BOARD'S REPORT TO THE MEMBERS The Directors hereby present the Forty Fifth Annual Report of the Company together with the Financial Statement (Audited Statements of Account) for the year ended 31st March, 2016. OPERATIONS The Company registered 6% growth in revenues as compared to previous year. While room revenues were 10% higher than the previous year, the F&B revenues decreased by1 %. The newly opened Gateway Hotel at Gondia, Maharashtra in 2014, completed its first full financial year of operations and registered increase in revenues. The directors hope that the Hotel's financial performance will continue to improve and the Hotel will be well received in the market. Owing to decrease in F&B revenues and increase in operating expenses, the profit before taxes for the year was at Rs. 1287 Lacs, i.e. 10% lower than the previous year. Your directors hope that the Company will register superior financial performance in the next financial year i.e.2016-17. DIVIDEND Your Directors recommend the payment of dividend @200% (previous year dividend @ 200%) per equity share involving distribution of Rs. 260.00 lacs PARTICULARS OF EMPLOYEES The Company had no employees during the year who were in receipt ofremuneration aggregating to: (a) Not less than Rs. 60.00 lacs for the year, if employed throughout the financial year, or (b) Not less than Rs. 5.00 lacs per month, if employed for part Rs. financial year. DIRECTORS In accordance with the Companies Act, 2013 and the Articles of Association of the Company, Mr. Rakesh Sarna, Director of the Company is liable to retire by rotation and being eligible seeks reappointment. KEY MANAGERIAL PERSONNEL During the year under report, Mr. Ahmar Siddiqui, Chief Executive Officer (CEO) and Mr. P K Bhatia, Company Secretary of the Company resigned w.e.f. June 29, 2015 and March 28, 2016 respectively. They were replaced by Mr. Ashwani Anand as CEO and Ms. Vanika Mahajan as the Company Secretary of the Company w.e.f. July 23, 2015 and May 3, 2016 respectively. In terms of Section 203 of Companies Act, 2013, your Company has Mr. Ashwani Anand as the Chief Executive Officer (CEO), Mr. Ravi Sharma as the Chief Financial Officer (CFO) and Ms. Vanika Mahajan as the Company Secretary of the Company, as the Key Managerial Personnel of the Company. INFORMATION PURSUANT TO RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014 The information pursuant to Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure 1. SUBSIDIARY COMPANIES The Company does not have any subsidiary company HOLDING COMPANY The Indian Hotels Company Limited (IHCL) is the Ultimate Holding Company of the Company NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR The Company had convened 4 (Four) Board Meetings during the financial year under report. AUDIT COMMITTEE AND VIGIL MECHANISM In terms of Section 177 of the Companies Act, 2013, your Company has an Audit Committee with Mr. B.L. Passi, Mr. Shriraman, Mr. Rohit Khosla and Mrs. Rukmani Devi as its members. Your Company has a Policy on vigil mechanism/ Whistleblower Policy to provide a mechanism for the Directors and employees to report actual or suspected fraud or violation of your Company's Code of Conduct. The provisions ofthis Policy are in line with the provisions of Section 177 (9) of the Act and Clause 22 of the SEBI Listing Regulations. The Whistle Blower Policy can be accessed on your Company's website www. Benareshotelslimited.com. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE In terms of Section 135 of the Companies Act, 2013 (the Act), your Company has the Corporate Social Responsibility Committee (CSR Committee) of the Board with Dr. Anant Narain Singh, Mr. D.R. Kaarthikeyan and Mr. Rohit Khosla as the members of the Committee. The brief outline of the Corporate Social Responsibility (CSR) Policy of your Company and the initiatives undertaken by your Company on CSR activities during the year are set out in "Annexure 2" of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy is available on the website of your Companywww.benareshotelslimited.com NOMINATION AND REMUNERATION COMMITTEE In terms of Section 178(1) of the Companies Act, 2013 (the Act), the Company has a Nomination and Remuneration Committee (NRC) of the Board with Dr. Anant Narain Singh, Mrs. Rukmani Devi and Mr. Shriraman as the members of the Committee. The Committee met thrice during the year on 7th May, 2015,23rdJuly, 2015 and 15thMarch, 2016. In terms of the requirement of section 178(3) and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has a policy relating to the remuneration for the directors, KMPs and other employees. The key features of the said policy are: - Overall remuneration (sitting fees and Commission) should be reasonable and sufficient to attract, retain and motivate directors aligned to the requirements of the Company - Overall remuneration practices should be consistent with recognized best practices - Within the parameters prescribed under the law, the payment of sitting fees and commission will be recommended by NRC and approved by the Board. - The aggregate commission payable to the Directors will be recommended by NRC to the Board based on company performance, profits, return to investors, shareholder value creation and any other significant qualitative parameters as may be decided by the Board. - The quantum of commission for each director shall be recommended by NRC to the Board based upon the outcome of the evaluation process drive by various factors including attendance and time spent in the Board and committee meetings, individual contributions at the meetings and contributions made by the Directors other than in meetings. INTERNAL COMPLAINTS COMMITTEE The Company has an 'Internal Complaints Committee' under The Sexual Harassment ofWomen at Workplace (Prevention, Prohibition and Redressal) Act, 2013 for the prevention and redressal of complaints of sexual harassment and for the matters concerned, connected or incidental thereto. During the financial year 2015-16, the Company received one complaint from an industrial trainee at The Gateway Hotel Ganges - Varanasi, on sexual harassment. The Investigation for the same has been completed and accused employee has since resigned from the Company. DECLARATION BY INDEPENDENT DIRECTORS In terms of Section 149(7) of the Companies Act, 2013 (the Act), the Independent Directors have given a declaration that they meet the criteria of independenceas perSection149(6) Rs.Act. FAMILIARISATION PROGRAMME FOR INDEPENDENTDIRECTORS In addition to the Corporate Governance Guidelines discussed and adopted by the Board which, inter alia, included the role, rights and responsibilities of independent directors, the Company has an appropriate ongoing familiarisation programme, with respect to the roles, rights responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. The details of the familiarisation programme are disclosed on the Company's website under the weblink: www. benareshotelslimited.com. LOANS, GUARANTEES AND INVESTMENTS MADE UNDER SECTION 186 During the year under report, the Company has placed/renewed a sum ofRs. 4.00 crores as short term Inter Corporate Deposits with bodies corporate within the limits prescribed under Section 186 of the Companies Act, 2013. SECRETARIALAUDIT REPORT In terms of Section 204(1) of the Companies Act, 2013, M/s A K Bhayana & Associates, Company Secretaries, were appointed by the Company as the Secretarial Auditor. The secretarial audit report as obtained from them is attached to this Report as Annexure 3. The report is self explanatory and does not call for any comments. ANNUALRETURN The extract of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules 2014 is furnished in Annexure 4 to this Report. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES All related party transactions that were entered into during the financial year under report were at arm's length basis and in the ordinary course of business. The Company has developed a Related Party Transactions Framework under the Policy on Related Party Transactions, which policy is also available at Company's website www.benareshotelslimited.com, for the purpose of identification and monitoring of such transactions. Prior omnibus approval of the Board is obtained for transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted and a statement giving details ofall the related party transactions is placed before the Audit Committee for its approval on a quarterlybasis. Other than transactions entered into in the normal course ofbusiness, the Company has not entered into any materially significant related party transactions during the year, which could have a potential conflict of interest between the Company and its Promoters, Directors, Management and/or relatives save and except that the transaction with the Indian Hotels Co. Ltd., the ultimate holding company during the year exceeded 10% of the annual gross turnover of the Company for the previous year, the approval for which was taken from the shareholders by way of a special resolution at the AGM held on August 21, 2015. CORPORATE GOVERNANCE As required by Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations, 2015, the report on Management Discussion and Analysis, Corporate Governance as well as the Auditors' Certificate regarding compliance ofconditions of Corporate Governance, forms part of the Annual Report. During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company's Operations. RISKMANAGEMENT POLICY Pursuant to the provisions of Section 134 of the Act, your Company has a Risk Management Policy, to identify and evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on business objective and enhance the Company's competitive advantage. The risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework enables risks to be appropriately rated and graded in accordance with their potential impact and likelihood. The two key components of risks are the probability (likelihood) of occurrence and the impact (consequence) ofoccurrence, ifthe risk occurs. Risk is analyzed by combining estimates of probability and impact in the context of existing control measures. Existing control measures are evaluated against Critical Success Factors (CSFs) and Key Performance Indicators (KPIs) identified for those specific controls. Guiding principles to determine the risk consequence (impact), probability of occurrence (likelihood factor) and mitigation plan effectiveness have been set out in Risk Register. The Key business risks identified by the Company and its mitigation plans are as under: Strategy Risks: Risk of erosion of market dominance by losing market share, which originates from the choices we make on markets, resources and delivery models that can potentially impact our competitive advantage in the medium and long term. Loss ofF&B attractiveness on account of pricing/design/ competition. Industry and Economic Risks: High dependence on US, Europe and East Asian markets for foreign tourists arrival. The economic situation in these parts of the world has a potential impact on the entire tourism industry. Risks arising from the development in the regulatory environment that could impact the Hotel/Tourism Industry. Risks due to geographic concentration of business, primarily in the city of Varanasi. Operational Risks: High dependence on several technology platforms & systems to operate business both Internal & External. Cost overruns/delays in completion of projects. Loss of critical/sensitive data due to leakage/loss/hacking. Increase in fixed cost elements beyond entity control. Highly litigious nature of the industry/adverse consequences of litigation against company. Non-renewal of key licenses and NOCs. Safety and Security Risks: Risks arising from factors such as Fire, Accidents, Electricity mishaps, etc. Business interruption on account of natural calamities/ acts of God/riots & strikes/political instability and terrorism. Resources: Risks arising from sub-optimal succession planning and retention of talent pool. Inappropriate utilization of financial capital, talent and infrastructure. KEY RISKMANAGEMENT PRACTICES Risk Identification and Impact Assessment: Risk assessment enables risks to be appropriately rated and graded in accordance with their potential impact and likelihood. The two key components of risks are the probability (likelihood) of occurrence and the impact (consequence) if the risk occurs. Risk is analyzed by combining estimates of probability and impact in the context of existing control measures and included in the Risk Register. Apart from risk register, internal audit findings also provide input for risk identification and assessment, which is carried out on an annual basis across all functions. Operational risks are assessed primarily on three dimensions, namely strength of underlying controls, compliance to policies and business procedure effectiveness. Risk reporting and Disclosure: Risks to the achievement of key business objectives, trend line of risk level, impact and mitigation actions are reported risk level, impact and mitigation action are reported and discussed. The escalation of risk information is timely, accurate and gives complete coverage of the key risks to support management decision making at all levels. Risk Mitigation and Monitoring: Each Manager creates a risk mitigation plan by employing an effective system of internal controls & checks and balances to mitigate the risks in the most effective manner, including designating responsibilities and providing for upward and onward communication of any significant issues that may merit attention or escalation. All employees actively engage in risk management within their own areas of responsibility. Integration with Strategy and Business Planning: Identified risks to the business objectives in the near term, medium term and long term are used as one of the key inputs for the development of strategy and annual business plan. Key strategic initiatives are identified to mitigate specific risk. AUDITORS At the Annual General Meeting the Members will be required to appoint the Auditors for the current year and fix their remuneration. CONSERVATION OF ENERGY The Company has always been conscious of the need for conservation of energy and has been sensitive in making progress towards this end. The Company has implemented following energy conservation initiatives at the hotel: • Installation of LED lights in lobby, public areas and corridors in place of CFL lights. • Replacing oil based hot water generation with heat pump that also generates useful chilled water concurrently and reduces heat loss. • Converting primary and secondary pumping system into single variable primary system resulting in savings in electricity consumption. • Improving power factor and reducing line losses by installing suitable capacitors. TECHNOLOGYABSORPTION The activities of the Company do not involve the absorption of technology as envisaged to be furnished pursuant to The Companies (Accounts) Rules, 2014. FOREIGN EXCHANGE EARNINGS AND OUTGO In terms of the provisions of Section 134(3)(f)(m) of the Companies Act, 2013, read with Rule 8(3)(C) of The Companies (Accounts) Rules, 2014, the Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows is furnished in Notes on Accounts (Refer Note 27 and 28 in Notes to Financial Statements). DIRECTORS EVALUATION The Board of Directors has made the annual evaluation of its own performance and that of its committees and individual directors based on the review conducted by the Nomination & Remuneration Committee by assessing the questionnaires furnished by the directors/members of various committees in respect of their self assessment as well as the assessment of the Board/Committees followed by the discussions with the directors/ members Rs. Committees. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY Your Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority Rs. Internal Audit function is well defined in the organization. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman Rs. Audit Committee Rs. Board. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies at all locations Rs. Company. Based on the report of Internal Audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions suggested are presented to the Audit Committee of the Board. DIRECTORS' RESPONSIBILITY STATEMENT Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors including audit of internal financial controls over financial reporting by the statutory auditor and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during the financial year 2015-16 Accordingly, pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best Rs.ir knowledge and ability, confirm that: a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; b) The Directors 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 as at March 31, 2016 and of the profit of the Company for that period; c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) The Directors have prepared the annual accounts on a going concern basis; e) The Directors have 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) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. ACKNOWLEDGEMENTS The Board desires to place on record its appreciation of the services rendered by the employees of the Company during the year under review. On behalf of the Board of Directors Dr. Anant Narain Singh Chairman Place : Mumbai Date : 3rd May, 2016 |