benares hotels ltd share price Directors report


TO THE MEMBERS

The Directors hereby present the Forty Ninth Annual Report of BENARES HOTELS LIMITED ("BHL" or "the Company") along with the Audited Financial Statements for the Financial Year ended March 31, 2020.

OPERATING AND FINANCIAL RESULTS
(Rs Lakhs) (Rs Lakhs)
2019-20 2018-19
Income 6,384 6,039
Gross Profit for the year 2,095 1816
Less: Depreciation 638 523
Less: Interest 108 76
Profit before tax 1,350 1218
Less: Provision for Tax:
- Current Tax 312 272
- Deferred Tax –24 74
- Provision of tax of earlier years ( Net ) — —
Profits after Taxes 1,061 872
Add: Other Comprehensive Income (Net of Taxes) –12 2
Total Comprehensive Income 1,049 874
Add: Balance brought forward from previous year 4,872 4233
Changes in accounting policy - Transition impact of Ind AS 116 –153 —
Balance available for appropriations 5,768 5107
Less: Dividend Paid –195 – 195
Less: Tax on Dividend –40 –40
Less: Amount transferred to General Reserve — —
Balance Carried forward 5,533 4,872

COMPANYS OPERATIONS AND PERFORMANCE

The rebranded hotel "Taj Ganges Varanasi" has received strong response in the market. The hotel has completed the renovation in phases starting from 2017/18, in which all 130 rooms including Lobby and the Tea Lounge have been renovated.

During the year, your Company added three new additional suites and one additional room to the inventory of Taj Nadesar Palace. Accordingly, it has now 14 keys instead of 10 keys. Also, the company has operationalized Tented Jiva SPA at Taj Nadesar Palace.

The Total Income for the year ended 31st March, 2020 at Rs. 6384 lakhs represents a growth of 6% over the previous year. The room revenue increased by 9% driven by growth in rooms per day & average room rate. The Food & Beverage Revenues increased by 3% over the previous year.

The Gross Operating Profit (EBIDTA) achieved by the Company for the year was at Rs. 2095 Lakhs, thereby registered an increase of 15% over the previous year.

The Profit before Tax for the year was at Rs. 1350 Lakhs, as compared to Rs. 1218 lakhs for the previous year. The Profit after Tax for the year was at Rs. 1061 lakhs, as compared to Rs. 872 lakhs for the previous year.

DIVIDEND

Based on the performance of the Company and keeping in view of the uncertainty in the business arisen out of the outbreak of Global Pandemic Covid 19, the Board recommended a dividend @ 75% i.e. Rs 7.50 per fully paid Equity Share on 13,00,000 Equity Shares of face valueRs 10 each, for the year ended March 31, 2020 (Previous Year Rs 15 per share).

The dividend on Equity Shares, if approved by the Members, would involve a cash outflow of Rs 97.50 lakhs.

HOLDING, SUBSIDIARY COMPANIES

The Indian Hotels Company Limited (IHCL) is the ultimate Holding Company of BHL. The Company does not have any subsidiary company.

DIRECTORS

In accordance of the provisions of Section 152 and other applicable provisions of the Companies Act, 2013 ("the Act") and the Articles of Association of the Company, Dr. Anant Narain Singh (DIN: 00114728), Director of the Company is liable to retire by rotation and being eligible, offers himself for re-appointment. A resolution seeking Shareholders approval for his re-appointment forms part of the Notice.

During the year under report, there was no change in the Directorship of the Company.

During the year under review, the non-executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses, if any incurred by them for the purpose of attending meetings of the Board/Committee and general meeting of the Company.

KEY MANAGERIAL PERSONNEL

Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel of the Company as on March 31, 2020 are: Mr. Vijay Partap Shrikent, Chief Executive Officer (CEO) Mr. Harish Kumar, Chief Financial Officer (CFO) Ms. Vanika Mahajan, Company Secretary (CS)

NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR

During the year under review, four (4) Board Meetings were held and the intervening gap between the meetings did not exceed the period of one hundred and twenty days, the details of which are given in the Corporate Governance Report, which is a part of this report.

STATUTORY AUDITORS

At the 47th AGM held on August 24, 2018, the members approved the appointment of PKF Sridhar & Santhanam LLP, Chartered Accountants (Firm Registration No. 003990S/S200018), as the Statutory Auditors of the Company to hold office for a period of five consecutive years, from the conclusion of the 47th AGM till the conclusion of the 52nd AGM of the Company to be held in the year 2023, subject to ratification of their appointment by Members at every AGM, if so required under the Act. The requirement to place the matter relating to appointment of Auditors for ratification by Members at every AGM has been done away by the Companies (Amendment) Act, 2017 with effect from May 7, 2018. Accordingly, no resolution is being proposed for ratification of appointment of Statutory Auditor at the ensuing AGM.

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

The Statutory Auditors of the Company have not reported any fraud as specified in Section 143 (12) of the Act.

SECRETARIAL AUDIT REPORT

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 have appointed D. S. Associates, Company Secretaries, to undertake the Secretarial Audit of your Company for the financial year 2019-20. The secretarial audit report is attached to this Report as Annexure 3. The report does not contain any qualifications, reservation, disclaimers or adverse remarks.

COST AUDIT

Maintenance of cost records as specified by the Central Government under Section 148 (1) of the Act is not applicable to the Company.

EXTRACT OF ANNUAL RETURN

As per the requirement of Section 92(3) of the Act and Rules framed thereunder, the extract of Annual Return for the Financial Year 2019-20 is furnished in Annexure - 4 in the prescribed Form No. MGT-9, which is a part of this report.

The Annual Return for Financial Year 2019-20 is also available on the Companys website at https:// www.benareshotelslimited.com/en-in/AGM-2020/

AUDIT COMMITTEE AND VIGIL MECHANISM

The Company has an Audit Committee with Mr. Moiz Miyajiwala, Mrs. Rukmani Devi and Mr. Rohit Khosla as its members. During the year under report, there was no change in the constitution of the Committee.

In line with the Tata Code of Conduct (‘TCOC), your Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting the highest standards of professionalism, honesty, integrity and ethical behavior.

The Company has a Whistleblower Policy establishing vigil mechanism, to provide a formal mechanism for the Directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Companys Code of Conduct or ethics policy. The policy provides for adequate safeguards against victimization of Directors and employees who avail of the mechanism and also provided them direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. The policy is in line with the provisions of Section 177(9) of the Act and Regulation 22 of the SEBI listing Regulations. The said Policy can be accessed on your Companys website https://www. Benareshotelslimited.com/content/dam/thrp/benareshotelslimited/documents/announcement-policies/ Whistle_Blower.pdf

CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY COMMITTEE

The Company has the Corporate Social Responsibility (CSR) and Sustainability Committee of the Board with Dr. Anant Narain Singh, Mrs. Rukmani Devi and Mr. Rohit Khosla as the members of the Committee. During the year under report, there was no change in the constitution of the Committee.

The Company has in place a CSR policy in line with schedule VII of the Act. The brief outline of the CSR policy of the Company and the initiatives undertaken by the Company on CSR activities during the year under review are set out in Annexure - 2 of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The CSR policy is available on the website of your Company at https://www.benareshotelslimited.com/content/dam/thrp/benareshotelslimited/documents/announcement-policies/CSR%20POLICY.pdf

NOMINATION AND REMUNERATION COMMITTEE

The Company has a Nomination and Remuneration Committee (NRC) of the Board with Mr. Moiz Miyajiwala, Dr. Anant Narain Singh and Mrs. Rukmani Devi as the members of the Committee. During the year under report, there was no change in the constitution of the Committee.

The Company has a policy relating to the payment of remuneration for the directors, KMPs and other senior employees pursuant to the provisions of section 178(3) and SEBI Listing Regulations. The key features of the said policy are: - Overall remuneration (sitting fees and Commission) should be reasonable and sufficient to attract, retain and motivate directors aligned to the requirements of the Company; - Overall remuneration practices should be consistent with recognized best practices - Within the parameters prescribed under the law, the payment of sitting fees and commission will be recommended by NRC and approved by the Board.

- The aggregate commission payable to the Directors will be recommended by 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 quantum of commission for each director shall be recommended by NRC to the Board based upon the outcome of the evaluation process drive by various factors including attendance and time spent in the Board and committee meetings, individual contributions at the meetings and contributions made by the Directors other than in meetings.

It is affirmed that the remuneration paid to Directors, KMPs and all other employees is as per the Remuneration policy of your Company. The Remuneration policy for Directors, KMPs and other employees is uploaded on the website of your Company at https://www.benareshotelslimited.com/content/dam/thrp/benareshotelslimited/ documents/ policies/remuneration.pdf

DISCLOSURES IN RELATION TO THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has always believed in providing a safe and harassment-free workplace for every individual working in the Company. The Company has zero tolerance for sexual harassment at its workplace and has adopted an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (‘POSH Act) and the Rules thereunder.

The Company has constituted an ‘Internal Complaints Committee (ICC) in accordance with the provisions of the POSH Act for the prevention and redressal of complaints received regarding sexual harassment and for the matters concerned, connected or incidental thereto.

During the financial year 2019-20 the Company received one complaint on sexual harassment. The said complaint was appropriately addressed and closed and the Respondent was suspended through Third Party. No case remains pending as on March 31, 2020.

The Company has complied with the applicable provisions of the POSH Act, and the rules framed thereunder, including constitution of the ICC.

INDEPENDENT DIRECTORS

In terms of Section 149 of the Act, and Regulation 16(1) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") Mrs. Rukmani Devi, Mr. Moiz Miyajiwala and Mr. Puneet Raman are the Independent Directors of the Company as on March 31, 2020.

Pursuant to the provisions of Section 149 of the Act, the Independent Directors have submitted declarations that each of them meet the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. In terms of Regulation 25(8) of SEBI Listing Regulations, they have confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence. The Board of Directors of the Company has taken on record the declaration and confirmation submitted by the Independent Directors after undertaking due assessment of the veracity of the same. There has been no change in the circumstances affecting their status as Independent Directors of the Company.

The Independent Directors of the Company have undertaken requisite steps towards the inclusion of their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment & Qualification of Directors) Rules, 2014.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

The Company has an ongoing familiarization programme for the Independent Directors with respect to their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. All the Board members of the Company are afforded every opportunity to familiarize themselves with the Company, statutory changes impacting the Company, its Management and its operations and all the information /documents sought by them is/are shared with them for enabling a good understanding of the Company, its various operations and the industry of which it is a part. The details of the familiarization programme for Independent Directors are disclosed on the Companys website under the weblink: https://www.benareshotelslimited.com/content/dam/thrp/benareshotelslimited/documents/indepenent-directors/Familiarization%20Programme%20-%20BHL.pdf

PARTICULARS OF EMPLOYEES

The Company had no employees during the year who were in receipt of remuneration aggregating to: (a) Not less than Rs. 102.00 lakhs for the year, if employed throughout the financial year, or (b) Not less than Rs. 8.50 lakhs per month, if employed for part of the financial year.

INFORMATION PURSUANT TO RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

The information required under Section 197 of the Act read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is furnished in Annexure 1.

FINANCE COST

Finance cost for the year ended 31st March 2020 was Rs. 107.64 lakhs (Previous year Rs. 75.8 Lakhs).

During the year, INDAS 116, Accounting of Lease has got applicable with effect from 01st April 2019. The total interest cost of Rs. 107.64 lakhs is break down as follows: Interest expenses on borrowings: Rs. 72.96 lakhs Interest on lease liability Rs. 34.68 lakhs

DEPRECIATION - Rs. 638.10 Lakhs

EXCEPTIONAL ITEMS - Nil

LOANS, GUARANTEES AND INVESTMENTS MADE UNDER SECTION 186

The Company has not given any loans or guarantees nor has made any investments under Section 186 of the Act during the year under review.

BORROWINGS

The total borrowings (Inter Corporate Deposits) stood at Rs. 550 lakhs as at March 31, 2020 borrowed at 9% from United Hotels Limited, as against Rs. 500 lakhs as at March 31, 2019.

DEPOSITS FROM PUBLIC

The Company has not accepted any deposits from public covered under Chapter V of the Act and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions that were entered into during the financial year under report were at arms length basis and in the ordinary course of business.

The Company has developed a Related Party Transactions Framework under the Policy on Related Party Transactions, which policy is also available at Companys website: https://www.benareshotelslimited.com/ content/dam/thrp/benareshotelslimited/documents/policies/RPT.pdf for the purpose of identification and monitoring of such transactions. Prior omnibus approval of the Board is obtained for transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted and a statement giving details of all the related party transactions is placed before the Audit Committee for its approval on a quarterly basis.

Other than transactions entered into in the normal course of business, the Company has not entered into any materially significant related party transactions during the year, which could have a potential conflict of interest between the company and its promoters, Directors, Management and/or relatives save and except that the transaction with The Indian Hotels Co. Ltd., the ultimate holding company during the year exceeded 10% of the annual gross turnover of the Company for the previous year, the approval for which was taken from the shareholders by way of a special resolution at the AGM held on August 21, 2015.

CORPORATE GOVERNANCE

As required by SEBI Listing Regulations, the report for the year 2019-20 on Management Discussion and Analysis and Corporate Governance along with the Practicing Company Secretarys Certificate regarding compliance of conditions of Corporate Governance norms as stipulated in Regulation 34 read along with Schedule V of the SEBI Listing Regulations forms part of the Annual Report.

COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD MEETINGS AND GENERAL MEETINGS

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

DIRECTORS RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by the Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Companys internal financial controls were adequate and effective during the financial year 2019-2020.

Pursuant to Section 134(5) of the Act, the Board of Directors to the best of its knowledge and ability, confirm that: a) in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures; b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period; c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) they have prepared the annual accounts on a going concern basis; e) they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively; f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

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 financial year 2019-20 till the date of this report except that arise on account of outbreak global pandemic Covid 19. The impact of Covid-19 on the Companys financial statements has been given in Note 3(d) of the Notes to financial statements for the year ended March 31, 2020 and the Companys response to the situation arising from this pandemic has been explained in the Management Discussion and Analysis, which forms part of the Annual Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

During the year under review, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and the Companys operations.

RISK MANAGEMENT POLICY

Although not mandatory, your Company has aligned Risk Management with Audit Committee as a measure of good governance. The Committee is responsible for monitoring and reviewing the Enterprise Risk Management process and ensuring its effectiveness. The Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuous basis. The details of the Committee and its term of reference are set out in the Corporate Governance Report.

Your Company has 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 continuous basis. This framework seeks to create transparency, minimize adverse impact on business objective and enhance your Companys competitive advantage. The risk management framework defines the risk management approach across the enterprise at various levels including documentation and reporting.

The framework enables risks to be appropriately rated and graded in accordance with their potential impact and likelihood. The two key components of risks are the probability (likelihood) of occurrence and the impact (consequence) of occurrence, if the risk occurs. Risk is analyzed by combining estimates of probability and impact in the context of existing control measures.

The key business risks identified by the Company and its mitigation plans are as under:

S.No. Risk that matter Type of Risk Mitigants
1 Cyber vulnerabilities Strategic, Reputation Cyber Risk assessment conducted
2 Abuse of social media and other media by guest / staff / stakeholders Reputation • Continuous monitoring of comments in social media and timely responses provided
3 Employee and customer well being Operational, Strategic • Protective care & counselling
4 Data governance, including quality of data Strategic • Customer Communication Data warehousing and Analytics
5 Changes in levy/tax structure, resulting in litigation / astronomical demands Macro-Economic, Operational Improve coordination with relevant authorities
6 Loss in market cap due to impact of macro- economic changes linked to tourism/ hospitality sector Macro-Economic, Strategic • Adherence to Strategy of the Company
7 Inadequate returns from investments Strategic, Macro- Economic & Operational • Stakeholder communication Continuous reviews
8 Data privacy regulations leading to penalties and litigation Reputation, Operational • Internal Audits, Continuous monitoring
• Data Processor/Controller agreements with all relevant vendors
9 Business interruption on account of Acts of God, riots & strikes, political instability, terrorism, and pandemics Operational, Macro economic • Changes in Polices & Processes Hotels categorised based on risk profile and appropriate security measures put in place

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO [PURSUANT TO COMPANIES (ACCOUNTS) RULES, 2014] CONSERVATION OF ENERGY: The Company has always been conscious of the need for conservation of energy and has been sensitive in making progress towards this end. The Company has completed the installation of 256 kw solar power generation equipment at the Hotel in Varanasi in July 2019 and is in the process to increase its capacity further.

TECHNOLOGY ABSORPTION: There is no material information on technology absorption to be furnished. The Company continues to adopt and use the latest technologies to improve the efficiency and effectiveness of its business operations.

FOREIGN EXCHANGE EARNINGS AND OUTGO : In terms of the provisions of Section 134(3)(m) of the Act, read with Rule 8(3)(C) of The Companies (Accounts) Rules, 2014, the foreign exchange earned in terms of actual inflows during the year and the foreign exchange outgo during the year in terms of actual outflows is furnished below:

2019-20 2018-19
Rs. Lakhs Rs. Lakhs
a) Value of Imports
Stores, Supplies and Spare Parts for Machinery 16.95 0.44
Value of Imports (CIF) Capital Imports 11.78 73.85
b) Expenditure in Foreign Currency
Professional and Consultancy Fees 1.74 7.36
Other Expenditure in Foreign Currency 15.89 16.47
c) Earnings in Foreign Currency
Earnings in Foreign Exchange 943.54 812.25

INTERNAL FINANCIAL CONTROL SYSTEM AND 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 organization. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board.

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

The Boards Audit Committee oversees the adequacy of the internal control environment through periodic reviews of audit findings and by monitoring implementation of internal audit recommendations through compliance reports. In addition, as required under Section 143 of the Act, the Statutory Auditors have evaluated and expressed an opinion on the Companys internal financial controls over financial reporting based on the audit for the FY 2019-20. In their opinion, the Company has, in all material respects, adequate internal controls over financial reporting and such internal financial controls over financial reporting were operating effectively as on March 31, 2020.

BOARD EVALUATION

The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual Directors pursuant to the provisions of the Act and SEBI Listing Regulations.

The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc. The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, the Board as a whole and the Chairman of the Company was evaluated, taking into account the views of Executive Directors and Non-Executive Directors.

The Board and the NRC reviewed the performance of individual Directors on the basis of criteria such as the contribution of the individual Director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

At the Board Meeting that followed the meeting of the Independent Directors and meeting of NRC, 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.

GENERAL

No material changes and commitments have occurred between the end of the financial year to which these financial statements relate and the date of this Report, which affect the financial position of the Company.

ACKNOWLEDGMENTS

The Directors record their grateful appreciation of the devoted services rendered by all the employees, which made possible the results achieved by the Company.

On behalf of the Board of Directors
Dr. Anant Narain Singh
Chairman
(DIN: 00114728)
Place : Varanasi
Date : 28th May, 2020