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May your adventures bring you closer

together, even as they take you far

away from home.

Trenton Lee Stewart

04 Chairman’s Message09 Notice to Shareholders15 Directors’ Report24 Management Discussion and Analysis34 Report on Corporate Governance50 Auditors’ Report56 Balance Sheet

58 Statement of Profit and Loss59 Cash Flow Statement62 Notes81 Auditors’ Report on Consolidated Accounts82 Consolidated Accounts107 Financial Information of Subsidiaries

contents contents

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Dear Shareholders,

Over the last few years, your Company has been focusing on upgrading the quality of its product and service. The investments we have made, and will continue to make, have resulted in both accolades and substantial growth. In FY13, your Company crossed the INR 1000 million revenue milestone. The Total Operating Income for the financial year ended March 31, 2013 stood at INR 1166.8 million, representing a 52% growth in revenue. Notably, your Company’s improved performance has resulted in net losses reducing in FY13 by INR 200.3 million, as compared to the previous fiscal year.

Your Company’s performance can be said to be commendable in the light of an unfavourable macroeconomic environment dampening investor and consumer sentiment. However, while broad economic conditions are a cause for concern, the potential in the Indian economy and Travel & Tourism sector in particular continue to be promising with the World Travel & Tourism Council (WTTC) predicting that India will be one of the fastest rising tourism markets in the coming 10 to 15 years. Indeed, this is reflected in the latest WTTC report which predicts that Domestic Travel Spending is expected to grow by 6.1% in 2013 to INR 4331 billion, and rise by 8.3% per annum thereafter to INR 9573.4 billion in 2023.

These projections augur well for the Vacation Ownership and Leisure Hospitality industry in India as the number of Indian travellers grow exponentially over the next 25 years. The Leisure and Hotels sector is expected to top projected growth across sectors with a Compounded Annual Growth rate (CAGR) of 8.4% and 8.2% respectively, exceeding sectors such as Housing, Communications and Education.

Your Company is poised to capitalise on the positive trends in Leisure Hospitality. At the end of FY13, we had completed renovating a significant amount of our room inventory. In the coming year, we will continue our investments in enhancing the resort standards and holiday experience and work towards delighting our Members and Guests. We have already achieved this to a great extent in Kodai - By The Lake, Munnar - Terrace Greens, and Ooty - Fern Hill, leading to rave reviews. In the time to come, we will look to complete the upgradation of resorts across our network in order to deliver a uniformly Great Holiday experience.

On behalf of the entire Sterling family, I would like to thank you, our valued shareholder, for your belief in our potential. With your continued support, I have no doubt that Sterling will soon achieve its business potential and aspirations to be the market leader!

Sincerely,

Siddharth Mehta

"At the end of FY13, we had completed renovating a

significant amount of our inventory. In the coming year, we will continue our

investments in enhancing the resort standards and holiday

experience."

Sterling Holiday Resorts (India) LimitedAnnual Report 2012-2013


STERLING HOLIDAY RESORTS (INDIA) LIMITED

BOARD OF DIRECTORS Siddharth Mehta Chairman S. Sidharth Shankar Vice Chairman Ramesh Ramanathan Managing Director K. Chandrasekaran Director M. N. Rangamani Director Amit Jatia Director Shahzaad Siraj Dalal Director Utpal Sheth Director

COMPANY SECRETARY M. Balasubramaniyan

BANKERS Kotak Mahindra Bank HDFC Bank Limited State Bank of India Axis Bank Limited Syndicate Bank

AUDITORS R. Subramanian and Company Chartered Accountants Chennai - 600 004

V. Sankar Aiyar & Co. Chartered Accountants Chennai - 600 024

REGISTERED OFFICE No.163, T.T.K. Road Alwarpet Chennai - 600 018

REGISTRAR & SHARE Cameo Corporate Services Limited TRANSFER AGENT “Subramanian Building” No.1, Club House Road Chennai - 600 002

Notice to Shareholders

NOTICE TO SHAREHOLDERS

The 26th Annual General Meeting of the Members of Sterling Holiday Resorts (India) Limited will be held on September 17, 2013, Tuesday, 02.30 PM at Rani Seethai Hall, No. 603, Anna Salai, Chennai - 600 006, to transact the following businesses:

ORDINARY BUSINESS

1. To receive and adopt the audited Balance Sheet as on March 31, 2013 and the statement of Profit and Loss for the year ended on that date and the Reports of the Board of Directors and Auditors’ thereon.

2. To appoint a Director in the place of Mr. K. Chandrasekaran, who retires by rotation and, being eligible, offers himself for re-appointment.

3. To appoint a Director in the place of Mr. S. Sidharth Shankar, who retires by rotation and, being eligible, offers himself for re-appointment.

4. To consider and, if thought fit, to pass, with or without modification(s), the following as an Ordinary Resolution :

“RESOLVED THAT pursuant to Section 224 of the Companies Act, 1956, R.Subramanian and Company, Chartered Accountants (ICAI Registration Number 004137S) and V.Sankar Aiyar & Co., Chartered Accountants, (ICAI Registration Number 109208W) be and are hereby re-appointed as Joint Statutory Auditors of the Company from the conclusion of this Annual General Meeting, until the conclusion of next Annual General Meeting of the Company at a remuneration to be determined by the Board in addition to out of pocket expenses as may be incurred by them during the course of the Audit."

SPECIAL BUSINESS

5. To consider and, if thought fit, to pass with or without modification(s), the following Resolution as a Special Resolution

“RESOLVED THAT in accordance with the provisions of Sections 198, 269, 309 and 310 read with Schedule XIII and all other applicable provisions, if any, of the Companies Act. 1956, (“the ACT”) and subject to the approval of the Central Government, if necessary, and such other

approvals, permissions and sanctions, as may be required, and subject to such conditions, modifications as may be prescribed or imposed by the authorities concerned while granting such approvals, permissions and sanctions, the approval of the Company be and is hereby accorded for payment of revised remuneration and perquisites to Mr. Ramesh Ramanathan, as Managing Director for a period of 3 (Three) years with effect from July 1, 2013 to June 30, 2016 as given below.

Salary

A consolidated remuneration of INR 1,75,00,000 (Rupees One Crore seventy five lakhs only) per annum.

Absence or inadequacy of profits

In the event of absence or inadequacy of profits in any Financial year, the above remuneration by way of salary, allowances, perquisites, amenities, facilities and retirement benefits to Mr. Ramesh Ramanathan, Managing Director shall be paid as a minimum remuneration subject to the approval of the Central Government.

General

(i) Remuneration shall be valued in terms of the actual expenditure incurred by the Company in providing benefit to the Employee. However, in cases, where the actual amount of expenditure cannot be ascertained with reasonable accuracy, the perquisites shall be valued as per Income Tax Rules.

(ii) Mr. Ramesh Ramanathan would be subject to all other service conditions as applicable to the Managing Director as per the Company’s policy.

RESOLVED FURTHER THAT in the event of absence or inadequacy of profits in any Financial Year during the tenure of the Managing Director, the Company shall pay to the Managing Director the remuneration by way of salary, allowances, perquisites, amenities, facilities and retirement benefits as stated above, as minimum remuneration for a period not exceeding 3 (three) years from July 1, 2013 to June 30, 2016 subject to the required approvals, if any, from the Central Government.

RESOLVED FURTHER THAT the Board of Directors of the Company, (herein after referred to as the “Board” which term shall be deemed to include the Remuneration Committee or any committee thereof for the time

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being exercising the powers conferred on the Board by this Resolution) be and are hereby authorized, for the purpose of giving effect to this resolution, to do all such acts, deeds, things and matters as it may, in its absolute discretion, deem necessary, proper or desirable and to settle any questions, difficulties or doubts that may arise in this regard and further to execute all necessary documents, applications, returns and writings as may be deemed necessary, proper, desirable and expedient.”

By Order of the BoardFor Sterling Holiday Resorts (India) Limited

Place : Chennai M. BALASUBRAMANIYANDate : July 25, 2013 COMPANY SECRETARY

NOTES:

1. A member entitled to attend and vote at the above meeting is entitled to appoint a proxy to attend and vote instead of himself / herself and the proxy need not be a member (Proxy form is annexed herewith).

2. The proxy form duly completed and in order to be effective should be duly stamped, completed and signed and must be deposited at the Registered Office of the Company, not later than 48 hours before the time fixed for the commencement of the meeting.

3. The Company’s Registrar and Share Transfer Agent for its Share Registry work (Physical and Electronic) are Cameo Corporate Services Limited, having their office premises at 'Subramanian Building', No.1, Club House Road, Chennai - 600 002.

4. The Register of Members and Share Transfer Books of Equity Shares of the Company will remain closed from September 6, 2013 to September 17, 2013 (both days inclusive).

5. Members can avail of the facility of nomination in respect of shares held by them in physical form pursuant to provisions of Section 109A of the Companies Act, 1956. Members desiring to avail this facility may send their nomination in the prescribed Form 2B duly filled in to the Company’s Registrar and Share Transfer Agent: Cameo Corporate Services Limited, 'Subramanian Building', No.1, Club House Road, Chennai - 600 002. Members holding shares in electronic form may contact their respective Depository Participant for availing this facility.

6. Members are requested to notify immediately any change of address to their Depositories Participants

(DPs) in respect of their electronic share accounts and to the Company’s Registrar and Share Transfer Agent Cameo Corporate Services Limited, 'Subramanian Building', No.1, Club House Road, Chennai - 600 002, in respect of their physical share folios, if any.

7. Members who are desirous of seeking any further information or clarification, if any, particularly with regard to the accounts are requested to write to the Company at least seven days in advance of the meeting so that the information can be made available at the meeting.

8. Members are requested to note that the Company’s Equity Shares are under Compulsory Demat trading with effect from August 28, 2000 for all investors. Members are therefore requested to demat their shareholdings to avoid inconvenience in future.

9. Re-appointment of Directors

As per Clause 49(IV)(G) of the Listing Agreement entered into by the Company with the Stock Exchanges, the brief resume, functional expertise of the Directors proposed for appointment are furnished below along with the details of Companies in which they are Directors and the Board Committees of which they are members.

(i) Mr.K.Chandrasekaran aged about 63 years, is a Fellow Member of the Institute of Company Secretaries of India and also a Law graduate from Madras University with corporate experience of more than 36 years in various fields and is the Managing Director of Sterling Holiday Financial Services Limited. He joined the Company’s Board on July 4, 2005.

Details of Directorships held by him are provided herein below:

Sl. No

Name of Companies/ Firms Nature of Interest

1. STERLING HOLIDAY FINANCIAL SERVICES LIMITED

MANAGING DIRECTOR

2. STERLING RESORTS HOME FINANCE LIMITED

DIRECTOR

3. STERLING SECURITIES & FUTURES LIMITED

DIRECTOR

4. STERLING HOLIDAY FINVEST LIMITED

DIRECTOR

5. C.G.K. FINVEST (MADRAS) PRIVATE LIMITED

DIRECTOR

Shareholding in the Company

Mr. K. Chandrasekaran, Director holds 434810 equity shares in the Company.

(ii) Mr. S. Sidharth Shankar, aged about 40 years holds Management degree from University of IOWA, USA with around 10 years of experience in the corporate sector in various fields. He joined the Company’s Board on October 25, 2006. He was appointed as Whole-Time Director with effect from September 3, 2007 and re-designated as Joint-Managing Director with effect from April 1, 2008. Subsequently, he was designated as Non-executive Vice Chairman of the Company with effect from July 1, 2011.

Details of other Directorships held by him are provided herein below:

Sl. No

Name of Companies / Firms Nature of Interest

1.CONCORDE DIGITAL TECHNOLOGIES PRIVATE LIMITED

Director


S. Sidharth Shankar, holds 37,80,500 Equity Shares in the Company.

10. Corporate Members intending to send their authorized representatives to attend the meeting are requested to send a certified copy of the Board Resolution authorizing their representatives to attend and vote on their behalf at the Meeting.

11. Members are requested to bring their Attendance Slip along with their copy of the Annual Report to the Meeting.

12. As part of “Green Initiative” in Corporate Governance, Ministry of Corporate Affairs (MCA) vide circular No.18/2011 dated 29.04.2011, has permitted paperless compliances by recognizing communication through electronic mode to shareholders under the Companies Act, 1956.

Accordingly, it has been decided to send all future communication from the Company including Notices, Annual Reports, Attendance slip, proxy form etc., to the shareholders in electronic form to their registered email address. Investors are requested to update their e-mail IDs with

Depository Participants (DP) for shares held in electronic form or with the Registrar and Share Transfer Agent Cameo Corporate Services Limited, 'Subramanian Building', No.1, Club House Road, Chennai - 600 002 (RTA) (or) the Company / RTA in case the shares are held in physical form.

13. The Explanatory Statement pursuant to Section 173 of the Companies Act, 1956 is annexed hereto.

ANNEXURE TO THE NOTICE

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956.

Item No. 5

The Shareholders of the Company at their Extra-Ordinary General Meeting held on August 13, 2011 had approved the appointment of Mr. Ramesh Ramanathan as Managing Director for a period of 5 years with effect from July 1, 2011 to June 30, 2016 and payment of Remuneration for a period of 3 years with effect from July 1, 2011 and the Ministry of Corporate Affairs, Government of India, New Delhi had approved the same.

In view of the growth in the business activities and increased volume of work, the Remuneration Committee and subsequently the Board of Directors considered it just, fair and reasonable to revise the remuneration to Mr.Ramesh Ramanathan, Managing Director.

The Remuneration Committee and the Board of Directors at their meeting held on July 25, 2013 have approved the payment of revised remuneration to Mr. Ramesh Ramanathan, as Managing Director of the Company for a period of 3 years with effect from July 1, 2013 to June 30, 2016.

The terms of remuneration and perquisites payable to Mr. Ramesh Ramanathan are set out under Item No.5 of the Notice. This may be treated as an abstract as required under Section 302 of the Companies Act, 1956.

Pursuant to the provisions of Sections 269, 198, 309 and 310 read with Schedule XIII and all other applicable provisions of the Companies Act. 1956, the Special Resolution mentioned under Item No.5 of the Notice pertaining to payment of revised remuneration to Mr. Ramesh Ramanathan, Managing Director is placed before the members for approval.

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Your Directors recommend the Special Resolution for approval of the Members.

Except Mr. Ramesh Ramanathan, none of the Directors are concerned or interested in this Resolution.

In this regard as required under sub-section (C) of Section II of Part II of Schedule XIII to the Companies Act, 1956, the following additional information is furnished.

I. General Information

1. Nature of industry

The Company is engaged in main business of Hospitality, Vacation Ownership Sales and Resorts and Hotel Sales.

2. Date or expected date of commencement of commercial production

The Company was incorporated on May 22, 1986.

3. In case of new companies, expected date of commencement of activities as per project approved by financial institutions appearing in the prospectus

Not applicable

4. Financial performance based on given indicators (INR in Lakhs)

Financial Parameters 2010-11 2011-12 2012-13

Turnover (including other Income) 3936.50 7093.03 10868.27

Net Profit/(Loss)as per Statement of Profit and Loss

(3003.88) (4044.08) (2088.70)

Rate of Dividend NIL NIL NIL

5. Export performance and net foreign exchange collaborations : NIL

6. Foreign Investments of Collaborators, if any: NIL

II. INFORMATION ABOUT THE APPOINTEE

1. Background Details

Mr. Ramesh Ramanathan (aged 58 years) is an Economics graduate and a rank holder from Madras University, with a Management Degree from the Indian Institute of Management, Kolkata. He has over 35 years of work experience over a range of industries, starting with the intensely competitive Paint Industry. A successful stint of over 10 years in that industry was followed by other consumer durable industries, hospitality, internet, tyres and organized retail.

Mr. Ramesh Ramanathan has been one of the pioneers in the Holiday Industry in India and was successful in establishing the concept.

Prior to joining this Company he was the Managing Director of Mahindra Holidays & Resorts India Limited, a Company setup and successfully managed for a period of 11 ½ years. He was a Group Executive Board Member of the Mahindra Group.

Mr. Ramesh Ramanathan is the founder member of the All India Resort Developers Association (AIRDA).

2. Past Remuneration

Consolidated remuneration of INR 75 lakhs per annum along with Perquisites as approved by Shareholders at their Extra-Ordinary General Meeting held on August 13, 2011 and subsequently approved by Ministry of Corporate Affairs, Government of India.

3. Recognition or awards

Given in the Background Details

4. Job Profile and his suitability

Mr. Ramesh Ramanathan, Managing Director, is responsible for the day to day management of affairs of the Company subject to the superintendence, control and direction of the Board of Directors.

5. Remuneration proposed

A consolidated remuneration of INR 1,75,00,000 (Rupees One Crore seventy five lakhs only) per annum.

In terms of Schedule XIII, sub-para 2 of Section II of Part II, the aforesaid managerial remuneration does not include the following perquisites.

(a) Contribution to provident fund, super-annuation fund or annuity fund to the extent these either singly or put together are not taxable under the Income-tax Act, 1961.

(b) Gratuity payable at a rate not exceeding half a month's salary for each completed year of service.

(c) Encashment of leave at the end of the tenure.

6. Comparative remuneration profile with respect to industry, size of the company, profile of the position and person (in case of expatriates the relevant details would be w.r.t the country of his origin)

Taking into consideration the size of the Company, the responsibilities to be shouldered by him and the track record and profile of Mr. Ramesh Ramanathan, the proposed revised remuneration is commensurate with the remuneration packages paid to the equal level of senior managerial personnel in other Corporates.

7. Pecuniary relationship directly or indirectly with the company, or relationship with the managerial personnel, if any

Mr. Ramesh Ramanathan, has no pecuniary relationship, directly or indirectly with the Company (except to the extent of the remuneration payable to him by the Company and his holding in the Equity Share capital of the Company).

III OTHER INFORMATION

1. Reasons of loss or inadequate profits

The sale of Vacation Ownership declined due to crash in Stock Market, recession in Real Estate and Investment Markets and other external factors.

2. Steps taken or proposed to be taken for improvement

The Company has already settled the loans and other liabilities. Also the Company has started the process of refurbishing and developing the resorts and completing the pending projects. Recruited a strong team with expertise to lead the Company towards achievement of its objectives.

3. Expected increase in productivity and profits in measurable terms

In view of the all out efforts taken by the Company to refurbish the resorts, to complete the pending projects and steps to stimulate and to increase the marketing and sales activities, it is expected that the performance of the Company will improve in the nearest future.

IV DISCLOSURES

1. The shareholders of the Company have been informed in respect of the remuneration package of Mr. Ramesh Ramanathan, Managing Director, in the Notice of Extra-ordinary General Meeting held on August 13, 2011.

2. The disclosure to be specified in the Board of Directors' Report under the heading Corporate Governance has been duly disclosed.

By Order of the BoardFor Sterling Holiday Resorts (India) Limited

Place : Chennai M. BALASUBRAMANIYANDate : July 25, 2013 COMPANY SECRETARY

_______________________

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Your Directors are pleased to present the Twenty-sixth Report together with audited accounts of your Company for the year ended March 31, 2013.

FINANCIAL HIGHLIGHTS

(INR in lakhs)

2012 - 2013 2011 - 2012

Sales 9,897.01 6,679.24 ======= =======

Profit before Interest, Depreciation & Tax (1,333.90) (3,228.08)

Less : Interest 122.29 335.71

Profit/(Loss) before Depreciation & Tax (1,456.19) (3,563.79)

Less : Depreciation 632.51 480.29

Profit/(Loss) before Tax (2,088.70) (4,044.08)

Less : Provision for Tax - -

Profit/(Loss) for the year (2,088.70) (4,044.08)

OPERATIONS AND FINANCIAL OVERVIEW

Your Company crossed a significant milestone during the year by crossing INR 10,000 lakhs in turnover. For the financial year ended March 31, 2013, the Total Operating Income of the Company was reported as INR 10,868 lakhs, as compared to INR 7,009 lakhs for FY12, representing a 55% growth in revenue. Sales of Vacation Ownership Plans (earlier called Timeshare) rose to INR 7,320 lakhs, an increase of 72%, while Total Income from Resort Operations rose to INR 4,350 lakhs, up by 23%. Notably, the Company’s performance has improved with net losses reducing in FY13 by INR 1,955 lakhs, as compared to the previous fiscal year.

Over the course of the year, your Company added 4 new resorts in Dharamshala, Gangtok, Lonavala and North Goa, taking the total room inventory to 1477 across 19 resorts. With the expansion in the resort network to 19 across India, your Company continues to have a healthy member to room ratio, giving its base of around 67,000 active members more opportunities to holiday in various seasons and locales. In FY13, your Company added 3,409 new Vacation Ownership members as compared to 2,490 in the previous year.

Your Company continued to invest in upgrading its existing resorts to global, best-in-class standards. In the year under review, three renovated resorts – Kodai - By The Lake, Munnar - Terrace Greens and Ooty - Fern Hill – began welcoming Members and Guests

to a vastly enhanced holiday experience. Your Company also undertook renovation of accommodation across its other resorts, completing a significant portion of the total owned room inventory.

The ongoing effort to substantially raise the standards of the Company’s product and service, and deliver an enhanced holiday experience has resulted in a clear and significant increase in Member and Guest satisfaction ratings of your Company’s resorts. These ratings are monitored through ongoing Guest Service Tracking Systems (GSTS) at the resorts, post-holiday surveys, and analysis of Sterling’s reputation in social media networks and other online forums.

The increase in positive reviews has also had a positive impact on your Company’s One-Time Hotel Stays business, which saw a healthy increase year-on-year in FY13. The One-Time Hotel Stays and Meetings, Incentives, Conferences and Exhibitions (MICE) business are important revenue earning streams as it enables your Company to cater to multiple market segments such as One-Time leisure holidays for non-members, booked directly or through Online Travel Agencies (OTAs), and corporate houses looking for attractive off-site destinations to host their meetings and conferences. In this connection, it is notable that your Company saw a significant increase in room nights from the fast growing OTA segment in the Travel & Tourism industry.

In terms of strategic direction, your Company is on track to achieving its growth plans by expanding its destination network and upgrading the holiday experience it delivers to its Members and Guests. As the strategy sees execution, your Company’s resorts will include professionally managed spas and a sophisticated, multi-cuisine Food & Beverage experience. With these inclusions, Sterling Members and Guests will enjoy a significantly enhanced holiday experience, leading to greater member satisfaction and goodwill.

Your Company continued its investments in upgrading its Information Communications Technology (ICT) backbone with the goal of improving service efficiencies and employee productivity. Your Company rolled out a Human Resource Management System (HRMS) to manage payroll, intranet, etc., apart from establishing a virtual branch network across locations and an Information Security Management System (ISMS). In the area of Member Relations, your Company initiated an SMS and email update system across various touch points of the member life cycle apart from introducing e-versions of the confirmation voucher,

Directors’ Report

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Sterling World (our member magazine) and membership kit, thereby reducing our carbon footprint and the lead time for dispatch to members.

To achieve the goal of rapid growth in the Vacation Ownership and Leisure Hospitality market, your Company further expanded its Management team by bringing on board a new Head of Resort Operations, who is a veteran in the Hospitality and Vacation Ownership industry with over 22 years of experience across Europe. Another recent addition to strengthen the Management team was the Head of Human Resources, who comes with over 21 years of industry experience and the achievement of having played a pivotal role across several leading companies in India. To set culinary standards of an international level, your Company brought on board a highly skilled and competent Corporate Chef, whose experience spans over 25 years with renowned international hospitality chains, to manage the Company’s culinary operations and to create an unmatched food and dining experience. The enhanced Leadership Team, backed with an expanded and trained work force, has been working hard to bring about the Company’s resurgence and growth.

All the measures in the last few years have yielded results leading to your Company now being an INR 10,000 lakhs plus organisation.

CAPITAL EXPENDITURE

In 2012-13, the Company added INR 4,941 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, 2013 stood at INR 5,416.58 lakhs; an amount representing project expenditure on resorts under renovation.

SHARE CAPITAL

During the year under review, your Company has raised its Equity Share Capital through various Issues as described hereunder:

• INR 4,237.50 lakhs (being 75% of consideration amount) through issue of 75,33,333 Equity Shares of INR 10 each at a premium of INR 65 per Equity Share upon conversion of Warrants issued on preferential basis.

• INR 140 lakhs through issue of 2,77,557 Equity Shares of INR 10 each at a premium of INR 40.44 per Equity Share under ESPS 2011.

• INR 51.32 lakhs through issue of 1,00,000 Equity Shares of INR 10 each at a premium of INR 41.32 per Equity Share under ESPS 2011.

• INR 50.48 lakhs through issue of 97,676 Equity Shares of INR 10 each at a premium of INR 41.68 per Equity Share under ESPS 2011.

Further during the current year your Company has raised:

• INR 230.82 lakhs through issue of 4,87,171 Equity Shares of INR 10 each at a premium of INR 37.38 per Equity Share under ESPS 2011.

• INR 9.41 lakhs through issue of 20,651 Equity Shares of INR 10 each at a premium of INR 35.55 per Equity Share under ESPS 2011.

PROCEEDS OF ISSUES

The details of utilisation of proceeds arising out of various issues made during the year ended March 31, 2013 are set out in Annexure A.

CORPORATE GOVERNANCE REPORT

The 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 certificate from the Statutory Auditors of the Company confirming the compliance is annexed.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed analysis of the Company’s operational and financial performance and initiatives taken by the 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 Employee Stock Purchase Scheme 2010, 6,57,019 Equity Shares were allotted. The balance 14,42,981 Shares are yet to be allotted.

Under the Employee Stock Purchase Scheme 2011, 19,31,569 Equity Shares were allotted. The balance 15,68,431 Equity Shares are yet to be allotted.

Under the Employee Stock Option Scheme 2012, 7,50,000 Options were granted. Balance of 2,50,000 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 (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines 1999.

DIRECTORS

K. Chandrasekaran, Director and S. Sidharth Shankar, Director retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for

reappointment. As stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges, brief resumes of K. Chandrasekaran and S. Sidharth Shankar, are provided in the report on Corporate Governance, which forms as a part of this Annual Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors to the best of their knowledge and belief confirm that:

1. In the preparation of the Profit and Loss Account for the financial year ended March 31, 2013, 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 judgements 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 and Loss of the Company for that year

3. That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities

4. That the Directors had prepared the Annual Accounts for the financial year ended March 31, 2013 on 'Going Concern' basis.

SUBSIDIARY COMPANIES

As on March 31, 2013, your Company had three Subsidiary Companies as below:

1. Sterling Holidays (Ooty) Limited 2. Sterling Holiday Resorts (Kodaikanal) Limited 3. Manchanda Resorts Private Limited

There has been no material change in the nature of business of the subsidiaries. A statement containing brief financial details of the subsidiaries is included in the Annual Report.

As required under the Listing Agreements with the Stock Exchanges, a Consolidated Financial Statement of the 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 financial statements disclose the assets, liabilities, income, expenses and other details of the 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, Profit and Loss Account and other documents of the subsidiary companies with the Balance Sheet of the Company. A statement containing brief financial details of the Company’s subsidiaries for the financial year ended March 31, 2013 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 the Company/its subsidiaries seeking such information at any point of time and are also available for inspection by any member of the Company/its subsidiaries at the registered office of the Company. The annual accounts of the said subsidiaries will also be available for inspection, as above, at the head offices/registered offices of the respective subsidiary companies. The Company shall furnish a copy of details of annual accounts of subsidiaries to any member on demand.

During the year under review, your Company has made an application to the Hon’ble High Court, Madras seeking approval for merging the Company’s subsidiary Manchanda Resorts Private Limited with Sterling Holiday Resorts (India) Limited. The Court had convened the meeting of Equity shareholders of your Company on April 2, 2013 and the shareholders have approved the Scheme of Amalgamation. Your Company also filed the Petition with the Hon’ble High Court, Madras for sanctioning the Scheme of Amalgamation of Manchanda Resorts Private Limited with Sterling Holiday Resorts (India) Limited.

AUDITORS

The Joint Statutory Auditors of the Company R. Subramanian and Company, Chartered Accountants, Chennai, and V. Sankar Aiyar & Co., Chartered Accountants, Chennai, retire at the conclusion of this Annual General Meeting and are eligible for reappointment. The Company has received confirmation that their appointment will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. The Audit Committee of the Board has recommended their appointment. The necessary resolution is being placed before the shareholders for approval.

PUBLIC DEPOSITS, LOANS AND ADVANCES

The 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 within the Accounts.

16 17



CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

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 as a part of the Directors’ Report.

STATUS OF PROCEEEDINGS UNDER SECTION 408 OF THE COMPANIES ACT, 1956

The Members are informed that the Hon’ble High Court had passed an Order, setting aside the Orders of the Hon’ble Company Law Board, Chennai in respect of Appeal made under CMA No. 3647 of 2005.

AUDIT, INVESTOR GRIEVANCES, REMUNERATION AND COMPENSATION COMMITTEES

In terms of Clause 49 of the Listing Agreement of the Stock Exchanges and pursuant to the provisions of Section 292A of the Companies Act, 1956, the details pertaining to Audit Committee, Investor Grievances Committee, Remuneration Committee, Share Transfer Committee and Compensation 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 THEREUNDERThe Company had two employees who were in receipt of remuneration of not less than INR 60,00,000 during the year ended March 31, 2013 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 a 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 of the Company.

CEO/CFO CERTIFICATION The Managing Director and the Senior Vice President, Finance have submitted a certificate to the Board regarding the financial statements and other matters as required under Clause 49V of the Listing Agreement.

ACKNOWLEDGEMENTS

Your 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. Your Directors also wish to thank the Shareholders and Vacation Ownership Members for their continued support. The Directors are looking forward to receiving continued support from them.

The Directors also wish to thank the employees of the Company for their dedicated performance and wholehearted commitment to achieving the Company's mission and business goals.

For and on behalf of the Board

Place : Chennai SIDDHARTH MEHTA Date : July 25, 2013 CHAIRMAN

ANNEXURE – A TO THE DIRECTORS’ REPORT

Details of Utilisation of Proceeds arising out of various Issues made during the year ended March 31, 2013

Particulars As on March 31, 2013 (INR in lakhs)

Details of Funds raised out of Issue of Equity Shares during the FY 2012-13

Allotment of 75,33,333 Equity Shares on conversion of Warrants - 75% amount received (INR 56.25 per conversion)

4,237.50

Allotment of 4,75,233 Equity Shares under Employee Stock Purchase Scheme – 2011 241.80

Total 4,479.30

Details of Funds utilised

Utilised for the ongoing expansion programme, completion of projects, general corporate purpose, and refurbishment of resorts

4,479.30

ANNEXURE – B FORMING AS A PART OF THE DIRECTORS’ REPORT

Information to be disclosed under Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 for the financial year ended March 31, 2013

Sl. No. Description ESPS-2010 ESPS-2011 ESOS-2012

1. Total number of Options under the Plan/Shares reserved under ESPS

21,00,000 35,00,000 10,00,000

2. Options granted/Shares issued during the year

NIL 4,75,233 7,50,000

3. Pricing formula NA 1) 2,77,557 Equity Shares @ INR 50.44 2) 1,00,000 Equity Shares @ INR 51.32 3) 97,676 Equity Shares @ INR 51.68

INR 96

4. Options vested NA NA -

5. Options exercised NA NA -

6. Total number of Shares arising as a result of exercise of Option

NA NA -

7. Options lapsed NA NA NIL

8. Variation of terms of Options NIL NA NA

9. Money realised by exercise of Options/Issue of Shares during the year (in INR)

NIL 2,41,79,871 -

10. Total number of Shares/Options in force 14,42,981 20,76,253 2,50,000

18 19



15. A description of the method and significant assumptions used during the year to estimate the fair values of Options, including the following weighted-average information:

(1) Risk free interest rate(2) Expected life(3) Expected volatility(4) Expected dividends and (5) The price of the underlying Share in market at the time of Option grant

Market Price at the time of Grant of Options

ANNEXURE - C TO THE DIRECTORS’ REPORT

Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988

A. Conservation Energy : Not Applicable

B. Technology Absorption : Not Applicable

C. Foreign Exchange Earnings and Outgo

(i) Activities relating to export incentives taken to increase exports development of new export and markets for products and services and export plans : NIL

(ii) Total Foreign Exchange earned : NIL

(iii) Total Foreign Exchange used : INR 70.10 lakhs

11. Employee wise details of Options granted/Shares issued to:

Names of Directors and Senior Managerial persons to whom Stock Options/Equity Shares have been granted

No. of Equity Shares issued – ESPS 2010

No. of Equity Shares issued – ESPS 2011

No. of Options granted –ESOS 2012

1. Senior Managerial Personnel (during the year)

Ramesh RamanathanR. MohanLata SubramanianM. BalasubramaniyanS. VenkataramanaUdhay DaveyMohan DasSabarishBalaji SureshKarananidhan MidhaV. Rajeev MenonRamesh S

------------

4,75,233-----------

-30,00025,00012,50018,00018,00021,00018,0009,750

18,00012,50012,500

2. Any other employee who receives a grant/issued Shares in any one year amounting to 5% (or) more of Options granted/Shares issued

Ramesh Ramanathan 4,85,000 4,75,233 NIL

3. Identified employees who were granted Options/issued Shares during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding Warrants and conversions) of the Company at the time of issuance

Ramesh Ramanathan, Managing Director, was granted 19,08,747 Equity Shares under ESPS.

12. Diluted Earnings Per Share pursuant to issue of Shares on exercise of Options calculated in accordance with Accounting Standard (AS) 20

INR (3.19)

13. Where the Company has calculated the employee compensation cost using the intrinsic value of the Stock Options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognised if it had used the fair value of the Options. The impact of this difference on profits and on EPS of the Company.

Not Applicable

14. Weighted average exercise prices and weighted average fair value of Options separately for Options whose exercise price either equals or exceeds or is less than the market price of the stock.

No. of Options granted – ESOS

2012

Weighted Average Exercise Price in

INR

Weighted Average Fair Value in INR

7,50,000 96.00 96.00

20 21



Management Discussion & Analysis

Sterling Holiday Resorts (India) Limited ['Sterling' or the 'Company'] is a leading Vacation Ownership and Leisure Hospitality Company. Sterling is widely acknowledged to be a thought leader and pioneer in the Vacation Ownership (earlier called Timeshare) industry segment as the Company has played an instrumental role in changing the holiday habits and aspirations of middle class Indian families.

Today, the Company has a base of around 67,000 active Vacation Ownership members who have access to holidays in a network of 19 full-service resorts with an inventory of 1,477 apartments. The Company maintains a healthy member to room ratio, providing members with more opportunities to holiday in locales and seasons of their choice. With over 26 years of expertise in Vacation Ownership and Resort Operations, a national network of resorts, and a growing base of holidaying members, Sterling is one of the clear leaders in the Vacation Ownership and Leisure Hospitality industry in India.

SUMMARY OF HIGHLIGHTS

Over the last few years, Sterling has been making investments to enhance the product and service on offer to contemporary, best-in-class standards. The efforts made to substantially raise the standards of the Company’s resorts and holiday experience delivered, have begun to yield results with a clear increase in member satisfaction ratings across resorts and improved business performance.

The key highlights of the Company’s performance and progress are as follows:

• During 2012-13, the Company continued its investments and focus on offering its Members and Guests increased opportunities to holiday in modern, full-service resorts. Over the course of the year, 4 new resorts were added in Dharamshala, Gangtok, Lonavala and North Goa, taking the total room inventory to 1,477 across 19 resorts. With an expanded network of 19 resorts across India, the Company continues to maintain a healthy member to room ratio, giving its base of around 67,000 active members more opportunities to holiday in various seasons and locales. The Company also signed MOUs for 3 more resorts in Daman, Dindi and Sariska.

• The Company continued to invest in upgrading its existing resorts to global, best-in-class standards. In the year under review, three renovated resorts, Kodai - By The Lake, Munnar - Terrace Greens and Ooty - Fern Hill – began welcoming Members and Guests to a vastly enhanced holiday experience.

• The Company also undertook renovation of accommodation across its other resorts, completing the renovation of a significant portion of its total owned inventory. The investments in renovated resorts and facilities accompanied by significantly enhanced service standards have resulted in a clear increase in member satisfaction ratings, which the Company monitors through ongoing Guest Service Tracking Systems (GSTS) at the resorts, post-holiday surveys, and analysis of Sterling’s reputation in social media networks and other online forums. All reviews are monitored by deploying an Online Tracking System, which has been integrated with the Sales Force Customer Relationship Management platform, the Company has been using from FY12. The details of the measures taken to deliver a vastly enhanced holiday experience are discussed under the Resort Operations Section in this report.

• In FY13, the Company added 3,409 new Vacation Ownership members as compared to 2,490 in the previous year, an increase of 36.90%. The performance is commendable considering the slowdown of the Indian economy and dampened consumer sentiment caused by inflationary trends and the Reserve Bank of India (RBI) maintaining high interest rates.

• The Company’s One-Time Hotel Stays business saw a healthy increase year-on-year. This is an important revenue earning stream as it enables the Company to cater to the needs of multiple market segments such as One-Time leisure holidays for non-members, booked directly or through Offline and Online Travel Agencies (OTAs), and corporate houses looking for attractive off-site destinations to host their meetings and conferences. In this connection, it is notable that your Company saw a significant increase in room nights in FY13 from the fast growing OTA segment in the Travel & Tourism industry.

• In the last couple of years, consumers world over have increasingly adopted digital platforms to manage professional and personal communication systems. Keeping pace with these trends, the Company has, since 2010, been steadily increasing its presence on Digital Platforms, including Social Media. The Company’s increasing Web presence is seeing a rise in revenue from digital media enquiries about Vacation Ownership Membership Plans and from One-Time Hotel Stays bookings directly on the Company web site and through OTAs.

The key financial results for 2012-13 were:

• The Company crossed a significant milestone during the year by crossing INR 10,000 lakhs in turnover.

• Total Operating Income stood at INR 10,868 lakhs, an increase of 55% over the previous fiscal figure of INR 7,009 lakhs.

• Sales of Vacation Ownership memberships rose to INR 7,320 lakhs, an increase of 72%.

• Total Income from Resort Operations rose to INR 4,350 lakhs, up by 23%.

• Notably, the Company’s performance has improved with net losses reducing in FY13 by INR 1,955 lakhs, as compared to the previous fiscal year.

The continued focus and investments in delivering Great Holiday experiences whilst simultaneously increasing productivity will enable the Company to strengthen its market position and create a strong brand. Though the macroeconomic environment in India is currently cause for some concern, it is notable that the Travel & Tourism industry continues to be vibrant world over, displaying an increasing consumer interest in travelling to discover different geographies and cultures. These trends are favourable for Vacation Ownership companies as the concept offers tremendous economic and emotional benefits for families who would like to holiday frequently and explore India and the world. The Company’s surveys amongst its base of Vacation Ownership members reveal that its members derive a great deal of financial and emotional comfort through an ongoing relationship with a reputed Vacation Ownership brand, as it carries an assurance of quality and safety while holidaying with their families.

This Section is followed by an overview of the economic and market environment in which Sterling operates as well as the operational and financial performance of the Company during 2012-13. The Section also discusses in greater detail the market opportunities as well as important initiatives taken during the year in key functional areas such as resort operations, human resources, information technology and marketing.

THE TOURISM INDUSTRY: AN OVERVIEW

In the aftermath of the global slowdown triggered by the financial crisis in 2008-09, the Indian economy responded to fiscal and monetary stimulus and achieved a growth rate of over 8% annually between 2009-10 and 2011-12. However, with the economy displaying inflationary tendencies, the Reserve Bank of India (RBI) began raising policy rates in March 2010. High rates as well as policy bottlenecks adversely impacted corporate and infrastructure investment, and in the successive two years viz. 2011-12 and 2012-13, the growth rate decelerated to 6.2% and 5.0% respectively. While macroeconomic trends are cause for concern currently, the potential in the Indian economy and the

Travel & Tourism industry in particular continues to be a promising one.

The year 2012-2013 exhibited again the strength of the Travel & Tourism industry in the face of an uncertain global economic environment. According to the latest annual research from the World Travel & Tourism Council (WTTC), Travel & Tourism’s contribution to global GDP grew for the third successive year in calendar year 2012, and generated more than 40 lakh fresh jobs with leisure and business travellers continuing to display a strong appetite for travel beyond national borders. Travel & Tourism contributed 9% of global GDP (USD 6.6 trillion) and created over 2,600 lakh jobs – 1 in 11 of the world’s total jobs. The industry performed better than the entire broader economy in 2012, rising faster than other notable industries such as retail, manufacturing and financial services.

In the Indian context, the tourism industry continues to be vibrant in the services sector and overall economy with direct contribution to total GDP in 2012 at 2% (INR 1,91,97,000 lakhs). This is forecast to rise by 7.0% in 2013 and 7.8% per annum thereafter to INR 4,36,00,000 lakhs in 2023 (in constant 2012 prices). The WTTC predicts that India will be one of the fastest rising tourism industries in the coming 10 to 15 years. The colossal potential in the industry in attracting inbound and domestic tourists (Domestic Tourism is an important segment with a 14.34% CAGR from 1991 to 2011) has unsurprisingly attracted the interest of global investors, as demonstrated by the sector receiving FDI investments totalling to USD 3.2 billion in the period April 2012 to February 2013.

Sterling believes it is well-positioned to profit from the positive trends in the Travel and Leisure Hospitality industry in India, as the Company has a national network of 19 full-service resorts and over 26 years of expertise in Vacation Ownership and Leisure Hospitality.

MARKETS AND OPPORTUNITIES

Although the Indian economy has slowed down in the last couple of years and growth is currently hovering around the 5% mark, India is still seen as a growth story with leading analysts such as the McKinsey Global Institute (MGI) predicting that over the next two decades, the Indian market will undergo a major transformation resulting in India growing into the world’s fifth-largest consumer market by 2025.

As income levels in India rise, the burgeoning middle class (projected to triple from 500 lakhs to 5,830 lakh people) will contribute to 60% of the country’s total consumption. The MGI analysis also projects an increase in India’s wealthy class to over 230 lakh Indians (more than the population of Australia).

24 25



The increasing consumption story of the Indian middle class, combined with the large untapped potential in Leisure Tourism bodes well for established companies in the Leisure Hospitality sector, leading to projections of 8.4% CAGR for the leisure industry and 8.2% CAGR for the hotel industry in India. The potential in the sector is evident in the fact that direct contribution of travel and tourism to GDP is 2% in India whereas the average global direct contribution is 5.2%, indicating the tremendous room for growth.

Source : Euromontior, Travel and Tourism India, April 2011

Business Leisure

77%

leisure travel

constitutesof travel in India

Indians are holidaying more

2010 2011E 2012E 2013E 2014E 2015E

Mn

.T

rip

s

Source : WTTC 2012

India Currently ranks149

5.2%Global Average

Contribution of Travel & Tourism to GDP

In the arena of holidays and the role they play in lifestyle aspirations of India’s burgeoning middle class, it is encouraging that there has been an exponential growth in the number of Indians undertaking leisure travel from 5,730 lakhs in 2010 to 7,300 lakhs in 2012. This number is further projected to increase to 10,820 lakhs in the year 2015, auguring well for companies in the Vacation Ownership and Leisure Hospitality space.

Currently, the total number of Vacation Ownership memberships sold in India is approximately 3.5 lakhs. It is estimated that the potential market comprises around 110 lakh households, taking car ownership figures and income data as indicators. As Indian families get habituated to holidays and understand the economic benefits of owning a Vacation Ownership Membership Plan, the industry will see increased penetration and accelerated growth. In this connection, it is important to note here that Sterling enjoys a huge competitive advantage in terms of its destination network, large inventory and additional sites it already has, which will enable it to grow rapidly along with the industry.

BUSINESS PERFORMANCE

Sterling functions in three segments in the Leisure and Hospitality industry namely, Vacation Ownership, One-Time Hotel Stays and Meetings, Incentives, Conferences and Exhibitions (MICE). The resorts in the Sterling network are designed or leased to cater to all 3 business verticals. For example, all resorts are equipped with conference and banquet facilities, hotel rooms and apartments of different sizes. By virtue of the Company operating in these 3 verticals, it enjoys the flexibility of earning from multiple revenue earning streams, catering to the Vacation Ownership membership base, One-Time Hotel Stays from individual and group travellers, and off-site conferences and events booked by corporate houses and event companies.

VACATION OWNERSHIP

Sterling was the pioneer in the Vacation Ownership industry in India. Although the Company offers One-Time leisure vacations and MICE facilities, the primary focus of the Company is on its Vacation Ownership business, which has numerous benefits over the traditional leisure hotels model. For one, Vacation Ownership companies enjoy higher annual average resort occupancy as members tend to use their Vacation Ownership Points to holiday multiple times during the year. Since holidaying trends currently are headed towards more frequent, shorter breaks as against one long, annual holiday, Vacation Ownership companies will benefit even more in the future. In addition, the Vacation Ownership business is less susceptible to economic cycles as members have already paid for their holidays upfront and tend to

utilise the time credited (this is in the form of Vacation Ownership Points, the number of which is dependent on the type of Membership Plan purchased) to their account every year. The Vacation Ownership business is also less dependent on debt since it has robust cash flows with members paying upfront for holidays over a period of 25 years. The business also enjoys manifold revenue streams through annual and annuity based fees.

The Company’s Vacation Ownership product is based on a highly flexible Vacation Ownership Points system, which offers members a range of choices in destinations, apartment types and seasons and the ability to trade in their Vacation Ownership Points to suit their requirements. When compared to the expense of hotels of an equivalent standard, the Company's Vacation Ownership plans are attractively priced as it offers consumers protection against the effects of inflation. This particular aspect of the product will have enhanced appeal in the current economic environment.

From the member perspective, resorts designed to cater to Vacation Ownership members triumph compared to conventional leisure hotels which are more impersonal and designed for individuals. To illustrate, Vacation Ownership resorts are designed as per the needs of the whole family from senior citizens to younger children. This is reflected in the choice of apartments to suit different family sizes, and the fact that these resorts are full-service resorts, offering members a wide choice of facilities from multi-cuisine restaurants, in-room dining and a range of Holiday Activities designed to engage members and guests of all ages.

Sterling currently has a Vacation Ownership membership base of around 67,000 active member families who enjoy the facility of holidaying in 19 resorts across India, and overseas through the additional facility of a Resort Condominium International (RCI) membership, which allows them to exchange a week’s time of vacation with over 6700 resorts across the world.

During 2012-13, the Company added 3,409 members to its base, as compared to 2,490 in the previous year reflecting a 36.90% growth. The growth in new member acquisition is creditable in the light of an economic slowdown in India and dampened consumer sentiment with high interest rates negatively affecting discretionary spending power.

The performance can be further said to be commendable in the light of the fact that the Company increased its prices in 2012-13 by an average of 15% across its various Membership Plans with the aim of signaling the enhanced holiday experience being delivered, post investing in an expanded destination network, resort renovation and higher service standards.

26 27



PROPERTIES AND NEW PROJECTS

Sterling has a network of 19 resorts in 16 of India's most scenic and popular holiday destinations. 10 of these resorts are owned while the balance are managed on long-lease.

In 2012-13, the Company added 4 new resorts (Dharamshala - The Sanctuary, Gangtok - Delisso Abode, Goa - Club Estadia and Lonavala - Under The Over), taking the total room inventory to 1,477 across 19 resorts. With the expansion in the resort network to 19 across India, the Company continues to maintain a healthy member to room ratio, giving its base of around 67,000 active members more opportunities to holiday in various seasons and locales. The Company also signed MOUs for 3 more resorts in Daman, Dindi, and Sariska, which will come on-stream in the near future. In the mid to long-term, the Company also has the option of undertaking Greenfield projects as it has a large land bank of 15 additional sites.

RESORT OPERATIONS

The primary motivation of customers purchasing a Vacation Ownership membership is to enjoy Great Holiday experiences. Recognising this, the Company has been investing in renovating its resorts to contemporary, best-in-class standards in a focused manner.

In 2012-13, three resorts in the Company’s network (Kodai - By The Lake, Munnar - Terrace Greens, and Ooty - Fern Hill) began welcoming Members and Guests to a vastly enhanced holiday experience. The resorts in Kodaikanal and Munnar were earlier called Lake View and Green Vistas. Post renovation, the resorts were rebranded to suit their new décor and in order to signal a major change in the holiday experience being offered. The name Fern Hill was retained for the renovated Ooty resort since a ‘fern’ was chosen as the central theme for the renovated resort, given that the fern plant grows in abundance in the area. All 3 resorts were given a new logo to communicate their transformation.

Since inception, the locales for all Sterling resorts were chosen with the goal of delighting the Company’s Members and Guests with stunning vistas as all vacationers seek holiday destinations for their beauty and tranquility. Reflecting this unique competitive edge, the Company’s renovation program and consequently new resort identity ecosystem seeks inspiration from the beauty of the resort surroundings and the harmony that abounds in Mother Nature. Thus, the new identity for each renovated resort aptly captures a contemporary reflection of the local flora and reflects the Company’s commitment to the environment. As the Company’s renovation program progresses, new resort identities are being given to all resorts in the network.

Along with the work of substantially renovating the Kodaikanal, Munnar and Ooty resorts, the Company also made progress in renovation of rooms across its resorts. Currently the Company has completed renovation of a significant portion of the total owned room inventory. In 2013-2014, the Company will earmark a few more resorts for complete renovation and undertake more rooms across other resorts for upgradation and modernisation.

Great Holiday experiences are more than the provision of modern, aesthetically designed resorts. At the heart of the holiday experience are the thoughtful facilities provided at the resorts and the service delivery by staff. Along with the investments made in renovation, the Company has, in the last couple of years, been investing in recruitment and training of skilled human capital to raise the service standards at resorts. The Company has also bought in an experienced Resort Management team, headed by an expat who has been actively involved in Resort Operations and Marketing for reputed Hospitality and Vacation Ownership brands in Europe for over two decades.

In the recent past, the Food & Beverage industry of India has developed to offer consumers a vibrant choice of global culinary experiences. In line with this, Sterling has enhanced its Food & Beverage services at all resorts to delight the varied palate of members and guests. The fully renovated resorts in Kodaikanal, Munnar and Ooty offer tastefully done up restaurants with an appetising

spread of global, multi-cuisine dishes. These resorts also have tea and coffee lounges branded Tall Tales where Members and Guests can lounge comfortably and relax with a tasty brew and delicious snacks. An expanded global, multi-cuisine and in-room dining menu has also

been rolled out at all resorts, along with a provision to cater to specialist diet requirements such as Jain meals. In addition, all resorts host periodic theme food festivals which celebrate both local and pan Indian cuisine.

Great Holiday experiences encompass exploring the local attractions and participating in fun-filled outdoor and indoor recreational activities. Sterling was the pioneer in introducing a concept branded as Fun Rangers at its resorts. Fun Rangers are teams of Holiday Activities personnel who entertain

28 29



members and guests of all ages and ensure that they have a memorable holiday filled with outdoor and indoor leisure recreation and entertainment in the evenings.

The investments in renovated resorts and facilities accompanied by significantly enhanced service standards have resulted in a substantial increase in member satisfaction ratings, which the Company monitors through ongoing Guest Service Tracking Systems (GSTS) at the resorts, post-holiday surveys, and analysis of Sterling’s reputation in social media networks and other online forums. All reviews are monitored by deploying an Online Tracking System, which has been integrated with the Sales Force Customer Relationship Management platform used by sthe Company since FY12.

The increase in member satisfaction and positive word-of-mouth of the new Sterling experience has also begun to yield results, as evidenced by Total Income from Resort Operations increasing to INR 4,350 lakhs, up by 23% over the FY12 Income of INR 3,546 lakhs.

MEMBER RELATIONS

When a customer becomes a Vacation Ownership member, she or he enters into a 25-year relationship with the Company, which needs to be nurtured to build a community of happy members. In FY12, the Company strengthened its service delivery mechanisms at key member touch points by making an investment in the Sales Force Customer Relationship Management (CRM) platform.

With the requisite infrastructure in place, the Company today regularly reaches out to its members through

multiple communication channels, including digital mailers, text messages, the member magazine 'Sterling World', and outbound calls to disseminate information on new resorts, destination events and special member offers. Through this program, the Company encourages its members to holiday more frequently and discover new experiences, be it at a newly opened resort or at a destination that the member has not visited before.

The Company is also cognizant of the importance of New Member On-Boarding; a process that plays a vital role in welcoming new members to the Sterling family and assuring them that their investment in the Company’s Vacation Ownership Membership Plans will open the doors to 25 years of Happy Holidays with their family and loved ones. During the course of FY13, the Company made process improvements to make new members feel part of an extended Sterling family through Welcome Calls and speedier dispatch of membership kits. As part of this process, the Company’s Member Relations teams in its 14 offices across India regularly reach out to members in their geographies through calls, personal meetings and periodic member meets.

ONE-TIME HOTEL STAYS

The Company’s One-Time Hotel Stays business saw a healthy increase year-on-year. This is an important revenue earning stream as it enables the Company to cater to multiple market segments such as One-Time leisure holidays for non-members, booked directly or through Offline and Online Travel Portals (OTAs), and corporate houses looking for attractive off-site destinations to host their meetings and conferences. In this connection, it is notable that your Company saw a significant increase in room nights in FY13 from the fast growing OTA segment in the Travel & Tourism industry.

INFORMATION TECHNOLOGY

The strategic use of Information Technology can increase the service efficiency and productivity of any business, particularly service organisations. As mentioned earlier, the Company has made significant investments in deploying the Sales Force CRM platform with the objective of facilitating efficient and engaging interaction with its members and guests. In 2012-13, the Company continued investing in Information Communications Technology (ICT) infrastructure. A Human Resource Management System (HRMS) was introduced to manage payroll and serve as an intranet communication platform with all employees. A virtual branch network across locations and an Information Security Management System was also rolled out (ISMS) .

Plans are also on the drawing board to invest in Enterprise Resource Planning along with a Property Management system, which will suit the requirements of the unique

Vacation Ownership industry. The new system aims at enabling more productive, efficient management of resort inventory, while increasing the efficiencies of MIS and Financial Reporting.

DIGITAL INITIATIVES

In the last couple of years, consumers world over have increasingly adopted digital platforms to manage professional and personal communication systems. Keeping pace with these trends, the Company has, since 2010, been steadily increasing its presence on Digital Platforms, including Social Media. In 2012-13, the Booking Engine on the Company web site was evolved to enable promotion of Best Available Rates (BAR) and in order to ensure rate parity across web based channels. In addition, the Company stepped up its presence on Online Travel Portals (OTAs), leading to a significant increase in room nights booked through this avenue.

Increased Search Engine Optimization (SEO), Search Engine Marketing (SEM) and Social Media engagement during the year led to an average of over one lakh visitors to the Company web site every month and an accumulated Facebook fan base of over 200,000. The Company’s increasing web presence is seeing a rise in revenue from digital media enquiries about Vacation Ownership membership plans and from One-Time Hotel Stays bookings directly on the Company web site and through OTAs.

HUMAN RESOURCES

In an effort to substantially raise the service standards and efficiency of Human Capital, the Company has been steadily investing in recruiting a senior Management team with the requisite expertise in the Vacation Ownership and Leisure Hospitality industry. As mentioned earlier, in 2012-13, the Company bought on board an expat as Head of Resort Operations with a track record of over two decades in Resort Operations and Marketing for reputed Hospitality and Vacation Ownership brands in Europe. The Company also continued to make investments in training staff across levels to enhance service standards and efficiency.

On March 31, 2013, there were a little over 2,170 employees on the payroll of the Company.

INTERNAL CONTROL SYSTEMS

In 2012-13, the Company strengthened its internal control systems. These systems, including regular internal audits, have been designed to protect and safeguard the Company's assets and ensure reliability of financial transactions. The systems provide for adequate checks and balances; adherence to applicable statutes, accounting policies and approval procedures; and for ensuring optimum use of available resources. The

systems are regularly reviewed and improved upon. The Company also has a comprehensive budgetary control system to regularly monitor revenue and budgeted expenditures.

In addition to the above, Venkat & Associates, Internal Auditors of the Company, review on an ongoing basis the adequacy and effectiveness of Internal Control. The observations of the Internal Auditors are reviewed periodically on a quarterly basis and due compliances ensured. The exceptional items are reported to the Board.

FINANCIAL OPERATIONAL PERFORMANCE

For the financial year ended March 31, 2013, the Total Operating Income of the Company was reported as INR 10,868 lakhs, as compared to INR 7,009 lakhs for 2012-13, representing a 55% growth in revenues. Sales of Vacation Ownership Plans rose to INR 7,320 lakhs, an increase of 72%, while Total Income from Resort Operations rose to INR 4,350 lakhs, up by 23%. Notably, the Company’s performance has improved with net losses reducing in FY13 by INR 1,955 lakhs, as compared to the previous fiscal year.

OUTLOOK

Despite the uncertain macroeconomic environment, the Company believes that it is in a strong position to leverage the favourable trends in the Domestic Leisure Tourism market and strengthen its market position in the Vacation Ownership and Leisure Hospitality segments in India. The Company’s Vacation Ownership plans have been developed bearing in mind attractive value pricing, made more appealing by virtue of the enhanced holiday experience in the Company’s renovated resorts and network of holiday destinations. The efforts made towards turning the Company’s performance around and creating a strong, resurgent brand have already begun to yield results with the Company crossing the INR 10,000 lakhs milestone. With plans to make continued investments to further enhance the holiday experience and strengthen the Company’s market position, the Company’s outlook for 2013-14 is optimistic.

Cautionary statement

Statements in the Management Discussion and Analysis describing the Company's objectives, projections, estimates and expectations may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results could differ from those expressed or implied.

Sources: The McKinsey Global Institute; WTTC; Euromonitor; Ministry of Tourism; AIRDA, Census India; Economic Survey of India.

30 31



REPORT ON CORPORATE GOVERNANCE FOR THE YEAR 2012-2013

(As required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges) The Directors have pleasure in presenting the Corporate Governance Report for the financial year ended March 31, 2013

1. COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE

The Board of Directors and the Management of Sterling Holiday Resorts (India) Limited commit themselves to:

(a) Strive towards enhancement of shareholder value through

(i) sound business decisions

(ii) prudent financial Management, and

(iii) high standards of ethics throughout the organisation

(b) Ensure transparency and professionalism in all decisions and transactions of the Company

(c) Achieve excellence in Corporate Governance by

(i) conforming to, and exceeding wherever possible, the prevalent mandatory guidelines on Corporate Governance

(ii) regularly reviewing the processes and the Management systems for further development

The Company has implemented the Code of Conduct for members of the Board and senior Management to the extent it is applicable to the Company.

2. BOARD OF DIRECTORS (‘BOARD’)

2.1 Composition and Category of Directors and Number of other Directorships and Membership on other Board Committees.

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34 35



2.2 Board Meetings held

Seven Board Meetings were held during the financial year April 1, 2012 to March 31, 2013 on: April 10, 2012, May 29, 2012, July 23, 2012, September 20, 2012, October 17, 2012, January 24, 2013 and March 12, 2013.

The gap between two Meetings did not exceed four months. These Meetings were well attended. Required quorum was present at all meetings.

2.3 Board Procedure

A detailed agenda folder is being sent to each Director in advance of Board and Committee Meetings. To enable the Board to discharge its responsibilities effectively, the Managing Director apprises the Board at every meeting of the overall performance of the Company. A detailed functional report is also placed at Board Meetings.

The Board reviews strategy and business plans, annual operating and capital expenditure budgets, investment limits, compliance reports of all laws applicable to the Company, as well as steps taken by the Company to rectify the instances of non-compliances, if any. The Board also reviews major legal issues, Minutes of the Board Meetings of Company’s Subsidiary Companies, significant transactions and arrangements entered into by the Subsidiary Companies, adoption of financial results, major accounting provisions and write-offs, Minutes of Meetings of the Audit and other Committees of the Board, and information on recruitment of the officer(s).

2.4 Directors seeking Appointment/Reappointment

K. Chandrasekaran and S. Sidharth Shankar, Directors, retire by rotation at the forthcoming Annual General Meeting and being eligible, have offered themselves for reappointment. Brief resumes of Directors seeking appointment/reappointment are given below as per Clause 49 (IV) (G) of the Listing Agreement.

K. Chandrasekaran

K. Chandrasekaran aged about 63 years, is a Fellow Member of the Institute of Company Secretaries of India and also a Law graduate from Madras University with corporate experience of more than 36 years in various fields and is the Managing Director of Sterling Holiday Financial Services Limited. He joined the Company’s Board on July 4, 2005.

Details of other Directorships held by him are provided herein below:

Sl. No.

Name of the Companies/Firms

Nature of Interest

1. Sterling Holiday Financial Services Limited

Managing Director

2. Sterling Resorts Home Finance Limited

Director

3. Sterling Securities & Futures Limited

Director

4. Sterling Holiday Finvest Limited

Director

5. C.G.K. Finvest (Madras) Private Limited

Director


K. Chandrasekaran, Director holds 4,34,810 Equity Shares in the Company.

S. Sidharth Shankar

S. Sidharth Shankar, aged about 40 years holds a Management degree from University of Iowa, USA with around 10 years of experience in the corporate sector in various fields. He joined the Company’s Board on October 25, 2006. He was appointed as Whole-Time Director with effect from September 3, 2007 and redesignated as Joint-Managing Director with effect from April 1, 2008. Subsequently, he was designated as Non-executive Vice Chairman of the Company with effect from July 1, 2011.

Details of Directorships/Memberships of Committees of the Board in other companies are given hereunder:

Sl. No.

Name of the Company Nature of Interest

1. Concorde Digital Technologies Private Limited

Director


S. Sidharth Shankar, holds 37,80,500 Equity Shares in the Company.

2.5 Remuneration Policy

While deciding on the remuneration for Directors, the Board and the Remuneration Committee consider the performance, the current trends in the industry, the qualifications of the appointee(s), their experience, past performance and other relevant factors. The Board and the Remuneration Committee regularly tracks the market trends in terms of compensation levels and practices in relevant industries through participation in

structured surveys. This information is used to review the Company’s remuneration policies.

2.6 Remuneration paid

The Remuneration paid to Non-executive Directors including Independent Directors is by way of sitting fees and reimbursement of expenses incurred in attending the Board and Committee meetings The remuneration paid to Managing Director is fixed by the Remuneration Committee which is subsequently approved by the Board of Directors and Shareholders at a General Meeting.

Salary and Perquisite to Ramesh Ramanathan during the year 2012-13 is given below:

Particulars: Amount in INR

Salary 64,15,200 Provident Fund 5,04,000 Medical Reimbursement 2,17,977 Insurance 41,250 Driver’s Salary 1,02,000 Gratuity Liability 2,02,020

Total 74,82,447

Details of sitting fee paid to Directors’ during the year 2012-13 is given below:

Sl. No. Name of the Director

Sitting Fees Paid (INR)

1. Siddharth Mehta 55,000

2. S. Sidharth Shankar 80,000

3. K. Chandrasekaran 90,000

4. M. N. Rangamani 90,000

5. Amit Jatia NIL

6. Shahzaad Dalal 40,000

7. Utpal Sheth 20,000

Notes:

The Managing Director did not receive sitting fees for attending meetings of the Board/Committees of the Board of Directors of the Company.Non-executive Directors are paid sitting fees of INR 10,000 per meeting for attending meetings of the Board and INR 5,000 per meeting for attending meetings of the Audit Committee of the Board of Directors of the Company.

COMMITTEES OF THE BOARD

3. AUDIT COMMITTEE

3.1 Terms of Reference

The terms of reference of this Committee cover the matters specified for Audit Committee under Clause 49 of the Listing Agreement as well as in Section 292A of the Companies Act, 1956. This inter alia includes overseeing the Financial Reporting Process and disclosure of Financial Information, reviewing any change in Accounting Policies and Practices, Compliance with Accounting standards and reviewing the adequacy of Internal Control System.

The Company had formulated a Whistle Blower Policy, which mainly covers the information on suspected unethical and improper practices or wrongful conduct, which employees, in good faith, believe exist.

During the financial year, there was no such incident that necessitated the Audit Committee to investigate according to the Whistle Blower Policy.

3.2 Composition and Meetings

The Audit Committee comprised of one Promoter Non-executive Director and three Independent Non-executive Directors. All the members have a sound financial knowledge. The Committee met 4 times during the Financial Year ended March 31, 2013, on: May 29, 2012, July 23, 2012, October 17, 2012 and January 24, 2013. Required quorum was present at all meetings.

The details of the members of the Committee and their attendance at the above meetings are given below:

Sl. No. Name of the Member CategoryNumber of Meetings

Held Attended

1. Siddharth Mehta Independent Non-executive 4 3

2. S. Sidharth Shankar Promoter Non-executive 4 4

3. M. N. Rangamani Independent Non-executive 4 4

4. K. Chandrasekaran Independent Non-executive 4 4

The Company Secretary acts as the Secretary of the Audit Committee. As and when necessary, senior officials are invited to participate in the meetings to assist the Committee. The Chairman of the Audit Committee was present at the 25th Annual General Meeting held on July 23, 2012.

36 37



4. REMUNERATION COMMITTEE


The terms of reference of this Committee cover the matters specified for Remuneration Committee under Clause 49 of the Listing Agreement. This inter alia, includes determining the remuneration packages of the executive directors including pension rights and any compensation payment.

4.2 Composition & Meetings

The Committee comprised of three Independent Non-executive Directors, the Chairman of Committee being an Independent Director. All the members have a sound financial knowledge. No meeting was held during the financial year ended March 31, 2013. The members of the Remuneration Committee are detailed below:

Sl. No. Name of the Member Category

1. Siddharth Mehta Independent Non-executive

2. K. Chandrasekaran Independent Non-executive

3. M. N. Rangamani Independent Non-executive

5. SHARE HOLDERS/INVESTORS GRIEVANCE COMMITTEE


The role of the Committee includes formulation of shareholders servicing Plans and Policies, monitoring and reviewing the mechanism of Share Transfers and Dematerialisation of Shares, payment of Dividends, etc., and looking into the redressal of shareholders’ complaints and to determine, monitor and review the standards for resolution of shareholders grievances.


The Committee comprised of three Non-executive Directors with an Independent Director as Chairman. During the financial year ended March 31, 2013, the Committee met 4 times on: May 29, 2012, July 23, 2012, October 17, 2012 and January 24, 2013 to review the shareholders’ correspondence including the grievances received from the shareholders and their redressal. Required quorum was present at all meetings.

The details of the members of the Committee and their attendance at the above meetings are given below:


Held Attended



3. M. N. Rangamani Independent Non-executive 4 4

Name & Designation of the Compliance Officer: M. Balasubramaniyan, Company Secretary.

The Shareholders/Investors’ Grievance Committee has prescribed norms for attending to the shareholders’ requests and these norms have been complied with. The Committee generally meets every quarter to review the Investor query/complaints.

Shareholder/Investor Complaints:

Complaints pending as on April 1, 2012 NIL

During the period April 1, 2012 to March 31, 2013, complaints identified and reported under Clause 41 of the Listing Agreement 11

Complaints disposed off during the year ended March 31, 2013 11

Complaints unresolved to the satisfaction of shareholders as on March 31, 2013 NIL

Number of pending share transfers as on March 31, 2013 NIL

6. COMPENSATION COMMITTEE


The role of the Compensation Committee includes powers to decide on the matters relating to granting Stock Options/Equity Shares to the permanent employees (including the Directors of the Company whether Whole-time Directors or not).


The Committee comprised of one Promoter Non-executive Director and three Independent Non-executive Directors with an Independent Director as Chairman. All the members have a sound financial knowledge. The Committee met 4 times on: June 14, 2012, September 20, 2012, October 17, 2012 and January 24, 2013 during the Financial Year ended March 31, 2013. Required quorum was present at all meetings.


Held Attended


2. S. Sidharth Shankar Promoter Non-executive 4 4


4 M. N. Rangamani Independent Non-executive 4 3

7. SHARE TRANSFER COMMITTEE


The role of the Committee includes power to approve Transfers and Transmission of Shares/Debentures and Transpositions, Issue of new Share Certificates, Issue of Powers of Attorney and such other powers the Board may delegate.


The Committee consists of one Promoter Non-executive Director and two Independent Non-executive Directors. The Committee met 16 times on: April 26, 2012, May 21, 2012, June 21, 2012, July 23, 2012, August 10, 2012, September 3, 2012, October 8, 2012, October 26, 2012, November 19, 2012, December 10, 2012, December 31, 2012, January 16, 2013, January 28, 2013, February 22, 2013, March 6, 2013 and March 20, 2013. Required quorum was present at all meetings.

The details of Composition and Attendance of the members are given below:


Held Attended

1. S. Sidharth Shankar Non-executive Director 16 14

2. K. Chandrasekaran Independent Director 16 16

3. M. N. Rangamani Independent Director 16 8

The details of Composition and Attendance of the members are given below:

38 39



8. GENERAL BODY MEETINGSi) The details of Annual General Meetings held during the past three years and Special Resolution passed:

Year Venue Date & Time Special Resolutions Passed

31.03.2010 Rani Seethai Hall, No.603, Anna Salai, Chennai – 600 006

29.09.201002.30 P.M.

1. Approval for ESPS 20102. Approval for allotment in excess of 1%

under ESPS 20103. Allotment of Securities under QIP


28.09.201102.30 P.M.

1. Alteration of Articles of Association

31.03.2012 Chinmaya Heritage Centre, No.2, 13th Avenue, Harrington Road,Chetpet, Chennai – 600 031

23.07.201202.30 P.M.

1. Approval for ESOS 20122. Approval for allotment in excess of 1%

under ESOS 2012

ii) The details of Extraordinary General Meetings held during the past three years and Special Resolution passed:

Year Venue Date & Time Special Resolutions Passed


13.08.201111.30 A.M.

1. Appointment and Payment of Remuneration to Managing Director

2. Preferential allotment of 80,00,000 Equity Shares

3. Preferential allotment of 82,00,000 Warrants

4. Approval for ESPS 20115. Approval for allotment in excess of 1%

under ESPS 2011

No Extraordinary General Meetings were held during FY 2010-11 and FY 2012-13.

9. POSTAL BALLOT:

During the year under review, no Ordinary or Special Resolution was passed through Postal Ballot during FY 2012-13.

Tentative Financial Calendar

April 1, 2013 to March 31, 2014

I Quarter ended 30.06.2013 July 25, 2013

Annual General Meeting September 17, 2013

II Quarter ending 30.09.2013

Third week of October, 2013

III Quarter ending 31.12.2013

Third week of January, 2014

IV Quarter ending 31.03.2014

First week of May, 2014

Audited Results for the Financial Year ending 31.03.2014

First week of May, 2014

10. DISCLOSURES

CEO/CFO Certification

As required under Clause 49V of the Listing Agreement with the Stock Exchanges, the Managing Director and the Chief Financial Officer of the Company have certified to the Board regarding the financial statements, and matters related to internal controls in the prescribed format for the year ended March 31, 2013.

11. SUBSIDIARY COMPANIES

Clause 49 defines a “material non-listed Indian subsidiary” as an unlisted subsidiary, incorporated in India, whose turnover or net worth (i.e. paidup capital and free reserves) exceeds 20% of the consolidated turnover or net worth respectively, of the listed holding Company and its subsidiaries in the immediately preceding accounting year.

Under this definition, the Company did not have any material non-listed Indian subsidiary during the year under review. The subsidiaries of the Company function independently, with an adequately empowered Board of Directors and sufficient resources. The Minutes of Board Meetings of subsidiaries of the Company are placed before the Board of Directors of the Company.

12. RELATED PARTY TRANSACTIONS

(a) During the financial year 2012-13, there were no materially significant transactions entered into between the Company and its Promoters, Directors or the Management, Subsidiaries or relatives that may have potential conflict with the interests of the Company at large. Further, details of related party transactions form as a part of notes to the accounts of the Annual Report.

(b) The Company affirms that no personnel has been denied access to the Audit Committee of the Company (in respect of matters involving alleged misconduct) and that it has provided protection to “Whistle Blowers” from unfair termination and other unfair or prejudicial employment practices.

(c) The Company has complied with the reporting of mandatory requirements as contained in the Annexure 1C and has also reasonably complied with reporting of non mandatory requirements, as contained in the Annexure 1D to Clause 49 of the Listing Agreement.

13. RECONCILIATION OF SHARE CAPTIAL AUDIT

A Reconciliation of Share Capital audit was carried out by a qualified practicing Company Secretary on quarterly basis for reconciling the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The audit inter alia confirms that total issued/paidup capital is in agreement with the total number of Shares held in physical form and the total number of dematerialised Shares held with NSDL and CDSL.

13.1 Accounting Treatment in Preparation of Financial Statements

The Company has followed the Accounting Standards laid down by The Institute of Chartered Accountants of India and The Companies (Accounting Standards) Rules, 2006 in preparation of its financial statements.

13.2 Details of Compliance Relating to Capital Markets

The Company has complied with all the requirements of regulatory authorities. There were

no instances of non-compliance by the Company and no penalties or strictures were imposed on the Company by the Stock Exchanges or SEBI or any statutory authority, on any matter related to the capital markets during the year under review.

13.3 Code for Prevention of Insider Trading Practices

The Company has instituted a comprehensive Code of Conduct for Prevention of Insider Trading for its Designated Employees, in compliance with Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, as amended from time to time. The Code lays down Guidelines, vide which it advises the designated employees on procedures to be followed and disclosures to be made, while dealing with Shares of the Company, and caution them of the consequences of violations.

13.4 Proceeds arising out of various Issues made during the year

Pursuant to the issue of Equity Shares arising out of conversion of Warrants/allotment of Equity Shares under Employee Stock Purchase Scheme made by the Company during the year under review, the Audit Committee has been monitoring the uses and applications of funds by major category such as capital expenditure, sales and marketing, working capital on a quarterly basis as part of its quarterly declaration of financial results. The Company has not utilised the funds generated out of the said issue(s) for any purpose other than those stated in the notice(s).

13.5 Management Discussion and Analysis Report

Management Discussion and Analysis Report (MDAR) has been attached as a separate chapter and forms as a part of this Annual Report.

13.6 Compliance with Clause 49

The Company has complied with all the mandatory requirements of Clause 49 of the Listing Agreement relating to Corporate Governance. As for the non-mandatory requirements, the Company has set up the Remuneration Committee of the Board of Directors, the details of which have been provided under the Section “Committees of the Board”. During the year under review, there is no audit qualification in the Company’s financial statements. The Company continues to adopt best practices to ensure that its financial statements remained unqualified. The Company has not adopted any other non-mandatory requirement specified in Annexure 1D of the Clause 49.

40 41



14. MEANS OF COMMUNICATION

The quarterly results published in the proforma prescribed by the Stock Exchanges are approved and taken on record by the Board of Directors of the Company within 45 days of the close of the relevant quarter. The approved results are forthwith sent to all the Stock Exchanges with which the Company has listing arrangements. Further, the results in the prescribed proforma are published within 48 hours in the English daily newspaper - Trinity Mirror and Tamil daily newspaper - Makkal Kural. The Company sends the Unaudited Financial Results within the stipulated period of 45 days from the end of each quarter as required by the Listing Agreement with the Stock Exchanges.

The Annual Reports are sent to the Shareholders individually before the Annual General Meeting and the same is placed on the Company’s Website - www.sterlingholidays.com

15. GENERAL SHAREHOLDER INFORMATION

(a) Twenty-sixth Annual General Meeting

Date : September 17, 2013

Time : 02.30 p.m.

Venue : Rani Seethai Hall, No.603, Anna Salai, Chennai - 600 006

(b) Financial Year

The Financial Year covers the period from April 1 to March 31.

(c) Book Closure Date

06.09.2013 to 17.09.2013 (Both days inclusive)

(d) Dividend Payment Date

No dividend has been recommended by the Board of Directors of the Company.

(e) Listing on Stock Exchanges

Name of Stock Exchange Address Scrip Symbol/ Scrip Code

Status of payment of listing fees for the year 2012-13

The Madras Stock Exchange Limited [MSE]

Exchange BuildingsPost Box No.18330, Second Line Beach, Chennai - 600 001

STERHOLRES Paid

Bombay Stock Exchange Limited [BSE]

P.J.TowersDalal Street, Fort Mumbai - 400 001

523363 Paid

Demat ISIN Code for NSDL & CDSL - INE657A01019

(f) Market Price Data

Monthly High/Low price of the Equity Shares quoted on Bombay Stock Exchange Limited during the FY 2012-13.

MonthHigh PriceINR P.

LowPriceINR P.

No. of Shares

April 2012 94.90 83.50 23,66,404

May 2012 87.40 72.20 13,25,425

June 2012 83.95 76.25 7,63,602

July 2012 91.15 78.10 20,68,050

August 2012 82.90 73.15 12,15,373

September 2012 90.40 76.50 13,14,284

October 2012 93.50 76.60 25,30,091

November 2012 110.20 77.60 71,94,114

December 2012 104.90 86.35 28,44,623

January 2013 115.70 90.30 75,43,329

February 2013 97.40 74.00 28,81,835

March 2013 82.90 62.00 36,74,183

There was no trading on the Equity Shares of the Company on the Madras Stock Exchange Limited during the FY 2012-13.

(g) Performance of the Company - BSE SENSEX

Month Open High Low Close

April 2012 17,429.96 17,664.10 17,010.16 17,318.81

May 2012 17,370.93 17,432.33 15,809.71 16,218.53

June 2012 16,217.48 17,448.48 15,748.98 17,429.98

July 2012 17,438.68 17,631.19 16,598.48 17,236.18

August 2012 17,244.44 17,972.54 17,026.97 17,429.56

September 2012 17,465.60 18,869.94 17,250.80 18,762.74

October 2012 18,784.64 19,137.29 18,393.42 18,505.38

November 2012 18,487.90 19,372.70 18,255.69 19,339.90

December 2012 19,342.83 19,612.18 19,149.03 19,426.71

January 2013 19,513.45 20,203.66 19,508.93 19,894.98

February 2013 19,907.21 19,966.69 18,793.97 18,861.54

March 2013 18,876.68 19,754.66 18,568.43 18,835.77

(h) Registrar & Share Transfer Agents

Cameo Corporate Services Limited “Subramanian Building”

No.1, Club House Road Chennai - 600 002 Phone : 044 - 28460390 (5 Lines)

Fax : 044 - 28460129 E-mail : [email protected]

(i) Share Transfer System

Trading in Equity Shares of the Company through recognised stock exchanges is permitted only in dematerialised form. Shares sent for transfer in physical form are registered and returned within a period of fifteen days from the date of receipt of the documents, provided the documents are valid and complete in all respects.

The Share Transfer Committee and Investors Grievance Committee meet as and when required to consider the transfer proposals and attend to Shareholders’ grievances. As of March 31, 2013, there are no pending share transfers pertaining to the year under review.

A Committee of the Board, constituted for this purpose, approves the share transfers in the Physical Form periodically subject to the documents being valid and complete in all respects. The Board has also authorised the Members of the Share Transfer Committee to approve the Transfers, Transmissions and Transpositions. As per the directions of SEBI, the Company immediately on transfer of Shares, endorse their name on the Share Certificates and send them to the investors. The Committee met 16 times during the Financial Year commencing from April 1, 2012 to March 31, 2013.

(j) Shareholding Pattern as on March 31, 2013

Category No. of Shares held % of Shareholding

A. PROMOTER’S HOLDING

(i) Indian Promoters 79,01,008 11.669

(ii) Acquirers & PAC -- --

B. NON-PROMOTER HOLDING

1. Institutional Investors

(a) Mutual Fund 7,450 0.011

(b) Banks, Financial Institutions, Insurance Companies 4,650 0.007

(c) Foreign Institutional Investors 1,36,85,903 20.213

2. Others

(a) Private Corporate Bodies 88,31,018 13.043

(b) Indian Public 2,67,50,184 39.507

(c) Non Resident Indians/Overseas Bodies Corporate 82,46,948 12.180

(d) Foreign Nationals 325 0.000

(e) Trusts 22,42,142 3.311

(f) Clearing Member 39,723 0.059

Total 6,77,09,351 100.000

42 43



(k) Distribution of Shareholding as on March 31, 2013

Category No. of Holders % to Total No. of Shares % to Total

1 - 500 18,623 88.13 23,09,200 3.41

501 - 1000 1,050 4.97 8,81,169 1.30

1001 - 2000 586 2.77 9,27,350 1.37

2001 - 3000 233 1.10 6,11,475 0.90

3001 - 4000 103 0.49 3,72,224 0.55

4001 - 5000 109 0.52 52,2,363 0.77

5001 - 10000 184 0.87 13,82,846 2.04

Above 10000 244 1.15 6,07,02,724 89.65

Total 21,132 100.00 6,77,09,351 100.00

(l) Nomination Facility

The Shareholders may avail themselves of the nomination facility under Section 109A of the Companies Act, 1956. The Nomination Form (Form 2B) along with instructions will be provided to the members on request. In case the members wish to avail this facility, they are requested to write to M. Balasubramaniyan, Company Secretary at the Registered Office of the Company.

(m) Dematerialisation of Equity Shares and Liquidity The Equity Shares of the Company are compulsorily traded in dematerialised form with effect from August 28,

2000 as per the directives issued by SEBI. The Code Number allotted by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) to Sterling Holiday Resorts (India) Limited is ISIN - INE 657A01019.

As on March 31, 2013, 97.68% of the Company’s total Equity Shares representing 6,61,39,942 Equity Shares were held in Dematerialised Form and the balance 2.32% representing 15,69,409 Equity Shares were held in Physical Form.

The Company has received 250 requests for Dematerialisation of Shares during the 12 months period commencing from April 1, 2012 to March 31, 2013. The time taken for processing the dematerialisation requests is detailed below.

For the period 01.04.2012 to 31.03.2013

Days taken for

processing

No. of requisitions

accepted

No. of Shares accepted

% to Paidup Capital

No. of requisitions

rejected

No. of Shares rejected

% to Paidup Capital

1 – 10 days 203 38,863 0.057%

38 6,113 0.009%11 – 15 days 9 1,49,241 0.220%

Total 212 1,88,104 0.278%

(n) Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, Conversion date and likely impact on Equity.

The Company did not have any outstanding GDRs/ADRs/Warrants or any convertible instruments as on March 31, 2013.

(o) Resort Locations

Corbett, Darjeeling, Dharamshala, Gangtok, Goa, Karwar, Kodaikanal, Lonavala, Manali, Munnar, Mussoorie, Ooty, Puri, Thekkady, Yelagiri, Yercaud.

(p) Address for Correspondence

Registered Office: Corporate Office:

Sterling Holiday Resorts (India) LimitedNo.163, T.T.K. Road, Alwarpet,Chennai - 600 018E-mail : [email protected]

Sterling Holiday Resorts (India) Limited,Citi Tower, No.7, 3rd Cross Street,Kasturba Nagar, Adyar, Chennai - 600 020Board line : 044 33573300 Fax : 044 33573423

For and On Behalf of the Board

Place : Chennai SIDDHARTH MEHTADate : July 25, 2013 CHAIRMAN

DECLARATION ON CODE OF CONDUCT

To,

The Members of Sterling Holiday Resorts (India) Limited

This is to inform that the Board has laid down a Code of Conduct for all Board Members and Senior Management Personnel of the Company. It is further declared that all Directors and Senior Management Personnel have affirmed compliance with the Code of Conduct of the Company for the year ended March 31, 2013 as envisaged in Clause 49 of the Listing Agreement entered into with the Stock Exchanges.

Place : Chennai Ramesh RamanathanDate : July 25, 2013 Managing Director & CEO

44 45



REPORT ON CORPORATE GOVERNANCE

To The Members of Sterling Holiday Resorts (India) Limited,

We have examined the compliance of the conditions of Corporate Governance by Sterling Holiday Resorts (India) Limited for the financial year ended March 31, 2013, as stipulated in Clause 49 of the Listing Agreement of the said Company, with Stock Exchanges.

The Compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to procedures and implementation thereof adopted by the Company for ensuring the compliance of the condition of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of the information and according to the explanations given to us and the representations made by the Directors and the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreements.

Based on the information and explanations given to us there are no investor grievances pending for a period exceeding one month against the Company.

We further state that such compliance is neither an assurance as to the future viability of the Company nor that efficiency or effectiveness with which the Management has conducted the affairs of the Company.

For V. Sankar Aiyar & Co. For R. Subramanian and Company Chartered Accountants Chartered Accountants

ICAI Regn. No. 109208W ICAI Regn. No. 004137S

S. Venkataraman, Partner A. S. Ramanathan, Partner Membership No.: 023116 Membership No.: 011072

Place : ChennaiDate : July 25, 2013

STERLING HOLIDAY RESORTS (INDIA) LIMITEDCHIEF EXECUTIVE OFFICER (CEO) AND CHIEF FINANCIAL OFFICER (CFO) CERTIFICATION

UNDER CLAUSE 49 OF THE LISTING AGREEMENT

To,

The Board of Directors

Sterling Holiday Resorts (India) Limited

Chennai

We, Ramesh Ramanathan, Managing Director, in the capacity as Chief Executive Officer (CEO) and R. Mohan, Senior Vice President, Finance in the capacity as Chief Financial Officer (CFO) of Sterling Holiday Resorts (India) Limited (“the Company”), to the best of our knowledge and belief certify that:

(a) We have reviewed financial statements and the Cash Flow Statement for the year ended March 31, 2013 and that to the best of our knowledge and belief, we state that:

(i) These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading.

(ii) These statements together present a true and fair view of the Company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations.

(b) We further state that to the best of our knowledge and belief, there are no transactions entered into by the Company during the year which are fraudulent, illegal or violative of the Company’s code of conduct.

(c) We accept responsibility for establishing and maintaining internal controls for financial reporting and we have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting and we have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these deficiencies.

(d) We have indicated to the Company’s Auditors and the Audit committee

(i) Significant changes, if any, in internal control over financial reporting during the year;

(ii) Significant changes, if any, in accounting policies made during the year and that the same have been disclosed in the notes to the financial statements; and

(iii) Instances of significant fraud of which we have become aware and the involvement therein, if any, of the Management or an employee having a significant role in the Company’s internal control system over financial reporting.

RAMESH RAMANATHAN (CEO) R. MOHAN (CFO)

MANAGING DIRECTOR SENIOR VICE PRESIDENT – FINANCE

Place : ChennaiDate : July 25, 2013

48 49



INDEPENDENT AUDITORS' REPORT FOR THE YEAR ENDED MARCH 31, 2013To the Members of Sterling Holiday Resorts (India) Limited

Report on Financial Statements

We have audited the accompanying financial statements of Sterling Holiday Resorts (India) Limited which comprise of the Balance Sheet as at March 31, 2013, Statement of Profit & Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-Section (3C) of Section 211 of the Companies Act, 1956 (“the Act”). The responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the State of Affairs of the Company as at March 31, 2013 b) in the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government of India in terms of sub-Section (4A) of Section 227 of the Act, we give in the annexure a statement on the matters specified in the paragraphs 4 and 5 of the said Order.

2. As required by Section 227(3) of the Act, we report that:

(a) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

(b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

(c) the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-Section (3C) of Section 211 of the Companies Act, 1956.

(e) On the basis of written representations received from the directors as on March 31, 2013 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013 from being appointed as a director in terms of Clause (g) of sub-Section (1) of Section 274 of the Companies Act, 1956.

For V. Sankar Aiyar & Co. For R. Subramanian and Company,Chartered Accountants Chartered Accountants ICAI Regn. No. 109208W ICAI Regn. No. 004137S

S. Venkataraman A. S. Ramanathan Partner PartnerMembership No.: 023116 Membership No.: 011072

Place: ChennaiDate : April 29, 2013

50 51



ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE.1. (a) The Company has updated and reconstructed

its Fixed Assets Register with full particulars including quantitative details and situation of Fixed Assets. Consequent to such reconciliation, certain categories of Fixed Assets have been re-grouped.

(b) We are informed that during the year the Fixed Assets located at resorts and Head Office have been physically verified by the Management and reconciled with financial records and no material discrepancies were noticed on such verification.

(c) As per information and explanations given to us, the disposal of Fixed Assets during the year were not substantial and hence it does not affect the going concern assumption.

2. (a) The inventories have been physically verified at the end of the year by the Management. In our opinion, the frequency of verification was reasonable.

(b) In our opinion, the procedures of physical verification of inventories followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) On the basis of the records examined by us and relying on the information provided to us, in our opinion, the Company is maintaining proper records of inventories and no material discrepancies were noticed on physical verification as compared to the record of inventories.

3. (a) The Company has not granted any loans secured or unsecured to companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

(b) The Company has not taken any loan secured or unsecured from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act 1956.

4. In our opinion and according to the information and explanations given to us, the internal control system are commensurate with the size of the Company and the nature of its business for purchase of inventory, Fixed Assets, sale of goods and services. During the course of audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

5. (a) Based on the audit procedures applied by us, to the best of our knowledge and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the Register maintained under that Section.

(b) Other than our observation stated in para 18 given below, there are no transactions exceeding INR 5 lakhs in respect of any parties referred to in the Register maintained under Section 301 of the Companies Act, 1956 in the financial year.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public. We are informed by the Management that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal under Sections 58A and 58AA of the Companies Act, 1956.

7. The Company has an internal audit system commensurate with the size of the Company and the nature of its business.

8. According to the information and explanations given to us and as clarified under General Circular No. 67/2011 dated November 30, 2011 the Companies (Cost Accounting Records) Rules, 2011 are not applicable to the Company since the Company is in hospitality sector. Hence reporting under this para does not arise.

9. (a) According to the information and explanations given to us, the Company is generally regular in depositing the undisputed statutory dues in respect of Income Tax, Luxury Tax, Employees State Insurance and Customs Duty. However, there have been instances of delay in deposit of the undisputed statutory dues of Provident Fund, Sales Tax (VAT) and Service Tax with appropriate authorities, during the year. There is no liability to remit Excise duty and Investor Education and Protection Fund.

(b) According to the information and explanations given to us, except for the undisputed Fringe Benefit Tax of INR 101.34 lakhs, no other Statutory Dues were outstanding at the year end for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us and on the basis of examination of records of the Company the dues of Income Tax/Service Tax as at March 31, 2013 which have not been deposited on account of any dispute are as follows:

Name of Statute/Nature of Dues Period

Forum where dispute is pendingINR in lakhs

High Court Appellate Authority@ Grand Total

Service Tax Rules (Service Tax including penalty & interest wherever applicable)

16.06.05 to 30.09.06 527.03 - 527.03

Luxury Tax (Kerala) 2006-07 & 2007-08 - 12.69 12.69@Appellate Authority includes Commissioner Appeals, Assistant Commissioner Appeals, Deputy Commissioner Appeals, and Joint Commissioner Appeals

10. The accumulated loss at the end of the financial year exceeds 50% of net worth inclusive of “Deferred income”(other than “Entitlement Fee” which is refundable in nature). The Company has incurred cash loss during the current financial year and in the preceding financial year.

11. In our opinion and according to the information and explanations given to us, there is no default in the repayment of dues to the Financial Institutions/Banks.

12. According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of Shares, debentures and other securities.

13. The provisions of Clause 4(xiii) of the Order relating to Chit Funds are not applicable to the Company.

14. In our opinion, the Company is not dealing or trading in Shares, securities, debentures and other investments other than investing in mutual fund units. Proper records of the transactions and contracts have been maintained and timely entries have been made. The said investments have been held by the Company in its own name.

15. According to the information and explanations given to us, the Company has not given any guarantee for any loan taken by others from any Bank or Financial Institution.

16. According to the information and explanations given to us and based on the examination of records, the term loan availed during the year has been used for the purpose for which such loan has been availed.

17. According to the information and explanations given to us, based on an overall examination of the Balance Sheet of the Company, information made available to us and as represented to us by the Management, funds raised on short-term basis have not been applied for long-term investment during the year.

18. According to the information and explanations given to us, during the year the Company has not made any preferential allotment of Shares to parties and companies covered in the Register maintained under Section 301 of the Act, other than Shares allotted on conversion of Warrants issued on preferential basis in earlier years to parties covered in Register maintained under Section 301 of the Companies Act, 1956. The issue price of Shares so allotted has been determined in accordance with SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. Hence, it is not prejudicial to the interest of the Company.

19. The Company has not issued debentures during the year and therefore the question of creating security or charge in respect thereof does not arise.

20. The Company has not made public issue of securities during the year and therefore the question of disclosing the end-use of money raised by way of public issue does not arise.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have not come across any instance of material fraud on or by the Company, noticed or reported during the year.

For V. Sankar Aiyar & Co. For R. Subramanian and CompanyChartered Accountants Chartered Accountants ICAI Regn. No. 109208W ICAI Regn. No. 004137S



52 53



STERLING HOLIDAY RESORTS (INDIA) LIMITED BALANCE SHEET AS AT MARCH 31, 2013

(INR in lakhs except share data, per share data and if otherwise stated)

Particulars Note No. As at 31.03.2013 As at 31.03.2012

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

(a) Share Capital 1 6,770.94 5,970.09

(b) Reserves and Surplus 2 2,166.53 (922.96)

(c) Money received against Share Warrants - 1,812.50

NON-CURRENT LIABILITIES

(a) Long-term borrowings 3 2,110.01 61.02

(b) Deferred income [vide Note No: 26(12)] 23,854.82 21,598.41

(c) Other long-term liabilities 4 150.81 32.54

CURRENT LIABILITIES

(a) Short-term borrowings 5 887.74 -

(b) Trade payables [vide Note No.26(15) and 26(19)] 2,002.99 1,152.85

(c) Deferred income [vide Note No.26(12)] 621.37 687.47

(d) Other current liabilities 6 1,805.44 983.82

(e) Short-term provisions 7 318.04 248.84

Total 40,688.69 31,624.58

ASSETS

NON-CURRENT ASSETS

(a) Fixed Assets 8

(i) Tangible assets 22,848.70 18,477.74

(ii) Intangible assets 174.95 126.97

(iii) Capital Work in Progress [vide Note No.26(10)] 5,416.58 4,874.22

(b) Deferred Tax Asset (Net) [vide Note No.26(16)] - -

(c) Non-Current Investments 9 70.22 70.22

(d) Long-term Loans and Advances 10 1,926.35 2,180.77

(e) Other Non-Current Assets 11 4,515.04 2,100.55

Particulars Note No. As at 31.03.2013 As at 31.03.2012

CURRENT ASSETS

(a) Current investments 12 - 96.56

(b) Inventories 13 180.52 108.97

(c) Trade receivables 14 3,461.66 1,588.82

(d) Cash and bank balances 15 150.95 289.72

(e) Short-term loans and advances 16 1,740.18 1,641.01

(f) Other current assets 17 203.54 69.03

Total 40,688.69 31,624.58

Significant Accounting Policies 25

Additional Notes forming part of Financial Statements 26

Contingent Liabilities 26

For and on behalf of the board

SIDDHARTH MEHTA S. SIDHARTH SHANKAR RAMESH RAMANATHANChairman Vice Chairman Managing Director

R. MOHAN M. BALASUBRAMANIYANSenior Vice President - Finance Company Secretary

As per our report of even date

For V. Sankar Aiyar & Co. For R. Subramanian and CompanyChartered Accountants Chartered AccountantsICAI Regn.No. 109208W ICAI Regn.No. 004137S

S. Venkataraman A. S. RamanathanPartner PartnerMembership No.: 023116 Membership No.: 011072

Place: Chennai

Date : April 29, 2013


56 57



Particulars NoteNo.

For theYear ended 31.03.2013


Revenue from Operations 18 10,079.32 6,749.69

Other income 19 788.95 259.70 Total Revenue 10,868.27 7,009.39

Expenses:Cost of materials consumed 20 597.62 603.94Employee benefit expense 21 5,362.34 4,442.69

Other Operating and General Expenses 22 6,396.58 4,603.63

Finance cost 23 122.29 335.71

Depreciation and Amortisation Expense 8 632.51 480.29

Total Expenses 13,111.34 10,466.26Profit/(Loss) before exceptional items and Tax (2,243.07) (3,456.87)

Exceptional items (net) 24 154.37 (587.21)


Tax expense:

Current Tax - - Deferred Tax - - Profit/(Loss) after Tax (2,088.70) (4,044.08)"Earning per Equity Share: (Basic and Diluted) [vide Note No. 26 (21)]"

(1) Before Exceptional Items (3.42) (6.36)

(2) After Exceptional Items (3.19) (7.45)

Significant Accounting Policies 25Additional Notes forming part of Financial Statements 26Contingent Liabilities 26




As per our report of even dateFor V.Sankar Aiyar & Co. For R. Subramanian and CompanyChartered Accountants Chartered AccountantsICAI Regn.No. 109208W ICAI Regn.No. 004137S


Place: Chennai

Date : April 29, 2013

STERLING HOLIDAY RESORTS (INDIA) LIMITED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2013


Particulars



A. Cash flow from operating activities

Net Profit/(Loss) before extraordinary items and Tax (2,088.70) (4,044.08)

Adjustments for:

Depreciation and amortisation 632.51 480.29

Amortisation of Employee Stock option cost 130.24 1,250.01

Profit on Sale of Assets (net of Revaluation Reserve) (4.85) (6.79)

Finance costs 122.29 967.42

Interest income (565.24) (139.48)

Dividend income from Mutual Funds (6.39) (54.11)

Net (Gain)/Loss on sale of investments (7.83) (48.92)

Unclaimed balances written back (244.62) (44.50)

Provision no longer required written back (93.31) -

Depreciation and amortisation written back (117.45) -

Provision for doubtful trade and other receivables, loans and advance

192.27 -

Advances written off 15.43 -

Exchange gain (0.89) -

52.16 2,403.92

Operating Profit/(Loss) before working capital changes (2,036.54) (1,640.16)

Adjustment for (increase)/decrease :

Inventories (71.55) (48.08)

Trade Receivables (1,779.53) (1,312.52)

Loans and Advances (2,720.43) (1,718.61)

Deferred Income 2,190.31 1,313.88

Trade Payable & Other Liabilities 1,346.82 530.92

Provisions 69.20 (3.33)

Cash generated from Operating Activities (965.18) (1,237.74)

Net cash flow from/(used in) Operating Activities (A) (3,001.72) (2,877.90)

CASH FLOW STATEMENT - FINANCIAL YEAR ENDED MARCH 31, 2013


58 59



Particulars For the

Year ended 31.03.2013


B. Cash flow from investing activities

Purchase of Fixed Assets (5,175.90) (1,347.35)

Increase in Capital Work in Progress (89.38) (2,167.79)

Proceeds from sale of Fixed Assets 11.85 650.08

Proceeds from sale of Investments 104.39 216.30

Increase/decrease in Deposit Accounts (maturing beyond three months)

29.67 501.36

Interest received 565.24 139.48

Dividend on Current Investments 6.39 54.11

Net cash flow from/(used in) investing activities (B)

(4,547.74) (1,953.81)

C. Cash flow from financing activities

Proceeds from issue of Equity Shares/Share Warrants (including Securities Premium)

4,079.31 8,548.96

Proceeds from long-term borrowings 2,747.62 43.17

Repayment of long-term borrowings (10.26) (2,784.39)

Increase in short-term borrowings (net) 887.74 -

Finance cost paid (264.05) (967.42)

Net cash flow from/(used) by financing activities (C)

7,440.36 4,840.32

Net increase/(decrease) in cash and cash equivalents (A+B+C)

(109.10) 8.61

Cash and cash equivalents at the beginning of the year 245.65 237.04

Cash and cash equivalents at the end of the year 136.55 245.65

Reconciliation of cash and cash equivalents with the Balance Sheet:

Cash and cash equivalents as per Balance Sheet (Refer Note 15)

Cash and cash equivalents at the end of the year comprises:

(a) Cash on hand 8.27 6.20

(b) Balances with banks

(i) In current accounts 128.28 239.45

136.55 245.65

(INR in lakhs except share data, per share data and if otherwise stated) Notes:

Previous year figures have been regrouped wherever necessary to confirm with current year grouping.

Refer significant accounting policies and additional notes forming part of financial statements (Note No. 25 and 26).








60 61



As at As at 31.03.2013 31.03.2012

NOTE 1

SHARE CAPITAL

(a) Authorised Share Capital: 7,50,00,000 (7,50,00,000) of Equity Shares of INR 10 each 7,500.00 7,500.00 (b) Issued, Subscribed and Fully Paid up Share Capital: 6,77,09,351 (5,97,00,785) of Equity Shares of INR 10 each 6,770.93 5,970.08 Add : Share Capital pending allotment 0.01 0.01 6,770.94 5,970.09 (c) Par Value per Share (INR) 10 10 (d) Reconciliation of number of Shares Equity Shares at the beginning of the year 5,97,00,785 4,89,28,585

Issued during the year - 80,00,000 Warrants conversion [vide Note No.26(23)] 75,33,333 6,66,667 Options under ESOS and ESPS exercised [vide Note No.26(22)] 4,75,233 21,05,533 Equity Shares at the end of the year 6,77,09,351 5,97,00,785 (e) Details of Shareholders holding more than 5% of Equity Shares of the Company

India Discovery Fund Limited 54,59,542 8.06 53,34,542 8.94 India Horizon Fund Limited 40,86,092 6.03 40,86,092 6.84 Bay Capital Investment Limited 78,88,718 11.65 78,88,718 13.21 Sidharth Shankar 37,80,500 5.58 37,80,500 6.33 S. Dhanalakshmi 41,13,334 6.07 41,13,334 6.89

(f) Terms/Rights attached to Equity Shares The Company has only one class of Equity Shares having a par value of INR 10 per Share. Each Shareholder has a

right to participate in General Meeting and is eligible for one vote per Share held.(g) Terms of Share Warrants convertible into Equity Shares

During the previous year 82,00,000 share Warrants at an issue price of INR 75 per warrant on preferential basis were issued to certain promoters/others. These Warrants were to be converted into one Equity Share of INR 10 each at a premium of INR 65 per Share on or before 18 months from the date of issue. As on March 31, 2012, 75,33,333 Warrants were pending for conversion. These Warrants were converted into Equity Shares during the year 2012-13 on receipt of full consideration.

(h) Employee Stock Purchase Scheme 2011 During the year, the Company has allotted 4,75,233 fully paid Equity Shares of INR 10 each under Employee Stock

Purchase Scheme 2011 (ESPS 2011).(i) Increase in Paid-up Share Capital Consequent to the allotment of Shares on Conversion of Share Warrants [vide (g)] and allotment of Shares under

ESPS 2011 [vide (h)] above, the paid up Share Capital of the Company stands increased to INR 6,770.94 lakhs as on March 31, 2013.

No. of Shares

Notes to Financial Statements for the year ended March 31, 2013(INR in lakhs except share data, per share data and if otherwise stated)

As at As at 31.03.2013 31.03.2012

NOTE 2RESERVES & SURPLUS

(a) CAPITAL RESERVE As per last Balance Sheet 93.10 93.10 (b) SECURITY PREMIUM RESERVE As per last Balance Sheet 21,380.60 14,254.86 Add : On issue of Shares/conversion of Warrants 5,221.18 7,210.19 Less : Share issue expenses written off 42.99 84.45

Closing Balance 26,558.79 21,380.60 (c) REVALUATION RESERVE [vide Note No.26(4)] As per last Balance Sheet 1,959.20 2,020.58 Less : Withdrawn during the year - 61.38

Closing Balance 1,959.20 1,959.20

(d) GENERAL RESERVE As per last Balance Sheet 3,945.40 3,945.40 Closing Balance 3,945.40 3,945.40

(e) (Deficit)/Surplus (Balance in Statement of Profit and Loss) As per last Balance Sheet (Deficit) (28,301.26) (24,257.18) Add : (Deficit) for the year (2,088.70) (4,044.08) Closing balance (Deficit) (30,389.96) (28,301.26) Total of Reserves and Surplus 2,166.53 (922.96) NOTE 3LONG TERM BORROWINGS

TERM LOANS - SECURED

(i) From Banks* 32.91 43.17 (ii) From others ** 2,077.10 17.85

2,110.01 61.02

* Term loans from banks including current maturities of such loans aggregating to INR 47.49 lakhs (Previous year INR 69.34 lakhs) are secured by way of Hire purchase agreements with the lenders. Out of these, loans aggregating to INR 11.02 lakhs (Previous year INR 18.20 lakhs) are repayable in 40 months commencing from April 2012 and loans aggregating to INR 36.48 lakhs (Previous year INR 51.14 lakhs) are repayable in 35 months commencing from April 2012 in varying instalment amounts

**Term loan aggregating to INR 2,750 lakhs (including current maturities) from IL & FS Financial Services Limited is secured by an equitable mortgage of the immovable property situated at Munnar. The loan is repayable in eight equal quarterly instalments of INR 343.75 lakhs each commencing from October 2013. Term loans from other lenders (including current maturities) aggregating to INR 35.90 lakhs (Previous year INR 41.70 lakhs) are secured by Hire purchase agreements. These loans are repayable on a tenor ranging from 12 to 28 months commencing from January 2011 in varying instalments.


No. of Shares No. of Shares

As at March 31, 2013 As at March 31, 2012

% %

62 63



As at As at 31.03.2013 31.03.2012 NOTE 4

OTHER LONG-TERM LIABILITIES

OthersRetention Money - Capital Contracts 150.81 32.54 150.81 32.54NOTE 5

SHORT-TERM BORROWINGS

Secured Borrowings - Repayable on demand From Bank* 887.74 - 887.74 -

* Overdraft facility is secured by first and exclusive charge on immovable property being land situated at Kodaikanal and further secured by first and exclusive hypothecation charge on all existing and future inventory and receivables relating to resorts.

NOTE 6

OTHER CURRENT LIABILITIES

(a) Current Maturities of long-term borrowings 835.80 347.43(b) Interest accrued but not due on borrowings 8.31 -(c) Others (i) Customer refund due 14.90 7.51 (ii) Security deposit received 7.22 6.80 (iii) Dues to employees 203.40 89.42 (iv) Capital creditors 283.86 104.68 (v) Advance received from customers 318.43 295.34 (vi) Statutory Dues 133.52 132.64 1,805.44 983.82

NOTE 7

SHORT-TERM PROVISIONS

(a) Provisions for employee benefits 146.56 93.49(b) Others (i) Provision for Fringe Benefit Tax 137.72 137.72 (ii) Coupons redeemable 33.76 17.63 318.04 248.84


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64 65



As at As at 31.03.2013 31.03.2012

NOTE 9NON-CURRENT INVESTMENTS LONG-TERM INVESTMENTS (AT COST) INVESTMENT IN EQUITY INSTRUMENTS

(i) Trade Investments - Unquoted Investments in Subsidiaries [vide Note No.26(8)(b)]

(a) 19,00,000 (19,00,000) Equity Shares of INR 10 each fully paid up in Manchanda Resorts Pvt. Ltd. (Wholly Owned Subsidiary) 60.09 60.09 (b) 49,000 (49,000) Equity Shares of INR 10 each fully paid up in Sterling Holidays (Ooty) Ltd. 4.90 4.90 (c) 49,000 (49,000) Equity Shares of INR 10 each fully paid up in Sterling Holiday Resorts (Kodaikanal) Ltd. 4.90 4.90

(ii) Other Investments - Unquoted

(a) 1,00,000 (1,00,000) Equity Shares of INR 10 each fully paid up in Sterling Holiday Finvest Ltd. 10.00 10.00 Less : Provision for Diminution in Value (10.00) (10.00) - - (b) 1,00,000 (1,00,000) Equity Shares of INR 10 each fully paid up in Sterling Securites and Futures Ltd. 10.00 10.00 Less : Provision for Diminution in Value (10.00) (10.00) - - (c) 5,20,000 (5,20,000) Equity Shares of INR 10 each fully paid up in Sterling Resorts Home Finance Ltd. 52.00 52.00 Less : Provision for Diminution in Value (52.00) (52.00) - - (d) 7,00,000 (7,00,000) Equity Shares of INR 10 each fully paid up in Sterling Holidays Financial Services Ltd. 95.00 95.00 Less : Provision for Diminution in Value (95.00) (95.00) - -(iii) Non-trade Investments - Quoted

1,100 (1,100) Equity Shares of INR 10 each fully paid up in Tourism Finance Corporation of India Ltd. 0.33 0.33

(iv) Other Non-Current Investments - Unquoted:

28,765 (28,765) no. of Teak Units of Sterling Tree Magnum (India) Ltd. 978.00 978.00 Less : Provision for Diminution in Value (978.00) (978.00) 70.22 70.22NOTE:1. Aggregate cost of quoted investments 0.33 0.332. Market value of quoted investments 0.24 0.273. Aggregate cost of unquoted investments 1,214.89 1,214.894. Aggregate provision for dimunition in value of investments (1,145.00) (1,145.00)


As at As at 31.03.2013 31.03.2012

NOTE 10

LONG-TERM LOANS AND ADVANCES (UNSECURED, CONSIDERED GOOD) [vide Note No.26(15)](a) Capital Advances 1,182.11 1,493.35(b) Security Deposits 744.24 687.42 1,926.35 2,180.77NOTE 11

OTHER NON-CURRENT ASSETS(UNSECURED, CONSIDERED GOOD)(a) Long-term trade receivables (vide Note No.26(15)) 3,974.97 1,560.48(b) OTHERS Receivable on sale of Fixed Assets (vide Note No.26(11)) 527.10 527.10 Interest receivable on Income Tax refunds 12.97 12.97 4,515.04 2,100.55NOTE 12CURRENT INVESTMENTS (NON TRADE, VALUED AT LOWER OF COST AND NET REALISABLE VALUE) Investment in Mutual Funds (unquoted) - 96.56

- 96.56 NOTE 13 INVENTORIES(AT LOWER OF COST AND NET REALISABLE VALUE)(a) Stores and operating supplies 152.66 88.00(b) Food and Beverages 27.86 20.97 180.52 108.97NOTE 14 TRADE RECEIVABLES (UNSECURED) [vide Note No.26(15)](a) Trade receivables outstanding for a period exceeding 6 months from the date they are due for the payment Considered good 1,870.01 303.15 Considered doubtful 1,776.16 1,869.47 Less: Provision for doubtful receivables (1,776.16) (1,869.47) 1,870.01 303.15(b) Others Considered good 1,591.65 1,285.67 3,461.66 1,588.82 NOTE 15 CASH AND BANK BALANCES (a) Cash and cash equivalents (i) Balance with banks in current account 128.28 239.45 (ii) Cash-in-hand 8.27 6.20 (b) Other Bank Balances: Fixed Deposit for a period exceeding 3 Months* 14.40 44.07 150.95 289.72 * Includes deposits with banks towards Margin for Guarantees 14.40 22.48


66 67



As at As at 31.03.2013 31.03.2012

NOTE 16

SHORT-TERM LOANS AND ADVANCES (UNSECURED CONSIDERED GOOD)[vide Note No. 26(15)]

1. Loans and Advances to related parties: Dues from Subsidiary Companies (vide Note No.26(8)(b)) 1,283.65 1,146.712. Others (a) Tax deducted at Source 137.28 129.88 (b) Pre-deposit against litigation (vide Note No.26(2)(d) & 26(2)(e)) 32.72 30.00 (c) Advances recoverable in cash or in kind 223.77 173.03 (d) Inter-corporate deposit - 56.59 (e) Loans and Advances to employees 62.76 104.80

1,740.18 1,641.01NOTE 17

OTHER CURRENT ASSETS

Prepaid expenses 143.59 42.82 Unbilled revenue 22.15 26.21 Balances with Statutory Authorities 33.42 - Other receivables 4.38 -

203.54 69.03NOTE 18 REVENUE FROM OPERATIONS

(a) Sale of products (Timeshare/Resort Operations) Timeshare Sales 4,662.98 2,601.11 Annual Amenity Charges & Utility charges 1,674.01 1,122.77 Room Income 1,513.15 1,186.84 Holiday & Health Club 373.60 366.92 Sale of Food & Beverages 1,643.80 1,354.98(b) Others 29.47 46.62 Other Operating Income 182.31 70.45

10,079.32 6,749.69NOTE 19

OTHER INCOME (a) Interest Income 565.24 139.48(b) Dividend Income 6.39 54.11(c) Net Gain/(Loss) on sale of Current Investments 7.83 48.92(d) Profit on sale of Assets (net) 4.85 6.79(e) Other Non-operating Income (i) Scrap Sales 8.76 10.40 (ii) Income on securitisation (vide Note No. 26(13)) 101.68 - (iii) Excess provision written back 93.31 - (iv) Exchange Gain (Net) 0.89 -

788.95 259.70


As at As at 31.03.2013 31.03.2012

NOTE 20

COST OF MATERIALS CONSUMED

Opening Stock of Food and Beverages, Stores and Operating Supplies 108.97 60.88

Purchases 669.17 652.03

778.14 712.91 Less : Closing stock of Food and Beverages, Stores and Operating Supplies 180.52 108.97

597.62 603.94NOTE 21

EMPLOYEE BENEFIT EXPENSES

Salaries and Wages 4,604.44 2,777.06 Expense on Employee Stock Option/Employee Stock Purchase 130.24 1,250.01 Contribution to Providend fund and other funds 218.42 134.07 Staff Welfare expenses 409.24 281.55

5,362.34 4,442.69NOTE 22

OTHER OPERATING & GENERAL EXPENSES

A. Resort Operating Expenses Consumption of Stores and Spares 137.64 96.97 Power and Fuel 683.82 516.51 Guest supplies 66.76 44.88 Holiday Activities expenses 149.92 74.21 Laundry expenses 80.52 60.73

Repairs and Maintenance - Building 69.30 36.11 - Plant and Machinery 102.26 154.09 - Others 8.33 3.65 Security charges 95.85 61.11 Travelling and conveyance 161.78 180.88 Water charges 64.36 47.00 Rates and Taxes 77.46 51.43 Other Operating expenses 184.47 124.61

B. General Expenses Power and Fuel 51.03 32.55 Rent 1,173.49 609.64

Repairs and Maintenance - Building 2.42 5.29 - Plant and Machinery 0.76 4.33 - Others 44.05 48.77 Insurance 5.55 4.50 Rates and Taxes 19.69 38.53 Telephone and Fax 98.63 62.73 Recruitment and Training 115.62 71.60 Legal and Professional 180.80 417.80 Director Sitting Fees 3.75 3.54


68 69



As at As at 31.03.2013 31.03.2012

Payment to Auditors (a) Statutory Audit 15.20 15.44 (b) Tax Audit and Taxation matters 1.18 3.77 (c) Reimbursement of Expenses 0.69 0.55 (d) Certification Matters 3.60 2.48Travelling and Conveyance 496.96 325.18Advertisement 162.39 133.73Sales Commission and Brokerage 104.73 85.95Sales Promotion 1,648.20 862.39Miscellaneous Expenses 385.37 422.68

6,396.58 4,603.63

NOTE 23

FINANCE COST

(a) Interest 85.68 335.71(b) Interest on Statutory dues 3.45 -(c) Other borrowing costs 33.16 -

122.29 335.71

NOTE 24

EXCEPTIONAL ITEMS

Unclaimed credit balances written back 244.62 44.50 Provision for doubtful advances (192.27) - Depreciation written back (vide Note No. 26(6)) 117.45 - Advances written off (15.43) - One time settlement of dues to Financial Institution Interest and Charges (vide Note No.26(3)) - (631.71)

154.37 (587.21)


1. SYSTEM OF ACCOUNTING

(a) The Company follows mercantile system of accounting and recognises income and expenditure on accrual basis, unless and otherwise specified.

The financial statements have been prepared in all material respects in compliance of Accounting Standards as notified by the Companies (Accounting Standards) Rules, 2006.

(b) Financial statements are prepared under historical cost convention and on “Going Concern” basis.

2. USE OF ESTIMATES

The preparation of financial statements requires Management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. The Management believes that these estimates and assumptions are reasonable and prudent. However actual results could differ from these estimates. Differences between actual results and estimates are recognised in the period in which they materialise.

3. FIXED ASSETS AND DEPRECIATION

(a) Fixed Assets

Fixed Assets (other than certain lands which have been revalued) including Intangible Assets are stated at their original cost (including expenses related to acquisition/installation and borrowing costs on construction/acquisition of Fixed Assets up to the period the assets are ready for use) less depreciation and impairment provision, if any.

(b) Depreciation and Amortisation

Depreciation is calculated on Straight Line Method (SLM) as under:

(i) On Tangible Assets owned by the Company at the rates specified in Schedule XIV to the Companies Act, 1956. On assets added/disposed off during the year, on pro-rata basis with reference to the month of addition/disposal; any addition or extension to existing assets which is of a capital nature and which becomes integral part of the existing asset is depreciated over the remaining useful life of the assets.

(ii) Cost of leasehold land, building and improvements made thereon is amortised over the period of lease.

(iii) Intangible assets, namely Software are amortised over a period of 5 years.

4. IMPAIRMENT OF ASSETS

The carrying amounts of assets are reviewed at each Balance Sheet date for indication of any impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of the assets exceeds its recoverable amount. Any such impairment loss is recognised by charging it to the Statement of Profit and Loss. A previously recognised impairment loss is reversed where it is no longer required and the asset is restated to that effect.

5. BORROWING COSTS

Borrowing costs attributable to acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset, where it is possible that they will result in future economic benefit. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.

6. REVENUE RECOGNITION

Revenue is recognised to the extent that it can be reliably measured and is probable that the economic benefit will accrue to the Company;

(a) In respect of Sterling Holidays Vacation Ownership Plan (SHVOP), 60% of the product value, being admission fee, is recognised as income in the year of sale and the balance 40%, being entitlement fee, is recognised as income over the period of entitlement.

(b) In respect of all other Timeshare products, a portion of the consideration, namely 45% of the sale value is treated as income in the year of sale. Advance subscription towards Customer Facilities (ASCF), being balance 55%, of the sale value is accounted as income over the period of entitlement.

(c) In respect of sales made under EMI scheme, interest wherever applicable is accrued over the contracted period.

(d) Income from resorts comprising of room rent, food and beverages sales, utility charges, other services etc., are recognised when these are sold and services are rendered.

(e) Incomes in respect of Annual Amenity Charges (AAC)/Annual Subscription Fees (ASF) are accounted on cash basis, in view of uncertainty in collection.

SIGNIFICANT ACCOUNTING POLICIES FORMING PART OF FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2013:

NOTE 25

70 71



(f) Securitised Assets are derecognised as the contractual rights therein are transferred to the third party. On derecognition, the difference between book value of the securitised asset and consideration received is recognised as income.

(g) Dividend is accounted for when the right to receive the same is established. Interest is accounted on time proportionate basis.

7. INVESTMENTS

(a) Long-term investments are stated at cost. Provision for diminution in value, considered on individual basis, is recognised, if in the opinion of the Management such a decline is other than temporary.

(b) Current investments are valued at lower of cost and realisable value, determined on individual basis.

8. INVENTORIES

Inventories comprising of provisions, perishables, beverages, consumables and operating supplies are valued at lower of cost and net realisable value. Cost is computed on First In, First Out basis.

9. FOREIGN CURRENCY TRANSACTIONS

Transactions in Foreign Currency are recorded at the exchange rates prevailing on the date of Transactions. Monetary items denominated in foreign currencies (such as cash, receivables, payables, etc.) outstanding at the year end, are translated at exchange rate applicable as of that date. Non-monetary items denominated in foreign currency (such as investments, Fixed Assets, etc.) are valued at the exchange rate prevailing on the date of transaction. Any gain or loss arising due to exchange differences at the time of translation or settlement are accounted in the Statement of Profit and Loss.

10. EMPLOYEE BENEFITS

LONG-TERM EMPLOYEE BENEFIT PLANS DEFINED CONTRIBUTION PLAN:

Contribution to Provident Fund, which is a defined contribution retirement plan, is made monthly at pre-determined rate to the Provident Fund authorities and debited to the Statement of Profit and Loss on accrual basis.

DEFINED BENEFIT PLAN

Company makes annual contribution to Gratuity Fund and Leave Encashment Fund administered by an Insurance Company, which is considered as defined benefit plan. The present value of the defined benefit is measured using ‘Projected Unit Credit’ method with actuarial valuation being carried out at each Balance Sheet date by an independent

valuer. Actuarial gains and losses are immediately recognised in the Statement of Profit and Loss. Amount of contribution, computed by the insurers is paid by the Company and charged to Statement of Profit and Loss.

11. PROVISIONS & CONTINGENCIES

A provision arising out of a present obligation is recognised when it is probable that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated.

Wherever there is a possible obligation which may not require an outflow of resources, the same is disclosed by way of contingent liability.

Show Cause Notices are not considered as Contingent Liabilities unless converted into demand.

12. TAXES ON INCOME

Current Tax is determined in accordance with Income Tax Act 1961 on the amount of Tax Payable in respect of the income for the year. Deferred Tax Assets/ Liabilities are measured by applying Tax rate and Tax laws that have been enacted or substantially enacted by the Balance Sheet date. Deferred Tax Asset arising on account of loss and unabsorbed depreciation under Tax laws is recognised only to the extent there is virtual certainty of its realisation supported by convincing evidence. Deferred Tax Assets on account of other timing differences are recognised only to the extent there is reasonable certainty of its realisation. At each Balance Sheet date, the carrying amount of Deferred Tax Asset is reviewed based on developments to reassess realisation.

13. EMPLOYEE STOCK OPTION SCHEME (ESOS)

The Company measures the compensation cost relating to ESOS using the fair market value of Equity Shares. The compensation cost is amortised on a straight line basis over the total vesting period of the Stock Options.

14. EMPLOYEES STOCK PURCHASE SCHEME (ESPS)

The Company measures the compensation cost relating to ESPS using the fair market value of Equity Shares. The compensation cost is charged to Statement of Profit and Loss immediately on allotment of Shares.

15. LEASE ACCOUNTING

The lease payments made on the assets comprising of land and building taken on operating lease, are amortised as an expense on straight line basis over the lease term.

1. Estimated amount of contracts remaining to be executed on Capital Account and not provided for – INR 2,804 lakhs (Previous year INR 2,273.04 lakhs)

2. Contingent liabilities not provided for:

(a) INR 404.21 lakhs (Previous year INR 360.99 lakhs), comprises of Customer related cases - INR 208.64 lakhs (Previous year INR 204.59 lakhs), Vendor related cases - INR 98.40 lakhs (Previous year INR 65.17 lakhs), Employee related cases-INR 12.64 lakhs (Previous year INR 14.83 lakhs) and Property related INR 84.52 lakhs (Previous year INR 76.40 lakhs).

(b) INR 433.64 lakhs, (Previous year INR 433.64 lakhs), in respect of a suit filed by NOIDA creditors, in which the Company was included as one of the defendants.

(c) Advance Subscription towards Customer Facilities (ASCF) being 55% of sale value is treated as Deferred Income and recognised as income over the period of entitlement. In respect of Assessment Years 1997-98 to 2001-02, the Income Tax Appellate Tribunal, Chennai (ITAT) has passed orders against the said accounting treatment followed by the Company and to treat them as income in the respective year of receipt. There will be no Tax Liability on account of such order in view of carry forward losses and unabsorbed depreciation available under Income Tax Act. The Company has appealed against these Orders before Honb’le High Court of Madras and the case is pending. The ITAT, Chennai has recently decided in favour of Company’s accounting treatment of ASCF for assessment years 2002-03, 2006-07, 2007-08 and 2008-09.

In respect of assessment year 2009-10, against Orders received from Assessing Officer (AO), with reference to treatment of ASCF and other disallowances, the Company has filed appeals before Commissioner of Income Tax – Appeals, Chennai and the same is pending. There is no Tax Demand on account of carry forward losses and unabsorbed depreciation.

In view of the above, Management is of the opinion that no provision is required in respect of disputed Income Tax at this stage.

(d) The Company has filed appeal before Deputy Commissioner (Appeals) and obtained stay against the Order received from the Assessing Officer towards Luxury Tax on utility charges for the financial year 2006-07 and 2007-08 amounting to INR 16.01 lakhs (Previous year INR NIL). The Company has pre-deposited a

sum of INR 2.72 lakhs. The Company is advised by its legal counsel that the stand taken by the Company is valid and hence no provision is considered necessary at this stage.

(e) Service Tax, Interest and Penalty aggregating to INR 557.03 lakhs (Previous year INR 557.03 lakhs) have been demanded by Service Tax Authorities. The Company has appealed against the above said order before CESTAT and pre-deposited a sum of INR 30 lakhs. The Company is advised by its legal counsel that the stand taken by the Company is valid and hence no provision is considered necessary at this stage.

3. During the financial year 2011-12, pursuant to One Time Settlement (OTS) Scheme, the Company has fully settled the dues of the Financial Institution (FI) and also obtained a No Due certificate. However, the FI has not released the title deeds of the properties given as security for the reason that a Third Party has filed a writ petition against the FI challenging the cancellation of sale of the said property to them. The Company is also a party to the said writ petition pending before the Honb’le Madras High Court.

4. The Company had revalued certain lands in the years 1989, 1992 and 1999 by appointing an external valuer based on the then prevailing market value. The surplus on revaluation amounting to INR 1,959.20 lakhs (after making adjustment for sales effected in the interim period), stands credited to Revaluation Reserve.

5. Registration of lease in respect of land and building situated at Peermedu (INR 1,684 lakhs), and Kullu Manali (INR 2,053.68 lakhs) is pending.

6. During the year the Company has carried out detailed physical verification of Fixed Assets and reconciliation with reference to the Fixed Assets register, which has been reconstructed. Based on such exercise, certain categories of Fixed Assets have been regrouped. Consequent to such reconciliation and regrouping, a sum of INR 117.45 lakhs (net) being excess depreciation provided in the earlier years has been written back and credited to Statement of Profit and Loss and grouped under Exceptional Items.

7. Pursuant to the Scheme of Amalgamation of Manchanda Resorts Private Limited (Transferor Company) with Sterling Holiday Resorts (India) Limited (Transferee Company) filed with High Court of Madras, it is proposed to merge Transferor Company with the Transferee Company, the appointed date being April 1, 2012. The scheme shall be given effect to in the books of Company with effect from the appointed date, on receipt of necessary approvals.

NOTE 26

ADDITIONAL NOTES FORMING PART OF FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2013

72 73



8. (a) Leasehold lands include INR 2,053.68 lakhs, being lease rent paid in advance (Previous year INR 2,053.68 lakhs) to Manchanda Resorts Private Ltd (MRPL), a Wholly Owned Subsidiary towards long-term lease of the property at Kullu Manali. The Company has also invested INR 60.09 lakhs (Previous year INR 60.09 lakhs) in the Equity of MRPL. MRPL has accumulated losses of INR 1,371.26 lakhs (Previous year INR 1,409.60 lakhs) as on March 31, 2013. In view of the proposed merger as detailed in Note no. 7 above and considering the present value of the properties (vide Valuation Report dated December 2012) owned by the transferor Company, the Management is of the view that no provision is considered necessary in respect of lease deposits/investments.

(b) The Company holds 98% Shares in Sterling Holidays (Ooty) Limited and Sterling Holiday Resorts (Kodaikanal) Limited and invested INR 9.80 lakhs towards Share Capital (Previous year INR 9.80 lakhs). The sum due from subsidiaries as at March 31, 2013 is INR 1,283.65 lakhs (Previous year INR 1,146.71 lakhs). The accumulated losses as on March 31, 2013 of these subsidiaries are INR 591.49 lakhs and INR 734.38 lakhs (Previous year INR 606.91 lakhs and INR 640.23 lakhs) respectively. In view of the steps taken by the these companies to turn around the operations, the future business plan approved by the respective Companies Board and further funding taking place in the said properties for improving the quality of resorts, the Management is of the view that there is no permanent diminution in the value of investments/advances and these amounts are good and recoverable.

9. Five cottages located at Ooty - Fern Hill and included under ‘Buildings’ are given on lease for a period of 99 years to a customer.

10. The Capital Work in Progress (CWIP) includes value of certain properties under construction for more than 10 years. The Company is in the process of developing such properties, in a phased manner. In the opinion of the Management, no impairment provision is required in respect of such properties as their estimated market value together with the market value of appurtenant land far exceeds the book value of those properties as per valuation report of November 2010.

11. The Company had in the past transferred a property at Goa and part of the sale consideration amounting to INR 527.10 lakhs (Previous year INR 527.10 lakhs) (included under “Other Non-Current Assets”) is retained by the buyer pending compliance of certain conditions. The Company is confident of recovering this amount as it has taken

effective steps for discharge of its obligations. The Company is also legally advised that it has the right of vendor’s lien against the immovable property sold to the extent of amount due and it can seek legal remedy to recover the same. In view of the above, the same is considered good and recoverable.

12. Deferred income grouped under Non-Current and Current Liabilities, aggregating to INR 24,476.19 lakhs (Previous year INR 22,285.88 lakhs), represents “Advance Subscription towards Customer Facilities (ASCF)” and “Entitlement Fee” to be recognised as income, over the remaining holiday entitlement period.

13. SECURITISATION

The Company has securitised a portion of trade receivables including future interest receivable thereon. The excess of consideration received over the principal amounts (net of reversals in respect of cancelled members) is recognised as income.

Particulars


(INR in lakhs)


(INR in lakhs)

Value of Accounts receivable

500.51 -

Less : Future interest receivable

109.66 -

Principal amount of receivables

390.85 -

Consideration received 500.00 -

Profit on Securitisation 109.15 -

Less : Reversals in respect of cancelled members

7.47 -

Income from securitisation 101.68 - 14. The Company has infused additional funds into

operation by way of Equity as well as debt in the last few years. It has a comfortable working capital cycle. Substantial improvements are being made to the quality of resorts by refurbishment/renovation. The marketing team has been strengthened by recruiting qualified and experienced personnel. There has been significant improvement in the overall performance and the Company expects to sustain the growth in the turnover and improve profitability in the ensuing years. Hence in the view of the Management, the “Going Concern Assumption” is not affected.

15. Trade Receivables, Trade Payables and Advances are subject to confirmation. The Company has however circulated confirmation of balances to majority of creditors.


16. The breakup of Deferred Tax Liabilities (DTL) and Deferred Tax Assets (DTA) as on March 31, 2013 is as under:

Particulars2012 – 13(INR in lakhs)

2011 – 12(INR in lakhs)

Deferred Tax Liability (DTL):

Depreciation 3,059.70 2,937.76

Total 3,059.70 2,937.76

Deferred Tax Assets (DTA):

Carried Forward Business Loss and Unabsorbed Depreciation

3,021.39 2,891.78

Disallowances U/s. 43B and 40(A)(7)

38.31 45.98

Total (Restricted to DTL)

3,059.70 2,937.76

Net Deferred Tax Asset/(Liability)

NIL NIL

As a prudent measure, Deferred Tax Asset (DTA) has been recognised only to the extent of Deferred Tax Liability (DTL).

(INR in lakhs)

17. RELATED PARTY INFORMATION

Disclosure of related party transactions in accordance with Accounting Standard (AS-18) “Related Party Disclosure” issued by the Institute of Chartered Accountants of India.

(a) The list of Related Parties as identified by the Management is as under:

Key Management Personnel (KMP)

1. Siddharth Mehta – Chairman

2. Ramesh Ramanathan – Managing Director

Subsidiary Companies

1. Sterling Holidays (Ooty) Limited2. Sterling Holiday Resorts (Kodaikanal) Limited3. Manchanda Resorts Private Limited

Enterprise owned by/over which Key Managerial Personnel is able to exercise significant influence

1. RGR Finance and Investment Ltd.2. Indus Equicap Consultancy Ltd.3. Bay Capital Partners Pte. Ltd.4. Bay Capital Advisors Pvt. Ltd.5. Veda Real Estate Corporation Pvt. Ltd.6. Sterling Dreamworks Partners LLP

(b) The following transactions were carried out with the related parties

Sl No. Details

Subsidiary KMP & Relatives of KMP

31.03.2013 31.03.2012 31.03.2013 31.03.2012

1. Management Fee 3.00 3.00 - -

2. Remuneration & Perquisite - - 74.82 56.43

3. Employee Compensation Cost/ESPS - - 130.24 1,226.61

4. Allotment of ESOS - - - 143.35

5. Advances Given/(Received) (Net) 136.94 129.79 - -

6. Closing balance 1,283.65 1,146.71 - -

18. SEGMENT REPORTING

The Company has “Timeshare” as the only primary reportable segment, for the purpose of Accounting Standard 17.

19. The lists of undertaking covered under the “Micro, Small and Medium Enterprises Development Act (MSMDA), 2006” were determined by the Company on the basis of information available with the Company. As explained by the Company, there were no principal and/or interest due remaining unpaid as at March 31, 2013 in respect of undertakings covered by the MSMDA.


74 75



20. Disclosure pursuant to Accounting Standard – 15 (Revised) “Employee Benefits”

(a) Defined Contribution Plans:

Contribution of INR 164.05 lakhs (Previous year INR 100.79 lakhs) towards Defined Contribution Plan is recognised as expense and included in employee cost (Note No.21) in the Statement of Profit and Loss.

(b) Disclosure for Defined Benefit Plans based on actuarial valuation as on March 31, 2013:

Particulars

(INR in lakhs)

Gratuity (Funded)

Long-term compensated absences (Funded)

31.03.2013 31.03.2012 31.03.2013 31.03.2012

Movements in Accrued Liability

Accrued Liability as at beginning of the period 97.01 100.00 36.52 38.45

Interest Cost 8.52 7.65 3.10 3.01

Current Service Cost 25.02 19.76 58.45 4.50

Past Service Cost 0.00 0.00 0.00 0.00

Benefits Paid (14.70) (14.58) 0.00 (1.68)

Actuarial (Gain)/Loss (1.13) (15.83) (31.77) (7.76)

Accrued Liability as at the end of the period 114.70 97.01 66.29 36.52

Changes in the Plan Assets in the inter-valuation period

Value of Assets at the beginning of the period 49.66 32.33 21.47 0.00

Expected Return on Assets 4.50 3.49 1.82 0.91

Contributions made 21.21 31.91 0.00 23.15

Benefits paid out of the Assets (14.71) (14.58) 0.00 (1.68)

Actuarial Gain/(Loss) on Plan Assets 2.13 (3.48) (1.82) (0.91)

Value of Assets as at the end of the period 62.79 49.66 21.47 21.47

Recognition of Actuarial Gain/Loss as on accounting date

Actuarial Gain/(Loss) in inter-valuation period - Obligation

1.13 15.83 31.77 7.76

Actuarial Gain/(Loss) in inter-valuation period - Plan Assets

2.13 (3.48) (1.82) (0.91)

Actuarial Gain/(Loss) recognised in inter-valuation period

3.27 (12.35) 29.95 (6.85)

Unrecognised Actuarial gain/(Loss) 0.00 0.00 0.00 0.00

Amounts recognised in the Balance Sheet

Present value of obligation as on the accounting date 114.70 97.01 66.29 36.52

Fair Value of the Plan Assets 62.79 49.66 (21.47) 21.47

Liability/Assets to be recognised in the Balance Sheet 51.91 47.35 44.82 15.05


Particulars

(INR in lakhs)

Gratuity(Funded)

Long-term compensated absences (Funded)

31.03.2013 31.03.2012 31.03.2013 31.03.2012

Expenses recognised in Statement of Profit and Loss

Interest Cost 8.52 7.65 3.10 3.01


Expected Return on Plan Assets (4.50) (3.48) (1.82) (0.91)

Net Actuarial (Gain)/Loss (3.26) (12.35) (29.95) 6.85

Net Expenses/(Income) to be recognised in Statement of Profit and Loss

25.78 11.58 29.78 (0.25)

Reconciliation

Net Liability as at the beginning of the period 47.35 54.48 15.05 38.34

Net Expenses in Statement of Profit and Loss 25.78 11.58 29.78 (0.25)

Contribution paid (21.21) (18.72) 0.00 (23.04)

Net Liability as at the end of the period 51.91 47.35 44.82 15.05

Actual Return on Plan Assets

Expected Return on Plan Assets 4.49 3.48 1.82 0.91

Actual Gain/(Loss) on Plan Assets 2.13 (3.48) (1.82) (0.91)

Actual return on Plan Assets 6.63 0.00 0.00 0.00

Principal Actuarial Assumptions

(INR in lakhs)

Gratuity Long-term compensated absences

31.03.2013 31.03.2012 31.03.2013 31.03.2012

Interest Rate (Liabilities) 8.50% 8.60% 8.50% 8.60%

Return on Assets 8.50% 0.00% 0.00% 8.50%

Morality Table LIC(94-96) LIC (96-98) LIC(94-96) LIC (96-98)

Resignation Rate per annum 2% 2% 2% 2%

Salary Escalation Rate 5% 5% 5% 5%

The Company is expected to contribute INR 52.00 lakhs for Gratuity and INR 45.00 lakhs for long-term compensated absence, in 2013 - 2014.

The estimate of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.


76 77



Amounts for the current and previous four years are as follows:

ParticularsGratuity (INR in lakhs) Leave Encashment (INR in lakhs)

31.03.13 31.03.12 31.03.11 31.03.10 31.03.09 31.03.13 31.03.12 31.03.11 31.03.10 31.03.09

Defined Benefit Obligation

(114.70) (97.01) (86.81) (69.18) (57.79) (66.29) (36.52) (35.21) (25.24) (27.89)

Plan Assets 62.80 49.66 32.33 20.03 13.16 21.47 21.47 0.00 0.00 0.00

Surplus/(Deficit) (51.90) (47.35) (54.48) (49.15) (44.63) (44.82) (15.05) (35.21) (25.24) (27.89)

Experience adjustments on Plan Liabilities

(1.13) 15.83 7.65 1.42 0.00 31.77 7.76 8.51 0.00 0.00

Experience adjustments on Plan Assets

2.13 (3.48) 1.85 0.83 0.00 (1.82) (0.91) 0.00 0.00 0.00

21. Earnings per Share (EPS) as per Accounting Standard – 20

2012-13 2011-12

Profit/(Loss) available to Members

- Before Exceptional Items (INR in lakhs) (2,243.08) (3,456.87)

- After Exceptional Items (INR in lakhs) (2,088.70) (4,044.08)

Weighted Average number of Equity Shares of INR 10 each as the year end 65,541,432 54,318,708

EPS – Basic and Diluted – Before Exceptional Items (in INR) (3.42) (6.36)

EPS – Basic and Diluted – After Exceptional Items (in INR) (3.19) (7.45)

Since potential Equity Shares are antidilutive in nature, Basic and Diluted EPS are the same.

22. Employee Stock Option

(a) Employee Stock Purchase Scheme [ESPS] - 2010

Number of Shares Granted Exercised and Forfeited Year ended31.03.2013

Year ended31.03.2012

Shares Outstanding at the beginning of the year 14,42,981 21,00,000

Shares approved NIL NIL

Shares allotted NIL 6,57,019

Date of allotment NIL 14.07.11 & 28.03.12

Shares Outstanding at the end of the year 14,42,981 14,42,981

(b) Employee Stock Purchase Scheme [ESPS] – 2011

Number of Options Granted Exercised and Forfeited Year ended31.03.2013


Shares Outstanding at the beginning of the year 25,51,486 NIL

Shares approved NIL 35,00,000

Shares allotted 4,75,233 9,48,514

Date of allotment 14.06.12, 20.09.12 & 17.10.12

07.11.11



The Company has instituted Employee Stock Purchase Scheme, 2011 (ESPS 2011) vide resolution passed at the Extraordinary General Meeting held on August 13, 2011 in terms of which the Company can issue Shares up to 35 lakhs Equity Shares to eligible employees. During the year 4,75,233 Equity Shares were allotted under the above scheme.

(c) Employee Stock Option Scheme [ESOS] – 2012

The Company has instituted Employee Stock Option Scheme, 2012 (ESOS 2012) vide resolution passed at the Annual General Meeting held on July 23, 2012, in terms of which the Company can issue Equity Shares up to 10,00,000 out of which during the year 7,50,000 Options have been granted to eligible employees.

Particulars Year ended31.03.2013


Options outstanding at the beginning of the year NIL NIL

No. of Stock Options approved by Shareholders 10,00,000 NIL

Options Granted during the year 7,50,000 NIL

Options vested NIL NIL

Options exercised NIL NIL

Options forfeited NIL NIL

Options outstanding at the end of the year 2,50,000 NIL

23. Particulars of Share Warrants (preferential basis) issued, converted and outstanding at the year end is detailed below:

Number of Warrants Issued, Converted and Outstanding Year ended31.03.2013


Warrants outstanding at the beginning of the year 75,33,333 NIL

Warrants issued during the year NIL 82,00,000

Warrants converted during the year 75,33,333 6,66,667

Price per Share (in INR) 75.00 75.00

Amount received on conversion (in INR) 56,49,99,975 5,00,00,025

Warrants outstanding at the end of the year NIL 75,33,333

24. Expenditure in Foreign Currency

ParticularsYear ended31.03.2013

(INR in lakhs)


(INR in lakhs)

(a) CIF Value of Imports

Capital Goods 25.09 81.12

(b) Expenditure in Foreign Currency

Travel and Conveyance 3.10 29.27

Others 41.91 4.76


78 79



INDEPENDENT AUDITORS' REPORT FOR THE YEAR ENDED MARCH 31, 2013To the Board of Directors of Sterling Holiday Resorts (India) Limited

We have audited the accompanying consolidated financial statements of Sterling Holiday Resorts (India) Limited (“the Company”) and its subsidiaries, which comprise the consolidated Balance Sheet as at March 31, 2013, and the consolidated Statement of Profit and Loss and the consolidated Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation of these consolidated financial statements that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Company in accordance with accounting principles generally accepted in India. This includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and presentation of the

consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the reports of the other auditor on the financial statements of the subsidiary as noted below, the consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India: (a) in the case of the consolidated Balance Sheet, of

the state of affairs of the Company as at March 31, 2013;

(b) in the case of the Consolidated Profit and Loss Account, of the loss for the year ended on that date; and

(c) in the case of the Consolidated Cash Flow Statement, of the cash flows for the year ended on that date.

Other Matter

(a) The financial statements of the subsidiaries namely, Sterling Holiday Resorts (Kodaikanal) Limited and Sterling Holidays (Ooty) Limited are audited by one of the joint auditors namely, R. Subramanian and Company.

(b) We did not audit the financial statements of a subsidiary, Manchanda Resorts Private limited, whose financial statements for the year ended March 31, 2013, reflect total assets (net) of INR -1,181.25 lakhs (Previous year INR -1,219.60 lakhs), total revenues of INR 21.01 lakhs (Previous year INR 21.01 lakhs). These financial statements have been audited by an independent auditor whose report has been furnished to us by the Management, and our opinion is based solely on the reports of the other auditors. Our opinion is not qualified in respect of this matter.

For V. Sankar Aiyar & Co. For R. Subramanian and Company,Chartered Accountants Chartered Accountants ICAI Regn.No. 109208W ICAI Regn.No. 004137S



25. The Company has entered into commercial leases for certain resorts. Future minimum rentals payable under non-cancellable lease are as follows:

Future minimum lease paymentsYear ended31.03.2013

(INR in lakhs)


(INR in lakhs)

Within one year 768.56 475.47

More than one year but less than five years 2,757.51 871.55

More than five years 2,286.33 -

26. In the opinion of the Management and to the best of their knowledge and belief the value on realisation of Current Assets and Loans and Advances would not be less than the amount at which they are stated in the Balance Sheet.









80 81



STERLING HOLIDAY RESORTS (INDIA) LIMITED CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2013


PARTICULARS Note No. As at 31.03.2013 As at 31.03.2012

EQUITY AND LIABILITIES

SHAREHOLDERS' FUNDS

(a) Share Capital 1 6,770.94 5,970.09

(b) Reserves and Surplus 2 (400.68) (3,449.79)

(c) Money received against Share Warrants - 1,812.50

(d) Minority Interest 0.21 0.21

NON-CURRENT LIABILITIES

(a) Long-term Borrowings 3 2,110.01 61.02

(b) Deferred Income [vide Note No.27(11)] 23,854.82 21,598.41

(c) Other Long-term Liabilities 4 150.81 32.54

(d) Long-term Provisions 5 14.66 36.64

CURRENT LIABILITIES

(a) Short-term Borrowings 6 887.74 -

(b) Trade Payables (vide Note No.27(14) and 27(18)) 1,975.84 1,248.95

(c) Deferred Income (vide Note No.27(11)) 621.37 687.47

(d) Other Current Liabilities 7 1,997.49 1,075.60

(e) Short-term Provisions 8 322.78 248.84

Total 38,305.99 29,322.48

ASSETS

NON-CURRENT ASSETS

(a) Fixed Assets 9

(i) Tangible Assets 21,689.86 16,962.03

(ii) Intangible Assets 174.95 126.97

(iii) Capital Work in Progress [vide Note no. 27(9)] 5,416.58 5,233.22

(b) Deferred Tax Asset (Net) - -

(c) Non-Current Investments 10 0.33 0.33

(d) Long-term Loans and Advances 11 1,929.76 2,180.76

(e) Other Non-Current Assets 12 4,515.04 2,100.55

PARTICULARS Note No. As at 31.03.2013 As at 31.03.2012

CURRENT ASSETS

(a) Current Investments 13 - 96.56

(b) Inventories 14 235.24 124.34

(c) Trade Receivables 15 3,505.07 1,602.14

(d) Cash and Bank Balances 16 161.79 302.60

(e) Short-term Loans and Advances 17 467.33 522.26

(f) Other Current Assets 18 210.04 70.72

Total 38,305.99 29,322.48

Significant Accounting Policies 26

Additional Notes forming part of Financial Statements 27

Contingent Liabilities and Commitments 27









82 83



STERLING HOLIDAY RESORTS (INDIA) LIMITED CONSOLIDATED STATEMENT OF PROFIT AND LOSS

FOR THE YEAR ENDED MARCH 31, 2013

Particulars Note No.

For the Year ended 31.03.2013


Revenue from Operations 19 10,874.70 7,375.71

Other Income 20 793.23 283.93

Total Revenue 11,667.93 7,659.64

Expenses:Cost of materials consumed 21 717.32 737.14

Employee benefit expense 22 5,709.98 4,752.66

Administrative and Other Expenses 23 6,799.39 4,894.04Finance cost 24 122.29 335.71Depreciation and amortisation expense 8 631.81 484.59

Total Expenses 13,980.79 11,204.14

Profit/(Loss) before exceptional items and Tax (2,312.86) (3,544.50)Exceptional Items (net) 25 183.78 (587.21)


Tax expense:

Current Tax - - Deferred Tax - - Fringe Benefit Tax - Interest for Delayed Remittances - -

Profit/(Loss) after Tax (2,129.08) (4,131.71)

"Earning per Equity Share: (Basic and Diluted) [Refer Note No.27(20)]" (a) Before Exceptional Items (3.53) (6.54) (b) After Exceptional Items (3.25) (7.61)

Significant Accounting Policies 26Additional Notes forming part of Financial Statements 27Contingent Liabilities and Commitments 27



R. MOHAN M. BALASUBRAMANIYANSenior Vice President - Finance Company Secretary As per our report of even dateFor V.Sankar Aiyar & Co. For R. Subramanian and CompanyChartered Accountants Chartered AccountantsICAI Regn.No. 109208W ICAI Regn.No. 004137S

S.Venkataraman A. S. RamanathanPartner PartnerMembership No.: 023116 Membership No.: 011072



CONSOLIDATED CASH FLOW STATEMENT - FINANCIAL YEAR ENDED MARCH 31, 2013(INR in lakhs except share data, per share data and if otherwise stated)

Particulars



A. Cash flow from operating activities

Net Profit/(Loss) before extraordinary items and Tax (2,129.08) (4,131.71)

Adjustments for:

Depreciation and amortisation 631.81 484.59

Amortisation of Employee Stock Option Cost/ Employee Stock Purchase expense

130.24 1,250.01

Profit on Sale of Assets (4.85) (6.79)

Finance costs 122.29 967.42

Interest income 566.24 (139.48)

Dividend income from Mutual Funds (6.39) (54.11)

Net (Gain)/Loss on sale of Investments (7.83) (48.92)

Unclaimed balances written back (274.03) (44.50)

Provision no longer required written back (93.31) -

Depreciation written back (117.45) -

Provision for doubtful trade and Other Receivables, Loans and Advances

192.27 -

Advances written off 15.43 -

Exchange Gain (0.89) -

1,153.53 2,408.22

(975.55) (1,723.49)

Operating Profit/(Loss) before working capital changes

Adjustments for (increase)/decrease:

Inventories (110.91) (56.69)

Trade Receivables (1,809.61) (1,310.20)

Loans and Advances (2,574.53) (1,595.87)

Deferred Income 2,190.31 1,313.88

Trade Payables & Other Liabilities 1,353.25 512.24

Provisions 51.95 (3.33)

Cash generated from operating activities (899.54) (1,139.97)

Net cash flow from/(used in) operating activities (A) (1,875.09) (2,863.46)

84 85



Particulars



B. Cash flow from investing activities

Purchase of Fixed Assets (5,532.06) (1,347.35)

Increase in Capital Work in Progress 269.58 (2,173.78)

Proceeds from sale of Fixed Assets 11.85 650.06

Sale/(Purchase) of Investment (Net) 104.39 216.30

Increase/decrease in deposit account (maturing beyond three months)

29.67 501.36

Interest received (566.24) 139.48

Dividend received 6.39 54.11

Net cash flow from/(used in) investing activities (B)

(5,676.42) (1,959.82)

C. Cash flow from financing activities

Proceeds from issue of Equity Shares/Share Warrants

4,079.30 8,548.96

Proceeds from long-term borrowings 2,747.62 43.17

Repayment of long-term borrowings (10.26) (2,784.39)

Increase in short-term borrowings (net) 887.74 -

Finance cost (264.03) (967.41)

Net cash flow from/(used in) financing activities (C)

7,440.37 4,840.33

Net increase/(decrease) in Cash and Cash equivalents (A+B+C)

(111.14) 17.05

Cash and Cash equivalents at the beginning of the year

258.53 241.48

Cash and Cash equivalents at the end of the year 147.39 258.53

Reconciliation of Cash and Cash equivalents with the Balance Sheet:

Cash and Cash equivalents as per Balance Sheet (Refer Note No.16)

Cash and Cash equivalents at the end of the year comprises:

(a) Cash on hand 8.92 6.80

(b) Balances with banks

(i) In Current Accounts 138.47 251.73

147.39 258.53

(INR in lakhs except share data, per share data and if otherwise stated) Notes :

Previous year figures have been regrouped wherever necessary to confirm with current year grouping. Refer significant accounting policies and additional notes forming part of financial statements (Note No. 26 and 27)








86 87



As at 31.03.2013

As at 31.03.2012

NOTE 1

SHARE CAPITAL

(a) Authorised Share Capital:

7,50,00,000 (6,50,00,000) of Equity Shares of INR 10 each 7,500.00 7,500.00

(b) Issued, Subscribed and Fully Paid up Share Capital: 6,77,09,351 (5,97,00,785) of Equity Shares of INR 10 each Add : Share capital pending allotment

6,770.93

0.01 5,970.08

0.01

6,770.94 5,970.09

(c) Par Value per Share (INR) 10 10

(d) Reconciliation of number of Shares

No. of Shares

Equity Shares at the beginning of the year 5,97,00,785 4,89,28,585

Preferential issue - 8,000,000

Warrants conversion [vide Note No.27(22)] 75,33,333 6,66,667

Options under ESOS and ESPS exercised [vide Note No.27(21)]

4,75,233 21,05,533

Equity Shares at the end of the year 6,77,09,351 5,97,00,785

(e) Details of Shareholders holding more than 5% of Equity Shares of the Company

India Discovery Fund Limited 54,59,542 8.06 53,34,542 8.94 India Horizon Fund Limited 40,86,092 6.03 40,86,092 6.84 Bay Capital Investment Limited 78,88,718 11.65 78,88,718 13.21 Sidharth Shankar 37,80,500 5.58 37,80,500 6.33 S. Dhanalakshmi 41,13,334 6.07 41,13,334 6.89

(f) Terms/Rights attached to Equity Shares The Company has only one class of Equity Shares having a par value of INR 10 per share. Each shareholder has a

right to participate in General Meeting and is eligible for one vote per Share held.(g) Terms of Share Warrants convertible into Equity Shares During the previous year 82,00,000 Share Warrants at an issue price of INR 75 per Warrant on preferential basis

were issued to certain promoters/others. These Warrants were to be converted into one Equity share of INR 10 each at a premium of INR 65 per share on or before 18 months from the date of issue. As on March 31, 2012, 75,33,333 Warrants were pending for conversion. These Warrants were converted into Equity Shares during the year 2012-13 on receipt of full consideration.

(h) Employee Stock Purchase Scheme 2011 During the year, the Company has allotted 4,75,233 fully paid Equity Shares of INR 10 each under Employee Stock

Purchase Scheme 2011 (ESPS 2011).

(i) Increase in Paid up Share Capital

Consequent to the allotment of Shares on Conversion of Share Warrants [vide (g)] and allotment of Shares under ESPS 2011 [vide (h)] above, the paid up Share Capital of the Company stands increased to INR 6,770.94 lakhs as on March 31, 2013.


As at As at 31.03.2013 31.03.2012

NOTE 2

RESERVES & SURPLUS

(a) CAPITAL RESERVE As per last Balance Sheet 93.10 93.10

(b) CAPITAL RESERVE ON CONSOLIDATION 129.92 129.92

(c) SECURITY PREMIUM RESERVE As per last Balance Sheet 21,380.60 14,254.86 Add : On issue of Shares/conversion of Warrants 5,221.18 7,210.19 Less : Share issue expenses written off 42.99 84.45

Closing balance 26,558.79 21,380.60

(d) REVALUATION RESERVE [vide Note No.27(4)] As per last Balance Sheet 1,959.20 2,020.58 Less : Withdrawn during the year - 61.38

Closing balance 1,959.20 1,959.20 (e) GENERAL RESERVE As per last Balance Sheet 3,945.40 3,945.40

Closing balance 3,945.40 3,945.40

(f) (DEFICIT)/SURPLUS (BALANCE IN STATEMENT OF PROFIT AND LOSS) As per last Balance Sheet (Deficit) (30,958.01) (26,826.29) Add: (Deficit) for the year (2,129.08) (4,131.71)

Closing balance (Deficit) (33,087.09) (30,958.01)

Total of Reserves and Surplus (Deficit) (400.68) (3,449.79)

NOTE 3

LONG TERM BORROWINGS TERM LOANS - SECURED

(i) From Banks* 32.91 43.17 (ii) From others** 2,077.10 17.85

2,110.01 61.02

*Term loans from banks including current maturities of such loans aggregating to INR 47.49 lakhs (Previous year INR 69.34 lakhs) are secured by way of Hire purchase agreements with the lenders. Out of these, loans aggregating to INR 11.02 lakhs (Previous year INR 18.20 lakhs) are repayable in 40 months commencing from April 2012 and loans aggregating to INR 36.48 lakhs (Previous year INR 51.14 lakhs) are repayable in 35 months commencing from April 2012 in varying instalment amounts.

**Term loan aggregating to INR 2,750 lakhs (including current maturities) from IL & FS Financial Services Limited is secured by equitable mortgage of the immovable property situated at Munnar. The loan is repayable in eight equal quarterly instalments of INR 343.75 lakhs each commencing from October 2013. Term loans from other lenders (including current maturities) aggregating to INR 35.90 lakhs (Previous year INR 41.70 lakhs) are secured by Hire purchase agreements. These loans are repayable on a tenor ranging from 12 to 28 months commencing from January 2011 in varying instalments.


No. of Shares No. of Shares

As at March 31, 2013 As at March 31, 2012

% %

88 89



As at As at 31.03.2013 31.03.2012

NOTE 4

OTHER LONG-TERM LIABILITIES

OthersRetention from contractors 150.81 32.54

150.81 32.54

NOTE 5

LONG-TERM PROVISIONS

Provision for Gratuity 11.62 28.50Provision for Leave Encashment 3.04 8.14 14.66 36.64

NOTE 6

SHORT-TERM BORROWINGS

Secured Borrowings - Repayable on demand From Bank* 887.74 -

887.74 -

* Overdraft facility is secured by first and exclusive charge on immovable property being land situated at Kodaikanal and further secured by first and exclusive hypothecation charge on all existing and future inventory and receivables relating to resorts.

NOTE 7

OTHER CURRENT LIABILITIES

(a) Current Maturities of Long-term Debt 835.80 347.43(b) Interest accrued but not due 8.31 -(c) Others (i) Customer refund due 14.90 7.51 (ii) Security deposit received 46.58 6.80 (iii) Due to employees 221.27 107.88 (iv) Capital creditors 400.43 104.68 (v) Advance received from customers 324.50 360.71 (vi) Statutory Dues 145.44 140.33 (vii) Share application money received for allotment 0.26 0.26 1,997.49 1,075.60NOTE 8

SHORT-TERM PROVISIONS

(a) Provisions for employee benefits 151.30 93.49(b) Others (i) Provision for Fringe Benefit Tax 137.72 137.72 (ii) Coupons Redeemable 33.76 17.63 322.78 248.84


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90 91



As at As at 31.03.2013 31.03.2012 NOTE 10

NON-CURRENT INVESTMENTS

LONG-TERM INVESTMENTS (AT COST) INVESTMENT IN EQUITY INSTRUMENTS (i) Other Investments - Unquoted

(a) 1,00,000 (1,00,000) Equity Shares of INR 10 each fully paid up in Sterling Holiday Finvest Ltd. 10.00 10.00 Less : Provision for Diminution in Value (10.00) (10.00) - - (b) 1,00,000 (1,00,000) Equity Shares of INR 10 each fully paid up in Sterling Securites and Futures Ltd. 10.00 10.00 Less : Provision for Diminution in Value (10.00) (10.00) - - (c) 5,20,000 (5,20,000) Equity Shares of INR 10 each fully paid up in Sterling Resorts Home Finance Ltd. 52.00 52.00 Less : Provision for Diminution in Value (52.00) (52.00) - - (d) 7,00,000 (7,00,000) Equity Shares of INR 10 each fully paid up in Sterling Holidays Financial Services Ltd. 95.00 95.00 Less : Provision for Diminution in Value (95.00) (95.00) - - (ii) Non-trade Investments - Quoted 1,100 (1,100) Equity Shares of INR 10 each fully paid up in Tourism Finance Corporation of India Ltd. 0.33 0.33 (iii) Other Non-Current Investments - Unquoted: 28,765 (28,765) no. of Teak Units of Sterling Tree Magnum (India) Ltd. 978.00 978.00 Less : Provision for Diminution in Value (978.00) (978.00)

0.33 0.33

Note: INR INR

1. Aggregate cost of quoted investments 0.33 0.332. Market value of quoted investments 0.24 0.273. Aggregate cost of unquoted investments 1,145.00 1,145.004. Aggregate provision for dimunition in value of investments (1,145.00) (1,145.00)

NOTE 11

LONG-TERM LOANS AND ADVANCES (UNSECURED, CONSIDERED GOOD) [vide Note No.27(14)]

(a) Capital Advance 1,182.12 1,493.34(b) Security and Other Deposits 747.64 687.42

1,929.76 2,180.76


As at As at 31.03.2013 31.03.2012

NOTE 12

OTHER NON-CURRENT ASSETS [vide Note No.27(14)]

(a) Long-term Trade Receivable Unsecured, considered good 3,974.97 1,560.48(b) Others Receivable on sale of Fixed Assets (vide Note No.27(10)) 527.10 527.10 Interest receivable on Income Tax Refunds 12.97 12.97

4,515.04 2,100.55

NOTE 13

CURRENT INVESTMENTS (NON TRADE, VALUED AT LOWER OF COST AND NET REALISABLE VALUE)

Investment in Mutual Funds (unquoted) - 96.56 - 96.56 NOTE 14 INVENTORIES (AT LOWER OF COST AND NET REALISABLE VALUE)(a) Stores and operating supplies 202.34 99.21 (b) Food and Beverages 32.90 25.13

235.24 124.34NOTE 15

TRADE RECEIVABLES (UNSECURED) [vide Note No.27(14)]

(a) Trade Receivables Outstanding for a period exceeding 6 months from the date it became Payable Considered Good 1,912.26 306.88 Considered Doubtful 1,776.16 1,870.23 Less : Provision for doubtful Receivables (1,776.16) (1,870.23)

1,912.26 306.88

(b) Others Considered good 1,592.81 1,295.26

3,505.07 1,602.14NOTE 16 CASH AND BANK BALANCES

(a) Cash and cash equivalents

(i) Balance with banks In Current Account 138.47 251.73

(ii) Cash in hand 8.92 6.80

(b) Other Bank Balances:

Fixed Deposit for a period exceeding 3 Months* 14.40 44.07

161.79 302.60

* Includes deposits with banks towards Margin for Guarantees 14.40 22.48


92 93



As at As at 31.03.2013 31.03.2012

NOTE 17

SHORT-TERM LOANS AND ADVANCES (UNSECURED CONSIDERED GOOD) [vide Note No.27(14)]

Others

(a) Tax Deducted at Source 145.27 137.86(b) Pre-deposit against litigation (vide Note No. 27(2)(d) and 27(2)(e) 32.72 30.00(c) Advances recoverable in cash or in kind 223.79 193.01(d) Inter Corporate Deposit - 56.59(e) Loans and Advances to employees 65.55 104.80 467.33 522.26NOTE 18 OTHER CURRENT ASSETS

Prepaid expenses 146.47 43.88 Unbilled Revenue 25.27 26.84 Service Tax input credit 33.92 - Other receivable 4.38 -

210.04 70.72NOTE 19 REVENUE FROM OPERATIONS

(a) Sale of products (Timeshare / Resorts Operations) Timeshare Sales 4,662.98 2,601.11 Annual Amenity Charges and Utility charges 1,798.87 1,195.07 Room Income 1,759.26 1,375.10 Holiday & Health Club 429.91 366.92 Sale of Food & Beverages 1,975.30 1,632.93 Others 41.17 50.11

(b) Other Operating Income 207.21 154.47

10,874.70 7,375.71NOTE 20 OTHER INCOME

(a) Interest Income 566.24 139.48(b) Dividend Income - Current Investments 6.39 54.11(c) Net Gain/(Loss) on sale of Current Investment 7.83 48.92(d) Profit on Sale of Asset (Net) 4.85 6.79 (e) Other Non-Operating Income Scrap Sales 12.04 10.40 Income on securitisation [vide Note 27(12)] 101.68 - Excess provision written back 93.31 24.23 Exchange Gain (Net) 0.89 -

793.23 283.93


As at As at 31.03.2013 31.03.2012 NOTE 21

COST OF MATERIALS CONSUMED

Opening Stock of Food and Beverages, Stores and Operating Supplies 124.34 67.65 Purchases 795.96 793.83 920.30 861.48Less : Closing stock of Food and Beverages, Stores and Operating Supplies 202.98 124.34

717.32 737.14NOTE 22

EMPLOYEE BENEFIT EXPENSES

Salaries & Wages 4,861.63 3,000.07 Expense on Employee Stock option/Employee Stock Purchase 130.24 1,250.01 Contribution to Providend Fund & Other Funds 218.42 154.14 Welfare Expenses 481.90 326.93 Provision for Gratuity and Leave Encashment 17.79 21.51 5,709.98 4,752.66NOTE 23

OTHER OPERATING & GENERAL EXPENSES A Resort Operating Expenses Consumption of Stores and Spares 157.35 116.35 Power & Fuel 840.00 629.92 Guest supplies 87.38 47.49 Holiday Activities Expenses 157.71 95.83 Laundry Expenses 98.31 71.78 Repairs & Maintenance - Building 77.76 50.76 - Plant & Machinery 112.56 164.68 - Others 13.26 8.59 Security charges 116.57 72.16 Traveling & Conveyance 193.43 202.03 Water charges 78.17 57.64 Rates & Taxes 99.85 72.86 Other Operating Expenses 220.81 139.07

B General Expenses Power & Fuel 51.03 32.55 Rent 1,173.49 609.64 Repairs & Maintenance - Building 2.42 5.29 - Plant & Machinery 0.76 4.33 - Others 44.05 48.77 Insurance 5.55 4.50 Rates & Taxes 19.69 38.53 Telephone & Fax 98.63 62.73 Recruitment & Training 115.62 71.60 Legal & Professional 177.67 414.80


94 95



As at As at 31.03.2013 31.03.2012 Director's Sitting Fees 3.75 3.54 Payment to Auditors (a) Statutory Audit 17.02 17.24 (b) Tax Audit & Taxation matters 1.68 4.27 (c) Reimbursement of Expenses 0.69 0.55 (d) Certification Matters 3.60 2.48 Travelling & Conveyance 496.96 325.18 Advertisement 162.39 133.73 Sales commission and Brokerage 104.73 85.95 Sales Promotion 1,648.20 862.39 Miscellaneous Expenses 418.30 436.81

6,799.39 4,894.04NOTE 24

FINANCE COST

(a) Interest 85.68 335.71 (b) Interest on Statutory dues 3.45 - (c) Other borrowing costs 33.16 -

122.29 335.71NOTE 25

EXCEPTIONAL ITEMS

Unclaimed credit balances written back 274.03 44.50 Provision for Doubtful Advances (192.27) - Depreciation written back (vide Note No. 27(6)) 117.45 - Advances written off (15.43) - One time settlement of dues to Financial Institution - - Interest & Charges - (631.71)

183.78 (587.21)


1. COMPANY BACKGROUND

Sterling Holiday Resorts (India) Limited known as SHRIL, (“the Parent Company”) was incorporated in the year 1986 as Private Limited Company and converted into Public Limited in the year 1989 under the provisions of the Companies Act 1956. The Parent Company is engaged in the business of Timeshare and related hospitality services.

Significant Accounting Policies

2. PRINCIPLES OF CONSOLIDATION

The consolidated financial statement relate to Sterling Holiday Resorts (India) Limited and, its subsidiaries (collectively “the Company”). The consolidated financial statements have been prepared on the following basis.

(a) The financial statements of the Company and its subsidiary companies are combined on line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions in accordance with Accounting Standard (AS) 21 – “Consolidated Financial Statements”.

(b) Subsidiary companies are those in which Sterling Holiday Resorts (India) Limited directly or indirectly has an interest of more than one half of the voting power or otherwise has power to exercise significant control over the operations. Subsidiaries are consolidated from the date on which effective control is transferred to the Company until the date of cessation of parent subsidiary relationship.

(c) The difference between the costs of investments in the subsidiaries over the net assets at the time of acquisition of Shares in the subsidiaries is recognised in the financial statements as Goodwill/Capital Reserve as the case may be.

(d) The difference between the proceeds from disposal of investments in subsidiaries and carrying amount of investments as of the date of disposal is recognised in the Consolidated Statement of Profit and Loss being the profit or loss on disposal of investment in subsidiary.

(e) Minority interest’s share of net profit of consolidated subsidiaries for the year is identified and adjusted against the income of the group in order to arrive at the net income attributable to shareholders of the Company.

(f) Minority interest’s share of net assets of consolidated subsidiaries is identified and presented in the consolidated Balance Sheet separate from liabilities and the Equity of the Company’s shareholders.

(g) As far as possible, the consolidated financial statements are prepared using uniform accounting policies except to the extent disclosed herein below, for like transactions and other events in similar circumstances and are presented in the same manner as the Company’s separate financial statements. The effects arising out of variant accounting policies among the Group companies are neither dealt nor disclosed in the Consolidated Financial Statements since it is impracticable to do so.

(h) The subsidiary companies considered in the consolidated financial statements are:

Name of the Subsidiaries

Country of Incorporation

Proportion of

Ownership Interest

Sterling Holidays (Ooty) Ltd.

India 98.00 %

Sterling Holiday Resorts (Kodaikanal) Ltd.

India 98.00 %

Manchanda Resorts Private Ltd.

India 100.00%

3. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The consolidated financial statements are prepared and presented in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises accounting standards notified by the Central Government of India under Section 211 (3C) of the Companies Act, 1956, other pronouncements of the Institute of Chartered Accountants of India (ICAI) and provisions of the Companies Act, 1956.

4. USE OF ESTIMATES

The preparation of financial statements requires Management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. The Management believes that these estimates and assumptions are reasonable and prudent.

SIGNIFICANT ACCOUNTING POLICIES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2013.

NOTE 26

96 97



However actual results could differ from these estimates. Differences between actual results and estimates are recognised in the period in which they materialize.

5. FIXED ASSETS AND DEPRECIATION:

PARENT COMPANY

(A) Fixed Assets

Fixed Assets (other than certain lands which have been revalued) including Intangible Assets are stated at their original cost (including expenses related to acquisition/installation and borrowing costs on construction/acquisition of Fixed Assets up to the period the assets are ready for use) less depreciation and impairment provision, if any.

(B) Depreciation and Amortisation

Parent Company

Depreciation is calculated on Straight Line Method (SLM) as under:

(a) On Tangible assets owned by the Company at the rates specified in Schedule XIV to the Companies Act, 1956. On assets added/disposed off during the year, on pro- rata basis with reference to the month of addition/disposal; any addition or extension to existing assets which is of a capital nature and which becomes integral part of the existing asset is depreciated over the remaining useful life of the assets.

(b) Cost of leasehold land, building and improvements made thereon is amortised over the period of lease.

(c) Intangible assets, namely Software are amortised over a period of 5 years.


In case of Sterling Holiday Resorts (Kodaikanal) Limited and Sterling Holidays (Ooty) Limited, depreciation is charged on Written Down Value (WDV) method at the rates provided in Schedule XIV of the Companies Act, 1956.

In case of Manchanda Resorts Private Limited, depreciation is charged on Straight Line Method at the rates provided in Schedule XIV of the Companies Act, 1956.

6. IMPAIRMENT OF ASSETS

The carrying amounts of assets are reviewed at each Balance Sheet date for indication of any impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of the assets exceeds its recoverable amount. Any such impairment loss is recognised by charging it

to the Statement of Profit and Loss. A previously recognised impairment loss is reversed where it is no longer required and the asset is restated to that effect.

7. BORROWING COSTS

Borrowing costs attributable to acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset, where it is possible that they will result in future economic benefit. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.

8. REVENUE RECOGNITION

Revenue is recognised to the extent that it can be reliably measured and is probable that the economic benefit will accrue to the Company;

(a) In respect of Sterling Holiday Vacation Ownership Plan (SHVOP), 60% of the product value, being admission fee, is recognised as income in the year of sale and the balance 40%, being entitlement fee, is recognised as income over the period of entitlement.

(b) In respect of all other timeshare products, a portion of the consideration, namely 45% of the sale value is treated as income in the year of sale. Advance subscription towards Customer Facilities (ASCF), being balance 55%, of the sale value is accounted as income over the period of entitlement.

(c) In respect of sales made under EMI scheme, interest wherever applicable is accrued over the contracted period.

(d) Income from resorts comprising of room rent, food and beverages sales, utility charges, other services etc., are recognised when these are sold and services are rendered.

(e) Incomes in respect of Annual Amenity Charges (AAC)/Annual Subscription Fees (ASF) are accounted on cash basis, in view of uncertainty in collection.

(f) Securitized assets are derecognised as the contractual rights therein are transferred to the third party. On derecognition, the difference between book value of the securitized asset and consideration received is recognised as income.

(g) Dividend is accounted for when the right to receive the same is established. Interest is accounted on time proportionate basis.

9. INVESTMENTS

(a) Long-term investments are stated at cost. Provision for diminution in value, considered on individual basis, is recognised, if in the opinion of the Management such a decline is other than temporary.

(b) Current Investments are valued at lower cost and realizable value, determined on individual basis.

10. INVENTORIES

Inventories comprising of provisions, perishables, beverages, consumables and operating supplies are valued at lower cost and net realizable value. Cost is computed on First In, First Out basis.

11. FOREIGN CURRENCY TRANSACTIONS

Transactions in Foreign Currency are recorded at the exchange rates prevailing on the date of Transactions. Monetary items denominated in foreign currencies (such as cash, receivables, payables, etc.) outstanding at the year end, are translated at exchange rate applicable as of that date. Non-monetary items denominated in foreign currency (such as investments, Fixed Assets, etc.) are valued at the exchange rate prevailing on the date of transaction. Any gain or loss arising due to exchange differences at the time of translation or settlement are accounted in the Statement of Profit and Loss.

12. EMPLOYEE BENEFITS

12.1 Parent Company

LONG TERM EMPLOYEE BENEFIT PLANS

(a) DEFINED CONTRIBUTION PLAN

Contribution to Provident Fund, which is a Defined Contribution Retirement Plan, is made monthly at pre-determined rate to the Provident Fund authorities and debited to the Statement of Profit and Loss on accrual basis.

(b) DEFINED BENEFIT PLAN

Company makes annual contribution to Gratuity fund and Leave Encashment Fund administered by an Insurance Company, which is considered as defined benefit plan. The present value of the defined benefit is measured using ‘Projected Unit Credit’ Method with actuarial valuation being carried out at each Balance Sheet date by an independent valuer. Actuarial gains and losses are immediately recognised in the Statement of Profit and Loss. Amount of contribution, computed by the insurers is paid by the Company and charged to Statement of Profit and Loss.

12.2 Subsidiary Company:

(a) Contribution to Provident Fund, which is a defined contribution retirement plan, is made monthly

at predetermined rate to the Provident Fund authorities and debited to the Profit and Loss Account on accrual basis.

(b) The Company makes provision for Gratuity and Leave Encashment based on actuarial valuation carried out by an independent actuary at the Balance Sheet date. The same is not funded with Insurers.

13. PROVISIONS & CONTINGENCIES

(a) A provision arising out of a present obligation is recognised when it is probable that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated.

(b) Wherever there is a possible obligation which may not require an outflow of resources, the same is disclosed by way of contingent liability.

(c) Show Cause Notices are not considered as Contingent Liabilities unless converted into demand.

14. TAXES ON INCOME

Current Tax is determined in accordance with Income Tax Act 1961 on the amount of Tax Payable in respect of the income for the year. Deferred Tax Assets/Liabilities are measured by applying Tax rate and Tax laws that have been enacted or substantially enacted by the Balance Sheet date. Deferred Tax Asset arising on account of loss and unabsorbed depreciation under Tax laws is recognised only to the extent there is virtual certainty of its realisation supported by convincing evidence. Deferred Tax Assets on account of other timing differences are recognised only to the extent there is reasonable certainty of its realisation. At each Balance Sheet date, the carrying amount of Deferred Tax Asset is reviewed based on developments to reassess realisation.

15. EMPLOYEE STOCK OPTION SCHEME (ESOS)

The Company measures the compensation cost relating to ESOS using the fair market value of Equity Shares. The compensation cost is amortised on a straight line basis over the total vesting period of the Stock Options.

16. EMPLOYEE STOCK PURCHASE SCHEME (ESPS)

The Company measures the compensation cost relating to ESPS using the fair market value of Equity Shares. The compensation cost is charged to Statement of Profit and Loss immediately on allotment of Shares.

17. LEASE ACCOUNTING

The lease payments made on the assets comprising of land and building taken on operating lease, are amortised as an expense on straight line basis over the lease term.

98 99



NOTE 27

1. Estimated amount of contracts remaining to be executed on capital account and not provided for – INR 2,804 lakhs (Previous year INR 2,273.04 lakhs)

2. Contingent liabilities not provided for:

(a) INR 404.21 lakhs (Previous year INR 360.99 lakhs), comprises of Customer related cases - INR 208.64 lakhs (Previous year INR 204.59 lakhs), Vendor related cases - INR 98.40 lakhs (Previous year INR 65.17 lakhs), Employee related cases- INR 12.64 lakhs (Previous year INR 14.83 lakhs) and Property related INR 84.52 lakhs (Previous year INR 76.40 lakhs).

(b) INR 433.64 lakhs, (Previous year INR 433.64 lakhs), in respect of a suit filed by NOIDA creditors, in which Company was included as one of the defendants.

(c) Advance Subscription towards Customer Facilities (ASCF) being 55% of sale value is treated as Deferred Income and recognised as income over the period of entitlement. In respect of Assessment Years 1997-98 to 2001-02, the Income Tax Appellate Tribunal, Chennai (ITAT) has passed orders against the said accounting treatment followed by the Company and to treat them as income in the respective year of receipt. There will be no Tax Liability on account of such order in view of carry forward losses and unabsorbed depreciation available under Income Tax Act. The Company has appealed against these Orders before Honb’le High Court of Madras and the case is pending. The ITAT, Chennai has recently decided in favour of Company’s accounting treatment of ASCF for assessment years 2002-03, 2006-07, 2007-08 and 2008-09.

In respect of assessment year 2009-10, against Orders received from Assessing Officer (AO), with reference to treatment of ASCF and other disallowances, the Company has filed appeals before Commissioner of Income Tax – Appeals, Chennai and the same is pending. There is no Tax Demand on account of carry forward losses and unabsorbed depreciation.

In view of the above, Management is of the opinion that no provision is required in respect of disputed Income Tax at this stage.

(d) The Company has filed appeal before Deputy Commissioner (Appeals) and obtained stay order against the Order received from the Assessing Officer towards Luxury Tax on utility charges

for the financial year 2006-07 and 2007-08 amounting to INR 16.01 lakhs (Previous year INR NIL). The Company has predeposited a sum of INR 2.72 lakhs. The Company is advised by its legal counsel that the stand taken by the Company is valid and hence no provision is considered necessary at this stage.

(e) Service Tax, Interest and penalty aggregating to INR 557.03 lakhs (Previous year INR 557.03 lakhs) have been demanded by Service Tax Authorities. The Company has appealed against the above said order before CESTAT and pre deposited a sum of INR 30 lakhs. The Company is advised by its legal counsel that the stand taken by the Company is valid and hence no provision is considered necessary at this stage.

3. During the financial year 2011-12, pursuant to One Time Settlement (OTS) Scheme, the Company has fully settled the dues of the Financial Institution (FI) and also obtained a No Due certificate. However, the FI has not released the title deeds of the properties given as security for the reason that a Third Party has filed a writ petition against the FI challenging the cancellation of sale of the said property to them. The Company is also a party to the said writ petition pending before the Honb’le Madras High Court.

4. The Company had revalued certain lands in the years 1989, 1992 and 1999 by appointing an external valuer based on the then prevailing market value. The surplus on revaluation amounting to INR 1,959.20 lakhs (after making adjustment for sales effected in the interim period), stands credited to Revaluation Reserve.

5. Registration of lease in respect of land and building situated at Peermedu (INR 1,684 lakhs), and Kullu Manali (INR 2,053.68 lakhs) is pending.

6. During the year the Company has carried out detailed physical verification of Fixed Assets and reconciliation with reference to the Fixed Assets register, which has been reconstructed. Based on such exercise, certain categories of Fixed Assets have been regrouped. Consequent to such reconciliation and regrouping, a sum of INR 1,17.45 lakhs (net) being excess depreciation provided in the earlier years has been written back and credited to Statement of Profit and Loss and grouped under Exceptional Items.

7. Pursuant to the Scheme of Amalgamation of Manchanda Resorts Private Limited (Transferor Company) with Sterling Holiday Resorts (India) Limited (Transferee Company) filed with Honb’le High Court of Madras, it is proposed to merge


Transferor Company with the Transferee Company, the appointed date being April 1, 2012. The scheme shall be given effect to in the books of the Company with effect from the appointed date, on receipt of necessary approvals.

8. Five cottages located at Ooty - Fern Hill and included under ‘Buildings’ are given on lease for a period of 99 years to a customer.

9. The Capital Work in Progress (CWIP) includes value of certain properties under construction for more than 10 years. The Company is in the process of developing such properties, in a phased manner. In the opinion of the Management, no impairment provision is required in respect of such properties as their estimated market value together with the market value of appurtenant land far exceeds the book value of those properties as per valuation report of November 2010.

10. The Company had in the past transferred a property at Goa and part of the sale consideration amounting to INR 527.10 lakhs (Previous year INR 527.10 lakhs) (included under “Other Non-Current Assets”) is retained by the buyer pending compliance of certain conditions. The Company is confident of recovering this amount as it has taken effective steps for discharge of its obligations. The Company is also legally advised that it has the right of vendor’s lien against the immovable property sold to the extent of amount due and it can seek legal remedy to recover the same. In view of the above, the same is considered good and recoverable.

11. Deferred income grouped under Non Current and Current Liabilities, aggregating to INR 24,476.19 lakhs (Previous year INR 22,285.88 lakhs), represents “Advance Subscription towards Customer Facilities (ASCF)” and “Entitlement Fee” to be recognised as income, over the remaining holiday entitlement period.

12. SECURITISATION

The Company has securitised a portion of Trade Receivables including future interest receivable thereon. The excess of consideration received over the principal amounts (net of reversals in respect of cancelled members) is recognised as income.

Particulars


(INR in lakhs)


(INR in lakhs)

Value of Accounts receivable 500.51 -

Less : Future interest receivable

109.66 -

Principal amount of receivable

390.85 -

Consideration received 500.00 -

Profit on Securitisation 109.15 -

Less : Reversals in respect of cancelled members

7.47 -

Income from securitisation 101.68 -

13. The Company has infused additional funds into operation by way of Equity as well as debt in the last few years. It has a comfortable working capital cycle. Substantial improvements are being made to the quality of resorts by refurbishment/renovation. The marketing team has been strengthened by recruiting qualified and experienced personnel. There has been significant improvement in the overall performance and the Company expects to sustain the growth in the turnover and improve profitability in the ensuing years. Hence in the view of the Management, the “Going Concern Assumption” is not affected.

14. Trade Receivables, Trade Payables and Advances are subject to confirmation. The Company has however circulated confirmation of balances to majority of creditors.

15. The breakup of Deferred Tax Liabilities (DTL) and Deferred Tax Assets (DTA) as on March 31, 2013 is as under:

Particulars2012 – 13

(INR in lakhs)

2011 – 12 (INR in lakhs)

Deferred Tax Liability (DTL):Depreciation 3,151.19 3,046.49

Total 3,151.19 3,046.49

Deferred Tax Assets (DTA):Carried Forward Business Loss and Unabsorbed Depreciation

3,111.85 2,988.62

Disallowances U/s. 43B and 40(A)(7)

39.34 57.87

Total (Restricted to DTL) 3,151.19 3,046.49Net Deferred Tax Asset/(Liability)

NIL NIL


100 101



As a prudent measure, Deferred Tax Asset (DTA) has been recognised only to the extent of Deferred Tax Liability (DTL).

16. RELATED PARTY INFORMATION

Disclosure of related party transactions in accordance with Accounting Standard (AS-18) “Related Party Disclosure” issued by the Institute of Chartered Accountants of India.

(a) The list of Related Parties as identified by the Management is as under:

Key Management Personnel (KMP)

1) Siddharth Mehta – Chairman

2) Ramesh Ramanathan – Managing Director


1) Sterling Holidays (Ooty) Limited2) Sterling Holiday Resorts (Kodaikanal) Limited3) Manchanda Resorts Private Limited

Enterprise owned by/over which Key Managerial Personnel is able to exercise significant influence

1) RGR Finance and Investment Ltd.2) Indus Equicap Consultancy Ltd3) Bay Capital Partners Pte. Ltd.4) Bay Capital Advisors Pvt. Ltd.5) Veda Real Estate Corporation Pvt. Ltd.6) Sterling Dreamworks Partners LLP

(b) The following transactions were carried out with the related parties:

Sl. No Details

KMP & Relatives of KMP

31.03.2013(INR in lakhs)

31.03.2012(INR in lakhs)

1. Remuneration & Perquisite

74.82 56.43

2. Employee Compensation Cost/ESPS

130.24 1,226.61

3. Allotment of ESOS - 143.35

17. SEGMENT REPORTING:

The Company has “Timeshare” as the only primary reportable segment, for the purpose of Accounting Standard 17.

18. The lists of undertaking covered under the “Micro, Small and Medium Enterprises Development Act (MSMDA), 2006” were determined by the Company on the basis of information available with the Company. As explained by the Company, there were no principal and/or interest due remaining unpaid as at March 31, 2013 in respect of undertakings covered by the MSMDA.

19. Disclosure pursuant to Accounting Standard – 15 (Revised) “Employee Benefits” (a) Defined Contribution Plans:

Contribution of INR 34.60 lakhs (Previous year INR 117.77 lakhs) towards Defined Contribution Plan is recognised as expense and included in employee cost (Note No.22) in the Profit and Loss Statement.

(b) Disclosure for Defined Benefit Plans (non-contributory) based on actuarial valuation as on March 31, 2013:

Particulars

(INR in lakhs)

Gratuity(Partly Funded)

Long-term Compensated Absence

(Partly Funded)

31.03.2013 31.03.2012 31.03.2013 31.03.2012Movements in Accrued Liability

Accrued Liability as at beginning of the period 125.51 113.18 44.66 41.69Interest Cost 10.94 8.68 3.10 3.24


Past Service Cost 0.00 0.00 0.00 0.00


Benefits Paid (14.70) (15.29) 0.00 (2.26)

Actuarial (Gain)/Loss (22.09) (5.22) (36.88) (4.10)

Accrued Liability as at the end of the period 126.34 125.51 69.33 44.66

Changes in the Plan Assets in the inter-valuation period

Value of Assets at the beginning of the period 49.66 32.33 21.47 0.00

Expected Return on Assets 4.50 3.49 1.82 0.91

Contributions made 21.21 32.62 0.00 23.72

Benefits paid out of the Assets (14.70) (15.29) 0.00 (2.26)

Actuarial Gain/(Loss) on Plan Assets 2.13 (3.48) (1.82) (0.91)

Value of Assets as at the end of the period 62.79 49.66 21.47 21.47

Recognition of Actuarial Gain/Loss as on accounting date

Actuarial Gain/(Loss) in inter-valuation period – Obligation

22.09 5.22 36.88 4.10

Actuarial Gain/(Loss) in inter-valuation period - Plan Assets

2.13 (3.48) (1.82) (0.91)

Actuarial Gain/(Loss) recognised in inter-valuation period

(24.22) (1.74) (35.06) (3.19)

Unrecognised Actuarial Gain/(Loss) 0.00 0.00 0.00 0.00

Amounts recognised in the Balance Sheet

Present value of obligation as on the accounting date 126.34 125.51 69.33 44.66

Fair Value of the Plan Assets (62.79) (49.66) (21.47) (21.47)

Liability to be recognised in the Balance Sheet 63.55 75.85 47.86 23.20

Particulars

(INR in lakhs)

Gratuity(Funded)

Long-term Compensated Absence

(Partly Funded)

31.03.2013 31.03.2012 31.03.2013 31.03.2012

Expenses recognised in Statement of Profit and Loss

Interest cost 10.94 8.68 3.10 3.24


Expected Return on Plan Assets (4.50) (3.48) (1.82) (0.91)

Net Actuarial (Gain)/Loss (24.22) (1.74) (35.06) (3.19)

Net Expenses/(Income) to be recognised in Profit & Loss Account

8.90 27.62 24.67 5.23

Reconciliation

Net Liability as at the beginning of the period 75.85 67.66 23.20 41.69

Net Expenses in Profit & Loss Account 8.90 27.62 24.67 5.23

Contribution Paid (21.21) (19.43) 0.00 (23.72)

Net Liability as at the end of the period 63.55 75.85 47.86 23.20


102 103



Principal Actuarial Assumptions Gratuity

Long-term Compensated

AbsenceGratuity

Long-term Compensated

Absence

31.03.13 31.03.12 31.03.13 31.03.12

Interest Rate (Liabilities) 8.50% 8.60% 8.50% 8.60%

Return on Assets 8.50% 0.00% N.A 8.50%

Morality Table LIC(94-96) LIC (96-98) LIC(94-96) LIC (96-98)

Resignation Rate per annum 2.00% 2.00% 2.00% 2.00%

Salary Escalation Rate 5.00% 5.00% 5.00% 5.00% The Company is expected to contribute INR 64 lakhs for gratuity and INR 48 lakhs for compensated absence in the year 2013 - 2014

The estimate of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

Amounts for the current and previous four years are as follows:

ParticularsGratuity (INR in lakhs) Leave Encashment (INR in lakhs)

31.03.13 31.03.12 31.03.11 31.03.10 31.03.09 31.03.13 31.03.12 31.03.11 31.03.10 31.03.09

Defined Benefit Obligation

(126.34) (125.51) (99.99) (69.17) (57.79) (69.33) (44.66) (38.45) (25.24) (27.89)

Plan Assets 62.79 49.66 32.33 20.03 13.16 21.47 21.47 0.00 0.00 0.00

Surplus/(Deficit) (63.55) (75.84) (67.66) (49.14) (44.63) (47.86) (23.20) (38.45) (25.24) (27.89)

Experience adjustments on Plan Liabilities

22.09 5.22 8.49 1.42 0.00 36.88 4.10 8.51 0.00 0.00

Experience adjustments on Plan Assets

2.13 (3.48) 1.85 0.83 0.00 (1.82) (0.91) 0.00 0.00 0.00

20. Earnings per share (EPS) as per Accounting Standard – 20

2012-13 2011-12

Profit/(Loss) available to Members

- Before Exceptional Items (INR in lakhs) (2,312.87) (3,544.50)

- After Exceptional Items (INR in lakhs) (2,129.08) (4,131.71)

Weighted Average number of Equity Shares of INR 10 each at the year end

6,55,41,431 5,43,18,708

EPS – Basic and Diluted – Before Exceptional Items (in INR) (3.53) (6.53)

EPS – Basic and Diluted – After Exceptional Items (in INR) (3.25) (7.61)

Since potential Equity Shares are anti-dilutive in nature, Basic and Diluted EPS are the same


21. Employee Stock Options

(a) Employee Stock Purchase Scheme [ESPS] - 2010

Number of Shares Granted, Exercised and Forfeited Year ended31.03.2013


Shares Outstanding at the beginning of the year 14,42,981 21,00,000

Shares approved NIL NIL

Shares allotted NIL 6,57,019

Date of allotment NIL 14.07.11 & 28.03.12


(b) Employee Stock Purchase Scheme [ESPS] – 2011

Number of Shares Granted, Exercised and Forfeited Year ended31.03.2013


Shares Outstanding at the beginning of the year 25,51,486 NIL

Shares approved NIL 35,00,000

Shares allotted 4,75,233 9,48,514

Date of allotment 14.06.12, 20.09.12 & 17.10.12 07.11.11


The Company has instituted Employee Stock Purchase Scheme, 2011 (ESPS 2011) vide resolution passed at the Extraordinary General Meeting held on August 13, 2011 in terms of which the Company can issue Shares up to 35 lakhs Equity Shares to eligible employees. During the year 4,75,233 Equity Shares were allotted under the above scheme.

(c) Employee Stock Option Scheme [ESOS] – 2012

The Company has instituted Employee Stock Option Scheme, 2012 (ESOS 2012) vide resolution passed at the Annual General Meeting held on July 23, 2012, the Company can issue Equity Shares up to 10,00,000 out of which during the year 7,50,000 Options have been granted to eligible employees.

Particulars Year ended31.03.2013


Options Outstanding at the beginning of the year NIL NIL

No. of Stock Options approved by Shareholders 10,00,000 NIL

Options granted during the year 7,50,000 NIL

Options vested NIL NIL

Options Exercised NIL NIL

Options Forfeited NIL NIL

Options outstanding at the end of the year 2,50,000 NIL


104 105



22) Particulars of Share Warrants (preferential basis) issued, converted and outstanding at the year end is detailed below:

Number of Warrants Issued, Converted and Outstanding Year ended31.03.2013


Warrants Outstanding at the beginning of the year 75,33,333 NIL

Warrants issued during the year NIL 82,00,000

Warrants converted during the year 75,33,333 6,66,667

Price per share (in INR ) 75.00 75.00

Amount received on conversion (in INR ) 56,49,99,975 5,00,00,025

Warrants Outstanding at the end of the year NIL 75,33,333

23) Expenditure in Foreign Currency

ParticularsYear ended31.03.2013

(INR in lakhs)


(INR in lakhs)

A CIF Value of Imports

Capital Goods 25.09 81.12

B Expenditure in foreign currency

Travel and Conveyance 3.10 29.27

Others 41.91 4.76

24) The Company has entered into commercial leases for certain resorts. Future minimum rentals payable under non-cancellable lease are as follows:

Future minimum lease paymentsYear ended31.03.2013

(INR in lakhs)


(INR in lakhs)

Within one year 768.56 475.47

More than one year but less than five years 2,757.51 871.55

More than five years 2,286.33 -

25) In the opinion of the Management and to the best of their knowledge and belief the value on realisation of current assets and loans and advances would not be less than the amount at which they are stated in the Balance Sheet.



R. MOHAN M. BALASUBRAMANIYANSenior Vice President - Finance Company Secretary As per our report of even date

For V. Sankar Aiyar & Co. For R. Subramanian and Company,Chartered Accountants Chartered AccountantsICAI Regn.No. 109208W ICAI Regn.No. 004137S



ADDITIONAL NOTES FORMING PART OF FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2013 Statement pursuant to Section 212 of the Companies Act, 1956, relating to the Subsidiary Companies

INR in lakhs except share data, per share data and if otherwise stated

S.No Particulars

Name of Subsidiaries

Sterling Holidays (Ooty) Limited

Sterling Holiday Resorts

(Kodaikanal) Limited

Manchanda Resorts Private Limited

1. Financial Year of the subsidiary ended on

31.03.2013 31.03.2013 31.03.2013

2. Date from which it became subsidiary

30.04.2009 30.04.2009 30.04.2009

3. Shares of Subsidiary Company held on the above date and extent of holding

(i) Equity Shares 49,000 49,000 19,00,000

(ii) Extent of Holding(%) 98.00% 98.00% 100.00%

4. Capital 5.00 5.00 190.00

5. Reserves - - -

6. Total Assets 71.60 101.99 786.25

7. Total Liabilities 71.60 101.99 786.25

8. Details of Investment - - -

9. Turnover including other Income 426.85 372.84 21.00

10. Profit before Taxation (Loss) 15.42 (94.15) 38.34

11. Provision for Taxation - - -

12. Profit after Taxation (Loss) 15.42 (94.15) 38.34

13. Proposed dividend - - -

Notes :

In the consolidation, the accounts of subsidiaries have been re-stated in line with Indian GAAP and as required by the Accounting Standard 21 issued by The Institute of Chartered Accountants of India, wherever applicable.

106 107



STERLING HOLIDAY RESORTS (INDIA) LIMITEDRegd. Offi ce : No.163, T.T.K. Road, Alwarpet, Chennai – 600 018.

ATTENDANCE SLIPTO BE HANDED OVER AT THE ENTRANCE OF THE MEETING HALL

I hereby record my presence at the 26th Annual General Meeting of the Company held at Rani Seethai Hall, No.603, Anna Salai, Chennai – 600 006 on Tuesday, the September 17, 2013 at 02.30 p.m.

SIGNATURE OF SHAREHOLDER / PROXY*

Note : For the convenience of the Member / Proxies attending the AGM and to facilitate quicker registration of attendance, Member / Proxy holders are requested to bring Attendance Slips duly fi lling Folio Number / DP ID and Client ID and affi xing signature in it to the AGM. For immediate reference Folio Number / DP ID and Client ID is given address slip of the envelope.

* Strike out whichever is not applicable # Applicable for investors holding shares in electronic form

................................................................................................................................................................................................................................................

Folio No.

DP ID # No. of Shares

CLIENT ID #

STERLING HOLIDAY RESORTS (INDIA) LIMITEDRegd. Offi ce : No.163, T.T.K. Road, Alwarpet, Chennai – 600 018.

PROXY FORM

I/We ___________________________________________ of ___________________________________________ being a Member / Members of STERLING HOLIDAY RESORTS (INDIA) LIMITED do hereby appoint ________________________________________ of _________________________________________ or failing him _________________________________ of ___________________________________ as my / our proxy to attend and vote for me / us on my / our behalf at the 26th Annual General Meeting of the Company to be held at Rani Seethai Hall, No.603, Anna Salai, Chennai – 600 006 on Tuesday, the September 17, 2013 at 02.30 p.m. and at any adjournment thereof.

Dated ____ day of _______________ 2013 SIGNATURE BY THE SAID__________________________

Note: The Proxy Form must be deposited at the Registered Offi ce of the Company not less than 48 hours before the time fi xed for holding the meeting.

MEMBER’S FOLIO NUMBER

D P ID #

CLIENT ID #

No. of Shares heldName of the attending Member (in Block Letters)

Name of Proxy (in Block Letters)(To be fi lled in if the Proxy attends instead of the Member)

AFFIXINR.1

RevenueStamp

3

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