Tulip Star Hotels Ltd Management Discussions.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

We have attempted to include discussions on all specified matters to the extent relevant.

Industry Structure and Developments

With the decisive mandate in the Loksabha Elections held in 2014, India is expected to have a stable, progressive and proactive government for the next 5 years. In the longer term, the growth potential is significant as evident from the continued global interest in the Indian hospitality Industry. Growth in tourism will definitely lead to boom in hotels and restaurants. Tourism is playing a pivotal role in growth of hotel industry.

Risks and Concerns

The tourism & hospitality industry is extremely sensitive to downturns in business cycles, terror attacks, epidemics, conflicts & natural calamities. The time factor for the final decision and the outcome of the final decision in the matters under litigation can have a bearing on the quality of Companys investments in other hotel owning companies and the revenue of the Company.

Business Outlook

As mentioned above the prospects of your Company is linked to the time factor involved in the final decision in the ongoing arbitration and legal matters and the ability of the Company to raise long term funds.

Internal Control Systems and their adequacy

Internal control systems have been found to be adequate commensurate with its size and nature of business. The Audit Committee periodically reviews the internal control systems in operations. In addition it has become mandatory under Section 138 of Companies Act, 2013 to appoint Internal Auditors before September 30, 2014.

Financial Performance

As a matter of prudence the Company has not accounted for interest on the amount owing by V Hotels Ltd. in which the Company holds 50 percent equity stake. The loss for the year is Rs. 458.31 lacs as against loss of Rs. 469.19 lacs for the previous year.

Human Resources

The Company sustains its endeavours on the development of people with full commitment. The Company has taken steps to provide ample opportunities to its employees to upgrade skills and competence.

Cautionary Statement

Statements in the Management Discussion and Analysis section describing the Companys objectives, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. These statements reflect the Companys current views with respect to the future events and are subject to risks and uncertainties. Actual results could differ materially from those expressed or implied.

DIRECTORS

The Companies Act, 2013 provides that Independent Directors shall not be liable to retire by rotation. Accordingly, all the Independent Directors of your Company shall not retire by rotation pursuant to the provisions of Section 149 of Companies Act, 2013 and are proposed to be appointed for 5 (Five) consecutive years for a term upto the Annual General Meeting for the Financial Year 2018-19 or September 29, 2019 whichever is earlier.

Mr. A. B. M. Good, retires by rotation at the ensuing Annual General Meeting pursuant to the provisions of Section 152 of Companies Act, 2013 and being eligible, offers himself for re-appointment.

Dr. Ajit B. Kerkar, Managing Director of the Company, who hitherto was not liable to retire by rotation, shall now retire by rotation pursuant to the provisions of Section 152 of Companies Act, 2013.

PUBLIC DEPOSITS

During the year under review, the Company has not accepted any deposits from the public within the meaning of RBI Directions 1998.

EMPLOYEES

The Company does not have any employee covered by Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975.

INFORMATION AS PER SECTION 217 (1) (E) OF THE COMPANIES ACT, 1956

The Company has no activity relating to conservation of energy or technology absorption. The Company did not have any foreign exchange earnings as well as there are no outgoings during the year.

CORPORATE GOvERNANCE

The detailed report on the various issues, including the Auditors Report on Corporate Governance is attached to this Report.

AUDITORS & AUDITORS REPORT

Messrs. Ray & Ray, Chartered Accountants who had been appointed by the members at the Twenty Sixth Annual General Meeting as the Statutory Auditors for the year 2013-2014 would be retiring at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. The Auditors have confirmed their eligibility and willingness to accept the office, if re-appointed. The members are requested to consider their re-appointment.

With respect to the observations of the Auditors in the Annexure to their Report, the response of the management is as under :-Clause 5 regarding Loans Loans Granted :-

Your Company has lent Rs. 37 crores to V Hotels Ltd., in which your Company holds 50% of equity stake. In view of the present financial position ofV Hotels Ltd. it was decided not to charge interest. The financial position ofV Hotels Ltd. is expected to strengthen once the legal disputes are resolved.

Loans Taken :-

The Management of your Company is in negotiations with the Lenders to have suitable repayment schedule. Clause 10 regarding absence of internal audit system:

The present scale of operations does not warrant a formal internal audit system. However, its control procedures ensure reasonable internal checking of its financial and other records.

Clause 12 regarding delays in payment of statutory dues:

Due to liquidity problems faced by the Company, there has been a delay in payment of the statutory dues. Clause 19 regarding terms of guarantee being prejudicial to the interest of the Company:

The prime security based on which the Banks have disbursed / guaranteed loans to the other Company is the charge on the immovable property owned by V Hotels Ltd. and the guarantee is only by way of additional security. In the opinion of the management, the market value of the immovable property charged is far in excess of the loans disbursed / guaranteed by the Banks.

RESPONSIBILITY STATEMENT PURSUANT TO SECTION 217 (2AA) OF THE COMPANIES ACT, 1956

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Board of Directors hereby confirms that :

• in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures if any.

• the Company has selected and applied such accounting policy consistently and judgments and estimates are made in a reasonable and prudent manner so as to give true and fair view of the state of affairs of the Company as at the end of the financial year and loss of the Company for that period.

• proper and sufficient care has been taken for maintenance of accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing / detecting fraud and other irregularities.

• the annual accounts are prepared on a going concern basis.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to express their sincere gratitude to the Shareholders for their continued support.

For and on behalf of the Board

Place:Mumbai A. B. M. Good
Date : May 29, 2014 Chairman