Gujarat Hotels Ltd

FOR THE FINANCIAL YEAR ENDED 31st MARCH, 2011

Your Directors submit their Report for the financial year ended 31st March, 2011

FINANCIAL PERFORMANCE

During the year under review, your Company earned a license fee of Rs 392.30 lacs(previous year -Rs 321 90 lacs) registering a 21.87% growth over last year and a netprofit of Rs 294.97 lacs (previous year - Rs 250.40 lacs) after providing for income taxof Rs 134.66 lacs (previous year - Rs 128.93 lacs). Earnings Per Share for the year stoodat Rs 7.79 and Cash Flows from operations were Rs 254.25 lacs.

Your Directors are pleased to recommend a dividend of Rs 3/- per Equity Share of Rs10/- each (previous year -Rs 2.75 per equity share) for the year ended 31st March, 2011.Your Board further recommends a transfer to General Reserve of Rs 29.50 lacs (previousyear Rs 25.04 lacs).

HOTEL OPERATIONS

Your Company's hotel WelcomHotel Vadodara, licensed to ITC Limited, continues to retainits market leadership in the city of Vadodara. The hotel recorded an income of Rs 2,650lacs during the year as compared to Rs 2,174 lacs in the previous year.

Your Company is pursuing the initiation of arbitration proceedings in a bid to settlethe pending lease revision with respect to land on which your hotel is built and expectthe Honourable Gujarat High Court to pass appropriate orders in this regard in the nearfuture.

The foreign exchange earnings of the hotel during the year were Rs 1,391 lacs asagainst Rs 1,233 lacs in the previous year.

CONSERVATION OF ENERGY

Considering the fact that the Company's hotel is under an operating license with ITCLimited, no comment is made on conservation of energy. However, the hotel continues tofocus on energy conservation, safety and environment.

EMPLOYEES

Your Directors wish to record their sincere appreciation of the efforts made and thesupport rendered by the employees of the Company. Your Company's total manpower strengthas deployed in the Company's hotel is 196.

None of the employees fall under the purview of the provisions of Section 217(2A) ofthe Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975.

DIRECTORS

Mr. Ashok K. Tandon, Director of your Company resigned with effect from 13th December,2010. Your Directors would like to place on record their sincere appreciation of thevaluable services rendered by Mr. Tandon.

In accordance with the provisions of Article 147 of the Articles of Association of theCompany, Mr. S. C. Sekhar and Mr. Nakul Anand will retire by rotation at the ensuingAnnual General Meeting of the Company and, being eligible, offer themselves forre-election. The Board has recommended their re-election

Compliance Certificate Under Companies Act, 1956

A certificate issued by Messrs H. M Mehta & Associates, Company Secretaries, interms of the provisions of Section 383 A of the Companies Act, 1956, to the effect thatthe Company has complied with the applicable provisions of the said Act is attached tothis Report.

AUDITORS

The Company's Auditors, Messrs Talati & Talati, retire at the ensuing AnnualGeneral Meeting and being eligible, offer themselves for re-appointment.

OTHER INFORMATION

The certificate of the Auditors, Messrs Talati & Talati, confirming compliance ofconditions of Corporate Governance as stipulated under clause 49 of the Listing Agreementwith the Stock Exchanges, is annexed to the Report.

The Audit Committee of the Company reviewed the financial statements for the year underreview at its meeting held on 28th April, 2011 and recommended them for the approval ofthe Board of Directors.

Directors Responsibility Statement

As required under Section 217 (2AA) of the Companies Act, 1956, your Directors confirmhaving:

(i) followed in the preparation of the Annual Accounts the applicable AccountingStandards along with proper explanations relating to material departures, if any;

(ii) selected such accounting policies and applied them consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit of the Company for that period;

(iii) taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act, 1956 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) prepared the Annual Accounts on going concern basis.

CERTIFICATE

To the Members of Gujarat Hotels Limited

We have examined the compliance of conditions of Corporate Governance by Gujarat HotelsLimited for the year ended on 31^st March 2011, as stipulated in clause 49 ofthe Listing Agreement of the said Company with stock exchange(s).

The compliance of conditions of Corporate Governance is the responsibility of themanagement. Our examination was limited to procedures and implementation thereof, adoptedby the Company for ensuring the compliance of the conditions of the Corporate Governance.It is neither an audit nor an expression of opinion on the financial statements of theCompany.

In our opinion and to the best of our information and according to the explanationsgiven to us, we certify that the Company has complied with the conditions of CorporateGovernance as stipulated in the above-mentioned Listing Agreement.

As required by the guidance note on certificate of Corporate Governance issued by theInstitute of Chartered Accountant of India, we state that there were no investor'sgrievances remaining unattended/ pending for more than 30 days.

We further state that such compliance is neither an assurance as to the futureviability of the Company nor the efficiency or effectiveness with which the management hasconducted the affairs of the Company.