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BSE: 500850ISIN: INE053A01029INDUSTRY: Hotels, Resorts & Restaurants

BSE   ` 143.10   Open: 140.40   Today's Range 139.65
145.00
+4.15 (+ 2.90 %) Prev Close: 138.95 52 Week Range 110.00
155.90
Year End :2018-03 

To the Members

The Directors have pleasure in presenting the 117th Annual Report of your Company together with its Audited Financial Statements for the financial year ended March 31, 2018:

Financial Results

Rs./crores

Standalone

Consolidated

Particulars

2017-18

2016-17

2017-18

2016-17

Total Income

2639.34

2459.58

4165.28

4075.51

Profit before Depreciation, Finance Costs, Tax and Exceptional Items & share of equity accounted investees

684.19

577.70

732.08

664.56

Less: Depreciation

151.34

151.31

301.2

299.37

Less: Finance Costs

193.43

197.86

269.04

323.83

Profit before Tax, Exceptional Items and share of profit of equity accounted investees

339.42

228.53

161.84

41.36

Add/(Less): Exceptional Items

(55.19)

33.51

22.45

(10.78)

Profit before Tax

284.23

262.04

184.29

30.58

Less: Provision for Tax

136.46

118.86

121.06

113.74

Profit / (Loss) after Tax, before Non-Controlling interest & share of profit of equity accounted investees

147.77

143.18

63.23

(83.16)

Less: Non-Controlling Interest

-

-

2.65

(17.60)

Add: Share of Profit of Associates and joint ventures net of Tax

-

-

40.29

37.56

Profit / (Loss) after Tax attributable to Owners of the Company

147.77

143.18

100.87

(63.20)

External Environment

The Indian economy grew by 7.2% year on year in the quarter ending December 2017 on good showing by key sectors like agriculture, construction and manufacturing, as against 6.3% year on year in the previous quarter. The growth in GDP during FY 2017-18 is estimated at 6.5% as compared to the growth rate of 7.1% in FY 2016-17.

India’s annual inflation rate rose to a 3 month high of 4.58% in April 2018 from 4.28% in the previous month. Inflation rate in India averaged 6.60% from 2012 until 2018, reaching an all-time high of 12.17% in November 2013 and a record low of 1.54% in June 2017 mainly due to demonetization.

Revival in rural demand and increased infrastructure spending is likely to drive India’s growth in current year, even as increasing debt and trade protectionism could pose a challenge. After a year of disruptions and growth slowdown due to Goods and Services Tax & demonetisation, Indian economy is consolidating the gains from the recent reforms. There is high optimism in domestic demand in the form of consumption and revival in small scale business activities, resulting in an increase in Foreign Direct Investment flows into the country. With an eye on infrastructure development, the Government has given green light to Rs. 7 trillion infrastructure program in late 2017, with the aim to pave more than 80,000 km of road by March 2022. In addition, Government continues to encourage the expansion of Digital India.

Indian Hospitality Industry

The Indian hospitality industry has been instrumental in contributing to the nation’s economic growth. The introduction of e-visa for foreign tourists and the increased domestic travel have helped in contributing to the same.

International travel and tourism arrivals increased by a remarkable 7% to reach a total of 1,322 million in 2017 (January to December), 87 million more than the calendar year 2016. (Source: UNWTO).

For India, Foreign Tourist Arrivals during 2017 were 10.18 million with a growth of 15.6% over the same period of the previous year. During 2016 Foreign Tourist Arrivals were 8.8 million with a growth rate of 9.7% over 2015. (Source: Ministry of Tourism, Government of India)

The facility of e-visa has been enhanced and is now offered to citizens of 163 specified countries. In 2017, a total of 17 lakhs tourists availed the facility as compared to 10.79 lakhs in 2016, which represents a growth of 57%.

The growth in demand for rooms (5%) has been consistently outpacing the supply (3.2%) growth in India and this trend has been sustained over the recent past. This has resulted in an all India occupancy level of 65% across the industry. Except Chennai & Gurgaon, most key cities saw a healthy increase in demand. (Source: STR reports)

Financial Highlights-Standalone

The Taj Group opened one luxury hotel in Andaman. The inventory of the Taj Group of Hotels now stands at 145 hotels with 17,145 rooms. The Group’s portfolio also includes 42 hotels under the Ginger brand, which has an aggregate inventory of 3,763 rooms. Your Company continues to pursue expansion both in the domestic and international market, in a capital light manner, to achieve sustainable and profitable growth.

Income

The Total Income for the year ended March 31, 2018 at Rs. 2,639.34 crores represents a growth of 7% over the previous year. Within the overall revenue, Room Revenue increased by 4%, driven by improved average rate per room (‘ARR’) across the portfolio. The Food and Beverage Revenues increased by 8% over the previous year, aided by growth in restaurant sales and banqueting income. Other Operating Income, Management and Operating Fees, were also higher as compared to the previous year.

Dividend Income were lower as compared to the previous year, however Company earned interest income of Rs. 11.4 crores out of surplus funds from rights issue proceeds pending utilisation which was temporarily parked in fixed deposits with banks.

Depreciation and Finance Costs

Depreciation at Rs. 151.34 crores was at the same level as the previous year.

Finance costs for the year ended March 31, 2018 at Rs. 193.43 crores was lower than the previous year’s figure of Rs. 197.86 crores mainly due to repayment of debt out of Rights Issue proceeds.

Profit before Tax and Exceptional Items

Profit before Tax and Exceptional Items stood at Rs. 339.42 crores, which represents an increase of 49%, as compared to the previous year.

Exceptional Items

Exceptional Items mainly include exchange gain on change in Fair value of cross currency swap derivative contracts Rs. 25.51 crores and provision for impairment due to losses in an overseas subsidiary Rs. 80.50 crores. Corresponding figures for the previous year were Rs. 65.45 crores and Rs. 64.33 crores respectively.

In the previous year, there was a one-time gain of Rs. 24.33 crores arising out of settlement claims and refund of Municipal Tax and interest of Rs. 6.16 crores previously paid under protest.

Borrowings

The total borrowings stood at Rs. 1,783.88 crores as at March 31, 2018 as against Rs. 2,048.98 crores as on March 31, 2017 representing a decrease of Rs. 265.10 crores due to repayment & refinancing of debt.

Profit / (Loss) before and after Tax

The Profit before Tax for the year was at Rs. 284.23 crores, as compared to Rs. 262.04 crores for the previous year. The Profit after Tax for the year was at Rs. 147.77 crores, as compared to Rs. 143.18 crores, for the previous year.

Financial Highlights - Consolidated

The consolidated income of your Company for the year ended March 31, 2018 aggregated Rs. 4,165.28 crores as against Rs. 4,075.51 crores for the previous year. The revenue from operations increased by 4% (on a same store basis, without considering the results of Taj Boston which was divested during the previous year) from Rs. 3,944.20 crores to Rs. 4,103.55 crores largely due to improvement in the performance of the domestic portfolio.

The Profit before Tax and Exceptional Items and share of profits of equity accounted investees stood at Rs. 161.84 crores as compared to Rs. 41.36 crores in the previous year.

Profit / (Loss) after Tax attributable to Owners of the Company aggregated to Rs. 100.87 crores for the year which has significantly improved when compared to previous year figure of Rs. (63.20) crores. Improvement was on account of reduced finance cost as also improvement operational performance. The Previous Years results were also impacted due to loss on sale of Taj Boston.

Appropriations

Dividend

On account of improved performance and Profit after Tax reported by your Company during the current year, the Board of Directors recommend a dividend at the rate of 40% i.e. Rs. 0.40 per share (Previous Year - Rs. 0.35 per share). The dividend on Equity Shares, if approved by the Members would involve a cash payout of Rs. 57.35 crores, including dividend distribution tax. Pursuant to Regulation 43A of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’), the Company has adopted the Dividend Distribution Policy which is attached as Annexure-I.

Debentures

During the year under review, your Company redeemed 2,000, 2% Unsecured Non-convertible Redeemable Debentures of face value Rs. 10,00,000 each, aggregating to Rs. 200 Crores on April 23, 2017.

During the year under review, your Company raised 7.85% Unsecured Non-convertible Redeemable Debentures of face value Rs. 10,00,000 each aggregating to Rs. 200 crores.

Capital Expenditure

During the year under review, your Company incurred Rs. 311.33 crores towards capital expenditure, a majority of which was towards Taj Exotica Resort & Spa, Andamans and renovations and refurbishments of hotels. Other areas of investment included new Information Technology initiatives.

Fixed Deposits

The outstanding amount of Fixed Deposits placed with your Company was Nil (Previous Year - Nil) excluding Rs. 0.69 crore (Previous Year - Rs. 0.72 crore), which remained unclaimed by depositors as at March 31, 2018. Your Company does not accept and / or renew Fixed Deposits from the general public and shareholders.

Loans, Guarantees or Investments

Your Company is exempt from the provisions of Section 186 of the Companies Act, 2013 (‘Act’) with regard to Loans and Guarantees. Details of Investments made are given in the Notes to the Financial Statements.

Strategic Initiatives

Our strategic objective is to build a sustainable organization that remains committed to meet the expectations of our discerning customers, while generating profitable growth for our shareholders and all other stakeholders. In this regard, your Company has unveiled a slew of strategic initiatives, each of which is summarized in the Management Discussion and Analysis.

Amalgamation of TIFCO Holdings Limited (‘TIFCO’)

At a meeting held on May 26, 2017, the Board of Directors had approved the amalgamation of TIFCO, a wholly owned subsidiary of the Company with the Company, by way of a Scheme of Amalgamation between TIFCO and the Company (the ‘Scheme’), as provided under Sections 230 to 232 of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 or any other applicable law as amended from time to time. The appointed date for the Scheme was April 1, 2017. The Hon’ble National Company Law Tribunal, Mumbai Bench (NCL.T) vide its order dated March 8, 2018 approved the Scheme. Pursuant thereto, the NCLT order was filed with the Registrar of Companies, Maharashtra on April 11, 2018, being the ‘Effective Date’.

Pursuant thereto, in accordance with the terms of the Scheme, TIFCO was amalgamated with the Company w.e.f. the Appointed Date i.e. April 1, 2017, and consequently, TIFCO stands dissolved without winding up. The necessary accounting entries giving effect to the amalgamation were passed in the books of accounts of the Company.

Pursuant to the amalgamation, the Company has access to significant liquid assets of TIFCO in the form of cash, Mutual Fund investments and Inter-Corporate Deposits which can be put to better and more profitable use by the Company. The aggregate free reserves of the Company has increased by ~ Rs. 140 crores thereby enhancing the Company’s ability to pay dividend to its shareholders.

Transfer within Reserves

Subsequent to the merger of TIFCO Holdings Ltd., the Company has transferred Rs. 42.42 crores from Reserve Fund to Retained Earnings during the year. TIFCO Holdings Ltd. was a Non-Banking Financial Company (NBFC) and has filed intimation with the statutory authorities for surrender of the NBFC license.

Management Agreement for Taj Boston Hotel

As part of the Agreement of Sale of Taj Boston during the previous year, the Group had entered into a hotel management services agreement (the “Boston Management Agreement”) with Newbury Owner LLC.

On April 3, 2018, pursuant to Amendment to the Boston Management Agreement , the Group has received fees of about $ 6.91 million as an extraordinary income towards modification of certain contractual terms.

Corporate Social Responsibility

The brief outline of the Corporate Social Responsibility (CSR) Policy of your Company and the initiatives undertaken by your Company on CSR activities during the year under review are set out in Annexure II of this report in the format prescribed under the Companies (CSR Policy) Rules, 2014. The CSR policy is available on the website of your Company.

Internal Control Systems and their adequacy

Your Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is well defined in the organisation. To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board.

The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control systems in your Company, its compliance with operating systems, accounting procedures and policies at all locations of your Company. Based on the report of the Internal Audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions suggested are presented to the Audit Committee of the Board. The internal financial controls as laid down are adequate and were operating effectively during the year under review.

In addition, during the FY 2017-18, as required under Section 143 of the Act, the Statutory Auditors have evaluated and expressed an opinion on the Company’s internal financial controls over financial reporting based on an audit. In their opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as on March 31, 2018.

Vigil Mechanism / Whistle Blower Policy

Your Company has adopted a Whistle Blower Policy to provide a formal mechanism for the Directors and employees to report genuine concerns about any unethical behavior, actual or suspected fraud or violation of your Company’s Code of Conduct or ethics policy. The policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel has been denied access to the Chairman of the Audit Committee. The provisions of this policy are in line with the provisions of Section 177 (9) of the Act and Regulation 22 of the Listing Regulations. The Whistle Blower policy can be accessed on your Company’s website at the link: https://www.taihotels.com/policies/whistle-blower-policv. pdf.

Extract Of Annual Return

The details forming part of the extract of the Annual Return in Form MGT-9 as per Section 92(3) of the Act are given as Annexure III, which forms part of this Report.

Audit Committee

The details pertaining to the composition of the Audit Committee are included in the Corporate Governance Report, which forms part of the Annual Report.

Related Party Transactions

In line with the requirements of the Act and the Listing Regulations, your Company has formulated a policy on dealing with Related Party Transactions (‘RPTs’) which can be accessed on the Company’s website under the link: https://www.taihotels.com/policies/rpt-policv-post-amendment-act.pdf. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties.

Prior omnibus approval is obtained for RPTs which are of a repetitive nature and entered in the Ordinary Course of Business and are at Arm’s Length. A statement on RPTs specifying the details of the transactions, pursuant to each omnibus approval granted, has been placed on a quarterly basis for review by the Audit Committee.

All RPTs that were entered into during the financial year were in the Ordinary Course of Business and at Arm’s Length. No Material RPTs, i.e. transactions exceeding the prescribed limits under Section 188 of the Act or the Listing Regulations were entered into during the year by your Company. Accordingly, the disclosure of RPTs in Form AOC-2 is not applicable.

Risk Management

Although not mandatory, your Company has constituted a Risk Management Committee as a measure of good governance. The Risk Management Committee is tasked with the responsibility to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The details of the Committee and its terms of reference are set out in the Corporate Governance Report.

Your Company has adopted a Risk Management Policy, pursuant to the provisions of Section 134 of the Act, to identify and evaluate business risks and opportunities for mitigation of the same on a continual basis. This framework seeks to create transparency, minimize adverse impact on business objective and enhance your Company’s competitive advantage. The Risk Management framework defines the risk management approach across the enterprise at various levels including documentation and reporting.

Your Company is faced with risks of different types, each of which need varying approaches for mitigation. Details of various risks faced by your Company are provided in the Management Discussion and Analysis.

Subsidiaries, Joint Ventures and Associate Companies

Your Company announces its Consolidated Financial Statements as additional information along with the Standalone Financial Statements on a quarterly basis. The Annual Consolidated Financial Statements of your Company and its Subsidiaries, prepared in accordance with the relevant Accounting Standards, duly audited by the Statutory Auditors, form a part of the Annual Report and are reflected in the Consolidated Accounts.

Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of the Financial Statements of the Subsidiaries, is attached to the Financial Statement in Form AOC-1. The Company will make available the said Financial Statements and related detailed information of the Subsidiary Companies upon the request by any Member of the Company or its Subsidiary. The Financial Statements will also be kept open for inspection by any Member at the Registered Office of the Company and the Subsidiary Companies.

Pursuant to the provisions of Section 136 of the Act, the Financial Statements of your Company, Consolidated Financial Statements along with relevant documents and separate audited accounts in respect of subsidiaries are available on the website of your Company.

Your Company has 21 Subsidiaries, 8 Joint Ventures and 6 Associates as on March 31, 2018.

TIFCO Holdings Limited ceased to be a subsidiary of the Company pursuant to its amalgamation with the Company i.e. w.e.f from April 11,2018. The appointed date for the Scheme of Amalgamation was April 1, 2017.

Apex Hotel Management Services Pte Limited ceased to be a subsidiary of the Company w.e.f. August 7, 2017, Chieftain Corporation Limited was liquidated on April 13, 2017 and Samsara Properties Limited was dissolved on June 6, 2017.

The policy for determining material subsidiaries can be accessed on your Company’s website under the link https://www.taihotels.com/policies/policv-for-determinine-material-subsdiaries.docx

Rights Issue

The Company, vide its Letter of Offer dated September 25,2017, had offered up to 20,00,00,000 Equity Shares of face value of Rs. 1 each of the Company for cash at a price of Rs. 75 per Equity Share (including a premium of Rs. 74 per Equity Share), for an amount not exceeding Rs. 1,500 crores, on Rights basis, in the ratio of 1 Equity Share for every 5 fully paid-up Equity Shares held by the eligible equity shareholders as on the record date. The issue had opened on October 13, 2017 and closed on October 27, 2017. Consequently, on November 7, 2017, the Company allotted 19,99,84,430 Equity Shares of Rs. 75 each aggregating Rs. 14,99,88,32,250.

Directors And Key Managerial Personnel (‘KMP’) Appointments

During the year under review, the Board has on the recommendation of the Nomination and Remuneration Committee (‘NRC’) appointed Mr. Puneet Chhatwal as the Managing Director and Chief Executive Officer (‘MD & CEO1) of the Company w.e.f November 6, 2017 for a period of five years from the date of his appointment. Since Mr. Chhatwal was not a resident of India at the time of his appointment, the Company has made an application to the Central Government pursuant to the provisions of Section 196 read together with Schedule V of the Act and the approval is awaited.

In accordance with the Act and the Articles of Association of your Company, Mr. N. Chandrasekaran retires by rotation and being eligible, offers himself for re-appointment.

The approval of the shareholders for their appointment / re-appointment as Directors has been sought in the Notice convening the AGM of your Company.

Retirement / Resignations

Mr. Rakesh Sarna had expressed his desire to step down as the MD & CEO of the Company upon completion of his three year tenure due to personal reasons vide letter dated May 26, 2017.

The Board accepted the resignation of Mr. Sarna appreciating the contribution made by him to the Company in its transformation to operational excellence.

Mr. Sarna stepped down as the MD & CEO of the Company w.e.f the close of business hours on September 30, 2017.

During the year under review, the following Directors also stepped down from the Board of the Company as under:

- Mr. K. B. Dadiseth w.e.f. April 7, 2017

- Mr. Shapoor Mistry w.e.f. April 25, 2017

Mr. Mehernosh Kapadia retired as the Executive Director -Corporate Affairs on May 23, 2018 upon him reaching the age of retirement for Executive Directors in accordance with the Governance Guidelines adopted by the Company. During his tenure, Mr. Kapadia, a visionary and an outstanding leader steered the Company with great distinction and provided guidance and direction to the Company, in its quest to become a leading iconic hospitality Company in India as also overseas.

The Board places on record its appreciation of the services rendered by these Directors during their respective tenures.

Independent Directors

The Independent Directors have submitted a declaration that each of them meet the criteria for independence as provided in Section 149(6) of the Act and there has been no change in the circumstances which may affect their status as an Independent Director during the year under review.

KMP

Pursuant to the provisions of Section 203 of the Act, the KMPs of your Company as at March 31, 2018 are Mr. Puneet Chhatwal, MD & CEO, Mr. Mehernosh S. Kapadia, Executive Director - Corporate Affairs, Mr. Giridhar Sanjeevi, Executive Vice President & CFO and Mr. Beejal Desai, Senior Vice President - Legal & Company Secretary.

Board Meetings

During the year under review, six Board Meetings were held and the intervening gap between the meetings did not exceed the period prescribed under the Act, the details of which are given in the Corporate Governance Report.

Board Effectiveness

Your Company has adopted the Tata Governance Guidelines which, inter alia, cover aspects related to composition and role of the Board, Chairman and Directors, Board diversity, definition of independence, Director’s term, retirement age and Committees of the Board. They also cover aspects relating to nomination, appointment, induction and development of Directors, Director’s remuneration, subsidiary oversight, Code of Conduct, Board Effectiveness Review and mandates of Board Committees.

A. Board Evaluation

The evaluation of the individual Directors, Board and Committee effectiveness was conducted in accordance with the provisions of the Act, the Listing Regulations and the Tata Governance Guidelines on Board Effectiveness Review with the N RC having oversight of the whole process.

Board / Committee evaluation and Self-Assessment questionnaires having qualitative parameters and feedback based on rating after taking into consideration the guidance note issued by the Securities and Exchange Board of India on January 5, 2017 were circulated to the Directors for their comments.

Performance of the Board and Board Committees were evaluated on various parameters such as Board composition & structure, frequency, flow and functioning of meetings, quality, diversity, experience, competencies, performance of specific duties and obligations, quality of decision making and effectiveness of Board processes.

Performance of individual Directors was evaluated on parameters, such as attendance at Meetings, participation and constructive contribution in Meetings, preparedness on the issues to be discussed, integrity and independent judgement, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

The NRC Chairman and the Board Chairman conducted detailed discussions with every Board member with specific focus on their individual performance and effective functioning of the Board. The conclusions of the discussion were discussed by the NRC Chairman and the Board Chairman and based on the feedback gathered, the NRC carried out the evaluation of every Director’s performance.

The feedback and suggestions received from all Directors were discussed at the NRC Meeting for positive reinforcement implementation. Following the discussions, the inputs translated into an action plan followed up by the Board periodically. Areas that needed improvement and more focus at Board and Committee Meetings were noted.

The Board had received consistent ratings on its overall effectiveness and had been rated comparatively higher this year for composition of Directors and their skills, attributes and experience, Board Meeting practices, governance and compliance, Secretarial Support, Corporate culture and values amongst others.

At a separate Meeting of Independent Directors, performance of non-independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of the Executive Directors and Non-Executive Directors.

A comprehensive brief of the aforesaid Meetings was subsequently shared at the next Board Meeting at which the performance of the Board, its Committees and individual Directors was also discussed. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.

Following the Board discussion, feedback on the Committee reports were discussed with each of the relevant Committee Chairs. The Committees were highly regarded in the feedback and viewed as effective in fulfilling their remits and individual feedback, as appropriate, was provided to the Directors by the Board Chairman.

B. Appointment of Directors and criteria for determining qualifications, positive attributes & independence of a Director

The NRC is responsible for developing competency requirements for the Board based on the industry and strategy of your Company. The NRC reviews and meets potential candidates, prior to recommending their nomination to the Board. At the time of appointment, specific requirements for the position, including expert knowledge expected, is communicated to the appointee.

The NRC has formulated the criteria for determining qualifications, positive attributes and independence of Directors in terms of provisions of Section 178 (3) of the Act and the Listing Regulations as stated under:

Independence: A Director will be considered as an ‘Independent Director’ if he / she meets with the criteria for ‘Independence’ as laid down in the Act, Regulation 16 of the Listing Regulations and the Tata Governance Guidelines.

Competency: A transparent Board nomination process is in place that encourages diversity of thought, experience, knowledge, perspective, age and gender. It is ensured that the Board comprises a mix of members with different educational qualifications, knowledge and who possess adequate experience in banking and finance, accounting and taxation, economics, legal and regulatory matters, consumer industry, hospitality sector and other disciplines related to the Company’s businesses.

Additional Positive Attributes:

- The Directors should not have any other pecuniary relationship with the Company, its Subsidiaries, Associates or Joint Ventures and the Company’s Promoters, except as provided under law.

- The Directors should maintain an Arm’s Length Relationship between themselves and the employees of the Company, as also with the directors and employees of its Subsidiaries, Associates, Joint Ventures, Promoters and stakeholders for whom the relationship with these entities is material.

- The Directors should not be the subject of proved allegations of illegal or unethical behavior, in their private or professional lives.

- The Directors should have the ability to devote sufficient time to the affairs of the Company.

C. Remuneration Policy

Your Company has adopted a Remuneration Policy for the Directors, KMPs and other employees, pursuant to the provisions of the Act and the Listing Regulations. The NRC is responsible for recommending the Remuneration Policy to the Board. The Board is responsible for approving and overseeing implementation of the Remuneration Policy.

The key principles governing your Company’s Remuneration Policy are as follows:

Remuneration for Independent Directors and Non-Independent Non-Executive Directors

- Independent Directors (‘ID’) and Non-Independent Non-Executive Directors (‘NINED’) may be paid sitting fees for attending the Meetings of the Board and of Committees of which they may be members and receive commission within regulatory limits, as recommended by the NRC and approved by the Board.

- Overall remuneration should be reasonable and sufficient to attract, retain and motivate Directors aligned to the requirements of your Company, taking into consideration the challenges faced by your Company and its future growth imperatives.

- Remuneration paid should be reflective of the size of your Company, complexity of the sector / industry / Company’s operations and your Company’s capacity to pay the remuneration and be consistent with recognized best practices.

- Quantum of sitting fees may be subject to review on a periodic basis, as required.

- The aggregate commission payable to all the NINEDs and IDs will be recommended by the NRC to the Board based on Company performance, profits, return to investors, shareholder value creation and any other significant qualitative parameters as may be decided by the Board. The NRC will recommend to the Board the quantum of commission for each Director based upon the outcome of the evaluation process which is driven by various factors including attendance and time spent in the Board and Committee Meetings, individual contributions at the Meetings and contributions made by Directors other than in Meetings.

- The remuneration payable to Directors shall be inclusive of any remuneration payable for services rendered in any other capacity, unless the services rendered are of a professional nature and the NRC is of the opinion that the Director possesses requisite qualification for the practice of the profession.

- In addition to the sitting fees and commission, your Company may pay to any Director such fair and reasonable expenditure, as may have been incurred by the Director while performing his / her role as a Director of the Company. This could include reasonable expenditure incurred by the Director for attending Board / Committee Meetings, General Meetings, Court Convened Meetings, Meetings with Shareholders/ Creditors/Management, site visits, induction and training (organized by the Company for Directors) and in obtaining professional advice from independent advisors in furtherance of his/her duties as a Director.

Remuneration for Managing Director (MD) / Executive Directors (ED) / Key Managerial Personnel (KMP) / rest of the Employees

- The extent of the overall remuneration should be sufficient to attract and retain talented and qualified individuals suitable for every role. Hence, remuneration should be market competitive, driven by the role played by the individual, reflective of the size of your Company, complexity of the sector/industry/Company’s operations and your Company’s capacity to pay, consistent with recognized best practices and aligned to any regulatory requirements.

- Basic/fixed salary is provided to all employees to ensure that there is a steady income in line with their skills and experience. In addition, your Company provides employees with certain perquisites, allowances and benefits to enable a certain level of lifestyle and to offer scope for savings. Your Company also provides all employees with a social security net subject to limits, which covers medical expenses and hospitalization through re-imbursements or insurance cover and accidental death benefits, etc. Your Company provides retirement benefits as applicable with the Retirement Policy.

- In addition to the basic/fixed salary, benefits, perquisites and allowances as provided above, your Company provides MD/ EDs such remuneration by way of commission, calculated with reference to the net profits of your Company for the relevant financial year, as may be determined by the Board, subject to the overall limits stipulated in Section 197 of the Act. The specific amount payable to the MD/EDs would be based on performance as evaluated by the NRC and approved by the Board. Your Company may also provide to MD/EDs such remuneration by way of an annual incentive remuneration / performance linked bonus subject to the achievement of certain performance criteria and such other parameters as may be considered appropriate from time to time by the Board. An indicative list of factors may be considered for determination of the extent of this component such as Company performance on certain defined qualitative and quantitative parameters as may be decided by the Board from time to time, industry benchmarks of remuneration and performance of the individual.

- Your Company provides the rest of the employees a performance linked bonus. The performance linked bonus is driven by the outcome of the performance appraisal process and the performance of your Company and the individual’s contribution.

It is affirmed that the remuneration paid to Directors, KMP and all other employees is as per the Remuneration Policy of your Company.

Material Changes and Commitment affecting the Financial Position of the Company

There are no material changes affecting the financial position of the Company subsequent to the close of the FY2018 till the date of this report.

Significant and material orders passed by the Regulators

During the year under review, no significant material orders were passed by the Regulators or Courts or Tribunals impacting the going concern status and your Company’s operations.

Statutory Auditors

B S R & Co LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022), were appointed as the Statutory Auditors of the Company by the Members for a term of five consecutive years, from the conclusion of 116th AGM till the conclusion of the 121st AGM of the Company (subject to ratification of their appointment at every AGM, if required under the Act).

However, pursuant to the Companies Amendment Act, 2017 which was notified on May 7, 2018, the provision related to ratification of appointment of auditors by Members at every AGM has been done away with.

The report of the Statutory Auditors along with the Notes to Schedules forms part of the Annual Report and contains an Unmodified Opinion without any qualification, reservation or adverse remark.

Compliance with Secretarial Standards on Board Meetings and General Meetings

The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and General Meetings.

Secretarial Audit

Pursuant to the provisions of the Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had appointed BNP & Associates, Company Secretaries (Firm Registration No. P2014MH037400) to undertake the Secretarial Audit of your Company for the financial year 2017-18. The Secretarial Audit Report is annexed herewith as Annexure IV. The report does not contain any qualifications, reservation or adverse remarks.

Conservation of Energy and Technology Absorption

The details of conservation of energy are given in the Management Discussion and Analysis Report.

Particulars of Employees

The disclosure pertaining to remuneration and other details as required to be furnished pursuant to Section 197(12) read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is appended as Annexure V to this Report.

The statement containing particulars of top ten employees and the employees drawing remuneration in excess of limits prescribed under Section 197(12) of the Act read with Rule 5 (2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in a separate Annexure forming part of the Report. In terms of proviso to Section 136(1) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. The said statement is also open for inspection at the Registered Office of the Company. Any member interested in obtaining a copy of the same may write to the Company Secretary.

Disclosures as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Your Company has zero tolerance for sexual harassment at its workplace and has adopted a policy on Prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder for prevention and redressal of complaints of sexual harassment at workplace.

During the year under review, your Company has received 15 complaints on sexual harassment. All the complaints have been resolved and appropriate action taken, where so necessary, and no cases remain pending.

Directors’ Responsibility Statement

Based on the framework of internal financial controls and compliance systems established and maintained by your Company, work performed by the Internal, Statutory and Secretarial Auditors including audit of internal financial controls over financial reporting by the Statutory Auditors and reviews performed by the Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that your Company’s internal financial controls were adequate and effective during FY 2017-18.

Accordingly, pursuant to Section 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that:

(i) in the preparation of the annual accounts for the year ended March 31, 2018, the applicable Accounting

Standards have been followed and that there are no material departures;

(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent in order to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profit of your Company for that period;

(iii) they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance within the provisions of the Act, for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;

(iv) they have prepared the annual accounts for the financial year ended March 31, 2018 on a ‘going concern’ basis;

(v) they have laid down internal financial controls for the Company which are adequate and are operating effectively;

(vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and are operating effectively.

Corporate Governance

As required by the Listing Regulations, the Report on Management Discussion and Analysis, Business Responsibility and Corporate Governance along with the Practising Company Secretary’s Certificate regarding compliance of conditions of Corporate Governance norms as stipulated in Regulation 34 read along with Schedule V of the Listing Regulations forms part of the Annual Report.

Acknowledgement

The Directors express their deep sense of appreciation for the contributions made by the employees to the significant improvement in the operations of the Company.

The Directors also than kail the stakeholders including Members, customers, lenders, vendors, investors, business partners, and the Government of India for their continued co-operation and support and their confidence in its management.

On behalf of the Board of Directors

N. Chandrasekaran

Chairman

Mumbai, May 25, 2018

Registered Office:

Mandlik House, Mandlik Road, Mumbai 400 001.

CIN: L74999MH1902PLC000183

Tel.: 022 66395515 Fax: 022 22027442

Email: investorrelations(5)taihotels.com

Website: www.taihotels.com