A. Contingent liabilities to the extent, not provided for :

(i) Contingent liabilities not provided for in respect of:

a) Claims against the Company not acknowledged as debts and not provided for pending appellate /Judicial decisions:

Income Tax Rs.5,236,372 (2012-Rs. Nil )

Value Added Tax Rs.2,972,203 (2012 - Rs.6,909,904 )

Other Claims Rs.1,627,011 (2012-Rs.2,181,321 )

No provision has been made as the probability of the claim succeeding is remote.

b) The Income Tax Department has appealed to the Hon'ble High Court, Allahabad against the order of the Income Tax Appellate Tribunal upholding the views of the Company in respect of the claim of deduction regarding earnings in convertible foreign exchange under Section 80 HHD for Assessment Years 1989-90 to 1991-92. The total amount disputed (excluding interest and penalties) in the matter aggregates to Rs.5,859,000 (2012- Rs.5,859,000). The Company, based on expert analysis, is hopeful of a favourable decision from the Hon'ble High Court, Allahabad.

c) A stay has been granted by the Hon'ble Allahabad High Court as regards applicability of the notification under section 3 of the U P Industrial Disputes Act, 1947 regarding minimum wages applicable to hotels in U.P. Liability, if any, is unascertained.

d) A stay has been granted by Hon'ble High Court of Allahabad , Lucknow Bench in the matter of applicability of Provident Fund during infancy period. Liability, if any, is unascertained.

e) Certain employees have filed claims in various courts / legal forums against suspension/ termination etc. and have sought reliefs. The ultimate liability, if any, with respect to these claims is currently not ascertainable and in the opinion of management, would not have material effect on the financial statements.

B. Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for (as certified by the Management) Rs.13,059,275 (2012 - Rs.6,586,762).

2. Balance confirmations have not been received from most of the parties showing debit/credit balances.

3. In the opinion of the Board, the assets of the Company other than the fixed assets have a value on realization in the ordinary course of business at least equal to the amount at which they are stated. All known liabilities are accounted for and all contingent liabilities are stated.

3.1 The Company does not use derivative financial instruments such as forward exchange contracts and interest rates swaps to hedge its risks associated with foreign currency fluctuations and interest rate or for trading/speculation purposes.

4. During the year the Company has changed the basis of arriving cost from weighted average cost to FIFO basis at one of its location Clarks Avadh, due to change in software. The effect of such a change on the statement of Profit & Loss would not be material.

5. The company has not received from parties any information /memorandum (as required to be filed by suppliers / vendors with notified authority under Micro, Small & Medium Enterprises Act, 2009) claiming their status as Micro, Small or Medium Enterprises. As such, the company does not owe any dues on account of principal amount together with interest and accordingly no additional disclosures are made. This has been relied upon by the auditors.

6. Pending assessments of Luxury Tax, Value Added Tax, Employees State Insurance, Provident Fund, Service Tax, House & Water Tax etc., further liability, if any, could not be ascertained and provided for in accounts.

7. The Company has unutilised Cash Credit Limit of Rs.16,000,000 (2012 - Rs.16,000,000) from Allahabad Bank which is secured by hypothecation of present and future movable assets i.e. stock of provisions, wines, crockery, linen and other stores and also present and future book debts of the Company's hotels and is additionally secured by mortgage of the Company's hotels at Agra & Jaipur aggregating to Rs.67,800,000 (2012 - Rs.67,800,000).

8. No amount is paid / payable by the Company under Section 441A of the Companies Act, 1956 (cess on turnover) since rules specifying the manner in which the cess shall be paid has not been notified yet by Central Government.

9.1 Depreciation has been provided in the accounts on "Straight Line Method" at rates prescribed in Schedule XIV to the Companies Act, 1956 except for specific assets stated below where different rates are applied which are not less than those prescribed under the Companies Act, 1956 :

i) Leasehold land is amortised over a period of 30 years. Leasehold land acquired on 99 years basis is not amortised.

ii) Intangible assets viz. Trade Marks and Computer Software are being amortised over a period of sixty months.

9.2 Since depreciation has been calculated on the revalued cost, the difference of depreciation on original cost and the revalued figure amounting to Rs.1,024,668 (2012 - Rs.1,024,668) has been withdrawn from revaluation reserve and deducted from depreciation for the year.

10. Disclosures in respect of company's operating lease arrangements entered on or after 1st April 2001 under Accounting Standard (AS-19) on leases.

a) The Company has entered into operating Lease arrangement for office premises, transit facility and residential premises of employees/directors. Some of the significant terms and conditions of the arrangements are:

- The lease agreements are not non-cancellable in nature and may be terminated by either party by serving a notice

- lease arrangements which are not non-cancellable are generally renewable by mutual consent on mutually agreeable terms

b) The company has given shops on licence basis which are not non cancellable and can be terminated by either party by serving a notice

c) Rent in respect of above is charged/ credited to the statement of profit and loss.

11. The company's only business being hoteliering, disclosure of segment-wise information is not applicable under Accounting Standard 17 - 'Segmental Information' (AS 17) notified by the Companies (Accounting Standards) Rules, 2006 (as amended). There is no geographical segment to be reported since all the operations are undertaken in India.

12. Details of transactions entered into with related parties during the year A) Related parties and their relationship

i) Subsidiary Companies - Nil ii) Key Management Personnel :- a) Directors

Shri Birendra Kumar ( Chairman & Managing Director)

Shri Apurv Kumar (Joint Managing Director)

Shri Rupak Gupta (Joint Managing Director)

Smt. Supriya Gupta (Executive Director)

Shri Rakesh M Gupta

Shri Sushil Kumar

Shri Arvind Kumar

b) Relatives of Directors Shri Upendra Kumar Shri Manish Kumar Smt. Rajeshwari Kumar Smt. Renuka Kumar Shri Anoop Kumar Shri Binay Kumar Shri Ravi M Gupta Shri Vivek Kumar Shri Arjun Kumar Shri Akshay Gupta Shri Anant Kumar Smt. Aditi G Mittal

iii) Enterprise in which Key Management Personnel have significant influence: U.P. Hotels Clarks Limited U.P. Hotels India Limited Kalyani Holdings & Finance Limited The Indian Textiles Co. Private Limited Indian Textiles Company (Holdings) Private Limited Hotel Clarks Varanasi Limited Great Value Hotels Private Limited Carbon Paste Limited Banaras House Private Limited Bonita India Limited Banaras International Limited Banaras Global Private Limited Banaras House Engineering Private Limited U P Export Industries Limited ANK Travels Limited Silk Emporium Oriental Textiles Rastriya Vikas Limited Oriental Emporium Jaipur Shop Pride Hospitality Limited Clarks Brij Hotels (I) Limited

13. Employees Benefits

13.1 Defined Contribution Plans.

The Company makes contribution towards Provident Fund & Employees State Insurance for qualifying employees. The Provident Fund & Employees State Insurance is operated by Regional Provident Fund Commissioner and Director, Employees State Insurance Corporation respectively. The Company is required to contribute a specified percentage of payroll cost to the retirement benefit schemes to fund the benefits. The only obligation of the Company with respect to their retirement benefit plan is to make specified contribution at specified rates. A sum of Rs.11,542,998 (2012 - Rs.11,146,644) on account of Provident Fund has been debited to contribution to provident and other funds. Employees State Insurance contribution Rs.2,887,461 (2012 - Rs.2,689,017) has been debited to staff welfare expenses.

13.2 Defined Benefit Plan

Gratuity

The Company's scheme of gratuity provide for lump sum payment to vested employees on departure, of an amount equal to 15 days salary (last drawn) for each completed year of service. Vesting occurs on completion of five years service. The Company makes annual contribution to Employees Group Gratuity cum Life Insurance Scheme of Life Insurance Corporation of India (funded) at all units except Khajuraho. The funds are further invested by Life Insurance Corporation of India. The actuarial valuation at all units was carried out as at 31st March, 2013 by Actuaries under the Projected Unit Credit Method. Provisions were made to bring the gratuity liability in line with the actuarial valuation.

14. The Company has not made any remittances in foreign currencies on account of dividends during the year and does not have information to the extent to which remittances in foreign currencies on account of dividend have been made by or on behalf of non resident shareholders.

15. The remuneration to whole-time directors was paid in terms of shareholders' approval dated 28th August, 2010. In view of inadequacy of profits for the year 2012-1 3, the remuneration paid / provided to whole-time director, which is in excess by Rs.4,787,223 of the limits prescribed under section 309 (3) and Section 198 read with Schedule XIII of the Companies Act, 1956 which is subject to approval of the Central Government. The Company is seeking approval of Central Government for waiver of recovery of such excess remuneration. Pending approval of the Central Government an amount of Rs.4,787,223 being excess remuneration for the year is held in trust by the whole-time directors.

16. Inadvertently, there was a delay of one day in deposition of Rs.5,400,000 out of total sum of Rs.27,000,000 in a separate bank account as required by Sec. 205 (1A) of the Companies Act, 1956.

17. The Hon'ble Addl. Civil Judge (Sr. Division) Lucknow passed an interim order dated 20th March,2013 in the matter of civil suit filed by some promoters against most of promoters (including the company) not to undertake any such measures which may affect the shareholding pattern inter-se amongst promoters. The company has applied to the Civil Court Lucknow (Sr. Division) to give permission to enable the Company to comply with Clause 40A of the listing agreement and as such the company is yet to comply with the letter received from SEBI as regards Clause 40A. The Company's delisting proposal also stands withdrawn.

18. Previous year's figures have been regrouped/ reclassified wherever necessary to confirm to this year's classification.