SAYAJI HOTELS LIMITED

T W E N T Y S E V E N T HA N N U A L R E P O R T 2 0 0 9 - 1 0

2

BOARD OF DIRECTORS

· Sri Razak D. Dhanani - Chairman

· Sri Sajid R. Dhanani - Managing Director

· Sri Rajendra Sharma - Nominee -TFCI

· Sri Y.S. Mehta - Nominee – MPFC

· Sri T. S. Bhattacharya - Director

· Capt. Salim Sheikh - Director

· Sri Munawar Garbadawala - Director

CHIEF FINANCIAL OFFICER

· Sri Amarjit Singh Bagga

COMPANY SECRETARY

· Sri Awadhesh Gupta

STATUTORY AUDITORS

· M/s. Shah Gandhi & Shah,

Chartered Accountants, Vadodara-390019 (Gujarat)

REGISTRAR AND SHARE TRANSFER AGENT (RTA)

· Link Intime India Pvt. Limited.

C-13, Pannalal Silk Mills Compound,

L.B.S. Marg, Bhandup (W), Mumbai-400078

e-mail: mumbai@linkintime.co.in

Phone(022) 25963838, Fax: 25946969

BANKERS

· State Bank of India

· State Bank of Indore

· State Bank of Mysore

· Axis Bank Ltd.

REGISTERED OFFICE

· Sayaji Hotels, Opp. Rajshree Talkies,

Near Kala Ghoda, Sayajigunj,Vadodara – 390005

HOTELS

· Opp. Rajshree Talkies, Near Kala Ghoda, Sayajigunj,

Vadodara – 390005 (Gujarat)

· H/1, Scheme No. 54, Vijay Nagar, Near Maghdoot Garden,

Indore – 452010 (Madhya Pradesh)

· Survey No. 135, 136, Mumbai Bangalore Highway,

Opp. B. U. Bhandari Workshop, Waked, Pune - 411057

CORPORATE IDENTITY NUMBER (CIN)

· L51100GJ1982PLC005131

· Sri T.N. Unni - Director

3

SAYAJI HOTELS LTD.

Standalone

· Notice

· Directors' Report

· Report on Management, Discussion and Analysis

· Report on Corporate Governance

· Auditors' Report

· Annual Accounts

Consolidated

· Auditors' Report

· Annual Accounts

BARBEQUE-NATION HOSPITALITY LTD.

· Directors' Report

Consolidated

· Auditors' Report

· Annual Accounts

MALWA HOSPITALITY PVT. LTD.

· Directors' Report

· Auditors' Report

· Annual Accounts

· Statement pursuant of Section 212 (Sayaji)

of the Companies Act, 1956 relating to Subsidiary Companies

Statement pursuant of Section 212 (BNHL)

CONTENTS

Date : September 30, 2010

Day : Thursday

Time : 12.30 P.M.

Venue : Sayaji Hotel, Vadodara

Book Closure Date : From September 27, 2010 to September 30, 2010

4

restrictions, in such manner and by such persons as may, for

the time being, be permitted under the provisions of the

Articles of Association of the company or legislative

provisions for the time being in force in that behalf.

II. Alteration in the Clause No. V of the Memorandum

To Consider and if thought fit, to pass with or without

modifications, the following resolution as Special

Resolution.

RESOLVED that the existing Clause V of the Memorandum of

Association of the Company be altered and substituted by the

following new Clause:

V. The Authorised Share Capital of the company is Rs.

40,00,00,000 (Rupees Fourty Crores only) divided into

300,00,000 (Three Crore) Equity Shares of Rs. 10 (Rupees

Ten only) each and 10,00,000(Ten Lacs) Preference Shares

of Rs. 100/- (One Hundred) each.

III. Alteration in the Clause No. 3 of Articles

To Consider and if thought fit, to pass with or without

modifications, the following resolution as Special

Resolution.

RESOLVED that pursuant to section 31 of the Companies Act,

1956, Article No. 3 of the Articles of Association of the

Company be altered by substituting it with the following new

clause:

3. The Authorised Share Capital of the company is

Rs. 40,00,00,000 (Rupees Fourty Crores only) divided into

300,00,000 (Three Crore) Equity Shares of Rs. 10 (Rupees

Ten only) each and 10,00,000(Ten Lacs) Preference Shares

of Rs. 100/- (One Hundred) each, with a power of company to

increase, reduce or modify the capital and to divide all or any

of the shares in the capital of the company, for the time being,

and to classify and reclassify such shares from shares of one

class into shares of other class or classes and to attach

thereto respectively such preferential, deferred, qualified or

other special rights, privileges, conditions or restrictions as

may be determined by the company in accordance with the

Articles of Association of the company and to vary, modify or

abrogate any such rights, privileges, conditions or

restrictions, in such manner and by such persons as may, for

the time being, be permitted under the provisions of the

Articles of Association of the company or legislative

provisions for the time being in force in that behalf.

RESOLVED Further that the Board of Directors of the

Company be and is hereby authorised to do and perform all

such acts, deeds, matters and things as may be necessary,

desirable or appropriate to gives effect to this resolution.

NOTICE

NOTICE is hereby given that the Twenty Seventh Annual General

Meeting of the Members of Sayaji Hotels Limited will be held on

Thursday, 30th day of September 2010 at 12.30 P.M. at the

Registered Office of the Company at “Sayaji Hotel”, Opp.Rajshree

Talkies, Near Kala Ghoda, Sayajigunj, Vadodara–390005 (Gujarat),

to transact the following business:

ORDINARY BUSINESS

1. To receive, consider and adopt the Audited Balance Sheet for

the year ended on March 31, 2010 and the Profit and Loss

Account as at that date together with the reports of the

Directors and the Auditors thereon.

2. To appoint Director in place of Mr. Munawar Garbadawala,

who retires by rotation and is eligible, for re-appointment.

3. To appoint Director in place of Capt. Salim Sheikh, who

retires by rotation and is eligible, for re-appointment.

4. To appoint M/s Shah Gandhi & Shah Chartered Accountants,

the retiring Auditors, as the Auditors of the Company, who

shall hold office from the conclusion of this Annual General

Meeting until the conclusion of the next Annual General

Meeting on such remuneration as may be fixed by the Board

of Directors.

SPECIAL BUSINESS

5. I. To Increase Authorised Equity Share Capital from

Rs. 20,00,00,000.00 to Rs. 30,00,00,000.00

To Consider and if thought fit, to pass with or without

modifications, the following resolution as Special

Resolution.

RESOLVED that pursuant to provisions of sections 94, 97

and other applicable provisions, if any, of the Companies Act,

1956, the Authorised Equity Share Capital of the company be

and is hereby increased from Rs. 20,00,00,000 (Rupees

Twenty Crores Only) divided into 200,00,000 (Two Crore)

Equity Shares of Rs. 10 (Rupees Ten Only) each to Rs.

30,00,00,000 (Rupees Thirty Crores only) by creation of

100,00,000 (One Crores) Equity Shares of Rs. 10 (Rupees

Ten only) each, with a power of company to increase, reduce

or modify the capital and to divide all or any of the shares in

the capital of the company, for the time being, and to classify

and reclassify such shares from shares of one class into

shares of other class or classes and to attach thereto

respectively such preferential, deferred, qualified or other

special rights, privileges, conditions or restrictions as may

be determined by the company in accordance with the

Articles of Association of the company and to vary, modify or

abrogate any such rights, privileges, conditions or

5

6. To Increase remuneration of Managing Director Sri Sajid

R. Dhanani

To Consider and if thought fit, to pass with or without

modifications, the following resolution as Special

Resolution.

RESOLVED that pursuant to the provisions of Section 198,

309, 310, 311 read with the provisions of Schedule XIII and

other applicable provisions, if any, of the Companies Act,

1956 (including any Statutory modification or re-enactment

thereof for the time being enforce), Articles of Association of

the Company and Lead Financial Institution, in writing and

subject to approval of any Authority, wherever required, the

consent of the Meeting be granted to increase the overall

remuneration of the Managing Director from Rs. 2,50,000/-

p.m. or 5% of net profit of the company ( whichever is

higher) to Rs. 400,000/- p.m. or 5% of net profit (which ever

is higher) w.e.f. 1st April 2010 on such terms & conditions as

considered by the remuneration committee and set out in the

Explanatory Statement annexed herewith to”.

“FURTHER RESOLVED that the Company Secretary of the

Company be authorized to submit the proper form to the RoC

and to comply with all the necessary formalities in this

regard”.

7. To appointment of Sri Munawar Garbadawala as

Wholetime Director .

To Consider and if thought fit, to pass with or without

modifications, the following resolution as Ordinary

Resolution.

RESOLVED that pursuant to the provisions of section 198,

269, 302, 309, 310 read with Schedule XIII and other

applicable provisions of the Companies Act, 1956 (including

any statutory modifications or re-enactment thereof for the

time being in force) the approval of the Company be and is

hereby granted for appointment of Mr. Munawar

Garbadawala as the Whole-time Director of the Company and

designated as the executive director of the Company for a

period of 3 years w. e. f. 1st April, 2010 on the such terms,

conditions as approved by the Board of Directors of the

Company:

RESOLVED further that in the event of there being loss or

inadequacy of profit for any financial year, the aforesaid

remuneration payable to Mr. Munawar Garbadawala, shall be

the minimum remuneration payable to him in terms of the

provisions of Schedule XIII to the Companies Act, 1956.

RESOLVED further that the Managing Director of the

Company be and are hereby authorized to do all such acts,

deeds, matters and things as in its absolute discretion, it may

consider necessary, expedient or desirable, and to settle any

question, or doubt that may arise in relation thereto and the

Managing Director shall have absolute powers to decide

break up of the remuneration within the above said

maximum permissible limit and in order to give effect to the

foregoing resolution, or as may be otherwise considered by it

to be in the best interest of the Company.

8. To appointment of Mr. Sujit Desai as Manager in Training.

To Consider and if thought fit, to pass with or without

modifications, the following resolution as Special

Resolution.

RESOLVED that pursuant to the provisions of Section

314(1)and other applicable provisions, if any, of the

Companies Act, 1956, the company hereby consent to

appoint Sri Sujit Desai who is a relative of Sri Abdul Razak

Dhanani, Chairman and Sri Sajid R. Dhanani, Managing

Director of the company for holding and continuing to hold

an office or place of profit as an employee of the Company

w.e.f. 1st November, 2009 as an Manager in training on a

consolidated salary not exceeding Rs. 50,000/-per month as

decided by Board of Directors including all per perquisites,

allowances and benefits payable to other employees of his

grade.

9. Preferential Allotment of Equity Shares & Warrants:

To consider and if thought fit, to pass, with or without

modification(s), the following resolution as a Special

Resolution:

“RESOLVED that in terms of Section 81, 81(1A) and all other

applicable provisions, if any, of the Companies Act, 1956

(including any statutory modification(s) or re-enactment

thereof, for the time being in force), Memorandum and

Articles of Association of the Company, Listing Agreement

entered into by the Company with the Stock Exchanges,

where the shares of the company are listed, and in

accordance with the provisions of the Securities and

Exchange Board of India (Issue of Capital and Disclosure

Requirements) Regulations, 2009 as may be applicable on

preferential issue of Equity Shares, Warrants convertible into

Equity Shares other applicable regulations/guidelines of

SEBI, if any and subject to such consents and approval from

Securities And Exchange Board of India (SEBI), Stock

Exchange, Govt. of India or such other bodies or authorities

as may be required by the Law and as may be necessary and

subject to such conditions and modifications as may be

imposed upon and which may be agreed by the Board of

Directors of the Company (hereinafter called the Board)

and/or a duly authorised committee of Directors thereof for

the time being exercising the powers conferred by the Board

of Directors (hereinafter called the 'committee'), consent of

the members of the Company be and is hereby accorded to

the Board to offer/issue/allot upto 15,00,000 (Fifteen Lacs )

Equity Shares of Rs. 10/- each at the premium of Rs. 115/-

per share, and 18,00,000 (Eighteen Lacs) Warrants that are

convertible in to fully paid up equity shares (face value of Rs.

6

10/- each), on one equity share for one Warrant basis, within

a period of on or before 8 (eight) months from the date of

allotment at price not higher than Rs. 125 per warrant, on a

preferential basis, to the following Promoters, Persons,

Companies as mentioned in detail in the explanatory

statement.”

Sr. No. Name of the proposed Allottees

1 M/s Blue Deebaj Chemical LLC

2 Mr. Sajid R. Dhanani

3 Mrs. Suchitra Dhanani

4. M/s Liberty Phosphate Limited

All the above mentioned proposed allottees are the

promoters and/or has been defined as persons acting in

concert.

"RESOLVED FURTHER that the offer and allotment of the aforesaid equity shares, warrants shall be made at such time or times as the Board may in its absolute discretion decide, subject however to the compliance with applicable guidelines, notifications, rules and regulations."

RESOLVED FURTHER that the pricing of the Equity Shares and Warrants to be allotted on conversion of the above said warrants, calculated in accordance with the SEBI Regulations/Guidelines on the 'Relevant Date' in relation to the conversion of every warrants into one Equity Share, and the relevant date as under:

(i) 15,00,000 Equity Shares and 18,00,000 Warrants of Rs. 125 each shall be convertible into 18,00,000 Equity Share of the face value of Rs. 10 each on payment of aggregate price including premium of Rs. 115 (Rupees One Hundred Fifteen only).

(ii) 15,00,000 Equity Shares of Rs. 125 each shall be allotted after receiving of face value of Rs. 10 each including premium of Rs. 115 (Rupees One Hundred Fifteen only):

(iii) Exercise of offer for conversion of the warrants shall be at the sole option of the warrant holders at any time with on or before a period of 8 months from the date of allotment of warrants in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.

(iv) The warrant holder(s) shall pay an amount equivalent to 25% i.e. Rs. 31.25 (Rupees Thirty One and Paise Twenty Five only) per warrant of the value of the warrant on or before the date of allotment of warrants.

(v) The amount referred to in point (iv) above shall be adjusted against the price payable subsequently for acquiring the shares by exercising an option by the warrant holder(s).

(vi) The warrant holder(s) shall pay on or before the date of conversion of such warrants into equity shares, the balance 75% (Rs. 93.75 for each warrant).

(vii) The equity shares and warrants shall be locked in for a period of three/one years as applicable SEBI Regulation 2009 from the date of their allotment. Provided that the lock-in on shares acquired by conversion of warrants shall be reduced to the extent the warrants have already been locked-in.

(viii) The allotment of equity shares and convertible warrants shall be completed within a period of 15 days from the date of passing of this resolution by the shareholders provided, that where the allotment is pending on account of pendency of any approval from any regulatory authority or the Central Govt., the allotment shall be completed by the Company within a period of 15 days from the date of such approvals.

RESOLVED FURTHER that the Equity Shares so issued on conversion of warrants shall upon allotment have the same rights of voting as the existing equity shares and be treated for all other purposes pari passu with the existing equity shares of the Company and that the equity shares so allotted during the financial year shall be entitled to the dividend, if any, declared including other corporate benefits, if any, for the financial year in which the allotment has been made and subsequent years.

RESOLVED FURTHER that for the purpose of giving effect to the above resolution, the Board be and is hereby authorised to agree and accept all such condition(s), modification(s) and alteration(s) as may be stipulated by any relevant authorities while according approval or consent to the issue as may be considered necessary, proper or expedient and give effect to such modification(s) and to resolve and settle all questions, difficulties or doubts that may arise in regard to such issue and allotment and to do all acts, deeds and things in connection therewith and incidental thereto without being required to seek any further consent or approval of the members of the Company to the intent that the members shall be deemed to have given their approval thereto expressly by the authority of this resolution.

RESOLVED FURTHER that the Company shall ensure that whilst any warrants remaining exercisable, it will at all times, keep available and reserved such part of its authorised but un-issued share capital as would enable all outstanding warrants to be satisfied in full.

By Order of the Board of Directors

Indore, 31st August, 2010 CHAIRMAN

Registered Office :

Sayaji Hotel,

Near Kala Ghoda,

Sayajigunj, Vadodara-390005

7

NOTES

1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE

MEETING IS ALSO ENTITLED TO APPOINT A PROXY TO

ATTEND AND VOTE INSTEAD OF HIMSELF AND THE PROXY

NEED NOT BE A MEMBER OF THE COMPANY. THE

PROXIES, IN ORDER TO BE VALID MUST BE DEPOSITED AT

THE REGISTERED OFFICE OF THE COMPANY NOT LESS

THAN 48 HRS BEFORE THE TIME FOR THE MEETING.

2. An Explanatory Statement pursuant to Section 173(2) of the

Companies Act, 1956, relating to special business to be

transacted at the meeting is annexed hereto.

3. Shareholders are requested to bring their copy of Annual

Report to the meeting.

4. Members/ Proxies should fill the Attendance slip for

attending the meeting.

5. In case of joint holders attending the meeting, only such joint

holder who is first in the order of names will be entitled to

vote.

6. Members who hold shares in de-materialized form are

requested to write their Client ID and DP ID numbers and

those who hold shares in physical form are requested to

write their Folio Number in the attendance slip for attending

the meeting.

7. Members desirous of obtaining any information / details as

regard accounts and operations of the Company are

requested to write to the Company at least 7 days before the

meeting to enable the Company to keep the required

information ready at the time of meeting.

8. Corporate Members intending to send their authorized

representative to attend the Annual General Meeting are

requested to send a duly certified copy of the Board

Resolution authorizing their representative to attend and

vote at the meeting.

9. All documents referred to in the accompanying notice and

the Explanatory Statement are open for inspection at the all

working days between 11.00 a.m. to 1.00 p.m. upto the date

of the Annual General Meeting.

10. Members are requested to notify promptly any change in

their addresses to the Registrar and Transfer Agent Link

Intime India Pvt. Ltd., Unit: Sayaji Hotels Limited,C-13,

Pannalal Silk Mills Compound,L.B.S. Marg, Bhandup(W),

Mumbai-400078.

The Register of Members and Share Transfer Books of the

Company will remain closed from Monday, 27th day of

September, 2010 to Thursday, 30th day of September,

2010 (both days inclusive).

EXPLANATORY STATEMENTThe following Explanatory Statement, Pursuant to the provisions

of Sec. 173(2) of the Companies Act, 1956, sets out all material

facts relating to the business mentioned at Item no. 5,6,7,8 and

9 of the accompanying Notice dated August 31, 2010.

Item No. 5

The present Authorised Share Capital of the company is Rs.

30,00,00,000 (Rupees thirty Crores only) divided into 200,00,000

(Two Crore) Equity Shares of Rs. 10 (Rupees Ten only) each and

10,00,000(Ten Lacs) Preference Shares of Rs. 100/- (One

Hundred) each. Out of this 175,18,000 equity shares have been

issued and there has been no issue of Preference Shares.

The growth of the company's operation augmentation of resources

and the Board of Directors of the company is planning to make a

Preferential/Right issue of equity shares to part finance for

proposed project and augmenting long-term working capital

requirements of the company. In order to go in for any such issue,

the Authorised Capital of the company should be adequately

increased to accommodate the proposed augmentation of the

capital base. The change proposed will necessitate amendment to

the Capital Clause of the Memorandum of Association and Articles

of Association of the company.

Pursuant to section 16 and 31 of the Companies Act, 1956 read

with section 94 of the said Act, the above said amendments should

be approved by the General Body by way of a Special Resolution.

Your Board of Directors recommended the proposed resolutions

giving effect to the above amendments for your approval.

None of the Directors is interested in the proposed resolutions.

Item No. 6

The Board meeting held on 30th June, 2007, the Board of Directors

had passed a resolution and increase remuneration Sri Sajid R.

Dhanani, Managing Director of the Company upto Rs. 2,50,000/-

p.m. or 5% of net profits of the Company whichever is higher, had

taken effect from 1st April, 2007 and that the Members at their

Annual General Meeting held on 29th September, 2007 had

approved it.

Sri Sajid R. Dhanani has wide and rich experience in the field of the

hotels and the restaurants, thus to enable Sri Sajid R. Dhanani to

focus on the operations and management of the company in a

broader way. Since the salary structure of the managerial personnel

has undergone a major change in the hotel industry, it is also

proposed that his remuneration structure may also be revised

which would be comparative with the remuneration being paid

other hotel companies in the similar position. In view of the

economic performance of the company this will be helpful for the

Company to achieve the desired business, growth and to make the

Company competitive in the present corporate scenario.

The Remuneration proposed to be increased upto Rs. 400,000/-

p.m. or 5% of net profit (which ever is higher) is in accordance to

the provisions of Schedule XIII and Section 198, 309, 310, 311 of

the Companies Act, 1956 and the specific nature of the matter to be

8

duly considered by the Remuneration Committee as under:

1) Salary : Rs.2,40,000/- per month.

2) Commission : Commission based on the net profits of the

company computed in the manner laid down in section

309(5)of the Companies Act, 1956 subject to the provisions

of section 198,309 and other applicable provisions of the

Companies Act, 1956 such commission shall be such

percentage of the net profit and such amount as the board of

Directors of the Company may determine keeping in view the

performance of the Company in each financial year.

3) Perquisites and Allowance : Which shall be restricted to an

amount equal to Rs. 1,60,000/- per month and may be paid

under following categories:

a. House Rent Allowance

b. Medical Reimbursement

c. Leave Travel Allowance

d. Annual Club maintenance Fees

e. Payment of Statutory contribution towards PF, ESIC as

may be applicable

f. Other allowance

g. Conveyance allowance

h. Driver’s Salary

As per Section II [1 (B)] of PART II of schedule XIII of the

Companies Act 1956, the following information as given below to

the shareholders :

I. General Information:

(1) Nature of Industry. : Hotel & Restaurant

(2) Date or expected date of commencement of

commercial production: N.A.

(3) In case of new companies, expected date of

commencement of activities as per project approved

by financial institutions appearing in the prospectus:

N.A

(4) Financial performance based on given indicators.

i) Sales : Rs. 819.75 million (31.03.2010)

ii) Profit/Loss After Tax:(Rs. (4.66 million)

(5) Export performance and net foreign exchange

collaborations:

Foreign Currency Earning: Rs. 64.306 million

Foreign Exchange Outgo :Rs. 10.454 million

(6) Foreign Investments or collaborators, if any:

Clearwater Capital Partners (Cyprus) Limited

(Dt. 18.05.2006)

II. Information about the appointee:

(1) Background details. :

i) Name: Mr. Sajid R. Dhanani

ii) Age: 45 years

iii) Qualification: Diploma in Hotel Management.

iv) Experience: 25 years experience in hotel industry.

(2) Past remuneration. : Rs. 250,000/- Month

(3) Recognition or awards.: Nil

(4) Job profile and his suitability:

Mr. Sajid R. Dhanani is responsible for the day to day

operations & management of the company under the

overall superintendence, direction and control of the

Board of Directors. He is 45 years old, holds Diploma

in Hotel Management and has over 25 years

experience in hotel industry.

(5) Remuneration proposed: As given in Resolution.

(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): The proposed

remuneration is in line with the industry trends for

similar size of business units.

(7) Pecuniary relationship directly or indirectly with the

company, or relationship with the managerial

personal, if any : Promoter and Son of Chairman Mr.

Abdul Razak Dhanani

III. Other information:

(1) Reasons of loss or inadequate profits.

The Company has launched one new Hotel in the

previous year. In the initial stage expenses are typically

higher due to higher set-up and interest costs.

(2) Steps taken or proposed to be taken for improvement.

Company is trying to grow our sales revenue and

reducing higher cost.

(3) Expected increase in productivity and profits in

measurable terms : the company expects sales to

increase to Rs. 1500.00 million in 2010-11 and net

profit of Rs. 150.00 million.

IV. Disclosures:

(1) The shareholders of the company shall be informed of

the remuneration package of the managerial person :

is given in annual report.

(2) The following disclosures shall be mentioned in the

Board of Director’s report under the heading

“Corporate Governance”, if any attached to the annual

report:-

(i) All elements of remuneration package such as

salary, benefits, bonuses, stock options,

pension, etc. of all the directors;

(ii) Details of fixed component and performance

linked incentives along with the performance

criteria;

(iii) Service contracts, notice period, severance fees;

(iv) Stock option details, if any, and whether the

same has been issued at a discount as well as

the period over which accrued and over which

exercisable.

9

Item No. 7

The Board of Directors at the Meeting held on 31st August, 2010

subject to the approval of the Members, appointed Mr. Munawar

garbadawala as an whole-time Director, to assume responsibilities

as Whole-time Director of the company with effect from 1st April

2010 and thereafter.

Mr. Munawar Garbadawala, 55 years old, holds Diploma in Hotel

Management and has over 30 years experience in hotel industry. He

shall be responsible for the day to day operations & management of

the Baroda Hotel under the overall superintendence, direction and

control of the Board of Directors.

Item No. 8

Looking into the expansion of the business activities of the

Company, the Board of Directors at their meeting held on 29th

January, 2010 has considered that the Company should appoint a

qualified officer for discharging the duties of training officer in the

Company. The Board proposed the name of Mr. Sujit Desai, is

relative of Mr. Abdul Razak Dhanani, Chairman and Mr. Sajid R.

Dhanani, Managing Director of the company for appointment as the

Manager in training w. e. f. 01, November 2009.

The Board considered that Mr. Sujit Desai, aged 47 years is a

qualified, having practical experience of more than 5 years in this

field. The Board considers that looking into his dynamic education

background and his experience will strengthen the management in

controlling activities of the Company in more proper manner.

He shall be the training manager of the Company and will be

responsible for all the training affairs of the Company.

The terms of remuneration, as set out in the resolution are

considered to be just, fair and reasonable and are in accordance

with the remuneration paid to other similar placed executives in the

Company as well as in the Industry.

In terms of the provisions of section 314 (1) of the Companies Act,

1956 read with Director’s Relatives (Office or Place of Profit) Rules,

2003, the appointment of relative of Director of the Company on a

remuneration not exceeding Rs. 50000/- p.m. requires the

approval of the members by way of special resolution. The

resolution mentioned in the Item No. 8 of the notice is being

proposed for approval accordingly.

Except, Sri Abdul Razak Dhanai and Sri Sajid R. Dhanani, being the

relative of the proposed appointee, none of the Directors of the

Company is concerned or interested in the above said resolution.

Item No.9

Members may be aware that the company is not declaring any

dividend during the previous years. Consequently, investment in

shares has become more advantageous and popular to investors,

who are approaching the Company for Bulk investment in equity

shares/warrants on a preferential basis. Your Directors intends to

consider such proposals as and when necessary.

Looking into the possibilities of further expansion plans, future

growth, prospective revenue earning position, repayment of debts

of Sayaji Hotels Limited, Promoters, and companies want to infuse

more funds in the company in the form of share capital, towards the

consideration value of Rs. 125/- per share/warrant, being the price,

higher than the average price determined as per preferential

allotment guidelines of the SEBI. Thus the share/warrant of Rs. 10/-

each will be issued at the premium of Rs.115/-.

Your Directors are of the view that the proposed issue and

allotment will be in the benefit of the share holders of your

company. Your directors also consider the Basis of allotment of the

shares/warrants in the manner stated above, as fair and

reasonable. Your Directors therefore commend the resolution for

adoption.

The allotment, if made, to promoters companies, that would be

allotted strictly as per the Securities and Exchange Board of India

(Issue of Capital and Disclosure Requirements) Regulations, 2009

As per SEBI (Substantial Acquisition and Takeovers) Regulation,

1997, certain disclosures which are required, the Board of

Directors of the Company give below disclosures that are required

to be given in the explanatory statement to the special resolution to

be passed under section 81(1A) of the Companies Act, 1956 and in

terms of the SEBI (Disclosure and Investors Protection)

Guidelines.

1. Object and manner of activities of proceed of the Issue to be

utilised:

The purpose of the issue is to allot the equity shares and

warrants convertible into the equity shares is to achieve long

term plans of the Company and to meet the funding

requirements including but not limited to investment for

meeting its business requirements, funding ongoing capital

expenditure and/or for the repayment of its long term debts.

The above allotment is made in the interest of the company

and shareholders. Looking into the possibilities of further

expansion plans, future growth, prospective revenue earning

position and repayment of debts of Sayaji Hotels Limited,

Investors wants to infuse more funds in the company in form

of share capital and warrants. This will enable the company

to offer/issue and/or allot to the investors who are

approaching the Company for Bulk investment in equity

shares/warrants on a preferential basis. The fund will be

utilized in funding expansion project, capital expenditures,

long term working capital requirements for expansion

activities and repayment of debts of the company.

2. Relevant date and pricing of the issue:

The issue price of the Equity Shares and Warrants

convertible into the Equity Shares shall be Rs. 125.00 (Rs.

One Hundred Twenty Five only) each.

The price of the Equity shares and warrants of Rs. 10 each

together with premium of Rs. 115.00 (Rs. One Hundred

Fifteen only) has been fixed for Rs. 125.00 (Rs. One Hundred

Fifteen only) per share to be issued on conversion of

10

warrants based on the relevant date 31st August., 2010

calculated in the manner specified for pricing of shares and

warrants to be allotted in lieu of warrants as per the

Securities and Exchange Board of India (Issue of Capital and

Disclosure Requirements) Regulations, 2009.

As per the Securities and Exchange Board of India (Issue of

Capital and Disclosure Requirements) Regulations, 2009,

the price for equity shares/ warrants convertible into Equity

Shares of Rs. 10 each has been determined at Rs. 109.06 per

Share/Warrant convertible into equity shares on the relevant

date 31st August, 2010, based on the quotations available at

the Bombay Stock Exchange, Mumbai. The issue price of Rs.

125 per Shares/Warrant is much higher than the SEBI

guidelines. A Certificate to that effect has been obtained from

the Auditors of the Company on 4th September, 2010 which

is also available for inspection at the Registered Office of the

Company.

15,00,000 Equity Shares of Rs. 10/- each will be issued at

the premium of Rs. 115/- each, aggregating Rs.

18,75,00,000/- (Rs. Eighteen Crores Seventy Five Lacs

Only). These shares will be allotted to promoters companies.

This price is higher than the average price determined in

accordance with SEBI Preferential Issue Regulations,

prescribed in Chapter VII of Securities and Exchange Board

of India (Issue of Capital and Disclosure Requirements)

Regulations, 2009, as amended upto date Quotes are

received from BSE website.

18,00,000 Warrants will be issued at Rs. 125/- each

aggregating Rs. 22,50,00,000/- (Rs. Twenty Two Crores Fifty

Lacs Only).This price is higher than the average price

determined in accordance with SEBI Regulations for

preferential issue/allotment.

3. Intention of the promoters or their associates and relatives to

subscribe to the offer:

The proposed allottees for preferential issuance of 15,00,000

Equity Shares and 18,00,000 Warrants to be converted into

the Equity shares of Rs.10 each are the relatives of the

promoters and/or person(s) acting in concert (PAC) as

referred in the resolution.

4. Identity of the proposed allottees and :

As stated earlier, it is proposed to allot 15,00,000 equity

shares and 18,00,000 warrants to the promoters, their

relatives and persons acting in concert. The share holding

that may be held by allottees in post-issued capital shall be as

set out

Equity Shares

Warrants:

18,00,000 warrants to be issued/ allotted only two

promoters of the following:

v) Consequential change, if any in the share holding pattern of the allottee company:

1 Indian Promoters 66,74,605 38.102 81,74,605 42.983 99,74,605 47.913

2 Person Acting in Concert 100 0.00 100 0.000 100 0.000

3 Mutual Fund and UTI 155,093 0.885 155,093 0.815 155,093 0.745

4 Banks,Financial Institutions [Central/State 300 0.001 300 0.001 300 0.001

Govt. Institution/Non Govt. Institution], FIIS

5 Corporate Bodies 926,526 5.289 926,526 4.872 926,526 4.451

6 Indian Public 10,11,400 5.774 10,11,400 5.319 10,11,400 4.858

7 NRIs/ OCBs 15,85,573 9.051 15,85,573 8.338 15,85,573 7.617

8 d. Foreign Institutional Investors 13,95,747 7.968 13,95,747 7.340 13,95,747 6.705

9 Foreign Companies 57,57,891 32.868 57,57,891 30.276 57,57,891 27.658

10 Clearing Member 10,765 0.062 10,765 0.056 10,765 0.052

Total 175,18,000 100.00 190,18,000 100.00 208,18,000 100.00

Sr.No.

Pre - Issue Post – Issue (After allotment of

Eq. Shares)

Post – Issue(After Conversion of

Warrants into Eq. Shares)Category As on 30.08.2010

No. of Shares % of holding No. of Shares % of holding No. of Shares % of holding

Name CategoryPre Issue

Holding%

Proposed

Issue

Post Issue

Holding%

M/s Blue Deebaj

Chemical LLCPromoters 15,00,000 15,00,000 7.880.000.00

Name CategoryPre Issue

Holding%

Proposed

Issue

Post Issue

Holding%

Promoters

Promoters

Promoters

15.54

5.86

4.32

Mr. Sajid R. Dhanani

Mrs. Suchitra Dhanani

M/s Liberty Phosphate Ltd.

23,35,511

3,20,000

0.00

13.33

1.826

0.00

9,00,000

9,00,000

9,00,000

32,35,511

12,20,000

9,00,000

Other Details

i) Consequential changes, if any in voting rights:

The Voting rights would change in tandem with the share

holding pattern.

ii) Changes expected in Board after conversion takes place:

There would be no change in the Board of Directors

consequent to the above allotment.

iii) Whether the said allotment would result in change in

control over the Company:

The said allotment would not result in any change in the

control over the company, except change in share holding.

iv) Proposed date of Allotment:

Within the period of 15 days from date of passing resolution

or as per the SEBI (Issue of Capital and Disclosure

Requirements) Regulations, 2009 applicable as on date.

v) Lock in period :

The Shares/warrants as mentioned above, to be

issued/allotted to promoters shall be subject to lock in of 3

years as per the SEBI (Issue of Capital and Disclosure

Requirements) Regulations, 2009 amended upto the Date.

Provided that not more than twenty per cent. Of the total

capital of the issuer shall be locked-in for three years from

the date of allotment.

Provided further that equity shares allotted in excess of the

twenty per cent. Shall be lock-in for one year from the date of

their allotment pursuant to exercise of options or otherwise,

as the case may be.

vi) Relevant Date :

The relevant date for the purpose of SEBI (Disclosure and

Investor Protection) Guidelines, 2000 is 31st August, 2010,

i.e. 30 days prior to date of Annual General Meeting.

vii) Some specific terms of the warrants proposed to be issued:

lThe warrants under this resolution shall entrust a right

in the holder to apply and acquire equity shares of Rs.

10 each on one warrant one equity share basis, at price

not lower than the price under SEBI Guidelines and not

higher than Rs. 125/- per warrant.

lWarrants so issued will be convertible into fully paid up

equity shares of Rs. 10/- each(one warrant one equity

share basis) at any time with on or before expiry of 8

months from date of allotment and the Board of

Directors of the company be authorised to allot fully

paid equity shares upon such conversion.

lThe equity shares so issued on conversion of the

warrants shall rank pari-pasu in all respect with and

carry the same rights including dividend as, the

existing equity shares.

With the additional issue/allotment of shares to Promoters and

other Investors, the Paid up equity shares capital will be increased

and at the same time, by infusion of funds in expansion projects,

the revenue generation and profitability of the Company will go up

in due course of time.

SEBI Takeover code: In terms of the SEBI (Substantial Acquisition

of Shares and Takeovers) Regulations, 1997, the investors are not

required to and do not intent to make an open offer and comply with

formalities related to an open offer for this preferential allotment.

Holding of shares in the D-mat Account, non disposal of shares by

the proposed allottees and lock-in period of shares: The proposed

allottees are holding their entire pre-issued shareholding in the D-

mat form and they have not sold or disposed off any equity share of

the company during the six months period prior to the relevant date

and further that they will not sale or dispose any shares held by

them during the period of six months from the date of allotment of

the equity shares and warrants on preferential basis. The equity

shares and warrants so allotted shall be under lock-in period of 3

years from the date of allotment to the promoters, their relatives

and person acting in concert. Provided that the lock-in on the

shares acquired on conversion of warrants shall be reduced to the

extent the warrants have already been locked-in.

Provided that not more than twenty per cent. Of the total capital of

the issuer shall be locked-in for three years from the date of

allotment.

Provided further that equity shares allotted in excess of the twenty

per cent. Shall be lock-in for one year from the date of their

allotment pursuant to exercise of options or otherwise, as the case

may be.

The Auditors' Certificate for the issue price and other relevant

papers will be available at the Registered office of the Company

between 10.00 AM to 5.00 PM till AGM Date, and those papers will

be made available for inspection for the members at the AGM.

Section 81 of the Companies Act, 1956 and the Listing Agreements

executed with the Stock Exchanges, where your company's shares

are listed, provide inter alia, that when it is proposed to increase the

issues capital of the Company by allotment of further shares, such

further shares shall be offered to the existing shareholders of the

Company in the manner laid down in Section 81, unless the

Shareholders in a General meeting decides otherwise by passing

special resolution under section 81 (1A).

Accordingly, consent of the shareholders is being sought for issue

of Equity shares/warrants. Your Directors recommend the

resolution for approval of the shareholders.

None other Directors of the Company are concerned or interested

in the Resolution, except in capacity of member or director.

By Order of the Board of Directors

Indore, 31st August, 2010 CHAIRMAN

Registered Office :

Sayaji Hotel,

Near Kala Ghoda,

Sayajigunj, Vadodara-390005

11

Your Company has achieved a turnover of Rs. 819.75 million in the

current year against Rs. 826.04 million in the previous year.

Operating Profit (EBIDTA) for the year stood at Rs 230.84 million,

an increase of 14.68 % from Rs. 201.28 million in 2008-2009.

In order to conserve the resources and to be able to plough them

back for future growth, your Directors have not recommended any

dividend for the financial year 2009-2010.

SUBSIDIARY COMPANIES

The Financial Statements for the year ended March 31, 2010 of

Barbeque-Nation Hospitality Ltd. and Malwa Hospitality Pvt. Ltd.,

both subsidiaries of your company, are annexed to the Annual

Report.

CONSOLIDATED FINANCIAL STATEMENTS

A statement under Section 212 of the Companies Act, 1956 in

respect of the subsidiary Companies is annexed and forms an

integral part of this Report. The consolidated financial statements of

the Company and its subsidiary companies prepared in accordance

with Accounting Standards (AS)-21 and Clause 32 of the Listing

Agreement “Consolidated Financial Statement” form part of the

Annual Report and Accounts.

COURSE OF BUSINESS AND OUTLOOK

The annexed Management Discussion and Analysis forms a part of

this Report and covers, amongst other matters, the performance of

the Company during the Financial Year 2009-10 as well as the future

outlook.

2009-2010 proved to be yet another difficult year for the hospitality

industry worldwide. The `economic environment continued to be

clouded by the global financial crises. As per the World Travel and

Tourism Council("WTTC"), global GDP fell by 2.1% in real terms

during 2009. Hotel industry suffered in the wake of the economic

slowdown under review. However, your Company succeeded in

mitigating the impact to some extent by taking proactive measures

aimed at improving the efficiency and business development. Now,

with the economy showing signs of strengthening, business and

leisure travel is picking up and your Company is poised to benefit

from this trend.

PUNE HOTEL

Your Company launched the Final phase of its Pune hotel. The project

comprising of 243 rooms has many unique features. Your Company

has endeavored to offer a number of new features to discerning

customers – a luxurious Audi A7 to receive the guests from Airport to

the hotel and to drop them back at Airport; all 243 rooms equipped

with an Apple iTouch device, which becomes the single centralized

control for all gadgets within the room. Further, each of the floors is

intended to be a hotel in itself – one floor is designed for single

female traveler; one floor is dedicated to European guests and one

for Oriental visitors and so on. The hotel has received a good

response and is expected to meet the growing requirement of quality

accommodation at reasonable price in this fast growing city.

FINANCIAL RESULTS

Particulars Financial Year 2009-10 Financial Year 2008-09

Income 819.75 826.04

Less: Operating Expenses 588.91 624.76

Profit/(Loss) before Financial Charges and Depreciation. 230.84 201.28

Less: Financial Charges 129.39 71.88

Profit/(Loss) before Depreciation 101.45 129.40

Less: Amortization of Deferred Revenue Exp. 0.00 0.00

Less: Depreciation 94.37 60.25

Add: Prior Period & Extraordinary Items 0.00 7.16

Profit/(Loss) before Tax 7.08 76.31

Less: Provision for taxation 11.74 24.50

Operating profit/(Loss) after Tax (4.66) 51.80

Add: Mat Credit Entitlement 1.09 0.00

Profit after tax before Mat Credit (3.57) 51.80

Add: Balance brought forward from previous year 98.89 47.08

Balance carried to Balance Sheet. 95.32 98.89

(Figures in Rs. million)

DIRECTORS' REPORT

The Board presents the Twenty Seventh Annual Report together with the Audited Statement of Accounts and the Auditor's Report of the

Company for the year ended 31st March, 2010.

12

2. The Directors have selected such accounting policies and

applied them consistently and made judgments and estimates

that were reasonable and prudent so as to give a true and fair

view of the state of the affairs of the Company as at March 31,

2010 and of the Profit of the Company for the year under

review;

3. The Directors have 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; and

4. The Directors have prepared the annual accounts of the

Company on going concern basis.

CORPORATE GOVERNANCE

A separate section on Corporate Governance and a Certificate from

the Auditors of the Company regarding Compliance of conditions of

Corporate Governance as stipulated under Clause 49 of the Listing

Agreement with the Stock Exchanges, forming part of the Annual

Report is annexed.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION ETC.

Pursuant to Section 217(1)(e) of the Companies Act 1956, read with

rules made there under, the Company is not required to give the

particulars of the conservation of energy, since the Hotel industry is

not covered under the list of Industries required to provide such

information.

The Company has not absorbed any new technology during the year

under review. The inflow and Outflow of Foreign Exchange during the

year under review is as under:

Foreign Exchange Earnings : Rs. 64.306 million

Foreign Exchange Outgo : Rs. 10.454 million

PARTICULARS OF EMPLOYEES

Information in accordance with sub-section (2A) of Section 217 of

the Companies Act, 1956 read with the Companies (Particulars of

Employees) Rules, 1975, as amended, forms part of this Report.

However, as per provision of section 219(1)(b)(iv) of the Companies

Act, 1956, the reports and the accounts are being sent to all the

shareholders of the Company excluding the statement of particulars

of employees.

Any member interested in obtaining such particulars may write to the

Company Secretary at the Registered Office of the Company.

ACKNOWLEDGMENT

Your Directors would like to express their sincere appreciation for

the co-operation and support received from shareholders, bankers,

financial institutions, regulatory bodies, customers, suppliers,

employees and other business constituents during the year under

review.

For and on behalf of the Board of Directors

Place : Indore

Date: August 31, 2010 Chairman

FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)

The members are aware that the Company had issued /allotted

75(Seventy Five) 0.5% coupon secured Foreign Currency

Convertible Bonds(“FCCBs”) @ US$ 100,000 per Bond to Bond

Holders in their meeting held as on 28th July 2006 with the option of

conversion in to Equity shares which were due for redemption on or

before August 3, 2011.

The Acquirer had the right to convert these FCCBs into Equity Shares

during the conversion period i.e. from August 26, 2006 to July 23,

2011

M/s Clearwater Capital Partners (Cyprus) Limited (CCPCL) were the

holder of the said FCCBs and they had exercised their right to convert

those FCCBs into Equity Shares of the company at a Conversion

Price of Rs.75/-(Rupees Seventy Five Only) per Equity Share. The

exchange rate of US$ to rupee was Rs. 46.68 to one US$, being the

Federal Reserve Bank of New York’s US$ to Rupee Exchange Rate on

July 26, 2006 i.e. the date mentioned in the FCCBs Offer Circular as

the applicable date.

In order to effect Conversion of FCCBs a notice had been received

from the Bank of New York Mellon (YNY Mellon) as on date

31.03.2010 intends to convert their 75 FCCBs into 46,68,000 Equity

Shares at a price of Rs. 75.00/- per equity shares as per the FCCBs

Offer Circular and the Board of Director's of the company converted

into 46,68,000 Equity Shares @ Rs. 75/- per equity shares at their

meeting held on 10th May 2010.

The above equity shares shall be ranking pari-passu with the existing

equity shares of the company in all respect and entitled to receive the

dividend same as of the old equity shares of the company.”

DIRECTORS

Sri Munawar Garbadawala and Capt. Salim Sheikh, Directors retire

by rotation and being eligible, offer themselves for re-appointment.

The Board of Directors recommends their re-appointment as

Directors.

AUDITORS

M/s Shah Gandhi & Shah, Chartered Accountants, Auditors of the

Company, hold office until the conclusion of the ensuing Annual

General Meeting and are eligible for re-appointment. The Company

has received a letter from them to the effect that their appointment, if

made, would be within the prescribed limits under section 224 (1B)

of the Companies Act 1956.

FIXED DEPOSITS

The Company has renewed/accepted deposits by private placement

and confidential offers from friends, relatives and associates under

Section 58A of the Companies Act, 1956 in terms of Rule 4A of

Companies (Acceptance of Deposit) Rules, 1975. The Company

does not have any unpaid or unclaimed Deposits.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217(2AA) of the

Companies Act, 1956, with respect to Directors’ Responsibility

Statement, it is hereby confirmed that:

1. In the preparation of the accounts for the financial year ended

March 31, 2010, the applicable accounting standards have

been followed along with proper explanation relating to

material departures;

13

a number of proactive measures aimed at business development

and improvement of efficiencies. As a result of these measures,

your Company has been able to mitigate the impact of the adverse

situation.

INDUSTRY OUTLOOK

The outlook for the hotel industry in India, figures released by the

Finance Ministry in its Economic Survey for 2009-10 indicate that

GDP should grow by 7.2 % in the Financial Year 2010-2011 and

over 9% in the Financial Year 2011-2012. As the global economic is

showing signs of recovery and Indian economy appears to be

getting back on track. Business and leisure travel is returning back

to normalcy. WTTC has forecast that travel and tourism in India will

grow by 6.7% in 2010. The contribution of the Travel and Tourism

Industry to India's GDP in 2010 will be 8.6%. It is expected that the

industry will account for 10% of the total employment in the

country by the year end.

Demand is expected to grow as the financial year progress. The

fully opening of the Pune will ensure that the Company has the

requisite inventory of rooms to cater to this demand. Rooms rates

which were depressed during the previous Financial Year should

also begin to improve during the year. Margins are likely to be under

strain due to high inflation.

Substantial investments in tourism infrastructure are essential for

Indian hotel industry to achieve its potential. The upgrading of

national highways connecting various parts of India has opened

new avenues for the development of budget hotels in India.

OPPORTUNITIES:

1. There are signs that the global downturn may be slowly

receding. A recent editorial in the Economist (April 3rd to

April 9th, 2010) predicts that the American economy will

grow by around 3% in 2010 after shrinking by 2.4% in 2009.

2. The hotel industry has seen revival in recent times and with

the current economic policies, the industry is poised to grow.

3. Pune hotel is expected to benefit from the brand equity that

the hotel has created for itself.

4. Indore has seen lot of industrial activity in the last few years

and is still growing with developments like shopping malls,

hospitals etc. With the Government taking positive view with

regard to the setting up of IT and BPO hub in the city and

developing infrastructure, it is expected that more business

will be generated for hotel industry.

FORWARD LOOKING STATEMENTS:

This report contains forward- looking statement, which may be

identified by their use of words like 'plans', 'expects', 'will',

'anticipates', 'believes', 'intends', 'projects', 'estimates' or other

words of similar meaning. All statements that address expectations

or projections about the future, including, but not limited to

statements about the company's strategy for growth, product

development, market position, expenditure, and financial results,

are forward-looking statements. Forward-looking statements are

based on certain assumptions and expectations of future events.

The Company cannot guarantee that these assumptions and

expectations are accurate or will be realised. The Company's actual

results, performance or achievements could thus differ materially

from those projected in any such forward-looking statement. The

Company assumes no responsibility to publicly amend, modify or

revise any forward-looking statements, on the basis of any

subsequent developments, information or events.

OVERALL REVIEW

The India growth story has encouraged well established

international hotel chains to enter the country. Those already in

India are contemplating expanding their presence. The Company

welcomes such competition. It believes that healthy competition

will raise standards with the gust being the ultimate beneficiary.

Hotel industry in India has witnessed tremendous boom in recent

years. Hotel Industry is inextricably linked to both the tourism

industry and the overall business environment.

However, though the financial year 2009-10 proved to be another

difficult year for the hospitality industry worldwide. The economic

environment continued to be clouded by the global financial crises.

As per the World travel and Tourism Council ("WTTC"), global GDP

fell by 2.1% in real terms during 2009. Developed economies were

most seriously affected. Consequently, there was a decline in the

number of foreign visitors to India. The terror attacks on Mumbai in

November, 2008, leading to travel advisories by many countries,

made a difficult situation worse by restricting travel. These events

were further aggravated by the H1N1 pandemic during the first half

of the Financial Year 2009-10. Hotel industry, being largely

dependent on the overall business climate, had to bear the brunt of

this changed scenario. Restaurants business, which now forms a

significant part of Company’s business (including its subsidiary),

also was impacted to some extent on account of the prevailing

slowdown.

In a challenging environment like this, your Company had to initiate

MANAGEMENT DISCUSSION & ANALYSIS

14

steady even in the face of the economic downturn. As the economy

seems to be returning to its fast growth trajectory, business for

Company’s hotels is expected to improve. The Company has also

launched a major cost optimisation drive which is likely to bring in

reduction in operating costs.

RISKS AND CONCERNS

General Economic Conditions:

The hotel business is dependent on economic conditions globally

as well as in India. This sector was affected by the global economic

recession and its revival is dependent on several economic factors

all over the world. Local market conditions, excess hotel room

supply in some cities, reduced international or local demand for

hotel rooms, government polices and regulations on taxation, etc.

do affect the hotel business.

Risk Mitigating Initiatives

There has been considerable progress in implementing a

structured risk management framework in the Company. The

framework is now well documented with laid down dissemination

procedures: this is updated periodically.

Your Company employs various Polices and methods to counter

these risks effectively as enumerated below:-

?To reduce dependence on Indore. The Company has

launched operations in Pune and is operating off-site

restaurants in high growth cities.

?The Company plans to retire costly debt from internal

Accruals to reduce high financial leverage and also increase

profitability by reducing interest cost.

?As a policy, the Company plans to deploy most of its accruals

towards debt retirement and raise fresh funds by way of

innovative methods to fund expansion plans.

Competition

INDORE

Radisson and Fortune Landmark in Indore are determined to make

the investment a profitable one. There is also stiff competition from

outdoor banquet operators who have developed accommodation

facilities at par with star category hotels and resorts. In addition a

number of hotels with small capacities have come up. Sheraton and

other groups are coming up with their large projects in Indore.

These hotels are likely to be operational in FY 2011-12 and may

pose stiff challenge to the Company.

PUNE

Competition has intensified in almost all segments of the Indian

hotels market due to entry of new and established players and

5. Pune, one of the fastest growing cities, has seen the entry of

large number of BPO’s and IT Companies, and this may

further widen the existing demand supply gap. The revival of

global economy would potentially increase business for

these Companies, leading to more business travel to the city.

The Company’s hotel being in close promixity to the IT/BPO

units, is expected to get a good chunk of this business.

Furthermore, Pune has the most number of national level

educational and social institutions, which constantly

generate business for hotel industry.

THREATS & CHALLENGES

1. The volatility of crude oil prices is a major concern. There is

the concern of crude oil prices rising once again; this will

adversely impact travel and tourism.

2. Increase in prices of commodities like input material of food

& beverages in view of the potential drought could only be

partially offset by the Company’s cost reduction initiatives.

3. At present, the company is facing competition from some of

the national hotel chains, standalone hotel properties and

budget hotels in unorganized sector.

4. Tourism being highly sensitive industry, any adverse political

or other unforeseen unfortunate events can put a halt on the

foreign traffic movement. However, due to present upbeat

economic conditions in the country, there has been lot of

domestic corporate travel, which would counter any

adverse impact of reduced foreign traffic inflow.

5. Emergence of large hospitality chains in budget segment

may make it increasingly difficult for smaller chains to

compete.

6. Spread of diseases like Swine Flu may have a negative impact

on hotel industry and the Company’s business.

7. High inflation is also putting pressure on payroll and related

costs.

COMPANY OUTLOOK

The Company is fully committed to environmental conservation

and social responsibilities. The Hotels operated by the company are

pursuing initiatives for the betterment of the communities located

in their vicinity.

During the year under review, your Company has launched the final

phase of its Pune hotel, which has received a good response. The

Club facility in the hotel is expected to commence operations

shortly. Your Company has initiated aggressive marketing

campaign to generate business and this is likely to yield positive

results going forward. Indore and Baroda hotels have been fairly

15

expansion plans of existing ones. Your Company is aware of the

competition and is taking measures to remain competitive in the

market place. The Company’s hotel is expected to get the benefit of

brand equity enjoyed by the Company.

BARODA

Your Company’s Baroda Hotel had witnessed stiff competition from

leading Hotel chains. Several more Hotel chains have announced

plans to enter the market.

Internal control systems and their adequacy

The efficiency of the internal control systems operating in the

Company is tested and monitored on continuous basis under the a

structured Internal Audit function.Control systems at each hotel

and other business units are consistently re-engineered in line with

changing requirement through the internal audit process. The Audit

Committee periodically reviews the audit process. The focus of

these reviews has been to identify;

?Corporate policies on accounting and major processes;

?Control weaknesses and areas of improvement;

?Compliance with defined policies and processes;

?Safeguarding of tangible and intangible assets;

?Management of business and operational risks;

?Anti-fraud programme.

?Efficient operations.

Your Company has recently completed the implementation of an

ERP system. Internal processes have been mapped on the new

software to a large extent. This is expected to ensure that the

internal control systems are applied consistently and uniformly

across locations and on an ongoing basis.

Material Developments in Human Resources/Industrial

Relations

Your Company believes that its people are as much its assets as its

infrastructure and attaches the highest importance to human

resources. It focuses on developing a performance culture

throughout the organization. Some of initiatives undertaken by the

Company, in this regard are as follows:

?A major initiative has been launched recently to identify the

core values in line with the vision and mission statement of

the Company, these core values are now being inculcated in

the Company’s workforce through a series of programs.

?Performance Management System has been reviewed and

strengthened so as to measure objectively the achievement

in Key Result Areas with Variable salary package linked to

performance,

?Providing opportunities to high performers for attending

training programmes and additional exposure,

?Web-based rewarding called “GEMS (Guest Expectations

Manage and Serve) with the objective of identifying high

performers in guest services and reward innovative

suggestions to improve guest services.

Industrial relations throughout the year were cordial at all units of

the Company. As on March 31, 2010 the Company had around

1000 employees.

SAFETY, HEALTH AND ENVIRONMENT

Your Company attaches utmost importance to safety standards at

all units of the Company. At all the hotels and restaurants of the

company, necessary steps are regularly undertaken to ensure the

safety of employees, equipment and the customers. Internal safety

checks are conducted regularly. Fire fighting training is provided to

staff and mock drills are conducted gauge emergency and disaster

management preparedness.

The Company believes in good health of its employees. To pursue

this objective, efforts are being made on both treatment as well as

maintaining good health. The Company has a club and gymnasium

at its Indore facility, where the employees are allowed and

encourage participating. Yoga training course is also conducted in

the club premises. Programmes have been conducted to advice

employees on ill-effect on health due to excessive consumption of

liquor and tobacco.

The Company’s hotels maintain clean and hygeinic environment

and keep strict vigilance on their effluent generation and disposal

adhering to standard norms in order to protect the environment

and surroundings. Water recharging techniques have been

adopted to retain the ground level water.

CAUTIONARY STATEMENT

Statement made in the Management Discussion and Analysis,

describing the Company’s objectives, projection, estimates,

predications and expectations may be ‘forward-looking statement’,

within the meaning of applicable securities laws and regulations.

The Company assumes no responsibility to publicly amend, modify

or revise any forward looking statements on the basis of any

subsequent development or events or for any loss any investor may

incur by investing in the shares of the Company based on the

‘forward looking statement’.

16

MANDATORY REQUIREMENTS:

1. COMPANY’S PHILOSOPHY

Corporate Governance is based on the principles of integrity,

fairness, equity , transparency, accountability and

commitment to represents the value, ethical and moral

framework under which business decision are taken. The

investors want to be sure that not only is their capital handled

effectively and adds to the creation of wealth, but the

business decisions are also taken in a manner which is not

illegal or involving moral hazard.

The core roles of the key entities flow from this structure. The

core roles, in turn, determine the core responsibilities of

each entity. In order to discharge such responsibilities, each

entity is empowered formally with requisite powers.

In India, corporate governance practices are regulated by

Clause 49 of the Listing Agreement entered into by

companies with Stock Exchanges and the provisions of the

Companies Act, 1956.

Keeping the above in mind, your Company has also

committed itself to the philosophy of good Corporate

Governance in all its dealing, utmost integrity in its conduct

and in compliance with the highest standards of corporate

values and ethics.

Tour company consider Corporate Governance as a

continuous journey to provide a congenial environment to

harmonise the goals of maximizing the stakeholder' value

and maintaining a customer-centric focus in all dealings with

the outside world, besides keeping important segments of

the society adequately informed.

Reporting requirements as per revised Clause 49 as

applicable have been given due effect in this Report on

Corporate Governance.

2. BOARD OF DIRECTORS

In terms of the Company’s Corporate Governance policy, all

statutory and other significant and material information are

being placed before the Board to enable the Board discharge

its responsibilities of strategic supervision of the Company.

The primary role of the Board is that of trusteeship to protect

and enhance shareholder value through strategic

supervision. The Board ensures that the Company has clear

goals relating to shareholder value and its growth. The

Board, as part and parcel of its functioning, also periodically

reviews its role.

Composition of the Board.

The Sayaji Board is a balanced Board, comprising Executive

REPORT ON CORPORATE GOVERNANCEand Non-Executive Directors. As on 31st March 2010, the

Board consisted of Eight (8) Directors, out of which Two (2)

Executive and Four (4) Non- executive & Independent

Directors, who are having expertise in their respective

functional areas and capable of bringing in a wide range of

managerial skills and business and professional acumen.

During the year, Five (5) Board Meetings were held on

30/04/2009, 31/07/2009, 31/08/2009, 31/10/2009 and

29/01/2010.

Mr. Razak Dhanani Chairman 5 0 Yes

Mr. Sajid Dhanani Managing Director 5 4 No

Mr. T N Unni Independent Director 5 4 Yes

Mr. R. Sharma Nominee Director, TFCI 5 3 No

Capt. Salim Sheikh Director 5 5 No

Mr. Munawar Director 5 0 YesGarbadawala

Mr. Y.S. Mehta Nominee Director, MPFC 5 2 No

Mr. T.S. Bhattacharya Independent Director 5 1 No

Name ofDirectors

Designation

No. of Boardmeetings

held during the year2009-10

No. of BoardMeetingsattended

during theyear 2009-10

Attendance atthe last Annual

General Meetingheld on 30th

September, 2009

Detail of Directorship on the Board of other Companies as on

31/03/2010.

Name of Directors Directorship Chairmanship Chairmanshipin the board in the committees

Mr. Razak Dhanani 4 3 Nil

Mr. Sajid Dhanani 8 3 Nil

Mr. T. N. Unni 2 Nil Nil

Mr. R. Sharma 2 Nil Nil

Capt. Salim Sheikh 1 Nil Nil

Mr. Munawar Garbadawala Nil Nil Nil

Mr. Y.S. Mehta 1 Nil Nil

Mr. T.S. Bhattacharya 2 Nil Nil

3. COMMITTEES OF THE BOARD

Audit Committee

(a) Terms of reference.

The Terms of reference of the Audit Committee covers all

applicable aspects stipulated by SEBI from time to time. It is

also in full conformity to the requirements of section 292A of

the Companies Act, 1956.

(b) Composition, names of Members and Chairperson.

Name Designation

Mr. T. N. Unni Chairman of the Committee / Independent Director

Mr. R. Sharma Member / Independent Director

Capt. Salim Sheikh Member / Director

All the Directors have good financial and accounting Knowledge.

Chairman of the Committee is a Practicing Chartered Accountant.

17

Name Designation

Mr. T. N. Unni Chairman of the Committee / Independent Director

Mr. R. Sharma Member / Independent Director

Capt. Salim Sheikh Member / Director

30/04/2009 Mr. T. N. Unni Yes

Mr. R. Sharma No

Capt. Salim Sheikh Yes

31/07/2009 Mr. T. N. Unni No

Mr. R. Sharma Yes

Capt. Salim Sheikh Yes

31/08/2009 Mr. T. N. Unni Yes

Mr. R. Sharma Yes

Capt. Salim Sheikh Yes

31/10/2009 Mr. T. N. Unni Yes

Mr. R. Sharma Yes

Capt. Salim Sheikh Yes

29/01/2010 Mr. T. N. Unni Yes

Mr. R. Sharma No

Capt. Salim Sheikh Yes

Date of Meeting Members S/Shri Meetings Attended

REMUNERATION COMMITTEE

The Remuneration committee comprises of 3 Non Executive

Directors, details are given as below:

(a) Details of the remuneration paid to the Managing Director

and whole time Director for the year ended 31st March 2010.

Sri Sajid R. Dhanani, Managing Director received

remuneration of Rs. 3.009 Million

and Mr. Munawar Garbadawala, Whole time Director

received, Rs. 0.376 Million.

(b) Sitting Fees paid to Director:

Sitting fees to all the Non-Executive Directors have been paid

@ of Rs. 2000/- for attending each meeting of the Board and

committee.

SHAREHOLDERS/INVESTORS GRIEVANCE COMMITTEE

(a) Mr. T. N. Unni is the Chairman and Mr. Razak Dhanani is the

Member of the Committee.

(b) The Committee reviews the system of dealing with and

responding to correspondence from all categories of

investors. Every Complaint letter received from Stock

Exchanges/ SEBI/ Department of Company Affairs etc., and

the responses thereto are reviewed by this Committee.

(c) Complaints, if any, from investors are received either at the

Registered Office of the Company at Vadodara or at the Office

of Registrar and Transfer Agents or at the Administrative

Office of the Company at Indore.

(d) As on March 31st, 2010, there were no requests pending/

overdue beyond the due dates.

(e) The total number of complaints received and replied to the

satisfaction of the Shareholders during the year under review

were 12(Twelve) Outstanding complaints as on 31st March

2010 were Nil as per records.

(f) Name and designation of the Compliance Officer is as under:

Name : Awadhesh Gupta

Designation : Company Secretary

Share Transfer System:

The Share Transfer work is handled by Registrar and Share Transfer

Agent, M/s. Link Intime India Pvt. Limited formerly known as M/s

Intime Spectrum Registry Limited, Physical Shares for transfer are

generally transferred within statutory period if found in order. The

Committee meets regularly to review and take on record the

transfer proposals. The Committee approves the cases of Split and

consolidation of Shares Duplicate Certificate requests,

rematerialisation requests, etc.

Share Transfer Details for the period from 1st April 2009 to 31st

March 2010.

Transactions

Number of Transfers

Number of Shares Transferred

No. of Pending Share Transfers

77

17690

Demat

NIL

Total

107

22023

NIL

Physical

30

NIL

4333

(c) Meetings & Attendance: - The Audit Committee met five

times during the year 2009-10.The attendance at committee

meeting is as follows:

Year Location Date & TimeWhether Special Resolution

Passed or not

4. GENERAL BODY MEETINGS

Location and time of holding the last three AGMs.

24th AGM – 2007 Sayaji HotelOpp. Rajshree Talkies, Kala Ghoda,Sayajigunj, Vadodara. 390 005

29th September,2007at 12.30 P.M.

1. Increase in Remuneration of Managing Director 2. Issue of share Warrants convertible in to fully paid up equity shares3. Voluntary Delisting of equity shares from Madhya Pradesh Stock Exchange, &Vadodara Stock Exchange Limited, & Ahmedabad Stock Exchange 4. Investment in the excess of prescribed limit under section 372A.5. To give securities, guarantee and corporate guarantee under section 372 A.

26th AGM - 2009 Sayaji HotelOpp. Rajshree Talkies, Kala Ghoda,Sayajigunj, Vadodara. 390 005

30th September,2009at 12.30 P.M.

Nil

25th AGM - 2008 Sayaji HotelOpp. Rajshree Talkies, Kala Ghoda,Sayajigunj, Vadodara. 390 005

30th September,2008at 12.30 P.M.

To give Security, Guarantee and Corporate Guarantee forM/s Sana Hospitality Services Pvt. Ltd. as per the prescribed under section 372 A.

No other shareholders' meeting was held during the year.

18

5. DISCLOSURES

a. None of the transactions with any of the related parties

were in conflict with the interest of the Company.

b. There have been no cases of Non Compliance by the

Company imposing penalties, and strictures on the

Company by the Stock Exchanges or SEBI or any

authority on any matter related to Capital Markets

during last 3 years.

6. MEANS OF COMMUNICATION.

●The Quarterly results are published in English and

Gujarati version.

●Results are posted on the Bombay Stock Exchange

website : www.bseindia.com

●Management Discussion & Analysis is a part of the

Annual Report.

7. GENERAL SHAREHOLDER INFORMATION

a) Annual General Meeting

Day and date Thursday, September 30, 2010.

Time 12.30 P.M.

Venue Sayaji Hotels Limited

Opp: Rajshree Talkies,

Kalaghoda, Sayajigunj,

Vadodara – 390 005 (Guj.)

Date of Book Closure 27/09/2010 to 30/09/2010

b) Financial Calendar.

The Company follows the financial year from April to March.

Unaudited Financial Results for the four quarters and the

Audited Financial Results for the year ended 31st March,

2010 were taken on record and approved by the Board in its

meeting/s held on the following dates.

Quarter ended Date of Board Meeting

April-June, 2009 31st July, 2009

July-September, 2009 31st October, 2009

October-December, 2009 29th January, 2010

January-March, 2010 10th May 2010

Year ended

31st March, 2010 31st August, 2010

c) Dividend Payment Date : None

d) Registered Office : Sayaji Hotel,

Opp. Rajshree Talkies,

Kala Ghoda, Sayajigunj,

Vadodara.- 390 005.

Phone : 0265- 2363030.

Fax: 0265- 2226134

e) E-mail Address : sayaji90@yahoo.com

f) Stock Exchanges

Name of Exchanges where shares are Listed Code

The Stock Exchange, Mumbai 523710

Ahmedabad Stock Exchange 52190

The Stock Exchange Vadodara 523710

Madhya Pradesh Stock Exchange 2729

g) ISIN No. of the Company’s : INE318C01014

Equity Shares held in Demat Form : 10119685

Equity Shares held in Physical Form : 2730315

h) Depository Connectivity : NSDL & CDSL

i) Registrar and Transfer Agents :

Head Office & Correspondence Address

Link Intime India Pvt. Limited

C-13, Pannalal Silk Mills Compound,

L.B.S.Marg, Bhandup (W), Mumbai-400 078

E-mail: mumbai@linkintime.co.in

Phone (022)25963838

Fax: 25946969

j) Address for Investor’s Correspondence

Sayaji Hotel.

H-1, Scheme No. 54, Vijaynagar, Indore.

Phone: 0731- 4003636/ 4006666

Fax: 0731- 4003131

E-mail : mail@sayajiindore.com

cs@sayajiindore.com

K) The Company has not raised Equity Share Capital in the

Financial Year 2009-10.

l) Dematerialization of Shares:

As on 31st March 2010, 10119685 shares stands

dematerialized representing 78.75 % of the total shares of

the Company.

m) Project Locations:

- Sayaji Hotel, Indore, Madhya Pradesh.

- Sayaji Hotel, Vadodara, Gujarat.

- Sayaji Hotel, Pune, Maharashtra.

19

n) Categories of shareholdings as on 31st March 2010:

CategoryNo. of

Shares Held

% ofShare-holding

Promoters: 66,74,105 51.94

Directors and Relatives 100 0.00

Public:

1. Institutions:

a. Mutual Funds and UTI 96,015 0.75

b. Banks and Financial Institution 300 0.00

c. Central Govt./State Govt./ Venture

Capital Funds/Insurance Companies 0 0.00

d. Foreign Institutional Investors 13,95,747 10.86

e. Foreign Venture Capital Investors 10,89,891 8.48

2. Non Institutional Investors

a. Bodies Corporate 10,26,444 7.99

b. Individuals(Public) 12,63,694 9.83

c. NRI/OCB 12,56,721 9.78

d. Clearing Member 46,983 0.37

TOTAL 1,28,50000 100.00

o) Stock Market Data.

April 09 55.00 30.20 11403.25 9901.99

May 09 55.80 39.15 14625.25 11682.99

June 09 70.00 39.55 15466.81 14265.53

July 09 47.90 38.00 15670.31 13400.32

August 09 48.85 43.00 15924.23 14784.92

September 09 70.75 45.10 17126.84 15398.33

October 09 65.50 49.70 17326.01 15896.28

November 09 74.00 49.25 17198.95 15404.94

December 09 93.60 66.60 17464.81 16601.20

January 10 78.50 68.00 17701.13 16289.82

February 10 78.15 70.00 16496.05 15790.93

March 10 118.85 72.50 17711.35 16772.56

Sources : Data Compiled from BSE official website

MonthMumbai Stock Exchange Ltd. BSE SENSEX

High Low High Low

20

CERTIFICATE

To

The Members of

Sayaji Hotels Ltd

Vadodara

We have examined the Compliance of the conditions of Corporate Governance by Sayaji Hotels Limited for the year ended March 31, 2010 as stipulated in Clause 49 of listing Agreement of the said Company with Stock exchanges in India.

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

In our opinion and to the best of our information and explanation given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.

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

For SHAH GANDHI & SHAH

Firm Regn. No. 126862W

Chartered Accountants

Vadodara Nimesh Gandhi

27th August, 2010 Partner

M.No. 49134

21

22

AUDITORS REPORT'

For SHAH GANDHI & SHAH

Firm Regn. No. 126862W

Chartered Accountants

Vadodara Nimesh GandhiAugust 31, 2010 Partner

M.No. 49134

To

THE MEMBERS OF

SAYAJI HOTELS LIMITED

VADODARA

We have audited the attached Balance Sheet of SAYAJI HOTELS

LIMITED as at 31st March, 2010 and also the Profit & Loss

Account and Cash Flow Statement for the year ended on that

date annexed thereto. These financial statements are the

responsibility of the Company’s management. Our

responsibility is to express an opinion on these financial

statements based on our audit.

We conducted our audit in accordance with auditing standards

generally accepted in India. Those Standards require that we

plan and perform the audit to obtain reasonable assurance

about whether the financial statements are free of material

misstatement. An audit includes examining, on a test basis,

evidence supporting the amounts and disclosures in the

financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by

management, as well as evaluating the overall financial

statement presentation. We believe that our audit provides a

reasonable basis for our opinion.

As required by the Companies (Auditor’s Report) Order, 2003 as

amended by Companies (Auditor’s Report) (Amendment) Order

2004 (together “the Order”), issued by the Central Government

of India in terms of sub-section (4A) of section 227 of the

Companies Act, 1956, we enclose in the Annexure a statement

on the matters specified in paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to in above

paragraph, we report that:

(i) We have obtained all the information and explanations,

which to the best of our knowledge and belief were

necessary for the purposes of our audit;

(ii) 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;

(iii) The Balance Sheet and Profit and Loss Account and Cash

Flow Statement dealt with by this report are in agreement

with the books of account;

(iv) In our opinion, the Balance Sheet and Profit and Loss

Account and Cash Flow Statement dealt with by this report

comply with the accounting standards referred to in sub-

section (3C) of section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the

directors, as on 31st March, 2010, and taken on record by

the Board of Directors, we report that none of the directors

are disqualified as on 31st March, 2010 from being

appointed as a director in terms of clause (g) of sub-

section (1) of section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and

according to the explanations given to us, the said

accounts read together with the Significant Accounting

Policies as per Schedule 16 and other notes thereon

appearing in Schedule 16, give the information required

by the Companies Act, 1956, 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 31st March, 2010; and

b. in the case of the Profit & Loss Account, of the loss

of the Company for the year ended on that date., and

c. in the case of the Cash Flow Statement, of the cash

flows for the year ended on that date.

23

ANNEXURE TO AUDITOR’S REPORT

(Referred to in paragraph 3 of our report of even date on the

accounts for the year ended on 31st March, 2010 of Sayaji

Hotels Limited.)

As required by the Companies’ (Auditors’ Report) Order, 2003,

issued by the Company Law Board in terms of Section 227 (4A)

of the Companies Act, 1956 and on the basis of such checks of

books and records of the Company as we considered

appropriate and the information and explanations given to us

during the course of the audit, we report as under:

1. (a) The records of the Company in respect of fixed

assets needs to be updated in respect of additions,

quantitative details, identification numbers,

valuation, etc.

(b) We are informed that the Fixed Assets of the

Company have been physically verified by the

Management during the year at reasonable intervals

and no material discrepancy has been noticed on

such verification.

(c) The assets disposed off during the year are not

significant and therefore do not affect the going

concern assumption.

2. (a) Stocks of Food & Beverages, Stores, and Operating

Supplies etc. have been physically verified by the

management during the year. In our opinion,

frequency of verification is reasonable.

(b) In our opinion and according to the information and

explanations given to us, the procedures of physical

verification of stocks followed by the management

were reasonable and adequate in relation to the size

of the Company and the nature of its business.

(c) In our opinion the Company has maintained proper

records of inventory. The discrepancies noticed on

such physical verification of stocks as compared to

book records were not significant and the same has

been properly dealt with in the books of accounts.

3. (a) Company has granted loans to 3 companies, firms

or other parties covered in the register maintained

under section 301 of the Act., where in the balance

payable as at the year end is Rs. 228.05 lacs. The

maximum amounts involved in the transactions

during the year are Rs. 4.43 lacs.

(b) The loans granted are interest free and are repayable

on demand.

(c) There is no overdue amount of loans granted to

companies, firms or other parties since they have

not been called up for repayment.

(d) The Company has not taken any loans from firm

covered in the register maintained under section

301 of the Act, where in the balance payable as at the

year end is Rs. Nil lacs.

4. In our opinion and according to the information and

explanations given to us, there is adequate internal

control system commensurate with the size of the

company and the nature of its business with regard to the

purchase of stores, operating supplies, components,

plant and machinery, equipments and other assets and for

the sale of goods and services.

5. (a) According to the information and explanations

given to us, we are of the opinion that the particulars

of the contracts or arrangements refereed to in

section 301 of the Companies Act, 1956 have been

so entered.

(b) In our opinion according to the information and

explanations given to us, the transactions made in

pursuance of such contracts or arrangements have

been made at prices which are reasonable having

regard to prevailing market prices at the relevant

time.

6. In our opinion and according to the information and

explanations given to us, the Company, with regards to

the deposits accepted from the public, has complied the

provisions of the section 58A, 58AA or any other relevant

provision of the Companies Act, 1956 and the Companies

(Acceptance of Deposits) Rules, 1975.

7. The Company has system of internal audit which, in our

opinion, is commensurate with the size of the business.

8. Central Government has not prescribed maintenance of

the cost records under section 209(1)(d) of the

companies Act 1956 for the Company.

9. (a) According to the records, information and

explanations provided to us of the company is

generally regular in depositing, with appropriate

authorities undisputed amount of Provident Fund,

investor education fund, Employees’ State

24

Insurance, income tax, sales tax, wealth tax, service

tax, custom duty, excise duty, cess and other

statutory dues applicable to it and no undisputed

amounts payable were outstanding as at 31st

March, 2010 for the period of more than six months

from the date they became payable.

(b) The following are the details of disputed Income

Tax, Sales Tax, Wealth Tax, Service Tax, Customs

Duty, Excise Duty and Cess that have not been paid

to the concerned authorities :

10. Based on our audit procedures and on the information and

explanation given by management, the company has not

defaulted in repayment of dues to the financial institution,

bank or debenture holders as at the balance sheet date:

11. Based on our audit procedures and the information and

explanation given to us, the company has not granted

loans and advances on the basis of securities by way of

pledge of shares, debentures and other securities.

12. The Company is not a chit/ nidhi /mutual benefit fund/

society and clause XIII of the order is not applicable.

13. The Company is not dealing or trading in shares,

securities, debentures and other investments.

14. On the basis of the information and explanation given to

us the company has given guarantees for the loans taken

by other company from bank or financial institution and

are not prejudicial to the interest of the Company.

15. Based on our audit procedures and explanation given to

us the term loans have been applied for the purpose for

which they were raised.

16. On the basis of our examination of the Balance Sheet of

the Company and the information and explanation given

NAME OF THE

STATUTORY DUESFORUM WHERE DISPUTE

IS PENDING

UNPAID AMOUNT

(Rs.)

01

02

03

04

Service Tax

Luxury Tax

VAT

Entry Tax

Tribunal

Dy. Commr. VAT tax, Indore

Dy. Commr. VAT tax, Indore

Dy. Commr. VAT tax, Indore

Rs. 256.78 lacs Tax

Rs. 256.78 lacs Penalty

Rs. 148.35 lacs Interest

Rs. 41.13 lacs

Rs. 20.73 lacs

Rs. 04.64 lacs

to us, we are of the opinion that the funds raised on short-

term basis have not been used for long-term investment.

17. During the year, The company has not made any

preferential allotment of share to parties and companies

covered in the Register maintained under section 301 of

the Act.

18. The Company has not issued any debentures during the

year.

19. The Company has not raised any money by public issues

during the year.

20. Based on the audit procedures performed and

information and explanations given to us by the

management, we report that no fraud on or by the

company has been noticed or reported during the course

of our audit.

For SHAH GANDHI & SHAH

Firm Regn. No. 126862W

Chartered Accountants

Vadodara Nimesh GandhiAugust 31, 2010 Partner

M.No. 49134

25

BALANCE SHEET AS AT 31-03-2010

I. SOURCES OF FUNDS

(1) Shareholders' Funds

(a) Share Capital 1 1,285.00 1,285.00

(b) Reserves & Surplus 2 4,505.08 4,140.75

(c) Share Warrants of --- 5,790.08 400.08 5,825.83 (See note 19 of Part B of Sch.16)

(2) Loan Funds

(a) Secured Loans 3 12,964.13 13,591.29

(b) Unsecured Loans 4 4,055.33 17,019.46 4,020.93 17,612.22

(3) Deferred Tax (See note 6 of Part B of Sch.16) 792.62 748.90

TOTAL 23,602.16 24,186.95

II. APPLICATION OF FUNDS

(1) Fixed Assets 6

(a) Gross Block (Original Cost) 23,417.93 19,537.79

(b) Less : Depreciation (3,995.79) (3,054.80)

(c) Net Block 19,422.14 16,482.99

(d) Capital Work in Progress 6 --- 1,909.36

(e) Expenditure during Construction 6 24.91 558.50

Period pending allocation

(2) Investments 7 1,467.78 1,464.70

(3) Current Assets, Loans and Advances 8 3,980.91 5,545.74

Less: Current Liabilities & Provisions 5 (1,293.58) (1,774.34)

Net Current Assets 2,687.33 3,771.40

TOTAL 23,602.16 24,186.95

Significant Accounting Policies 16

Notes on Accounts 16

(Rs. In lacs)

SchAS AT

31/03/10AS AT

31/03/09

Schedules referred to above form an integral partof the Balance SheetAs per our report of even date attached For SHAH GANDHI & SHAHFirm Regn. No. 126862WChartered Accountants

Nimesh GandhiPartnerM.No. 49134

VADODARA : 31st August 2010

For and on behalf of the Board of Directors

INDORE : 31st August 2010

Sajid R Dhanani Managing Director

Capt. Salim SheikhDirector

M.F. GarbadwalaDirector

Awadhesh GuptaCo. Secretary

26

PROFIT & LOSS ACCOUNT FOR THE YEAR 01.04.2009 TO 31.03.2010

I. INCOME

Rooms, Restaurants, Banquets, Shops 9 8,141.57 8,218.54

and Other Services

Other Income 10 55.98 41.92

TOTAL 8,197.55 8,260.46

II. EXPENDITURE

Food and Beverages materials consumed 11 1,688.69 2,360.72

Operating Expenses 12 1,064.54 821.01

Power and Fuel 12 717.00 744.97

Employees' Emoluments 13 1,150.02 1,175.51

Selling & Administrative Exps. 14 1,268.88 1,145.43

5,889.13 6,247.64

III. OPERATING PROFIT BEFORE INTEREST 2,308.42 2,012.82

Financial Charges 15 1,293.91 718.80

IV. PROFIT/ (LOSS) BEFORE DEPRECIATION 1,014.51 1,294.02

Depreciation 947.42 603.81

Add : Depreciation Written Back 3.68 1.28

V. PROFIT/ (LOSS) BEFORE TAX & PRIOR PERIOD & 70.77 691.49

EXTRAORDINARY ITEMS

LESS : PRIOR PERIOD & EXTRAORDINARY ITEMS --- (71.61)

VI. PROFIT/ (LOSS) BEFORE TAX 70.77 763.10

VII. PROVISION FOR TAXATION

CURRENT TAX 73.73 93.09

DEFERRED TAX 43.72 144.13

FRINGE BENEFIT TAX --- 7.83

VIII. PROFIT/ (LOSS) AFTER TAX BEFORE MAT CREDIT (46.68) 518.06

IX. Add : MAT CREDIT ENTITLEMENT

CURRENT YEAR 10.93 ---

X. PROFIT/ (LOSS) AFTER TAX (35.75) 518.06

XI. BALANCE B/FORWARD FROM LAST YEAR 988.95 470.89

XII. AMOUNT AVAILABLE FOR APPROPRIATION 953.20 988.95

XIII. AMOUNT CARRIED TO BALANCE SHEET 953.20 988.95

31-Mar-10Sch 31-Mar-09

Schedules referred to above form an integral partof the Balance SheetAs per our report of even date attached For SHAH GANDHI & SHAHFirm Regn. No. 126862WChartered Accountants

Nimesh GandhiPartnerM.No. 49134

VADODARA : 31st August 2010

For and on behalf of the Board of Directors

INDORE : 31st August 2010

Sajid R Dhanani Managing Director

Capt. Salim SheikhDirector

M.F. GarbadwalaDirector

Awadhesh GuptaCo. Secretary

(Rs. In lacs)

27

SCHEDULE - 1 : SHARE CAPITAL

AUTHORISED

20,000,000 Equity Shares of Rs.10/- each 2,000.00 2,000.00

1,000,000 Preferance Shares of Rs.100/- each 1,000.00 1,000.00

TOTAL 3,000.00 3,000.00

ISSUED, SUBSCRIBED & PAID-UP

12850000 (12850000) Equity

Shares of Rs. 10/- each 1,285.00 1,285.00

TOTAL 1,285.00 1,285.00

SCHEDULE - 2 : RESERVES & SURPLUS

(i) Share Premium

Opening at beginning 2,910.40 2,910.40

Addition during the year --- ---

Utilised during the year --- ---

Closing at end 2,910.40 2,910.40

(ii) General Reserve

Opening at beginning 241.40 241.40

Addition during the year 400.08 ---

(See note 19 of Part B of Sch.16)

Utilised during the year --- ---

Closing at end 641.48 241.40

TOTAL (i+ii) 3,551.88 3,151.80

(iv) Profit & Loss Account

Opening at beginning 988.95 470.89

Addition during the year (35.75) 518.06

Closing at end 953.20 988.95

GRAND TOTAL 4,505.08 4,140.75

SCHEDULE - 3 : SECURED LOANS

(Refer Note 1 of Part B of Schedule 16)

Term Loans 12,345.99 13,469.87

Asset Credit Finance 148.73 121.42

Working Capital Loans 469.41 ---

TOTAL 12,964.13 13,591.29

SCHEDULES FORMING PART OF THE BALANCE SHEET

As at31/03/10

As at31/03/09

(Rs. In lacs)

28

SCHEDULE - 4 : UNSECURED LOANS

Foreign Currency Convertible Bonds

From Foreign Companies 3,501.00 3,501.00

(See Note 18 of Part B of Schedule 16)

Fixed Deposits :

From Public 510.22 216.32

Other Loans :

From Others 27.73 40.51

From Financial Institution --- 200.00

From Trade Deposit 16.38 44.11 63.10 303.61

TOTAL 4,055.33 4,020.93

SCHEDULE - 5 : CURRENT LIABILITIES &

PROVISIONS

Current Liabilities

Sundry Creditors 913.71 1,372.37

Interest Acc.but not due 119.58 1,033.29 150.10 1,522.47

(due within 12 months)

Provision -

Taxation 160.32 149.39

Others 99.97 260.29 102.48 251.87

TOTAL 1,293.58 1,774.34

As at31/03/10

As at31/03/09

(Rs. In lacs)

SC

HED

ULE

- 6

: F

IXED

AS

SET

S(R

s. in

lacs

)

Sr.

No.

PA

RTI

CU

LAR

S

GR

OS

S B

LOC

KD

EPR

ECIA

TIO

NN

ET B

LOC

K

Open

ing

as o

n 01

.04.

09A

dditi

ons

Dedu

ctio

n &

Adju

stm

ent

Clos

ing

as o

n 31

.03.

10Op

enin

g as

on

01.0

4.09

Del

etio

nA

dditi

onCl

osin

g as

on

31.0

3.10

As o

n31

.03.

10As

on

31.0

3.09

A.

TA

NG

IBLE

AS

SET

S

1 B

UIL

DIN

G 9

,372

.16

1,5

82.9

8 -

--

10,

955.

14

1,3

19.5

7 -

--

380

.91

1,7

00.4

7 9

,254

.66

8,0

52.6

0

2 FU

RN

ITU

RE

& F

IXTU

RE

3,1

86.8

8 1

,805

.51

3.9

0 4

,988

.50

804

.97

3.6

8 2

68.1

5 1

,069

.45

3,9

19.0

5 2

,381

.91

3 P

LAN

T &

MA

CH

INER

Y 2

,912

.79

194

.53

---

3

,107

.31

606

.96

---

1

40.4

0 7

47.3

5 2

,359

.96

2,3

05.8

3

4 S

ERV

ICE

EQU

IPM

ENT

779

.28

111

.30

0.0

7 8

90.5

1 1

75.1

3 0

.04

73.

05

248

.15

642

.37

604

.15

5 C

OM

PU

TER

EQ

UIP

MEN

TS 2

42.7

7 1

22.0

5 -

--

364

.82

76.

76

---

2

7.98

1

04.7

4 2

60.0

7 1

66.0

0

6 V

EHIC

LE 3

21.4

5 5

5.09

3

.05

373

.49

52.

60

2.7

1 3

3.60

8

3.48

2

90.0

1 2

68.8

6

7 LE

AS

E H

OLD

LA

ND

94.

06

---

-

--

94.

06

---

-

--

---

-

--

94.

06

94.

06

8 FR

EEH

OLD

LA

ND

2,5

52.3

2 -

--

---

2

,552

.32

---

-

--

---

-

--

2,5

52.3

2 2

,552

.32

B.

IN

TAN

GIB

LE A

SS

ETS

1 LI

QU

OR

LIC

ENC

E 3

3.08

-

--

---

3

3.08

7

.13

---

3

.97

11.

10

21.

98

25.

94

2 S

OFT

WA

RE

& L

ICEN

CES

43.

00

15.

70

---

5

8.71

1

1.68

-

--

19.

36

31.

04

27.

66

31.

32

TOTA

L 1

9,53

7.79

3

,887

.15

7.0

1 2

3,41

7.93

3

,054

.80

6.4

3 9

47.4

2 3

,995

.79

19,

422.

14

16,

482.

99

PR

EVIO

US

YEA

R F

IGU

RES

12,

372.

39

7,3

12.8

3 1

47.4

3 1

9,53

7.79

2

,522

.84

71.

85

603

.81

3,0

54.8

0 1

6,48

2.99

9

,849

.55

CA

PIT

AL

WO

RK

IN

PR

OG

RES

S 1

,909

.36

858

.57

2,7

67.9

3 -

--

PR

E-O

PER

ATI

VE

EXP

ENS

ES

INC

UR

RED

DU

RIN

G C

ON

STR

U-

CTI

ON

PER

IOD

PEN

DIN

G

ALL

OC

ATI

ON

558

.50

578

.63

1,1

12.2

2 2

4.91

TOTA

L 2

,467

.86

1,4

37.2

0 3

,880

.15

24.

91

PER

IOD

01.

04.0

9 TO

31.

03.1

0

29

30

SCHEDULE - 7 : INVESTMENT

TRADE INVESTMENTS - AT COST

UnQuoted :

Barbeque-Nation Hospitality Ltd 854.00 854.00

6464998 Equity Shares

of Rs. 10 each fully paid up

Malwa Hospitality Pvt. Ltd. 549.40 549.40

5494000 Equity Shares

of Rs. 10 each fully paid up

Welterman International Ltd. 26.30 26.30

2,63,000 Equity Shares of Rs. 10

each fully paid up

Bharat Equity Services Ltd. 10.00 10.00

1,00,000 Equity Shares of Rs.10

each fully paid up

Aries Hotels Pvt. Ltd. 25.00 25.00

2,50,000 Equity Shares of Rs.10

each fully paid up

Annoya Sahakari Mandali Co-Op Bank Ltd 0.01 0.01

50 Equity Shares of Rs.10 each fully

paid up

Axis Bank Limited - Equity Fund 3.07 ---

TOTAL 1,467.78 1,464.70

SCHEDULE - 8 : CURRENT ASSETS, LOANS

& ADVANCES

CURRENT ASSETS

Inventories

Operating Supplies 394.38 292.05

(Valued at cost as certified by Management)

Food and Beverage 133.65 81.63

(Valued at cost as certified by Management)

Shopping Arcade Stock (at cost) 42.54 570.57 42.54 416.22

Sundry Debtors (Unsecured considered good)

Outstanding Over Six Months 288.79 255.49

Others 444.29 733.08 278.55 534.04

As at31/03/10

As at31/03/09

(Rs. In lacs)

31

Cash and Bank Balances

Cash on hand 25.43 24.77

Bank Balances

With Scheduled Banks

In Current Accounts 211.90 98.26

In Fixed Deposit Account 103.05 340.38 51.76 174.79

LOANS AND ADVANCES (Unsecured,

Considered good unless otherwise

specified)

Advances recoverable in cash or in

kind or for value to be received 1,911.42 4,064.18

Mat Credit Entitlement 148.23 137.29

Advance Tax & TDS Receivable 277.23 2,336.88 219.22 4,420.69

TOTAL 3,980.91 5,545.74

As at31/03/10

As at31/03/09

(Rs. In lacs)

32

SCHEDULE - 09 : ROOMS, RESTAURANTS, BANQUETS, SHOPS

AND OTHER SERVICES

Rooms 2,907.17 1,855.29

Food and Beverages 3,395.23 5,503.94

Other Services 1,839.17 859.31

TOTAL 8,141.57 8,218.54

SCHEDULE - 10 : OTHER INCOME

Interest Earned 32.35 24.53

Miscellaneous Income 23.63 17.39

TOTAL 55.98 41.92

SCHEDULE - 11 : FOOD AND BEVERAGES MATERIALS CONSUMED

Opening Stock 81.63 80.78

Add : Purchases 1,740.71 2,361.57

1,822.34 2,442.35

Less : Closing Stock 133.65 81.63

TOTAL 1,688.69 2,360.72

SCHEDULE - 12 : OPERATING EXPENSES

Stores and Operating Supplies 773.07 565.23

Repairs and Maintenance

Building 76.85 84.84

Plant & Machinery 41.30 48.14

Others 70.90 74.25

Laundry Expenses 102.42 48.55

SUB-TOTAL 1,064.54 821.01

Power and Fuel 717.00 744.97

GRAND TOTAL 1,781.54 1,565.98

31-Mar-10 31-Mar-09

SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNT (Rs. In lacs)

33

SCHEDULE - 13 : EMPLOYEES' EMOLUMENTS

Salaries, Wages and Allowances 1,004.16 1,060.10

Contribution to P.F. and other Funds 76.87 64.48

Workmen and Staff Welfare Expenses 48.90 17.60

Workmen and Staff Uniform Expenses 20.09 33.33

TOTAL 1,150.02 1,175.51

SCHEDULE - 14 : SELLING AND ADMINISTRATIVE EXPENSES

Rent/Lease Rent 443.73 462.78

Rates & Taxes 80.22 108.40

Insurance 18.36 12.15

Legal & Professional 53.37 44.80

Travelling and Conveyance 35.98 43.74

Postage, Telegram and Telephones 39.19 41.96

Advertisement and Publicity 95.95 29.58

Printing and Stationery 51.17 49.26

Directors' Sitting Fees 0.45 0.49

Donation 2.71 0.53

Guest pick up Expenses 169.87 85.60

Other Expenses 180.27 94.36

Water charges 18.28 47.62

Housekeeping Expenses 76.83 27.22

Audit Fees 2.50 2.37

Bad Debts Written Off --- 94.57

TOTAL 1,268.88 1,145.43

SCHEDULE - 15 : FINANCIAL CHARGES

Interest on term Loan 1,109.01 581.73

Interest on Others 75.52 37.28

Bank Charges 109.38 55.07

Restructuring & Processing Fees --- 44.72

TOTAL 1,293.91 718.80

31-Mar-10 31-Mar-09

(Rs. In lacs)

34

S C H E D U L E - 1 6 : N O T E S T O A C C O U N T S

A. SIGNIFICANT ACCOUNTING POLICIES

a) Convention :

i. The financial statements have been prepared under the historical cost convention and on the basis of going concern, in

accordance with the generally accepted accounting principles and provisions of the Companies Act 1956.

ii. The Company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on

accrual basis.

iii. Where changes in presentation are made, comparative figures for the previous year are regrouped accordingly.

b) Fixed Assets :

i. Accounted at acquisition cost including directly attributable costs such as freight, insurance and specific installation charges for

bringing the asset to its working condition for use.

ii. Expenditure relating to existing fixed assets is added to the cost of the assets where it increases the performance/life of the assets

as assessed earlier.

iii. Fixed assets are eliminated from financial statements, either on disposal or when retired from active use. Generally, such retired

assets are disposed of soon thereafter.

iv. Pre-operative expenses, including interest on specific loans for the projects incurred till the projects are ready for Commercial

Operation, are capitalised.

v. Expenditure on the new projects are included in Capital Work-in-Progress.

c) Depreciation :

i. Depreciation is charged on fixed assets except on Freehold & leasehold land and buildings (in respect of restaurant chain

business) as per the straight-line method at the rates and in the manner prescribed under Schedule XIV to the Companies Act,

1956.

ii. Buildings (in respect of the restaurant chain business) constructed on the rented properties are depreciated over the term of the

respective leases.

iii. Assets like vehicles, computers etc. utilized during the construction period are not depreciated till the project is ready.

iv. Computer software and licence are depreciated over a period of three years.

v. Liquor licences purchased for restaurant chain business are depreciated over the period of lease term of the respective

restaurants.

d) Investments :

Long term Investments are stated at cost of acquisition including brokerage, stamp duty, fees, if any.

e) Inventories :

i. Inventories are valued at cost or replacement value, whichever is less, after providing for obsolescence and damage.

ii. In the case of raw materials, operating supplies and stores, cost represents purchase price and other costs incurred for bringing

inventories upto their locations and are determined on First-In-First-Out basis.

f) Sales :

Sales is exclusive of Luxury tax, Sales tax, Service Tax and other taxes.

g) Accounting for Provisions, Contingent Liabilities and Contingent Assets :

A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of

resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Accounting for contingencies

(gains and losses) arising out of contractual obligations, are made only on the basis of mutual acceptances.

35

h) Events occurring after the date of Balance Sheet date :

Where material, events occurring after the date of Balance Sheet are considered up to the date of adoption of the accounts.

i) Employee Benefit :

Employee benefit plans comprise both defined benefit and defined contribution plans.

Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method

made at the end of each financial year. Actuarial gains/ losses are immediately taken to profit and loss account and are not deferred.

Provident fund is a defined contribution plan. Each eligible employee and the company make contributions at a percentage of the basic

salary specified under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. The Company’s contributions are

charged to the profit and loss account of the year when the contributions to the respective funds are due. The company has no further

obligations under the plan beyond its periodic contributions.

j) Taxation :

i. Provision for current taxation has been made in accordance with the Income Tax Laws applicable to the assessment year.

ii. Deferred Tax is recognized on timing difference being the difference between taxable income and accounting income that

originate in one period and are capable of reversal in one or more subsequent periods. Where there is unabsorbed depreciation

or carry forward losses, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. The effect

on deferred tax assets and liabilities of a change in tax rates is recognized in income using the tax rates and tax laws that have

been enacted or substantively enacted by the balance sheet date.

iii. In accordance with the Guidance Note on Accounting for credit available in respect of MAT under the Income Tax Act,1961 issued

by the ICAI and in view of convincing evidences of the entitlement of credit of the MAT, the current years’ MAT provision has been

recognised and credited to the Profit & Loss Account.

k) Foreign Currency transactions :

Foreign currency transactions are accounted at the rate prevailing on the date of transaction. Gain or loss arising out of

translation/conversion is taken credit for or charged to the Profit & Loss Account.

Exchange difference arising due to repayment or restatement of liabilities incurred for the purpose of acquiring fixed assets are

adjusted in the carrying amount of the respective fixed assets.

l) Assets taken on lease :

i. In respect of finance lease transactions, lease rents paid are charged to the Profit and Loss Account in accordance with the terms

of the lease agreements.

ii. In respect of operating lease transactions, the assets are not capitalized in the books of the Company and lease payments are

charged to the Profit and Loss Account.

m) Borrowing Costs :

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such

assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs

are charged to revenue.

n) Impairment of Assets :

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the

Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting

period is reversed if there has been a change in the estimate of recoverable amount.

36

B. NOTES ON ACCOUNTS

1. Secured Loans :

a) Term Loans of Rs. 20.95 crores from Tourism Finance Corporation of India Ltd. (TFCI) are secured on pari- passu basis by way

of mortgage of land and building at Indore, Pune & Vadodara and hypothecation of the movables, present and future, except

stocks of all kinds including operating supplies, stores, and spares offered to the bankers for securing the working capital loans.

b) Term Loan of Rs. 4.93 crores from HUDCO is secured on pari- passu basis by way of mortgage of land and building at Indore,

Pune & Vadodara and hypothecation of the movables, present and future, except stocks of all kinds including operating supplies,

stores, and spares offered to the Bankers for securing the working capital form.

c) Term Loans of Rs. 7.40 crores from Madhya Pradesh Financial Corporation (MPFC) are secured by way of mortgage of land and

building at Indore and/ hypothecation of the movable, present and future, except stocks of all kinds including operating supplies,

stores and spares offered to the Bankers for securing the working capital finance. Term loan of Rs.7.50 Crores is secured by way

of hypothecation of the movable, present and future, except stocks of all kinds including operating supplies, stores and spares

offered to the Bankers for securing the working capital finance. The equitable mortgage for this loan is yet to be created.

d) Term Loans of Rs. 54.60 crores from State Bank of India of are secured by way of mortgage of land and building at Indore,

Vadodara & Pune and hypothecation of movables, present and future, except stocks of all kinds including operating supplies and

spares offered to the Bankers for securing the working capital finance.

e) Term Loan of Rs. 2.00 crores from State Bank of India is securitized against the lease rent receivables of Nokia India (P) Ltd. at

Indore.

f) Term Loans of Rs. 29.75 crores from State Bank of Indore are secured by way of mortgage of land and building at Indore,

Vadodara & Pune and hypothecation of movables, present and future, except stocks of all kinds including operating supplies and

spares offered to the Bankers for securing the working capital finance.

g) Term Loan of Rs. 11.50 crores from State Bank of Mysore is secured by way of mortgage of land and building at Indore, Vadodara

& Pune and hypothecation of movables, present and future, except stocks of all kinds including operating supplies and spares

offered to the Bankers for securing the working capital finance.

h) Term Loan of Rs. 6.75 crores from Axis Bank Ltd is secured by way of mortgage of land and building at Indore, Baroda & Pune

and hypothecation of the movable, present and future, except stocks of all kinds including operating supplies, stores and spares

offered to the Bankers for securing the working capital finance.

i) Working Capital Term Loan of Rs. 1.25 crores from Axis Bank Ltd is secured by first charge by way of hypothecation of stocks of

food, beverages, operating supplies stores, spares, book debt of the company and also by way of second charge on the

immovable properties of the company.

j) Working Capital Medium Term Loan of Rs.1.50 crores from Madhya Pradesh Financial Corporation (MPFC) is secured by way of

mortgage of Shops at Sayaji Plaza, Indore.

k) Cash credit facilities of Rs. 6.25 crores State Bank of India is secured by first charge by way of hypothecation of stocks of food,

beverages, operating supplies, stores, spares, book-debts (excluding credit card receivables), bills etc. of the company and also

by way of a second charge on the immovable properties of the company at Indore, Baroda and Pune.

l) Cash credit facilities of Rs. 1.50 crores from Axis Bank Ltd. is secured by first charge by way of hypothecation of stocks of food,

beverages, operating supplies, spares and book debts, bills etc. of the company and also by way of a second charge on the

immovable properties of the company at Indore, Baroda and Pune.

m) Corporate loan of Rs.16.00 crores from Axis Bank Ltd. is secured by first charge by way of hypothecation of stocks of food,

beverages, operating supplies, stores, spares, book-debts, bills etc. of the company and also by way of a Second charge on the

immovable properties of the company at Indore and Baroda.

37

n) Vehicle loans from ICICI Bank Ltd. are secured by way of hypothecation charge on the specific vehicles.

o) Vehicle loans from HDFC Bank Limited are secured by way of hypothecation charge on specific vehicles.

p) Vehicle loans from Axis Bank Ltd. are secured by way of hypothecation charge on specific vehicles.

q) All term loans except vehicle loans from ICICI Bank Limited,HDFC Bank Limited and Axis Bank Ltd. are personally guaranteed by

some of the director of the company.

r) Installment falling due within next 12 months Rs. 2501.83 Lacs.

2. Contingent Liabilities not provided for :

a) Guarantees given on behalf of other companies - Rs. 5621.82 lacs

(Previous year Rs. 520 lacs)

b) Disputed statutory liabilities in respect of service tax not provided for : (Rs. In lacs)

31.03.10 31.03.09

i) Tax Demanded 256.78 127.33

ii) Penalty thereon 256.78 127.33

iii) Interest (to be levied in case of confirmation of demand) 148.35 16.34

iv) Total 661.91 271.00

The matters are pending before the hon’ble CESTAT, New Delhi. The Company has got stay order against the tax demand of

Rs.127.33 lacs.

c) Customs duties saved against imports under EPCG scheme - Rs. 750.38 lacs (Previous year Rs. 695.30 lacs)

d) Claims against the company not acknowledged as debt : Rs. 5.06 lacs

e) Disputed liability in respect of :

i. Luxury Tax Rs. 41.13 lacs pertains to tax deposited not considered at the time of assessment and interest charged

thereon.

ii. Vat Tax Rs. 20.73 lacs pertains to Input tax rebate of exemption period being adjusted against presumptive tax of

exemption period.

iii. Entry Tax Rs. 4.64 lacs pertains to entry tax on some items which were considered taxable in the assessment.

The above matters are pending before Deputy Commissioner Vat Tax, Indore.

3. During the year under review, company was not engaged in the business of developing and selling of properties, hence the

Company has not provided primary segmental information for these segments as per Accounting Standard–17 on "Segment

Reporting" issued by the ICAI.

4. The Company adopted the Accounting Standards 15 "Employee Benefits" effective from April 1, 2007.

Defined contribution plans : During the year the Company has recognized the following amounts in the Profit and Loss account,

which are included in "Contribution to PF and other funds" in Schedule 13 :

31.03.10 31.03.09

i) Contribution to Provident Fund Rs. 76.87 lacs Rs. 64.48 lacs

Defined Benefit Plans : The Company makes annual contributions to the Employee’s Group Gratuity scheme of the SBI Life

Insurance Co. Ltd., a funded defined benefit plan for the qualifying employees. The scheme provides for lump sum payment to

vested employees at retirement, death while in employment or on termination of employment as per the terms of the scheme.

Vesting occurs upon completion of five years of service.

38

i) Changes in benefit obligations :

Present value of obligation as at the beginning of the year 4730414 4312162

Interest Cost 378433 344973

Current Service Cost 919210 764638

Actuarial (gain)/ loss on obligations 485749 (325769)

Benefit paid (307011) (365590)

Present value of obligation as at the end of the year 6206795 4730414

ii) Change in plan assets :

Fair value of plan assets as at the beginning of the year 1302494 1553711

Expected return on plan assets 104200 109673

Contributions Nil Nil

Benefits paid Nil (365590)

Actuarial gain/ (loss) on plan assets (307668) 4700

Fair value of plan assets at the end of the year 1099026 1302494

Excess of (obligation over plan assets)/ plan asset over obligation (5107769) (3427920)

(Accrued liability)/ Prepaid benefit (5107769) (3427920)

iii) Net Gratuity and other cost at the end of the year

Current Service cost 919210 764638

Interest on defined benefit obligation 378433 344973

Expected return on plan assets (104200) (109673)

Net actuarial gain recognized in the year 793417 (330469)

Net gratuity and other cost 1986860 669469

Actual return on plan asset (203468) 114373

iv) Category of Assets at the end of the year

Insurer Managed Funds 1099026 1302494

Others Nil Nil

Total 1099026 1302494

v) Assumptions used

Discount rate (p.a.) 8% 8%

Salary escalation rate (p.a.) 5% 5%

Expected rate of return on plan assets (p.a.) 8% 8%

(In Rupees)

31.03.10 31.03.09

The present value of the defined benefit obligation and current service cost were measured using the Projected Unit Credit

Method, with actuarial valuations being carried out at each balance sheet date.

The following table sets out the funded status of the gratuity plan and the amounts recognized in the company’s financial

statements as at March 31, 2010 :

39

5. Related Party Disclosure :

a) Relationship during the year :

i) Key Management Personnel

Sajid Dhanani – Managing Director

Munawar Garbadawala – Director

Capt. Salim Sheikh – Director

ii) Subsidiary Companies

Barbeque-Nation Hospitality Limited

Malwa Hospitality Pvt Ltd

iii) Associate Companies/ Firms/ Relatives

Ahilya Hotels Limited

Aries Hotels Pvt Ltd

Bharat Equity Service Ltd.

Clearwater Capital Partners (Cyprus) Ltd.

Dhanani Securities Ltd.

Kruger Chemical Ltd

M.P. Agro Industries Ltd.

M.Y. Merchant

R. R. Dhanani

R.S. Udar

Sanya Enterprises

Status Travels

Sabiya Amusement Pvt. Ltd

Uniera Laboratories Pvt. Ltd.

Welterman International Ltd.

b) Summary of transaction during the year : (Rs. in Lacs)

A KEY MANAGEMENT PERSONNEL

Remuneration 33.86 33.54

Commission on Profit ---- 1.66

Lease Rent ---- 14.64

B SUBSIDIARY COMPANIES

Investments ---- 1403.39

Loans receivable at the year end 127.72 1920.44

Sale of Brand ---- 249.00

C ASSOCIATE COMPANIES/ FIRMS/RELATIVES

Guest pick up expenses 14.14 19.73

Interest on FCCB 19.14 17.20

Loans receivable at the year end 354.09 504.78

Loans payable at the year end ---- 2.00

Sr.No. Nature of Transactions 2009-10 2008-09

40

6. Income Tax Liability for the year is estimated at Rs.73.73 lacs (Rs. 10.93 lacs towards Minimum Alternate Tax for the year and Rs.

62.80 lacs towards earlier year taxes) (Previous year 93.09 Lacs) under the Income tax Act, 1961. As there has been a virtual certainty

about the Company making profits, timing differences, namely the differences that originate in one accounting period and capable of

reversal in other, after duly identifying the differences between the profit offered to tax and profit as per financial statement, has been

recognized during the year.

The following is the break up of Deferred Assets and Liabilities:

Deferred Assets

- C/Forward losses and Depreciation 514.36 NIL

- Others 59.20 59.74

Total Deferred Assets 573.56 59.74

Deferred Liabilities

- Depreciation Differences 2905.47 2263.01

Total Deferred Liabilities 2905.47 2263.01

Net Deferred Liability 2331.91 2203.28

Net Deferred Tax (Liability)/ Assets (792.62) (748.90)

2009-10 2008-09

7. In the opinion of the Board, the Current Assets, Loans and Advances are approximately of the value stated, if realised, in the ordinary

course of business. Provision for all known liabilities is adequate and not in excess of the amount reasonably necessary.

8. Leave encashment has been determined based on the available leave entitlement at the end calendar year. The incremental amount so

calculated is debited to Employees Emoluments.

9. The turnover of the Company by way of Food and Beverages and sale of shops do not admit of quantitywise details.

10. Debit and Credit balances in party accounts are subject to confirmation and reconciliation.

11. DETAILS OF AUDITORS' REMUNERATION

31.03.10 31.03.09

i) Audit Fees Rs. 2,00,000 Rs.1,25,000

ii) Certification & Other Matters Rs. 50,000 Rs.25,000

12. EARNING IN FOREIGN CURRENCY:31.03.10 31.03.09

i. Sale of rooms and Food and Beverages (deemed export as defined in FTP) Rs. 643.06 Lacs Rs. 416.39 Lacs

13. CIF VALUE OF IMPORT & EXPENDITURES:31.03.10 31.03.09

i. Import of Capital Items Rs 85.36 lacs Rs. 629.67 Lacs

ii. Interest on FCCB Rs. 19.14 lacs Rs. 17.20 lacs

ii. Others Rs. 0.04 lacs Rs. 6.67 lacs

14. DETAILS OF MANAGERIAL REMUNERATION:31.03.10 31.03.09

i. Salaries Rs. 33.67 lacs Rs. 33.36 lacs

ii. Contribution to Provident & Other Funds Rs. 0.18 lacs Rs. 0.18 lacs

iii. Commission on Profit NIL Rs.1.66 lacs

The above payments are within the limits prescribed under the Companies Act, 1956.

(Rs. In lacs)

41

15. EARNING / (LOSS) PER SHARE:

Year ended Year ended

31.03.10 31.03.09

i. Profit/(Loss) after tax but before extraordinary item (Rs. 35.75 lacs) Rs. 446.45 lacs

ii. Profit/(Loss) after Tax and after extraordinary item (Rs. 35.75 lacs) Rs. 518.06 lacs

iii. Cash Profit after adding depreciation, deferred tax, preliminary exps Rs. 959.07 lacs Rs. 1264.74 lacs

iv. Wtd. Average no. of Shares – Basic 12850000 12850000

v. Wtd. Average no. of Shares – Diluted 12850000 12850000

vi. EPS – Basic – before extraordinary item NIL Rs. 3.47

vii. EPS – Basic – after extraordinary item NIL Rs. 4.03

viii. EPS – Diluted – before extraordinary item NIL Rs. 3.47

ix. EPS – Diluted – after extraordinary item NIL Rs. 4.03

x. Cash EPS Rs. 7.46 Rs. 9.84

16. Based on the information available with the Company, there are no dues to micro and small enterprises under the Micro, Small and

Medium Enterprises Development Act.

17. No provision has been made for diminution, if any, in the value of investments held for long term as in the opinion of the

management company would be able to recover at least the cost of the investments.

18. In pursuance of the resolution passed at the EGM held on 03.05.06 the company has issued 0.50% Foreign Currency Convertible

Bonds of US$ 1,00,000 each totaling to US$ 7.50 million. The Bonds are listed at Luxemburg Stock Exchange, London. After the

Balance Sheet date the Bondholders has exercised their option to convert the shares and accordingly 46,68,000 shares has been

allotted on 10.05.2010 in lieu of FCCB.

19. The company had allotted 50 lakhs share warrants @ Rs. 80/- each on 23.01.2008 against which Rs. 4,00,08.387/- were received

as application money. As per the terms of the issue and relevant guidelines the last date for conversion of share warrants to fully

paid-up equity shares was 22.07.2009. Since the investors has not opted to pay the balance amount of subscription, the company

has forfeited the application money. The forfeited amount has been transferred to General Reserve.

20. Figures of previous year have been regrouped, rearranged and recast wherever necessary so as to make them comparable with

those of current year.

42

BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE

I. REGISTRATION DETAILS

Registration No. State Code 04

Balance Sheet Date 31/03/2010

II CAPITAL RAISED DURING THE YEAR

(Amount in Rs. Lacs)

Public Issues NIL Right Issue NIL

Bonus Issue NIL Private Placement NIL

III POSITION OF MOBILISATION & DEPLOYMENT OF FUNDS

(Amount in Rs. Lacs)

Total Liabilities 23,602 Total Assets 23,602

Source of Funds

Paid-up Capital 1,285 Reserves & Surplus 4,505

Secured Loans 12,964 Unsecured Loan 4,055

Application of Funds

Net Fixed Assets 19,447 Investment 1,468

Net Current Assets 2,687 Misc. Expenditure NIL

Accumulated Losses NIL

IV PERFORMANCE OF COMPANY

(Amount in Rs. Lacs)

Turnover 8,198 Total Expenditure 8,127

Profit/(loss) Before Tax 71 Profit/(Loss) after tax (36)

Dividend Rate % 0

V GENERIC NAMES OF PRINCIPAL PRODUCTS/SERVICE OF THE COMPANY

Item Code No. (ITC Code) 591001006 Product Description Hotels

Item Code No. (ITC Code) 390001002 Product Description Restaurants

5131

Schedules referred to above form an integral partof the Balance SheetAs per our report of even date attached For SHAH GANDHI & SHAHFirm Regn. No. 126862WChartered Accountants

Nimesh GandhiPartnerM.No. 49134

VADODARA : 31st August 2010

For and on behalf of the Board of Directors

INDORE : 31st August 2010

Sajid R Dhanani Managing Director

Capt. Salim SheikhDirector

M.F. GarbadwalaDirector

Awadhesh GuptaCo. Secretary

43

CASH FLOW STATEMENT FOR THE YEAR ENDED ON 31st MARCH 2010

(Rs. in lacs)

31-Mar-10 31-Mar-09

A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before tax and extraordinary 70.77 763.10

Item adjusted for:

Depreciation 943.74 602.53

Interest paid 1,324.42 637.09

Interest Received (32.35) (24.53)

Prior Period & Extra-ordinary items 0.00 (71.61)

Finance lease rental 443.73 462.78

2,679.54 1,606.26

Operating profit before Working Capital 2,750.31 2,369.36

Changes

Adjusted for:

Trade and Other receivables 1,953.72 (1,379.49)

Inventories (154.35) (84.45)

Trade payables (491.70) 1,307.67 773.15 (690.79)

Cash generated from operations 4,057.98 1,678.57

Taxes Paid (131.74) (116.79)

Prior Period & Extra-ordinary items 0.00 71.61

Mat Credit Entitlement 10.93 0.00

Interest paid (1,324.41) (637.09)

Net cash from operating activities 2,612.76 996.30

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed assets (1,439.94) (7,602.20)

Investments (3.08) (797.40)

Interest Received 32.35 (1,410.67) 24.53 (8,375.07)

Net cash used in investing activities 1,202.09 (7,378.77)

44

31-Mar-10 31-Mar-09

CASH FLOW STATEMENT FOR THE YEAR ENDED ON 31st MARCH 2010

(Rs. in lacs)

CASH FLOW FROM FINANCING ACTIVITIES

Unsecured Loans 34.40 162.02

Long Term borrowings (627.16) 7,024.31

Repayment of Fianance lease liablities (443.73) (462.78)

Net cash generated from financing activities (1,036.49) 6,723.55

Net increase in cash and cash equivalents 165.60 (655.22)

Cash and cash equivalents as at the

beginning of the year 174.78 830.00

Cash and cash equivalents as at the

end of the year 340.38 174.78

Note : Figures in bracket indicate disposition of funds and others indicates of generation of funds except the figure of cash and cash

equivalents at the beginning and at the end of the year.

AUDITOR'S CERTIFICATE

We have verified the attached Cash Flow Statement of Sayaji Hotels Ltd for the year ended 31st March, 2010. This statement has been

compiled by the Company from the financial statements for the year ended 31st March 2010 and 31st March 2009. We have found the same

to be in acccordance with the requirements of clause 32 of the listing agreement with stock exchanges.

For and on behalf of the Board of Directors

INDORE : 31st August 2010 Sajid R Dhanani

Managing Director Capt. Salim Sheikh

Director M.F. Garbadwala

Director

Awadhesh GuptaCo. Secretary

VADODARA : 31st August, 2010

For SHAH GANDHI & SHAH

Firm Regn. No. 126862W

Chartered Accountants

Nimesh Gandhi

Partner

M.No. 49134

45

To

THE BOARD OF DIRECTORS

SAYAJI HOTELS LIMITED

VADODARA

We have examined the attached Consolidated Balance Sheet of

SAYAJI HOTELS LIMITED (“the Company”) and its subsidiaries

as at 31st March, 2010, the Consolidated Profit & Loss Account

for the year ended, annexed thereto and also the Consolidated

Cash Flow Statement for the year then ended. The preparation of

these financial statements is the responsibility of the

Company's management. Our responsibility is to express an

opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards

generally accepted in India. Those Standards require that we

plan and perform the audit to obtain reasonable assurance

about whether the financial statements are prepared, in all

material respects, in accordance with an identified financial

reporting framework and are free of material misstatements. An

audit includes examining, on a test basis, evidence supporting

the amounts and disclosures in the financial statements. An

audit also includes assessing the accounting principles used

and significant estimates made by management, as well as

evaluating the overall financial statement. We believe that our

audit provides a reasonable basis for our opinion.

We report that the consolidated financial statements have been

prepared by Sayaji Hotels Limited's management in accordance

with the requirements of Accounting Standards (AS) 21,

Consolidated Financial Statements', and Accounting Standard

(AS) 23, Accounting for Investments in Associates in

Consolidated Financial Statements' issued by the Institute of

Chartered Accountants of India.

Based on our audit and on consideration of other financial

information of the components, and to the best of our

information and according to the explanations given to us, we

are of the opinion that the attached 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 and its subsidiaries

as at 31st March, 2010; and

b. in the case of the Consolidated Profit & Loss

Account, of the consolidated results of the

operations of the Company and its subsidiaries for

the year ended on that date; and

c. in the case of the Consolidated Cash Flow

Statement, of the cash flows of the Company and its

subsidiaries for the year ended on that date.

AUDITORS' REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

For SHAH GANDHI & SHAH

Firm Regn. No. 126862W

Chartered Accountants

Vadodara Nimesh GandhiAugust 31, 2010 Partner

M.No. 49134

46

CONSOLIDATED BALANCE SHEET AS AT 31-03-2010

I. SOURCES OF FUNDS

(1) Shareholders' Funds

(a) Share Capital 1 1,285.00 1,285.00

(b) Reserves & Surplus 2 5,229.20 3,285.98

(c) Share Warrants --- 6,514.20 400.08 4,971.06

(See note 22 of Part B of Sch.16)

(2) Loan Funds

(a) Secured Loans 3 15,157.17 16,211.61

(b) Unsecured Loans 4 4,055.33 19,212.50 4,020.93 20,232.54

(3) Deferred Tax 452.83 426.74

(See note 7 of Part B of Sch.16)

(4) Minority Interest 97.56 ---

TOTAL 26,277.09 25,630.34

II. APPLICATION OF FUNDS

(1) Fixed Assets 6

(a) Gross Block (Original Cost) 27,181.49 23,055.37

(b) Less : Depreciation (4,638.81) (3,319.42)

(c) Net Block 22,542.68 19,735.95

(d) Capital Work in Progress 6 172.20 2,282.27

(e) Expenditure during Construction 6 75.96 766.51

Period pending allocation

(2) Investments 7 64.39 61.31

(3) Current Assets, Loans and Advances 8 5,583.50 5,265.41

Less: Current Liabilities & Provisions 5 (2,161.64) (2,481.11)

Net Current Assets 3,421.86 2,784.30

TOTAL 26,277.09 25,630.34

Significant Accounting Policies 16

Notes on Accounts 16

SchAS AT

31/03/10 AS AT

31/03/09

Schedules referred to above form an integral partof the Balance SheetAs per our report of even date attached For SHAH GANDHI & SHAHFirm Regn. No. 126862WChartered Accountants

Nimesh GandhiPartnerM.No. 49134

VADODARA : 31st August 2010

For and on behalf of the Board of Directors

INDORE : 31st August 2010

Sajid R Dhanani Managing Director

Capt. Salim SheikhDirector

M.F. GarbadwalaDirector

Awadhesh GuptaCo. Secretary

(Rs. In lacs)

47

CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR 01.04.2009 TO 31.03.2010

I. INCOME

Rooms, Restaurants, Banquets, Shops 9 15,791.63 11,158.54

and Other Services

Other Income 10 72.52 51.59

TOTAL 15,864.15 11,210.13

II. EXPENDITURE

Food and Beverages materials consumed 11 4,973.07 3,693.11

Operating Expenses 12 1,530.19 1,013.12

Power and Fuel 12 1,435.35 1,107.23

Employees' Emoluments 13 2,246.06 1,752.42

Selling & Administrative Exps. 14 2,554.25 2,004.22

12,738.92 9,570.10

III. OPERATING PROFIT BEFORE INTEREST 3,125.23 1,640.03

Financial Charges 15 1,624.73 930.78

IV. PROFIT/ (LOSS) BEFORE DEPRECIATION 1,500.50 709.25

Depreciation 1,326.49 860.25

Add : Depreciation Written Back 4.36 1.28

V. PROFIT/ (LOSS) BEFORE TAX & PRIOR PERIOD &

EXTRAORDINARY ITEMS 178.37 (149.72)

LESS : PRIOR PERIOD & EXTRAORDINARY ITEMS 132.04 178.75

VI. PROFIT/ (LOSS) BEFORE TAX 46.33 (328.47)

VII. PROVISION FOR TAXATION

CURRENT TAX 73.73 93.09

DEFERRED TAX 26.09 (151.84)

FRINGE BENEFIT TAX (3.26) 14.75

VIII. PROFIT/ (LOSS) AFTER TAX BEFORE MAT CREDIT (50.23) (284.47)

IX. Add : MAT CREDIT ENTITLEMENT

CURRENT YEAR 10.93 ---

X. PROFIT/ (LOSS) AFTER TAX AFTER MAT CREDIT (39.30) (284.47)

XI. BALANCE B/FORWARD FROM LAST YEAR 134.18 418.65

XII. AMOUNT AVAILABLE FOR APPROPRIATION 94.88 134.18

XIII. MINORITY INTEREST (182.45) ---

XIV. AMOUNT CARRIED TO BALANCE SHEET 277.33 134.18

31-Mar-10Sch 31-Mar-09

Schedules referred to above form an integral partof the Balance SheetAs per our report of even date attached For SHAH GANDHI & SHAHFirm Regn. No. 126862WChartered Accountants

Nimesh GandhiPartnerM.No. 49134

VADODARA : 31st August 2010

For and on behalf of the Board of Directors

INDORE : 31st August 2010

Sajid R Dhanani Managing Director

Capt. Salim SheikhDirector

M.F. GarbadwalaDirector

Awadhesh GuptaCo. Secretary

(Rs. In lacs)

48

SCHEDULE - 1 : SHARE CAPITAL

AUTHORISED

20,000,000 Equity Shares of Rs.10/- each 2,000.00 2,000.00

1,000,000 Preferance Shares of Rs.100/- each 1,000.00 1,000.00

TOTAL 3,000.00 3,000.00

ISSUED, SUBSCRIBED & PAID-UP

12850000 (12850000) Equity

Shares of Rs. 10/- each 1,285.00 1,285.00

TOTAL 1,285.00 1,285.00

SCHEDULE - 2 : RESERVES & SURPLUS

(i) Share Premium

Opening at beginning 2,910.40 2,910.40

Addition during the year 1,400.00 ---

Utilised during the year --- ---

Closing at end 4,310.40 2,910.40

(ii) General Reserve

Opening at beginning 241.40 241.40

Addition during the year

(See note 22 of Part B of Sch.16) 400.08 ---

Utilised during the year --- ---

Closing at end 641.48 241.40

TOTAL (i+ii) 4,951.88 3,151.80

(iv) Profit & Loss Account

Opening at beginning 134.17 418.65

Addition during the year 143.15 (284.47)

Closing at end 277.32 134.18

GRAND TOTAL 5,229.20 3,285.98

SCHEDULE - 3 : SECURED LOANS

(Refer Note 1 & 2 of Part B of Schedule 16)

Term Loans 14,400.97 16,090.19

Assets Credit Finance 148.73 121.42

Working Capital Loans 607.47 ---

TOTAL 15,157.17 16,211.61

SCHEDULES FORMING PART OF THE BALANCE SHEET

As at31/03/10

As at31/03/09

(Rs. In lacs)

49

SCHEDULE - 4 : UNSECURED LOANS

Foreign Currency Convertible Bonds

From Foreign Companies 3,501.00 3,501.00

(See Note 17 of Schedule 18)

Fixed Deposits

From Public 510.22 216.32

Other Loans :

From Others 27.73 40.51

From Financial Institution --- 200.00

From Trade Deposit 16.38 44.11 63.10 303.61

TOTAL 4,055.33 4,020.93

SCHEDULE - 5 : CURRENT LIABILITIES &

PROVISIONS

Current Liabilities

Sundry Creditors 1,537.25 1,951.43

Interest Acc.but not due 136.61 1673.86 172.82 2,124.25

(due within 12 months)

Provision -

Taxation 160.32 149.39

Others 327.46 487.78 207.47 356.86

TOTAL 2,161.64 2,481.11

As at31/03/10

As at31/03/09

(Rs. In lacs)

50

SC

HED

ULE

- 6

: F

IXED

AS

SET

S(R

s. in

lacs

)

Sr.

No.

PA

RTI

CU

LAR

S

GR

OS

S B

LOC

KD

EPR

ECIA

TIO

NN

ET B

LOC

K

Open

ing

as o

n 01

.04.

09A

dditi

ons

Dedu

ctio

n &

Adju

stm

ent

Clos

ing

as o

n 31

.03.

10Op

enin

g as

on

01.0

4.09

Del

etio

nA

dditi

onCl

osin

g as

on

31.0

3.10

As o

n31

.03.

10As

on

31.0

3.09

A.

TA

NG

IBLE

AS

SET

S

1 B

UIL

DIN

G 1

1,46

0.59

1

,718

.80

10.

65

13,

168.

74

1,4

94.0

5 0

.68

634

.56

2,1

27.9

3

11,0

40.8

1

9,9

66.5

4

2 FU

RN

ITU

RE

& F

IXTU

RE

3,5

18.8

6 1

,833

.81

3.9

0 5

,348

.77

827

.85

3.6

8 3

01.3

1 1

,125

.48

4,2

23.2

9

2,69

1.01

3 P

LAN

T &

MA

CH

INER

Y 3

,350

.52

235

.87

---

3

,586

.39

623

.57

---

1

62.4

4 7

86.0

1 2

,800

.38

2

,726

.95

4 S

ERV

ICE

EQU

IPM

ENT

1,3

25.7

2 1

59.4

4 0

.06

1,4

85.1

0 2

14.3

7 0

.04

127

.57

341

.90

1,1

43.2

0 1

,111

.35

5 C

OM

PU

TER

EQ

UIP

MEN

TS 2

99.5

5 1

25.0

7 -

--

424

.62

84.

33

---

3

7.44

1

21.7

7 3

02.8

5

215

.22

6 V

EHIC

LE 3

41.4

5 5

5.09

3

.05

393

.49

54.

12

2.7

1 3

5.50

8

6.91

306.

58

287

.33

7 LE

AS

E H

OLD

LA

ND

94.

06

---

-

--

94.

06

---

-

--

---

-

--

94.

06

94.

06

8 FR

EEH

OLD

LA

ND

2,5

52.3

2 -

--

---

2

,552

.32

---

-

--

---

-

--

2,5

52.3

2

2,5

52.3

2

B.

IN

TAN

GIB

LE A

SS

ETS

1 LI

QU

OR

LIC

ENC

E 6

9.30

-

--

---

6

9.30

9

.45

---

8

.32

17.

77

51.

53

59.

85

2 S

OFT

WA

RE

& L

ICEN

CES

43.

00

15.

70

---

5

8.70

1

1.68

-

--

19.

36

31.

04

27.

66

31.

32

TOTA

L 2

3,05

5.37

4

,143

.78

17.

66

27,

181.

49

3,3

19.4

2 7

.11

1,3

26.5

0 4

,638

.81

22,

542.

68

19,

735.

95

PR

EVIO

US

YEA

R F

IGU

RES

13,

648.

28

9,6

05.1

6 1

98.0

8 2

3,05

5.37

2

,531

.46

72.

30

860

.25

3,3

19.4

2 1

9,73

5.95

1

1,11

6.82

CA

PIT

AL

WO

RK

IN

PR

OG

RES

S 2

,282

.27

746

.87

2,8

56.9

4 1

72.2

0

PR

E-O

PER

ATI

VE

EXP

ENS

ES

INC

UR

RED

DU

RIN

G C

ON

STR

U-

CTI

ON

PER

IOD

PEN

DIN

G

ALL

OC

ATI

ON

766

.51

578

.63

1,2

69.1

8 7

5.96

TOTA

L 3

,048

.78

1,3

25.5

0 4

,126

.12

248

.16

PER

IOD

01.

04.0

9 TO

31.

03.1

0

51

SCHEDULE - 7 : INVESTMENT

TRADE INVESTMENTS - AT COST

UnQuoted :

Welterman International Ltd. 26.30 26.30

2,63,000 Equity Shares of Rs. 10

each fully paid up

Bharat Equity Services Ltd. 10.00 10.00

1,00,000 Equity Shares of Rs.10

each fully paid up

Aries Hotels Pvt. Ltd. 25.00 25.00

2,50,000 Equity Shares of Rs.10

each fully paid up

Annoya Sahakari Mandali Co-Op Bank Ltd 0.01 0.01

50 Equity Shares of Rs.10 ech fully

paid up

Axis Bank Limited - Equity Fund 3.08 ---

TOTAL 64.39 61.31

SCHEDULE - 8 : CURRENT ASSETS LOANS

& ADVANCES

CURRENT ASSETS

Inventories

Operating Supplies 456.64 354.50

(Valued at cost as certified by Management)

Food and Beverage 225.72 167.83

(Valued at cost as certified by Management)

Shopping Arcade Stock (at cost) 42.54 724.90 42.54 564.87

Sundry Debtors (Unsecured considered good)

Outstanding Over Six Months 318.18 256.76

Others 498.57 816.75 313.04 569.80

As at31/03/10

As at31/03/09

(Rs. In lacs)

52

Cash and Bank Balances

Cash on hand 38.85 31.20

Bank Balances

With Scheduled Banks

In Current Accounts 275.92 113.16

In Fixed Deposit Account 103.05 417.82 51.75 196.11

LOANS AND ADVANCES (Unsecured,

Considered good unless otherwise

specified)

Advances recoverable in cash or in

kind or for value to be received 3,187.69 3,570.97

Mat Credit Entitlement 148.23 137.29

Advance Tax & TDS Receivable 288.11 3,624.03 226.37 3,934.63

TOTAL 5,583.50 5,265.41

As at31/03/10

As at31/03/09

(Rs. In lacs)

53

SCHEDULE - 09 : ROOMS, RESTAURANTS, BANQUETS, SHOPS

AND OTHER SERVICES

Rooms 2,907.17 1,855.29

Food and Beverages 11,717.43 8,387.27

Other Services 1,167.03 915.98

TOTAL 15,791.63 11,158.54

SCHEDULE - 10 : OTHER INCOME

Interest Earned 42.04 32.16

Miscellaneous Income 30.48 19.43

TOTAL 72.52 51.59

SCHEDULE - 11 : FOOD AND BEVERAGES

Opening Stock 167.83 91.95

Add : Purchases 5,030.96 3,768.99

5,198.79 3,860.94

Less : Closing Stock 225.72 167.83

TOTAL 4,973.07 3,693.11

SCHEDULE - 12 : OPERATING EXPENSES

Stores and Operating Supplies 1,010.62 664.77

Repairs and Maintenance

Building 173.65 121.96

Plant & Machinery 89.54 72.16

Others 125.73 83.89

Laundry Expenses 130.65 70.34

SUB-TOTAL 1,530.19 1,013.12

Power and Fuel 1,435.35 1,107.23

GRAND TOTAL 2,965.54 2,120.35

31-Mar-10 31-Mar-09

(Rs. In lacs)SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNT

54

SCHEDULE - 13 : EMPLOYEES' EMOLUMENTS

Salaries, Wages and Allowances 1,964.86 1,570.35

Contribution to P.F. and other Funds 133.79 95.53

Workmen and Staff Welfare Expenses 96.41 32.62

Workmen and Staff Uniform Expenses 51.00 53.92

TOTAL 2,246.06 1,752.42

SCHEDULE - 14 : SELLING AND ADMINISTRATIVE EXPENSES

Rent/Lease Rent 1,132.52 1,006.22

Rates & Taxes 188.76 152.95

Insurance 23.20 14.76

Legal & Professional 222.44 77.74

Travelling and Conveyance 86.46 104.88

Postage, Telegram and Telephones 82.89 67.72

Advertisement and Publicity 164.91 62.42

Printing and Stationery 119.60 88.58

Directors' Sitting Fees 0.45 0.49

Donation 2.99 0.62

Guest pick up Expenses 169.87 85.60

Other Expenses 243.43 134.51

Water charges 32.09 54.70

Housekeeping Expenses 79.94 55.31

Audit Fees 4.70 3.15

Bad Debts Written Off --- 94.57

TOTAL 2,554.25 2,004.22

SCHEDULE - 15 : FINANCIAL CHARGES

Interest on term Loan 1,361.52 771.76

Interest on Others 76.25 37.94

Bank Charges 186.96 76.36

Restructuring & Processing Fees --- 44.72

TOTAL 1,624.73 930.78

31-Mar-10 31-Mar-09

(Rs. In lacs)

55

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS

S C H E D U L E - 1 6 : N O T E S T O A C C O U N T S

A. SIGNIFICANT ACCOUNTING POLICIES

a) The consolidated financial statements comprise the individual financial statements of Sayaji Hotels Limited and it’s subsidiaries

as on 31st March 2010 and for the year ended on that date. The consolidated financial statements have been prepared on the

following basis :

The financial statements of the Company and its subsidiaries have been combined on a line-by-line basis by adding together the

book values of like items of assets, liabilities, income and expenses, after eliminating intra-group balances and intra-group

transactions resulting in unrealized profit or losses as per Accounting Standard – 21 on “Consolidated Financial Statements”

issued by the Institute of Chartered Accountants of India.

b) The financial statements of the subsidiaries, in the consolidation are drawn up to the same reporting date as the Company i.e.

31st March 2010.

c) The financial statements of the following subsidiary companies have been consolidated :

Name of the subsidiary Proportion of Ownership Interest

Current Year Previous Year

i. Barbeque-Nation Hospitality Ltd 69.78 100

ii. Malwa Hospitality Pvt. Ltd. 100.00 100

d) Convention :

i. The financial statements are prepared under the historical cost convention and on the basis of going concern, in

accordance with the generally accepted accounting principles and provisions of the Companies Act 1956.

ii. The Company generally follows mercantile system of accounting and recognizes significant items of income and

expenditure on accrual basis.

iii. Where changes in presentation are made, comparative figures for the previous year are regrouped accordingly.

e) Fixed Assets :

i. Accounted at acquisition cost including directly attributable costs such as freight, insurance and specific installation

charges for bringing the asset to its working condition for use.

ii. Expenditure relating to existing fixed assets is added to the cost of the assets where it increases the performance/life of

the assets as assessed earlier.

iii. Fixed assets are eliminated from financial statements, either on disposal or when retired from active use. Generally, such

retired assets are disposed of soon thereafter.

iv. Pre-operative expenses, including interest on specific loans for the projects incurred till the projects are ready for

Commercial Operation, are capitalised.

v. Expenditure on the new projects are included in Capital Work-in-Progress.

f) Depreciation :

i. Depreciation is charged on fixed assets except on Freehold & leasehold land and buildings (in respect of restaurant chain

business) as per the straight-line method at the rates and in the manner prescribed under Schedule XIV to the Companies

Act, 1956.

ii. Buildings (in respect of the restaurant chain business) constructed on the rented properties are depreciated over the term

of the respective leases.

iii. Assets like vehicles, computers etc. utilized during the construction period are not depreciated till the project is ready.

iv. Computer software and licence are depreciated over a period of three years.

v. Liquor licences purchased for restaurant chain business are depreciated over the period of lease term of the respective

restaurants.

g) Investments :

Long term Investments are stated at cost of acquisition including brokerage, stamp duty, fees, if any.

56

h) Inventories :

i. Inventories are valued at cost or replacement value, whichever is less, after providing for obsolescence and damage.

ii. In the case of raw materials, operating supplies and stores, cost represents purchase price and other costs incurred for

bringing inventories upto their locations and are determined on First-In-First-Out basis.

i) Sales :

Sales is exclusive of Luxury tax, Sales tax, Service Tax and other taxes. Life membership fee of club is treated as income in the

year of its receipts.

j) Accounting for Provisions, Contingent Liabilities and Contingent Assets :

A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow

of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Accounting for

contingencies (gains and losses) arising out of contractual obligations, are made only on the basis of mutual acceptances.

k) Events occurring after the date of Balance Sheet date :

Where material, events occurring after the date of Balance Sheet are considered up to the date of adoption of the accounts.

l) Employee Benefit :

Employee benefit plans comprise both defined benefit and defined contribution plans.

Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit

method made at the end of each financial year. Actuarial gains/ losses are immediately taken to profit and loss account and are

not deferred.

Provident fund is a defined contribution plan. Each eligible employee and the company make contributions at a percentage of the

basic salary specified under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. The Company’s

contributions are charged to the profit and loss account of the year when the contributions to the respective funds are due. The

company has no further obligations under the plan beyond its periodic contributions.

m) Taxation :

i. Provision for current taxation has been made in accordance with the Income Tax Laws applicable to the assessment year.

ii. Deferred Tax is recognized on timing difference being the difference between taxable income and accounting income that

originate in one period and are capable of reversal in one or more subsequent periods. Where there is unabsorbed

depreciation or carry forward losses, deferred tax assets are recognized only if there is virtual certainty of realization such

assets. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income using the tax rates

and tax laws that have been enacted or substantively enacted by the balance sheet date.

iii. In accordance with the Guidance Note on Accounting for credit available in respect of MAT under the Income Tax Act,1961

issued by the ICAI and in view of convincing evidences of the entitlement of credit of the MAT, the current years’ MAT

provision has been recognised and credited to the Profit & Loss Account.

n) Foreign Currency transactions :

Foreign currency transactions are accounted at the rate prevailing on the date of transaction. Gain or loss arising out of

translation/conversion is taken credit for or charged to the Profit & Loss Account.

Exchange difference arising due to repayment or restatement of liabilities incurred for the purpose of acquiring fixed assets are

adjusted in the carrying amount of the respective fixed assets.

o) Assets taken on lease :

i. In respect of finance lease transactions, lease rents paid are charged to the Profit and Loss Account in accordance with the

terms of the lease agreements.

ii. In respect of operating lease transactions, the assets are not capitalized in the books of the Company and lease payments

are charged to the Profit and Loss Account.

p) Borrowing Costs :

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of

such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other

borrowing costs are charged to revenue.

57

B. NOTES ON ACCOUNTS

1. Notes on Secured Loans of Sayaji Hotels Ltd. :

a) Term Loans of Rs. 20.95 crores from Tourism Finance Corporation of India Ltd. (TFCI) are secured on pari- passu basis by way

of mortgage of land and building at Indore, Pune & Vadodara and hypothecation of the movables, present and future, except

stocks of all kinds including operating supplies, stores, and spares offered to the bankers for securing the working capital loans.

b) Term Loan of Rs. 4.93 crores from HUDCO is secured on pari- passu basis by way of mortgage of land and building at Indore,

Pune & Vadodara and hypothecation of the movables, present and future, except stocks of all kinds including operating

supplies, stores, and spares offered to the Bankers for securing the working capital form.

c) Term Loans of Rs. 7.40 crores from Madhya Pradesh Financial Corporation (MPFC) are secured by way of mortgage of land and

building at Indore and/ hypothecation of the movable, present and future, except stocks of all kinds including operating

supplies, stores and spares offered to the Bankers for securing the working capital finance. Term loan of Rs.7.50 Crores is

secured by way of hypothecation of the movable, present and future, except stocks of all kinds including operating supplies,

stores and spares offered to the Bankers for securing the working capital finance. The equitable mortgage for this loan is yet to

be created.

d) Term Loans of Rs. 54.60 crores from State Bank of India of are secured by way of mortgage of land and building at Indore,

Vadodara & Pune and hypothecation of movables, present and future, except stocks of all kinds including operating supplies

and spares offered to the Bankers for securing the working capital finance.

e) Term Loan of Rs. 2.00 crores from State Bank of India is securitized against the lease rent receivables of Nokia India (P) Ltd. at

Indore.

f) Term Loans of Rs. 29.75 crores from State Bank of Indore are secured by way of mortgage of land and building at Indore,

Vadodara & Pune and hypothecation of movables, present and future, except stocks of all kinds including operating supplies

and spares offered to the Bankers for securing the working capital finance.

g) Term Loan of Rs. 11.50 crores from State Bank of Mysore is secured by way of mortgage of land and building at Indore,

Vadodara & Pune and hypothecation of movables, present and future, except stocks of all kinds including operating supplies

and spares offered to the Bankers for securing the working capital finance.

h) Term Loan of Rs. 6.75 crores from Axis Bank Ltd is secured by way of mortgage of land and building at Indore, Baroda & Pune

and hypothecation of the movable, present and future, except stocks of all kinds including operating supplies, stores and spares

offered to the Bankers for securing the working capital finance.

i) Working Capital Term Loan of Rs. 1.25 crores from Axis Bank Ltd is secured by first charge by way of hypothecation of stocks of

food, beverages, operating supplies stores, spares, book debt of the company and also by way of second charge on the

immovable properties of the company.

j) Working Capital Medium Term Loan of Rs.1.50 crores from Madhya Pradesh Financial Corporation (MPFC) is secured by way of

mortgage of Shops at Sayaji Plaza, Indore.

k) Cash credit facilities of Rs. 6.25 crores State Bank of India is secured by first charge by way of hypothecation of stocks of food,

beverages, operating supplies, stores, spares, book-debts (excluding credit card receivables), bills etc. of the company and also

by way of a second charge on the immovable properties of the company at Indore, Baroda and Pune.

l) Cash credit facilities of Rs. 1.50 crores from Axis Bank Ltd. is secured by first charge by way of hypothecation of stocks of food,

beverages, operating supplies, spares and book debts, bills etc. of the company and also by way of a second charge on the

immovable properties of the company at Indore, Baroda and Pune.

m) Corporate loan of Rs.16.00 crores from Axis Bank Ltd. is secured by first charge by way of hypothecation of stocks of food,

beverages, operating supplies, stores, spares, book-debts, bills etc. of the company and also by way of a Second charge on the

immovable properties of the company at Indore and Baroda.

n) Vehicle loans from ICICI Bank Ltd. are secured by way of hypothecation charge on the specific vehicles.

o) Vehicle loans from HDFC Bank Limited are secured by way of hypothecation charge on specific vehicles.

p) Vehicle loans from Axis Bank Ltd. are secured by way of hypothecation charge on specific vehicles.

q) All term loans except vehicle loans from ICICI Bank Limited,HDFC Bank Limited and Axis Bank Ltd. are personally guaranteed by

some of the director of the company.

r) Installment falling due within next 12 months Rs. 2501.83 Lacs.

58

2. Notes on Secured Loans of Barbeque Nation Hospitality Ltd. :

a) Term loan of Rs. 20.00 crores from State Bank of India is secured on pari-passu basis on the entire fixed assets of the Company

and on pari-passu basis, with the term lenders of Sayaji Hotels Ltd, over the entire fixed assets of Sayaji Hotels Limited by way of

mortgage of land and buildings at Indore, Pune and Vadodara and hypothecation of the movables, present and future, except

stocks of all kinds including operating supplies and spares offered to the bankers for securing the working capital finance.

b) Term loan of Rs. 14.50 crores from State Bank of Mysore is secured on pari-passu basis on the entire fixed assets of the

Company and on pari-passu basis, with the term lenders of Sayaji Hotels Ltd, over the entire fixed assets of Sayaji Hotels

Limited by way of mortgage of land and buildings at Indore, Pune and Vadodara and hypothecation of the movables, present

and future, except stocks of all kinds including operating supplies and spares offered to the bankers for securing the working

capital finance.

c) Term loan of Rs. 15.00 crores from State Bank of Indore is secured on pari-passu basis on the entire fixed assets of the Company

and on pari-passu basis, with the term lenders of Sayaji Hotels Ltd, over the entire fixed assets of Sayaji Hotels Limited by way of

mortgage of land and buildings at Indore, Pune and Vadodara and hypothecation of the movables, present and future, except

stocks of all kinds including operating supplies and spares offered to the bankers for securing the working capital finance.

d) Cash credit facilities of Rs. 2.50 crores from State Bank of India is secured by way of hypothecation of movables, present &

future, including stocks of all kinds, operating supplies and spares and by way of second charge on the entire fixed assets of the

company.

e) The term loans and cash credit facilities are also personally guaranteed by some of the director of the company.

f) The term loans and cash credit facilities are also secured by Corporate Guarantee given by Sayaji Hotels Limited.

g) Installment falling due within next 12 months Rs. 689.88 Lacs.

3. Contingent Liabilities not provided for :

a) Guarantees given on behalf of other companies - Rs. 5621.82 lacs (Previous year Rs. 520 lacs)

b) Disputed statutory liabilities in respect of service tax not provided for : (Rs. In lacs)

31.03.10 31.03.09

i) Tax Demanded 256.78 127.33

ii) Penalty thereon 256.78 127.33

iii) Interest (to be levied in case of confirmation of demand) 148.35 16.34

iv) Total 661.91 271.00

The matters are pending before the hon’ble CESTAT, New Delhi. The Company has got stay order against the tax demand of

Rs.127.33 lacs.

c) Customs duties saved against imports under EPCG scheme - Rs. 783.43 lacs (Previous year Rs. 728.35 lacs)

d) Claims against the company not acknowledged as debt : Rs. 5.06 lacs

e) Disputed liability in respect of :

i. Luxury Tax Rs. 41.13 lacs pertains to tax deposited not considered at the time of assessment and interest charged

thereon.

ii. Vat Tax Rs. 20.73 lacs pertains to Input tax rebate of exemption period being adjusted against presumptive tax of

exemption period.

iii. Entry Tax Rs. 4.64 lacs pertains to entry tax on some items which were considered taxable in the assessment

The above matters are pending before Deputy Commissioner Vat Tax, Indore.

4. During the year under review, company was not engaged in the business of developing and selling of properties, hence the Company

has not provided primary segmental information for these segments as per Accounting Standard – 17 on “Segment Reporting” issued

by the ICAI.

5. The Company adopted the Accounting Standards 15 “Employee Benefits” effective from April 1, 2007.

59

i) Changes in benefit obligations :

Present value of obligation as at the beginning of the year 5315418 4754977

Interest Cost 425233 348179

Current Service Cost 1719038 903621

Actuarial (gain)/ loss on obligations (39756) (325769)

Benefit paid (307011) (365590)

Present value of obligation as at the end of the year 7112922 5315418

ii) Change in plan assets :

Fair value of plan assets as at the beginning of the year 1735128 1553711

Expected return on plan assets 158811 126207

Contributions 500000 413344

Benefits paid Nil (365590)

Actuarial gain/ (loss) on plan assets (301150) 7456

Fair value of plan assets at the end of the year 2092789 1735128

Excess of (obligation over plan assets)/ plan asset over obligation 5020133 (4951290)

(Accrued liability)/ Prepaid benefit (5020133) (4951290)

ii) Net Gratuity and other cost for the year ended 31st March 2009

Current Service cost 1719038 903621

Interest on defined benefit obligation 425233 348179

Expected return on plan assets (158811) (109673)

Net actuarial gain recognized in the year 261393 (330469)

Net gratuity and other cost 2246853 811658

Actual return on plan asset (142339) 133663

iv) Category of Assets as at 31 March 2009

Insurer Managed Funds 2092789 1735128

Others Nil Nil

Total 2092789 1735128

v) Assumptions used

Discount rate (p.a.) 8.00% 8.00%

Salary escalation rate (p.a.) 5.00% 5.00%

Expected rate of return on plan assets (p.a.) 8.00% 8.00%

(In Rupees)

31.03.10 31.03.09

Defined contribution plans : During the year the Company has recognized the following amounts in the Profit and Loss account,

which are included in “Contribution to PF and other funds” in Schedule 13 :

31.03.10 31.03.09

i. Contribution to Provident Fund Rs. 133.79 lacs Rs. 65.88 lacs

Defined Benefit Plans : The Company makes annual contributions to the Employee’s Group Gratuity scheme of the SBI Life Insurance

Co. Ltd., a funded defined benefit plan for the qualifying employees. The scheme provides for lump sum payment to vested employees

at retirement, death while in employment or on termination of employment as per the terms of the scheme. Vesting occurs upon

completion of five years of service.

The present value of the defined benefit obligation and current service cost were measured using the Projected Unit Credit Method,

with actuarial valuations being carried out at each balance sheet date.

The following table sets out the funded status of the gratuity plan and the amounts recognized in the company’s financial statements

as at March 31st, 2009.

60

6. Related Party Disclosure :

a) Relationship during the year :

i) Key Management Personnel

Sajid Dhanani – Managing Director

Munawar Garbadawala – Director

Capt. Salim Sheikh – Director

Prosenjeet Roy Choudhary – Director

ii) Associate Companies/ Firms/ Relatives

Ahilya Hotels Limited

Aries Hotels Pvt Ltd

Bharat Equity Service Ltd.

Clearwater Capital Partners (Cyprus) Ltd.

Dhanani Securities Ltd.

Kruger Chemical Ltd

M.P. Agro Industries Ltd.

M.Y. Merchant

R. R. Dhanani

R.S. Udar

Mansoor Memon

Saba Memon

Sanya Enterprises

Status Travels

Sabiya Amusement Pvt. Ltd

Uniera Laboratories Pvt. Ltd.

Welterman International Ltd.

b) Summary of transaction during the year : (Rs. in Lacs)

A KEY MANAGEMENT PERSONNEL

Remuneration 57.57 62.84

Commission on Profit Nil 1.66

Lease Rent Nil 14.64

Professional fees Nil 10.00

B ASSOCIATE COMPANIES/ FIRMS/RELATIVES

Guest pick up expenses 14.14 19.73

Lease rent paid Nil 104.34

Interest on FCCB 19.14 17.20

Loans receivable at the year end 354.09 504.78

Lease deposit paid Nil 90.00

Loans payable at the year end Nil 2.00

Professional Fees paid 18.00 Nil

Sr.No. Nature of Transactions 2009-10 2008-09

61

7. Income Tax Liability for the year is estimated at Rs.73.73 lacs (Rs. 10.93 lacs towards Minimum Alternate Tax for the year and Rs.

62.80 lacs towards earlier year taxes) (Previous year Rs.93.08 Lacs) under the Income tax Act, 1961 As there has been a virtual

certainty about the Company making profits, timing differences, namely the differences that originate in one accounting period and

capable of reversal in other, after duly identifying the differences between the profit offered to tax and profit as per financial statement,

has been recognized during the year.

The following is the break up of Deferred Assets and Liabilities:

Deferred Assets

- Unabsorbed Depreciation 1729.10 1012.80

- Others 97.45 96.61

Total Deferred Assets 1826.55 1109.41

Deferred Liabilities

- Depreciation Differences 3158.71 2366.37

Total Deferred Liabilities 3158.71 2366.37

Net Deferred Liability 1332.16 1256.96

Net Deferred Tax (Liability)/ Assets (452.83) (426.74)

2009-10 2008-09

8. In the opinion of the Board, the Current Assets, Loans and Advances are approximately of the value stated, if realised, in the ordinary

course of business. Provision for all known liabilities is adequate and not in excess of the amount reasonably necessary.

9. The turnover of the Company by way of Food and Beverages and sale of shops do not admit of quantitywise details.

10. Debit and Credit balances in party accounts are subject to confirmation and reconciliation.

11. DETAILS OF AUDITORS' REMUNERATION

31.03.10 31.03.09

i) Audit Fees Rs. 325000 Rs. 200000

ii) Certification & Other Matters Rs.50000 Rs.25000

12. EARNING IN FOREIGN CURRENCY:

31.03.10 31.03.09

i. Sale of rooms and Food and Beverages (deemed export as defined in FTP) Rs. 973.51 lacs Rs. 472.25 Lacs

13. CIF VALUE OF IMPORT & EXPENDITURES:

31.03.10 31.03.09

i. Import of Capital Items Rs. 113.23 lacs Rs.631.94 lacs

ii. Interest on FCCB Rs. 19.14 lacs Rs. 17.20 lacs

iii. Others Rs. 0.04 lacs Rs. 6.67 lacs

14. DETAILS OF MANAGERIAL REMUNERATION:

31.03.10 31.03.09

i. Salaries Rs. 57.29 lacs Rs. 72.49 Lacs

ii. Contribution to Provident & Other Funds Rs. 0.27 lacs Rs. 0.35 Lacs

iii. Commission on Profit NIL Rs. 1.66 Lacs

The above payments are within the limits prescribed under the Companies Act, 1956.

(Rs. In lacs)

62

15. Leave encashment has been determined based on the available leave entitlement at the end calendar year. The incremental amount

so calculated is debited to Employees Emoluments.

16. Extraordinary items of Rs. 132.04 lacs shown in Profit and Loss account includes the loss on account of write-off of fixed assets

expenditure incurred towards setting up of the Amritsar restaurant in Barbeque-Nation Hospitality Ltd. which did not start its

commercial operations.

17. In pursuance of the Special resolution passed in the Extraordinary General Meeting of Barbeque-Nation Hospitality Ltd. held on

28.03.2009 the company has allotted 28,00,000 equity shares at Rs. 60/- each to Blue Deebaj Chemicals LLC, Dubai on

07.07.2009.

18. EARNING / (LOSS) PER SHARE:

Period ended Period ended

31.03.10 31.03.09

i. Profit after tax but before extraordinary item Rs. 92.74 lacs Rs.(105.71) lacs

ii. Profit after tax and after extraordinary item (Rs. 39.30 lacs) Rs(284.46). lacs

iii. Cash Profit after adding depreciation, deferred tax, preliminary exps Rs 1126.48 lacs Rs.422.66 lacs

and after minority interest

iv. Wtd. Average no. of Shares – Basic 12850000 12850000

v. Wtd. Average no. of Shares – Diluted 12850000 12850000

vi. EPS – Basic – before extraordinary item Rs.0.72 Nil

vii. EPS – Basic – after extraordinary item Nil Nil

viii. EPS – Diluted – before extraordinary item Rs. 0.72 Nil

ix. EPS – Diluted – after extraordinary item Nil Nil

x. Cash EPS Rs. 8.77 Rs.3.29

19. Based on the information available with the Company, there are no dues to micro and small enterprises under the Micro, Small and

Medium Enterprises Development Act.

20. No provision has been made for diminution, if any, in the value of investments held for long term as in the opinion of the

management company would be able to recover at least the cost of the investments.

21. In pursuance of the resolution passed at the EGM held on 03.05.06 the company has issued 0.50% Foreign Currency Convertible

Bonds of US$ 1,00,000 each totaling to US$ 7.50 million. The Bonds are listed at Luxemburg Stock Exchange, London. After the

Balance Sheet date the Bondholders has exercised their option to convert the shares and accordingly 46,68,000 shares has been

allotted on 10.05.2010 in lieu of FCCB.

22. Sayaji Hotels Ltd. had allotted 50 lakhs share warrants @ Rs. 80/- each on 23.01.2008 against which Rs. 4,00,08.387/- were

received as application money. As per the terms of the issue and relevant guidelines the last date for conversion of share warrants

to fully paid-up equity shares was 22.07.2009. Since the investors has not opted to pay the balance amount of subscription, the

company has forfeited the application money. The forfeited amount has been transferred to General Reserve.

23. Figures of previous year have been regrouped, rearranged and recast wherever necessary so as to make them comparable with

those of current year.

63

(Rs. in lacs)

31-Mar-10 31-Mar-09

A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before tax and extraordinary 46.33 (328.48)

Item adjusted for:

Depreciation 1,322.13 858.98

Interest paid 1,660.95 840.67

Interest Received (42.04) (32.16)

Prior Period & Extra-ordinary items 132.04 178.75

Finance lease rental 1,132.52 1,006.22

4,205.60 2,852.46

Operating profit before Working Capital 4,251.93 2,523.98

Changes

Adjusted for:

Trade and Other receivables 136.33 (410.65)

Inventories (160.03) (193.63)

Trade payables (330.40) (354.10) 913.30 309.02

Cash generated from operations 3,897.83 2,833.00

Taxes Paid (132.22) (132.05)

Prior Period & Extra-ordinary items (132.04) (178.75)

Mat Credit Entitlement 10.93 0.00

Interest paid (1,660.94) (840.67)

Net cash from operating activities 1,983.56 1,681.53

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed assets (1,328.25) (9,829.25)

Investments (3.08) 0.00

Interest Received 42.04 (1,289.29) 32.15 (9,797.10)

Net cash used in investing activities 694.27 (8,115.57)

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED ON 31st MARCH 2010

64

31-Mar-10 31-Mar-09

CASH FLOW STATEMENT FOR THE YEAR ENDED ON 31st MARCH 2010

(Rs. in lacs)

CASH FLOW FROM FINANCING ACTIVITIES

Share Capital and Share Premium 1,680.00

Unsecured Loans 34.40 161.68

Long Term borrowings (1,054.44) 8,257.98

Repayment of Finance lease liabilities (1,132.52) (1,006.22)

Net cash generated from financing activities (472.56) 7,413.44

Net increase in cash and cash equivalents 221.71 (702.13)

Cash and cash equivalents as at the

beginning of the year 196.11 898.24

Cash and cash equivalents as at the

end of the year 417.81 196.11

Note : Figures in bracket indicate disposition of funds and others indicates of generation of funds except the figure of cash and cash

equivalents at the beginning and at the end of the year.

AUDITOR'S CERTIFICATE

We have verified the attached Cash Flow Statement of Sayaji Hotels Ltd & its subsidiaries for the year ended 31st March, 2010. This

statement has been compiled by the Company from the financial statements for the year ended 31st March 2010 and 31st March 2009. We

have found the same to be in accordance with the requirements of clause 32 of the listing agreement with stock exchanges.

For and on behalf of the Board of Directors

INDORE : 31st August, 2010 Sajid R Dhanani

Managing Director Capt. Salim Sheikh

Director M.F. Garbadwala

Director

Awadhesh GuptaCo. Secretary

VADODARA : 31st , 2010August

For SHAH GANDHI & SHAH

Firm Regn. No. 126862W

Chartered Accountants

Nimesh Gandhi

Partner

M.No. 49134

65

FINANCIAL STATEMENTS

The Audited financial statements of the Company prepared in

accordance with Accounting Standards -21 prescribed by the

Institute of Chartered Accountants of India form part of the Annual

Report.

STATE OF COMPANY AFFAIRS

As the members are aware, the restaurant business in the country

has been growing rapidly and is poised to grow fast in future. Your

management strongly believes that your company can be a part of

this growth story and therefore has undertaken ambitious

expansion plans. During the year under review, your company

operated twelve restaurants located at Janakpuri (New Delhi),

Thyagaraja (T Nagar Chennai), Chandigrah, Gomati Nagar

(Lucknow), Tonk Road (Jaipur), Drive in Road (Ahemdabad), J.P.

Nagar (Bangalore), Alkapuri (Baroda), Thane (Mumbai), Nagar

Road (Pune), Bidhan Nagar (Kolkata) and Jalandhar.

In the coming years, the company has plans to open more

restaurants in different part of India.

ISSUE AND ALLOTMENT OF EQUITY SHARES

During the year under review, your company has allotted 28,00,000

Equity Share on Preferential Basis to M/s Blue Deebaj Chemical LLC

outsider of the Company.

OPERATIONS OF FIVE RESTAURANT BUSINESS

These five units (i)Mumbai, (ii)Bangalore-Indra Nagar,(iii)

Bangalore- Koramangala, (iv) Hyderabad and (v) Gurgaon which

are in holding company have been successfully operated by the

Company during the financial year 2009-10.

OUTLOOK

Your Company strongly believes that Indian economy would

continue to grow at a firm pace notwithstanding some temporary

setbacks. With the economic growth, per capita income and

disposal income in the hands of the consumer would also rise. This

is expected to higher spending on eating out and thereby restaurant

business is also likely to get a boost. Restaurant chains like ours are

likely to benefit fun this trend. With this optimism and confidence

the company is embarking on its future growth plans.

DIVIDEND

In view of the loss and various expansions in hand, your directors

do not recommend dividend for the financial year 2009-2010.

DIRECTORS

Sri Sajid R. Dhanani, Director of the company, will retire by rotation

in ensuing Annual General Meeting and is eligible for re-

appointment as per provision of the Companies Act, 1956, read

with the Articles of Association of the Company.

FINANCIAL RESULTS

Particulars Financial Year 2009-10 Financial Year 2008-09

Income 844.05 300.21

Less: Operating Expenses 762.37 336.69

Profit/(Loss) before Financial Charges and Depreciation 81.68 (36.48)

Less: Financial Charges 33.07 21.19

Profit/(Loss) before Depreciation 48.610 (57.67)

Less: Depreciation 37.84 25.64

Less: Prior Period & Extraordinary Items 13.20 0.13

Profit/(Loss) before Tax (2.43) (83.44)

Less: Provision for taxation (2.14) (28.58)

Operating profit/(Loss) after Tax (0.29) (54.87)

Add: Balance brought forward from previous year (60.08) (5.21)

Balance carried to Balance Sheet (60.37) (60.08)

(Figures in Rs. million)

DIRECTORS' REPORT

Yours Directors have pleasure in presenting the Fourth Annual Report of the company together with the audited Balance Sheet as on March

31, 2010 and Profit and Loss account for the year ended on that date.

66

PARTICULARS OF EMPLOYEES

The provisions of Section 217 (2A) of the Companies Act, 1956, of

the Companies Act, 1956 read with the provisions of the

Companies (Particulars of Employees) Rules, 1975, are not

attracted in case of any employee of the company.

ACKNOWLEDGMENT

The Directors place on record their sincere gratitude to the

employees of the company for their hard work and continued

support to the company.

Your Directors also wish to acknowledge the continued support

and cooperation received from the participating financial

institutions, banks, various central and state government agencies,

Shareholders, suppliers and the valued customers of our

Company.

For and on behalf of the Board of Directors

Place : Indore

Date: 23rd August 2010 Chairman

AUDITORS

M/s Shah Gandhi & Shah, Chartered Accountants, Auditors of the

Company, who hold office until the conclusion of the ensuing

Annual General Meeting and are eligible for re-appointment. Your

company has received a letter from them to the effect that their

appointment, if made, would be within the prescribed limits under

section 224 (1B) of the Companies Act 1956.

AUDITORS’ REPORT

The report of the Board of Directors of the Company and notes to

the accounts are self-explanatory and do not require further

explanation.

FIXED DEPOSITS

The Company has not invited any deposits from public during the

period under review attracting the provision of Section 58A of the

Companies Act, 1956 and rules framed there under.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217 (2AA) of the Companies

Act, 1956, the Board confirms:

(i) That in the preparation of the annual accounts for the

financial year ended March 31, 2010 the applicable

accounting standards have been followed along with proper

explanations relating to material departures;

(ii) That the directors have selected such accounting policies

and applied them consistently and made judgments and

estimates that are reasonable and prudent so as to give a true

and fair view of the state of the affairs of the Company at the

end of the financial year and of the profit or loss of the

company for that period;

(iii) That the directors have taken proper and sufficient care for

the maintenance of adequate accounting records in

accordance with the provisions of this Act for safeguarding

the assets of the company and for preventing and detecting

fraud and other irregularities; and

(iv) That the directors had prepared the annual accounts on a

going concern basis.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION ETC.

Particulars of Conservation of Energy, Technology Absorption etc.,

required to be given pursuant to Section 217(1)(e) of the

Companies Act, 1956, read with the Rules made there under are not

applicable to the Company.

The Company has not absorbed any new technology during the

year under review. The inflow and Outflow of Foreign Exchange

during the year under review is as under:

Foreign Exchange Earnings : Rs.33.045 million

Foreign Exchange Outgo : Rs.02.787 million

67

To

THE BOARD OF DIRECTORS

BARBEQUE-NATION HOSPITALITY LIMITED

INDORE

We have examined the attached Consolidated Balance Sheet of

BARBEQUE-NATION HOSPITALITY LIMITED (“the Company”)

and its subsidiaries as at 31st March, 2010, the Consolidated

Profit & Loss Account for the year ended, annexed thereto and

also the Consolidated Cash Flow Statement for the year the

ended. The preparation of these financial statements is the

responsibility of the Company's management. Our

responsibility is to express an opinion on these financial

statements based on our audit.

We conducted our audit in accordance with auditing standards

generally accepted in India. Those Standards require that we

plan and perform the audit to obtain reasonable assurance

about whether the financial statements are prepared, in all

material respects, in accordance with an identified financial

reporting framework and are free of material misstatements. An

audit includes examining, on a test basis, evidence supporting

the amounts and disclosures in the financial statements. An

audit also includes assessing the accounting principles used

and significant estimates made by management, as well as

evaluating the overall financial statement. We believe that our

audit provides a reasonable basis for our opinion.

We report that the consolidated financial statements have been

prepared by Barbeque-Nation Hospitality Limited's

management in accordance with the requirements of

Accounting Standards (AS) 21, Consolidated Financial

Statements', and Accounting Standard (AS) 23, Accounting for

Investments in Associates in Consolidated Financial

Statements' issued by the Institute of Chartered Accountants of

India.

Based on our audit and on consideration of other financial

information of the components, and to the best of our

information and according to the explanations given to us, we

are of the opinion that the attached 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 and its subsidiaries

as at 31st March, 2010; and

b. in the case of the Consolidated Profit & Loss

Account, of the consolidated results of the

operations of the Company and its subsidiaries for

the year ended on that date; and

c. in the case of the Consolidated Cash Flow

Statement, of the cash flows of the Company and its

subsidiaries for the year ended on that date.

AUDITOR'S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

For SHAH GANDHI & SHAH

Firm Regn. No. 126862W

Chartered Accountants

Vadodara Nimesh Gandhi Partner

M.No. 4913423rd August 2010

68

BARBEQUE-NATION HOSPITALITY LIMITED (CONSOLIDATED)

I. SOURCES OF FUNDS

(1) Shareholders' Funds

(a) Share Capital 1 926.50 646.50

(b) Reserves & Surplus 2 1,607.50 2,534.00 207.50 854.00

(2) Loan Funds

(a) Secured Loans 3 2,193.04 2,620.32

(b) Unsecured Loans 4 99.22 2,292.26 1,920.44 4,540.76

TOTAL 4,826.26 5,394.76

II. APPLICATION OF FUNDS

(1) Fixed Assets 6

(a) Gross Block (Original Cost) 4,012.56 3,766.58

(b) Less : Depreciation (643.00) (264.62)

(c) Net Block 3,369.56 3,501.96

(d) Capital Work in Progress 6 172.20 372.91

(e) Expenditure during Construction 6 --- 156.96

Period pending allocation

(2) Current Assets, Loans and Advances 7 1,211.76 1,149.94

Less: Current Liabilities & Provisions 5 (867.98) (706.68)

Net Current Assets 343.78 443.26

(3) Deferred Tax

337.00 318.85

(4) Profit & Loss Account 2 603.72 600.82

TOTAL 4,826.26 5,394.76

Significant Accounting Policies 15

Notes on Accounts 15

(See note 5 of Part B of Sch.15)

SchAS AT

31/03/10AS AT

31/03/09

Schedules referred to above form an integral partof the Balance SheetAs per our report of even date attached For SHAH GANDHI & SHAHFirm Regn. No. 126862WChartered Accountants

Nimesh GandhiPartnerM.No. 49134

VADODARA : 23rd August 2010

For and on behalf of the Board of Directors

INDORE : 23rd August 2010

Sajid R Dhanani Director

Prosenjeet Roy ChoudharyDirector

Surendran R.Manager

(Rs. In lacs)BALANCE SHEET AS AT 31-03-2010

69

PROFIT & LOSS ACCOUNT FOR THE YEAR 01.04.2009 TO 31.03.2010

BARBEQUE-NATION HOSPITALITY LIMITED (CONSOLIDATED)

I. INCOME

Restaurants and Other Services 8 8,424.04 2,992.50

Other Income 9 16.54 9.67

TOTAL 8,440.58 3,002.17

II. EXPENDITURE

Food and Beverages materials consumed 10 3,284.38 1,365.05

Operating Expenses 11 465.65 211.94

Power and Fuel 11 719.59 362.27

Employees' Emoluments 12 1,096.04 576.91

Selling & Administrative Exps. 13 2,058.05 850.74

7,623.71 3,366.91

III. Operating Profit before Interest 816.87 (364.74)

Financial Charges 14 330.76 211.98

IV. PROFIT/ (LOSS) BEFORE DEPRECIATION 486.11 (576.72)

Depreciation 379.07 256.45

Add : Depreciation Written Back 0.68 ---

V PROFIT/ (LOSS) BEFORE TAX & PRIOR PERIOD &

EXTRAORDINARY ITEMS 107.72 (833.17)

LESS : PRIOR PERIOD & EXTRAORDINARY ITEMS 132.03 1.36

VI. PROFIT/ (LOSS) BEFORE TAX (24.31) (834.53)

VII. PROVISION FOR TAXATION

FRINGE BENEFIT TAX (3.26) 6.92

DEFERRED TAX (18.15) (292.74)

VIII. PROFIT/ (LOSS) AFTER TAX (2.90) (548.71)

IX. BALANCE B/FORWARD FROM LAST YEAR (600.82) (52.11)

X. AMOUNT AVAILABLE FOR APPROPRIATION (603.72) (600.82)

XI. AMOUNT CARRIED TO BALANCE SHEET (603.72) (600.82)

31-Mar-10Sch 31-Mar-09

Schedules referred to above form an integral partof the Balance SheetAs per our report of even date attached For SHAH GANDHI & SHAHFirm Regn. No. 126862WChartered Accountants

Nimesh GandhiPartnerM.No. 49134

VADODARA : 23rd August 2010

For and on behalf of the Board of Directors

INDORE : 23rd August 2010

Sajid R Dhanani Director

Prosenjeet Roy ChoudharyDirector

Surendran R.Manager

(Rs. In lacs)

70

SCHEDULE - 1 : SHARE CAPITAL

AUTHORISED

20,000,000 Equity Shares of Rs.10/- each 2,000.00 2,000.00

TOTAL 2,000.00 2,000.00

ISSUED, SUBSCRIBED & PAID-UP

9265004 (6465004) Equity 926.50 646.50

Shares of Rs. 10/- each

TOTAL 926.50 646.50

SCHEDULE - 2 : RESERVES & SURPLUS

(i) Share Premium

Opening at beginning 207.50 ---

Addition during the year 1,400.00 207.50

Utilised during the year --- ---

Closing at end 1,607.50 207.50

(ii) Profit & Loss Account

Opening at beginning (600.82) (52.11)

Addition during the year (2.90) (548.71)

Closing at end (603.72) (600.82)

GRAND TOTAL 1,003.78 (393.32)

SCHEDULE - 3 : SECURED LOANS

Term Loans 2,054.98 2,620.32

Working Capital Loans 138.06 ---

TOTAL 2,193.04 2,620.32

SCHEDULE - 4 : UNSECURED LOANS

Other Loans :

From Holding Company 99.22 1,920.44

TOTAL 99.22 1,920.44

SCHEDULE - 5 : CURRENT LIABILITIES &

PROVISIONS

Current Liabilities

Sundry Creditors 623.50 579.02

Interest Acc.but not due 17.03 640.53 22.73 601.75

(due within 12 months)

Provisions Others 227.45 227.45 104.93 104.93

TOTAL 867.98 706.68

(See note 1 of Part B of Sch. 15)

SCHEDULES FORMING PART OF THE BALANCE SHEET

As at31/03/10

As at31/03/09

(Rs. In lacs)

71

CA

PIT

AL

WO

RK

IN

PR

OG

RES

S37

2.91

(

111.

70)

89.

02

172

.20

PR

E-O

PER

ATI

VE

EXP

ENS

ES

INC

UR

RED

DU

RIN

G C

ON

STR

U-

CTI

ON

PER

IOD

PEN

DIN

G

ALL

OC

ATI

ON

156

.96

---

1

56.9

6 -

--

TOTA

L 5

29.8

7 (

111.

70)

245

.98

172

.20

SC

HED

ULE

- 6

: F

IXED

AS

SET

S(R

s. in

lacs

)

Sr.

No.

PA

RTI

CU

LAR

S

GR

OS

S B

LOC

KD

EPR

ECIA

TIO

NN

ET B

LOC

K

Open

ing

as o

n 01

.04.

09A

dditi

ons

Dedu

ctio

n &

Adju

stm

ent

Clos

ing

as o

n 31

.03.

10Op

enin

g as

on

01.0

4.09

Del

etio

nA

dditi

onCl

osin

g as

on

31.0

3.10

As

on31

.03.

10A

s on

31.0

3.09

A.

TA

NG

IBLE

AS

SET

S

1 LE

AS

EHO

LD I

MP

RO

VEM

ENTS

2

,088

.42

135

.82

10.

65

2,2

13.5

9 1

74.4

9 0

.69

253

.65

427

.45

1,7

86.1

4 1

,913

.93

(BU

ILD

ING

)

2 FU

RN

ITU

RE

& F

IXTU

RE

331

.97

28.

30

---

3

60.2

7 2

2.87

-

--

33.

15

56.

02

304

.25

309

.10

3 P

LAN

T &

MA

CH

INER

Y 4

37.7

3 4

1.35

-

--

479

.08

16.

62

---

2

2.05

3

8.67

4

40.4

1 4

21.1

1

4 S

ERV

ICE

EQU

IPM

ENT

546

.44

48.

15

---

5

94.5

9 3

9.24

-

--

54.

51

93.

75

500

.83

507

.20

5 C

OM

PU

TER

EQ

UIP

MEN

TS 5

6.80

3

.01

---

5

9.81

7

.58

---

9

.46

17.

04

42.

77

49.

22

6 V

EHIC

LE 2

0.00

-

--

---

2

0.00

1

.51

---

1

.90

3.4

1 1

6.59

1

8.49

B.

IN

TAN

GIB

LE A

SS

ETS

1 LI

QU

OR

LIC

ENC

E 3

6.22

---

-

--

36.

22

2.3

1 -

--

4.3

5 6

.66

29.

56

33.

91

2 B

RA

ND

NA

ME

249

.00

---

-

--

249

.00

---

-

--

---

-

--

249

.00

249

.00

TOTA

L 3

,766

.58

256

.63

10.

65

4,0

12.5

6 2

64.6

2 0

.69

379

.07

643

.00

3,3

69.5

6 3

,501

.96

PR

EVIO

US

YEA

R F

IGU

RES

1,2

75.9

0 2

,541

.33

50.

65

3,7

66.5

8 8

.62

0.4

5 2

56.4

5 2

64.6

2 3

,501

.96

1,2

67.2

8

PER

IOD

01.

04.0

9 TO

31.

03.1

0

72

SCHEDULE - 7 : CURRENT ASSETS LOANS

& ADVANCES

CURRENT ASSETS

Inventories

Operating Supplies 62.26 62.45

(Valued at cost as certified by Management)

Food and Beverage 92.07 154.33 86.20 148.65

(Valued at cost as certified by Management)

Sundry Debtors (Unsecured considered good)

Outstanding Over Six Months 29.38 1.27

Others 54.28 83.66 34.49 35.76

CASH AND BANK BALANCES

Cash on hand 13.32 6.43

Bank Balances

With Scheduled Banks

In Current Accounts 63.97 77.29 14.61 21.04

LOANS AND ADVANCES (Unsecured,

Considered good unless otherwise

specified)

Advances recoverable in cash or in

kind or for value to be received 885.59 937.34

Advance Tax & TDS Receivable 10.89 896.48 7.15 944.49

TOTAL 1,211.76 1,149.94

As at31/03/10

As at31/03/09

(Rs. In lacs)

73

SCHEDULE - 08 : RESTAURANTS AND OTHER SERVICES

Food and Beverages 8,322.20 2,935.83

Other Services 101.84 56.67

TOTAL 8,424.04 2,992.50

SCHEDULE - 09 : OTHER INCOME

Interest Earned 9.69 7.63

Miscellaneous Income 6.85 2.04

TOTAL 16.54 9.67

SCHEDULE - 10 : FOOD AND BEVERAGES

MATERIALS CONSUMED

Opening Stock 86.20 11.18

Add : Purchases 3,290.25 1,440.07

3,376.45 1,451.25

Less : Closing Stock 92.07 86.20

TOTAL 3,284.38 1,365.05

SCHEDULE - 11 : OPERATING EXPENSES

Stores and Operating Supplies 237.55 119.38

Repairs and Maintenance

Building 96.80 37.12

Plant & Machinery 48.23 24.02

Others 54.83 9.64

Laundry Expenses 28.24 21.78

SUB-TOTAL 465.65 211.94

Power and Fuel 719.59 362.27

GRAND TOTAL 1,185.24 574.21

31-Mar-10 31-Mar-09

(Rs. In lacs)SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNT

74

SCHEDULE - 12 : EMPLOYEES' EMOLUMENTS

Salaries, Wages and Allowances 960.70 510.25

Contribution to P.F. and other Funds 56.92 31.05

Workmen and Staff Welfare Expenses 47.51 15.02

Workmen and Staff Uniform Expenses 30.91 20.59

TOTAL 1,096.04 576.91

SCHEDULE - 13 : SELLING AND ADMINISTRATIVE EXPENSES

Rent/Lease Rent 688.80 543.44

Operating Fees on Revenue 765.54 ---

Rates & Taxes 108.53 44.55

Insurance 4.84 2.61

Legal & Professional 169.81 24.97

Travelling and Conveyance 50.48 61.14

Postage, Telegram and Telephones 43.70 25.76

Advertisement and Publicity 68.96 32.84

Printing and Stationery 68.43 39.32

Donation 0.28 0.08

Other Expenses 70.36 40.09

Water charges 13.81 7.09

Housekeeping Expenses 3.11 28.10

Audit Fees 1.40 0.75

TOTAL 2,058.05 850.74

SCHEDULE - 14 : FINANCIAL CHARGES

Interest on term Loan 252.50 190.03

Interest on Others 0.73 0.66

Bank Charges 77.53 21.29

TOTAL 330.76 211.98

31-Mar-10 31-Mar-09

(Rs. In lacs)

75

BARBEQUE NATION HOSPITALITY LIMITED

S C H E D U L E - 1 5 : N O T E S T O A C C O U N T S

A. SIGNIFICANT ACCOUNTING POLICIES

a) The financial statements comprise the individual financial statements of Barbeque-Nation Hospitality Limited and it’s

subsidiaries as on 31st March 2010 and for the year ended on that date. The financial statements have been prepared on the

following basis :

The financial statements of the Company and its subsidiaries have been combined on a line-by-line basis by adding together the

book values of like items of assets, liabilities, income and expenses, after eliminating intra-group balances and intra-group

transactions resulting in unrealized profit or losses as per Accounting Standard – 21 on “Consolidated Financial Statements”

issued by the Institute of Chartered Accountants of India.

b) The financial statements of the subsidiaries, in the consolidation are drawn up to the same reporting date as the Company i.e.

31st March 2010.

c) The financial statements of the following subsidiary companies have been consolidated :

Name of the subsidiary Proportion of Ownership Interest

Current Year Previous Year

i. Kshipra Restaurants Pvt. Ltd 100.00 Nil

ii. Favorite Restaurants Pvt. Ltd. 100.00 Nil

d) Convention :

i. The financial statements have been prepared under the historical cost convention and on the basis of going concern, in

accordance with the generally accepted accounting principles and provisions of the Companies Act 1956.

ii. The Company generally follows mercantile system of accounting and recognizes significant items of income and

expenditure on accrual basis.

iii. Where changes in presentation are made, comparative figures for the previous year are regrouped accordingly.

e) Fixed Assets :

i. Accounted at acquisition cost including directly attributable costs such as freight, insurance and specific installation

charges for bringing the asset to its working condition for use.

ii. Expenditure relating to existing fixed assets is added to the cost of the assets where it increases the performance/life of

the assets as assessed earlier.

iii. Fixed assets are eliminated from financial statements, either on disposal or when retired from active use. Generally, such

retired assets are disposed of soon thereafter.

iv. Pre-operative expenses, including interest on specific loans for the projects incurred till the projects are ready for

Commercial Operation, are capitalised.

v. Expenditure on the new project and advances given for capital expenditure are included in Capital Work-in-Progress.

f) Depreciation :

i. Depreciation is charged on fixed assets, except on buildings, as per the straight-line method at the rates and in the manner

prescribed under Schedule XIV to the Companies Act, 1956.

ii. Buildings constructed on the rented properties are depreciated over the term of the respective leases.

iii. Assets like vehicle, computers etc. utilized during the construction period are not depreciated till the project is ready.

iv. Liquor licences with perpetual term purchased for restaurant chain business are depreciated over the period of lease term

of the respective restaurants.

76

g) Inventories :

i. Inventories are valued at cost or replacement value, whichever is less, after providing for obsolescence and damage.

ii. In the case of raw materials, operating supplies and stores, cost represents purchase price and other costs incurred for

bringing inventories upto their locations and are determined on First-In-First-Out basis.

h) Sales :

Sales is exclusive of Sales tax, Service Tax and other taxes.

i) Accounting for Provisions, Contingent Liabilities and Contingent Assets :

A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow

of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Accounting for

contingencies (gains and losses) arising out of contractual obligations, are made only on the basis of mutual acceptances.

j) Events occurring after the date of Balance Sheet date :

Where material, events occurring after the date of Balance Sheet are considered up to the date of adoption of the accounts.

k) Employee Benefit :

Employee benefit plans comprise both defined benefit and defined contribution plans.

Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit

method made at the end of each financial year. Actuarial gains/ losses are immediately taken to profit and loss account and are

not deferred.

Provident fund is a defined contribution plan. Each eligible employee and the company make contributions at a percentage of the

basic salary specified under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. The Company’s

contributions are charged to the profit and loss account of the year when the contributions to the respective funds are due. The

company has no further obligations under the plan beyond its periodic contributions.

l) Taxation :

i. Due to absence of taxable income during the year the provision for current taxation has not been made in accordance with

the Income Tax Laws applicable to the assessment year.

ii. Deferred Tax is recognized on timing difference being the difference between taxable income and accounting income that

originate in one period and are capable of reversal in one or more subsequent periods. Where there is unabsorbed

depreciation or carry forward losses, deferred tax assets are recognized only if there is virtual certainty of realization such

assets. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income using the tax rates

and tax laws that have been enacted or substantively enacted by the balance sheet date.

iii. In accordance with the Guidance Note on Accounting for credit available in respect of MAT under the Income Tax Act,1961

issued by the ICAI and in view of convincing evidences of the entitlement of credit of the MAT, the current year MAT

provision has been recognised and credited to the Profit & Loss Account.

m) Foreign Currency transactions :

Foreign currency transactions are accounted at the rate prevailing on the date of transaction. Gain or loss arising out of

translation/conversion is taken credit for or charged to the Profit & Loss Account.

Exchange difference arising due to repayment or restatement of liabilities incurred for the purpose of acquiring fixed assets are

adjusted in the carrying amount of the respective fixed assets.

n) Assets taken on lease :

In respect of operating lease transactions, the assets are not capitalized in the books of the Company and lease payments are

charged to the Profit and Loss Account.

77

o) Segment Reporting :

During the year the company was engaged in the restaurant business only.

p) Borrowing Costs :

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of

such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other

borrowing costs are charged to revenue.

B. NOTES ON ACCOUNTS

1. Secured Loans :

a) Term loan of Rs. 20.00 crores from State Bank of India is secured on pari-passu basis on the entire fixed assets of the Company

and on pari-passu basis, with the term lenders of Sayaji Hotels Ltd, over the entire fixed assets of Sayaji Hotels Limited by way of

mortgage of land and buildings at Indore, Pune and Vadodara and hypothecation of the movables, present and future, except

stocks of all kinds including operating supplies and spares offered to the bankers for securing the working capital finance.

b) Term loan of Rs. 14.50 crores from State Bank of Mysore is secured on pari-passu basis on the entire fixed assets of the

Company and on pari-passu basis, with the term lenders of Sayaji Hotels Ltd, over the entire fixed assets of Sayaji Hotels Limited

by way of mortgage of land and buildings at Indore, Pune and Vadodara and hypothecation of the movables, present and future,

except stocks of all kinds including operating supplies and spares offered to the bankers for securing the working capital

finance.

c) Term loan of Rs. 15.00 crores from State Bank of Indore is secured on pari-passu basis on the entire fixed assets of the Company

and on pari-passu basis, with the term lenders of Sayaji Hotels Ltd, over the entire fixed assets of Sayaji Hotels Limited by way of

mortgage of land and buildings at Indore, Pune and Vadodara and hypothecation of the movables, present and future, except

stocks of all kinds including operating supplies and spares offered to the bankers for securing the working capital finance.

d) Cash credit facilities of Rs. 2.50 crores from State Bank of India is secured by way of hypothecation of movables, present &

future, including stocks of all kinds, operating supplies and spares and by way of second charge on the entire fixed assets of the

company.

e) The term loans and cash credit facilities are also personally guaranteed by some of the director of the company.

f) The term loans and cash credit facilities are also secured by Corporate Guarantee given by Sayaji Hotels Limited.

g) Installment falling due within next 12 months Rs. 689.88 Lacs.

2. Contingent Liabilities not provided for :

a) Customs duties saved against imports under EPCG scheme - Rs. 33.05 lacs (Previous year Rs. 33.05 Lacs)

3. The Company adopted the Accounting Standards 15 “Employee Benefits” effective from April 1, 2007.

Defined contribution plans : During the year the Company has recognized the following amounts in the Profit and Loss account,

which are included in “Contribution to PF and other funds” in Schedule 12 :

31.03.10 31.03.09

i. Contribution to Provident Fund Rs. 56.92 lacs Rs. 23.32 lacs

Defined Benefit Plans : The Company makes annual contributions to the Employee’s Group Gratuity scheme of the SBI Life Insurance

Co. Ltd., a funded defined benefit plan for the qualifying employees. The scheme provides for lump sum payment to vested employees

at retirement, death while in employment or on termination of employment as per the terms of the scheme. Vesting occurs upon

completion of five years of service.

The present value of the defined benefit obligation and current service cost were measured using the Projected Unit Credit Method,

with actuarial valuations being carried out at each balance sheet date.

78

i) Changes in benefit obligations :

Present value of obligation as at the beginning of the year 585004 442815

Interest Cost 46800 3206

Current Service Cost 799828 138983

Actuarial (gain)/ loss on obligations (525505) Nil

Benefit paid Nil Nil

Present value of obligation as at the end of the year 906127 585004

ii) Change in plan assets :

Fair value of plan assets as at the beginning of the year 432634 Nil

Expected return on plan assets 54611 16534

Contributions 500000 413344

Benefits paid Nil Nil

Actuarial gain/ (loss) on plan assets 6518 2756

Fair value of plan assets at the end of the year 993763 432634

Excess of (obligation over plan assets)/ plan asset over obligation 87636 (152370)

(Accrued liability)/ Prepaid benefit 87636 (152370)

iii) Net Gratuity and other cost for the year ended 31st March 2010

Current Service cost 799828 138983

Interest on defined benefit obligation 46800 3206

Expected return on plan assets (54611) Nil

Net actuarial gain recognized in the year (532024) Nil

Net gratuity and other cost 259994 142189

Actual return on plan asset 61129 19290

iv) Category of Assets as at 31 March 2010

Insurer Managed Funds 993763 432634

Others Nil Nil

Total 993763 432634

v) Assumptions used

Discount rate (p.a.) 8.00% 8.00%

Salary escalation rate (p.a.) 5% 5%

Expected rate of return on plan assets (p.a.) 8.00% 8.00%

(In Rupees)

31.03.10 31.03.09

The following table sets out the funded status of the gratuity plan and the amounts recognized in the company’s financial statements

as at

79

b) Summary of transaction during the year : (Rs. in Lacs)

A KEY MANAGEMENT PERSONNEL

Remuneration 23.71 29.30

Professional Fees NIL 10.00

B HOLDING COMPANY

Issue of Equity shares NIL 249.00

Loans payable at the year end 99.22 1920.44

C. SUBSIDIARY COMPANIES

Investments 2.00 NIL

D ASSOCIATE COMPANIES/ FIRMS/RELATIVES

Professional Fees 18.00 NIL

Sr.No. Nature of Transactions 2009-10 2008-09

5. Income Tax Liability for the year is estimated at NIL as Company has does not have taxable income under the Income tax Act, 1961.

The company is also not liable to pay minimum alternate tax. As there is a virtual certainty about the Company making profits, timing

differences, namely the differences that originate in one accounting period and capable of reversal in other, after duly identifying the

differences between the profit offered to tax and profit as per financial statement, has been recognized during the year.

The following is the break up of Deferred Tax Assets and Liabilities:

Deferred Assets

- C/Forward losses and Unabsorbed Depreciation 1206.35 1012.80

- Others 38.26 28.62

Total Deferred Assets 1244.61 1041.42

Deferred Liabilities

- Depreciation Differences 253.24 103.36

Total Deferred Liabilities 253.24 103.36

Net Deferred Assets/(Liability) 991.37 938.06

Net Deferred Tax Assets/(Liability) 337.00 318.85

2009-10 2008-09

(Rs. In lacs)

4. Related Party Disclosure :

a) Relationship during the year :

i) Key Management Personnel

Sajid Dhanani – Director

Prosenjeet Roy Choudhary – Director

Subhash Pandit – Director

ii) Holding Company

Sayaji Hotels Limited

iii) Associate Companies/ Firms/ Relatives

Sana Hospitality Pvt. Ltd.

Mansoor Memon

Saba Memon

80

6. In the opinion of the Board, the Current Assets, Loans and Advances are approximately of the value stated, if realised, in the ordinary

course of business. Provision for all known liabilities is adequate and not in excess of the amount reasonably necessary.

7. The turnover of the Company by way of Food and Beverages do not admit of quantitywise details.

8. Leave encashment has been determined based on the available leave entitlement at the end of each calendar year. The incremental

amount so calculated each year is debited to Employees Emoluments.

9. Extraordinary items of Rs. 132.04 lacs shown in Profit and Loss account includes the loss on account of write-off of fixed assets

expenditure incurred towards setting up of the Amritsar restaurant of the company which did not start its commercial operations.

10. In pursuance of the Special resolution passed in the Extraordinary General Meeting held on 28.03.2009 the company has allotted

28,00,000 equity shares at Rs. 60/- each to Blue Deebaj Chemicals LLC, Dubai on 07.07.2009.

11. Debit and Credit balances in party accounts are subject to confirmation and reconciliation.

12. DETAILS OF AUDITORS' REMUNERATION

31.03.10 31.03.09

i) Audit Fees Rs. 1,25,000 Rs. 75,000

13. EARNING IN FOREIGN CURRENCY:

31.03.10 31.03.09

i. Sale of Food and Beverages (deemed export as defined in FTP) Rs. 330.45 lacs Rs. 55.85 lacs

14. CIF VALUE OF IMPORT & EXPENDITURES:

31.03.10 31.03.09

i. Import of Capital Items Rs. 27.87 lacs Rs. 2.27 Lacs

15. DETAILS OF MANAGERIAL REMUNERATION:

31.03.10 31.03.09

i. Salaries Rs. 23.62 lacs Rs. 39.13 lacs

ii. Contribution to Provident & Other Funds Rs. 0.09 lacs Rs. 0.17 lacs

The above payments are within the limits prescribed under the Companies Act, 1956.

16. EARNING / (LOSS) PER SHARE:

31.03.10 31.03.09

i. Profit/(Loss) after tax but before extraordinary item Rs. 129.14 lacs (Rs. 547.35 lacs)

ii. Profit/(Loss) after Tax and after extraordinary item (Rs 2.90 lacs) (Rs. 548.71 lacs)

iii. Cash Profit after adding depreciation, deferred tax, preliminary exps Rs. 357.33 lacs (Rs. 585.00 lacs)

iv. Wtd. Average no. of Shares – Basic 8520894 6465004

v. Wtd. Average no. of Shares – Diluted 8520894 6465004

vi. EPS – Basic – before extraordinary item Rs. 1.52 NIL

vii. EPS – Basic – after extraordinary item NIL NIL

viii. EPS – Diluted – before extraordinary item Rs. 1.52 NIL

ix. EPS – Diluted – after extraordinary item NIL NIL

x. Cash EPS Rs. 4.19 NIL

17. Based on the information available with the Company, there are no dues to micro and small enterprises under the Micro, Small and

Medium Enterprises Development Act.

18. Figures of previous year have been regrouped, rearranged and recast wherever necessary so as to make them comparable with those

of current year.

81

(Rs. in lacs)

31-Mar-10 31-Mar-09

A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before tax and extraordinary (24.31) (834.53)

Item adjusted for:

Depreciation 378.38 256.45

Interest paid 336.46 203.58

Interest Received (9.68) (7.63)

Prior Period & Extra-ordinary items 132.03 1.36

Finance lease rental 688.80 543.44

1,525.99 997.20

Operating profit before Working Capital 1,501.68 162.67

Changes

Adjusted for:

Trade and Other receivables 3.85 (359.31)

Inventories (5.69) (109.18)

Trade payables 161.30 159.46 139.05 (329.44)

Cash generated from operations 1,661.14 (166.77)

Taxes Paid (0.48) (14.06)

Prior Period & Extra-ordinary items (132.04) (1.36)

Mat Credit Entitlement 0.00 0.00

Interest paid (336.46) (203.58)

Net cash from operating activities 1,192.16 (385.77)

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed assets 111.71 (2,454.99)

Interest Received 9.68 121.39 7.63 (2,447.36)

Net cash used in investing activities 1,313.55 (2,833.13)

CASH FLOW STATEMENT FOR THE YEAR ENDED ON 31st MARCH 2010

BARBEQUE-NATION HOSPITALITY LIMITED (CONSOLIDATED)

82

31-Mar-10 31-Mar-09

CASH FLOW STATEMENT FOR THE YEAR ENDED ON 31st MARCH 2010

(Rs. in lacs)

CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from Issue of Shares/ Appln. Money 1,680.00 249.00

Unsecured Loans (1,821.22) 1,847.72

Long Term borrowings (427.28) 1,233.66

Repayment of Finance lease liabilities (688.80) (543.44)

Net cash generated from financing activities (1,257.30) 2,786.94

Net increase in cash and cash equivalents 56.24 (46.19)

Cash and cash equivalents as at the

beginning of the year 21.04 67.23

Cash and cash equivalents as at the

end of the year 77.29 21.04

Note : Figures in bracket indicate disposition of funds and others indicates of generation of funds except the figure of cash and cash

equivalents at the beginning and at the end of the year.

AUDITOR'S CERTIFICATE

We have verified the attached Cash Flow Statement of Barbeque-Nation Hospitality Ltd. for the year ended 31st March, 2010. This

statement has been compiled by the Company from the financial statements for the year ended 31st March 2010 and 31st March 2009. We

have found the same to be in accordance with the requirements of clause 32 of the listing agreement with stock exchanges.

For and on behalf of the Board of Directors

INDORE : 23rd August 2010

VADODARA : 23rd August 2010

For SHAH GANDHI & SHAH

Firm Regn. No. 126862W

Chartered Accountants

Nimesh Gandhi

Partner

M.No. 49134

Sajid R Dhanani Director

Prosenjeet Roy ChoudharyDirector

Surendran R.Manager

83

FINANCIAL STATEMENTS

The Audited financial statements of the Company prepared in

accordance with Accounting Standards -21 prescribed by the

Institute of Chartered Accountants of India form part of the Annual

Report.

STATE OF COMPANY AFFAIRS

The company has not commenced any Business during the year.

DIVIDEND

In view of the loss, your Board has not recommended any dividend

for the financial year ended March 31, 2010.

DIRECTORS

In terms of the provision of the Companies Act, 1956 Smt. Suchitra

Dhanani director of the company retires by rotation in ensuing

Annual General Meeting and is eligible for re-appointment as

director.

AUDITORS

M/s Shah Gandhi & Shah, Chartered Accountants, Auditors of the

company, hold office until the conclusion of the ensuing Annual

General Meeting and being eligible, offer themselves for re-

appointment. The company has received a letter from them to the

effect that their appointment, if made, would be within the

prescribed limits under section 224 (1B) of the Companies Act

1956.The Board recommends their re-appointment.

AUDITORS’ REPORT

The report of the Board of Directors of the Company and notes to

the accounts are self-explanatory and do not require further

explanation.

FIXED DEPOSITS

The Company has not invited any deposits from public during the

period under review attracting the provision of Section 58A of the

Companies Act, 1956 and rules framed there under.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217 (2AA) of the Companies

Act, 1956, the Board confirms that:

(i) That in the preparation of the annual accounts for the

financial year ended March 31, 2010 the applicable

accounting standards have been followed along with proper

explanations relating to material departures;

(ii) That the directors have selected such accounting policies

and applied them consistently and made judgments and

estimates that are reasonable and prudent so as to give a true

and fair view of the state of the affairs of the Company at the

end of the financial year and of the profit or loss of the

company for that period;

DIRECTORS' REPORT

Yours Directors have pleasure in presenting Third Annual Report of the company together with audited Balance Sheet as on March 31, 2010

and Profit and Loss account for the year ended on that date.

Income - -

Less: Operating Expenses (0.012) 0.80

Profit/(Loss) before Depreciation (0.012) (0.80)

Less: Prior Period & Extraordinary Items - -

Profit/(Loss) before Tax (0.012) (0.80)

Less: Provision for taxation (0.052) (0.32)

Profit/(Loss) after Tax (0.064) (0.48)

Add: Balance brought forward from previous year (0.49) (0.01)

Balance carried to Balance Sheet (0.55) (0.49)

84

(iii) That the directors have taken proper and sufficient care for

the maintenance of adequate accounting records in

accordance with the provisions of this Act for safeguarding

the assets of the company and for preventing and detecting

fraud and other irregularities; and

(iv) That the directors had prepared the annual accounts on a

going concern basis.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION ETC.

Particulars of Conservation of Energy, Technology Absorption etc.,

required to be given pursuant to Section 217(1)(e) of the

Companies Act, 1956, read with the Rules made there under are not

applicable to the company.

The Company has not absorbed any new technology during the

year under review. The inflow and Outflow of Foreign Exchange

during the year under review is as under:

Foreign Exchange Earnings : Nil

Foreign Exchange Outgo : Nil

PARTICULARS OF EMPLOYEES

The provisions of Section 217 (2A) of the Companies Act, 1956, of

the Companies Act, 1956 read with the provisions of the

Companies (Particulars of Employees) Rules, 1975, are not

attracted in case of any employee of the company.

ACKNOWLEDGMENT

The Directors place on record their sincere gratitude to the

employees of the Company for their hard work and continued

support to the Company.

For and on behalf of the Board of Directors

Place : Indore

ChairmanDate : 16th August, 2010

85

To

THE MEMBERS OF

MALWA HOSPITALITY PVT.LTD.

We have audited the attached Balance sheet of MALWA

HOSPITALITY PRIVATE LIMITED as at 31 ST MARCH, 2010.

These financial statements are the responsibility of the

Company’s management. Our responsibility is to express an

opinion on these financial statements based on our audit and

Report that:

We conducted our audit in accordance with auditing standards

generally accepted in India. Those Standards require that we

plan and perform the audit to obtain reasonable assurance

about whether the financial statements are free of material

misstatement. An audit includes examining, on a test basis,

evidence supporting the amounts and disclosures in the

financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by

management, as well as evaluating the overall financial

statement presentation. We believe that our audit provides a

reasonable basis for our opinion.

1. As required by the Manufacturing and Other Companies

(Auditors' Report) Order, 1988, issued by the Company

Law Board in terms of Section 227 (4A) of the Companies

Act, 1956, and in terms of information and explanations

given to us and on the basis of such checks, as we

considered appropriate, we enclosed in an Annexure

hereto a Statement on the matters specified in paragraph

4 and 5 of the said Order, to the extent applicable to the

Company.

2. Further to our comments in the Annexure referred to in

Paragraph 1 above, 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 purposes of the

Audit.

(b) In our opinion, proper books of accounts as

required by law have been kept at the office of the

company, so far as appear from our examination of

books and accounts are in agreement therewith.

(c) In our opinion these accounts have been prepared in

compliance with the applicable Accounting

Standards referred to in sub-section (3C) of Section

211 of 'The Companies Act, 1956 of India.

(d) The Balance Sheet dealt with by this report are in

agreement with books of account.

(e) On the basis of written representations received

from the directors, as on 31st March 2010 and taken

on record by the Board of Directors, we report that

none of the directors is disqualified as on 31st

March 2010 from being appointed as a director in

terms of clause (g) of sub-section (1) of section 274

of the Companies Act, 1956.

3. In our opinion and to the best of our information and

according to the explanations given to us, the balance

sheet together with the notes thereon, give in the

prescribed manner and the information required by the

Act and also give respectively, a true and fair view of the

state of the Company's affairs as at 31st March, 2010.

AUDITORS' REPORT

For SHAH GANDHI & SHAH

Firm Regn. No. 126862W

Chartered Accountants

Vadodara Nimesh Gandhi Partner

M.No. 4913416th August, 2010

86

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR

AUDITORS' REPORT OF EVEN DATE ON THE ACCOUNTS FOR

THE YEAR ENDED 31ST MARCH, 2010 OF MALWA

HOSPITALITY PRIVATE LIMITED.

1) The Company has no fixed assets. Therefore, record

keeping and physical verification of the same does not

applicable.

2) Since the Company’s project is under implementation and

has no production related inventory, pertaining to

physical verification of finished goods, stores, spares

parts and raw materials, maintenance of records of the

said order are not applicable.

3) (a) Company has taken loans from 1 companies, firms

or other parties covered in the register maintained

under section 301 of the Act., where in the balance

payable as at the year end is Rs. 28.50 lacs. The

maximum amounts involved in the transactions

during the year are Rs. NIL.

(b) The loans taken are interest free and other terms

and conditions of loans taken by the company are

not prima facie prejudicial to the interest of the

Company.

(c) The loans taken by the company are repayable on

demand.

4) The Company has not granted unsecured advances to

companies or other parties covered in the Register

maintained under Section 301 of the Companies Act,

1956

5) In our opinion and to the best of our information and

according to the explanations given to us, there are

adequate internal control procedures commensurate with

the size of the company and nature of its business. There

are no major weaknesses in internal control procedure.

6) As per the information and explanation given to us, there

are no transactions that need to be entered into the

register maintained under section 301 of the Companies

Act, 1956.

7) As per the information and explanation given to us, the

Company has not accepted any deposits from the Public

and hence the matter of compliance with the directives

issued by the Reserve Bank of India and rules framed

thereunder does not arise.

8) The Company has system of internal audit, which is in our

opinion, is commensurate with size of the business.

9) Central Government has not prescribed maintenance of

the cost records under section 209(1)(d) of the

Companies Act, 1956 for the company.

10) According to the records and as per the information and

explanation given to us, the company is generally regular

in depositing with appropriate authorities undisputed

amount of Provident Fund, Investor Education Fund,

Employee State Insurance , Income Tax, Excise Duty,

Custom Duty and other statutory dues applicable to it and

no undisputed amounts payable were outstanding on

31st March 2010 for the period more that six months from

the date they became payable. There is no disputed

liability.

11) The company has not completed five years after its

registration, comments on cash loss incurred in the

current financial year or immediately preceding financial

year is not given.

12) Based on our audit procedure and as per the information

and explanation given to us, we report that no fraud on or

by the company has been noticed or reported during the

course of our audit.

13) The Company is not a Sick Industrial Company within the

meaning of Clause (o) of the Sub-section (1) of Section 3

of Sick Industrial Companies (Special Provisions) Act,

1985.

For SHAH GANDHI & SHAH

Firm Regn. No. 126862W

Chartered Accountants

Vadodara Nimesh Gandhi Partner

M.No. 4913416th August, 2010

87

MALWA HOSPITALITY PRIVATE LIMITED

I. SOURCES OF FUNDS

(1) Shareholders' Funds

(a) Share Capital 1 54,940,000 54,940,000

(2) Loan Funds

(a) Unsecured Loans 2 2,850,000 2,850,000

TOTAL 57,790,000 57,790,000

II APPLICATION OF FUNDS

(1) Fixed Assets (Gross Block)

(a) Expenditure incurred during

Pre Operation period pending

allocation 5,105,400 5,105,400 5,105,400 5,105,400

(2) Deferred Tax Assets 278,336 330,433

(See note 4 of Sch. 6)

(3) Current Assets, Loans and Advances 3

(a) Cash and Bank Balances 14,932 28,382

(b) Loans & Advances 51,840,000 51,840,000

51,854,932 51,868,382

Less : Current Liabilities & Provisions

(a) Sundry Creditors & Provisions 4 8,253 8,828

Net Current Assets 51,846,679 51,859,554

(4) Profit and Loss Account 559,584 494,613

TOTAL 57,790,000 57,790,000

SIGNIFICANT ACCOUNTING POLICIES 5

NOTES FORMING PART OF THE ACCOUNTS 6

(Rupees)

SchAS AT

31/03/10AS AT

31/03/09

BALANCE SHEET AS AT 31st MARCH, 2010

Sajid R Dhanani Director

Suchitra DhananiDirector

Schedules referred to above form an integral partof the Balance SheetAs per our report of even date attached For SHAH GANDHI & SHAHFirm Regn. No. 126862WChartered Accountants

Nimesh GandhiPartnerM.No. 49134

VADODARA : 16th August 2010

For and on behalf of the Board of Directors

INDORE : 16th August 2010

88

PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 31.03.2010

MALWA HOSPITALITY PRIVATE LIMITED

I. INCOME NIL NIL

TOTAL --- ---

II. EXPENDITURE

LEGAL EXPENSES 1,500 771,600

MISCELLANEOUS EXPENSES --- 5,536

PROFESSIONAL FEES --- 25,000

AUDIT FEES 5,000 3,000

BANK CHARGES 6,375

12,875 805,136

III. PROFIT/ (LOSS) BEFORE DEPRECIATION (12,875) (805,136)

IV PROFIT/ (LOSS) BEFORE & PRIOR PERIOD & (12,875) (805,136)

EXTRAORDINARY ITEMS

V PROFIT / (LOSS) BEFORE TAXES (12,875) (805,136)

Less : DEFERRED TAX (52,097) 323,666

VI. PROFIT /(LOSS) AFTER TAX (64,971) (481,470)

VII. BALANCE B/FORWARD FROM LAST YEAR (494,613) (13,143)

VIII. AMOUNT AVAILABLE FOR APPROPRIATION --- ---

IX. LOSS CARRIED TO BALANCE SHEET (559,584) (494,613)

TOTAL31-Mar-10

SchTOTAL

31-Mar-09

(Rupees)

Sajid R Dhanani Director

Suchitra DhananiDirector

Schedules referred to above form an integral partof the Balance SheetAs per our report of even date attached For SHAH GANDHI & SHAHFirm Regn. No. 126862WChartered Accountants

Nimesh GandhiPartnerM.No. 49134

VADODARA : 16th August 2010

For and on behalf of the Board of Directors

INDORE : 16th August 2010

89

SCHEDULE-1 : SHARE CAPITAL

AUTHORISED

100,00,000 Equity Shares of Rs.10/- each. 100,000,000 100,000,000

ISSUED, SUBSCRIBED & PAID-UP

5,494,000 Equity Shares of Rs.10/- each 54,940,000 54,940,000

TOTAL 54,940,000 54,940,000

SCHEDULE-2 : UNSECURED LOANS

Inter Corporate Loans :

From Associate Companies 2,850,000 2,850,000

TOTAL 2,850,000 2,850,000

SCHEDULE-3 : CURRENT ASSETS, LOANS

& ADVANCES

Current Assets

Cash and Bank Balance

Cash on hand 10,000 Nil

Bank Balances In Current Account 4,932 14,932 28,382 28,382

Loans & Advances

(Unsecured, Good unless otherwise specified)

Deposits 51,840,000 51,840,000

TOTAL 51,840,000 51,840,000

SCHEDULE-4 : CURRENT LIABILITIES & PROVISIONS

Sundry Creditors 3,253 3,253

Provision 5,000 5,575

TOTAL 8,253 8,828

SCHEDULES FORMING PART OF THE BALANCE SHEET

As at31/03/10

As at31/03/09

(Rupees)

90

31-Mar-10 31-Mar-09

A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before Tax & Extraordinary (12,875) (805,136)

Operating Profit before Working Capital Changes:

Trade Payables (575) (11,082)

Deposits --- (575) --- (11,082)

Cash generated from Operating Activities (13,450) (816,218)

B. CASH FLOW FROM INVESTMENT ACTIVITIES:

Increase in Expenditure incurred during

Pre Operation period pending allocation --- (2,105,400)

Cash generated from Investment Activities --- (2,105,400)

B. CASH FLOW FROM FINANCING ACTIVITIES:

Unsecured Loan --- 2,850,000.00

Cash generated from Financing Activities --- 2,850,000

Net Increase in Cash & Cash Equivalent (13,450) (71,618)

Cash & Cash Equivalent as at the 28,382 100,000.00

beginning of the year 28,382 100,000

Cash & Cash Equivalent as at the

end of the year 14,932 28,382.00

CASH FLOW STATEMENT FOR THE YEAR ENDED ON 31st MARCH 2010

MALWA HOSPITALITY PRIVATE LIMITED

Note : Figures in Bracket indicate disposition of funds and others indicates of generation of funds except the figure of Cash & Cash

Equivalents at the beginning and at the end of the year.

AUDITOR'S CERTIFICATE

We have verified the attached Cash Flow Statement of Malwa Hospitality Pvt.Ltd. For the year ended 31st March 2010. The Statement

has been complied by the company from the financial statements for the year ended 31st March 2010.

INDORE : 16th August 2010

For and on behalf of the Board of Directors

Sajid R Dhanani Director

Suchitra DhananiDirector

(Rupees)

VADODARA : 16th August 2010

For SHAH GANDHI & SHAH

Firm Regn. No. 126862W

Chartered Accountants

Nimesh Gandhi

Partner

M.No. 49134

91

SCHEDULE - 5

SIGNIFICANT ACCOUNTING POLICIES

A. SYSTEM OF ACCOUNTING :

The financial statements have been prepared under the historical cost convention and on the basis of going concern, in accordance

with the generally accepted accounting principles and provisions of the Companies Act 1956. The Company follows Mercantile

System of Accounting.

B. TAXES ON INCOME :

Due to absence of taxable income during the year the provision for current taxation has not been made in accordance with the Income

Tax Laws applicable to the assessment year

Deferred Tax is recognized on timing difference being the difference between taxable income and accounting income that originate in

one period and are capable of reversal in one or more subsequent periods. Where there is unabsorbed depreciation or carry forward

losses, deferred tax assets are recognized only if there is virtual certainty of realization such assets. The effect on deferred tax assets

and liabilities of a change in tax rates is recognized in income using the tax rates and tax laws that have been enacted or substantively

enacted by the balance sheet date

C. FIXED ASSETS:

Pre-operative expenses incurred, till the projects are ready for Commercial Operation, are capitalized.

SCHEDULE - 6

NOTES FORMING PART OF THE ACCOUNTS

(1) The Company has not yet commenced any business operations.

(2) Auditors Remuneration

Current Year (Rs) Previous Year (Rs)

As Audit Fees 5,000 3,000

(3) In the opinion of the Board, the Current Assets, Loans and Advances are approximately of the value stated, if realized, in the ordinary

course of business. Provision for all known liabilities is adequate and not in excess of the amount reasonably necessary.

(4) The Company has not been liable to pay any Income tax for the year as there is no income during the year. Company has not been also

liable to pay any Minimum Alternate Tax under the said Act, as book profit is negative. Following is the break up of Deferred Tax Assets

& Liabilities:

MALWA HOSPITALITY PRIVATE LIMITED : 31.03.2010

Deferred Assets :

Carry/Forward Losses 837921 825046

Deferred Liabilities : Nil Nil

Net Deferred Assets/ (Liabilities) 837921 825046

Net Deferred Tax Assets/ (Liabilities) 278336 330433

2009-10 2008-09

92

BALANCE SHEET ABSTRACT AND COMPANY/S GENERAL BUSINESS PROFILE

I. REGISTRATION DETAILS

Registration No. State Code

Balance Sheet Date 31/03/2010

II CAPITAL RAISED DURING THE YEAR

(Amount in Rs.)

Public Issues NIL Right Issue NIL

Bonus Issue NIL Private Placement NIL

III POSITION OF MOBILISATION & DEPLOYMENT OF FUNDS

(Amount in Rs.)

Total Liabilities 57,798,253 Total Assets 57,798,253

Source of Funds

Paid-up Capital 54940000 Reserves & Surplus NIL

Secured Loans NIL Unsecured Loan 2,850,000

Application of Funds

Net Fixed Assets 5105400 Investment NIL

Net Current Assets 51846679 Misc. Expenditure NIL

Accumulated Losses 559,584

IV PERFORMANCE OF COMPANY

(Amount in Rs.)

Turnover NIL Total Expenditure (12,875)

Profit/(loss) Before Tax (12,875) Profit/(Loss) after tax (64,971)

Dividend Rate % NIL

V GENERIC NAMES OF PRINCIPAL PRODUCTS/SERVICE OF THE COMPANY

Item Code No. (ITC Code) 591001006 Product Description Hotels

Item Code No. (ITC Code) 390001002 Product Description Restaurants

U55209MP2008PTC020502 04

Sajid R Dhanani Director

Suchitra DhananiDirector

Schedules referred to above form an integral partof the Balance SheetAs per our report of even date attached For SHAH GANDHI & SHAHFirm Regn. No. 126862WChartered Accountants

Nimesh GandhiPartnerM.No. 49134

VADODARA : 16th August 2010

For and on behalf of the Board of Directors

INDORE : 16th August 2010

93

STATEMENT PURSUANT SECTION 212 OF THE COMPANIES ACT, 1956RELATING TO SUBSIDIARY COMPANIES (SHL)

1 Name of the subsidiaries : Barbeque-Nation Hospitality Malwa Hospitality Private

Limited Limited

2 Financial Year of the

subsidiary ended on : 31st March 2010 31st March 2010

3 Number of shares of the subsidiary

company held by the Holding

Company on the above date

a) Number and Face Value : 6,464,998 Equity Shares 5,494,000 Equity Shares

of Rs. 10 each fully paid-up of Rs. 10 each fully paid-up

b) Extent of holding : 69.78% 100%

4 The net aggregate amount of

Profit/(Losses) of the Subsidiary

Company for the above financial

year, so far as they concern the

Members of the Company

(I) dealt within the accounts

of the Company :

(a) For the financial year ended (60,372,000) (559,584)

31st March, 2010

(b) For the previous financial (60,082,000) (494,613)

year since these became

subsidiaries of the Company

(ii) not dealt with in the accounts

of the Company:

(a) For the financial year ended

31st March, 2010

(b) For the previous financial

year since these became

subsidiaries of the Company

Place : IndoreDate : 31st August 2010

For and on behalf of the Board of Directors

Sajid R Dhanani Managing Director

Capt. Salim SheikhDirector

M.F. GarbadwalaDirector

Awadhesh GuptaCo. Secretary

94

STATEMENT PURSUANT SECTION 212 OF THE COMPANIES ACT, 1956RELATING TO SUBSIDIARY COMPANIES (BNHL)

1 Name of the : Kshipra Restaurants Favorite Restaurant

Private Limited

2 Financial Year of the

subsidiary ended on : 31st March 2010 31st March 2010

3 Number of shares of the subsidiary

company held by the Holding

Company on the above date

a) Number and Face Value : 10,000 Equity Shares 10,000 Equity Shares

of Rs. 10 each fully paid-up of Rs. 10 each fully paid-up

b) Extent of holding : 100% 100%

4 The net aggregate amount of

Profit/(Losses) of the Subsidiary

Company for the above financial

year, so far as they concern the

Members of the Company

(I) dealt within the accounts

of the Company :

(a) For the financial year ended (0) (0)

31st March, 2010

(b) For the previous financial (0) (0)

year since these became

subsidiaries of the Company

(ii) not dealt with in the accounts

of the Company:

(a) For the financial year ended

31st March, 2010

(b) For the previous financial

year since these became

subsidiaries of the Company

subsidiaries

Private Limited

Place : IndoreDate : 23rd August 2010

For and on behalf of the Board of Directors

Sajid R Dhanani Director

Prosenjeet Roy ChoudharyDirector

Surendran R.Manager

95

ATTENDANCE SLIP

SAYAJI HOTELS LIMITED

Please complete this Attendance Slip and hand it over at the Entrance of the Meeting Hall

"Sayaji Hotel", Opp. Rajshree Talkies, Near Kala Godha, Sayajigunj, Vadodara-390 005

I hereby record my presence at the 27th Annual General Meeting at Registered Office of the Company on

Thursday, 30th September, 2010 at 12.30 P.M.

Member's / Proxy's Signature

Note : The copy of the Annual Report may please be broght to the Meeting Hall.

PROXY FORM

SAYAJI HOTELS LIMITED"Sayaji Hotel", Opp. Rajshree Talkies, Near Kala Godha, Sayajigunj, Vadodara-390 005

TEAR HERE

Master Folio No.

I/We

of

being a member/members of above named company hereby appoint

of

or failing him / her

of

Note : The Proxy must be deposited at the Registered Office of the Company not less than 48 hours before the time of

holding the meeting. The Proxy need not be member of the company.

Signature

Signed this day of 2010.

as my/our proxy to attend and vote on me/us any my/our behalf at the 27th Annual General Meeting of the Company to be

held on 30th September, 2010 and/or at any adjournment thereof.Thursday,

1. Name of the Share Holder(In Block Letter)

2. Regd. Folio No. / Client I.D. / DP ID.

3. No. of Shares held

4. Name of Proxy (In Block Letters)

BO

OK-

PO

ST

To,

If un

deliv

ered

ple

ase

retu

rn to

:

SA

YA

JI H

OT

EL

S L

IMIT

ED

Adm

n. O

ffic

e : H

-1, S

chem

e N

o. 5

4,

Vija

y N

agar

, Ind

ore

- 45

2 01

0 (M

.P.)

Pri

nted

by

:

Raj

at

Gra

ph

ics

224,

Tila

k P

ath,

G-1

2, M

isal

Pla

za,

IND

OR

E (M

.P.)

Mob

ile :

982

60-2

7010