| Dear Members,
The Directors have pleasure in presenting their Fifty Second Annual
Report, together with the Audited Accounts of the Company for the
financial year 2013-14 consisting of 12 months from 01-04-2013 to
31-03-2014.
FINANCIAL RESULTS
During this financial year, your Company made a turnover of Rs. 926.72
lakhs including other income. There have been arrears of interest on
certain loans availed by the Company, arrears of salary & wages,
arrears of remuneration to the directors and statutory dues. etc.,
which could not be provided in the past due to the financial condition
of the Company. Your board of directors decided to make provisions for
such overdue arrears, ahead of the implementation of the new business
plans. After making provision for such overdue arrears and other
expenses, and after providing for depreciation, there was a net loss of
Rs.3364.41 lakhs.
2013/14 2012/13
Gross Sales 784.66 971.97
Other Income 142.06 436.11
Total Income 926.72 1408.08
Less:
- Cost of materials consumed 186.02 189.64
- Employee Benefit Expenses 373.01 412.4
- Financial Charges 1917.63 296.34
- Depreciation & Amortisation Expenses 186.43 149.41
- Other Expenses 1628.04 813.83
- Total Expenditure 4291.13 1861.63
Loss before exceptional &
extraordinary items & tax -3364.41 -453.55
Exceptional items 0 0
Profit before extraordinary items -3364.41 -453.55
Less: Provision for tax 0 0
Net Profit / Loss (-) -3364.41 -453.55
DIVIDEND
Considering the financial results of the Company for the year under
review, the Board of Directors could not consider payment of any
dividend to the shareholders.
MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION
OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH
THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
Subsequent to the end of the financial year under review, the hotel has
been dosed for demolition and putting up of commercial / residential
blocks. Hence there will not be any generation of revenue during this
year.
It has also been dec ided to revalue the block assets of the Company
during the current financial year 2014-15, since the historical value
does not reflect the intrinsic value of these assets. It has also been
decided provide for balance of arrears of remuneration due to the
Executive Directors (Managing Director and Executive Director) and some
of the senior executives who have put in long service, statutory dues,
etc., which could not be provided fully in the past.
REVIEW OF OPERATIONS
HOTEL DIVISION
During the year under review, the Hotel was operational with 79 rooms.
The gross sales shown above consisted mainly of room revenue and Food &
Beverage revenue. The Other Income consisted of rent received from the
floors in the annexe building leased out to restaurants. The
performance of the Hotel has not been satisfactory.
BLEAK PROSPECTS OF HOTEL BUSINESS
The availability of hotel rooms within Chennai city is much more than
the current demand, which i s affecting the performance of almost ail
the hotels in the City. Many hotels have already closed down and are
putting up residential/commercial apartments. Even some of the new
hotel projects, where construction was in progress, have decided to
demolish the construction and convert into real estate projects. The
existing mismatch of demand and supply would continue for some more
years and the Company would continue to be incurring losses, As the
Company cannot afford to incur further losses, the Board of Directors
took a decision to close down the existing hotel, demolish the building
and in its place put up commercial/residential apartments.
Therefore, offers were invited from reputed builders and out of them,
the offer made by M/s, Kgeyes Residency Pvt. Ltd., Chennai was found to
be the most beneficial and accepted by the Management, and a
preliminary agreement has been entered into with them. As per the terms
agreed, in due course, we have to hand over vacant possession of the
property to them to enable them to proceed with the various formalities
for demolishing the existing hotel and annexe buildings and
constructing new commercial / residential building(s) on the same site.
Accordingly, the hotel business was closed effective from 1st April
2014.
The Company will not totally exit from hotel business. As per the
studies undertaken, there is a scope for putting up a hotel near the
Airport and therefore, out of the surplus anticipated from the above
proposed property redevelopment, the Company would consider putting up
a hotel with lesser number of rooms in a new location.
Meanwhile, some of the shareholders have approached the Company Law
Board and obtained an interim Order, which prevents alienation,
encumbrance and creation of third party interest on the property, due
to which the property redevelopment proposal has come to a standstill.
The Management is exploring the possibilities of removing the deadlock.
EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE
REMARKS OR DISCLAIMERS MADE BY THE INDEPENDENT AUDITORS.
Replies to the observations made by the Auditors are given in the
Addendum to this Report.
LISTING OF COMPANY'S SECURITIES
Your Company's equity shares are currently listed on Bombay Stock
Exchange Limited (BSE), Mumbai. The company had taken an in-principle
decision to delist the equity shares from Ahmadebad Stock Exchange and
Madras Stock Exchange.
DEMATERIALIZATION OF SHARES
Your Company's shares have been made available for dematerialization
through the National Securities Depository Limited (NSDL) and Central
Depository Services (India) Limited (CDSL).
FIXED DEPOSITS
The Company has not been accepting any fixed deposit.
BOARD OF DIRECTORS
Additional Directors - During the year company co-opted seven Directors
on the board as Additional Directors. They are Dr. Muthiah Senthil
Nathan, Mr. Sankaranarayanan Subramanian, Mr, Natesa Pillai
Subramanian, Mr. Venkatesa Iyer Viswanathan. Dr. Raghavan Sivaram, Mr.
Kasirajan Rangaswamy and Mr, Shameer Ahamed.
Accordingly, all the aforementioned persons were appointed as a
Additional Directors with effect from November 14, 2013 to hold office
till the conclusion of ensuing Annual General Meeting. They do not seek
reappointment.
Cessation of director - Mr. Kamal Kumar Babbar ceased to be Director of
the Company with effect from 30.09.2013.
Resignation of Director - A. Periasamy Pillay resigned from the Board
of the Company with effect from 14.05.2013.
Re-appointment of directors retiring by rotation -Mr. S.Kalyanam and
Mr. C.L. Ravichandran Directors of the Company retire by rotation at
the ensuing Annual General Meeting and being eligible offer themselves
for re-appointment.
The Board expresses its appreciation for the services rendered and for
the matured advice provided by the outgoing directors during their
association with the Company.
AUDITORS
At the Annual General Meeting, the members have to appoint Auditors for
the period from conclusion of the 52nd AGM till the conclusion of the
53rd AGM.
M/s. Anil Kumar Bhandari & Associates, Chartered Accountants.
Bangalore, the retiring Auditors, are eligible for reappointment and
they have confirmed that their reappointment, if made, will be within
the limits prescribed under the provisions of Companies Act 2013.
SUBSIDIARIES
The Company does not have any subsidiaries and hence Consolidation of
Accounts does not arise.
CORPORATE GOVERNANCE
A detailed report on Corporate Governance has been included separately
in the Annual Report. A report on Management Discussion and Analysis is
attached to the Directors Report and forms part of this Annual Report.
A report on Corporate Governance including Certificate on compliance
with the conditions of Corporate Governance under Clause 49 of the
listing agreement is furnished with the Annual Report.
BOARD COMMITTEES:
The Company has three Board Committees, viz. Audit Committee. Share
Transfer/Investors' Grievances Committee and Remuneration Committee to
assist the Board of Directors in effective discharge of its
responsibilities.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors confirm:
That in preparation of the annual Accounts, the applicable accounting
standards have been followed along with proper explanation.
That the Directors had selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year ended on 31st March
2014 and of the loss of the Company for that year.
That the Directors had taken proper and sufficient care for maintenance
of adequate accounting records for the year ended 3 lst March 2014 in
accordance with the provisions of the Companies Act, 1956 for
safeguarding the assets of the Company and for prevention of fraud and
other irregularities.
That the Directors have prepared the Annual Accounts on an ongoing
basis.
CODE OF CONDUCT
The Board has laid down a Code of Conduct for all Board Members and
Senior Management of the Company. The Code of Conduct has been posted
on Companies website. Board Members and Senior Management personnel
have affirmed Compliance with the Code for the financial year 2013-14.
A separate declaration to this effect is made out in the Corporate
Governance Report.
PERSONNEL
Information required to be furnished under the provisions of Companies
Act 2013 read with the rules made there-under, is not applicable since
none of the employees are receiving remuneration specified.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
As the Company is not engaged in any of the industrial activity
mentioned in the Schedule to Companies (Disclosure of particulars in
the report of Board of Directors) 1988, Section 217(1 )(e) of the
Companies Act. 1956 read along with Companies (Disclosure of
particulars in the report of Board of Directors) 1988, the requirement
of furnishing particulars regarding conservation of energy, technology
absorption and adoption provided under Section 217(1 )(e) of the
Companies Act, 1956 is not applicable and hence same has not been
provided.
There are no material foreign exchange earnings or outgo during this
period.
ACKNOWLEDGEMENT
Your Directors wish to take the opportunity to thank the Central &
State Governments and Punjab National Bank for the help and support
extended by them.
Thanks are also due to our patrons for their continued patronage and
the vendors for their co-operation.
Your Directors also wish to thank the Members for the continued
confidence they repose in the Management and the Employees for their
sincere services and co-operation.
By Order of the Board
For Aruna Hotel Ltd
Date : 25/02/2015 M. Sivaram
Place : Chennai Chairman |