DIRECTORS' REPORT Dear Members, Mr. P.L. Suri, the Chairman & Managing Director of the Company passed away on March 1, 2015. He was on the Board of the Company for the period from November 16, 2005 to March 1, 2015 and his loving compassionate nature and vision will always inspire the company achieve a success in future. Your Directors place on record the pleasure in presenting the 22ndAnnual Report together with audited financial statements of the Company for the period ended 31st March 2015. OPERATIONS The Company's has registered a nominal growth of 3% in its income from operations as compared to the previous year. The operating profit has grown by 26% as compared to the previous year however due to interest and finance charges on the projects under implementation and having a long gestation period resulted the company in incurring a loss even during the year under review. Your Directors are pleased to inform you that Park Hyatt Goa Resort & Spa continues to be considered as one of the best hotels in Goa and was awarded the 2014 Favourite Leisure Hotel in India - Conde Nast Traveller India Readers' Travel Awards, 2014 Most Luxurious Spa (Resort). Your Directors also inform that during the year, the secured lender had allegedly sold the secured asset i.e. Hotel Park Hyatt Goa under the provisions of the SARFAESI Act 2002 which has been challenged by the Company before the Hon'ble High Court of Judicature at Bombay. The Company has also challenged the order of the Debt Recovery Appellate Tribunal which had set aside the order of the Debt Recovery Tribunal which had quashed the recovery proceedings initiated by the secured lender and all further measures undertaken therein by the Secured lender. The Goa bench of the Hon'ble Bombay High Court has directed the respondents i.e. the secured lender and auction purchaser to maintain a "Status Quo".The Company has also filed its counter claim against the secured lender before the Debt Recovery Tribunal, Delhi in response to the application filed by the secured lender for recovery of debt. The ongoing litigations may have a material impact on the operations of the Company. The Company is also seeking a legal opinion to challenge the enforcement of the security by the secured lender for the obligation of the company in respect of the buy back, minimum assured return on investment on the equity contribution of Rs.8,500 lacs made by the secured lender in the subsidiary of the company Silver Resort Hotel India Private Limited (SPV which is developing a Five Star Hotel under the brand MGM Grand at New Delhi) Further, the trustees for the debenture holders have also initiated a recovery proceedings and the matter is sub-judice in the Courts at Goa. SHARE CAPITAL During the year under review, the company has converted its 40,00,000 1% Cumulative Redeemable Preference Shares of the face value of Rs. 100/- each into 38,83,495 equity shares of the face value of Rs. 10/- each fully paid up allotted at an issue price of Rs. 103/-(including premium of Rs. 93/-) to the persons belonging to the promoters group in terms of the provisions of the CDR scheme thus the paid up Equity Share Capital of the Company as on March 31, 2015 increased to Rs. 5,424.85 Lacs after taking all the necessary approvals from SEBI and Stock Exchanges. The shares issued by Company are listed at following Stock Exchanges as on March 31, 2015: 1. National Stock Exchange of India Limited (NSE) 2. Bombay Stock Exchange Limited (BSE) DIVIDEND On account of losses during the current Financial Year, the Board of Directors do not recommend any dividend. PUBLIC DEPOSITS During the period under review, your Company has not accepted, renewed or invited any public deposit and no amount of principal or interest was outstanding as on the Balance Sheet Date. BOARD OF DIRECTORS During the year under review, the Company has lost its mentor when Mr. P.L. Suri, Chairman & Managing Director suddenly passed away on 1st of March, 2015. He was keeping healthy and was the driving force for the family and the group. The Board of Directors in their meeting held on March 21, 2015 and subject to the approval thereof in the forthcoming General Meeting appointed Mr. Sushil Suri as the Chairman and Managing Director of the Company to hold office from March 21, 2015 to March 20, 2020. Further, Mr. Ashok Kini was appointed as an Additional Director under the Category of Independent Director and Mr. Kushal Suri was appointed as an Additional Director under the category of Non Executive Director on the Board of the Company. The above appointments were made upon the recommendation of the Nomination and Remuneration Committee of the Company. Pursuant to Section 152, no Independent Director is liable to retire by rotation. Ms. Seema Joshi, the Non Executive Woman Director is liable to retire by rotation at this Annual General Meeting and being eligible has offered for re-appointment. BOARD EVALUATION Clause 49 of the Listing Agreement mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 and Schedule IV of Companies Act 2013 state that a formal evaluation needs to be made by the Board of its own performance and that of its committees and individual Directors and that the performance evaluation of the Independent Directors shall be done by the entire Board of Directors, excluding the Director being evaluated. DECLARATION BY INDEPENDENT DIRECTOR (S) AND RE-APPOINTMENT The Company has received necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013 that he meets the criteria of independence as provided in Section 149(6) of Companies Act, 2013 and Clause 49 of the Listing Agreement. MEETINGS OF BOARD OF DIRECTORS During the year under review, the Board of Directors met 7 (seven) times to transact the business of the Company, the details of which are given in Corporate Governance Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION The current policy is to have an appropriate mix of Executive and Independent Directors to maintain the independence of the Board, and separate its function of management and governance. As on March 31, 2015, the Board consists of 6 members comprising a Chairman and Managing Director, two Non-Executive Directors (including one-Woman Director) and three Independent Directors. The Nomination & Remuneration Committee periodically evaluates the need for change in its composition and size. The Policy on Directors appointment and remuneration, including criterion determining the qualifications, positive attributes, independence of a Director and other matters provided under Sub Section (3) of Section 178 of the Companies Act, 2013, adopted by the Board is available on our website www.bluecoast.in INDEPENDENT DIRECTORS TRAINING/ MEETING During the year under review a separate meeting of the Independent Directors of the Company was held on February 11, 2015, without the presence of other Directors and Members of Management. The Independent Directors reviewed the performance of Non-Independent Directors and the Board as a whole, performance of Chairperson of the Company and assessed the quality, quantity and timelines of flow of information between the Company management and the Board. The Company Secretary acted as a secretary to the Meeting. To familiarize the new inductees with the strategy, operations and functions of the Company, the Executive Directors/Senior Managerial Personnel make presentations to the inductees about the Company's strategies, operations. Further at the time of joining, the Independent Directors are issued a formal letter of appointment outlining his/her role, functions, duties and responsibilities as a director. The format of Letter of appointment is available on our website www.bluecoast.in DIRECTORS' RESPONSIBILITY STATEMENT To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statements in terms of Section 134 (3) (c) of the Companies Act, 2013, ("Act"): a) in the preparation of annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures, wherever applicable; b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period; c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for prevention and detecting fraud and other irregularities; d) the annual accounts have been prepared on a going concern basis; e) they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and f) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. MANAGERIAL REMUNERATION AND OTHER DISCLOSURES The disclosures as required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 a) Ratio of the remuneration of each Director to the median employee's remuneration and other details pursuant to Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The aforesaid Disclosure is annexed and forms part of this report as ANNEXURE 'A'. b) Detail of every employee of the Company as required pursuant to Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The aforesaid Disclosure is annexed and forms part of this report as ANNEXURE 'B'. c) No Director of the Company, including its Managing Director, is in receipt of any commission from the Company or its Subsidiary Companies. AUDITORS i) STATUTORY AUDITORS M. Kamal Mahajan and Co. was appointed as the Statutory Auditors of the Company by the shareholders in 21st Annual General Meeting to hold office till conclusion of 24th Annual General Meeting to be held in the year 2017. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every subsequent Annual General Meeting. Accordingly the appointment of M. Kamal Mahajan & Co., Chartered Accountants, as the Statutory Auditors of the Company, is placed for ratification by the shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if their appointment were ratified, it would be in accordance with Section 141 of the Companies Act, 2013. ii) SECRETARIAL AUDITOR During the year under review, the Company has appointed M/s. PD and Associate, Practicing Company Secretaries, (C.P No 2139) Delhi to conduct the Secretarial Audit of the Company as per the provisions under section 204(1) of the Companies Act 2013 and other laws as applicable for the financial year 2014-15. The Report in Form MR-3 is enclosed as Annexure - 'C' to this Annual Report along with observations and clarifications therein. EXPLANATION TO SECRETARIAL AUDIT REPORT Regarding the Appointment of Chief Financial Officer: The said observation is self-explanatory and needs no further clarification. Regarding interest free loan to its subsidiaries The Company had incorporated two wholly owned subsidiaries as special purpose vehicles (SPV) in name of Blue Coast Hospitality Limited and Golden Joy Hotel Private Limited and under the Section 372A(8) of the erstwhile Companies Act 1956, the interest free loans granted to the Wholly owned subsidiaries were exempt. Hence your Directors in consultation with the Statutory Auditors deemed it fit that no interest be charged to the earlier transactions. iii) INTERNAL AUDITOR During the year under review, pursuant to Section 138 and any other applicable provisions of the Companies Act 2013, M/s. KSMN & Company has been appointed as the Internal Auditors for the Financial Year 2014-15. COMMITTEES OF THE BOARD A detailed note on the Board and its Committees is provided under the Corporate Governance Report Section in this Annual Report. WHISTLE BLOWER /VIGIL MECHANISM The Company has established a Whistle Blower Policy/Vigil Mechanism through which its Directors, Employees and Stakeholders can report their genuine concern about unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct or Ethics Policy. The said policy provides for adequate safeguard against victimization and also direct access to the higher level of superiors including Chairman of the Audit Committee in exceptional cases. The Audit Committee reviews the same from time to time. In compliance with Section 177 of the Act and the Listing Agreement, the same is available on our website, www.bluecoast.in RISK MANAGEMENT The Company has in place a mechanism to inform the Board about the risk assessment and minimisation procedures and periodical review to ensure that management controls risk through means of a properly defined framework. The Company has formulated and adopted Risk Management Policy to prescribe risk assessment, management, reporting and disclosure requirements of the Company; the same is available on our website, www.bluecoast.in VOTING RIGHTS In terms of the provisions contained in Section 47(2) of the Companies Act, 2013, the Preference Shareholders of the Company with respect to the 41,50,000, 10% Cumulative Redeemable Preference shares of Rs.100/- each are entitled to vote on every resolution placed before the Company at the General Meeting. The existing Promoters/Promoters Group holds the said preference shares and there is no change in the management/ control of the Company. EXPLANATION TO AUDITOR'S REPORT On Matters of Emphasis on Statutory Auditor's Report 1. Regarding default by the Company towards debenture holders and filing of suit by the debenture holders. The Company has served a notice of arbitration on the debenture holders for the resolution of the dispute in relation to the pre-mature recall of the facility, coupon rate, recovery suit filed in the court, security and their alleged consent to the other secured lender for the enforcement of the securities thereof etc. The outcome of the Arbitration will have a material impact on the operations of the company in future. 2. The outcome of the verdict of the Hon'ble High Court will have a material impact on the operations of the Company in future in respect of the alleged sale of secured assets by the secured lender pending the writ petitions before the High Court of Judicature at Bombay. 3. Regarding initiation of recovery proceedings by term lenders against Associate Company under SARFAESI Act, 2002 where company is guarantor for securing loans. The Associate concern has challenged the recovery proceedings initiated by the secured lender before the Debt Recovery Tribunal, Chandigarh on the grounds that neither the project implementation has been completed nor the banks have fully disbursed the loan. The amount disbursed by the bank is comparatively very small as compared to the equity infused by the promoters. In addition to this the value of the security is substantial to cover the debt of the banks and Company does not anticipate or envisage any amount payable on account of the Corporate Guarantee obligation undertaken by it. On Disclosures on Annexures in the Directors Report: i) Para (ix)(a) of Annexure to Auditors Report- TDS liability of Rs. 445.50 Lacs and Income Tax Liability of Rs. 56.58 Lacs outstanding for more than six months: - The Company is making an arrangement to raise the alternative source of financing, as surplus from the revenues of the hotel operations were suomoto offered to the secured term lender. ii) Para (xix) of Annexure to Auditors Report - We submit that in terms of Debenture Subscription Agreement, the Company has pledged its 10,00,00,000 Equity shares in Silver Resort Hotel Pvt. Ltd. as Interim Security with Debenture Trustee. The entire matter is sub-judice now since the secured lenders have enforced the security and the alleged consent of the debenture holder thereof. The outcome of the verdict of the Hon'ble Court will have a material impact on the operations of the company in future. SUBSIDIARIES / JOINT VENTURES / ASSOCIATES The Company has following Subsidiaries/Associates as on March 31, 2015 namely: 1. Silver Resort Hotel India Private Limited (Subsidiary Company) 2. Golden Joy Hotel Private Limited (Wholly Owned Subsidiary Company) 3. Blue Coast Hospitality Limited (Wholly Owned Subsidiary Company)& 4. Joy Hotel & Resort Private Limited (Associate Company). The Company does not have any Joint Ventures as on March 31, 2015. During the year under review, the Board reviewed the affairs of the Subsidiaries. In accordance with Section 129(3) of the Companies Act, 2013, we have prepared Consolidated Financial Statements of the Company and all its Subsidiaries, which form part of the Annual Report. Further, a Statement containing the salient features of the Financial Statements of our Subsidiaries and Associate, in the prescribed form, AOC -1 pursuant to Section 129 of the Companies Act, 2013 read with the Rule 5 of the Companies (Accounts) Rules, 2014 is annexed to this report as ANNEXURE 'D'. In accordance with Section 136 of the Companies Act, 2013, the Audited Financial Statements including the consolidated Financial Statements and related information of the Company and audited accounts of each of our Subsidiaries are available on our website www.bluecoast.inThese documents are also be available for inspection during the business hours at the Corporate Office of the Company situated at 415-417, Antriksh Bhawan, 22 K G Marg, New Delhi 110001. SEGMENT REPORTING Your Company's operations comprise of only one segment Hotel Operations and accordingly, there are no separate reportable segments as envisaged by Accounting Standard 17 LISTING The shares of your Company are listed at Bombay Stock Exchange Limited, Mumbai and National Stock Exchange of India Limited, Mumbai. The listing fees up to date have been paid to the Stock Exchanges. EXTRACT OF ANNUAL RETURN The detailed extract of Annual Return in Form MGT-9 as required under Section 134(3) (a) of the Companies Act, 2013 is annexed and forms part of this report as ANNEXURE ' E'. INTERNAL FINANCIAL CONTROLS The Company has an Internal Control System, commensurate with size, scale and complexity of its operations. The internal financial controls are adequate and are operating effectively so as to ensure orderly and efficient conduct of business operations. The Company's internal financial control procedures ensure that Company's financial statements are reliable and prepared in accordance with the applicable laws. To maintain its objectivity and independence, the Internal Audit Team reports to the Chairman of the Audit Committee of the Board. Based on the internal audit report, process owners undertake corrective action in their respective areas and thereby strengthening the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. Team engaged in internal audit carries out extensive audit throughout the year across all functional areas, and submits its reports from time to time to the Audit Committee of the Board of Directors. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF REPORT During the period between the end of the Financial Year and date of report, the material subsidiary of the Company, Silver Resort Hotel Private Limited, has been served with a Termination notice dated 16.07.2015 from Delhi International Airport Authority ("DIAL") over the alleged dispute of payment of outstanding dues. The subsidiary company is taking a legal recourse available to it under the law including invocation Arbitration Clause. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS / COURTS / TRIBUNALS The secured lenders enforced the security to recover their dues pursuant to the order of the Debt Recovery Appellate Tribunal (DRAT), which had set aside the Order of the Debt Recovery Tribunal. The order of the DRAT has been challenged by the Company before the Hon'ble High Court of Judicature at Bombay and the verdict may have the material impact on Company's operations in future. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 form part of the notes to the Financial Statements provided in this Annual Report. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES The information relating to contracts or arrangements with related parties including certain arm's length transactions under third proviso of Section 188 of the Companies Act, 2013 read with the Companies (Meeting of Board and its Powers) Rules, 2014 is annexed in Form AOC - 2 and forms part of this report as ANNEXURE 'F'. In accordance with the requirements of the Listing Agreement, the Company has formulated policy on the related Party transactions and material subsidiaries. The said Policy is available on our website, www.bluecoast.in CORPORATE GOVERNANCE A Report on Corporate Governance along with a certificate from the Statutory Auditors of the Company regarding compliance with conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement forms part of this report discussed separately. MANAGEMENT DISCUSSION AND ANALYSIS REPORT A detailed review of the operations, performance and other matters of the Company is set out in the Management Discussion and Analysis Report pursuant to Clause 49 of the Listing Agreement which forms part of this Annual Report as ANNEXURE 'G'. DISCLOSURES UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORK PLACE (PREVENTION, PROHIBITION & REDERESSAL) ACT, 2013 The Company has in place a policy on prevention of sexual harassment at workplace on the line of the requirement of the Sexual Harassment of Women at The Work Place (Prevention, Prohibition & Redressed) Act, 2013. Internal Complaint Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The following is a summary of sexual harassment complaints received and disposed off during the year 2014-15 No. of Complaints received: 0 No. of Complaints disposed off: 0 HUMAN RESOURCES Your Company had been able to retain good and talented people. Significant number of employees has chosen to stay back with Company and have contributed a lot in smooth running of the Company. Fair practices and equal opportunity has been afforded to employees at all levels. The Company is keeping these traditions alive and is making conscious effort to grow year after year. The Company understands that importance of Human capital and acts judiciously in rewarding its workforce. It has strong belief in collective efforts of all the team members. The inter-personal relationship amongst workers, staff and officers has always been cordial and healthy. As on March 31, 2015, there were 458 employees working for the Company across all levels at various locations. AWARDS AND RECOGNITION Park Hyatt Goa Resort and Spa received the following Awards & Accolades: Sereno Spa 2014 - Conde Nast Traveller India Readers' Travel Awards 2014 2014 Asia Spa India Awards 2014 Most Luxurious Spa (Resort) 2013 Conde Nast Traveller India Readers' Travel Awards 2013 Favorite Destination Spa Food and Beverage 2014 - Times Food Awards Goa, 2014 - Casa Sarita awarded, Best Restaurant Goa 2014 Times Food Awards Goa, 2014 Da Luigi awarded, Best Italian Restaurant 2013 - Ospitalita' Italiana Awards 2013 - Da Luigi awarded, Authentic Italian restaurant 2013 Wine Spectator Awards, 2013 Award of Excellence for outstanding restaurant wine lists in the world CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO Information pursuant to of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014 pertaining to the conservation of energy, technology absorption, foreign exchange earnings & outgo are set out as Annexure 'H ' to this report. ACKNOWLEDGEMENT The Directors express their sincere appreciation of the co-operation and assistance received from Shareholders, Bankers and Hyatt International and other Business Associates. The Directors also wish to place on record their deep sense of appreciation for the commitment displayed by the Employees at all levels. By Order of the Board For Blue Coast Hotels Limited Sushil Suri) Chairman and Managing Director DIN: 00012028 Place: New Delhi Date: 20.08.2015 |