1. (a) Due to inadequacy of, profits computed in accordance with the provisions of section 198 of the Companies Act read with Schedule V thereto, the remuneration paid to the Managing Director for the financial year 2018-19 is in excess of the limits specified under section 198 of the Companies Act, 2013, aggregating to Rs.148.87 lakhs. The Nomination and Remuneration Committee of the Board and Board of Directors at their meeting held on 15th May, 2019 approved and waived the recovery of excess remuneration paid to Managing Director. The Company shall place the said resolution for approval of the shareholders at the ensuing Annual General Meeting as required under the amended provisions of the Companies Act, 2013.

The Company made applications to the Central Government / Ministry of Corporate Affairs (MCA) seeking waiver/ exemption for payment of excess remuneration for the above said financial years to Managing Director and Executive Director.

Following the amendment to the Companies Act in 2018, the Ministry has notified the rules vide notification dated 12.09.2018 amending sections 196, 197 and 198 and Schedule V of the Companies Act, 2013. As per the notification, the approval of the Central Government / MCA is not required for payment of excess remuneration to managerial personnel and all the pending applications with the MCA seeking approval for payment of managerial remuneration in excess of the limits laid down would automatically abate and companies are given one year time to approach the shareholders for passing necessary resolution seeking waiver of the excess remuneration paid to managerial personnel.

The Nomination and Remuneration Committee of the Board and Board of Directors at their meeting held on 15th March, 2019 approved the excess remuneration paid to Managing Director and Executive Director for the respective years and waived the recovery of the excess remuneration from Managing Director and Executive Director of the company. The Company is placing the said resolution for approval of the shareholders at the ensuing Annual General Meeting as required under the amended provisions of the Companies Act, 2013.

2. i) Disclosure of Trade Payables under Current Liabilities is based on the information furnished by the vendors and available with the Company regarding the status of the suppliers as defined under the "Micro, Small and Medium Enterprises Development (MSMED) Act, 2006”.

Sensitivity Analysis:

Gratuity is a lump sum plan and the cost of providing these benefits is typically less sensitive to small changes in demographic assumptions. The key actuarial assumptions to which the benefit obligation results are particularly sensitive to are discount rate and future salary escalation rate. The following table summarizes the impact in percentage terms on the reported defined benefit obligation at the end of the reporting period arising on account of an increase or decrease in the reported assumption by 50 basis points.

These sensitivities have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market conditions at the accounting date. There have been no changes from the previous periods in the methods and assumptions used in preparing the sensitivity analyses.

Compensated Absences:

The Company’s liability towards un-funded leave encashment is determined by independent actuarial valuation using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation.

The Defined Benefit Obligation of compensated absence in respect of the employees of the Company as at 31 March, 2019 works out to Rs.2,53,65,566/- (2018: Rs.2,31,73,091)

The discount rate and salary escalation rate is the same as adopted for gratuity liability valuation.

The estimates of future salary increases (which has been set in consultation with the company) takes account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

28. Corporate Social Responsibility Expenditure

Gross amount required to be spent and actually spent by the company during the year: Rs. 44.91 lakhs (2018: Rs.22.42 lakhs)

3 In the opinion of the Board of Directors of the company, the current assets, loans and advances are expected to realize in the ordinary course of business approximately the value at which they are stated in accounts.

4. Segmental Reporting:

The Company’s only business being hoteliering, disclosure of segment-wise information under Accounting Standard (AS) 108 "Segmental Information” notified by the Companies (Accounting Standards) Rules, 2006 (as amended) does not arise. There is no geographical segment to be reported since all the operations are undertaken in India.

5. Risk Management, Objectives and Policies:

Risks and Concerns

Economic Risks: Hotel business in general is sensitive to fluctuations in the economy. The hotel sector may be unfavourably affected by changes in global and domestic economies, changes in local market conditions, excess room supply, reduced international or local demand for hotel rooms and associates services, competition in the industry, government policies and regulations, fluctuations in interest rates and foreign exchange rates and other natural and social factors. Since demand for hotels is affected by world economic growth, a global recession could lead to a downturn in the hotel industry.

Socio-Political Risks: The Hotel industry faces risk from volatile socio-political environment, internationally as well as within the country. India, being one of the fastest growing economies of the world in the recent past, continues to attract investments. However, any adverse events such as political instability, conflict between nations, terrorist attacks or spread of any epidemic or security threats to any countries may affect the level of travel and business activity.

Security Risks: The Hotel industry demands peace at all times to flourish. The biggest villain in South East Asia has been terrorism supplemented by political instability. Subsequent to the Mumbai terror attacks in November 2008, the hotel industry has invested substantially on security and intelligence. The security concerns have been duly addressed instilling confidence in the customer by providing international standards of safety.

Company-specific Risks Heavy Dependence on India

Risk of wage inflation: The hotel industry needs quality employees and with demand for the same improving across the industry, the Company feels that wage inflation would be a critical factor in determining costs for the Company. Thus, your Company will continue to focus on improving manpower efficiencies and creating a lean organization, while maximizing effectiveness in terms of customer service and satisfaction, which is an area of great importance for your Company.

Foreign Exchange Risk: Your Company may be impacted by the fluctuation of the Indian Rupee against other foreign currencies. To mitigate this risk the Company has migrated to single currency billing in Indian Rupees.

Project Implementation Risk: Your Company may be impacted by delays in implementation of projects which would result in increasing project cost and loss of potential revenue. To mitigate this risk, the Company has in place an experienced project team supported by the leading external technical consultants and a dedicated project management company. The Company will endeavor to complete its projects on time at optimal cost so as to maximize the profitability.

6. Capital management

The Company’s policy is to maintain strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of business.

The Company manages its Capital structure through a balanced mix of debt and equity. The Company’s capital structure is influenced by the changes in the regulatory frameworks, government policies, available options of financing and impact of the same on liquidity position.

The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The table below shows the Gearing ratio for FY 2018-19 and FY 2017-18.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March, 2019 and 31 March, 2018.

7. Financial risk management objectives and policies

The Company is exposed to financial risk such as Market Risk (Interest Rate Risk, fluctuation in foreign exchange rates and price risk), credit risk and liquidity risk. The general risk management program of the Company focuses on the unpredictability of the financial markets and attempts to minimize their potential negative influence on the financial performance of the Company. The Company continuously reviews its risk exposures and takes measures to limit it to acceptable levels. The Board of Directors have the overall responsibility for the establishment and oversight of the Company’s risk management framework.

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk i.e. interest rate risk, foreign currency risk and other price risk. Financial instruments of the Company affected by market risk include borrowings and deposits.

The sensitivity analysis in the following sections relate to the position as at 31 March, 2019 and 31 March, 2018.

The analysis exclude the impact of movements in market variables on the carrying values of gratuity and other post- retirement obligations; provisions; and the non-financial assets and liabilities.

The following assumptions have been made in calculating the sensitivity analysis:

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March, 2019 and 31 March, 2018.

Interest rate risk

The interest rate risk arise from long term borrowing of the company with variable interest rates (Bank one year MCLR plus spread). Although the spread is fixed, it is subject to change at fixed time interval or occurrence of specified event(s). Management monitors the movement in interest rate and, wherever possible, reacts to material movements in such rates by restructuring its financing arrangement.

Price risk

Price risk is the risk of fluctuations in the change in prices of equity Investments. The Company’s investment in JV company is of strategic in nature rather than for trading purpose.

Credit risk

Credit risk is the risk arising from credit exposure to customers and the counter party will default on its contractual obligations.

The Company has adopted a policy of only dealing with creditworthy customers/ corporates to minimize collection losses. Credit Control team assesses the credit quality of the customers, their financial position, past experience in payments and other relevant factors. Advance payments are obtained from customers in banquets, as a means of mitigating the risk of financial loss from defaults.

The carrying amount of trade and other receivables, advances to suppliers, cash and short-term deposits and interest receivable on deposits represents company’s maximum exposure to the credit risk. No other financial asset carry a significant exposure with respect to the credit risk. Deposits and cash balances are placed with Schedule Commercial banks.

An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company also holds advances as security from customers to mitigate credit risk.

Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy. Investments held by the Company are in the nature of investment in jointly controlled entity and also an investment in an alternate energy supply company as required under the respective State energy policy. Both the categories are unquoted non-trade equity.

Liquidity risk

Liquidity risk is the risk that the Company will have difficulty in raising the financial resources required to fulfill its commitments. Liquidity risk is held at low levels through effective cash flow management. Cash flow forecasting is performed internally by rolling forecasts of the Company’s liquidity requirements to ensure that it has sufficient cash to meet operational requirements, to fund scheduled capex and debt repayments and to comply with the terms of financing documents.

The Company primarily uses short-term bank facilities in the nature of bank overdraft facility to fund its ongoing working capital requirements.

8. New Accounting Standards, Amendments to Existing Standards, Annual Improvements and Interpretations Effective Subsequent to 31 March, 2019

On 30 March 2019, Ministry of Corporate Affairs issued Companies (Indian Accounting Standards) Amendment Rules, 2019 notifying Ind AS 116 - "Leases". Ind AS 116 will replace Ind AS 16. Ind AS 116 introduces major changes in the principles for measuring, recognizing and presenting leases in the financial statements of lessees. As of 1 April, 2019, Ind AS 116 requires lessees to recognize most leases using a single accounting model, i.e., the same model as that used to recognize finance leases under Ind AS 17. The lessee will recognize:

- a non-current asset representing its right to use the leased asset, in the statement of financial position;

- a financial liability representing its obligation to pay for the right to use the asset, in the statement of financial position;

- amortization of the right-of-use asset and interest expenses on the lease liability, in the statement of income.

The main measures included in Ind AS 116 to simplify application and adopted by the Company are:

- exclusion of short-term leases;

- exclusion of leases of low-value assets.

The Company will apply Ind AS 116 using the modified retrospective approach. This simplified approach does not require restatement of financial statements published before the date Ind AS 116 is first applied.

Within the scope of its transition to Ind AS 116, the Company has elected the following main options to simplify application:

- exclusion of leases with a residual term of 12 months or less at the transition date, along with leases of low-value assets;

- application of Ind AS 116 only to contracts previously identified as leases;

- use of the initial lease term to determine the discount rate at the transition date;

- exclusion of initial direct costs from the measurement of the right-of-use asset at the date of initial application.

The Company is currently finalizing its assessment of the impact of applying Ind AS 116 on its financial statements, based on the leases identified and an analysis of their main terms and conditions. The Company mainly has lease contracts for land and buildings which are currently accounted for as operating leases and for which it will be required to recognize a right-of-use asset under Ind AS 116.

9. Balances in the accounts of various parties are subject to confirmation and reconciliation.

10. Previous Year’s figures have been regrouped / rearranged, wherever necessary. Figures in brackets indicate those for previous year.