Bharat Hotels Ltd.

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'Notes to Accounts' Bharat Hotels Ltd.

THE YEAR ENDED 31st MARCH, 2007. [Rs. in lacss] 2006-07 2005-06

1 [as] Claims against the Company, not acknowledged as debts. - 20.00 [bs] Disputed service tax claim paid but not provided for & contested 36.05 [cs] [is] Disputed income tax liabilities under appeal, not provided for - 55.65

[iis] In respect of assessment years between 1987-88 to 1997-98, the Department is in appeal before the High Court [against the decision of the ITAT in favour of Companys] contending that the shop deposits from allottees / sub-licensees are taxable receipts. The Department has also gone in appeal in respect of assessment years 1987-88 and thereafter against the depreciation allowed in respect of commercial buildings, viz. World Trade Centre & World Trade Tower situated in the Hotel Complex at New Delhi. The liability, if the decision goes against the Company, is not presently determinable.

[iiis] Provision for taxation for year has been made after taking into Acc. the loss incurred by subsidiary Khajuraho Hotels Ltd. keeping in view the proposed merger of subsidiary with the Company pending approval before Delhi High Court.

2 [as] The land on which the buildings & other assets are situated at New Delhi, has been licenced by authorities to the Comp. with effect from 11/03/1981 & ending on 10/03/2080. The current annual fee of Rs.145 lacs is subject to revision after every 33 years.

[bs] Under the disinvestment process of ITDC, the Comp. has been licensed, inter alia, to operate the hotel premises at Bangalore & to use the business assets on a lease cum management agreement, commencing from 29/11/2001 upto 31/03/2032. As consideration, the Comp. is required to pay 16.50% of gross turnover of hotel, subject to a minimum guaranteed annual payment [MGAPs] of Rs.411.00 lacs . MGAP will be increased on 1st April, 2007 & every five years thereafter by 25%, computed on the amount payable at the time of such increase.

[cs] The land on which the buildings & other assets are situated in Goa have been taken on Licence with effect from 23rd June, 1995 for a period of 25 years. The current annual fees of Rs.100 lakhs is subject to revision & there is option for renewal of agreement for a further period of 25 years by mutual consent.

[ds] The State Government of Gujarat by an Order has alloted land in Ahmedabad during the year 2005-06 for a consideration of Rs739.11 lacs, which has been treated as freehold.

3 In the opinion of Board, the value on realisation of current assets, loans & advances in the ordinary course of business will not be less than the amount at which they are stated in the balance sheet.

4 Balance confirmations have not been received from many of parties showing debit / credit balances.

5 As the turnover of Comp. is in respect of food and beverages, it is not practicable to give quantitative details as required under para 3[is][as] of part II of Schedule VI to the Companies Act, 1956. The Company has been exempted for three financial years 2004-05 to 2006-07 from giving these particulars by Department of Comp. Affairs, Government of India, vide their Order no 46/74/2005-CL III Dt. 05.04.2005. Certain specific disclosures, as required by Department while granting exemption, have been carried out.

6. [is] The subsidiary Jyoti Limited, at Srinagar [Jammu and Kashmirs] shows an accumulated loss of Rs. 366.02 lacs as on 31st March, 2007. The Comp. has an outstanding loan recoverable of Rs.380.98 lacs. The Companys investment of Rs. 3,107.89 lacs in the subsidiary has been made, considering the value of lease hold rights extending upto 22nd November, 2096 & the immovable property of subsidiary.The Company, under an arrangement, is carrying on hotel operation in the subsidiarys property. Keeping in view the long term nature of the investment, in the opinion of Board, there is no permanent diminution in the value of investment & accordingly no provision is considered necessary at present.

[iis] The financials of subsidiaries, namely Khajuraho Hotels Ltd. and Udaipur Hotels limited which are wholly owned shows accumulated losses in excess of their net worth. Keeping in view the long term planning and prospects & the fact that further loans have been advanced, the Board is of view that there is no permanent diminution in the value of Companys investments.

[iiis] The Comp. had acquired 90% of equity capital of Apollo Zipper India Ltd [AZILs] w.e.f. 30.11.2005 & thus AZIL became a subsidiary. AZIL has been vested with the assets of Great Eastern Hotel Kolkata. The Comp. vide non-disposal agreement dated 30.11.2005 entered into with the State Government of West Bengal in respect of investment in AZIL, can't transfer the legal or beneficial ownership or any other rights & obligations for a period of three years. For this purpose, the Comp. has pledged its investments of face value of Rs. 72.78 lacs in AZIL with the State Government.

[ivs] The shares purchase agreement dated 07.08.2002 for acquiring [under disinvestment process of ITDCs] equity shares of Khajuraho Hotels Ltd., interalia, provided for adjustment in the value of net current assets taken over by Comp. , based on the closing audit as on the date of acquistion. Such adjustment upon crystalisation of value of net current assets, would have an effect on the final purchase consideration. On the basis of closing audit, a sum of Rs. 16,18,453 is recoverable, which will be adjusted when received.

[vs] Prime Cellular Limited, the subsidiary has taken up equity shares of Rs.50,000 [50% of paid up capitals] in Kujjal Builders Private Limited, the Comp. which has aquired land in Chandigarh for construction of hotel. It is proposed that the Comp. would be given the right to manage & run the proposed hotel.The Comp. has advanced Rs.25.37 lacs [interest frees] to the subsidiary to facilitate the financing of proposed hotel.

7 Voluntary Retirement Settlement cost amounting to Rs.9.11,09,384 incurred during the year 2003-04 in respect of Grand Ashok Bangalore, is being amortised over a period of five years. An amount of Rs. 1.82,22,147 [Previous year Rs.1,82,21,877s] has been charged to Profit & Loss Account for this year

8 During the year, the Comp. has changed the method of providing depreciation on fixed assets in respect of Mumbai & Goa units from written down value method to straight line method. Depieciation has been recomputed with retrospective effect from the year 2003-04, the year in which the Units commenced commercial operation. The change has resulted in a lower depreciation charge of Rs 10,45,38,746 for year and a write back of Rs 40,59,58,873 relating to earlier years with a corresponding increase in the profit of year.

9 Segment Reporting - Accounting Standard-17

Based on the guiding principles given in Accounting Standard 17, the Companys primary business consists of hoteliering. This business incorporates related activities such as revenue from rooms, running of restaurants, health club, beauty parlour etc. which mainly have similar risks & returns. The commercial space within the hotel complex have been given to occupants on sublicence, for which deposits have been taken & the occupants pay maintenance & related charges.

10 Related party disclosures as per Accounting Standard -18

a Related parties & their relationship

[is] Subsidiary Companies Jyoti Limited Udaipur Hotels Limited Khajuraho Hotels Limited Apollo Zipper India Limited Prime Cellular Limited Prima Buildwell Private Limited

[iis] Key Management Personnel

- Late Mr. Lalit Suri - Chairmain-cum-Managing Director [till 10.10.2006s]

- Ms. Jyotsna Suri, Joint Managing Director [ CMD since 16.10.2006s] - Relatives

- Mr. Ramesh Suri [Directors]

- Ms. Deeksha Suri

- Ms. Divya Suri Singh

- Mr. Keshav Suri

[iiis] Enterprises over which key management personnel exercise significant influence.

1. Jyotsna Holding Pvt. Ltd.

2. Deeksha Holding Limited

3. Responsible Builders Pvt. Ltd.

4. Special Protection Services Pvt. Ltd.

5. Premium Exports Ltd.

6. Prima Telecom Ltd.

7. Premium Holdings Ltd.

8. Rohan Motors Ltd.

9. Subros Ltd.

10. Hemkunt Service Station Pvt. Ltd.

11. Mercantile Capital and Financial Services Pvt. Ltd.

12. Deeksha Human Resource Initiatives Ltd.

11 Unclaimed dividends of Rs.3.74 lakhs do not include any amount due and outstanding to be credited to the 'Investor Education and Protection Fund 'as on 31st March, 2007.

12 A petition filed with the Delhi High Court in September 2006 for merger of Khajuraho Hotels limited [ a subsidarys] with the Comp. is pending. If approved,the appointed date for merger will be 01.04.2006 or such other date as may be specified by Court.

13 Figures of previous year have been regrouped wherever necessary to correspond to current year figures.

 

 

 

 

 

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