BOARDS' REPORT 

TO

THE MEMBERS,

Your Directors are pleased to present the Thirtieth Annual Report on the business and operations of your Company with the audited financial statement for the financial year ended March 31st, 2015.

Your Directors believe that the Company should offer increasing value to all its stakeholders and society at large. We have maintained this with our tradition and policy of offering high quality content and services. As stewards of the Company, we will always share our vision of growth with you.

Review of Operations

The hotel industry experienced a moderate revenue growth in 2014-15. The GDP growth in India was aided by improved performance of agriculture and services, whilst manufacturing and mining continued to report subdued performance as explained by the Index of Industrial Production. Inflation started easing during second half of the year on account of reducing demand and monetary control by RBI. Exchange rate remained stable for most part of the year losing around 3% in the second half of the year due to strengthening of the Dollar against all major currencies.

The tourism industry has had a remunerative effect on the hospitality sector with an increase in the occupancy ratios. The revenue growth was largely driven by the incremental rooms along with food and beverage income. The supply of premium rooms, however, has gone up as hospitality chains are gradually building up their room inventory on expectations of higher demand. The average room rates, which drive revenue growth, have remained flat because of competition in the industry, while occupancies improved by 2 to 4 %.

Hotel companies had been trying to put a lid on costs/ expenses to protect their profitability. Hotel operators have also heightened their focus on the food and beverage segment, revenues of which have been consistently increasing and to attract a wide range of global tourists, besides generating interest among domestic travelers.

Your Company performed reasonably well during the year, under review. The sales and other income of Financial Year 2014-15 was recorded at Rs.3189.18 lacs and have increased by 5.54% as compared to previous Financial Year 2013-14 (P.Y Rs.3021.67 lacs).

In the Financial year 2014-15, there was moderate growth in RevPAR (Revenue per available Room). There was increase in room occupancy rate due to renovation, refurbishment and up gradation of guest rooms, supported by personalized service and provision of special amenities for guest comfort.

The Company emphasizes for a sharp focus on marketing strategy as well as consistent sales effort and this has contributed well to increase room occupancy and ARR. Our innovative food and beverage offerings also got their due recognition and patronage with significant increase in Restaurant and Banquet business. Due to efficiency at every stage of operation, internal cost control system and prudent management measures, the bottom line has also improved considerably.

The long term outlook for the Indian hospitality business continues to be positive, both for the business and leisure segments with the potential for economic growth, increases in disposable incomes and the burgeoning middle class.

Prospects & Concerns

India's travel and tourism industry has huge growth potential. The medical tourism market in India is projected to hit US$ 3.9 billion mark this year having grown at a Compounded Annual Growth Rate (CAGR) of 27 per cent over the last three years, according to a joint report by FICCI and KPMG. Also, inflow of medical tourists is expected to cross 320 million by 2015 compared with 85 million in 2012. The tourism industry is also looking forward to the E-visa scheme which is expected to double the tourist inflow to India. Enforcing the Electronic Travel Authorisation (ETA) before the next tourism season, which starts in November, will result in a clear jump of at least 15 per cent. ICRA Ltd rating agency expects the revenue growth of Indian hotel industry strengthening to 9-11 per cent in 2015-16. According to ICRA Research, India has over 29,000 premium rooms under construction to be launched over the next six years

India is projected to be number one for growth globally in the wellness tourism sector in the next five years, clocking over 20 per cent gains annually through 2017, according to a study conducted by SRI International.

However, measures taken by the Union government to drive tourism through several strong policy initiatives could bring in stronger demand, supporting the industry.

Indirect Taxes are a concern for this segment. The high VAT rate & increase in rate of service tax had resulted in increase in the cost of materials and services. The imposition of service tax affected Indian hotels at large, which led to a decrease in growth of hotel industry.

Current Year

Demand is likely to surge in the current year. We expect to have increase in market share (room division) with the addition in rooms. Our main forte and focus has been the popularity of Food and beverages facilities. The foray of Indian restaurants into a variety of global cuisines is having a positive impact on the F&B sector. Customers are more willing to experiment with different cuisines because it is now easily accessible in the cities they live in, and this trend had increased Indian consumers' frequency of eating out.

Your Company continues in its quest for excellence by constant improvement of the guest experience through better service levels and product upgrades. A lot of credit for these enhanced satisfaction levels goes to the positive experience at the newly furnished rooms. The suites as well as renovated rooms have been very well received and were a key differentiator that facilitated in the hotel garnering high profile business from corporate leaders & renowned personalities from national & international platform.

The legendary Greek-American composer, keyboardist, pianist, and music producer & performer Yiannis Chryssomallis (Yaani) during the Vad Fest 2015 (Vad Fest is the biggest International art and cultural festival organized in Baroda) was overwhelmed by our warm hospitality & customized services during his stay.

We are indeed proud to share that your Company has been recognized and duly awarded Certificate of Excellence for the year 2015 by its guests by TRIP ADVISOR. in world's most trusted travel advice portal .

A strong Guest Relations Management (GRM) initiative has been activated through personalized services, collection and analysis of guest information, effective communication and proper networking system. This will ensure that we retain as well as build upon current businesses and consolidate our market positions. Meetings, Incentives, Conventions and Events' (MICE) is a new concept which many hospitality companies are adapting to and there is an ample room for growth.

Your Hotels communication campaign is through leading dailies, magazines, hoardings and social networking (Facebook and Twitter) also. The management has taken active steps to promote the property with some effective marketing initiatives. We are launching some new services to add to the brand portfolio. Internal skill sets are being honed and developed for better utilization and implementation of available resources. With these efforts, we hope to maintain the profitability of your Company in the coming years.

The optimism surrounding the Indian hospitality industry is not without challenge. The industry faces certain obstacles, which need to be overcome to realize its potential to the fullest.

Expansion & Renovation Project

Your Company have already completed the major part of expansion project of the adjoining building by launching "Ball Room" (largest Banquet Hall), three conference Halls & a dedicated Board Room on first floor. Another Banquet hall with open terrace on 2nd floor of the adjoining building is well-nigh completed i.e. interiors and furnishing job is in progress.

Under the Renovation of Rooms Project for existing Hotel Building the company plans to add more guest rooms on fifth and eighth floor of existing Hotel Building so as to cope up with possible increase in room demand, consequent to increase in large banquet facilities.

The Management is taking effective steps for completion of the project at stipulated time and within the budget.

DIRECTORS

Mr Piyush D Shah, Director ,retiring by rotation, being eligible for reappointment offers himself for re election.  In the last Annual General Meeting held on 9th September, 2014, three independent Directors (namely, Mr. A C Patel, Mr. J G Patel & Mr. M P Bakshi) were appointed for a term of 5 years.

RESERVES

The Board proposes Rs. 30,00,000 (RupeeThirty lacs) to carry to General Reserves.

DIVIDEND

In view of considerable fund requirement for "Expansion & Renovation Project" your Directors, recommend a dividend @ 8% i.e. Rs. 0.80 per Equity Share of Rs. 10/- each for the financial year ended 31st March, 2015, subject to approval of the members at the Annual General Meeting.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND

In terms of Section 125 of the Companies Act, 2013, any unclaimed or unpaid Dividend for the financial year ended March 31, 2008 is due for remittance on 22nd October, 2015 to the Investor Education and Protection Fund established by the Central Government.

MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN

THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate on the date of this report.

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

The information pertaining to conservation of energy, technology absorption, Foreign exchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished below pertaining to conservation of energy , technology absorption, foreign exchange earnings and out go.

# CONSERVATION OF ENERGY

The Company is extremely cautious with regard to resource management & particularly the energy conservation be it electrical or gas consumption. We have installed necessary capacitors in our electrical sub stations & VFD (Variable Frequency Drive) in most of the motors. All the halogens, incandescent bulbs & even the PL tubes (Plug in light) are almost replaced with LED (Light Emitting Diodes). The entire property has magnetic door locks which monitors the overall supply to individual guest rooms & thermostats controls are provided for guest comfort & energy saving. All the glass window are replaced with Double Glace DGU & fixed sunscreen protection are laid on them. The new magnetic chillers used for air conditioning process have proved to be major savers. Every Quarter we have a trend of celebrating Energy Saving Week wherein entire team is motivated not only to save energy but also to contribute their ideas for energy conservation.

# TECHNOLOGY ABSORPTION

In the Opinion of the Board, the required particulars, pertaining to technology absorption are not applicable as hotels form part of service industry.

# FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year under review, your Company earned Foreign Exchange of Rs106,92,369 /- (Previous year Rs. 1,55,38,492 /-), whereas outflow of foreign exchange was Rs.34,22,564/- (Previous year Rs 74,59,293/- ) .

STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY

The Company has been taking proactive approach concerning the development and implementation of a Risk Management Policy after identifying the following elements of risks which in the opinion of the Board may threaten the very existence of the Company itself.

(a) financial; (b) legal and regulatory; (c) operating; and (d) commercial risks, including health, safety and environment.

The Company does not have any Risk Management Committee as the Board takes into consideration all the risk factors at regular intervals at its meetings.

INSURANCE

The Company has a broad-banded approach towards insurance. Adequate cover has been taken for all movable and immovable assets against numerous risks and hazards.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.

The Company has zero tolerance for sexual harassment at its workplace. The Company has adopted an Anti-harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaint Committee are set up to redress complaints received regularly and are monitored by women line supervisors who directly report to the Chairman & Managing Director. All female employees are covered under the policy. There was no complaint received from any employee during the financial year 2014­15 and hence, no complaint is outstanding as on March 31, 2015 for redressal.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

There was no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provision is not applicable.

DETAILS OF SIGNIFICANT & MUTUAL ORDERS PASSED BY THE REGULATORS OR COURTS

No such order passed.

COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES

The provisions of Section 178(1) relating to constitution of Nomination and Remuneration Committee are applicable to the Company and hence the Company has devised policy relating to appointment of Directors, payment of Managerial remuneration, Directors qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 and for details refer link www.suryapalace.com.

FORMAL ANNUAL EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a structured questionnaire was prepared after taking into consideration the various aspects of the Board's functioning, composition of the Board and its committees. The Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committees. The Board of Directors expressed their satisfaction with the evaluation process.

STATUTORY AUDITORS

M/s V Shah & Associates Chartered Accountants, Baroda were appointed as Statutory Auditors for a period of 3 years in the 29th Annual General Meeting held on 9th September, 2014 .Their continuance of appointment and payment of remuneration is to be ratified in the ensuing Annual General Meeting. The Company has received a certificate from the above Auditors to the effect that if members ratify their appointment, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.

SECRETARIAL AUDIT REPORT

A Secretarial Audit Report issued by Mr.Kashyap Shah, a company secretary in practice is annexed with the report as Annexure 1 ( Form No. MR-3) with an observation that the Company had complied with all the provisions except the consent order issued by Gujarat Pollution Control Board valid upto 15-11-2014, for which neccesary steps have been taken by the Company for its renewal.

EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE

AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS

There was no qualifications, reservations or adverse remarks made by the either by the Auditors or by the Practicing Company Secretary in their respective reports.

EXTRACT OF ANNUAL RETURN

The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 is furnished in Annexure 2 (Form No. MGT- 9) and is attached to this Report.

DISCLOSURE UNDER RULE-5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION) RULES, 2014

Disclosure required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration) Rules, 2014 have been annexed as Annexure 3.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

The contract or arrangements made with related parties as defined under Section 188 of the Companies Act, 2013 during the year under review is furnished in Annexure 4 (AOC 2) and is attached to this report.

CORPORATE GOVERNANCE CERTIFICATE

The Compliance certificate from Practicing Company Secretaries regarding compliance of conditions of corporate governance as stipulated in Clause 49 of the Listing Agreement is annexed as Annexure 5 to the report.

NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW

The Company had five Board meetings during the financial year under review and details are given in the Corporate Governance Report.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The Company does not have any Subsidiary, Joint venture or Associate Company.

INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY

Your Company has in place an adequate system of Internal Controls, with documented procedures covering all corporate functions and hotel operating unit to ensure that all transactions are authorized, recorded and reported correctly. This ensures prompt financial reporting, optimum utilization of various resources and immediate reporting of deviations. Compliance with laws and regulations is also ensured and confirmed and is checked by the Internal Auditor of the Company.

The reports of the Internal Auditor are reviewed by the Audit Committee. The Audit Committee also reviews adequacy of internal controls, system and procedures, insurance coverage of assets from various risks and steps are taken to manage foreign currency exposures. The Audit Committee also interacts with Internal Auditors and Statutory Auditors of the Company to ensure compliance of various observations made during the conduct of audits and adequacy of various controls.

DEPOSITS

The Company has not invited deposit from members or public. However, the Company has during the year under review accepted interest free unsecured deposits from Directors.

With the applicability of Companies Act, 2013 and Companies (Acceptance of Deposits) Rules w.e.f. 1st April, 2014 the Company had repaid all the deposits from members or relatives of Directors.

WEBSITE

The corporate website www.suryapalace.com reflecting the new architecture is far more experimental, with large images showcasing the property and its facilities, enhanced content , both in quantity and quality, with in depth information on experiences, services and facilities. The website also displays financial & corporate information.

BRAND DEVELOPMENT

As an integral part of business strategy and brand development, the Company has entered into a management and marketing agreement with ACCOR group of hotels, an international brand that is compatible with the character and culture of our Company to increase our business prospects and strengthen the marketing network. Their strong management systems will not only improve sales but will also contribute to profits. ACCOR has sales offices in all international markets & major cities of India, the Average Rate of Room Realization is much higher than the Average Rate of Room realised by the local/city based sales offices. Their Central Reservation system and association with Global distribution system will yield higher number of room reservations. ACCOR is known to be one of the best employer with state of an art training & HR practices. This will support the Company with high quality executives and improvement in guest and staff satisfaction level. ACCOR's Loyalty program for its customers has more than 7 lacs club "A" members and has also tied up with many national & international airlines and credit card companies. Thus it is expected to give high and sustainable business.

DECLARATION OF INDEPENDENT DIRECTORS

The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules.

DISCLOSURE OF COMPOSITION OF AUDIT COMMITTEE AND PROVIDING VIGIL MECHANISM

The Audit Committee consists of the following members

a. Mr. Jatil patel (Chairman & Non executive Independent Director)

b. Mr. A C Patel (Non executive Independent Director)

c. Ms. Chanda Shah(Non executive Director)

The above composition of the Audit Committee consists of independent Directors who form the majority. The Company has established a vigil mechanism and overseas through the committee, the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning the interests of co employees and the Company.

CA Mukund Bakshi, Director had been appointed on 26th May, 2015 as a new member of the Audit Committee on the recommendations of Nomination and Remuneration Committee (NRC), which the Board had also approved.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submit its responsibility Statement:—

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had 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;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. Internal financial control means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

SHARES

During the year under review the Company has not bought back any of its securities/ nor issued any Sweat Equity Shares or any shares with differential rights / not provided any Stock Option Scheme to the employees.

ACKNOWLEDGEMENTS

An acknowledgement to all, with whose help, cooperation and hard work, the Company is able to achieve the results.

The Directors express their deep sense of appreciation for the contribution made by the employees to the significant improvement in the operations of the Company.

The Directors also thank all their stakeholders including Members, customers, Bankers, vendors, business partners, the Government of India for their continued co-operation and support.

For and on behalf of the Board of Directors

Ambalal Patel  

Chairman

Signing as per Board resolution passed on 26th May, 2015

 Place:Baroda

Date: 26th May, 2015