EIH Associated Hotels Ltd Directors Report.

The Board presents the Thirty-sixth Annual Report together with the Audited Financial Statement and the Auditors Report in respect of the Financial Year ended 31st March, 2019.

Financial Highlights

The financial highlights are set out below:

Rupees in Million

2018-19 2017-18
Total Revenue 2737.00 2692.67
Earnings Before Interest, Depreciation, Taxes and Amortisations (EBIDTA) 730.41 731.45
Interest and Finance Charges 4.34 3.97
Depreciation and Amortisation Expenses 142.62 140.88
Profit before Tax 583.45 586.60
Tax including Deferred Tax 204.07 208.66
Profit after Tax 379.38 377.94
Other Comprehensive Income/(Loss), net of tax (1.14) (0.60)
Total Comprehensive Income 378.24 377.34
Balance brought forward 907.07 694.75
Dividend on Equity Shares 137.11 137.11
Dividend Distribution Tax 28.18 27.91
Balance carried forward in Retained Earnings 1120.02 907.07

Directors Responsibility Statement

In accordance with the provisions of Section 134(5) of the Companies Act, 2013 ("the Act") and based upon representations from the Management, the Board states that:

a) in preparing the Annual Accounts, applicable accounting standards have been followed and there are no material departures;

b) the Directors have selected accounting policies, applied them consistently and made judgments and estimates that are reasonable and prudent 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 the year;

c) the Directors have taken proper and sufficient care in maintaining 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) the Directors have prepared the Annual Accounts of the Company on a "going concern" basis;

a) the Directors have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and are operating effectively; and

b) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Performance

The annexed Management Discussion and Analysis forms part of this report and covers, amongst other matters, the performance of the Company during the Financial Year 2018-19 as well as the future outlook.

Corporate Governance Report

In accordance with Regulation 34(3) read with Schedule V(C) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the Listing Regulations"), the Report on Corporate Governance along with the Auditors Certificate is attached and forms part of this Report.

Dividend

The Board recommends a Dividend of Rs. 4.50 per equity share of Rs. 10 each for the Financial Year 2018-19 for approval by the Shareholders at the forthcoming Annual General Meeting. The dividend, if declared at the forthcoming Annual General Meeting will be paid on 31st July, 2019 to those Shareholders whose names appear in the Register of Shareholders/ Beneficial Owners as on 22nd July, 2019. In accordance with the Income Tax Act, 1961, the tax on dividend will be borne by the Company.

Board Meetings

During the year, seven Board Meetings were held ie. on 18th April, 2018, 28th May, 2018, 3rd August, 2018, 27th September, 2018, 31st October, 2018, 31st January, 2019 and 29th March, 2019.

Directors

In accordance with Regulation 17(1A) of the Listing Regulations, the Shareholders, by passing a special resolution by way of postal ballot and remote e-voting on 16th March, 2019 approved the continuation of Mr. P.R.S. Oberoi (DIN: 00051894) as the Non-executive Chairman on the Board of the Company on and after 1st April, 2019, notwithstanding that he has attained the age of 75 (seventy-five) years.

Mr. Anil Kumar Nehru (DIN: 00038849), a Non-executive Independent Director was re-appointed on the Board for a second term of 5 (five) consecutive years with effect from 1st April, 2019 up to 31st March 2024, notwithstanding that he has attained the age of 75 (seventy-five) years. In accordance with Regulation 17(1A) of the Listing Regulations, the Shareholders have approved re-appointment of Mr. Anil Kumar Nehru by passing a special resolution by way of postal ballot and remote e-voting on 16th March, 2019.

Mr. Sudipto Sarkar (DIN 00048279) and Mr. L. Ganesh (DIN: 00012583), Non-executive Independent Directors first term in office expires on 8th August, 2019. The Nomination and Remuneration Committee and the Board at their respective Meetings held on 28th May, 2019, noted that the above Non-executive Independent Directors are highly renowned professionals drawn from diverse fields, who bring with them a wide range of skills and experience to the Board, which enhances the quality of the Boards functioning and its decision making process. The Company and the Board has immensely benefitted from their vast experience, knowledge and strategic insights on various matters relating to the Companys business. Considering the enormous contributions of the Directors to the functioning and performance of the Company, the Board was of unanimous view that it will be in the best interest of the Company to re-appoint them as Non-executive Independent Directors for a second term of 5 (five) consecutive years.

Taking into account the outcome of the Performance Evaluation Report of the aforesaid two Independent Directors, the Board of Directors, on the recommendation of the Nomination and Remuneration Committee, approved and recommended to the Shareholders, the re-appointment of Mr. Sudipto Sarkar and Mr. L. Ganesh as Non-executive Independent Directors on the Board of the Company, not liable to retire by rotation, for a second term of 5 (five) consecutive years from the expiry date of their current term.

At the first meeting of the Board of Directors for the Financial Year 2018-19 held on 18th April 2018, the Independent Directors have confirmed, as required under sub-section (7) of Section 149 of the Act read with Regulation 25(8) of the Listing Regulations that they meet the criteria of independence required under sub-section (6) of Section 149 of the Act and clause (b) of sub-regulation (1) of Regulation 16 of the Listing Regulations. The Board, after undertaking due assessment of the veracity of the declaration submitted by the Independent Directors under sub-section (6) of Section 149 of the Act read with sub-regulation (9) of Regulation 25 of the Listing Regulations, was of the opinion that the Independent Directors meet the criteria of independence.

Mr. S.S. Mukherji retires by rotation at the forthcoming Thirty-sixth Annual General Meeting and being eligible, offers himself for reappointment. The Directors recommend re-appointment of Mr. S.S. Mukherji as a Director on the Board.

Corporate Social Responsibility

The Companys Corporate Social Responsibility (CSR) Policy formulated in accordance with Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 can be accessed on the Companys website www.eihassociatedhotels.in.

The Annual Report on Corporate Social Responsibility activities for the Financial Year 2018-19 is given in Annexure 1, which forms a part of this Report. The Annexure also gives the composition of the CSR Committee.

In addition to the mandatory CSR spend in accordance with the Act, during the year, the Companys Hotels have also taken the following CSR initiatives:

a. The Oberoi Rajvilas, Jaipur extends assistance to "With care" programmes for the under privileged sections of the society. The hotel also supports Mother Teresa Foundation. Staff from the hotel visited schools in nearby villages to spread awareness of environmental conservation, hygiene and wellness.

b. The Oberoi Cecil, Shimla extends its support to Sarvodaya Bal Ashram for orphaned children in Shimla. On 15th August, 2018, the hotel organized an annual blood donation camp for the local blood bank. The World Environment Day was commemorated by observing an Environment Week to create awareness on global warming, pollution and ecological balance.

c. Trident Hotels at Agra and Udaipur extend assistance to local chapters of Mother Teresas Missionaries of Charity. To commemorate the World Environment Day on 5th June, 2018 with an endeavour to promote a healthier and green environment, Trident Agra pioneered a sapling plantation drive.

d. Trident Jaipur supports Bhavani Child Development Centre, a school for dyslexic children. The school is involved in providing intensive early intervention for children showing signs of developmental delay and exposed to the risk of learning disability.

e. Trident Chennai supported the One time use plastic ban initiative of the Tamil Nadu Government by organising awareness programs and campaigns across various communication platforms such as notice boards and television, to make people aware of the products that have been banned by the Government and some of the greener alternatives for plastic products. On World Environment Day, saplings plantation was done by the Trident Chennai team in and around the Hotel. The team visited SOS Childrens Village, Tambaram, with an aim to create awareness amongst young children about the World Environment Day and its importance. Trident Chennai made voluntary contribution towards the Kerala Chief Ministers Distress Relief Fund for strengthening relief activities for the victims of the devastating Kerala floods in August, 2018.

f. Trident Cochin in association with the other hotels and business organizations in its locality distributed school supplies to the Government Schools in Willingdon Island. This is an yearly event in which the hotel participates and is appreciated and supported by the local community. During the recent Kerala floods, the hotel joined hands with local Government organizations in distributing flood relief materials at relief camps in Kochi.

g. Trident Bhubaneswar commemorated the World Environment Day by initiating a sapling plantation drive among its employees within the sprawling garden area of the hotel. On the eve of Independence Day, children from Asha Kiran and Doughlas Memorial Childrens Home, an orphanage school with which the hotel is associated, were invited for flag hoisting followed by distribution of sweet and clothes.

Audit Committee

The composition of the Audit Committee is as under:

Mr. Sudipto Sarkar Independent Director & Chairperson
Mr. Anil Nehru Independent Director
Mr. L. Ganesh Independent Director
Ms. Radhika Haribhakti Independent Director
Mr. Akshay Raheja Non-executive Non-Independent Director
Mr. S.S. Mukherji Non-executive Non- Independent Director

For other details relating to the Audit Committee, please refer page nos 37.

Companys Policy on Director Appointment and Remuneration and Senior Management Personnel Appointment and Remuneration.

The Companys Policy on Director Appointment and Remuneration Policy (revised) 2019 ("Director Appointment Policy") and Senior Management Appointment and Remuneration Policy ("Senior Management Policy") formulated in accordance with Section 178 of the Act read with Regulation 19(4) of the Listing Regulations can be accessed on the Companys website www.eihassociatedhotels.in

The salient features of the Director Appointment Policy are as under:

• The Policy aims to engage Directors (including non-executive and independent nonexecutive directors) who are highly skilled, competent and experienced persons within one or more fields of business, finance, accounting, law, management, sales, marketing, administration, corporate governance, technical operations or other disciplines related to the business of the Company. The Directors shall be able to positively carry out their supervisory role in the management and the general affairs of the Company;

• assessing the individual against a range of criteria including but not limited to industry experience, background and other qualities required to operate successfully in the position, with due regard to the benefits of diversity of the Board;

• the extent to which the individual is likely to contribute to the overall effectiveness of the Board and work constructively with existing Directors;

• the skills and experience the individual brings to the role and how these will enhance the skill sets and experience of the Board as a whole;

• the nature of positions held by the individual including directorships or other relationships and the impact they may have on the Directors ability to exercise independent judgment;

• the time commitment required from a Director to actively discharge his or her duties to the Company.

The salient features of the "Senior Management Policy" are as under:

• The objective of this Policy is to provide a framework and set standards for the appointment, remuneration and termination of Key Managerial Personnel (KMP) and the Core Management Team (within the Senior Management Personnel) who have the capacity and responsibility to lead the Company towards achieving its long term objectives, development and growth;

• Appointment & Remuneration of Key Managerial Personnel and Core Management Team are aligned with the interests of the Company and its Shareholders within an appropriate governance framework;

• Remuneration is structured to align with the Companys interests, taking into account the Companys strategies and risks;

• Remuneration is linked to individual and Company performance, which, in turn, impacts the quantum of variable pay;

• Remuneration is designed to be competitive within the hospitality industry or general industry for applicable roles;

• Executives performing similar complexity of jobs are paid similar compensation.

The remuneration paid to Senior Management Personnel is categorised under the following major heads:

Fixed Salary: This includes basic salary, other allowances, perquisites and retirement benefits; Variable Salary: This includes variable pay linked to Company and Individual performance. ]

Energy Conservation Measures

During the year, energy conservation measures taken by the Company include:

• replacement of incandescent, halogen and CFL lamps with energy efficient LED lamps;

• replacement of old pumps with energy efficient pumps;

• installation of motion sensors to reduce energy for lighting;

• installation of condensate recovery system and

• installation of variable frequency drives for demand based control of high power fans.

In addition to these, various operational measures were taken to reduce energy consumption such as de-scaling of heat exchangers and timely preventive maintenance of equipment to maintain their efficiency.

Actions planned for the next year include:

• replacement with energy efficient equipment viz. electrically operated chiller, chiller and condenser pumps;

• automation of cooling tower as per ambient temperature, steam boiler, condensate recovery system;

• installation of heat pumps for hot water generation, air blowers for STP;

• installation of rain water harvesting system and

• continued replacement of halogen & CFL lamps to energy efficient LED lamps.

Operational measures like ensuring effective working of energy conservation committees, energy audits, close monitoring & control of energy consumption will be continued.

Foreign Exchange earnings & outgo

During the Financial Year 2018-19, the foreign exchange earnings of the Company amounted to Rs. 810.55 Million as against Rs. 794.93 Million in the previous year. The expenditure in foreign exchange during the Financial Year 2018-19 was Rs. 88.30 Million compared to Rs. 60.93 Million in the previous year.

Auditor and Auditors Report

At the 34th Annual General Meeting of the Company held in the year 2017, the Shareholders had approved the appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, (FRN 117366 W/W 100018) ("Deloitte") as the Statutory Auditors of the Company to hold office for 5 (five) consecutive years.

The Report of the Auditors does not contain any qualification, reservation or adverse remark.

Secretarial Auditors

In accordance with the provisions of Section 204 of the Act, M/s JUS & Associates were appointed as the Secretarial Auditors of the Company for the Financial Year ended 31st March, 2019. The Secretarial Audit Report submitted by the Secretarial Auditors does not contain any qualification, reservation or adverse remark. The Secretarial Auditors Report forms part of the Annual Report.

Compliance with Secretarial Standards

During the year, the Company has complied with the applicable Secretarial Standards.

Related Party Transactions

The contracts, arrangements and transactions entered into by the Company during the Financial Year with related parties were in the ordinary course of business and are on an arms length basis. During the year, the Company has not entered into any contract, arrangement or transaction with Related Parties which could be considered material in accordance with the Related Party Transactions Policy of the Company. The policy on Related Party Transactions, approved by the Board, can be accessed on the Companys website www.eihassociatedhotels.in.

The details of Related Party Transactions are as set out in Note no. 38(b) to the Financial Statements.

Extract of Annual Return

The Extract of Annual Return for the Financial Year ended 31st March, 2019 in Form MGT-9 is annexed as Annexure 2.

Loans, Guarantees or Investments

During the year 2018-19, the Company has not given any loan or made any investment or provided any guarantee in terms of Section 185 of the Companies Act, 2013.

Deposits

During the year, the Company did not accept any deposits from the public.

Vigil Mechanism/ Whistle blower Policy

In accordance with Section 177(9) of the Act and rules framed thereunder read with Regulation 4(2)(d) and 22 of the Listing Regulations, the Company has a Whistleblower Policy in place for its Directors and Employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the Companys Code of Conduct, "The Oberoi Dharma". The Policy provides for protected disclosures for the Whistleblower. Disclosures can be made through e-mail or a letter to the Whistle Officer or to the Chairperson of the Audit Committee. The Whistleblower Policy is accessible on the Companys website www.eihassociatedhotels.in. During the year ended 31st March, 2019 the Company did not receive any complaint under the scheme.

Subsidiaries, Associates and Joint Ventures

The Company has no subsidiaries, associates or joint ventures.

Directors/Key Managerial Personnel ("KMP") Remuneration

All the Directors of the Company are Non-executive Directors, except Mr. Vikram Oberoi, who is the Managing Director. Mr. Vikram Oberoi does not draw any remuneration from the Company.

a) The percentage increase in remuneration of each director, CFO,CEO,CS or Manager, if any, in the Financial Year:

Sl No Name Total Remuneration 2018-19 (Rs. Million) Total Remuneration 2017-18 (Rs. Million) Percentage Increase
1 Chief Financial Officer 7.80 7.43 4.98
2 Company Secretary 4.26 3.93 8.40

b) the percentage increase in the median remuneration of the employees in the Financial Year is 6.04%;

c) the number of permanent employees on the rolls of the Company as at the end of the Financial Year is 698;

d) the average percentile increase in remuneration of the employees in the Financial Year 2018-19 is 6.9%;

It is hereby affirmed that all remuneration of Directors and KMPs are as per the Remuneration Policy of the Company.

Internal Financial Control Systems and Risk Management Systems Compliance of the above is given in the Management Discussion & Analysis on page nos. 29 to 31.

Board Evaluation

In accordance with the provisions of the Act and Regulation 17(10) of the Listing Regulations, a Board Evaluation Policy is in place. A structured questionnaire by an independent external agency covering various aspects of the Boards functioning, Board culture, performance of specific duties by Directors and contribution to the Board proceedings was circulated to the members of the Board for the Financial Year 2018-19. Based on the responses received, the Board as a whole, the Committees, the Chairperson and individual Directors were separately evaluated in the Meeting of the Independent Directors and at the Meeting of the Board of Directors.

The process of review of Non-Independent Directors and the Board as a whole and also its Committees were undertaken in a separate meeting of Independent Directors held on 29th March, 2019, without the attendance of Non-Independent Directors and members of the Management. At the Meeting, the performance of the Chairman of the Company was reviewed taking into account the views of the Executive Director, Non-Executive Directors and Independent Directors. The Meeting also assessed the quality, quantity and timeliness of information required for the Board to perform its duties properly.

The entire Board, excluding the Director being evaluated, evaluated the performance of each Independent Director.

The Directors have expressed their satisfaction with the evaluation process conducted by the independent external agency.

Based on the findings from the evaluation process, the Board will continue to review its procedures, processes and effectiveness of Boards functioning, individual Directors effectiveness and contribution to the Boards functioning in the Financial Year 2019-20 as well with a view to practice the highest standards of Corporate Governance.

Cost Records

The Company is not required to maintain cost records in accordance with Section 148 of the Act read with Rule 3 of the Companies (Cost Records and Audit) Rules, 2014 as the services of the Company are not covered under the said rules.

Significant and Material orders, if any

During the Financial Year, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Companys operation in future.

Prevention of Sexual Harassment at Workplace

The Company has a policy for prevention of sexual harassment at the workplace. In accordance with the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("Redressal Act") and rules made thereunder, the Company has constituted an Internal Complaints Committee (ICC) in all its hotels. During the year, the ICC received two complaints, both of which were disposed of within the statutory period. During the year, the Company has duly complied with the Redressal Act.

Particulars of Employees

The information required under Section 197 of the Companies Act, 2013 read with sub-rule(2) of Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed and forms part of this Report.

Cautionary Statement

Risks, uncertainties or future actions could differ materially from those expressed in the Directors Report and the Management Discussion and Analysis. These statements are relevant on the date of this report. We have no obligation to update or revise these statements, whether as a result of new information, future developments or otherwise. Therefore, undue reliance should not be placed on these statements.

Acknowledgement

The Board takes this opportunity to thank all employees for their commitment, dedication and co-operation.

For and on behalf of the Board

Gurugram VIKRAM OBEROI SUDIPTO SARKAR
28th May, 2019 Managing Director Chairperson Audit Committee