strong> spare rooms available with various house owners by classifying <strong>the</strong>se facilities as “Incredible India Bed<br />

and Breakfast Establishments”, under ‘Gold’ or ‘Silver’ category.<br />

� A new category <strong>of</strong> visa, “Medical Visa” (‘M’-Visa), has been introduced which can be given for specific purpose to<br />

foreign tourists coming into India.<br />

� Guidelines have been formulated by De<strong>part</strong>ment <strong>of</strong> AYUSH prescribing minimum requirements for Ayurveda and<br />

Panchkarma Centres.<br />

� Ministry <strong>of</strong> tourism has tied up with United Nations Development Programme (UNDP) to promote rural tourism. India<br />

has also received international accolades as a leading global tourist destination.<br />

� India has been elected to head <strong>the</strong> UN World Tourism Organisation (UNWTO), <strong>the</strong> highest policy making world tourism<br />

body represented by 150 countries.<br />

� The world’s leading travel and tourism journal, “Conde Nast Traveller”, ranked India as <strong>the</strong> numero uno travel destination<br />

in <strong>the</strong> world.<br />

� The Association <strong>of</strong> British Travel Agents (ABTA) has ranked India as No.1 amongst <strong>the</strong> top 50 places for 2006.<br />

� The “Incredible India” campaign has been ranked as <strong>the</strong> Highest Recall Advertisement worldwide by “Travel and Leisure”.<br />

� India was adjudged Asia’s leading destination at <strong>the</strong> regional World Travel Awards (WTA).<br />

� India’s Taj Mahal continues to figure in <strong>the</strong> Seven Wonders <strong>of</strong> <strong>the</strong> World.<br />

Your Company would aggressively pursue its strategy both in <strong>the</strong> domestic and international market at different price points from<br />

<strong>the</strong> smart basic hotels to <strong>the</strong> luxury segment. Against this backdrop, your Company expects to achieve sustainable and pr<strong>of</strong>itable<br />

growth.<br />

THE TAJ WAY<br />

Your Company along with its Subsidiaries, Associates and Joint Venture companies operating under <strong>the</strong> brand “Taj Hotels<br />

Resorts and Palaces” runs <strong>the</strong> hotels under <strong>the</strong> brands ‘Taj’, ‘Gateway’ and ‘Ginger’ hotels and has been able to leverage <strong>the</strong><br />

sources <strong>of</strong> competitive advantage in <strong>the</strong> present buoyant and growth oriented environment. The Company has taken several<br />

initiatives during <strong>the</strong> year and a brief summary <strong>of</strong> <strong>the</strong> same is given below with details in <strong>the</strong> section- Management Discussion<br />

and Analysis.<br />

PRODUCT UPGRADATION<br />

Your Company continues with its ongoing programme <strong>of</strong> investing in renovation and upgradation <strong>of</strong> its property. During <strong>the</strong> year<br />

<strong>the</strong> following properties were renovated - Taj Mahal Palace and Tower, Mumbai, Taj Palace, Delhi, Taj Bengal , Kolkata, Fort<br />

Aguada Beach Resort, Goa, Lake Palace, Udaipur, Taj Mahal, New Delhi, Taj West End , Bangalore, Gateway on Residency Road,<br />

Bangalore. The Pierre in New York is closed down for refurbishment on January 1, 2008 and will reopen in first quarter <strong>of</strong> 2009. The<br />

Company also over-saw and supported renovation in some <strong>of</strong> <strong>the</strong> key properties <strong>of</strong> Associate companies as <strong>part</strong> <strong>of</strong> its ongoing<br />

programme <strong>of</strong> investing in renovation and product upgradation.<br />

NEW PROPERTIES<br />

During <strong>the</strong> year, <strong>the</strong> Company commenced operations under Management and Operating Contract at <strong>the</strong> “Gateway” a 100 room<br />

Hotel in Vijaywada, Andhra Pradesh and a beautiful 66 room Hotel ‘Taj Tashi’ in <strong>the</strong> heart <strong>of</strong> Bhutan’s capital city Thimpu which


Annual Report 2007-2008<br />

reflects Bhutan’s rich heritage and architecture. The project at Whitefield, Bangalore a 199 room premium hotel is slated to open<br />

shortly. Roots Corporation Ltd., <strong>the</strong> Company’s wholly owned subsidiary, commenced operation <strong>of</strong> its four new 100 rooms<br />

‘Ginger’ hotels at Nashik, Agartala, Pondicherry & Baroda under <strong>the</strong> ‘Smart basics’ format.<br />

During <strong>the</strong> year, your Company launched several unique restaurants in <strong>the</strong> domestic & international hotels, notably “Latitude”<br />

<strong>the</strong> exquisite all day dining restaurant at Taj Samudra, Sri Lanka, <strong>the</strong> Italian restaurant “Prego” at Taj Coromandel, Chennai,<br />

“Masala Club” at <strong>the</strong> Taj West End, Bangalore and <strong>the</strong> “Wasabi” restaurant at <strong>the</strong> Taj Mahal, New Delhi.<br />

During <strong>the</strong> year, your Company invested in a Singapore subsidiary, BJETS Pte Limited which, when operational, will provide a<br />

range <strong>of</strong> services including private non-scheduled aviation services, fractional ownership programmes, acquisition and maintenance<br />

<strong>of</strong> private jet fleet. BJETS intends to target high net worth individuals and MNC’s across India, Sri Lanka, Bangladesh, Pakistan,<br />

Nepal and South-east Asian countries .<br />

Your Company, along with Tata Realty and Infrastructure Limited, successfully bid for setting up an IT SEZ in Chennai which,<br />

a<strong>part</strong> from creation <strong>of</strong> IT space, will include setting up <strong>of</strong> a 5 Star Hotel, Serviced A<strong>part</strong>ments and Convention Centre which will<br />

be managed by your Company.<br />

EXPANSION IN DOMESTIC AND INTERNATIONAL MARKETS<br />

The Domestic market has been rapidly expanding and your Company’s expansion strategy in <strong>the</strong> domestic market has been in line<br />

with <strong>the</strong> expectations given <strong>the</strong> buoyancy in <strong>the</strong> industry. During <strong>the</strong> year under review, <strong>the</strong> Company has at strategic locations<br />

made commitments by way <strong>of</strong> acquiring properties on lease, entering into tie ups for equipping hotels being built by <strong>part</strong>ners and<br />

executing a number <strong>of</strong> management and technical services contracts for managing, operating and rendering technical services.<br />

The Company also entered into management contracts for several properties which will commence operation over <strong>the</strong> next few<br />

years both in <strong>the</strong> domestic and international markets. In <strong>the</strong> domestic sector, <strong>the</strong> Company has signed Management Contracts for<br />

hotels at Pune, Kolkata, Pondicherry and a Service A<strong>part</strong>ment at Pune. On <strong>the</strong> international front, Management Contracts are in<br />

place for properties at YAS Island-Abu Dhabi, Ras Al Khaimah Saraya Islands-UAE, Doha in Qatar and Cape Town, South Africa.<br />

All <strong>the</strong>se new hotels will come in <strong>the</strong> market in <strong>the</strong> next few years. On <strong>the</strong> wild life safari lodges business, while two high end<br />

lodges are operational, two more lodges are slated to open shortly at Panna and Kanha, <strong>the</strong>reby completing <strong>the</strong> first safari circuit<br />

in India. Under <strong>the</strong> ‘Ginger’ brand in addition to <strong>the</strong> 11 operational hotels, various projects at New Delhi, Ludhiana, Goa,<br />

Mangalore, Ahmedabad and Guwahati are under implementation. Management Contracts are also in place under <strong>the</strong> ‘Ginger’<br />

brand in Jaipur, Katra, Lucknow and Tirupur.<br />

SERVICE EXCELLENCE<br />

Guest Experience (LUXURY)<br />

In its commitment to continually enhance <strong>the</strong> guest experience, your Company has initiated a series <strong>of</strong> programmes to upgrade<br />

<strong>the</strong> product and service levels.The online Customer Feedback Survey has greatly facilitated <strong>the</strong> direction and focus <strong>of</strong> <strong>the</strong> service<br />

enhancement programme and <strong>the</strong> training efforts as identified through <strong>the</strong> Voice <strong>of</strong> <strong>the</strong> Customer.<br />

Key guest service touch points like <strong>the</strong> Concierge, Butler Services, <strong>the</strong> Sommelier and Bartender programmes were fur<strong>the</strong>r<br />

reinforced. Associates who had undergone <strong>the</strong> initial training under <strong>the</strong>se programmes, received focused development inputs<br />

through dedicated training sessions and on-site interactions using international experts.<br />

Currently, 15 <strong>of</strong> our Concierge team members have been recognized as members by <strong>the</strong> International Association <strong>of</strong> Concierges,<br />

<strong>the</strong> Clefs d’Or (including adherent members). The crossed gold keys worn on <strong>the</strong> labels <strong>of</strong> <strong>the</strong> Concierge uniform are more than<br />

just <strong>the</strong> symbol <strong>of</strong> <strong>the</strong> organization - <strong>the</strong>y represent guaranteed, quality service.<br />

A world-renowned Sommelier has been recruited to create unique Wine Programmes in our hotels and enhance <strong>the</strong> dining<br />

experience <strong>of</strong> our guests.This ongoing development <strong>of</strong> such key guest facing areas will ensure that service delivery at Taj Luxury<br />

Hotels is personalized and fur<strong>the</strong>r differentiated.<br />

In your Company’s quest to benchmark against <strong>the</strong> world’s finest hotels, <strong>the</strong> Taj Luxury Experience continues to be refined and<br />

evolve. This will enable Taj Luxury Hotels to establish a unique identity synonymous with <strong>the</strong> ‘Taj’ brand.<br />

17


The Indian Hotels Company Limited<br />

18<br />

There was a special focus on energy conservation and <strong>the</strong> environment and several programmes pertaining to <strong>the</strong>se aspects were<br />

initiated. Energy audits were conducted at all Luxury (India) hotels and <strong>the</strong> recommendations are under implementation. The use<br />

<strong>of</strong> solar energy in our hotels is being actively promoted and solar energy panels have been installed in some hotels.<br />

As a commitment to <strong>the</strong> safety and security <strong>of</strong> our guests, we have instituted a process <strong>of</strong> independent external audits to evaluate<br />

<strong>the</strong> preparedness <strong>of</strong> our hotels from a hygiene and safety perspective.<br />

The Tata Business Excellence Model was introduced in <strong>the</strong> three hotels in <strong>the</strong> United States <strong>of</strong> America and some o<strong>the</strong>r international<br />

luxury hotels in <strong>the</strong> first phase <strong>of</strong> <strong>the</strong> roll-out.<br />

This exercise has resulted in a) identifying <strong>the</strong> priority areas to focus on for improving <strong>the</strong> service levels and b) introducing a<br />

process-oriented model to achieve excellence.<br />

In terms <strong>of</strong> product upgrades and facilities enhancement, <strong>the</strong> renovation programme for <strong>the</strong> year was successfully concluded in<br />

several properties.<br />

Guest Experience (BUSINESS)<br />

All hotels in <strong>the</strong> Business SBU are in <strong>the</strong> process <strong>of</strong> enhancing hygiene initiatives and progressively moving from HACCP to ISO<br />

22000 (Food Safety Management) certifications. Hotels have also commenced work on OHSAS certification (ISO 14001 & ISO<br />

18000 covering environment, ergonomics, Health & Safety)<br />

In our effort to provide defect free product and services, a Six Sigma programme was launched as a pilot project in two (2) hotels<br />

in <strong>the</strong> Business SBU.<br />

Feedback from our guests on <strong>the</strong>ir changing needs have been incorporated into planned hotel renovations and into <strong>the</strong> design<br />

planning for new builds. A competency based training matrix was introduced to augment knowledge, skill & total quality <strong>of</strong><br />

service and enhance <strong>the</strong> guest experience.<br />

A “Personal Contact” programme was developed to ensure a consistent guest experience which is unique and personalized to<br />

each guest’s needs. This helps in building customer loyalty and eventually giving us a competitive edge.<br />

Guest Experience (LEISURE)<br />

In <strong>the</strong> Leisure Hotels division, efforts are ongoing to streamline processes in all de<strong>part</strong>ments and <strong>the</strong>se have resulted in an<br />

increase in <strong>the</strong> Customer Satisfaction index. The number <strong>of</strong> HACCP certified hotels increased from nine (9) in <strong>the</strong> previous year<br />

to thirteen (13) in <strong>the</strong> current year.<br />

The increase <strong>of</strong> certified internal / external Tata Business Excellence Model assessors has helped <strong>the</strong> division to implement and<br />

enforce a process-driven operation. About 80 executives in <strong>the</strong> SBU were trained in <strong>the</strong> usage <strong>of</strong> Quality tools for analysis <strong>of</strong> <strong>the</strong>ir<br />

de<strong>part</strong>mental operations. This has reflected in a positive trend <strong>of</strong> results in measures pertaining to financials, customer satisfaction,<br />

internal processes and human resources.<br />

The phased roll out <strong>of</strong> Total Productive Maintenance (TPM) has resulted in optimum usage <strong>of</strong> equipment in <strong>the</strong> engineering Plant<br />

Rooms, Kitchens and Laundry as well as reduced incidence <strong>of</strong> equipment breakdown.<br />

The efforts in Food & Beverage benchmarking to create awareness <strong>of</strong> global food and beverage trends are continuing. Alternate<br />

dining experiences and local cuisine dining experiences have been well-received by our guests.<br />

A project to cultivate organic vegetables in kitchen gardens and make home-made preserves in all hotels was initiated. Spa<br />

cuisine was introduced in all Leisure hotels where Taj Spas are located.<br />

MARKETING ALLIANCES<br />

During <strong>the</strong> year, your Company entered into some Marketing initiatives. The key amongst those were <strong>the</strong> alliance with Okura<br />

Hotels & Resorts, one <strong>of</strong> <strong>the</strong> largest international hotel groups in Japan, to develop cross-promotional opportunities for both<br />

companies to harness each o<strong>the</strong>r’s strengths in <strong>the</strong>ir respective markets <strong>of</strong> dominance.<br />

During <strong>the</strong> year, your Company also tied up with several Airlines for <strong>the</strong>ir Frequent Flier loyalty programme, <strong>the</strong> key amongst<br />

<strong>the</strong>m being with Lufthansa, American Airlines and KLM. The major tie-ups entered into are like “Miles & More”, <strong>the</strong> frequent<br />

flyer programme <strong>of</strong> Lufthansa, Adria Airways, Air Dolomiti, Air One, Austrian Airlines, Croatia Airlines, LOT Polish Airlines and


Annual Report 2007-2008<br />

Luxair, “Flying Blue”, an innovative frequent flyer program with a four-tier structure (Platinum, Gold, Silver and Ivory levels)<br />

launched jointly by AIR FRANCE and KLM and “AAdvantage” a frequent flyer program <strong>of</strong> American Airlines.<br />

Your Company in collaboration with ICICI Bank and American Express launched <strong>the</strong> new ICICI Bank Ascent American Express ®<br />

Card. The Card is six times more rewarding for <strong>the</strong> consumer than <strong>the</strong> o<strong>the</strong>r leading credit cards in India. Consumers earn<br />

attractive 6 reward points per Rs 100 spent on dining, shopping, travel and overseas expenses. Additionally, <strong>the</strong>re are exciting<br />

<strong>of</strong>fers and privileges to help customers save even as <strong>the</strong>y prepare for that long awaited getaway.<br />

SUBSIDIARIES<br />

The Company has obtained an exemption from <strong>the</strong> De<strong>part</strong>ment <strong>of</strong> Company Affairs (DCA) vide its letter no. 47/267/2008 – CL –<br />

III dated May 16, 2008, for publication <strong>of</strong> <strong>the</strong> Accounts <strong>of</strong> its subsidiaries under <strong>the</strong> provision <strong>of</strong> Section 212 <strong>of</strong> <strong>the</strong> Companies<br />

Act <strong>of</strong> 1956. Hence, <strong>the</strong> accounts <strong>of</strong> <strong>the</strong> subsidiary companies are not separately included in <strong>the</strong> Annual Report. However, <strong>the</strong><br />

Consolidated Financial Statements <strong>of</strong> <strong>the</strong> Company and its Subsidiaries, Joint Ventures and Associates, in accordance with<br />

relevant Accounting Standards <strong>of</strong> <strong>the</strong> Institute <strong>of</strong> Chartered Accountants <strong>of</strong> India, duly audited by <strong>the</strong> Statutory Auditors, form<br />

a <strong>part</strong> <strong>of</strong> <strong>the</strong> Annual Report and are reflected in <strong>the</strong> consolidated accounts.<br />

The Financial Statements <strong>of</strong> <strong>the</strong> subsidiary companies and o<strong>the</strong>r detailed information will be made available to <strong>the</strong> investors<br />

seeking such information at any point <strong>of</strong> time. The annual accounts <strong>of</strong> <strong>the</strong> subsidiary companies will also be available for<br />

inspection at <strong>the</strong> Registered Office <strong>of</strong> <strong>the</strong> Company as well as <strong>the</strong> respective Registered Offices <strong>of</strong> subsidiary companies.<br />

LISTING<br />

The Ordinary Shares <strong>of</strong> your Company are listed on <strong>the</strong> Bombay Stock Exchange Limited and National Stock Exchange <strong>of</strong> India<br />

Limited. The Global Depository Shares (GDS) issued by <strong>the</strong> Company are listed on <strong>the</strong> London Stock Exchange.<br />

FIXED DEPOSITS<br />

The Company accepts/renews fresh deposits only from <strong>the</strong> Members <strong>of</strong> <strong>the</strong> Company at a rate <strong>of</strong> 6.25% p. a. for a period <strong>of</strong> three<br />

years with <strong>the</strong> minimum amount <strong>of</strong> <strong>the</strong> deposit being Rs. 25,000.<br />

The outstanding amount <strong>of</strong> fixed deposits placed with <strong>the</strong> Company amounted to Rs. 3.38 crores (previous year Rs. 5.13 crores)<br />

including Rs. 0.30 crores (previous year Rs. 0.73 crores), which remained unclaimed by depositors as on March 31, 2008.<br />

DIRECTORS<br />

Mr. Anil P. Goel and Mr. Abhijit Mukerji were appointed as Additional Directors and as Whole Time Directors <strong>of</strong> <strong>the</strong> Company for<br />

a period <strong>of</strong> five years with effect from March 17, 2008. They respectively hold <strong>of</strong>fice upto <strong>the</strong> date <strong>of</strong> <strong>the</strong> forthcoming Annual<br />

General Meeting <strong>of</strong> <strong>the</strong> Company. Taking into consideration <strong>the</strong>ir knowledge and experience, <strong>the</strong> Board commends <strong>the</strong>ir appointment<br />

as Whole-time Directors <strong>of</strong> <strong>the</strong> Company to <strong>the</strong> Members <strong>of</strong> <strong>the</strong> Company. Members’ approval for <strong>the</strong>ir appointment as Directors<br />

and Whole-time Directors has been sought in <strong>the</strong> Notice convening <strong>the</strong> Annual General Meeting <strong>of</strong> <strong>the</strong> Company.<br />

Mr. Raymond N. Bickson’s tenure as Managing Director ends on July 18, 2008. The Company has greatly benefited from his<br />

expertise and international experience. In view <strong>of</strong> <strong>the</strong> same, it is proposed to re-appoint Mr. Bickson as <strong>the</strong> Managing Director <strong>of</strong><br />

<strong>the</strong> Company for a period <strong>of</strong> 5 years w.e.f. July 19, 2008. The Board commends his re-appointment as <strong>the</strong> Managing Director <strong>of</strong> <strong>the</strong><br />

Company to <strong>the</strong> Members <strong>of</strong> <strong>the</strong> Company.<br />

In accordance with <strong>the</strong> Companies Act, 1956, and <strong>the</strong> Articles <strong>of</strong> Association <strong>of</strong> <strong>the</strong> Company, three <strong>of</strong> your Directors, viz.,<br />

Mr. R.K. Krishna Kumar, Mr. Shapoor Mistry and Mr. K. B. Dadiseth retire by rotation, and are eligible for re-appointment.<br />

CORPORATE GOVERNANCE<br />

As required by Clause 49 <strong>of</strong> <strong>the</strong> Listing Agreement with <strong>the</strong> Stock Exchanges, <strong>the</strong> report on Management Discussion and<br />

Analysis, Corporate Governance as well as <strong>the</strong> Auditors’ Certificate regarding compliance <strong>of</strong> conditions <strong>of</strong> Corporate Governance,<br />

form <strong>part</strong> <strong>of</strong> <strong>the</strong> Annual Report.<br />

AUDITORS<br />

M/s S.B. Billimoria & Company, <strong>the</strong> retiring Auditors, have by <strong>the</strong>ir letter dated May 29, 2008 informed <strong>the</strong> Company <strong>of</strong> <strong>the</strong>ir<br />

decision not to seek re-appointment as Joint Auditors <strong>of</strong> <strong>the</strong> Company. The Board <strong>of</strong> Directors recommend <strong>the</strong> appointment <strong>of</strong><br />

19


The Indian Hotels Company Limited<br />

20<br />

M/s. Deloitte Haskins & Sells and M/s. N.M. Raiji & Company as Joint Auditors. The Members are requested to appoint<br />

M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai and re-appoint M/s. N.M. Raiji & Co., Chartered Accountants,<br />

Mumbai as Joint Auditors for <strong>the</strong> current year and authorise <strong>the</strong> Board <strong>of</strong> Directors to fix <strong>the</strong>ir remuneration.<br />

FOREIGN EXCHANGE EARNINGS AND OUTGO<br />

As required under Section 217(1)(e) <strong>of</strong> <strong>the</strong> Companies Act, 1956, read with rule 2 <strong>of</strong> <strong>the</strong> Companies (Disclosure <strong>of</strong> Particulars in<br />

<strong>the</strong> Report <strong>of</strong> <strong>the</strong> Board <strong>of</strong> Directors) Rules, 1988, <strong>the</strong> information relating to foreign exchange earnings and outgo is in Note Nos.<br />

18, 19, 20 & 21 <strong>of</strong> <strong>the</strong> Notes to <strong>the</strong> Accounts.<br />

STAFF<br />

As required by Section 217(2A) <strong>of</strong> <strong>the</strong> Companies Act, 1956, read with <strong>the</strong> Companies (Particulars <strong>of</strong> Employees) Rules, 1975, a<br />

statement <strong>of</strong> information relating to <strong>the</strong> employees has been given in <strong>the</strong> Annexure to <strong>the</strong> Report and forms a <strong>part</strong> <strong>of</strong> it.<br />

The Board desires to place on record, its appreciation to all employees <strong>of</strong> <strong>the</strong> Company who during <strong>the</strong> year under review with<br />

sustained dedicated effort enabled <strong>the</strong> Company to deliver a good all-round record performance.<br />

DIRECTORS’ RESPONSIBILITY STATEMENT<br />

Pursuant to <strong>the</strong> provisions <strong>of</strong> Section 217(2AA) <strong>of</strong> <strong>the</strong> Companies Act, 1956, <strong>the</strong> Board <strong>of</strong> Directors, based on <strong>the</strong> representations<br />

received from <strong>the</strong> Operating Management, hereby confirms that:<br />

i. in <strong>the</strong> preparation <strong>of</strong> <strong>the</strong> annual accounts, <strong>the</strong> applicable accounting standards have been followed and that <strong>the</strong>re are no<br />

material de<strong>part</strong>ures;<br />

ii. it has in <strong>the</strong> selection <strong>of</strong> <strong>the</strong> accounting policies, consulted <strong>the</strong> Statutory Auditors and has applied <strong>the</strong>m consistently and<br />

made judgements and estimates that are reasonable and prudent, so as to give a true and fair view <strong>of</strong> <strong>the</strong> state <strong>of</strong> affairs <strong>of</strong> <strong>the</strong><br />

Company as at March 31, 2008 and <strong>of</strong> <strong>the</strong> pr<strong>of</strong>it <strong>of</strong> <strong>the</strong> Company for that period;<br />

iii. it has taken proper and sufficient care for <strong>the</strong> maintenance <strong>of</strong> adequate accounting records in accordance with <strong>the</strong> provisions<br />

<strong>of</strong> <strong>the</strong> Act for safeguarding <strong>the</strong> assets <strong>of</strong> <strong>the</strong> Company and for preventing and detecting fraud and o<strong>the</strong>r irregularities, to <strong>the</strong><br />

best <strong>of</strong> its knowledge and ability. There are however, inherent limitations, which should be recognized while relying on any<br />

system <strong>of</strong> internal control and records; and<br />

iv. it has prepared <strong>the</strong> annual accounts on a going concern basis.<br />

GLOBAL COMPACT<br />

As <strong>part</strong> <strong>of</strong> <strong>the</strong> Tata Group, your Company had signed up to promote <strong>the</strong> United Nations “Global Compact” which lays down ten<br />

key principles to specifically address issues in <strong>the</strong> areas <strong>of</strong> human rights, labour, corruption and <strong>the</strong> environment. Your Company<br />

continues to be an active member <strong>of</strong> Global Compact. Your Company annually submits a ‘Corporate Sustainability Report’<br />

detailing its economic, environmental and social performance.<br />

Mumbai, June 23, 2008<br />

Registered Office:<br />

Mandlik House<br />

Mandlik Road<br />

Mumbai 400 001.<br />

On behalf <strong>of</strong> <strong>the</strong> Board <strong>of</strong> Directors<br />

Ratan N. Tata<br />

Chairman


Annual Report 2007-2008<br />

Annexure to <strong>the</strong> Directors’ Report<br />

INFORMATION AS PER SECTION 217 (2A) OF THE COMPANIES ACT, 1956, READ WITH<br />

COMPANIES ( PARTICULARS OF THE EMPLOYEES ) RULES 1975 & FORMING PART<br />

OF THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2008<br />

Sr.No. Designation Age as on Gross Net Qualification Experience Last Commencement<br />

Name <strong>of</strong> Employee Nature <strong>of</strong> Job 31/3/2008 Remuneration Remuneration (No. <strong>of</strong> Years) Employment <strong>of</strong> Employment<br />

Years Rs. Rs. Held<br />

1 Ananda S. Corporate Chef -<br />

Premium Hotels<br />

& Executive Chef -<br />

Taj President Hotel, Mumbai<br />

52 6,915,040 44,27,110 Dip. In H.M.C.T 25 Hotel Blue Diamond March, 1990<br />

2 Avasthi Alok Director - Operations, 45 2,741,680 1,799,920 B. Com., Dip In Hotel 22 First Employment August, 1986<br />

Taj Luxury Hotels International Management,<br />

MBA - IMHI-Cornell -<br />

Essec, France Dip.<br />

In Systems Management<br />

3 *Bajpai Dev Vice President -<br />

Legal & Company Secretary<br />

42 5,084,183 3,357,808 B.Com, LLB, F.C.S 20 Marico Industries Limited February, 2006<br />

4 Basu Renu (Ms.) Vice President - Sales 48 5,421,172 3,424,072 B.A (Hons.) L.L.B,<br />

Dip. In Business Management<br />

26 HDFC Bank Mumbai January, 1999<br />

5 Batliwala S. R. (Ms.) Vice President - Food & Beverage 57 4,939,865 3,174,935 Dip. In H.M.C.T., Post Dip. In<br />

Spl. Hotel Management<br />

F.H.C.I.M.A. (UK)<br />

37 First Employment May, 1970<br />

6 Beri D K Vice President - 59 2,464,574 1,527,454 B.Sc. Dip. In H.M.C.T 37 ITDC January, 1982<br />

Business & Corporate Affairs Advance Dip. In Hotel<br />

Management (Germany)<br />

7 Bhatia Prakash k Director - Legal & Secretarial<br />

(North)<br />

50 2,609,905 1,691,115 M.Com., A.C.S 29 Indian Overseas Bank February, 1986<br />

8 Bhesania Director - Human Resources 40 3,048,322 1,953,482 B.A(Eco.), Dip. 16 Tata NYK August, 2000<br />

Kristyl P (Ms.) (Premium Hotels) In Personnel Management.,<br />

MBA, Transport<br />

Systems<br />

9 Bickson. R Managing Director 52 45,479,018 30,079,328 Advance Mgmt. Program - 35 The Mark Hotel January, 2003<br />

Harvard University Boston,<br />

MA, USA<br />

International Senior Managers<br />

Program - Harvard University<br />

Boston, MA, USA<br />

Financial Mgmt. Course -<br />

Cornell University (U S A)<br />

Production & Services -<br />

Ecole Lernania de Lausanne,<br />

Switzerland<br />

Honorary Doctorate in<br />

Hospitality Management from<br />

Johnson & Wales University,<br />

USA<br />

New York, U.S.A<br />

10 *Chandrasekhar N. Vice President - Finance 45 2,903,122 1,963,582 B. Com, A.C.A 22 M/s. Brahmaya & Co.<br />

Chartered Accountant Madras<br />

December, 1986<br />

11 Chawla Simi Vice President - Internal Audit 43 5,198,957 3,370,627 B.Com., A.C.A 20 Tata Administrative June, 1988<br />

Kumar (Ms.) Service<br />

12 Commissariat Director - Marketing 51 2,735,582 1,753,932 B.Com. (Hons) 28 Mahindra & Mahindra Ltd. December, 1999<br />

Rohinton K (Premium Hotels) Dip. In Management Studies,<br />

13 Daboo Jamshed Chief Operating Officers 45 6,715,112 4,248,952<br />

Dip In Advertising & Marketing,<br />

Dip In Public Relations,<br />

B.E. (Mech.), 21 Tata Administrative Service July, 2000<br />

- Premium Hotel PGDBM (Marketing & Finance)<br />

14 *David Tilly Chef de Cuisine - 27 942,113 641,893 Secondary & Primary 10 “Morton Club” November, 2007<br />

Taj Palace Hotel, Delhi School (IFAC and CFA, Private Club London<br />

Brest 29 France)<br />

21


The Indian Hotels Company Limited<br />

22<br />

15 *Diwan Rajendra Director - Operations (TSACL) 60 2,950,636 2,056,136 H.S.C 39 V.P Operations - September, 1992<br />

Kumar Ambasador “Sky Chef”<br />

16 Dutt Salil Chairman - 59 3,461,227 2,209,567 B.A, Dip In H.M.C.T 35 First Employment October, 1973<br />

Kumar Taj Trade &<br />

Transport Company Limited<br />

17 Dutta Dibyendu Director - Finance<br />

(Gateway Hotels)<br />

41 2,972,074 1,947,024 B.Com., A.C.A, AICWA 15 Tata Steel April, 2001<br />

18 Dutta Mohini Executive Director - 60 6,737,120 4,249,750 B. Com., Dip In Travel & 34 Stallion Travel July, 2006<br />

Inditravel Private Limited Tourism from <strong>the</strong><br />

University <strong>of</strong> Hawaii<br />

Services pvt ltd.<br />

19 D’souza Vida J (Ms.) Director - Business Excellence 38 3,046,955 1,979,445 B.A (Eco), Dip<br />

In H.M.C.T, PGDBM<br />

18 First Employment September, 1990<br />

20 * Eric Ducellier Bakery/Pastry Chef - 37 2,409,070 1,648,660 Training as a Baker at 18 Le Cordon Bleu School in Seoul June, 2007<br />

The Taj Mahal Palace & Mr. Catto Jean-Jacques 25230<br />

Tower, Mumbai Seloncourt, Doubs France<br />

Training in Bakery at<br />

Mr. Bourcet Bernard,<br />

Montbeliard, Doubs France<br />

, Obtaining <strong>the</strong> CAP Baker<br />

South Korea, Asia<br />

21 Goel Anil P Executive Director - Finance 51 10,540,441 6,624,040 B.Com.(Hons.) A.C.A 25 Tata Tea Limited July, 2004<br />

22 Guha Sumit Vice President - Projects & 41 6,144,170 3,863,990 B.E (IIT) Kharagpur, 18 Tata Administrative Services June, 1990<br />

Development PGDM (IIM Ahmedabad)<br />

23 Gujral Rajiv Chief Operating Officer &<br />

Senior Vice President - Mergers,<br />

Acquisitions & Development<br />

57 7,506,557 4,792,817 B B M ( Mkt.), FHCIMA 35 Quality Traders August, 1973<br />

24 *Gulati Bhavya Director - Mergers & Acquisitions 38 1,292,729 874,888 B. Com., ACA, 14 Larson & Toubro Limited October, 2007<br />

Surinder (Vice Chairman’s Office) M.Sc (International Marketing<br />

& Finance) London University<br />

25 *H N Shrinivas Senior Vice President - 55 1,952,668 1,226,428 B.Sc., MSW (PM&IR), 34 Hewlett-Packard November, 2007<br />

Nagaraj Human Resources L.L.B, L.L.M<br />

26 Ingo Moeller Chef De-Cusine - 32 2,603,044 1,753,020 3 years Apprenticeship from 14 The Imperial Hotel, May, 2006<br />

Taj Mahal Hotel, New Delhi Restaurant Paris Moskau New Delhi<br />

27 Iranpour Nowzer Pastry Chef - Western Region 55 2,486,255 1,657,725 S.S.C, Course in Bakery 36 First Employment October, 1972<br />

28 *Jamal Farhat Vice President (Mumbai Hotels) &<br />

General Manager -<br />

The Taj Mahal Palace & Tower,<br />

Mumbai<br />

50 4,718,854 3,236,064 Dip. In H.M.C.T 30 First Employment May, 1978<br />

29 *Joachim Caula Chef Pattiserie - Taj Mahal Hotel, 45 590,095 407,946 Certified Master Pastry & 25 Fauchon, Cairo February, 2008<br />

New Delhi Chocolate Chef<br />

30 *Kale Raghunath Vice President - 45 3,539,079 2,304,039 B.A (Eco.), Dip. In Advertising 24 Tata Quality<br />

Internal Comminication & Public Relations,<br />

Dip.In Marketing<br />

Management Services August, 2001<br />

31 Kang Karambir General Manager - 40 3,184,750 2,003,670 B.A (Eco.), PGDBM 16 First Employment October, 1991<br />

Singh The Taj Mahal Palace & Tower,<br />

Mumbai<br />

(Marketing)<br />

32 Kanda Noriyuki Japanese Chef - 32 2,980,485 2,026,045 Pre University 11 Suankawa Food & August, 2004<br />

The Taj Mahal Palace &<br />

Tower, Mumbai<br />

Planning, Japan<br />

33 Khosla Rohit General Manager - 41 2,829,576 1,808,366 Dip. In. Hotel Management, 20 Hyatt Regency, Delhi November, 1999<br />

Taj Lands End, Mumbai Post Graduate Dip.<br />

In Hotel Admin. & Management<br />

34 Khullar Deepak Director - Sales ITD 43 3,182,046 2,099,366 B.A, Dip. In Hotel<br />

Management, MBA<br />

22 Ramada Hotels (I) Limited February, 1995<br />

35 Kumar Perpetua Director - ITPL Project, 53 3,110,284 2,041,084 B.A.(Hons.) 25 First Employment August, 1976<br />

(Ms.) Bangalore


Annual Report 2007-2008<br />

36 Kunjur Sandhya Director - Marketing 51 2,495,337 1,608,847 B.A, Dip. In Social 29 Trikaya Grey Adverstising April, 1999<br />

(Ms.) (Gateway Hotels)<br />

Communication Media<br />

(Specialisation in<br />

Advertising & Marketing)<br />

37 Lakhmana Monicaa Director - Product & 46 3,036,034 2,008,834 B.A (English Literature) 25 Savvy & Bokaro News August, 1992<br />

(Ms.) Services Operations<br />

(Gateway Hotels)<br />

38 Lin Shi Xi Chines Chef -<br />

The Taj Mahal Palace &<br />

Tower, Mumbai<br />

49 5,095,051 3,421,871 Degree In Hotel Management, 13 Park Sheraton, Chennai January, 1997<br />

39 Lo Ka Yan Executive Chines Chef - 57 3,855,406 2,441,319 Graduate 35 Consultant to Chinese January, 2000<br />

Taj Palace Hotel, New Delhi Restaurant, Hong Kong<br />

40 *Luca Vancini Italian Chef - Taj Bengal, Kolkata 43 1,601,788 850,687 Academie Culinaire de 21 Crown & Champa Resort, October, 2007<br />

Cuisine et de Patisserie, Meeru Island Resort<br />

Paris, French,<br />

LE CORDON BLUE<br />

Republic <strong>of</strong> Maldives<br />

41 *Mahalingam<br />

Shivkumar<br />

Vice President - Corporate Finance 50 2,000,317 1,407,377 B.Com, A.C.A 26 Ranbaxy Group April, 1999<br />

42 Manchanda Ajit Director - Cordination 60 2,646,920 1,725,190 B. Com, Executive Masters<br />

In Intl. Trade<br />

39 Indian Airlines September, 78<br />

43 Maru Niyant Vice President - Corporate Finance 45 4,174,345 2,711,705 B.Com, A.C.A 17 Tata Tele Services,<br />

Hyderabad<br />

July, 1999<br />

44 Matcheswala General Manager - 48 3,347,242 2,170,882 Dip. In. Hotel Management, 27 First Employment September, 1981<br />

Ashrafi (Ms.) Taj Wellington Mews, Mumbai Post Graduate Dip.<br />

In Hotel Admin. &<br />

Management,<br />

MBA from Les Roches<br />

Hotelschool, Switzerland<br />

45 Misra A.K Sr. Vice President -<br />

Sales & Marketing<br />

51 10,356,175 6,643,425 B.E.(Hons.)-Civil, M.B.A. 28 Tata Administrative Services June, 1980<br />

46 Misra Deepa Vice President - Marketing 50 6,457,320 4,066,380 B.A, M.A (English.), 24 Fashion Magazine July, 1983<br />

H (Ms.) Dip. In Journalism<br />

47 *Mitra Avijit Vice President - Finance 47 581,603 529,253 B.Com., A.C.A 25 Tata Tea Limited February, 1999<br />

48 Miyashita Takahito Japanese Chef -<br />

The Taj Mahal Palace &<br />

Tower, Mumbai<br />

24 2,792,991 1,902,281 Graduate 1 First Employment March, 2007<br />

49 Mohankumar P K Area Director (Bangalore) &<br />

General Manager -<br />

Taj West End, Bangalore<br />

56 4,145,247 2,671,607 Dip. In. H.M.C.T 34 First Employment June, 1974<br />

50 Momen Faisal Chief Operating Officer - 39 3,568,391 2,271,421 B.B.A 16 White Cliff Tea (P) LTD April, 2005<br />

Taj Trade & (Wharton School <strong>of</strong> Business)<br />

Transport Company Limited &<br />

Inditravel Private Limited<br />

Universtity <strong>of</strong> Pennsylvania<br />

51 Mukerji Abhijit Executive Director - 45 6,822,587 4,458,407 B.Com. Dip. In Hotel. 23 First Employment December, 1984<br />

Hotel Operations Management,<br />

MBA - Cornell -Essec,<br />

CHA, TGMP<br />

(Harvard University)<br />

52 Mukherjee Arindam Diretor - Projects 43 4,034,085 2,672,245 B.Tech (Hons) 20 Bovis Land Lease February, 2004<br />

53 Nagpal Rajesh Advisor - Project 40 3,780,000 2,553,810 MBA (London Business School) 15<br />

Bachelor <strong>of</strong> Science in Business<br />

Administration (Finance/Intl.<br />

Bsuiness)<br />

Alliance Capital Mgt., Mumbai August, 1998<br />

54 Nagpal Sudhir Advisor - IT 49 3,780,000 2,553,810 MBA (Indian University <strong>of</strong> 25 MPOWER Information August, 1998<br />

Pennsylvania, U.S.A) Systems (P) Ltd.<br />

55 N Prakash Director - Sales (South) 45 3,489,229 2,271,619 B.Com 23 Food Specilaities Ltd., September, 1988<br />

56 *Nair Praveen Director - Santacruz Project 50 1,778,528 1,265,104 B. Com., L.L.B., Post Dip. 26 EIH Hotels Ltd., July, 2000<br />

In Hotel, Management, MBA<br />

23


The Indian Hotels Company Limited<br />

24<br />

57 *Nair Sheila (Ms.) Vice President - Special Projects 44 3,489,016 2,433,316 B.Sc., PGDM 22 Mathura Restaurant<br />

Woodland Group<br />

June, 1986<br />

58 Narang Jyoti (Ms.) Chief Operating Officer -<br />

Gateway Hotels<br />

50 6,893,631 4,361,381 B.A. (Eco), M.B.A 29 Spica Group <strong>of</strong> Indusrties October, 1982<br />

59 Natarajan K Corporate Chief - Gateway Hotels 52 3,616,306 2,344,366 B.Sc. D.H.M.C.T 27 First Employment September, 1981<br />

60 Newar Rajeev Director - Finance (Luxury India) 40 3,292,410 2,264,774 B.Com (Hons), A.C.A, A.C.S 16 Birla Corporation Ltd June, 2000<br />

61 Oberoi H.K. Corporate Chef -<br />

Luxury Hotels Division &<br />

Executive Chef The Taj Mahal<br />

Palace & Tower, Mumbai<br />

53 9,297,271 6,014,521 Dip. in H.M.C.T. 33 First Employment July, 1974<br />

62 Panchana<strong>the</strong>eswaran Director - 51 2,535,841 1,637,191 B.E(Mechanical) 28 Sundram Fasteners Ltd., May, 2000<br />

B Total Productive Maintenance<br />

63 Pandey Ashutosh General Manager - Development 37 2,902,195 1,998,985 B.Sc.(Engg), M.B.A 10 Accenture January, 2006<br />

64 Parekh Director - 45 3,089,733 2,000,973 B.Com, A.C.A, A.C.S 23 Tata Chemicals Ltd., March, 2001<br />

Rajeshkumar H Finance International Companies<br />

65 Parvathy M M (Ms) Director -<br />

Coordination (Operations)<br />

Premium Hotels<br />

54 2,641,609 1,704,419 B.Sc. (Home Science) 34 First Employment July, 1974<br />

66 Pasupathy Director - Coimbatore Project 55 2,637,412 1,764,992 Dip. In Hotel Management 34 Hotel Ramada International November, 1980<br />

Rajamani Doha - Qatar<br />

67 Patel Bina S (Ms) Vice President -<br />

Spa Operations & Development<br />

37 2,702,947 1,858,197 B.A (Hons) in Corporate Law 17 Syda Foundation, NY., USA August, 2003<br />

68 Patel Gev Nari Director - Sales<br />

(Luxury International)<br />

47 3,909,733 2,537,063 B.Sc. 25 Eureka Forbes Ltd., March, 1984<br />

69 Patel Samir Vice President - Spa Operations<br />

& Development<br />

44 5,069,508 3,445,298 B.E (Production) 21 Syda Foundation, NY., USA September, 2003<br />

70 Pokhariyal Gaurav General Manager -<br />

Rambagh Palace, Jaipur<br />

40 3,328,585 2,164,865 Dip. In. Hotel Management, 16 Park Hotel, New Delhi June, 1993<br />

71 Poupon Yannick Chief Operating Officer - 59 12,656,879 8,412,589 Graduate Hotel Management 36 Intercontinental Group September, 2001<br />

Luxury India School Strasbourg, France<br />

72 Rao Pradip Vice President - Materials 56 4,270,314 2,788,634 B.Sc., A.C.A 29 ITC Hotels Ltd., September, 1999<br />

73 Rathore Mahavir<br />

Singh<br />

Head - Security Taj Group 50 2,936,486 1,884,956 B.A, M.A, 25 First Employment October, 1982<br />

74 *S Y Raman Director - Finance (TSACL) 43 3,598,346 2,448,198 B.Com (Hons),<br />

A.C.A, A.C.S, AICWAI<br />

20 Tata Tea Limited October, 2002<br />

75 Saher Pervez<br />

Pestonji<br />

Senior Operator 59 13,949,670 9,140,543 S S C 34 First Employment January, 1974<br />

76 *Sankar Vice President - 48 410,847 319,525 B.Sc., L.L.M, A.C.S 26 Amway India Enterprises March. 2008<br />

Parameswaran Legal & Company Secretary Associate Member <strong>of</strong><br />

The Institute <strong>of</strong> Chartered<br />

Secretaries &<br />

Administratin (London)<br />

77 Sengupta P Director - Finance<br />

(Premium Hotels)<br />

42 2,773,500 1,824,190 B.Sc.(Hons), A.C.A 16 Sarova Group <strong>of</strong> Hotels August, 2003<br />

78 *Shah Chetan Director - Mergers & 44 5,157,855 3,368,635 B.Com, A.C.A, 22 Damac Holding, Dubai June, 2006<br />

Gamanlal Acquisitions Dip. In Computer<br />

(Vice Chairman’s Office) Management<br />

79 Siganporia Khushru Director - Information Systems 43 2,937,134 1,876,124 B.Sc., Dip. In Computer<br />

Maintenance & Architecture<br />

21 Everest Marketing Ltd. December, 1990<br />

80 Shukla Prakash Senior Vice President - Technology 41 10,947,187 7,284,867 Electrical & Electronics 24 IBM August, 1999<br />

& Chief Information Officer Engineering from Rutgers<br />

University &<br />

Chief Information Officer<br />

Engineering (Computer/<br />

Telecommunication)<br />

from New York Polytechnic<br />

University AMP from<br />

Harvad Universty (U.S.A)<br />

81 Singh Digvijay General Manager - 41 2,863,925 1,868,325 Dip. in H.M.C.T. 22 The Bristol Hotel, DLF, April, 2001<br />

Taj Mahal Hotel, New Delhi Gurgaon


Annual Report 2007-2008<br />

82 Singh Sarabjeet General Manager -<br />

Taj Palace Hotel, New Delhi<br />

43 3,217,328 2,033,338 B.A, Dip. In Hotel Management20 First Employment September, 1988<br />

83 Singh Taljinder General Manager -<br />

Taj Bengal, Kolkata<br />

39 3,011,078 1,972,888 B.Com (Hons) 18 First Employment September, 1990<br />

84 Singh Veer Vijay Director (Operations) 53 6,481,290 4,191,060 Dip. In Hotel Management, 32 First Employment December, 1976<br />

Taj GVK Hotels &<br />

Resorts Ltd. & General Manager -<br />

Taj Krishna, Hyderabad<br />

IHM PUCA<br />

85 *Sinhji Amar Director - Human Resources 41 2,348,423 1,587,503 B.Com, MBA 17 Tata TD Waterhouse October, 2003<br />

(Leisure Hotels) Securites Pvt. Ltd.,<br />

86 Srinivasan K S Vice President - 49 4,949,630 3,230,280 B.Com.(Hons) L.L.B, 24 Hyderabad Allwyn Ltd, April, 1989<br />

Human Resources PGDPM CHRE<br />

87 Suma Venkatesh Director - 39 3,349,762 2,269,752 B.E - Hons.(Electrical), 18 Portman Overseas October, 2002<br />

(Ms.) Business Development MMS (Marketing & Finance)<br />

88 Taneja Sunil Director - Marketing & 48 3,015,553 1,942,353 B.Com, Dip In Hotel 28 First Employment September, 1980<br />

Business Development (TSACL) Management, MHCIMA<br />

89 Takulia Ramesh Director - Learning & 57 3,061,897 1,988,017 Dip. In H.M.CT, 37 Hotel Jaipur Ashoka May, 1992<br />

Development (Luxury India) Salzburg, Austria<br />

90 Umashankar sanjay General Manager - 45 3,057,650 2,023,130 B.Sc., Dip. In. Hotel 22 Radisson Hotel, Chennai June, 2001<br />

Taj Umaid Bhawan, Jodhpur Management<br />

91 Vesavevala Rustom Vice President -<br />

Learning & Development<br />

44 4,433,011 2,935,620 B.Com., M.M.S 20 Tata Administrative Services June, 1989<br />

92 Vidyadhar Vaidya General Manager - 48 2,757,280 1,802,856 B.A, M.A, Dip. 23 First Employment February, 1985<br />

Human Resources In Industrial Relations &<br />

The Taj Mahal Palace & Personnel Management<br />

Tower, Mumbai Dip. In Marketing &<br />

Sales Management<br />

93 *Wing Kan Yiu Dimsum Chef - 47 1,776,408 1,190,116 Graduate 38 JW Marriott Hotel, August, 2007<br />

Taj Mahal Hotel, New Delhi Bangkok<br />

94 *Yogi Sriram Sr. Vice President - 53 4,400,007 2,971,891 M.A in Personel Management 31 B.P. India Services Pvt. Ltd May, 2005<br />

Human Resources & Industrial Relations (TISS),<br />

L.L.B, MBA Fellow -<br />

All India Management Association<br />

Dip. In Training &<br />

Development (ISTD)<br />

95 Zeller Franz Senior Vice President & 61 1,990,642 13,198,352 Certified Food & B 44 Millennium Hotels & Resorts November, 2003<br />

Chief Operating Officer Institute <strong>of</strong> American Hotel &<br />

everage Executive from Motel Association Course in London<br />

- Taj Luxury Hotels - International Business School, London, UK<br />

96 *Zhang Quingsheng Chinese Chef 29 1,599,127 1,071,445 Graduate 12 Shangri-La, Dubai September, 2007<br />

97 Zorniger Birgit (Ms) Deputy General Manager 44 7,234,668 4,838,198 German Pr<strong>of</strong>essional Hotel & 24 The Mark Hotel, New York March, 2003<br />

The Taj Mahal Palace & Restaurant Diploma (Hons)<br />

Tower, Mumbai from Hotel School Villingen-<br />

Schwenningen PDP Program<br />

from Cornell University<br />

Note :<br />

1. Net Remuneration is arrived at by deducting from <strong>the</strong> remuneration received, Income Tax, Company’s Contribution to provident fund and superannuating fund.<br />

2. All employees are entitled to Gratuity, Medical Benefits & Leave Travel Assistance as per rules <strong>of</strong> <strong>the</strong> Company.<br />

3. All <strong>the</strong> employees have adequate experience to discharge <strong>the</strong> responsibilities assigned to <strong>the</strong>m.<br />

4. The nature <strong>of</strong> employment in all cases is contractual.<br />

5. No Employee is related to any Director <strong>of</strong> <strong>the</strong> Company.<br />

6. None <strong>of</strong> <strong>the</strong> above employees hold more <strong>the</strong>n 2% <strong>of</strong> paid up capital <strong>of</strong> <strong>the</strong> Company.<br />

*7. Employed only for <strong>part</strong> <strong>of</strong> <strong>the</strong> year.<br />

Mumbai, June 23, 2008<br />

On behalf <strong>of</strong> <strong>the</strong> Board <strong>of</strong> Directors<br />

Ratan N.Tata<br />

Chairman<br />

25


The Indian Hotels Company Limited<br />

26<br />

Management Discussion and Analysis<br />

In line with <strong>the</strong> international practice, The Indian Hotels Company Limited (IHCL) has been reporting consolidated results taking<br />

into account <strong>the</strong> results <strong>of</strong> its Subsidiaries, Joint Ventures and Associates (toge<strong>the</strong>r referred to as “<strong>the</strong> Group”). This discussion,<br />

<strong>the</strong>refore, covers <strong>the</strong> financial results and o<strong>the</strong>r Group developments during April, 2007 to March, 2008 in respect <strong>of</strong> <strong>the</strong> Group.<br />

Some statements in this discussion describing <strong>the</strong> projections, estimates, expectations or outlook may be forward looking. Actual<br />

results may, however, differ materially from those stated on account <strong>of</strong> various factors such as changes in Government Regulations,<br />

Tax Regimes, Economic Developments within India and <strong>the</strong> countries within which your Company conducts its business, exchange<br />

rates and interest rates fluctuations, impact <strong>of</strong> competition, demand and supply constraints.<br />

INDUSTRY STRUCTURE AND DEVELOPMENTS<br />

An Overview <strong>of</strong> <strong>the</strong> Global Tourism Industry<br />

Global tourism continued to move upward during 2007-08 with <strong>the</strong> number <strong>of</strong> international tourist arrivals worldwide reaching<br />

about 1,000 million (UNWTO estimates) and international tourism receipts scaling US$ 900 billion in <strong>the</strong> year. Despite continuing<br />

challenges, 2007-08 proved to be ano<strong>the</strong>r excellent year for travel & tourism – <strong>the</strong> fourth consecutive year <strong>of</strong> healthy growth. Since<br />

2004-05, <strong>the</strong> annual increase in travel & tourism economy GDP has averaged 4% in real terms – faster than <strong>the</strong> overall global<br />

economy and in <strong>the</strong> same period, travel & tourism has created more than 34 million jobs.<br />

The prospects for Travel & Tourism over <strong>the</strong> coming decade look bright, with <strong>the</strong> Travel & Tourism Economy forecast to sustain<br />

annual growth <strong>of</strong> more than 4% over <strong>the</strong> next ten years. Emerging economies are expected to continue growing rapidly, boosting<br />

both international and domestic travel and globalisation will be sustained, as <strong>the</strong>se economies become increasingly integrated into<br />

<strong>the</strong> world economy, providing ongoing support for both business and personal travel. In developed countries, rising living<br />

standards and an increasing preference for leisure are expected to generate new long-haul travel, while <strong>the</strong> popularity <strong>of</strong> short<br />

breaks shows little sign <strong>of</strong> abating. Although growth is expected to slow in 2008-09, in line with <strong>the</strong> recent deterioration in <strong>the</strong><br />

economic environment in developed economies, led by <strong>the</strong> USA, WTTC forecasts – developed in collaboration with research<br />

<strong>part</strong>ner Oxford Economics indicated a 3% increase in Travel & Tourism Economy GDP and 6 million additional Travel & Tourism<br />

Economy jobs worldwide. World travel & tourism is expected to contribute nearly US$5,890 billion to global GDP in 2008, rising to<br />

approximately US$10,855 billion over <strong>the</strong> next ten years, according to <strong>the</strong> latest tourism satellite accounting (TSA) research from<br />

<strong>the</strong> World Travel & Tourism Council (WTTC). In terms <strong>of</strong> regional performance, Africa, Asia Pacific and <strong>the</strong> Middle East are<br />

experiencing higher growth rates than <strong>the</strong> world average, in terms <strong>of</strong> total Travel & Tourism Demand, at 5.9%, 5.7% and 5.2%<br />

respectively, while <strong>the</strong> matured markets – most notably <strong>the</strong> Americas and Europe – are falling below <strong>the</strong> world average with growth<br />

<strong>of</strong> 2.1% and 2.3% respectively.<br />

The Charts below depict <strong>the</strong> Travel & Tourism demand amongst <strong>the</strong> top nine countries in <strong>the</strong> world and <strong>the</strong> employment potential<br />

contributed by Travel & Tourism as per <strong>the</strong> research based forecast from <strong>the</strong> WTTC.<br />

(Source: WTTC report – Progress & Priorities 2008/09)<br />

Travel & Tourism Demand, 2008-18 (% annualized growth) <strong>of</strong> top countries


Annual Report 2007-2008<br />

Indian Economy:<br />

The Indian economy has moved decisively to a higher growth phase with growth in GDP at market prices exceeding 8 per cent in<br />

every year since 2003-04. The projected economic growth <strong>of</strong> 8.7 per cent for 2007-08 is fully in line with this trend. There was an<br />

acceleration in domestic investment and saving rates to drive growth and provide <strong>the</strong> resources for meeting <strong>the</strong> 9 per cent<br />

(average) growth target <strong>of</strong> <strong>the</strong> Eleventh Five-Year Plan. Macroeconomic fundamentals continue to inspire confidence and <strong>the</strong><br />

investment climate is full <strong>of</strong> optimism. The recent increase in inflation levels and increase in crude prices will impact <strong>the</strong> economic<br />

activity, which is <strong>the</strong> current cause <strong>of</strong> concern for <strong>the</strong> economy.<br />

Indian Tourism Industry:<br />

The Indian Tourism and Hospitality Industry driven by <strong>the</strong> huge surge in both business and leisure travel by domestic and foreign<br />

tourists as per <strong>the</strong> World Travel & Tourism Council (WTTC) is expected to generate approximately USD 100 billion in 2008. The<br />

flow <strong>of</strong> foreign tourist arrivals recorded a growth rate <strong>of</strong> 11.9% in 2007 over 2006 and was 4.9 million in 2007. The first 4 months <strong>of</strong><br />

2008 recorded a growth rate <strong>of</strong> 11.9 % (in tourist arrivals) over <strong>the</strong> corresponding arrivals in 2007 receiving 2.02 million in foreign<br />

tourist arrivals. According to <strong>the</strong> WTTC, Indian tourism demand is estimated to grow at an average <strong>of</strong> 8.8% between 2004 to 2013<br />

making India <strong>the</strong> world’s third fastest growing tourist market.<br />

Source: Ministry <strong>of</strong> Tourism<br />

Fur<strong>the</strong>r, tourism is an important industry in Indian economy contributing around 6.8 per cent <strong>of</strong> <strong>the</strong> Gross Domestic Product and<br />

providing employment to over 41 million persons. According to a research by University <strong>of</strong> New South Wales (UNSW), Australian<br />

School <strong>of</strong> Business (ASB), India and China will be <strong>the</strong> new global players competing for a huge chunk <strong>of</strong> tourists, transforming <strong>the</strong><br />

geopolitical landscape. Significantly, while India’s share in world arrivals was about 0.5 per cent, its share in revenue generated<br />

from tourism worldwide was over 1 per cent. India, with its diverse landscape, <strong>of</strong>fers huge scope for various <strong>the</strong>me-based travel like<br />

Medical Tourism, Adventure tourism, Heritage tourism, Wellness tourism, Pilgrimage tourism, Golf tourism, Eco-tourism, Wildlife<br />

tourism among o<strong>the</strong>rs. India’s growing reputation as a major medical tourism destination is attracting more and more foreign<br />

visitors. In fact, Indian hospitals are fast becoming <strong>the</strong> first choice for foreign patients and many travel agents are now <strong>of</strong>fering<br />

packages combining treatment with a vacation. The boom in <strong>the</strong> Indian tourism industry has cascaded to <strong>the</strong> rural areas as well.<br />

India continues to attract tourists owing to its splendid historical architecture and rich culture along with beautiful beaches. Rural<br />

tourism or what now is called ‘responsible tourism’ is also fast gaining popularity with travelers flocking to discover <strong>the</strong> best in<br />

rural arts and heritage.<br />

27


The Indian Hotels Company Limited<br />

28<br />

The booming tourism industry has had a cascading effect on <strong>the</strong> hospitality sector with an increase in <strong>the</strong> occupancy ratio and<br />

average room rates. While occupancy ratio is 75-80%, <strong>the</strong> average increase in <strong>the</strong> room rates has been hovering around 22-25%.<br />

The level <strong>of</strong> activity would depend on <strong>the</strong> impact <strong>of</strong> inflation and increase in crude prices on <strong>the</strong> overall economic activity. The<br />

Governments move to declare <strong>the</strong> Tourism industry as a high priority sector with a provision for 100% FDI has provided a fur<strong>the</strong>r<br />

impetus in attracting investments to this industry. Government has also taken various initiatives for <strong>the</strong> development in this<br />

sector.<br />

� Launch <strong>of</strong> “Incredible India” campaign to promote tourism both in domestic and international markets.<br />

� Recognition <strong>of</strong> spare rooms available with various house owners by classifying <strong>the</strong>se facilities as “Incredible India Bed and<br />

Breakfast Establishments”, under ‘Gold’ or ‘Silver’ category.<br />

� A new category <strong>of</strong> visa, “Medical Visa” (‘M’-Visa), has been introduced which can be given for specific purpose to foreign<br />

tourists coming into India.<br />

� Guidelines have been formulated by De<strong>part</strong>ment <strong>of</strong> Tourism for AYUSH prescribing minimum requirements for Ayurveda and<br />

Panchkarma Centres.<br />

� Ministry <strong>of</strong> tourism has tied up with United Nations Development Programme (UNDP) to promote rural tourism.<br />

� India has also received international accolades as a leading global tourist destination.<br />

� India has been elected to head <strong>the</strong> UN World Tourism Organisation (UNWTO), <strong>the</strong> highest policy making world tourism<br />

body represented by 150 countries.<br />

� The world’s leading travel and tourism journal, “Conde Nast Traveller”, ranked India as <strong>the</strong> numero uno travel destination in<br />

<strong>the</strong> world.<br />

� The Association <strong>of</strong> British Travel Agents (ABTA) has ranked India as No.1 amongst <strong>the</strong> top 50 places for 2006.<br />

� The “Incredible India” campaign has been ranked as <strong>the</strong> Highest Recall Advertisement worldwide by “Travel and Leisure”.<br />

� India was adjudged Asia’s leading destination at <strong>the</strong> regional World Travel Awards (WTA).<br />

� India’s Taj Mahal continues to figure in <strong>the</strong> Seven Wonders <strong>of</strong> <strong>the</strong> World.<br />

Your Company would aggressively pursue its strategy both in <strong>the</strong> domestic and international market at different price points from<br />

<strong>the</strong> smart basic hotels to <strong>the</strong> luxury segment. Against this backdrop your Company expects to achieve sustainable and pr<strong>of</strong>itable<br />

growth.<br />

The Taj Advantage<br />

Your Company operates its hotels under <strong>the</strong> “Taj Hotels Resorts and Palaces” umbrella brand and is <strong>the</strong> largest hotel chain in<br />

South Asia. It comprises <strong>of</strong> hotels with 10487 rooms and over 280 Food & Beverage outlets. The total numbers <strong>of</strong> hotels which are<br />

owned or managed by <strong>the</strong> Company have grown to 88 as against 82 in 2006/07. Internationally, <strong>the</strong> Company has hotels, among<br />

o<strong>the</strong>r locations, at USA, Australia, Maldives, Mauritius, Malaysia, UK, Sri Lanka, Africa and <strong>the</strong> Middle East. Your Company<br />

owns ei<strong>the</strong>r directly or through its associates and <strong>part</strong>ners, properties in many key business and leisure destinations and has built<br />

for itself several sources <strong>of</strong> competitive advantage.<br />

Among <strong>the</strong> key sources <strong>of</strong> competitive advantage that your Company enjoys are branding, infrastructure and best in class<br />

services. The “Taj” brand has been built over <strong>the</strong> years by consciously investing into brand building, establishing high brand<br />

standards and adhering to <strong>the</strong> same with <strong>the</strong> objective <strong>of</strong> providing an exclusive TAJ experience to <strong>the</strong> guests. The brand equity<br />

is fur<strong>the</strong>r streng<strong>the</strong>ned by <strong>the</strong> ownership and backing <strong>of</strong> Tatas, a Group with varied business interest operating in several<br />

countries and enjoying high credibility.<br />

The Company has a good infrastructure by way <strong>of</strong> properties at prime location in India. It has <strong>the</strong> largest portfolio <strong>of</strong> rare and<br />

au<strong>the</strong>ntic Original Palaces and is <strong>the</strong> largest hotel chain in South Asia. The Sales and Marketing network, <strong>the</strong> network <strong>of</strong> Partners<br />

and Associates, Reservation network and <strong>the</strong> Information Technology Services add to a robust and strong infrastructure. The<br />

Company has also been a pioneer in <strong>the</strong> Food & Beverage experience in India.


Annual Report 2007-2008<br />

Your Company is <strong>the</strong> First hotel chain in India to announce <strong>the</strong> elimination <strong>of</strong> “Trans Fat” from all its F & B <strong>of</strong>ferings across its<br />

hotels. Taking cognizance <strong>of</strong> <strong>the</strong> ill-effects and health hazards that surround Trans fats, <strong>the</strong> Master Chefs <strong>of</strong> <strong>the</strong> Taj have made<br />

every effort to ensure that this move will have no impact whatsoever, on <strong>the</strong> taste and texture <strong>of</strong> <strong>the</strong> food.<br />

In an endeavour to reinstate its vision and efforts to boost sustainable tourism and integrate environment management in all<br />

business areas your Company initiated EARTH (Environment Awareness & Renewal at Taj Hotels), a project which reiterates <strong>the</strong><br />

conscious effort <strong>of</strong> one <strong>of</strong> Asia’s largest and finest group <strong>of</strong> hotels to commit to energy conservation and environmental management.<br />

EARTH has received certification from Green Globe, <strong>the</strong> only worldwide environmental certification program for travel and<br />

tourism.<br />

Your Company Taj Hotels Resorts and Palaces is delighted to have won <strong>the</strong> Selling Long Haul Travel Awards 2007 an award<br />

nominated by travel agents and tour operators across <strong>the</strong> UK and Ireland,<br />

Opportunities<br />

Your Company is poised strategically to take advantage <strong>of</strong>:<br />

� Rapidly growing market in India, South Asia and key gateway cities in source-market destinations.<br />

� Expansion in international destinations with top-<strong>of</strong>-<strong>the</strong>-line luxury and leisure properties.<br />

� Meeting growing demand in <strong>the</strong> budget and mid-market segments.<br />

� Extending <strong>the</strong> product portfolio into related <strong>of</strong>ferings viz. luxury residences, wildlife lodges and spas.<br />

Key initiatives taken by your Company during <strong>the</strong> year are discussed in a separate section.<br />

Threats<br />

The threats identified by your Company are related mainly to <strong>the</strong> markets in which your Company operates and general factors<br />

related to <strong>the</strong> tourism industry. Significant among <strong>the</strong>se are:<br />

� General downturn in global & domestic economies<br />

� Interest rates fluctuation could have adverse effect on performance.<br />

� Cheaper international airfares increasing <strong>the</strong> affordability <strong>of</strong> travel to international destinations, especially South East Asia,<br />

Europe and Australia.<br />

� Growing presence <strong>of</strong> international hospitality chains competing in <strong>the</strong> luxury and business segments to meet excess demand<br />

situation.<br />

These threats and your Company’s strategy to overcome <strong>the</strong>m have been discussed in detail in <strong>the</strong> section on Risk and Concerns<br />

and <strong>the</strong> Risk Mitigation Initiatives.<br />

Update on Key Initatives<br />

New Properties and Expansion Plans<br />

The Domestic market has been rapidly expanding and your Company’s expansion strategy in <strong>the</strong> domestic market has been in line<br />

with <strong>the</strong> expectations given <strong>the</strong> buoyancy in <strong>the</strong> industry. During <strong>the</strong> year under review, <strong>the</strong> Company has at strategic locations<br />

made commitments by way <strong>of</strong> acquiring properties on lease, entering into tie ups for equipping hotels being built by <strong>part</strong>ners and<br />

executing a number <strong>of</strong> management and technical services contracts for managing, operating and rendering technical services.<br />

During <strong>the</strong> year <strong>the</strong> Company commenced operations at <strong>the</strong> “Gateway” a 100 room Hotel in Vijaywada, Andhra Pradesh and a<br />

beautiful 66 room Hotel Taj Tashi in <strong>the</strong> heart <strong>of</strong> Bhutan’s capital city Thimpu which reflects Bhutan’s rich heritage and architecture.<br />

The project at Whitefield, Bangalore a 199 room premium hotel is slated to open shortly. Roots Corporation Ltd. <strong>the</strong> Company’s<br />

wholly owned subsidiary commenced operation <strong>of</strong> it’s four new 100 rooms ‘Ginger’ hotels at Nashik, Agartala, Pondicherry &<br />

Baroda under <strong>the</strong> ‘Smart basic’s’ format. During <strong>the</strong> year your Company launched several unique restaurants in <strong>the</strong> domestic &<br />

International arena notably being “Latitude” <strong>the</strong> exquisite all day dining restaurant at Taj Samudra, Sri Lanka, The Italian restaurant<br />

29


The Indian Hotels Company Limited<br />

30<br />

“Prego” at Taj Coromandel, Chennai, “Masala Club” at <strong>the</strong> Taj West End, Bangalore and The “Wasabi” restaurant at <strong>the</strong><br />

Taj Mahal, New Delhi.<br />

The Company also entered into management contracts for several properties which will commence operation over <strong>the</strong> next few<br />

years both in <strong>the</strong> domestic & international market. In <strong>the</strong> domestic sector <strong>the</strong> Company has signed Management Contracts for<br />

hotels at Pune, Kolkata, Pondicherry and a Serviced A<strong>part</strong>ment at Pune. On <strong>the</strong> International front Management contracts are in<br />

place for properties at YAS Island-Abu Dhabi, Ras Al Khaimah Saraya Islands-UAE, Doha in Qatar & Cape Town, South Africa. On<br />

<strong>the</strong> Wild life safari lodges business, while two high end lodges are operational, two more lodges are slated to open shortly at Panna<br />

and Kanha, <strong>the</strong>reby completing <strong>the</strong> first safari circuit in India.<br />

During <strong>the</strong> year your Company invested in a Singapore subsidiary, BJETS Pte Limited which when operational will provide a range<br />

<strong>of</strong> services including private , non-scheduled aviation services , fractional ownership programmes, acquisition and maintenance<br />

<strong>of</strong> private jet fleet. BJETS intends to target high net worth individuals and MNC’s across India, Sri Lanka, Bangladesh, Pakistan,<br />

Nepal and South-east Asian countries.<br />

Your Company along with Tata Realty and Infrastructure Limited successfully bid for setting up an IT SEZ in Chennai which will<br />

a<strong>part</strong> from creation <strong>of</strong> IT space will include setting up <strong>of</strong> a 5 Star Hotel, Service A<strong>part</strong>ments and Convention centre which will be<br />

managed by your Company.<br />

Ginger Hotels<br />

Under <strong>the</strong> ‘Ginger’ brand your Company’s subsidiary commenced operations <strong>of</strong> four new 100 rooms hotels at Nashik, Agartala,<br />

Pondicherry and Baroda. Under this brand currently <strong>the</strong>re are 12 operational hotels at Bangalore, Haridwar, Bhubaneshwar,<br />

Mysore, Trivandrum, Pune, Durgapur, Nashik, Agartala, Pondicherry, Baroda & Pantnagar. In addition several projects are at<br />

various stages <strong>of</strong> construction at New Delhi, Ludhiana, Goa, Mangalore, Ahmedabad, & Guwahati. In addition, to expand <strong>the</strong><br />

market <strong>of</strong> “Ginger Hotels”, we have signed up management contracts for hotels in Jaipur, Katra, Lucknow and Tirupur.<br />

The focus during <strong>the</strong> year was to commission a new ERP system, SAP – Simhotels across all properties. We undertook Mystery<br />

audits, Brand Health Track, Customer Feed back to identify gap areas and improve <strong>the</strong> operational efficiency <strong>of</strong> <strong>the</strong> hotels. Café<br />

C<strong>of</strong>fee Day outlets were opened at 8 locations and a Landmark book and gifts store is being evaluated at Pondicherry. An<br />

advertising campaign with coverage in magazines, TV, internet and outdoor media was launched.<br />

Wildlife Lodges<br />

Your Company’s Joint Venture operates two lodges viz. Mahua Kothi at Bandhavgarh and Baghvan Pench, both in Madhya<br />

Pradesh and is now gearing up to open two new lodges at Panna and Kanha by October 2008 <strong>the</strong>reby completing <strong>the</strong> first safari<br />

circuit in India.<br />

Serviced A<strong>part</strong>ments<br />

Your Company recognizes that Serviced A<strong>part</strong>ments / A<strong>part</strong>ment Hotels is emerging as an important segment in <strong>the</strong> hospitality<br />

business. Various options are being evaluated to enable your Company to have a significant presence in this segment <strong>of</strong> <strong>the</strong><br />

hospitality areas.<br />

Spas<br />

The philosophy <strong>of</strong> our spas is rooted inherently in India’s ancient approach to wellness. The ethos <strong>of</strong> our carefully recreated<br />

treatments is drawn on <strong>the</strong> rich and ancient wellness heritage <strong>of</strong> India; <strong>the</strong> fabled lifestyle and culture <strong>of</strong> Indian royalty and <strong>the</strong><br />

healing <strong>the</strong>rapies that embrace Indian spirituality. Taj Spa is an eco-sensitive brand hence all spa products are natural and contain<br />

Indian herbs, pure essential oils, lipids, clays, mud, salts and flower waters all <strong>of</strong> a botanical source. Taj Spa uses organic linen and<br />

eco-friendly toxin-free pottery.<br />

In <strong>the</strong> year 2007 – 08, two new Taj Spas were launched - at Rambagh Palace, Jaipur in April 2007 and at Taj Tashi, Thimphu, Bhutan<br />

in February 2008. Set in luxurious tents, Taj Spa at Rambagh Palace, Jaipur, recreates <strong>the</strong> au<strong>the</strong>ntic grandeur synonymous with<br />

royal India’s exquisite Rajput palaces, beautiful Mughal encampments, water gardens, and fabled lifestyle. The spa was featured<br />

under <strong>the</strong> World’s Top Spas in <strong>the</strong> Tatler Body and Soul Guide 2007, UK. Drawing on <strong>the</strong> rich and ancient wellness traditions <strong>of</strong>


Annual Report 2007-2008<br />

both countries, Taj Spa at Taj Tashi Thimphu <strong>of</strong>fers luxurious Indian and Bhutanese signature spa <strong>the</strong>rapies and experiences.<br />

Within two months <strong>of</strong> opening, <strong>the</strong> spa has been featured in <strong>the</strong> prestigious Conde Nast Traveler Hot List 2008, USA. Taj Spa at<br />

Umaid Bhawan Palace, Jodhpur, Taj Green Cove Resort, Kovalam and Taj Malabar, Cochin underwent facility upgradation and<br />

renovations. As on date, 16 Taj Spas are operational in Taj Hotels Resorts and Palaces in India and international locations.<br />

Product Upgradation<br />

Your Company continues with its ongoing program <strong>of</strong> investing in renovation and upgradation <strong>of</strong> its property. During <strong>the</strong> year Taj<br />

Mahal Palace and Tower, Mumbai, Taj Palace, Delhi, Taj Bengal , Kolkata, Fort Aguada Beach Resort, Goa, Lake Palace, Udaipur,<br />

Taj Mahal, New Delhi, Taj West End , Bangalore, Gateway on Residency Road, Bangalore were renovated. The Pierre in New York<br />

is currently under major renovation and will open soon. The Company also over saw and supported renovation in some <strong>of</strong> <strong>the</strong> key<br />

properties <strong>of</strong> Associate companies as <strong>part</strong> <strong>of</strong> its ongoing programme <strong>of</strong> investing in renovation and product upgradation.<br />

Guest Experience<br />

Your Company is committed to enhancing Guest experience by improving <strong>the</strong> product and service levels so that <strong>the</strong>y are best in<br />

class. Towards this objective <strong>the</strong> Company has continued its efforts and this has resulted in several key initiatives being taken<br />

in terms <strong>of</strong> service and product aspects. The hotel concierge service was fur<strong>the</strong>r reinforced through on-site training by expert<br />

international trainers and enhanced technology. The concierge service has been received well by our guests and has been a<br />

significant value addition. The continuing efforts in training our Food & Beverage associates in <strong>the</strong> skills required for sommeliers<br />

and bartenders has significantly improved <strong>the</strong> guest experience in our restaurants. Similarly, various product refinements were<br />

introduced in <strong>the</strong> hotels covering <strong>the</strong> entire aspect <strong>of</strong> floral arrangements, lighting aroma etc.<br />

In your Company’s quest to benchmark against <strong>the</strong> world’s finest hotels, <strong>the</strong> services <strong>of</strong> world renowned international firm was<br />

retained to refine <strong>the</strong> Taj brand standards. This will enable your Company to establish a unique identity in its endeavor to clearly<br />

differentiate <strong>the</strong> brand.<br />

Recognition and retention <strong>of</strong> talent is <strong>of</strong> critical importance in a people-intensive industry such as ours. Key initiatives to identify<br />

key resources were <strong>the</strong> “Role Models” programme for executives and <strong>the</strong> “Diamonds are Forever” for staff were commenced<br />

during <strong>the</strong> year.<br />

Your Company is aware that well-trained frontline employees are key to retaining our market positioning. Training initiatives for<br />

<strong>the</strong> year included new modules on Inter-cultural Sensitization, Accent Rectification and Voice Modulation, etc.<br />

The focus on employee engagement in improving processes and procedures to ensure guest delight is reflected in <strong>the</strong> Process<br />

Improvement Teams deployed across <strong>the</strong> Strategic Business Units (SBUs). These teams meet, analyze and implement improvements<br />

in operational processes that impact guest satisfaction.<br />

The SBUs have created and implemented, a series <strong>of</strong> initiatives, focusing on service excellence and delighting <strong>the</strong> guests. Brand<br />

Service Standards, Procedures & Standards Manual, Internal & External Audits, were rolled out for all front line de<strong>part</strong>ments to<br />

focus on ensuring consistency in service, enhancing service standards and ensuring defect free product and services. The<br />

SBUs launched <strong>the</strong> Competency Based Training Module, targeting at all front line employees, to build people capabilities, to<br />

deliver service excellence. Cross exposure training, international talent swaps and developing talent were focused on. Key<br />

performance indicators (KPIs) have been created and implemented for all de<strong>part</strong>ments, to track in-process measures to ensure<br />

adherence to service and operating standards.<br />

During <strong>the</strong> year, <strong>the</strong> Customer Feedback System was extended to all <strong>the</strong> international hotels. All <strong>the</strong> hotels are HACCP certified.<br />

Standardization <strong>of</strong> crockery, cutlery, recipes and menu templates, uniforms for frontline positions and also <strong>the</strong> back <strong>of</strong> <strong>the</strong> house<br />

positions and room amenities in <strong>the</strong> form <strong>of</strong> mini bar standards were undertaken. Standardization <strong>of</strong> cuisine <strong>of</strong> different regions<br />

and types were driven to enhance quality <strong>of</strong> food and provide innovative F&B <strong>of</strong>ferings. A range <strong>of</strong> food items like exotic breads,<br />

desserts and felchlin chocolates were launched to provide higher level <strong>of</strong> F&B experience.<br />

Pre-Opening Manuals have been created and implemented for new opening properties, to ensure consistency in service delivery<br />

and enhance guest interaction. The SBUs launched a series <strong>of</strong> employee related initiatives. These include Wall <strong>of</strong> Fame for<br />

recognizing outstanding service delight stories, Brick Bats - a stepping stone to proactively correct a mistake to ensure that<br />

31


The Indian Hotels Company Limited<br />

32<br />

measures are taken to enhance service delight, Empower - to recognize employees for acts <strong>of</strong> empowerment and Joy at Work<br />

activities to energize employees.<br />

Several Service Excellence initiatives were taken during <strong>the</strong> year. These included focus on processes/systems by continuously<br />

increasing <strong>the</strong> number <strong>of</strong> Tata Business Excellence Model certified internal/ external assessors resulting in <strong>the</strong> process orientated<br />

work culture. This has again resulted in consistency in service delivery and enhanced guest interaction. Besides <strong>the</strong> above, <strong>the</strong><br />

o<strong>the</strong>r areas <strong>of</strong> focus which has resulted in Service Excellence include Competency Assessment Model for all operational staff with<br />

focus on training need identification leading to enhanced service experience, cross exposure training programme, international<br />

talent swaps, individual development swaps, food & beverage bench marking exercise for senior managers and chefs resulting in<br />

awareness in global F & B trends and corporate chefs competition called <strong>the</strong> “Dish <strong>of</strong> <strong>the</strong> month” to innovate and enhance <strong>the</strong><br />

quality <strong>of</strong> food resulting in innovation in F & B <strong>of</strong>ferings leading to enhanced guest experience.<br />

Business Excellence<br />

i. Brand Standards –<br />

Two major changes in <strong>the</strong> hospitality industry in India are intensive competition from o<strong>the</strong>r hotel chains and <strong>the</strong> emergence <strong>of</strong> a<br />

more demanding and discerning customer.<br />

Creation <strong>of</strong> Brand Standards<br />

The Business Excellence Team <strong>part</strong>nered with Hotel Operations Teams to -<br />

� Ensure consistent brand standards based on international benchmarking<br />

� Monitor and measure customer satisfaction to bring about sharper customer focus and implement service improvements.<br />

� Explore <strong>the</strong> latest trends in hospitality for absorption / implementation into <strong>the</strong> group.<br />

� Update operating manuals for all brands, products and services.<br />

In your Company’s quest to benchmark against <strong>the</strong> world’s finest hotels, it <strong>part</strong>nered with an internationally acknowledged expert<br />

on hotel experiences to refine <strong>the</strong> Taj Luxury Experience Standards, thus enabling it to establish a unique identity in its endeavor<br />

to clearly differentiate <strong>the</strong> Taj brand.<br />

World-class trainers trained associates in competencies such as personal butler services, concierge, sommeliers and bartenders.<br />

Taj fosters and encourages associate engagement in improving processes and procedures to ensure guest delight. This is<br />

reflected in <strong>the</strong> Process Improvement Teams deployed across <strong>the</strong> organization. These teams meet, analyze and implement<br />

improvements in operational processes to impact guest satisfaction positively.<br />

ii. Mystery Shopper Audits –<br />

Mystery Shopper Audits continued to help your company improve associate guest service awareness by <strong>the</strong> use <strong>of</strong> audits and<br />

detailed narratives. These audits provided an unbiased opinion <strong>of</strong> how your company is perceived by it’s guests and uniquely<br />

assesses each moment <strong>of</strong> truth.<br />

iii. Customer Feedback System (CFS) –<br />

The Customer Feedback System was fur<strong>the</strong>r refined to capture guest feedback from multiple channels. An advanced CFS data<br />

warehouse now provides sharper and more insightful data to all user de<strong>part</strong>ments thus ensuring that guest feedback drives<br />

improvement. The system is functional at hotels across <strong>the</strong> organization, including international locations and sales & marketing<br />

<strong>of</strong>fices.<br />

iv. Guest Satisfaction Tracking System (GSTS) –<br />

The online GSTS survey allows guests to record <strong>the</strong>ir feedback on <strong>the</strong> entire gamut <strong>of</strong> products and services being <strong>of</strong>fered by Taj<br />

Hotels, at <strong>the</strong> convenience <strong>of</strong> <strong>the</strong> guests. GSTS includes extensive evaluation parameters pertaining to ALL aspects <strong>of</strong> a resident<br />

guest’s experience at <strong>the</strong> hotel. These evaluation parameters have been designed to translate guest expectations into tangible,


Annual Report 2007-2008<br />

measurable information which is used for decision making. The GSTS form was redesigned based on guest feedback to capture<br />

feedback on all touch points during a guest’s stay.<br />

v. Tata Business Excellence Model:<br />

This year, your Company has once again applied for <strong>the</strong> Tata Business Excellence Model (TBEM) Assessment. The feedback from<br />

past assessments has gone a long way in helping your company improve its processes to deliver a robust business performance,<br />

building a high sense <strong>of</strong> associate commitment in a high performance work culture.<br />

vi. Accreditation Processes –<br />

ISO 22000<br />

Your company has taken <strong>the</strong> lead in <strong>the</strong> implementation <strong>of</strong> ISO 22000 (a food safety management system). This is an upgrade over<br />

<strong>the</strong> earlier Hazard Analysis and Critical Control Point (HACCP) certifications. Several hotels were certified last year.<br />

ISO 14000 / Environment Management System<br />

The ISO has developed international environmental management standards which are known as <strong>the</strong> ISO 14000. ISO 14000<br />

provides a framework for <strong>the</strong> development <strong>of</strong> an environmental management system and <strong>the</strong> supporting audit programme. Your<br />

company is conscious <strong>of</strong> <strong>the</strong> role it plays in impacting <strong>the</strong> environment and has hence commenced implementation <strong>of</strong> ISO 14000.<br />

Key Marketing Initiatives<br />

Marketing Alliances<br />

During <strong>the</strong> year your Company entered into some Marketing alliances. The key amongst those were <strong>the</strong> alliance with Okura Hotels<br />

& Resorts, one <strong>of</strong> <strong>the</strong> largest international hotel groups in Japan, to develop cross-promotional opportunities for both companies<br />

and to harness each o<strong>the</strong>r’s strengths in <strong>the</strong>ir respective markets <strong>of</strong> dominance.<br />

During <strong>the</strong> year, your Company also tied up with several Airlines for <strong>the</strong>ir Frequent Flier loyalty program <strong>the</strong> key amongst <strong>the</strong>m<br />

being with Lufthansa, American Airlines and KLM. The alliance allows your company to have access to <strong>the</strong>ir data base and<br />

<strong>the</strong>reby gives your company an opportunity to do a customized communication in <strong>the</strong>ir respective dominant markets. Members <strong>of</strong><br />

<strong>the</strong> frequent flyer tie-ups can earn miles for stay at all Taj properties. This association is in recognition to <strong>the</strong> rise <strong>of</strong> <strong>the</strong> world<br />

traveler today, who is discerning and is extremely demanding <strong>of</strong> every <strong>of</strong>fering. With associations <strong>of</strong> such nature, <strong>the</strong> Taj aims to<br />

garner a lifetime connection with its guests and <strong>the</strong>ir families.<br />

Your Company in collaboration with ICICI Bank and American Express launched <strong>the</strong> new ICICI Bank Ascent American Express®<br />

Card. The Card is six times more rewarding for <strong>the</strong> consumer than <strong>the</strong> o<strong>the</strong>r leading credit cards in India. Consumers earn attractive<br />

6 reward points per Rs 100 spent on dining, shopping, travel and overseas expenses. Additionally, <strong>the</strong>re are exciting <strong>of</strong>fers and<br />

privileges to help customers save even as <strong>the</strong>y prepare for that long awaited getaway. Your Company enhances <strong>the</strong> customer<br />

experience by <strong>of</strong>fering attractive privileges for <strong>the</strong> cardmembers including discounts on best available rates for stay at <strong>the</strong><br />

Company properties.<br />

Your Company continues to promote its existing marketing alliances for <strong>the</strong> mutual benefit <strong>of</strong> both <strong>the</strong> <strong>part</strong>ners.<br />

Outlook<br />

On <strong>the</strong> backdrop <strong>of</strong> a successful year, <strong>the</strong> outlook for <strong>the</strong> hotel industry in <strong>the</strong> coming year remains bullish. With <strong>the</strong> number <strong>of</strong><br />

tourist arrivals expected to go upto 10 million by 2010, <strong>the</strong> interest in India as a leisure destination has tremendously gone up. This<br />

will drive tourist traffic into India. Fur<strong>the</strong>r, <strong>the</strong> general economic conditions in most industrial sectors remain bullish for <strong>the</strong> coming<br />

year. This will drive business travel into India which will benefit <strong>the</strong> hotel industry. Certain major events like <strong>the</strong> Commonwealth<br />

Games planned in Delhi in 2010 would require addition to <strong>the</strong> inventory <strong>of</strong> rooms which would again help <strong>the</strong> hotel industry.<br />

Your Company would aggressively pursue its strategy both in <strong>the</strong> domestic as well as <strong>the</strong> international market at different price<br />

points from <strong>the</strong> Smart Basic Hotels to <strong>the</strong> luxury segments. With its leadership position in most markets in <strong>the</strong> luxury and leisure<br />

segments, your Company expects to achieve sustainable and pr<strong>of</strong>itable growth in <strong>the</strong> coming years.<br />

33


The Indian Hotels Company Limited<br />

34<br />

Management Discussion and Analysis <strong>of</strong> Operating Results and Financial Positions<br />

The Annual Report contains Financial Statements <strong>of</strong> your Company, both on a stand-alone and consolidated basis. An analysis <strong>of</strong><br />

<strong>the</strong> financial affairs is discussed below under summarized headings.<br />

Results <strong>of</strong> Operations for <strong>the</strong> year ended March 31, 2008<br />

Standalone Financial Results<br />

The following table sets forth financial information for <strong>the</strong> Company for <strong>the</strong> year ended March 31, 2008<br />

Rs/Crores<br />

Particulars Year Ended<br />

March 31, 2008 March 31, 2007<br />

Income<br />

Sales & O<strong>the</strong>r operating income 1764.51 1540.86<br />

O<strong>the</strong>r Income 58.65 76.45<br />

Total Income<br />

Expenditure<br />

1823.16 1617.31<br />

Consumption <strong>of</strong> Raw Materials 128.24 121.20<br />

Staff costs 312.77 280.77<br />

License Fees 104.73 99.48<br />

Fuel, Power & Light 92.61 80.49<br />

Depreciation 85.48 91.44<br />

O<strong>the</strong>r Expenditure 436.00 399.68<br />

Less: Unallocated Expenditure during construction period<br />

transferred to Fixed Assets<br />

(11.42) (2.28)<br />

Total Expenditure 1148.41 1070.78<br />

Pr<strong>of</strong>it Before Interest and Tax 674.75 546.53<br />

Interest (Net) 94.28 71.89<br />

Pr<strong>of</strong>it from Ordinary Activities before tax 580.47 474.64<br />

Provision for Tax 198.91 152.25<br />

Tax Provision <strong>of</strong> earlier years (Net) 4.10 -<br />

Pr<strong>of</strong>it from Ordinary Activities after tax<br />

Revenues:<br />

377.46 322.39<br />

The summary <strong>of</strong> total income is provided in <strong>the</strong> table below:<br />

Rs/Crores<br />

Particulars Year Ended % Change<br />

March 31, 2008 March 31, 2007<br />

Rooms sales 978.71 845.15 16<br />

Food & Beverages Sales 585.32 523.73 12<br />

O<strong>the</strong>r Operating Income 200.48 171.98 17<br />

Non-Operating Income 58.65 76.45 (23)<br />

Total Income<br />

Statistical Information<br />

1823.16 1617.31 13<br />

Average Room Rate 10,674 9,233 16<br />

Occupancy (%) 73 72 -


Annual Report 2007-2008<br />

� Room sales were mainly driven by increase in Average Room Rate by 16% from Rs 9,233 to Rs 10,674.<br />

� Strong Food & Beverages sales growth achieved with banquets revenue increasing by 16%.<br />

� O<strong>the</strong>r operating income mainly includes income from management fees and o<strong>the</strong>r operating income from hotels, which<br />

increased in line with overall buoyancy in <strong>the</strong> business.<br />

� Non-operating income was lower mainly due to lower Dividend Income and Pr<strong>of</strong>it on sale <strong>of</strong> investments received in <strong>the</strong><br />

previous year.<br />

Operating expenses:<br />

The operating expenses increased by 7% from Rs. 1070.78 crores to Rs. 1148.41 crores. The increase was mainly on account <strong>of</strong><br />

payroll to keep in line with competition and industry, increase in advertisement and general administration expenses. Operating<br />

revenue expenses were in line with <strong>the</strong> increased volume <strong>of</strong> business. The increased advertisement expenses are an endeavour to<br />

make Taj a global brand and create awareness <strong>of</strong> its rapid international expansion.<br />

Depreciation for <strong>the</strong> year was lower due one time charge on leased assets considered in <strong>the</strong> previous year.<br />

Pr<strong>of</strong>it before Interest and Tax (PBIT):<br />

The PBIT increased by 23% from Rs. 546.53 crores to Rs. 674.75 crores. The Company achieved a PBIT margin <strong>of</strong> 37% <strong>of</strong> sales for<br />

<strong>the</strong> current year, an improvement from 34% margin achieved in <strong>the</strong> previous year.<br />

PBIT trend for <strong>the</strong> last three years is depicted in <strong>the</strong> graph below<br />

Rs/Crores<br />

Interest costs:<br />

Interest cost was higher at Rs. 94.28 crores for <strong>the</strong> year ended March 31, 2008 as compared to Rs. 71.89 crores in <strong>the</strong> previous year<br />

consequent to complete utilization <strong>of</strong> FCCB proceeds and incremental debt to fund acquisition <strong>of</strong> Campton Place in San Francisco.<br />

Pr<strong>of</strong>it before Tax:<br />

Pr<strong>of</strong>it before tax, increased from Rs. 474.64 crores to Rs. 580.47 crores, an increase <strong>of</strong> 22 %.<br />

Pr<strong>of</strong>it after Tax:<br />

Pr<strong>of</strong>it after tax for 2007/08 increased by 17 % over that <strong>of</strong> 2006/07 from Rs. 322.39 crores to Rs. 377.46 crores.<br />

35


The Indian Hotels Company Limited<br />

36<br />

Rs/Crores<br />

Particulars Year Ended<br />

March 31, 2008 March 31, 2007<br />

Net cash from operating activities 474.36 520.49<br />

Net cash used for investing activities (492.97) (354.88)<br />

Net cash from/(used in) financing activities 5.33 (260.30)<br />

Net Increase / (Decrease) in cash and cash equivalents (13.28) (94.69)<br />

Operating Activities:<br />

Net cash from operating activities was lower at Rs 474.36 crores as compared to Rs 520.49 crores in <strong>the</strong> previous year, mainly due<br />

to lower tax outflow in <strong>the</strong> previous year on account <strong>of</strong> adjustment <strong>of</strong> tax losses <strong>of</strong> <strong>the</strong> merging companies.<br />

Investing Activities<br />

Net cash used for investing activities was mainly on account <strong>of</strong><br />

� Rs 259.00 crores spent towards expansion plans, renovation <strong>of</strong> existing properties and replacement/up-gradation <strong>of</strong> existing<br />

fixed assets .<br />

� Rs 49.60 crores for investment in Joint Venture Company, Bjets Pte. Ltd.<br />

� Rs 179.02 crores for acquisition <strong>of</strong> Campton Place, San Francisco and renovation <strong>of</strong> The Pierre, New York.<br />

Financing Activities<br />

The Company during <strong>the</strong> year, repaid 11.42% secured Non-Convertible Debentures totaling to Rs 330.74 crores by raising 9.86%<br />

Secured Non-Convertible Debentures totaling to Rs 300 crores. In addition, <strong>the</strong> Company raised a debt <strong>of</strong> US$ 30 million through<br />

External Commercial Borrowings route to <strong>part</strong> finance <strong>the</strong> acquisition <strong>of</strong> Campton Place, San Francisco.<br />

Certain Financial Ratios for Standalone Financials:<br />

Particulars Year Ended<br />

Rs/Crores<br />

March 31, 2008<br />

Net Debt to Total Capital (total debt less cash and bank<br />

March 31, 2007<br />

balances divided by <strong>the</strong> sum <strong>of</strong> net debt and net worth)<br />

Net Debt to Equity (total debt less cash and bank<br />

0.33 0.34<br />

balances divided by <strong>the</strong> sum <strong>of</strong> net debt and net worth) 0.52 0.52<br />

Consolidated Financial Results<br />

Your Company has Consolidated its Financial Statements with those <strong>of</strong> its Subsidiaries, Joint Ventures and Associates (toge<strong>the</strong>r<br />

referred as ‘Group Companies’ or ‘Group’) in accordance with generally accepted accounting practices prevailing in India. The<br />

Consolidated statements include <strong>the</strong> financial position <strong>of</strong> Subsidiaries on line by line basis, Jointly Controlled entities on a line by<br />

line basis to <strong>the</strong> extent <strong>of</strong> proportionate holding and Associates by a one-line consolidation <strong>of</strong> share <strong>of</strong> pr<strong>of</strong>it after tax.<br />

The following table sets forth <strong>the</strong> Consolidated Financial results for <strong>the</strong> year ended March 31, 2008


Annual Report 2007-2008<br />

Rs/Crores<br />

Particulars Year Ended<br />

March 31, 2008 March 31, 2007<br />

Income<br />

Sales & O<strong>the</strong>r operating income 2920.03 2506.25<br />

O<strong>the</strong>r Income 92.59 94.88<br />

Share <strong>of</strong> Pr<strong>of</strong>it in Associates 64.18 54.39<br />

Total Income<br />

Expenditure<br />

3076.80 2655.52<br />

Consumption <strong>of</strong> Raw Materials 266.07 253.76<br />

Staff costs 784.11 652.73<br />

License Fees 113.64 112.19<br />

Fuel, Power & Light 153.25 132.83<br />

Depreciation 167.62 160.67<br />

O<strong>the</strong>r Expenditure 729.83 642.54<br />

Less: Unallocated Expenditure during construction period<br />

transferred to Fixed Assets<br />

(18.90) (8.29)<br />

Total Expenditure 2195.62 1946.43<br />

Pr<strong>of</strong>it Before Interest and Tax 881.18 709.09<br />

Interest (Net) 202.32 122.15<br />

Pr<strong>of</strong>it from Ordinary Activities before tax 678.86 586.94<br />

Provision for Tax 242.63 196.15<br />

Tax Provision <strong>of</strong> earlier years (Net) 4.35 0.37<br />

Less: Minority Interest in Subsidiaries 22.74 20.11<br />

Pr<strong>of</strong>it from Ordinary Activities after tax 409.14 370.31<br />

Less: Exceptional Items 54.16 -<br />

Pr<strong>of</strong>it after Exceptional items and tax 354.98 370.31<br />

Revenues:<br />

The Company, its subsidiaries and its Jointly Controlled Entities (<strong>the</strong> Group) are primarily engaged in <strong>the</strong> business <strong>of</strong> hoteliering<br />

with <strong>the</strong> exception <strong>of</strong> two Jointly Controlled Entities, which are engaged in <strong>the</strong> business <strong>of</strong> Air Catering. The o<strong>the</strong>r areas <strong>of</strong><br />

business primarily include Ready to Eat / Ready to Cook foods business.<br />

Particulars Year Ended<br />

Rs/Crores<br />

March 31, 2008 March 31, 2007<br />

Hoteliering 2641.15 2256.66<br />

Air Catering 298.87 265.39<br />

O<strong>the</strong>rs 25.93 17.15<br />

Unallocable Income 46.67 61.93<br />

Share <strong>of</strong> Pr<strong>of</strong>it in Associates 64.18 54.39<br />

Total Revenue 3076.80 2655.52<br />

� Increase in hoteliering revenue is mainly on account <strong>of</strong> continued buoyancy in domestic market and acquisitions in USA<br />

over last couple <strong>of</strong> years.<br />

� Air Catering business improved on account <strong>of</strong> strong performance <strong>of</strong> Air Line Industry.<br />

� Unallocable Income represents Dividend Income and Pr<strong>of</strong>it on sale <strong>of</strong> Investments.<br />

37


The Indian Hotels Company Limited<br />

38<br />

� Share <strong>of</strong> pr<strong>of</strong>it in Associates represents Company’s proportionate share in Pr<strong>of</strong>it After tax <strong>of</strong> its associates. The increase is<br />

on account <strong>of</strong> improved performance <strong>of</strong> its associates carrying out hoteliering business.<br />

Operating expenses:<br />

The operating expenses increased by 13% from Rs. 1946.43 crores to Rs. 2195.62 crores. The increase was mainly on account <strong>of</strong><br />

payroll to keep in line with competition and industry, new properties acquired in USA over last couple <strong>of</strong> years, increase in<br />

advertisement and general administration expenses. The increased advertisement expenses are an endeavour to make Taj a global<br />

brand and create awareness <strong>of</strong> its rapid international expansion.<br />

Consolidated Pr<strong>of</strong>its:<br />

Pr<strong>of</strong>it Before tax & Interest increased by 24% from Rs. 709.09 crores to Rs. 881.18 crores, which is in line with <strong>the</strong> growth in domestic<br />

properties.<br />

Interest costs:<br />

Interest cost was higher at Rs. 202.32 crores for <strong>the</strong> year ended March 31, 2008 as compared to Rs. 122.15 crores in <strong>the</strong> previous year<br />

consequent to incremental debt to fund acquisition <strong>of</strong> Campton Place in San Francisco and 11.57% <strong>of</strong> <strong>the</strong> Common Stock A <strong>of</strong><br />

Orient-Express Hotels Limited, USA.<br />

Pr<strong>of</strong>it after Tax from Ordinary Activities:<br />

Pr<strong>of</strong>it after Tax from Ordinary Activities, increased from Rs. 409.14 crores to Rs. 370.31 crores, an increase <strong>of</strong> 10 %.<br />

Exceptional Items:<br />

International Hotel Management Services Inc., a 100% overseas subsidiary <strong>of</strong> <strong>the</strong> Company, in order to undertake extensive<br />

renovation, shut down all <strong>the</strong> rooms at The Pierre Hotel, New York. Consequent to <strong>the</strong> closure <strong>of</strong> rooms for renovation, <strong>the</strong><br />

Company incurred an expenditure <strong>of</strong> Rs. 54.16 crores as employee severance cost.<br />

Pr<strong>of</strong>it after Exceptional items and Tax:<br />

Pr<strong>of</strong>it after tax for 2007/08 in view <strong>of</strong> <strong>the</strong> exceptional items and higher interest cost was marginally lower from Rs. 370.31 crores to<br />

Rs. 354.98 crores.<br />

Cash Flow Data<br />

The following table sets forth selected items from <strong>the</strong> consolidated cash flow statements:<br />

Particulars Year Ended<br />

Rs/Crores<br />

March 31, 2008 March 31, 2007<br />

Net cash from operating activities 583.68 670.30<br />

Net cash used for investing activities (1,650.99) (1,097.74)<br />

Net cash from financing activities 1,127.34 148.39<br />

Net Increase / (Decrease) in cash and cash equivalents 60.03 (279.05)<br />

Operating Activities:<br />

Net cash from operating activities was lower at Rs 583.68 crores as compared to Rs 670.30 crores in <strong>the</strong> previous year, mainly due<br />

to lower tax outflow in <strong>the</strong> previous year on account <strong>of</strong> adjustment tax losses that were available to The Indian Hotels Company<br />

Ltd. and incremental working capital requirement for <strong>the</strong> purpose <strong>of</strong> new properties acquired during <strong>the</strong> year.<br />

Investing Activities<br />

Net cash used for investing activities was mainly on account <strong>of</strong><br />

� Rs 677.73 crores spent towards purchase <strong>of</strong> Fixed Assets, including US$ 60 million for acquisition <strong>of</strong> Campton Place, San<br />

Francisco and balance for expansion plans, renovation <strong>of</strong> existing properties and replacement/up-gradation <strong>of</strong> existing fixed<br />

assets.


Annual Report 2007-2008<br />

� Samsara Properties Limited, a 100% overseas subsidiary <strong>of</strong> <strong>the</strong> Company had acquired 11.57% <strong>of</strong> <strong>the</strong> Common Stock A <strong>of</strong><br />

Orient-Express Hotels Limited, USA at an aggregate cost <strong>of</strong> US$ 246.9 million<br />

Financing Activities<br />

Net cash raised from financing activities was mainly due to<br />

� US$ 60 million raised for acquisition <strong>of</strong> Campton Place, San Francisco.<br />

� US$ 260 million raised by Samsara Properties Limited, a 100% overseas subsidiary for acquisition <strong>of</strong> 11.57% <strong>of</strong> <strong>the</strong> Common<br />

Stock A <strong>of</strong> Orient-Express Hotels Limited, USA.<br />

Particulars Year Ended<br />

Rs/Crores<br />

March 31, 2008<br />

Net Debt to Total Capital (total debt less cash and bank<br />

March 31, 2007<br />

balances divided by <strong>the</strong> sum <strong>of</strong> net debt and net worth)<br />

Net Debt to Equity (total debt less cash and bank<br />

0.53 0.38<br />

balances divided by <strong>the</strong> sum <strong>of</strong> net debt and net worth) 1.42 0.90<br />

Risks & Concerns<br />

Industry Risk<br />

General economic conditions<br />

Hotel business in general is sensitive to fluctuations in <strong>the</strong> economy. The hotel sector may be unfavourably affected by changes<br />

in global and domestic economies, changes in local market conditions, excess hotel room supply, reduced international or local<br />

demand for hotel rooms and associated services, competition in <strong>the</strong> industry, government policies and regulations, fluctuations in<br />

interest rates and foreign exchange rates and o<strong>the</strong>r natural and social factors. Since demand for hotels is affected by world<br />

economic growth, a global recession could lead to a downturn in <strong>the</strong> hotel industry.<br />

Socio-political risks<br />

In addition to economic risks, your Company faces risks from <strong>the</strong> socio-political environment, internationally as well as within <strong>the</strong><br />

country and is affected by events like political instability, conflict between nations, threat <strong>of</strong> terrorist activities, occurrence <strong>of</strong><br />

infectious diseases, extreme wea<strong>the</strong>r conditions and natural calamities, etc. which may affect <strong>the</strong> level <strong>of</strong> travel and business<br />

activity.<br />

Company specific Risks<br />

The Company specific risks remain by and large <strong>the</strong> same as enumerated last year. These are:<br />

Heavy Dependence on India<br />

A significant portion <strong>of</strong> your Company’s revenues are realised from its Indian operations, making it susceptible to domestic sociopolitical<br />

and economic conditions. Moreover, within India, <strong>the</strong> operations and earnings are primarily concentrated in hotel properties<br />

in five cities.<br />

Dependence on <strong>the</strong> high-end Luxury segment<br />

Luxury hotels contribute a significant proportion <strong>of</strong> <strong>the</strong> total revenue and earnings <strong>of</strong> your Company. This segment is affected by<br />

<strong>the</strong> international events and travel behaviour and suffers from high operating leverage. Adverse development affecting <strong>the</strong>se<br />

hotels or <strong>the</strong> cities in which <strong>the</strong>y operate could have a materially adverse effect on <strong>the</strong> Taj Group.<br />

Competition from International Hotel Chains<br />

The Indian subcontinent, South East Asia and Asia Pacific with high growth rates have become <strong>the</strong> focus area <strong>of</strong> major international<br />

chains. Several <strong>of</strong> <strong>the</strong>se chains have announced <strong>the</strong>ir plans to establish hotels to take advantage <strong>of</strong> <strong>the</strong> demand supply imbalance.<br />

39


The Indian Hotels Company Limited<br />

40<br />

These entrants are expected to intensify <strong>the</strong> competitive environment. The success <strong>of</strong> Taj Group will be dependent upon its ability<br />

to compete in areas such as room rates, quality <strong>of</strong> accommodation, brand recognition, service level, convenience <strong>of</strong> location and<br />

to a lesser extent, <strong>the</strong> quality and scope <strong>of</strong> o<strong>the</strong>r amenities, including food and beverage facilities.<br />

Increased outbound travel<br />

Recent competitiveness in international airfares and streng<strong>the</strong>ning <strong>of</strong> <strong>the</strong> Indian Rupee resulted in destinations like Europe, South<br />

East Asia and Australia becoming more affordable to <strong>the</strong> average Indian traveler. This has increased outbound travel and presents<br />

a risk to <strong>the</strong> domestic segment for leisure resorts.<br />

High Operating Leverage<br />

The industry in general has a high operating leverage which has fur<strong>the</strong>r increased with on-going renovations and product<br />

upgrades. However, it has been observed that your Company has been able to earn higher revenues with acceptance <strong>of</strong> its<br />

products in <strong>the</strong> market and improved economic conditions.<br />

Foreign exchange fluctuation risks<br />

Your Company also has a portfolio <strong>of</strong> foreign currency debt, in respect <strong>of</strong> which it faces exposure to fluctuations in currency as well<br />

as interest rate risks.<br />

Risk mitigation Initiatives<br />

Your Company employs various policies and methods to counter <strong>the</strong>se risks effectively, as enumerated below:<br />

� To reduce <strong>the</strong> geographical and economic risk, your Company is looking at increasing its presence internationally in key<br />

gateway cities and resorts in South East Asia and <strong>the</strong> Indian Ocean rim.<br />

� To counter <strong>the</strong> risk <strong>of</strong> dependence on <strong>the</strong> high end luxury segment, your Company is entering <strong>the</strong> mid-market segment which<br />

is comparatively insulated from political and social changes in India. The Company through its subsidiary Roots Corporation<br />

Limited is also increasing its presence in ‘Budget Hotel’ segment under <strong>the</strong> brand ‘Ginger’.<br />

� To successfully counter <strong>the</strong> risk from growing competition and new properties, your Company is renovating and repositioning<br />

all its key properties. It is also improving its service standards in consultation with international experts to provide exceptional<br />

service consistently across its hotels.<br />

� Operating and financial leverage, by expansion through management contracts and leveraging <strong>the</strong> strengths <strong>of</strong> its Associates.<br />

� Your Company closely monitors foreign currency exposures and hedges in consultation with its advisors. Net exposures,<br />

including those from derivative instruments, are kept at acceptable levels and within overall limits approved by <strong>the</strong> Board.<br />

These exposures are subjected to regular reviews.<br />

Internal control systems and <strong>the</strong>ir adequacy<br />

Your Company has reviewed internal controls and its effectiveness through <strong>the</strong> internal audit process. Internal audits were<br />

undertaken for every operational Unit and all major corporate functions under <strong>the</strong> direction <strong>of</strong> <strong>the</strong> Group Internal Audit de<strong>part</strong>ment.<br />

The focus <strong>of</strong> <strong>the</strong>se reviews are as follow:<br />

� Identify weaknesses and areas <strong>of</strong> improvement<br />

� Compliance with defined policies and processes<br />

� Safeguarding <strong>of</strong> tangible and intangible assets<br />

� Management <strong>of</strong> business and operational risks<br />

� Compliance with applicable statutes<br />

� Compliance with <strong>the</strong> Tata Code <strong>of</strong> Conduct<br />

The ‘Taj Positive Assurance Model’, which is an objective methodology <strong>of</strong> providing a positive assurance based on <strong>the</strong> audits <strong>of</strong><br />

operating units and corporate functions, was institutionalized in 2004/05 as a standard audit process in conjunction with empanelled<br />

internal audit firms. While this methodology was adopted for select Units in <strong>the</strong> year 2004/05 and 2005/06, it was successfully


Annual Report 2007-2008<br />

implemented at all operational Units during <strong>the</strong> last year.<br />

The novelty <strong>of</strong> this model is that it is a convergence <strong>of</strong> Process Framework, Risk and Control Matrix and a Scoring Matrix. A<br />

framework developed for each functional area identified on <strong>the</strong> basis <strong>of</strong> an assessment <strong>of</strong> risk and control and provides a score,<br />

allowing <strong>the</strong> Unit to improve on high risk and weak areas.<br />

The Audit Committee <strong>of</strong> <strong>the</strong> Board oversees <strong>the</strong> adequacy <strong>of</strong> <strong>the</strong> internal control environment through regular reviews <strong>of</strong> <strong>the</strong> audit<br />

findings and monitoring implementations <strong>of</strong> internal audit recommendations through <strong>the</strong> compliance reports submitted to <strong>the</strong>m.<br />

Human Resources & Industrial Relations<br />

The manpower employed in your Company for 2006/07 was 10018 (previous year was 8553), which included executives, bargainable<br />

staff, probationers, trainees, apprentices and contract employees. The increase in numbers is mainly on account <strong>of</strong> amalgamation<br />

<strong>of</strong> five Group companies with your Company.<br />

Your Company has embarked on a strategic initiative to identify and develop top talent in <strong>the</strong> company through a structured<br />

developmental process. This initiative, called Emerging Leaders <strong>of</strong> Taj or EL Taj, is a process that provides an opportunity to high<br />

performing executives in different grades to <strong>part</strong>icipate in a process that begins with defining competencies required at each<br />

executive grade, nominating high performing executives, <strong>part</strong>icipating in Developmental and Assessment Centers where <strong>the</strong>se<br />

executives <strong>part</strong>icipate in exercises and simulations to identify strong and weak competencies. The process ends with creating<br />

developmental plans for each individual and executing <strong>the</strong>se to prepare <strong>the</strong> executives for future leadership positions. The aim is<br />

to create a reservoir <strong>of</strong> talent <strong>of</strong> 400 top notch people by <strong>the</strong> end <strong>of</strong> this decade with leadership qualities to man <strong>the</strong> slots that will<br />

arise due to <strong>the</strong> growth and expansion plans <strong>of</strong> <strong>the</strong> Company.<br />

The expansion plans <strong>of</strong> your Company are being supported by an initiative <strong>of</strong> aggressively recruiting young catering college<br />

graduates and providing <strong>the</strong>m with high quality training. The existing Taj Management Trainee Program is being fur<strong>the</strong>r streng<strong>the</strong>ned<br />

and as an extension <strong>of</strong> this young hotelier program a Hotel Operations Management Trainee Program is being initiated. Several<br />

training programs to improve operational efficiency have been launched.<br />

Based on Guest or Peer feedback process <strong>of</strong> <strong>the</strong> internationally recognized reinforcement program <strong>of</strong> your Company, ‘Special<br />

Thanks and Recognition System – STARS’, 56 employees have qualified to <strong>the</strong> highest category, <strong>the</strong> MD’s Club and will be<br />

felicitated.<br />

The Employee Satisfaction Survey conducted by Gallup Organization was completed for <strong>the</strong> year, where your Company seeks<br />

regular feedback from its employees to ascertain <strong>the</strong>ir levels <strong>of</strong> satisfaction and to ensure that employees’ morale and motivation<br />

are constantly improved. Critical human resource issues are analyzed, corrective actions initiated and results monitored regularly.<br />

Industrial relations throughout <strong>the</strong> year were cordial at all hotels and operating units <strong>of</strong> your Company. Period wage settlement<br />

agreements were entered into with <strong>the</strong> Staff representatives and Unions at various locations.<br />

Awards & Acclaims<br />

AWARDS – TAJ HOTELS RESORTS AND PALACES<br />

Corporate Global Awards<br />

� Taj Hotels Resorts & Palaces was <strong>the</strong> Winner <strong>of</strong> <strong>the</strong> Selling Long Haul Travel Awards 2007.<br />

� Taj Spa was honored with <strong>the</strong> SENSES Visions Award 2007 at <strong>the</strong> SENSES Wellness Awards 2007 held in Berlin<br />

Corporate National Awards<br />

� CNBC TV 18 International Travel Award for <strong>the</strong> Outstanding Exporter <strong>of</strong> <strong>the</strong> Year 2007, in <strong>the</strong> Travel Tourism & Hospitality<br />

Category.<br />

� Dun & Bradstreet - American Express Corporate Awards 2007 accolades The Indian Hotels Company Ltd. as India’s Top 500<br />

Companies 2007 - in <strong>the</strong> “Hotels” category<br />

� India’s Most Customer Responsive Hotel – Category Hotels by <strong>the</strong> Avaya Global Connect Customer Responsiveness<br />

Awards 2007-.<br />

41


The Indian Hotels Company Limited<br />

42<br />

� Abacus & TAFI Awards 2007 (Malaysia) by Travel Biz Monitor for Business Leadership in Hospitality in <strong>the</strong> category <strong>of</strong><br />

‘Best Luxury Hotel Brand’.<br />

� Today’s Traveller Leadership Award 2007 for India’s Most Recognised Hotel Brand.<br />

� The Best Hotel Website in India namely <strong>the</strong> ‘Genius <strong>of</strong> <strong>the</strong> Web 2007’ award, given by CNBC-Web 18 in association with Frost<br />

& Sullivan.<br />

� India’s most respected Company by Business World magazine in 2007.<br />

� Taj is <strong>the</strong> winner <strong>of</strong> <strong>the</strong> Reader’s Digest Trusted Brands Platinum Award for <strong>the</strong> Hotel Category in India in 2007<br />

LUXURY HOTELS<br />

Taj Exotica Resort & Spa, Maldives<br />

� Taj Exotica Resort & Spa, Maldives The Rehendi Presidential Suite received <strong>the</strong> Annual World Travel Award as ‘Maldives<br />

Leading Suite’ 2007.<br />

� Maldives Spa has been recognized as Asia’s Connoisseur Collection <strong>of</strong> <strong>the</strong> World’s Finest Spas in 2007.<br />

� Taj Exotica Resort & Spa, Maldives has been selected in <strong>the</strong> category <strong>of</strong> “Best for Water Sports” in <strong>the</strong> 2007 Spa Finder<br />

Readers’ Choice Awards.<br />

� Spa Finder’s Reader’s Choice Award - amongst World’s 10 best spas.<br />

Taj Exotica Resort & Spa, Mauritius<br />

� Best Spa Resort in <strong>the</strong> world by Italy’s No 1 “Luna” Spa awards 2008.<br />

� TERS Mauritius - Mauritius’ Leading Suite in <strong>the</strong> Indian Ocean - 14th Annual World Travel Awards 2007 - Presidential Suites,<br />

Taj Exotica Resort & Spa, Mauritius.<br />

Rambagh Palace, Jaipur<br />

� Selected in <strong>the</strong> Travel + Leisure 500 list <strong>of</strong> The World’s Best Hotels in January 2007.<br />

� Conde Nast Traveler USA Gold List 2007 – The Best Places to Stay in <strong>the</strong> World, Selected by <strong>the</strong> Readers <strong>of</strong> Conde Nast<br />

Traveler.<br />

� Tatlers Body & Soul Guide 2007 – World’s Top Spas.<br />

.Taj Coromandel Hotel, Chennai<br />

� Taj Coromandel Chennai features in <strong>the</strong> Conde Nast Traveler USA Hot List Tables 2008.<br />

Taj Lake Palace, Udaipur<br />

� Taj Lake Palace, Udaipur Spa received “Luna” Spa awards, Italy in May 2008.<br />

� Taj Lake Palace, Udaipur features in <strong>the</strong> Conde Nast Traveler USA Gold List 2008.<br />

� Conde Nast Traveler, USA Gold List 721 World’s Best Places to Stay in January 2008 has featured Taj Lake Palace, Udaipur.<br />

� Taj Lake Palace, Udaipur has been honored as India’s Top 10 Hotels by Forbes.com, USA in 2007.<br />

� Taj Lake Palace, Udaipur - Spa Asia’s Connoisseur Collection <strong>of</strong> <strong>the</strong> World’s Finest Spas<br />

� Selected in <strong>the</strong> Travel + Leisure 500 list <strong>of</strong> The World’s Best Hotels.<br />

� Taj Lake Palace, Udaipur is ranked 8 in <strong>the</strong> Travel + Leisure Top 20 Reader’s Poll - World’s Best Hotel Value Awards<br />

� Taj Lake Palace, Udaipur wins <strong>the</strong> award for India’s Leading Castle and Palace in <strong>the</strong> Regional 2007 World Travel Asia,<br />

Australasia & Indian Ocean Awards (World Travel Awards).<br />

� Spa Finder’s Reader’s Choice Award - amongst World’s 10 best spas.


Annual Report 2007-2008<br />

Taj Mahal Palace & Tower, Mumbai<br />

� Taj Mahal Palace & Tower, Mumbai features among <strong>the</strong> Conde Nast Traveller, UK Gold List 2008, Best Hotels in <strong>the</strong> World –<br />

Best for Food amongst 17 hotels<br />

� Taj Mahal Palace & Tower, Mumbai features in <strong>the</strong> Conde Nast Traveler USA Gold List 2008.<br />

� Conde Nast Traveler, USA - Gold List 721 World’s Best Places to Stay - The Taj Mahal Palace & Tower, Mumbai, 91.9 in Asia,<br />

Australia & Pacific Nations<br />

� Robb Report Luxury Hotels accolades The Taj Mahal Palace & Tower, Mumbai among 100 Ultimate City Escapes Hotels in<br />

Asia and <strong>the</strong> Pacific.<br />

� Listed in India’s Top 10 Hotels by Forbes.com, USA<br />

� Awarded as CNBC AWAAZ Travel Award for being <strong>the</strong> Best Leisure Hotel and Best Business Hotel.<br />

� The Taj Mahal Palace & Tower, Mumbai receives <strong>the</strong> CNBC TV 18 International Travel Award for Best Business Hotel<br />

� The Taj Mahal Palace & Tower, Mumbai has been honored as Asia’s Leading Hotel in <strong>the</strong> Regional 14th Annual World Travel<br />

Awards 2007<br />

� DestinAsian Readers’ Choice Awards 2008, Jakarta, Indonesia accolades The Taj Mahal Palace & Tower, Mumbai as winner<br />

for being <strong>the</strong> Best Hotel in Mumbai.<br />

� Best Hotel in Mumbai – DestinAsian Readers’ Choice Awards 2007<br />

Umaid Bhawan Palace, Jodhpur<br />

� Umaid Bhawan Palace, Jodhpur features in <strong>the</strong> Conde Nast Traveler USA Gold List 2008.<br />

� Conde Nast Traveler, USA - Gold List 721 World’s Best Places to Stay - Umaid Bhawan Palace, Jodhpur.<br />

� Tatler Travel Guide states Umaid Bhawan Palace, Jodhpur in <strong>the</strong> best 101 hotels - within <strong>the</strong> “Crazy Beautiful” section and<br />

‘monumental palace with serious wow factor.<br />

� Umaid Bhawan Palace, Jodhpur - Spa Asia’s Connoisseur Collection <strong>of</strong> <strong>the</strong> World’s Finest Spas.<br />

� Robb Report Luxury Hotels - 100 Ultimate City Escapes Hotels - Asia and <strong>the</strong> Pacific.<br />

Taj Palace Hotel, New Delhi<br />

� Taj Palace, New Delhi receives <strong>the</strong> CNBC TV 18 International Travel Award for Best Business Hotel July 2007.<br />

� Business Traveller Asia-Pacific Reader Poll voted Taj Palace, New Delhi <strong>the</strong> Best Business Hotel in New Delhi.<br />

The Taj West End, Bangalore<br />

� Times Good Food Guide awarded Blue Ginger as “Best Vietnamese Cuisine”, Mynt as “Best All Day Dining” and Blue Bar as<br />

“Best Bar”.<br />

� Mysore Horticultural Society has awarded Taj West End, Bangalore for its “Best Ornamental Gardens” and “Best Landscaped<br />

Gardens”.<br />

Taj Wellington Mews<br />

� Has been recognized as Asia’s Connoisseur Collection <strong>of</strong> <strong>the</strong> World’s Finest Spas<br />

Taj Boston, Boston, USA<br />

� Taj Boston, USA features in <strong>the</strong> Conde Nast Traveler USA Gold List 2008<br />

� Conde Nast Traveler, USA - 2008 Gold List 721 World’s Best Places to Stay<br />

� Travel & Leisure - The Worlds 500 Best Hotels - Taj Boston.<br />

� Taj Boston earns inclusion in Institutional Investor’s ranking by Chief Executive Officers and o<strong>the</strong>r senior executives from<br />

around <strong>the</strong> world.<br />

43


The Indian Hotels Company Limited<br />

44<br />

51 Buckingham Gate, London, U.K.<br />

� 51 Buckingham Gate, London, U.K Quilon has been awarded with <strong>the</strong> prestigious Michelin star in January 2008<br />

PREMIUM HOTELS<br />

BLUE Sydney, Australia<br />

� Selected amongst <strong>the</strong> World’s 100 Best Spas in <strong>the</strong> Conde Nast Traveller’s UK Readers Spa Awards 2007<br />

Taj Samudra, Colombo, Sri Lanka<br />

� The 14th Annual World Travel Awards 2007 awarded The Presidential Suite, Taj Samudra Hotel, Colombo Sri Lanka as<br />

Sri Lanka’s Leading Suite<br />

Taj Tashi, Bhutan<br />

� Taj Tashi, Bhutan featured in <strong>the</strong> Conde Nast Traveller, UK Hot List 2008 being recognized among <strong>the</strong> 65 most stylish, most<br />

innovative, most luxurious hotels<br />

Taj Exotica, Goa<br />

� Conde Nast Traveller, UK - Readers Spa awards 2007 acclaims Taj Exotica Spa, Goa as Worlds 100 best Spas in March 2007<br />

Taj Malabar, Cochin<br />

� Conde Nast Travellers Readers Awards – 100 best spas Taj Malabar, Cochin - 8th Best in Asia<br />

Taj President, Mumbai<br />

� Times Food Guide has given <strong>the</strong> Times Nightlife award for Wink at Taj President, Mumbai among <strong>the</strong> Best Bars/Restobars<br />

Taj Residency, Bangalore<br />

� Times Good Food Guide awarded Sugar N Spice as <strong>the</strong> “Best Patisserie” and Graze as <strong>the</strong> “Best European Dining”<br />

� National Tourism Award, De<strong>part</strong>ment <strong>of</strong> Tourism - Best 5 Star Hotel<br />

GATEWAY HOTELS<br />

Baghvan, Pench National Park<br />

� Travel+Leisure: IT List: Editor’s pick 2007- favourite places to stay - from Mexico to <strong>the</strong> Mediterranean has featured Baghvan<br />

in Asia.<br />

Mahua Kothi, Bandhavgarh National Park<br />

� Travel+Leisure: IT List: Editor’s pick 2007 - favourite places to stay - from Mexico to <strong>the</strong> Mediterranean - Mahua Kothi<br />

featured in Asia.<br />

� Mahua Kothi was mentioned in <strong>the</strong> Conde Nast Traveler, US 2007 Hot List <strong>of</strong> <strong>the</strong> Year’s 138 Top New Hotels. Was also<br />

highlighted among <strong>the</strong> magazine’s choice for <strong>the</strong> top 5 hotels in India<br />

� Mahua Kothi features in <strong>the</strong> Conde Nast Traveller, UK - 2007 Hot List amongst 65 cool new places to stay<br />

� Awarded ‘Best Wildlife Resort’ in <strong>the</strong> inaugural May 2007 Madhya Pradesh Tourism State Awards


Annual Report 2007-2008<br />

Report On Corporate Governance<br />

Philosophy on Corporate Governance<br />

Corporate governance is both <strong>the</strong> structure and <strong>the</strong> relationships which determine corporate direction and performance.<br />

The corporate governance framework is based on <strong>the</strong> legal, regulatory, institutional and ethical environment <strong>of</strong> <strong>the</strong> community,<br />

which helps to hold <strong>the</strong> balance between economic and social goals and between individual and community goals, by encouraging<br />

<strong>the</strong> efficient use <strong>of</strong> resources and equally to require accountability for <strong>the</strong> stewardship <strong>of</strong> those resources. The aim is to align <strong>the</strong><br />

interests <strong>of</strong> individuals, corporations and society to ensure transparency, accountability and equity in all areas. Good governance<br />

is an essential ingredient in corporate success and sustainable economic growth. It ensures accountability for <strong>the</strong> pursuit <strong>of</strong><br />

corporate objectives and that <strong>the</strong> corporation itself conforms to <strong>the</strong> law and regulations.<br />

In addition to its staunch adherence to its philosophy and values, <strong>the</strong> Company has also complied with <strong>the</strong> provisions <strong>of</strong> Clause<br />

49 <strong>of</strong> <strong>the</strong> Listing Agreement <strong>of</strong> <strong>the</strong> Stock Exchange, which deals with <strong>the</strong> compliance <strong>of</strong> Corporate Governance requirements.<br />

The same are detailed below<br />

The Board <strong>of</strong> Directors:<br />

1. The Company’s Board <strong>of</strong> Directors consists <strong>of</strong> a judicious mix <strong>of</strong> Executive, Non-Executive as well as Independent Directors.<br />

Over fifty percent <strong>of</strong> <strong>the</strong> Board <strong>of</strong> Directors comprises Non-Executive Directors, with <strong>the</strong> Chairman also being a Non-<br />

Executive Director. The Directors possess rich experience in varied fields ranging from hoteliering, architecture and <strong>the</strong><br />

liberal arts to banking, administration and finance. The experience and wisdom <strong>of</strong> <strong>the</strong> Directors who are stalwarts in <strong>the</strong>ir<br />

respective fields, have proved to be invaluable to <strong>the</strong> Company. The details <strong>of</strong> Directors seeking re-appointment have been<br />

attached along with <strong>the</strong> Notice <strong>of</strong> <strong>the</strong> Annual General Meeting.<br />

2. “Independent Directors,” i.e. Directors who a<strong>part</strong> from receiving Directors’ remuneration, do not have any o<strong>the</strong>r material<br />

pecuniary relationship or transactions with <strong>the</strong> Company, its promoters, its management or its subsidiaries, which, in <strong>the</strong><br />

judgement <strong>of</strong> <strong>the</strong> Board, may affect <strong>the</strong> independence <strong>of</strong> judgement <strong>of</strong> <strong>the</strong> Director, comprise over one third <strong>of</strong> <strong>the</strong> Board.<br />

3. During <strong>the</strong> year under review, <strong>the</strong> Board <strong>of</strong> Directors <strong>of</strong> <strong>the</strong> Company met ten times and <strong>the</strong> period between any two meetings<br />

did not exceed four months. The dates <strong>of</strong> <strong>the</strong> Board Meetings held during each quarter are as follows :<br />

No. Date <strong>of</strong> Meeting For The Quarter<br />

1 April 2, 2007 April to June<br />

2 June 19, 2007 April to June<br />

3 July 31, 2007 July to September<br />

4 August 13, 2007 July to September<br />

5 September 17, 2007 July to September<br />

6 September 27, 2007 July to September<br />

7 October 26, 2007 October to December<br />

8 December 12, 2007 October to December<br />

9 January 28, 2008 January to March<br />

10 February 7, 2008 January to March<br />

As required under Annexure I to Clause 49 <strong>of</strong> <strong>the</strong> Listing Agreement with <strong>the</strong> Stock Exchanges, all <strong>the</strong> necessary information<br />

was placed before <strong>the</strong> Board from time to time.<br />

45


The Indian Hotels Company Limited<br />

46<br />

4. All <strong>the</strong> relevant information, as recommended by <strong>the</strong> Securities and Exchange Board <strong>of</strong> India (SEBI) /Stock Exchanges, is<br />

promptly furnished to <strong>the</strong> Board from time to time in a structured manner.<br />

5. In addition to commission, <strong>the</strong> Company pays its Non-Executive Directors sitting fees which have been increased from<br />

Rs. 10,000/- to Rs. 20,000/- per meeting for attending meetings <strong>of</strong> <strong>the</strong> Board <strong>of</strong> Directors, Audit Committee and Remuneration<br />

Committee effective September 27, 2007. The fees for attending Share Transfer & Shareholders’ / Investor Grievance<br />

meetings have been increased from Rs. 5,000/- to Rs. 10,000/- per meeting effective September 27, 2007.<br />

6. None <strong>of</strong> <strong>the</strong> Directors <strong>of</strong> <strong>the</strong> Board serve as members <strong>of</strong> more than 10 Committees nor are <strong>the</strong>y Chairman <strong>of</strong> more than<br />

5 Committees, as per <strong>the</strong> requirements <strong>of</strong> <strong>the</strong> Listing Agreement. “Committees” for this purpose include <strong>the</strong> Audit Committee<br />

and <strong>the</strong> Shareholders’ / Investor Grievance Committee under <strong>the</strong> said Clause 49 <strong>of</strong> <strong>the</strong> Listing Agreement.<br />

7. A detailed explanation, in <strong>the</strong> form <strong>of</strong> a table illustrating <strong>the</strong> above is given on page No. 55 for ready reference.<br />

8. The Company has adopted a Code <strong>of</strong> Conduct for its Non-Executive Directors and all Non-Executive Directors have<br />

affirmed compliance with <strong>the</strong> said Code. All Senior Management <strong>of</strong> <strong>the</strong> Company have affirmed compliance with <strong>the</strong> Tata<br />

Code <strong>of</strong> Conduct. The Code <strong>of</strong> Conduct is also displayed on <strong>the</strong> Company’s web site. The Annual Report <strong>of</strong> <strong>the</strong> Company<br />

contains a Certificate duly signed by <strong>the</strong> Managing Director (CEO) in this regard.<br />

9. O<strong>the</strong>r than transactions entered into in <strong>the</strong> normal course <strong>of</strong> business, <strong>the</strong> Company has not entered into any materially<br />

significant related <strong>part</strong>y transactions during <strong>the</strong> year, which could have a potential conflict <strong>of</strong> interest between <strong>the</strong> Company<br />

and its Promoters, Directors, Management and / or relatives.<br />

Committees <strong>of</strong> <strong>the</strong> Board :<br />

The Committees constituted by <strong>the</strong> Board <strong>of</strong> Directors <strong>of</strong> <strong>the</strong> Company are as under :<br />

1. Audit Committee:<br />

The Company’s Audit Committee comprises entirely <strong>of</strong> Independent Directors. Each Member <strong>of</strong> <strong>the</strong> Committee has <strong>the</strong><br />

relevant experience in <strong>the</strong> field <strong>of</strong> finance, banking and accounting, with a majority <strong>of</strong> <strong>the</strong> Members being Chartered<br />

Accountants. The Committee has, inter alia, <strong>the</strong> following terms <strong>of</strong> reference:<br />

i. Oversight <strong>of</strong> <strong>the</strong> Company’s financial reporting process and <strong>the</strong> disclosure <strong>of</strong> its financial information to ensure that <strong>the</strong><br />

financial statements are correct, sufficient and credible.<br />

ii. Recommending <strong>the</strong> appointment and removal <strong>of</strong> statutory auditors, fixation <strong>of</strong> audit fee and also approval for payment<br />

for any o<strong>the</strong>r services.<br />

iii. Reviewing with management <strong>the</strong> annual financial statements before submission to <strong>the</strong> Board for approval, with <strong>part</strong>icular<br />

reference to:<br />

� Matters required to be included in <strong>the</strong> Board’s Report in terms <strong>of</strong> clause 2AA <strong>of</strong> Section 217 <strong>of</strong> <strong>the</strong> Companies<br />

Act, 1956<br />

� Any changes in accounting policies and practices and reasons <strong>the</strong>re<strong>of</strong>.<br />

� Major accounting entries based on <strong>the</strong> exercise <strong>of</strong> judgement by <strong>the</strong> Management.<br />

� Qualifications in <strong>the</strong> draft audit report.<br />

� Significant adjustments made in <strong>the</strong> financial statements, arising out <strong>of</strong> audit findings.<br />

� The Going Concern assumption.<br />

� Compliance with Accounting Standards.<br />

� Compliance with listing and o<strong>the</strong>r legal requirements relating to financial statements.<br />

� Any related <strong>part</strong>y transactions i.e. transactions <strong>of</strong> <strong>the</strong> Company <strong>of</strong> material nature, with Promoters or <strong>the</strong> Management,<br />

<strong>the</strong>ir subsidiaries or relatives etc. that may have potential conflict with <strong>the</strong> interests <strong>of</strong> <strong>the</strong> Company at large.


Annual Report 2007-2008<br />

iv. Reviewing with <strong>the</strong> management, <strong>the</strong> quarterly financial statements before submission to <strong>the</strong> Board for approval.<br />

v. Reviewing, with <strong>the</strong> management, <strong>the</strong> statement <strong>of</strong> uses / application <strong>of</strong> funds raised through an issue (public issue,<br />

rights issue, preferential issue etc.) <strong>the</strong> statement <strong>of</strong> funds utilised for purposes o<strong>the</strong>r than those stated in <strong>the</strong> Offer<br />

Document / prospectus / notice and <strong>the</strong> report submitted by <strong>the</strong> Monitoring Agency monitoring <strong>the</strong> utilisation <strong>of</strong> <strong>the</strong><br />

proceeds <strong>of</strong> a public or rights issue and making appropriate recommendations to <strong>the</strong> Board to take steps in this matter.<br />

vi. Reviewing with <strong>the</strong> management, performance <strong>of</strong> statutory and internal auditors and <strong>the</strong> adequacy <strong>of</strong> internal control<br />

systems.<br />

vii. Reviewing <strong>the</strong> adequacy <strong>of</strong> internal audit function, including <strong>the</strong> structure <strong>of</strong> <strong>the</strong> internal audit de<strong>part</strong>ment, staffing and<br />

seniority <strong>of</strong> <strong>the</strong> <strong>of</strong>ficial heading <strong>the</strong> de<strong>part</strong>ment, reporting structure coverage and frequency <strong>of</strong> internal audit.<br />

viii.Discussion with internal auditors on any significant findings and follow-up <strong>the</strong>reon.<br />

ix. Reviewing <strong>the</strong> findings <strong>of</strong> any internal investigations by <strong>the</strong> internal auditors into matters where <strong>the</strong>re is suspected<br />

fraud or irregularity or a failure <strong>of</strong> internal control systems <strong>of</strong> a material nature and reporting <strong>the</strong> matter to <strong>the</strong> Board.<br />

x. Discussion with external / statutory auditors before <strong>the</strong> audit commences, nature and scope <strong>of</strong> audit, as well as have<br />

post-audit discussion to ascertain any area <strong>of</strong> concern.<br />

xi. Reviewing <strong>the</strong> Company’s financial and risk management policies.<br />

xii. To look into <strong>the</strong> reasons for substantial defaults in <strong>the</strong> payment to <strong>the</strong> depositors, debenture holders, shareholders<br />

(in case <strong>of</strong> non payment <strong>of</strong> declared dividends) and creditors.<br />

The details <strong>of</strong> <strong>the</strong> composition, names <strong>of</strong> Members and Chairman as well as <strong>the</strong> number <strong>of</strong> meetings held and Directors<br />

attendance <strong>the</strong>reat during <strong>the</strong> year are as under:<br />

NO. MEMBERS ATTENDANCE AT AUDIT COMMITTEE MEETINGS HELD ON<br />

19.06.07 31.07.07 26.10.07 28.01.08 06.02.08<br />

1. Mr. S. K. Kandhari – Chairman � � � � �<br />

2. Mr. Deepak Parekh - � � � -<br />

3. Mr. Jagdish Capoor � � � � �<br />

The Committee met five times during <strong>the</strong> period under review.<br />

Audit Committee meetings are attended by invitation by <strong>the</strong> Executive Director - Finance, Vice President – Group Internal<br />

Audit and <strong>the</strong> Statutory Auditors. The Company Secretary acts as <strong>the</strong> Secretary to <strong>the</strong> Audit Committee.<br />

2. Share Transfer & Shareholders’ / Investor Grievance Committee :<br />

The Share Transfer & Shareholders’/Investor Grievance Committee has <strong>the</strong> required powers to carry out <strong>the</strong> handling <strong>of</strong><br />

shareholders / investor grievances. The brief terms <strong>of</strong> reference <strong>of</strong> <strong>the</strong> Committee include redressing shareholder and<br />

investor complaints like transfer <strong>of</strong> shares, non-receipt <strong>of</strong> Annual Reports, non-receipt <strong>of</strong> dividends etc.<br />

The Committee met thrice during <strong>the</strong> period under review.<br />

47


The Indian Hotels Company Limited<br />

48<br />

NO. MEMBERS ATTENDANCE AT SHARE TRANSFER & SHAREHOLDERS’ /<br />

INVESTOR GRIEVANCE COMMITTEE MEETINGS HELD ON<br />

Share transfers are processed weekly and approved by <strong>the</strong> Committee. Investor grievances are placed before <strong>the</strong> Committee.<br />

There were no pending investor complaints which remained unresolved. All share transfers lodged up to March 31, 2008 have<br />

been processed by <strong>the</strong> Committee. The status <strong>of</strong> <strong>the</strong> complaints received from shareholders from 01.04.07 to 31.03.08 is as under:<br />

Complaints received Pending as on 31.03.08<br />

17 Nil<br />

As per <strong>the</strong> provisions <strong>of</strong> Section 205A read with Section 205C <strong>of</strong> <strong>the</strong> Companies Act, 1956, <strong>the</strong> Company is required to<br />

transfer unpaid dividends, matured deposits, redeemed debentures and interest accrued <strong>the</strong>reon remaining unclaimed and<br />

unpaid for a period <strong>of</strong> 7 years from <strong>the</strong> due date to <strong>the</strong> Investor Education and Protection Fund (IEPF) set up by <strong>the</strong> Central<br />

Government.<br />

Given below are <strong>the</strong> proposed dates for transfer <strong>of</strong> <strong>the</strong> unclaimed dividend to <strong>the</strong> IEPF by <strong>the</strong> Company: -<br />

Financial Year Date <strong>of</strong> declaration <strong>of</strong> Dividend Proposed Date <strong>of</strong> transfer to IEPF*<br />

2000-01 September 1, 2001 November 5, 2008<br />

2001-02 June 13, 2002 August 17, 2009<br />

2002-03 September 5, 2003 November 9, 2010<br />

2003-04 August 10, 2004 October 15, 2011<br />

2004-05 August 12, 2005 October 16, 2012<br />

2005-06 August 5, 2006 October 9, 2013<br />

2006-07 August 4, 2007 October 8, 2014<br />

2007-08 April 15, 2008 June 20, 2015<br />

* Indicative dates, actual dates may vary<br />

09.05.07 06.11.07 17.01.08<br />

1. Mr. N. A. Soonawala - Chairman � � �<br />

2. Mr. R. K. Krishna Kumar � � �<br />

3. Mr. Raymond N. Bickson - � �


Annual Report 2007-2008<br />

It may be noted that no claims will lie against <strong>the</strong> Company nor <strong>the</strong> IEPF in respect <strong>of</strong> <strong>the</strong> said unclaimed amounts<br />

transferred to <strong>the</strong> Fund.<br />

Amounts Transferred to IEPF<br />

The following amounts have been transferred to IEPF <strong>of</strong> <strong>the</strong> Central Government as at March 31, 2008:<br />

Particulars Rs.<br />

Amounts transferred upto March 31, 2007 2,02,61,432.67<br />

Unpaid / unclaimed dividend with <strong>the</strong> Company 15,68,872.00<br />

Unpaid / unclaimed matured deposits with <strong>the</strong> Company 5,67,000.00<br />

Unpaid matured debentures with <strong>the</strong> Company 0.00<br />

Interest accrued on <strong>the</strong> unpaid matured deposits 4,55,936.00<br />

Interest accrued on <strong>the</strong> unpaid matured debentures 43,266.00<br />

Total 2,28,96,506.67*<br />

* Includes transfers for <strong>the</strong> financial year 2007-08.<br />

49


The Indian Hotels Company Limited<br />

50<br />

Compliance Officer<br />

Mr. P. Sanker<br />

Vice President (Legal) & Company Secretary<br />

The Indian Hotels Company Limited<br />

Address: Mandlik House, Mandlik Road, Mumbai – 400 001<br />

Phone : 6639 5515<br />

Fax : 2202 7442<br />

E-mail : shares.dept@tajhotels.com<br />

3. Remuneration Committee :<br />

The Listing Agreement with <strong>the</strong> Stock Exchanges provides that a Company may appoint a Committee for recommending<br />

managerial remuneration payable to <strong>the</strong> Directors. The Company has in place a Remuneration Committee for <strong>the</strong> said purpose.<br />

The main function <strong>of</strong> <strong>the</strong> said Committee is to determine <strong>the</strong> remuneration payable to <strong>the</strong> Whole-time Directors.<br />

The Chairman <strong>of</strong> <strong>the</strong> Remuneration Committee was present at <strong>the</strong> last Annual General Meeting <strong>of</strong> <strong>the</strong> Company. During <strong>the</strong><br />

year, <strong>the</strong> Committee met once as under :<br />

NO. MEMBERS ATTENDANCE AT THE REMUNERATION COMMITTEE<br />

MEETING HELD ON 19.06.07<br />

1. Mr. Jagdish Capoor - Chairman �<br />

2. Mr. Ratan N. Tata �<br />

3. Mr. N. A. Soonawala �<br />

4. Mr. R. K. Krishna Kumar �<br />

4. Remuneration Policy :<br />

The remuneration <strong>of</strong> <strong>the</strong> Whole-time Director(s) is recommended by <strong>the</strong> Remuneration Committee based on factors such as<br />

industry benchmarks, <strong>the</strong> Company’s performance vis-à-vis <strong>the</strong> industry, performance/ track record <strong>of</strong> <strong>the</strong> Whole-time<br />

Director(s) etc, which is decided by <strong>the</strong> Board <strong>of</strong> Directors. Remuneration comprises a Fixed Component viz. salary, perquisites<br />

and allowances and a variable component viz. commission. The Remuneration Committee also recommends <strong>the</strong> annual<br />

increments (which are effective April 1 annually) within <strong>the</strong> salary scale approved by <strong>the</strong> Members as also <strong>the</strong> Commission<br />

payable to <strong>the</strong> Whole-time Director(s) on determination <strong>of</strong> pr<strong>of</strong>its for <strong>the</strong> financial year, within <strong>the</strong> ceilings on net pr<strong>of</strong>its<br />

prescribed under Sections 198 and 309 <strong>of</strong> <strong>the</strong> Companies Act, 1956.<br />

The commission payable to Non-Executive Directors is decided by <strong>the</strong> Board and is distributed based on a number <strong>of</strong> factors,<br />

including number <strong>of</strong> Board and Committee meetings attended, individual contribution <strong>the</strong>reat etc.<br />

Service Contract and Notice Period <strong>of</strong> <strong>the</strong> Managing Director and <strong>the</strong> Executive Directors<br />

Mr. Raymond N. Bickson’s contract as a Managing Director is for a period <strong>of</strong> 5 years, commencing from July 19, 2008 up to<br />

and including July 18, 2013, terminable by 6 months notice on ei<strong>the</strong>r side.<br />

Mr. Anil P. Goel was appointed as an Additional Director and Whole Time Director <strong>of</strong> <strong>the</strong> Company for a period <strong>of</strong> 5 years,<br />

commencing from March 17, 2008 up to and including March 16, 2013 terminable by 6 months notice on ei<strong>the</strong>r side.<br />

Mr. Abhijit Mukerji was appointed as an Additional Director and Whole Time Director <strong>of</strong> <strong>the</strong> Company for a period <strong>of</strong> 5 years,<br />

commencing from March 17, 2008 up to and including March 16, 2013 terminable by 6 months notice on ei<strong>the</strong>r side.


Annual Report 2007-2008<br />

The Company has no scheme for stock options.<br />

The details <strong>of</strong> <strong>the</strong> terms <strong>of</strong> <strong>the</strong>ir appointment and remuneration are given in <strong>the</strong> Explanatory Statement to <strong>the</strong> Notice <strong>of</strong> <strong>the</strong><br />

Annual General Meeting.<br />

Details <strong>of</strong> ordinary shares <strong>of</strong> <strong>the</strong> Company held by <strong>the</strong> Non-Executive Directors are as under:<br />

Mr. Ratan N. Tata 59,792<br />

Mr. Deepak Parekh 1,845<br />

Mr. Jagdish Capoor 2,400<br />

Details on General Meetings:<br />

Location, date and time <strong>of</strong> <strong>the</strong> General Meetings held in <strong>the</strong> last 3 years are as under :<br />

Location<br />

ANNUAL GENERAL MEETINGS<br />

Date Time<br />

Birla Matushri Sabhagar August 3, 2007 3.30p.m.<br />

19, Sir Vithaldas Thackersey Marg, August 4, 2006 3.30 p.m.<br />

Mumbai – 400 020<br />

COURT CONVENED MEETING<br />

August 11, 2005 3.45 p.m.<br />

Birla Matushri Sabhagar<br />

19, Sir Vithaldas Thackersey Marg,<br />

Mumbai – 400 020<br />

December 13, 2006 10.30 a.m.<br />

All special resolutions passed in <strong>the</strong> previous three Annual General Meetings <strong>of</strong> <strong>the</strong> Company were unanimously<br />

passed by a show <strong>of</strong> hands by <strong>the</strong> Members <strong>of</strong> <strong>the</strong> Company present and voting at <strong>the</strong> said meetings.<br />

Postal Ballot<br />

The Company had successfully completed <strong>the</strong> process <strong>of</strong> obtaining <strong>the</strong> approval <strong>of</strong> its Members on <strong>the</strong> Ordinary<br />

Resolutions under Sections 293(1)(d) read with 192A <strong>of</strong> <strong>the</strong> Companies Act, 1956, pertaining to increase in borrowing<br />

limits <strong>of</strong> <strong>the</strong> company from Rs. 2000 Crores to 4000 Crores.<br />

Mr. Khushroo Driver, Advocate was appointed as <strong>the</strong> Scrutinizer, who had carried out <strong>the</strong> Postal Ballot process in a fair<br />

and transparent manner. The results were announced on November 23, 2007.<br />

Voting Pattern and Procedure for Postal Ballot :<br />

1. The Board <strong>of</strong> Directors <strong>of</strong> <strong>the</strong> Company had, at its meeting held on August 13, 2007, appointed Mr. Khushroo<br />

Driver, Advocate, as <strong>the</strong> Scrutinizer for conducting <strong>the</strong> postal ballot voting process.<br />

2. The postal ballot forms had been kept under his safe custody in sealed and tamper pro<strong>of</strong> ballot boxes before<br />

commencing <strong>the</strong> scrutiny <strong>of</strong> such postal ballot forms.<br />

3. All postal ballot forms received/receivable up to <strong>the</strong> close <strong>of</strong> working hours on November 15, 2007 <strong>the</strong> last date<br />

and time fixed by <strong>the</strong> Company for receipt <strong>of</strong> <strong>the</strong> forms, had been considered by him in his scrutiny.<br />

4. Envelopes containing postal ballot forms received on /after November 15, 2007, had not been considered for his<br />

scrutiny.<br />

51


The Indian Hotels Company Limited<br />

52<br />

5. The results <strong>of</strong> <strong>the</strong> Postal Ballot were announced on November 23, 2007 at <strong>the</strong> Registered Office <strong>of</strong> <strong>the</strong> Company as<br />

per <strong>the</strong> Scrutinizer’s Report as under :<br />

Postal Ballot Summary :<br />

Accordingly, <strong>the</strong> Ordinary Resolution set out in <strong>the</strong> Notice dated October 15, 2007 was duly approved by <strong>the</strong> requisite<br />

majority <strong>of</strong> <strong>the</strong> shareholders.<br />

Number <strong>of</strong> valid postal ballot forms received 7,375<br />

Votes in favour <strong>of</strong> <strong>the</strong> Resolution 21,25,43,930<br />

Votes against <strong>the</strong> Resolution 1,49,94,637<br />

Invalid Votes 6,06,365<br />

Number <strong>of</strong> invalid postal ballot forms received 751


Annual Report 2007-2008<br />

Means <strong>of</strong> Communication :<br />

Quarterly, half-yearly and annual results <strong>of</strong> <strong>the</strong> Company were published in leading English and vernacular newspapers viz.<br />

Business Standard, Financial Express, Indian Express and Loksatta. Additionally, <strong>the</strong> results and o<strong>the</strong>r important information is<br />

also periodically updated on <strong>the</strong> Company’s website viz. www.tajhotels.com, which also contains a separate dedicated section<br />

“Investor Relations”.<br />

Fur<strong>the</strong>r, <strong>the</strong> Company also holds an Analysts’ Meet after <strong>the</strong> quarterly, half-yearly and Annual Accounts have been adopted by <strong>the</strong><br />

Board <strong>of</strong> Directors, where information is disseminated and analysed. Moreover, <strong>the</strong> Company also gives important Press Releases<br />

from time to time.<br />

Securities and Exchange Board <strong>of</strong> India (SEBI) vide its circular nos. SMD/POLICY/CIR – 13 /02 dated June 20, 2002 and SMD/<br />

POLICY/CIR – 17 /02 dated July 3, 2002, had made it mandatory for companies by introducing Clause 51 in <strong>the</strong> Listing Agreement<br />

entered into between <strong>the</strong> Companies and <strong>the</strong> Stock Exchange, to file information through <strong>the</strong> internet on <strong>the</strong>ir website http://<br />

www.sebiedifar.nic.in/ vide Electronic Data Information and Retrieval System (EDIFAR) which is an automated system for filing,<br />

retrieval and dissemination <strong>of</strong> time – sensitive corporate information. The Company has been regularly filing information such as<br />

<strong>the</strong> full version <strong>of</strong> <strong>the</strong> Annual Report including <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong>, Pr<strong>of</strong>it and Loss Account, Directors’ Report and Auditors’ Report,<br />

Cash Flow Statements, half yearly financial statements, quarterly financial statements, Corporate Governance report, shareholding<br />

pattern etc. on <strong>the</strong> site.<br />

The Stock Exchanges have vide introduction <strong>of</strong> Clause 52 in <strong>the</strong> Listing Agreement, introduced <strong>the</strong> Corporate Filing and Dissemination<br />

System (CFDS) which is a portal jointly owned, managed and maintained by <strong>the</strong> Bombay Stock Exchange Limited (BSE) and <strong>the</strong><br />

National Stock Exchange <strong>of</strong> India Limited (NSE). It is a single source to view information filed by listed companies. Commencing<br />

with <strong>the</strong> quarter ending October, 2007, all disclosures and communications to <strong>the</strong> BSE and NSE are filed electronically through <strong>the</strong><br />

CFDS portal. Hard copies <strong>of</strong> <strong>the</strong> said disclosures and correspondence are also filed with <strong>the</strong> BSE and NSE.<br />

Reminders are sent each year to investors for unclaimed dividend or unclaimed interest on debentures.<br />

The Annual Report containing inter alia <strong>the</strong> Audited Accounts, Consolidated Financial Statements, Directors Report, Auditors<br />

Report and o<strong>the</strong>r important information is circulated to <strong>the</strong> investors. Management Discussion and Analysis forms <strong>part</strong> <strong>of</strong> <strong>the</strong><br />

Annual Report. The Annual Reports are also available in <strong>the</strong> Investor Relations section on <strong>the</strong> Company’s web site www.tajhotels.com.<br />

Disclosures<br />

The Board <strong>of</strong> Directors receive, from time to time, disclosures relating to financial and commercial transactions from key managerial<br />

personnel <strong>of</strong> <strong>the</strong> Company, where <strong>the</strong>y and / or <strong>the</strong>ir relatives have personal interest. There are no materially significant related<br />

<strong>part</strong>y transactions, which have potential conflict with <strong>the</strong> interest <strong>of</strong> <strong>the</strong> Company at large.<br />

The details <strong>of</strong> <strong>the</strong> Related Party transactions are placed before and reviewed by <strong>the</strong> Company’s Audit Committee.<br />

The Company has complied with <strong>the</strong> requirements <strong>of</strong> <strong>the</strong> Stock Exchanges / Securities and Exchange Board <strong>of</strong> India / statutory<br />

authorities on all matters relating to capital markets, during <strong>the</strong> last 3 years.<br />

Pursuant to <strong>the</strong> provisions <strong>of</strong> sub – clause V <strong>of</strong> <strong>the</strong> revised Clause 49 <strong>of</strong> <strong>the</strong> Listing Agreement with <strong>the</strong> Stock Exchanges, <strong>the</strong><br />

Managing Director (CEO) and <strong>the</strong> Executive Director - Finance have issued a certificate to <strong>the</strong> Board, for <strong>the</strong> Financial Year ended<br />

March 31, 2008.<br />

Risk Management<br />

The Company has in place a Risk Management Policy, which lays down a vigorous and active process for identification and<br />

mitigation <strong>of</strong> risks. This Policy has been adopted by <strong>the</strong> Audit Committee as well as <strong>the</strong> Board <strong>of</strong> Directors <strong>of</strong> <strong>the</strong> Company. The<br />

Audit Committee reviews <strong>the</strong> risk management and mitigation plan from time to time.<br />

Subsidiary Companies<br />

The Company does not have any material unlisted subsidiary and hence is not required to have an Independent Director <strong>of</strong> <strong>the</strong><br />

Company on <strong>the</strong> Board <strong>of</strong> such subsidiary. The Audit Committee reviews <strong>the</strong> financial statements <strong>of</strong> <strong>the</strong> Company’s unlisted<br />

subsidiary companies.<br />

53


The Indian Hotels Company Limited<br />

54<br />

The Minutes <strong>of</strong> <strong>the</strong> subsidiary companies are periodically placed before and reviewed by <strong>the</strong> Board <strong>of</strong> Directors <strong>of</strong> <strong>the</strong> Company.<br />

Compliance with non-mandatory requirements<br />

1. The Board : The Non-Executive Chairman has a separate <strong>of</strong>fice in his capacity as <strong>the</strong> Group Chairman at <strong>the</strong> Tata Group<br />

headquarters at Bombay House, 24 Homi Mody Street, Mumbai - 400 001 and hence a separate <strong>of</strong>fice is not maintained. The<br />

Company has adopted <strong>the</strong> Tata Guidelines for composition <strong>of</strong> <strong>the</strong> Board <strong>of</strong> Directors, Committees <strong>of</strong> <strong>the</strong> Board and Retirement<br />

Age <strong>of</strong> Directors, which take into account <strong>the</strong> provisions <strong>of</strong> <strong>the</strong> Listing Agreement, <strong>the</strong> Companies Act, 1956 and o<strong>the</strong>r<br />

applicable laws. In line with best practices to continuously refresh <strong>the</strong> Board’s membership, <strong>the</strong> Board is encouraged to seek<br />

a balance between change and continuity.<br />

2. Remuneration Committee: Details already given under <strong>the</strong> caption ‘Remuneration Committee’ in an earlier <strong>part</strong> <strong>of</strong> <strong>the</strong> Report.<br />

3. Shareholders Rights : In addition to being published in leading English and a Marathi newspaper having wide circulation, <strong>the</strong><br />

Company publishes its quarterly results on its website www.tajhotels.com. Additionally, <strong>the</strong> same is also now available on<br />

http://www.corpfiling.co.in Hence, a quarterly declaration <strong>of</strong> financial performance including summary <strong>of</strong> <strong>the</strong> significant<br />

events is presently not being sent to each household <strong>of</strong> shareholders individually.<br />

4. Audit qualifications : For <strong>the</strong> financial year 2007-08, <strong>the</strong>re are no audit qualifications to <strong>the</strong> Company’s financial statements.<br />

The Company continues to adopt best practices to ensure a regime <strong>of</strong> unqualified financial statements.<br />

5. Mechanism for evaluating Non-Executive Board members : The Board <strong>of</strong> Directors <strong>of</strong> <strong>the</strong> Company presently comprises<br />

eight Non-Executive Directors. The Directors appointed on <strong>the</strong> Board are from diverse fields relevant to <strong>the</strong> Company’s<br />

business and have long-standing experience and expertise in <strong>the</strong>ir respective fields. They have considerable experience in<br />

managing large corporates and have been in public life for decades. The enormously rich background <strong>of</strong> <strong>the</strong> Directors is <strong>of</strong><br />

considerable value to <strong>the</strong> Company.<br />

Non-Executive Directors add substantial value through <strong>the</strong> deliberations at <strong>the</strong> Meetings <strong>of</strong> <strong>the</strong> Board and Committees<br />

<strong>the</strong>re<strong>of</strong>. To safeguard <strong>the</strong> interests <strong>of</strong> <strong>the</strong> investors, <strong>the</strong>y also play a control role. In important Committees <strong>of</strong> <strong>the</strong> Board like<br />

<strong>the</strong> Audit Committee, <strong>the</strong> Remuneration Committee etc., <strong>the</strong>y play an important role by contributing to <strong>the</strong> deliberations <strong>of</strong> <strong>the</strong><br />

Committee Meetings. Besides contributing at <strong>the</strong> meetings <strong>of</strong> <strong>the</strong> Board and Committees, <strong>the</strong> Non-Executive Directors also<br />

have <strong>of</strong>f-line deliberations with <strong>the</strong> Management <strong>of</strong> <strong>the</strong> Company and add value through such deliberations.<br />

In <strong>the</strong> light <strong>of</strong> <strong>the</strong> above, <strong>the</strong> Chairman under authority from <strong>the</strong> Board decides on <strong>the</strong> performance <strong>of</strong> each Non-Executive<br />

Director and <strong>the</strong>y are accordingly evaluated and remunerated.<br />

6. Whistle Blower Policy: The Company has adopted <strong>the</strong> Whistle Blower policy pursuant to which employees can raise <strong>the</strong>ir<br />

concerns relating to fraud, malpractice or any o<strong>the</strong>r activity or event which is against <strong>the</strong> Company’s interest. No employee<br />

has been denied access to <strong>the</strong> Audit Committee in this regard.<br />

As regards <strong>the</strong> o<strong>the</strong>r non-mandatory requirements, <strong>the</strong> Board has taken cognisance <strong>of</strong> <strong>the</strong> same and shall consider adopting<br />

<strong>the</strong> same as and when necessary.


Annual Report 2007-2008<br />

Board <strong>of</strong> Directors:<br />

Names Category Remuneration paid No. <strong>of</strong> outside No. <strong>of</strong> outside No. <strong>of</strong> Board Attendance<br />

Rs. Directorships Committee Meetings at <strong>the</strong> last<br />

Positions Held attended Annual<br />

General<br />

Meeting held<br />

on 03.08.2007<br />

Salary & Perks Sitting Fees Commission Indian Foreign as as<br />

2007-2008 2007-2008 2006–2007 Member Chairman<br />

Mr. R. N. Tata Promoter - 1,30,000 53,50,000 13 9 - - 8 Yes<br />

(Chairman) Non-Executive<br />

Mr. R.K. Krishna Kumar Promoter - 1,85,000 51,75,000 11 5 1 1 10 Yes<br />

(Vice Chairman) Non-Executive<br />

# Dr. J. J. Bhabha Promoter - 10,000 17,75,000 - - - - 1 -<br />

Non-Executive<br />

Mr. N. A. Soonawala Promoter - 1,85,000 31,00,000 5 - - 2 10 Yes<br />

Non-Executive<br />

Mr. S.K. Kandhari Non-Executive - 2,10,000 57,50,000 - 1 - - 9 Yes<br />

Independent<br />

Mr. K. B. Dadiseth Non-Executive - 80,000 12,50,000 6 1 2 1 5 Yes<br />

Independent<br />

Mr. Deepak Parekh Non-Executive - 1,10,000 15,25,000 15 - 1 5 4 Yes<br />

Independent<br />

Mr. Jagdish Capoor Non-Executive - 2,30,000 33,00,000 6 - 2 2 9 Yes<br />

Independent<br />

Mr. Shapoor Mistry Non-Executive - 1,30,000 15,25,000 12 - 4 - 8 Yes<br />

Independent<br />

@<br />

Mr. Tejendra Khanna Non-Executive - 10,000 12,50,000 - - - - 1 -<br />

Independent<br />

Mr. Raymond N. Bickson Executive 324,79,018/- - 130,00,000 9 7 3 3 7 Yes<br />

** Mr. Anil P. Goel Executive - 7 12 4 - - -<br />

** Mr. Abhijit Mukerji Executive - 1 - 1 - - -<br />

# Passed away on May 30, 2007. @ Resigned effective April 2, 2007 ** Appointed with effect from March 17, 2008<br />

NOTE: Traditionally, <strong>the</strong> Directors are paid commission each year, after <strong>the</strong> Annual Accounts are approved by <strong>the</strong> Members at <strong>the</strong> Annual General Meeting <strong>of</strong> <strong>the</strong> Company.<br />

A sum <strong>of</strong> Rs. 4.00 Crores has been provided as commission to Non Executive Directors for <strong>the</strong> year 2007-08. An amount <strong>of</strong> Rs. 1.50 Crores is proposed to be paid as commission<br />

to <strong>the</strong> Managing Director. Payment <strong>of</strong> commission to <strong>the</strong> Directors – both Managing and Non- Executive Directors will be made after <strong>the</strong> accounts are approved at <strong>the</strong> Annual<br />

General Meeting.<br />

55


The Indian Hotels Company Limited<br />

56<br />

General Shareholder Information<br />

Annual General Meeting<br />

� Date and Time August 14, 2008 at 3.30 p.m.<br />

� Venue Birla Matushri Sabhagar,<br />

19, Sir Vithaldas Thackersey<br />

Marg, Mumbai 400 020<br />

Registered Office Mandlik House<br />

Mandlik Road<br />

Mumbai 400 001<br />

Telephone No. 91- 22- 6639 5515<br />

Facsimile No. 91- 22- 2202 7442<br />

Website www.tajhotels.com<br />

E-mail shares.dept@tajhotels.com<br />

Financial Calendar<br />

Financial reporting for:<br />

� Quarter ending 30 th June, 2008 July 2008<br />

� Quarter ending 30 th September, 2008 October 2008<br />

� Quarter ending 31 st December, 2008 January 2009<br />

� Quarter ending 31 st March, 2009 May /June 2009<br />

Date <strong>of</strong> Book Closure<br />

Listing<br />

August 11, 2008 to August 14, 2008<br />

(both days inclusive)<br />

� Ordinary Shares Bombay Stock Exchange Ltd.<br />

National Stock Exchange <strong>of</strong> India Ltd.<br />

� Global Depository Shares London Stock Exchange<br />

The Company has paid annual listing fees to each <strong>of</strong> <strong>the</strong> above Stock Exchanges in respect <strong>of</strong> <strong>the</strong> financial year 2008-2009.<br />

Stock Codes<br />

STOCK EXCHANGE STOCK CODE<br />

Bombay Stock Exchange Ltd. 500850<br />

National Stock Exchange <strong>of</strong> India Ltd. INDHOTEL EQ


Annual Report 2007-2008<br />

Market Price Data : High, Low during each month in last financial year<br />

Months BSE High BSE Low No. <strong>of</strong> Shares NSE High NSE Low No. <strong>of</strong> Shares<br />

traded Traded<br />

Apr-07 153.70 137.80 9,197,256 152.75 138.00 25,007,472<br />

May-07 150.20 133.50 9,630,705 149.95 133.05 28,972,501<br />

Jun-07 154.55 135.55 11,368,225 158.00 137.55 38,660,227<br />

Jul-07 153.70 136.60 6,964,847 153.00 137.00 24,537,984<br />

Aug-07 144.00 115.05 10,718,129 155.00 115.00 27,962,482<br />

Sep-07 146.40 125.00 13,283,452 146.40 125.20 35,687,954<br />

Oct-07 149.00 124.00 11,580,720 153.00 123.00 41,599,204<br />

Nov-07 152.55 131.00 7,913,327 153.00 127.55 38,532,750<br />

Dec-07 162.70 124.00 12,613,159 162.90 132.40 48,397,928<br />

Jan-08 177.80 101.00 13,095,229 177.45 100.00 61,371,775<br />

Feb-08 145.25 120.00 8,687,258 145.15 115.80 30,131,340<br />

Mar-08 125.30 100.05 4,276,545 130.10 95.00 18,449,562<br />

IHCL Comparative High Low price on BSE & NSE<br />

57


The Indian Hotels Company Limited<br />

58<br />

Performance in comparison to broad-based indices such as BSE Sensex<br />

Performance IHCL Share Price in Comparison to BSE Sensex<br />

Two-way Fungibility <strong>of</strong> Global Depository Receipts (GDRs)<br />

Reserve Bank <strong>of</strong> India, vide its circular dated February 13, 2002, had brought into force <strong>the</strong> Operative Guidelines for <strong>the</strong> two –way<br />

fungibility under <strong>the</strong> “Issue <strong>of</strong> Foreign Currency Convertible Bonds and Ordinary shares (through Depository Receipt mechanism)<br />

Scheme 1993. Consequent <strong>the</strong>reto, <strong>the</strong> Company has executed documents with Citibank N.A., New York, Depository for GDR<br />

holders, supplemental to <strong>the</strong> Depository Agreements executed by <strong>the</strong> Company at <strong>the</strong> time <strong>of</strong> issue <strong>of</strong> GDRs in 1995 and 1997,<br />

whereby <strong>the</strong> Company <strong>of</strong>fers investors <strong>the</strong> facility for conversion <strong>of</strong> Ordinary Shares into GDRs, within <strong>the</strong> limits prescribed for<br />

two-way fungibility.<br />

Registrar and Share Transfer Agent The Company has obtained Category I ‘Registrar to an Issue & Share<br />

Transfer Agent Certificate’ from SEBI which was valid till March 31, 2008.<br />

An application for renewal <strong>of</strong> <strong>the</strong> same is under process.<br />

SEBI Registration No. Category I - INR000003746<br />

Share Transfer System<br />

All shares have been transferred and returned within 21 days from <strong>the</strong> date <strong>of</strong> lodgement, provided <strong>the</strong> necessary documents were<br />

in order.<br />

STATUS OF FOREIGN CURRENCY CONVERTIBLE BONDS ISSUED<br />

The Company had raised US $ 150 million through an issue <strong>of</strong> Foreign Currency Convertible Bonds (FCCBs) in <strong>the</strong> financial year<br />

2003-04. The conversion price was fixed at Rs.501.53 per share. As at March 31, 2008, <strong>the</strong> Company had received request <strong>of</strong> US $<br />

1000 (Previous Year - US $ 22.117 million) for conversion <strong>of</strong> FCCB into Ordinary Shares <strong>of</strong> <strong>the</strong> Company. During <strong>the</strong> year under<br />

review, <strong>the</strong> Company had allotted 903 shares, arising out <strong>of</strong> conversion <strong>of</strong> FCCB into shares (Previous Year – 19,97,684 shares). As<br />

at March 31, 2008 <strong>the</strong>re are no FCCBs outstanding to be converted into ordinary shares <strong>of</strong> <strong>the</strong> Company.<br />

BSE SENSEX


Annual Report 2007-2008<br />

Distribution <strong>of</strong> Shareholding as on March 31, 2008<br />

Category No. <strong>of</strong> Shares held % to paid up Capital<br />

Promoters 175895939 29.18<br />

Directors & Their Relatives 366885 0.06<br />

Foreign Institutional Investors 116242464 19.28<br />

Foreign Banks 6200 0.00<br />

Resident Individuals & HUF 121477124 20.15<br />

Non-Resident Indians 3106084 0.51<br />

Global Depository Receipts 4549770 0.76<br />

Financial Institutions / Banks 79444036 13.18<br />

Insurance Companies 30578144 5.07<br />

Mutual Funds / UTI 37870793 6.28<br />

Clearing Members 272064 0.05<br />

Corporate Bodies 32947090 5.46<br />

Trusts 94900 0.02<br />

Total 602851493 100.00<br />

59


The Indian Hotels Company Limited<br />

60<br />

Distribution Schedule <strong>of</strong> The Indian Hotels Company Limitedas on March 31, 2008<br />

No. <strong>of</strong> Shares held Total Members Total Shares Total % to Paid up Capital<br />

Upto 2500 126867 45074096 7.477<br />

2501 to 5000 5422 19816886 3.287<br />

5001 to 10000 3426 24721389 4.100<br />

10001 to 20000 1214 16793235 2.786<br />

20001 to 30000 306 7524280 1.248<br />

30001 to 40000 138 4835975 0.802<br />

40001 to 50000 58 2665448 0.442<br />

50001 to 100000 133 9491954 1.575<br />

100001 & above 218 471928230 78.283<br />

Total 137782 602851493 100.00<br />

Secretarial Audit<br />

In keeping with <strong>the</strong> requirements <strong>of</strong> <strong>the</strong> SEBI and <strong>the</strong> Stock Exchanges, a secretarial audit by a practicing Company Secretary is<br />

carried out to reconcile <strong>the</strong> total admitted capital with NSDL and CDSL and <strong>the</strong> total issued and listed capital. The said audit<br />

confirms that <strong>the</strong> total issued / paid–up capital tallies with <strong>the</strong> total number <strong>of</strong> shares in physical form and <strong>the</strong> total number <strong>of</strong><br />

dematerialised shares held with NSDL and CDSL.<br />

A certificate from <strong>the</strong> Statutory Auditors <strong>of</strong> <strong>the</strong> Company on Corporate Governance is attached as an annexure to <strong>the</strong> Report.<br />

Report on Corporate Governance<br />

The Company regularly submits to <strong>the</strong> Stock Exchanges, within <strong>the</strong> prescribed period, quarterly reports on Corporate Governance.<br />

A certificate from <strong>the</strong> Statutory Auditors <strong>of</strong> <strong>the</strong> Company on Corporate Governance is attached as an annexure to <strong>the</strong> Report.<br />

Dematerialisation <strong>of</strong> Shares & Liquidity<br />

� As <strong>of</strong> <strong>the</strong> end <strong>of</strong> March 2008, shares comprising approximately 95.70% <strong>of</strong> <strong>the</strong> Company’s Equity Share Capital have been<br />

dematerialised.<br />

� Trading in <strong>the</strong> Company’s shares in a dematerialised form has been made compulsory with effect from April 5, 1999.<br />

ISIN No. INE053A01029


Annual Report 2007-2008<br />

Outstanding GDRs/ADRs/Warrants or any Convertible instruments, conversion date and likely impact on equity<br />

During <strong>the</strong> year under review, all outstanding FCCBs have been converted into shares. The Company made a simultaneous but<br />

unlinked Rights Issue <strong>of</strong> 120,570,299 Ordinary Equity shares in <strong>the</strong> ratio <strong>of</strong> 1:5, at a price <strong>of</strong> Rs. 70/- per share, aggregating<br />

Rs. 844 crores and 60,285,150 - 6% Secured Redeemable Non-Convertible Debentures, with detachable warrants, (which would<br />

give <strong>the</strong> holder <strong>the</strong> right to purchase 1 Ordinary Equity share <strong>of</strong> <strong>the</strong> Company for each detachable warrant at a price <strong>of</strong> Rs. 150/- per<br />

share exercisable between September 1, 2009 to September 30, 2009) in <strong>the</strong> ratio <strong>of</strong> 1:10 at a price <strong>of</strong> Rs. 100/- each, aggregating<br />

Rs. 603 crores.<br />

Pursuant to <strong>the</strong> Rights Issue, 120,553,795 Ordinary Equity Shares and 60,276,898 NCDs with Detachable Warrants were allotted.<br />

The Debentures are listed on <strong>the</strong> National Stock Exchange <strong>of</strong> India Limited & Bombay Stock Exchange Limited and Central Bank<br />

<strong>of</strong> India (Debenture Trustee Section) are <strong>the</strong> Debenture Trustees for <strong>the</strong> same<br />

Sub-Division <strong>of</strong> Shares<br />

The Ordinary Equity Shares <strong>of</strong> <strong>the</strong> Company were sub-divided from Rs.10/- each to Re.1/- each w.e.f. 3rd day <strong>of</strong> November, 2006<br />

being <strong>the</strong> “Record Date” fixed for <strong>the</strong> purpose<br />

The Members whose name/s was appearing on <strong>the</strong> Register <strong>of</strong> Members on <strong>the</strong> Record Date, was entitled to get 10 fully paid up<br />

ordinary shares <strong>of</strong> <strong>the</strong> face value <strong>of</strong> Re. 1/- each for every 1 ordinary share <strong>of</strong> face value <strong>of</strong> Rs.10/- held by <strong>the</strong>m.<br />

The Company called back <strong>the</strong> existing share certificates having paid-up value <strong>of</strong> Rs.10/- each and issued <strong>the</strong> new share certificate<br />

<strong>of</strong> face value <strong>of</strong> Re.1/- each. The members who have still not exchanged <strong>the</strong>ir share certificates are requested to kindly get in touch<br />

with <strong>the</strong> Company.<br />

The Members are requested not to deal with share certificates <strong>of</strong> face value <strong>of</strong> Rs.10/- each in any manner whatsoever. If any<br />

member deals, sell, transfers, pledge such share certificate <strong>of</strong> a paid value <strong>of</strong> Rs.10/- each shall do so at his own cost and<br />

consequence and <strong>the</strong> company shall not be held responsible or liable for such acts <strong>of</strong> <strong>the</strong> members.<br />

Registrars to <strong>the</strong> Company’s<br />

Fixed Deposit Scheme TSR Darashaw Limited<br />

(formerly Tata Share Registry Limited)<br />

6-10 Haji Moosa Patrawala Industrial Estate<br />

20, Dr. E. Moses Road Mahalaxmi, Mumbai 400011.<br />

Tel. No.91-22-66568484<br />

Fax No.91-22-66568494<br />

Email : csg-unit@tsrdarashaw.com<br />

Website : www.tsrdarashaw.com<br />

Investor Correspondence<br />

For any queries, investors are requested to get in touch with <strong>the</strong> Company’s share de<strong>part</strong>ment at Mandlik House, Mandlik Road,<br />

Mumbai 400 001. A dedicated e-mail id shares.dept@tajhotels.com has been set up for investor complaints<br />

Electronic Clearing Service (ECS)<br />

The Company is availing <strong>of</strong> <strong>the</strong> ECS facility to distribute dividend to those members who have opted for it.<br />

DECLARATION BY THE MANAGING DIRECTOR UNDER CLAUSE 49 OF THE LISTING AGREEMENT REGARDING<br />

ADHERENCE TO THE CODE OF CONDUCT<br />

In accordance with sub-clause I(D) <strong>of</strong> Clause 49 <strong>of</strong> <strong>the</strong> Listing Agreement with <strong>the</strong> Stock Exchanges, I hereby confirm that, all <strong>the</strong><br />

Directors and <strong>the</strong> Senior Management personnel <strong>of</strong> <strong>the</strong> Company have affirmed compliance with <strong>the</strong>ir respective Codes <strong>of</strong><br />

Conduct, as applicable to <strong>the</strong>m, for <strong>the</strong> Financial Year ended March 31, 2008.<br />

For The Indian Hotels Company Limited<br />

Raymond N. Bickson<br />

Managing Director<br />

61


The Indian Hotels Company Limited<br />

62<br />

Hotel Locations:<br />

The various hotels / units <strong>of</strong> <strong>the</strong> Taj Group are tabled as under:<br />

TAJ LUXURY HOTELS<br />

DOMESTIC<br />

THE TAJ MAHAL PALACE & TOWER HOTEL,<br />

MUMBAI<br />

TAJ LANDS END, MUMBAI<br />

TAJ WELLINGTON MEWS LUXURY APARTMENTS,<br />

MUMBAI<br />

THE TAJ MAHAL HOTEL, NEW DELHI<br />

TAJ PALACE HOTEL, NEW DELHI<br />

TAJ BENGAL, KOLKATA<br />

TAJ COROMANDEL, CHENNAI<br />

THE TAJ WEST END, BANGALORE<br />

TAJ KRISHNA, HYDERABAD<br />

TAJ LAKE PALACE, UDAIPUR<br />

RAMBAGH PALACE, JAIPUR<br />

UMMAID BHAVAN PALACE, JODHPUR<br />

INTERNATIONAL<br />

THE PIERRE, NEW YORK<br />

TAJ EXOTICA RESORT & SPA, MALDIVES<br />

TAJ EXOTICA RESORT & SPA, MAURITIUS<br />

CROWNE PLAZA - ST. JAMES COURT, LONDON<br />

51 BUCKINGHAMGATE LUXURY SUITES &<br />

APARTMENTS, LONDON<br />

TAJ BOSTON, BOSTON<br />

CAMPTON PLACE, SAN FRANCISCO<br />

TAJ PALACE HOTEL, DUBAI<br />

TAJ BUSINESS HOTELS<br />

DOMESTIC<br />

TAJ PRESIDENT, MUMBAI<br />

TAJ CONNEMARA, CHENNAI<br />

TAJ RESIDENCY, BANGALORE<br />

TAJ BANJARA, HYDERABAD<br />

TAJ RESIDENCY, VISAKHAPATNAM<br />

TAJ RESIDENCY, UMMED, AHMEDABAD<br />

TAJ RESIDENCY, CALICUT<br />

TAJ RESIDENCY, LUCKNOW<br />

TAJ RESIDENCY, AURANGABAD<br />

TAJ RESIDENCY, NASIK<br />

TAJ BLUE DIAMOND, PUNE<br />

TAJ RESIDENCY, VADODRA<br />

CITY INN, BARAMATI<br />

THE AMBASSADOR HOTEL, NEW DELHI<br />

GATEWAY HOTEL ON RESIDENCY ROAD,<br />

BANGALORE<br />

MANJARUN HOTEL, MANGALORE<br />

GATEWAY HOTEL, SURAT<br />

TAJ DECCAN, HYDERABAD<br />

THE GATEWAY HOTEL, VIJAYWADA<br />

TAJ RESIDENCY, CHANDIGARH<br />

INTERNATIONAL<br />

TAJ SAMUDRA, COLOMBO<br />

AIRPORT GARDEN HOTEL, COLOMBO<br />

THE PAMODZI HOTEL, LUSAKA<br />

BLUE WOOLLOOMOOLOO BAY, AUSTRALIA<br />

TAJ LEISURE HOTELS<br />

DOMESTIC<br />

TAJ EXOTICA, GOA<br />

FORT AGUADA BEACH RESORT, GOA<br />

TAJ HOLIDAY VILLAGE, GOA<br />

FISHERMAN’S COVE, CHENNAI<br />

TAJ GREEN COVE, KOVALAM<br />

TAJ RESIDENCY, ERNAKULAM<br />

TAJ-VIEW HOTEL, AGRA<br />

TAJ GANGES, VARANASI<br />

HOTEL CHANDELA, KHAJURAO<br />

TAJ HARI MAHAL, JODHPUR<br />

TAJ MALABAR, COCHIN<br />

JAI MAHAL PALACE, JAIPUR<br />

SAVOY HOTEL, OOTY<br />

SAWAI MADHOPUR LODGE, SAWAI<br />

MADHOPUR<br />

RAMGARH LODGE, JAIPUR<br />

THE GIR LODGE, SASANGIR<br />

USHA KIRAN PALACE, GWALIOR<br />

RAWAL KOT HOTEL, JAISALMER<br />

TAJ GARDEN RETREAT, MADURAI<br />

TAJ GARDEN RETREAT, CONOOR<br />

TAJ GARDEN RETREAT, CHIKMAGLUR<br />

TAJ GARDEN RETREAT, VARKALA<br />

TAJ GARDEN RETREAT, THEKKADY<br />

TAJ GARDEN RETREAT, KUMARAKOM<br />

KUTTEERAM, BANGALORE<br />

MAHUA KOTHI, BANDHAVGARH<br />

BAGHVAN, PENCH<br />

SMS HOTEL, JAIPUR<br />

INTERNATIONAL<br />

TAJ EXOTICA, BENTOTA<br />

TAJ CORAL REEF RESORT, MALDIVES<br />

TAJ TASHI, THIMPU, BHUTAN<br />

REBAK MARINA RESORT, MALAYSIA<br />

AIR CATERING<br />

MUMBAI<br />

NEW DELHI<br />

KOLKATA<br />

CHENNAI<br />

GOA<br />

GINGER HOTELS<br />

HARIDWAR<br />

BANGALORE<br />

MYSORE<br />

PUDUCHERRY<br />

THIRUVANANTHAPURAM<br />

AGARTALA<br />

BHUBANESHWAR<br />

DURGAPUR<br />

PANTNAGAR<br />

NASHIK<br />

PUNE<br />

VADODRA


Annual Report 2007-2008<br />

AUDITORS’ CERTIFICATE<br />

TO THE MEMBERS OF<br />

THE INDIAN HOTELS COMPANY LIMITED<br />

We have examined <strong>the</strong> compliance <strong>of</strong> conditions <strong>of</strong> Corporate Governance by The Indian Hotels Company Limited (“<strong>the</strong> Company”)<br />

for <strong>the</strong> year ended 31st March, 2008 as stipulated in Clause 49 <strong>of</strong> <strong>the</strong> Listing Agreements <strong>of</strong> <strong>the</strong> Company with <strong>the</strong> stock exchanges.<br />

The compliance <strong>of</strong> conditions <strong>of</strong> Corporate Governance is <strong>the</strong> responsibility <strong>of</strong> <strong>the</strong> Management. Our examination was limited to<br />

a review <strong>of</strong> <strong>the</strong> procedures and implementation <strong>the</strong>re<strong>of</strong>, adopted by <strong>the</strong> Company for ensuring <strong>the</strong> compliance <strong>of</strong> <strong>the</strong> conditions <strong>of</strong><br />

Corporate Governance. It is nei<strong>the</strong>r an audit nor an expression <strong>of</strong> opinion on <strong>the</strong> financial statements <strong>of</strong> <strong>the</strong> Company.<br />

In our opinion and to <strong>the</strong> best <strong>of</strong> our information and according to <strong>the</strong> explanations given to us and <strong>the</strong> representations made by<br />

<strong>the</strong> Management, we certify that <strong>the</strong> Company has complied with <strong>the</strong> condition <strong>of</strong> Corporate Governance as stipulated in <strong>the</strong><br />

abovementioned Listing Agreements.<br />

We fur<strong>the</strong>r state that such compliance is nei<strong>the</strong>r an assurance as to <strong>the</strong> future viability <strong>of</strong> <strong>the</strong> Company nor <strong>the</strong> efficiency or<br />

effectiveness with which <strong>the</strong> Management has conducted <strong>the</strong> affairs <strong>of</strong> <strong>the</strong> Company.<br />

For S. B. BILLIMORIA & CO. For N. M. RAIJI & CO.<br />

Chartered Accountants Chartered Accountants<br />

Nalin M. Shah Vinay D. Balse<br />

Partner Partner<br />

Membership No.15860 Membership No.39434<br />

Mumbai, 3 rd July, 2008<br />

63


The Indian Hotels Company Limited<br />

64<br />

Community Initiatives <strong>of</strong> <strong>the</strong> Taj Group <strong>of</strong> Hotels - 2007 -2008<br />

At <strong>the</strong> Taj, all employees believe in serving people being actively involved in improving <strong>the</strong> quality <strong>of</strong> lives <strong>of</strong> under-privileged<br />

women, youth, children and <strong>the</strong> disadvantaged, which not only revives <strong>the</strong> spirit <strong>of</strong> learning in <strong>the</strong> organization but also results<br />

in transformational benefits to <strong>the</strong>m.<br />

The Taj Group has deeply committed to serving <strong>the</strong> community and has expressed this commitment through programmes evolved<br />

out <strong>of</strong> our core competencies in hospitality management in <strong>the</strong> area <strong>of</strong> food production, kitchen management, house keeping,<br />

event management, art & handicrafts and well-being related services – for fulfilling <strong>the</strong> above purposes. The Primary Impact Areas<br />

are:<br />

� Skill Development<br />

� Promoting Artisans & Craftsmen<br />

� Supporting Voluntary Organisations & Welfare Homes<br />

The <strong>the</strong>me for Community Initiatives during <strong>the</strong> year has been “Building Livelihoods” which impacted more than 58000 people<br />

across <strong>the</strong> country involving an expenditure <strong>of</strong> over a crore <strong>of</strong> Rupees. These initiatives resulted in building <strong>the</strong> livelihoods <strong>of</strong><br />

more than 252 people within an additional 1900 people being trained in s<strong>of</strong>t skills. Around 4300 volunteers took <strong>part</strong> in this<br />

initiative volunteering around 38000 man hours to make a meaningful difference to <strong>the</strong> lives <strong>of</strong> <strong>the</strong> underprivileged and disadvantaged<br />

in society.<br />

To carry forward this <strong>the</strong>me, our hotels across <strong>the</strong> Group have reached out to scores <strong>of</strong> people in helping <strong>the</strong>m build <strong>the</strong>ir<br />

livelihoods. A few <strong>of</strong> <strong>the</strong> important various initiatives undertaken are enumerated as under:<br />

BUILDING LIVELIHOODS:<br />

Jai Mahal, Jaipur trained Garden women under <strong>the</strong> Literacy Program and enhanced <strong>the</strong>ir skills in bakery and housekeeping to<br />

enable <strong>the</strong>m to earn <strong>the</strong>ir livelihood.<br />

Fish Cove Care installed tailoring machines and im<strong>part</strong>ed special training to <strong>the</strong> women. The same has enabled most <strong>of</strong> <strong>the</strong>m to join<br />

Garment factories and some <strong>of</strong> <strong>the</strong>m have independently begun work at home.<br />

Taj Malabar, Cochin conducted training for 15 underprivileged women in cutting and stitching. They have been provided with 06<br />

new tailoring machines and a shop near Thoppumpadi in coordination with Y’s Men International.<br />

Taj Deccan, Hyderabad employed 20 college dropouts in <strong>the</strong> banquet de<strong>part</strong>ment on stipend who completed training in <strong>the</strong><br />

hospitality industry at Dr. Reddy’s Foundation.<br />

Taj Retreat, Vadodara counseled 7 orphans and im<strong>part</strong>ed basic skill training in <strong>the</strong> Kitchen, housekeeping and engineering<br />

de<strong>part</strong>ment supporting <strong>the</strong>ir living.<br />

Taj Samudra, Colombo trained 13 underprivileged youth in hospitality & life skill training enhancing <strong>the</strong>ir personality and<br />

grooming standards for employment. They were also taught English & French language.<br />

SPECIAL PROJECTS:<br />

Hotel Chandela, Khajuraho adopted <strong>the</strong> maintenance and upkeep <strong>of</strong> <strong>the</strong> gardens, airport gardens and Poddar Chowk to make <strong>the</strong><br />

city look clean and more presentable.<br />

Fisherman’s Cove, Chennai conducted a Craft Course on Housekeeping and Food Production to Tsunami Affected Rural Youths.<br />

The Project <strong>of</strong>fered 6 months craft course in Food Production & Housekeeping (Theory 3 months & Practical 3 months)<br />

Taj Exotica, Bentota donated necessities for school children <strong>of</strong> Rambukkana boy’s school meetings <strong>the</strong> basic needs <strong>of</strong> <strong>the</strong><br />

children.<br />

Taj Residency, Nasik donated a Water Harvesting model made by <strong>the</strong> engineering de<strong>part</strong>ment for a week long environment<br />

exhibition held in <strong>the</strong> local school to spread awareness.


Annual Report 2007-2008<br />

Taj Krishna, Hyderabad in support with Red Cross Society organized a Blood Donation Camp for Thalesemic Patients who<br />

required blood to be transfused regularly. The same was provided to <strong>the</strong> needy free <strong>of</strong> cost.<br />

Taj Connemara, Chennai Volunteers help at <strong>the</strong> Manimangalam Medical Care and <strong>the</strong> hotel also provides <strong>the</strong> basic medicines to<br />

<strong>the</strong> villagers every month.<br />

ENCOURAGING PARAMPARIK KARIGARS:<br />

Jai Mahal Palace, Jaipur supported Paramparik Karigars (textile block printers <strong>of</strong> Bagaru) by providing space to display and sell<br />

<strong>the</strong>ir items. Extended <strong>the</strong>ir sales outreach through visibility and publicity. Also aid was provided to <strong>the</strong> artisans in making <strong>the</strong><br />

product and design development.<br />

Taj, Varanasi supports silk weavers with humanitarian & economic support to continue weaving traditional benarasi silks with<br />

modern designs.<br />

Taj Krishna, Hyderabad has been supporting <strong>the</strong> artisans <strong>of</strong> Srikalahasthi by continuously marketing <strong>the</strong>ir products by buying<br />

<strong>the</strong>m from <strong>the</strong> artists and presenting as gifts to <strong>the</strong> long stayers and vvip guests at <strong>the</strong> hotel. The Artisans have also been given<br />

a place for display <strong>of</strong> <strong>the</strong>ir items.<br />

SUPPORTING THE DISADVANTAGED<br />

Taj Exotica, Goa tied up with Daddy’s Home a school for Mentally Challenged children giving children <strong>the</strong> generation <strong>of</strong> income<br />

engaging <strong>the</strong>m in various activities in <strong>the</strong> hotel. eg. engaging <strong>the</strong>m in carol singing for guests, purchasing greeting cards made by<br />

<strong>the</strong>se children, promoting <strong>the</strong> products and displaying <strong>the</strong> products in <strong>the</strong> hotel.<br />

Taj, Coonoor employed a handicapped person and gave him a tailoring job in <strong>the</strong> Housekeeping de<strong>part</strong>ment for his upliftment in<br />

<strong>the</strong> society.<br />

Taj President, Mumbai im<strong>part</strong>ed Food Production skills to 5 handicapped students and employed <strong>the</strong>m in <strong>the</strong> production de<strong>part</strong>ment<br />

at a monthly salary <strong>of</strong> Rs. 6000/-.<br />

Taj Garden Retreat, Varkala has trained 2 boys who are physically impaired and has employed <strong>the</strong>m in <strong>the</strong> Kitchen stewarding,<br />

enabling <strong>the</strong>m to run <strong>the</strong>ir family independently.<br />

Lake Palace, Udaipur selected a few physically challenged candidates from two different organizations and im<strong>part</strong>ed vocational<br />

training in trade like backer and Maintenance work.<br />

In addition to <strong>the</strong> various initiatives undertaken and listed above, our hotels <strong>part</strong>icipated in a number <strong>of</strong> events. Significant<br />

amongst <strong>the</strong>m being World Environment Day, Children’s Day, World Tobacco Day and New Year’s Day were celebrated across <strong>the</strong><br />

Leisure SBUs. Chief activities focused upon during <strong>the</strong>se events were Beach Cleaning Drives on World Environment Day, Special<br />

Lunch with Games and Activities organized for <strong>the</strong> Children from nearby orphanages on Children’s Day and New Years Day and<br />

Tobacco Awareness Campaigns on World Tobacco Day. The Beach Cleaning drive was initiated with a focus on training <strong>the</strong><br />

employees and local members about <strong>the</strong> importance <strong>of</strong> <strong>the</strong> environment, reducing and recycling all types <strong>of</strong> wastes while <strong>the</strong><br />

Tobacco Awareness Drive was initiated with a focus on generating awareness among people on <strong>the</strong> ill-effects <strong>of</strong> tobacco usage on<br />

health and on <strong>the</strong> environment.<br />

65


The Indian Hotels Company Limited<br />

66<br />

O<strong>the</strong>r Expenditure<br />

29%<br />

Fuel Power & Light<br />

5%<br />

BREAK-UP OF TOTAL INCOME<br />

Consumption <strong>of</strong> Raw Materials<br />

7%<br />

Interest<br />

Provision for Tax<br />

Staff Cost<br />

Fuel Power & Light<br />

Interest<br />

5% Depreciation<br />

5%<br />

Staff Cost<br />

17%<br />

Depreciation<br />

Pr<strong>of</strong>it After Tax<br />

Provision for Tax<br />

11%<br />

Pr<strong>of</strong>it After Tax<br />

21%<br />

Consumption <strong>of</strong> Raw Materials<br />

O<strong>the</strong>r Expenditure


Annual Report 2007-2008<br />

AUDITORS’ REPORT<br />

TO THE MEMBERS OF<br />

THE INDIAN HOTELS COMPANY LIMITED<br />

1. We have audited <strong>the</strong> attached <strong>Balance</strong> <strong>Sheet</strong> <strong>of</strong> THE INDIAN HOTELS COMPANY LIMITED (“<strong>the</strong> Company”) as at<br />

31st March, 2008, <strong>the</strong> Pr<strong>of</strong>it and Loss Account and <strong>the</strong> Cash Flow Statement <strong>of</strong> <strong>the</strong> Company for <strong>the</strong> year ended on that date,<br />

both annexed <strong>the</strong>reto. These financial statements are <strong>the</strong> responsibility <strong>of</strong> <strong>the</strong> Company’s Management. Our responsibility<br />

is to express an opinion on <strong>the</strong>se financial statements based on our audit.<br />

2. We conducted our audit in accordance with <strong>the</strong> auditing standards generally accepted in India. These Standards require<br />

that we plan and perform <strong>the</strong> audit to obtain reasonable assurance about whe<strong>the</strong>r <strong>the</strong> financial statements are free <strong>of</strong><br />

material misstatements. An audit includes examining, on a test basis, evidence supporting <strong>the</strong> amounts and <strong>the</strong> disclosures<br />

in <strong>the</strong> financial statements. An audit also includes assessing <strong>the</strong> accounting principles used and <strong>the</strong> significant estimates<br />

made by <strong>the</strong> Management, as well as evaluating <strong>the</strong> overall financial statement presentation. We believe that our audit<br />

provides a reasonable basis for our opinion.<br />

3. As required by <strong>the</strong> Companies (Auditor’s Report) Order, 2003 (CARO) issued by <strong>the</strong> Central Government in terms <strong>of</strong><br />

Section 227(4A) <strong>of</strong> <strong>the</strong> Companies Act, 1956, we enclose in <strong>the</strong> Annexure a statement on <strong>the</strong> matters specified in paragraphs<br />

4 and 5 <strong>of</strong> <strong>the</strong> said Order.<br />

4. Fur<strong>the</strong>r to our comments in <strong>the</strong> Annexure referred to in paragraph 3 above, we report as follows:<br />

(a) we have obtained all <strong>the</strong> information and explanations which, to <strong>the</strong> best <strong>of</strong> our knowledge and belief, were necessary<br />

for <strong>the</strong> purposes <strong>of</strong> our audit;<br />

(b) in our opinion, proper books <strong>of</strong> account, as required by law, have been kept by <strong>the</strong> Company, so far as it appears from<br />

our examination <strong>of</strong> those books;<br />

(c) <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong>, <strong>the</strong> Pr<strong>of</strong>it and Loss Account and <strong>the</strong> Cash Flow Statement, dealt with by this report, are in agreement<br />

with <strong>the</strong> books <strong>of</strong> account;<br />

(d) in our opinion, <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong>, <strong>the</strong> Pr<strong>of</strong>it and Loss Account and <strong>the</strong> Cash Flow Statement, dealt with by this report,<br />

are in compliance with <strong>the</strong> Accounting Standards referred to in Section 211(3C) <strong>of</strong> <strong>the</strong> Companies Act, 1956;<br />

(e) in our opinion and to <strong>the</strong> best <strong>of</strong> our information and according to <strong>the</strong> explanations given to us, <strong>the</strong> said accounts<br />

give <strong>the</strong> information required by <strong>the</strong> Companies Act, 1956, in <strong>the</strong> manner so required and give a true and fair view in<br />

conformity with <strong>the</strong> accounting principles generally accepted in India:<br />

(i) in <strong>the</strong> case <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong>, <strong>of</strong> <strong>the</strong> state <strong>of</strong> affairs <strong>of</strong> <strong>the</strong> Company as at 31st March, 2008;<br />

(ii) in <strong>the</strong> case <strong>of</strong> <strong>the</strong> Pr<strong>of</strong>it and Loss Account, <strong>of</strong> <strong>the</strong> pr<strong>of</strong>it <strong>of</strong> <strong>the</strong> Company for <strong>the</strong> year ended on that date and<br />

(iii) in <strong>the</strong> case <strong>of</strong> <strong>the</strong> Cash Flow Statement, <strong>of</strong> <strong>the</strong> cash flows <strong>of</strong> <strong>the</strong> Company for <strong>the</strong> year ended on that date.<br />

5. On <strong>the</strong> basis <strong>of</strong> <strong>the</strong> written representations received from <strong>the</strong> Directors as on 31st March, 2008, and taken on record by <strong>the</strong><br />

Board <strong>of</strong> Directors, none <strong>of</strong> <strong>the</strong> Directors is disqualified as on 31st March, 2008 from being appointed as a director in terms<br />

<strong>of</strong> Section 274(1)(g) <strong>of</strong> <strong>the</strong> Companies Act, 1956.<br />

For S. B. BILLIMORIA & CO. For N. M. RAIJI & CO.<br />

Chartered Accountants Chartered Accountants<br />

Nalin M. Shah Vinay D. Balse<br />

Partner Partner<br />

(Membership No.15860)<br />

MUMBAI, 23<br />

(Membership No. 39434)<br />

rd June, 2008<br />

67


The Indian Hotels Company Limited<br />

68<br />

ANNEXURE TO THE AUDITORS’ REPORT<br />

(Referred to in paragraph 3 <strong>of</strong> our report <strong>of</strong> even date)<br />

(i) Having regard to <strong>the</strong> nature <strong>of</strong> <strong>the</strong> Company’s business/activities and results for <strong>the</strong> year, clauses (viii), (x), (xiii) and (xiv)<br />

<strong>of</strong> paragraph 4 <strong>of</strong> CARO are not applicable.<br />

(ii) In respect <strong>of</strong> its fixed assets:<br />

(a) The Company has maintained proper records showing full <strong>part</strong>iculars, including quantitative details and situation <strong>of</strong><br />

<strong>the</strong> fixed assets.<br />

(b) Physical verification <strong>of</strong> fixed assets has been carried out by <strong>the</strong> Management at most <strong>of</strong> <strong>the</strong> units, in accordance with<br />

a programme <strong>of</strong> verification which, in our opinion, provides for physical verification <strong>of</strong> all <strong>the</strong> fixed assets at reason<br />

able intervals. We have been informed that <strong>the</strong> reconciliation <strong>of</strong> assets verified with <strong>the</strong> fixed assets register is still in<br />

progress at some <strong>of</strong> <strong>the</strong> units. Discrepancies, if any, arising out <strong>of</strong> verification and reconciliation are yet to be<br />

determined.<br />

(c) The fixed assets disposed <strong>of</strong>f during <strong>the</strong> year, in our opinion, do not constitute a substantial <strong>part</strong> <strong>of</strong> <strong>the</strong> fixed assets <strong>of</strong><br />

<strong>the</strong> Company and such disposal has, in our opinion, not affected <strong>the</strong> going concern status <strong>of</strong> <strong>the</strong> Company.<br />

(iii) In respect <strong>of</strong> inventory <strong>of</strong> stores, operating supplies and food and beverages:<br />

(a) As explained to us, inventories were physically verified during <strong>the</strong> year by <strong>the</strong> Management at reasonable intervals.<br />

(b) In our opinion and according to <strong>the</strong> information and explanations given to us, <strong>the</strong> procedures <strong>of</strong> physical verification<br />

<strong>of</strong> inventories followed by <strong>the</strong> Management were reasonable and adequate in relation to <strong>the</strong> size <strong>of</strong> <strong>the</strong> Company and<br />

<strong>the</strong> nature <strong>of</strong> its business.<br />

(c) In our opinion and according to <strong>the</strong> information and explanations given to us, <strong>the</strong> Company has maintained proper<br />

records <strong>of</strong> its inventories and no material discrepancies were noticed on physical verification.<br />

(iv) In respect <strong>of</strong> <strong>the</strong> loans, secured or unsecured, granted by <strong>the</strong> Company to companies, firms or o<strong>the</strong>r <strong>part</strong>ies covered in <strong>the</strong><br />

Register maintained under Section 301 <strong>of</strong> <strong>the</strong> Companies Act, 1956, according to <strong>the</strong> information and explanations given<br />

to us:<br />

(a) The Company has granted loans aggregating Rs. 24.50 crores to one <strong>part</strong>y. At <strong>the</strong> year-end, <strong>the</strong> outstanding balances<br />

<strong>of</strong> such loans granted aggregated Rs. 242.53 crores (number <strong>of</strong> <strong>part</strong>ies – four ) and <strong>the</strong> maximum amount involved<br />

during <strong>the</strong> year was Rs. 262.80 crores (number <strong>of</strong> <strong>part</strong>ies – four).<br />

(b) The rate <strong>of</strong> interest and o<strong>the</strong>r terms and conditions <strong>of</strong> such loans are, in our opinion, prima facie not prejudicial to <strong>the</strong><br />

interests <strong>of</strong> <strong>the</strong> Company.<br />

(c) The receipt <strong>of</strong> principal amounts and interest has been regular/as per stipulations except in <strong>the</strong> case <strong>of</strong> a joint venture<br />

company, wherein interest <strong>of</strong> Rs. 2.17 crores remains overdue.


Annual Report 2007-2008<br />

(d) In respect <strong>of</strong> overdue amounts <strong>of</strong> over Rs.1 lakh remaining outstanding as at <strong>the</strong> year-end, as explained to us, <strong>the</strong><br />

Management has taken reasonable steps for recovery <strong>of</strong> <strong>the</strong> overdue interest.<br />

(v) In respect <strong>of</strong> <strong>the</strong> loans, secured or unsecured, taken by <strong>the</strong> Company from companies, firms or o<strong>the</strong>r <strong>part</strong>ies covered<br />

in <strong>the</strong> Register maintained under Section 301 <strong>of</strong> <strong>the</strong> Companies Act, 1956, according to <strong>the</strong> information and<br />

explanations given to us:<br />

(a) The Company has taken loans aggregating Rs. 85.50 crores from three <strong>part</strong>ies. At <strong>the</strong> year-end, <strong>the</strong> outstanding<br />

balances <strong>of</strong> such loans taken aggregated Rs. 31.48 crores (number <strong>of</strong> <strong>part</strong>ies – four) and <strong>the</strong> maximum amount in<br />

volved during <strong>the</strong> year was Rs. 38.40 crores (number <strong>of</strong> <strong>part</strong>ies – five).<br />

(b) The rate <strong>of</strong> interest and o<strong>the</strong>r terms and conditions <strong>of</strong> such loans are, in our opinion, prima facie not prejudicial to <strong>the</strong><br />

interests <strong>of</strong> <strong>the</strong> Company.<br />

(c) The payment <strong>of</strong> principal amounts and interest in respect <strong>of</strong> such loans are regular/as per stipulations.<br />

(vi) In our opinion and according to <strong>the</strong> information and explanations given to us, <strong>the</strong>re is an adequate internal control system<br />

commensurate with <strong>the</strong> size <strong>of</strong> <strong>the</strong> Company and <strong>the</strong> nature <strong>of</strong> its business for <strong>the</strong> purchase <strong>of</strong> inventory and fixed assets<br />

and for <strong>the</strong> sale <strong>of</strong> goods and services. During <strong>the</strong> course <strong>of</strong> our audit, we have not observed any major weakness in such<br />

internal control system.<br />

(vii) In respect <strong>of</strong> contracts or arrangements entered in <strong>the</strong> Register maintained in pursuance <strong>of</strong> Section 301 <strong>of</strong> <strong>the</strong> Companies<br />

Act 1956, to <strong>the</strong> best <strong>of</strong> our knowledge and belief and according to <strong>the</strong> information and explanations given to us:<br />

(a) The <strong>part</strong>iculars <strong>of</strong> contracts or arrangements referred to in Section 301 that needed to be entered in <strong>the</strong> Register<br />

maintained under <strong>the</strong> said Section have been so entered.<br />

(b) Where each <strong>of</strong> such transactions (excluding loans reported under paragraphs (iv) and (v) above) is in excess <strong>of</strong> Rs. 5<br />

lakhs in respect <strong>of</strong> any <strong>part</strong>y, <strong>the</strong> transactions have been made at prices which are prima facie reasonable, having<br />

regard to <strong>the</strong> prevailing market prices at <strong>the</strong> relevant time.<br />

(viii) In our opinion and according to <strong>the</strong> information and explanations given to us, <strong>the</strong> Company has complied with <strong>the</strong> provisions<br />

<strong>of</strong> Sections 58A and 58AA, or any o<strong>the</strong>r relevant provisions <strong>of</strong> <strong>the</strong> Companies Act, 1956 and <strong>the</strong> Companies (Acceptance<br />

<strong>of</strong> Deposits) Rules, 1975, with regard to deposits accepted from <strong>the</strong> public. According to information and explanations<br />

given to us, no order has been passed by <strong>the</strong> Company Law Board or <strong>the</strong> National Company Law Tribunal or <strong>the</strong> Reserve<br />

Bank <strong>of</strong> India or any Court or any o<strong>the</strong>r Tribunal.<br />

(ix) In our opinion, <strong>the</strong> internal audit functions carried out during <strong>the</strong> year by <strong>the</strong> firms <strong>of</strong> Chartered Accountants appointed by<br />

<strong>the</strong> Management have been commensurate with <strong>the</strong> size <strong>of</strong> <strong>the</strong> Company and <strong>the</strong> nature <strong>of</strong> its business.<br />

(x) According to <strong>the</strong> information and explanations given to us, in respect <strong>of</strong> statutory dues:<br />

(a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor<br />

Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax,<br />

Customs Duty, Excise Duty, Cess and any o<strong>the</strong>r material statutory dues with <strong>the</strong> appropriate authorities during <strong>the</strong><br />

year.<br />

(b) There were no undisputed amounts outstanding as at 31 st March, 2008 for a period <strong>of</strong> more than six months from<br />

<strong>the</strong> date <strong>the</strong>y became payable.<br />

69


The Indian Hotels Company Limited<br />

70<br />

(c) Details <strong>of</strong> dues <strong>of</strong> Sales Tax and Service Tax which have not been deposited as on 31 st March, 2008 on account <strong>of</strong><br />

disputes are given below:<br />

Name <strong>of</strong> Statute Nature <strong>of</strong> Dues Amount Period to which Forum where dispute is<br />

(Rs. in crores) <strong>the</strong> amount relates pending<br />

Central Sales Tax Sales Tax 0.11 2000-01/2002-03 Additional Commissioner<br />

Act, 1956 and <strong>of</strong> Sales Tax<br />

Sales Tax Act <strong>of</strong><br />

various states<br />

1.12 1997-98/1999-2001 Assessing Officer <strong>of</strong> Sales Tax<br />

1.48 2001-02 Deputy Commissioner<br />

<strong>of</strong> Sales Tax<br />

0.11 1992-95 Tribunal<br />

0.27 1995-96 Appellate Board<br />

0.23 1996-98 Appellate & Revision Board<br />

0.36 2001-02/2004-05 Deputy Commissioner<br />

<strong>of</strong> Commercial Taxes<br />

0.06 2003-05 Joint Commissioner <strong>of</strong><br />

Trade Tax, Noida<br />

Finance Act, 1994 Service Tax 0.05 2002-05 Deputy Commissioner<br />

<strong>of</strong> Central Excise<br />

Total 3.83<br />

0.04 2002-05 Assistant Commissioner<br />

<strong>of</strong> Service Tax<br />

(xi) In our opinion and according to <strong>the</strong> information and explanations given to us, <strong>the</strong> Company has not defaulted in <strong>the</strong><br />

repayment <strong>of</strong> dues to financial institutions, banks and debentureholders.<br />

(xii) In our opinion and according to <strong>the</strong> information and explanations given to us, <strong>the</strong> Company has not granted any loans and<br />

advances on <strong>the</strong> basis <strong>of</strong> security by way <strong>of</strong> pledge <strong>of</strong> shares, debentures and o<strong>the</strong>r securities.<br />

(xiii) In our opinion and according to <strong>the</strong> information and explanations given to us, <strong>the</strong> terms and conditions <strong>of</strong> <strong>the</strong> guarantees<br />

given by <strong>the</strong> Company for loans taken by o<strong>the</strong>rs from banks and financial institutions are not prima facie prejudicial to <strong>the</strong><br />

interests <strong>of</strong> <strong>the</strong> Company.<br />

(xiv) To <strong>the</strong> best <strong>of</strong> our knowledge and belief and according to <strong>the</strong> information and explanations given to us, in our opinion,<br />

term loans availed by <strong>the</strong> Company were prima facie applied by <strong>the</strong> Company during <strong>the</strong> year for <strong>the</strong> purposes for<br />

which <strong>the</strong> loans were obtained.


Annual Report 2007-2008<br />

(xv) According to <strong>the</strong> information and explanations given to us, and on an overall examination <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> <strong>of</strong> <strong>the</strong><br />

Company, funds raised on short-term basis have prima facie not been used during <strong>the</strong> year for long-term investment.<br />

(xvi) According to <strong>the</strong> information and explanations given to us, <strong>the</strong> Company has not made any preferential allotment <strong>of</strong><br />

shares to <strong>part</strong>ies and companies/firms covered in <strong>the</strong> Register maintained under Section 301 <strong>of</strong> <strong>the</strong> Companies Act,<br />

1956.<br />

(xvii) According to <strong>the</strong> information and explanations given to us and <strong>the</strong> records examined by us, securities have been<br />

created in respect <strong>of</strong> <strong>the</strong> debentures issued.<br />

(xviii)The Company had received an amount <strong>of</strong> Rs. 23.85 crores as application money up to 31 st March, 2008 in response to<br />

<strong>the</strong> Rights Issue <strong>of</strong> simultaneous but unlinked issue <strong>of</strong> Equity Shares and Non Convertible Debentures with detachable<br />

warrants, which is retained in an escrow account pending allotment.<br />

(xix) To <strong>the</strong> best <strong>of</strong> our knowledge and according to <strong>the</strong> information and explanations given to us, no fraud by <strong>the</strong> Company<br />

and no material fraud on <strong>the</strong> Company was noticed or reported during <strong>the</strong> year.<br />

For S. B. BILLIMORIA & CO. For N. M. RAIJI & CO.<br />

Chartered Accountants Chartered Accountants<br />

Nalin M. Shah Vinay D. Balse<br />

Partner Partner<br />

(Membership No.15860)<br />

MUMBAI, 23<br />

(Membership No. 39434)<br />

rd June, 2008<br />

71


The Indian Hotels Company Limited<br />

72<br />

<strong>Balance</strong> <strong>Sheet</strong> as at 31st March, 2008<br />

Schedule Rupees Rupees<br />

Previous Year<br />

Rupees<br />

crores crores crores<br />

SOURCES OF FUNDS<br />

Shareholders’ Funds<br />

Share Capital 1 60.29 60.29<br />

Share Application Money (Refer Note 2, Page 93) 19.97 -<br />

Reserves and Surplus 2 1,956.29 1,738.39<br />

Total<br />

Loan Funds<br />

2,036.55 1,798.68<br />

Secured Loans 3 755.58 774.36<br />

Unsecured Loans 4 378.60 167.54<br />

Total 1,134.18 941.90<br />

Long Term Trade Deposits 23.63 15.28<br />

Deferred Tax Liability (Refer Note 4 (b), Page 94) 137.86 135.40<br />

APPLICATION OF FUNDS<br />

3,332.22 2,891.26<br />

Fixed Assets 5<br />

Gross Block 2,072.16 2014.29<br />

Less : Depreciation 700.56 654.24<br />

Net Block 1,371.60 1360.05<br />

Capital work-in-progress 265.45 111.52<br />

Investments 6 977.58 962.81<br />

Long Term Deposits 7 585.55 403.90<br />

Current Assets, Loans and Advances 8<br />

Inventories 32.85 29.02<br />

Sundry Debtors 138.41 127.20<br />

Cash & Bank <strong>Balance</strong>s 74.43 67.75<br />

Loans & Advances 332.77 275.92<br />

578.46 499.89<br />

Less: Current Liabilities and Provisions 9<br />

Liabilities 401.14 291.54<br />

Provisions 46.73 156.75<br />

447.87 448.29<br />

Net Current Assets 130.59 51.60<br />

Miscellaneous Expenditure (to <strong>the</strong> extent not adjusted or written <strong>of</strong>f) 10 1.45 1.38<br />

3,332.22 2891.26<br />

The accompanying notes form an integral <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> 13 / 14<br />

As per our report attached. For and on behalf <strong>of</strong> <strong>the</strong> Board<br />

For S. B. BILLIMORIA & CO. For N. M. RAIJI & CO. R. N. TATA Chairman<br />

Chartered Accountants Chartered Accountants R. K. KRISHNA KUMAR Vice - Chairman<br />

RAYMOND N. BICKSON Managing Director<br />

Nalin M. Shah Vinay D. Balse<br />

Partner Partner<br />

ANIL P. GOEL Executive Director - Finance<br />

ABHIJIT MUKERJI Executive Director - Hotel Operations<br />

N.A.SOONAWALA<br />

S. K. KANDHARI<br />

K. B. DADISETH<br />

JAGDISH CAPOOR<br />

SHAPOOR MISTRY }<br />

Directors<br />

Mumbai, June 23 rd , 2008 SANKER PARAMESWARAN Vice President - Legal &<br />

Company Secretary


Annual Report 2007-2008<br />

Pr<strong>of</strong>it and Loss Account for <strong>the</strong> year ended 31st March, 2008<br />

Schedule Rupees Rupees<br />

Previous Year<br />

Rupees<br />

crores crores crores<br />

INCOME<br />

Rooms, Restaurants, Banquets and O<strong>the</strong>r Income<br />

EXPENDITURE<br />

11 1,823.16 1,617.31<br />

Operating and General Expenses 12 1,074.35 981.62<br />

Depreciation 85.48 91.44<br />

Interest (net) (Refer Note 13, Page 98) 94.28 71.89<br />

Total<br />

Less : Unallocated Expenditure during construction<br />

1,254.11 1,144.95<br />

period transferred to Fixed Assets 11.42 2.28<br />

1,242.69 1,142.67<br />

PROFIT BEFORE TAX 580.47 474.64<br />

Less : Provision for Tax (Refer Note 4 (a), Page 94) 198.91 152.25<br />

Less : Short Provision <strong>of</strong> Tax <strong>of</strong> earlier years (Net) 4.10 -<br />

PROFIT AFTER TAX 377.46 322.39<br />

Add : <strong>Balance</strong> brought forward from Previous Year 331.33 156.80<br />

Amount available for Appropriation<br />

Appropriation:<br />

708.79 479.19<br />

Interim Dividend 114.54 -<br />

Tax on Interim Dividend 19.47 -<br />

Proposed Dividend - 96.46<br />

Tax on Dividend - 16.40<br />

Transfer to General Reserve 38.00 35.00<br />

<strong>Balance</strong> carried forward 536.78 331.33<br />

Earnings Per Share - (In Rupees)<br />

708.79 479.19<br />

Basic and Diluted (Refer Note 32, Page 112) 6.26 5.35<br />

Face Value per equity share - (In Rupees)<br />

The accompanying notes form an integral <strong>part</strong> <strong>of</strong> <strong>the</strong><br />

1.00 1.00<br />

Pr<strong>of</strong>it and Loss Account 13 / 14<br />

As per our report attached. For and on behalf <strong>of</strong> <strong>the</strong> Board<br />

For S. B. BILLIMORIA & CO. For N. M. RAIJI & CO. R. N. TATA Chairman<br />

Chartered Accountants Chartered Accountants R. K. KRISHNA KUMAR Vice - Chairman<br />

RAYMOND N. BICKSON Managing Director<br />

Nalin M. Shah Vinay D. Balse<br />

Partner Partner<br />

ANIL P. GOEL Executive Director - Finance<br />

ABHIJIT MUKERJI Executive Director - Hotel Operations<br />

N.A.SOONAWALA<br />

S. K. KANDHARI<br />

K. B. DADISETH<br />

JAGDISH CAPOOR<br />

SHAPOOR MISTRY }<br />

Directors<br />

Mumbai, June 23 rd , 2008 SANKER PARAMESWARAN Vice President - Legal &<br />

Company Secretary<br />

73


The Indian Hotels Company Limited<br />

74<br />

Cash Flow Statement for <strong>the</strong> year ended 31st March, 2008<br />

Rupees Rupees Rupees<br />

Previous Year<br />

Rupees<br />

crores crores crores crores<br />

Cash Flow From Operating Activities<br />

Net Pr<strong>of</strong>it Before Tax<br />

Adjustments For :<br />

580.47 474.64<br />

Depreciation 85.48 91.44<br />

Amortisation <strong>of</strong> VRS Expenditure 0.51 0.51<br />

Pr<strong>of</strong>it on sale <strong>of</strong> investments - (24.75)<br />

Loss / (Pr<strong>of</strong>it) on sale <strong>of</strong> assets 5.98 (0.19)<br />

Provision for Doubtful Debts and Advances (1.26) 1.95<br />

Dividend Income (19.98) (32.78)<br />

Interest (Net) 94.28 71.89<br />

Unrealised Exchange Gain on borrowings (14.23) (9.80)<br />

Provision for Diminution in value <strong>of</strong> Investments written back (0.25) -<br />

Provision for Loyalty Programmes 2.14 2.01<br />

Provision for Employee Benefits 0.93 9.67<br />

153.60 109.95<br />

Cash Operating Pr<strong>of</strong>it before working capital changes<br />

Adjustments For :<br />

734.07 584.59<br />

Trade and O<strong>the</strong>r Receivables (19.56) (19.62)<br />

Inventories (3.83) (1.74)<br />

Trade Payables (29.24) 69.83<br />

(52.63) 48.47<br />

Cash Generated from Operating Activities 681.44 633.06<br />

Direct Taxes Paid (207.08) (112.57)<br />

Net Cash From Operating Activities<br />

Cash Flow From Investing Activities<br />

474.36 520.49<br />

Purchase <strong>of</strong> Fixed Assets (259.00) (197.45)<br />

Sale <strong>of</strong> Fixed Assets 2.06 7.26<br />

Purchase <strong>of</strong> Investments (including Share Application Money) (64.12) (584.62)<br />

Sale <strong>of</strong> Investments - 30.34<br />

Interest Received 7.02 26.98<br />

Dividend Received 19.98 32.78<br />

Long Term Deposits Placed with Subsidiary (179.02) -<br />

Long Term Deposits Placed with O<strong>the</strong>rs (27.74) -<br />

Long Term Deposits Refunded by O<strong>the</strong>r Companies 0.25 -<br />

Loans Repaid by Subsidiaries 9.17 324.00<br />

(Loans to) / Loans Repaid by O<strong>the</strong>r Companies (net) (1.57) 5.83<br />

Net Cash Used In Investing Activities<br />

Cash Flow From Financing Activities<br />

(492.97) (354.88)<br />

Share Application money collected 19.97 -<br />

Debenture Application money collected 3.88 -<br />

Debenture issue costs (0.69) (0.74)<br />

Interest Paid (101.08) (100.25)<br />

Repayment <strong>of</strong> Long Term Loans and Debentures (352.75) (381.45)<br />

Proceeds <strong>of</strong> Long Term Loans and Debentures 422.73 256.43<br />

Short Term Loans Raised / (Repaid) (net) 117.57 82.03<br />

Long Term Trade Deposits Raised/(Repaid) (net) 8.34 (21.22)<br />

Dividend Paid (Including tax on dividend) (112.64) (95.10)<br />

Net Cash Used In Financing Activities 5.33 (260.30)<br />

Net Increase / (Decrease) In Cash and Cash Equivalents (13.28) (94.69)<br />

Cash and Cash Equivalents - Opening - 1st April - (Refer Note 9 (b), Page 96) 56.38 115.24<br />

Cash and Cash Equivalents acquired on Amalgamation - 35.83<br />

Cash and Cash Equivalents - Closing - 31st March - (Refer Note 9 (b), Page 96) 43.10 56.38<br />

As per our report attached. For and on behalf <strong>of</strong> <strong>the</strong> Board<br />

For S. B. BILLIMORIA & CO. For N. M. RAIJI & CO. R. N. TATA Chairman<br />

Chartered Accountants Chartered Accountants R. K. KRISHNA KUMAR Vice - Chairman<br />

RAYMOND N. BICKSON Managing Director<br />

Nalin M. Shah Vinay D. Balse<br />

Partner Partner<br />

ANIL P. GOEL Executive Director - Finance<br />

ABHIJIT MUKERJI Executive Director - Hotel Operations<br />

N.A.SOONAWALA<br />

S. K. KANDHARI<br />

K. B. DADISETH<br />

JAGDISH CAPOOR<br />

SHAPOOR MISTRY }<br />

Directors<br />

Mumbai, June 23 rd , 2008 SANKER PARAMESWARAN Vice President - Legal &<br />

Company Secretary


Annual Report 2007-2008<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 1 : Share Capital<br />

Rupees<br />

Previous Year<br />

Rupees<br />

crores Crores<br />

AUTHORISED SHARE CAPITAL<br />

Ordinary Shares<br />

100,00,00,000 Ordinary Shares <strong>of</strong> Re. 1/- each<br />

Preference Shares<br />

100.00 100.00<br />

1,00,00,000 Cumulative Redeemable Preference Shares <strong>of</strong> Rs. 100/- each 100.00 100.00<br />

ISSUED, SUBSCRIBED AND PAID UP<br />

60,28,51,493 ((Previous Year 58,66,30,920) Ordinary Shares <strong>of</strong> Re. 1 /-<br />

200.00 200.00<br />

each, Fully Paid ( See Notes below ) 60.29 58.67<br />

Share Capital Pending Allotment (See Note (iv) below) - 1.62<br />

60.29 60.29<br />

Notes :<br />

1. Of <strong>the</strong> total paid up capital :<br />

(i) 4,90,04,000 Ordinary Shares, <strong>of</strong> <strong>the</strong> face value <strong>of</strong> Re. 1/- each, were issued as fully paid Bonus Shares by capitalisation<br />

<strong>of</strong> Reserves.<br />

(ii) 24,88,77,170 Ordinary Shares, <strong>of</strong> <strong>the</strong> face value <strong>of</strong> Re. 1/- each, were issued as fully paid Bonus Shares by capitalisation<br />

<strong>of</strong> Securities Premium Account.<br />

(iii) 13,54,84,873 (Previous Year - 13,54,83,970) Ordinary Shares, <strong>of</strong> <strong>the</strong> face value <strong>of</strong> Re. 1/- each, were issued as fully<br />

paid shares, pursuant to exercise <strong>of</strong> option for conversion by holders <strong>of</strong> Foreign Currency Convertible Bonds (FCCBs).<br />

(iv) 1,62,19,670 Ordinary Shares, <strong>of</strong> <strong>the</strong> face value <strong>of</strong> Re. 1/- each, were allotted on May 9, 2007, as fully paid shares,<br />

pursuant to amalgamation <strong>of</strong> Gateway Hotels & Getaway Resorts Limited and Indian Resort Hotels Limited with <strong>the</strong><br />

Company in <strong>the</strong> previous year.<br />

75


The Indian Hotels Company Limited<br />

76<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 2 : Reserves and Surplus<br />

Rupees Rupees<br />

Previous Year<br />

Rupees<br />

crores crores crores<br />

Capital Reserve<br />

<strong>Balance</strong> as per Last Account 43.91 0.85<br />

Add : On Amalgamation - 43.06<br />

Total<br />

Capital Redemption Reserve<br />

43.91 43.91<br />

<strong>Balance</strong> as per Last Account 1.12 0.55<br />

Add : On Amalgamation - 0.57<br />

Total<br />

Securities Premium Account<br />

1.12 1.12<br />

<strong>Balance</strong> as per Last Account 852.06 817.76<br />

Add : On Conversion <strong>of</strong> FCCBs Rs. 38,737 - 12.68<br />

Add: On Amalgamation - 20.89<br />

Less: Debenture Issue Expenses written <strong>of</strong>f (Refer Note 3, Page 93) 0.69 0.74<br />

Add: Provision for premium on redemption <strong>of</strong> FCCBs no longer<br />

required, written back Rs. 4,976 - 1.47<br />

Total<br />

General Reserve<br />

851.37 852.06<br />

<strong>Balance</strong> as per Last Account 366.63 538.16<br />

Add : Transferred from Pr<strong>of</strong>it and Loss Account 38.00 35.00<br />

Add : On Amalgamation - 6.86<br />

Add : Unrecognised Net Deferred Tax Assets <strong>of</strong> Amalgamating Companies - 21.89<br />

Less: Net Deficit in Pr<strong>of</strong>it & Loss <strong>of</strong> Amalgamating Companies - 167.16<br />

Less: Deficit on Amalgamation - 57.65<br />

Less: Adjustment for differential accounting policy <strong>of</strong> amalgamating companies - 2.56<br />

Less: Transistional Adjustment for Employee Benefits - 7.91<br />

Total<br />

Investment Reserve<br />

404.63 366.63<br />

<strong>Balance</strong> as per Last Account<br />

Investment Allowance Utilised Reserve<br />

5.00 5.00<br />

<strong>Balance</strong> as per Last Account<br />

Export Pr<strong>of</strong>its Reserve<br />

4.03 4.03<br />

<strong>Balance</strong> as per Last Account<br />

Debenture Redemption Reserve<br />

0.41 0.41<br />

<strong>Balance</strong> as per Last Account<br />

Foreign Exchange Earnings Reserve<br />

88.67 88.67<br />

<strong>Balance</strong> as per Last Account 7.51 -<br />

Add : On Amalgamation - 7.51<br />

Total<br />

Foreign Exchange Earnings Utilised Reserve<br />

7.51 7.51<br />

<strong>Balance</strong> as per Last Account 2.31 -<br />

Add : On Amalgamation - 2.31<br />

Total<br />

Foreign Currency Translation Reserve (Refer Note 1 (f), Page 91)<br />

2.31 2.31<br />

<strong>Balance</strong> as per Last Account 35.41 45.60<br />

Less : Foreign Exchange fluctuation for <strong>the</strong> year 24.86 10.19<br />

Total<br />

Pr<strong>of</strong>it and Loss Account<br />

10.55 35.41<br />

<strong>Balance</strong> carried forward 536.78 331.33<br />

1,956.29 1,738.39


Annual Report 2007-2008<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 3 : Secured Loans<br />

Previous Year<br />

Rupees Rupees Rupees<br />

crores crores crores<br />

DEBENTURES<br />

2,500, 9.5% Secured Non-Convertible Redeemable Debentures <strong>of</strong><br />

Rs.10 lakhs each, allotted on February 27, 2007, and repayable at <strong>the</strong><br />

end <strong>of</strong> <strong>the</strong> 5th year from <strong>the</strong> date <strong>of</strong> allotment 250.00 250.00<br />

3,30,74,300, 11.75% Secured Non-Convertible Redeemable Debentures<br />

<strong>of</strong> Rs.100 each, redeemed during 2007-08 - 330.74<br />

3,000, 9.86% Secured Non-Convertible Redeemable Debentures<br />

<strong>of</strong> Rs.10 lakhs each, allotted on September 3, 2007, and repayable at <strong>the</strong> end<br />

<strong>of</strong> <strong>the</strong> 3rd year from <strong>the</strong> date <strong>of</strong> allotment 300.00 -<br />

Security :<br />

All <strong>the</strong> above Debentures are secured by a pari passu first charge created on<br />

all <strong>the</strong> fixed assets <strong>of</strong> <strong>the</strong> Company, both present and future, o<strong>the</strong>r than<br />

immovable properties <strong>of</strong> Taj Wellington Mews, Mumbai and Taj Exotica, Goa<br />

Term loan from a Bank (Repayable within one year - Nil) 100.00 100.00<br />

Less: Exchange Gain on Currency Swap <strong>of</strong> <strong>the</strong> above Term Loan 9.04 2.04<br />

Security :<br />

The Term Loan is secured by a specific charge on <strong>the</strong> immovable and<br />

movable properties <strong>of</strong> Taj Wellington Mews, Mumbai<br />

90.96 97.96<br />

Term loan from Housing Development Finance Corporation Limited (HDFC)<br />

[Repayable within one year - Nil (Previous Year - Nil) ] 83.29 83.29<br />

Security :<br />

Term Loan from HDFC is secured by a specific charge on<br />

<strong>the</strong> immovable properties <strong>of</strong> Taj Exotica, Goa<br />

FROM BANK<br />

Bank Overdraft 31.33 12.37<br />

(Secured by hypo<strong>the</strong>cation <strong>of</strong> Operating Supplies, Stores, Beverages and Receivables )<br />

TOTAL 755.58 774.36<br />

77


The Indian Hotels Company Limited<br />

78<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 4 : Unsecured Loans<br />

FIXED DEPOSITS<br />

Previous Year<br />

Rupees Rupees<br />

crores crores<br />

From Shareholders: (Refer Note 1 below ) 1.91 2.39<br />

Repayable within one year - Rs. 1.05 crores (Previous Year - Rs. 0.92 crore)<br />

From O<strong>the</strong>rs : 1.17 2.01<br />

Repayable within one year - Rs. 1.14 crores (Previous Year - Rs. 0.81 crore)<br />

SHORT TERM LOANS FROM BANKS 89.18 67.66<br />

Repayable within one year - Rs 89.18 crores; ( Previous Year - Rs. 67.66 crores)<br />

INTER - CORPORATE DEPOSITS (Refer Note 2 below ) 57.05 11.00<br />

Repayable within one year - Rs. 57.05 crores (Previous Year - Rs. 11.00 crores)<br />

COMMERCIAL PAPER (Refer Note 3 below ) 50.00 -<br />

Repayable within one year - Rs. 50 crores<br />

1% FOREIGN CURRENCY CONVERTIBLE BONDS - -<br />

(Previous Year - Rs. 43,100)<br />

FOREIGN CURRENCY TERM LOAN FROM BANKS 179.29 84.48<br />

Repayable within one year - Rs. 59.23 crores (Previous Year - Rs. 20.69 crores)<br />

TOTAL 378.60 167.54<br />

Notes:<br />

1) Includes Fixed deposits from a Director - Rs 1.00 crore (Previous Year - Rs. 1.23 crores).<br />

2) Includes deposits from subsidiary - Rs. 14.05 crores (Previous Year - Nil).<br />

3) Maximum amount outstanding during <strong>the</strong> year - Rs. 170.00 crores (Previous Year - Nil).


Annual Report 2007-2008<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 5 : Fixed Assets<br />

Rupees crores<br />

Gross Block Additions Additions Deductions Gross Block Accumulated Additions Depreciation Deductions Accumulated Net Block Net Block<br />

(at cost ) on for <strong>the</strong> for <strong>the</strong> (at cost ) Depreciation on for <strong>the</strong> for <strong>the</strong> Depreciation as at as at<br />

as at Amalgamation Year Year as at as at Amalgamation Year Year as at<br />

01.04.2007 31.03.2008 01.04.2007 31.03.2008 31.03.2008 31.03.2007<br />

(See Note 3)<br />

TANGIBLE ASSETS<br />

Freehold Land 135.47 - 0.85 - 136.32 3.88 - - - 3.88 132.44 131.59<br />

14.46 85.18 35.83 - 135.47 3.88 - - - 3.88 131.59 -<br />

Leasehold Land 13.35 - 1.75 0.19 14.91 0.20 - 0.12 - 0.32 14.59 13.15<br />

Buildings<br />

8.62 0.15 4.58 - 13.35 0.12 0.02 0.06 - 0.20 13.15 -<br />

(See Note 1 below) 815.47 - 25.21 2.12 838.56 88.65 - 14.68 0.35 102.98 735.58 726.82<br />

495.57 270.23 51.62 1.95 815.47 50.35 24.77 14.17 0.64 88.65 726.82 -<br />

Plant and Machinery 710.73 - 52.28 22.06 740.95 363.20 - 44.54 20.19 387.55 353.40 347.53<br />

Furniture, Fixtures<br />

518.81 153.67 58.85 20.60 710.73 264.82 66.09 49.44 17.15 363.20 347.53 -<br />

and Office Equipment 290.89 - 18.11 4.42 304.58 170.72 - 21.44 3.42 188.74 115.84 120.17<br />

225.77 51.82 19.71 6.41 290.89 123.38 30.28 21.89 4.83 170.72 120.17 -<br />

Vehicles 13.19 - 0.80 0.99 13.00 5.27 - 1.07 0.64 5.70 7.30 7.92<br />

INTANGIBLE ASSETS<br />

12.64 0.89 1.80 2.14 13.19 5.17 0.39 1.13 1.42 5.27 7.92 -<br />

Wesbite Development 4.53 - 0.08 - 4.61 4.53 - 0.02 - 4.55 0.06 -<br />

Cost 4.53 - - - 4.53 4.30 - 0.23 - 4.53 - -<br />

Customer Reservation System 17.18 - 3.95 14.84 6.29 13.29 - 1.99 13.81 1.47 4.82 3.89<br />

(including licensed s<strong>of</strong>tware) 17.11 - 0.07 - 17.18 10.37 - 2.92 - 13.29 3.89 -<br />

Service and Operating Rights 13.48 - 2.04 2.58 12.94 4.50 - 1.62 0.75 5.37 7.57 8.98<br />

10.83 - 2.65 - 13.48 2.90 - 1.60 - 4.50 8.98 -<br />

TOTAL 2,014.29 - 105.07 47.20 2,072.16 654.24 - 85.48 39.16 700.56 1,371.60 1,360.05<br />

1,308.34 561.94 175.11 31.10 2,014.29 465.29 121.55 91.44 24.04 654.24 1,360.05<br />

Notes :<br />

(1) Gross Block includes improvements to buildings constructed on leasehold land - Rs. 406.98 crores; (Previous Year -<br />

Rs. 387.07 crores).<br />

(2) Exchange gain adjusted to cost <strong>of</strong> <strong>the</strong> Fixed Assets during <strong>the</strong> year - Nil; (Previous Year - Rs. 1.27 crores).<br />

(3) Accumulated Depreciation includes adjustment for impairment <strong>of</strong> Rs. 9.25 crores made in <strong>the</strong> earlier years.<br />

(4) Figures in italics are in respect <strong>of</strong> <strong>the</strong> previous year.<br />

79


The Indian Hotels Company Limited<br />

80<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 6 : Investments<br />

Face Holdings Holdings Previous Year<br />

Value As at Rupees Rupees As at Rupees<br />

Long Term Rupees 31st Trade Investments :(unlesso<strong>the</strong>rwise stated)<br />

Fully Paid Unquoted Equity Shares<br />

(unless o<strong>the</strong>rwise stated) :<br />

Hotels and Restaurant Co-op. Service Society Ltd.<br />

Mar 08 crores crores 31st Mar 07 crores<br />

(Rs. 1,000/-) 50 20 - 20 -<br />

Ideal Ice & Cold Storage Co. Ltd.<br />

India Tourism Development Corporation Ltd.<br />

10 107,224 0.06 107,224 0.06<br />

(Listed but not quoted) 10 67,50,275 44.58 67,50,275 44.58<br />

Inditravel Pvt. Ltd. 10 2,40,003 0.24 2,40,003 0.24<br />

Kumarkrupa Hotels Ltd. 10 96,432 0.94 96,432 0.94<br />

Piem Hotels Ltd.<br />

Rallis India Ltd. (7.5% Cumulative<br />

10 8,81,228 35.27 8,81,228 35.27<br />

Redeemable Preference Shares) 10 2,00,00,000 20.00 2,00,00,000 20.00<br />

Taida Trading & Industries Ltd. 100 26,912 0.27 26,912 0.27<br />

Taj Air Ltd. 10 1,47,060 0.15 1,47,060 0.15<br />

Taj Asia Ltd. US $ 1 13,29,778 13.63 13,29,778 13.63<br />

Taj Enterprises Ltd.<br />

Taj International Hotels (South Africa)<br />

100 7,000 0.07 7,000 0.07<br />

(Proprietary) Ltd. (Rs. 2,925) S A Rand 1 500 - 500 -<br />

Taj Karnataka Hotels & Resorts Ltd. 10 3,00,000 0.30 3,00,000 0.30<br />

Taj Kerala Hotels & Resorts Ltd. 10 1,41,51,663 15.67 1,41,51,663 15.67<br />

Taj Madras Flight Kitchen Pvt. Ltd. 10 79,44,112 8.56 79,44,112 8.56<br />

Taj Madurai Ltd. 10 9,11,994 0.95 9,11,994 0.95<br />

Taj Rhein Shoes Co. Ltd. 100 45,000 0.45 45,000 0.45<br />

Taj Trade & Transport Co. Ltd.<br />

Taj Safaris Ltd. (formerly known as<br />

Taj Wilderness Lodges Ltd.)<br />

10 12,54,000 2.67 12,54,000 2.67<br />

(10,16,667 shares acquired during <strong>the</strong> year) 10 46,66,667 6.67 36,50,000 3.65<br />

Tata Projects Ltd. 100 15,000 0.17 15,000 0.17<br />

Tata Services Ltd. 1,000 421 0.03 421 0.03<br />

Tata Sons Ltd. 1,000 4,500 25.00 4,500 25.00<br />

175.68 172.66<br />

Carried over 175.68 172.66


Annual Report 2007-2008<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 6 : Investments (Contd.)<br />

Face Holdings Holdings Previous Year<br />

Value As at Rupees Rupees As at Rupees<br />

Rupees 31st Mar 08 crores crores 31st Mar 07 crores<br />

Brought over<br />

Quoted Equity Shares - Fully Paid :<br />

175.68 172.66<br />

Tourism Finance Corporation <strong>of</strong> India Ltd. 10 50,000 0.10 50,000 0.10<br />

Benares Hotels Ltd. 10 2,93,000 0.69 2,93,000 0.69<br />

Taj Lanka Hotels Ltd. Sri Lankan Rs. 10 3,43,75,640 18.72 3,43,75,640 18.72<br />

Oriental Hotels Ltd. 10 33,76,455 28.72 33,76,455 28.72<br />

Taj GVK Hotels & Resorts Ltd. 2 1,60,00,000 40.34 1,60,00,000 40.34<br />

Tata Consultancy Services Ltd. 1 614,376 0.05 614,376 0.05<br />

88.62 88.62<br />

Investments in Subsidiary Companies<br />

Unqoted Equity Shares - Fully Paid :<br />

International Hotel Management Services Inc. US $ 1 100 418.47 100 418.47<br />

KTC Hotels Ltd. 10 6,04,000 0.70 6,04,000 0.70<br />

Residency Food & Beverages Ltd.<br />

Roots Corporation Ltd. (1,25,00,000 shares<br />

10 1,85,00,000 18.25 1,85,00,000 18.25<br />

acquired during <strong>the</strong> year) 10 5,10,00,000 51.00 3,85,00,000 38.50<br />

Taj International Hotels (H.K.) Ltd. US $ 1 2,67,55,000 81.12 2,67,55,000 81.12<br />

Taj Investment & Finance Company Ltd. 10 8,15,00,000 81.50 8,15,00,000 81.50<br />

Taj SATS Air Catering Ltd. 10 88,74,000 61.82 88,74,000 61.82<br />

United Hotels Ltd. 10 25,18,320 1.11 25,18,320 1.11<br />

713.97 701.47<br />

O<strong>the</strong>r Investments - Long Term<br />

Central India Spinning Weaving &<br />

Manufacturing Co. Ltd. ( 10% unquoted<br />

Cumulative Preference Shares ) ( Rs. 27,888/-)<br />

HDFC Bank Ltd. (quoted Equity Shares )<br />

500 50 - 50 -<br />

( Rs. 5,000/- ) 10 500 - 500 -<br />

- -<br />

Total Long Term Investments - Gross 978.27 962.75<br />

Less : Provision for Diminution in Value <strong>of</strong> Investments 0.69 0.94<br />

Total Long Term Investments - Net 977.58 961.81<br />

Carried over 977.58 961.81<br />

81


The Indian Hotels Company Limited<br />

82<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 6 : Investments (Contd.)<br />

Face Holdings Holdings Previous Year<br />

Value As at Rupees Rupees As at Rupees<br />

Rupees 31 st Mar 08 crores crores 31st Mar 07 crores<br />

Brought over<br />

Current Investments<br />

Investments in Mutual Funds<br />

(Unquoted - Units <strong>of</strong> Rs. 10/- each )<br />

Tata Fixed Horizon Fund<br />

977.58 961.81<br />

Series 3-13 months dividend 10,00,000 * - 10 1.00<br />

* sold during <strong>the</strong> year - 1.00<br />

TOTAL 977.58 962.81<br />

During <strong>the</strong> year <strong>the</strong> Company accquired and sold <strong>the</strong> following investments in Mutual Funds<br />

Particulars Face No <strong>of</strong> Units Purchase<br />

Grindlays Floating Fund LT-INST<br />

value Cost<br />

Plan B - Daily Dividend<br />

Tata Liquid Super High Investment<br />

10 1,50,19,042 15.02<br />

Fund - Daily Dividend<br />

ICICI Prudential Institutional<br />

Liquid Plan - Super Institutional<br />

1,000 6,73,678 75.08<br />

Daily Dividend- Reinvestment Dividend<br />

ICICI Prudential FlexibleIncome<br />

10 3,50,30,457 35.03<br />

Plan Dividend - Daily Reinvestment Dividend<br />

Standard Chartered Liquidity<br />

10 66,33,044 7.01<br />

Manager - Plus - Daily Dividend<br />

HDFC Cash Management<br />

Fund - Savings Plan - Daily<br />

1,000 3,30,265 33.03<br />

Dividend Reinvestment.<br />

Birla Cash Plus - Instituional Premium -<br />

10 1,88,24,755 20.02<br />

Daily Dividend - Reinvestment 10 4,74,51,669 47.54<br />

Total<br />

Notes :<br />

12,39,62,910 232.73<br />

1 Aggregate <strong>of</strong> Quoted Investments - Gross : Cost 88.62 88.62<br />

: Market Value 335.02 513.77<br />

2 Aggregate <strong>of</strong> Unquoted Investments - Gross : Cost 889.65 875.13


Annual Report 2007-2008<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 7 : Long Term Deposits<br />

Rupees<br />

Previous Year<br />

Rupees<br />

crores crores<br />

Long term deposits placed for Hotel Properties<br />

[includes Rs. 3.50 crores placed with subsidiaries<br />

(Previous Year - Rs. 3.50 crores)] 142.81 131.10<br />

Shareholder’s Deposit placed :<br />

(i) With Subsidiary Companies (Refer Note 5, Page 94) 417.63 260.13<br />

(ii) With O<strong>the</strong>rs 25.11 12.67<br />

TOTAL 585.55 403.90<br />

83


The Indian Hotels Company Limited<br />

84<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 8 : Current Assets, Loans and Advances<br />

Rupees Rupees<br />

Previous Year<br />

Rupees<br />

crores crores crores<br />

Inventories<br />

Stores and Operating Supplies 15.16 13.83<br />

Food and Beverages 17.69 15.19<br />

32.85 29.02<br />

Sundry Debtors (Unsecured) (See Note 1 below)<br />

Outstanding over six months :<br />

Considered good 20.91 11.59<br />

Considered doubtful 10.32 11.47<br />

31.23 23.06<br />

O<strong>the</strong>rs (Considered good) 117.50 115.61<br />

148.73 138.67<br />

Less : Provision for Doubtful Debts (Refer Note 24, Page 105) 10.32 11.47<br />

138.41 127.20<br />

Cash and Bank <strong>Balance</strong>s<br />

Cash on Hand [Including Cheques on Hand - Rs.16.61 crores;<br />

(Previous Year - Rs. 10.85 crores)]<br />

<strong>Balance</strong>s with Scheduled Banks :<br />

19.03 13.05<br />

In Current Accounts 28.92 37.33<br />

In Call and Short Term Deposit Accounts 1.43 16.49<br />

In Rights Issue Collection Account (Refer Note 2, Page 93) 23.85 -<br />

54.20 53.82<br />

<strong>Balance</strong>s with Non-Scheduled Banks (Refer Note 9 (a), Page 96) :<br />

In Current Accounts 1.07 0.74<br />

In Call and Short Term Deposit Accounts 0.13 0.14<br />

1.20 0.88<br />

74.43 67.75<br />

Loans and Advances<br />

(Unsecured, considered good)<br />

Deposits with Public Bodies and O<strong>the</strong>rs 33.39 34.23<br />

Advances to Subsidiary Companies<br />

Deposits with Companies :<br />

4.75 9.97<br />

Subsidiary Companies 21.28 30.45<br />

O<strong>the</strong>rs 19.57 18.00<br />

40.85 48.45<br />

O<strong>the</strong>r Advances (See Note 2 below) :<br />

Considered good 253.78 183.27<br />

Considered doubtful 0.98 1.09<br />

254.76 184.36<br />

Provision for Doubtful Advances 0.98 1.09<br />

253.78 183.27<br />

332.77 275.92<br />

TOTAL<br />

Notes :<br />

578.46 499.89<br />

(1) Sundry Debtors include debts due from Directors - Rs. 68,602/- (Previous Year - Rs. 78,177/-) in <strong>the</strong> ordinary course <strong>of</strong> business.<br />

Maximum amount due during <strong>the</strong> year - Rs. 8,22,415 /- (Previous Year - Rs. 87,058/-).<br />

(2) O<strong>the</strong>r Advances include :<br />

(i) Amount due from an Officer - Nil (Previous Year - Rs. 0.10 crore ); maximum amount due during <strong>the</strong> year -<br />

Rs.0.10 crore (Previous Year - Rs. 0.10 crore);<br />

(ii) Amount paid towards Share Application Money - Rs. 49.80 crores (Previous Year - Rs. 1.20 crores);<br />

(iii) Advance payment <strong>of</strong> Income tax, net <strong>of</strong> provisions for current tax - Rs. 113.06 crores (Previous Year - Rs. 106.53<br />

crores)


Annual Report 2007-2008<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 9 : Current Liabilities & Provisions<br />

Rupees Rupees<br />

Previous Year<br />

Rupees<br />

crores crores crores<br />

CURRENT LIABILITIES<br />

Sundry Creditors :<br />

(i) Total Outstanding dues <strong>of</strong> micro and small enterprises<br />

(Refer Note 28, Page 106)<br />

(ii) Total Outstanding dues <strong>of</strong> Creditors o<strong>the</strong>r<br />

0.02 -<br />

than micro and small enterprises 148.56 186.89<br />

O<strong>the</strong>r Liabilities 59.62 60.23<br />

Sundry Deposits 8.18 7.92<br />

Advance Collections against Reservation 38.53 29.18<br />

Interest accrued but not due<br />

Non-Convertible Debenture Application money<br />

6.34 5.54<br />

(Refer Note 2, Page 93) 3.88 -<br />

Interim Dividend 114.54 -<br />

Tax on Interim Dividend<br />

Amount to be credited to Investor Education and Protection Fund :<br />

19.47 -<br />

Dividend Warrants issued but not encashed (Refer Note below ) 2.00 1.78<br />

TOTAL CURRENT LIABILITIES 401.14 291.54<br />

PROVISIONS<br />

Employee Benefits 31.30 30.31<br />

Contingencies (Refer Note 10 (c) , Page 97) 1.12 1.12<br />

Fringe Benefit Tax (net) 3.35 3.64<br />

Loyalty Programmes (Refer Note 25, Page 105)<br />

Premium on Redemption <strong>of</strong> Debentures / Bonds<br />

10.96 8.82<br />

(Previous year - Rs. 4,976 /-) - -<br />

Proposed Dividend - 96.46<br />

Tax on Dividend - 16.40<br />

TOTAL PROVISIONS 46.73 156.75<br />

TOTAL 447.87 448.29<br />

Note: The figure does not include any amount, due and outstanding, to be credited to Investor Education and Protection Fund<br />

85


The Indian Hotels Company Limited<br />

86<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 10 : Miscellaneous Expenditure (to <strong>the</strong> extent not adjusted or written <strong>of</strong>f)<br />

Rupees Rupees<br />

Previous Year<br />

Rupees<br />

crores crores crores<br />

Borrowing Costs<br />

Opening <strong>Balance</strong> 0.74 1.48<br />

Add : Incurred during <strong>the</strong> year 1.15 -<br />

Less : Amortised during <strong>the</strong> year (Refer Note 13, Page 98) 0.57 0.74<br />

Closing <strong>Balance</strong> 1.32 0.74<br />

Voluntary Retirement Scheme (VRS)<br />

Opening <strong>Balance</strong> 0.64 1.15<br />

Less : Amortised during <strong>the</strong> year 0.51 0.51<br />

Closing <strong>Balance</strong> 0.13 0.64<br />

1.45 1.38


Annual Report 2007-2008<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> Pr<strong>of</strong>it and Loss Account<br />

Schedule 11 : Rooms, Restaurants, Banquets and O<strong>the</strong>r Income<br />

Rupees Rupees<br />

Previous Year<br />

Rupees<br />

crores crores crores<br />

INCOME<br />

Rooms, Restaurants, Banquets and O<strong>the</strong>r Services<br />

[Includes Sale <strong>of</strong> Food and Beverages - Rs. 531.16 crores<br />

(Previous Year - Rs. 474.44 crores)]<br />

O<strong>the</strong>r Income<br />

1,764.51 1,540.86<br />

Dividend Income (Refer Note 8 (c) and 8 (d), Page 95) 19.98 32.78<br />

Pr<strong>of</strong>it on sale <strong>of</strong> assets (Net) - 0.19<br />

Pr<strong>of</strong>it on sale <strong>of</strong> Current Investments (Refer Note 8 (e), Page 95) 0.07 24.75<br />

Miscellaneous Income (Refer Note 8 (f), Page 95) 38.60 18.73<br />

58.65 76.45<br />

TOTAL 1,823.16 1,617.31<br />

Schedule 12 : Operating and General Expenses<br />

(Refer Note 8 (a), Page 95)<br />

Rupees Rupees<br />

Previous Year<br />

Rupees<br />

crores crores crores<br />

OPERATING EXPENSES<br />

Payments to & Provisions for Employees<br />

Salaries, Wages, Bonus etc. 216.10 198.90<br />

Company’s Contribution to Provident Fund & O<strong>the</strong>r Funds 21.67 19.68<br />

Reimbursement <strong>of</strong> Expenses on Personnel Deputed to <strong>the</strong> Company 17.71 12.98<br />

Payment to Contractors 12.34 10.84<br />

Workmen Staff Welfare Expenses<br />

Food & Beverages Consumed<br />

44.95 38.37<br />

312.77 280.77<br />

Opening Stock 15.19 13.86<br />

Add: Addition on Amalgamation - 0.96<br />

Add: Purchases 130.74 121.57<br />

145.93 136.39<br />

Less: Closing Stock 17.69 15.19<br />

128.24 121.20<br />

Carried Over 441.01 401.97<br />

87


The Indian Hotels Company Limited<br />

88<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> Pr<strong>of</strong>it and Loss Account<br />

Schedule 12 : Operating and General Expenses (contd..)<br />

Previous Year<br />

Rupees Rupees Rupees<br />

crores crores crores<br />

Brought Over<br />

O<strong>the</strong>r Operating Expenses<br />

441.01 401.97<br />

Linen & Room Supplies 27.68 24.70<br />

Catering Supplies 15.42 13.56<br />

O<strong>the</strong>r Supplies 2.35 1.67<br />

Fuel, Power & Light 92.61 80.49<br />

Repairs to Buildings 19.17 18.89<br />

Repairs to Machinery 20.58 17.86<br />

Repairs to O<strong>the</strong>rs 17.29 16.96<br />

Linen & Uniform Washing and Laundry Expenses 6.94 5.72<br />

Payment to Orchestra Staff, Artists and O<strong>the</strong>rs 7.58 7.29<br />

Guest Transportation 12.59 14.80<br />

Travel Agents’ Commision 15.94 13.08<br />

Collecting Agents’ Commision 18.13 15.92<br />

O<strong>the</strong>r Operating Expenses<br />

GENERAL EXPENSES<br />

18.57 16.81<br />

274.85 247.75<br />

Rent 24.18 22.60<br />

License Fees 104.73 99.48<br />

Rates & Taxes 28.00 20.17<br />

Insurance 6.76 7.42<br />

Advertising & Publicity 66.84 58.56<br />

Printing & Stationery 9.82 8.92<br />

Passage & Travelling 15.60 15.58<br />

Provision for Doubtful Debts (Refer Note 24, Page 105) 2.40 4.49<br />

Pr<strong>of</strong>essional Fees (Refer Note 14, Page 98) 36.31 36.39<br />

Loss on Sale <strong>of</strong> Fixed Assets (Net) 5.98 -<br />

O<strong>the</strong>r Expenses 51.83 52.95<br />

Auditors’ Remuneration (Refer Note 14, Page 98) 1.40 1.75<br />

353.85 328.31<br />

Amortisation <strong>of</strong> Voluntary Retirement Scheme Expenses 0.51 0.51<br />

Directors’ Fees and Commission 4.13 3.08<br />

TOTAL 1,074.35 981.62


Annual Report 2007-2008<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> Pr<strong>of</strong>it and Loss Account<br />

Schedule 13 :Computation <strong>of</strong> Net Pr<strong>of</strong>it Under Sections 198 and 309(5) <strong>of</strong> <strong>the</strong> Companies Act, 1956<br />

Previous Year<br />

Rupees Rupees Rupees<br />

crores crores crores<br />

Pr<strong>of</strong>it as per Pr<strong>of</strong>it and Loss Account<br />

580.47 474.64<br />

Add :<br />

Provision for doubtful debts (1.15) 2.05<br />

Loss on sale <strong>of</strong> fixed assets 5.98 -<br />

Directors’ Remuneration (including Directors’ Fees) 9.29 8.38<br />

14.11 10.43<br />

594.58 485.07<br />

Less :<br />

Capital pr<strong>of</strong>it on sale <strong>of</strong> assets / undertaking - 2.00<br />

Consideration on assignment <strong>of</strong> operating license - 0.21<br />

Pr<strong>of</strong>it on sale <strong>of</strong> investments 0.07 24.75<br />

0.07 26.96<br />

Pr<strong>of</strong>it<br />

Commission payable at 1% <strong>of</strong> net pr<strong>of</strong>it restricted to :<br />

594.51 458.11<br />

Managing Director and Executive Directors 1.80 1.50<br />

O<strong>the</strong>r Directors 4.00 3.00<br />

TOTAL 5.80 4.50<br />

89


The Indian Hotels Company Limited<br />

90<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account<br />

1. Significant Accounting Policies:<br />

The financial statements are prepared under historical cost convention on an accrual basis and comply with <strong>the</strong><br />

Accounting Standards (AS) notified by <strong>the</strong> Companies (Accounting Standards) Rules, 2006. The preparation <strong>of</strong><br />

financial statements requires <strong>the</strong> Management to make estimates and assumptions considered in <strong>the</strong> reported amounts<br />

<strong>of</strong> assets and liabilities (including contingent liabilities) as <strong>of</strong> <strong>the</strong> date <strong>of</strong> financial statements and <strong>the</strong> reported income<br />

and expenses during <strong>the</strong> reporting period. The management believes that <strong>the</strong> estimates used in preparation <strong>of</strong> <strong>the</strong><br />

financial statements are prudent and reasonable. Future results could differ from <strong>the</strong>se estimates. The significant<br />

accounting policies adopted in <strong>the</strong> presentation <strong>of</strong> <strong>the</strong> Accounts are as under:-<br />

(a) Sales:<br />

Sales comprise sale <strong>of</strong> rooms, food and beverages, allied services relating to hotel operations, including net income<br />

from telecommunication services and management and operating fees. Revenue is recognised upon rendering <strong>of</strong> <strong>the</strong><br />

service.<br />

(b) Export Benefits Entitlement:<br />

Export Benefits in <strong>the</strong> nature <strong>of</strong> Duty Credit Scrips are recognised in <strong>the</strong> Pr<strong>of</strong>it and Loss Account upon <strong>the</strong> actual<br />

utilisation <strong>of</strong> Duty Credit Scrips.<br />

(c) Employee Benefits:<br />

i. Provident Fund<br />

The Company’s Contribution to <strong>the</strong> recognised Provident Fund, paid/payable during <strong>the</strong> year, is debited to <strong>the</strong><br />

Pr<strong>of</strong>it and Loss Account. The shortfall, if any, between <strong>the</strong> return guaranteed by <strong>the</strong> statute and actual earnings <strong>of</strong><br />

<strong>the</strong> Fund is provided for by <strong>the</strong> Company and contributed to <strong>the</strong> Fund.<br />

ii. Gratuity Fund<br />

The Company makes annual contributions to funds administered by trustees and managed by insurance<br />

companies for amounts notified by <strong>the</strong> said insurance companies. The Company accounts for <strong>the</strong> net present value<br />

<strong>of</strong> its obligations for gratuity benefits based on an independent external actuarial valuation determined on <strong>the</strong> basis<br />

<strong>of</strong> <strong>the</strong> projected unit credit method carried out annually. Actuarial gains and losses are immediately recognised in<br />

<strong>the</strong> Pr<strong>of</strong>it and Loss Account.<br />

iii. Post Retirement Benefits<br />

The net present value <strong>of</strong> <strong>the</strong> Company’s obligation towards post retirement pension scheme for whole time<br />

directors is actuarially determined based on <strong>the</strong> projected unit credit method. Actuarial gains and losses are recognised<br />

immediately in <strong>the</strong> Pr<strong>of</strong>it and Loss Account.<br />

iv. Superannuation<br />

The Company has a defined contribution plan, wherein it annually contributes a sum equivalent to <strong>the</strong> employee’s<br />

eligible annual basic salary to an insurance company, which administers <strong>the</strong> fund. The Company recognises such<br />

contributions as an expense in <strong>the</strong> year <strong>the</strong>y are incurred.<br />

The Company also has separate funded and unfunded schemes, which guarantee a minimum pension to certain<br />

categories <strong>of</strong> employees. The Company accounts for <strong>the</strong> net present value <strong>of</strong> its obligations <strong>the</strong>rein, based on an<br />

independent external actuarial valuation carried out annually, which is determined on <strong>the</strong> basis <strong>of</strong> <strong>the</strong> projected<br />

unit credit method. Actuarial gains and losses are immediately recognised in <strong>the</strong> Pr<strong>of</strong>it and Loss Account.


Annual Report 2007-2008<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account<br />

v. Compensated Absences<br />

The Company has a scheme for compensated absences for employees, <strong>the</strong> liability for which is determined on <strong>the</strong><br />

basis <strong>of</strong> an actuarial valuation carried out at <strong>the</strong> end <strong>of</strong> <strong>the</strong> year.<br />

vi. O<strong>the</strong>r Employee Benefits<br />

O<strong>the</strong>r benefits comprising <strong>of</strong> Long Service Awards and Leave Travel Allowances are determined on an undiscounted<br />

basis and recognised based on <strong>the</strong> likely entitlement <strong>the</strong>re<strong>of</strong>.<br />

(d) Fixed Assets:<br />

Fixed assets are stated at cost less depreciation/amortisation and impairment losses, if any. Cost includes expenses<br />

incidental to <strong>the</strong> installation <strong>of</strong> assets and attributable borrowing costs.<br />

(e) Depreciation/Amortisation:<br />

In respect <strong>of</strong> assets acquired before 16 th December, 1993, depreciation is provided under <strong>the</strong> straight-line method, at<br />

<strong>the</strong> rates and in <strong>the</strong> manner specified in Schedule XIV to <strong>the</strong> Companies Act, 1956, as existing prior to that date.<br />

In respect <strong>of</strong> assets acquired on or after 16 th December, 1993, depreciation is provided at <strong>the</strong> rates as specified in<br />

Schedule XIV to <strong>the</strong> Companies Act, 1956, as revised with effect from that date. In respect <strong>of</strong> Leasehold Land,<br />

depreciation is charged over <strong>the</strong> unexpired period <strong>of</strong> <strong>the</strong> lease, commencing from <strong>the</strong> date <strong>the</strong> land is put to use for<br />

commercial operation.<br />

Intangible assets are amortised on a straight-line basis at rates specified below:<br />

Website Development Cost - 20.00%<br />

Cost <strong>of</strong> Customer Reservation System (including licensed s<strong>of</strong>tware) - 16.67%<br />

Service & Operating Rights - 10.00%<br />

(f) Transactions in Foreign Exchange:<br />

Transactions in foreign currencies are recorded at <strong>the</strong> exchange rate prevailing on <strong>the</strong> date <strong>of</strong> <strong>the</strong> transaction.<br />

In respect <strong>of</strong> integral foreign operations:-<br />

i) Monetary items outstanding at <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> date are translated at <strong>the</strong> exchange rate prevailing at <strong>the</strong> <strong>Balance</strong><br />

<strong>Sheet</strong> date and <strong>the</strong> resultant difference is recognised as income or expense.<br />

ii) Non-monetary items outstanding at <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> date are reported using <strong>the</strong> exchange rate at <strong>the</strong> date <strong>of</strong> <strong>the</strong><br />

transactions.<br />

In respect <strong>of</strong> non-integral foreign operations :-<br />

Both monetary and non-monetary items are translated at <strong>the</strong> closing rate and <strong>the</strong> resultant difference is<br />

accumulated in a Foreign Currency Translation Reserve, until <strong>the</strong> disposal <strong>of</strong> <strong>the</strong> net investment.<br />

(g) Derivative Instruments:<br />

The Company has an exposure to derivative contracts in <strong>the</strong> nature <strong>of</strong> currency swaps which are in respect <strong>of</strong> some <strong>of</strong><br />

<strong>the</strong> underlying rupee borrowings. Exchange differences arising on repayment/revaluation <strong>of</strong> such currency swaps are<br />

recognised as income or expense in <strong>the</strong> period in which <strong>the</strong>y arise.<br />

91


The Indian Hotels Company Limited<br />

92<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account<br />

(h) Impairment <strong>of</strong> Assets:<br />

Impairment is ascertained at each <strong>Balance</strong> <strong>Sheet</strong> date in respect <strong>of</strong> <strong>the</strong> Company’s fixed assets. An impairment loss is<br />

recognised whenever <strong>the</strong> carrying amount <strong>of</strong> an asset exceeds its recoverable amount. The recoverable amount is <strong>the</strong><br />

greater <strong>of</strong> <strong>the</strong> net selling price and value in use. In assessing value in use, <strong>the</strong> estimated future cash flows are discounted<br />

to <strong>the</strong>ir present value, based on an appropriate discount factor.<br />

(i) Assets taken on lease:<br />

Operating Lease payments are recognised as expenditure in <strong>the</strong> Pr<strong>of</strong>it and Loss Account on a straight line basis,<br />

representative <strong>of</strong> <strong>the</strong> time pattern <strong>of</strong> benefits received from <strong>the</strong> use <strong>of</strong> <strong>the</strong> assets taken on lease.<br />

(j) Inventories:<br />

Stock <strong>of</strong> food and beverages and operating supplies are carried at cost (computed on weighted average basis) or Net<br />

Realisable Value, whichever is lower.<br />

(k) Investments:<br />

i) Long term investments are carried at cost. However, provision is made for diminution in value, o<strong>the</strong>r than<br />

temporary, on an individual basis.<br />

ii) Current investments are carried at <strong>the</strong> lower <strong>of</strong> cost and fair value, determined on a category-wise basis.<br />

(l) Miscellaneous Expenditure:<br />

Payments made under <strong>the</strong> Voluntary Retirement Scheme, including <strong>the</strong> additional liabilities towards leave encashment<br />

and gratuity, arising pursuant to <strong>the</strong> Voluntary Retirement Scheme, are amortised over a period <strong>of</strong> 60 months,<br />

commencing from <strong>the</strong> month in which <strong>the</strong> Scheme is implemented, or upto 31 st March, 2010, whichever is earlier.<br />

(m) Taxes on income:<br />

i. Income tax is computed in accordance with Accounting Standard 22 - ‘Accounting for Taxes on Income’ (AS-22),<br />

notified by <strong>the</strong> Companies (Accounting Standards) Rules, 2006. Tax expenses are accounted in <strong>the</strong> same period to<br />

which <strong>the</strong> revenue and expenses relate.<br />

ii. Provision for current income tax is made for <strong>the</strong> tax liability payable on taxable income after considering tax allow<br />

ances, deductions and exemptions determined in accordance with <strong>the</strong> prevailing tax laws. The differences be<br />

tween <strong>the</strong> taxable income and <strong>the</strong> net pr<strong>of</strong>it or loss before tax for <strong>the</strong> year as per <strong>the</strong> financial statements are<br />

identified and <strong>the</strong> tax effect <strong>of</strong> timing differences is recognised as a deferred tax asset or deferred tax liability. The<br />

tax effect is calculated on accumulated timing differences at <strong>the</strong> end <strong>of</strong> <strong>the</strong> accounting year based on effective tax<br />

rates substantively enacted by <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> date that would apply in <strong>the</strong> years in which <strong>the</strong> timing<br />

differences are expected to reverse.<br />

iii. Deferred tax assets, o<strong>the</strong>r than on unabsorbed depreciation or carried forward losses, are recognised only if <strong>the</strong>re<br />

is reasonable certainty that <strong>the</strong>y will be realised in <strong>the</strong> future and are reviewed for <strong>the</strong> appropriateness <strong>of</strong> <strong>the</strong>ir<br />

respective carrying values at each <strong>Balance</strong> <strong>Sheet</strong> date.


Annual Report 2007-2008<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account<br />

(n) Accounting for Provisions, Contingent Liabilities and Contingent Assets:<br />

Provisions are recognised in terms <strong>of</strong> Accounting Standard 29 – ‘Provisions, Contingent Liabilities and Contingent<br />

Assets’ (AS-29), notified by <strong>the</strong> Companies (Accounting Standards) Rules, 2006, when <strong>the</strong>re is a present legal or<br />

statutory obligation as a result <strong>of</strong> past events, where it is probable that <strong>the</strong>re will be outflow <strong>of</strong> resources to settle <strong>the</strong><br />

obligation and when a reliable estimate <strong>of</strong> <strong>the</strong> amount <strong>of</strong> <strong>the</strong> obligation can be made. Contingent Liabilities are<br />

recognised only when <strong>the</strong>re is a possible obligation arising from past events due to occurrence or non-occurrence <strong>of</strong><br />

one or more uncertain future events, not wholly within <strong>the</strong> control <strong>of</strong> <strong>the</strong> Company, or where any present obligation<br />

cannot be measuredin terms <strong>of</strong> future outflow <strong>of</strong> resources or where a reliable estimate <strong>of</strong> <strong>the</strong> obligation cannot be<br />

made. Obligations are assessed on an ongoing basis and only those having a largely probable outflow <strong>of</strong> resources are<br />

provided for. Contingent Assets are not recognised in <strong>the</strong> financial statements.<br />

(o) Borrowing Costs (O<strong>the</strong>r than on Debentures) :<br />

Interest and o<strong>the</strong>r borrowing costs on specific borrowings, attributable to qualifying assets, are capitalised. O<strong>the</strong>r<br />

borrowing costs are charged to revenue over <strong>the</strong> tenure <strong>of</strong> <strong>the</strong> loan.<br />

(p) Debenture Issue Costs :<br />

These are adjusted against <strong>the</strong> Securities Premium Account, in accordance with Section 78 <strong>of</strong> <strong>the</strong> Companies Act,<br />

1956.<br />

2 Rights Issue <strong>of</strong> simultaneous but unlinked issue <strong>of</strong> Equity Shares and Non-Convertible Debentures with Detachable<br />

Warrants to <strong>the</strong> equity shareholders <strong>of</strong> <strong>the</strong> Company<br />

i. The Board <strong>of</strong> Directors, at its meeting held on August 13, 2007 and September 27, 2007, approved <strong>the</strong> rights issue <strong>of</strong><br />

a) Equity Shares in <strong>the</strong> ratio <strong>of</strong> 1: 5, at a price <strong>of</strong> Rs. 70 per share, aggregating Rs. 843.99 crores ;<br />

b) 6% Non-Convertible Debentures with detachable warrants in <strong>the</strong> ratio 1 : 10, <strong>of</strong> <strong>the</strong> face value <strong>of</strong> Rs. 100 each,<br />

aggregating Rs. 602.85 crores ;<br />

c) An option to receive one equity share for every detachable warrant held exercisable at a price <strong>of</strong> Rs. 150 per share<br />

commencing from September 1, 2009 to September 30, 2009. Assuming that all <strong>the</strong> warrant holders exercise <strong>the</strong>ir<br />

option, <strong>the</strong> Company would additionally raise Rs. 904.28 crores.<br />

ii. The Company has filed <strong>the</strong> Letter <strong>of</strong> Offer on February 27, 2008, with <strong>the</strong> Securities Exchange Board <strong>of</strong> India,<br />

subsequent to which <strong>the</strong> Rights issue opened on March 14, 2008 and closed on on April 24, 2008.<br />

iii. The Company has allotted <strong>the</strong> 6% Secured Non-Convertible Debentures on May 13, 2008 and Equity Shares on<br />

May 23, 2008.<br />

3. Non-Convertible Debentures:<br />

The Company has, during <strong>the</strong> year, issued 9.86% Secured Non-Convertible Redeemable Debentures, having a face value<br />

<strong>of</strong> Rs. 10,00,000/- each, aggregating Rs. 300 crores. The expenses in relation to <strong>the</strong> said issue, amounting to Rs. 1.05 crores,<br />

have been set <strong>of</strong>f against <strong>the</strong> ‘Securities Premium Account’ net <strong>of</strong> tax Rs. 0.36 crore, in accordance with Section 78 <strong>of</strong> <strong>the</strong><br />

Companies Act, 1956.<br />

93


The Indian Hotels Company Limited<br />

94<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account<br />

4. Provision for Current Tax, Deferred Tax & Fringe Benefit Tax:-<br />

(a) Provision for tax includes <strong>the</strong> following :<br />

Particulars Current Year Previous Year<br />

Rs. crores Rs. crores<br />

Current Tax 191.00 63.68<br />

Wealth Tax 0.90 0.90<br />

Deferred Tax charge (net) 2.46 83.97<br />

Fringe Benefit Tax 4.55 3.70<br />

Total 198.91 152.25<br />

(b) The net deferred tax liability comprises <strong>of</strong> <strong>the</strong> following :<br />

Particulars Current Year Previous Year<br />

Deferred tax liability<br />

Rs. crores Rs. crores<br />

Depreciation on fixed assets 154.73 150.48<br />

Total (A)<br />

Deferred tax asset<br />

154.73 150.48<br />

Provision for doubtful debts 3.51 3.90<br />

Employee Benefits 7.55 6.10<br />

O<strong>the</strong>rs 5.81 5.08<br />

Total (B) 16.87 15.08<br />

Net deferred tax liability (A-B) 137.86 135.40<br />

5. Shareholder’s Deposits placed with a subsidiary company include Rs. 135.20 crores (previous year Rs. 145.59 crores)<br />

(equivalent to USD 33.784 million) placed in earlier years, with <strong>the</strong> Company retaining <strong>the</strong> rights to convert <strong>the</strong> said<br />

deposits into equity by December 31, 2009, as per <strong>the</strong> permission received from <strong>the</strong> Reserve Bank <strong>of</strong> India.<br />

6. (a) The Company has given an undertaking to The Hongkong & Shanghai Banking Corporation, in respect <strong>of</strong> borrowing<br />

by IHMS (Australia) Pty Limited, a wholly-owned subsidiary, for Australian Dollars 17.10 million, that it will not<br />

dilute its shareholding in its subsidiary, IHMS (Australia) Pty Limited.<br />

(b) The Company has given a letter <strong>of</strong> comfort to The Hongkong & Shanghai Banking Corporation, New York, in respect<br />

<strong>of</strong> credit facilities <strong>of</strong> upto US $ 10 Million given to its wholly-owned subsidiary International Hotel Management<br />

Services, INC. in New York.


Annual Report 2007-2008<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account<br />

7. Estimated amount <strong>of</strong> contracts remaining to be executed on capital account and not provided for is Rs. 194.56 crores<br />

(previous year – Rs. 58.12 crores).<br />

8. (a) Expenditure recovered from o<strong>the</strong>r <strong>part</strong>ies :-<br />

Particulars Current Year Previous Year<br />

Rs. crores Rs. crores<br />

Salaries & Wages 0.10 -<br />

Fuel, Power and Light 5.13 6.79<br />

Repairs to Buildings 0.10 0.55<br />

Repairs to Machinery 0.10 0.38<br />

Linen and Uniform Washing 0.60 0.94<br />

Rent 0.02 0.03<br />

O<strong>the</strong>r Expenses 0.44 0.50<br />

Total 6.49 9.19<br />

(b) Purchase <strong>of</strong> Food and Beverages is after adjusting Rs. 0.66 crore (previous year - Rs. 0.57 crore) on account <strong>of</strong> sale <strong>of</strong><br />

empties, etc.<br />

(c) Dividend Income includes dividend from subsidiary companies - Rs. 4.75 crores (previous year - Rs. 8.80 crores).<br />

(d) Dividend Income includes income on long term investments - Rs. 14.98 crores (previous year - Rs. 31.51 crores) and<br />

on current investments - Rs. 0.25 crore (previous year - Rs. 1.27 crores).<br />

(e) Pr<strong>of</strong>it on sale <strong>of</strong> investments includes an amount <strong>of</strong> Rs. Nil (previous year - Rs. 16.76 crores) on <strong>the</strong> sale <strong>of</strong> Company’s<br />

shares held by an amalgamating company, prior to <strong>the</strong> scheme <strong>of</strong> amalgamation becoming effective.<br />

(f) Miscellaneous Income includes gain on currency swap - Rs. 7.00 crores (previous year - Rs. 2.03 crores) and net gain<br />

on foreign exchange transactions - Rs. 10.09 crores (previous year - Rs. 7.31 crores).<br />

(g) O<strong>the</strong>r expenses include Bad Debts written <strong>of</strong>f - Rs. 2.33 crore (previous year - Rs. 0.65 crores).<br />

(h) Duty Credit Scrips recognised in <strong>the</strong> Pr<strong>of</strong>it and Loss Account amounts to Rs. 12.41 crores (previous year - Rs. 6.71<br />

crores), and is included under miscellaneous income, being on Capital account.<br />

95


The Indian Hotels Company Limited<br />

96<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account<br />

9. (a) <strong>Balance</strong> with Non-Scheduled Banks comprises <strong>of</strong> :-<br />

Particulars Maximum Maximum<br />

amount amount<br />

outstanding in outstanding in<br />

Current Year Previous Year Current Year Previous Year<br />

Rs. Rs. Rs. Rs.<br />

Current Account<br />

Standard Chartered Bank, Beijing 19,251 22,640 22,640 23,997<br />

Citibank, New York 19,066 20,427 20,427 21,726<br />

National Westminster Bank PLC, London 80,88,477 69,67,695 80,88,477 69,67,695<br />

HSBC Bank, Dubai 25,34,733 4,10,143 61,59,846 14,00,372<br />

Total Current Account<br />

Deposit Account<br />

1,06,61,527 74,20,905<br />

Citibank, New York 13,36,273 13,97,520 13,97,520 14,59,340<br />

(b) Details <strong>of</strong> Cash and Cash Equivalents:-<br />

Particulars Current Year Previous Year<br />

Rs. crores Rs. crores<br />

Cash and Bank balances ( as per Schedule 8 ) 74.43 67.75<br />

Add :- Investment in Liquid Mutual Funds ( as per Schedule 6 ) - 1.00<br />

Less:- Bank Overdraft ( as per Schedule 3 ) 31.33 12.37<br />

Cash and Cash Equivalents as per Cash Flow Statement 43.10 56.38<br />

10. Contingent Liabilities:<br />

(a) On account <strong>of</strong> Income Tax matters in dispute :<br />

i. In respect <strong>of</strong> matters, which have been decided in <strong>the</strong> Company’s favour by <strong>the</strong> Appellate Authorities, where<br />

<strong>the</strong> Income Tax de<strong>part</strong>ment has preferred an appeal - Rs. 63.60 crores (previous year - Rs. 63.50 crores).<br />

ii. In respect <strong>of</strong> o<strong>the</strong>r matters for which Company’s appeals are pending - Rs. 34.55 crores (previous year -<br />

Rs. 29.95 crores).<br />

The said amounts have been paid/adjusted and will be recovered as refund if <strong>the</strong> matters are decided in favour <strong>of</strong><br />

<strong>the</strong> Company.<br />

(b) On account <strong>of</strong> o<strong>the</strong>r disputes in respect <strong>of</strong> :i.<br />

Luxury tax – Rs. 0.42 crore (previous year – Rs. 1.00 crore).<br />

ii. Entertainment tax – Rs. 0.53 crore (previous year - Rs. 0.47 crore).<br />

iii. Sales tax – Rs. 4.04 crores (previous year - Rs. 2.25 crores).


Annual Report 2007-2008<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account(Contd.)<br />

iv. Property tax – Rs. 6.39 crores (previous year – Rs. 1.46 crores).<br />

v. License Fee – Nil (previous year – Rs. 1.39 crores)<br />

vi. Stamp Duty – Rs. 2.34 crores (previous year – Rs. 2.34 crores)<br />

vii. O<strong>the</strong>rs – Rs. 7.81 crores (previous year – Rs. 5.13 crores)<br />

(c) In respect <strong>of</strong> a disputed demand <strong>of</strong> Rs. 4.15 crores, made in an earlier year towards Entertainment Tax in respect <strong>of</strong> a<br />

property, <strong>the</strong> Company has preferred an appeal in <strong>the</strong> High Court <strong>of</strong> Kolkata, West Bengal, against <strong>the</strong><br />

said demand and has paid an amount <strong>of</strong> Rs. 3.03 crores, under protest, to <strong>the</strong> relevant authorities, as directed by <strong>the</strong><br />

court. As a matter <strong>of</strong> prudence, <strong>the</strong> Company has made a provision <strong>of</strong> <strong>the</strong> entire amount, <strong>the</strong> unpaid demand <strong>of</strong><br />

Rs.1.12 crores is being reflected in <strong>the</strong> books <strong>of</strong> account as Provision for Contingencies.<br />

(d) O<strong>the</strong>r claims against <strong>the</strong> Company not acknowledged as debts - Rs. 56.67 crores (previous year - Rs. 17.16 crores)<br />

mainly pertains to <strong>the</strong> demand <strong>of</strong> Rs. 17.14 crores, raised by <strong>the</strong> Delhi Development Authority, towards additional<br />

License fees. (previous year - Rs. 17.14 crores ) and additional ground rent amounting to Rs. 39.16 (previous year -<br />

Nil) demanded by Mumbai Port Trust.<br />

(e) Guarantees given by <strong>the</strong> Company in respect <strong>of</strong> deposits received and loans obtained by o<strong>the</strong>r companies, and<br />

outstanding as on 31 st March 2008 - Rs. 308.14 crores (previous year - Rs. 157.92 crores).<br />

11. Managerial Remuneration:<br />

Particulars Current Year Previous Year<br />

Rs. crores Rs. crores<br />

Salaries 2.39 2.28<br />

Benefits in Cash or in kind(estimated monetary value) 0.97 1.52<br />

Commission on Pr<strong>of</strong>its 1.80 1.50<br />

Total 5.16 5.30<br />

Managerial remuneration excludes provision for gratuity and leave availment, since it is provided on an actuarial<br />

valuation <strong>of</strong> <strong>the</strong> Company’s liability to all its employees. Remuneration amounting to Rs. 0.11 crore is subject to <strong>the</strong><br />

approval <strong>of</strong> <strong>the</strong> shareholders.<br />

12 The Company has taken on operating lease certain assets. The total lease rent paid on <strong>the</strong> same amounting to Rs. 2.97<br />

crores (previous year Rs. 3.63 crores) is included under o<strong>the</strong>r expenses. The minimum future lease rentals payable in<br />

respect <strong>the</strong>re<strong>of</strong> are as follows:-<br />

Particulars Current Year Previous Year<br />

Rs. crores Rs. crores<br />

Not later than one year 2.10 2.97<br />

Later than one year but not later than five years 1.39 3.49<br />

Later than five years - -<br />

97


The Indian Hotels Company Limited<br />

98<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account(Contd.)<br />

13. Interest expense is net <strong>of</strong> interest income and comprises <strong>of</strong> :<br />

Particulars Current Year Previous Year<br />

Interest Expense<br />

Rs. crores Rs. crores<br />

Fixed loans# 97.18 96.13<br />

O<strong>the</strong>r loans @ 4.12 1.95<br />

Total expense (A)<br />

Interest Income (Gross)*<br />

101.30 98.08<br />

Inter-Corporate Deposits 2.75 1.32<br />

Deposits with Banks 0.19 1.70<br />

On Deposits from related <strong>part</strong>ies 0.65 16.41<br />

Interest on Income Tax Refund 2.20 -<br />

O<strong>the</strong>rs 1.23 6.76<br />

Total Income (B) 7.02 26.19<br />

Interest (net) (A-B) 94.28 71.89<br />

* Tax deducted at source 0.77 0.35<br />

# Interest on Fixed Loans includes Rs. 0.57 crore (previous year - Rs. 0.74 crore) being expenses on loans amortised<br />

over <strong>the</strong> tenure <strong>of</strong> <strong>the</strong> loan.<br />

@ Includes interest on luxury tax amounting to Rs. 2.14 crores (previous year – Nil).<br />

14. Auditors’ Remuneration:<br />

Particulars Current Year Previous Year<br />

Rs. crores Rs. crores<br />

1) As Auditors 1.12 0.90<br />

2) For Tax Audit<br />

3) For Company Law Matters<br />

0.18 0.12<br />

[Rs. 25,000/- (Previous Year - Rs. 30,000/-)] - -<br />

4) For O<strong>the</strong>r Services 0.07 0.37<br />

5) For out <strong>of</strong> pocket expenses 0.03 0.02<br />

6) For Branch Auditors - 0.21<br />

7) Service tax on above<br />

[Net <strong>of</strong> credit availed Rs. 0.17 crore (Previous Year - Nil)]<br />

- 0.13<br />

Total Auditors’ Remuneration 1.40 1.75<br />

Pr<strong>of</strong>essional fees include an amount <strong>of</strong> Rs. 0.03 crore (previous year - Nil) paid to a firm in which <strong>part</strong>ners <strong>of</strong> one <strong>of</strong> <strong>the</strong><br />

audit firms are <strong>part</strong>ners. The above excludes Rs. 0.05 crore (previous year - Nil) paid to auditors for O<strong>the</strong>r Services and<br />

debited to <strong>the</strong> Securities Premium Account.


Annual Report 2007-2008<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account(Contd.)<br />

15. Derivative Instruments :<br />

The Company uses forward exchange contracts, interest rate swaps, currency swaps and options to hedge its exposure in<br />

foreign currency borrowings and interest rates. The information on derivative instruments is as follows:-<br />

(a) Derivative Instruments outstanding:<br />

Particulars Current Year Previous Year<br />

(USD million) (USD million)<br />

Currency Swaps - 5.5<br />

Principal - only swaps 22.73 22.73<br />

Interest - only swaps - 37.86<br />

(b) Foreign currency exposure receivables (net), not covered by forward exchange contracts as at March 31, 2008, - US$<br />

41.2 million (previous year - US $ 6.2 million).<br />

16. Employee Benefits:<br />

(a) The Company has recognised <strong>the</strong> following amounts in <strong>the</strong> Pr<strong>of</strong>it and Loss Account under <strong>the</strong> head Company’s<br />

Contribution to Provident Fund and O<strong>the</strong>r Funds.-<br />

Rs. crores<br />

Particulars Current Year Previous Year<br />

Provident Fund 12.18 10.43<br />

Superannuation Fund 3.92 2.79<br />

Total 16.10 13.22<br />

(b) The Company operates post retirement defined benefit plans as follows :i.<br />

Funded :<br />

� Post Retirement Gratuity<br />

� Pension to Employees – Post retirement minimum guaranteed pension scheme for certain categories <strong>of</strong> employees<br />

which is funded by <strong>the</strong> Company and <strong>the</strong> employees.<br />

ii. Unfunded:<br />

� Pension to Executive Directors and Employees – Post retirement minimum guaranteed pension scheme for<br />

certain retired executive directors and certain categories <strong>of</strong> employees which is unfunded.<br />

(c) Details <strong>of</strong> gratuity plan are as follows :i.<br />

Amount to be recognised in <strong>Balance</strong> <strong>Sheet</strong> and movement in net liability<br />

Rs. crores<br />

Particulars Current Year Previous Year<br />

Present Value <strong>of</strong> Funded Obligations 74.80 62.42<br />

Fair Value <strong>of</strong> Plan Assets (73.34) (60.84)<br />

Net Liability recognised in <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

and included under Sundry Creditors<br />

1.46 1.58<br />

99


The Indian Hotels Company Limited<br />

100<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account(Contd.)<br />

ii. Expenses recognised in <strong>the</strong> Pr<strong>of</strong>it &Loss Account<br />

Particulars Current Year<br />

Rs. crores<br />

Previous Year<br />

Current Service Cost 4.40 3.42<br />

Interest Cost 4.94 3.65<br />

Expected return on Plan Assets (4.38) (4.30)<br />

Actuarial Losses 2.67 9.48<br />

Losses on “Acquisition”<br />

Present value <strong>of</strong> available future refunds and<br />

- (1.93)<br />

reduction in future contributions<br />

Net gratuity expenses included in payments to<br />

- 0.65<br />

and provision for employees 7.63 9.67<br />

Actual Return on Plan Assets 10.32 5.23<br />

iii. Reconciliation <strong>of</strong> Defined Benefit Obligation<br />

Rs. crores<br />

Particulars Current Year Previous Year<br />

Opening Defined Benefit Obligation 62.42 50.32<br />

Current Service Cost 4.40 3.42<br />

Interest Cost 4.94 3.65<br />

Actuarial Losses 8.61 10.41<br />

Liabilities assumed on Amalgamation - -<br />

Benefits Paid (5.57) (5.38)<br />

Closing Defined Benefit Obligation 74.80 62.42<br />

iv. Reconciliation <strong>of</strong> Fair value <strong>of</strong> Plan Assets<br />

Rs. crores<br />

Particulars Current Year Previous Year<br />

Opening Fair value <strong>of</strong> Plan Assets 60.84 59.06<br />

Expected return on Plan Assets 4.38 4.30<br />

Actuarial Losses 5.94 0.93<br />

Contributions by Employer 7.75 -<br />

Assets acquired due to Amalgamation - 1.93<br />

Benefits Paid (5.57) (5.38)<br />

Closing Fair Value <strong>of</strong> Plan Assets 73.34 60.84<br />

Expected Employers contribution Next year 2.00 1.50


Annual Report 2007-2008<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account(Contd.)<br />

v. Description <strong>of</strong> Plan Assets<br />

Particulars Current Year Previous Year<br />

Government <strong>of</strong> India Securities 1% 2%<br />

Corporate Bonds 1% 1%<br />

Special Deposit Scheme 1% 1%<br />

Insurer Managed Funds 97% 96%<br />

Grand Total 100% 100%<br />

vi. Summary <strong>of</strong> Actuarial Assumptions<br />

Particulars Current Year Previous Year<br />

Discount Rate 7.85 % 7.75 %<br />

Expected rate <strong>of</strong> return on Assets 7.50 % 7.50 %<br />

Salary Escalation Rate 5.00 % 5.00 %<br />

Mortality<br />

Published notes under <strong>the</strong> LIC(1994-96)<br />

Mortality Tables<br />

(d) Details <strong>of</strong> unfunded post retirement defined benefit obligations are as follows :-<br />

i. Reconciliation <strong>of</strong> Defined Benefit Obligation<br />

Rs. crores<br />

Particulars Current Year Previous Year<br />

Opening Defined Benefit Obligation 2.55 2.53<br />

Current Service Cost 5.01 -<br />

Interest Cost 0.56 0.18<br />

Actuarial (Gain) / Losses (1.60) 0.06<br />

Benefits Paid (0.79) (0.22)<br />

Closing Defined Benefit Obligation 5.73 2.55<br />

ii. Expenses recognised in <strong>the</strong> Pr<strong>of</strong>it &Loss Account<br />

Particulars Current Year<br />

Rs. crores<br />

Previous Year<br />

Current Service Cost 5.01 -<br />

Interest Cost 0.56 0.18<br />

Actuarial (Gain) / Losses (1.60) 0.06<br />

Net expenses included in Payments to<br />

and Provision for Employees<br />

3.97 0.24<br />

101


The Indian Hotels Company Limited<br />

102<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account(Contd.)<br />

iii. Summary <strong>of</strong> Actuarial Assumptions<br />

Particulars Current Year Previous Year<br />

Discount Rate 7.85 % 7.75 %<br />

Pension Increase Rate 4.00% 3.00%<br />

Salary escalation Rate 5.00% 5.00%<br />

Mortality Published notes under <strong>the</strong> LIC(1994-96)<br />

Mortality Tables<br />

(e) Pension Scheme for Employees:<br />

The Company has formulated a funded pension scheme for certain employees. The actuarial liability arising on <strong>the</strong><br />

above after allowing for employees contribution is determined as at March 31, 2008 under <strong>the</strong> basis <strong>of</strong> uniform<br />

accrual benefit with demographic assumptions taken as Nil is as follows:<br />

Particulars Rs. crores<br />

Past Service Liability 3.04<br />

Future Service Liability 1.20<br />

Total Service Liability 4.24<br />

The past service liability is being amortised over <strong>the</strong> average vesting period <strong>of</strong> 16.25 years.<br />

(f) Provident Fund:<br />

In keeping with <strong>the</strong> Guidance on implementing Accounting Standard (AS) 15 (Revised) on Employee Benefits notified<br />

by <strong>the</strong> Companies (Accounting Standards) Rules, 2006, employer established provident fund trusts are treated as<br />

Defined Benefit Plans, since <strong>the</strong> Company is obligated to meet interest shortfall, if any, with respect to covered<br />

employees. According to <strong>the</strong> Management, <strong>the</strong> Actuary has opined that actuarial valuation cannot be applied to<br />

reliably measure provident fund liabilities in <strong>the</strong> absence <strong>of</strong> guidance from <strong>the</strong> Actuarial Society <strong>of</strong> India. Accord<br />

ingly, <strong>the</strong> Company is currently not in a position to provide o<strong>the</strong>r related disclosures as required by <strong>the</strong> aforesaid AS<br />

15 read with <strong>the</strong> Accounting Standards Board Guidance. However, having regard to <strong>the</strong> position <strong>of</strong> <strong>the</strong> Fund (for<br />

covered employees) and confirmation from <strong>the</strong>Trustees <strong>of</strong> such Fund, provision has been made for such shortfall as<br />

at year-end.<br />

The estimates <strong>of</strong> future salary increases, considered in actuarial valuation, take into account inflation, seniority,<br />

promotion,and o<strong>the</strong>r relevant factors. The above information has been certified by <strong>the</strong> actuary and has been relied<br />

upon by <strong>the</strong> Auditors.<br />

17. As <strong>the</strong> turnover <strong>of</strong> <strong>the</strong> Company includes sale <strong>of</strong> food and beverages, it is not possible to give quantitative details <strong>of</strong> <strong>the</strong><br />

turnover and food & beverages consumed. Vide Order No. 46/20/2008-CL-III dated May 23, 2008, issued by <strong>the</strong>


Annual Report 2007-2008<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account(Contd.)<br />

De<strong>part</strong>ment <strong>of</strong> Company Affairs, <strong>the</strong> Company has been exempted from giving <strong>the</strong>se <strong>part</strong>iculars for <strong>the</strong> year. However,<br />

<strong>the</strong> following information has been given based on <strong>the</strong> guidelines applicable in <strong>the</strong> previous year :<br />

Particulars Current Year Previous Year<br />

Income from Rooms, Restaurants & O<strong>the</strong>r Service includes:<br />

Rs. crores Rs. crores<br />

Income from sale <strong>of</strong> Wine, Beer and Spirits 90.75 84.84<br />

Income from Telephone and Telex<br />

Food and Beverages (excluding wine and liquor) and<br />

Smokes consumed :<br />

9.24 12.02<br />

Opening Stock 3.04 2.26<br />

Add:- addition on amalgamation - 0.20<br />

Purchases 107.85 100.19<br />

110.89 102.65<br />

Less : Closing Stock 3.15 3.04<br />

Consumption<br />

Food and Beverages comprising wine and liquor :<br />

107.74 99.61<br />

Opening Stock 12.15 11.60<br />

Add :- addition on amalgamation - 0.76<br />

Purchases 22.89 21.38<br />

35.04 33.74<br />

Less : Closing Stock 14.54 12.15<br />

Consumption 20.50 21.59<br />

18. CIF Value <strong>of</strong> imports is as follows:<br />

Particulars Current Year Previous Year<br />

Rs. crores Rs. crores<br />

Raw Materials (Food and Beverages) 7.52 3.17<br />

Stores, Supplies and Spare Parts for Machinery 9.79 4.42<br />

Capital Goods 28.59 17.30<br />

19. Earnings in Foreign Exchange are as follows :<br />

Particulars Current Year Previous Year<br />

Rs. crores Rs. crores<br />

(a) Royalty, Know-how, Pr<strong>of</strong>essional and Consultation Fees 7.64 7.06<br />

(b) Interest 0.60 17.99<br />

(c) Sale <strong>of</strong> Rooms / F&B Income 802.30 706.95<br />

103


The Indian Hotels Company Limited<br />

104<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account(Contd.)<br />

The earnings in foreign exchange, as reported in 19 (c) above, are on <strong>the</strong> basis <strong>of</strong> actual receipts during <strong>the</strong> year,<br />

as certified by <strong>the</strong> Management.<br />

20. Expenditure in Foreign Exchange:<br />

Particulars Current Year Previous Year<br />

Rs. crores Rs. crores<br />

Membership Fees 1.27 1.07<br />

Advertising 19.05 15.20<br />

Pr<strong>of</strong>essional Consultancy Fees 5.49 3.58<br />

O<strong>the</strong>rs 10.04 7.62<br />

21. Remittance in Foreign Currencies for dividends to non-resident shareholders:<br />

The Company has not remitted any amount in foreign currencies on account <strong>of</strong> dividends during <strong>the</strong> year and does<br />

not have information as to <strong>the</strong> extent to which remittances, if any, in foreign currencies on account <strong>of</strong> dividends<br />

have been made by/on behalf <strong>of</strong> non-resident shareholders. The <strong>part</strong>iculars <strong>of</strong> dividends paid to non-resident<br />

shareholders during <strong>the</strong> year, are as under:<br />

Particulars Current Year Previous Year<br />

Rs. crores Rs. crores<br />

Year to which dividend relates 2006-07 2005-06<br />

Numbers <strong>of</strong> non-resident shareholders 1,492 738<br />

Number <strong>of</strong> Ordinary Shares held by non-resident shareholders 7,612,056 6,78,086<br />

Gross amount <strong>of</strong> dividend (Rs. crores) 1.22 0.88<br />

Net amount <strong>of</strong> dividend (Rs. crores) 1.22 0.88<br />

22. The Company has an investment <strong>of</strong> Rs. 0.30 crore (previous year - Rs. 0.30 crore) and advances outstanding<br />

(including interest) <strong>of</strong> Rs. 9.42 crores (previous year - Rs. 8.97 crores) in a Joint Venture, Taj Karnataka Hotels and<br />

Resorts Limited (TKHRL). TKHRL has accumulated losses in excess <strong>of</strong> its paid-up capital and reserves. Consid<br />

ering <strong>the</strong> inherent value <strong>of</strong> TKHRL’s assets, based on a valuation <strong>of</strong> <strong>the</strong> property and its proposed financial restruc<br />

turing, for which <strong>the</strong> Company is in talks with <strong>the</strong> JV <strong>part</strong>ner – <strong>the</strong> Government <strong>of</strong> Karnataka, <strong>the</strong> Management is<br />

<strong>of</strong> <strong>the</strong> view that <strong>the</strong>re is no o<strong>the</strong>r than temporary diminution in <strong>the</strong> value <strong>of</strong> <strong>the</strong> investment and that <strong>the</strong> amount<br />

outstanding after <strong>the</strong> financial restructuring will be fully recovered.<br />

23. The Company, on a review <strong>of</strong> its foreign operations had, in <strong>the</strong> past, made voluntary disclosures to <strong>the</strong> appropriate<br />

regulator, <strong>of</strong> what it considered to be possible irregularities, in relation to foreign exchange transactions relating to<br />

<strong>the</strong> period prior to 1998. Arising out <strong>of</strong> such disclosures, <strong>the</strong> Company received show cause notices. The Company<br />

has replied to <strong>the</strong> notices and is waiting for <strong>the</strong> directorate to return its files, after which it will complete <strong>the</strong> replies.<br />

Adjudication proceedings are in progress.


Annual Report 2007-2008<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account(Contd.)<br />

24. Provision for Doubtful Debts :<br />

Particulars Current Year Previous Year<br />

Rs. crores Rs. crores<br />

Opening <strong>Balance</strong> 11.47 9.42<br />

Add : Provision during <strong>the</strong> year 2.40 4.49<br />

13.87 13.91<br />

Less : Bad debts written <strong>of</strong>f 2.33 0.65<br />

Less : Provision no longer required, written back 1.22 1.79<br />

Closing <strong>Balance</strong> 10.32 11.47<br />

25. Provision for Loyalty Programmes :<br />

The Company has loyalty programmes, which enable its customers to accumulate points based on <strong>the</strong>ir spends at <strong>the</strong> hotels.<br />

Such points can be encashed ei<strong>the</strong>r by stay at <strong>the</strong> Company’s hotels or by purchase <strong>of</strong> merchandise. The estimated liability<br />

against <strong>the</strong> loyalty schemes is as under:<br />

Particulars Current Year Previous Year<br />

Rs. crores Rs. crores<br />

Opening <strong>Balance</strong> 8.82 6.81<br />

Less : Redeemed during <strong>the</strong> year 0.77 2.40<br />

8.05 4.41<br />

Add : Provision during <strong>the</strong> year 2.91 4.41<br />

Closing <strong>Balance</strong> 10.96 8.82<br />

26 Long Term Deposits and Loans and Advances in <strong>the</strong> nature <strong>of</strong> loans to Subsidiaries, Jointly controlled entities and<br />

Associates:-<br />

Rs. crores<br />

Particulars Maximum Maximum<br />

amount<br />

outstanding<br />

during <strong>the</strong><br />

year<br />

<strong>Balance</strong><br />

Outstanding<br />

as on March<br />

31, 2008<br />

amount<br />

outstanding<br />

during <strong>the</strong><br />

previous year<br />

<strong>Balance</strong><br />

Outstanding<br />

as on March<br />

31, 2007<br />

Subsidiaries<br />

Taj Investments and Finance Co. Ltd. - - 17.00 17.00<br />

IHMS Inc. 212.11 212.11 40.16 38.79<br />

Innovative Foods Limited 2.75 2.75 - -<br />

Residency Food & Beverages Limited 6.77 6.77 - -<br />

Taj International Hotels (HK) Ltd. 223.76 207.76 611.95 225.73<br />

Roots Corporation Ltd.<br />

Jointly Controlled Entities<br />

16.00 12.00 11.00 11.00<br />

Taj International Hotels (South Africa)(Pty) Ltd 15.86 13.35 - -<br />

Taj Karnataka Hotels & Resorts Ltd. 5.35 5.35 5.35 5.35<br />

Taj Asia Ltd. 19.14 17.76 19.36 19.14<br />

Taj GVK Hotels & Resorts Ltd.<br />

Associates<br />

5.00 5.00 5.00 5.00<br />

Taj Air Ltd. - - 12.25 -<br />

105


The Indian Hotels Company Limited<br />

106<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account(Contd.)<br />

27. Investments made in <strong>the</strong> Equity Shares <strong>of</strong> <strong>the</strong> Company and its subsidiaries by a loanee as at March 31, 2008:<br />

Investment in Subsidiary<br />

Company Investment<br />

Rs. crores<br />

Piem Hotels Ltd. 0.38<br />

28. Micro and Small Enterprises:<br />

(a) There is no interest paid/payable during <strong>the</strong> year by <strong>the</strong> Company to <strong>the</strong> suppliers covered under Micro, Small, Me<br />

dium Enterprises Development Act, 2006.<br />

(b) The above information takes into account only those suppliers who have responded to <strong>the</strong> enquiries made by <strong>the</strong><br />

Company for this purpose.<br />

29. Related Party disclosures:<br />

(a) The names <strong>of</strong> <strong>the</strong> related <strong>part</strong>ies <strong>of</strong> <strong>the</strong> Company are as under:<br />

i) Subsidiary Companies<br />

Name <strong>of</strong> <strong>the</strong> Company<br />

Domestic<br />

Country <strong>of</strong> Incorporation<br />

Taj Investment and Finance Company Ltd. India<br />

KTC Hotels Ltd. India<br />

United Hotels Ltd. India<br />

Roots Corporation Ltd. India<br />

Taj SATS Air Catering Ltd. India<br />

Residency Foods & Beverages Ltd. India<br />

Innovative Foods Ltd.<br />

International<br />

India<br />

Taj International Hotels (H.K.) Ltd. Hong Kong<br />

Chieftain Corporation NV Ne<strong>the</strong>rlands Antilles<br />

IHOCO BV Ne<strong>the</strong>rlands<br />

St. James Court Hotels Ltd. United Kingdom<br />

Taj International Hotels Ltd. United Kingdom<br />

International Hotel Management Services Inc. United States <strong>of</strong> America<br />

Samsara Properties Ltd. British Virgin Islands<br />

IHMS Australia Pty Ltd. Australia<br />

IHMS (Restaurants) Pty. Ltd. Australia<br />

Apex Hotel Management Services (Pte) Ltd. Singapore


Annual Report 2007-2008<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account(Contd.)<br />

ii) Jointly Controlled Entities<br />

Name <strong>of</strong> <strong>the</strong> Company Country <strong>of</strong> Incorporation<br />

Domestic<br />

Taj Madras Flight Kitchen Pvt. Ltd. India<br />

Taj Karnataka Hotels & Resorts Ltd. India<br />

Taj Kerala Hotels & Resorts Ltd. India<br />

Taj GVK Hotels & Resorts Ltd. India<br />

Taj Safaris Ltd. (Formerly known as Taj Wilderness Lodges Ltd.) India<br />

International<br />

Taj Asia Ltd. Hong Kong<br />

Taj International Hotels (South Africa) (Pty) Ltd. South Africa<br />

iii) Associates<br />

Name <strong>of</strong> <strong>the</strong> Company Country <strong>of</strong> Incorporation<br />

Domestic<br />

Benares Hotels Ltd. India<br />

Taj Air Ltd. India<br />

Piem Hotels Ltd. India<br />

Taj Trade and Transport Ltd. India<br />

Taj Enterprises Ltd. India<br />

Inditravel Pvt. Ltd. India<br />

Oriental Hotels Ltd. India<br />

Taj Madurai Ltd. India<br />

Taida Trading & Industries Ltd. India<br />

Ideal Ice & Cold Storage Co. Ltd. India<br />

International<br />

Taj Lanka Resorts Ltd. Sri Lanka<br />

Taj Lanka Hotels Ltd. Sri Lanka<br />

107


The Indian Hotels Company Limited<br />

108<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account(Contd.)<br />

Key managerial personnel comprise whole-time directors, who have <strong>the</strong> authority and responsibility for<br />

planning, directing and controlling <strong>the</strong> activities <strong>of</strong> <strong>the</strong> Company. The remuneration paid to such directors is<br />

disclosed in Note 11 on Page 24 and <strong>the</strong> dues from such persons are disclosed in footnotes 1 and 2 (i) <strong>of</strong> Schedule<br />

8 Current Assets, Loans and Advances, forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong>. Presently Mr. Raymond N Bickson,<br />

<strong>the</strong> Managing Director, Mr. Anil P. Goel, <strong>the</strong> Executive Director - Finance and Mr. Abhijit Mukerji, <strong>the</strong> Executive<br />

Director - Hotel Operations are <strong>the</strong> Key Management Personnel.<br />

(b) The details <strong>of</strong> transactions with related <strong>part</strong>ies are as follows:<br />

Rs. crores<br />

Particulars Subsidiaries Associates Joint Venture<br />

Current Previous Current Previous Current Previous<br />

Year Year Year Year Year Year<br />

Interest paid / provided 0.68 0.20 0.96 1.62 - -<br />

Interest received/accrued 1.54 16.10 0.72 0.29 0.89 1.02<br />

Dividend received 4.75 8.80 4.38 9.39 5.00 6.58<br />

Operating / Licence fees paid 0.43 0.42 - - - -<br />

Operating fees received 8.95 8.75 48.55 49.96 28.05 28.09<br />

Purchase <strong>of</strong> goods and services 0.49 0.18 35.36 17.68 0.36 0.47<br />

Sale <strong>of</strong> goods and services 0.75 0.91 4.59 3.27 1.03 0.99<br />

Due from/(to) on Current Account 4.75 9.97 (3.11) (0.66) 1.56 (1.09)<br />

Purchase <strong>of</strong> Shares 12.50 423.44 - - 2.81 3.00<br />

Sundry Debtors 5.99 3.21 8.31 11.91 15.70 13.89<br />

Security Deposits - - - - - 10.00<br />

Deposits(Net) 428.36 294.08 (28.00) - 41.47 29.49


Annual Report 2007-2008<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account(Contd.)<br />

(c) Statement <strong>of</strong> Material Transactions<br />

Name <strong>of</strong> Company<br />

Subsidiaries<br />

Taj Investment and Finance Co. Ltd.<br />

Current Year<br />

Rs. crores<br />

Previous Year<br />

- ICDs raised 22.00 17.50<br />

- ICDs repaid 7.95 17.50<br />

- ICDs placed - 17.00<br />

- ICDs encashed 17.00 -<br />

- Interest paid 0.68 -<br />

- Interest received 0.60 -<br />

- Deposits taken 14.05 -<br />

Roots Corporation Ltd.<br />

- Purchase <strong>of</strong> shares 12.50 14.50<br />

- ICDs raised - 10.00<br />

- ICDs repaid - 10.00<br />

- ICDs placed 24.50 11.00<br />

- ICDs encashed 23.50 -<br />

- Interest received 0.64 -<br />

- Sundry Debtors 3.61 -<br />

Taj SATS Air Catering Ltd.<br />

- Dividend received 3.99 6.66<br />

- Due from - Current Account 2.47 3.67<br />

Taj International Hotels (HK) Ltd.<br />

- ICD/Shareholders Deposit 205.53 225.73<br />

- Interest received - 13.71<br />

International Hotel Management Services Inc.<br />

- ICDs placed - 38.79<br />

- Due to - Current Account 2.09 -<br />

- Purchase <strong>of</strong> shares - 407.15<br />

- Interest received - 2.10<br />

- Deposits given 212.11 -<br />

United Hotels Ltd.<br />

- ICDs raised - 2.00<br />

- ICDs repaid - 2.00<br />

IHMS Australia Pty Ltd.<br />

- Due to - Current Account 1.08 0.17<br />

Residency Food & Beverages Ltd.<br />

- Purchase <strong>of</strong> shares - 18.00<br />

- ICD placed 6.77 -<br />

KTC Hotels Limited<br />

- Operating Fees paid 0.43 0.42<br />

- Due to - Current Account 2.10 -<br />

Inditravel Pvt. Ltd.<br />

- Purchase <strong>of</strong> Goods & Services 27.43 16.18<br />

- Sale <strong>of</strong> Goods & Services 0.86 0.65<br />

109


The Indian Hotels Company Limited<br />

110<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account(Contd.)<br />

(c)Statement <strong>of</strong> Material Transactions-<br />

Name <strong>of</strong> Company Current Year<br />

Rs. crores<br />

Previous Year<br />

Associates<br />

Oriental Hotels Ltd.<br />

- Dividend received 3.21 2.52<br />

- Operating & reimbursement fees 18.17 18.13<br />

- ICDs raised from 36.00 29.00<br />

- ICDs repaid 37.00 18.00<br />

- Interest paid 0.56 0.57<br />

- Due to - Current Account 0.33 1.80<br />

- Sundry Debtors 6.73 6.92<br />

- Sale <strong>of</strong> Goods & Services 0.70 -<br />

- Deposits taken 10.00 -<br />

Piem Hotels Ltd.<br />

- Dividend received - 6.17<br />

- Operating Fees received 27.89 29.36<br />

- Interest paid 0.40 1.06<br />

- Due to - Current Account 3.05 1.42<br />

- ICD raised 39.50 53.00<br />

- ICD repaid 21.50 53.00<br />

- Sundry Debtors 1.04 3.98<br />

- Sale <strong>of</strong> Goods & Services 1.92 -<br />

- Deposits taken 18.00 -<br />

Taj Air Ltd.<br />

- Interest received 0.72 -<br />

- Purchase <strong>of</strong> Goods & Services 4.78 -<br />

- ICDs placed 29.00 -<br />

- ICDs encashed 29.00 -<br />

Taj Trade & Transport Ltd.<br />

- Sale <strong>of</strong> Goods & Services 0.94 -<br />

Taj GVK Hotels & Resorts Ltd.<br />

- Due on Security Deposit - 10.00<br />

- Operating Fees received 22.31 23.90<br />

- Dividend received 4.80 3.20<br />

- Interest received 0.35 -<br />

- ICD placed - 5.00<br />

- Sundry Debtors 9.20 9.68<br />

Taj Karnataka Hotels & Resorts Ltd.<br />

- ICDs placed - 5.35<br />

Taj Asia Ltd.<br />

- Interest received 0.54 -<br />

- ICDs placed - 19.14


Annual Report 2007-2008<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account (Contd.)<br />

30. In compliance with Accounting Standard 27 – ‘Financial Reporting <strong>of</strong> Interests in Joint Ventures’ - (AS-27), notified by<br />

<strong>the</strong> Companies (Accounting Standards) Rules, 2006, <strong>the</strong> Company has interests in <strong>the</strong> following jointly controlled<br />

entities:<br />

Name <strong>of</strong> <strong>the</strong>Company Country <strong>of</strong> Holding<br />

Rs. crores<br />

Amount <strong>of</strong> Interest based on <strong>the</strong> Last Audited<br />

Incorporation (%) Accounts for <strong>the</strong> year ended March 31, 2008<br />

Assets Liabilities Income Expenditure<br />

Taj Safaris Ltd. India 33.33 5.38 1.66 2.10 2.98<br />

(Formerly known at Taj Wilderness<br />

Lodges Ltd.)<br />

(33.33) (5.32) (0.66) (0.45) (1.54)<br />

Taj GVK Hotels and Resorts Ltd. India 25.52 80.72 21.28 66.11 38.48<br />

(25.52) (68.25) (20.78) (62.32) (36.61)<br />

Taj Karnataka Hotels and Resorts Ltd. India 40.00 2.58 5.73 1.68 1.67<br />

(40.00) (6.32) (5.84) (1.49) (1.41)<br />

Taj Kerala Hotels Ltd. India 28.30 13.70 0.74 11.42 9.33<br />

(28.30) (16.93) (2.78) (10.41) (8.91)<br />

Taj Madras Flight Kitchen Pvt. Ltd. India 50.00 17.63 0.98 23.88 15.93<br />

(50.00) (15.40) (1.11) (21.18) (13.93)<br />

Taj Asia Ltd. * Hong Kong 26.66 77.19 35.50 41.17 31.49<br />

(26.66) (40.09) (45.21) (41.35) (33.48)<br />

Taj International Hotels South Africa 50.00 13.92 14.07 0.03 0.07<br />

(South Africa) (Pty) Ltd.* (50.00) - (0.15) - (0.15)<br />

* Based on Unaudited results.<br />

Note : Figures in <strong>the</strong> brackets relate to <strong>the</strong> previous year.<br />

111


The Indian Hotels Company Limited<br />

112<br />

Schedule forming <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 14 : Notes to <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> and <strong>the</strong> Pr<strong>of</strong>it and Loss Account (Contd.)<br />

31. The Company’s only business is hoteliering and hence disclosure <strong>of</strong> segment-wise information is not applicable under<br />

Accounting Standard 17 - ‘Segmental Information’ (AS-17) notified by <strong>the</strong> Company’s (Accounting Standard) Rules, 2006.<br />

There is no geographical segment to be reported since all <strong>the</strong> operations are undertaken in India.<br />

32. Earnings Per Share (EPS) :<br />

Earnings Per Share is calculated in accordance with Accounting Standard 20 – ‘Earnings Per Share’ - (AS-20), notified by<br />

<strong>the</strong> Companies (Accounting Standards) Rules, 2006.<br />

Particulars CurrentYear PreviousYear<br />

Pr<strong>of</strong>it after tax - (Rs. crores) 377.46 322.39<br />

No <strong>of</strong> Equity Shares - Basic 60,28,51,493 60,28,50,590<br />

Earnings Per Share - Basic (In Rupees) 6.26 5.35<br />

No <strong>of</strong> Equity Shares - Diluted 60,28,51,493 60,28,50,680<br />

Earnings Per Share - Diluted (In Rupees) 6.26 5.35<br />

Note: Since <strong>the</strong> exercise price <strong>of</strong> <strong>the</strong> Warrants Option issued by <strong>the</strong> Company is more than <strong>the</strong> fair value <strong>of</strong> <strong>the</strong> Equity<br />

Shares, <strong>the</strong>se have not been considered for <strong>the</strong> calculation <strong>of</strong> Diluted Earnings per shares being anti-dilutive in nature as at<br />

<strong>the</strong> year end.<br />

33. Previous year’s figures have been regrouped, wherever necessary, to conform to <strong>the</strong> current year’s presentation.<br />

For and on behalf <strong>of</strong> <strong>the</strong> Board<br />

R.N. TATA Chairman<br />

R.K. KRISHNA KUMAR Vice Chairman<br />

RAYMOND N. BICKSON Managing Director<br />

ANIL P. GOEL Executive Director - Finance<br />

ABHIJIT MUKERJI Executive Director - Hotel Operations<br />

N.A. SOONAWALA Director<br />

S. K. KANDHARI Director<br />

K. B. DADISETH Director<br />

JAGDISH CAPOOR Director<br />

SHAPOOR MISTRY Director<br />

SANKER PARAMESWARAN Vice President – Legal & Company Secretary<br />

Mumbai, June 23, 2008


Annual Report 2007-2008<br />

INFORMATION PURSUANT TO PART IV OF SCHEDULE VI OF THE COMPANIES ACT, 1956<br />

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL PROFILE<br />

Registration Details<br />

Registration No. 183<br />

State Code : 11<br />

<strong>Balance</strong> <strong>Sheet</strong> Date 31 03 08<br />

Capital Raised during <strong>the</strong> year ( Amount in Rs. Thousands)<br />

Public Issue Rights Issue<br />

Nil Nil<br />

Bonus Issue Private Placement<br />

Nil Nil<br />

Position <strong>of</strong> Mobilisation and Deployment <strong>of</strong> Funds (Amount in Rs. Thousands)<br />

Total Liabilities Total Assets<br />

33,322,138<br />

Sources <strong>of</strong> Funds<br />

33,322,138<br />

Paid-up Capital Share Application Money Reserves & Surplus<br />

602,851 199,696 19,562,982<br />

Secured Loans Unsecured Loans<br />

7,555,793 3,786,051<br />

Deferred Tax Liability Trade Deposits<br />

1,378,591<br />

Application <strong>of</strong> Funds<br />

236,174<br />

Net Fixed Assets Investments<br />

16,370,530 9,775,760<br />

Long Term Deposits Net Current Assets<br />

5,855,471 1,305,944<br />

Misc. Expenditure Accumulated Losses<br />

14,432 Nil<br />

Performance <strong>of</strong> Company (Amount in Rs. Thousands)<br />

Turnover Total Expenditure<br />

18,231,585 12,427,008<br />

+ / - Pr<strong>of</strong>it / Loss before Tax + / - Pr<strong>of</strong>it / Loss after Tax<br />

+<br />

5,804,576 +<br />

3,774,472<br />

Earnings Per Share in Rs. (Basic) Divident Rate %<br />

6.26<br />

Earnings Per Share in Rs. (Diluted)<br />

6.26<br />

190<br />

Generic Names <strong>of</strong> Principal Product / Services <strong>of</strong> <strong>the</strong> Company ( as per monetary terms )<br />

Product Description Item Code No. (ITC Code)<br />

(Hoteliering & Catering) Not Applicable<br />

113


The Indian Hotels Company Limited<br />

114<br />

Statement Pursuant To Section 212 Of The Companies Act, 1956<br />

Taj KTC United Taj SATS Roots Residency Innovative Taj Chieftan<br />

Investments & Hotels Hotels Air Catering Corporation Food Foods International Corporation<br />

Finance Co. Ltd. Ltd. Ltd. Ltd. Ltd. and Beverages Ltd. Hotels (H.K.) NV<br />

Ltd. Ltd.<br />

1 The Financial Year <strong>of</strong> <strong>the</strong> 31st March 31st March 31st March 31st March 31st March 31st March 31st March 31st March 31st March<br />

Company ends on : 2008 2008 2008 2008 2008 2008 2008 2008 2008<br />

2 Fully paid-up shares held by IHCL in <strong>the</strong><br />

Subsidiary Company or by Subsidiary<br />

Company in <strong>the</strong> Sub-subsidiary Company<br />

at <strong>the</strong> end <strong>of</strong> <strong>the</strong> Financial Year <strong>of</strong> <strong>the</strong><br />

Subsidiary or Sub-subsidiary Company<br />

as <strong>the</strong> case may be<br />

a) Number 81,500,000 6,04,000 4,620,000 8,874,000 51,000,000 18,750,000 7,886,423 26,755,000 9,923<br />

Equity Equity Equity Equity Equity Equity Equity Equity Equity<br />

Shares <strong>of</strong> Shares <strong>of</strong> Shares <strong>of</strong> Shares <strong>of</strong> Shares <strong>of</strong> Shares <strong>of</strong> Shares <strong>of</strong> Shares <strong>of</strong> Shares <strong>of</strong><br />

Rs. 10/- each Rs. 10/- each Rs. 10/- each Rs. 10/- each Rs. 10/- each Rs. 10/- each Rs. 10/- each US$ 1 each UK£ 1 each<br />

fully paid-up fully paid-up fully paid-up fully paid-up fully paid-up fully paid-up fully paid-up fully paid-up fully paid-up<br />

b) Extent <strong>of</strong> holding 100.00% 100.00% 55.00% 51.00% 100.00% 98.68% 67.94% 100.00% 100.00%<br />

3 Changes in <strong>the</strong> interest <strong>of</strong> <strong>the</strong> Company Does Not Does Not Does Not Does Not Does Not Does Not Does Not Does Not Does Not<br />

or <strong>the</strong> Subsidiary Company between <strong>the</strong><br />

end <strong>of</strong> <strong>the</strong> Financial Year <strong>of</strong> <strong>the</strong> Subsidiary<br />

Company or Sub-subsidiary Company and<br />

31st March, 2008<br />

Number <strong>of</strong> Shares acquired<br />

Arise Arise Arise Arise Arise Arise Arise Arise Arise<br />

4 The net aggregate <strong>of</strong> Pr<strong>of</strong>it <strong>of</strong> <strong>the</strong><br />

Subsidiary Company/Sub-subsidiary<br />

Company so far as <strong>the</strong>y concern <strong>the</strong><br />

Members <strong>of</strong> <strong>the</strong> Company<br />

a) Dealt with in <strong>the</strong> accounts <strong>of</strong> <strong>the</strong> Company<br />

for <strong>the</strong> year ended 31st March, 2008<br />

Nil Nil - 39,933,000 Nil Nil Nil Nil Nil<br />

b) Not dealt with in <strong>the</strong> accounts <strong>of</strong> <strong>the</strong> Rs. Rs. Rs. Rs. Rs. Rs. Rs. US$ UK£<br />

Company for <strong>the</strong> year ended 31st March,<br />

2008<br />

401,993,000 2,813,671 68,946,440 106,839,900 (104,800,000) (16,462,832) (55,177,983) 2,339,706 (91,684)<br />

5 The net aggregate <strong>of</strong> pr<strong>of</strong>its/(losses) <strong>of</strong> <strong>the</strong><br />

Subsidiary/Sub-subsidiary Company for<br />

previous financial years, so far as <strong>the</strong>y<br />

concern <strong>the</strong> Members <strong>of</strong> <strong>the</strong> Company<br />

a) Dealt with in <strong>the</strong> accounts <strong>of</strong> <strong>the</strong> Company<br />

for <strong>the</strong> year ended 31st March, 2008<br />

Nil Nil 13,860,000 Nil Nil Nil Nil Nil Nil<br />

b) Not dealt with in <strong>the</strong> accounts <strong>of</strong> <strong>the</strong> Rs. Rs. Rs. Rs. Rs. Rs. Rs. US$ UK£<br />

Company for <strong>the</strong> year ended 31st March,<br />

2,008<br />

330,958,000 11,958,853 66,304,088 815,326,800 (119,558,000) (34,140,751) Nil 1,523,091 (512,241)<br />

6 Material changes between <strong>the</strong> end <strong>of</strong> <strong>the</strong><br />

Financial Year <strong>of</strong> <strong>the</strong> Subsidiary or Subsubsidiary<br />

Company as <strong>the</strong> case may be<br />

and 31st March, 2008<br />

a) Fixed Assets<br />

b) Investments<br />

c) Moneys lent by <strong>the</strong> Subsidiary Company<br />

d) Moneys borrowed by <strong>the</strong> Subsidiary Does Not Does Not Does Not Does Not Does Not Does Not Does Not Does Not Does Not<br />

Company o<strong>the</strong>r than for meeting Current<br />

Liabilities<br />

Arise Arise Arise Arise Arise Arise Arise Arise Arise


Annual Report 2007-2008<br />

Statement Pursuant To Section 212 Of The Companies Act, 1956 (Contd.)<br />

IHOCO B.V. ST. James Taj IHMS INC. Samsara IHMS (AUS) IHMS Apex Hotel<br />

Court Hotel International Properties Pty Ltd. (REST) Management.<br />

Ltd. Hotel Ltd. Ltd. Pty Ltd. Services Pte.<br />

(U.K.) Ltd.<br />

1 The Financial Year <strong>of</strong> <strong>the</strong> Company 31st March 31st March 31st March 31st March 31st March 31st March 31st March 31st March<br />

ends on : 2008 2008 2008 2008 2008 2008 2008 2008<br />

2 Fully paid-up shares held by IHCL in <strong>the</strong><br />

Subsidiary Company or by Subsidiary<br />

Company in <strong>the</strong> Sub-subsidiary Company<br />

at <strong>the</strong> end <strong>of</strong> <strong>the</strong> Financial Year <strong>of</strong> <strong>the</strong><br />

Subsidiary or Sub-subsidiary Company<br />

as <strong>the</strong> case may be<br />

a) Number 41000 30527912 2 100 1,000 5,000,000 1 2<br />

Equity Equity Equity Equity Equity Equity Equity Equity<br />

Shares <strong>of</strong> Shares <strong>of</strong> Shares <strong>of</strong> Shares <strong>of</strong> Shares <strong>of</strong> Shares <strong>of</strong> Shares <strong>of</strong> Shares <strong>of</strong><br />

DFL 100 each UK£ 1 each UK£ 1 each US$ 1 each US$ 1 each AUD$ 1 each AUD$ 1 each S$<br />

fully paid-up fully paid-up fully paid-up fully paid-up fully paid-up fully paid-up fully paid-up fully paid-up<br />

b) Extent <strong>of</strong> holding 100.00% * 54.01% # 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%<br />

3 Changes in <strong>the</strong> interest <strong>of</strong> <strong>the</strong> Company Does Not Does Not Does Not Does Not Does Not Does Not Does Not Does Not<br />

or <strong>the</strong> Subsidiary Company between <strong>the</strong><br />

end <strong>of</strong> <strong>the</strong> Financial Year <strong>of</strong> <strong>the</strong> Subsidiary<br />

Company or Sub-subsidiary Company and<br />

31st March, 2008<br />

Number <strong>of</strong> Shares acquired<br />

Arise Arise Arise Arise Arise Arise Arise Arise<br />

4 The net aggregate <strong>of</strong> Pr<strong>of</strong>it <strong>of</strong> <strong>the</strong><br />

Subsidiary Company/Sub-subsidiary<br />

Company so far as <strong>the</strong>y concern <strong>the</strong><br />

Members <strong>of</strong> <strong>the</strong> Company<br />

a) Dealt with in <strong>the</strong> accounts <strong>of</strong> <strong>the</strong> Company<br />

for <strong>the</strong> year ended 31st March, 2008<br />

Nil Nil Nil Nil Nil Nil Nil Nil<br />

b) Not dealt with in <strong>the</strong> accounts <strong>of</strong> <strong>the</strong><br />

Company for <strong>the</strong> year ended 31st March, 2008<br />

EUR<br />

(19,162)<br />

UK£<br />

712,317<br />

UK£<br />

820,881<br />

US$<br />

(31,746,169)<br />

US$<br />

(9,037,923)<br />

AUD$<br />

(1,376,678)<br />

AUD$<br />

(50,106)<br />

S$<br />

-<br />

5 The net aggregate <strong>of</strong> pr<strong>of</strong>its/(losses) <strong>of</strong> <strong>the</strong><br />

Subsidiary/Sub-subsidiary Company for<br />

previous financial years, so far as <strong>the</strong>y<br />

concern <strong>the</strong> Members <strong>of</strong> <strong>the</strong> Company<br />

a) Dealt with in <strong>the</strong> accounts <strong>of</strong> <strong>the</strong> Company<br />

for <strong>the</strong> year ended 31st March, 2008<br />

Nil Nil Nil Nil Nil Nil Nil Nil<br />

b) Not dealt with in <strong>the</strong> accounts <strong>of</strong> <strong>the</strong> EUR UK£ UK£ US$ US $ AUD$ AUD$ S$<br />

Company for <strong>the</strong> year ended 31st March, 2,008 9,997,221 (7,095,987) 849,449 (11,826,047) 2,475,229 (12,784,663) Nil Nil<br />

6 Material changes between <strong>the</strong> end <strong>of</strong> <strong>the</strong><br />

Financial Year <strong>of</strong> <strong>the</strong> Subsidiary or Subsubsidiary<br />

Company as <strong>the</strong> case may be<br />

and 31st March, 2008<br />

a) Fixed Assets<br />

b) Investments<br />

c) Moneys lent by <strong>the</strong> Subsidiary Company<br />

d) Moneys borrowed by <strong>the</strong> Subsidiary Does Not Does Not Does Not Does Not Does Not Does Not Does Not Does Not<br />

Company o<strong>the</strong>r than for meeting Current<br />

Liabilities<br />

Arise Arise Arise Arise Arise Arise Arise Arise<br />

* Indirect holding as per Hong Kong Law<br />

# Inclusive <strong>of</strong> indirect holding <strong>of</strong> 21.23% as per Hong Kong Law<br />

Mumbai, June 23, 2008<br />

For and on behalf <strong>of</strong> <strong>the</strong> Board<br />

R. N. TATA Chairman<br />

R. K. KRISHNA KUMAR Vice - Chairman<br />

RAYMOND N. BICKSON Managing Director<br />

ANIL P. GOEL Executive Director- Finance<br />

ABHIJIT MUKERJI Executive Director- Hotel Operations<br />

N. A. SOONAWALA<br />

S. K. KANDHARI<br />

K B DADISETH<br />

DEEPAK PAREKH<br />

JAGDISH CAPOOR<br />

SHAPOOR MISTRY }<br />

Directors<br />

SANKER PARAMESWARAN Vice President- Legal & Company Secretary<br />

115


The Indian Hotels Company Limited<br />

Summary <strong>of</strong> Financial Information <strong>of</strong> Subsidiary Companies<br />

116<br />

Rs. Crores<br />

Name <strong>of</strong> Subsidiary Taj KTC United Roots Taj Residency Innovative Apex Taj St. James Chieftain IHOCO IHMS Taj Inter- Inter- Samsara<br />

Investment Hotels Hotels Corpo- SATS Food Foods Hotel Inter- Court Corpo- BV (Restau- Inter- national national Properties<br />

and Ltd. Ltd. ration Air and Ltd. Manage- national Hotels ration rants) national Hotel Hotel Ltd.<br />

Finance Ltd. Catering Beverages ment (H.K.) Ltd. NV Pty Ltd. Hotels Manage- Manage-<br />

Company Ltd. Ltd. Services Ltd. Ltd. ment ment<br />

Ltd. PTE Services Services<br />

Ltd. Inc. Australia<br />

Funds Employed<br />

Capital 81.50 0.60 8.40 51.00 17.40 19.30 11.61 0.00 107.07 449.57 0.08 11.74 0.00 0.00 378.19 18.31 0.00<br />

Reserves 73.30 1.48 14.32 (22.35) 176.80 (5.06) (5.60) - 15.46 (94.00) 92.55 87.34 (0.18) 13.28 (174.82) (51.86) (26.26)<br />

Liabilities:<br />

Secured Loans - - - 100.70 3.60 - 8.29 - - 355.85 - - - 0.01 320.16 55.86 -<br />

Unsecured Loans - 3.50 - 50.62 3.00 6.99 2.75 - 331.11 - - - 0.23 - 446.22 41.01 1,082.32<br />

Deferred Tax Liability - 0.77 - - 6.78 - - - - - - - - 0.04 - - -<br />

Total Liabilities - 4.27 - 151.32 13.38 6.99 11.04 - 331.11 355.85 - - 0.23 0.05 766.38 96.87 1,082.32<br />

Total Funds Employed 154.80 6.35 22.72 179.97 207.58 21.23 17.05 0.00 453.64 711.42 92.63 99.08 0.05 13.33 969.75 63.32 1,056.06<br />

Application <strong>of</strong> Funds<br />

Assets:<br />

Fixed Assets 1.08 3.71 4.87 171.30 209.21 0.02 11.75 0.03 67.71 735.87 - - - 1.35 990.59 65.40 -<br />

(Including CWIP)<br />

Investments 121.11 - 6.26 - 2.47 18.01 0.30 - 318.02 - 97.42 96.94 - - - - 1,005.01<br />

Long Term Deposits - - - 1.12 - - - - - - - - - - - - -<br />

Net Current Assets 32.61 2.64 11.24 7.55 (4.70) 3.21 5.00 (0.03) 67.91 (27.97) (4.79) 2.14 0.05 11.98 (32.55) (2.47) 51.05<br />

Deferred Tax Assets - - 0.35 - - - - - - - - - - - - - -<br />

Miscellaneous Expenditure - - - - 0.60 - - - - 3.52 - - - - 11.71 0.39 -<br />

(to <strong>the</strong> extent not written <strong>of</strong>f)<br />

Total Assets (Net) 154.80 6.35 22.72 179.97 207.58 21.23 17.05 0.00 453.64 711.42 92.63 99.08 0.05 13.33 969.75 63.32 1,056.06<br />

Total Income 45.78 0.46 39.85 26.16 209.10 32.56 22.26 1.63 22.47 204.97 - 0.02 - 66.70 425.10 35.00 6.68<br />

Pr<strong>of</strong>it Before Taxation 44.91 0.38 19.07 (10.24) 44.43 (1.64) (5.46) 0.01 9.36 10.51 (0.73) (0.10) (0.18) 9.75 (127.89) (4.81) (36.17)<br />

Provision for Taxation 4.72 0.10 6.53 0.15 15.65 - 0.06 0.01 - 0.02 - 0.02 - 3.22 - - -<br />

Pr<strong>of</strong>it After Taxation 40.20 0.28 12.54 (10.39) 28.78 (1.64) (5.52) - 9.36 10.49 (0.73) (0.12) - 6.53 (127.89) (4.81) (36.17)<br />

Proposed / Interim Dividend - - 8.40 - 10.44 - - - - - - - - - - - -


Annual Report 2007-2008<br />

Financial Statistics<br />

CAPITAL ACCOUNTS REVENUE ACCOUNTS<br />

(Rs. Crores)<br />

Year Share Reserves Borrow- Gross Net Invest- Gross Expen Depre- Pr<strong>of</strong>it Tax Pr<strong>of</strong>it Net Divi Rate <strong>of</strong><br />

Capital and ing Block Block ment Revenue diture ciation before Prov. after Transfer dend Dividend<br />

Surplus (including Taxes Taxes to on<br />

Interest) Reserves Ordinary<br />

Shares %<br />

1971-72 ! 2.34 0.35 3.45 6.96 5.47 0.06 2.90 2.60 0.20 0.10 0.03 0.07 0.03 0.04 0.00<br />

1972-73 2.35 0.76 5.38 10.06 8.12 0.02 4.35 3.50 0.45 0.40 0.04 0.44 0.29 0.16 6.00<br />

1973-74 2.35 1.12 5.32 10.58 8.14 0.16 5.82 4.82 0.50 0.50 0.01 0.51 0.35 â 0.17 6.40<br />

1974-75 2.35 1.94 4.55 10.99 8.09 0.20 7.26 5.79 0.49 0.98 0.00 0.98 3.61 â 0.37 18.00<br />

1975-76 2.35 2.21 4.21 11.82 8.42 0.20 8.61 6.73 0.50 1.38 0.33 1.05 0.64 â 0.41 20.00<br />

1976-77 # 3.07 2.38 3.98 12.21 8.30 0.25 10.77 8.45 0.52 1.80 0.75 1.05 0.49 â 0.56 20.00<br />

1977-78 3.07 3.39 4.73 13.14 8.69 0.34 13.92 9.76 0.53 3.63 1.94 1.69 1.01 â 0.68 25.00<br />

1978-79 3.07 5.41 6.17 17.81 12.68 0.55 18.42 13.63 0.69 4.10 1.40 2.70 2.02 â 0.68 25.00<br />

1979-80 *5.09 5.58 5.56 20.48 14.31 0.74 26.49 18.59 1.04 6.86 3.63 3.23 2.18 â 1.05 25.00<br />

1980-81 5.09 8.53 7.76 25.01 17.60 1.10 31.54 23.13 1.24 7.17 3.17 4.00 2.95 â 1.45 22.00<br />

1981-82 **6.90 9.20 8.87 28.79 20.06 1.13 36.09 26.72 1.33 8.04 4.10 3.94 2.49 â 1.45 22.00<br />

1982-83 ***6.35 12.34 26.71 49.54 39.22 2.65 42.98 36.87 1.62 4.49 0.00 4.49 2.99 â 1.50 23.00<br />

1983-84 6.35 17.45 32.25 58.48 44.40 3.77 54.69 43.79 3.80 7.10 0.40 6.70 5.11 1.59 25.00<br />

1984-85 6.35 22.23 42.20 67.77 44.55 11.70 65.50 55.39 2.66 7.45 1.08 6.37 4.78 1.59 25.00<br />

1985-86 a 7.85 28.70 38.82 71.69 53.72 6.21 78.48 69.32 3.44 7.66 1.60 6.06 4.22 1.84 25.00<br />

1986-87 7.85 32.73 53.58 89.73 67.56 5.53 93.05 79.68 4.25 9.12 2.75 6.37 4.02 2.35 30.00<br />

1987-88 + 9.86 41.97 63.47 107.70 80.08 6.90 105.69 90.98 5.55 9.16 2.40 6.76 4.23 2.53 30.00<br />

1988-89 9.86 48.54 74.06 127.39 93.56 9.34 117.72 100.61 6.24 10.87 1.50 9.37 6.42 2.96 30.00<br />

1989-90 !! 14.78 51.44 97.13 161.28 119.95 11.19 141.50 120.93 7.80 12.77 1.25 11.52 7.83 3.70 25.00<br />

1990-91 14.78 56.77 121.07 178.61 128.43 12.37 159.11 139.42 9.11 10.58 1.55 9.03 5.33 3.70 25.00<br />

1991-92 14.78 73.72 123.53 194.44 135.89 13.76 206.79 169.52 ++<br />

8.85 27.58 6.50 21.08 16.75 5.17 35.00<br />

1992-93 !!! 19.96 124.44 106.86 210.68 142.53 16.93 239.21 188.24 9.77 41.20 9.00 32.20 24.86 8.68 50.00<br />

1993-94 19.96 165.65 100.86 234.64 156.21 32.54 301.92 223.49 10.90 67.53 15.50 52.03 41.21 13.97 70.00<br />

1994-95 æ 39.92 205.84 245.05 293.59 201.92 36.04 381.88 263.20 13.67 105.11 23.00 82.11 60.15 21.96 55.00<br />

1995-96 = 45.12 567.16 200.18 384.01 273.21 142.09 547.36 347.42 20.37 179.57 39.00 140.57 107.10 33.47 75.00<br />

1996-97 45.12 671.86 219.75 500.10 364.08 214.80 613.33 405.67 27.18 180.48 33.60 146.48 104.70 38.35 85.00<br />

1997-98 45.12 767.68 197.31 581.48 414.57 218.09 623.91 427.53 32.42 163.96 26.00 137.96 95.78 38.35 85.00<br />

1998-99 45.12 844.35 178.42 665.67 466.77 259.09 623.34 435.36 33.84 154.14 35.00 119.14 76.57 38.35 85.00<br />

1999-00 45.12 913.96 432.32 842.01 606.86 337.75 650.91 482.49 37.69 130.73 17.50 113.23 70.66 @38.35 85.00<br />

2000-01 45.12 980.10 555.31 942.16 665.06 422.13 742.92 560.47 45.16 137.29 20.50 116.79 67.07 45.12 100.00<br />

2001-02 45.12 844.13 809.21 946.15 655.08 541.34 617.55 589.81 47.49 98.14 17.44 80.70 40.00 36.09 80.00<br />

2002-03 45.12 842.17 799.50 985.71 677.77 571.64 609.91 575.43 38.98 53.80 13.72 40.48 7.50 31.58 70.00<br />

2003-04 45.12 844.79 1412.46 1159.69 813.13 600.83 727.09 646.89 48.58 80.20 19.55 60.65 8.57 36.09 80.00<br />

2004-05 ¶ 50.25 1081.80 1052.03 1290.70 885.20 607.01 896.23 754.55 56.77 141.68 35.82 105.86 11.00 50.25 100.00<br />

2005-06 ¶ 58.41 1657.83 544.34 1308.34 843.01 656.57 1154.80 890.90 65.90 272.00 88.22 183.78 20.00 77.95 130.00<br />

2006-07 60.29 1738.39 943.94 2014.34 1360.05 962.81 1618.83 1146.47 91.44 474.64 152.25 322.39 35.00 96.46 160.00<br />

2007-08 60.29 1956.29 1134.18 2072.16 1371.60 977.58 1823.16 1254.11 85.48 580.47 203.01 377.46 38.00 114.54 190.00<br />

! Pref. and Ordinary Share Fully Called<br />

Preference Dividend<br />

â Preference and Ordinary Dividend<br />

# Issue <strong>of</strong> Bonus Shares in <strong>the</strong> Ratio 2:5<br />

* Issue <strong>of</strong> Bonus Shares in <strong>the</strong> Ratio 4:5<br />

** Issue <strong>of</strong> Bonus Shares in <strong>the</strong> Ratio 2:5<br />

*** After redemption <strong>of</strong> Preference Share <strong>of</strong> Rs. 0.55 Crore<br />

¶ Convension <strong>of</strong> foreign currency bonds into share capital.<br />

Split <strong>of</strong> Shares <strong>of</strong> Face Value Rs 10/- each to share <strong>of</strong> Face Value Re. 1/- each<br />

a After conversion <strong>of</strong> a <strong>part</strong> <strong>of</strong> <strong>the</strong> 15,000,000 Convertible Debenture at a premium <strong>of</strong><br />

Rs 15/- per Share<br />

+ After conversion <strong>of</strong> a <strong>part</strong> <strong>of</strong> <strong>the</strong> 20,01,121 Convertible Debentures at a premium <strong>of</strong><br />

Rs. 15/- per share.<br />

!! After issue <strong>of</strong> Bonus Share in <strong>the</strong> Ratio 1:2<br />

++ After Deducting Rs 0.84 Crore towards excess provision <strong>of</strong> depreciation for previous years.<br />

!!! After Issue <strong>of</strong> Rights Shares in <strong>the</strong> Ratio <strong>of</strong> 1:3<br />

æ Issue <strong>of</strong> Bonus Shares in <strong>the</strong> Ratio <strong>of</strong> 1:1<br />

= Issue <strong>of</strong> Global Depository Shares.<br />

@ Ordinary / Interim dividend for <strong>the</strong> year<br />

117


The Indian Hotels Company Limited<br />

118<br />

AUDITORS’ REPORT<br />

TO THE BOARD OF DIRECTORS OF<br />

THE INDIAN HOTELS COMPANY LIMITED<br />

ON THE CONSOLIDATED FINANCIAL STATEMENTS<br />

1. We have audited <strong>the</strong> attached Consolidated <strong>Balance</strong> <strong>Sheet</strong> <strong>of</strong> THE INDIAN HOTELS COMPANY LIMITED (“<strong>the</strong><br />

Company”), its subsidiaries and jointly controlled entities, (<strong>the</strong> Company, its subsidiaries and jointly controlled entities<br />

toge<strong>the</strong>r constitute “<strong>the</strong> Group”) as at 31 st March, 2008, <strong>the</strong> Consolidated Pr<strong>of</strong>it and Loss Account and <strong>the</strong> Consolidated<br />

Cash Flow Statement <strong>of</strong> <strong>the</strong> Group for <strong>the</strong> year ended on that date, both annexed <strong>the</strong>reto. The Consolidated Financial<br />

Statements include investments in associates, accounted for on <strong>the</strong> equity method, in accordance with Accounting Standard<br />

23 (Accounting for Investments in Associates in Consolidated Financial Statements) (AS 23) and financial statements <strong>of</strong> <strong>the</strong><br />

jointly controlled entities, accounted for in accordance with Accounting Standard 27 (Financial Reporting <strong>of</strong> Interests in<br />

Joint Ventures) (AS 27), as notified by <strong>the</strong> Companies (Accounting Standards) Rules, 2006. These financial statements are<br />

<strong>the</strong> responsibility <strong>of</strong> <strong>the</strong> Company’s Management. Our responsibility is to express an opinion on <strong>the</strong>se Consolidated Financial<br />

Statements based on our audit.<br />

2. We conducted our audit in accordance with <strong>the</strong> generally accepted auditing standards in India. These Standards require that<br />

we plan and perform <strong>the</strong> audit to obtain reasonable assurance about whe<strong>the</strong>r <strong>the</strong> financial statements are free <strong>of</strong> material<br />

misstatements. An audit includes examining, on a test basis, evidence supporting <strong>the</strong> amounts and <strong>the</strong> disclosures in <strong>the</strong><br />

financial statements. An audit also includes assessing <strong>the</strong> accounting principles used and <strong>the</strong> significant estimates made by<br />

<strong>the</strong> Management, as well as evaluating <strong>the</strong> overall financial statements presentation. We believe that our audit provides a<br />

reasonable basis for our opinion.<br />

3. (i) We did not audit <strong>the</strong> financial statements <strong>of</strong> fifteen subsidiaries and two jointly controlled entities, whose financial<br />

statements reflect total assets (net) <strong>of</strong> Rs. 3,384.59 crores as at 31 st March, 2008, total revenues <strong>of</strong> Rs. 937.40 crores and<br />

net cash flows amounting to Rs. 37.71 crores for <strong>the</strong> year <strong>the</strong>n ended as considered in <strong>the</strong> Consolidated Financial<br />

Statements. We have also not audited <strong>the</strong> accounts <strong>of</strong> any <strong>of</strong> <strong>the</strong> associates, which reflect <strong>the</strong> Group’s share <strong>of</strong> pr<strong>of</strong>it<br />

(net) for <strong>the</strong> year amounting to Rs. 64.18 crores. These financial statements have been audited by o<strong>the</strong>r auditors, whose<br />

reports have been furnished to us and our opinion, in so far as it relates to <strong>the</strong> amounts included in respect <strong>of</strong> <strong>the</strong>se<br />

subsidiaries, jointly controlled entities and associates, is based solely on <strong>the</strong>ir reports.<br />

(ii) The Consolidated Financial Statements include <strong>the</strong> unaudited financial statements <strong>of</strong> two jointly controlled entities,<br />

having total assets (net) <strong>of</strong> Rs. 91.11 crores as at 31 st March, 2008, total revenues <strong>of</strong> Rs. 41.20 crores and cash flows<br />

amounting to Rs. 7.15 crores for <strong>the</strong> year <strong>the</strong>n ended, as considered in <strong>the</strong> Consolidated Financial Statements. The<br />

financial statements <strong>of</strong> <strong>the</strong>se entities have not been audited but have been certified by <strong>the</strong> Management.<br />

4. (i) We report that <strong>the</strong> Consolidated Financial Statements have been prepared in accordance with <strong>the</strong> requirements <strong>of</strong><br />

Accounting Standard 21, (Consolidated Financial Statements), AS 23 and AS 27, as notified by <strong>the</strong> Companies<br />

(Accounting Standards) Rules, 2006 and on <strong>the</strong> basis <strong>of</strong> <strong>the</strong> separate audited/unaudited financial statements <strong>of</strong> <strong>the</strong>


Annual Report 2007-2008<br />

Company, its subsidiaries, jointly controlled entities and associates included in <strong>the</strong> Consolidated Financial Statements,<br />

referred to in paragraph 3 above.<br />

(ii) Based on our audit and on consideration <strong>of</strong> <strong>the</strong> separate audit reports on individual financial statements <strong>of</strong> <strong>the</strong><br />

Company, its aforesaid subsidiaries, jointly controlled entities and associates, referred to in paragraph 3 (i) above, and<br />

to <strong>the</strong> best <strong>of</strong> our information and according to <strong>the</strong> explanations given to us, we are <strong>of</strong> <strong>the</strong> opinion that <strong>the</strong> aforesaid<br />

Consolidated Financial Statements, subject to our comments in paragraph 3 (ii) above, regarding two jointly<br />

controlled entities, whose accounts have not been audited, give a true and fair view in conformity with <strong>the</strong> accounting<br />

principles generally accepted in India:<br />

(a) in <strong>the</strong> case <strong>of</strong> <strong>the</strong> Consolidated <strong>Balance</strong> <strong>Sheet</strong>, <strong>of</strong> <strong>the</strong> state <strong>of</strong> affairs <strong>of</strong> <strong>the</strong> Group as at 31 st March, 2008;<br />

(b) in <strong>the</strong> case <strong>of</strong> <strong>the</strong> Consolidated Pr<strong>of</strong>it and Loss Account, <strong>of</strong> <strong>the</strong> pr<strong>of</strong>it <strong>of</strong> <strong>the</strong> Group for <strong>the</strong> year ended on that<br />

date and<br />

(c) in <strong>the</strong> case <strong>of</strong> <strong>the</strong> Consolidated Cash Flow Statement, <strong>of</strong> <strong>the</strong> cash flows <strong>of</strong> <strong>the</strong> Group for <strong>the</strong> year ended on that<br />

date.<br />

For S. B. BILLIMORIA & CO. For N. M. RAIJI & CO.<br />

Chartered Accountants Chartered Accountants<br />

Nalin M. Shah Vinay D. Balse<br />

Partner Partner<br />

(Membership No.15860) (Membership No. 39434)<br />

MUMBAI, 23 rd June, 2008<br />

119


The Indian Hotels Company Limited<br />

120<br />

Consolidated <strong>Balance</strong> <strong>Sheet</strong> as at 31 st March, 2008<br />

Schedule Rupees Rupees<br />

Previous Year<br />

Rupees<br />

crores crores crores<br />

SOURCES OF FUNDS<br />

Shareholders’ Funds<br />

Share Capital 1 60.29 60.29<br />

Share Application Money 19.97 -<br />

Reserves and Surplus 2 2,188.83 2,036.33<br />

Total 2,269.09 2,096.62<br />

Minority Interest<br />

Loan Funds<br />

282.01 275.84<br />

Secured Loans 3 1,631.57 1,701.56<br />

Unsecured Loans 4 1,835.26 353.58<br />

Total 3,466.83 2,055.14<br />

Long Term Trade Deposits 23.63 15.28<br />

Deferred Tax Liabilities (Refer Note 7 (b), Page 137) 148.88 147.02<br />

APPLICATION OF FUNDS<br />

6,190.44 4,589.90<br />

Goodwill on consolidation 297.03 314.12<br />

Fixed Assets 5<br />

Gross Block 4,646.45 4,416.09<br />

Less : Depreciation 1,132.08 1,034.01<br />

Net Block 3,514.37 3,382.08<br />

Capital work-in-progress 435.17 174.53<br />

Investments 6 1,541.94 514.27<br />

Long Term Deposits for Hotel Properties 165.71 149.22<br />

Deferred Tax Assets (Refer Note 7 (c), Page 138) 0.35 0.42<br />

Current Assets, Loans and Advances 7<br />

Inventories 53.33 44.91<br />

Sundry Debtors 207.91 204.75<br />

Cash and Bank <strong>Balance</strong>s 257.60 177.15<br />

Loans and Advances 366.20 268.36<br />

885.04 695.17<br />

Less: Current Liabilities and Provisions 8<br />

Liabilities 572.24 458.95<br />

Provisions 86.08 193.70<br />

658.32 652.65<br />

Net Current Assets<br />

Miscellaneous Expenditure<br />

226.72 42.52<br />

(to <strong>the</strong> extent not adjusted or written <strong>of</strong>f) 9 9.15 12.74<br />

6,190.44 4,589.90<br />

The accompanying notes form an integral <strong>part</strong> <strong>of</strong> <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> 12<br />

As per our report attached. For and on behalf <strong>of</strong> <strong>the</strong> Board<br />

For S. B. BILLIMORIA & CO. For N. M. RAIJI & CO. Raymond N. Bickson Managing Director<br />

Chartered Accountants Chartered Accountants<br />

Anil P. Goel Executive Director - Finance<br />

Nalin M. Shah Vinay D. Balse Abhijit Mukerji Executive Director - Hotel Operations<br />

Partner Partner<br />

Mumbai, 23 rd June, 2008


Annual Report 2007-2008<br />

Consolidated Pr<strong>of</strong>it and Loss Account for <strong>the</strong> year ended 31st March, 2008<br />

Previous Year<br />

Schedule Rupees Rupees Rupees<br />

crores crores crores<br />

INCOME<br />

Rooms, Restaurants, Banquets and O<strong>the</strong>r Income<br />

EXPENDITURE<br />

10 3,012.62 2,601.13<br />

Operating and General Expenses 11 2,046.90 1,794.05<br />

Depreciation 167.62 160.67<br />

Interest (net) (Refer Note 11, Page 142) 202.32 122.15<br />

Total<br />

Less : Unallocated Expenditure during construction period<br />

2,416.84 2,076.87<br />

transferred to Fixed Assets 18.90 8.29<br />

2,397.94 2,068.58<br />

PROFIT BEFORE EXCEPTIONAL ITEM AND TAX 614.68 532.55<br />

Less : Exceptional item (Refer Note 3, Page 136) 54.16 -<br />

PROFIT BEFORE TAX 560.52 532.55<br />

Less : Provision for Tax (Refer Note 7 (a), Page 137)<br />

Less : Short Provision <strong>of</strong> Tax <strong>of</strong> earlier years<br />

242.63 196.15<br />

(Net) (Refer Note 7 (a), Page 137) 4.35 0.37<br />

PROFIT AFTER TAX 313.54 336.03<br />

Less : Pr<strong>of</strong>it attributable to minority interest (net) 22.74 20.11<br />

Add : Share <strong>of</strong> Pr<strong>of</strong>its <strong>of</strong> Associates (Net)<br />

PROFIT AFTER MINORITY INTEREST AND SHARE OF<br />

64.18 54.39<br />

PROFIT OF ASSOCIATES 354.98 370.31<br />

Add : <strong>Balance</strong> brought forward from previous year 497.20 274.75<br />

AMOUNT AVAILABLE FOR APPROPRIATION<br />

Appropriation :<br />

852.18 645.06<br />

Interim Dividend 114.54 -<br />

Tax on Interim Dividend 19.47 -<br />

Proposed Dividend - 96.46<br />

Tax on Dividend - 16.40<br />

Transferred to General Reserve 38.00 35.00<br />

<strong>Balance</strong> carried forward 680.17 497.20<br />

Earnings Per Share Before Exceptional Item -<br />

(In Rupees) ( Refer Note 17, Page 148)<br />

852.18 645.06<br />

Basic & Diluted<br />

Earnings Per Share after Exceptional Item -<br />

(In Rupees) ( Refer Note 17, Page 148)<br />

6.79 6.14<br />

Basic & Diluted 5.89 6.14<br />

Face Value per equity share - (In Rupees)<br />

The accompanying notes form an integral <strong>part</strong> <strong>of</strong> <strong>the</strong> Pr<strong>of</strong>it<br />

1.00 1.00<br />

and Loss Account 12<br />

As per our report attached. For and on behalf <strong>of</strong> <strong>the</strong> Board<br />

For S. B. BILLIMORIA & CO. For N. M. RAIJI & CO. Raymond N. Bickson Managing Director<br />

Chartered Accountants Chartered Accountants<br />

Anil P. Goel Executive Director - Finance<br />

Nalin M. Shah Vinay D. Balse Abhijit Mukerji Executive Director - Hotel Operations<br />

Partner Partner<br />

Mumbai, 23 rd June, 2008<br />

121


The Indian Hotels Company Limited<br />

122<br />

Consolidated Cash Flow Statement for <strong>the</strong> year ended March 31, 2008<br />

Rupees Rupees Rupees<br />

Previous Year<br />

Rupees<br />

crores crores crores crores<br />

Cash Flow From Operating Activities<br />

Net Pr<strong>of</strong>it Before Tax<br />

Adjustments For :<br />

560.52 532.55<br />

Depreciation 167.62 160.66<br />

Amortisation <strong>of</strong> VRS Expenditure 1.36 1.36<br />

Issue costs <strong>of</strong> Loans 3.83 2.28<br />

Pr<strong>of</strong>it on sale <strong>of</strong> investments (39.12) (32.67)<br />

Loss on sale <strong>of</strong> assets disposed / discarded 8.54 0.07<br />

Provision for Doubtful Debts and Advances 4.46 5.82<br />

Dividend Income (7.55) (29.26)<br />

Interest (Net) 202.32 122.15<br />

Unrealised exchange gain on borrowings (15.03) (9.80)<br />

Provision for Loyalty Programmes 2.14 2.01<br />

Provision for Employee Benefits 2.63 10.54<br />

331.20 233.16<br />

Cash Operating Pr<strong>of</strong>it before working capital changes<br />

Adjustments For :<br />

891.72 765.71<br />

Trade and O<strong>the</strong>r Receivables (26.30) (53.89)<br />

Inventories (8.99) (4.30)<br />

Trade Payables (25.82) 106.76<br />

(61.11) 48.58<br />

Cash Generated from Operating activities 830.61 814.29<br />

Direct Taxes Paid (246.93) (143.99)<br />

Net Cash From Operating Activities<br />

Cash Flow From Investing Activities<br />

583.68 670.30<br />

Purchase <strong>of</strong> Fixed Assets (677.73) (1,083.59)<br />

Sale <strong>of</strong> Fixed Assets 4.32 7.53<br />

Purchase <strong>of</strong> Investments (including Share Application Money) (1,042.64) (145.78)<br />

Sale <strong>of</strong> Investments 44.17 49.75<br />

Interest Received<br />

Dividend Received [including Rs. 9.42 crores<br />

17.14 28.34<br />

(Previous Year - Rs. 17.58 crores ) from Associates] 13.91 50.20<br />

Deposits Placed with O<strong>the</strong>r Companies (NET) (10.15) (4.21)<br />

Net Cash Used In Investing Activities<br />

Cash Flow From Financing Activities<br />

(1,650.98) (1,097.74)<br />

Share Application Money Collected 19.97 -<br />

Debenture Application money collected 3.88 -<br />

Debenture issue costs (0.69) (5.96)<br />

Interest Paid (221.58) (149.29)<br />

Repayment <strong>of</strong> long term Loans and Debentures (417.97) (475.50)<br />

Proceeds <strong>of</strong> long term Loans and Debentures 463.17 830.48<br />

Short Term Loans Raised (NET) 1,388.90 78.29<br />

Long Term Trade Deposits Raised / (Repaid) (NET) 8.20 (21.22)<br />

Dividend Paid (Including tax on dividend) (116.53) (108.41)<br />

Net Cash Used In Financing Activities 1,127.34 148.39<br />

Net Increase / (Decrease) In Cash and Cash Equivalents 60.03 (279.05)<br />

Cash and Cash Equivalents - Opening - 1st April - (Refer Note 13, Page 142) 167.01 435.02<br />

Cash and Cash Equivalents acquired on Amalgamation - 29.56<br />

Impact <strong>of</strong> Exchange Fluctuations on Cash and Cash Equivalents (5.08) (18.52)<br />

Cash and Cash Equivalents - Closing - 31st March - (Refer Note 13, Page 142) 221.96 167.01<br />

As per our report attached. For and on behalf <strong>of</strong> <strong>the</strong> Board<br />

For S. B. BILLIMORIA & CO. For N. M. RAIJI & CO. Raymond N. Bickson Managing Director<br />

Chartered Accountants Chartered Accountants<br />

Anil P. Goel Executive Director - Finance<br />

Nalin M. Shah Vinay D. Balse Abhijit Mukerji Executive Director - Hotel Operations<br />

Partner Partner<br />

Mumbai, 23 rd June, 2008


Annual Report 2007-2008<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> Consolidated <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 1 : Share Capital<br />

Rupees<br />

Previous Year<br />

Rupees<br />

crores crores<br />

AUTHORISED SHARE CAPITAL<br />

Ordinary Shares<br />

100,00,00,000 Ordinary Shares <strong>of</strong> Re. 1/- each<br />

Preference Shares<br />

1,00,00,000 Cumulative Redeemable Preference Shares <strong>of</strong> Rs. 100/- each<br />

100.00 100.00<br />

100.00 100.00<br />

ISSUED, SUBSCRIBED AND PAID UP<br />

60,28,51,493 (Previous Year 58,66,30,920) Ordinary Shares <strong>of</strong><br />

200.00 200.00<br />

Re. 1 /- each, Fully Paid 60.29 58.67<br />

Share Capital Pending Allotment (See Note below) - 1.62<br />

Note :<br />

60.29 60.29<br />

1,62,19,670 Ordinary Shares, <strong>of</strong> <strong>the</strong> face value <strong>of</strong> Re. 1/- each were alloted on May 9, 2007, as fully paid shares,<br />

pursuant to amalgamation <strong>of</strong> Gateway Hotels & Getaway Resorts Limited and Indian Resort Hotels Limited with<br />

<strong>the</strong> Company in <strong>the</strong> previous year.<br />

Schedule 2 : Reserves and Surplus<br />

Rupees<br />

Previous Year<br />

Rupees<br />

crores crores<br />

Capital Reserve 43.91 43.91<br />

Capital Redemption Reserve 1.12 1.12<br />

Securities Premium Account (Refer Note 4, Page 136) 851.37 852.06<br />

General Reserve 404.63 366.63<br />

Investment Reserve 5.00 5.00<br />

Investment Allowance Utilised Reserve 4.03 4.03<br />

Export Pr<strong>of</strong>its Reserve 0.41 0.41<br />

Debenture Redemption Reserve 88.67 88.67<br />

Foreign Exchange Earnings Reserve 7.51 7.51<br />

Foreign Exchange Earnings Utilised Reserve 2.31 2.31<br />

Foreign Currency Translation Reserve 10.55 35.41<br />

Foreign Currency Translation Reserve on Consolidation 12.13 24.27<br />

Share <strong>of</strong> Post Acquisition Reserves <strong>of</strong> Group Companies 77.02 107.80<br />

Pr<strong>of</strong>it and Loss Account 680.17 497.20<br />

2,188.83 2,036.33<br />

123


The Indian Hotels Company Limited<br />

124<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> Consolidated <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 3 : Secured Loans<br />

Previous Year<br />

Rupees Rupees<br />

crores crores<br />

Non - Convertible Debentures 550.00 580.74<br />

Term loans 1,045.51 1,105.79<br />

Bank Overdraft 35.38 14.66<br />

Interest accrued & due 0.68 0.37<br />

TOTAL 1,631.57 1,701.56<br />

Schedule 4 : Unsecured Loans<br />

Previous Year<br />

Rupees Rupees<br />

crores crores<br />

Fixed Deposits 3.08 4.40<br />

Foreign Currency Term Loan from Bank 179.29 84.48<br />

Long Term Loans from O<strong>the</strong>rs 7.89 -<br />

Long Term Loans from Banks 128.06 137.92<br />

Short Term Loans from Banks 326.69 95.24<br />

Short Term Loan from O<strong>the</strong>rs 1,069.49 9.14<br />

Inter - Corporate Deposits 67.89 13.84<br />

Commercial Paper 50.00 -<br />

Bank Overdraft 2.87 8.56<br />

TOTAL 1,835.26 353.58


Annual Report 2007-2008<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> Consolidated <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 5 : Fixed Assets<br />

Particulars Gross Block Adjustment Additions Additions Deductions Gross Block Opening Adjustment Additions Depreciation Deductions Accumulated Net Block<br />

(at cost ) to on for <strong>the</strong> for <strong>the</strong> (at cost ) Depreciation to on for <strong>the</strong> for <strong>the</strong> Depreciation as at<br />

as at Opening Amalgamation year year as at as at Opening Amalgamation Year year as at<br />

01.04.2007 <strong>Balance</strong> 31.03.2008 01.04.2007 <strong>Balance</strong> 31.03.2008 31.03.2008<br />

(Refer Note 5) (Refer Note 5) (Refer Note 6)<br />

TANGIBLE ASSETS<br />

LAND (Freehold) 333.80 (12.41) - 57.88 - 379.27 3.88 - - - - 3.88 375.39<br />

115.94 1.07 0.20 217.48 0.89 333.80 3.92 (0.04) - - - 3.88 329.92<br />

LAND (Leasehold) 259.81 (14.55) - 2.08 0.19 247.15 20.41 (1.27) - 2.66 - 21.80 225.35<br />

221.76 17.89 0.15 20.01 - 259.81 14.66 0.82 0.02 4.91 - 20.41 239.40<br />

BUILDINGS 2,290.57 (79.28) - 232.11 2.15 2,441.25 221.19 (4.98) - 52.08 0.35 267.94 2,173.31<br />

(SEE NOTE 2 BELOW) 1,504.44 115.72 28.34 645.23 3.16 2,290.57 159.28 20.90 4.45 36.59 0.03 221.19 2,069.38<br />

PLANT AND MACHINERY 919.54 (3.43) - 84.66 27.57 973.20 447.92 (1.57) - 61.58 24.98 482.95 490.25<br />

(See Note 4 below) 779.76 31.11 28.51 97.26 17.10 919.54 366.23 16.58 13.54 66.14 14.57 447.92 471.62<br />

FURNITURE , FIXTURES 463.58 (8.29) - 34.50 14.72 475.07 261.30 (4.04) - 40.29 9.59 287.96 187.11<br />

AND OFFICE EQUIPMENTS. 405.20 19.35 7.63 49.08 17.68 463.58 219.36 13.94 3.73 38.26 13.99 261.30 202.28<br />

VEHICLES 34.54 (0.12) - 3.77 1.48 36.71 13.47 (0.09) - 3.33 0.96 15.75 20.96<br />

28.84 1.82 0.40 5.86 2.38 34.54 10.43 1.12 0.06 3.44 1.58 13.47 21.07<br />

INTANGIBLE ASSETS<br />

Rupees crores<br />

GOODWILL - - - - - - - - - - - - -<br />

2.03 - - - 2.03 - - - - - - -<br />

LEASEHOLD 10.95 (0.78) - - - 10.17 1.26 (0.09) - 0.68 - 1.85 8.33<br />

PROPERTY RIGHTS 11.28 (0.40) - 0.07 - 10.95 0.56 (0.06) - 0.76 - 1.26 9.69<br />

WEBSITE 4.53 - - 0.08 - 4.61 4.53 - - 0.02 - 4.55 0.06<br />

DEVELOPMENT COST 4.53 - - - 4.53 4.30 - - 0.23 - 4.53 -<br />

CUSTOMER RESERVATION 17.18 - - 4.19 14.84 6.53 13.30 - - 2.02 13.81 1.52 5.01<br />

SYSTEM (including licenced<br />

s<strong>of</strong>tware)<br />

17.11 - - 0.07 - 17.18 10.37 0.01 - 2.92 - 13.30 3.88<br />

MANAGEMENT 64.04 (8.56) - - - 55.48 41.64 (2.19) - 2.93 4.88 37.50 17.98<br />

CONTRACTS 65.85 (1.81) - - - 64.04 37.26 (0.91) - 5.29 - 41.64 22.40<br />

OTHERS 17.55 - - 2.04 2.58 17.01 5.11 - - 2.03 0.75 6.39 10.62<br />

10.83 4.07 - 2.65 - 17.55 2.90 0.08 - 2.13 - 5.11 12.44<br />

TOTAL 4,416.09 (127.42) - 421.31 63.52 4,646.45 1,034.01 (14.23) - 167.62 55.32 1,132.08 3,514.37<br />

3,167.57 188.82 65.23 1,037.71 43.24 4,416.09 829.27 52.44 21.80 160.67 30.17 1,034.01 3,382.08<br />

Notes :<br />

1 Figures in italics are in respect <strong>of</strong> <strong>the</strong> previous year.<br />

2 Gross block includes improvements to leased buildings - Rs. 1077.24 crores ( Previous Year - Rs. 1092.46 crores).<br />

3 Exchange gain adjusted to cost <strong>of</strong> <strong>the</strong> Fixed Assets during <strong>the</strong> year - Rs. NIL; ( Previous Year - Rs. 1.27 crores ).<br />

4 Plant and Machinery as at <strong>the</strong> year end includes Fixed Assets on finance lease: Gross Block - Rs. 0.05 crore; (Previous Year- Rs. 0.05 crore), Accumulated<br />

Depreciation-Rs. 0.01crore (Previous Year- Rs Nil), Depreciation for <strong>the</strong> year - Rs. 0.01(Previous Year- Rs Nil).<br />

5 Adjustment on account <strong>of</strong> foreign exchange translation difference on opening balance is reflected as “Adjustment to Opening <strong>Balance</strong>”.<br />

6 Accumulated Depreciation includes adjustment for impairment <strong>of</strong> Rs. 9.25 crores made in <strong>the</strong> earlier years.<br />

125


The Indian Hotels Company Limited<br />

126<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> Consolidated <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 6 : Investments<br />

Rupees<br />

Previous Year<br />

Rupees<br />

crores crores<br />

Long Term<br />

Trade Investments:<br />

In Associate Companies<br />

[Includes Goodwill (Net <strong>of</strong> capital reserve <strong>of</strong> Rs. 0.70 crore)<br />

{Previous Year - Rs. 0.70 crore} <strong>of</strong> Rs.76.05 crores<br />

{Previous Year - 76.05 crores } arising on <strong>the</strong> acquisition <strong>of</strong> Associates]<br />

In Shares<br />

396.12 345.04<br />

a Quoted (refer note below) 992.31 5.26<br />

b Unquoted 151.39 151.37<br />

O<strong>the</strong>r Investments - Shares 0.01 0.02<br />

Current Investments - Units <strong>of</strong> Liquid Mutual Funds 2.61 13.08<br />

TOTAL 1,542.44 514.77<br />

Less : Provision for Diminution in Value <strong>of</strong> Investments 0.50 0.50<br />

Note:<br />

1,541.94 514.27<br />

Investments in Quoted Shares include 50,900 shares <strong>of</strong> <strong>the</strong> Company held by a subsidiary, at a cost <strong>of</strong> Rs. 73,950, which<br />

were acquired by it prior to it becoming a subsidiary.<br />

Schedule 7 : Current Assets, Loans and Advances<br />

Rupees Rupees<br />

Previous Year<br />

Rupees<br />

crores crores crores<br />

CURRENT ASSETS<br />

Inventories<br />

Stores and Operating Supplies 26.46 21.10<br />

Food and Beverages 26.87 23.81<br />

53.33 44.91<br />

Sundry Debtors (net <strong>of</strong> provision) 207.91 204.75<br />

Cash and Bank <strong>Balance</strong>s 257.60 177.15<br />

518.84 426.81<br />

LOANS AND ADVANCES<br />

Deposits with Public Bodies and O<strong>the</strong>rs 39.94 37.68<br />

Advance payment <strong>of</strong> Tax (net <strong>of</strong> provision) 118.69 109.07<br />

O<strong>the</strong>r Advances (net <strong>of</strong> provision) 163.16 106.17<br />

Deposits with Companies 44.41 15.44<br />

366.20 268.36<br />

TOTAL 885.04 695.17


Annual Report 2007-2008<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> Consolidated <strong>Balance</strong> <strong>Sheet</strong><br />

Schedule 8 : Current Liabilities & Provisions<br />

CURRENT LIABILITIES<br />

Previous Year<br />

Rupees Rupees Rupees<br />

crores crores crores<br />

Sundry Creditors 260.22 280.09<br />

O<strong>the</strong>r Liabilities 88.41 106.09<br />

Sundry Deposits 8.36 8.46<br />

Advance from customers 60.29 49.16<br />

Interest accrued but not due 14.84 12.73<br />

Non-Convertible Debentures Application money 3.88<br />

Interim Dividend 114.54 -<br />

Tax on Interim Dividend 19.47 -<br />

Dividend Warrants issued but not encashed 2.23 2.42<br />

TOTAL CURRENT LIABILITIES<br />

PROVISIONS<br />

572.24 458.95<br />

Employee Benefits 58.12 57.74<br />

Contingencies 1.16 1.16<br />

Loyalty programmes (Refer Note 14, Page 143) 10.96 8.82<br />

Taxation (net <strong>of</strong> advance)<br />

Premium on Redemption <strong>of</strong> Debentures/Bonds<br />

15.84 13.12<br />

(Previous Year - Rs.4,976/-) - -<br />

Proposed Dividend - 96.46<br />

Tax on Dividend - 16.40<br />

TOTAL PROVISIONS 86.08 193.70<br />

TOTAL 658.32 652.65<br />

Schedule 9 : Miscellaneous Expenditure (to <strong>the</strong> extent not adjusted or written <strong>of</strong>f)<br />

Rupees Rupees<br />

Previous Year<br />

Rupees<br />

crores crores crores<br />

Borrowing Costs<br />

Opening <strong>Balance</strong> 11.08 7.49<br />

Add : Incurred during <strong>the</strong> year 1.60 5.87<br />

Less : Amortised during <strong>the</strong> year 3.83 2.28<br />

Closing <strong>Balance</strong><br />

Voluntary Retirement Scheme Expenses<br />

8.85 11.08<br />

Opening <strong>Balance</strong> 1.66 3.02<br />

Less : Amortised during <strong>the</strong> year<br />

Closing <strong>Balance</strong><br />

1.36 1.36<br />

0.30 1.66<br />

TOTAL 9.15 12.74<br />

127


The Indian Hotels Company Limited<br />

128<br />

Schedules forming <strong>part</strong> <strong>of</strong> <strong>the</strong> Consolidated Pr<strong>of</strong>it and Loss Account<br />

Schedule 10 : Rooms, Restaurants, Banquets and O<strong>the</strong>r Income<br />

Previous Year<br />

Rupees Rupees Rupees<br />

crores crores crores<br />

INCOME<br />

Rooms, Restaurants, Banquets and O<strong>the</strong>r Services 2,920.03 2,506.25<br />

O<strong>the</strong>r Income<br />

Dividend Income (Refer Note 6, Page 137) 7.55 29.26<br />

Pr<strong>of</strong>it on sale <strong>of</strong> investments (net) (Refer Note 5 (a)<br />

& (b), Page 137) 39.12 32.67<br />

Miscellaneous Income 45.92 32.95<br />

92.59 94.88<br />

TOTAL 3,012.62 2,601.13<br />

Schedule 11 : Operating and General Expenses<br />

Rupees Rupees<br />

Previous Year<br />

Rupees<br />

crores crores crores<br />

OPERATING EXPENSES<br />

Payments to & Provisions for Employees 784.11 652.73<br />

Food & Beverages Consumed<br />

O<strong>the</strong>r Operating Expenses<br />

266.07 253.76<br />

Linen & Room Supplies 45.93 42.30<br />

Catering Supplies 28.18 20.74<br />

O<strong>the</strong>r Supplies 7.53 8.90<br />

Fuel, Power & Light 153.25 132.83<br />

Repairs to Buildings 28.60 24.94<br />

Repairs to Machinery 31.75 29.80<br />

Repairs to O<strong>the</strong>rs 30.96 32.17<br />

Linen, Uniform Washing and Laundry Expenses 24.37 18.24<br />

Payment to Orchestra Staff, Artistes and O<strong>the</strong>rs 8.27 8.72<br />

Guest Transportation 13.04 14.15<br />

Travel Agents’ Commission 30.95 25.86<br />

Collecting Agents’ Commission 32.93 26.49<br />

O<strong>the</strong>r Operating Expenses 20.23 16.81<br />

455.99 401.95<br />

General Expenses<br />

Rent 55.34 56.30<br />

Licence Fees 113.64 112.19<br />

Rates & Taxes 47.97 38.20<br />

Insurance 17.91 16.76<br />

Advertising & Publicity 83.75 75.54<br />

Printing & Stationery 15.43 13.73<br />

Passage & Travelling 22.79 22.54<br />

Provision for Doubtful Debts and Advances 4.46 5.82<br />

Pr<strong>of</strong>essional Fees 51.91 44.23<br />

Loss on Sale <strong>of</strong> Assets (Net) 8.54 0.07<br />

O<strong>the</strong>r Expenses 108.49 92.04<br />

Auditors’ Remuneration 4.46 3.72<br />

534.69 481.14<br />

Amortisation <strong>of</strong> Voluntary Retirement Scheme Expenses 1.36 1.36<br />

Directors’ Fees and Commission 4.68 3.11<br />

TOTAL 2,046.90 1,794.05


Annual Report 2007-2008<br />

Schedule 12 : Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account<br />

1. Basis <strong>of</strong> Consolidation:<br />

(a) The Consolidated Financial Statements relate to The Indian Hotels Company Ltd. (‘<strong>the</strong> Company’) its Subsidiaries,<br />

Jointly Controlled Entities and Associates. The Company, its subsidiaries and jointly controlled entities toge<strong>the</strong>r consti<br />

tute ‘<strong>the</strong> Group’. The Consolidated Financial Statements have been prepared on <strong>the</strong> following basis:<br />

— The financial statements <strong>of</strong> <strong>the</strong> Company and its Subsidiaries have been combined on a line-by-line basis by<br />

adding toge<strong>the</strong>r <strong>the</strong> book values <strong>of</strong> like items <strong>of</strong> assets, liabilities, income and expenses, after eliminating intragroup<br />

balances, intra-group transactions and unrealised pr<strong>of</strong>its or losses as per Accounting Standard 21 ‘Consoli<br />

dated Financial Statements’, as notified by <strong>the</strong> Companies (Accounting Standards) Rules, 2006.<br />

— In case <strong>of</strong> foreign subsidiaries and foreign jointly controlled entities, revenue items are consolidated at <strong>the</strong> average<br />

exchange rate prevailing during <strong>the</strong> year. The opening balance in Pr<strong>of</strong>it and Loss Account and <strong>the</strong> opening balance<br />

in Reserves and Surplus have been converted at <strong>the</strong> rates prevailing as at <strong>the</strong> respective <strong>Balance</strong> <strong>Sheet</strong> dates. All<br />

assets and liabilities as at <strong>the</strong> year-end are converted at <strong>the</strong> rates prevailing as at <strong>the</strong> end <strong>of</strong> <strong>the</strong> year. Any exchange<br />

difference arising on consolidation is shown under Foreign Currency Translation Reserve on Consolidation.<br />

— Investments in Associate Companies have been accounted for under <strong>the</strong> equity method, as per Accounting Stan<br />

dard 23 ‘Accounting for Investments in Associates in Consolidated Financial Statements’, as notified by <strong>the</strong><br />

Companies (Accounting Standards) Rules, 2006.<br />

— Interests in Jointly Controlled Entities have been accounted for by using <strong>the</strong> proportionate consolidation method,<br />

as per Accounting Standard 27 ‘Financial Reporting <strong>of</strong> Interests in Joint Ventures’, as notified by <strong>the</strong> Companies<br />

(Accounting Standards) Rules, 2006.<br />

— The financial statements <strong>of</strong> Subsidiaries, Jointly Controlled Entities and Associates used in <strong>the</strong> consolidation are<br />

drawn upto <strong>the</strong> same reporting date as that <strong>of</strong> <strong>the</strong> Company.<br />

— The excess <strong>of</strong> cost to <strong>the</strong> Company, <strong>of</strong> its investment in <strong>the</strong> Subsidiaries and Jointly Controlled Entities over <strong>the</strong><br />

Company’s portion <strong>of</strong> equity, as at <strong>the</strong> date <strong>of</strong> making <strong>the</strong> investment, is recognised in <strong>the</strong> financial statements as<br />

Goodwill.<br />

— The excess <strong>of</strong> Company’s portion <strong>of</strong> equity <strong>of</strong> <strong>the</strong> Subsidiaries and Jointly Controlled Entities over <strong>the</strong> cost <strong>of</strong><br />

acquisition <strong>of</strong> <strong>the</strong> respective investments, as at <strong>the</strong> date <strong>of</strong> making <strong>the</strong> investment, is treated as Capital Reserve.<br />

— Goodwill/Capital Reserve arising on investments in Associate Companies is retained/adjusted under <strong>the</strong> head<br />

“Investments in Associate Companies”.<br />

— Goodwill arising out <strong>of</strong> consolidation is not amortised.<br />

— Minority Interest in <strong>the</strong> net assets <strong>of</strong> Subsidiaries consists <strong>of</strong> :<br />

i. <strong>the</strong> amount <strong>of</strong> equity attributable to <strong>the</strong> minorities at <strong>the</strong> date on which investment in a Subsidiary is made and<br />

ii. <strong>the</strong> minorities’ share <strong>of</strong> movements in equity since <strong>the</strong> date <strong>the</strong> parent-subsidiary relationship came into existence.<br />

129


The Indian Hotels Company Limited<br />

130<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

(b) The list <strong>of</strong> Subsidiaries, Jointly Controlled Entities and Associates, which are included in <strong>the</strong> consolidation with <strong>the</strong>ir<br />

respective country <strong>of</strong> incorporation and <strong>the</strong> Group’s holdings <strong>the</strong>rein, is given below: -<br />

i) Subsidiary Companies<br />

Name <strong>of</strong> <strong>the</strong> Company Country <strong>of</strong> Holding (%)<br />

Incorporation 2007-08 2006-07<br />

Domestic<br />

Taj Investment and Finance Company Ltd.( TIFCO) India 100.00 100.00<br />

KTC Hotels Ltd. (KTC) India 100.00 100.00<br />

United Hotels Ltd. (UHL) India 55.00 55.00<br />

Roots Corporation Ltd. India 100.00 100.00<br />

Taj SATS Air Catering Ltd. India 51.00 51.00<br />

Residency Foods & Beverages Ltd. India 98.68 98.68<br />

Innovative Foods Ltd.<br />

International<br />

India 67.94 67.94<br />

Taj International Hotels (H.K.) Ltd. (TIHK) Hong Kong 100.00 100.00<br />

Chieftain Corporation NV (Chieftain) Ne<strong>the</strong>rlands Antilles 100.00 100.00<br />

IHOCO BV (IHOCO) Ne<strong>the</strong>rlands 100.00 100.00<br />

SJCHL Ltd. # United Kingdom - 100.00<br />

St. James Court Hotels Ltd. (SJCHL) United Kingdom 54.01 54.01<br />

Taj International Hotels Ltd. (TIHL) United Kingdom 100.00 100.00<br />

International Hotel Management Services Inc United States <strong>of</strong><br />

(IHMS) and its Limited Liability Companies America 100.00 100.00<br />

Samsara Properties Ltd. British Virgin Islands 100.00 100.00<br />

IHMS Australia Pty Ltd. (IHMSA) Australia 100.00 100.00<br />

IHMS (Restaurants) Pty. Ltd. Australia 100.00 100.00<br />

Apex Hotel Management Services (Pte) Ltd. Singapore 100.00 100.00<br />

ii)<br />

# The Company has been liquidated during <strong>the</strong> year and hence not considered for consolidation.<br />

Jointly Controlled Entities<br />

Name <strong>of</strong> <strong>the</strong> Company Country <strong>of</strong> Holding (%)<br />

Incorporation 2007-08 2006-07<br />

Domestic<br />

Taj Madras Flight Kitchen Pvt. Ltd. India 50.00 50.00<br />

Taj Karnataka Hotels & Resorts Ltd. India 40.00 40.00<br />

Taj Kerala Hotels & Resorts Ltd. India 28.30 28.30<br />

Taj GVK Hotels & Resorts Ltd. India 25.52 25.52<br />

Taj Safaris Ltd. (Formerly known as Taj<br />

Wilderness Lodges Ltd.) India 33.33 33.33<br />

International<br />

Taj Asia Ltd. Hong Kong 26.66 26.66<br />

Taj International Hotels (South Africa)(Pty) Ltd. South Africa 50.00 50.00


Annual Report 2007-2008<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

iii) Associates<br />

Name <strong>of</strong> <strong>the</strong> Company Country <strong>of</strong> Holding(%)<br />

Incorporation 2007-08 2006-07<br />

Domestic<br />

Ideal Ice & Cold Storage Co. Ltd. ** India 34.99 34.99<br />

Benaras Hotels Ltd. India 49.53 49.53<br />

Taj Air Ltd. India 45.64 45.64<br />

Piem Hotels Ltd. India 46.20 46.20<br />

Taj Trade and Transport Ltd. India 46.62 46.62<br />

Taj Enterprises Ltd. India 44.60 44.60<br />

Taida Trading and Industries Ltd. ** India 41.50 41.50<br />

Inditravel Pvt. Ltd. India 47.08 47.08<br />

Oriental Hotels Ltd. * India 33.80 33.80<br />

Taj Madurai Ltd. India 26.00 26.00<br />

International<br />

Taj Lanka Resorts Ltd. (TLRL) Sri Lanka 24.16 24.16<br />

Taj Lanka Hotels Ltd. (TLHL) Sri Lanka 24.62 24.62<br />

* Including 5.25% <strong>of</strong> <strong>the</strong> shares held in <strong>the</strong> form <strong>of</strong> Global Depository Receipts (GDR).<br />

** Investments in <strong>the</strong>se Associates have been reported at NIL value as <strong>the</strong> Company’s share <strong>of</strong> losses exceeds<br />

<strong>the</strong> carrying amount <strong>of</strong> investments.<br />

(c) In <strong>the</strong> case <strong>of</strong> <strong>the</strong> following Jointly Controlled Entities, unaudited financial statements, as certified by <strong>the</strong><br />

Management, have been considered in <strong>the</strong> consolidated financial statements. The adoption <strong>of</strong> <strong>the</strong> accounts by <strong>the</strong><br />

Board <strong>of</strong> Directors <strong>of</strong> <strong>the</strong>se companies is pending :<br />

i. Taj Asia Ltd.<br />

ii. Taj International Hotels (South Africa)(Pty) Ltd.<br />

(d) The following amounts are included in <strong>the</strong> Financial Statements in respect <strong>of</strong> <strong>the</strong> Jointly Controlled Entities, based<br />

on <strong>the</strong> proportionate consolidation method prescribed in <strong>the</strong> Accounting Standard relating to ‘Financial Reporting<br />

<strong>of</strong> Interest in Joint Ventures’ (AS 27), as notified by <strong>the</strong> Companies (Accounting Standards) Rules, 2006 :-<br />

131


The Indian Hotels Company Limited<br />

132<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

Particulars Current Year Previous Year<br />

Assets<br />

Rs. crores Rs. crores<br />

Fixed Assets (Net Block) 169.07 154.40<br />

Investments<br />

Working Capital<br />

0.28 0.69<br />

Current Assets, Loans and Advances 63.68 59.18<br />

Less :- Current Liabilities and Provisions 29.02 28.24<br />

Net Current Assets 34.66 30.94<br />

Miscellaneous Expenditure (to <strong>the</strong> extent not written <strong>of</strong>f or adjusted)<br />

Liabilities<br />

Loan Funds<br />

0.46 0.70<br />

Secured Loans 31.35 41.00<br />

Unsecured Loans 33.58 23.75<br />

Deferred Tax Liability 3.44 3.04<br />

Contingent Liabilities 15.87 15.89<br />

Capital Commitments<br />

Income<br />

8.81 10.33<br />

Operating Income<br />

O<strong>the</strong>r Income :<br />

144.83 135.32<br />

Dividend 0.06 0.05<br />

Pr<strong>of</strong>it on sale <strong>of</strong> assets (net) 0.01 0.03<br />

Miscellaneous Income<br />

Expenses<br />

Operating Expenses<br />

1.17 1.35<br />

Payment to & Provisions for Employees 21.41 20.22<br />

Food & Beverages consumed 16.32 14.54<br />

O<strong>the</strong>r Operating Expenses 22.51 20.46<br />

General Expenses 26.90 27.65<br />

VRS amortisation expenses 0.20 0.20<br />

Directors’ Fees 0.03 0.03<br />

Depreciation 10.12 10.48<br />

Interest (net) 2.32 3.54


Annual Report 2007-2008<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

2. Significant Accounting Policies:<br />

The financial statements are prepared under <strong>the</strong> historical cost convention on an accrual basis and comply with <strong>the</strong> Accounting<br />

Standards (AS) notified by <strong>the</strong> Companies (Accounting Standards) Rules, 2006. The preparation <strong>of</strong> financial statements<br />

requires <strong>the</strong> Management to make estimates and assumptions considered in <strong>the</strong> reported amounts <strong>of</strong> assets and liabilities<br />

(including contingent liabilities) as <strong>of</strong> <strong>the</strong> date <strong>of</strong> financial statements and <strong>the</strong> reported income and expenses during <strong>the</strong><br />

reporting period. The Management believes that <strong>the</strong> estimates used in <strong>the</strong> preparation <strong>of</strong> <strong>the</strong> financial statements are prudent<br />

and reasonable. Future results could differ from <strong>the</strong>se estimates. The significant accounting policies adopted in <strong>the</strong> presentation<br />

<strong>of</strong> <strong>the</strong> Accounts are as under:-<br />

(a) Sales:<br />

Sales comprise sale <strong>of</strong> rooms, food and beverages, allied services relating to hotel operations, including net income<br />

from telecommunication services and management and operating fees. Revenue is recognised upon rendering <strong>of</strong> <strong>the</strong><br />

service.<br />

(b) Export Benefits Entitlement:<br />

Export Benefits in <strong>the</strong> nature <strong>of</strong> Duty Credit Scrips are recognised in <strong>the</strong> Pr<strong>of</strong>it and Loss Account upon <strong>the</strong> actual<br />

utilisation <strong>of</strong> Duty Credit Scrips.<br />

(c) Employee Benefits:<br />

i. Defined Contribution Schemes<br />

Employee benefits arising out <strong>of</strong> contributions to recognised Provident Fund, Superannuation, Social Security<br />

etc. paid/payable during <strong>the</strong> year are recognised in <strong>the</strong> Pr<strong>of</strong>it and Loss Account. The shortfall, if any, between <strong>the</strong><br />

return guaranteed by <strong>the</strong> statute and actual earnings <strong>of</strong> <strong>the</strong> Provident Fund is provided for and contributed to <strong>the</strong><br />

Fund.<br />

The Group also has separate funded and unfunded schemes, which guarantee a minimum pension to certain<br />

categories <strong>of</strong> employees. The Company accounts for <strong>the</strong> net present value <strong>of</strong> its obligation <strong>the</strong>rein, based on an<br />

independent external actuarial valuation carried out annually.<br />

Certain international subsidiaries operate a defined contribution pension scheme and <strong>the</strong> pension charge<br />

represents <strong>the</strong> amounts payable by <strong>the</strong>m to <strong>the</strong> Fund.<br />

ii. Gratuity<br />

The Group has separate funded and unfunded schemes for gratuity benefits. In respect <strong>of</strong> funded schemes, annual<br />

contributions are made to funds administered by <strong>the</strong> trustees and managed by insurance companies for amounts<br />

notified by <strong>the</strong> said insurance companies. The group accounts for <strong>the</strong> net present value <strong>of</strong> its obligations for<br />

gratuity benefits based on an independent external actuarial valuation, determined on <strong>the</strong> basis <strong>of</strong> <strong>the</strong> projected<br />

unit credit method, carried out annually. Actuarial gains and losses are immediately recognised in <strong>the</strong> Pr<strong>of</strong>it and<br />

Loss Account.<br />

iii. Post Retirement Benefits<br />

The net present value <strong>of</strong> <strong>the</strong> Group’s obligation towards post retirement pension scheme, wherever applicable, is<br />

actuarially determined based on <strong>the</strong> projected unit credit method as at <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> date. Actuarial gains and<br />

losses are recognised immediately in <strong>the</strong> Pr<strong>of</strong>it and Loss Account.<br />

133


The Indian Hotels Company Limited<br />

134<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

iv. Compensated Absences<br />

The Group has a scheme for compensated absences for employees, <strong>the</strong> liability for which is determined on <strong>the</strong><br />

basis <strong>of</strong> an actuarial valuation carried out at <strong>the</strong> end <strong>of</strong> <strong>the</strong> year.<br />

v. O<strong>the</strong>r Employee Benefits<br />

O<strong>the</strong>r benefits, comprising <strong>of</strong> Long Service Awards and Leave Travel Allowance, are determined on an undiscounted<br />

basis and recognised based on <strong>the</strong> likely entitlement <strong>the</strong>re<strong>of</strong>.<br />

(d) Fixed Assets:<br />

Fixed assets are stated at cost, less depreciation/amortisation and impairment losses, if any. Cost includes expenses<br />

incidental to <strong>the</strong> installation <strong>of</strong> assets and attributable borrowing costs.<br />

(e) i) Depreciation:<br />

Indian Entities<br />

In respect <strong>of</strong> assets acquired before 16th December, 1993, depreciation is provided under <strong>the</strong> straight-line method, at<br />

<strong>the</strong> rates and in <strong>the</strong> manner specified in Schedule XIV to <strong>the</strong> Companies Act, 1956, as existing prior to that date.<br />

In respect <strong>of</strong> assets acquired on or after 16th December, 1993, depreciation is provided under <strong>the</strong> straight-line method<br />

at <strong>the</strong> rates as specified in Schedule XIV to <strong>the</strong> Companies Act, 1956, as revised with effect from that date. In respect<br />

<strong>of</strong> Leasehold Land, depreciation is charged over <strong>the</strong> unexpired period <strong>of</strong> <strong>the</strong> lease, commencing from <strong>the</strong> date <strong>the</strong> land<br />

is put to use for commercial operations.<br />

In respect <strong>of</strong> one subsidiary, depreciation is provided under <strong>the</strong> written down value method at <strong>the</strong> rates and in <strong>the</strong><br />

manner specified in Schedule XIV to <strong>the</strong> Companies Act, 1956, amounts in respect <strong>of</strong> which are not material.<br />

International Entities<br />

Assets are depreciated based on <strong>the</strong> estimated useful life determined by <strong>the</strong> Management <strong>of</strong> <strong>the</strong> respective<br />

Subsidiaries, where<strong>of</strong> <strong>the</strong> average rates <strong>of</strong> depreciation for each category are equal to or higher than <strong>the</strong> rates<br />

prescribed in Schedule XIV to <strong>the</strong> Companies Act, 1956.<br />

ii) Amortisation:<br />

Intangible assets are amortised on a straight-line basis at rates specified below:<br />

Leasehold Property Rights 6.67% *<br />

Website Development Cost 20.00%<br />

Cost <strong>of</strong> Customer Reservation System (including licensed s<strong>of</strong>tware) 16.67%<br />

Management Contract Acquisition Costs 5% to 33.33% **<br />

O<strong>the</strong>rs<br />

Service & Operating Rights 10.00%<br />

Non-Compete Fees 14.29%<br />

Lease Acquisition Costs <strong>of</strong> a Jointly Controlled Entity 5.00%<br />

* - Over <strong>the</strong> term <strong>of</strong> <strong>the</strong> lease.<br />

** - Based on <strong>the</strong> terms <strong>of</strong> <strong>the</strong> Contract.


Annual Report 2007-2008<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

(f) Transactions in Foreign Exchange:<br />

Transactions in foreign currencies are recorded at <strong>the</strong> exchange rate prevailing on <strong>the</strong> date <strong>of</strong> <strong>the</strong> transaction.<br />

In respect <strong>of</strong> integral foreign operations:-<br />

i) Monetary items outstanding at <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> date are translated at <strong>the</strong> exchange rate prevailing at <strong>the</strong> <strong>Balance</strong><br />

<strong>Sheet</strong> date and <strong>the</strong> resultant difference is recognised as income or expense.<br />

ii) Non-monetary items outstanding at <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> date are reported using <strong>the</strong> exchange rate prevailing on <strong>the</strong><br />

date <strong>of</strong> <strong>the</strong> transaction.<br />

In respect <strong>of</strong> non-integral foreign operations :-<br />

Both monetary and non-monetary items are translated at <strong>the</strong> closing rate and <strong>the</strong> resultant difference is<br />

accumulated in a Foreign Currency Translation Reserve, until <strong>the</strong> disposal <strong>of</strong> <strong>the</strong> net investment.<br />

(g) Derivative Instruments:<br />

The Group has an exposure to derivative contracts in <strong>the</strong> nature <strong>of</strong> currency and interest rate swaps, which are in<br />

respect <strong>of</strong> some <strong>of</strong> <strong>the</strong> underlying borrowings. Exchange differences arising on repayment/revaluation <strong>of</strong> such swaps<br />

are recognised as income or expense in <strong>the</strong> period in which <strong>the</strong>y arise.<br />

(h) Impairment <strong>of</strong> Assets:<br />

Impairment is ascertained at each <strong>Balance</strong> <strong>Sheet</strong> date in respect <strong>of</strong> <strong>the</strong> Group’s fixed assets. An impairment loss is<br />

recognised whenever <strong>the</strong> carrying amount <strong>of</strong> an asset exceeds its recoverable amount. The recoverable amount is <strong>the</strong><br />

greater <strong>of</strong> <strong>the</strong> net selling price and value in use. In assessing value in use, <strong>the</strong> estimated future cash flows are<br />

discounted to <strong>the</strong>ir present value, based on an appropriate discount factor.<br />

(i) Assets taken on lease:<br />

i) In respect <strong>of</strong> finance lease arrangements, <strong>the</strong> assets are capitalised and depreciated. Finance charges are debited to<br />

<strong>the</strong> Pr<strong>of</strong>it and Loss Account <strong>of</strong> <strong>the</strong> year in which <strong>the</strong>y are incurred.<br />

ii) Operating Lease payments are recognised as expenditure in <strong>the</strong> Pr<strong>of</strong>it and Loss Account on a straight line basis,<br />

representative <strong>of</strong> <strong>the</strong> time pattern <strong>of</strong> benefits received from <strong>the</strong> use <strong>of</strong> <strong>the</strong> assets taken on lease.<br />

(j) Inventories:<br />

Stock <strong>of</strong> food and beverages and operating supplies are carried at cost (computed on weighted average basis) or Net<br />

Realisable Value, whichever is lower.<br />

(k) Investments:<br />

i) Long term investments are carried at cost. However, provision is made for diminution in value, o<strong>the</strong>r than tempo<br />

rary, on an individual basis.<br />

ii) Current investments are carried at <strong>the</strong> lower <strong>of</strong> cost and fair value, determined on a category-wise basis.<br />

(l) Miscellaneous Expenditure:<br />

Payments made under <strong>the</strong> Voluntary Retirement Scheme, including <strong>the</strong> additional liabilities towards leave encashment<br />

and gratuity, arising pursuant to <strong>the</strong> Voluntary Retirement Scheme, are amortised over a period <strong>of</strong> 60 months, commencing<br />

from <strong>the</strong> month in which <strong>the</strong> Scheme is implemented, or upto 31 st March, 2010, whichever is earlier.<br />

135


The Indian Hotels Company Limited<br />

136<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

(m) Taxes on income:<br />

i) Income tax is computed in accordance with Accounting Standard 22 - ‘Accounting for Taxes on Income’ (AS-22),<br />

notified by <strong>the</strong> Companies (Accounting Standards) Rules, 2006. Tax expenses are accounted in <strong>the</strong> same period to<br />

which <strong>the</strong> revenue and expenses relate.<br />

ii) Provision for current income tax is made for <strong>the</strong> tax liability payable on taxable income after considering tax allow<br />

ances, deductions and exemptions determined in accordance with <strong>the</strong> prevailing tax laws. The differences<br />

between <strong>the</strong> taxable income and <strong>the</strong> net pr<strong>of</strong>it or loss before tax for <strong>the</strong> year as per <strong>the</strong> financial statements are<br />

identified and <strong>the</strong> tax effect <strong>of</strong> timing differences is recognised as a deferred tax asset or deferred tax liability. The<br />

tax effect is calculated on accumulated timing differences at <strong>the</strong> end <strong>of</strong> <strong>the</strong> accounting year based on effective tax<br />

rates substantively enacted by <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> date that would apply in <strong>the</strong> years in which <strong>the</strong> timing differences<br />

are expected to reverse.<br />

iii) Deferred tax assets arising on account <strong>of</strong> unabsorbed depreciation or carried forward losses are recognised only if<br />

<strong>the</strong>re is virtual certainty, supported by convincing evidence, that <strong>the</strong>y will be realised in <strong>the</strong> future and are<br />

reviewed for appropriateness <strong>of</strong> <strong>the</strong>ir respective carrying values at each <strong>Balance</strong> <strong>Sheet</strong> date. O<strong>the</strong>r deferred tax<br />

assets are recognised on <strong>the</strong> basis <strong>of</strong> <strong>the</strong>ir reasonable certainty.<br />

(n) Accounting for Provisions, Contingent Liabilities and Contingent Assets:<br />

Provisions are recognised in terms <strong>of</strong> Accounting Standard 29 – ‘Provisions, Contingent Liabilities and Contingent<br />

Assets’ (AS-29), notified by <strong>the</strong> Companies (Accounting Standards) Rules, 2006, when <strong>the</strong>re is a present legal or<br />

statutory obligation as a result <strong>of</strong> past events, where it is probable that <strong>the</strong>re will be outflow <strong>of</strong> resources to settle <strong>the</strong><br />

obligation and when a reliable estimate <strong>of</strong> <strong>the</strong> amount <strong>of</strong> <strong>the</strong> obligation can be made. Contingent Liabilities are<br />

recognised only when <strong>the</strong>re is a possible obligation arising from past events due to occurrence or non-occurrence <strong>of</strong><br />

one or more uncertain future events, not wholly within <strong>the</strong> control <strong>of</strong> <strong>the</strong> Company, or where any present obligation<br />

cannot be measured in terms <strong>of</strong> future outflow <strong>of</strong> resources or where a reliable estimate <strong>of</strong> <strong>the</strong> obligation cannot be<br />

made. Obligations are assessed on an ongoing basis and only those having a largely probable outflow <strong>of</strong> resources are<br />

provided for. Contingent Assets are not recognised in <strong>the</strong> financial statements.<br />

(o) Borrowing Costs (O<strong>the</strong>r than on Debentures) :<br />

Interest and o<strong>the</strong>r borrowing costs on specific borrowings, attributable to qualifying assets, are capitalised. O<strong>the</strong>r<br />

borrowing costs are charged to revenue over <strong>the</strong> tenure <strong>of</strong> <strong>the</strong> loan.<br />

(p) Debenture Issue Costs :<br />

Debenture Issue Costs are adjusted against <strong>the</strong> Securities Premium Account, in accordance with Section 78 <strong>of</strong> <strong>the</strong><br />

Companies Act, 1956.<br />

3. Exceptional Item :<br />

During <strong>the</strong> year IHMS Inc. has incurred an expenditure <strong>of</strong> Rs. 54.16 crores towards Employee severance costs consequent<br />

to closure <strong>of</strong> one <strong>of</strong> its properties for extensive renovation.<br />

4. Non-Convertible Debentures:<br />

The Company has, during <strong>the</strong> year, issued 9.86% Secured Non-Convertible Redeemable Debentures, having a face value <strong>of</strong><br />

Rs. 10,00,000/- each, aggregating Rs. 300 crores. The expenses in relation to <strong>the</strong> said issue, amounting to Rs. 1.05 crores,<br />

have been set <strong>of</strong>f against <strong>the</strong> ‘Securities Premium Account’ (net <strong>of</strong> tax <strong>of</strong> Rs. 0.36 crore) in accordance with Section 78 <strong>of</strong> <strong>the</strong><br />

Companies Act, 1956.


Annual Report 2007-2008<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

5. Pr<strong>of</strong>it on sale <strong>of</strong> investments consist <strong>of</strong>:<br />

(a) An amount <strong>of</strong> Rs. 39.05 crores on sale <strong>of</strong> <strong>the</strong> Company’s shares, held by a trust <strong>of</strong> a subsidiary, which shares were<br />

acquired by <strong>the</strong> subsidiary on merger <strong>of</strong> Asia Pacific Hotels Ltd., Taj Lands End Ltd., Indian Resort Hotels Ltd.,<br />

Gateway Hotels & Getaway Resorts Ltd. and Kuteeram Resorts Pvt. Ltd. into <strong>the</strong> Company in <strong>the</strong> previous year, in<br />

accordance with <strong>the</strong> Scheme <strong>of</strong> Amalgamation approved by <strong>the</strong> Honourable High Courts <strong>of</strong> judicature.<br />

(b) Rs. 0.07 crore being Pr<strong>of</strong>it on Sale <strong>of</strong> units <strong>of</strong> Mutual Fund, which is considered as a <strong>part</strong> <strong>of</strong> Cash and Cash Equivalent<br />

in <strong>the</strong> Cash Flow.<br />

6. Dividend Income:<br />

Dividend Income consists <strong>of</strong> income on long term investments – Rs. 6.64 crores (Previous Year - Rs. 27.19 crores ) and on<br />

current investments - Rs. 0.91 crore (Previous Year - 2.07 crores).<br />

7. Provision for Current Tax & Deferred Tax:<br />

(a) Provision for Tax Includes<br />

Particulars Current Year Previous Year<br />

Rs. crores Rs. crores<br />

Current Tax 234.67 106.73<br />

Tax for earlier years 4.35 0.37<br />

Wealth Tax 0.91 0.91<br />

Fringe Benefit Tax 5.30 4.36<br />

Deferred Tax charge 1.75 84.15<br />

Total 246.98 196.52<br />

(b) The net deferred tax liability comprises <strong>of</strong> <strong>the</strong> following components :<br />

Particulars Current Year Previous Year<br />

Rs. crores Rs. crores<br />

Deferred tax Liability<br />

Depreciation on fixed assets 168.16 163.46<br />

Deferred revenue expenditure 0.10 0.48<br />

Total<br />

Deferred tax Assets<br />

168.26 163.94<br />

Provision for doubtful debts 4.31 4.14<br />

Employee Benefits 9.17 7.52<br />

O<strong>the</strong>rs 5.90 5.26<br />

Total 19.38 16.92<br />

Net Deferred Tax Liabilities 148.88 147.02<br />

137


The Indian Hotels Company Limited<br />

138<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

(c) The net deferred tax assets comprises <strong>of</strong> <strong>the</strong> following components :<br />

Particulars Current Year Previous Year<br />

Deferred tax Liability<br />

Rs. crores Rs. crores<br />

Depreciation on fixed assets - 0.04<br />

O<strong>the</strong>rs - 0.02<br />

Total<br />

Deferred tax Assets<br />

- 0.06<br />

Employee Benefits 0.02 0.16<br />

Depreciation 0.33 -<br />

O<strong>the</strong>rs - 0.32<br />

Total 0.35 0.48<br />

Net Deferred Tax Assets 0.35 0.42<br />

8. Estimated amount <strong>of</strong> contracts remaining to be executed on capital account and not provided for (including share <strong>of</strong> Jointly<br />

Controlled Entities) is Rs. 408.69 crores (previous year - Rs. 122.33 crores.)<br />

9. Contingent Liabilities<br />

(Includes share <strong>of</strong> Jointly Controlled Entities)<br />

(a) On account <strong>of</strong> Income Tax matters in dispute:<br />

i) In respect <strong>of</strong> appeals filed by <strong>the</strong> Income Tax De<strong>part</strong>ment against <strong>the</strong> decision <strong>of</strong> <strong>the</strong> Income Tax Appellate<br />

Tribunal - Nil (previous year - Rs. 0.05 crore).<br />

ii) In respect <strong>of</strong> appeals pending before Appellate Authorities for matters which have been decided in <strong>the</strong> Group’s<br />

favour in earlier assessment years - Rs. 64.66 crores (previous year - Rs. 63.85 crores).<br />

iii) In respect <strong>of</strong> o<strong>the</strong>r matters for which appeals are pending - Rs. 45.57 crores (previous year - Rs. 30.29 crores).<br />

(b) On account <strong>of</strong> dispute in respect <strong>of</strong>:<br />

i) Luxury tax – Rs. 0.48 crore (previous year - Rs. 1.36 crores)<br />

ii) Entertainment tax – Rs. 0.53 crore (previous year - Rs. 0.47 crore)<br />

iii) Sales tax – Rs. 7.20 crores (previous year - Rs. 5.18 crores)<br />

iv) Property tax – Rs. 8.97 crores (previous year - Rs. 4.05 crores)<br />

v) O<strong>the</strong>rs – Rs. 21.53 crores (previous year - Rs. 19.26 crores)<br />

c) O<strong>the</strong>r claims against <strong>the</strong> Group not acknowledged as debts - Rs.57.90 crores (previous year - Rs.22.51 crores).<br />

d) Guarantees given by <strong>the</strong> Group in respect <strong>of</strong> deposits received and loans obtained outstanding as on March 31, 2008 -<br />

Rs. 33.04 crores (previous year - Rs. 32.83 crores).<br />

e) A subsidiary has reported a contingent liability in respect <strong>of</strong> a labour dispute, <strong>the</strong> amount <strong>of</strong> which is unascertainable.


Annual Report 2007-2008<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

f) Guarantees given to bankers:<br />

St. James Court Hotel Limited owns <strong>the</strong> leasehold interest in a property in London, such interest having been assigned<br />

to it in an earlier year by a subsidiary company (under liquidation) on <strong>the</strong> basis <strong>of</strong> a licence granted by <strong>the</strong> landlord <strong>of</strong><br />

<strong>the</strong> property, Scottish Widows’ Fund and Life Assurance Society. The licence was granted for such assignment upon<br />

<strong>the</strong> guarantee from <strong>the</strong> Company for <strong>the</strong> due performance and observance by St. James Court Hotel Limited <strong>of</strong> <strong>the</strong><br />

covenants and conditions contained in <strong>the</strong> licence. The obligations <strong>of</strong> <strong>the</strong> Company in favour <strong>of</strong> <strong>the</strong> landlord shall<br />

remain in force throughout <strong>the</strong> full term <strong>of</strong> <strong>the</strong> lease, including any renewals.<br />

g) Undertakings given:<br />

The Group has given <strong>the</strong> following undertakings as at <strong>the</strong> <strong>Balance</strong> <strong>Sheet</strong> date:<br />

i. An undertaking to <strong>the</strong> bankers <strong>of</strong> TLRL by TIHK., for non-disposal <strong>of</strong> its shares in TLRL in consideration <strong>of</strong> <strong>the</strong><br />

banks providing loan facilities to TLRL. TIHK holds 24.16% ordinary shares <strong>of</strong> TLRL as at March 31, 2008.<br />

ii. TIHK has agreed to subordinate 50% <strong>of</strong> its basic management fees and 100% <strong>of</strong> its incentive fees due from TLRL<br />

in lieu <strong>of</strong> a bank having extended loan facilities to TLRL. No amount <strong>of</strong> fee has remained unpaid on account <strong>of</strong><br />

this subordination as at March 31, 2008.<br />

iii. The Group has entered into a Share Retention Agreement with International Finance Corporation, Washington,<br />

USA (“IFC”) in November 2003, in consideration <strong>of</strong> IFC having provided loan facilities to a subsidiary <strong>of</strong> a<br />

jointly controlled entity, Taj Maldives Private Limited (“TMPL”). The Group, <strong>of</strong> which TIHK is a member, has<br />

also agreed to maintain at least a 26% aggregate effective shareholding in TMPL and to retain effective control <strong>of</strong><br />

TMPL, so long as any amount remains outstanding under <strong>the</strong> loan agreement between TMPL and IFC.<br />

iv. The Group has given an undertaking to a lender <strong>of</strong> Taj Air Limited (TAL) not to transfer, assign, dispose <strong>of</strong> or<br />

encumber its holding in <strong>the</strong> shares <strong>of</strong> TAL without <strong>the</strong> said lender’s prior written approval, except for changes in<br />

<strong>the</strong> shareholding <strong>of</strong> TAL between specified entities<br />

10. Finance and Operating Leases:<br />

a) IHMS formed IHMS LLC (“New York LLC”) under <strong>the</strong> laws <strong>of</strong> <strong>the</strong> State <strong>of</strong> Delaware, U.S.A. The New York LLC<br />

was formed to acquire <strong>the</strong> lease with 795 Fifth Avenue Corporation, its affiliates 795 Fifth Avenue Limited Partner<br />

ship, Barneys New York and individual a<strong>part</strong>ment owners, which encompass <strong>the</strong> facilities <strong>of</strong> <strong>the</strong> Hotel Pierre.<br />

The New York LLC has entered into lease agreements for <strong>the</strong> use <strong>of</strong> various facilities at <strong>the</strong> Hotel Pierre for <strong>the</strong> purpose<br />

<strong>of</strong> operating a hotel business. Under <strong>the</strong> terms <strong>of</strong> <strong>the</strong> various Agreements, <strong>the</strong> New York LLC is required to:<br />

i. provide an irrevocable unconditional letter <strong>of</strong> credit in <strong>the</strong> amount <strong>of</strong> $ 5 million, as to be renewed annually until<br />

expiration <strong>of</strong> <strong>the</strong> lease.<br />

ii. spend not less than $35 million on renovations <strong>of</strong> <strong>the</strong> property not later than June 30, 2007.<br />

139


The Indian Hotels Company Limited<br />

140<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

iii. In November 2007, <strong>the</strong> New York LLC entered into a lease modification agreement with its landlord. The<br />

principal modification extended <strong>the</strong> lease term for an additional 10 years, to June 30, 2025, and increased <strong>the</strong> New<br />

York LLC’s renovation commitment to $80 million. In order to expedite <strong>the</strong> renovation, <strong>the</strong> New York LLC closed<br />

<strong>the</strong> hotel rooms and restaurant operations <strong>of</strong> <strong>the</strong> Hotel Pierre effective December 31, 2007, and entered into a<br />

severance arrangement with <strong>the</strong> union to <strong>of</strong>fer eligible employees enhanced severance payments with no recall<br />

rights or normal severance payments with recall rights. The company paid approximately $12.25 million in sev<br />

erance payments in January 2008. As on March 31, 2008, <strong>the</strong> New York LLC has expended approximately US $<br />

15,880,000. Future fixed and minimum rentals, exclusive <strong>of</strong> formula or percentage rentals for <strong>the</strong> period ending<br />

March 31, are approximately as under :-<br />

iv. Lease on cooperative a<strong>part</strong>ments and ballroom<br />

Year Rs. crores<br />

2009 7.88<br />

2010 7.88<br />

2011 7.88<br />

2012 7.88<br />

2013 7.88<br />

Thereafter 17.73<br />

Total 57.13<br />

The New York LLC assumed a lease agreement with Barney’s New York, currently scheduled to expire<br />

in June 2013, for <strong>the</strong> use <strong>of</strong> Hotel Pierre’s ballroom, and with some o<strong>the</strong>r individuals for <strong>the</strong> use <strong>of</strong> <strong>the</strong>ir cooperative<br />

a<strong>part</strong>ments as hotel rooms and suites. Such leases require <strong>the</strong> New York LLC to pay minimum rent which<br />

increase annually by <strong>the</strong> change in <strong>the</strong> Consumer Price Index and to reimburse <strong>the</strong> owners for <strong>the</strong>ir actual<br />

cooperative maintenance charges. Future fixed minimum rentals, exclusive <strong>of</strong> formula or percentage rentals for<br />

<strong>the</strong> years ending March 31, are approximately as follows:<br />

YearRs. crores<br />

2009 3.28<br />

2010 3.28<br />

2011 3.28<br />

2012 3.28<br />

2013 3.28<br />

Thereafter 2.12<br />

Total 18.52<br />

b) IHMS formed IHMS Boston LLC under <strong>the</strong> laws <strong>of</strong> <strong>the</strong> State <strong>of</strong> Delaware, U.S.A. The Boston LLC was formed to<br />

acquire on an outright basis, <strong>the</strong> erstwhile Ritz Carlton Hotel in Boston. The acquisition was completed in January<br />

2007, at a cost <strong>of</strong> US $ 170 million, equivalent to Rs. 732 crores.


Annual Report 2007-2008<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

c) IHMS New York LLC and IHMS Boston LLC, as lessors under various operating leases, will receive base rents over<br />

<strong>the</strong> next five years and, in <strong>the</strong> aggregate, over <strong>the</strong> remaining terms <strong>of</strong> <strong>the</strong> leases as follows :-<br />

March 31 Boston LLC New York LLC Total<br />

Rs. crores Rs. crores Rs. crores<br />

2009 1.78 0.60 2.38<br />

2010 1.74 0.53 2.27<br />

2011 1.74 0.47 2.21<br />

2012 1.74 0.23 1.97<br />

2013 1.74 - 1.74<br />

Thereafter 7.25 - 7.25<br />

Total 15.99 1.83 17.82<br />

d) The Group has taken on finance lease, assets having an aggregate value <strong>of</strong> Rs. 0.05 crore, (previous year - Rs. 0.05<br />

crore), against which <strong>the</strong> future obligations aggregate to Rs. 0.03 crore (previous year - Rs. 0.05 crore). Lease rentals<br />

paid during <strong>the</strong> year were - Rs. 0.01 crore (previous year - Rs. 0.01 crore).<br />

Particulars Current Year Previous Year<br />

Rs. crores Rs. crores<br />

Minimum lease rentals payable as on <strong>Balance</strong> <strong>Sheet</strong> date<br />

Present value <strong>of</strong> Minimum lease rentals payable at discounted<br />

0.03 0.05<br />

rate implicit in lease agreement 0.02 0.04<br />

Particulars Minimum lease Present value <strong>of</strong> minimum<br />

payment lease payment at<br />

discounted rate implicit in<br />

lease agreement<br />

Current Year Previous Year Current Year Previous Year<br />

Rs. crores Rs. crores Rs. crores Rs. crores<br />

Not later than one year<br />

Later than one year but not later<br />

0.02 0.02 0.01 0.01<br />

than five years 0.01 0.03 0.01 0.03<br />

TOTAL 0.03 0.05 0.02 0.04<br />

e) The Group has taken on operating lease, certain assets, <strong>the</strong> minimum future lease rentals payable on which are as<br />

follows:<br />

Particulars Current Year Previous Year<br />

Rs. crores Rs. crores<br />

Not later than one year 3.39 4.69<br />

Later than one year but not later than five years 5.82 6.21<br />

Later than five years 65.98 7.11<br />

141


The Indian Hotels Company Limited<br />

142<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

11. Interest expense is net <strong>of</strong> interest income and it comprises <strong>of</strong>:<br />

Particulars Current Year Previous Year<br />

Interest Expenses<br />

Rs. crores Rs. crores<br />

Fixed Loans * 208.90 133.97<br />

O<strong>the</strong>r Loans ** 15.84 37.75<br />

224.74 171.72<br />

Less : Interest Capitalised 4.45 1.63<br />

Total Expenses<br />

Interest Income (Gross)<br />

220.29 170.09<br />

Inter-Corporate Deposits 1.94 1.48<br />

Deposits with Banks 7.43 2.32<br />

Interest on IT Refund 2.20 -<br />

O<strong>the</strong>rs 6.40 44.14<br />

Total Income 17.97 47.94<br />

Interest (net) 202.32 122.15<br />

* Interest on Fixed Loans includes Rs. 3.83 crores (Previous year - Rs. 2.28 crores) being expenses on loans amor<br />

tised over <strong>the</strong> tenure <strong>of</strong> <strong>the</strong> loan.<br />

** Includes interest on luxury tax amounting to Rs. 2.14 crores (previous year - Nil).<br />

12. Derivative Instruments :<br />

The Group uses forward exchange contracts, interest rate swaps, currency swaps and options to hedge its exposure<br />

in foreign currency borrowings and interest rates. The information on derivative instruments is as follows:<br />

Derivative Instruments outstanding:<br />

Particulars Current Year Previous Year<br />

(USD million) (USD million)<br />

Currency Swaps - 5.5<br />

Principal only swaps 22.73 22.73<br />

Interest only swaps 80.00 37.86<br />

13. Details <strong>of</strong> Cash and Cash Equivalents:<br />

Particulars 31 st March, 2008 31 st March, 2007<br />

Rs. crores Rs. crores<br />

Cash and Bank <strong>Balance</strong>s (as per Schedule 7) 257.60 177.15<br />

Add : Investments in Liquid Mutual Funds (as per Schedule 6) 2.61 13.08<br />

Less : Secured Bank Overdraft (as per Schedule 3) 35.38 14.66<br />

Less : Unsecured Bank Overdraft (as per Schedule 4) 2.87 8.56<br />

Cash and Cash Equivalents 221.96 167.01


Annual Report 2007-2008<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

14. Provision for Loyalty Programmes :<br />

Particulars 31st March, 2008 31st March, 2007<br />

Rs. crores Rs. crores<br />

Opening <strong>Balance</strong> 8.82 6.81<br />

Less : Redemption during <strong>the</strong> year 0.77 2.40<br />

8.05 4.41<br />

Add : Provision for <strong>the</strong> year 2.91 4.41<br />

Closing <strong>Balance</strong> 10.96 8.82<br />

15. Related Party Disclosures :<br />

a) Associates<br />

The names <strong>of</strong> all <strong>the</strong> associates are given in Note no. 1 (b) (iii) on Page 131<br />

b) Investing Parties<br />

Singapore Airport Terminal Services Ltd. (SATS)<br />

Malaysian Airline Systems<br />

Tourism Resorts Kerala Ltd.<br />

Cigen Corporaton<br />

The Conservation Corporation <strong>of</strong> South Africa Ltd.<br />

c) Key Management Personnel.<br />

Key managerial personnel comprise <strong>the</strong> whole-time directors <strong>of</strong> <strong>the</strong> Company, who have <strong>the</strong> authority and<br />

responsibility for planning, directing and controlling <strong>the</strong> activities <strong>of</strong> <strong>the</strong> Company.<br />

Following are <strong>the</strong> Key Management Personnel : a) Mr. Raymond N. Bickson<br />

b) Mr. Anil P. Goel<br />

c) Mr. Abhijit Mukerji<br />

d) The details <strong>of</strong> transactions with related <strong>part</strong>ies (Associates and investing <strong>part</strong>ies) are as follows :<br />

Particulars Associates Joint Ventures Total<br />

CY PY CY PY CY PY<br />

Interest paid/provided 1.75 2.46 - - 1.75 2.46<br />

Interest received/accrued 1.40 0.33 0.66 0.75 2.06 1.08<br />

Dividends received 8.90 10.39 11.17 4.07 20.07 14.46<br />

Operating/Licence fees paid - - 0.74 - 0.74 -<br />

Operating fees received 49.96 53.59 21.31 20.79 71.27 74.38<br />

Purchase <strong>of</strong> goods and services 40.67 17.68 3.30 0.09 43.97 17.77<br />

Sale <strong>of</strong> goods and services 7.94 3.49 5.81 0.71 13.75 4.20<br />

Due from / (to) (7.46) 2.35 0.97 (0.95) (6.49) 1.40<br />

Sundry Debtors 8.31 - 11.27 - 19.58 22.07<br />

Purchase <strong>of</strong> shares - - 5.03 2.00 5.03 2.00<br />

Security Deposits - - 1.50 7.45 1.5 7.45<br />

Deposits (28.00) - 26.64 20.83 (1.36) 20.83<br />

143


The Indian Hotels Company Limited<br />

144<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

e) Statement <strong>of</strong> Material Transactions<br />

Name <strong>of</strong> Company Current Year Previous Year<br />

Associates<br />

Inditravel Pvt. Ltd.-<br />

Rs. crores Rs. crores<br />

- Purchase <strong>of</strong> Goods & Services 27.75 16.18<br />

- Sale <strong>of</strong> Goods & Services 0.86 0.65<br />

- Dividend Received 0.73 -<br />

- Due to - Current Account 0.89 -<br />

Oriental Hotels Ltd.-<br />

- Dividend Received 5.72 2.52<br />

- Operating & reimbursement fees 18.17 18.13<br />

- Purchase <strong>of</strong> Goods & Services 5.67 -<br />

- Sale <strong>of</strong> Goods & Services 3.73 -<br />

- ICDs Raised 43.05 29.00<br />

- ICDs Repaid 37.00 21.00<br />

- Interest paid 1.35 0.80<br />

- Deposits Taken 10.00 -<br />

- Due to - Current Account 4.96 1.80<br />

- Sundry Debtors 6.73 6.92<br />

Piem Hotels Ltd.-<br />

- Dividend Received 1.76 6.17<br />

- Operating Fees Received 27.89 29.36<br />

- Interest paid 0.40 1.46<br />

- Purchase <strong>of</strong> Goods & Services 0.65 -<br />

- Sale <strong>of</strong> Goods & Services 1.92 -<br />

- Deposits Taken 18.00 -<br />

- Due to - Current Account 3.05 1.42<br />

- ICDs raised 39.50 53.00<br />

- ICDs repaid 21.50 59.35<br />

- Sundry Debtors 1.04 3.98<br />

Taj Air Ltd.-<br />

- Interest Received 1.40 -<br />

- Purchase <strong>of</strong> Goods & Services 4.78 -<br />

- Sale <strong>of</strong> Goods & Services 0.23 -<br />

- ICDs Placed 45.00 -<br />

- ICDs Encashed 29.00 -<br />

Taj Trade & Transport Ltd.-<br />

.- Purchase <strong>of</strong> Goods & Services 1.41 -<br />

- Sale <strong>of</strong> Goods & Services 0.94 -<br />

- Due from - Current Account 0.32 0.21


Annual Report 2007-2008<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

Name <strong>of</strong> Company Current Year Previous Year<br />

Associates<br />

Rs. crores Rs. crores<br />

Benares Hotels Ltd.-<br />

- Dividend Received 0.64 -<br />

- Operating Fees Received 2.49 -<br />

- Sundry Debtors 0.54 -<br />

- ICD repaid - 2.00<br />

- Due to - Current Account<br />

Taj Lanka Resorts Ltd.-<br />

0.20 0.07<br />

- Operating Fees Received 1.41 -<br />

- Due from - Current Account 0.49 0.32<br />

Taida Trading & Industries Ltd.-<br />

- Due from - Current Account<br />

Taj Enterprise Ltd.-<br />

1.02 1.02<br />

- Due from - Current Account<br />

Taj Lanka Hotels Ltd.-<br />

0.21 -<br />

- Due From – Current Account 0.74 -<br />

Joint Ventures<br />

Taj GVK Hotels & Resorts Ltd.-<br />

- Deposit Given 3.72 7.45<br />

- Interest Received 0.26 -<br />

- Operating Fees Received 16.62 17.80<br />

- Dividend Received 3.58 2.38<br />

- Purchase <strong>of</strong> Goods & Services 0.18 -<br />

- Sale <strong>of</strong> Goods & Services 0.43 -<br />

- Due from/ (to) - Current Account 0.14 (0.33)<br />

- ICD Placed - 3.72<br />

- Sundry Debtors 6.85 7.21<br />

Taj Madras Flight Kitchen Pvt. Ltd.-<br />

- Dividend received - 1.69<br />

- Operating Fees Received 0.74 -<br />

- Sale <strong>of</strong> Goods & Services 0.19 -<br />

- Deposits Taken 1.50 -<br />

- Due from/(to) - Current Account (1.00) 1.63<br />

Taj Kerala Hotels & Resorts Ltd.-<br />

- Operating Fees Received 2.38 -<br />

- Sundry Debtors 0.94 -<br />

- Due to – Current Account 0.28 1.37<br />

145


The Indian Hotels Company Limited<br />

146<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

Name <strong>of</strong> Company Current Year Previous Year<br />

Rs. crores Rs. crores<br />

Taj Karnataka Hotels & Resorts Ltd.-<br />

- Operating Fees Received 0.30 -<br />

- Sundry Debtors 0.85 -<br />

- Deposits Given 3.21 -<br />

- ICDs placed - 3.21<br />

- Due from - Current Account 0.18 0.18<br />

Taj Safaris Ltd.-<br />

- Operating Fees Received 0.41 -<br />

- Purchase <strong>of</strong> shares 2.01 2.00<br />

- Sundry Debtors 0.46 -<br />

- Due from - Current Account 0.80 0.51<br />

Taj Asia Ltd.-<br />

- Interest Received 0.40 -<br />

- Operating Fees Received 0.67 -<br />

- Sale <strong>of</strong> Goods & Services 2.29 -<br />

- Sundry Debtors 1.97 -<br />

- Deposits Given 13.03 -<br />

- Due from - Current Account 0.81 2.30<br />

- ICDs Placed 0.18 14.04<br />

Taj International Hotels (SA) (Pty) Ltd.-<br />

- Operating Fees Received 0.20 -<br />

- Sundry Debtors 0.20 -<br />

- Deposits Given 6.67 -<br />

Singapore Airline Terminal Services-<br />

- Dividend Received 6.55 -<br />

- Sale <strong>of</strong> Goods & Services 2.58 -<br />

- Due From – Current Account 0.73 -<br />

Malaysian Airlines Systems-<br />

- Dividend Received 0.95 -<br />

- Cigen Corporation<br />

- Purchase <strong>of</strong> Shares 3.02 -<br />

The Conservation Corporation <strong>of</strong> South Africa Ltd.-<br />

- Purchase <strong>of</strong> Goods & Services 0.45<br />

- Due to – Current Account 1.41 --


Annual Report 2007-2008<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

16. Segmental Information:<br />

The Group regards <strong>the</strong> business segment as <strong>the</strong> primay segments. The business segments have been classified as follows:<br />

Hoteliering<br />

Air Catering<br />

O<strong>the</strong>rs – comprising <strong>of</strong> Food Processing and Investing activities.<br />

The disclosure in respect <strong>of</strong> <strong>the</strong> above business segments are as under:<br />

Business Segments<br />

Rs. Crores<br />

Particulars<br />

Hoteliering Air Catering O<strong>the</strong>rs Total<br />

CY PY CY PY CY PY CY PY<br />

Segment Revenue 2,641.15 2,256.66 298.87 265.39 25.93 17.15 2,965.95 2,539.20<br />

Dividend 7.55 29.26<br />

Pr<strong>of</strong>it on sale <strong>of</strong> investments 39.12 32.67<br />

Total Revenue 3,012.62 2601.13<br />

Segment Results 713.17 534.91 62.91 61.28 (5.75) (3.42) 770.33 592.77<br />

Add: Unallocable Income 46.67 61.93<br />

Interest (net) 202.32 122.15<br />

Pr<strong>of</strong>it before tax and Exceptional Item 614.68 532.55<br />

Exceptional Item 54.16 -<br />

Pr<strong>of</strong>it before tax 560.52 532.55<br />

Provision for tax 246.98 196.52<br />

Pr<strong>of</strong>it after tax 313.54 336.03<br />

Segment Assets 4,717.17 4,174.68 213.95 185.25 69.20 41.07 5,000.29 4,401.00<br />

Unallocated Assets 1,848.48 841.55<br />

Total Assets 6,848.77 5,242.55<br />

Segment Liabilities 618.41 618.20 52.38 43.29 11.16 6.44 681.95 667.93<br />

Unallocated Liabilities<br />

( including Minority interest) 3,897.72 2,478.00<br />

Total Liabilities 4,579.67 3,145.93<br />

O<strong>the</strong>r Information<br />

Depreciation 154.46 147.03 11.73 12.33 1.43 1.31 167.62 160.67<br />

Significant non-cash expenditure<br />

o<strong>the</strong>r than depreciation 6.98 14.83<br />

Capital Expenditure 410.59 993.66 9.34 21.37 1.38 22.67 421.31 1,037.71<br />

147


The Indian Hotels Company Limited<br />

148<br />

Notes on Consolidated <strong>Balance</strong> <strong>Sheet</strong> and Pr<strong>of</strong>it and Loss Account (Contd.)<br />

The disclosures in respect <strong>of</strong> <strong>the</strong> above geographic segments are as under :<br />

Geographic Segments<br />

Rs. crores<br />

Particulars<br />

Domestic International<br />

Total<br />

CY PY CY PY CY PY<br />

Segment Revenue 2167.68 1898.46 798.27 640.48 2965.95 2538.94<br />

Segment Assets 2928.21 2301.50 2072.08 2099.50 5000.29 4401.00<br />

Capital Expenditure 163.34 255.89 257.97 781.82 421.31 1,037.71<br />

17.<br />

Figures pertaining to Subsidiaries and Jointly Controlled Entities have been reclassified wherever necessary in order to<br />

conform to <strong>the</strong> presentation in <strong>the</strong> Company’s financial statements.<br />

Earnings Per Share (EPS) :<br />

Earnings per share is calculated in accordance with Accounting Standard 20 – ‘Earnings Per Share’ as notified by <strong>the</strong><br />

Companies (Accounting Standards) Rules, 2006.<br />

Particulars<br />

Pr<strong>of</strong>it after minority interest and share <strong>of</strong> pr<strong>of</strong>it <strong>of</strong><br />

Current Year Previous Year<br />

associates (Rs. crores) 354.98 370.31<br />

Add : Exceptional Item ( net <strong>of</strong> tax - Nil ) 54.16 -<br />

Pr<strong>of</strong>it after tax before exceptional item (Rs. crores) 409.14 370.31<br />

No. <strong>of</strong> Equity Shares – Basic and Diluted 60,28,51,493 60,28,50,590<br />

Earnings Per Share – Basic and Diluted (In Rupees) 6.79 6.14<br />

Pr<strong>of</strong>it after tax after exceptional item (Rs. crores) 354.98 370.31<br />

No. <strong>of</strong> Equity Shares – Basic and Diluted 60,28,51,493 60,28,50,590<br />

Earnings Per Share – Basic and Diluted (In Rupees) 5.89 6.14<br />

18.<br />

Note: Since <strong>the</strong> exercise price <strong>of</strong> <strong>the</strong> Warrants Option issued by <strong>the</strong> Company is more than <strong>the</strong> fair value <strong>of</strong> <strong>the</strong> Equity<br />

Shares, <strong>the</strong>se have not been considered for <strong>the</strong> calculation <strong>of</strong> Diluted Earnings per shares being anti-dilutive in nature as at<br />

<strong>the</strong> year end.<br />

Previous year’s figures have been regrouped wherever necessary to conform to <strong>the</strong> current year’s presentation.<br />

Mumbai, June 23, 2008<br />

For and on behalf <strong>of</strong> <strong>the</strong> Board<br />

Raymond N. Bickson Managing Director<br />

Anil P. Goel Executive Director - Finance<br />

Abhijit Mukerji Executive Director – Hotel Operations


Annual Report 2007-2008<br />

Notes<br />

149


The Indian Hotels Company Limited<br />

150<br />

Notes


Annual Report 2007-2008<br />

Notes<br />

151


The Indian Hotels Company Limited<br />

152<br />

Notes


Annual Report 2007-2008<br />

Notes<br />

153


Mandlik House, Mandlik Road, Mumbai - 400 001.<br />

www.tajhotels.com

Hooray! Your file is uploaded and ready to be published.

Saved successfully!

Ooh no, something went wrong!