MIRA INFORM REPORT

Report Date :

09.06.2011

IDENTIFICATION DETAILS

Name :	HOTEL LEELA VENTURE LIMITED
Registered Office :	The Leela Sahar Mumbai – 400059, Maharashtra
Country :	India
Financials (as on) :	31.03.2011
Date of Incorporation :	20.03.1981
Com. Reg. No.:	11-024097
Capital Investment / Paid-up Capital :	Rs.775.650 Millions
CIN No.: [Company Identification No.]	L55101MH1981PLC024097
TAN No.: [Tax Deduction & Collection Account No.]	MUMH07048G
PAN No.: [Permanent Account No.]	AAACH3167J
Legal Form :	Public Limited Liability Company. The company’s shares are listed on the Stock Exchanges
Line of Business :	Subject company engaged in Hotel Business
No. of Employees :	Not Divulged by the management.

RATING & COMMENTS

MIRA’s Rating :

A (68)

RATING		STATUS	PROPOSED CREDIT LINE
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large

Maximum Credit Limit :	USD 84000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and reputed company in concern business it is an established company having fine track. Financial position of the company appears to be sound. Trade relations are reported as fair. Payments are reported to be regular and as per commitments. The company can be considered good for normal business dealings at usual trade terms and conditions.

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

INFORMATION PARTED BY

Name :	Mr. Sudhish Nair
Designation :	Finance Controller
Date :	06.06.2011

LOCATIONS

Registered Office / Corporate Office :	The Leela Sahar Mumbai – 400059, Maharashtra, India
Tel. No.:	91-22-66911234
Fax No.:	91-22-66911212
E-Mail :	investor.services@theleela.com
Website :	http://www.theleela.com
Branches :	Located at · Mumbai · Bangalore · Goa · Kerala · Delhi · Udaipur · New Delhi

DIRECTORS

AS ON 31.03.2011

Name :	Capt. C. P. Krishnan Nair
Designation :	Chairman
Name :	Mr. Vivek Nair
Designation :	Vice Chairman and Managing Director
Name :	Mr. Dinesh Nair
Designation :	Joint Managing Director
Name :	Mr. Venu Krishnan
Designation :	Deputy Managing Director
Name :	Mr. Krishna Deshika 1
Designation :	Director – Finance and CFO
Name :	Mrs. Madhu Nair
Designation :	Director
Name :	Mrs. Anna Malhotra
Designation :	Director
Name :	Mr. M. Narasimham
Designation :	Director
Name :	Mr. P. C. D. Nambiar
Designation :	Director
Name :	Mr. Vijay Amritraj
Designation :	Director
Name :	Dr. K. U. Mada
Designation :	Director
Name :	Mr. Anil Harish
Designation :	Director
Name :	Dr. K. U. Mada
Designation :	Director
Name :	Mr. R. Venkatachalam
Designation :	Director
Name :	Mr. C. K. Kutty
Designation :	Director
Name :	Mr. Indur Kirpalani 2
Designation :	Director
Name :	Mr. A. K. Dasgupta
Designation :	Director
Name :	Mr. Dinesh Dalani
Designation :	Company Secretary

Note : With effect from 17th January, 2011, With effect from 29th January, 2011.

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

AS ON : 31.03.2011

Names of Shareholders	No. of Shares	Percentage of Holding
(A) Shareholding of promoters and Promoter Group
1. Indian
Individuals / Hindu Undivided Family	2037555	0.53
Bodies Corporate	209749825	54.08
Sub Total (A) (1)	211787380	54.61
(B) Public Shareholding
1. Institutions
Mutual Funds / UTI	149400	0.04
Financial Institutions / Banks	1039450	0.27
Central Government/State Government	24211523	6.24
Foreign Institutional Investors	9242771	2.38
Sub Total (B) (1)	34643144	8.93
2. Non Institutions
Bodies Corporate	60611493	15.63
Individual shareholders holding nominal share capital up to Rs. 0.100 million	66768454	17.22
Individual shareholders holding nominal share capital in excess of Rs. 0.100 million	3387102	0.87
Non Residents
NRI	10627419	2.74
Sub Total (B) (2)	387824992	100.00
(B) = (B) (1) + (B) (2)
Shares held by custodians and against which depository receipts have been issued (C)	---	--
Total (A) + (B) +(C)	387824992	100.00

BUSINESS DETAILS

Line of Business :	Subject company engaged in Hotel Business
Terms :
Selling :	Cash
Purchasing :	Cash

GENERAL INFORMATION

Customers :

· End Users

· Corporate

No. of Employees :

Not divulged by the management

Bankers :

· Housing Development Finance Corporation Limited

· State Bank of India and Associated Banks

· Syndicate Bank

· Bank of India

· Export Import Bank of India

· Union Bank of India

· Bank of Baroda

· Oriental Bank of Commerce

· Indian Overseas Bank

Facilities :

Secured Loan	Rs. In Millions 31.03.2011	Rs. In Millions 31.03.2010
Debentures	900.000	900.000
Term Loans
Financial Institutions
Foreign Currency Loans	1404.575	1731.760
Rupee Currency Loans	7373.372	4807.918
Banks
Foreign Currency Loans	4795.174	5120.803
Rupee Currency Loans	18382.597	10674.423
Cash Credit from Banks	218.258	299.872
Total	33073.976	23534.776
Unsecured Loan	Rs. In Millions 31.03.2011	Rs. In Millions 31.03.2010
Short term Loan from Bank	100.000	100.000
Other term Loan from Bank	2000.000	900.000
Other term Loan from a Financial Institution	1000.000	0.000
Foreign Currency Convertible Bonds	4857.440	4251.776
Total	4957.440	5251.776

Banking Relations :	--
Auditors :
Name :	Picardo and Company Chartered Accountant
Subsidiaries :	· Leela Realty Ltd (Formerly Amin Group Hotel Limited) · Leela Palaces and Resorts Ltd (Formerly Iskon Estates Private Limited)
Associates :	· Leela Lace Software Solutions Private Limited · Leela Lace Holdings Private Limited · Leela Fashions Private Limited · Rockfort Estate Developers Private Limited · Season Apparels Private Limited · Standard Precious Alloy Industries Private Limited · Elegant Eateries Private Limited · L. M. Realtors Private Limited · Aushim Soft Private Limited · Leela Soft Private Limited · Armcess Engineering Private Limited · Zantho Pharmaceuticals Private Limited · Leela Lace Estate Private Limited · Emmel Real Estate Developers Private Limited · Leela Villas Private Limited · Leela Lace Info Park Private Limited · Leela Constates Private Limited · Leela Hospitality Private Limited · Leela Realcon Private Limited · Kinfra International Apparel Parks Limited · Palakkad Infrastructure Private Limited · Leela Lace Builders Private Limited · Vibgyour Leasing Private Limited · Zillion Hotels and Resorts Private Limited · Leela Capital and Finance Limited · Mumbai International Convention and Exhibition Centre Limited

CAPITAL STRUCTURE

AS ON 31.03.2011

Authorised Capital :

No. of Shares	Type	Value	Amount
600000000	Equity Shares	Rs.2/- each	Rs.1200.000 Millions
60000000	Preference Shares	Rs.100/- each	Rs.600.000 Millions
	Total		Rs.1800.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
387824992	Equity Shares	Rs.2/- each	Rs.775.650 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2011	31.03.2010	31.03.2009
SHAREHOLDERS FUNDS
1] Share Capital		775.650	755.650	755.650
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		20253.121	19785.809	19586.977
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		21028.771	20541.459	20342.627
LOAN FUNDS
1] Secured Loans		33073.976	23534.776	18196.645
2] Unsecured Loans		4957.440	5251.776	6308.866
TOTAL BORROWING		38031.416	28786.552	24505.511
DEFERRED TAX LIABILITIES		1479.568	1327.168	1107.388
TOTAL		60339.755	50655.179	45955.526
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		57011.436	49332.275	43695.290
Capital work-in-progress		0.000	0.000	0.000
INVESTMENT		461.408	461.383	462.369
DEFERREX TAX ASSETS		0.000	0.000	0.000
TRANSLATION DIFFERENCE ACCOUNTS		0.000	0.000	942.372
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	543.809	434.344	419.636
	Sundry Debtors	493.021	379.017	315.099
	Cash & Bank Balances	560.523	134.776	314.340
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	4212.500	2644.814	3027.165
Total Current Assets		5809.853	3592.951	4076.240
Less : CURRENT LIABILITIES & PROVISIONS
	Other Current Liabilities	1235.662	874.591	1009.281
	Sundry Creditors	509.224	570.459	703.741
	Provisions	998.056	1286.380	1507.723
Total Current Liabilities		2742.942	2731.430	3220.745
Net Current Assets		3066.911	861.521	855.495
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		60539.755	50655.179	45955.526

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2011	31.03.2010	31.03.2009
	SALES SERVICES RENDRED AND OTHER INCOME		5533.503	4783.801	5821.646
Less	EXPENSES
		Operating Administrative and other expenses	3678.407	3205.776	2958.557
		Loss on sales of fixed assets	18.282	3.646	2.624
		TOTAL (B)	3696.689	3209.422	2961.181
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		1836.814	1574.379	2860.465
Less	FINANCIAL EXPENSES (D)		576.233	244.681	271.991
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		1260.581	1329.698	2588.474
Less/ Add	DEPRECIATION/ AMORTISATION (F)		684.344	683.274	653.942
	PROFIT BEFORE TAX (E-F) (G)		576.237	646.424	1934.532
Less	TAX (I)		197.852	236.213	484.686
	PROFIT AFTER TAX (G-I) (J)		378.385	410.211	1449.846
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		3258.818	3287.659	3464.262
Less	APPROPRIATIONS
		Transfer to General Reserve	0.000	11.500	110.000
		Proposed Dividend on Equity Shares	58.174	75.565	15.130
		Dividend Distribution Tax	9.437	12.550	25.684
		Transfer to Debentures Redemption Reserves	180.000	60.000	300.000
	BALANCE CARRIED TO THE B/S		3506.429	3258.818	3287.659
	Earnings Per Share (Rs.)		0.99	1.09	3.13

KEY RATIOS

PARTICULARS		31.03.2011	31.03.2010	31.03.2009
PAT / Total Income	(%)	6.83	8.57	24.90
Return on Total Assets (PBT/Total Assets}	(%)	0.96	1.22	4.04
Return on Investment (ROI) (PBT/Networth)		0.02	0.03	0.09
Debt Equity Ratio (Total Liability/Networth)		1.93	1.53	1.36
Current Ratio (Current Asset/Current Liability)		2.11	1.31	1.26

LOCAL AGENCY FURTHER INFORMATION

SUNDRY CREDITORS DETAILS :

(Rs. In Millions)

Particulars	31.03.2011	31.03.2010	31.03.2009
- For Operation	129.243	473.774	703.741
- For Project	379.981	96.685
Total	509.224	570.459	703.741

REVIEW OF OPERATIONS

The overall performance of the Company has improved during the year, in line with the overall global economic recovery. The total income stood at Rs. 5533.500 millions, compared to Rs.4783.800 millions in the previous year.

ENVIRONMENTAL INITIATIVES :

The Company recognizes the need to contribute to reducing the impact of daily operations on the environment and make a contribution. The Company maintains a large stretch of greenery and gardens in and around its properties. The Company has made substantial investments for improving energy efficiencies, fresh and waste water management in its hotel properties. The Company’s latest hotel in New Delhi has been designed considering eligibility of Gold LEED Certification in the near future

MANAGEMENT DISCUSSION AND ANALYSIS

INDUSTRY STRUCTURE AND OUTLOOK

India is ranked 4th in terms of Travel and Tourism growth in the world and 1st in South East Asia. According to the World Travel and Tourism Council Report, the Indian Travel and Tourism Industry estimated at Rs. 1,970 billion in FY 2010 contributed 6% to the overall GDP and is expected to reach Rs. 6,211 billion by 2020, growing at a CAGR of 12% per annum. The industry has consistently outperformed other sectors in GDP Growth and is expected to continue to do so. The Travel and Tourism Industry is the largest contributor to employment generation and accounts for about 8.4% of the total employment.

The Foreign Tourist Arrivals more than doubled during the period 2000 to 2010 and is presently about 5.5 million. World Travel and Tourism Council has estimated that the foreign tourist arrivals are expected to register 8.2% CAGR over the period 2010-19. The foreign tourist arrivals have increased substantially during the year, due to improvement in global economic situation and the increased global confidence in the business development in India. Domestic Travel reached 650 million in 2009. With increased disposable income, there is immense potential for growth in domestic tourism.

According to various estimates, the total demand for branded hotels in India as on date is about 200,000 rooms whereas the supply is only about 1,20,000 rooms. Therefore, there is a huge gap to be filled. Moreover, increased supply creates its own demand.

The Government of India has recently made a satisfactory amendment to Section 35AD of the Income Tax Act in the Union Budget 2011-12, which now allows new hotels to set off the benefit of investment based deduction against the profit from other existing hotels of the Company. This would reduce the overall cash outflow towards income tax in the initial years of hotel operation.

One of the long pending requests of the Hotel Industry is the grant of Infrastructure Status by RBI. The Hotel Industry is highly capital intensive and new hotels especially the super luxury hotels take long time to generate cash surplus. Therefore, it is necessary that the hotel industry should have access to cheaper loans with longer repayment schedules. It is also necessary that the Hotel industry should have access to foreign currency loans not just for new projects but also for refinancing of existing loans. This would be possible, only when the industry is granted Infrastructure status.

MARKETING AND OTHER ALLIANCES :

The Company has marketing alliances with Germany based Kempinski Group of Hotels (Hoteliers since 1897) and US based Preferred Hotel Group and is a member of Global Hotel Alliance based in Geneva, Switzerland. Under the alliance with Kempinski, the Company has been receiving, among others, international marketing services for the existing hotels, technical and pre opening services for the proposed hotels in Chennai as well as other hotels that the Company would operate in the future, purchasing services, services related to IT and management information systems, as well as personnel and operational support.

Preferred Hotel Group is 40 year old sales centric organization with 700 prestigious hotel groups across the world as its members. The alliance with Preferred Hotel Group benefits the Company with co-branding resulting in greater recognition of the Company’s brand in the USA as premium and luxury hotels. The Company also gets the opportunity to leverage their seven Global Sales Offices in the USA, as well as in Paris, Singapore, Hong Kong, Japan, Australia and others. In addition, their technology empowers the Company’s website to receive direct bookings. Their preferred relationship with American Express allows the Company the lower commissions on receipts through American Express Credit Card, which results in substantial savings and opportunities to participate in many road shows in the Company’s main source markets. The alliances also assist the Company to get more international business and to enhance its competitive positioning in the market. Global Hotel Alliance is a collection of 12 upscale and luxury regional hotel brands from across the world with a collection of over 300 hotels in 47 countries. As a member of the alliance, the Company gets access to preferred relationships with 15 International Airlines and three of the largest Travel Management Companies, American Express, Carlson Wagonlit and BCD, which help the Company to market its hotels globally. The Company is also part of their newly launched recognition program, GHA Discovery, which already has 1.4 million members and this helps the Company to compete with other similar programs of global hotel chains. As a GHA member, the Company derives substantial savings on its hotel room management and reservations technology provided by Micros, as well as avail technical support for the Company’s planned independent GDS code. Towards maintaining world-class standards, the Company has engaged ESPA of London, one of the leading Spa management companies in the world, to manage the Company’s Spas at Mumbai, Goa, Udaipur and New Delhi.

EXPANSION / UP-GRADATION PLANS :

Tourism industry is growing and bound to grow stronger in India owing to its splendid historical architecture, rich heritage and ancient culture along with beautiful beaches and rural tourism, and the inherently rooted concept of

hospitality in form of “Ätithi Devo Bhava”. The Company owns and operates six hotels at the locations viz. New Delhi, Mumbai, Bangalore, Goa, Kovalam and Udaipur, besides operating another hotel at Gurgaon under Management Contract. The Company expects to start operations of the hotel under construction in Chennai during the current financial year.

The Company has acquired land in Agra and Ashtamudi in Kerala for construction of hotels. These projects will be taken up in due course after completion of the Chennai project. The Company had purchased about 4.21 acres of land in Pune and 38.500 millions of land in Hyderabad for building hotels in these locations. Since then, considerable capacity addition has taken place in these cities. Therefore, the Company has decided to use the land for high end residential use. Accordingly, the Company has already entered into joint development agreement with a reputed builder in Pune. In Hyderabad, the Company would either directly undertake development or enter into joint development agreement with a reputed builder. The Company also has about 2 acres of land next to Leela Palace, Bangalore and is in discussions with reputed local builders for developing high end residential buildings.

FIXED ASSETS :

· Land (Freehold)

· Land (Leasehold)

· Buildings

· Plant and Machinery

· Electrical Installation

· Furniture and Fixtures

· Vehicles and Motor Boats

· Projects in Progress

CONTINGENT LIABILITIES NOT PROVIDED FOR:

a) Estimated amount of contracts remaining to be executed on capital account not provided for- Rs. 2554.331 millions (previous year Rs. 2406.800 millions).

b) Claims against the Company not acknowledged as debts Rs. 747.800 millions (previous year Rs. 175.000 millions).

c) Disputed Statutory Liabilities not provided for Rs. 218.470 millions (previous year Rs. 21.700 millions).

d) Letter of Credit open and outstanding Rs. 331.912 millions (previous year 61.032 millions).

e) Counter guarantee given to banks in respect of guarantees given by them on behalf of the Company Rs. 16.085 millions (previous year Rs.12.882 millions ).

f) The Company has made provision for leave salary on actuarial valuation basis. This being retirement benefit, an obligation to pay this amount

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs. 44.61
UK Pound	1	Rs. 73.27
Euro	1	Rs. 65.47

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	8
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	8
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	7
--PROFITABILIRY	1~10	7
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	7
--RESERVES	1~10	8
--CREDIT LINES	1~10	8
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		68

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
-	NB	New Business	-

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.