Annual report of advani hotel

ANNUAL REPORT

2009-2010

ADVANI HOTELS & RESORTS (INDIA) LTD.

1

dvani Hotels & Resorts (India) Limited

Page

Notice ....................................................................................................................... 3

Directors’ Report...................................................................................................... 7

Management Discussion and Analysis .................................................................... 12

Corporate Governance Report.................................................................................. 15

Auditors’ Certificate on Corporate Governance....................................................... 22

Auditors’ Report....................................................................................................... 23

Balance Sheet.......................................................................................................... 26

Profit and Loss Account .......................................................................................... 27

Cash Flow Statement .............................................................................................. 28

Schedules to Balance Sheet ................................................................................... 29

Schedules to Profit and Loss Account.................................................................... 32

Significant Accounting Policies and Notes on Accounts ........................................ 35

Statement under section 212 of the Companies Act .............................................. 46

Auditors’ Report on Consolidated Financial Statement ........................................... 47

Consolidated Balance Sheet.................................................................................... 48

Consolidated Profit and Loss Account .................................................................... 49

Consolidated Cash Flow Statement ......................................................................... 50

Schedules to Consolidated Balance Sheet ............................................................. 51

Schedules to Consolidated Profit and Loss Account .............................................. 55

Significant Accounting Policies and Notes on Consolidated Accounts .................. 57

CONTENTS

2


Annual Report 2009 - 2010

BOARD OF DIRECTORS Mr. Sunder G. Advani Chairman & Managing Director

Mr. K. Kannan

Mr. Prakash V. Mehta

Mr. Anil Harish

Mr. Haresh G. Advani Executive Director

Mrs. Menaka S. Advani

GENERAL MANAGER FINANCE (CFO) Mr. Shankar Kulkarni

COMPANY SECRETARY Mr. Kumar Iyer

AUDITORS Messrs J. G. Verma & Co.

Chartered Accountants

SOLICITORS Messrs Talwar Thakore & Associates

Messrs Malvi Ranchoddas & Co.

BANKERS Bank of Baroda

Bank of India

REGISTERED OFFICE 1009/1010, Dalamal Tower

211, Nariman Point

Mumbai - 400 021

REGISTRAR AND Datamatics Financial Services Limited

SHARE TRANSFER AGENTS Plot No. B/5, Part B Cross Lane

MIDC Marol

Andheri (East), Mumbai - 400 093

FOREIGN COLLABORATORS Wyndham Hotels, U.S.A.

(Previously Ramada International, Inc., U.S.A.)

LOCATION OF THE RESORT Ramada Caravela Beach Resort

Varca Beach, Varca Village

Salcette, Goa - 403 721

3


NOTICE

Notice is hereby given that the Twenty Third Annual General Meeting of the Members of Advani Hotels & Resorts

(India) Limited will be held at ‘Rangaswar’, 4

th

Floor, Chavan Centre, General Jagannath Bhosale Marg, Nariman

Point, Mumbai – 400021 on Wednesday, 15

th

December, 2010 at 11.00 a.m. to transact the following business

:

ORDINARY BUSINESS:

1. To receive, consider and adopt the audited Balance Sheet as at 31st March, 2010, Profit & Loss account for the

year ended on that date together with Reports of the Directors and Auditors thereon.

1A. To declare dividend on Equity Shares.

2. To appoint a Director in place of Mr. K. Kannan, who retires by rotation and is eligible for re-appointment.

3. To appoint a Director in place of Mr. Prakash V. Mehta, who retires by rotation and is eligible for re-appointment.

4. To appoint M/s. J. G. Verma & Co., Chartered Accountants, to hold the office as Auditors of the Company from the

conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting and to

authorise the Board to fix their remuneration.

SPECIAL BUSINESS:

5. To consider and if thought fit, to pass with or without modification the following resolution as a Special Resolution:

“Resolved that in accordance with and pursuant to the provisions of Section 314(1B) and other applicable provisions,

if any, of the Companies Act, 1956 and the rules and regulations thereto, including any statutory modification(s) or

re-enactment thereof, for the time being in force and subject to the approval of the Central Government, including

modifications, if any, the consent of the Company be and is hereby accorded for Mr. Prahlad Advani, son of Mr.

Sunder G. Advani, Chairman & Managing Director and Mrs. Menaka S. Advani, Director and nephew of Mr. Haresh

G. Advani, Executive Director, to hold and continue to hold an office or place of profit as the Vice President & Asset

Manager of the Company on the following revised remuneration with effect from 15

th

December 2010:

Salary

Salary of Rs. 1,30,000/- in the Company’s Special Grade of Rs. 1,30,000 – Rs. 17,500 - Rs. 2,00,000.

Perquisites

In addition to the salary, Mr. Prahlad S. Advani shall be entitled to the following perquisites:

Category ‘A’

I. Housing:

(a) Company leased unfurnished accommodation or House Rent Allowance in lieu thereof subject to a

maximum of 60% of Salary.

(b) In case the accommodation is owned by the Company, 10% of the salary shall be deducted by the

Company.

II. Medical reimbursement:

Medical expenses reimbursement for self, spouse and family members subject to a maximum of one month’s

salary per annum or three months’ salary over a period of three years.

III. Leave Travel Allowance:

Leave Travel Allowance for self, spouse and family members once in a year incurred in accordance with the

Company’s rules subject to a maximum of one month’s salary per annum or two months’ salary over a period

of two years.

IV. Insurance:

Insurance premium not exceeding 3.1% of the Salary.

V. Other allowances/reimbursements

(a) Reimbursement of Uniform, Books & Periodicals and Computer Allowance subject to a maximum of 15%

of the Salary.

4



(b) Reimbursement of Club Fees / Expenses subject to a maximum of 10% of the Salary.

(c) Reimbursement of Entertainment Expenses subject to a maximum of 12% of the Salary.

Category ‘B’

I. Provident Fund

Provident Fund / Superannuation / Annuity Fund Contributions as per the Company’s rules.

II. Gratuity

Gratuity as per the Company’s rules.

Category ‘C’

I. Car

Provision of a car with driver and petrol expenses for use of Company’s business. Use of car for personal

purposes shall be billed by the Company.

II. Telephone

Provision of telephone at residence for Company’s business purpose. Provision of Mobile phone as per

Company’s rules.

The employment can be terminated by either party by giving 90 days notice in writing.

Resolved further that the Board of Directors or any of its Committee be and is hereby authorised to sanction

at its discretion annual increments within the scale as the Board / Committee may deem fit and proper

effective from December every year and to do all such acts, deeds, matters and things, make and execute all

such applications, writings and instruments as the Board may in its absolute discretion deem necessary or

desirable and delegate the said authority to any person(s) as the Board may deem fit in its discretion for the

purpose of giving effect to this resolution.”

By Order of the Board of Directors

For Advani Hotels & Resorts (India) Limited

Place: Mumbai Kumar Iyer

Date: November 4th, 2010. Company Secretary

Registered Office:

1009/1010, Dalamal Tower,

211, Nariman Point, Mumbai - 400 021.

NOTES:

1. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE ON

A POLL INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER.

The Proxy Form duly completed and stamped, must be lodged at the Registered Office of the Company not later

than 48 hours before the time fixed for the meeting.

2. The Register of Members and Share Transfer Books of the Company will remain closed from 11

th

to 15

th

December

2010 (both days inclusive).

3. Pursuant to Section 205A (5) of the Companies Act, 1956 all unclaimed dividends up to the financial year ended

31

st

March 2001 have been transferred to the Investor Education and Protection Fund (IEPF) of the Central

Government. The details of the due dates for transfer of unpaid/ unclaimed dividend to the IEPF for the subsequent

years are as under:

Year of Declaration Due Date (For transfer to the IEPF)

2005-2006 25-04-2013

2006-2007 21-03-2014

2007-2008 (Interim) 17-05-2015

2007-2008 (Final) 13-09-2015

4. Members who have not claimed dividend in respect of the financial year 2005 - 2006 and for the subsequent years

are requested to approach the Company/the Registrar and Share Transfer Agents of the Company for claiming the

same.

5


5. The particulars of the Directors seeking re-appointment are furnished below as per the provisions of Clause 49 of

the Listing Agreement:

Name of Director (1) Mr. K. Kannan (2) Mr. Prakash V. Mehta

Date of Appointment 28.07.2003 30.06.1989

Age 71 years 68 years

Qualification FCA, ACWA LL.B. Solicitor

Expertise Finance, Banking Law

List of other Directorsh ips # 1. Kesar Enterprises Ltd. 1. Bharat Bijlee Limited

2. Patel Engineering Ltd.. 2. Hikal Ltd.

3. Consolidated Construction Consortium 3. India Safety Vaults Ltd.

Ltd. 4. JBF Industries Ltd.

4. Prithvi Asset Reconstruction Company 5. Mukand Ltd.

Ltd. 6. Mukand Engineers Ltd.

5. Heritage Foods (India) Ltd. 7. PCS Technologies Ltd.

6. Kesar Terminals & Infrastructure Ltd. 8. W.H. Brady & Co., Ltd.

Chairmanship/Membership of 1. Kesar Enterprises Ltd. 1. Bharat Bijlee Limited

other Committees of other – Member-Audit Committee – Member-Audit Committee

Companies 2. Patel Engineering Ltd. –Member-Shareholders Grievance

– Chairman-Audit Committee Committee

– Chairman-Shareholders 2. Mukand Engineers Ltd.

Grievance Committee – Member-Audit Committee

3. Consolidated Construction Consoritium 3. JBF Industries Ltd.

Ltd. – Member-Shareholders Grievance

– Member-Audit Committee Committee

4. Prithvi Asset Recons. Co. Ltd. 4. Hikal Ltd.

– Member-Audit Committee – Member-Audit Committee

5. Heritage Foods (India) Ltd. – Member-Shareholders Grievance

– Member-Audit Committee Committee

6. Subhalakshmi Polyesters Ltd. 5. Mukand Ltd.

– Member-Audit Committee – Member-Audit Committee

7. Kesar Terminals & Infra Ltd.

– Member-Audit Committee

# Excludes Directorships in Private Limited Companies, Unlimited Companies, Foreign Companies, Section 25 Companies and Alternat e Directorships.

$ Includes only membership/s of Audit Committee and Shareholders/Investors Grievance Committee of other Public Limited Companies .

6. The Registrar and Share Transfer Agents of the Company are:

Datamatics Financial Services Limited

Plot No. B-5, Part B, Cross Lane, MIDC Marol, Andheri (East), Mumbai - 400 093

Tel.: 91-22-6671 2237 Fax: 91-22-6671 2209

Members are requested to contact them for any matter relating to Bank details, ECS Mandates, nominations, power

of attorney, change in name/address etc.

7. Members are requested to quote their Folio Number or the DP & Client ID on all the correspondence with the

Company or with the Share Transfer Agents.

8. In view of the numerous advantages offered by the Depository System, members holding Shares in physical form

are requested to avail of the facility of dematerialisation of the Company’s shares.

9. Members desirous of seeking clarifications / explanations are requested to forward their queries to the Company at

its Registered Office at least 7 days prior to the date of the Meeting.

10. Members are requested to kindly bring their copies of the Annual Report to the Annual General Meeting.


For Advani Hotels & Resorts (India) Limited


Date: November 4, 2010. Company Secretary

Registered Office:

1009/1010, Dalamal Tower, 211, Nariman Point, Mumbai - 400 021

6



EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956:

ITEM NO: 5

The Special Resolution relates to the revision in the remuneration payable to Mr. Prahlad S. Advani who has been

employed with the Company as General Manager – Asset Management since1st May, 2000. Mr. Prahlad S. Advani is the

son of Mr. Sunder G. Advani, Chairman and Managing Director and Mrs. Menaka S. Advani, Director and nephew of

Mr. Haresh G. Advani, Executive Director.

Mr. Prahlad Advani has completed his Bachelor of Science in Hotel Administration from Cornell University with

concentration in Financial Management. Before joining the Company in 2000 he was employed with Deutsche Bank Alex

Brown in U.S.A. as a Financial Analyst in the Investment Banking Division. His annual compensation was valued at

US $ 75,000 excluding the benefits package of US $ 10,000. However, Mr. Prahlad Advani joined the Company in May

2000 on a monthly salary of Rs. 60,000/- plus perquisites.

The members of the Company and the Central Government had consented to Mr. Prahlad S. Advani for holding of an

office or place of profit in the Company. Accordingly, at present Mr. Prahlad S. Advani is being paid a monthly salary of

Rs.1,10,000/- plus perquisites in accordance with Section 314 (1B) of the Companies Act, 1956.

Taking into account the qualification, experience and performance of Mr. Prahlad S. Advani and the additional

responsibilities handled by him, the Remuneration Committee and the Board of Directors of the Company have considered

and approved the promotion of Mr. Prahlad Advani as Vice President & Asset Manager on the revised remuneration and

terms and conditions w.e.f. 15

th

December 2010 as contained in the resolution. The monthly salary payable to

Mr. Prahlad Advani is proposed to be increased from Rs.1,10,000/- per month to Rs.1,30,000/- per month plus perquisites

and annual increments as specified in the resolution. Payment of remuneration to a relative of director exceeding

Rs.50,000/- per month attracts provisions of Section 314 (1B) of the Companies Act, 1956 and requires prior consent of

the members of the Company by way of a Special Resolution and approval of the Central Government. The consent of

the Members is therefore being sought for the Special Resolution as proposed in the Notice. After approval by the

Members, an application shall be made to the Central Government.

The Board feels that the increase in the remuneration is reasonable and in line with the salary offered to other senior

managers and will be in the best interests of the Company. The Board therefore recommends the Special Resolution for

the approval of the Members.

None of the Directors except Mr. Sunder G. Advani, Mrs. Menaka S. Advani and Mr. Haresh G. Advani is concerned or

interested in the resolution.


For Advani Hotels & Resorts (India) Ltd,


Date: 4

th

November, 2010 Company Secretary

7


DIRECTORS’ REPORT

Dear Members,

Your Directors are pleased to present the 23

rd

Annual Report of the Company along with the audited Profit & Loss

Account for the year ended 31

st

March 2010 and the Balance Sheet as on that date.

Financial Results:

Your Company’s performance for the year ended March 31, 2010 is summarized below:

(Rs. in Lakhs)

Item Year ended Year ended

March 31, 2010 March 31, 2009

Operating Income ................................................................... 3164.31 3057.38

Other Income ........................................................................... 75.37 309.78

Total Income 3239.68 3367.16

Profit before depreciation, interest, tax and

exceptional items .................................................................... 371.40 587.22

Less: Interest............................................................................. 123.60 165.85

Profit/(Loss) before depreciation, tax and exceptional items 247.80 421.37

Less: Depreciation.................................................................... 248.98 250.86

Profit/(Loss) before tax and exceptional items .................... (1.18) 170.51

Add/(Less): Exceptional items (net) .......................................... 147.04 (222.34)

Profit/(Loss) before tax ........................................................... 145.86 (51.83)

Less: Provision for:

Current tax ...................................................................... 37.00 77.00

Deferred tax liability/(asset) ............................................ 31.96 (145.56)

Fringe Benefit tax ........................................................... — 11.58

Profit after tax .......................................................................... 76.90 5.15

Add: Profit brought forward from previous year ........................ 361.92 643.68

Less: Adjustment on adoption of AS-11 Notification ................ — 86.91

Profit available for appropriation .......................................... 438.82 561.92

Less: Dividend and tax thereon ................................................. 53.90 —

Less: Transfer to General Reserve ........................................... — 200.00

Balance Profit carried to Balance Sheet ................................... 384.92 361.92

Basic and Diluted Earnings per share (in Rs.) .......................... 0.17 0.01

Income:

The total income for the year ended 31

st

March 2010 at Rs.3240 lakhs is lower by 3.8% as compared to Rs.3367

lakhs during the previous year. However, the income from Operations for the year has gone up from Rs.3057

lakhs to Rs.3164 lakhs even though income for the previous year included two months operational income of the

Airport Plaza catering unit. The other income has gone down significantly during this financial year as no dividend

income was received from the erstwhile subsidiary (Advani Pleasure Cruise Company Private Limited [APCCPL])

as compared to Rs. 166 lakhs received in the previous financial year.

Interest and Depreciation:

Interest costs for the year ended 31

st

March 2010 stood at Rs.124 lakhs, which represents a reduction of Rs.42

lakhs or 25% over the previous year. This has been achieved by bringing down the Secured Loans from Rs.1128

8



lakhs to only Rs.960 lakhs and the lower LIBOR rate during the year. Unsecured Loans did go up by Rs.512

lakhs for a short period. This amount was given by the intended acquirer of APCCPL as an interest-free loan to

facilitate renewal of the Company’s Casino Licence used by APCCPL and has since been repaid. The Unsecured

Loans of the Company as of date stand at Rs.125 lakhs as compared to Rs.614 lakhs as on March 31, 2010.

The figures for depreciation are almost the same as no additional capital expenditures were carried out.

Profits:

The Profit for the year before tax is Rs.146 lakhs as compared to a loss of Rs.52 lakhs. Since the sale of our

investment in APCCPL has been completed during the year, the provision made in previous year for diminution

in value of investment in APCCPL has been reversed during the year. The net excess provision of Rs.147 lakhs

has been added to profits as exceptional item.

Consolidated Financial Results:

The Consolidated Results for this financial year include the standalone results as well as the operations of

APCCPL. APCCPL, which was operated by Casinos Austria International had been making considerable losses

due to competition from other new offshore casinos. Subsequently, the business operations were suspended

from 12

th

June 2009.

The total income of APCCPL for the year 2009-10 declined to Rs.91 lakhs as against Rs.2320 lakhs during the

previous year. The loss after tax for the year 2009-10 was Rs.1327 lakhs as against Rs 79 lakhs last year. As

a prudent accounting policy, APCCPL has written off the assets on the leased ship M.V. Caravela amounting to

Rs.339 lakhs in the year 2009-10. These assets were not removed from the Ship on expiry of the lease and the

same is also included in the above loss. APCCPL has made cumulative loss of Rs.822 lakhs upto March 31,

2010 of which 51% is reflected in the consolidated accounts.

Considering the above, the Board of Directors has sold the 51% investment in APCCPL to Delta Corp Ltd. for a

consideration of Rs.245 lakhs which sale was completed on 20

th

September 2010. APCCPL has thus ceased to

be Company’s subsidiary with effect from that date.

Dividend:

In view of the improved results and the sale of the investment in the loss-making APCCPL, the Board has

recommended a dividend of Rs.0.10 per Share (i.e. @ 5%) in respect of the financial year 2009-10 and the same

will be paid to the shareholders subject to the approval at the Annual General Meeting.

The tax on dividends will be borne by the Company as per the Income-tax Act provisions.

Future Outlook:

The business from the foreign tourists is expected to be much higher due to increased flights into Goa from

Russia and its neighbouring countries whose economies have not been adversely affected. There is also an

increase in domestic traffic into Goa due to improvement in the disposable income available with individuals and

the better performance of the corporates and the stock market. Although Indians are travelling abroad extensively

for holidays, there is a decline in cost of air travel within India.

Your Company has maintained the sales of about Rs.1190 lakhs for the half-year despite the unexpected heavy

rainfall in Goa and other parts of India. The net loss for the half-year has been reduced by Rs.84 lakhs. Your

Company expects to do better than last year as occupancy rates are higher with the early start of the foreign

season in October. The Indian economy is going to do even better and coupled with the boom in the stock

market, domestic travel to Goa will also increase.

Renovation:

The Company managed to do a limited touch up of some of the hotel guest rooms in the period between May and

October 2009. Since there have been some complaints of mustiness of a particular section of the hotel, the 20

rooms in this section have been upgraded in the period between May and October 2010. A new conference

9


facility has also been created during the above period, which will add to the revenues for the financial

year 2010-11.

Subsidiary Companies:

As informed in our Director’s Report last year, APCCPL had been making losses and the operations of the casino

on the leased ship ‘Caravela’ had been suspended from 12

th

June, 2009. Your Company had a 51% stake in

APCCPL. The balance 49% of the equity in APCCPL was held by Casinos Austria International, who did not wish

to provide any matching funds to cover the recurring losses. Your Company did not wish to borrow unilaterally to

fund the negative cash flow due to competition from other Casino ships. Your Company had already provided

substantial amounts to APCCPL unilaterally and felt it would be prudent to sell the shareholding in APCCPL

instead of putting more funds in APCCPL over which the Company had no operational control.

On 19

th

January 2010 your Company entered into a Share Purchase Agreement (SPA) to sell the 51% stake in

APCCPL to Delta Corp Limited whereby all the funds provided to APCCPL would be returned and liabilities as of

that date and thereafter absorbed by Delta. Subsequently, Delta wished to renegotiate the commercials and after

protracted discussions a new SPA was signed on 20

th

September 2010. Your Company has managed to recover

most of the funds provided to APCCPL and also freed itself from the Corporate Guarantee of Rs.836.40 lakhs

given exclusively by your Company to the Bankers for a loan provided to APCCPL.

Pursuant to the sale of the 51% investment, APCCPL has ceased to be a subsidiary of the Company w.e.f. 20

th

September 2010.

The other subsidiary Company Advani Flight Catering Services Private Limited has not yet commenced operations.

The Ministry of Corporate Affairs, New Delhi has vide its Order No. 47/373/2010-CL-III dated 17

th

May 2010

exempted the Company from the requirement of attaching the Financial statements of its subsidiaries in terms of

Section 212(1) of the Companies Act, 1956. As per the order, a gist of the financial statements of the subsidiary

companies has been prepared and forms part of the annual report. The accounts of the subsidiary companies

and other detailed information will be made available to the Shareholders on request.

Directors’ Responsibility Statement:

As required by Section 217 (2AA) of the Companies Act, 1956 the Directors hereby confirm that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed and that

there are no material departures;

(ii) Appropriate accounting policies have been selected and applied consistently and judgments and estimates

made 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 of the Company for that period;

(iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance

with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for

preventing fraud and other irregularities.

(iv) The annual accounts have been prepared on a ‘going concern’ basis.

Directors:

Mr. K. Kannan and Mr. Prakash V. Mehta, Directors of the Company, retire by rotation at the ensuing Annual

General Meeting and are eligible for re-appointment.

Corporate Governance:

The Company has complied with the requirements regarding the Corporate Governance as required under Clause

49 of the Listing Agreement.

The report on Management Discussion and Analysis, Corporate Governance as well as the Auditors’ Certificate

on the compliance of Corporate Governance, form part of the Annual Report.

10



Additional Information:

(a) Conservation of Energy

Energy conservation continues to receive utmost priority and the Company monitors energy costs and

reviews the consumption of energy on a regular basis. The Company wherever necessary also initiates

appropriate measures to reduce consumption of electricity.

(b) Technology Absorption

The relevant particulars relating to technology absorption in terms of Rule 2 of the Companies (Disclosure of

Particulars in the Report of the Board of Directors) Rules 1988 is not applicable as the hotel forms a part of

the service industry and as such the Company does not have any significant manufacturing operations.

(c) Foreign Exchange Earnings and Outgo

The Company’s foreign exchange earnings were Rs.103,564,239/- (previous year Rs.154,289,333/-) whereas

the outgo was only Rs.49,396,473/- (previous year Rs.58,404,481/-). The relevant details are given in the

notes to Accounts.

Auditors:

M/s. J. G. Verma & Co., Chartered Accountants, Mumbai, Auditors of the Company retire at the conclusion of

the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

Particulars of Employees:

The information required under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars

of Employees) Rules, 1975 is given in the annexure.

Acknowledgment:

Your Directors thank the Company’s bankers, investors, the WYNDHAM Hotel Group International and clientele

for their continued support during the year. Your Directors also appreciate the hard work put in by all employees

of the Company.

For and on behalf of the Board of Directors

Place: Mumbai SUNDER G. ADVANI

Date: November 4, 2010 Chairman & Managing Director

11


ANNEXURE TO THE DIRECTORS’ REPORT

The information required under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars

of Employees) Rules, 1975 and forming part of the Directors’ Report for the year ended 31

st

March 2010, is as

follows:

Employees Name Designation Age in Qualification Experience Date of Remuneration Last Employment

years in years Commence- Rupees held

ment

Mr. Sunder G. Chairman & 71 Strategic Hospitality Management 49 01.03.88 5,300,000 Chairman &

Advani Managing Financial Management Courses Managing Director,

Director Cornell University (USA) Hotel Airport Plaza

Mumbai

Masters in Business Administration

from The Wharton School (USA)

B.S. — Business Administration

Temple University (USA)

Innkeepers Diploma

Holiday Inn University (USA)

Mr. Haresh G. Executive 60 B.S. Cornell University (USA) 41 01.03.88 3,307,200 Director, Hotel

Advani Director School of Hotel Administration Airport Plaza,

Mumbai

Mr. Sanjay Vice 44 M Com. Post Graduate in 21 15.11.08 2,541,500 Managing Director,

Saxena President – Marketing Management MCI Management

Sales & (India) Pvt. Ltd.

Marketing

Notes:

1. ‘Remuneration’ includes salary, commission, allowances and taxable value of perquisites.

2. The above appointments are contractual.

3. Mr. Sunder G. Advani, Mr. Haresh G. Advani and Mrs. Menaka S. Advani are related to each other.

4. Mr. Sunder G. Advani holds 9,376,393 equity shares (20.29%) and Mr. Haresh G. Advani holds 5,709,886 equity shares (12.35%).




12



MANAGEMENT DISCUSSION AND ANALYSIS REPORT

1. DEVELOPMENTS AND OUTLOOK FOR YOUR COMPANY:

The Management Discussion and Analysis Report which is part of the Annual Report includes the performance of

the Company and developments that may affect the likely prospects for the future. The discussion relates to the

Company’s hotel on a standalone basis.

The last two years have been difficult ones for the world economy and the hospitality industry. The performance of

your Company is affected by several exogenous factors such as the growth of the GDP of those countries from

which Goa receives major portion of its tourists as well as the growth of the Indian economy. Your Company’s 5-star

deluxe hotel relies principally on two diverse segments. Historically, your Company’s hotel has been dependent on

the foreign market particularly tourists from Europe, who come to Goa between November and April to escape the

harsh European winters. In recent years, there has been an increase in domestic tourists, who come to Goa to hold

conferences, get a short holiday break or to celebrate family events such as weddings or anniversaries.

2. THE FOREIGN MARKET:

Europeans still wished to take their customary winter holidays in a warm climate. However, many, particularly in the

UK, could not do so as they had lost or were afraid of losing their jobs and their homes as a result of the downturn

in the UK economy. Charter flights to Goa from the UK this season were further reduced to only 6 weekly flights due

to decrease in demand. However, tourists from the UK at our resort have increased in the 2010-2011 season. The

German economy has not bounced back. There were 2 weekly flights from Germany, but due to poor load factors,

the number of seats to Goa have been reduced in the 2010-2011 season. The only saviour last year was the

relative strength of the economy of Russia, which provided majority of the tourists who visited Goa from abroad. The

number of weekly charter flights from Russia and CISR to Goa is expected to go up by 50% in the coming season.

This may not necessarily lead to a similar increase in the amount of business for the upmarket hotels, as airlines

will need to drop rates and fill seats with low-paying passengers due to increased supply. New Russian tour

operators have expressed an interest in Goa not only from Moscow but from other Russian cities and the nearby

CISR States. There is also interest from Poland though there is concern that the Indian embassy in Poland is not

issuing visas readily.

Goa is perceived as good value for money as most hoteliers have not increased their rates due to the reduction of

foreign tourist arrivals in the winter season of 2009-10 when rooms were available even during the New Year. The

scheduled flights to Goa started by Qatar Airways and Air Arabia will make it easier for tourists to reach Goa.

Aeroflot, the national carrier, which had discontinued its long standing Moscow to Mumbai flights has found it

feasible to start Moscow to Goa operations this season. More passengers are travelling by scheduled airlines to

Goa, as the difference in cost between flying on a scheduled flight and a chartered flight is decreasing. The work on

the new terminal at Dabolim airport with several new aero bridges has begun in full swing and this will make it

possible to accommodate more aircrafts and passengers in Goa.

The advantage of having more foreign tourists is that they stay for an average of 10 days throughout the six months

winter season beginning in November and ending in April when rates at all Goa hotels are higher. Moreover, they

come to Goa to get away from the cold winters in Europe and not just for sightseeing. They are attracted to the

beautiful beaches of Goa and the friendliness of the people as well as the pollution-free environment. The Russians

and their neighbours from CISR countries are fond of Goa as an attractive holiday destination. The economies of

the UK and Germany are also looking brighter. Tourists from these countries plan long distance holidays every

year, but try to find a cheaper option in bad times. As such, it was not possible to obtain increases in the room rates

due to decrease in demand and increase in supply of rooms, both in the lower and higher category segments.

Moreover the strengthening of the Rupee has made our rates more expensive as our rates are quoted in Rupees.

3. THE INDIAN MARKET:

Domestic tourists to Goa are increasing by leaps and bounds.

The continuing improved performance of the Indian economy has led to more funds available with Corporates and

individuals for travel. Traditionally, individuals and families have always been inclined to travel overseas as the air

fares between Delhi and Singapore / Bangkok have been close to those prevailing between Delhi and Goa. The

new low-cost carriers with their new planes which are not yet permitted to fly overseas have been offering very

attractive fares of-late which have contributed to the increase in domestic travel to Goa. We, in India, like to travel

13


with our families on a holiday and the total cost of the holiday is an important consideration. Moreover, Goa offers

something for everyone and a choice of all classes of accommodation. More direct flights to Goa have been added

from such cities as Bangalore, Jaipur, Hyderabad and convenient connecting flights from Kolkata, Chennai etc.

Goa as a wedding venue is becoming more popular as Goa offers a cheaper option with more flexibility and

availability of rooms on auspicious dates.

Corporates have always preferred to hold their sales and strategy meetings in a carefree environment where there

are few distractions. Goa has been and will continue to be a favourite destination with its closeness to Mumbai, the

commercial capital of India and better air connectivity to the rest of India. Goa has the potential to become the

leading center for the Meetings Incentive Conventions and Exhibitions (MICE) market, if necessary, infrastructure is

improved.

4. RELATIVE ATTRACTIVENESS OF YOUR COMPANY’S RESORT:

Both the foreign and the Indian clients have appreciated the remarkable architecture of your Company’s hotel. The

large beach frontage on the white sands of Varca, the best beach in Goa, has been sought out more by the foreign

tourists who are connoisseurs of beaches. The golf course facing the ocean is another unique attraction. The layout

of your Company’s 5 Star Deluxe Beach Resort is ideal for foreign tourists who prefer to have a large swimming

pool with adequate surrounding deck area for sun bathing. The placement of a swim-up bar in the centre of one of

the largest swimming pools in Goa is an added unique feature. The swimming pool and separate children pool is

also a major attraction for corporate events and for families. The monsoon proof large Atrium lobby and the

additional conference hall will attract more domestic business in the rainy season.

The location of the resort very close to the main railway station is also a major advantage for domestic clients.

5. OPPORTUNITIES

Your Company’s hotel was built on one of the best beaches in Goa and close to the upmarket Leela and Taj

Exotica hotels.

The hotel is 20-years old and is well known as the first international hotel in Goa.

The additional land purchased adjoining the hotel can be merged with the existing complex to create new

facilities based on the demand.

The tourists from Russia are growing and the Ramada Caravela Beach Resort is well-known in that market

having received many awards from Russian operators.

The initial cost of building has been low and the hotel can effectively compete with new hotels and offer value for

money.

Ramada being a US brand and part of the WYNDHAM Group is likely to get more US visitors after the Obama

visit and the improvement in US partnerships.

Increase in flights from UAE is likely to benefit our hotel, as the Ramada brand is well established in UAE.

Ramada is becoming more known in India with more hotels opening in other Indian cities.

The Government of Goa has realized the importance of the tourism industry and is successfully lobbying for

funds from the Central Government to improve tourist infrastructure.

The airport capacity being increased will lead to more flights to Goa.

Hotels are now eligible for loans with a 15-year repayment facility. There will be increased opportunity to borrow

for any expansion due to the low debt to equity ratio.

Leisure hotels are seeing a larger growth in the MICE market (Meeting Incentive Convention and Exhibitions), as

it is difficult to take large groups overseas for such event – also, applies to the wedding market.

6. THREATS

Your Company has reduced the currency risk caused by the appreciation of the Rupee by quoting rates only in

Indian rupees.

Sri Lanka is likely to take away both European and domestic tourists as the civil war has ended.

There is always some possibility of law and order problems in some part of India, which may affect tourist flow

to Goa.

Goa is the only area where the Company has its business. Any adverse publicity for Goa can affect the Company’s

fortunes.

The price of aviation fuel may make air travel too expensive.

Any outbreak of an infectious disease in India may impact flow of tourists.

14



7. FINANCIAL RESULTS/OPERATIONAL PERFORMANCE

The financial results of your Company, on a standalone basis and on a consolidated basis are contained in the

Annual Report.

The operating revenues of the hotel unit increased by 8% from Rs.2,932 lakhs in F.Y. 2008-09 to Rs.3,173 lakhs for

the F.Y. 2009-10. The room revenue for the year has increased from Rs.1909 lakhs to Rs.2004 lakhs. The average

occupancy has increased from 53% to 67% while the average rate has decreased from Rs.5028 to Rs.4094. The

food and beverage income of hotel unit has increased by about 23%.

The Company had sold its flight catering unit in June 2008, which had made a turnover of Rs.136 lakhs in F.Y.

2008-09 till the date of its sale. The staff cost has gone up by 6.5% as retention of experienced staff is required in

the competitive environment. The EBITDA decreased by 37% from Rs.587 lakhs to Rs.371 lakhs mainly due to non

receipt of any dividend from the erstwhile casino subsidiary as against Rs.166 lakhs received during the previous

year.

The interest cost declined by almost 25% from Rs.166 to Rs.124 lakhs due to repayments of secured loans and

lower LIBOR during the year. Depreciation has remained almost same during the year in comparison with last year.

The profit from Ordinary Activities before Tax has remained almost the same except that there was no dividend from

the erstwhile subsidiary during the year as against a dividend of Rs.166 lakhs in the previous year.

The profit after tax increased mainly due to reversal of the provision made for diminution in the value of investment

as the sale of the said investment in the erstwhile subsidiary has been completed after the close of the financial

year.

8. INTERNAL CONTROL SYSTEM AND ADEQUACY:

The internal control systems set up in terms of financial reporting, efficiency of operations and compliance with

various rules; regulations, etc. are adequate and effective. In order to enhance the control process further, each

department is asked by the Management to justify variances and discrepancies pointed out by the Internal

Auditors.

The review of the adequacy of the internal control procedures and their implementation is closely monitored by

the Audit Committee of the Board of Directors.

9. HUMAN RESOURCES:

The Company has streamlined its recruitment and selection policies while giving emphasis on retaining the

trained staff. Continuous training is conducted during the off season period. Opportunities are given to those with

potential to move upwards in the organization.

Accordingly, the Company has formulated various programmes like the employees reward recognition programme

to encourage improved performance that results in greater guest satisfaction. This programme also helps

employees to contribute towards cost saving, productivity, efficiency and better customer service. The relations

with the employees during the year were very cordial.

10. CAUTIONARY STATEMENT

Comments made in this analysis describing the Company’s objectives, estimates may be “forward looking

statements” within the meaning of applicable securities law. These are based on assumptions over which the

Company exercises no controls. The Company cannot guarantee the accuracy nor can it be sure that the results

will occur. Significant factors that can affect the Company’s operations include domestic and international economic

conditions affecting supply and demand, law and order problems in India, change in tax and other Government

regulations, etc.




15


REPORT ON CORPORATE GOVERNANCE

CORPORATE PHILOSOPHY:

The Company subscribes fully to the basic principles of good corporate governance, the objective of which is to

increase productivity and competitiveness, thus maximize shareholder value. The Company continues to adhere

to the philosophy of good Corporate Governance and believes in values of transparency, professionalism,

accountability and is also committed to continually evolving and adopting appropriate Corporate Governance best

practices.

BOARD OF DIRECTORS:

Composition of the Board

The Board of Directors of the Company consists of Executive and Non-Executive Directors, of whom three are

Independent Directors who are experts in diverse fields. The Independent Directors comprise of 50% of the total

strength of the Board of Directors of the Company. The details are as follows:

Sr. Name of the Directors Category

No.

1. Mr. Sunder G. Advani, Chairman & Managing Director Promoter Executive Director

2. Mr. Haresh G. Advani, Executive Director Promoter Executive Director

3. Mr. K. Kannan Independent Non-Executive Director

4. Mr. Prakash V. Mehta Independent Non-Executive Director

5. Mr. Anil Harish Independent Non-Executive Director

6. Mrs. Menaka S. Advani Non-Executive Director

Directors’ Attendance

During the year 2009-10, 10 (Ten) Board Meetings were held on 25.04.2009, 12.06.2009, 10.07.2009, 30.07.2009,

13.08.2009, 25.09.2009, 30.10.2009, 25.11.2009, 19.01.2010 and 29.01.2010. Majority of the Directors attended

the Meetings. Leave of absence was granted to the Directors who expressed their inability to attend the

Meetings.

The details of attendance of Directors at the Board Meetings and at the 22

nd

Annual General Meeting as well as

the details of their other Directorships / Committee Chairmanships or Memberships are as follows:

Sr. Name of Directors Designation No. of Attendance No. of No. of other Committee

No. Board at the last Outside Chairmanships/Memberships

Meetings AGM held on Directorships (excluding the Company)

attended 25.09. 2009 # $

Chairmanship Membership

1. Mr. Sunder G. Advani Chairman &

Managing Direcor 10 Present None None None

2. Mr. Haresh G. Advani Executive

Director 10 Present None None None

3. Mr. K. Kannan Director 10 Present 7 2 6

4. Mr. Prakash V. Mehta Director 10 Present 8 None 7

5. Mr. Anil Harish Director 9 Present 13 5 7

6. Mrs. Menaka S. Advani Director 10 Present None None None

# Excludes Directorships contemplated under Section 278 of the Companies Act, 1956.

$ Includes only membership/s of Audit Committee and Shareholders/Investors Grievance Committee of other Public Limited Companies .

16



AUDIT COMMITTEE:

The composition of the Committee and particulars of meetings attended by the Members of the Audit Committee

are as under. During the year under review, 5 meetings of the Audit Committee were held on 25.04.2009,

30.07.2009, 13.08.2009, 30.10.2009 and 29.01.2010.

Sr. Name of the Member Designation No. of Committee Meetings attended

No. in the year under review

1. Mr. K. Kannan Chairman 5

2. Mr. Prakash V. Mehta Member 5

3. Mrs. Menaka S. Advani Member 5

The Audit Committee comprises of only Non-Executive Directors of which two-thirds are Independent Directors.

The constitution of the Audit Committee also meets the requirements of the provisions of Section 292A of the

Companies Act, 1956.

The Scope and broad terms of reference of the Audit Committee are as follows:

— To oversee the Company’s financial reporting process and disclosure of its financial information.

— To recommend the appointment of Statutory Auditors and fixation of remuneration.

— To review and discuss with the Auditors about internal control systems, the scope of audit including the

observations of the Auditors, adequacy of internal audit functions, major accounting policies, practices and

entries, compliance with accounting standards and with the Stock Exchanges and legal requirements

concerning financial statements and related party transactions, if any.

— To review the Company’s financial and risk management policies and discuss with the internal auditors.

— To follow-up significant findings thereon.

— To review the quarterly, half yearly and annual financial statements before submission to the Board of

Directors.

— To investigate into any matter relating to the items specified in Section 292A of the Companies Act, 1956, or

as may be referred to by the Board and for this purpose to seek any relevant information contained in the

records of the Company and also to seek professional advice, if necessary.

— To obtain external advice, legal or other professional advice.

— To secure attendance of outside parties with relevant expertise, if it considers necessary.

— To seek information from any employee

REMUNERATION COMMITTEE:

The composition of the Remuneration Committee and particulars of meetings attended by the Members of the

Remuneration Committee are as under. The Committee approves the annual salaries, performance commission,

service agreements and other employment conditions of the Executive Directors and relatives of the Directors.

During the year under review one Meeting of the Remuneration Committee was held on 12.06.2009.

Sr. Name of the Member Designation No. of Committee Meetings attended

No. in the year under review

1. Mr. K. Kannan Chairman 1

2. Mr. Anil Harish Member 1

3. Mrs. Menaka S. Advani* Member 0

4. Mr. Prakash V. Mehta Member 1

* Resigned w.e.f. 4/11/2010

17


The scope and broad terms of reference of the Remuneration Committee are as follows:

— To review, assess and recommend the appointment of Executive and Non-Executive Directors and relative

of Directors from time to time;

— To periodically review the remuneration package of the Executive Directors, relative of Director and recommend

suitable revision;

— To recommend compensation to the Non-Executive Directors in accordance with the Companies Act, 1956.

DETAILS OF REMUNERATION PAID TO THE EXECUTIVE DIRECTORS DURING THE YEAR ENDED

MARCH 31, 2010.

Sr. Name of the Director Salary Perquisites Commission Service Notice

No. (Basic + HRA) Tenure Period

Rs. Rs. Rs.

1. Mr. Sunder G. Advani 48,00,000 5,00,000 0 5 years 3 months

Chairman & Managing Director

2. Mr. Haresh G. Advani 29,95,200 3,12,000 0 5 years 3 months

Executive Director

DETAILS OF SITTING FEES PAID TO NON-EXECUTIVE DIRECTORS DURING THE YEAR ENDED

MARCH 31, 2010.

Name of the Director Mr. K. Kannan Mr. Prakash V. Mehta Mr. Anil Harish Mrs. Menaka S. Advani

Sitting Fees Paid (Rs.) 3,20,000 3,20,000 2,00,000 3,00,000

SHAREHOLDERS/INVESTORS GRIEVANCE COMMITTEE:

The Committee comprises of the following two Non-Executive Directors and two Executive Directors:

Sr. Name of the Member Designation

No.

1. Mrs. Menaka S. Advani Chairperson & Non-Executive Director

2. Mr. Sunder G. Advani Member & Managing Director

3. Mr. Haresh G. Advani Member & Executive Director

4. Mr. K. Kannan Member & Non-Executive Independent Director

The Company has constituted a Shareholders/Investors Grievance Committee to look into the Redressal of

complaints of shareholders and investors relating to transfer of shares, non-receipt of Annual report, dividends

etc. The Chairperson of the Committee is a Non-Executive Director.

The Board has designated Mr. Kumar Iyer, Company Secretary as the Compliance Officer.

The Company Secretary acts as the Compliance Officer and regularly interacts with the Registrar & Share

Transfer Agents (RTA) to ensure that the complaints/ grievances of the shareholders/investors are attended to

without delay and where deemed expedient, the complaints are referred to the Chairperson of the Committee or

discussed at its meetings.

During the year under review one meeting of the Shareholders/Investors Grievance Committee was held on 30

th

October, 2009.

During the year under review, the Company received 27 shareholder complaints, which were promptly responded

to and resolved to the satisfaction of the respective shareholders and as on 31.03.2010 there were no pending

complaints.

18



SHARE TRANSFER COMMITTEE:

The Committee comprises of the following two Executive Directors:

Sr. No. Name of the Member Designation

1. Mr. Sunder G. Advani Member & Managing Director

2. Mr. Haresh G. Advani Member & Executive Director

The Share Transfer Committee looks into the approval of share transfers, transmissions, issue of duplicate share

certificates etc.

GENERAL BODY MEETINGS AND POSTAL BALLOT:

Annual General Meetings held during the last 3 years

Particulars FY 2008-09 FY 2007-08 FY 2006-07

Date 25.09.2009 28.08.2008 26.09.2007

Location ‘Rangaswar’, 4th Floor, Kamalnayan Bajaj Hall, Seminar Hall of K.C. College

Chavan Centre, Ground Floor, Bajaj Bhavan, Dinshaw Wachha Road,

Gen. Jagannath Bhosale Marg, Jamnalal Bajaj Marg, Churchgate,

Nariman Point, Nariman Point, Mumbai-400 020

Mumbai-400 021 Mumbai-400 021

Time 11.00 a.m. 11.00 a.m. 3.00 p.m.

All the Resolutions as set out in the respective notices were passed unanimously by a show of hands by the

Members of the Company present at the said Annual General Meetings.

The Company has not conducted any business through postal ballot during the year under review.

DISCLOSURES:

➢ During the year, the Company has not entered into any material significant related party transactions with

its Directors/Promoters that may have potential conflict with the interest of the Company at large. As

required by the Accounting Standard AS-18, the details of Related Party Transactions are given in the

Notes to the Accounts.

➢ There was no instance of non-compliance on any matter relating to the capital markets during the past three

years.

➢ The Company has complied with all the mandatory requirements of Clause 49 relating to Corporate

Governance except Clause 49 (III) (i) due to the resignation of the Company’s Independent Director from

the board of it’s subsidiary Advani Pleasure Cruise Company Private Limited (APCCPL) w.e.f.12

th

June

2009. The said APCCPL has ceased to be the Company’s subsidiary w.e.f. 20

th

September 2010.

➢ Pursuant to the provisions of Sub-Clause V of Clause 49 of the Listing Agreement with the Stock

Exchanges, the Chairman & Managing Director (CMD) and the General Manager Finance (CFO) have

issued a Certificate to the Board, for the financial year ended March 31, 2010.

MEANS OF COMMUNICATION:

➢ The Company communicates with the shareholders at large through its Annual Report, publication of

financial results, press releases and by submission and filing of reports and returns with the stock

exchanges and all statutory bodies.

➢ The Financial results are usually published in the ‘Business Standard’ and/or ‘The Free Press Journal’

(in English) and ‘Navshakti’ or ‘Sakal’ (in Marathi).

➢ Management Discussion and Analysis Report forms part of this Annual Report.

19


STATUS OF COMPLIANCE WITH NON-MANDATORY REQUIREMENTS:

(a) Remuneration Committee:

The Company has a Remuneration Committee, the details whereof are furnished above in this Report.

(b) Tenure of Independent Directors:

The Board has not laid down any specific maximum tenure for the Independent Directors.

(c) Training of Board Members:

The Directors of the Company are senior professionals of high standing and experience in corporate sector

and the industry in which the Company operates. They are being kept informed of the business model,

growth factors and the risk profile of the Company. Hence, the Company has not laid down any formal

training mechanism for its Directors.

(d) Whistle Blower Policy:

Though the Company does not have a formal Whistle Blower Policy, the Company takes cognizance of

complaints made and suggestion given by the employees and others. Even anonymous complaints are

looked into and whenever necessary, suitable corrective steps are taken. The Company promotes ethical

behaviour in all its business activities. All employees are free to approach the Audit Committee to raise their

concern relating to fraud, malpractice or any other activity or event which is against the Company’s interest.

GENERAL SHAREHOLDERS INFORMATION:

➢ 23rd Annual General Meeting

Date & Time : Wednesday, December 15, 2010 at 11.00 a.m.

Venue : Rangaswar, 4th Floor, Chavan Centre, General Jagannath Bhosale Marg,

Nariman Point, Mumbai - 400 021

➢ Financial Calendar

Results for the Quarter ended June 30, 2010 August 12, 2010

Results for the Quarter ending Sept. 30, 2010 November 4, 2010

Annual General Meeting December 15, 2010

Results for the Quarter ending Dec. 31, 2010 Second week of February, 2011

Results for the Quarter ending March 31, 2011 Second week of May, 2011

➢ Date of Book Closure

From December 11, 2010 to December 15, 2010 (both days inclusive) for the purpose of payment of

Dividend for the year 2009-10 and Annual General Meeting for the financial year ended March 31, 2010.

➢ Listing on Stock Exchange

Bombay Stock Exchange Limited (Stock Code – 523269)

National Stock Exchange of India Limited (Stock Symbol – ADVANIHOTR)

Delhi Stock Exchange Association Limited (Stock Code – 5924)

➢ Market Price Data

The high and low Market Price of the Company’s shares traded on the Bombay Stock Exchange Limited,

during each month in the financial year ended March 31, 2010 are given below.

Month High Low Close Price Month High Low Close Price

Rs. Rs. Rs. Rs. Rs. Rs.

April’ 09 31.85 26.35 27.55 October’09 61.15 54.55 56.50

May’ 09 39.45 27.35 39.45 November’09 59.55 49.20 50.10

June’ 09 50.00 37.10 40.85 December’09 57.00 49.25 55.10

July’ 09 41.85 36.00 38.25 January’10 64.90 50.00 53.10

August’ 09 44.10 32.00 44.10 February’10 56.45 47.00 49.80

September’ 09 71.65 46.30 59.25 March’10 50.00 38.50 40.10

20



➢ Performance of Company’s share price in comparison to BSE Sensex

AHRIL Share Price / BSE Sensex From April 2009 to March 2010

17528

16430

16358

17465

16926

15896

17 12 7

15667

15670

14625

114 0 3

14494

40.10

49.80

53.10

55.10

50.10

56.50

59.25

44.10

38.25

40.85

39.45

27.55

0

5,000

10,000

15,000

20,000

Apr'09 May'09 June'09 July'09 Aug'09 Sept'09 Oct'09 Nov'09 Dec'09 Jan'10 Feb'10 Mar'10

BSE Sensex

10

60

110

AHRIL Closing Price at the end of month (Rs.)

BSE Sensex AHRIL Share Prices

➢ Registrar and Share Transfer Agent

Datamatics Financial Services Limited

(Unit: Advani Hotels & Resorts (India) Limited)

Plot No. B5, Part B, Cross Lane,

MIDC Marol, Andheri (East), Mumbai - 400 093.

Telephone No: (022) 66712237 Fax No: (022) 66712209

Contact Person: Mr. Salim Shaikh

➢ Share Transfer System

The Share Transfer Committee constituted by the Board considers and approves all shares related issues

like transfer, transmission, issue of duplicate shares, dematerialization, etc. The transfer formalities are

attended to on fortnightly basis by Datamatics Financial Services Ltd. All the share certificates are returned

within 21 days from the date of lodgment provided the transfer instruments are valid and complete in all

respects.

➢ Distribution of Shareholding as on March 31, 2010

Range No. of % of No. of % of

(No. of Shares) Shareholders Total Shares Total

1-500 3,630 66.85 13,13,722 2.84

501-1000 926 17.05 8,66,822 1.88

1001-2000 396 7.29 6,31,995 1.37

2001-3000 217 4.00 5,57,051 1.20

3001-4000 46 0.85 1,69,447 0.37

4001-5000 90 1.66 4,41,538 0.96

5001-10000 55 1.01 4,25,977 0.92

10001 and above 70 1.29 4,18,12,698 90.46

Total 5,430 100.00 4,62,19,250 100.00

21


➢ Category of Shareholding as on March 31, 2010

Category No. of Shares % of Total

Promoters & Promoter Group 2.29,91,579 49.74

Mutual Funds 58,500 0.13

Bank/FIs/Insurance Companies 2,500 0.01

Foreign Institutional Investors 1,36,982 0.29

Corporate Bodies Corporate 1,75,29,788 37.93

NRIs/OCBs 7,50,542 1.62

General Public 47,49,359 10.28

Total 4,62,19,250 100.00

➢ Shares held by Non-Executive Directors

Sr. No. Non-Executive Directors No. of Shares held as on 31-03-2010

1. M. K. Kannan NIL

2. Mr. Prakash V. Mehta 500

3. Mr. Anil Harish NIL

4. Mrs. Menaka S. Advani 13,05,630

➢ Demat of shares and liquidity

The Company’s shares are held in the dematerialized form by National Securities Depository Limited and

the Central Depository Services (India) Limited under the ISIN No. INE199C01026. Out of the total Equity

Share Capital, 93.50% is held in dematerialised form as on March 31, 2010. Trading in Equity Shares of the

Company is permitted only in dematerialised form w.e.f. 28.05.2001 as per the Notification issued by the

SEBI.

➢ As on date the Company has not issued GDRs/ADRs/Warrants or any other convertible instruments.

➢ Location

Hotel

Ramada Caravela Beach Resort

Varca Beach, Varca Village, Salcette, Goa – 403 721

Telephone No: (0832) 6695000

➢ Address for Correspondence

Advani Hotels & Resorts (India) Limited

1009/1010, Dalamal Tower,

211, Nariman Point, Mumbai – 400 021

Telephone No: (022) 2285 0101 Fax No: (022) 2204 0744

Email ID: [email protected]

CODE OF CONDUCT:

The Board of Directors of the Company has laid a code of conduct for the Directors and senior management. The

code of conduct is posted on the Company’s website. All Directors and designated personnel in the senior

management have affirmed compliance with the code for the year under review.



Date: November 4, 2010. Chairman & Managing Director

22



AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE

To the Members of

Advani Hotels & Resorts India Limited

We have examined the compliance of Corporate Governance of ADVANI HOTELS & RESORTS (INDIA)

LIMITED for the year ended 31

st

March 2010 as stipulated in Clause 49 of the Listing Agreement of the said

Company with stock exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination

was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of

the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial

statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us and the

representations made by the Directors and the Management, we certify that the Company has complied with the

conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement except Clause 49

(III) (i) due to the resignation of the Company’s independent director from the board of it’s subsidiary Advani

Pleasure Cruise Company Private Limited (APCCPL) w.e.f. 12

th

June 2009. The said APCCPL has ceased to be

the Company’s subsidiary w.e.f. 20

th

September 2010 .

We state that no investor grievances are pending for a period exceeding one month against the Company as per

the records maintained by the Share Transfer and Shareholders / Investors Grievance Committee.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the

efficiency or effectiveness with which the Management has conducted the affairs of the Company.

For J.G. VERMA & CO.


Registration No. 111381W

J.G. VERMA

Place: Mumbai Partner

Date: November 4, 2010 Membership No. 5005

23


AUDITORS’ REPORT TO THE MEMBERS

We have audited the attached Balance Sheet of ADVANI HOTELS & RESORTS (INDIA) LIMITED, as at

31

st

March, 2010 and also the Profit and Loss Account and the Cash Flow Statement of the Company for

the year ended on that date annexed thereto. These financial statements are the responsibility of the

Company’s management. Our responsibility is to express an opinion on these financial statements based on

our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those standards

require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements

are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the

amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles

used and significant estimates made by management, as well as evaluating the overall financial statement

presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government of India in terms

of sub-section (4A) of Section 227 of the Companies Act, 1956, and on the basis of such checks as we

considered appropriate, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5

of the said Order.

Further to our comments in the Annexure referred to above, we report that:

1. We have obtained all the information and explanations, which to the best of our knowledge and belief were

necessary for the purpose of our audit.

2. In our opinion, proper books of account as required by law have been kept by the Company so far as

appears from our examination of those books.

3. The Balance Sheet, Profit and Loss Account and Cash Flow Statement, dealt with by this Report, are in

agreement with the books of account.

4. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the

applicable Accounting Standards referred to in sub-section (3-C) of Section 211 of the Companies Act,

1956.

5. On the basis of written representations received from the Directors of the Company and taken on record by

the Board of Directors, we report that none of the directors of the Company is disqualified as on 31

st

March,

2010 from being appointed as a director under clause (g) of sub-section (1) of Section 274 of the


6. In our opinion and to the best of our information and according to the explanations given to us, the said

accounts, read together with the significant accounting policies stated in Schedule “K” and the other

notes appearing thereon, give the information required by the Companies Act, 1956, in the manner so

required and give a true and fair view in conformity with the accounting principles generally accepted in

India:

(i) in the case of the Balance Sheet, of the state of the affairs of the Company as at 31st March, 2010;

(ii) in the case of Profit and Loss Account, of the profit of the Company for the year ended on that date;

and

(iii) in the case of Cash Flow Statement, of the cash flows of the Company for the year ended on that

date.

For J.G. VERMA & CO.



J.G. VERMA

Place: Mumbai Partner

Date: November 4, 2010 Membership No. 5005

24



ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE

1. (a) The Company has maintained proper records showing full particulars including quantitative details and situation

of its fixed assets.

(b) The fixed assets were physically verified during the year and after the close of the year by the management. No

material discrepancies were noticed by the Management on such physical verification as compared to book

records.

(c) In our opinion, the Company has not disposed off a substantial part of its fixed assets during the year and the

going concern status of the Company is not affected.

2. (a) The inventories have been physically verified during the year by the management. In our opinion, the frequency

of verification is reasonable;

(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate

in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the inventory records of the Company, we are of the opinion that the

Company is maintaining proper records of inventory. Discrepancies, which were noticed on physical verification

of inventory as compared to book records, were not material and have been properly dealt with in the books of

account.

3. (a) The Company has not granted any loan or advance to companies, firms or other parties covered in the Register

maintained under section 301 of the Companies Act, 1956 except an interest free advance of Rs. 90,908,724/-(maximum balance Rs. 119,416,887/-) being amount due on current account from one of its subsidiaries, out of

which Rs. 25,315,947/- is considered doubtful of recovery and provided for.

(b) The terms and conditions of above interest free advance given are prima facie not prejudicial to the interest of

the Company except to the extent indicated in 3(a) above.

(c) According to the information and explanations given to us, there is no stipulation for repayment of the above

advance given by the Company to its subsidiary. However, the entire amount except Rs. 25,315,947/- which is

considered doubtful by the Management has since been recovered after the close of the year.

(d) In view of our comment in paragraph 3 (c) above, clause III (d) of paragraph of the aforesaid Order is not

applicable to the Company.

(e) The Company has not taken any loan, secured or unsecured, during the year from companies, firms and other

parties covered in the Register maintained under Section 301 of the Companies Act, 1956. In view of the same,

our comments on clauses III (f) and (g) of paragraph (4) of the aforesaid Order are not applicable to the

Company.

4. In our opinion, and according to the information and explanations given to us, there is an adequate internal control

system commensurate with the size of the Company and the nature of its business for the purchase of inventory and

fixed assets and for the sale of goods and services. During the course of our audit, no major weaknesses have

been noticed in the internal control system.

5. To the best of our knowledge and belief and according to the information and explanations given to us, (a) the

particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered

in the register required to be maintained under that section; and (b) such transactions exceeding the value of

Rupees five lacs in respect of any party during the year have been made at prices, which are reasonable having

regard to prevailing market prices at the relevant time.

6. The Company has not accepted any deposits from the public within the meaning of Section 58A 58AA and other

provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975. Hence the

clause (vi) of the Order is not applicable to the Company.

7. In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed

by the Management have been commensurate with the size of the Company and nature of its business.

8. The maintenance of cost records has not been prescribed by the Central Government under Section 209(1)(d) of

the Companies Act, 1956 for any of the products of the Company.

9. (a) According to the records of the Company and the information and explanations given to us, the Company has

been generally regular in depositing undisputed statutory dues, including provident fund, investor education &

protection fund, employees’ state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise

duty, cess and other applicable statutory dues with the appropriate authorities during the year . The Company’s

operations do not give rise to any excise duty liability.

25


(b) According to the information and explanations given to us, there are no undisputed amounts payable in respect

of undisputed statutory dues as at 31

st

March, 2010 which were outstanding for a period of more than six months

from the date they became payable.

(c) According to the information and explanations given to us and on the basis of our examination of the documents

and records, there are no cases of non-deposit with appropriate authorities of disputed dues of income-tax,

sales-tax, wealth tax, service tax, customs duty, excise duty, cess except the following:

Name of the Nature of dues Amount Period to which Forum where the

statute (Rs. in lakhs) the amount dispute is

relates pending

Central Sales Tax Act, Central Sales tax 12.16 Asst. Years Asst. Commissioner

1956 2005-06 to of Commercial Tax

2006-07 (Value Added Tax)

Income-tax Act, 1961 Income-tax on 10.66 Asst. Years Income-Tax

completion of 2005-06 Appellate Tribunal

regular assessment

10. The Company neither had accumulated losses at the end of the financial year nor incurred any cash losses either

during the financial year or preceding financial year.

11. According to the records of the Company examined by us and the information and explanations given to us, the

Company has not defaulted in repayment of dues to banks as per loan agreements or extended due dates There

were no borrowings from any financial institutions or by way of debentures.

12. According to the information and explanations given to us, the Company has not granted loans and advances on

the basis of security by way of pledge of shares, debentures and other securities.

13. The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund / societies are not applicable

to the Company.

14. The Company is not a dealer or trader in shares, securities, debentures, and other investments.

15. According to the information and explanations given to us, the Company has given guarantee for loan taken by its

one of the subsidiaries from a bank, the terms and conditions whereof, in our opinion, are not prima facie prejudicial

to the interest of the Company. The said guarantee has since been extinguished after the close of the year.

16. In our opinion on an overall basis, and according to the information and explanations given to us, the term loans

taken during the year were applied for the purpose for which the loans were obtained.

17. According to the information and explanations given to us and on an overall examination of the Balance sheet of

the Company, we report that funds raised on short term basis have prima facie, not been used during the year for

long term investment.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the Register

maintained under section 301 of the Companies Act, 1956.

19. The Company has not issued any debentures during the year under audit. Accordingly, the provisions of clause

(XIX) of paragraph 4 of the aforesaid Order are not applicable to the Company.

20. The Company has not raised money by public issue during the year. Accordingly, the provisions of clause (XX) of

paragraph 4 of the aforesaid Order are not applicable to the Company.

21. To the best of our knowledge and belief, and according to the information given to us, no fraud on or by the

Company was noticed or reported during the year.

For J.G.VERMA & CO.



J.G.VERMA

Partner

Mumbai, November 4, 2010 Membership No. 5005

26



BALANCE SHEET AS AT 31ST MARCH, 2010

Previous Year

SOURCES OF FUNDS: Schedule Rupees Rupees Rupees

SHAREHOLDERS’ FUNDS:

Share Capital.................................................................... ‘A’ 92,438,500 92,438,500

Reserves and Surplus ...................................................... ‘B’ 200,437,464 198,137,495

292,875,964 290,575,995

LOAN FUNDS:

Secured Loans ................................................................. ‘C’ 95,952,256 112,836,915

Unsecured Loans............................................................. ‘D’ 61,452,388 12,580,644

157,404,644 125,417,559

DEFERRED TAX LIABILITY (Net) ...................................... 53,561,105 50,364,744

TOTAL................ 503,841,713 466,358,298

APPLICATION OF FUNDS:

FIXED ASSETS: ‘E’

Gross Block (At cost) ............................................................. 666,129,004 669,775,597

Less: Depreciation ............................................................ 244,862,538 225,149,888

Net Block ........................................................................... 421,266,466 444,625,709

Capital Work in Progress ................................................. 363,682 1,785,841

421,630,148 446,411,550

INVESTMENTS ..................................................................... ‘F’ 22,285,000 100,000

FOREIGN CURRENCY MONETARY ITEMS TRANSLATION

DIFFERENCE: ....................................................................... 126,174 1,802,657

CURRENT ASSETS, LOANS AND ADVANCES: ‘G’

Interest accrued ................................................................ 14,755 —

Stock .................................................................................. 13,598,464 15,916,533

Sundry Debtors ................................................................. 21,364,352 17,497,077

Cash and Bank Balances ................................................ 8,840,212 14,408,888

Loans and Advances ....................................................... 92,688,368 38,679,658

136,506,151 86,502,156

LESS: CURRENT LIABILITIES AND PROVISIONS: ‘H’

Current Liabilities............................................................. 65,537,428 63,045,329

Provisions .......................................................................... 11,168,332 5,412,736

76,705,760 68,458,065

NET CURRENT ASSETS ..................................................... 59,800,391 18,044,091

TOTAL................ 503,841,713 466,358,298

SIGNIFICANT ACCOUNTING POLICIES AND

NOTES ON ACCOUNTS...................................................... ‘K’

As per our report of even date Signature on the above Balance Sheet and Schedules “A” to “H” and “K”

For and on behalf of the Board

FOR J. G. VERMA & CO. SUNDER G. ADVANI HARESH G. ADVANI

Chartered Accountants Chairman & Managing Director Executive Director

J. G. VERMA KUMAR IYER SHANKAR KULKARNI

Partner Company Secretary General Manager – Finance (CFO)

Mumbai, November 4, 2010

27


PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010

Previous Year

Schedule Rupees Rupees Rupees

INCOME:

Rooms, Restaurant, Bar, Banquets, Flight Catering

and Other Services..................................................................... ‘I’ 316,431,527 305,738,143

Other Income.............................................................................. ‘I’ 7,536,532 30,978,274

Total................................................................................... 323,968,059 336,716,417

EXPENDITURE:

Operating and General Expenses ............................................. ‘J’ 278,220,801 269,440,925

Managerial Remuneration (Refer Note 15(i)(a) of Part B of Shedule ‘K’) 8,607,200 8,553,738

Depreciation ................................................................................. 24,898,280 25,086,088

Interest:

(a) On Fixed Loans ............................................................... 9,944,553 14,354,585

(b) On Other Loans ............................................................... 2,415,611 2,230,328

12,360,164 16,584,913

Total Expenditure ............................................................ 324,086,445 319,665,664

PROFIT/(LOSS) BEFORE EXCEPTIONAL ITEMS .................... (118,386) 17,050,753

Less: Exceptional Items (Net) ......................................................... ‘J-1’ 14,704,285 (22,234,243)

PROFIT/(LOSS) BEFORE TAXATION......................................... 14,585,899 (5,183,490)

Less: Provision for taxation

Current tax.................................................................................. 3,700,000 7,700,000

Fringe Benefits tax ...................................................................... — 1,158,000

Deferred tax Liability/(Asset) ...................................................... 3,196,361 (14,556,203)

6,896,361 (5,698,203)

7,689,538 514,713

PROFIT FOR THE YEAR AFTER TAX

Profit brought forward ................................................................. 36,192,312 64,368,446

Less: Adjustment on adoption of AS-11 Notification ...................... — 8,690,847

36,192,312 55,677,599

43,881,850 56,192,312

PROFIT AVAILABLE FOR APPROPRIATION:

Less: Appropriations made:

Proposed Dividend ................................................................ 4,621,925 —

Tax on Dividend ..................................................................... 767,644 —

5,389,569 —

Transfer to General Reserve — 20,000,000

5,389,569 20,000,000

Balance Profit carried to Balance Sheet ......................................... 38,492,281 36,192,312

Basic and Diluted Earnings Per Share (In Rs.) ........................ 0.17 0.01

Face value Rs. 2/- per share (Refer note 13 of Part B of Schedule “K”)

SIGNIFICANT ACCOUNTING POLICIES AND

NOTES ON ACCOUNTS .......................................................... ‘K’

As per our report of even date Signature on the above Profit and Loss Account and Schedules “I” to “K”







28



CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010

31st March, 2010 31st March, 2009

Rupees Rupees

A. CASH FLOW FROM OPERATING ACTIVITIES:

Net Profit/(Loss) before tax and adjustments .................................................................... 14,585,899 (5,183,490)

Adjustments for:

Depreciation .......................................................................................................................... 24,898,280 25,086,088

Loss on sale of assets........................................................................................................ 1,286,652 2,187,818

Profit on sale of Flight kitchen ............................................................................................. — ( 37,544,603)

Duty Free Entitlement .......................................................................................................... — (1,310,285)

Provision for doubtful debts ................................................................................................. 166,977 1,945,163

Provision for incomplete Jaipur Project .............................................................................. — 11, 958,615

Provision for diminution in value of investment/(written back) .......................................... (22,185,000) 22,185,000

Provision for doubtful Loans & Advances/(written back) .................................................. (319,285) 25,635,231

Provision for liability for refund of Jetty Deposit................................................................ 7,800,000 —

Provision for retirement benefits/(written back) ................................................................. 366,027 (1,440,805)

Interest and Dividend Income ............................................................................................ (165,552) (17,925,978)

Interest ............................................................................................................................... ... 12,360,164 16,584,913

Amortisation of Foreign Exchange Difference.................................................................... 126,174 901,328

Operating profit before working capital changes: .................................................... 38,920,336 43,078,995

Adjustments for:

Trade and other receivables............................................................................................... (4,034,252) 25,072,586

Inventories ............................................................................................................................ 2,318,069 2,517,631

Trade payable ....................................................................................................................... 2,727,531 (12,719,754)

Cash generated from operations: ................................................................................. 39,931,684 57,949,458

Direct Taxes paid (Net of refund received) ....................................................................... (9,215,598) (48,294,910)

Cash Flow before Extraordinary Items: ....................................................................... 30,716,086 9,654,548

Extraordinary Items.............................................................................................................. — —

Net cash from Operating Activities: ............................................................................. 30,716,086 9,654,548

B. CASH FLOW FROM INVESTMENT ACTIVITIES:

Purchase of Fixed Assets (including Capital Work-in-progress): .................................... (10,617,455) (17,011,269)

Increase in Loans, Advances and deposits ....................................................................... (55,944,304) (40,619,232)

Disposal of Investment ........................................................................................................ — 100,500

Net sale consideration of Flight Kitchen Unit ..................................................................... — 197,785,026

Sale of Fixed Assets ............................................................................................................ 427,443 133,266

Interest and Dividend Received .......................................................................................... 165,552 17,942,888

Net Cash (used in)/ from Investing Activities ............................................................ (65,968,764) 158,331,179

C. CASH FLOW FROM FINANCING ACTIVITIES:

Proceeds from Borrowings:

Term Loans .......................................................................................................................... 11,344,085 3,593,946

Unsecured Loans................................................................................................................. 51,250,000 7,912,451

Cash Credits ......... ................................................................................................................ 16,155,572 —

Repayment of :

Term Loans .......................................................................................................................... (34,214,464) (104,334,592)

Cash Credit ........................................................................................................................... — (18,875,702)

Unsecured Loans................................................................................................................. (2,378,256) (2,642,402)

Interest Paid .................................................................................................................. ........ (12,449,920) (17,441,520)

Dividend paid for earlier years including Dividend Tax ..................................................... (23,015) (29,258,614)

Net Cash (used in)/from Financing Activities ............................................................ 29,684,002 (161,046,433)

NET INCREASE/(DECREASE) IN CASH & CASH EQUIVALENTS (A+B+C) ................... (5,568,676) 6,939,294

CASH & CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR (Opening Balance) .. 14,408,888 7,469,594

CASH & CASH EQUIVALENTS AT THE CLOSING OF THE YEAR (Closing Balance) ... 8,840,212 14,408,888

As per our report of even date Signature on the above Cash Flow Statement







29


SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31ST MARCH, 2010

Previous Year

Rupees Rupees Rupees

SCHEDULE “A” : SHARE CAPITAL

AUTHORISED:

99,750,000 Equity Shares of Rs. 2/- each ...................................... 199,500,000 199,500,000

5,050,000 Preference Shares of Rs. 10/- each .............................. 50,500,000 50,500,000

TOTAL 250,000,000 250,000,000

ISSUED, SUBSCRIBED AND PAID UP:

46,219,250 Equity Shares of Rs. 2/- each, fully paid up .................. 92,438,500 92,438,500

TOTAL 92,438,500 92,438,500

SCHEDULE “B” : RESERVES AND SURPLUS

CAPITAL RESERVE:

As per last accounts:

Subsidy received under the Central Investment subsidy scheme

of the Government of Goa ............................................................... 2,500,000 2,500,000

Share Premium Account .................................................................. 47,089,900 47,089,900

Profit on re-issue of forfeited shares ............................................... 14,000 14,000

Surplus being capital gain on sale of flight catering unit ............ 82,341,283 82,341,283

131,945,183 131,945,183

CAPITAL REDEMPTION RESERVE

As per last accounts ......................................................................... 10,000,000 10,000,000

GENERAL RESERVE

As per last accounts:........................................................................ 20,000,000 6,390,000

Less: Adjustment on adoption of AS-11 Notification .................... — 6,390,000

20,000,000 —

Add: Set aside this year ................................................................... — 20,000,000

20,000,000 20,000,000

SURPLUS IN PROFIT AND LOSS ACCOUNT 38,492,281 36,192,312

TOTAL 200,437,464 198,137,495

SCHEDULE “C” : SECURED LOANS

FROM BANKS:

1. Term Loan (By way of ECB) (Note 1) ....................................... 24,601,300 40,760,000

2. New Foreign Currency Term Loan for renovation (Note 1) .... 23,821,562 41,776,867

3. Medium Term Loans (Note 2) .................................................... 3 201

4. Term Loan from Bank (Note 2) .................................................. 10,594,085 —

5. Foreign Currency Term Loan ( Note 2) ..................................... 7,083,138 16,725,912

6. Cash Credits (Note 3) ................................................................. 29,729,507 13,573,935

7. Interest accrued and due ............................................................ 122,661 —

TOTAL 95,952,256 112,836,915

NOTES:

1. Loans under items No. (1) and (2) from Bank of Baroda are secured by (i) a mortgage executed in favour of Bank of Baroda by

deposit of title deeds of all the immovable properties of the Company situated at Village Varca, Salcette, Goa, both present an d

30



future, and (ii) a first charge by way of hypothecation of all the movables (except book debts) including machinery, spares, to ols

and accessories, present and future (subject to the charges created in favour of the Company’s Bankers on its stocks of raw

material, consumable stores, etc. for working capital borrowings) and (iii) personal guarantees of the Managing Director and

Executive Director. The balance in Loan Account under item No. (1) and (2) is after adjustment of foreign exchange gain of Rs.

8,786,483/- (Prev. year Rs. 20,245,354/-) arose during the year.

2. Loans under item No. (3) to (5) from Bank of India is secured by way of first charge on (i) immovable properties of the Company

situated at Village Varca, Salcette, Goa, both present and future and (ii) all the movable assets of the Company including

machinery, spares, tools and accessories, present and future and by way of personal guarantees of the Managing Director and

Executive Director. The balance in Loan under item No. (3) is after adjustment of foreign exchange gain of Rs. 1,506,030/- (Prev.

year Rs. 4,804,786/-) arose during the year.

3. Cash Credits from Bank of Baroda and Bank of India under item No. (6) are secured by hypothecation of Company’s inventories

of stocks, stores and provisions, goods in transit and other moveable items and book debts, both present and future.

4. Amount payable within one year Rs. 58,505,000/- (Prev. Year Rs. 43,247,000/-).

Previous Year

Rupees Rupees

SCHEDULE “D” : UNSECURED LOANS

Vehicle Loans .................................................................................. 7,426,548 9,729,804

From erstwhile Collaborators .......................................................... 14,840 14,840

Security Deposits from a Subsidiary Company ............................ 1,186,000 1,186,000

Security Deposits from Shops and Others .................................... 1,575,000 1,650,000

Short term loan from Delta Corps Ltd. (since repaid) .................. 51,250,000 —

TOTAL 61,452,388 12,580,644


NOTES:

1. Capital Work in Progress includes:

(a) Advances of Rs. Nil (Prev. Year Rs. 7,253,400/-) and Pre-Operative Expenses of Rs Nil (Prev. Year Rs. 4,705,215/-) paid and

incurred on proposed Jaipur Hotel Project, which is considered doubtful. These amounts are net of Provision of Rs. Nil (Prev. Y ear

Rs. 11,98,615/-) made for such doubtful project. (Refer Schedule J-1) .

(b) Pre-Operative Expenses include : Payment of Legal and Consultants Fees- Rs. Nil (Prev. Year Rs. 1,667,135/-); Travelling and

Conveyance of Rs. Nil (Prev. Year 986,271) and Security and other Expenses of Rs. Nil (Prev. Year 2,051,809/-).

(c) Expenses and advances of Rs. 363,682/- (Prev. year Rs. 1,785,840/-) incurred on renovation/refurbishing of the hotel, pendin g

completion of the work, (pending allocation).

2. Additions to Fixed Assets include Rs. NIL (Prev. Year Rs.7,265,307/-) being loss due to fluctuation in foreign currency rates capitalised

in accordance with AS-11 Notification.

3. Deductions from Fixed Assets include foreign exchange gain of Rs 8,786,483/- (Previous year Rs Nil) due to fluctuation of for eign currency

rates in accordance with AS-11 Notification.

4. Includes Rs. 23,757/- (Previous Years Rs. Nil) relating to earlier years.

SCHEDULE “E” : FIXED ASSETS (Amount in Rupees)

1 Land (Free hold) 23,626,546 — — 23,626,546 ————23,626,546 23,626,546

(Including

landscaping)

2 Buildings 379,974,250 322,285 4,638,755 375,657,780 98,529,912 9,455,412 (24,575) 108,009,899 267,647,881 281,444,338

3 Plant and Machinery 126,336,532 10,164,765 8,590,875 127.910,422 52,195,397 6,773,807 4,481,986 54,487,218 73,423,204 74,141,135

4 Furniture, Fixtures 118,468,743 1,530,564 1,655,612 118,343,695 69,931,559 6,544,625 251,841 76,224,343 42,119,352 48,537,184

and Office Equipment

5 Vehicles and Motor 19,036,589 22,000 449,852 18,608,737 3,734,675 1,803,968 257,908 5,280,735 13,328,002 15,301,914

Boats (Ref. Note 4)

6. Intangible Asset- 2,332,937 — 351,113 1,981,824 758,345 320,468 218,470 860,343 1,121,481 1,574,592

Computer Software

TOTAL 669,775,597 12,039,614 15,686,207 666,129,004 225,149,888 24,898,280 5,185,630 244,862,538 421,266,466 444,625,709

Previous Year Total 758,148,517 40,420,409 128,793,329 669,775,597 262,954,011 25,086,088 62,890,211 225,149,888 444,625,709

7 Capital Work in Progress [See Note (1) below] 363,682 1,785,841

GROSS BLOCK (AT COST) DEPRECIATION NET BLOCK

As at Additions Deductions As at Upto For the Less: Sales/ As at As at As at

1.4.2009 (Note 2) (Note 3) 31.3.2010 31.3.2009 year (Adjustments) 31.3.2010 31.3.2010 31.3.2009

31



Previous Year


SCHEDULE “F” : INVESTMENTS: (Long Term)

Trade : (At cost)

Investment in Shares of Subsidiary Companies:

(Unquoted) (Fully paid up)

Advani Pleasure Cruise Co. Private Limited:

2,218,500 Equity Shares of Rs. 10/- each ..................................................... 22,185,000 22,185,000

Less: Provision for diminution in Value of Investment................................... — 22,185,000

(Refer Note 16 (a) of Part B Schedule “K”)

22,185,000 —

Advani Flight Catering Services Private Limited:

10,000 Equity Shares of Rs. 10/- each .......................................................... 100,000 100,000

TOTAL 22,285,000 100,000

Note: Aggregate of unquoted investments – Cost 22,285,000 100,000

SCHEDULE “G” : CURRENT ASSETS, LOANS AND ADVANCES

CURRENT ASSETS:

Interest accrued ........................................................................................ 14,755 —

Stock:

(Valued and certified by the Management)

Stores and Operating Supplies ................................................................... 11,766,234 14,126,434

Food and Beverage..................................................................................... 1,832,230 1,790,099

13,598,464 15,916,533

Sundry Debtors:

(Unsecured, good unless otherwise stated)

Over six months .......................................................................................... 3,874,199 3,951,601

(Rs.3,226,137/- considered doubtful (Prev. Year Rs. 3,059,160/-)

Refer Note 7(a) of Part B of Schedule “K”)

Others........................................................................................................... 20,716,290 16,604,636

24,590,489 20,556,237

Less: Provision for Doubtful Debts ............................................................. 3,226,137 3,059,160

21,364,352 17,497,077

Cash and Bank Balances:

On Hand....................................................................................................... 1,150,277 1,449,786

With Scheduled Banks: On Current Account ...................................... 5,643,536 10,623,288

On Margin / Deposit Account ....................... 1,917,343 2,206,692

With other Bank on:

Current Account (Refer Note 7(c) of part B of Schedule “K”) ........... 129,056 129,122

8,840,212 14,408,888

LOANS AND ADVANCES:


Advances recoverable in cash or in kind or for value to be received 103,094,812 41,645,349

(Rs. 25,315,947/- considered doubtful (Previous year Rs.25,635,231/-)

(Refer Note 7(a) of Part B of Schedule “K”)

Less: Provision for doubtful loans and advances ..................................... 25,315,947 25,635,231

77,778,865 16,010,118

Deposits........................................................................................................ 12,326,354 17,801,989

Less: Provision for liability for refund of Deposit ....................................... 7,800,000 —

4,526,354 17,801,989

Payments of taxes ....................................................................................... 10,383,149 4,867,551

(Net of Provision of Rs. 85,747,077/- (Previous year Rs. 82,047,077/-)

92,688,368 38,679,658

TOTAL 136,506,151 86,502,156

32




Previous Year


SCHEDULE “H” : CURRENT LIABILITIES AND PROVISIONS:

CURRENT LIABILITIES:

Sundry Creditors .............................................................................. 23,690,069 26,629,262

(Include Rs. Nil [Previous Year Nil] due to Micro and

Small Enterprises)

Interest accrued but not due on loans ........................................... — 212,417

Dividend Warrants issued but not encashed ................................ 655,740 678,755

Advance from Customers ................................................................ 13,067,840 11,086,852

Other Liabilities................................................................................ 28,123,779 24,438,043

65,537,428 63,045,329

PROVISIONS:

Provision for retirement benefits:

As per last accounts ........................................................................ 5,412,736 6,853,541

Add: Addition during the year ......................................................... 749,378 177,371

6,162,114 7,030,912

Less: Deduction during the year .................................................... 383,351 1,618,176

5,778,763 5,412,736

Proposed Dividend and Tax thereon 5,389,569 —

11,168,332 5,412,736

TOTAL 76,705,760 68,458,065

SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE

YEAR ENDED 31ST MARCH, 2010

SCHEDULE “I” : ROOMS, RESTAURANTS, BAR, BANQUETS,

FLIGHT CATERING AND OTHER INCOME

(a) Rooms, Restaurants, Banquets, Flight Catering and Other

Services (Gross) ................................................................. 302,097,518 290,906,131

[(Include sale of food, beverages, etc. Rs. 77,813,803/-)

(Prev. Year Rs. 72,146,383/-)]

(Include income from Flight Catering Unit Rs. Nil)

(Prev. Year Rs. 13,641,083/-)

(Tax deducted at source Rs.705,677/-) (Prev. Year Rs.1,033,232/-)

(b) Wines and liquor .................................................................... 14,334,009 14,832,012

316,431,527 305,738,143

Other Income:

Exchange Gain (net) .................................................................... 2,361,431 7,045,275

Interest (Gross) ............................................................................. 165,552 1,287,228

(Tax deducted at source Rs. 20,813/-)

(Prev. Year Rs. 139,344/-)

Dividend from Subsidiary (Gross) (Tax free) ............................. — 16,638,750

Excess provisions/credits written back ....................................... 2,133,368 1,010,747

(Including liabilities not payable written back)

Miscellaneous Income................................................................. 2,876,181 4,996,274

(Refer Note 7(d) of Part B Schedule “K”)

7,536,532 30,978,274

TOTAL 323,968,059 336,716,417

33


SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE

YEAR ENDED 31ST MARCH, 2010

Previous Year


SCHEDULE “J” : OPERATING AND GENERAL EXPENSES

Operating Expenses

(A) CONSUMPTION OF PROVISIONS, WINES, AND SMOKES:

(i) Provisions, Beverages (excluding Wines and Liquor ) and smokes:

Opening Stock ........................................................................ 714,296 1,606,299

Add: Purchases ...................................................................... 23,340,665 22,432,040

24,054,961 24,038,339

Less: Closing Stock ............................................................... 914,466 714,296

23,140,495 23,324,043

(ii) Wine and Liquor:

Opening Stock ........................................................................ 1,075,803 977,854

Add: Purchases ...................................................................... 2,441,143 2,932,251

3,516,946 3,910,105

Less: Closing Stock ............................................................... 917,764 1,075,803

2,599,182 2,834,302

25,739,677 26,158,345

(B) PAYMENTS TO AND PROVISIONS FOR EMPLOYEES:

Salaries, Wages and Bonus ......................................................... 64,746,755 59,996,534

Contributions to Provident and Other Funds .............................. 4,430,223 4,030,929

Provision for retirement benefits .................................................. 749,378 844,181

Workmen and Staff Welfare Expenses ........................................ 6,481,054 6,896,746

76,407,410 71,768,390

(C) OTHER OPERATING EXPENSES:

Power and Fuel ............................................................................. 29,631,141 30,517,219

Licences, Rent, Rates and Taxes ................................................ 41,114,596 8,088,676

Repairs to Building ....................................................................... 7,386,480 29,539,093

Repairs to Plant and Machinery .................................................. 10,694,292 8,982,161

Repairs – Others ........................................................................... 3,164,166 3,683,973

Replacements................................................................................ 3,986,354 3,393,846

Expenses on Apartments and Board ........................................... 14,804,249 9,947,126

Water Charges .............................................................................. 6,020,578 4,070,319

116,801,856 98,222,413

Carried forward ........................................................................... 218,948,943 196,149,148

34



SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNT FOR THE YEAR

ENDED 31ST MARCH, 2010

Previous Year


Brought forward ................................................................... 218,948,943 196,149,148

SCHEDULE “J” continued:

OPERATING AND GENERAL EXPENSES

GENERAL EXPENSES:

Printing and Stationery ................................................................. 1,370,746 1,615,542

Expenses on communication ....................................................... 2,585,627 3,208,104

Travelling and Conveyance ......................................................... 12,509,236 14,215,655

Insurance ....................................................................................... 2,321,723 1,921,849

Advertisement and Publicity ......................................................... 6,284,837 6,930,403

Royalty........................................................................................... 5,984,670 5,704,227

Service Charges – Marketing and collections ............................ 3,985,882 9,845,773

Band and Music ............................................................................ 4,933,434 5,475,428

Directors’ Fees .............................................................................. 1,140,000 1,000,000

Legal and Professional Fees ....................................................... 12,637,636 13,423,555

Donations ....................................................................................... 301,501 855,675

(Includes Rs. 200,000/- (Prev. Year Rs. 500,000/-)

paid to Goa Pradesh Congress Committee)

Bad debts and irrecoverable advances written off ..................... 288,679 121,938

Provision for Doubtful debts ......................................................... 166,977 1,945,163

Loss on sale/discard of fixed assets (Net) .................................. 1,286,652 2,187,818

Luxury tax and other assessment dues ...................................... 797,938 250,472

(Including Rs.797,938/- for earlier years [Previous Year Rs. Nil])

Amortisation of Foreign Exchange Monetary Item Translation

Difference ....................................................................................... 126,174 901,328

Miscellaneous Expenses.............................................................. 2,550,146 3,688,847

59,271,858 73,291,777

TOTAL 278,220,801 269,440,925

SCHEDULE “J-1” : EXCEPTIONAL ITEMS (NET):

EXCEPTIONAL ITEMS OF EXPENSES:

Provision for incomplete Hotel Project, considered doubtful — 11,958,615

Provision for diminution in value of investment in Subsidiary .. — 22,185,000

Provision for doubtful loans and advances ................................ — 25,635,231

Loss on Abandoning of Jaipur Hotel Project ............................ 11,956,815 —

Provision for liability for refund of Jetty Deposit 7,800,000 —

(Refer Note 16 (d) of Part B of Schedule ‘K’)

19,756,815 59,778,846

Less: Exceptional items of Income:.........................................

Profit on sale of Flight Catering Unit ........................................... — 37,544,603

Provision for diminution in value of investment in Subsidiary no longer

required, written back (Refer Note 16 (a) of Part B of Schedule ‘K’) 22,185,000 —

Provision for Incomplete Hotel Project no longer required, written back 11,956,815 —

Provision for doubtful loans and advances, no longer required,

written back 319,285 —

34,461,100 37,544,603

TOTAL 14,704,285 (22,234,243)

35


SCHEDULE FORMING PART OF THE ACCOUNTS FOR THE YEAR


SCHEDULE ‘K’ : SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS:

A. SIGNIFICANT ACCOUNTING POLICIES:

1. Basis for preparation of financial statements:

The financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting

in accordance with accounting principles accepted in India (“Indian GAAP”) and are in compliance with Accounting Standards

as notified by the Companies (Accounting Standards) Rules, 2006.

2. Use of Estimates:

The preparation of the financial statements in conformity with the Indian GAAP requires Company management to make

estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent

liabilities as of the date of the financial statements. Actual results could differ from these estimates and assumptions. Any

revision to accounting estimates is recognized prospectively in the current and future periods.

3. Revenue Recognition:

The Company derives revenues primarily from hospitality services. Revenue on time and material contracts are recognized

as the related services are performed. Revenue yet to be billed is recognized as unbilled revenue. Sales and services are

stated exclusive of taxes.

Export Benefits arising out of Duty Free Scrips utilised for the acquisition of fixed assets are being adjusted against the

cost of the related fixed assets (Refer Note 1 of Notes on Accounts) .

4. Fixed Assets:

Fixed Assets are stated at cost less depreciation. In the case of new projects successfully implemented, substantial

expansion of existing units and expenditure resulting into enduring benefit, all pre-operative expenses including interest on

borrowings for the project, incurred up to the date of installation are capitalised and added pro-rata to the cost of fixed

assets

5. Depreciation:

(i) Depreciation is provided in the accounts on straight-line method at the rates prescribed in Schedule XIV to the


(ii) Where the historical cost of a depreciable asset undergoes a change due to increase or decrease on account of

price adjustments, changes in duties or similar factors, depreciation on the revised amount is provided prospectively

over the residual useful life of the asset.

6. Impairment:

In accordance with Accounting Standard 28 – Impairment of Assets, the carrying amount of the Company’s assets

including intangible assets are reviewed at each balance sheet date to determine whether there is any indication of

impairment. If any such indication exists, the asset’s recoverable amount is estimated, as the higher of the net selling price

and the value in use. Any impairment loss is recognized whenever the carrying amount of an asset or its cash generating

unit exceeds its recoverable amount.

7. Investments:

Long Term Investments are valued at cost. Provision for diminution in value is made, if in the opinion of the management,

such a decline is considered permanent. Other Investments are valued at cost or market value whichever is lower.

8. Inventories:

Stock of food, beverages and operating supplies are carried at cost (computed on weighted average basis) or net

realizable value, whichever is lower.

9. Employee Benefits:

Company’s contributions to Provident Fund are charged to Profit and Loss Account. Gratuity payable at the time of

retirement are charged to Profit and Loss Account on the basis of independent external actuarial valuation determined on

the basis of the projected unit credit method carried out annually Actuarial gains and losses are immediately recognized in

the Profit and Loss Account. Gratuity in certain applicable cases is provided for in accordance with the provisions of the

Goa Shops & Establishment Act, 1973. Provision for leave encashment is made on the basis of independent external

actuarial valuation carried out at the end of the year.

36



10. Foreign Currency Transactions:

(i) Sales made in foreign currency are converted at the prevailing applicable exchange rate. Gain/Loss arising out of

fluctuation in exchange rate is accounted for on realization.

(ii) Payment made in foreign currency including for acquiring fixed assets are converted at the applicable rate prevailing

on the date of remittance. Liability on account of foreign currency is converted at the exchange rate prevailing at the

end of the year except in cases of subsequent payments where liability is provided at actual. Foreign currency in

hand is translated at the year-end exchange rate.

(iii) Monetary assets and liabilities denominated in foreign currency at the balance sheet date other than long term

foreign currency items of assets and liabilities having a term of twelve months or more as discussed herein below,

are translated at the year end exchange rate and the resultant exchange differences are recognised in the Profit and

Loss Account. Exchange differences relating to long term foreign currency items of assets and liabilities having a

term of twelve months or more as covered in the Companies (Accounting Standards) Amendment Rules 2009 on

Accounting Standard 11 (AS-11) notified by Government of India on 31st March 2009 in so far as they relate to the

acquisition of a depreciable capital asset, are added to or deducted from the cost of the assets and depreciated over

the balance useful life of the asset, and in other cases are accumulated in a “Foreign Currency Monetary Item

Translation Difference Account” and amortized over the balance period of such long term monetary item in accordance

with the aforesaid Notification..

11. Prior period adjustments, Extra Ordinary items and Changes in accounting policies:

Prior period adjustments, extraordinary items and changes in accounting policies having material impact on the financial

affairs of the Company are disclosed.

12. Leases:

Lease payment under an operating lease is recognized as an expense in the Profit and Loss account on a straight line

basis over the lease period.

Assets taken on finance lease are capitalized and finance charges are charged to Profit and Loss account on accrual

basis.

13. Borrowing costs:

Borrowing costs that are directly attributable to and incurred on acquiring qualifying assets (assets that necessarily takes

a substantial period of time for its intended use) are capitalized. Other borrowing costs are recognized as expenses in the

period in which same are incurred.

14. Segment Accounting:

Reportable Segments are identified having regard to the dominant source of revenue and nature of risks and returns.

15. Taxes on Income:

Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance

with the provisions of the Income Tax Act, 1961. Deferred tax is recognized on timing differences between the accounting

income and the taxable income for the year, and quantified using the tax rates and laws enacted as on the Balance Sheet

date. Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that

sufficient future taxable income will be available against which such deferred tax assets can be realized.

16. Accounting Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognized in terms of Accounting Standards 29 – “Provisions, Contingent Liabilities and Contingent

Assets” as notified by the Companies (Accounting Standards) Rules, 2006, when there is a present legal or statutory

obligation as a result of past events where it is probable that there will be outflow of resources to settle the obligation

and when a reliable estimate of the amount of the obligation can be made.

Contingent Liabilities are recognized only when there is a possible obligation arising from past events due to occurrence of

one or more uncertain future events not wholly within the control of the Company or where any present obligation cannot

be measured in terms of future outflow or resources or where a reliable estimate of the obligation cannot be made.

Obligations are assessed on an ongoing basis and only those having a largely probable outflow of resources are provided

for.



SCHEDULE ‘K’ : SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS —(contd.)

37


B. NOTES ON ACCOUNTS:

1. Benefits arising out of Duty Free Scrips, utilised for the acquisition of fixed assets are, with effect from April 1, 2009, bei ng

adjusted against the cost of the related asset, as against the practice hitherto followed of recognising the same as income.

Consequent upon the change, miscellaneous income for the year is lower by Rs. 1,843,819/- with a corresponding

deduction in the value of fixed assets, as also reduction in the depreciation thereon

2. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 541,680/- (Prev. year

Rs. 15,763,930/-) net of advances.

3. Contingent liabilities not provided for in respect of:

(a) Claims against the Company not acknowledged as debts Rs. 5,603,834/- (Prev. year, net of counter claims, Rs.

8,785,164/-).

(b) Pending Bank Guarantees:

Current year Previous year

Rupees Rupees

Bank Guarantees 6,785,484 7,885,484

(c) The Company has given a Corporate Guarantee of Rs. 84,000,000/- (Prev. year Rs.84,000,000/-) on behalf of its

subsidiary Company M/s. Advani Pleasure Cruise Company Private Limited to Bank of Baroda, Mumbai. The Corporate

Guarantee is 51% of the sanctioned loan amount of Rs. 164,000,000/- (Prev. year Rs.164,000,000/-). As on March

31, 2010, the guarantee stood at Rs. 80,117,060/- (Prev.year Rs.63,805,332/-) being 51% of the loan of Rs.

1,570,92,275/- (Prev. year Rs.125,108,495/-) availed by subsidiary Company. The above corporate Guarantee has

since been extinguished after the close of the year.

(d) Demand raised by Income Tax authorities disputed by the Company in appeal and rectification proceedings, which are

pending – Rs. 1,065,815/- (Prev. year Rs. 1,065,815/-).

(e) Demand raised by Sales tax and luxury tax authorities, disputed by the Company in appeal, which are pending

amounting to Rs.1,215,646/- (Prev. year Rs. 5,881,182/-).

(f) Certain employees of the Company’s flight catering unit i.e. Airport Plaza, which is sold in previous year have

demanded higher wages with effect from August 01, 2006. The matter is pending in the Labour Court. Pending

disposal of the matter, no provision has been made for the additional wages, as the amount is indeterminate.

4. There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days

as at March 31, 2010. This is information as required to be disclosed under “The Micro, Small and Medium Enterprises

Development Act, 2006” (the Act) has been determined to the extent such parties have been identified on the basis of

information available with the Company.

5. Details of Auditors’ Remuneration:

Current Year Previous Year

Rupees Rupees

Audit Fees 200,000 160,000

Tax Audit Fees 55,000 55,000

For Tax matters 15,000 55,000

For Certification, opinion etc. 20,000 40,000

For Limited Review Certification 30,000 35,000

For Expenses 90,194 87,167

Service Tax 35,638 37,080

Total 445,832 469,247




38






6. The Unclaimed dividend for the year 2005-06, 2006-07 and 2007-08 aggregating to Rs.655,741/- (Previous Year Rs.

678,755/-) will be deposited at the appropriate time as and when applicable.

7. (a) Current Assets, Loans and Advances (Schedule “G”) include Rs 91,045,154/- (Previous year Rs.635,231/-) due from

the Subsidiary Company, viz. Advani Pleasure Cruise Company Private Limited, out of which Rs. 25,452,377/-(Prev.year Rs.635,231/-) is considered doubtful and provided for.

(b) Movement in Provision for Doubtful Debts / Loans and Advances


Rupees Rupees

Opening balance 28,694,391 1,113,997

Addition during the year 166,977 27,580,394

Deduction during the year (write back) 319,284 —

Closing balance 28,542,084 28,694,391

(c) Cash and Bank balances (Schedule “G”) includes Rs. 129,056/- (Previous year Rs. 129,122/-) with Priyadarshini

Mahila Co-op Bank Limited on Current Account. Maximum balance Rs.129,122/- (Previous Year Rs.129,122/-).

(d) Duty Credit Scrips recognized in the Profit and Loss Account amount to Rs.Nil (Previous year Rs. 1,310,285/-) being

on capital account is included under Other Income.

8. As the turnover of the company includes sale of food and beverage, it is not possible to give quantity-wise details of sale

and consumption of food and beverage. The Department of Company Affairs vide its Order No. 46/183/2008-CL-III dated

17

th

October, 2008 has exempted the Company from giving such details for the year ended March 31, 2008, March 31,

2009 and March 31, 2010.

9. Segment Reporting under Accounting Standard 17:

Hotel business is the Company’s only business segment and hence disclosure of segment-wise information is not applicable

under Accounting Standard 17 – “Segment Information”.

10. The disclosures required under Accounting Standard 15 “Employee Benefits” notified in the Companies (Accounting

Standards) Rules 2006, are given below::

Defined Contribution Plan

Contribution to Defined Contribution Plan, recognized are charged off for the year are as under:

Particulars Current Year Previous Year

Rupees Rupees

Employer’s Contribution to Provident Fund 1,864,778 1,653,805

Employer’s Contribution to Pension Scheme 1,533,458 1,400,205

Defined Benefit Plan

In respect of Employees’ Retiring Gratuity, the present value of obligation is determined based on actuarial valuation using

the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee

benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment

is recognized on actuarial valuation basis.

39





S.No. Current Year Previous Year

Rupees Rupees

Retiring Gratuity Liability (Unfunded) (Unfunded)

I. Assumptions:

Discount rate – previous 8.00% 8.00%

Salary Escalation – previous 4.00% 4.00%

Discount rate – current 8.00% 8.00%

Salary Escalation – current 4.00% 4.00%

II. Change in Benefit Obligation:

Liability at the beginning of the year 4,279,057 5,411,388

Interest cost 342,325 480,168

Current Service Cost 627,213 792,815

Benefit Paid (104,155) (404,199)

Actuarial (Gain) / Loss on obligations (116,005) (2,001,115)

Liability at the end of the year 5,028,435 4,279,057

III. Recognition of Transitional Liability: N.A. N.A.

IV. Amount recognized in the Balance Sheet:

Liability at the end of the year 5,028,435 4,279,057

Fair value of Plan Assets at the end of the year — —

Difference (5,028,435) (4,279,057)

Amount recognized in the Balance Sheet (5,028,435) (4,279,057)

V. Expenses recognized in the Profit and Loss Account:

Current Service Cost 627,213 792,815

Interest Cost 342,325 480,168

Actuarial Gain or (Loss) (116,005) (2,001,115)

Expense recognized in the Profit and Loss Account 853,533 (728,132)

VI. Balance Sheet Reconciliation:

Opening Net Liability 4,279,057 5,411,388

Expenses as above 853,533 (728,132)

Employer’s Contribution (104,155) (404,199)

Closing Net Liability 5,028,435 4,279,057

S.No. Current Year Previous Year

Rupees Rupees

Leave Encashment Liability (Unfunded) (Unfunded)

I. Summary of Assumption:

Retirement age 60 years 60 years

Attrition rate 2.00% 2.00%

Future Salary Rise 4.00% 4.00%

Rate of Discounting 8.00% 8.00%

Mortality Table LIC (1994-96) LIC (1994-96)

Ultimate Ultimate

II. Actuarial Value of leave encashment liability 700,328 10,83,679

40






Other details:

a. Gratuity is payable @ 15 days salary for each year of service subject to

a maximum of Rs.350,000/-.

b. Leave is encashable on retirement / while in service/ maximum leave

accumulation is a per company’s scheme from time to time.

c. The above information is certified by the actuary.

d. Salary Escalation is considered as advised by the company which in line

with the industry practice considering promotion and demand and supply

of the employee.

e. Number of employees (average) 188 (Previous year 191).

f. Salary per month – Rs. 1,968,047/- (Previous year Rs. 1,949,253/-).

g. Contribution for next year – Rs. Nil (Previous year Rs. Nil)

11. Related Party Disclosures under Accounting Standard 18:

(a) Subsidiary Companies:

(i) Advani Pleasure Cruise Company Private Limited (51%)

(ceased to be a subsidiary after the close of the year)

(ii) Advani Flight Catering Service Private Limited (100%)

(b) Parties where control exists: None

(c) Key Management Personnel:

Mr. Sunder G. Advani … Chairman & Managing Director

Mr. Haresh G. Advani … Executive Director

Mr. Prahlad S. Advani … Manager – Asset Management and Relative (Son)

(d) Other parties being relatives of Key Management Personnel with whom transactions have taken place during

the year:

Mrs. Menaka S. Advani … Director and relative (Wife)

(e) Other related parties with whom transactions have taken place during the year:

Mr. K. Kannan … Non-executive Director

Mr. Prakash V. Mehta … Non-executive Director

Mr. Anil Harish … Non-executive Director

D.M. Harish & Co., Advocates (A Partnership firm wherein Mr. Anil Harish is a partner)

M/s. Malvi Ranchhodas & Co. Solicitors & Advocates (A Partnership firm wherein Mr. Prakash V. Mehta is a

partner)

41


(f) Summary of transactions during the year with Related Parties and status of outstanding balances as on 31st March,

2010:

Sr. Nature of transactions Associates and Key

No. Subsidiary other related Management

parties Personnel


1 Sale of goods & services — — —

2,426,273 —— 2 Purchase of goods & services 266,550 —— 1,050,750 —— 3 Remuneration including Sitting Fees — 1,140,000 11,019,249

— 1,000,000 10,589,542

4 Consultancy Fees — 1,051,299 —

— 217,963 —

5 Expenses recovered 51,093,299 — 884,876

86,753.108 — 902,989

6 Loans & Advances given / (recovered) 90,273,493 —— (2,203,158) —— 9 Investment in Perference shares — — —

——— 10 Balance outstanding at the year end:

Unsecured Loans taken — — —

——— Unsecured Loans (Deposit) taken 1,186,000 —— 1,186,000 — —

Accounts receivable 136,430 —— 136,430 —— Loans & Advances recoverable 90,908,724 —— 635,231 —— Creditors / Payables — — 155,200

——120,800

11 Dividend paid — — —

— 817,926 9,737,786

12 Dividend received — — —

16,734,365 —— 12 Amount written off / back arising out of debts due (319,284) —— ——— 11 Guarantee given on behalf of (Refer to Note 3 (c) 80,117,060 —— Part B of Schedule “K”) 63,805,332 —— (Figures in italics are for previous year)

12. The Company has taken certain premises on lease. The aggregate lease rentals payable are charged as rent in the Profit

and Loss Account.

Future commitments in respect of minimum lease payments payable for non-cancelable operating leases entered into by

the Company:


Rupees Rupees

Payable within one year 14,665,927 35,871,704

Payable later than one year but not later than five years 1,764,000 24,261,897

Payable after five year Nil Nil




42



13. Earnings per share (E.P.S.) under Accounting Standard 20:


Profit after tax as per Accounts (Rs.) 7,689,538 514,713

No. of Shares outstanding 46,219,250 46,219,250

Nominal face value of share Rs. 2 Rs. 2

Basic & Diluted E.P.S. (Rupees per share) 0.17 0.01

14. Components of Deferred Tax Assets and Liabilities are as under:


Rupees Rupees

Deferred tax liabilities on account of: Difference between the written down value of assets under the Companies

Act, 1956 and the Income Tax Act, 1961. 67,273,860 66,678,003

TOTAL (A) 67, 273,860 66,678,003

Deferred tax assets on account of:

Expenses allowable for tax purpose on payment basis 1,406,453 1,532,914

Provision for doubtful debt/loans and advances 9,655,082 9,753,224

Provision for doubtful deposit 2,651,220 —

Provision for diminution in value of investment — 5,027,121

TOTAL (B) 13,712,755 16,313,259

Deferred Tax Liability -net (A – B) 53,561,105 50,364,744

Deferred Tax Debit / (Credit) for the year 3,196,361 (14,556,203)

15. Additional information pursuant to the provisions of paragraphs 3 & 4 of Part – II and Part – IV of Schedule VI to the

Companies Act, 1956 are given as under to the extent applicable:


Rupees Rupees

(i) Managerial Remuneration:

Paid to Chairman and Managing Director:

Salary 3,000,000 3,000,000

House Rent Allowance 1,800,000 1,800,000

Other Perquisites 500,000 445,754

SUB TOTAL 5,300,000 5,245,754

Paid to Executive Director:

Salary 1,872,000 1,872,000

House Rent Allowance 1,123,200 1,123,200

Other Perquisites 312,000 312,784

SUB TOTAL 3,307,200 3,307,984

TOTAL 8,607,200 8,553,738




43





Note:

(a) The above Managerial Remuneration has been paid / provided in accordance with the resolutions approved by

the shareholders of the Company in the Annual General Meeting held on September 26, 2007 read with the

resolution passed by the board of Directors in their meeting held on January 29, 2010. However, in view of

inadequacy of profits for the year under consideration, the above remuneration exceeds the limits prescribed

under the Companies Act, 1956 and therefore, the Company has made an application to the Central Government

on May 13, 2010 for approval of the remuneration and the same is awaited. The above remuneration is subject

to the aforesaid approval.

(b) The above remuneration excludes provision for gratuity and leave availment since it is provided on an actuarial

valuation of the Company’s liability to all its employees.

(c) Since there is no Commission paid or payable to the above managerial personnel in this year or previous year,

computation of Net Profit under Section 198 (1) read with Section 349 of the Companies Act for the year ended

31st March, 2010 is not applicable, hence not given.


Rupees Rupees

(ii) Earnings in Foreign Exchange:

Hotel earnings (including encashment) 103,564,239 154,289,333

as certified and reported by the Company to the

Department of Tourism and relied upon the Auditors

(iii) Expenditure in foreign Currency on account of:

(a) Royalty (actual payment during the year Rs. 5,084,655/-) 5,074,970 5,704,227

(Previous year Rs. 5,122,507/-)

(b) Professional & Consultation Fees 1,697,320 216,950

(c) Interest and other charges (actual payment during the year 6,981,771 9,262,779

Rs. 7,194,188/- [Previous year Rs. 10,194,555/-])

(d) Other matters 318,330 274,508

(iv) Non-resident Shareholders etc.:

(a) Number of Non-Resident Shareholders 46 39

(b) Year to which the dividend related 2008-09 2007-08

(c) Number of equity shares held 887,524 421,522

(d) Amount of dividend (Rupees) NIL 2,675,548

(v) C.I.F. Value of Imports: (on payment basis)

Capital goods 6,265,369 7,650,496

Stores, Spares and Supplies 197,914 1,084,763

Provision, Wines, etc. 395,830 384,946

16. (a) For the year ended 31.03.2009, a provision of Rs. 22,185,000/- was made for diminution in the value of the shares of

the Company’s in its subsidiary viz. Advani Pleasure Cruise Company Private Limited. Subsequent to the close of the

accounting year ended 31.03.2010, the said shares have been sold by the Company to Delta Corp Limited (the

Acquirer) in terms of the Agreement dated 20

th

September, 2010 at a consideration of Rs. 24,500,000/-. Accordingly,

the provision earlier made is now no longer required and has been written back. (Refer to Schedule J-1). Necessary

44



entries for sale of shares and further expenses of approximately Rs. 85 lakhs relating thereto will be passed in the

financial year 2010-2011.

(b) In view of sale of shares as stated above, Advani Pleasure Cruises Company Private Limited is no longer a subsidiary

of the Company with effect from 20

th

September, 2010.

(c) In terms of the Agreement for sale of shares referred to above, the Company after the close of the year, furnished a

bank guarantee of Rs. 15,000,000/- to the Acquirer as and by way of security for the performance of its obligation to

transfer the casino gaming license to Advani Pleasure Cruises Company Private Limited by 20

th

December, 2010. The

Company has made an application for transfer of the gaming license, which is under consideration of the concerned

authorities. Accordingly, this amount of Rs. 15,000,000/- is a contingent liability not provided for.

(d) The Company has paid a security deposit of Rs. 7,800,000/- to the Government of Goa for Jetty Premises at Goa. In

terms of the Agreement for sale referred to above, the Company is obliged to refund the above deposit to Advani

Pleasure Cruise Co. Pvt. Ltd. on receipt of refund from the Government of Goa for which an application has been

made, which is pending. The Company has provided for this liability in the enclosed accounts. (Refer Schedule J-1)

17. Previous year’s figures have been recast / regrouped / rearranged, wherever necessary for comparison sake.

18. Balance Sheet Abstract and Company’s General Business Profile:

(a) Registration Details:

Registration No. : 42891

State Code : 011

Date of Balance Sheet : 31st March, 2010

(b) Capital raised during the year:

(Rupees in thousands)

Public Fresh Issue Nil

Rights Issue Nil

Bonus Issue Nil

Private placements Nil

(c) Position of Mobilization and deployment

Total Liabilities 503,842

Total Assets 503,842

Sources of Funds:

Paid up Capital 92,439

Reserves and Surplus 200,438

Secured loans 95,952

Unsecured loans 61,452

Deferred Tax Liability 53,561

Application Funds:

Net Fixed Assets 421,630

Investments 22,285

Foreign Currency Monetary Item Translation 126

Difference

Net Current Assets 59,801

Miscellaneous Expenditure —

Accumulated Loss —




45





Signature on the Schedules “A” to “K”


SUNDER G. ADVANI HARESH G. ADVANI

Chairman & Managing Director Executive Director

KUMAR IYER SHANKAR KULKARNI

Company Secretary General Manager – Finance (CFO)


(Rupees in thousands)

(d) Performance of Company

Turnover / Other Income 323,968

Total Expenditure 324,086

Profit / (Loss) before Tax 14,586

Profit after Tax and adjustments 7,690

Earning per share (year end): Rupees 0.17

Dividend rate (%) (Proposed 5.00%

(e) Generic Names of three Principal Products of Company: The Company is in the business of hoteliering and

catering, which is not covered under ITC Classification.

46



1. Name of the Subsidiary Company Advani Pleasure Cruise Advani Flight Catering

Company Private Limited Services Private Limited

(Refer Note i below) (Refer Note ii below)

2. Financial year of the Subsidiary ended on March 31, 2010 March 31, 2010

3. Shares of the Subsidiary held by the Holding

Company on the above datea.

(a) Number and face value 2,218,500 Equity Shares 10,000 Equity Shares

of Rs. 10/- each of Rs. 10/- each

(b) Extent of holding 51% 100%

4. The net aggregate amount of Profit / (Loss) of the

Subsidiary for the above financial year, so far as

they concern the Members of the Company.

(a) Dealt with in the accounts of the Company for Nil Nil

the year ended March 31, 2010

(b) Not dealt with in the accounts of the Company (Rs. 67,600,053/-) (Rs. 18,315/-)

for the year ended March 31, 2010

5. The net aggregate of Profit / (Loss) of the subsidiary

for the previous financial years, since it became a

subsidiary, so far as they concern the Members of

the Company.

(a) Dealt with in the accounts of the Company for the Nil Nil

year ended March 31, 2010

(b) Not dealt with in the accounts of the Company for Rs. 25,685,172/- (Rs. 28,910/-)

the year ended March 31, 2010

Note: (i) Advani Pleasure Cruise Company Private Limited has ceased to be a subsidary of the Company w.e.f.

September 20, 2010.

(ii) There are no business operations till March 31, 2010 in Advani Flight Catering Services Private

Limited.

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956

RELATING TO SUBSIDIARY COMPANIES







47


AUDITORS’ REPORT ON CONSOLIDATED FINANCIAL STATEMENTS OF ADVANI

HOTELS & RESORTS (INDIA) LIMITED AND ITS SUBSIDIARY COMPANIES

The Board of Directors,

Advani Hotels & Resorts (India) Limited

We have examined the attached Consolidated Balance Sheet of ADVANI HOTELS & RESORTS (INDIA)

LIMITED and its subsidiaries (viz. (1) Advani Pleasure Cruise Company Private Limited and (2) Advani Flight

Catering Services Private Limited) as at 31

st

March, 2010 and also the Consolidated Profit and Loss Account and

the Consolidated Cash Flow Statement of the Company for the year ended on that date, both annexed thereto.

These financial statements are the responsibility of the Company’s management. Our responsibility is to express

an opinion on these Consolidated Financial Statements based on our audit..

We conducted our audit in accordance with auditing standards generally accepted in India. Those standards

require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements

are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the

amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles

used and significant estimates made by management, as well as evaluating the overall financial statement

presentation. We believe that our audit provides a reasonable basis for our opinion.

We report that the Consolidated Financial Statements have been prepared by the Company in accordance with

the requirements applicable provisions of Accounting Standard 21 “Consolidated Financial Statements” notified

by the Companies (Accounting Standards) Rules, 2006 and on the basis of the separate audited financial

statements of the Company and its subsidiaries included in the Consolidated Financial Statements.

Without qualifying our opinion, we draw attention to Note 2 of Notes to Accounts, which indicates that the

Subsidary company has been incurring net losses including during the year due to conditions set forth in the said

note. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the

Subsidary company’s ability to continue as a going concern.

On the basis of the information and the explanations given to us and on consideration of separate audit reports

on individual financial statements of the Company and its subsidiaries, in our opinion, the Consolidated Financial

Statements give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of Consolidated the Balance Sheet, of the state of the affairs of the Company and its

subsidiaries as at 31st March, 2010;

(ii) in the case of the Consolidated Profit and Loss Account, of the loss of the Company and its subsidiaries

for the year ended on that date; and

(iii) in the case of the Consolidated Cash Flow Statement, of the Cash Flows of the Company and its

subsidiaries for the year ended on that date.

For J.G.VERMA & CO.



J.G.VERMA

Partner

Mumbai, November 4, 2010 Membership No. 5005

48



CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2010

Previous Year

SOURCES OF FUNDS Schedule Rupees Rupees Rupees

SHAREHOLDERS’ FUNDS:

Share Capital .......................................................................... ‘A’ 92,438,500 92,438,500

Reserves and Surplus........................................................... ‘B’ 199,315,833 251,166,026

291,754,333 343,604,526

LOAN FUNDS:

Secured Loans....................................................................... ‘C’ 253,158,502 238,719,710

Unsecured Loans................................................................... ‘D’ 83,001,252 16,584,054

336,159,754 255,303,764

DEFERRED TAX LIABILITY (Net) .......................................... 57,649,575 54,453,214

MINORITY INTEREST ............................................................... 28,619,416 93,568,487

TOTAL .................... 714,183,078 746,929,991

APPLICATION OF FUNDS:

FIXED ASSETS: ‘E’

Gross Block (At cost) ........................................................... 684,639,446 772,475,935

Less: Depreciation ................................................................. 247,556,135 271,927,959

Net Block ................................................................................ 437,083,311 500,547,976

Capital Work in Progress ...................................................... 244,252,437 192,458,527

681,335,748 693,006,503

FOREIGN CURRENCY MONETARY ITEMS TRANSLATION 126,174 1,802,657

DIFFERENCE

CURRENT ASSETS, LOANS AND ADVANCES: ‘F’

Interest accrued ..................................................................... 37,545 1,037

Stock ....................................................................................... 14,870,613 18,378,536

Sundry Debtors...................................................................... 21,227,922 19,897,843

Cash and Bank Balances...................................................... 10,330,495 24,156,105

Loans and Advances ............................................................. 60,810,838 85,745,525

107,277,413 148,179,046

LESS: CURRENT LIABILITIES AND PROVISIONS: ‘G’

Current Liabilities .................................................................... 101,197,915 93,035,672

Provisions ............................................................................... 11,168,332 6,697,342

112,366,247 99,733,014

NET CURRENT ASSETS .......................................................... (5,088,834) 48,446,032

MISCELLANEOUS EXPENDITURE ......................................... ‘H’ 1,837,499 3,674,799

PROFIT AND LOSS ACCOUNT ............................................. 35,972,491 —

TOTAL .................... 714,183,078 746,929,991

SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON

ACCOUNTS ................................................................................ ‘K’

As per our report of even date Signature on the Consolidated Balance Sheet and Schedules “A” to “H” and “K”







49


CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED

31ST MARCH, 2010

Previous Year

Schedule Rupees Rupees Rupees

INCOME:

Rooms, Restaurant, Bar, Banquets, Flight Catering,

Casino and Other Services ................................................... ‘I’ 319,019,426 504,807,854

Other Income ‘I’ 14,015,432 44,810,543

TOTAL 333,034,858 549,618,397

EXPENDITURE:

Operating and General Expenses ........................................ ‘j’ 413,780,161 502,021,405

Managerial Remuneration ...................................................... 8,607,200 8,553,738

Depreciation ............................................................................ 31,093,996 31,695,922

Interest:

(a) On Fixed Loans ............................................................. 9,944,553 14,354,585

(b) On Other Loans ............................................................. 2,462,428 2,336,356

12,406,981 16,690,941

TOTAL ............. 465,888,338 558,962,006

(LOSS)/PROFIT BEFORE EXCEPTIONAL ITEMS ................ (132,853,480) (9,343,609)

Add: Exceptional items (net).................................................. “J-1” (7,800,000) 585,988

(LOSS)/ PROFIT BEFORE TAXATION (140,653,480) (8,757,621)

Less: Provision for taxation:

Current tax............................................................................. 3,700,000 7,700,000

Fringe Benefits tax ................................................................. — 1,598,000

MAT credit Entitlement ........................................................... — (441,251)

Deferred tax Liability/(Assets)............................................... 3,196,361 (11,132,293)

6,896,361 (2,275,544)

PROFIT FOR THE YEAR BEFORE ADJUSTMENTS: ......... (147,549,841) (6,482,077)

Add:/ Less : Prior Periods adjustments (net) ............................ 167,655 564,511

(LOSS)/PROFIT AFTER TAX AND ADJUSTMENTS: .......... (147,382,186) (7,046,588)

LESS: MINORITY INTEREST ................................................... 64,949,071 (4,162,145)

(LOSS)/PROFIT AFTER MINORITY INTEREST .................... (82,433,115) (2,884,443)

Add/Less: Profit/(Loss) brought forward .................................... 13,666,725 50,786,634

Less: Adjustment on adoption of AS11 Notification .................. — 8,690,847

13,666,725 42,095,787

Less: Transfer from General Reserve ...................................... 38,183,468 —

PROFIT/(LOSS) AVAILABLE FOR APPROPRIATION: (30,582,922) 39,211,344

Less: APPROPRIATION

Proposed Dividend ........................................................... 4,621,925 —

Tax on Proposed Dividend .............................................. 767,644 3,696,413

Tax on Interim Dividend ................................................... 1,848,206

Transfer to General Reserve .......................................... — 20,000,000

5,389,569 25,544,619

Profit /(Loss) carried to Balance Sheet (35,972,491) 13,666,725

Basic and Diluted Earnings Per Share (In Rs.) ........................ (1.78) (0.06)

Face value Rs. 2/- per share (Refer note 10 of part B of Schedule “K”)

SIGNIFICANT ACCOUNTING POLICIES & NOTES ON ACCOUNTS ‘K’

As per our report of even date Signature on the above Consolidated Profit & Loss and Schedules “I” to “K”







50



CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010

31st March, 2010 31st March, 2009

Rupees Rupees

A. CASH FLOW FROM OPERATING ACTIVITIES:

Net Profit before tax and adjustments (140,653,480) (8,757,621)

Adjustments for:

Depreciation 31,093,996 31,695,922

(Profit)/Loss on sale of assets 35,196,359 3,884,712

Notional Foreign Exchange rate difference (952,577) 1,718,277

Duty Free Entitlement — (1,310,285)

Provision for doubtful Hotel project Advances — 11,958,615

Profit on sale of Flight Kitchen — (37,544,603)

Provision for Loans and Advances/(written back) — 25,000,000

Provision for Employee benefits (Net) (918,579) (2,280,851)

Provision for Doubtful Debts (33,023) 1,945,163

Amortisation of Expenses 1,837,300 1,837,400

Interest and Dividend Income (197,699) (2,496,746)

Interest Expenses 12,406,981 16,690,941

Amortisation of Foreign Exchange Loss 126,174 901,328

Provision for liability for refund of Jetty Deposit 7,800,000 —

Operating profit before working capital changes: (54,294,548) 43,242,252

Adjustments for:

Trade and other receivable (1,318,809) 29,046,072

Loan, Advances and deposits (18,085,908) (21,849,995)

Inventories 3,507,923 3,827,940

Trade payable 9,350,252 (15,395,232)

Cash generated from operations: (60,841,090) 38,871,037

Direct Taxes paid (Net of refund received) (2,747,847) (57,097,121)

Cash Flow before Extraordinary Items: (63,588,937) (18,226,084)

Extraordinary Items of expenses — (564,511)

Net cash from / (used in) Operating Activities: (63,588,937) (18,790,595)

B. CASH FLOW FROM INVESTMENT ACTIVITIES:

Purchase of Fixed Assets (including Capital Work-in-progress) (63,833,524) (206,616,629)

Sales proceeds of Flight Kitchen unit — 197,785,026

Disposal of Investment — 100,500

Decrease in Loans, Advances and deposits 34,465,623 —

Sale of Fixed Assets 427,443 1,170,384

Interest received 197,699 2,513,350

Net Cash (used in) Investing Activities (28,742,759) (5,047,369)

C. CASH FLOW FROM FINANCING ACTIVITIES:

Proceeds from Borrowings:

Term Loans 43,327,865 128,702,441

Unsecured Loans 68,795,450 6,969,932

Cash Credits 16,155,572 —

Repayment of :

Term Loans (34,874,793) (104,935,749)

Unsecured Loans (2,378,256) (2,642,402)

Cash Credits — (18,875,702)

Finance Charges — —

Interest paid (12,496,737) (17,547,548)

Dividend including dividend tax paid (23,015) (50,789,483)

Net Cash from / (used in) Financing Activities 78,506,086 (59,118,511)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) (13,825,610) (82,956,475)

CASH & CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR (Opening Balance) 24,156,105 107,112,580

CASH & CASH EQUIVALENTS AT THE CLOSING OF THE YEAR (Closing Balance) 10,330,495 24,156,105

As per our report of even date Signature on the Consolidated Cash Flow Statement







51


SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT

31ST MARCH, 2010

Previous Year


SCHEDULE “A” : SHARE CAPITAL

AUTHORISED:

99,750,000 Equity Share of Rs. 2/- each ................................................ 199,500,000 199,500,000

5,050,000 Preference Shares of Rs. 10/- each .................................... 50,500,000 50,500,000

250,000,000 250,000,000

ISSUED, SUBSCRIBED AND PAID UP:

46,219,250 Equity Shares of Rs. 2/- each fully paid up ......................... 92,438,500 92,438,500

TOTAL 92,438,500 92,438,500

SCHEDULE “B” : RESERVES AND SURPLUS:

CAPITAL RESERVE:

As per last accounts:

Subsidy received under the Central Investment:

Subsidy Scheme of the Government of Goa ............................................ 2,500,000 2,500,000

Share Premium Account.............................................................................. 57,960,550 57,960,550

Profit on re-issue of forfeited shares.......................................................... 14,000 14,000

60,474,550 60,474,550

Surplus being capital gain on sale of flight catering unit 82,341,283 82,341,283

142,815,833 142,815,833

CAPITAL REDEMPTION RESERVE:

As per last accounts: .................................................................................. 53,500,000 53,500,000

CONTINGENCY RESERVE:


GENERAL RESERVE:


Less: Adjustment on adoption of AS-11 Notification................................. — 6,390,000

Transfer to Profit & Loss Account 38,183,468 18,183,468

Add/(Less): Set aside/ (transfer to Profit and Loss Account) during the year (38,183,468) 20,000,000

— 38,183,468

SURPLUS IN PROFIT AND LOSS ACCOUNT — 13,666,725

TOTAL 199,315,833 251,166,026

SCHEDULE “C”: SECURED LOANS:

FROM BANKS:

1. Term Loan (By way of ECB) (Note 1) ............................................... 24,601,300 40,760,000

2. New Foreign Currency Term Loan for renovation (Note 1) ............ 23,821,562 41,776,867

3. Medium Term Loans (Note 2) ............................................................ 3 201

4. Foreign Currency Term Loan ( Note 2) ............................................ 7,083,138 16,725,912

5. Term Loan from Bank (Note 2) .......................................................... 10,594,085 —

6. Cash Credits (Note 3) ......................................................................... 29,729,507 13,573,935

7. Term Loan from Bank (Note 4) .......................................................... 157,092,275 125,108,495

8. Vehicle Loan from a Bank (Note 5) ................................................... 113,971 774,300

9. Interest accrued and due .................................................................... 122,661 —

TOTAL 253,158,502 238,719,710

NOTES:

1. Loans under items No. (1) and (2) from Bank of Baroda are secured by (i) a mortgage executed in favour of Bank of Baroda by

deposit of title deeds of all the immovable properties of the Company situated at Village Varca, Salcette, Goa, both present an d

future, and (ii) a first charge by way of hypothecation of all the movables (except book debts) including machinery, spares, to ols

52




31ST MARCH, 2010

and accessories, present and future (subject to the charges created in favour of the Company’s Bankers on its stocks of raw

material, consumable stores, etc. for working capital borrowings) and (iii) personal guarantees of the Managing Director and

Executive Director. The balance in Loan Account under item No. (1) and (2) is after adjustment of foreign exchange gain of Rs.

8,786,483/- (Prev. year Rs. 20,245,354/-) arose during the year.

2. Loans under item No. (3) to (5) from Bank of India is secured by way of first charge on (i) immovable properties of the Company

situated at Village Varca, Salcette, Goa, both present and future and (ii) all the movable assets of the Company including

machinery, spares, tools and accessories, present and future and by way of personal guarantees of the Managing Director and

Executive Director. The balance in Loan under item No. (3) is after adjustment of foreign exchange gain of Rs. 1,506,030/- (Prev.

year Rs. 4,804,786/-) arose during the year.

3. Cash Credits from Bank of Baroda and Bank of India under item No. (6) are secured by hypothecation of Company’s inventories

of stocks, stores and provisions, goods in transit and other moveable items and book debts, both present and future.

4. Loan under item No. 7 is secured by equitable mortgage of freehold land at Goa, hypothecation of ship M. V. Majesty, stocks,

bookdebts and machinery and corporate guarantee of Advani Hotels & Resorts (India) Limited to the extent of 51%.

5. Loan under Item No. 8 is secured by hypothecation of certain vehicles.

6. Amount payable within one year Rs. 65,705,000/- (Prev. Year Rs. 43,247,000/-)

Previous Year

Rupees Rupees

SCHEDULE “D” : UNSECURED LOANS:

Vehicle Loans/Equipment Loans 7,426,548 9,729,804

From erstwhile Collaborators 14,840 14,840

Security Deposit from Subsidiary Company — —

Security Deposits from Shops and Others 1,575,000 1,650,000

Amount due to the Shareholders 4,598,147 5,189,410

Delta Corporation Limited (since repaid Rs. 51,250,000/-) 69,386,717 —

TOTAL 83,001,252 16,584,054

NOTES:

1. Capital Work in Progress includes:

(a) Advances of Rs. Nil (Prev. Year Rs. 7,253,400/-) and Pre-Operative Expenses of Rs Nil (Prev. Year Rs. 4,705,215/-) paid and

incurred on proposed Jaipur Hotel Project, which is considered doubtful. These amounts are net of Provision of Rs. Nil (Prev. Y ear

Rs. 11,98,615/-) made for such doubtful project. (Refer Schedule J-1).

SCHEDULE “E” : FIXED ASSETS

1. Land (Free hold) 32,572,121 — — 32,572,121 ————32,572,121 32,572,121

(Including landscaping)

2. Capital expenditure on 22,038,063 — 22,038,063 — 8,644,299 964,165 9,608,464 — — 13,393,764

the Casino Project

3. Buildings 379,974,250 322,285 4,638,755 375,657,780 98,529,912 9,455,412 (24,575) 108,009,899 267,647,881 281,444,338

4. Improvement to 1,203,550 — 1,203,550 — 154,703 — 154,703 — — 1,048,847

Leased Building

5. Plant and Machinery 145,863,757 10,164,765 26,857,702 129,170,820 58,409,635 7,598,426 11,014,163 54,993,898 74,176,922 87,454,122

6. Furniture, Fixtures, 162,686,643 1,468,898 44,337,068 119,818,473 101,101,401 10,513,816 34,236,687 77,378,530 42,439,943 61,585,242

Office Equipment and

Decoration

7. Vehicles and Motor 25,804,614 83,666 449,852 25,438,428 4,329,664 2,562,177 257,908 6,633,933 18,804,495 21,474,950

Boats (Ref. Note 4)

8. Intangible Asset — 2,332,937 — 351,113 1,981,824 758,345 — 218,470 539,875 1,441,949 1,574,592

Computer Software

TOTAL 772,475,935 12,039,614 99,876,103 684,639,446 271,927,959 31,093,996 55,465,820 247,556,135 437,083,311 500,547,976

Previous Year Total 861,527,557 45,375,403 134,427,025 772,475,935 306,021,933 31,695,922 65,789,896 271,927,959 500,547,976

9. Capital Work in Progress (See Note [1] below) 244,252,437 192,458,527

GROSS BLOCK (AT COST) DEPRECIATION NET BLOCK

As at Additions Deductions As at Upto For the Less: Sales/ As at As at As at

1.4.2009 (Note 2) 31.3.2010 31.3.2009 year Adjustments 31.3.2010 31.3.2010 31.3.2009

(Note 3)

53


Previous Year


SCHEDULE “F”: CURRENT ASSETS, LOANS AND ADVANCES:

CURRENT ASSETS:

Interest accrued ........................................................................................ 37,545 1,037

Stock:

Stores and Operating Supplies ................................................................... 12,810,921 16,165,053

Food and Beverage..................................................................................... 2,059,692 2,213,483

14,870,613 18,378,536

Sundry Debtors:


Over six months .......................................................................................... 3,737,769 4,015,171

(Rs. 3,229,137/- Considered doubtful (Prev. Year Rs. 3,259,160/-)

Others........................................................................................................... 20,716,290 19,141,832

24,454,059 23,157,003

Less: Provision for Doubtful Debts ............................................................. 3,226,137 3,259,160

21,227,922 19,897,843

Cash and Bank Balances:

On Hand....................................................................................................... 1,252,843 7,058,765

With Scheduled Banks: on:

Current Account ........................................................................................... 6,002,826 14,716,547

Margin / Deposit Account ............................................................................ 2,945,770 2,251,671

With Other Bank On:

Current Account ........................................................................................... 129,056 129,122

10,330,495 24,156,105

LOANS AND ADVANCES:


Advances recoverable in cash or in kind or for value to be received 60,890,324 72,106,177

Rs. Nil considered doubtful (Prev. Year Rs. 25,000,000/-)

Less: Provision for doubtful loans and advances ..................................... 25,000,000 25,000,000

35,890,324 47,106,177

Deposits........................................................................................................ 13,370,274 18,504,609

Less: Provision for liability for refund of deposit ....................................... 7,800,000 —

5,570,274 18,504,609

Payments of taxes ....................................................................................... 19,350,240 20,134,739

(Net of provision of Rs. 86,187,077/- (Prev. year 180,390,077/-) 60,810,838 85,745,525

TOTAL 107,277,413 148,179,046


31ST MARCH, 2010

(b) Pre-Operative Expenses include : Payment of Legal and Consultants Fees- Rs. Nil (Prev. Year Rs. 1,667,135/-); Travelling an d

Conveyance of Rs. Nil (Prev. Year 986,271) and Security and other Expenses of Rs. Nil (Prev. Year 2,051,809/-).

(c) Expenses and advances of Rs. 363,682/- (Prev. year Rs. 1,785,840/-) incurred on renovation/refurbishing of the hotel, pendin g

completion of the work, (pending allocation).

(d) Expenses and advances of Rs. 243,888,755/- (Prev. year Rs. 190,672,686/-) incurred on purchase of ship, feeder boats etc,

pending completion of the work and allocation.

2. Additions to Fixed Assets include Rs. NIL (Prev. Year Rs.7,265,307/-) being loss due to fluctuation in foreign currency rates capitalised

in accordance with AS-11 Notification.

3. Deductions from Fixed Assets include foreign exchange gain of Rs 8,786,483/- (Previous year Rs Nil) due to fluctuation of for eign currency

rates in accordance with AS-11 Notification.

4. Includes Rs. 23,757/- (Previous Years Rs. Nil) relating to earlier years.

54




31ST MARCH, 2010

Previous Year


SCHEDULE “G” : CURRENT LIABILITIES AND PROVISIONS

CURRENT LIABILITIES:

Sundry Creditors .......................................................................................... 43,931,370 52,530,251

(Include Rs Nil [Previous year Nil] due to Micro and Small Enterprises)

Interest accrued but not due on loans ....................................................... — 212,417

Advance from customers ............................................................................ 13,202,140 11,379,552

Dividend Warrants issued but not encashed............................................. 655,740 678,755

Other Liabilities............................................................................................. 43,408,665 28,234,697

101,197,915 93,035,672

PROVISIONS:

Provision for Employee benefits:

As per last accounts ................................................................................... 5,412,736 8,978,193

Add: Addition during the year ...................................................................... 749,378 177,371

6,162,114 9,155,564

Less: Deduction during the year ................................................................ 383,351 2,458,222

5,778,763 6,697,342

Proposed Dividend and Tax thereon .......................................................... 5,389,569 —

11,168,332 6,697,342

TOTAL 112,366,247 99,733,014

SCHEDULE “H” : MISCELLANEOUS EXPENDITURE:

(To the extent not written off)

Preliminary Expenses .................................................................................. 4,440 8,720

Pre-operative Expenses.............................................................................. 1,833,059 3,666,079

TOTAL 1,837,499 3,674,799

55


SCHEDULE “I” : ROOMS, RESTAURANTS, BAR, BANQUETS,

FLIGHT CATERING, CASINO AND OTHER INCOME:

1. (a) Rooms, Restaurants, Banquets, Flight Catering and 302,097,518 288,479,858

Other Services (Gross)

[Include sale of food, beverages, etc. Rs. 77,813,803/-)

(Previous Year Rs. 72,146,383/-)]

(include income from Flight Catering Unit Rs. Nil)

(Previous year Rs 13,641,083/-)

(Tax deducted at source Rs.705677/-), (Prev. Year Rs.1,033,232/-)

(b) Income from Casino operations ........................................... 2,587,899 201,495,984

(c) Wines and liquor .................................................................... 14,334,009 14,832,012

319,019,426 504,807,854

2. Other Income:

Exchange Gain (net) .................................................................... 3,327,131 7,045,275

Recoveries towards provision of food and beverage ............... 1,735,889 27,451,717

Interest (Gross) ............................................................................. 197,699 2,496,746

(Tax deducted at source Rs. 23,346/-) (Previous Year Rs. 402,931/-)

Excess provisions/credits written back ....................................... 3,970,428 2,314,924

(Including liabilities not payable written back)

Miscellaneous Income................................................................. 4,784,285 5,501,881

14,015,432 44,810,543

TOTAL 333,034,858 549,618,397

SCHEDULE “J” : OPERATING AND GENERAL EXPENSES:

Operating Expenses:

(A) CONSUMPTION OF PROVISIONS, WINES, AND SMOKES:

(i) Provisions, Beverages (excluding Wines and Liquor) and smokes:

Opening Stock ........................................................................ 714,296 1,606,299

Add: Purchases ...................................................................... 23,340,665 22,432,040

24,054,961 24,038,339

Less: Closing Stock ............................................................... 914,466 714,296

23,140,495 23,324,043

(ii) Wine and Liquor:

Opening Stock ........................................................................ 1,075,803 977,854

Add: Purchases ...................................................................... 2,441,143 2,932,251

3,516,946 3,910,105

Less: Closing Stock ............................................................... 917,764 1,075,803

2,599,182 2,834,302

25,739,677 26,158,345

( B) PAYMENTS TO AND PROVISIONS FOR EMPLOYEES:

Salaries, Wages and Bonus ......................................................... 85,627,380 108,296,928

Contributions to Provident and Other Funds .............................. 5,652,902 5,786,794

Provision for Employee benefits .................................................. 749,378 844,181

(Gratuity and Leave Encashment benefits)

Workmen and Staff Welfare Expenses ........................................ 8,073,890 10,636,151

100,103,550 125,564,054

Carried Forward .... ......................................................................... 125,843,227 151,722,399

SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS

ACCOUNT AS AT 31ST MARCH, 2010

Previous Year


56



(C) OTHER OPERATING EXPENSES:

Casino Operating Expenses .................................................................... 52,550,008 69,032,000

Power and Fuel ......................................................................................... 30,862,981 38,868,193

Licenses, Rent, Rates and Taxes ........................................................... 43,211,551 25,278,220

Repairs to Building .................................................................................... 7,386,480 29,539,093

Repairs to Plant and Machinery ............................................................... 13,410,681 12,680,844

Repairs – Others ....................................................................................... 3,246,850 5,515,251

Replacements ............................................................................................ 3,986,354 3,393,846

Guest Supplies .......................................................................................... 17,301,627 24,634,789

Water Charges.......................................................................................... 6,082,345 4,335,271

Management Fees .................................................................................... 86,473 4,580,624

Other Operating Expenses....................................................................... 238,576 2,233,854

178,363,926 220,091,985

(D) GENERAL EXPENSES:

Printing and Stationery .............................................................................. 1,490,446 2,140,984

Expenses on communication ................................................................... 2,987,166 3,751,069

Travelling and Conveyance ...................................................................... 14,277,671 19,707,112

Insurance ................................................................................................... 2,822,182 3,062,069

Advertisement and Publicity ..................................................................... 11,985,607 18,698,907

Royalty ....................................................................................................... 5,984,670 5,704,227

Service Charges – Marketing and collections ........................................ 4,086,938 11,750,151

Band and Music ......................................................................................... 5,929,431 10,281,466

Directors’ Fees.......................................................................................... 1,160,000 1,120,000

Legal and Professional Fees .................................................................... 14,693,693 17,875,376

Donations [(Includes Rs. 200,000/- (Prev. Year Rs. 500,000/-)

(paid to Goa Pradesh Congress Committee)]........................................ 301,501 866,780

Bad debts and irrecoverable advances written off ................................. 832,679 121,938

Provision for Doubtful debts ..................................................................... 166,977 1,945,163

Loss due to fluctuation in rates of foreign exchange (net) .................... — 1,469,441

Loss on sale/discard/disposal of fixed assets, etc. (Net) ..................... 35,196,359 3,884,712

Service tax, Entertainment tax Enry tax, Etc .......................................... 1,680,737 20,481,258

Amortisation of Foreign Exchange Monetary Item Translation Difference 126,174 901,328

Amortisation of Expenses ......................................................................... 1,837,300 1,837,400

Miscellenous Expenses ............................................................................ 4,013,477 4,607,640

109,573,008 130,207,021

TOTAL 413,780,161 502,021,405

SCHEDULE “J-1” : EXCEPTIONAL ITEMS (NET)

Exceptional item of Income:

Provision for incomplete hotel project, no longer required, written back 11,956,815 —

Profit on sale of Flight Catering Unit ........................................................ — 37,544,603

11,956,815 37,544,603

Less: Exceptional item of Expenses

Provision for diminution in value of investment in subsidiary, no longer

required, written back ............................................................................... — 11,958,615

Loss on abandoning of Jaipur hotel project ............................................ 11,956,815 —

Provision for liability for refund of Jetty Deposit ..................................... 7,800,000 —

Provision for doubtful loans and advances ............................................. — 25,000,000

19,756,815 36,958,615

TOTAL (7,800,000) 585,988

SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS

ACCOUNT AS AT 31ST MARCH, 2010

Previous Year


Brought Forward.... 125,843,227 151,722,399

57


SCHEDULE FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31ST MARCH, 2010

SCHEDULE ‘L’ : SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS:

A. SIGNIFICANT ACCOUNTING POLICIES:

1. Basis of Accounting:

The financial statements are prepared under historical cost convention on an accrual basis and in accordance with the

requirements of the Companies Act, 1956.

2. Basis of Consolidation:

The consolidated financial statements have been prepared in accordance with Accounting Standard 21 on “Consolidated

Financial Statements (AS 21)” notified by the Companies (Accounting Standards) Rules, 2006. The consolidated financial

statements are based on the audited financial statements of the subsidiaries for the financial year. The financial statements

of the Company and its subsidiaries have been combined to the extent possible on a line by line basis by adding together like

items of assets, liabilities, income and expenses. All intra-group balances and transactions have been eliminated on consolidat ion.

Minority interest in the net income and net assets of the subsidiary is computed and disclosed separately. The subsidiaries

considered in the Consolidated Financial Statements are:

Name of the Company Country of incorporation Percentage holding

Advani Pleasure Cruise Company Private Limited India 51%

Advani Flight Catering Services Private Limited India 100%

3. Revenue Recognition:

The Company derives revenues primarily from hospitality services. Revenue on time and material contracts are recognized

as the related services are performed. Revenue yet to be billed is recognized as unbilled revenue. Sales and services are

stated exclusive of taxes. Income from Live Casino Business is accounted for on the basis on winnings and losses at the end

of each night of play with the count of chips. Income from Slot machines is accounted for on the basis of actual collection in

the respective machine. Interest income is recognized on time proportion basis. Dividend income is recognized when the right

receive payment is established.

Export Benefits arising out of Duty Free Scrips utilised for the acquisition of fixed assets are being adjusted against the cos t

of the related fixed assets (Refer Note 3 of Notes on Accounts).

4. Sales and Services:

Sales are stated net of discount and allowances.

5. Fixed Assets:

(i) Fixed Assets are stated at cost less depreciation. Fee paid for acquisition of technical know-how is capitalised.

(ii) In the case of new projects successfully implemented, substantial expansion of existing units and expenditure resulting

into enduring benefit, all pre-operative expenses including interest on borrowings for the project, incurred up to the date of

installation are capitalised and added pro-rata to the cost of fixed assets.

6. Depreciation:

(i) Depreciation is provided in the accounts on straight-line method at the rates prescribed in Schedule XIV to the


(ii) Where the historical cost of a depreciable asset undergoes a change due to increase or decrease on account of price

adjustments, changes in duties or similar factors, depreciation on the revised amount is provided prospectively over

the residual useful life of the asset.

7. Investments:

Long Term Investments are valued at cost. Provision for diminution in value is made, if in the opinion of the management, such

a decline is considered permanent. Other Investments are valued at cost or market value whichever is lower.

8. Inventories:

Inventories are valued after providing for obsolescence as under:

— Stores and Operating Supplies – At lower of cost or realisable value;

— Food and Beverage - At lower of cost or realisable value; and

— Goods in transit - At lower of cost or realisable value.

58





SCHEDULE ‘L’ : SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS —(contd.)


Company’s contributions to Provident Fund are charged to Profit and Loss Account. Gratuity payable at the time of retirement

are charged to Profit and Loss Account on the basis of independent external actuarial valuation determined on the basis of the

projected unit credit method carried out annually Actuarial gains and losses are immediately recognized in the Profit and Loss

Account. Gratuity in certain applicable cases is provided for in accordance with the provisions of the Goa Shops & Establishmen t

Act, 1973. Provision for leave encashment is made on the basis of independent external actuarial valuation carried out at the

end of the year.

10. Foreign Currency Transactions:

(i) Sales made in foreign currency are converted at the prevailing applicable exchange rate. Gain/Loss arising out of

fluctuation in exchange rate is accounted for on realization.

(ii) Payment made in foreign currency including for acquiring fixed assets are converted at the applicable rate prevailing on

the date of remittance. Liability on account of foreign currency is converted at the exchange rate prevailing at the end

of the year except in cases of subsequent payments where liability is provided at actual. Foreign currency in hand is

translated at the year-end exchange rate.

(iii) Monetary assets and liabilities denominated in foreign currency at the balance sheet date other than long term foreign

currency items of assets and liabilities having a term of twelve months or more as discussed herein below, are

translated at the year end exchange rate and the resultant exchange differences are recognised in the Profit and Loss

Account. Exchange differences relating to long term foreign currency items of assets and liabilities having a term of

twelve months or more as covered in the Companies (Accounting Standards) Amendment Rules 2009 on Accounting

Standard 11 (AS-11) notified by Government of India on 31st March, 2009 in so far as they relate to the acquisition of

a depreciable capital asset, are added to or deducted from the cost of the assets and depreciated over the balance

useful life of the asset, and in other cases are accumulated in a “Foreign Currency Monetary Item Translation

Difference Account” and amortized over the balance period of such long term monetary item in accordance with the

aforesaid Notification.

11. Prior period adjustments, Extra Ordinary items and Changes in accounting policies:

Prior period adjustments, extraordinary items and changes in accounting policies having material impact on the financial

affairs of the Company are disclosed.

12. Leases:

Lease payment under an operating lease is recognised as an expense in the profit and loss account on a straight line basis

over the lease period.

Assets taken on finance lease are capitalized and finance charges are charged to profit and loss account on accrual basis.

13. Amortisation of Expenses:

Share Issue Expenses and Deferred Revenue Expenses incurred prior to 1

st

April, 2003 are continued to be amortised over

a period of ten years and over the period over which such benefit is expected to accrue respectively in line with the

Accounting Standard 26 (AS - 26) – “Intangible Assets” notified by the Companies (Accounting Standards) Rules, 2006.

14. Borrowing costs:

Borrowing costs that are directly attributable to and incurred on acquiring qualifying assets (assets that necessarily takes a

substantial period of time for its intended use) are capitalized. Other borrowing costs are recognized as expenses in the

period in which same are incurred.

15. Segment Accounting:

Reportable Segments are identified having regard to the dominant source of revenue and nature of risks and returns.

16. Taxes on Income:

Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance

with the provisions of the Income Tax Act, 1961. Deferred tax is recognized on timing differences between the accounting

income and the taxable income for the year, and quantified using the tax rates and laws enacted as on the Balance Sheet

date. Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient

future taxable income will be available against which such deferred tax assets can be realized.

17. Accounting Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognized in terms of Accounting Standards 29 – “Provisions, Contingent Liabilities and Contingent Assets”

notified by the Companies (Accounting Standards) Rules, 2006, when there is a present legal or statutory obligation as a

result of past events where it is probable that there will be outflow of resources to settle the obligation and when a reliable

59


estimate of the amount of the obligation can be made.

Contingent Liabilities are recognized only when there is a possible obligation arising from past events due to occurrence of

one or more uncertain future events not wholly within the control of the Company or where any present obligation cannot be

measured in terms of future outflow or resources or where a reliable estimate of the obligation cannot be made. Obligations

are assessed on an ongoing basis and only those having a largely probable outflow of resources are provided for.

B. NOTES ON ACCOUNTS:

1. In terms of the Share Purchase Agreement dated 20th September, 2010 entered into by the Company with Delta Corp Limited,

the Company has sold its 51% investment in Advani Pleasure Cruise Company Private Limited. Accordingly, Advani Pleasure

Cruise Company Private Limited has ceased to be the subsidiary of the Company with effect from that date.

2. (a) The subsidary Company viz. Advani Pleasure Cruise Company Private Limited operates a full –fledged casino ship in

Goa under a management contract with Casinos Austria International, which also owns 49% of shares of the subsidary

Company. The Government of Goa issued five other casino licenses in the same river at Goa. Due to fierce competition

faced by the subsidiary Company from other Casino Operators and exodus of trained employees from the subsidary

Company, the Company incurred loss in the financial year 2008-09 and this year as against highly profitable position

in earlier years. The management has temporarily suspended the casino operations from 12th June, 2009 and still

continuing. This situation may indicate the existence of material uncertainty that may cast significant doubt on the

subsidiary Company’s ability to continue as a going concern. The management is trying to find a suitable solution to this

problem

(b) Since the business operations of the Company’s subsidiary viz. Advani Pleasure Cruise Company Private Limited

were suspended with effect from 12

th

June 2009, which is continuing, the current year’s performance is not comparable

with the performance of previous year.

3. Benefits arising out of Duty Free Scrips, utilised for the acquisition of fixed assets are, with effect from April 1, 2009, being

adjusted against the cost of the related asset, as against the practice hitherto followed of recognising the same as income.

Consequent upon the change, miscellaneous income for the year is lower by Rs. 1,843,819/- with a corresponding deduction

in the value of fixed assets, as also reduction in the depreciation thereon.

4. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 4,992,444/- (Prev. year

Rs. 20,247,819/-) net of advances.

5. Contingent liabilities not provided for in respect of:

(a) Claims against the Company not acknowledged as debts Rs. 5,603,834/- (Prev. year, net of counter claims, Rs.

8,785,164/-).

(b) The Dy. Commissioner of Central Excise, Service tax Goa, vide his order dated 31st March, 2005 has held the

Company liable to pay service tax on amounts paid by way of management fee and reimbursement of salaries to

expatriates under the management Agreement signed by the Company with Casinoinvest, Austria and raised a demand

of Rs. 510,349/- in respect of payments of management fees and salaries upto 31

st

March, 2001 paid during 2003-04

and a further demand of Rs. 30,167/- towards interest & penalty.

The Company’s first appeal against the said order has been rejected and second appeal has been filed by the

Company, which is pending. The Company has paid further amounts of management fees upto the period ended

November 2006, and based on the findings in the order dated 31st March, 2005, deposited further service tax of Rs.

1,245,086/- for subsequent period under protest pending disposal of the Company’s appeal. The disputed tax, interest

& penalty paid so far of Rs. 2,660,708/- (Rs. 510,349/-, Rs. 2,120,192/- and Rs. 30,167/- respectively) has not been

provided for in the accounts for the year ended 31

st

March, 2010 and the same has been shown under ‘Loans &

Advances’.

(c) Demand raised by Sales tax and luxury tax authorities, disputed in appeal, which are pending amounting to Rs.

1,215,646/- (Prev. Year Rs. Rs. 5,881,182/-).

(d) The Commercial tax Officer, Goa raised a demand of Rs. 1,910,097/- in respect of Entertainment tax dues of

Rs.1,910,197/- for the year 2007-2008 vide assessment order dated 23rd March, 2010. (consisting of entertainment

tax of Rs. 1,461,690/-; interest of Rs. 438,507/- for non-payment of tax; and penalty of Rs. 10,000/-) passed under

Section 6A of the Goa Entertainment Tax Act, 1964. The subsidiary Company has disputed the levy of additional tax

and an appeal has been filed, which is pending. Pending disposal of appeal, no provision has been made for the




60






aforesaid assessment dues of Rs. 1,910,097/-. The subsidiary Company viz. Advani Pleasure Cruise Company

Private Limited has paid Entertainment tax for subsequent years in accordance with the relevant provisions of the

above Act and assessments are pending.

(e) The second Feeder Boat ordered with Aquarius Fibreglas Pvt.Ltd. was lying ready for delivery since June’2009.The

delivery was to be taken after paying 40% balance payment. Since the subject delivery was not taken the supplier has

demanded parking charges @ Rs.50,000/- p.m. from July’2009 which amounts to Rs.450,000/- upto 31.03.2010.The

said dues are being shown contingent liability as subsidiary company viz. Advani Pleasure Cruise Company Private

Limited has not accepted his claim as debts.

(f) Demand raised by Income Tax authorities disputed by the Company in appeal and rectification proceedings, which are

pending - Rs. 1,065,815/- (Prev. year Rs. 1,065,815/-).

(g) The Company has given Corporate Guarantee of Rs. 84,000,000/- (Prev. year Rs. 84,000,000/-) on behalf of its

subsidiary Company M/s. Advani Pleasure Cruise Company Private Limited to Bank of Baroda, Mumbai. The Corporate

Guarantee is 51% of the sanctioned loan amount of Rs. 164,000,000/- (Prev. year Rs. 164,000,000/-). As on year

ending March 31, 2010, the guarantee stood at Rs. 80,117,060/- (Prev. year Rs. 63,805,332/-) being 51% of Rs.

157,092,275/- (Prev. year Rs. 125,108,495/-) i.e. the loan availed by subsidiary Company. The above corporate

guarantee has since been extinguished after the close of the year.

(h) Other money for which the Company is contingently liable:

Current year Previous year

Rupees Rupees

Bank Guarantees 6,785,484 7,885,484

(i) Certain employees of the Company’s flight catering unit i.e. Airport Plaza, which is sold in previous year have demanded

higher wages with effect from August 01, 2006. The matter is pending in the Labour Court. Pending disposal of the

matter, no provision has been made for the additional wages, as the amount is indeterminate.

6. Segment Reporting under Accounting Standard 17: (Figures in Rupees)

Particulars Hotel Casino Operations Consolidated

1. Segment Revenue 323,968,059 9,066,799 333,034,858

317,651,394 231,967,003 549,618,397

2. Segment Results (7,936,701) (132,716,779) (140,653,480)

992,419 (9,750,040) (8,757,621)

3. Profit after taxation (After prior period items) (14,833,062) (132,549,124) (147,382,186)

1,447,586 (8,494,174) (7,046,588)

4. Segment Assets 421,630,148 261,543,009 683,173,247

446,411,550 250,569,652 696,981,202

5. Segment Liabilities 65,173,490 270,986,264 336,159,754

123,596,328 131,707,436 255,303,764

(Figure in italics are for previous year)


The disclosures required under Accounting Standard 15 “Employee Benefits” notified in the Companies (Accounting Standards)

Rules 2006, are given below:

61





Defined Contribution Plan

Contribution to Defined Contribution Plan, recognized are charged off for the year are as under:


Rupees Rupees

Employer’s Contribution to Provident Fund 1,864,778 2,167,549

Employer’s Contribution to Pension Scheme 1,533,458 2,124,332

Defined Benefit Plan

In respect of Employees’ Retiring Gratuity, the present value of obligation is determined based on actuarial valuation using th e

Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit

entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is

recognized on actuarial valuation basis.

Sr. Retiring Gratuity Liability Current Year Previous Year

Rupees Rupees

(Unfunded) (Unfunded)

I. Assumptions:

Discount rate – previous ............................................................................... 8.00% 8.00%

Salary Escalation – previous ......................................................................... 4.00% 4.00% - 5.00%

Discount rate – Current ................................................................................. 8.00% 7.75% - 8.00%

Salary Escalation – Current .............. ............................................................ 4.00% 4.00% - 5.00%

II. Change in Benefit Obligation:

Liability at the beginning of the year ............................................................. 5,128,303 5,921,763

Interest cost .................................................................................................... 342,325 528,166

Current Service Cost ..................................................................................... 627,213 960,258

Benefit Paid ..................................................................................................... (953,401) (493,045)

Actuarial (Gain) / Loss on obligations .......................................................... (116,005) (1,788,839)

Liability at the end of the year ....................................................................... 5,028,435 5,128,303

III. Recognition of Transitional Liability: N.A. N.A.

IV. Amount recognized in the Balance Sheet:

Liability at the end of the year ....................................................................... 5,028,435 5,128,303

Fair value of Plan Assets at the end of the year ........................................ — —

Difference ........................................................................................................ (5,028,435) (5,128,303)

Amount recognized in the Balance Sheet .................................................... (5,028,435) (5,128,303)

V. Expenses recognized in the Profit and Loss Account:

Current Service Cost ..................................................................................... 627,213 960,258

Interest Cost ................................................................................................... 342,325 528,166

Actuarial Gain or (Loss) ................................................................................ (116,005) (1,788,839)

Expense recognized in the Profit and Loss Account .................................. 853,533 (300,415)

VI. Balance Sheet Reconciliation:

Opening Net Liability ...................................................................................... 5,128,303 5,921,763

Expenses as above ....................................................................................... 853,533 (300,415)

Employer’s Contribution ................................................................................. (953,401) (493,045)

Closing Net Liability ........................................................................................ 5,028,435 5,128,303

62






Sr.No. Leave Encashment Liability Current Year Previous Year

Rupees Rupees

(Unfunded) (Unfunded)

I. Summary of Assumption:

Retirement age............................................................................................... 60 Years 58-60 years

Attrition rate ..................................................................................................... 2% 2%

Future Salary Rise ......................................................................................... 4.00% 4.00%-5.00%

Rate of Discounting ........................................................................................ 8.00% 7.50%-8.00%

Mortality Table ................................................................................................ LIC (1994-96) LIC (1994-96)

Ultimate Ultimate

II. Actuarial Value of leave encashment liability ........................................ 700,328 1,519,039

Notes:

a. The business operations of the subsidiary Company Advani Pleasure Cruise Company Private Limited have been

suspended with effect from 12th June, 2009. Most of the employees, barring some, have left the employment or their

employment ceased due to non-attendance or taking employment with other employers. The subsidiary Company has

paid / provided actual gratuity and leave encashment payable to these employees. Likewise in respect of certain

employees continuing as on the losing day, the subsidiary Company has provided actual liability of gratuity of Rs.

1,221,476/- and leave encashment payable of Rs. 497,099/-. The aggregate of such payment and provision for gratuity

amounting to Rs. 667,608/- and for leave encashment amounting to Rs. 546,288/- has been charged to revenue. In

view of provision/payment of actual liability, provision made in the accounts upto 31st March, 2009 on the basis of

actuarial basis, has been written back.

b. In view of suspension of business and for the facts mentioned in Note (1) above, the actuarial valuation of gratuity and

leave encashment for the above subsidary is not done for 2009-10.

8. Related Party Disclosures under Accounting Standard 18:

(a) Parties where control exists: None

(b) Parties where control exists: None

(c) Key Management Personnel:

Mr. Sunder G. Advani : Chairman & Managing Director

Mr. Haresh G. Advani : Executive Director

Mr. Prahlad S. Advani : Manager – Asset Management and Relative (Son)

(d) Other parties being relative of key management personnel with whom transactions have taken place during the year :

None.

(e) Other related parties with whom transactions have taken place during the year:

Mr. K. Kannan, Mr. Prakash V. Mehta, and Mr. Anil Harish – Non-Executive Directors

Mrs. Menaka S. Advani, Non-Executive Director and a relative

D. M. Harish & Co., Advocates (Partnership firm wherein Mr. Anil Harish is a partner)

Malvi Ranchoddas & Co. Solicitors & Advocates (Partnership firm wherein Mr. Prakash V. Mehta is a partner)

CAI CasinoInvest GMBH (substantial shareholder of the Subsidiary)

(f) Summary of transactions during the year with Related Parties and status of outstanding balances as on 31st March,

2010:

63





Sr. Nature of transactions Associates and Key

No. other related Management

parties Personnel

Rupees Rupees

1 Sale of goods & services ...................................................................... — —

—— 2 Purchase of goods & services ............................................................. — —

—— 3 Remuneration including Sitting Fees..................................................... 1,160,000 11,019,249

1,120,000 10,589,542

4 Consultancy Fees.................................................................................. 1,051,299 —

217,963 —

5 Expenses recovered.............................................................................. — 884,876

— 902,989

6 Interest paid ............................................................................................ — —

—— 7 Management Fees ................................................................................. 86,473 —

4,580,624 —

8 Loans taken ............................................................................................ — —

— —

9 Loans & Advances given / (recovered) ............................................... — —

—— 10 Balance outstanding at the year end:

Amount Payable...................................................................................... 7,649,236 —

8,452,727 —

Accounts receivable............................................................................... — —

—— (Figures in italics are for previous year)

9. The Company has taken certain premises on lease. The aggregate lease rentals payable are charged as rent in the Profit and

Loss Account. Future commitments in respect of minimum lease payments payable for non-cancelable operating leases

entered into by the Company:

Particulars


Rupees Rupees

Payable within one year .............................................................................................. 14,665,927 35,871,704

Payable later than one year but not

later than five years ..................................................................................................... 1,764,000 24,261,897

Payable after five years .............................................................................................. Nil Nil

10. Earnings per share (E.P.S.) under Accounting Standard 20:


Profit after tax and Minority Interest as per Accounts Rs. (82,433,115) Rs. (2,884,443)

No. of Shares issued ................................................................................................... 46,219,250 46,219,250

Nominal face value of share ....................................................................................... Rs. 2 Rs. 2

Basic & Diluted E.P.S. .................................................................................................. Rs. (1.78) Rs. (0.06)

64






11. Components of Deferred Tax Assets and Liabilities are as under:


Rupees Rupees

Deferred tax liabilities on account of:

Difference between the written down value of assets under the Companies

Act, 1956 and the Income Tax Act, 1961. ................................................................. 67,273,860 72,411,734

Amount allowable under Section 40(a)(ia)/43B of the Income-tax Act, 1961 .......... — 3,434,895

Total (A) 67,273,860 75,846,629

Deferred tax assets on account of:

Expenses allowable on payment basis ...................................................................... 1,406,453 1,532,914

Disallowance under Section 40(a)(ia)/43B of the Income-tax Act, 1961 ................. — 6,934,675

Provision for doubtful debt/loans and advances ........................................................ 9,655,082 9,605,289

Provision for liability for refund of jetty deposit .......................................................... 2,651,220 —

Business loss and unabs orbed depreciation ............................................................. — 2,642,525

Provision for Employment benefits ............................................................................. — 678,012

Total (B) 13,712,755 21,393,415

Deferred Tax Liability – Net (A – B) 53,561,105 54,453,214

Deferred Tax Debit / (Credit) for the year (Refer Note below) 3,196,361 (11,132,293)

Note: In the absence of virtual certainty and considering the prudence, the management has not recognised the Deferred Tax

assets of Rs. 33,297,532/- relating to subsidiary company and has recognised Deferred Tax Liability of Rs. 3,196,361/-relating to the parent company only.

12. The Company has obtained exemption from the Department of Company Affairs (DCA) vide its letter No. 47/373/2010-CL-III

dated May 17, 2010 for publication of the Accounts of its subsidiaries under the provisions of the Companies Act, 1956. The

information as required under the condition 3 of the said approval is given below: (Rupees)

Particulars

Advani Pleasure Advani Flight Catering

Cruise Co. Pvt. Ltd. Services Pvt. Ltd.

LIABILITIES:

Share Capital........................................................................................ 43,500,000 100,000

Reserves & Surplus............................................................................ 57,370,650 —

Secured Loan ....................................................................................... 157,206,246 —

Unsecured Loan .................................................................................. 113,780,018 —

Current Liabilities .................................................................................. 36,225,887 11,030

TOTAL LIABILITIES 408,082,801 111,030

ASSETS:

Fixed Assets-Net (incl. CWIP) ........................................................... 259,705,600 —

Investments .......................................................................................... — —

Defferred Tax Asset............................................................................ 1,154,566 —

Current Assets..................................................................................... 63,199,095 63,805

Miscellaneous Expenditure.................................................................. 1,837,499 —

Profit and Loss Account...................................................................... 82,186,041 47,225

TOTAL ASSETS 408,082,801 111,030

Turnover............................................................................................... 9,066,799 —

Profit/(Loss) Before Taxation .............................................................. (132,716,779) (18,315)

Provision for Tax ................................................................................. — —

Profi After Tax ...................................................................................... (132,716,779) (18,315)

Proposed Dividend ............................................................................... — —

Note: There are no business operations till March 31, 2010 in the Advani Flight Catering Company Private Limited.

65





13. (a) In terms of the Agreement for sale of shares of subsidiary company, the Company after the close of the year, furnished

a bank guarantee of Rs. 15,000,000/- to the Acquirer as and by way of security for the performance of its obligation to

transfer the casino gaming license to Advani Pleasure Cruises Company Private Limited by 20

th

December, 2010. The

Company has made an application for transfer of the gaming license, which is under consideration of the concerned

authorities. Accordingly, this amount of Rs. 15,000,000/- is a contingent liability not provided for.

(b) The Company has paid a security deposit of Rs. 7,800,000/- to the Government of Goa for Jetty Premises at Goa. In

terms of the Agreement for sale referred to above, the Company is obliged to refund the above deposit to Advani

Pleasure Cruise Co. Pvt. Ltd. on receipt of refund from the Government of Goa for which an application has been

made, which is pending. The Company has provided for this liability in the enclosed accounts. (Refer Schedule J-1)

14. There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days

as at March 31, 2010. This is information as required to be disclosed under “The Micro, Small and Medium Enterprises

Development Act, 2006” (the Act) has been determined to the extent such parties have been identified on the basis of

information available with the Company.

15. Previous year’s figures have been recast/regrouped/rearranged wherever necessary for comparison sake.

Signature on the Schedules “A” to “K”







NOTES:

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Mr. Sunder G. Advani, Chairman & Managing Director

receiving the Certificate for Hotel with best services & facilities in Goa from the

representatives of the Russian Tour Operator, Megapolis, at a Ceremony in Moscow.

Registered Office: 1009/1010 Dalamal Tower, 211 Nariman Point, Mumbai 400 021.

Tel: (91-22) 2285 0101, Fax: (91 - 22) 2204 0744, Email: [email protected]

www.caravelabeachresort.com

Printed by Neil Grafix

Annual report of advani hotel

Economy & Finance

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previous yearrupees rupeesschedule

projects successfully implemented

resultant exchange differences

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defined contribution plancontribution

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onthe balance sheetdate