| The Directors are pleased to present the Twenty-seventh Report together
with audited fnancial statements of your Company for the year ended
March 31, 2014.
FINANCIAL HIGHLIGHTS
(INR in lakhs)
2013-14 2012-13
Sales 11931 9897
Profit before Interest Depreciation & Tax (177.83) (1333.90)
less: Interest 581.10 122.29
Profit / (Loss) before Depreciation & Tax (758.93) (1456.19)
less: Depreciation 877.00 632.51
Profit / (Loss) before Tax (1635.93) (2088.71)
less Provision for Tax --- ---
Profit / (Loss) for the year (1635.93) (2088.71)
OPERATIONS AND FINANCIAL OVERVIEW
For the fnancial year ended March 31, 2014, your Company declared
Positive EBIDTA of INR 627 lakhs on Total Operating Income of INR
13,606 lakhs, as compared to a negative EBITDA of INR 1,358 lakhs in
the previous year. Total Operating Income grew by 25% over the previous
year from INR 10,868 lakhs to INR 13,606 lakhs. Income from Sales of
Vacation Ownership Plans rose to INR 5,993 lakhs, an increase of 13%,
while Total Income from Resort Operations rose to INR 4,673 lakhs, up
by 27%. The Total Income from Resort Operations includes Income from
non-members booking holidays and MICE. Notably, your Company's
performance has improved with net losses reducing in FY14 to INR 974
lakhs (before exceptional items), as compared to INR 2,243 lakhs in the
previous year.
It is also notable that your Company reported Total Operating Income of
INR 3,883 lakhs in the last quarter of FY14, an increase of 35% over
the same period of the previous fscal. Income from Sales of Vacation
Ownership Plans grew by 72%, indicating an accelerated momentum in the
Company's growth. Your Company declared a Proft after Tax (before
exceptional items) of INR 131 lakhs for the quarter.
The signifcant improvement in your Company's performance in the year is
an indicator of the strong resurgence of Brand Sterling, a result of
the strategic turnaround initiatives over the last couple of years.
The substantial investments your Company made in enhancing the overall
customer holiday experience through refurbishment of its resorts and an
expanded menu of recreational and culinary experiences have resulted in
a healthy rise in the number of Vacation Ownership members and
non-members holidaying at the Company's resorts, leading to an increase
in resort occupancy to 49% from 41% in the previous year.
Over the course of the year, your Company added a new resort in
Yelagiri, taking the total room inventory to 1512 across 19 resorts.
With the inventory on hand, and an active member base of over 70,000
Vacation Ownership members, your Company continues to have a healthy
customer to room ratio. In FY14, your Company added 3,650 new Vacation
Ownership members as compared to 3,409 in the previous year, refecting
a 7% growth. Your Company's member acquisition program during the year
was challenged by dampened consumer sentiment caused by an uncertain
economic environment and high interest rates negatively affecting
discretionary spending power. In the light of this, your Company's
performance can be said to be commendable especially since Vacation
Ownership Membership prices increased by 7.5% during the year; a move
that was taken to communicate the signifcantly enhanced holiday
experience being delivered post investing in an expanded destination
network, resort renovation and higher service standards.
During the year, your Company continued to invest in upgrading its
existing resorts to global, best-in-class standards. Major
refurbishment in your Company's Yercaud property was commenced during
the year while renovation of accommodation was undertaken in other
resorts across the network. To improve effciency, your Company began
work on Information Technology platforms in the areas of Enterprise
Resource Planning, Property Management and lead Management systems in
FY14. In the area of soft skills, your Company continued to invest in
Human Resources and Training.
Your Company's performance has been improving consistently over the
last couple of years, indicating that it is well on track to achieving
the stated goal of becoming the market leader in the leisure
Hospitality and Vacation Ownership industry in India. Already, all the
strategic turnaround initiatives taken during the last couple of years
have begun to yield positive results with your Company turning EBITDA
positive for FY14.
The proposed merger with Thomas Cook and the resultant fresh injection
of capital will further strengthen your Company's market position. The
investments made will allow your Company to accelerate the pace of
expansion into new holiday destinations. The merger will also beneft
your Company as there are multiple natural synergies.
CAPITAL EXPENDITURE
In FY14, your Company added INR 2462 lakhs to its gross block,
comprising investment in new resorts, renovation of existing resorts
and Information Technology. The Capital work in progress as on March
31, 2014 stood at INR 5297 lakhs; an amount representing project
expenditure on resorts under renovation.
MATERIAL CHANGES
(1) Merger and De-merger with Thomas Cook Group:
Your Company entered into a composite scheme of arrangement and
amalgamation with Thomas Cook Insurance Services (India) limited
("TCISIl"), having its registered offce at Thomas Cook Building, Dr. D.
N. Road Fort, Mumbai, Maharashtra - 400001, India and Thomas Cook
(India) limited ("TCIl"), having its registered offce at Thomas Cook
Building, Dr. D. N. Road Fort, Mumbai, Maharashtra - 400001, India
pursuant to which the following shall be undertaken:
(i) the resort and timeshare business carried out by your Company shall
be transferred by way of de-merger from your Company to TCISIl, in lieu
whereof such number of Equity Shares of TCIl as set out in the Scheme
will be issued to the shareholders of your Company; and
(ii) the entire residual business remaining in your Company following
the said de-merger shall be amalgamated into TCIl in lieu whereof such
number of Equity Shares of TCIl as set out in the Scheme will be issued
to the shareholders of your Company.
(2) Open Offer:
Thomas Cook Insurance Services (India) limited ("Acquirer") with Thomas
Cook (India) limited and Travel Corporation (India) limited ("Persons
Acting in Concert / PAC") have made an Open Offer for Acquisition of up
to 23486264 fully paid Equity Shares of the face value of INR 10 each
of Sterling Holiday Resorts (India) limited representing 26% of the
Voting Capital, at a price of INR 98 per Equity Share from all the
Equity Shareholders of your Company.
SHARE CAPITAL
During the year under review, your Company has raised its Equity Share
capital through the following issues as described hereunder:
- INR 230.82 lakhs through issue of 487171 Equity Shares of INR 10 each
at a premium of INR 37.38 Under ESPS 2011.
- INR 9.4 lakhs through issue of 20651 Equity Shares of INR 10 each at
a premium of INR 35.55 Under ESPS 2011.
- INR 18,686.18 lakhs through issue of 20650000 Equity Shares of INR 10
each at a premium of INR 80.49 under preferential allotment.
Further during the current year, your Company has raised INR 697.86
lakhs through issue of 1023258 Equity Shares of INR 10 each at a
premium of INR 58.20 under ESPS 2011.
PROCEEDS OF ISSUES
The details of utilisation of proceeds arising out of various issues
made during the year ended March 31, 2014 are set out in Annexure A.
CORPORATE GOVERNANCE REPORT
Your Company has complied with the Corporate Governance Code as
stipulated under Clause 49 of the listing Agreement with the Stock
Exchanges. A separate Section on Corporate Governance, along with a
certifcate from the Statutory Auditors of the Company confrming the
compliance is annexed.
Salary and perquisite paid to Mr. Ramesh Ramanathan during the year
FY14 is given below:
Particulars Amount in INR
Salary 64,15,200
Provident Fund - Employers Contribution 5,04,000
Medical Reimbursement 2,31,620
Insurance 41,250
Gratuity liability 2,02,020
TOTAL 73,94,090
During the year ended March 31, 2014, following shares were issued to
Mr. Ramesh Ramanathan, Managing Director under the Employees Stock
Purchase Scheme 2011:
1) 487171 Equity Shares of INR 10 each at INR 47.38 per share with a
discount of INR 28.72 per share.
2) 20651 Equity Shares of INR 10 each at INR 45.55 per share with a
discount of INR 14.40 per share.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A detailed analysis of your Company's operational and fnancial
performance and initiatives taken by your Company in key functional
areas is separately discussed under the Management Discussion and
Analysis section, as per Clause 49 of the listing Agreement of the
Stock Exchanges.
STOCK OPTIONS
EMPLOYEE STOCK OPTION SCHEME / EMPLOYEE STOCK PURCHASE SCHEME
Under the Employees Stock Purchase Scheme 2010, 657019 Equity Shares
were allotted. The balance 1442981 Shares are yet to be allotted.
Under the Employees Stock Purchase Scheme 2011, 1931569 Equity Shares
were allotted. The balance 1568431 Equity Shares are yet to be
allotted.
Under the Employees Stock Option Scheme 2012, 750000 Options were
granted. Balance of 250000 Options are available for future grants.
The details of Equity Shares issued under ESPS 2010 and ESPS 2011 and
Stock Options granted under ESOS 2012 are given in Annexure B in
accordance with SEBI (Employees Stock Option Scheme & Employees Stock
Purchase Scheme) Guidelines, 1999.
DIRECTORS
Mr. Sidharth Shankar, Vice Chairman shall retire by rotation at the
ensuing Annual General Meeting and being eligible, offer himself for
re-appointment.
Mr. Madhavan Karunakaran Menon, Mr. Harsha Raghavan, Mr. Mahendra Kumar
Sharma were appointed as Additional Directors on the board of your
Company with effect from March 14, 2014. Your Company has received
notices under section 160(1) of the Companies Act, 2013 from the
members signifying their intention to propose Mr. Madhavan Karunakaran
Menon, Mr. Harsha Raghavan, Mr. Mahendra Kumar Sharma as candidates for
the offce of Directors.
Mr. Pradipta K. Mohapatra and Mr. Anil Kumar Madhok were appointed as
Additional Directors on the board of your Company with effect from
April 25, 2014. Your Company has received notices under section 160(1)
of the Companies Act, 2013 from the members signifying their intention
to propose Mr. Pradipta K. Mohapatra and Mr. Anil Kumar Madhok as
candidates for the offce of Director.
As stipulated in Clause 49 of the listing Agreement with the Stock
Exchanges, brief resume of the above Directors is provided in the
report on Corporate Governance, which forms part of this Annual Report.
Mr. Siddharth Mehta, Chairman, Mr. K. Chandrasekaran, Mr. M. N.
Rangamani, Mr. Utpal Sheth, Directors resigned from the Board of your
Company with effect from March 14, 2014 and Mr. Shahzaad Siraj Dalal,
Director resigned on April 25, 2014. The Board of Directors recorded
their sincere appreciation for their valuable services rendered to your
Company.
Mr. Amit Jatia, Director shall retire by rotation at the ensuing Annual
general meeting and has expressed that he is not seeking
re-appointment. Mr. Darshanbhai Naranbhai Patel, Director was appointed
as Additional director on the board of your Company with effect from
October 26, 2013 who ceases to hold the offce of Director at the
ensuing Annual General Meeting. The Board of Directors recorded their
sincere appreciation for their valuable services rendered by them to
your Company.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
to the best of their knowledge and belief confrm that:
1. In the preparation of the Proft and Loss Account for the fnancial
year ended March 31, 2014, and the Balance Sheet as at that date
("Annual Accounts"), the applicable accounting standards have been
followed.
2. That the Directors had 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 your Company at the end of the fnancial year and of the
Proft and Loss of your Company for that year.
3. That the Directors had taken proper and suffcient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
your Company and for preventing and detecting fraud and other
irregularities.
4. That the Directors had prepared the Annual Accounts for the fnancial
year ended March 31, 2014 on 'Going Concern' basis.
SUBSIDIARY COMPANIES
As on March 31, 2014, your Company had two Subsidiary Companies as
below:
1. Sterling Holidays (Ooty) limited
2. Sterling Holiday Resorts (Kodaikanal) limited
There has been no material change in the nature of business of the
subsidiaries.
As required under the listing Agreements with the Stock Exchanges, a
Consolidated Financial Statement of you Company and all its
subsidiaries is attached. The Consolidated Financial Statements have
been prepared in accordance with the relevant Accounting Standards as
prescribed under Section 211(3C) of the Companies Act, 1956 ("Act").
These fnancial statements disclose the assets, liabilities, income,
expenses and other details of your Company and its subsidiaries.
Pursuant to the provision of Section 212(8) of the Act, the Ministry of
Corporate Affairs vide its circular dated February 8, 2011 has granted
general exemption from attaching the Balance Sheet, Proft and Loss
Account and other documents of the subsidiary companies with the
Balance Sheet of companies. A statement containing brief fnancial
details of your Company's subsidiaries for the fnancial year ended
March 31, 2014 is included in the Annual Report. The annual accounts of
these subsidiaries and the related detailed information will be made
available to any member of your Company / its subsidiaries seeking such
information at any point of time and are also available for inspection
by any member of your Company / its subsidiaries at the registered
offce of your Company. The annual accounts of the said subsidiaries
will also be available for inspection, as above, at the head offces /
registered offces of the respective subsidiary companies. The Company
shall furnish a copy of details of annual accounts of subsidiaries to
any shareholder on demand.
MANCHANDA RESORTS PRIVATE LIMITED
As reported earlier, your Company had fled the petition with the
Hon'ble High Court, Madras for sanctioning the Scheme of Amalgamation
of Manchanda Resorts Private limited (Subsidiary Company) with your
Company. The Honble High Court of Madras has approved the scheme of
Amalgamation vide order dated August 26, 2013.
AUDITORS
The Statutory Auditors of the Company, R. Subramanian and Company,
Chartered Accountants (ICAI Registration Number 004137S) and V. Sankar
Aiyar & Co., Chartered Accountants, (ICAI Registration Number 109208W)
shall be retiring at the ensuing Annual General Meeting of your
Company. Your Company has received notices from the Statutory Auditors
of their intention of not seeking re-appointment at the ensuing Annual
General Meeting of your Company.
Your Company has received a special notice from a member of your
Company, in terms of the applicable provisions of the Companies Act,
2013 signifying his intention to propose the appointment of M/s. Price
Waterhouse & Co., Chartered Accountants, Bangalore (Firm Registration
Number 007567S) as the statutory auditors of your Company from the
conclusion of this Annual General Meeting till the conclusion of the
next Annual General Meeting. M/s. Price Waterhouse & Co, Chartered
Accountants, Bangalore (Firm Registration Number 007567S) expressed
their willingness to act as statutory auditors of your Company, if
appointed, and have further confrmed that the said appointment would be
in conformity with the provisions of the Companies Act, 2013 read with
the rules made thereunder.
With reference to the Auditors Remarks in their report dated April 26,
2014, your Directors reply is as under:- 1. Reply to Para 9(a) of the
Auditors Report:
The outstanding amount of INR 73.12 lakhs relate to Fringe Beneft Tax
to be adjusted against the refund receivable from the Income Tax
department on completion of assessment.
2. Reply to Para 10 of the Auditors Report:
Your Company has been continuously infusing additional funds into
operation by way of Equity. There has been signifcant improvement in
the overall performance and your Company expects to sustain the growth
in the turnover and improve proftability in the ensuing years. The
Board of Directors are confdent that because of such positive signs,
your Company will improve its performance.
PUBLIC DEPOSITS, LOANS AND ADVANCES
Your Company has not accepted any Deposits from the public or its
employees during the year under review.
The details of outstanding loans and Advances are dealt with in the
Accounts.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
In terms of the Companies (Disclosure Of Particulars In The Report Of
The Board Of Directors) Rules, 1988, the particulars relating to
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo required in terms of Section 217(1)(e) of the
Companies Act, 1956 read with the Companies (Disclosure of Particulars
in the Report of Board of Directors) Rules, 1988 are given in Annexure
C which forms part of the Directors' Report.
AUDIT, INVESTOR GRIEVANCES, REMUNERATION AND COMPENSATION COMMITTEES
In terms of Clause 49 of the listing Agreement entered with the Stock
Exchanges and pursuant to the provisions of the Companies Act, 2013 the
details pertaining to Audit Committee, Stakeholders' Relationship
Committee, Nomination and Remuneration Committee, Share Transfer
Committee are furnished in the Report on Corporate Governance which is
annexed herewith.
PARTICULARS OF EMPLOYEES AS REqUIRED UNDER SECTION 217(2A) OF THE
COMPANIES ACT, 1956 AND RULES MADE THEREUNDER
Your Company had employees who were in receipt of remuneration of not
less than INR 60,00,000 during the year ended March 31, 2014 or not
less than INR 5,00,000 per month during any part of the said year.
However as per the provisions of Section 219(1)(b)(iv) of the Companies
Act, 1956, the Directors' Report and Accounts are being sent to all the
shareholders of the Company excluding the statement of particulars of
employees. Any shareholder interested in obtaining the copy of the
statement may write to the Company.
DEMATERIALISATION OF EqUITY SHARES
As mentioned in our earlier Annual Reports, the Company's Equity Shares
are in the compulsory Demat mode with effect from August 28, 2000, as
per Circular No.SMDRP / Policy / CIR-23 / 2000 dated May 29, 2000
issued by Securities and Exchange Board of India (SEBI). This has been
facilitated through arrangement with National Securities Depository
limited (NSDl) and Central Depository Services (India) limited (CDSl).
A large number of our shareholders have taken advantage of
Dematerialisation facility. The Cameo Corporate Services limited,
Chennai, has been appointed as the Registrar and Share Transfer Agents.
CEO / CFO CERTIFICATION
The Managing Director (CEO) and the Senior Vice President - Finance
(CFO) have submitted a certifcate to the Board regarding the fnancial
statements and other matters as required under clause 49(V) of the
listing Agreement.
ACKNOWLEDGEMENTS
The Board of Directors take this opportunity to express their sincere
thanks to the Central and State Governments, Financial Institutions and
Bankers and other Creditors for their valuable support and assistance
during this period. The Directors also wish to thank the Shareholders
and Timeshare Customers who have supported the Company in this hour of
need. Our Directors look forward to receiving continued support from
them.
The Directors also wish to thank the employees of the Company for their
dedicated performance and place on record their wholehearted commitment
to your Company and combined efforts to turnaround your Company's
performance.
For and on behalf of the Board
Place: Chennai
Date: April 26, 2014 PRADIPTA K. MOHAPATRA
CHAIRMAN | 