Board of Directors

Ratan N. Tata Chairman Management R. K. Krishna Kumar Vice Chairman Raymond N. Bickson Managing Director N. A. Soonawala Anil P. Goel Executive Director - Finance S. K. Kandhari Abhijit Mukerji Executive Director - Hotel Operations K. B. Dadiseth Deepak Parekh Ajoy K. Misra Sr. Vice President - Sales & Marketing Jagdish Capoor H. N. Shrinivas Sr. Vice President - Human Resources Shapoor Mistry Prakash Shukla Sr. Vice President - Technology & CIO Nadir Godrej - (w.e.f. November 7, 2008) Arnavaz Aga - (w.e.f. November 7, 2008) Rajiv Gujral Chief Operating Officer and Sr. Vice President - Raymond N. Bickson Managing Director Mergers, Acquisitions & Development Anil P. Goel Executive Director - Finance Yannick Poupon Chief Operating Officer - Luxury Hotels (International) Abhijit Mukerji Executive Director - Hotel Operations Jyoti Narang Chief Operating Officer - Luxury Hotels (India) P. K. Mohan Kumar Chief Operating Officer - Gateway Hotels Committees of the Board Veer Vijay Singh Chief Operating Officer - Premium Hotels Audit Committee P. Sanker Vice President - Legal & Company Secretary S. K. Kandhari Chairman Sumit Guha Vice President - Projects & Deepak Parekh Business Development Jagdish Capoor

Remuneration Committee Solicitors Jagdish Capoor Chairman Mulla & Mulla & Craigie Blunt & Caroe R. N. Tata R. K. Krishna Kumar Auditors N. A. Soonawala Deloitte, Haskins and Sells N. M. Raiji & Company Shareholders'/ Investor Grievance Committee Bankers N. A. Soonawala Chairman The Hongkong & Shanghai Banking Corporation Ltd. R. K. Krishna Kumar Standard Chartered Bank Raymond N. Bickson Citibank N. A. Registered Office HDFC Bank Mandlik House, Mandlik Road, Mumbai 400 001. ICICI Bank Ltd. Tel: 6639 5515, Fax: 2202 7442

Share Department Mandlik House, Mandlik Road, Mumbai 400 001. Tel: 6639 5515, Fax: 2202 7442 Email: [email protected]

Website: www.tajhotels.com AnnualThe Indian Report Hotels 2008-2009 Company Limited Annual Report 2008-2009

Contents

Highlights 3

Notice 4 - 9

Directors' Report 10 - 20

Management Discussion & Analysis 21 - 43

Corporate Governance 44 - 61

Community Initiatives 62 - 64

Break-up of Total Expenses 65

Auditors' Report 66 - 69

Balance Sheet 70

Profit and Loss Account 71

Cash Flow Statement 72

Schedules to Accounts 73 - 88

Notes to Balance Sheet and Profit and Loss Account 89 - 116

Balance Sheet Abstract and Company's General Profile 117

Statement pursuant to Section 212 118 - 119

Summary of Financial Information of Subsidiary Companies 120

Financial Statistics 121

Consolidated Financial Statements 122 - 164

1 The Indian Hotels Company Limited

2 Annual Report 2008-2009

Financial Highlights

2008-09 2007-08 Rupees Rupees (In Crores) (In Crores)

Gross Revenue 1706.52 1823.16

Profit Before Tax 362.30 580.47

Profit After Tax 234.03 377.46

Dividend 86.81 114.54

Retained Earnings 226.93 328.93

Funds Employed 4984.57 3332.22

Net Worth 3046.90 2035.10

Borrowings 1766.47 1134.18

Debt : Equity Ratio 0.58:1 0.55:1

Net Worth Per Ordinary Share of Re. 1/- each 42.11 33.76

Earnings per Ordinary Share (Basic) - In Rupees 3.28 5.77

Earnings Per Ordinary Share (Diluted) - In Rupees 3.28 5.77

Dividend Per Ordinary Share 1.20 1.90

Dividend % 120% 190%

3 The Indian Hotels Company Limited

NOTICE NOTICE is hereby given that the HUNDRED AND EIGHTH ANNUAL GENERAL MEETING of THE INDIAN HOTELS COMPANY LIMITED will be held at the Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, Mumbai 400 020, on Monday, August 3, 2009, at 3.00 p.m to transact the following business: 1. To receive, consider and adopt the Audited Profit and Loss Account for the year ended March 31, 2009 and the Balance Sheet as at that date together with the Report of the Board of Directors and the Auditors thereon. 2. To declare a dividend on ordinary shares. 3. To appoint a Director in the place of Mr. R. N. Tata who retires by rotation and is eligible for re-appointment. 4. To appoint a Director in the place of Mr. N. A. Soonawala who retires by rotation and is eligible for re-appointment. 5. To appoint a Director in the place of Mr. Deepak Parekh who retires by rotation and is eligible for re-appointment. 6. Appointment of Ms. Arnavaz Aga as a Director of the Company To appoint a Director in place of Ms. Arnavaz Aga who was appointed as an Additional Director of the Company with effect from November 7, 2008, by the Board of Directors and who holds office upto the date of the forthcoming Annual General Meeting of the Company under Section 260 of the Companies Act, 1956 (the Act) but who is eligible for appointment and in respect of whom the Company has received a notice in writing under Section 257 of the Act from a Member proposing her candidature, for the office of the Director of the Company. 7. Appointment of Mr. Nadir Godrej as a Director of the Company To appoint a Director in place of Mr. Nadir Godrej who was appointed as an Additional Director of the Company with effect from November 7, 2008 by the Board of Directors and who holds office upto the date of the forthcoming Annual General Meeting of the Company under Section 260 of the Companies Act, 1956 (the Act) but who is eligible for appointment and in respect of whom the Company has received a notice in writing under Section 257 of the Act from a Member proposing his candidature, for the office of the Director of the Company. 8. To appoint Auditors and fix their remuneration To consider and, if thought fit, to pass with or without modification, the following resolution as a Special Resolution: “RESOLVED THAT pursuant to the provisions of Section 224A and other applicable provisions, if any, of the Companies Act, 1956, M/s Deloitte Haskins & Sells, Chartered Accountants, and M/s. N. M. Raiji & Company, Chartered Accountants, be and are hereby re-appointed as Joint Auditors of the Company, to hold office from the conclusion of this meeting until the conclusion of the next Annual General Meeting of the Company, to examine and audit the Books of Account of the Company for the financial year 2009-10 on such remuneration as may be mutually agreed upon between the Board of Directors of the Company and the Auditors, plus reimbursement of service tax, out-of-pocket and travelling expenses actually incurred by them in connection with the audit.” 9. Commission to Directors other than the Managing and Whole-time Director(s) of the Company. To consider and, if thought fit, to pass with or without modification, the following resolution as a Special Resolution : “RESOLVED THAT pursuant to the provisions of Section 309 and other applicable provisions, if any, of the Companies Act, 1956, a sum not exceeding 1% per annum of the net profits of the Company calculated in accordance with the provisions of Sections 198, 349 and 350 of the Act, be paid to and distributed amongst the Directors of the Company or some or any of them [other than the Managing Director and the Whole-time Director(s)] in such amounts or proportions and in such a manner as may be directed by the Board of Directors of the Company and such payments shall be made in respect of the profits of the Company for each year of the period of five years commencing 1st April, 2009.”

4 Annual Report 2008-2009

NOTES : 1. The relative Explanatory Statement, pursuant to Section 173 of the Companies Act, 1956, in respect of the business under Item Nos. 6 to 9 is annexed hereto. 2. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. 3. The Register of Members and the Share Transfer Books of the Company will remain closed from Tuesday, July 21, 2009 to Monday, August 3, 2009 both days inclusive. 4. The Dividend on Ordinary Shares, as recommended by the Board of Directors, if declared at the Annual General Meeting, will be paid on or after August 3, 2009, to the Members whose names appear on the Company’s Register of Members on August 3, 2009. As regards shares held in electronic form, the dividend will be payable to the ‘beneficial owners’ of the shares whose names appear in the Statement of Beneficial Ownership furnished by the National Securities Depository Limited and the Central Depository Services (India) Limited as at the close of business hours on July 20, 2009. 5. Members/Proxies should bring the Attendance Slip sent herewith duly filled in for attending the Meeting. 6. Pursuant to Sections 205A and 205C of the Companies Act, 1956, all dividends remaining unclaimed for seven years from the date they first became due for payment are now required to be transferred to the “Investor Education and Protection Fund” (IEPF) established by the Central Government under the amended provisions of the Companies Act, 1956. Members shall not be able to claim any unpaid dividend from the said Fund nor from the Company thereafter. It may be noted that unpaid dividend for the financial year ended March 31, 2002 is due for transfer to the IEPF on August 17, 2009. 7. To avoid loss of dividend warrants in transit and undue delay in the receipt of dividend warrants, the Company has provided a facility to the Members for remittance of dividend through the Electronic Clearing System (ECS). The ECS facility is available at locations identified by the Reserve Bank of India from time to time and covers most of the major cities and towns. Members holding shares in a physical form and who are desirous of availing of this facility are requested to contact the Company’s Share Department at the Registered Office of the Company. 8. Members holding shares in physical form are requested to kindly notify the Company of any change in their addresses so as to enable the Company to address future communication to their correct addresses. Members holding shares in demat form are requested to notify their respective Depository Participant of any change in their addresses. 9. Pursuant to Clause 49 of the Listing Agreement, the particulars of Directors seeking appointment/re-appointment at the meeting are annexed. 10. Members desiring any information as regards the Accounts are requested to write to the Company Secretary at an early date so as to enable the Management to reply at the Meeting. 11. Members are requested to kindly bring their copies of the Annual Report to the Meeting.

By Order of the Board of Directors

P. Sanker Vice President – Legal & Company Secretary Mumbai, Dated: June 12, 2009 Registered Office : Mandlik House, Mandlik Road, Mumbai 400 001.

5 The Indian Hotels Company Limited

EXPLANATORY STATEMENT As required by Section 173 of the Companies Act, 1956 (the Act) 1. The following Explanatory Statement sets out the material facts relating to the business under Item Nos. 6 to 9 mentioned in the accompanying Notice dated June 12, 2009. Item Nos. 6 to 7 2. The Board of Directors appointed Ms. Arnavaz Aga and Mr. Nadir Godrej as Additional Directors of the Company with effect from November 7, 2008 pursuant to the provisions of Section 260 of the Act and Article 132 of the Articles of Association of the Company. In terms of Section 260 of the Companies Act, 1956, Ms. Aga and Mr. Godrej hold office as Additional Directors up to the date of the forthcoming Annual General Meeting of the Company, but are eligible for appointment as Directors. The Company has received Notices pursuant to Section 257 of the Act, from Members proposing Ms. Aga and Mr. Godrej’s candidatures for the office of Director of the Company at the forthcoming Annual General Meeting of the Company. The Board commends to the Members their appointment as Directors of the Company. 3. Ms. Aga, holds a B.A. degree in Economics and a post graduate degree in Medical and Psychiatric Social Work from the Tata Institute of Social Sciences. She retired as Chairperson of Thermax Limited, the leading player in environment and energy management, in 2004 and continues to serve as a Director. She is very active in various associations viz. Confederation of Indian Industry (CII) and has served as the Chairperson of CII’s Western Region. 4. Mr. Nadir Godrej, holds a B.S. degree in Chemical Engineering from the Massachusetts Institute of Technology and a M.S. in Chemical Engineering from Stanford University, in addition to an M B A from Harvard Business School. He is the Managing Director of Godrej Industries Limited and the Chairman of Godrej Agrovet Limited. He has been very active in research, with several patents in the field of agricultural chemicals and surfactants. 5. Ms. Aga and Mr. Godrej may be deemed to be concerned and interested in Item Nos. 6 and 7 respectively, as it relates to their appointment as Directors of the Company. Item No. 8 6. Section 224A of the Act, provides that in the case of a public company, in which not less than 25% of the subscribed share capital of the company, is held, whether singly or in any combination by Financial Institutions, Nationalised Banks, Insurance Companies and other Bodies specified in that Section, the appointment of Auditors is to be made by way of a Special Resolution. 7. The shareholdings of the aforesaid Financial Institutions, Nationalised Banks, etc. as on the date of the accompanying Notice is close to 25% of the subscribed share capital of the Company and it may, by the date of the Annual General Meeting, exceed 25% of the subscribed share capital of the Company. Hence, the resolution for re-appointment of M/s Deloitte Haskins & Sells and M/s N. M. Raiji & Company, is being proposed as a Special Resolution. As required under Section 224 of the Act, certificates have been received from the Auditors to the effect that their appointments if made, will be in accordance with the limits specified under Section 224(1B) of the Act. 8. The Members’ approval is also being sought to authorise the Board of Directors to determine the remuneration payable to the Auditors in consultation with them. The Board commends the Resolution for approval by the Members. 9. None of the Directors of the Company is in any way, concerned or interested in the Resolution at Item No. 8 of the accompanying notice.

6 Annual Report 2008-2009

Item No. 9 10. The Members of the Company had, at the Annual General Meeting of the Company held on 9th August, 2004, approved under the provisions of Section 309 of the Companies Act, 1956, the payment of a commission to the non-Whole-time Directors of the Company, of an amount not exceeding 1% per annum of the net profits of the Company computed in accordance with the provisions of the Act, for a period of five financial years of the Company commencing 1st April, 2004. Accordingly, the Members approval for payment of such commission is available upto and including the financial year ended on 31st March, 2009. 11. In view of the valuable services being rendered by the said Directors to the Company, it is proposed to continue to pay commission not exceeding 1% per annum of the net profits of the Company to the non-Whole-time Directors of the Company for a further period of five years commencing 1st April, 2009, subject to the approval of the Members of the Company in this regard. The amount will be distributed amongst all or some of the Directors in accordance with the directions given by the Board. 12. All the Directors of the Company except the Managing Director (Mr. Raymond N. Bickson) and the Executive Directors (Mr. Anil P. Goel and Mr. Abhijit Mukerji) of the Company are deemed to be concerned or interested in the Resolution at Item No. 9 of the accompanying Notice, to the extent of the amount that may be received by them as commission.

By Order of the Board of Directors

P. Sanker Vice President – Legal & Company Secretary Mumbai, Dated: June 12, 2009 Registered Office : Mandlik House, Mandlik Road, Mumbai 400 001.

7 The Indian Hotels Company Limited

Details of Directors seeking appointment / re-appointment at the forthcoming Annual General Meeting of the Company (Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges)

NAME OF DIRECTOR Mr. Ratan N. Tata Mr. N. A. Soonawala Mr. Deepak Parekh Ms. Arnavaz Aga Mr. Nadir Godrej Date of Birth 28.12.1937 27.06.1935 18.10.1945 03.08.1942 26.08.1951 Date of Appointment 09.01.1984 31.07.1980 09.04.2000 07.11.2008 07.11.2008 Expertise in specific Eminent Finance & Banking & Finance Eminent Industrialist with rich functional areas industrialist with Development Industrialist and business experience wide business Banking, Investment Social Activist experience across & Capital Markets a variety of industries Qualifications B.Sc. Architecture BCom.(Hons) A.C.A. B Com FCA(England BA in Economics BSc Chemical with Structural & Wales) Post graduate Engineering - Engineering from degree in medical Massachusetts Cornell University, and psychiatric Institute of Ithaca, New York social work from Technology (MIT) (including one year Tata Institute of M.S.Chemical at the Cornell Social Sciences Engineering - Graduate School of (TISS). Stanford University. Business MBA- Harvard Administration) Business School Details of shares 59,792-- 1,845 - held in the Company

List of Companies in Ltd Tata Sons Ltd. Housing Development Thermax Ltd. Godrej Industries Ltd which outside Tata Industries Ltd Tata Industries Ltd. Finance Corporation Thermax Godrej Agrovet Ltd Ltd Directorships held as Ltd Ltd. Sustainable Energy Godrej Tyson Foods on 31.03.2009 Infrastructure Tata Investment Solutions Ltd Ltd (excluding private & Tata Motors Ltd Development Finance Corporation Ltd. Godrej Oil Palm Ltd foreign companies) Co Ltd Ltd Ltd. GlaxoSmithKline Godrej & Boyce Mfg. The Pharmaceuticals Ltd Co. Ltd. Company Ltd Mahindra & Mahindra Godrej Properties Ltd Tata Tea Limited Ltd Godrej Consumer The Bombay Hindustan Unilever Products Ltd Dyeing & Ltd Mahindra & Manufacturing Co. Castrol India Ltd Mahindra Ltd. Ltd Hindustan Oil Godrej Sara Lee Ltd Tata Consultancy Exploration Company Ltd KarROX Services Limited Technologies Ltd HDFC Asset Godrej Gold Coin Limited Management Company Ltd Aquafeed Ltd HDFC Standard Life Tata Teleservices Insurance Company (Maharashtra) Ltd Ltd HDFC Ergo General Insurance Company Ltd Siemens Limited Motor Industries Company Ltd

8 Annual Report 2008-2009

NAME OF DIRECTOR Mr. Ratan N. Tata Mr. N. A. Soonawala Mr. Deepak Parekh Ms. Arnavaz Aga Mr. Nadir Godrej

Satyam Computer Services Ltd. Airports Authority of India Exide Industries Ltd (Alternate Director) Borax Morarji Ltd (Alternate Director) Zodiac Clothing Ltd (Alternate Director) Bharat Bijlee Ltd (Alternate Director)

Chairman / Member – Audit Committee Audit Committee – Audit Committee of the *Committees Tata Sons Ltd. GlaxoSmithKline Godrej Sara Lee Ltd of other Companies Pharmaceuticals Ltd Mahindra & on which he is a Mahindra & Mahindra Ltd Director as on Mahindra Ltd 31.03.2009 Castrol India Ltd Hindustan Unilever Ltd Siemens Ltd

Share Transfer & Share Transfer & Share Transfer & Investors’ Investors’ Investors’ Grievance Grievance Grievance Committee Committee Committee GlaxoSmithKline Godrej Consumer Tata Investment - Corporation Ltd. Pharmaceuticals Ltd Products Ltd.

*The Committees include the Audit Committee and the Shareholders’ / Investor Grievance Committee.

9 The Indian Hotels Company Limited

DIRECTORS’ REPORT TO THE MEMBERS The Directors have pleasure in presenting the 108th Annual Report of the Company together with its Audited Profit and Loss Account for the year ended March 31, 2009 and the Balance Sheet as on that date: FINANCIAL RESULTS Rs/Crores Particulars 2008/09 2007/08 Total Income 1706.52 1823.16 Profit before Depreciation, Interest and Tax 553.41 760.23 Less: Depreciation 94.46 85.48 Less: Interest 90.44 94.28 Profit before tax & exceptional Item 368.51 580.47 Less : Exceptional Items 6.21 - Profit before tax 362.30 580.47 Less: Provision for tax 124.58 198.91 Less: Short Provision of Tax of earlier years (Net) 3.69 4.10 Profit after tax 234.03 377.46 Add: Balance brought forward from the previous year 536.78 331.33 Profit before Appropriations 770.81 708.79 APPROPRIATIONS (i) General Reserve 30.00 38.00 (ii) Dividend: A final dividend of 120% i.e. Re. 1.20/- per Ordinary Share was recommanded by the Board of Directors on 12th June, 2009. (In respect of the previous year, an interim dividend of 190% i.e. Rs. 1.90 per Ordinary Share was paid to the share holders) 86.81 114.54 Tax on Dividend 14.75 19.47 (iii) Transfer to Debenture Redemption Reserve 100.00 - (iv) Balance carried to Balance Sheet 539.25 536.78 770.81 708.79 INCOME The total income for the year ended March 31, 2009 at Rs. 1706.52 crores was lower than that of the previous year by 6 %. Room Income was lower than the previous year by 14 % The Average Room Rate (ARR) decreased by 2 % over the previous year. Food & Beverage (F&B) income was 13% lower than the previous year. INTEREST AND DEPRECIATION Interest cost was lower at Rs. 90.44 crores for the year ended March 31, 2009 as compared to Rs. 94.28 crores in the previous year due to income earned from surplus funds and proceeds of Rights Issue pending its utilisation. Depreciation for the year was higher due to incremental depreciation on new additions to fixed assets including the new hotel in Bangalore that started operations in December, 2008.

10 Annual Report 2008-2009

PROFITS Profit before Tax at Rs. 362.30 crores was lower than the previous year by 38 %. Profit after Tax at Rs. 234.03 crores was also lower by 38 % over the previous year. CONSOLIDATED RESULTS The consolidated revenues at Rs. 2782.12 crores were lower by 10% as compared to the previous year. Profit before Interest and Taxes reduced to Rs. 419.22 crores by 52% compared to previous year. The consolidated profitability was adversely impacted during the year under review on account of a decline in the profitability of IHCL and its Indian associate and JV companies which were due to the terrorist attacks in India as also the onset of global recession. In addition, as a result of renovations at , New York and Taj Coral Reef, Maldives there was a loss of revenue and profits. Profitability was also adversely impacted on account of adverse foreign exchange movements during the year as also because of the cost of holding the company’s strategic investments. The consolidated Profit after Tax reduced to Rs. 12.46 crores as compared to Rs. 354.98 crores in the previous year. We believe that a recovery process has begun. DIVIDEND Your Directors are pleased to recommend a dividend of 120% or Re. 1.20/- per Ordinary Share in respect of the year ended March 31, 2009. BORROWINGS The total borrowings stood at Rs.1766.47 crores as at March 31, 2009 as against Rs. 1134.18 crores as on March 31, 2008. The increase in debt was on account of on going capital expenditure on new projects and renovations and investment in international subsidiaries. CAPITAL EXPENDITURE During the year under review, your Company incurred Rs. 315.33 crores towards capital expenditure. Major expenditure was incurred on by Taj, Bangalore, Faluknuma Palace, Hyderabad, Taj Lands End, Mumbai, VIVANTA by Taj, Yeshwantpur and ongoing renovations across existing hotels. BUSINESS OVERVIEW The year 2008-09 was a difficult year for the tourism and hospitality industry. After having four years of robust growth, global tourism slowed down during the global economic downturn. The global economic downturn which started in early 2008 impacted your Company’s business and performance, as also the hospitality industry and will likely continue to impact the sector in the near term. The terrorist attack on the Company’s iconic property Taj Mahal Palace & Tower and the city of Mumbai in November 2008 further impacted the hospitality industry in the country. Travel & Tourism growth in 2008 slowed down to just 1% and is likely to contract further by 3.3% in 2009 only to expand by 0.3% in 2010. However looking beyond the current crisis, Travel & Tourism is expected to resume its leading, dynamic role in global growth. World travel & tourism is expected to contribute nearly US$5,474 billion to global GDP in 2009, rising to approximately US$10,478 billion over the next ten years, according to the latest tourism satellite accounting (TSA) research from the World Travel & Tourism Council (WTTC). In terms of regional performance, Africa, Asia Pacific and the Middle East are experiencing higher growth rates than the world average, in terms of total Travel & Tourism Demand while the matured markets – most notably the Americas and Europe – are falling below the world average. The global economic downturn has had its impact on Indian Tourism and Hospitality industry which saw a decline in the foreign tourist arrivals to India from 5.27 million in FY 2007/08 to 5.13 million in FY 2008/09 a decrease of 3%. The foreign tourist arrival in March 2009 was 4.72 lakhs as compared to 5.41 lakhs during March 2008, a decrease of 12.8%. Consequently foreign exchange earning during March, 2009 was USD 867 million as compared to USD 1248 million in March 2008. Despite short and medium term setbacks, tourism revenues are expected to rise by 42% from 2007 to 2017, according to a report of Indian Brand Equity Foundation on Tourism and Hospitality.

11 The Indian Hotels Company Limited

The slowdown in the tourism sector has had a cascading effect on the hospitality industry with a decrease in the occupancy ratio and average room rates. The Government of India has taken a number of initiatives to support the Tourism Industry details whereof are given under Management Discussion and Analysis. Supply of additional capacity is expected to be delayed due to the slowdown in the economy, constructions delays, high real estate prices and difficulty in getting bank credit. Several real estate developers have already announced cancellations or deferrals of their projects which will continue the demand supply mismatch for the ensuing year. For your Company, despite this adversity and challenge, there are opportunities as well to consolidate our position in the market, speedily complete projects under implementation whilst re-prioritizing future investments and rationalizing our cost base to protect margins which are under pressure. During the fourth quarter, all capital expenditure, other than that for projects was frozen and operating costs were minutely scrutinized and kept to the bare essential. There was strong focus on maintaining liquidity and working capital norms were continuously optimized. During the year, 12 hotels were opened with an inventory of 1167 rooms. Management Contracts were signed for hotels in Beijing, Hainan Island, Dwarka and Guwahati.. The inventory of the Taj Group now stood at 99 hotels with 11754 rooms. More details on the new properties launched, product upgradation, expansion in domestic and international markets are provided under the section Management Discussion and Analysis. Your Company wiil pursue the completion of ongoing projects, both in the domestic and international market, at different price points. Against this backdrop your Company expects to achieve sustainable and profitable growth. TERRORIST ATTACK ON ‘TAJ MAHAL PALACE & TOWER’ Your Company’s flagship property, The Taj Mahal Palace and Tower in Mumbai was attacked by terrorists on November 26, 2008 amongst the other targets in the city. 31 persons were killed in the attack within the hotel, including 12 members of staff of the hotel. The Board mourns the death of innocent people in the hotel and Mumbai city and also pays tribute to the exceptional services rendered by the employees of the Taj, the police, security forces, hospitals and others during the attack and thereafter. The Tower Wing was re-opened after refurbishment on December 21, 2008, whilst the Heritage block will be opened in phases over the next few months. The Taj Mahal Palace & Tower is insured under two primary insurance covers for safeguarding the hotel from property damage and business interruption. TAJ PUBLIC SERVICE WELFARE TRUST The unprecedented attack on Mumbai between November 26-29, 2008 saw many people from the security forces, police, hotel employees, guests of the Taj / Oberoi and general public being killed or wounded. Pursuant to the outpouring of emotional support from well wishers in India and across the globe to provide relief for those affected by the attack, your Company set up the “Taj Public Service Welfare Trust” on December 12, 2008. The Trust is a registered Public Charitable Trust. The Trust has received donations from people of all walks of life and would use the income/corpus to provide relief to the dependants of those who were killed as well as provide medical and other assistance to those who were injured till they lead a normal life. The Trust has so far provided assistance to 104 affected families with disbursements / commitments of Rs. 1.63 crores. INTERNATIONAL OPERATIONS Revenue from International Operations constitutes 25% of the Taj group’s chain wide revenues. During the year under review, the turnover from International hotels was lower by 23% primarily due to the ongoing renovations at The Pierre, New York and Coral Reef, Maldives. The operations of the US hotels in particular were impacted especially in the second half of the year due to the global economic slowdown and consequent curtailment of business travel. Further, the increase in unemployment and reduced income levels in the US economy did lead to a reduction of overall demand for the lodging industry which is expected to recover by the end of this financial year. In order to intervene and to protect the margins, in the meanwhile the Management has taken a variety of cost reduction initiatives.

12 Annual Report 2008-2009

The UK operations continued to improve during the year under review. The company fully renovated the Bombay Brasserie, its iconic restaurant in London. Despite the economic slowdown, the income and profitability from the international operations will improve with the impending reopening of The Pierre, New York as also the Taj Coral Reef, Maldives and the strong possibility of a global economic recovery. THE TAJ WAY Your Company along with its Subsidiaries, Associates and Joint Venture companies operating under the brand “ Resorts and Palaces” run the hotels under the brands ‘Taj’, ‘Taj Residency’, ‘VIVANTA by Taj’, ‘Gateway’, and ‘Ginger’ hotels, has been able to leverage the sources of competitive advantage despite the slowdown in the hospitality industry. Your Company has taken several initiatives during the year details of which are given in the section- Management Discussion and Analysis under the headings ‘Product Upgradation’, ‘New Properties’, ‘Expansion in Domestic and International Markets’, ‘Service Excellence’ and ‘Marketing Alliances’ and are not being repeated herein . SUBSIDIARIES Your Company has obtained an exemption from the Ministry of Corporate Affairs vide its letter no. 47/158/2009-CL-III dated May 1, 2009, for publication of the Accounts of its subsidiaries under the provision of Section 212 of the Companies Act 1956. The accounts of the subsidiary companies are not separately included in the Annual Report. However, the Consolidated Financial Statements of the Subsidiaries, Joint Ventures and Associates, in accordance with relevant Accounting Standards of the Institute of Chartered Accountants of India, duly audited by the Statutory Auditors, form a part of the Annual Report and are reflected in the consolidated accounts. The Financial Statements of the subsidiary companies and other detailed information will be made available to the investors seeking such information at any point of time. The Annual Accounts of the subsidiary companies will also be available for inspection at the Registered Office of the Company as well as the respective Registered Offices of subsidiary companies. LISTING The Ordinary Shares of your Company are listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Global Depository Shares (GDS) issued by your Company are listed on the London Stock Exchange. FIXED DEPOSITS Your Company launched a revised Fixed Deposit Scheme inviting deposits from the general public at a rate of 9.5% p. a. for a period of two years and 10% p.a for a period of three years with the minimum amount of deposit being Rs.25,000. Additional interest of 0.25% p.a. is payable on deposits received from shareholders/senior citizens/employees. The outstanding amount of fixed deposits placed with the Company amounted to Rs 27.18 crores. (previous year Rs. 3.08 crores) excluding Rs. 0.41 crores (previous year Rs. 0.42 crores), which remained unclaimed by depositors as on March 31, 2009. DIRECTORS Mr. Nadir Godrej and Ms. Arnavaz Aga were appointed as Additional Directors with effect from November 7, 2008. They respectively hold office upto the date of the forthcoming Annual General Meeting and are eligible for appointment. Your approval for their appointment as Directors has been sought in the Notice convening the Annual General Meeting of the Company. In accordance with the Companies Act, 1956, and the Articles of Association of the Company, three of your Directors, viz., Mr. Ratan N. Tata, Mr. N. A. Soonawala and Mr. Deepak Parekh retire by rotation, and are eligible for re-appointment. CORPORATE GOVERNANCE As required by Clause 49 of the Listing Agreement with the Stock Exchanges, the report on Management Discussion and Analysis, Corporate Governance as well as the Auditors’ Certificate regarding compliance of conditions of Corporate Governance, form part of the Annual Report.

13 The Indian Hotels Company Limited

AUDITORS The Members are requested to re-appoint M/s. Deloitte, Haskins & Sells, Chartered Accountants, Mumbai and M/s. N.M. Raiji & Co., Chartered Accountants, Mumbai as Joint Auditors for the current year and authorise the Board of Directors to fix their remuneration. FOREIGN EXCHANGE EARNINGS AND OUTGO As required under Section 217(1)(e) of the Companies Act, 1956, read with rule 2 of the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, the information relating to foreign exchange earnings and outgo is in Note Nos.22, 23 & 24 of the Notes to the Accounts. STAFF As required by Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, a statement of information relating to employees has been given in the Annexure to the Report and forms a part of it. The Board desires to place on record, its appreciation to all employees of the Company and pays its respects to all those who laid down their lives in the course of duty to protect the lives of our valued guests without whose sustained dedicated effort the Company would not have been able to overcome the crisis it met with during the year. DIRECTORS’ RESPONSIBILITY STATEMENT Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Board of Directors, based on the representations received from the Operating Management, hereby confirms that: i. in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures; ii. it has in the selection of the accounting policies, consulted the Statutory Auditors and has applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2009 and of the profit of the Company for that period; iii. it has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, to the best of its knowledge and ability. There are however, inherent limitations, which should be recognized while relying on any system of internal control and records; and iv. it has prepared the annual accounts on a going concern basis. GLOBAL COMPACT As part of the , your Company had signed up to promote the United Nations “Global Compact” which lays down ten key principles to specifically address issues in the areas of human rights, labour, corruption and the environment. Your Company continues to be an active member of Global Compact. Your Company annually submits a ‘Corporate Sustainability Report’ detailing its economic, environmental and social performance.

On behalf of the Board of Directors

Ratan N. Tata Chairman Mumbai, June 12, 2009 Registered Office: Mandlik House Mandlik Road Mumbai 400 001.

14 Annual Report 2008-2009

Annexure to the Directors' Report INFORMATION AS PER SECTION 217 (2A) OF THE COMPANIES ACT, 1956, READ WITH COMPANIES ( PARTICULARS OF THE EMPLOYEES ) RULES 1975 & FORMING PART OF THE DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH, 2009

Sr. Name of Designation Age as on "Gross“ Net Qualification Experience Last Commencement No. Employee 31/3/2009 Remuneration" Remuneration (No. of Years) Employment of Employment As on 31/03/09 Held 1 Aiyer Mahesh General Manager - 38 2,620,229 1,791,759 PGDBM (Marketing), 14 First Employment April, 1995 Taj Deccan, Hyderabad B. Tech (Mech.), 2 Ananda S. Corporate Chef - Premium 53 9,156,250 5,894,130 Dip. In H.M.C.T 26 Hotel Blue Diamond March, 1990 Hotels & Executive Chef - Taj President Hotel, Mumbai 3 Arulmani General Manager - Learning 44 2,463,157 1,654,037 B.Sc., Dip. In H.M.C.T 20 First Employment July, 1989 & Development 4 Avasthi Alok Director - Operations, Taj 46 3,700,690 2,503,490 B. Com., Dip In 23 First Employment August, 1986 Luxury Hotels International Hotel Management, MBA - IMHI-Cornell -Essec, France Dip. In Systems Management 5 Ayyapan Director - Corporate 51 2,617,512 1,795,912 B.Sc., PGDM (Marketing) 29 Hotel Inter-Continental July, 1995 Vasant Sustainability Initiatives Al-ain, UAE 6 Banerjee General Manager - 39 2,637,522 1,812,482 PGDM, B.Sc. (Eco Hons) 16 Orient Fans August, 2005 Sandeep Human Resources, Luxury International 7 Basu Renu (Ms.) Vice President - Sales 49 6,254,785 3,997,445 B.A (Hons.) L.L.B, 27 HDFC Bank Mumbai January, 1999 Dip. In Business Management 8 Batliwala S. R. Vice President - Food & 58 5,262,574 3,410,954 Dip. In H.M.C.T., Post Dip. In 38 First Employment May, 1970 (Ms.) Beverage Spl. Hotel Management F.H.C.I.M.A. (UK) 9 Beri D K Vice President - Business & 60 7,332,527 4,731,227 B.Sc. Dip. In H.M.C.T 38 ITDC January, 1982 Corporate Affairs Advance Dip. In Hotel Management (Germany) 10 Bhatia Director - Legal & 51 3,751,304 2,448,164 M.Com., A.C.S 30 Indian Overseas Bank February, 1986 Prakash K Secretarial (North) 11 Bhesania Director - Human Resources 41 3,652,105 2,423,735 B.A(Eco.), Dip. In Personnel 17 Tata NYK Transport August, 2000 Kristyl P (Ms.) (Premium Hotels) Management., MBA, Systems 12 Bickson. R Managing Director 53 53,099,832 35,159,682 Advance Mgmt. Program - 36 The Mark Hotel January, 2003 Harvard University Boston, New York, U.S.A MA, USA International Senior Managers Program - Harvard University Boston, MA, USA Financial Mgmt. Course - Cornell University (U S A) Production & Services - Ecole Lernania de Lausanne, Switzerland Honorary Doctorate in Hospitality Management from Johnson & Wales University, USA 13 Bose Sanjay Director - Human Resources 40 2,979,157 2,008,577 B A, PGDPM 14 First Employment September, 1995 (New Strategic Initiatives) 14 Chandwani General Manager - 40 2,981,222 2,016,692 MHRDM, MA(Psychology) 15 Application Company August, 2003 Maria D'Costa Human Resources, Sales (Ms.) & Marketing 15 Chawla Simi Vice President - 44 5,901,959 3,841,189 B.Com., A.C.A 21 Tata Administrative June, 1988 Kumar (Ms.) Internal Audit Service 16 Commissariat Director - Marketing 52 3,096,772 2,027,942 B.Com. (Hons) 29 Mahindra & December, 1999 Rohinton K (Premium Hotels) Dip. In Management Studies, Mahindra Ltd. Dip In Advertising & Marketing, Dip In Public Relations, 17 Daboo Jamshed Chief Operating Officer - 47 7,726,888 4,937,398 B.E. (Mech.), 22 Tata Administrative July, 2000 Premium Hotels PGDBM (Marketing & Service Finance)

15 The Indian Hotels Company Limited

Sr. Name of Designation Age as on "Gross“ Net Qualification Experience Last Commencement No. Employee 31/3/2009 Remuneration" Remuneration (No. of Years) Employment of Employment As on 31/03/09 Held 18 Dasgupta General Manager - IS 49 2,759,778 1,925,088 B. Com 27 Hotel Sofitel Surya, December, 1983 Debashish New Delhi 19 Drego Allwyn General Manager - Taj Coral 41 2,518,420 1,677,650 Dip In Hotel Mgmt., B.A 14 The Oberoi June, 2005 Reef, Maldives Dip In Hospitality., Amarvilas, Agra (Sales & Marketing) Post Graduate Dip. In Hotel Mgmt., 20 Dutt Salil Chairman - Taj Trade & 60 4,208,077 2,729,187 B.A, Dip In H.M.C.T 36 First Employment October, 1973 Kumar Transport Company Limited 21 Dutta Dibyendu Director - Finance 42 3,806,049 2,494,809 B.Com., A.C.A, AICWA 16 Tata Steel April, 2001 (Gateway Hotels) 22 Dutta Mohini Executive Director - 61 7,621,487 4,853,427 B. Com., Dip In Travel & 35 Stallion Travel October, 2001 TC Travel Services Ltd. Tourism from the Services pvt ltd. University of Hawaii 23 D'souza Vida Director - Business Excellence 40 3,860,423 2,577,323 B.A (Eco), Dip In H.M.C.T, 19 First Employment September, 1990 J (Ms.) PGDBM 24 Farooqi Zaid Director - Marketing 44 4,338,090 2,763,815 B.A., PGDBM 19 Air France November, 2000 Communications 25 Gangrade General Manager - Sales & 31 2,438,461 1,663,001 B Tech, PGDM (IIM Calcutta) 7 Tata Administrative June, 2002 Ashish Marketing, Gateway Hotels Services 26 Gimi Feroze Jal Director - Legal 53 3,050,535 2,023,585 B.A (Economics), LLB 33 Shri A. S. Bobde April, 1980 Civil Lines, Nagpur 27 Goel Anil P Executive Director - Finance 52 11,536,396 8,029,306 B.Com.(Hons.) A.C.A 26 Tata Tea Limited July, 2004 28 Guha Sumit Vice President - Projects 43 8,302,170 5,436,280 B.E (IIT) Kharagpur, 19 Tata Administrative June, 1990 & Development PGDM (IIM Ahmedabad) Services 29 Gujral Rajiv Senior Vice President - 58 8,487,474 5,458,944 B B M ( Mkt.), FHCIMA 36 Quality Traders August, 1973 Mergers, Acquisitions & Development 30 Gulati Bhavya Director - Mergers & 40 3,499,800 2,294,330 B. Com., ACA, 15 Larson & Toubro October, 2007 Surinder Acquisitions M.Sc (International Limited (Vice Chairman's Office) Marketing & Finance) London University 31 Gupta Mohit Financial Controller & 40 2,626,987 1,833,187 B. Com., ACA, A.C.S 13 HEG Ltd.(LNJ October, 2005 Company Secretary Bhilwara Group) Taj SATS Air Catering Limited 32 Gupta Ritika (Ms.) Director - Sales, Luxury India 37 3,173,728 2,080,448 M. Com 15 First Employment November, 1993 33 H N Shrinivas Senior Vice President - 55 7,493,302 4,691,482 B.Sc., MSW (PM&IR), 35 Hewlett-Packard November, 2007 Nagaraj Human Resources L.L.B, L.L.M 34 Iranpour Nowzer Pastry Chef - Western Region 57 2,832,569 1,887,589 S.S.C, Course in Bakery 37 First Employment October, 1972 35 Iyer Executive Sous Chef - 49 2,856,390 1,944,307 Dip. In Hotel Mgmt., B.A 29 First Employment August, 1980 Ramchandran Taj Mahal Palace & Tower, Mumbai 36 Jain Sonika (Ms.) Director - Sales, Tamil Nadu 39 2,938,300 1,934,880 B.A, M.A 18 Video Express, April, 1994 and Premium Hotels, South New Delhi 37 Shyam Kaikini Director - Operations 36 3,083,339 2,036,439 MBA - Cornell -Essec 13 Hospitality August, 2006 Dip In Hotel Mgmt. & Leisure Dubai UAE 38 Kamat S B Company Secretary & 36 2,603,975 1,782,645 B. Com., ACA, A.C.S 16 Tata Tea Ltd March, 2006 Financial Controller Taj GVK Hotels 39 Kang Karambir Vice President - 41 4,400,490 2,837,470 B.A (Eco.), PGDBM 17 First Employment October, 1991 Singh Mumbai Hotels (Marketing) & General Manager - The Taj Mahal Palace & Tower, Mumbai 40 Kanda Noriyuki Japanese Chef - 33 3,562,497 2,450,189 Pre University 12 Suankawa Food & August, 2004 The Taj Mahal Palace & Planning, Japan Tower, Mumbai 41 Kaur General Manager - Interiors 55 2,776,444 1,838,174 B.A (Hons) 29 Taj Services Ltd. June, 2000 Hardeepak (Ms.) Dip. In Interior Design 42 Khosla Pradeep Executive Chef - 51 2,436,186 1,672,406 Dip. In. Hotel Management, 33 Hotel Holiday Inn, August, 1978 Kumar Taj Krishna, Hyderabad Faridabad

16 Annual Report 2008-2009

Sr. Name of Designation Age as on "Gross“ Net Qualification Experience Last Commencement No. Employee 31/3/2009 Remuneration" Remuneration (No. of Years) Employment of Employment As on 31/03/09 Held 43 Khosla Rohit General Manager - 42 3,167,424 2,053,784 Dip. In. Hotel Management, 21 Hyatt Regency, Delhi November, 1999 Taj Lands End, Mumbai Post Graduate Dip. In Hotel Admin. & Management 44 Khullar Deepak Director - Sales TIS 44 3,643,750 2,435,760 B.A, Dip. In Hotel 23 Ramada Hotels (I) February, 1995 Management, PGDBM Limited 45 Kumar General Manager ( Designate) 54 3,562,903 2,366,773 B.A.(Hons.) 26 First Employment August, 1976 Perpetua (Ms.) New Premium Hotel Yeshwantpur, Bangalore 46 Kumar Parveen General Manager - 38 2,575,582 1,710,292 Dip. In. Hotel Management, 17 First Employment June, 1992 Chander Taj Lake Palace, Udaipur 47 *Kumar Rakesh Head - Techical Services 44 5,230,031 3,563,621 B.Arch (Architecture), 17 University of December, 2006 M.Arch (Architecture) Chicago 48 Kunar Arindam General Manager - 39 3,139,427 2,089,387 Dip. In. Hotel Management, 18 Hyatt Regency Delhi December, 2000 Taj West End, Bangalore 49 *Kunjur Director - Marketing 52 1,395,923 915,505 B.A, Dip. In Social 30 Trikaya Grey April, 1999 Sandhya (Ms.) (Gateway Hotels) Communication Media Adverstising (Specialisation in Advertising & Marketing) 50 Lakhmana Director - Product & Services 47 3,987,448 2,669,858 B.A (English Literature) 26 Savvy & Bokaro August, 1992 Monicaa (Ms.) Operations (Gateway Hotels) News 51 Lalvani Rakhee Director of Public Relations, 38 2,613,185 1,755,325 Dip. In. Hotel Management, 17 First Employment June, 1992 (Ms.) South 52 Lalvani Vikram General Manager - 35 2,616,960 1,729,500 B E (Mechanical), PGDM 12 First Employment June, 1997 Taj Malabar, Cochin (Marketing) 53 Lin Shi Xi Chinese Chef - The Taj Mahal 50 2,566,697 1,790,571 Degree In Hotel Management, 14 Park Sheraton, January, 1997 Palace & Tower, Mumbai Chennai 54 Madhukar General Manager - 45 2,969,330 2,014,660 B.Com., BGL 22 First Employment October, 1986 Dinaz (Ms.) Taj Connemara, Chennai 55 Mahal Inderjeet Laundry Manager - 46 2,532,380 1,747,260 Dip In Management & 23 First Employment July, 1986 Singh The Taj Mahal Palace & Marketing of Man Made Tower, Mumbai Textile Dip In Textile Tech. 56 Mahindroo Corporate Director of Revenue 31 2,987,491 2,042,561 Dip. In. Hotel Management, 10 Intercontinental Hotel November, 2005 Puneet Management & Bachelor's Degree in Strategic Group, Bangkok Global Distribution Hospitality Management 57 Malhotra Anil General Manager - 45 3,115,491 2,098,421 B. Com 23 Kuwait Hotels. Co. February, 1992 Taj Chandigarh, Chandigarh 58 *Manchanda Director - Co-ordination 61 1,634,286 1,281,276 B. Com, Executive Masters 40 Indian Airlines September, 1978 Ajit In Intl. Trade 59 Maru Niyant Vice President - Finance 46 6,284,344 4,104,164 B.Com, A.C.A 18 Tata Tele Services, July, 1999 60 Matcheswala General Manager - Taj 49 3,751,816 2,443,916 Dip. In. Hotel Management, 28 First Employment September, 1981 Ashrafi (Ms.) Wellington Mews, Mumbai Post Graduate Dip. In Hotel Admin. & Management, MBA from Les Roches Hotelschool, Switzerland 61 *Mehendale Director - Mergers & 35 2,790,034 1,844,420 B Com., ACA 15 Edelweiss Capital July, 2008 Managesh Acquisition Madhav 62 Merchant General Manager - 50 2,515,688 1,729,778 B. Com 31 Sheraton, Deira July, 1999 Darius The Gateway Hotel, Ahmedabad 63 Misra A.K Sr. Vice President - Sales & 52 11,219,145 7,099,915 B.E.(Hons.)-Civil, M.B.A. 29 Tata Administrative June, 1980 Marketing Services 64 Misra Deepa Vice President - 51 8,371,572 5,406,212 B.A, M.A (English.), 25 Fashion Magazine July, 1983 H (Ms.) Marketing Dip. In Journalism 65 *Miyashita Japanese Chef - 25 2,263,164 1,491,110 March, 2007 Takahito The Taj Mahal Palace & Tower, Mumbai 66 Mohankumar Chief Operating Officer - 57 4,394,288 2,853,738 Dip. In. H.M.C.T 35 First Employment June, 1974 P K Gateway Hotels 67 Momen Faisal Chief Operating Officer - 40 4,325,913 2,772,123 B.B.A (Wharton School of 17 White Cliff Tea (P) August, 2002 Taj Trade & Transport Business) LTD Company Limited & Universtity of Pennsylvania Inditravel Private Limited

17 The Indian Hotels Company Limited

Sr. Name of Designation Age as on "Gross“ Net Qualification Experience Last Commencement No. Employee 31/3/2009 Remuneration" Remuneration (No. of Years) Employment of Employment As on 31/03/09 Held 68 Mukerji Abhijit Executive Director - 46 8,910,599 5,596,947 Dip. In Hotel. Management, 24 First Employment December, 1984 Hotel Operations MBA - Cornell -Essec, CHA, TGMP (Harvard University) 69 Mukherjee Diretor - Projects 44 4,899,217 3,226,197 B.Tech (Hons) 21 Bovis Land Lease February, 2004 Arindam 70 Mukherjee Director of Operations 51 2,661,071 1,757,861 Dip. In. Hotel Management, 32 Carlsons Hospitality May, 1998 Sandip (Luxury India) B.A, Worldwide Masters Degree in Tourism PT Tri Sagar Sarana Mgmt (IGNOU) 71 Nagpal Rajesh Advisor - Project 41 3,780,000 2,603,660 MBA (London Business School) 16 Alliance Capital Mgt., August, 1998 Bachelor of Science in Business Mumbai Administration (Finance/Intl. Bsuiness) 72 Nagpal Sudhir Advisor - IT 50 3,780,000 2,603,660 MBA (Indiana University of 26 MPOWER Information August, 1998 Pennsylvania, U.S.A) Systems (P) Ltd. 73 N Prakash Director - Operations, OHL 46 3,775,440 2,483,017 B.Com 24 Food Specilaities Ltd., September, 1988 & General Manager - Taj Coromandel, Chennai 74 Narang Chief Operating Officer - 51 7,917,371 5,035,031 B.A. (Eco), M.B.A 30 Spica Group of October, 1982 Jyoti (Ms.) Luxury India Indusrties 75 *Noronha Joyce Staff Officer 58 2,429,631 1,851,781 Class XI, Secretarial Course - 40 Stock Exchange September, 1997 Barbara (Ms.) Pitman 76 Natarajan K Corporate Chef - 53 5,796,027 3,787,697 B.Sc. D.H.M.C.T 28 First Employment September, 1981 Gateway Hotels 77 Newar Rajeev Director - Finance 41 3,859,156 2,612,346 B.Com (Hons), A.C.A, A.C.S 17 Birla Corporation Ltd June, 2000 (Luxury India) 78 Oberoi H.K. Corporate Chef - 55 9,362,145 6,053,425 Dip. in H.M.C.T. 34 First Employment July, 1974 Luxury Hotels Division & Executive Chef The Taj Mahal Palace & Tower, Mumbai 79 Panchanatheeswaran Director - Total Productive 52 2,977,821 1,954,151 B.E(Mechanical) 29 Sundram Fasteners May, 2000 B Maintenance Ltd., 80 *Pandey General Manager - 38 2,335,820 1,569,101 B.Sc.(Engg), M.B.A 11 Accenture January, 2006 Ashutosh Development 81 Parekh Director - Finance 47 3,844,288 2,473,228 B.Com, A.C.A, A.C.S 24 Tata Chemicals Ltd., March, 2001 Rajeshkumar H International Companies 82 Parvatha General Manager - Sales, 40 2,519,816 1,718,816 Bachelors In Hotel 16 ITC Hotels Limited March, 2000 Kiran V. Andhra Pradesh Management, MBA 83 Parvathy Director - Coordination 55 3,652,170 2,506,740 B.Sc. (Home Science) 35 First Employment July, 1974 M M (Ms) (Operations) Premium Hotels 84 Pasupathy General Manager - 56 3,091,604 2,122,224 Dip. In Hotel Management 35 Hotel Ramada November, 1980 Rajamani The Gateway Hotel, Coonoor International & The Gateway Hotel, Ooty Doha - Qatar 85 Patel Bina Vice President - Spa 38 3,645,200 2,557,610 B.A (Hons) in Corporate Law 18 Gurudev Siddha August, 2003 S (Ms) Operations & Development Peeth, Ganeshpuri 86 Patel Gev Nari Vice President - Sales & 48 5,001,341 3,287,201 B.Sc. 26 Eureka Forbes Ltd., March, 1984 Marketing (Luxury International) 87 *Patel Samir Vice President - Spa 45 5,839,584 4,071,724 B.E (Production) 22 Gurudev Siddha September, 2003 Operations & Development Peeth, Ganeshpuri 88 Pavithran Ajit General Manager - Vivanta 35 2,775,376 1,912,006 Dip. In. Hotel Management, 15 The Oberoi, August, 2007 by Taj, Bangalore Bangalore 89 Pokhariyal Area Director - Goa & 41 3,661,247 2,389,797 Dip. In. Hotel Management, 17 Park Hotel, June, 1993 Gaurav General Manager - New Delhi Taj Exotica, Goa 90 Poupon Yannick Chief Operating Officer - 60 23,012,206 15,303,936 Graduate Hotel Management 37 Intercontinental September, 2001 Luxury International School Strasbourg, France Group 91 Rao Pradip Vice President - Materials 57 4,484,082 2,898,272 B.Sc., A.C.A 30 ITC Hotels Ltd., September, 1999 92 *Late Rao Executive Sous Chef - - 2,127,553 1,529,690 Dip. In. Hotel Management, 28 First Employment October, 1980 Vijay Banja Taj Mahal Palace & Tower, Mumbai 93 Rathore Mahavir Head - Security Taj Group 51 3,373,064 2,177,654 B.A, M.A, 26 First Employment October, 1982 Singh

18 Annual Report 2008-2009

Sr. Name of Designation Age as on "Gross“ Net Qualification Experience Last Commencement No. Employee 31/3/2009 Remuneration" Remuneration (No. of Years) Employment of Employment As on 31/03/09 Held 94 Rebello Jessica Executive Assistant to 41 2,444,684 1,689,968 B.A 24 Dow Chemical August, 2003 (Ms.) Managing Director International Pvt. Ltd., Mumbai 95 Reshamwala General Manager - Taxation 42 2,520,735 1,804,325 B. Com., M.Com., & ACA 17 S R Batliboi & Co. January, 1999 Kunal 96 Roy Sarita Director of Public Relations 41 2,542,702 1,681,622 BA (Economics & 22 HRH Group of February, 2003 Hegde (Ms.) Psychology) Hotels, Rajasthan Diploma in Marketing Mngt. and Advertising Post Graduate Diploma in Public Relations Post Graduate Diploma in Computer Science 97 Saher Pervez Senior Operator 60 15,297,921 10,077,066 S S C 35 First Employment January, 1974 Pestonji 98 Sampat Pankaj General Manager - 36 2,536,751 1,717,221 Dip. In. Hotel Management 16 First Employment June, 1993 Taj President, Mumbai 99 Sanker Vice President - 49 5,393,800 3,443,940 B.Sc., L.L.M, A.C.S 27 Amway India March, 2008 Parameswaran Legal & Company Secretary Associate Member of The Enterprises Institute of Chartered Secretaries & Administration (London) 100 *Schmidt Justin Corporate Fitness Consultant 29 719,358 595,138 B A in Philosophy from 7 January, 2009 University of San Francisco Certified Fitness Trainer, International Sports Science Association USA Certified Nutritional Micro Biologist, from PH Miracle Center & Doctor Robert Young. USA 101 Seeni M Director - Projects (South) 54 3,130,340 2,078,970 Dip. In Civil Engineering 34 Southern December, 1986 Petrochemical Industries Corporate Limited, Madras 102 Sengupta P Director - Finance 43 3,717,289 2,495,389 B.Sc.(Hons), A.C.A 17 Sarova Group of August, 2003 (Premium Hotels) Hotels 103 Sethi Gautam Financial Controller - 41 2,699,658 1,867,868 B.Com., A.C.A 14 Unipatch Rubber Ltd., December, 1995 The Taj Mahal Palace & Tower, Mumbai 104 Sharma Rajni General Manager - 58 2,578,139 1,788,449 Dip. In Hotel Management 35 First Employment July, 1974 Mohan Deccan Odyssey 105 Sharma General Manager - 51 2,496,706 1,659,816 Dip In Cookery, Dip In Bakery 32 Mansingh Hotel, October, 1979 Sanjeev The Gateway Hotel, Agra & Confectionery Jaipur 106 Shinde Hemant Manager - Human Resources 51 2,570,398 1,709,588 B. Com., LLB 26 Blue Diamond, Pune November, 1999 Arjoonrao Taj Lands End, Mumbai 107 Shukla Prakash Senior Vice President - 46 16,707,273 11,136,953 Graduate from Rutgers 25 IBM August, 1999 Technology University with Degree in & Chief Information Electrical Engineering & Officer English Master Degree in Computer Science from New York Polytechnic University AMP from Harvard Universty (U.S.A) 108 Shyam Aekta General Manager – Online 33 3,429,667 2,256,967 Masters of International 9 Tata Administrative June, 2000 (Ms.) Marketing & Technology Business, BA (Hons) Eco. Services MBA (INSEAD) 109 Siganporia Director - Information Systems 44 3,909,893 2,538,143 B.Sc., Dip. In Computer 22 Everest Marketing Ltd. December, 1990 Khushru Maintenance & Architecture 110 Singh Digvijay General Manager - 43 3,411,516 2,314,427 Dip. in H.M.C.T. 23 The Bristol Hotel, April, 2001 Taj Mahal Hotel, New Delhi DLF, Gurgaon 111 Singh Sarabjeet Director (Operations) Taj 44 4,151,725 2,648,195 B.A, Dip. In Hotel 21 First Employment September, 1988 GVK Hotels & Resorts Ltd. & Management General Manager - Taj Krishna, Hyderabad 112 Singh Taljinder General Manager - 40 3,499,991 2,324,561 B.Com (Hons) 19 First Employment September, 1990 Taj Palace Hotel, New Delhi

19 The Indian Hotels Company Limited

Sr. Name of Designation Age as on "Gross“ Net Qualification Experience Last Commencement No. Employee 31/3/2009 Remuneration" Remuneration (No. of Years) Employment of Employment As on 31/03/09 Held 113 Singh Veer Chief Operating Officer - 55 7,970,916 5,216,786 Dip. In Hotel Management, 33 First Employment December, 1976 Vijay Premium Hotels IHM PUSA 114 Sood Sanjay General Manager - 45 2,998,411 1,997,021 Dip. In Hotel Management 23 First Employment August, 1986 Taj Mount Road, Chennai 115 Srinivasan K S Vice President - 50 6,253,398 4,168,958 B.Com.(Hons) L.L.B, 25 Hyderabad Allwyn April, 1989 Human Resources PGDPM CHRE Ltd, 116 Suma Director - Business 40 4,190,393 2,865,823 B.E - Hons.(Electrical), 19 Portman Overseas October, 2002 Venkatesh (Ms.) Development MMS (Marketing & Finance) 117 T Murugan General Manager - Sales, 41 2,875,308 1,952,708 B.Sc., M.A 18 United Liner Agencies February, 1992 Rajan Premium Hotels (Chennai) of India Pvt. Ltd. 118 Takulia Ramesh Director - Learning & 57 3,731,369 2,434,439 Dip. In H.M.CT, Salzburg, 38 Hotel Jaipur Ashoka May, 1992 Development (Luxury India) Austria 119 Taneja Sunil Director - Marketing & 49 3,519,119 2,291,749 B.Com, Dip In Hotel 29 First Employment September, 1980 Business Development Management, MHCIMA (TSACL) 120 Tangirala Director - Operations - 37 2,961,819 1,952,859 B.Arch, PGDM 12 Tata Administrative June, 1997 Mridula (Ms.) Taj Wilderness Lodge (IIM Lucknow) Services 121 Umashankar General Manager - 46 3,624,250 2,438,190 B.Sc., Dip. In. Hotel 23 Radisson Hotel, June, 2001 Sanjay Blue Hotel Sydney Management Chennai 122 V Mohan Area Financial Controller - 49 2,570,625 1,740,095 B. Com (Hons) M.Com 28 M/s. Print House October, 1982 Taj Palace Hotel, New Delhi 123 Valson Vinod General Manager - The 51 2,423,351 1,688,591 Dip. In Hotel Management 29 Sindoori Hotel, October, 1996 Gateway Hotel, Bangalore Madras 124 Vesavevala Vice President - 44 4,824,613 3,166,472 B.Com., M.M.S 20 Tata Administrative June, 1989 Rustom Learning & Development Services 125 Vaidya General Manager - 49 3,136,700 2,092,730 B.A, M.A, Dip. In Industrial 24 First Employment February, 1985 Vidyadhar Human Resources Relations & Personnel The Taj Mahal Palace & Management Tower, Mumbai Dip. In Marketing & Sales Management 126 Vohra Divyesh General Manager - Materials 55 2,652,058 1,748,488 B.A 33 V R Doshi & Co. November, 1976 127 Yousuff Saleem General Manager - 45 2,723,315 1,777,605 B.A 22 First Employment May, 1986 Taj Residency, Bangalore 128 Zakaria Editor & Sr. Vice President - 72 6,183,738 4,198,658 Graduated from Institute of 50 October, 2001 Fatma (Ms) Taj Magazine Social Science, Nirmala Niketan 129 Zaveri Sumit General Manager - Finance 35 2,834,530 1,873,900 B. Com, ACA, ICWA 11 A F Ferguson & Co., February, 2001 Chartered Accountants 130 Zeller Franz Senior Vice President & 62 23,397,183 15,552,963 Certified Food & Beverage 45 Millennium Hotels & November, 2003 Chief Operating Officer - Executive from Resorts Taj Luxury Hotels - Institute of American Hotel & International Motel Association Course in London Business School, London, UK 131 Zorniger Deputy General Manager - 45 7,963,222 5,347,526 German Professional Hotel & 25 The Mark Hotel, March, 2003 Birgit (Ms) The Taj Mahal Palace & Restaurant Diploma (Hons) New York Tower, Mumbai from Hotel School Villingen-Schwenningen PDP Program from Cornell University

Note : 1. Net Remuneration is arrived at by deducting from the remuneration received, Income Tax, Company's Contribution to provident fund and superannuation fund. 2. All employees are entitled to Gratuity, Medical Benefits & Leave Travel Assistance as per rules of the Company. 3. All the employees have Adequate experience to discharge the responsibilities assigned to them. 4. The nature of employment in all cases is contractual. 5. No . Employees is related to any director of the company. 6. None of the above employees hold more then 2% of paid up capital of the company. *7. Employed only for part of the year.

On behalf of the Board of Directors Ratan N. Tata Mumbai, June 12, 2009 Chairman

20 Annual Report 2008-2009

MANAGEMENT DISCUSSION AND ANALYSIS In line with the international practice, The Indian Hotels Company Limited (IHCL) has been reporting consolidated results taking into account the results of its subsidiaries, joint ventures and associates (together referred to as “the Group”). This discussion, therefore, covers the financial results and other developments during April, 2008 to March, 2009 in respect of the Group. Some statements in this discussion describing the projections, estimates, expectations or outlook may be forward looking. Actual results may, however, differ materially from those stated on account of various factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which your Company conducts its business, exchange rates and interest rates fluctuations, impact of competition, demand and supply constraints. INDUSTRY STRUCTURE AND DEVELOPMENTS Global and Indian Economy Fiscal 2008-09 started off on a note that the economy was decidedly on a higher growth path with the macro-economic fundamentals inspiring confidence and a general optimism about the medium to long term prospects of the economy. The economy was expected to slowdown marginally from the three years of 9 per cent plus growth in real Gross Domestic Product (GDP), reflecting a cyclical downturn in the global economy and expectations were that growth would be 7.5 to 8 per cent. High oil prices and domestic inflation were definite areas of concern, as was the possibility of a worsening of the international financial crisis which had surfaced in 2008. As it happened, the global situation deteriorated massively after mid September 2008 following the collapse of several leading financial institutions in the US . There has been a massive choking of credit since then and a global crash in stock markets. The slowdown that was expected in the global economy became much worse with the US, Europe and Japan moving into recession. A crisis of this magnitude in industrialized countries is bound to have an impact around the world, and it did. Most emerging market countries have slowed down significantly and India has also been affected. While the slowdown in economy was primarily driven by the knock on effects of the global economic crisis, it also reflected to some extent the slowdown associated with cyclical factors. Industrial growth experienced a significant downturn and the loss of growth momentum was evident in all categories, viz., the basic, capital, intermediate and consumer goods . In sum, the Indian economy experienced some loss of growth momentum with major drivers of growth witnessing moderation. In particular, the broad- based industrial slowdown, dampened services sector growth, deceleration in private consumption and investment demand along with declining export demand are some of the major concerns facing the Indian economy in the wake of the global recession at the present juncture. The fiscal stimulus packages of the Government and the monetary easing of the Reserve Bank will, however, arrest the moderation in growth and revive consumption and investment demand, though with some lag, in the months ahead. Furthermore, prospects of the agricultural sector also remain bright, and this will continue to support the rural demand. Notwithstanding widened current account deficit in 2008-09, the balance of payments position remains sustainable in the context of the present level of foreign exchange reserves and external debt. Finally, in the wake of expected improvement in agricultural production as well as low international commodity prices, inflationary pressures are also anticipated to remain at a low level through the greater part of the 2009-10. An Overview of the Global Tourism Industry The year 2008-09 was a difficult year for the tourism and hospitality industry. After having four years of robust growth, global tourism slowed down during the global economic downturn. The global economic downturn which started in early 2008 impacted the Company’s business and performance, as also the hospitality industry and will likely continue to impact the sector in the near term. The terrorist attack on the Company’s iconic property Taj Mahal Palace & Tower and the city of Mumbai in November 2008 further impacted the hospitality industry in the country. Travel & Tourism growth in 2008 slowed down to just 1% and is likely to contract further by 3.3% in 2009 only to expand by 0.3% in 2010. However looking beyond the current crisis, Travel & Tourism is expected to resume its leading, dynamic role in global growth. World travel & tourism is expected to contribute nearly US$5,474 billion to global GDP in 2009, rising to

21 The Indian Hotels Company Limited

approximately US$10,478 billion over the next ten years, according to the latest tourism satellite accounting (TSA) research from the World Travel & Tourism Council (WTTC). In terms of regional performance, Africa, Asia Pacific and the Middle East are experiencing higher growth rates than the world average, in terms of total Travel & Tourism Demand while the matured markets – most notably the Americas and Europe – are falling below the world average. Indian Tourism Industry The global recessionary trend has had its impact on Indian Tourism and Hospitality industry . There was a decline in the foreign tourist arrivals to India from 5.27 million in FY 2007/08 to 5.13 million in FY 2008/09 a decrease of 3%. The foreign tourist arrival in March 2009 was 4.72 lakh as compared to 5.41 lakh during March 2008, a decrease of 12.8%. Consequently foreign exchange earning during March 2009 was USD 867 million as compared to USD 1248 million in March 2008. Despite short and medium term setbacks, tourism revenues are expected to rise by 42% from 2007 to 2017, according to a report of Indian Brand Equity Foundation on Tourism and Hospitality. The slowing tourism industry has had a cascading effect on the hospitality sector with a decrease in the occupancy ratio and average room rates. The Government of India has taken a number of initiatives to support the Tourism Industry some of which are as under:  Launch of Incredible India campaign to promote tourism both in domestic and international markets.  Recognition of spare rooms available with various house owners by classifying these facilities as “Incredible India Bed and Break fast Establishments”’, under ‘Gold’ or ‘Silver’ category.  A new category of visa, “Medical Visa” (‘M’-Visa), has been introduced which can be given for specific purpose to foreign tourists coming into India. Foreign medical tourists will be offered one additional treatment for free.  Guidelines have been formulated by Department of AYUSH prescribing minimum requirements for Ayurveda and Panchkarma Centres.  A number of reasonably priced wellness centres and health spas are coming up in several destinations.  Ministry of tourism has tied up with United Nations Development Programme (UNDP) to promote rural tourism.  The Government is offering free air ticket for companion, travel to additional places and extended stay at hotels.

India has also received international accolades as a leading global tourist destination.  India has been elected to head the UN World Tourism Organisation (UNWTO), the highest policy making world tourism body represented by 150 countries.  India is ranked 7th in terms of number of World Heritage cultural sites, according to a UNESCO report 2008.  The world’s leading travel and tourism journal, “Conde Nast Traveller”, ranked India as the numero uno travel destination in the world.  The Association of British Travel Agents (ABTA) has ranked India as No.1 amongst the top 50 places.  India is ranked 1st with regard to tourism fair attendance.  The “Incredible India” campaign has been ranked as the Highest Recall Advertisement worldwide by “Travel and Leisure”.  India was adjudged Asia’s leading destination at the regional World Travel Awards (WTA).  India’s Taj Mahal continues to figure in the Seven Wonders of the World. Every year, more than 3 million tourist visit Taj Mahal in Agra. Despite economic slowdown, your Company would aggressively pursue its strategy both in the domestic and international market at different price points from the smart basic hotels to the luxury segment. Against this backdrop your Company expects to achieve sustainable and profitable growth.

22 Annual Report 2008-2009

The Taj Advantage Your Company operates its hotels under the “Taj Hotels Resorts and Palaces” umbrella brand and is the largest hotel chain in South Asia. It comprises of 99 hotels with 11754 rooms and over 281 Food & Beverage outlets. The total numbers of hotels which are owned or managed by the Company have grown to 99 as against 88 in 2007/08. Internationally, the Company has hotels, among other locations, at USA, Australia, Maldives, Malaysia, UK, Sri Lanka, Africa and the Middle East. Your Company owns either directly or through its associates and partners, properties in many key business and leisure destinations and has built for itself several sources of competitive advantage. Among the key sources of competitive advantage that your Company enjoys are branding, infrastructure and best in class services. The “Taj” brand has been built over the years by consciously investing into brand building, establishing high brand standards and adhering to the same with the objective of providing an exclusive TAJ experience to the guests. The brand equity is further strengthened by the ownership and backing of Tatas, a Group with varied business interest operating in several countries and enjoying high credibility. The Company has a good infrastructure by way of properties at prime location in India. It has the largest portfolio of rare and authentic Original Palaces and is the largest hotel chain in South Asia. The Sales and Marketing network, the network of Partners and Associates, Reservation network and the Information Technology Services add to a robust and strong infrastructure. The Company has also been a pioneer in the Food & Beverage experience in India. Opportunities Your Company is poised strategically to take advantage of:  Rapidly growing market in India, South Asia and key gateway cities in source-market destinations.  Expansion in international destinations with top-of-the-line luxury and leisure properties.  Meeting growing demand in the budget and mid-market segments.  Extending the product portfolio into related offerings viz. luxury residences, wildlife lodges and spas. Key initiatives taken by your Company during the year are discussed in a separate section. Threats The threats identified by your Company are related mainly to the markets in which your Company operates and general factors related to the tourism industry. Significant among these are:  General downturn in global & domestic economies with consequent downturn in travel & tourism.  Interest rates fluctuation could have adverse effect on performance.  Cheaper international airfares increasing the affordability of travel to international destinations, especially South East Asia, Europe and Australia.  Growing presence of international hospitality chains competing in the luxury and business segments to meet excess demand situation. These threats and your Company’s strategy to overcome them have been discussed in detail in the section on Risk and Concerns and the Risk Mitigation Initiatives. Update on Key Initiatives The Domestic market saw shrinkage especially in the second half in keeping with the global financial crisis. During the year under review, the Company has at strategic locations made commitments by way of acquiring properties on lease, entering into tie ups for equipping hotels being built by partners and executing a number of management and technical services contracts for managing, operating and rendering technical services. New Properties Opened During the year, the Company commenced operations at the “Vivanta by Taj”in Bangalore, Karnataka, a 199 room new

23 The Indian Hotels Company Limited

generation upper upscale hotel located in Whitefield, Bangalore. Designed by Warner Wong of Singapore, the hotel’s avant garde architecture reflects the spirit of the new positioning being aimed at by this new brand. Your company added another significant hotel to its TAJ Residency portfolio, with the opening of the TAJ Mount Road, Chennai a hotel under management contract, owned by its associate company, TAJ GVK Hotels and Resorts. The Company also opened Nadesar Palace (owned by its associate company, Benaras Hotels), in Varanasi, a small boutique luxury hotel and spa. The TAJ Residency, Trivandrum, an upper upscale hotel, in the center of the city of Trivandrum also opened during this period. The hotel is on management contract from Dodla International. The Company opened “Vivanta by TAJ”, a hotel under management contract in the heart of Panjim city in the month of May. Additionally, the company commenced operation of the top four floors (120 rooms) at TAJ Lands Ends in the month of June, 2009. Expansion In Domestic And International Markets Both the domestic and international markets saw a downward turn with a large number of developer and real estate companies cancelling or putting projects on hold. Internationally, regions which had seen aggressive growth, such as the Middle East and North Africa put several new projects on hold or cancelled them on account of the financial crisis. Your Company’s expansion strategy, however, remain robust compared to the market. During the year under review, the Company has been able to maintain a healthy pipeline of projects with most of them still going ahead at strategic locations. While some of the projects under management contracts have slowed down, none of the projects have been cancelled. During the year, your Company successfully signed a land deal with “Delhi Metro Rail Corporation” for setting up a 400 room 5-Star hotel in Dwarka, New Delhi. Your Company also signed a land lease with Assam Government to set up the first 5-Star Hotel of northeast in Guwahati. The plan is to set up a 125 key hotel, which can be expanded in a phased manner to 200 keys over time. The Company also entered into management contracts for several properties which will commence operation over the next few years both in the domestic and international markets. In the domestic sector, the Company has signed Management Contracts for hotels at Kakarduma, New Delhi for a 180 key “Vivanta by Taj” and a 300 key “Gateway Hotel”, a 150 key Gateway in both Navi Mumbai and Cochin. On the international front, Management Contracts are in place for hotels in Tangiers, Morroco and a breakthrough by signing our first hotel in China in the Temple of Heaven Complex in Beijing and in Hainan. All these new hotels will come up over the next few years. Update on Key ongoing Expansion Initiatives Your Company continued on its aggressive growth path through a mix of owned assets and management contracts through both its associate companies and new developer owners. Projects under way include a 330 room Vivanta hotel in Yeshwantapur, Bangalore. The property is designed to hold the largest conference facility among hotels in Bangalore and is expected to be completed around the middle of 2010. Falaknuma Palace is going through an extensive restoration process and is expected to open in early 2010. The Falaknuma Palace, a long awaited hotel opening, is expected to be yet another addition to the Luxury Collection of the TAJ. The Company has commenced work on its project in Dwarka and design planning for its project in Guwahati. The Company’s Associate Oriental Hotels Limited is also undertaking a 70 room expansion of its Fisherman’s Cove Hotel project. On the international front, work is progressing rapidly on the Company’s joint venture project in Cape Town and this hotel is expected to open towards the end of 2009. Your Company’s management contract projects in the Middle East are also progressing although there has been a slackening of pace on account of the financial crisis. Work is progressing on the Taj Exotica Resort and Spa in Dubai and the hotel is scheduled to open in the latter half of 2010. Design work is in progress on the TAJ Exotica Resort and Spa in Doha. The projects in Abu Dhabi and Ras Al Khaimah have slowed down and are expected to commence only after a year.

24 Annual Report 2008-2009

Management contracts have been a route used by your Company to grow the Vivanta and the Gateway brands. For the Vivanta brand, work is progressing rapidly on its projects in Gurgaon, Kakarduma, Bekal and Pondicherry. For the Gateway brands, projects in Pune, Kolkata, Chennai, Cochin, Bangalore are showing good progress and can be expected to open in the next couple of years. Product Upgradation Your Company continues with its ongoing program of investing in renovation and upgradation of its property. The Pierre, your company’s landmark property in New York, opened its doors to guests on 1st June, 2009 after a one and a half year renovation, costing US $ 100 million. The renovation, undertaken by international designers such as James Park Associates and Alexandra Champalimaud, has remained sensitive to the historic nature of the property and weaved in several facets of the renovation, touches of Indian elements so closely associated with the TAJ brand. The renovation has been well appreciated by the media, guests and the hotel will be launched formally in the month of September. During the last one year, your Company has also been undertaking an extensive makeover of the TAJ Coral Reef (an associate company hotel) and this hotel is expected to open its doors as the first international “Vivanta by TAJ” in the month of August. During the year, your Company launched several unique restaurants in the domestic & international hotels, notably “Varq” the exquisite Indian specialty restaurant, the second “Wasabi” at Taj Mahal, New Delhi, “Souk” at the Taj Bengal, Kolkata. During the same year the Company also launched the newly renovated 8 bay Grand Presidential Suite at Taj Palace, New Delhi which enhanced the hotels suite offerings and made it the preferred choice for ‘Heads of State’ visits. The Company also opened the newly renovated and expanded Grand Ballroom in the TAJ West End. Your Company also undertook several renovation projects in key properties of Associate companies as part of its ongoing programme of investing in renovation and product upgradation. This included the Taj President Hotel in Mumbai, the TAJ Coromandel in Chennai and the Blue Diamond in Pune. Under the ‘Ginger’ brand, your Company’s subsidiary, commenced operations of seven new hotels at Pant Nagar, New Delhi, Panaji (Goa), Ludhiana, Ahmedabad, Mangalore and Durg. Under this brand currently there are 19 operational hotels at Bangalore, Haridwar, Bhubaneshwar, Mysore, Trivandrum, Pune, Durgapur, Nashik, Agartala, Pondicherry, Baroda, Pantnagar, New Delhi, Panaji (Goa), Ludhiana, Ahmedabad, Mangalore, Guwahati & Durg. In addition, several projects are at various stages of construction at , Wakad-Pune, Chennai and Surat. In addition, to expand the market of “Ginger Hotels”, the Company has signed up management contracts for hotels in Manesar and Agra in addition to the earlier signed locations like Jaipur, Katra, Lucknow and Tirupur. Wildlife Lodges Your Company’s Joint Venture operates four lodges viz. Mahua Kothi at Bandhavgarh, Baghvan Pench, Pasangarh at Panna and Banjar Tola at Kanha thereby completing the first safari circuit in India. Spas The philosophy of our spas is rooted inherently in India’s ancient approach to wellness. The ethos of our carefully recreated treatments is drawn on the rich and ancient wellness heritage of India; the fabled lifestyle and culture of Indian royalty and the healing therapies that embrace Indian spirituality. Taj Spa is an eco-sensitive brand hence all spa products are natural and contain Indian herbs, pure essential oils, lipids, clays, mud, salts and flower waters all of a botanical source. Taj Spa uses organic linen and eco-friendly toxin-free pottery. In the year 2008– 09, we launched a brand new concept in spa experiences, the first of its kind in the world – the Jiva Spa boat at the Taj Lake Palace, Udaipur in October 2008. This unique spa experience, recreates the splendour of the Lake Palace, the royal traditions of the House of Mewar and the rejuvenating experiences of the Jiva Spa.

25 The Indian Hotels Company Limited

Inspired by the style of the old palaces of Udaipur, the Jiva Spa Boat evokes the stately air of past royal cruises aboard the House of Mewar’s ceremonial Gangaur barge. The design of the boat fuses historical and regal references with contemporary design, featuring a spacious, air conditioned double spa suite, a relaxation lounge, steam bath and shower. The suite opens out onto a large sky deck, which offers a soak bath, traditional lounging bed and dining area with views out to the Aravalli mountains – the oldest in the world. The Spa Boat has received several international accolades which include: 1) Taj Lake Palace and the new spa boat covered in Gallivanter Guide 2) The Spa Boat, has appeared in the Condenast Traveler, UK Hot List - May issue 3) The Spa Boat appeared on the first page of Condenast Travelers, USA – Hotlist – April issue In addition the first Business hotel spa was inaugurated at the Taj Residency Bangalore in August 2008. For the first time we introduced special corporate spa treatments for those business people who were short on time but needed some relaxation. Umaid Bhavan Palace, Jodhpur, became the member of the Leading Spas, USA which has helped them with greater visibility amongst the top customers of leading Hotels database. As on date, 16 Taj Spas are operational in Taj Hotels Resorts and Palaces in India and international locations. Guest Experience Your company continues to enhance the Guest Experience by improving service levels and product upgrades. To sustain the market leadership position, comprehensive studies and initiatives like the ‘Luxury Hotels Customer Engagement Journey’ were undertaken to build new Guest experiences and unique product and service offerings. These were then documented as Taj Luxury Experience Standards and extensive training was provided to our associates on these benchmark standards. During the year, your company completed exposure on the Tata Business Excellence Model for colleagues in the Luxury International hotels and engaged Tata Quality Management Services (TQMS) to facilitate the Juran Methodology for Continuous Improvement Projects. With comprehensive in-house training infrastructure aided by external trainers – both overseas and domestic - training has been a continuous process for all levels of associates in your company. We have augmented our skills inventory of Concierges (currently 25 members of the prestigious club - Clefs d’Or), Sommeliers, Bartenders and Butlers. A separate programme with sharper focus on Grand Palaces was established for creating a team of Palace Services professionals. The expertise of an international consultancy was sought for specialised programmes to energise teams and ignite passion, create awareness on the cultural dimensions for senior managers and enhance skills through programmes such as a Master Bartending course. Specialist inputs were also provided for Imaging and Grooming and Communications Enhancement programmes. E – Learning modules covering the Taj Leadership System, Taj Leadership Behaviour and Tata Code of Conduct helped associates learn in their own time and at their own pace. The associates in your company are provided continuous training inputs through Learning and Development Managers and specially designated ‘Certified Taj Departmental Trainers’. The learning experience is further enhanced using varied processes such as Cross Exposure Training, Systematic Induction Programme, Taj Luxury Experience Training and Safety Training with emphasis on Fire Safety and First Aid. The Customer Feedback System (CFS) is now stabilized in all our international hotels. During the year, the Guest Satisfaction levels showed appreciable improvement. The practice of mystery audits conducted by a world renowned independent audit firm continued and their bi-annual audits at our hotels enabled us to benchmark us against the best international luxury hotels and also to ensure adherence to the Taj Luxury Experience Standards. In order to maintain market leadership, continual upgrades of the product and introduction of new offerings at our hotels are essential. The new additions to the Food and Beverage offering this year were restaurants such as Masala Klub at The Taj

26 Annual Report 2008-2009

West End, Bangalore; Wasabi and Varq at The Taj Mahal Hotel, New Delhi and Souk at Taj Bengal, Kolkata. The Bombay Brasserie, our signature Indian restaurant in London was closed for renovation and reopened in December 2008 to fabulous reviews. To enhance the guest experience, we have added plunge pools in 21 Deluxe Lagoon Villas at The Taj Exotica Resort & Spa, Maldives and a new boardroom was launched at the Rambagh Palace Jaipur. The impressive $100 million renovation of the iconic Beaux Arts flagship property of Taj Hotels on Fifth Avenue overlooking Central Park will see the unveiling of new guestroom and bath interiors. The rooms at The Pierre in New York were not available during the year due to ongoing renovations; the hotel re-opened on 1st June, 2009. The inviting, residential-style décor will complement The Pierre’s classic heritage and retain the hotel’s understated elegance. High ceilings, abundant natural light, rich woods, custom furnishings and hand-carved carpets have enhanced the experience, designed with comfort and quiet luxury in mind. All guestrooms will provide an interactive 40-inch flat screen television, a Bose Wave Studio with iPod docking station, Wi-Fi, a working desk and large sound-insulated, energy efficient windows. New Turkish marble-clad bathrooms will feature glass-walled showers with oversized shower heads and steam-free mirrors. Expansion continued in the other hotel divisions as well. In the course of the year, the Taj Upper Upscale Brand added 4 new properties in 4 cities –Vivanta by Taj, Bangalore, Taj Mount Road at Chennai and Taj Residency at Trivandrum. The erstwhile Taj Coral Reef will reopen this summer as Vivanta by Taj – Coral Reef, Maldives. The Brand has an aggressive growth plan with 9 projects currently under various stages of implementation which will enhance its foot-print across 9 cities. All renovation plans and new builds are in keeping with the requirement of the new age guests incorporating their requirements iPod docking stations, rain showers, RFID locks, stylish chic interiors, private lounges, etc. In keeping with changing guest requirements and to arrive at relevant and differentiating brand standards, a workshop with a reputed international branding consultancy was conducted. Associates at various levels were involved in conceptualising the music philosophy, food philosophy, healthy options and 24 x 7 in-room dining menus amongst other initiatives. The wandering chef concept, global coffee experience, multi skilling and multi tasking of associates, new grooming standard and innovative training methods such as dance and drama were introduced to keep abreast of changing guest expectations. In accordance with your company’s brand architecture, The Gateway Hotels brand, comprising of Upscale, full service hotels and resorts was launched in September 2008. The Gateway Hotels brand is a pan-India network of hotels and resorts that offers business and leisure travelers a product that has been designed keeping the modern nomad in mind. The Gateway Hotel philosophy is to keep things simple. This is why Gateway hotels are divided into 7 simple zones - Stay, Hangout, Meet, Work, Workout, Unwind and Explore. Round-the-clock services and menus help our guests take advantage of what every day has to offer and the focus is always on creating sanctuaries that refresh, refuel and renew the modern day traveler. Healthy living, fitness and health consciousness are an increasingly important part of our guests’ daily lives. We help guests stay healthy through exercise and the traditional Indian practice of Yoga. Yoga mats and instruction videos are offered on The Gateway in-house TV channel and the branded fitness centres are available 24 x 7 for guests. Guests can plan their workout schedule taking advantage of the early opening hours for swimming pools. During the year, aptly named as the ‘Year of the Associate’, your company launched various initiatives to engage associates and improve their well being and satisfaction, morale and motivation. We recorded excellent Employee Satisfaction scores as reported via an annual survey conducted by a respected independent polling agency. The unfortunate events of 26th November 2008 at our flagship, the much loved “Taj of Apollo Bunder” serve as a reminder of the dedication to service of our associates and their heroic acts will go down in the annals of hospitality. Motivated by a clear and unyielding conviction to honour the courage of these brave men and women, we are resolute in our goal of restoring The Taj Mahal Palace & Tower to its original grandeur and will leave no stone unturned towards achieving this. The restoration work at the hotel is well underway, involving the best international designers and experts and we have no doubt that The Taj Mahal Palace & Tower, Mumbai will rise again and rightfully claim its place among the legendary hotels of the world.

27 The Indian Hotels Company Limited

As a commitment to the safety and security of our guests and employees, the process of independent external audits to evaluate the preparedness of our hotels has been further reinforced. Specialist agencies have been retained to evaluate the fire safety preparedness, food safety, general hygiene and cleanliness at our hotels. An international security consultancy has been appointed to provide expert inputs and training to our associates. EARTH (Environmental Awareness and Renewal at Taj Hotels) To demonstrate our commitment to the Environment, EARTH (Environmental Awareness and Renewal at Taj Hotels) vision was launched in August 2008 by the Managing Director. The EARTH program aims to put initiatives in place to reduce the impact of our hotels’ daily operations on the environment. This means that we progressively consume less and systematically switch to renewable energy sources and manage our dry and wet waste effectively. As part of the EARTH initiative we have undertaken certification by an external agency for all our hotels in a phased manner. The certification standard complies with the Mohonk Agreement which outlines the guidelines and principles and the standards provide a framework to measure, monitor and improve environmental and social performance. The external auditors adhere to the principles and requirements of ISO 17021:2006. Standards focus on performance outcomes in the following areas:  Greenhouse gas emissions  Energy efficiency, conservation and management  Management of freshwater resources  Ecosystem conservation and management  Management of social and cultural issues  Land use planning and management  Air quality protection and noise control  Waste water management  Solid waste management  Storage of environmentally harmful substances Since commencement in July 2008, 55 of our hotels have achieved certification in 3 phases and eight hotels have achieved SILVER certification in the first attempt itself. Your company aims to have all hotels certified by the end of 2009-10. Business Excellence 1) Brand Standards – IHCL continues to take significant steps to enhance guest experience by improving the product and service levels to be in line with the best-in-class hotels, in each of the segments in which it operates. Brand Experience standards have been redefined, infusing global trends and guest preferences. The Business Excellence Team partnered with Hotel Operations Teams to -  Ensure consistent brand standards based on international benchmarking  Monitor and measure customer satisfaction to bring about sharper customer focus and implement service improvements.  Explore the latest trends hospitality for absorption / implementation into the group.  Set standards and audit products created by new projects or renovation  Update operating manuals for all brands, products and services. In your company’s quest to benchmark against the world’s finest hotels, it partnered with an internationally acknowledged expert on hotel experiences to refine the Taj Experience Standards, thus enabling it to establish a unique identity in its endeavor to clearly differentiate the Taj brand. World-class trainers trained associates in competencies such as personal butler services, concierge, sommeliers and bartenders.

28 Annual Report 2008-2009

Taj fosters and encourages associate engagement in improving processes and procedures to ensure guest delight. This is reflected in the Process Improvement Teams deployed across the organization. These teams meet, analyze and implement improvements in operational processes that to impact guest satisfaction positively. 2) Mystery Shopper Audits – Mystery Shopper Audits continued to help your company improve associate guest service awareness by the use of audits and detailed narratives. These audits provided an unbiased opinion of how your company is perceived by its guests and uniquely assesses each moment of truth. 3) Customer Feedback System (CFS) - The Customer Feedback System was further refined to capture guest feedback from multiple channels. An advanced CFS data warehouse now provides sharper and more insightful data to all user departments thus ensuring that guest feedback drives improvement. The system is functional at hotels across the organization, including international locations and sales & marketing offices. 4) Guest Satisfaction Tracking System (GSTS) – The online GSTS survey allows guests to record their feedback on the entire gamut of products and services being offered by Taj Hotels, at the convenience of the guests.GSTS includes extensive evaluation parameters pertaining to ALL aspects of a resident guest’s experience at the hotel. These evaluation parameters have been designed to translate guest expectations into tangible, measurable information which is used for decision making. The GSTS form was redesigned based on guest feedback to capture feedback on all touch points during a guest’s stay. This year, your company introduced feedback mechanisms to capture guest feedback from non-resident guests using the restaurants. 5) Tata Business Excellence Model: Your Company applied as one organization for the Tata Business Excellence Model (TBEM) Assessment. The feedback from past assessments has gone a long way in helping your company improve its processes to deliver a robust business performance, building a high sense of associate commitment in a high performance work culture. 6) Accreditation Processes - ISO 22000 Your company has taken the lead in the implementation of ISO 22000 (a food safety management system). This is an upgrade over the earlier Hazard Analysis and Critical Control Point (HACCP) certifications. Several hotels were certified last year. ISO 14000 / Environment Management System The ISO has developed international environmental management standards which are known as the ISO 14000. ISO 14000 provides a framework for the development of an environmental management system and the supporting audit programme. Your company is conscious of the role it plays in impacting the environment and has hence commenced implementation of ISO 14000. ISO 18001 / Occupational Health and Safety Assessment Series for Health and Safety Management Systems Your company has adopted a systematic certification approach to manage Health and Safety for all associates and guests. OHSAS 18001 is the assessment specification used by Taj which promotes a safe and healthy working environment. Sales & Marketing: Key Initiatives Launch of Gateway Hotel brand :”The Gateway Hotel” was launched on 11th September 2008 with a press conference in Mumbai. A national advertising campaign was launched on 12th September, 2008 with full page advertisement in Times of India and all key editions of Economic times. The campaign also has an outdoor element, with hoardings and airport translites in Mumbai, Delhi, Chennai and Bangalore. The campaign had received very good response from the market and

29 The Indian Hotels Company Limited

was able to generate a buzz amongst all key stakeholders and received extensive coverage in media. All key messaging was covered – brand proposition, footprint and growth strategy. The Gateway Hotel is a pan-India network of hotels and resorts that offers business and leisure travelers a hotel designed, keeping the modern nomad in mind. At the Gateway Hotel, we believe in keeping things simple and that is why, these hotels are divided into 7 simple zones- Stay, Hangout, Meet, Work, Workout, Unwind and Explore. These hotels offer round the clock services or menus that offer a mix of options where the guest can either choose to indulge or to eat healthy. The “warm welcome “makes the guests feel at home, away from home and the crisp and courteous service empowers them to get more done with greater effectiveness and control. The service provided is effortless, simple, never overwhelming, and always warm. The focus of these hotels is to create sanctuaries that refresh, refuel and renew the modern day traveler. The Gateway Hotel today is in 19 cities with 12 hotels under development.

The brand now has its own website – www.thegatewayhotel.com. The website was designed by Razor fish, keeping in mind the brand values of contemporary and crisp. The website is very user friendly with reservation tool on very page to enhance convenience. The visual experience is much stronger with images on every page and has a new contemporary lay out which allows users to pan between images and information. While it is a stand alone website, Gateway and Taj website are interlinked at appropriate sections. Re Opening of The Taj Mahal Tower, Mumbai : Post 26/11, a crisis management cell was put in place. Some key activities undertaken by sales and marketing involved managing and communicating with customers, information dissemination, managing the environment and ensuring business continuity. To put all this into effect, a communication centre was set up which was manned on a 24/7 basis during this period. Additionally, the Taj micro site was set up within hours of the crisis taking place to give regular updates and to provide necessary information to customers during and post the crisis. Immediately after the crisis, we released the “I Will Prevail” ad to reassure our guest and to emphasize on business continuity. The ad was released in key domestic and international markets. It received an overwhelmingly response from people across the world and also from our media partners, who supported us by giving heavily discounted and in many cases, complimentary advertising space. Post the crisis, a “Guest Outreach Program” was put into place to establish contact with all the guests who were staying at the hotel during those days to reach out and empathize with them.

From 21st December, 2008 onwards, advertisements were released in the domestic market, announcing the reopening of the Tower wing and also welcoming the guest back home. The Tower Wing reopened on 21st December, 2008 with most of the F & B outlets. The event started with a multi religion prayer service followed by felicitation of all the hotel staff who were on duty that fateful night. Key clients and stakeholders expressed their support and over 1000 guests graced this occasion. Marketing initiatives for re opening the hotel included re-opening advertisements in key domestic and international publications, press release and E Mailers to our 2,00,000 strong databases. Integrated marketing initiatives to build business are ongoing, like F& B promotions, Stay Over Packages, Electronic marketing and PR initiatives.  Re Launch of Bombay Brasserie: Bombay Brasserie, reopened on 5th January 2009 after an extensive refurbishment programme. The restaurant has a completely new interior that retains the charm of the original whilst still being chic and contemporary. To celebrate the occasion, The Bombay Brasserie joined forces with Tatler magazine to co-host a star-studded party. The restaurant has been receiving excellent reviews and the same have been showcased on the new website. All marketing collaterals including the logo, signage, menu cards and other collaterals, was revamped, keeping the new theme and décor of the restaurant. A new micro site – www.bombaybrassierielondon.com has also been launched with all information on the restaurant.

 Launch of 2009 as “Visit India”: this is an initiative by the Ministry of tourism to attract inbound tourists from various markets across the globe. MOT has partnered with major hotel chains in India, major airlines and IATO, to develop a special “Visit India “offer and marketing campaign. The Taj Group has taken a lead role in creating this consumer offer which involves one complimentary service to the guest during his stay in India (which includes hotel, airline and tour component), on the purchase of one trip to India during the period April 1, 2009 to Dec 31, 2009. The Visit India campaign also includes pro active sourcing of media press trips, travel agents educational tours and road shows across various regions of the world, targeting travel trade and consumers.

30 Annual Report 2008-2009

 Taj Hotels Resorts and Palaces have signed on as the “hero partner”: or First amongst Equals partner for the Platinum Charge card in India with exclusive lodging offers and Taj Epicure Plus offered as an opt in card. We have leveraged our relationship to get a preferential status amongst all the Platinum charge card partners. This partnership entails embedded “lodging partnership” and an opt in offer for the Taj Epicure Plus and privileges on other select services like Khazana, Jiva Spas etc. Outlook On the backdrop of economic slowdown, the outlook for the hotel industry in the coming year does not look bright. But looking beyond the current crisis, Travel & Tourism is expected to resume its leading, dynamic role in global growth. India having a diverse cultural and geographical centre will continue to attract tourist from all over the world. With the recovery of global economy which is expected around end of this fiscal, the flow of tourist is expected to grow. Tourism revenues are expected to rise by 42% from 2007 to 2017, according to a report of Indian Brand Equity Foundation on Tourism and Hospitality. Certain major events like the Commonwealth Games planned in Delhi in 2010 would require addition to the inventory of rooms which would again help the hotel industry. Despite economic slowdown, your Company would aggressively pursue its strategy both in the domestic as well as the international market at different price points from the Smart Basic Hotels to the luxury segments. With its leadership position in most markets in the luxury and leisure segments, your Company expects to achieve sustainable and profitable growth in the coming years. Management discussion & Analysis of Operating Results and Financial Positions The Annual Report contains Financial Statements of your Company, both on a stand-alone and consolidated basis. An analysis of the financial affairs is discussed below under summarized headings. Results of Operations for the year ended March 31, 2009 Standalone Financial Results The following table sets forth financial information for the Company for the year ended March 31, 2009 Rs/Crores Particulars Year ended March 31, 2009 March 31, 2008 Income Sales & Other operating income 1706.52 1823.16 Expenditure Consumption of Raw Materials 114.54 128.24 Staff Costs 389.80 312.77 License Fees 97.51 104.73 Fuel, Power and Light 98.50 92.61 Depreciation 94.46 85.48 Other Expenditure 463.17 436.00 Less: Unallocated expenditure during construction period transferred to Fixed Assets (10.41) (11.42) Total Expenditure 1247.57 1148.41 Profit before Interest and Tax 458.95 674.75 Interest (net) 90.44 94.28 Profit before Tax and Exceptional Items 368.51 580.47 Exceptional Items 6.21 - Profit before Tax 362.30 580.47 Provision for tax (incl for earlier years) 128.27 203.01 Profit after Tax 234.03 377.46

31 The Indian Hotels Company Limited

Revenues: The summary of total income is provided in the table below: Rs/Crores Particulars Year Ended % Change March 31, 2009 March 31, 2008 Room Income 843.19 978.71 (14) Food & Beverage Income 508.99 585.32 (13) Other Operating Income 267.39 200.48 33 Non-Operating Income 86.95 58.65 48 Total Income 1706.52 1823.16 (6) Statistical Information Average Room Rate (Rupees) 10504 10674 (2) Occupancy (%) 66 73 - 7% pts  Room sales were mainly driven by Average Room Rate being maintained at previous year levels albit a drop in occupancy rates.  Reduction in Food & Beverages sales due to lower room occupancy.  Other operating income mainly includes income from management fees, insurance claim on account of business interruption and other operating income from hotels. Other Operating Income for the year includes Rs 85.54 crores for claim for Business Interruption filed on account of closure of Taj Mahal Palace & Tower following the terrorist attack on November 26, 2008.  Non-operating income was higher mainly due to Dividend Income earned on Surplus Rights Issue proceeds invested with various mutual funds. Operating expenses: The operating expenses increased by 8% from Rs. 1148.41 crores to Rs. 1247.57 crores. The increase was mainly on account of payroll to keep in line with competition and industry, wage settlement and reduction in interest rates leading to higher gratuity liabilities, increase in advertisement and general administration expenses. The increased advertisement expenses are an endeavour to make Taj a global brand and create awareness of its rapid international expansion. Depreciation for the year was higher due to addition of Vivanta, Bangalore and capital expenditure incurred to upgrade our properties. Profit before Interest and Tax (PBIT): The PBIT was Rs 458.95 as compared to Rs 674.75 crores reflecting a reduction by 32%. Interest costs: Interest cost at Rs. 90.44 crores for the year ended March 31, 2009 as compared to Rs. 94.28 crores in the previous year. In view of the increase in debt levels, gross interest cost increased to Rs 122.21 crores as compared to Rs 101.30 crores. Net interest costs were lower on account of interest earned on unutilized rights issue proceeds. Profit before Tax: Profit before tax, was Rs. 362.30 crores as compared to Rs. 580.47 crores achieved in the previous year.

32 Annual Report 2008-2009

Profit after Tax: Profit after tax for 2008/09 reduced to Rs. 234.03 crores from Rs. 377.46 crores. Cash Flow Data Rs/Crores Particulars Year ended March 31, 2009 March 31, 2008 Net Cash from operating activities 294.31 522.96 Net cash used for investing activities (1105.74) (541.57) Net cash from financing activities 1182.59 24.29 Net Increase in cash and cash equivalents 371.16 5.68 Operating Activities: Net cash from operating activities was lower at Rs 294.31 crores as compared to Rs 522.96 crores in the previous year, mainly due to lower operational profits and advance paid for purchase of Company to acquire a hotel property. Investing Activities: Net cash used for investing activities of Rs 1105.74 was mainly on account of amounts spent towards expansion plans, renovation of existing properties and replacement/up-gradation of existing fixed assets. The major spends were as follows:  Rs. 262.44 crores spent towards expansion plans, renovation of existing properties and replacement/up-gradation of existing fixed assets.  Rs 152.96 crores for purchase of investment.  Rs 482.72 crores invested in subsidiaries companies for renovation of The Pierre, New York and repayment of existing debt in various subsidiaries companies. Financing Activities The Company during the year raised Rs 843.87 crores by issue of equity and Rs 602.77 crores as 6% Secured Non- convertible debentures on rights issue basis. Further, the Company also raised Rs 300 crores by issue of 11.80% Secured Non-Convertible Debentures on a private placement basis. In view of the availability of the liquidity, the Company repaid all its short term debt existing as at March 31, 2008 and prepaid the secured term loan amounting to Rs 83.29 crores taken from Housing Development Finance Corporation Limited. Certain Financial Ratios for Standalone Financials: Rs/Crores Particulars Year ended March 31, 2009 March 31, 2008 Net Debt to Total Capital (total debt less cash and cash equivalents divided by the sum of net debt and net worth) 0.30 0.34 Net Debt to Equity (total debt less cash and cash equivalents divided by the net worth) 0.43 0.53

33 The Indian Hotels Company Limited

Consolidated Financial Results Your Company has Consolidated its Financial Statements with those of its Subsidiaries, Joint Ventures and Associates (together referred as ‘Group Companies’ or ‘Group’) in accordance with generally accepted accounting practices prevailing in India. The Consolidated statements include the financial position of Subsidiaries on line by line basis, Jointly Controlled entities on a line by line basis to the extent of proportionate holding and Associates by a one-line consolidation of share of profit after tax. The following table sets forth the Consolidated Financial results for the year ended March 31, 2009.

Particulars Year ended March 31, 2009 March 31, 2008 Income Sales & Other operating income 2686.13 2920.03 Other Income 70.50 92.59 Share of Profit in Associates 25.49 64.18 Total Income 2782.12 3076.80 Expenditure Consumption of Raw Materials 277.22 278.19 Staff Costs 855.16 764.44 License Fees 106.42 113.64 Fuel, Power and Light 167.74 154.68 Depreciation 188.53 167.62 Other Expenditure 790.38 735.95 Less: Unallocated expenditure during construction period transferred to Fixed Assets (22.55) (18.90) Total Expenditure 2362.90 2195.62 Profit before Interest and Tax 419.22 881.18 Interest (net) 230.46 202.32 Profit before Tax and Exceptional Items 188.76 678.86 Exceptional Items 4.76 54.16 Profit before Tax 184.00 624.70 Provision for tax (incl for earlier years) 155.77 246.98 Profit after Tax before minority interest 28.23 377.72 Minority Interest 15.77 22.74 Profit after Tax 12.46 354.98

Total Income: The Company, its subsidiaries and its Jointly Controlled Entities (the Group) are primarily engaged in the business of hoteliering with the exception of two Jointly Controlled Entities, which are engaged in the business of Air Catering. The other areas of business primarily include Ready to Eat / Ready to Cook foods business.

34 Annual Report 2008-2009

The segment wise break-up of revenue is as follows: Rs/Crores Particulars Year ended March 31, 2009 March 31, 2008 Hoteliering 2364.25 2641.15 Air Catering 281.65 298.87 Others 59.24 25.93 Unallocable Income 51.49 46.67 Share of Profit in Associates 25.49 64.18 Total Income 2782.12 3076.80  Hoteliering revenue is lower due to the slowdown of demand on account of current market condition, closure of The Pierre, New York and Coral Reef Maldives.  Air Catering business showed only marginal drop inspite of current economic downturn on account of increased market share through new catering units in Amritsar, Bangalore and Goa.  Unallocable Income represents Dividend Income and Profit on sale of Investments.  Share of profit in Associates represents Company’s proportionate share in Profit After tax of its associates. Operating expenses: The operating expenses increased by 8% from Rs. 2195.62 crores to Rs. 2362.90 crores. The increase was mainly on account of payroll to keep in line with competition and industry and impact of reduction in benchmark interest on retirement costs, partially off-set by lower employee costs in The Pierre on account of closure of property for renovation. The increased advertisement expenses are an endeavour to make Taj a global brand and create awareness of its rapid international expansion. Consolidated Profits: Profit Before tax & Interest was lower at Rs 419.22 crores as compared to Rs 881.18 crores achieved in the previous financial year on account of global financial meltdown which affected the industry as also the Company’s operating in all its key markets. Interest costs: Interest cost was higher at Rs. 230.46 crores for the year ended March 31, 2009 as compared to Rs. 202.32 crores in the previous year. The gross interest costs were higher at Rs 271.09 crores as compared to Rs 220.29 crores mainly on account of Rs 902.77 crores raised by issuances of Secured Non-Convertible Debentures and impact of loan taken for acquisition of shares of Orient-Express Hotels Ltd. The increase in gross interest costs was partially off-set by interest earned on unutilized Rights Issue proceeds. Profit after Tax: Profit after Tax was at Rs 12.46 crores as compared to Rs 354.98 crores achieved in the previous year.

35 The Indian Hotels Company Limited

Cash Flow Data The following table sets forth selected items from the consolidated cash flow statements: Rs/Crores Particulars Year ended March 31, 2009 March 31, 2008 Net Cash from operating activities 338.97 579.85 Net cash used for investing activities (1161.05) (1650.98) Net cash from financing activities 1231.56 1146.19 Net Increase in cash and cash equivalents 409.48 75.06 Operating Activities: Net cash from operating activities was lower at Rs 338.97 crores as compared to Rs 579.85 crores in the previous year, mainly due to lower operating profit for the year. Investing Activities Net cash used for investing activities was mainly on account of  Rs 793.64 crores were utilized towards addition to Fixed Assets, mainly covering the renovation of The Pierre, New York, ongoing construction of a new property in South Africa and capital expenditure incurred for renovation of existing properties and replacement/up-gradation of existing fixed assets.  Rs 250 crores paid as advance consideration towards acquisition of shares of the Company that owns the Sea Rock hotel in Mumbai. Financing Activities Net cash raised from financing activities was mainly due to  The Company during the year raised Rs 843.87 crores by issue of Equity and Rs 602.77 crores as 6% Secured Non- Convertible Debentures on Rights Issue basis.  The Company also raised Rs 300 crores by issue of 11.80% Secured Non-Convertible Debentures on a private placement basis.  In view of the availability of the liquidity, the Company repaid  All its short term debt existing as at March 31, 2008 on the standalone Balance Sheet.  Prepaid the secured term loan amounting to Rs 83.29 crores taken from Housing Development Finance Corporation Limited.  Prepaid debt of its international subsidiaries amounting to US$ 25 million. Rs/Crores Particulars Year ended March 31, 2009 March 31, 2008 Net Debt to Total Capital (total debt less cash and cash equivalents by the sum of net debt and net worth) 0.55 0.59 Net Debt to Equity (total debt less cash and bank balances divided by the net worth) 1.25 1.41

36 Annual Report 2008-2009

RISKS & CONCERNS Industry Risk General economic conditions Hotel business in general is sensitive to the economic environment. The hotel sector may be unfavourably affected by changes in global and domestic economies, changes in local market conditions, excess hotel room supply, reduced international or local demand for hotel rooms and associated services, competition in the industry, government policies and regulations, fluctuations in interest rates and foreign exchange rates and other natural and social factors. Since demand for hotels is affected by world economic growth, a global recession could lead to a downturn in the hotel industry. Socio-political risks In addition to economic risks, your Company faces risks from the socio-political environment, internationally as well as within the country and is affected by events like political instability, conflict between nations, threat of terrorist activities, occurrence of infectious diseases, extreme weather conditions and natural calamities, etc. which may affect the level of travel and business activity. Company specific Risks The Company specific risks remain by and large the same as enumerated last year. These are: Heavy Dependence on India A significant portion of your Company’s revenues are realised from its Indian operations, making it susceptible to domestic sociopolitical and economic conditions. Moreover, within India, the operations and earnings are primarily concentrated in hotel properties in five cities. Dependence on the high-end Luxury segment Luxury hotels contribute a significant proportion of the total revenue and earnings of your Company. This segment is affected by the international events and travel behaviour and suffers from high operating leverage. Adverse development affecting these hotels or the cities in which they operate could have a materially adverse effect on the Taj Group. Competition from International Hotel Chains The Indian subcontinent, South East Asia and Asia Pacific with high growth rates have become the focus area of major international chains. Several of these chains have announced their plans to establish hotels to take advantage of the demand supply imbalance. These entrants are expected to intensify the competitive environment. The success of Taj Group will be dependent upon its ability to compete in areas such as room rates, quality of accommodation, brand recognition, service level, convenience of location and to a lesser extent, the quality and scope of other amenities, including food and beverage facilities. Increased outbound travel Recent competitiveness in international airfares has resulted in destinations like Europe, South East Asia and Australia becoming more affordable to the average Indian traveler. This has increased outbound travel and presents a risk to the domestic segment for leisure resorts. High Operating Leverage The industry in general has a high operating leverage which has further increased with on-going renovations and product upgrades. However, it has been observed that your Company has been able to earn higher revenues with acceptance of its products in the market and improved economic conditions.

37 The Indian Hotels Company Limited

Foreign exchange fluctuation risks Your Company also has a portfolio of foreign currency debt, in respect of which it faces exposure to fluctuations in currency as well as interest rate risks. Risk mitigation Initiatives Your Company employs various policies and methods to counter these risks effectively, as enumerated below:  In view of the recent terrorist attack, the Company has taken various measures to enhance guest and proper security across all its properties.  To reduce the geographical and economic risk, your Company is looking at increasing its presence internationally in key gateway cities and resorts in South East Asia, West Asia and the Indian Ocean rim.  To counter the risk of dependence on the high end luxury segment, your Company is entering the mid-market segment which is comparatively insulated from political and social changes in India. The Company through its subsidiary Roots Corporation Limited is also increasing its presence in ‘Budget Hotel’ segment under the brand ‘Ginger’.  To successfully counter the risk from growing competition and new properties, your Company is renovating and repositioning all its key properties. It is also improving its service standards in consultation with international experts to provide exceptional service consistently across its hotels.  Operating and financial leverage, by expansion through management contracts and leveraging the strengths of its Associates and subsidiary companies.  Your Company closely monitors foreign currency exposures and hedges in consultation with its advisors. Net exposures, including those from derivative instruments, are kept at acceptable levels and within overall limits approved by the Board. These exposures are subjected to regular reviews. Internal control systems and their adequacy Your Company has reviewed internal controls and its effectiveness through the internal audit process. Internal audits were undertaken for every operational Unit and all major corporate functions under the direction of the Group Internal Audit department. The focus of these reviews are as follow:  Identify weaknesses and areas of improvement  Compliance with defined policies and processes  Safeguarding of tangible and intangible assets  Management of business and operational risks  Compliance with applicable statutes  Compliance with the Tata Code of Conduct The ‘Taj Positive Assurance Model’, which is an objective methodology of providing a positive assurance based on the audits of operating units and corporate functions, was institutionalized in 2004/05 as a standard audit process in conjunction with empanelled internal audit firms. While this methodology was adopted for select Units in the year 2004/05 and 2005/06, it was successfully implemented at all operational Units including all International Units during the last three years. The novelty of this model is that it is a convergence of Process Framework, Risk and Control Matrix and a Scoring Matrix. A framework developed for each functional area identified on the basis of an assessment of risk and control and provides a score, allowing the Unit to improve on high risk and weak areas. The Audit Committee of the Board oversees the adequacy of the internal control environment through regular reviews of the audit findings and monitoring implementations of internal audit recommendations through the compliance reports submitted to them.

38 Annual Report 2008-2009

Human Resources & Industrial Relations In keeping with the established traditions of Taj, we have been continuously enhancing people practices to make it employee friendly, to create a congenial and high performance work culture across the company. Since ‘guest’ is at the heart of our business, and receives service through associate actions, ensuring a well trained, motivated frontline and back-end work force is central to our business. Some specific initiatives implemented to achieve this during the year 2008-09 and focused efforts to manage work force costs more efficiently to cope with the current recessionary trends are listed below : A. HR initiatives for building a high performance work culture 1. Hewitt Best Employers Award- Taj Hotels Palaces and Resorts have been recognized as the third best employer in the country by Hewitt Associates on a nation wide survey on HR Practices, ahead of all other hospitality companies in India, like the Marriotts, Oberois and ITC. Some of the key people initiatives in the group like the Performance Management System, Employee engagement i.e. Year of the Associate, and the high potential leadership program called EL Taj (Emerging Leader of the Taj) are considered by the Hewitt Associates as the best people practices in the country. 2. Employee Satisfaction Scores - Gold Standards under Gallup Survey - Taj Hotels Palaces and Resorts have been adjudged as reaching the gold standard on the overall satisfaction of employee survey conducted for 2009 by the Gallup Organization. We have scored the highest Q12 grand mean in the Tata Group and we are in the top quartile performance in Asia Pacific and highest in Indian organizations employing more than ten thousand plus employees, with a grand mean Q12 of 4.28. Some specific initiatives implemented during the year 2008-09 and focused efforts to manage work force costs more efficiently to cope with the current recessionary trends are listed below : a. Career Architecture. The job architecture exercise aims at classifying of jobs scientifically and defining roles and responsibilities to align with the strategic goals of the company. Each job is assessed to establish the relative internal value of the job within the organization. This will provide an equitable basis for broad banding compensation, grading system, job transfers, career / succession planning and other related HR interventions. This exercise will also identify areas of organizational inefficiencies in terms of non value add reporting relationships. b. Regional Training Centers. With a view to strengthen operational skills of front line staff, which is core to the hotel business and to hire and develop entry level talent in the operational areas, Regional Training Centers have been commissioned in key cities like Chennai, Bangalore, Goa, Mumbai and Delhi. These Regional Training Centers, apart from training the existing staff in the hotels based in that city, will also train young apprentices in various skills like F&B (Services and Cookery) and Housekeeping and facilitate certification in different skill sets. c. SPEED program This is a Career Development Program for Operational Associates in the hotels viz. SPEED (Special Program for Employee Education & Development). This program is a part of our endeavour to provide opportunities for talented associates, working in operational departments (including FTCs) to advance their careers into supervisory / managerial positions at a quicker pace. All the above measures have yielded a positive result as reflected in the positive Employee satisfaction survey scores. Work force productivity standards have also improved from 1:3 room to employee ratio to 1:2.7. B. Initiatives for efficient work force cost management for this year (2009-10) 1. Freeze on recruitments .Given the current slowdown in business, a mandate has been issued across the company to put a freeze on recruitment, including attrition backfill hiring. We have intensified our efforts to redeploy staff into vacant positions internally. 2. Filling most positions in the new hotels through internal redeployment .For all new hotels that are opening up in the near future like the new VIVANTA by Taj in Panjim, Bangalore, Hyderabad and the new Luxury hotel - Falaknuma Palace, executive and supervisory positions will be filled through internal redeployment. 3. Holiday for salary increase and accumulation of earned leave etc. Increases in salaries will be frozen for the year 2009-10. Also with a view to decrease the liability on accrued leave all executives were mandated to fully avail their privilege leave.

39 The Indian Hotels Company Limited

AWARDS & ACCLAIMS Date Hotel and Details of the Award GROUP Taj Hotels Resorts and Palaces April ‘2009 Hewitt Associates’ third Best Employers in India 2009 in partnership with Outlook Business 81% employees stated that future career opportunities at their organization seem to look good April ‘2008 IHCL one of 5 Indian firms in world’s 25 ‘unsung’ innovative companies - Business Standard Magazine Nov ‘2008 The Taj Hotels Resorts & Palaces ‘No room for the Ordinary’ advertising campaign print media category 2008 PATA Gold Award in the Marketing – Hospitality category Oct ‘2008 Skal International, International Association of Travel and Tourism Professionals Ecotourism Award 2008 - Building Livelihoods, Eco Taj India winner of the Ecotourism Award in Rural Accommodation LUXURY HOTELS The Taj Mahal Palace & Tower, Mumbai April ‘2009 Taj Wellington Mews, Mumbai ‘Best Day Spa’ Pevonia Asia Spa India Awards 2008 March ‘2009 Ranked 1st in Asiamoney’s Travel Poll 2009. Asia’s Best Hotels in Individual Cities March ‘2009 National Tourism Award - Atithi Devo Bhava: Pride of India for exemplary service going beyond the call of duty. March ‘2009 Economic Times Special Corporate Citizen Award for its brave staff for putting service before self , for saving the lives of others at the risk of their own. Feb-Mar ‘2009 DestinAsian Readers’ Choice Awards 2009 - Best Hotel in Mumbai Feb ‘2009 National Tourism Award: new award “The pride of India” Feb ‘2009 2009 Tablet Hotels Selection Award - Hotels Worldwide Honored for Excellence in Industry Nov ‘2008 Conde Nast Traveler, USA Reader’s Choice Awards - Best of the Best Top 100 in Asia Nov ‘2008 2nd Place in the best hotels in Mumbai category for 2008 by FinanceAsia’s influential audience+A1 Sept ‘2008 Institutional Investor Magazine Survey September ’08 - The World’s Best Hotels 2008-09 - Top 100 hotels Sept ‘2008 Forbes Traveler 400, USA The World’s Very Best Hotels & Resorts Sept ‘2008 Condé Nast Traveller Readers’ Travel Awards, UK - TMPT Best Overseas Business Hotel in the World and 23rd within the World’s Top 100 for the best travel experiences worldwide Sept ‘2008 Smart Travel Asia Magazine Top 25 list - Best Business Hotels of Asia 2008 Best In Travel July ‘2008 Wine Spectator - Best of Award of Excellence - The Zodiac Grill, Wasabi by Morimoto, Golden Dragon, Souk, Masala Kraft 2008 Conde Nast Traveller, UK - 4th Annual Gold List of the Best Hotels in the World - Best for Food 2008 Conde Nast Traveler, USA - Gold List 2008 Taj Lands End, Mumbai July ‘2008 Wine Spectator Award of Excellence - Pure at the Taj Lands End, Mumbai Taj Coromandel Hotel, Chennai July ‘2008 Wine Spectator Award of Excellence - Prego at the Taj Coromandel Hotel, Chennai. June ‘2008 Conde Nast Traveler, USA - Prego-Taj Coromandel, Chennai - Hot List Tables 2008

40 Annual Report 2008-2009

Date Hotel and Details of the Award Taj Lake Palace, Udaipur May ‘2009 Conde Nast Traveler, USA Hot List 2009 - 50 New Spas to Lose Yourself in - Spa Boat at Taj Lake Palace, Udaipur March ‘2009 GAYOT.com - The Top 10 Castle Hotels Worldwide - Taj Lake Palace, Udaipur Dec ‘2008 The Gallivanter’s Guide 2009 - Editor’s Choice Award for Excellence Nov ‘2008 Conde Nast Traveler, USA Reader’s Choice Awards - Best of the Best Top 100 Sept ‘2008 Forbes Traveler 400, USA The World’s Very Best Hotels & Resorts May ‘2008 World Luna Spa awards, Italy 2008 Conde Nast Traveler, USA - Gold List 2008 Umaid Bhawan Palace, Jodhpur April ‘2009 Best Palace in The 2009 Best List of Vanity Fair, U.K Ministry of Tourism for National Tourism Awards – 2007 – 08- Best Five Star Deluxe Hotel Category Nov ‘2008 Conde Nast Traveler, USA Reader’s Choice Awards - Best of the Best Top 100 in Asia Oct ‘2008 Forbes Traveler 400, USA The World’s Very Best Hotels & Resorts Sept ‘2008 Most Romantic Retreats Worldwide - Conde Nast Traveller, U.K. July ‘2008 Wine Spectator Award of Excellence – Risala June ‘2008 T+L USA “IT List” editors’ picks of the best new hotels in the world. Top pick for “renovation” June ‘2008 T+L “IT LIST” of 30 Best New Hotels around the Globe Editors’ Top Picks for 2008, Asia, Australia and New Zealand May ‘2008 Gold E Award of Excellence one of the World’s Best Hotels by ENTRÉE dedicated to very special places for the discriminating and sophisticated traveller. Rambagh Palace, Jaipur Jan ‘2009 Conde Nast Traveller, UK - The Gold List 2009 - World’s Best Hotels for Ambience & Design in Asia Nov ‘2008 Conde Nast Traveler, USA Reader’s Choice Awards - Best of the Best Top 100 in Asia Sept ‘2008 Tatler Spa Guide 2008 the 101 Best Spas in the world Sept ‘2008 The 10th Condé Nast Traveller Readers’ Travel Awards, UK - Overseas Leisure Hotels: Asia & the Indian Subcontinent July ‘2008 Wine Spectator Award of Excellence - Rajput Room, Suvarna Mahal Taj Palace Hotel, New Delhi May ‘2009 Times food Guide, Delhi, 2009 - the Orient Express restaurant under the “Best European” category July ‘2008 Wine Spectator - Best of Award of Excellence - Kafe Fontana, Masala Art, Orient Express, Tea House of the August Moon Taj Mahal Hotel, New Delhi May ‘2009 Conde Nast Traveler, USA 50 Hot Tables – Varq May ‘2009 Times food Guide, Delhi, 2009 - Wasabi restaurant under the “Best Japanese” category March ‘2009 Ranked #2 in Asiamoney’s Travel Poll 2009. Asia’s Best Hotels in Individual Cities

41 The Indian Hotels Company Limited

Date Hotel and Details of the Award Feb ‘2009 Wasabi - Whisky Restaurant of the Year by Whisky Magazine, Icons of Whisky India Awards 2009. Nov ‘2008 Conde Nast Traveler, USA Reader’s Choice Awards - Best of the Best Top 100 in Asia July ‘2008 Wine Spectator - Award of Excellence - House of Ming The Taj West End, Bangalore Feb ‘2008 Department of Tourism’s National Awards for 2006-07 for the Best Eco-friendly Hotel Taj Bengal, Kolkata July ‘2008 Wine Spectator - Award of Excellence - The Chambers, The Hub and The Chinoiserie Taj Safaris May ‘2009 Conde Nast Traveler, USA Hot List 13th Annual 140 Top New Hotels Jan ‘2009 Conde Nast Traveller, UK - Gold List 2009 - World’s Best Hotels - Asia - Best for Facilities Jan ‘2009 Luxury Travel Magazine’s Gold List 2006-Australia - Best Overseas Resort and Best Overseas Spa May ‘2008 The 100 Best hotels - Ultra Travel Daily Telegraph - best African/Indian Ocean hotel category as runners up Taj Exotica Resort & Spa, Mauritius Feb ‘2009 CONDE NAST Traveller - one of the best 28 Beach Resorts in the world. May ‘2008 Ranked #1 the best Spa in the world on “Luna” ITALY Spa awards The Pierre, New York, USA Sept ‘2008 Institutional Investor Magazine Survey “The World’s Best Hotels 2008-09 - Top 100 hotels” Taj Boston, USA Jan ‘2009 2009 Mobil Four-Star honors, USA Nov ‘2008 Commitment to Quality Award - LHW Membership Services Sept ‘2008 Institutional Investor Magazine Survey “The World’s Best Hotels 2008-09 - Top 100 hotels” 2008 Conde Nast Traveler, USA - Gold List 2008 Campton Place, USA Sept ‘2008 Forbes Traveler 400, USA The World’s Very Best Hotels & Resorts PREMIUM HOTELS Taj President, Mumbai July ‘2008 Wine Spectator - Award of Excellence - Thai Pavilion Usha Kiran Palace, Gwalior Sept ‘2008 Tatler Spa Guide 2008 ‘Secret Stars’ section of the 101 Best Spas in the world Taj Ambassador Hotel, New Delhi July ‘2008 Wine Spectator Award of Excellence - Larry’s China Jai Mahal Palace, Jaipur Sept ‘2008 Conde Nast Traveler 2008 World Savers Awards, New York - Honorable Mention for “Health”

42 Annual Report 2008-2009

Date Hotel and Details of the Award Taj Exotica, Goa Nov ‘2008 Conde Nast Traveler, USA Reader’s Choice Awards - Best of the Best Top 100 in Asia Sept ‘2008 Best resort in India - “www.travel.ru” through on-line voting of Russian tourists and travelers. Taj Malabar, Cochin Sept ‘2008 The 10th Condé Nast Traveller Readers’ Travel Awards, UK - Overseas Leisure Hotels: Asia & the Indian Subcontinent March ‘2008 Taj Spa - 8th Best Spa in Asia & the Indian Subcontinent in Conde Nast Traveller, UK Reader’s Spa Awards 2008 - The World’s 100 Best Spas Taj Connemara, Chennai July ‘2008 Wine Spectator - Award of Excellence - Hip Asia Taj Residency, Bangalore July ‘2008 Wine Spectator - AwArd of Excellence – Graze June ‘2008 Conde Nast Traveler, USA - Graze - Hot List Tables 2008 Nadesar Palace, Varanasi June ‘2009 Travel + Leisure, USA - It List: 45 Best New Hotels of 2009 May ‘2009 Conde Nast Traveler, USA Hot List 13th Annual 140 Top New Hotels Taj Tashi, Thimpu, Bhutan March ‘2009 Asia Spa & Wellness Festival 2009 Gold Awards - “Best Traditional Treatment” 2008 Conde Nast Traveller, UK - The Hot List 2008 - The 65 most stylish, most innovative, most luxurious hotels Rebak Island Resort, Langkawi July ‘2008 Elite Traveler’s Top 101 Best Suites in the World BLUE Woolloomooloo Bay, Sydney Jan ‘2009 2009 Tablet Hotels Selection Award - Hotels Worldwide Honoured for Excellence in Industry Jan ‘2009 No.16 in the Luxury Travel Magazine, Australia - Gold List 2009 - Best Australian Hotel Nov ‘2008 Conde Nast Traveler, USA Reader’s Choice Awards - Best of the Best Top 20 Australia/Pacific Hotels No.16 July ‘2008 Elite Traveler, USA - runner-up for the best massage therapist in Sydney Taj Palace, Dubai Nov ‘2008 Dubai International Holy Quran Award - best hotel hosting the personality of the year: Mr. Peter Mansourian, General Manager

43 The Indian Hotels Company Limited

REPORT ON CORPORATE GOVERNANCE Philosophy on Corporate Governance Corporate Governance goes beyond mere financial measurement of the performance of the Company, taking into consideration a basket of parameters such as employee satisfaction, shareholder satisfaction, commitment to quality etc. It rests upon strong foundations of transparency, disclosure, fairness, monitoring and review. The Company is committed to Corporate Governance and endeavours to adhere to the highest standards of corporate values and ethics and in doing so, has consistently enhanced shareholder’s value. The Company has complied with the provisions of Clause 49 of the Listing Agreement of the Stock Exchange, which deals with the compliance of Corporate Governance requirements as detailed below: The Board of Directors: 1. The Board of Directors comprises Executive, Non-Executive as well as Independent Directors. Non-Executive Directors comprise more than 50% of the Board of Directors, with the Chairman being a Non-Executive Director. The Directors possess experience in fields as diverse as hoteliering and architecture, to banking, finance and social service. The experience and wisdom of the Directors who are captains of industry, have proved to be of immense assistance to the Company. The details of Directors seeking re-appointment have been attached along with the Notice of the Annual General Meeting. 2. “Independent Directors,” i.e. Directors who apart from receiving Directors’ remuneration, do not have any other material pecuniary relationship or transactions with the Company, its promoters, its management or its subsidiaries, which, in the judgement of the Board, may affect the independence of judgement of the Director, comprise over half of the Board. 3. During the year under review, the Board of Directors of the Company met six times and the period between any two meetings did not exceed three months. The dates of the Board Meetings held during each quarter are as follows : No. Date of Meeting For The Quarter 1 April 15, 2008 April to June 2 June 23, 2008 April to June 3 July 25, 2008 July to September 4 October 20, 2008 October to December 5 November 7, 2008 October to December 6 January 29, 2009 January to March As required under Annexure I to Clause 49 of the Listing Agreement with the Stock Exchanges, all the necessary information was placed before the Board from time to time. 4. All the relevant information, as recommended by the Securities and Exchange Board of India (SEBI) /Stock Exchanges, is promptly furnished to the Board from time to time in a structured manner. 5. The Non-Whole-time Directors of the Company are paid, in addition to commission, sitting fees @ Rs. 20,000/- per meeting for attending meetings of the Board of Directors, Audit Committee and Remuneration Committee and for Share Transfer & Shareholders’ / Investor Grievance meetings the sitting fees is paid @ Rs. 10,000/- per meeting. 6. None of the Directors of the Board serve as members of more than 10 Committees nor are they Chairmen of more than 5 Committees, as per the requirements of the Listing Agreement. “Committees” for this purpose include the Audit Committee and the Shareholders’ / Investor Grievance Committee under the said Clause 49 of the Listing Agreement.

44 Annual Report 2008-2009

7. A detailed explanation, in the form of a table illustrating the above is given on page No. 50 for ready reference. 8. The Company has adopted a Code of Conduct for its Non-Executive Directors and all Non-Executive Directors have affirmed compliance with the said Code. All Senior Management of the Company have affirmed compliance with the Tata Code of Conduct. The Code of Conduct is also displayed on the Company’s web site. The Annual Report of the Company contains a Certificate duly signed by the Managing Director (CEO) in this regard. 9. Other than transactions entered into in the normal course of business, the Company has not entered into any materially significant related party transactions during the year, which could have a potential conflict of interest between the Company and its Promoters, Directors, Management and / or relatives. Committees of the Board : The Committees constituted by the Board of Directors of the Company are as under : 1. Audit Committee: The Company’s Audit Committee comprises entirely of Independent Directors. Each Member of the Committee has the relevant experience in the field of finance, banking and accounting, with a majority of the Members being Chartered Accountants. The Committee has, inter alia, the following terms of reference: i. Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible. ii. Recommending the appointment and removal of statutory auditors, fixation of audit fee and also approval for payment for any other services. iii. Reviewing with management the annual financial statements before submission to the Board for approval, with particular reference to:  Matters required to be included in the Board’s Report in terms of clause 2AA of Section 217 of the Companies Act, 1956.  Any changes in accounting policies and practices and reasons thereof.  Major accounting entries based on the exercise of judgement by the Management.  Qualifications in the draft audit report.  Significant adjustments made in the financial statements, arising out of audit findings.  The Going Concern assumption.  Compliance with Accounting Standards.  Compliance with listing and other legal requirements relating to financial statements.  Any related party transactions i.e. transactions of the Company of material nature, with Promoters or the Management, their subsidiaries or relatives etc. that may have potential conflict with the interests of the Company at large. iv. Reviewing with the management, the quarterly financial statements before submission to the Board for approval. v. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue etc.) the statement of funds utilised for purposes other than those stated in the Offer Document / prospectus / notice and the report submitted by the Monitoring Agency monitoring the utilisation of the proceeds of a public or rights issue and making appropriate recommendations to the Board to take steps in this matter.

45 The Indian Hotels Company Limited

vi. Reviewing with the management, performance of statutory and internal auditors and the adequacy of internal control systems. vii. Reviewing the adequacy of internal audit function, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit. viii. Discussion with internal auditors on any significant findings and follow-up thereon. ix. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board. x. Discussion with external / statutory auditors before the audit commences, nature and scope of audit, as well as have post-audit discussion to ascertain any area of concern. xi. Reviewing the Company’s financial and risk management policies. xii. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors. The details of the composition, names of Members and Chairman as well as the number of meetings held and Directors attendance thereat during the year are as under: NO. MEMBERS ATTENDANCE AT AUDIT COMMITTEE MEETINGS HELD ON 23.05.08 23.06.08 25.07.08 20.10.08 29.01.09 1. Mr. S. K. Kandhari – Chairman   2. Mr. Deepak Parekh - - -  3. Mr. Jagdish Capoor   The Committee met five times during the period under review. Audit Committee meetings are attended by invitation by the Executive Director –Finance, Executive Director – Hotel Operations, Group Internal Audit and the Statutory Auditors. The Company Secretary acts as the Secretary to the Audit Committee. 2. Share Transfer & Shareholders’ / Investor Grievance Committee : The Share Transfer & Shareholders’/Investor Grievance Committee has the required powers to carry out the handling of shareholders / investor grievances. The brief terms of reference of the Committee include redressing shareholder and investor complaints like transfer of shares, non-receipt of Annual Reports, non-receipt of dividends etc. The Committee met twice during the period under review. NO. MEMBERS ATTENDANCE AT SHARE TRANSFER & SHAREHOLDERS’ / INVESTOR GRIEVANCE COMMITTEE MEETINGS HELD ON 09.06.08 08.08.08 1. Mr. N. A. Soonawala - Chairman  2. Mr. R. K. Krishna Kumar  - 3. Mr. Raymond N. Bickson 

46 Annual Report 2008-2009

Share transfers are processed weekly and approved by the Committee. Investor grievances are placed before the Committee. There were no pending investor complaints which remained unresolved. All share transfers lodged up to March 31, 2009 have been processed by the Committee. The status of the complaints received from shareholders from 01.04.08 to 31.03.09 is as under: Complaints received Pending as on 31.03.09 52 - As per the provisions of Section 205A read with Section 205C of the Companies Act, 1956, the Company is required to transfer unpaid dividends, matured deposits, redeemed debentures and interest accrued thereon remaining unclaimed and unpaid for a period of 7 years from the due date to the Investor Education and Protection Fund (IEPF) set up by the Central Government. Given below are the proposed dates for transfer of the unclaimed dividend to the IEPF by the Company: - Financial Year Date of declaration of Dividend Proposed Date of transfer to IEPF* 2001-02 June 13, 2002 August 17, 2009 2002-03 September 5, 2003 November 9, 2010 2003-04 August 10, 2004 October 15, 2011 2004-05 August 12, 2005 October 16, 2012 2005-06 August 5, 2006 October 9, 2013 2006-07 August 4, 2007 October 8, 2014 2007-08 April 15, 2008 June 20, 2015 * Indicative dates, actual dates may vary It may be noted that no claims will lie against the Company nor the IEPF in respect of the said unclaimed amounts transferred to the Fund. Amounts Transferred to IEPF The following amounts have been transferred to IEPF of the Central Government as at March 31, 2009: Particulars Rs. Amounts transferred upto March 31, 2008 (a) 2,28,96,506.67 Amounts transferred during the year: - Unpaid / unclaimed dividend with the Company 15,91,528.00 - Unpaid / unclaimed matured deposits with the Company 2,30,000.00 - Unpaid matured debentures with the Company 1,63,478.00 - Interest accrued on the unpaid matured deposits 2,24,604.00 - Interest accrued on the unpaid matured debentures - Total (b) 22,09,610.00 Amount transferred upto March 31, 2009 (a+b) 2,51,06,116.67* * Includes transfers for the financial year 2008-09.

47 The Indian Hotels Company Limited

Compliance Officer Mr. P. Sanker Vice President (Legal) & Company Secretary The Indian Hotels Company Limited Address: Mandlik House, Mandlik Road, Mumbai – 400 001 Phone : 022-6665 3238 Fax : 022-2202 7442 E-mail : [email protected] 3. Remuneration Committee : The Listing Agreement with the Stock Exchanges provides that a Company may appoint a Committee for recommending managerial remuneration payable to the Directors. The Company has in place a Remuneration Committee for the said purpose. The main function of the said Committee is to determine the remuneration payable to the Whole-time Directors. The Chairman of the Remuneration Committee was present at the last Annual General Meeting of the Company. During the year, the Committee met once as under : NO. MEMBERS ATTENDANCE AT THE REMUNERATION COMMITTEE MEETING HELD ON 23.06.08 1. Mr. Jagdish Capoor - Chairman  2. Mr. Ratan N. Tata  3. Mr. N. A. Soonawala  4. Mr. R. K. Krishna Kumar  4. Remuneration Policy : The remuneration of the Whole-time Director(s) is recommended by the Remuneration Committee based on factors such as industry benchmarks, the Company’s performance vis-à-vis the industry, performance/ track record of the Whole-time Director(s) etc, which is decided by the Board of Directors. Remuneration comprises a Fixed Component viz. salary, perquisites and allowances and a variable component viz. commission. The Remuneration Committee also recommends the annual increments (which are effective April 1 annually) within the salary scale approved by the Members as also the Commission payable to the Whole-time Director(s) on determination of profits for the financial year, within the ceilings on net profits prescribed under Sections 198 and 309 of the Companies Act, 1956. The commission payable to Non-Executive Directors is decided by the Board and is distributed based on a number of factors, including number of Board and Committee meetings attended, individual contribution thereat etc. Service Contract and Notice Period of the Managing Director and the Executive Directors Mr. Raymond N. Bickson’s contract as a Managing Director is for a period of 5 years, commencing from July 19, 2008 up to and including July 18, 2013 terminable by 6 months notice on either side. Mr. Anil P. Goel’s contract as Whole Time Director of the Company is for a period of 5 years, commencing from March 17, 2008 up to and including March 16, 2013 terminable by 6 months notice on either side. Mr. Abhijit Mukerji contract as Whole Time Director of the Company is for a period of 5 years, commencing from March 17, 2008 up to and including March 16, 2013 terminable by 6 months notice on either side. The Company has no scheme for stock options.

48 Annual Report 2008-2009

Details of ordinary shares of the Company held by the Non-Executive Directors as on March 31, 2009, are as under: Mr. Ratan N. Tata 59,792 Mr. Deepak Parekh 1,845 Mr. Jagdish Capoor 2,400 Details on General Meetings: Location, date and time of the General Meetings held in the last 3 years are as under: Location Date Time ANNUAL GENERAL MEETINGS Birla Matushri Sabhagar, August 14, 2008 3.30 p.m. 19, Sir Vithaldas Thackersey Marg, August 3, 2007 3.30 p.m. Mumbai - 400 020 August 4, 2006 3.30 p.m. COURT CONVENED MEETING Birla Matushri Sabhagar, December 13, 2006 10.30 a.m. 19, Sir Vithaldas Thackersey Marg, Mumbai - 400 020 All special resolutions passed in the previous three Annual General Meetings of the Company were unanimously passed by a show of hands by the Members of the Company present and voting at the said meetings.

49 The Indian Hotels Company Limited General 14.08.2008 Annual ectors – both Attendance -09. An amount Meeting held No. of Board at the last attended General Meetings Chairman on Committee Positions Member Foreign as as Passed away on May 30, 2007 # Directorships No. of outside No. of outside Indian 3,00,000 ------25,50,000 10 - 4 - 4 Yes 72,50,00062,50,000 11 5 7 - 1 - 1 2 5 6 Yes Yes Rs. Held 20,00020,000 - - 13 4 7 - 2 - 1 - 1 1 - - 80,000 Sitting Commission 1,20,000 22,50,0002,20,000 44,00,000 17 5 2 - 1 3 5 2 4 5 No Yes 1,00,000 16,00,000 6 1 2 2 5 Yes 1,80,000 77,00,000 - 1 - - 4 Yes 1,20,000 74,00,000 10 10 - - 5 Yes Resigned effective April 2, 2007 Resigned effective Remuneration paid @ Perks Fees 2007–2008 Salary & 98,64,48659,11,101 - - - - 7 2 13 - 4 2 - - 6 6 Yes Yes 2008-2009 2008-2009 3,89,10,265 - 15,000,000 9 7 2 3 6 Yes Independent Executive Executive Executive PromoterNon-Executive - - 3,00,000 ------Non-Executive - - Non-ExecutiveIndependent Non-Executive - - Independent Independent Non-ExecutiveIndependent - Independent Non-Executive - Independent Non-Executive - Independent Non-Executive - PromoterNon-Executive PromoterNon-Executive Non-Executive - 1,30,000 - - 1,60,000 Parekh Traditionally, the Directors are paid commission each year, after the Annual Accounts are approved by the Members at the Annual Accounts are approved by the Members at Annual after the the Directors are paid commission each year, Traditionally, Mr. Tejendra Khanna Tejendra Mr. Dr. J. Bhabha Dr. Mr. Raymond N. Bickson Mr. Mr. Anil P. Goel Anil P. Mr. Abhijit Mr. Mukerji Names Category # @ **Ms. Anu Aga Mr. Shapoor Mistry Mr. Nadir Godrej **Mr. Mr. Jagdish Capoor Mr. Mr. Deepak Mr. Mr. K. B. Dadiseth Mr. (Chairman) R.K. Krishna Kumar Mr. Chairman) (Vice A. Soonawala N. Mr. Non-Executive S.K. Kandhari Mr. Mr. R. N. Tata N. R. Mr. Promoter - Board of Directors: from November 7, 2008 **Appointed with effect of Rs. 3.00 crores is provided as commission to the Managing Director and Executive Directors. Payment Dir Meeting of the Company. A sum of Rs. 3.60 Crores has been provided as commission to Non – Executive Directors for the year 2008 A Meeting of the Company. Annual General Meeting. Managing, Executive and Non- Directors will be made after the accounts are approved at NOTE:

50 Annual Report 2008-2009

Means of Communication: Quarterly, half-yearly and annual results of the Company were published in leading English and vernacular newspapers viz. Business Standard, Financial Express, Indian Express and Loksatta. Additionally, the results and other important information is also periodically updated on the Company’s website viz. www.tajhotels.com, which also contains a separate dedicated section “Investor Relations”. Further, the Company also holds an Analysts’ Meet after the quarterly, half-yearly and Annual Accounts have been adopted by the Board of Directors, where information is disseminated and analysed. Moreover, the Company also gives important Press Releases from time to time. The Stock Exchanges have vide introduction of Clause 52 in the Listing Agreement, introduced the Corporate Filing and Dissemination System (CFDS) which is a portal jointly owned, managed and maintained by the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE). This system has been introduced in place of updation of information on www.sebiedifar.nic.in . It is a single source to view information filed by listed companies. Commencing with the quarter ending October, 2007, all disclosures and communications to the BSE and NSE are filed electronically through the CFDS portal www.corpfiliing.co.in . Hard copies of the said disclosures and correspondence are also filed with the BSE and NSE. Reminders are sent each year to investors for unclaimed dividend or unclaimed interest on debentures. The Annual Report containing inter alia the Audited Accounts, Consolidated Financial Statements, Directors Report, Auditors Report and other important information is circulated to the investors. Management Discussion and Analysis forms part of the Annual Report. The Annual Reports are also available in the Investor Relations section on the Company’s web site www.tajhotels.com. Disclosures : The Board of Directors receive, from time to time, disclosures relating to financial and commercial transactions from key managerial personnel of the Company, where they and / or their relatives have personal interest. There are no materially significant related party transactions, which have potential conflict with the interest of the Company at large. The details of the Related Party transactions are placed before and reviewed by the Company’s Audit Committee. The Company has complied with the requirements of the Stock Exchanges / Securities and Exchange Board of India / statutory authorities on all matters relating to capital markets, during the last 3 years. Pursuant to the provisions of sub – clause V of the revised Clause 49 of the Listing Agreement with the Stock Exchanges, the Managing Director (CEO) and the Executive Director - Finance have issued a certificate to the Board, for the Financial Year ended March 31, 2009. Risk Management The Company has in place a Risk Management Policy, which lays down a vigorous and active process for identification and mitigation of risks. This Policy has been adopted by the Audit Committee as well as the Board of Directors of the Company. The Audit Committee reviews the risk management and mitigation plan from time to time. Subsidiary Companies The Company does not have any material unlisted subsidiary and hence is not required to have an Independent Director of the Company on the Board of such subsidiary. The Audit Committee reviews the financial statements of the Company’s unlisted subsidiary companies. The Minutes of the subsidiary companies are periodically placed before and reviewed by the Board of Directors of the Company.

51 The Indian Hotels Company Limited

Compliance with non-mandatory requirements 1. The Board : The Non-Executive Chairman has a separate office in his capacity as the Group Chairman at the Tata Group headquarters at , 24 Homi Mody Street, Mumbai - 400 001 and hence a separate office is not maintained. The Company has adopted the Tata Guidelines for composition of the Board of Directors, Committees of the Board and Retirement Age of Directors, which take into account the provisions of the Listing Agreement, the Companies Act, 1956 and other applicable laws. 2. Remuneration Committee: Details already given under the caption ‘Remuneration Committee’ in an earlier part of the Report. 3. Shareholders Rights : In addition to publishing its quarterly results in leading English and a Marathi newspaper having wide circulation, the Company publishes its quarterly results on its website www.tajhotels.com. Additionally, the same is also available on www.corpfiling.co.in Hence, a quarterly declaration of financial performance including summary of the significant events is presently not being sent to each household of shareholders individually. 4. Audit qualifications : For the financial year 2008-09, there are no audit qualifications to the Company’s financial statements. The Company continues to adopt best practices to ensure a regime of unqualified financial statements. 5. Mechanism for evaluating Non-Executive Board members : The Board of Directors of the Company presently comprises ten Non-Executive Directors. The Directors appointed on the Board are from diverse fields relevant to the Company’s business and have long-standing experience and expertise in their respective fields. They have considerable experience in managing large corporates and have been in public life for decades. The enormously rich background of the Directors is of considerable value to the Company. Non-Executive Directors add substantial value through the deliberations at the Meetings of the Board and Committees thereof. To safeguard the interests of the investors, they also play a control role. In important Committees of the Board like the Audit Committee, the Remuneration Committee etc., they play an important role by contributing to the deliberations of the Committee Meetings. Besides contributing at the meetings of the Board and Committees, the Non-Executive Directors also have off-line deliberations with the Management of the Company and add value through such deliberations. In the light of the above, the Chairman under authority from the Board decides on the performance of each Non- Executive Director and they are accordingly evaluated and remunerated. 6. Whistle Blower Policy: The Company has adopted the Whistle Blower policy pursuant to which employees can raise their concerns relating to fraud, malpractice or any other activity or event which is against the Company’s interest. No employee has been denied access to the Audit Committee in this regard. As regards the other non-mandatory requirements, the Board has taken cognisance of the same and shall consider adopting the same as and when necessary.

52 Annual Report 2008-2009

General Shareholder Information Annual General Meeting  Date and Time August 3, 2009 at 3.00 p.m.  Venue Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, Mumbai 400 020 Registered Office Mandlik House Mandlik Road Mumbai 400 001 Telephone No. 91- 22- 6639 5515 Facsimile No. 91- 22- 2202 7442 Website www.tajhotels.com E-mail [email protected] Financial Calendar Financial reporting for:  Quarter ending 30th June, 2009 July 2009  Quarter ending 30th September, 2009 October 2009  Quarter ending 31st December, 2009 January 2010  Quarter ending 31st March, 2010 May /June 2010 Date of Book Closure July 21, 2009 to August 3, 2009 (both days inclusive) Dividend Payment Date On or after August 4, 2009 Listing  Ordinary Shares Bombay Stock Exchange Ltd. National Stock Exchange of India Ltd.  Global Depository Shares London Stock Exchange The Company has paid annual listing fees to each of the above Stock Exchanges in respect of the financial year 2009-2010. Stock Codes STOCK EXCHANGE STOCK CODE Bombay Stock Exchange Ltd. 500850 National Stock Exchange of India Ltd. INDHOTEL EQ

53 The Indian Hotels Company Limited

Market Price Data : High, Low during each month in last financial year Months BSE High BSE Low No. of Shares traded NSE High NSE Low No. of Shares traded Apr-08 118.75 107.10 30,62,730 118.80 107.50 1,61,04,707 May-08 122.00 108.00 39,34,843 122.00 108.00 1,47,77,340 Jun-08 112.70 76.20 37,66,376 112.95 76.30 1,97,99,586 Jul-08 93.00 75.00 62,69,457 93.80 75.00 2,07,78,928 Aug-08 90.00 74.50 1,01,73,296 90.00 74.60 2,38,41,293 Sep-08 79.00 65.10 88,33,047 85.00 65.05 2,79,19,500 Oct-08 69.25 43.00 57,28,134 69.60 39.60 1,98,53,093 Nov-08 55.00 40.00 75,73,119 58.00 39.85 1,98,23,322 Dec-08 51.00 36.25 95,99,183 50.35 36.20 2,37,22,252 Jan-09 48.00 37.75 78,92,378 47.90 37.10 1,20,52,619 Feb-09 42.50 35.20 47,94,751 41.30 35.35 85,40,109 Mar-09 41.15 34.00 58,23,387 41.20 34.05 1,84,05,701

54 Annual Report 2008-2009

Performance in comparison to broad-based indices such as BSE Sensex

Two-way Fungibility of Global Depository Receipts (GDRs) Reserve Bank of India, vide its circular dated February 13, 2002, had brought into force the Operative Guidelines for the two–way fungibility under the “Issue of Foreign Currency Convertible Bonds and Ordinary shares (through Depository Receipt mechanism) Scheme 1993. Consequent thereto, the Company has executed documents with Citibank N.A., New York, Depository for GDR holders, supplemental to the Depository Agreements executed by the Company at the time of issue of GDRs in 1995 and 1997, whereby the Company offers investors the facility for conversion of Ordinary Shares into GDRs, within the limits prescribed for two-way fungibility. Registrar and Share Transfer Agent The Company has obtained Category I Registrar to an Issue & Share Transfer Agent Certificate from SEBI SEBI Registration No. Category I - INR000003746

Share Transfer System All shares have been transferred and returned within 21 days from the date of lodgement, provided the necessary documents were in order.

55 The Indian Hotels Company Limited

IHCL Distribution of Shareholding as on March 31, 2009 Category of Shareholders No. of Shares held % to total capital Promoters 21,36,13,999 29.53 Directors & Their Relatives 4,42,682 0.06 Foreign Institutional Investors 12,42,28,242 17.17 Foreign Banks 7,108 0.00 Resident Individuals & HUF 15,55,56,328 21.50 Non-Resident Indians 53,24,350 0.74 Global Depository Receipts 24,16,790 0.33 Financial Institutions / Banks 11,11,78,317 15.37 Insurance Companies 3,72,37,180 5.15 Mutual Funds / UTI 3,12,39,124 4.32 Clearing Members 5,02,862 0.07 Corporate Bodies 4,15,43,064 5.74 Trusts 1,12,342 0.02 Central / State Governments 2,900 0.00 Total 72,34,05,288 100.00

56 Annual Report 2008-2009

Distribution Schedule of The Indian Hotels Company Limited as on March 31, 2009 No. of Shares held Total Total Total % to Members Shares Paid up Capital Upto 100 66,477 34,33,297 0.47 101 to 1000 72,214 2,71,73,217 3.76 1001 to 2500 16,017 2,59,55,209 3.59 2501 to 5000 6,324 2,29,38,830 3.17 5001 to 10000 4,001 2,84,09,936 3.93 10001 to 20000 1,774 2,41,39,535 3.34 20001 to 30000 427 1,04,12,232 1.44 30001 to 40000 172 60,44,724 0.84 40001 to 50000 95 42,22,894 0.58 50001 to 100000 173 1,20,22,313 1.66 100001 & above 245 55,86,53,101 77.22 Total 1,67,919 72,34,05,288 100.00 Secretarial Audit In keeping with the requirements of the SEBI and the Stock Exchanges, a secretarial audit by a practicing Company Secretary is carried out to reconcile the total admitted capital with NSDL and CDSL and the total issued and listed capital. The said audit confirms that the total issued / paid – up capital tallies with the total number of shares in physical form and the total number of dematerialised shares held with NSDL and CDSL. A certificate from the Statutory Auditors of the Company on Corporate Governance is attached as an annexure to the Report. Report on Corporate Governance The Company regularly submits to the Stock Exchanges, within the prescribed period, quarterly reports on Corporate Governance. A certificate from the Statutory Auditors of the Company on Corporate Governance is attached as an annexure to the Report. Dematerialisation of Shares & Liquidity  As of the end of March 31, 2009, shares comprising approximately 96.35% of the Company’s Equity Share Capital have been dematerialised.  Trading in the Company’s shares in a dematerialised form has been made compulsory with effect from April 5, 1999.

57 The Indian Hotels Company Limited

ISIN No. INE053A01029 Outstanding GDRs/ADRs/Warrants or any Convertible instruments, conversion date and likely impact on equity 6,02,76,898 Detachable Warrants were issued along with 6% Secured Redeemable Non-Convertible Debentures. The Warrant holder has the right to purchase 1 Ordinary Equity share of face value of Re.1/- each of the Company at a price of Rs. 150/- per share against 1 Warrant held during the warrant exercise period i.e. starting from September 1, to September 30, 2009 only. The paid-up equity capital of the Company would be Rs.78.37 crores, if all the warrants are exercised. Sub-Division of Shares The Ordinary Equity Shares of the Company were sub-divided from Rs.10/- each to Re.1/-each w.e.f. 3rd day of November, 2006 being the “Record Date” fixed for the purpose. The Members whose name/s was appearing on the Register of Members on the Record Date, was entitled to get 10 fully paid up ordinary shares of the face value of Re. 1/- each for every 1 ordinary share of face value of Rs.10/- held by them. The Company called back the existing share certificates having paid-up value of Rs.10/- each and issued the new share certificate of face value of Re.1/- each. The members who have still not exchanged their share certificates are requested to kindly get in touch with the Company. The Members are requested not to deal with share certificates of face value of Rs.10/- each in any manner whatsoever. If any member deals, sell, transfers, pledge such share certificate of a paid value of Rs.10/- each shall do so at his own cost and consequence and the Company shall not be held responsible or liable for such acts of the Members.

58 Annual Report 2008-2009

Registrars to the Company’s Fixed Deposit Scheme Sharepro Services (I) Pvt. Ltd. Samhita Warehousing Complex 13 AB, Gala No.52 Near Sakinaka Telephone Exchange Off. Kurla Andheri Road Sakinaka, Mumbai 400072. Tel. No.91-22-67720400 Fax No.91-22-28508927 Email : [email protected] Investor Correspondence For any queries, investors are requested to get in touch with the Company’s share department at Mandlik House, Mandlik Road, Mumbai 400 001. A dedicated e-mail id [email protected] has been set up for investor complaints. Electronic Clearing Service (ECS) The Company is availing of the ECS facility to distribute dividend to those members who have opted for it. DECLARATION BY THE MANAGING DIRECTOR UNDER CLAUSE 49 OF THE LISTING AGREEMENT REGARDING ADHERENCE TO THE CODE OF CONDUCT In accordance with sub-clause I (D) of Clause 49 of the Listing Agreement with the Stock Exchanges, I hereby confirm that, all the Directors and the Senior Management personnel of the Company have affirmed compliance with their respective Codes of Conduct, as applicable to them, for the Financial Year ended March 31, 2009.

For The Indian Hotels Company Limited Raymond N. Bickson Managing Director

59 The Indian Hotels Company Limited

HOTELS LOCATIONS: The various hotels/units of the Taj Group are tabled as under: GINGER TAJ LUXURY HOTELS TAJ PREMIUM HOTELS GATEWAY HOTELS HOTELS India India TGH - Residency Road, Bangalore Bangalore The Taj Mahal Palace & Towers, Mumbai Taj Connemara, Chennai TGH - Beach Road, Calicut Haridwar Bhubaneshwar Taj Lands End, Mumbai Taj Exotica, Goa Hotel Chandela, Khajuraho Mysore The Taj Mahal Hotel, New Delhi Fort Aguada Beach Resort, Goa TGH - Savoy, Ooty Trivandrum Taj Palace Hotel, New Delhi Taj Holiday Village, Goa TGH - Rawalkot, Jaisalmer Pune Taj Bengal, Kolkata Usha Kiran Palace, Gwalior TGH - Kuteeram, Bangalore Durgapur The Taj West End, Bangalore Taj Hari Mahal Palace, Jodhpur The Gir Lodge, Sasan Gir Nashik Taj Lake Palace Hotel, Udaipur Jai Mahal Palace, Jaipur TGH - City Inn, Baramati Agartala Pondicherry Taj Wellington Mews, Mumbai Vivanta by Taj, Whitefield Bengaluru TGH - Beach Road, Vizag Baroda Taj Coromandel, Chennai Taj President, Mumbai TGH - Pasumalai Hills, Madurai Pant Nagar Taj Krishna, Hyderabad Taj Residency, Bangalore TGH - Sylks Road, Coonoor Delhi Rambagh Palace, Jaipur Ambassador Hotel, New Delhi TGH - Port Road, Manjarun, Mangalore Goa Umaid Bhawan Palace, Jodhpur Taj Residency, Aurangabad TGH - Fatehabad Road, Agra Ludhiana Mahua Kothi, Bandhavgarh Taj Banjara, Hyderabad TGH - Ambad, Nasik Ahmedabad Mangalore Baghvan, Pench Taj Deccan, Hyderabad TGH - Varanasi Guwahati Pasangarh, Panna Taj Chandigarh, Chandigarh TGH - Ernakulam Banjar Tola, Kanha Taj Residency, Lucknow TGH - Varkala AIR CATERING Blue Diamond, Pune TGH - Chikmagalur Mumbai Overseas Fisherman’s Cove, Chennai TGH - Athwa Lines, Surat New Delhi The Pierre, New York Kolkata Taj Malabar, Cochin TGH - M. G. Road, Vijaywada Taj Boston, Boston Chennai Taj Garden Retreat, Kumarakom TGH - Ummed, Ahmedabad Campton Place, San Francisco Goa Taj Green Cove Resort, Kovalam TGH - Akota Gardens, Vadodara Taj Exotica Resort & Spa, Maldives Amritsar Sawai Madhopur Lodge, Sawai Madhopur TGH - SMS, Jaipur Bangalore Taj Palace Hotel, Dubai Ramgarh Lodge, Jaipur Nadesar Palace, Varanasi Crown Plaza / St. James - London Taj Residency, Trivandrum 51 Buckingham Gate, London Taj Mount Road, Chennai Vivanta by Taj, Panaji, Goa

Overseas Taj Samudra, Colombo Taj Exotica, Bentota Vivanta by Taj, Coral Reef, Maldives Rebak Island Resort, Langkawi, Malaysia Taj Tashi, Thimphu, Bhutan Taj Pamodzi, Lusaka Airport Garden Hotel, Colombo Blue, Sydney, Australia

60 Annual Report 2008-2009

AUDITORS’ CERTIFICATE

TO THE MEMBER OF THE INDIAN HOTEL COMPANY LIMITED We have examined the compliance of conditions of Corporate Governance by The Indian Hotel Company Limited (“the Company”) for the year ended 31st March, 2009 as stipulated in Clause 49 of the Listing Agreements of the Company with the stock exchanges. The compliance of conditons of Corporate Governance is the responsibility of the Management. Our examination was limited to a review of the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us and the representations made by the Management, we certify that the Company has complied with the condition of Corporate Governance as stipulated in the abovementioned Lisiting Agreements. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.

For DELOITTE HASKINS & SELLS For N. M. RAIJI & CO. Chartered Accountants Chartered Accountants

Nalin M. Shah Vinay D. Balse Partner Partner Membership No. 15860 Membership No. 39434

Mumbai, 26th June, 2009

61 The Indian Hotels Company Limited

Community Initiatives of the Taj Group of Hotels – 2008-09 Your company has been steadfast in its belief that it is in existence not only to make profits but also play a role as responsible corporate citizens, who add value to the society and the nation. With the growing focus on Corporate Sustainability and Triple Bottom Line approach in the contemporary business environment and as a brand of international visibility and repute, it has become increasingly imperative that your company updates its approach and processes towards the same. It has been our conscious endeavor to align our existing corporate sustainability activities to the global benchmarks. This has required us to upgrade our structure including aligning it with the company values, establishing robust processes and effectively cascading them down to the various properties. Your company is currently in the process of publishing a comprehensive GRI (Communication on Progress to UN Global Compact) report that reflects the company vision, approach and performance on three simultaneous measures – economic, social and environmental. Further, a Director level position for Corporate Sustainability has been created to integrate both social and environmental functions and drive the development of these initiatives. Social The Taj continues to believe in working symbiotically with the larger community and our goals is to empower our identified communities to be independent, earning members of society. By adapting some of our core strengths in hoteliering, we work alongside the state systems towards evolving realistic and sustainable solutions for national challenges like malnutrition, unemployment & gaps in vocational training and education. Our association with the rich heritage of India enables us to provide a platform to showcase indigenous art and culture to the world, while encouraging the craftsmen who create it. Last financial year, the total expenditure on social initiatives by the Taj Group of Hotels was to the tune of 25 Lacs, with the focus being on long-term, sustainable projects. This year, to back our growing commitment, an amount of Rs 35 Lacs has been allocated for both social and environmental projects. The growing significance of Corporate Sustainability in the current organization processes is apparent through the improvement in the data capturing systems and quality of the data collected. Data for 2008-09 Community Development 2008-09 Volunteering hours 73710 Volunteers 7415 Number of people impacted 57688 In the year 2008-09, the total number of volunteering hours spent on various activities increased by 94% to 73,710, while the number of employees who volunteer for the various initiatives has increased by 73% to 7415. There has been a reduction in the number of people impacted through these projects from 58,045 last year to 57,688 in the course of this financial year since the nature of projects has been changing from charities and one-time events to more long-term initiatives that economically empowers its beneficiaries in the long run. Our growing thrust on community initiatives has helped streamline our broad social theme of ‘building livelihoods’ to include projects that use the Taj’s core competency as leaders in hospitality: 1. Increasing employability and self – employability by empowering candidates from marginalized socio-economic backgrounds through vocational skill training, personality development, grooming and mentoring 2. Reduction of malnutrition 3. Promotion of indigenous artisans and craftsmen 4. Training & recruitment of Persons with Disabilities

62 Annual Report 2008-2009

A brief summary of our projects is presented below Skill trainings for less privileged women & youth Taj-Pratham Skill Training Center This project aims to train school dropouts and other less-privileged aspirants from rural areas in hotel operations like Food Production, House-keeping, Food & Beverage Services. More than 300 youth of Khaultabad region near Aurangabad are to be trained in a year, starting from June 2009. ITI Upgradation Program Your company has been tying up with rural ITIs in order to reach out to youth from less-privileged socio-economic backgrounds by facilitating market-relevant skill-trainings and on-the-job exposure in identified rural areas. Two such partnerships are in progress and two more shall be operational by the end of this calendar year. Skill trainings for grooming youth for Service Industry Taj President Mumbai, in partnership with TRENT & Kherwadi Social Welfare Association (KSWA) conducted youth development programmes at Geeta Nagar, a slum in South Mumbai. More than 70 young men and women were trained in beautician courses, hospitality and retail industry skill sets through this partnership. Interested candidates also were supported with accessing employment/self employment opportunities. Empowerment of Women Rehabilitation of commercial sex workers Your company’s hotels in Goa support 40 women of Swift Wash, an income generation initiative by the NGO Arz, which rehabilitates women from human trafficking. The hotel volunteers support to this NGO through skill trainings in laundry, team-building & business development inputs. These women today are capable of managing the laundry load of two Taj hotels in Goa and many other commercial establishments. Nutrition Support and Training IHCL has entered into a knowledge partnership with the government supplementary nutrition scheme through the support of Bhavishya Alliance which promotes public-private partnerships for the cause of child-malnutrition. Taj hotels provides inputs and trainings for government functionaries and relevant target groups to enhance the quality and taste of food being served through supplementary nutrition program to children between 0-6 years, pregnant and lactating women through a pilot venture in the Nandurbar district of rural Maharashtra. A training of trainers approach was followed to reach out to more than 12,000 grassroot stakeholders who have been trained in diverse low cost cooking, personal and cooking hygiene. Promoting Art, Culture and Artisans Your company supports and revives dying arts, unique to India’s heritage. In particular, with an aim to revive the handloom industry from extinction, your company uses hand-woven saris from the master weavers of Varanasi for uniforms across ten Taj Luxury properties. Disability Training and Recruitment People with disability are celebrated in your company where people with hearing and learning disabilities are trained in hospitality skills and employed across our properties in collaboration with the DEEDS Catering College for the Hearing Impaired and the SPJ Sadhana School for the Mentally Challenged. Environmental Initiatives The commitment of your company to the environment has been to reduce the impact of our daily operations on it. The broad areas of focus have been identified as:

63 The Indian Hotels Company Limited

1. Improving Energy Efficiencies 2. Water (Fresh & Waste) management 3. Solid Waste Management To reiterate our commitment to preservation of the environment, to boost sustainable tourism and integrate environment management in all business areas, your company launched the EARTH (Environment Awareness & Renewal at Taj Hotels) vision in August last year. Further your company decided to go in for the prestigious Green Globe certification - the only worldwide environmental certification program for travel and tourism industry. In the first year itself 55 of our hotels have achieved Green Globe certification. We expect all our hotels to achieve certification by the end of this year. Consumptions have been well under control despite increase in number of rooms by opening of new hotels Emissions & discharge of pollutants have always been maintained well below stipulated norms. Usage of Energy / Water 2008-09 Quantity of energy generated by unconventional methods (KwH) 43600651 Quantity of water recycled (KL) 1148999.2 Air Emission Tracking (ìgs/m³) 2008-09 NoX (permitted level upto 120 micro grams / m3) 11.5 SoX (permitted standard upto 120 micro grams / m3) 9.7 Particulate Matter (SPM) 221.7 Pollutants discharge in Waste Water (g/lt) 2008-09 CoD (permitted standard <250) 41 BoD (permitted standard <30) 20 TSS (permitted standard <100) 30 Oil & Grease (permitted standard <10) 3 Waste Disposal (Tons / Day) 2008-09 Waste for composting 24.91 Waste to Municipality 27.8 In our effort to reduce dependence on fossil fuels, the Taj has constantly looked at renewable sources of energy. Over the last year, the Taj has seen many initiatives towards the saving of precious natural resources like the installation of solar panels, heat exchangers and heat pumps. This has helped us increase the quantity of energy generated by unconventional methods by 58% over the last year from 43600651 KwH. Your company has remained well under the stipulated norms of up to 120 micro grams / m3. We have also taken active measures to ensure that the pollutants discharged in waste water remain within the norms as well.

64 Annual Report 2008-2009

65 The Indian Hotels Company Limited

AUDITORS’ REPORT TO THE MEMBERS OF THE INDIAN HOTELS COMPANY LIMITED 1. We have audited the attached Balance Sheet of THE INDIAN HOTELS COMPANY LIMITED (“the Company”) as at March 31, 2009, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both 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. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) 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. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) 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; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account; (d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts 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: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2009; (ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors as on 31st March, 2009 and taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2009 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956. For DELOITTE HASKINS & SELLS For N. M. RAIJI & CO. Chartered Accountants Chartered Accountants Nalin M. Shah Vinay D. Balse Partner Partner (Membership No.15860) (Membership No. 39434) MUMBAI, 12th June, 2009

66 Annual Report 2008-2009

ANNEXURE TO THE AUDITORS’ REPORT (Referred to in paragraph 3 of our report of even date) (i) Having regard to the nature of the Company’s business/activities and results for the year, clauses (viii), (x), (xiii) and (xiv) of paragraph 4 of CARO are not applicable. (ii) In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. The fixed asset records of the Taj Mahal Palace & Towers, Mumbai have not been updated, pursuant to the terrorist attack in November 2008, as the unit is in the process of restoration of its property, which is covered by a reinstatement policy. The records, we are informed, will be updated only after the insurance claim for reinstatement has been settled. (b) Physical verification of fixed assets has been carried out by the Management at most of the units in accordance with a programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. We have been informed that the reconciliation of assets verified with the fixed assets register is still in progress at some of the units. Discrepancies, if any, arising out of verification and reconciliation are yet to be determined. (c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company. (iii) In respect of inventory of stores, operating supplies and food and beverages: (a) As explained to us, inventories were physically verified during the year by the Management at reasonable intervals. (b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories 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 and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification. (iv) In respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us: (a) The Company has granted loans aggregating Rs. 500 crores to seven parties during the year. At the year-end, the outstanding balances of such loans granted aggregated Rs. 650.77 crores (number of parties – six) and the maximum amount involved during the year was Rs. 1,150.92 crores (number of parties – eleven). (b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie, not prejudicial to the interests of the Company. (c) The receipts of principal amounts and interest have been regular/as per stipulations, except in the case of a joint venture company, wherein interest of Rs. 4.42 crores remains overdue. (d) In respect of overdue amounts of over Rs.1 lakh remaining outstanding as at the year-end, as explained to us, the Management has taken reasonable steps for recovery of the overdue interest. (v) In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us: (a) The Company has taken loans aggregating Rs. 1.85 crores from one party during the year. At the year-end, the outstanding balances of such loans taken aggregated Rs. 3.76 crores (number of parties – two) and the maximum amount involved during the year was Rs. 46.56 crores (number of parties – five).

67 The Indian Hotels Company Limited

(b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie, not prejudicial to the interests of the Company. (c) The payments of principal amounts and interest in respect of such loans are regular/as per stipulations. (vi) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. In the course of our audit, we have not observed any major weakness in such internal control system. (vii) In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act 1956, to the best of our knowledge and belief and according to the information and explanations given to us: (a) The particulars of contracts or arrangements referred to Section 301, that needed to be entered in the Register maintained under the said Section, have been so entered. (b) Where each of such transactions (excluding loans reported under paragraphs (iv) and (v) above) is in excess of Rs. 5 lakhs in respect of any party, the transactions have been made at prices which are, prima facie, reasonable, having regard to the prevailing market prices at the relevant time. (viii) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 58A and 58AA, or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975, with regard to deposits accepted from the public. According to information and explanations given to us, no order has been passed by the Company Law Board or the National Company Law Tribunal or the Reserve Bank of India or any Court or any other Tribunal. (ix) In our opinion, the Company has an internal audit system commensurate with the size of the Company and the nature of its business. (x) According to the information and explanations given to us, in respect of statutory dues: (a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other material statutory dues with the appropriate authorities during the year. (b) There were no undisputed amounts outstanding as at 31st March, 2009 for a period of more than six months from the date they became payable. (c) Details of dues of Sales Tax and Service Tax which have not been deposited as on 31st March, 2009, on account of disputes, are given below: Name of Nature Amount Period to which Forum where Statute of Dues (Rs.in the amount relates dispute is pending crores) Central Sales Sales Tax 0.11 2000-01/2002-03 Additional Tax Act, 1956 Commissioner of and Sales Tax Act Sales Tax of various states 0.38 1997-98/1999-2001 Assessing Officer of Sales Tax 1.23 2001-02 Deputy Commissioner of Sales Tax 0.11 1992-95 Tribunal 0.27 1995-96 Appellate Board

68 Annual Report 2008-2009

Name of Nature Amount Period to which Forum where Statute of Dues (Rs.in the amount relates dispute is pending crores) 0.23 1996-98 Appellate & Revision Board 2.53 2001-06 Deputy Commissioner of Commercial Taxes 0.06 2003-05 Joint Commissioner of Trade Tax, Noida Finance Act, 1994 Service Tax 0.05 2002-05 Deputy Commissioner of Central Excise 1.10 2002-05 Commissioner of Service Tax Total 6.07 (xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to financial institutions, banks and debenture holders. (xii) In our opinion and according to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks and financial institutions are not, prima facie, prejudicial to the interests of the Company. (xiv) To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained. (xv) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, funds raised on short-term basis have, prima facie, not been used during the year for long-term investment. (xvi) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies/firms covered in the Register maintained under Section 301 of the Companies Act, 1956. (xvii) According to the information and explanations given to us and the records examined by us, securities have been created in respect of the debentures issued. (xviii) We have verified the end use of money raised by the Rights Issue of simultaneous but unlinked issue of Equity Shares and Non Convertible Debentures as disclosed in Note 3 of Schedule 14 “ Notes to the Balance Sheet and the Profit and Loss Account”. (xix) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company was noticed or reported during the year.

For DELOITTE HASKINS & SELLS For N. M. RAIJI & CO. Chartered Accountants Chartered Accountants

Nalin M. Shah Vinay D. Balse Partner Partner (Membership No.15860) (Membership No. 39434) MUMBAI, 12th June, 2009

69 The Indian Hotels Company Limited

Balance Sheet as at March 31, 2009 March 31, 2008 Schedule Rupees Rupees Rupees crores crores crores SOURCES OF FUNDS Shareholders’ Funds Share Capital 1 72.34 60.29 Share Application Money - 19.97 Reserves and Surplus 2 2,975.29 1,956.29 Total 3,047.63 2,036.55 Loan Funds Secured Loans 3 1,598.02 755.58 Unsecured Loans 4 168.45 378.60 Total 1,766.47 1,134.18 Long Term Trade Deposits 23.53 23.63 Deferred Tax Liability (Refer Note 5 (b), Page 94) 146.94 137.86 4,984.57 3,332.22 APPLICATION OF FUNDS Fixed Assets 5 Gross Block 2,362.23 2,069.68 Less : Depreciation 776.83 700.56 Net Block 1,585.40 1,369.12 Capital work-in-progress 215.10 267.93 Total 1,800.50 1,637.05 Investments 6 2,026.88 977.58 Long Term Deposits 7 677.78 585.55 Foreign Currency Monetary Item Translation 11.63 - Difference Account(Refer Note 18, Page 99) Current Assets, Loans and Advances 8 Inventories 38.91 32.85 Sundry Debtors 101.70 138.41 Cash & Bank Balances 23.44 74.43 Loans & Advances 776.76 330.01 940.81 575.70 Less: Current Liabilities and Provisions 9 Liabilities 320.36 401.14 Provisions 153.40 43.97 473.76 445.11 Net Current Assets 467.05 130.59 Miscellaneous Expenditure (to the extent not adjusted or written off) 10 0.73 1.45 4,984.57 3,332.22 The accompanying notes form an integral part of the Balance Sheet 13 / 14

As per our report attached. For and on behalf of the Board For DELOITTE HASKINS & SELLS For N. M. RAIJI & CO. R. N. TATA Chairman Chartered Accountants Chartered Accountants R. K. KRISHNA KUMAR Vice - Chairman RAYMOND N. BICKSON Managing Director ANIL P. GOEL Executive Director - Finance ABHIJIT MUKERJI Executive Director - Hotel Operations Nalin M. Shah Vinay D. Balse N. A. SOONAWALA Partner Partner S. K. KANDHARI JAGDISH CAPOOR Directors SHAPOOR MISTRY ARNAVAZ AGA } NADIR GODREJ Mumbai, June 12, 2009 SANKER PARAMESWARAN Vice President - Legal & Company Secretary

70 Annual Report 2008-2009

Profit and Loss Account for the year ended March 31, 2009 Previous Year Schedule Rupees Rupees Rupees crores crores crores INCOME Rooms, Restaurants, Banquets and Other Income 11 1,706.52 1,823.16 EXPENDITURE Operating and General Expenses 12 1,163.52 1,074.35 Depreciation 94.46 85.48 Interest (net) (Refer Note 15, Page 98) 90.44 94.28 Total 1,348.42 1,254.11 Less : Expenditure during construction period transferred 10.41 11.42 to Fixed Assets 1,338.01 1,242.69 PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS 368.51 580.47 EXCEPTIONAL ITEMS (Refer Note 2(b), Page 92) 6.21 - PROFIT BEFORE TAX 362.30 580.47 Less : Provision for Tax (Refer Note 5, Page 93) 124.58 198.91 Less : Short Provision of Tax of earlier years (Net) 3.69 4.10 PROFIT AFTER TAX 234.03 377.46 Add : Balance brought forward from Previous Year 536.78 331.33 Amount available for Appropriation 770.81 708.79 Appropriation: Interim Dividend - 114.54 Tax on Interim Dividend - 19.47 Proposed Dividend 86.81 - Tax on Dividend 14.75 - Transfer to Debenture Redemption Reserve 100.00 - Transfer to General Reserve 30.00 38.00 Balance carried forward 539.25 536.78 770.81 708.79 Earnings Per Share - (In Rupees) (Refer Note 36, Page 116) Basic and Diluted 3.28 5.77 Face Value per equity share - (In Rupees) 1.00 1.00 The accompanying notes form an integral part of the 13 / 14 Profit and Loss Account

As per our report attached. For and on behalf of the Board For DELOITTE HASKINS & SELLS For N. M. RAIJI & CO. R. N. TATA Chairman Chartered Accountants Chartered Accountants R. K. KRISHNA KUMAR Vice - Chairman RAYMOND N. BICKSON Managing Director ANIL P. GOEL Executive Director - Finance ABHIJIT MUKERJI Executive Director - Hotel Operations Nalin M. Shah Vinay D. Balse N. A. SOONAWALA Partner Partner S. K. KANDHARI JAGDISH CAPOOR Directors SHAPOOR MISTRY ARNAVAZ AGA } NADIR GODREJ Mumbai, June 12, 2009 SANKER PARAMESWARAN Vice President - Legal & Company Secretary

71 The Indian Hotels Company Limited

Cash Flow Statement for the year ended March 31, 2009 Previous Year Rupees Rupees Rupees Rupees crores crores crores crores Cash Flow From Operating Activities Net Profit Before Tax 362.30 580.47 Adjustments For : Depreciation 94.46 85.48 Amortisation of VRS Expenditure 0.13 0.51 Provision for Doubtful Debts and Advances 2.98 (1.26) Loss / (Profit) on sale of assets (4.09) 5.98 Dividend Income (69.50) (19.98) Interest (Net) 90.44 94.28 Unrealised Exchange Loss / (Gain) 10.03 (14.23) Provision for Diminution in value of Investments written back - (0.25) Provision for Loyalty Programmes (net of Redemptions) 1.61 2.14 Provision for Employee Benefits 6.45 0.93 132.51 153.60 Cash Operating Profit before working capital changes 494.81 734.07 Adjustments For : Trade and Other Receivables (70.55) 29.04 Inventories (6.06) (3.83) Trade Payables 31.25 (29.24) (45.36) (4.03) Cash Generated from Operating Activities 449.45 730.04 Direct Taxes Paid (155.14) (207.08) Net Cash From Operating Activities 294.31 522.96 Cash Flow From Investing Activities Purchase of Fixed Assets (262.44) (259.00) Sale of Fixed Assets 8.67 2.06 Purchase of Investments (including Advance paid) (353.36) (112.72) Interest Received 31.77 7.02 Dividend Received 69.50 19.98 Long Term Deposits Placed with Subsidiaries (482.72) (179.02) Long Term Deposits Placed with Others (7.25) (27.74) Long Term Deposits Refunded by Other Companies 10.17 0.25 Loans repaid by Subsidiaries 19.46 9.17 Short Term (Loans to) / Loans repaid by Other Companies (net) (139.54) (1.57) Net Cash Used In Investing Activities (1,105.74) (541.57) Cash Flow From Financing Activities Share Application money collected - 19.97 Debenture Application money collected - 3.88 Proceeds from Issue of Equity Shares 823.90 - Debenture issue costs (9.44) (0.69) Interest Paid (80.69) (101.08) Repayment of Long Term Loans and Debentures (142.52) (352.75) Proceeds of Long Term Loans and Debentures 922.99 422.73 Short Term Loans Raised / (Repaid) (net) (197.71) 136.53 Long Term Trade Deposits Raised/(Repaid) (net) (0.10) 8.34 Dividend Paid (Including tax on dividend) (133.84) (112.64) Net Cash Used In Financing Activities 1,182.59 24.29 Net Increase / (Decrease) In Cash and Cash Equivalents 371.16 5.68 Cash and Cash Equivalents - Opening - 1st April - (Refer Note 11 (b), Page 96) 74.43 68.75 Cash and Cash Equivalents - Closing - 31st March - (Refer Note 11 (b), Page 96) 445.59 74.43

As per our report attached. For and on behalf of the Board For DELOITTE HASKINS & SELLS For N. M. RAIJI & CO. R. N. TATA Chairman Chartered Accountants Chartered Accountants R. K. KRISHNA KUMAR Vice - Chairman RAYMOND N. BICKSON Managing Director ANIL P. GOEL Executive Director - Finance ABHIJIT MUKERJI Executive Director - Hotel Operations Nalin M. Shah Vinay D. Balse N. A. SOONAWALA Partner Partner S. K. KANDHARI JAGDISH CAPOOR Directors SHAPOOR MISTRY ARNAVAZ AGA } NADIR GODREJ Mumbai, June 12, 2009 SANKER PARAMESWARAN Vice President - Legal & Company Secretary

72 Annual Report 2008-2009

Schedules forming part of the Balance Sheet Schedule 1 : Share Capital March 31, 2008 Rupees Rupees crores crores AUTHORISED SHARE CAPITAL Ordinary Shares 100,00,00,000 Ordinary Shares of Re. 1/- each 100.00 100.00 Preference Shares 1,00,00,000 Cumulative Redeemable Preference Shares of Rs. 100/- each 100.00 100.00 200.00 200.00 ISSUED SHARE CAPITAL 72,34,21,792 (Previous Year - 60,28,51,493) Ordinary Shares of Re. 1 /- each 72.34 60.29 72.34 60.29 SUBSCRIBED AND PAID UP 72,34,05,288 (Previous Year - 60,28,51,493) Ordinary Shares of Re. 1 /- each, Fully Paid ( See Notes below ) 72.34 60.29 72.34 60.29

Notes : 1. Of the total paid up capital : (i) 4,90,04,000 Ordinary Shares, of the face value of Re. 1/- each, were issued as fully paid Bonus Shares by capitalisation of Reserves. (ii) 24,88,77,170 Ordinary Shares, of the face value of Re. 1/- each, were issued as fully paid Bonus Shares by capitalisation of Securities Premium Account. (iii) 13,54,84,873 Ordinary Shares, of the face value of Re. 1/- each, were issued as fully paid shares, pursuant to exercise of option for conversion by holders of Foreign Currency Convertible Bonds (FCCBs). (iv) 1,62,19,670 Ordinary Shares, of the face value of Re. 1/- each, were allotted as fully paid shares, pursuant to amalgamation of Gateway Hotels & Getaway Resorts Limited and Indian Resort Hotels Limited with the Company. (v) 12,05,53,795 Ordinary Shares, of the face value of Re 1/- each, were allotted on May 23, 2008 as fully paid shares, pursuant to Rights Issue of Equity Shares by the Company (Refer Note 3, Page 92). (vi) 16,504 Ordinary Shares have been issued but not subscribed to as at the end of the year and have been kept in abeyance pending resolution of legal dispute.

73 The Indian Hotels Company Limited

Schedules forming part of the Balance Sheet Schedule 4 : Unsecured Loans March 31, 2008 Rupees Rupees crores crores FIXED DEPOSITS

From Shareholders: (Refer Note 1 below ) 22.14 1.91 [Repayable within one year - Rs. 0.03 crore (Previous Year - Rs. 1.05 crores)]

From Others : 5.04 1.17 [Repayable within one year - Rs. 0.17 crore (Previous Year - Rs. 1.14 crores)]

SHORT TERM LOANS FROM BANKS - 89.18

INTER - CORPORATE DEPOSITS (Refer Note 2 below ) 0.41 57.05 [Repayable within one year - Rs. 0.41 crore (Previous Year - Rs. 57.05 crores)]

COMMERCIAL PAPER (Refer Note 3 below ) - 50.00

FOREIGN CURRENCY TERM LOAN FROM BANKS 140.86 179.29 [Repayable within one year - Nil (Previous Year - Rs. 59.23 crores)]

TOTAL 168.45 378.60

Note:

1) Includes Fixed deposits from a Director - Rs. 0.60 crore (Previous Year - Rs. 1.00 crore).

2) Includes deposits from a subsidiary - Rs. 0.41 crore (Previous Year - Rs. 14.05 crores).

3) Maximum amount outstanding during the year - Rs. 150.00 crores (Previous Year - Rs. 170.00 crores).

76 The Indian Hotels Company Limited

Schedules forming part of the Balance Sheet Schedule 2 : Reserves and Surplus March 31, 2008 Rupees Rupees Rupees crores crores crores Capital Reserve Balance as per Last Account 43.91 43.91 Capital Redemption Reserve Balance as per Last Account 1.12 1.12 Securities Premium Account Balance as per Last Account 851.37 852.06 Add: On allotment of Rights Issue of Equity Shares (Refer Note 3, Page 92) 831.82 - Less: Share / Debenture Issue Expenses written off (Refer Notes 3 and 4 , Page 92 and 93) 7.91 0.69 Total 1,675.28 851.37 General Reserve Balance as per Last Account 404.63 366.63 Add: Transferred from Profit and Loss Account 30.00 38.00 Less: Transferred to Foreign Currency Monetary Item Translation Difference Account (Refer Note 18 , Page 99 ) 3.82 - Total 430.81 404.63 Investment Reserve Balance as per Last Account 5.00 5.00 Investment Allowance Utilised Reserve Balance as per Last Account 4.03 4.03 Export Profits Reserve Balance as per Last Account 0.41 0.41 Debenture Redemption Reserve Balance as per Last Account 88.67 88.67 Add : Transferred from Profit and Loss Account 100.00 - Total 188.67 88.67 Foreign Exchange Earnings Reserve Balance as per Last Account 7.51 7.51 Foreign Exchange Earnings Utilised Reserve Balance as per Last Account 2.31 2.31 Foreign Currency Translation Reserve (Refer Note 1 (f), Page 90) Balance as per Last Account 10.55 35.41 Add / (Less) : Foreign Exchange fluctuation for the year 86.63 (24.86) Less : Transferred to Profit and Loss Account (Refer Note 10 (e), Page 95) 20.19 - Total 76.99 10.55 Profit and Loss Account Balance carried forward 539.25 536.78 2,975.29 1,956.29

74 Annual Report 2008-2009

Schedules forming part of the Balance Sheet Schedule 3 : Secured Loans March 31, 2008 Rupees Rupees Rupees crores crores crores DEBENTURES 2,500, 9.5% Secured Non-Convertible Debentures of Rs.10 lakhs each, allotted on February 27, 2007, and repayable at the end of the 5th year from the date of allotment 250.00 250.00 3,000, 9.86% Secured Non-Convertible Debentures of Rs.10 lakhs each, allotted on September 3, 2007, and repayable at the end of the 3rd year from the date of allotment 300.00 300.00 6,02,76,898, 6% Secured Non-Convertible Debentures of Rs.100 each, allotted on May 13, 2008, and repayable at the end of the 3rd year from the date of allotment 602.77 - 3,000, 11.8% Secured Non-Convertible Debentures of Rs.10 lakhs each, allotted on 18th December, 2008, and repayable in 3 annual instalments commencing from the end of the 3rd year 300.00 - Security : All the above Debentures are secured by a pari passu first charge created on all the fixed assets of the Company, both present and future, other than immovable properties and movable assets of Taj Wellington Mews, Mumbai Term loan from a Bank [Repayable within one year - Rs. 100 crores (Previous year - Nil)] 100.00 100.00 Add : Exchange Loss / (Gain) on Currency Swap of the above Term Loan 15.81 (9.04) 115.81 90.96 Security : The Term Loan is secured by a specific charge on the immovable properties and movable assets of Taj Wellington Mews, Mumbai Term loan from Housing Development Finance Corporation Limited (HDFC) - 83.29 Security : Term Loan from HDFC was secured by a specific charge on the immovable properties of Taj Exotica, Goa FROM BANK Bank Overdraft 29.44 31.33 ( Secured by hypothecation of Operating Supplies, Stores, Food & Beverages and Receivables ) TOTAL 1,598.02 755.58

75 Annual Report 2008-2009

Schedules forming part of the Balance Sheet Schedule 5 : Fixed Assets Rupees crores

Gross Block Additions Deductions Gross Block Accumulated Depreciation Deductions Accumulated Net Block Net Block (at cost ) for the for the (at cost ) Depreciation for the for the Depreciation as at as at as at Year Year as at as at Year Year as at 01.04.2008 31.03.2009 01.04.2008 31.03.2009 31.03.2009 31.03.2008 (See Note 2) (See Note 2)

TANGIBLE ASSETS Freehold Land 136.28 - - 136.28 3.88 - - 3.88 132.40 132.40 135.47 0.81 - 136.28 3.88 - - 3.88 132.40 Leasehold Land 12.44 - - 12.44 0.32 0.14 - 0.46 11.98 12.12 12.02 0.61 0.19 12.44 0.20 0.12 - 0.32 12.12 Buildings (See Note 1 below) 838.58 139.61 2.54 975.65 102.98 19.39 0.44 121.93 853.72 735.60 815.49 25.21 2.12 838.58 88.65 14.68 0.35 102.98 735.60 Plant and Machinery 740.91 133.79 13.16 861.54 387.55 47.48 11.70 423.33 438.21 353.36 710.69 52.28 22.06 740.91 363.20 44.54 20.19 387.55 353.36 Furniture, Fixtures and Office Equipment 304.59 34.91 5.05 334.45 188.74 22.84 4.17 207.41 127.04 115.85 290.90 18.11 4.42 304.59 170.72 21.44 3.42 188.74 115.85 Vehicles 13.00 3.75 0.62 16.13 5.70 1.03 0.48 6.25 9.88 7.30 13.19 0.80 0.99 13.00 5.27 1.07 0.64 5.70 7.30 INTANGIBLE ASSETS Wesbite Development Cost 4.61 - - 4.61 4.55 0.01 - 4.56 0.05 0.06 4.53 0.08 - 4.61 4.53 0.02 - 4.55 0.06 Customer Reservation System 6.57 2.15 - 8.72 1.55 1.29 - 2.84 5.88 5.02 and licensed software 17.44 3.97 14.84 6.57 13.37 1.99 13.81 1.55 5.02 Service and Operating Rights 12.70 1.12 1.41 12.41 5.29 2.28 1.40 6.17 6.24 7.41 13.22 2.06 2.58 12.70 4.42 1.62 0.75 5.29 7.41 TOTAL 2,069.68 315.33 22.78 2,362.23 700.56 94.46 18.19 776.83 1,585.40 1,369.12

2,012.95 103.93 47.20 2,069.68 654.24 85.48 39.16 700.56 1,369.12

Notes : (1) Gross Block includes improvements to buildings constructed on leasehold land - Rs. 423.10 crores; Previous Year - Rs. 406.98 crores . (2) Accumulated Depreciation includes adjustment for impairment of Rs. 9.25 crores made in the earlier years. (3) Attention is invited to Note 2 of Schedule 14 regarding the damage to The Taj Mahal Palace & Tower in Mumbai. (4) Figures in italics are in respect of the previous year.

77 The Indian Hotels Company Limited

Schedules forming part of the Balance Sheet Schedule 6 : Investments Face Holdings Holdings March 31, Value As at Rupees Rupees As at 2008 Long Term Rupees March 31, crores crores March 31, Rupees (unless 2009 2008 crores Trade Investments : otherwise stated) Fully Paid Unquoted Equity Shares (unless otherwise stated) : Hotels and Restaurant Co-op. Service Society Ltd. (Rs. 1,000/-) 50 20 - 20 - Ideal Ice & Cold Storage Co. Ltd. 10 107,224 0.06 107,224 0.06 India Tourism Development Corporation Ltd.(Listed but not quoted) 10 67,50,275 44.58 67,50,275 44.58 Inditravel Pvt. Ltd. 10 2,40,003 0.24 2,40,003 0.24 Kumarkrupa Hotels Ltd. 10 96,432 0.94 96,432 0.94 Piem Hotels Ltd. 10 8,81,228 35.27 8,81,228 35.27 Rallis India Ltd. (7.5% Cumulative Redeemable Preference Shares) 10 2,00,00,000 20.00 2,00,00,000 20.00 Taida Trading & Industries Ltd. 100 26,912 0.27 26,912 0.27 Taj Air Ltd. 10 1,47,060 0.15 1,47,060 0.15 Taj Asia Ltd. US$ 1 13,29,778 13.63 13,29,778 13.63 Taj Enterprises Ltd. 100 7,000 0.07 7,000 0.07 IHMS Hotels (SA) (Proprietary) Ltd. (formerly known as Taj International Hotels (South Africa) (Proprietary) Ltd.) South African (Rs. 3,052) Rand 1 500 - 500 - Taj Karnataka Hotels & Resorts Ltd. 10 3,00,000 0.30 3,00,000 0.30 Taj Kerala Hotels & Resorts Ltd. 10 1,41,51,663 15.67 1,41,51,663 15.67 Taj Madras Flight Kitchen Pvt. Ltd. 10 79,44,112 8.56 79,44,112 8.56 Taj Madurai Ltd. 10 9,11,994 0.95 9,11,994 0.95 Taj Rhein Shoes Co. Ltd. 100 45,000 0.45 45,000 0.45 Taj Trade & Transport Co. Ltd. 10 12,54,000 2.67 12,54,000 2.67 Taj Safaris Ltd. (12,50,000 shares acquired during the year) 10 59,16,667 7.92 46,66,667 6.67 Tata Projects Ltd. ( 75, 000 bonus shares allotted during the year) 100 90,000 0.17 15,000 0.17 Tata Services Ltd. 1,000 421 0.03 421 0.03 Tata Sons Ltd. 1,000 4,500 25.00 4,500 25.00 BJETS Pte Ltd. , Singapore US$ 1 2,00,00,000 102.59 -- Tril Infopark Ltd. 10 4,91,18,060 49.12 -- 328.64 175.68 Quoted Equity Shares - Fully Paid : Tourism Finance Corporation of India Ltd. 10 50,000 0.10 50,000 0.10 Benares Hotels Ltd. 10 2,93,000 0.69 2,93,000 0.69 Taj Lanka Hotels Ltd. Sri Lankan Rs 10 3,43,75,640 18.72 3,43,75,640 18.72 Oriental Hotels Ltd. 10 33,76,455 28.72 33,76,455 28.72 Taj GVK Hotels & Resorts Ltd. 2 1,60,00,000 40.34 1,60,00,000 40.34 Tata Consultancy Services Ltd. 1 614,376 0.05 614,376 0.05 88.62 88.62 Carried over 417.26 264.30

78 Annual Report 2008-2009

Schedules forming part of the Balance Sheet Schedule 6 : Investments (Contd.) Face Holdings Holdings March 31, Value As at Rupees Rupees As at 2008 Rupees March 31, crores crores March 31, Rupees (unless 2009 2008 crores otherwise stated) Brought over 417.26 264.30 Investments in Subsidiary Companies Unqoted Equity Shares - Fully Paid : International Hotel Management Services Inc. (includes Rs. 365.08 crores by way of additional paid-in capital during the year) US $ 1 100 783.55 100 418.47 KTC Hotels Ltd. 10 6,04,000 0.70 6,04,000 0.70 Residency Food & Beverages Ltd. 10 1,85,00,000 18.25 1,85,00,000 18.25 Roots Corporation Ltd. 10 5,10,00,000 51.00 5,10,00,000 51.00 Taj International Hotels (H.K.) Ltd. (2,32,45,000 shares alloted during the year) US $ 1 5,00,00,000 190.23 2,67,55,000 81.12 TIFCO Holdings Ltd. (formerly known as Taj Investment & Finance Company Ltd. ) 10 8,15,00,000 81.50 8,15,00,000 81.50 Taj SATS Air Catering Ltd. 10 88,74,000 61.82 88,74,000 61.82 United Hotels Ltd. 10 25,18,320 1.11 25,18,320 1.11 1,188.16 713.97 Non-trade Investments - Long Term Central India Spinning Weaving & Manufacturing Co. Ltd. 500 50 - 50 - (10% unquoted Cumulative Preference Shares) (Rs. 27,888/-) HDFC Bank Ltd. (quoted Equity Shares) (Rs. 5,000/- ) 10 500 - 500 - National Savings Certificate (Rs 10,000) - - - - Total Long Term Investments - Gross 1,605.42 978.27 Less : Provision for Diminution in Value of Investments 0.69 0.69 Total Long Term Investments - Net 1,604.73 977.58 Current Investments (Refer Note 3 below) Investments in Mutual Fund Units (Unquoted) ABN Amro Money Plus IP fund-Daily Dividend 10 6,60,81,388 66.10 - DWS Money Plus Fund-IP-Daily Dividend 10 4,08,81,766 40.92 - Kotak Floater-LT-Daily Dividend 10 3,98,15,614 40.13 - Birla Sun Life Liquid Plus-IP-Daily Dividend 10 5,62,92,424 56.33 - ICICI Prudential Flexible Income Plan-Daily Dividend 10 4,94,02,547 52.24 - JM Money ManagerFund-Super Plan- Daily Dividend 10 50,24,833 5.03 - Templeton IndiaUltra Short Bond Fund-IP-Daily Dividend 10 4,57,84,604 45.84 - Tata Floater Fund-Daily Dividend 10 5,10,02,326 51.18 - UTI Liquid Plus Fund- IP-Daily Dividend 1,000 2,08,201 20.82 - Sundaram BNP Paribas-Liquid Plus- Super IP-Daily Dividend 10 4,14,47,061 41.55 - Fidelity Ultra Short Term Debt Fund- Super IP-Daily Dividend 10 20,16,879 2.01 - 422.15 - TOTAL 2,026.88 977.58 Notes : 1 Aggregate of Quoted Investments - Gross : Cost 88.62 88.62 : Market Value 184.92 335.02 2 Aggregate of Unquoted Investments - Gross : Cost 1,938.95 889.65 3 The unutilised monies out of the Rights Issue proceeds as at the year end aggregating Rs. 105.50 crores have been temporarily invested in various Liquid Mutual Fund Schemes. (Refer Note 3, Page 92 )

79 The Indian Hotels Company Limited

Schedules forming part of the Balance Sheet Schedule 6 : Investments (Contd.) During the year the Company acquired and sold the following investments in Mutual Funds March 31, 2008 Rupees Rupees Rupees crores crores crores Particulars Face value No of Units Purchase No of Purchase Cost Units Cost ABN AMRO Interval Fund - Montly Plan A - Dividend-Red 10 2,51,77,027 25.36 ABN AMRO Overnight Fund - Institutional Plus Plan - Daily Dividend 10 13,60,59,167 136.08 AIG India Liquid Fund - Super IP - Daily Dividend 1,000 4,69,721 47.01 AIG India Treasury Plus Fund - Super IP - Daily Dividend 10 7,53,67,185 75.45 DWS Insta Cash Plus - Super IP - Daily Dividend 10 16,54,04,003 165.73 DWS Liquid Plus Fund - IP - Daily Dividend 10 17,61,11,508 176.30 DWS FTF - Series 57 - IP - Dividend 10 1,02,06,017 10.21 Grindlays Floating Fund LT - Inst Plan B - Daily Dividend 10 - - 1,50,19,042 15.02 IDFC Liquidity Manager Fund Plus - Daily Dividend 1,000 9,99,960 100.02 IDFC F R F - IP - LTP - Plan B - Daily Dividend 10 15,03,05,712 150.39 IDFC Liquid Plus - Treasury Plan - Plan B - Daily Dividend 10 2,61,09,587 26.29 IDFC Liquid Plus - Treasury Plan - Plan C - Daily Dividend 10 1,50,25,846 15.03 IDFC Cash Fund - Plan B - Daily Dividend 10 75,61,892 8.00 IDFC Cash Fund - Plan C - Daily Dividend 10 2,79,98,362 28.01 ING Liquid Fund - Super IP - Daily Dividend 10 17,34,78,913 173.56 ING Liquid Plus Fund - IP - Daily Dividend 10 20,05,34,414 200.60 HSBC Cash Fund - Super IP - Daily Dividend 10 5,29,84,395 53.04 HSBC Cash Fund-Institutional Plus - Daily Dividend 10 10,99,11,639 110.04 HSBC FTS 60 - IP - Dividend 10 2,55,54,228 25.55 Kotak FMP- 1 Months- Series 1- Dividend 10 5,07,92,668 50.79 Kotak FMP- 3 Months- Series 33- Dividend 10 5,18,77,738 51.88 Kotak FMP- 1 Months- Series 3 - Dividend 10 2,51,80,479 25.18 Kotak Monthly Interval Plan - Series II - Dividend 10 2,53,47,051 25.35 Kotak FMP- 1 Months- Series III - Dividend 10 4,02,70,267 40.27 Kotak Liquid - Inst Premium Plan - Daily Dividend 10 65,43,523 8.00 Kotak Flexi Debt Fund- Daily Dividend 10 12,00,85,807 120.49 Kotak Liquid - Inst Premium Plan - Daily Dividend 10 7,78,47,348 95.19 Birla Sun Life Cash Plus- Institutional Premium Plan-Daily Dividend 10 23,71,02,202 237.59 4,74,51,669 47.54 Birla Sun Life Interval Income Fund Monthly Plan - Series I - IP - Dividend 10 50,35,870 5.04 Birla Sun Life Interval Income Fund Monthly Plan - Series II - IP - Dividend 10 3,51,05,626 35.27 HDFC Cash Management Fund- Savings Plan-Daily Dividend 10 2,77,39,359 29.51 HDFC FRIF-STF-WP-Daily Dividend 10 14,53,83,770 146.56 Carried over 2,397.79 62.56

80 Annual Report 2008-2009

Schedules forming part of the Balance Sheet Schedule 6 : Investments (Contd.) During the year the Company acquired and sold the following investments in Mutual Funds March 31, 2008 Rupees Rupees Rupees crores crores crores Particulars Face value No of Units Purchase No of Purchase Cost Units Cost Brought over 2,397.79 62.56 HDFC Cash Management Fund- Savings Plus- Wholesale- Daily Dividend 10 10,95,44,616 110.46 1,88,24,755 20.02 HDFC Cash Management Fund - Call Plan - Daily Dividend 10 57,62,078 6.01 ICICI Prudential Liquid-Super IP-Daily Dividend 10 40,12,25,178 401.25 3,50,30,457 35.03 ICICI Prudential FMP- Series 44-1M PLan A- Ret Dividend 10 7,00,00,000 70.42 ICICI Prudential FMP- Series 44-1M PLan B- Ret Dividend 10 3,01,93,500 30.19 ICICI Prudential FMP- Series 44-1M PLan C- Ret Dividend 10 3,00,00,000 30.21 ICICI Prudential FRF - Plan D - Daily Dividend 10 7,53,85,401 75.40 ICICI Prudential FMP - S 48 - 1 Months - Plan A - IP - Dividend 10 2,00,00,000 20.16 ICICI Prudential FMP - Series 44 - 1M - Plan D - Ret - Dividend 10 7,00,00,000 70.49 ICICI Prudential Interval Fund - Monthly Interval I - IP - Dividend 10 13,68,98,349 136.90 ICICI Prudential Interval Fund - Monthly Interval III - Dividend 10 6,54,37,245 65.47 ICICI Prudential Interval Fund II - Quarterly Interval - Plan A - Dividend 10 1,53,30,720 15.33 ICICI Prudential Flexible Income Plan - Daily Dividend 10 - - 66,33,044 7.01 JM High Liquidity- Super IP- Daily Dividend 10 27,05,43,679 270.99 JM Money Manager Fund- Super Plan - Daily Dividend 10 21,47,20,813 214.81 JM Money Manager Fund-Super Plan-Daily Dividend 10 38,75,66,594 387.82 JM Money Manager Fund-Super Plan-Daily Dividend 10 2,51,93,922 25.21 JM Money Manager Fund- Super Plan - Daily Dividend 10 2,02,11,053 20.22 JM FMF - Series XII - Monthly Plan 3 - IP - Dividend 10 2,01,48,971 20.15 JM FMF - Series XII - Monthly Plan 3 - IP - Dividend 10 2,01,52,604 20.15 Standard Chartered Liquidity Manager - Plus - Daily Dividend 1,000 3,30,265 33.03 Templeton India TMA - IP - Daily Dividend 1,000 1,54,926 15.50 Templeton India Ultra Short Bond Fund - Super IP - Dividend 10 7,27,58,712 72.90 Templeton India Ultra Short Bond Fund - IP - Dividend 1,000 5,69,725 57.01 Templeton India TMA - Super IP - Daily Dividend 1,000 4,49,776 45.01 Tata Liquid Fund - SHIP - Daily Dividend 1,000 25,47,923 281.39 6,73,678 75.08 Tata Dynamic Bond Fund - Option B - Dividend 10 7,40,14,183 75.90 Tata FIP Fund - Series A2 - IP - Monthly Dividend 10 5,54,46,674 55.59 Tata FIP Fund - Series A3 - IP - Monthly Dividend 10 3,61,50,429 36.32 Tata FIP Fund - Series A3 - IP - Monthly Dividend 10 1,50,27,132 15.36 UTI Liquid Fund - Cash Plan - IP - Daily Dividend 1,000 7,40,731 75.51 UTI Fixed Income Interval Fund - Monthly Plan I - IP - Dividend 10 15,73,86,465 157.39 Carried over 5,277.31 232.73

81 The Indian Hotels Company Limited

Schedules forming part of the Balance Sheet Schedule 6 : Investments (Contd.) During the year the Company acquired and sold the following investments in Mutual Funds March 31, 2008 Rupees Rupees Rupees crores crores crores Particulars Face value No of Units Purchase No of Purchase Cost Units Cost Brought over 5,277.31 232.73 UTI Fixed Income Interval Fund - Monthly Plan II - IP - Dividend 10 7,63,63,000 76.36 -- UTI Money Market - Daily Dividend 10 5,53,51,518 100.27 -- SBI Magnum Insta Cash - Daily Dividend 10 29,94,765 5.02 -- Sundaram BNP Paribas Money Fund - IP - Daily Dividend 10 49,54,531 5.00 -- Sundaram BNP Paribas Money Fund - Super IP - Daily Dividend 10 3,56,67,811 36.01 -- Fidelity Cash Fund - Super IP - Daily Dividend 10 99,96,054 10.00 -- ABN Amro Money Plus IP fund-Daily Dividend 10 7,86,40,962 78.65 -- DWS Money Plus Fund-IP-Daily Dividend 10 69,94,065 7.00 -- Kotak Floater-LT-Daily Dividend 10 2,48,02,079 25.00 -- Birla Sun Life Liquid Plus-IP-Daily Dividend 10 28,57,08,886 285.90 -- ICICI Prudential Flexible Income Plan- Daily Dividend 10 23,22,61,567 245.58 -- JM Money ManagerFund-Super Plan- Daily Dividend 10 14,61,26,150 146.20 -- Templeton IndiaUltra Short Bond Fund-IP- Daily Dividend 10 49,99,839 5.01 -- Tata Floater Fund-Daily Dividend 10 24,76,29,343 248.51 -- UTI Liquid Plus Fund- IP-Daily Dividend 1,000 99,979 10.00 -- Fidelity Ultra Short Term Debt Fund-Super IP-Daily Dividend 10 79,98,001 8.00 -- Total 6,569.82 232.73

Schedule 7 : Long Term Deposits March 31, 2008 Rupees Rupees crores crores Long term deposits placed for Hotel Properties [includes Rs. 3.50 crores placed with subsidiaries (Previous Year - Rs. 3.50 crores)] 139.89 142.81 Shareholder’s Deposit placed : (i) With Subsidiary Companies (Refer Note 6, Page 94) 508.30 417.63 (ii) With Others 29.59 25.11 TOTAL 677.78 585.55

82 Annual Report 2008-2009

Schedules forming part of the Balance Sheet Schedule 8 : Current Assets, Loans and Advances March 31, 2008 Rupees Rupees Rupees crores crores crores Inventories Stores and Operating Supplies 17.96 15.16 Food and Beverages 20.95 17.69 38.91 32.85 Sundry Debtors (Unsecured) (See Note 1 below) Outstanding over six months : Considered good 21.89 20.91 Considered doubtful 10.39 10.32 32.28 31.23 Others (Considered good) 79.81 117.50 112.09 148.73 Less : Provision for Doubtful Debts (Refer Note 28, Page 107 ) 10.39 10.32 101.70 138.41 Cash and Bank Balances Cash on Hand [Including Cheques on Hand - Rs.4.10 crores; (Previous Year - Rs. 16.61 crores)] 5.24 19.03 Balances with Scheduled Banks : In Current Accounts 15.63 28.92 In Call and Short Term Deposit Accounts 1.46 1.43 In Rights Issue Collection Account - 23.85 17.09 54.20 Balances with Non-Scheduled Banks (Refer Note 11 (a), Page 96 ) : In Current Accounts 0.94 1.07 In Call and Short Term Deposit Accounts 0.17 0.13 1.11 1.20 23.44 74.43 Loans and Advances (Unsecured, considered good) Deposits with Public Bodies and Others 36.34 33.39 Advances to Subsidiary Companies 16.10 4.75 Deposits with Companies : Subsidiary Companies 1.82 21.28 Others 159.11 19.57 160.93 40.85 Other Advances (See Note 2 below) : Considered good 563.39 251.02 Considered doubtful 0.98 0.98 564.37 252.00 Provision for Doubtful Advances 0.98 0.98 563.39 251.02 776.76 330.01 TOTAL 940.81 575.70 Notes : (1) Sundry Debtors include debts due from Directors - Rs. 0.02 crore (Previous Year - Rs. 0.01 crore) in the ordinary course of business. Maximum amount due during the year - Rs. 0.07 crore (Previous Year - Rs. 0.08 crore). (2) Other Advances include : (i) Amount paid towards Share Application Money - Rs. 0.20 crore (Previous Year - Rs. 49.80 crores). (ii) Advance payment of Income tax, net of provisions for current tax - Rs. 150.35 crores (Previous Year - Rs. 113.06 crores). (iii) Advance consideration for acquisition of shares of a Company owning hotel property - Rs. 250.00 crores (Previous Year - Nil). (iv) Insurance claim receivable (net of reimbursement) - Rs 73.49 crores (Previous Year - Nil).

83 The Indian Hotels Company Limited

Schedules forming part of the Balance Sheet Schedule 9 : Current Liabilities & Provisions March 31, 2008 Rupees Rupees Rupees crores crores crores CURRENT LIABILITIES Sundry Creditors : (i) Total Outstanding dues of micro and small enterprises (Refer Note 32, Page 109) 0.40 0.02 (ii) Total Outstanding dues of Creditors other than micro and small enterprises (Refer Note 1 below) 177.38 148.56 177.78 148.58 Other Liabilities 41.55 59.01 Sundry Deposits 8.72 8.18 Advance Collections against Reservation 42.21 38.53 Interest accrued but not due 47.27 6.34 Non-Convertible Debenture Application money - 3.88 Interim Dividend - 114.54 Tax on Interim Dividend - 19.47 Amount to be credited to Investor Education and Protection Fund (Refer Note 2 below) : Dividend Warrants issued but not encashed 2.17 2.00 Unclaimed matured deposits 0.41 0.42 Unclaimed matured debenture (Rs. 25,100) - 0.02 Refund of excess Rights Issue application money not encashed 0.16 - Unclaimed Interest accured theron 0.09 0.17 2.83 2.61 TOTAL CURRENT LIABILITIES 320.36 401.14 PROVISIONS Employee Benefits 37.75 31.30 Contingencies (Refer Note 12 (c) , Page 97) 1.12 1.12 Fringe Benefit Tax (net) 0.40 0.59 Loyalty Programmes (Refer Note 29, Page 107) 12.57 10.96 Proposed Dividend 86.81 - Tax on Dividend 14.75 - TOTAL PROVISIONS 153.40 43.97 TOTAL 473.76 445.11

Note: 1) The figure includes Rs 6.63 crores (Previous year - Rs 5.27) due to subsidiary companies. 2) The figure does not include any amount, due and outstanding, to be credited to Investor Education and Protection Fund . During the year, Rs. 0.22 crore (Previous year - Rs. 0.26 crore) have been transferred to the Fund.

84 Annual Report 2008-2009

Schedules forming part of the Balance Sheet Schedule 10 : Miscellaneous Expenditure (to the extent not adjusted or written off) March 31, 2008 Rupees Rupees Rupees crores crores crores Borrowing Costs Opening Balance 1.32 0.74 Add : Incurred during the year - 1.15 Less : Amortised during the year (Refer Note 15, Page 98 ) 0.59 0.57 Closing Balance 0.73 1.32 Voluntary Retirement Scheme (VRS) Opening Balance 0.13 0.64 Less : Amortised during the year 0.13 0.51 Closing Balance - 0.13 TOTAL 0.73 1.45

85 The Indian Hotels Company Limited

Schedules forming part of the Profit and Loss Account Schedule 11 : Rooms, Restaurants, Banquets and Other Income Previous Year Rupees Rupees Rupees INCOME crores crores crores Rooms, Restaurants, Banquets and Other Services [Includes Sale of Food and Beverages - Rs. 460.08 crores (Previous Year - Rs. 531.16 crores)] 1,534.03 1,764.51 Other Operating Income (Refer Note 2 (a), Page 92 ) 85.54 - TOTAL 1,619.57 1,764.51 Other Income Dividend Income (Refer Note 10 (c) and (d), Page 95 ) 69.50 19.98 Profit on sale of assets (Net) 4.09 - Profit on sale of Current Investments 0.04 0.07 Miscellaneous Income (Refer Note 10 (e), Page 95 ) 13.32 38.60 TOTAL 86.95 58.65 TOTAL 1,706.52 1,823.16

Schedule 12 : Operating and General Expenses (Refer Note 10 (a) , Page 95) Previous Year Rupees Rupees Rupees OPERATING EXPENSES crores crores crores Payments to & Provisions for Employees Salaries, Wages, Bonus etc. 269.34 228.88 Company’s Contribution to Provident & Other Funds 46.36 22.59 Reimbursement of Expenses on Personnel Deputed to the Company 7.00 3.83 Payment to Contractors 16.48 12.47 Staff Welfare Expenses 50.62 45.00 389.80 312.77 Food & Beverages Consumed Opening Stock 17.69 15.19 Add: Purchases 117.80 130.74 135.49 145.93 Less: Closing Stock 20.95 17.69 114.54 128.24 Carried Over 504.34 441.01

86 Annual Report 2008-2009

Schedules forming part of the Profit and Loss Account Schedule 12 : Operating and General Expenses (contd..) Previous Year Rupees Rupees Rupees crores crores crores Brought Over 504.34 441.01 Other Operating Expenses Linen & Room Supplies 24.97 27.68 Catering Supplies 13.95 15.42 Other Supplies 2.23 2.35 Fuel, Power & Light 98.50 92.61 Repairs to Buildings 19.85 19.17 Repairs to Machinery 22.40 20.58 Repairs to Others 16.59 17.29 Linen & Uniform Washing and Laundry Expenses 6.62 6.94 Payment to Orchestra Staff, Artists and Others 9.97 7.58 Guest Transportation 11.13 12.59 Travel Agents’ Commision 13.12 15.94 Discount to Collecting Agents 16.33 18.13 Other Operating Expenses 15.73 18.57 271.39 274.85 GENERAL EXPENSES Rent 28.31 24.18 Licence Fees 97.51 104.73 Rates & Taxes 22.03 28.00 Insurance 5.63 6.76 Advertising & Publicity 74.01 66.84 Printing & Stationery 8.06 9.82 Passage & Travelling 14.51 15.60 Provision for Doubtful Debts (Refer Note 28, Page 107 ) 2.98 2.40 Professional Fees 38.30 36.31 Exchange Loss (Refer Note 10 (e), Page 95 ) 22.23 - Loss on Sale of Fixed Assets (Net) - 5.98 Other Expenses 69.00 51.83 Auditors’ Remuneration (Refer Note 16, Page 98 ) 1.37 1.40 383.94 353.85 Amortisation of Voluntary Retirement Scheme Expenses 0.13 0.51 Directors’ Fees and Commission 3.72 4.13 TOTAL 1,163.52 1,074.35

87 The Indian Hotels Company Limited

Schedules forming part of the Profit and Loss Account Schedule 13 :Computation of Net Profit Under Sections 198 and 309(5) of the Companies Act, 1956

Previous Year Rupees Rupees Rupees crores crores crores Profit as per Profit and Loss Account 362.30 580.47 Add : Provision for doubtful debts 0.07 (1.15) Loss on sale of fixed assets - 5.98 Directors’ Remuneration (including Directors’ Fees) 12.19 9.29 12.26 14.11 374.56 594.58 Less : Capital profit on sale of assets 4.94 - Profit on sale of investments 0.04 0.07 4.98 0.07 Profit 369.58 594.51 Commission to Directors : Managing Director and Executive Directors 3.00 1.80 Other Directors (Restricted to 1% of net profit) 3.60 4.00 TOTAL 6.60 5.80

88 Annual Report 2008-2009

Schedules forming part of the Balance Sheet Schedule 14 : Notes to the Balance Sheet and the Profit and Loss Account

1. Significant Accounting Policies: The financial statements are prepared under historical cost convention on an accrual basis and comply with the Accounting Standards (AS) notified by the Companies (Accounting Standards) Rules, 2006. The preparation of the financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses. The Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. The significant accounting policies adopted in the presentation of the financial Statements are as under:- (a) Rooms, Restaurants, Banquets and Other Services: Rooms, Restaurants, Banquets and Other Services comprise of sale of rooms, food and beverages, allied services relating to hotel operations, including net income from telecommunication services and management and operating fees. Revenue is recognised upon rendering of the service. (b) Export Benefits Entitlement: Benefits arising out of Duty Free Scrips utilised for the acquisition of fixed assets are being adjusted against the cost of the related fixed assets (Refer Note 8, Page 94). (c) Employee Benefits: i. Provident Fund The Company's contribution to the recognised Provident Fund, paid/payable during the year, is debited to the Profit and Loss Account. The shortfall, if any, between the return guaranteed by the statute and actual earnings of the Fund is provided for by the Company and contributed to the Fund. ii. Gratuity Fund The Company makes annual contributions to funds administered by trustees and managed by an insurance company for amounts notified by the said insurance company. The Company accounts for the net present value of its obligations for gratuity benefits based on an independent external actuarial valuation determined on the basis of the projected unit credit method carried out as at the Balance Sheet date. Actuarial gains and losses are recognised immediately in the Profit and Loss Account. iii. Post Retirement Benefits The net present value of the Company's obligation towards post retirement pension scheme for whole time directors is actuarially determined, based on the projected unit credit method. Actuarial gains and losses are recognised immediately in the Profit and Loss Account. iv. Superannuation The Company has a defined contribution plan, wherein it annually contributes a sum equivalent to the employee's eligible annual basic salary to an insurance company, which administers the fund. The Company recognises such contributions as an expense in the year they are incurred. The Company also has separate funded and unfunded schemes, which guarantee a minimum pension to certain categories of employees. The Company accounts for the net present value of its obligations therein, based on an independent external actuarial valuation carried out as at the Balance Sheet date,

89 The Indian Hotels Company Limited

Schedules forming part of the Balance Sheet Schedule 14 : Notes to the Balance Sheet and the Profit and Loss Account

which is determined on the basis of the projected unit credit method. Actuarial gains and losses are recognised immediately in the Profit and Loss Account. v. Compensated Absences The Company has a scheme for compensated absences for employees, the liability for which is determined on the basis of an actuarial valuation carried out at the Balance Sheet date. vi. Other Employee Benefits Other benefits comprising of Long Service Awards and Leave Travel Allowances are determined on an undiscounted basis and recognised based on the likely entitlement thereof. (d) Fixed Assets: Fixed assets are stated at cost less depreciation/amortisation and impairment losses, if any. Cost includes expenses incidental to the installation of assets and attributable borrowing costs. (e) Depreciation/Amortisation: In respect of assets acquired before December 16, 1993, depreciation is provided under the straight-line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956, as existing on that date. In respect of assets acquired on or after December 16, 1993, depreciation is provided at the rates as specified in Schedule XIV to the Companies Act, 1956, as revised with effect from that date. In respect of Leasehold Land, depreciation is provided for, from the date the land is put to use for commercial operations, over the balance period of the lease. In respect of Improvements to Building, depreciation is provided @ 6.67%. Intangible assets are amortised on a straight-line basis at rates specified below: Website Development Cost - 20.00% Cost of Customer Reservation System (including licensed software) - 16.67% Service & Operating Rights - 10.00% (f) Transactions in Foreign Exchange: Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. In respect of integral foreign operations:- i. Monetary items outstanding at the Balance Sheet date are translated at the exchange rate prevailing at the Balance Sheet date and the resultant difference is recognised as income or expense. ii. Non-monetary items outstanding at the Balance Sheet date are reported using the exchange rate at the date of the transactions. In respect of non-integral foreign operations:- Both monetary and non-monetary items are translated at the closing rate and the resultant difference is accumulated in a Foreign Currency Translation Reserve, until the disposal of the net investment. The exchange differences arising on revaluation of long term foreign currency monetary items for the year ended March 31, 2008 and 2009 are being amortised over the shorter of the maturity period or March 31, 2011.

90 Annual Report 2008-2009

Schedules forming part of the Balance Sheet Schedule 14 : Notes to the Balance Sheet and the Profit and Loss Account

The unamortised balance as at the year end is presented as "Foreign Currency Monetary Item Translation Difference Account". (g) Derivative Instruments: The Company has an exposure to derivative contracts in the nature of currency swaps which are in respect of some of the underlying rupee borrowings. Exchange differences arising on repayment/revaluation of such currency swaps are recognised as income or expense in the period in which they arise. (h) Impairment of Assets: Impairment is ascertained at each Balance Sheet date in respect of the Company's fixed assets. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, based on an appropriate discount factor. (i) Assets taken on lease: Operating Lease payments are recognised as expenditure in the Profit and Loss Account on a straight line basis, representative of the time pattern of benefits received from the use of the assets taken on lease. (j) Inventories: Stock of food and beverages and operating supplies are carried at cost (computed on a weighted average basis) or Net Realisable Value, whichever is lower. (k) Investments: i. Long term investments are carried at cost. However, provision is made for diminution in value, other than temporary, on an individual basis. ii. Current investments are carried at the lower of cost and fair value, determined on a category-wise basis. (l) Miscellaneous Expenditure: Payments made under the Voluntary Retirement Scheme, including the additional liabilities towards leave encashment and gratuity, arising pursuant to the Voluntary Retirement Scheme, are amortised over a period of 60 months, commencing from the month in which the Scheme is implemented. (m) Taxes on income: i. Income tax is computed in accordance with Accounting Standard 22 - 'Accounting for Taxes on Income' (AS-22), notified by the Companies (Accounting Standards) Rules, 2006. Tax expenses are accounted in the same period to which the revenue and expenses relate. ii. Provision for current income tax is made for the tax liability payable on taxable income after considering tax allowances, deductions and exemptions determined in accordance with the prevailing tax laws. The differences between the taxable income and the net profit or loss before tax for the year as per the financial statements are identified and the tax effect of timing differences is recognised as a deferred tax asset or deferred tax liability. The tax effect is calculated on accumulated timing differences at the end of the accounting year, based on effective tax rates substantively enacted by the Balance Sheet date.

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iii. Deferred tax assets, other than on unabsorbed depreciation or carried forward losses, are recognised only if there is reasonable certainty that they will be realised in the future and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date. In situations where the Company has unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits. (n) Accounting for Provisions, Contingent Liabilities and Contingent Assets: Provisions are recognised in terms of Accounting Standard 29 - 'Provisions, Contingent Liabilities and Contingent Assets' (AS-29), notified by the Companies (Accounting Standards) Rules, 2006, when there is a present legal or statutory obligation as a result of past events, where it is probable that there will be outflow of resources to settle the obligation and when a reliable estimate of the amount of the obligation can be made. Contingent Liabilities are recognised only when there is a possible obligation arising from past events, due to occurrence or non-occurrence of one or more uncertain future events, not wholly within the control of the Company, or where any present obligation cannot be measured in terms of future outflow of resources, or where a reliable estimate of the obligation cannot be made. Obligations are assessed on an ongoing basis and only those having a largely probable outflow of resources are provided for. Contingent Assets are not recognised in the financial statements. (o) Borrowing Costs : i. Interest and other borrowing costs on specific borrowings, attributable to qualifying assets are capitalised. ii. Interest not attributable to qualifying assets is charged to revenue account in the year in which it is incurred. iii. Debenture issue costs are adjusted against the Security Premium Account in accordance with Section 78 of the Companies Act, 1956. iv. Other Borrowing Costs are charged to revenue account over the tenure of the borrowing. 2. (a) The Taj Mahal Palace & Tower in Mumbai was attacked by terrorists on November 26, 2008 amongst the other targets in the city, due to which the heritage wing of the property was severely damaged. No adjustments have been carried out in the books of account of the Company, with regard to the value of the damage to property, as the Company is adequately insured for property restoration under its insurance policy. The Company is also insured for Loss of Profits to cover the period of interruption for up to 12 months from the date of the incident. Accordingly, the Company has recognised a claim for Business Interruption upto March 31, 2009, amounting to Rs. 85.54 crores on an estimated basis and is at an advanced stage of finalising the claim with the Insurers. (b) Exceptional item of Rs 6.21 crores pertains to annuities purchased from the Life Insurance Corporation of India for pension payments to legal heirs of the employees deceased in the above mentioned incident. 3. Rights Issue of Simultaneous but unlinked issue of Equity Shares and Non-Convertible Debentures with Detachable Warrants to the equity shareholders of the Company During the year, the Company completed its simultaneous but unlinked issue of Equity Shares at a price of Rs. 70 each and 6,02,76,898, 6% Non-Convertible Debentures with Detachable Warrants aggregating Rs. 1,446.65 crores. The

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warrant holders can exercise their right to apply for the Equity Shares at the Exercise Price of Rs. 150 at any time during the Warrant Exercise Period i.e. September, 2009. Consequently, the Share Capital of the Company increased from Rs. 60.29 crores to Rs. 72.34 crores on allotment of 120,553,795 Equity Shares. The expenditure of Rs. 7.04 crores (net of tax of Rs. 1.08 crores) in connection with the Rights Issue has been set off against the 'Securities Premium Account' in accordance with Section 78 of the Companies Act, 1956. The Funds raised by way of Rights Issue of Equity Shares and Non-Convertible Debentures were utilised as under :- Rs. crores Particulars Amount Amounts raised through Rights Issue 1,446.65 Utilisation Capital expenditure on Projects 108.80 Investment in International Subsidiaries / Associates 591.49 Investment in Domestic Companies 299.12 Repayment of Long Term Debts 83.29 General corporate purposes 250.33 Issue expenses 8.12 Total 1,341.15 Surplus Amounts invested in Mutual Funds as on March 31, 2009 105.50 4. Non-Convertible Debentures: The Company has, during the year, issued 11.86% Secured Non-Convertible Debentures, having a face value of Rs. 10,00,000/- each, aggregating Rs. 300 crores. The expenses in relation to the said issue, amounting to Rs. 0.87 crore (net of tax of Rs. 0.45 crore), have been set off against the 'Securities Premium Account', in accordance with Section 78 of the Companies Act, 1956. 5. Provision for Current Tax, Deferred Tax & Fringe Benefit Tax:- (a) Provision for tax includes the following : Rs. crores Particulars Current Previous Year Year Current Tax 109.00 191.00 Wealth Tax 1.00 0.90 Deferred Tax charge 9.08 2.46 Fringe Benefit Tax 5.50 4.55 Total provision 124.58 198.91

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(b) The net deferred tax liability comprises of the following : Rs. crores Particulars Current Previous Year Year Deferred tax liability Depreciation on fixed assets 167.00 154.73 Total (A) 167.00 154.73 Deferred tax asset Provision for doubtful debts 3.53 3.51 Employee Benefits 8.48 7.55 Others 8.05 5.81 Total (B) 20.06 16.87 Net deferred tax liability (A-B) 146.94 137.86 6. Shareholder's Deposits placed with a subsidiary company include Rs. 168.70 crores (equivalent to USD 33.110 million) [(previous year Rs.135.20 crores) (equivalent to USD 33.784 million)] placed in earlier years, with the Company retaining the right to convert the said deposits into equity by December 31, 2009, as per the permission received from the Reserve Bank of India. 7. (a) The Company has given an undertaking to The Hongkong & Shanghai Banking Corporation, in respect of borrowing by IHMS (Australia) Pty Limited, a wholly-owned subsidiary, for Australian Dollars 10.44 million, that it will not dilute its shareholding in its subsidiary, IHMS (Australia) Pty Limited. (b) The Company has given a letter of comfort to Standard Chartered Bank, Singapore, in respect of credit facilities of US $ 150 Million given to its wholly-owned subsidiary Samsara Properties Ltd, British Virgin Islands, that it will not dilute its shareholding in its subsidiary, Samsara Properties Ltd. 8. Benefits arising out of Duty Free Scrips, utilised for the acquisition of fixed assets are, with effect from April 1, 2008, being adjusted against the cost of the related asset, as against the practice hitherto followed of recognising the same as income. Consequent upon the change, miscellaneous income for the year is lower by Rs. 17.90 crores, with a corresponding deduction in the value of fixed assets, as also reduction in the depreciation thereon. 9. Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 351.29 crores (previous year - Rs. 194.56 crores).

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10. (a) Expenditure recovered from other parties :- Rs. crores Particulars Current Previous Year Year Salaries & Wages - 0.10 Fuel, Power and Light 4.24 5.13 Repairs to Buildings 0.11 0.10 Repairs to Machinery 0.11 0.10 Linen and Uniform Washing 0.97 0.60 Rent 0.11 0.02 Other Expenses 0.67 0.44 Total 6.21 6.49 (b) Purchase of Food and Beverages is after adjusting Rs. 0.69 crore (previous year - Rs. 0.66 crore) on account of sale of empties, etc. (c) Dividend Income includes dividend from subsidiary companies - Rs. 6.51 crores (previous year - Rs. 4.75 crores). (d) Dividend Income includes income on long term investments - Rs. 31.08 crores (previous year - Rs. 19.73 crores) and on current investments - Rs. 38.42 crores (previous year - Rs. 0.25 crore). (e) Exchange loss includes loss on currency swap - Rs. 24.80 crores (previous year - gain of Rs. 7.00 crores included in Miscellaneous Income) and gain on foreign exchange transactions - Rs. 2.57 crores (previous year - gain of Rs. 10.09 crores included in Miscellaneous Income) which includes Rs. 20.19 crores (previous year - Nil) transferred from Foreign Currency Translation Reserve upon realisation. (f) Other expenses include Bad Debts written off - Rs. 1.89 crores (previous year - Rs. 2.33 crores).

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11. Cash and Bank Balances: (a) Balances with Non-Scheduled Banks comprise of :- Particulars Maximum Maximum amount Amount Current Previous outstanding in outstanding in Year Year Current Year Previous Year Rs. Rs. Rs. Rs. Current Account Standard Chartered Bank, Beijing 2,63,317 19,251 2,63,317 22,640 Citibank, New York 24,357 19,066 24,357 20,427 National Westminster Bank PLC, London 78,10,589 80,88,477 80,88,477 80,88,477 HSBC Bank, Dubai 13,12,348 25,34,733 25,34,733 61,59,846 Total Current Account 94,10,611 1,06,61,527 Deposit Account Citibank, New York 17,19,882 13,36,273 17,19,882 13,97,520

(b) Details of Cash and Cash Equivalents:- Rs. crores Particulars Current Previous Year Year Cash and Bank balances ( as per Schedule 8 ) 23.44 74.43 Add :- Investment in Liquid Mutual Funds ( as per Schedule 6 ) 422.15 - Cash and Cash Equivalents as per Cash Flow Statement 445.59 74.43

12. Contingent Liabilities: (a) On account of Income Tax matters in dispute : i. In respect of matters, which have been decided in the Company's favour by the Appellate Authorities, where the Income Tax Department has preferred an appeal - Rs. 57.01 crores (previous year - Rs. 63.60 crores). ii. In respect of other matters for which Company's appeals are pending - Rs. 21.67 crores (previous year - Rs. 34.55 crores). The said amounts have been paid / adjusted and will be recovered as refund if the matters are decided in favour of the Company.

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(b) On account of other disputes in respect of :- i. Luxury tax - Rs. 0.32 crore (previous year - Rs. 0.42 crore). ii. Entertainment tax - Rs. 0.53 crore (previous year - Rs. 0.53 crore). iii. Sales tax - Rs. 6.22 crores (previous year - Rs. 4.04 crores). iv. Property tax - Rs. 6.77 crores (previous year - Rs. 6.39 crores). v. Stamp Duty - Rs. 2.34 crores (previous year - Rs. 2.34 crores) vi. Others - Rs. 8.17 crores (previous year - Rs. 7.81 crores) (c) In respect of a disputed demand of Rs. 4.15 crores, made in an earlier year towards Entertainment Tax in respect of a property, the Company has preferred an appeal in the High Court of Kolkata, West Bengal, and has paid an amount of Rs. 3.03 crores, under protest, to the relevant authorities, as directed by the court. As a matter of prudence, the Company has made a provision of the entire amount, the unpaid demand of Rs. 1.12 crores is being reflected in the books of account as Provision for Contingencies. (d) Other claims against the Company not acknowledged as debts - Rs. 90.14 crores (previous year - Rs. 56.67 crores) mainly pertains to the demand of Rs. 22.32 crores, raised by the Delhi Development Authority, towards additional License fees (previous year - Rs. 17.14 crores) and additional ground rent amounting to Rs. 67.82 crores (previous year - Rs 39.16 crores) demanded by the Mumbai Port Trust. (e) Guarantees given by the Company in respect of deposits received and loans obtained by other companies, and outstanding as on March 31, 2009 - Rs. 463.27 crores (previous year - Rs. 308.14 crores). 13. Managerial Remuneration: Rs. crores Particulars Current Previous Year Year Salaries 3.67 2.39 Benefits in Cash or in kind (estimated monetary value) 1.80 0.97 Commission on Profits 3.00 1.80 Total 8.47 5.16 Managerial remuneration excludes provision for gratuity and compensated absences, since these are provided on the basis of an actuarial valuation of the Company's liability to all its employees. 14. The Company has taken certain vehicles on operating lease. The total lease rent paid on the same amounting to Rs. 2.17 crores (previous year - Rs. 2.97 crores) is included under Other Expenses. The minimum future lease rentals payable in respect thereof are as follows:- Rs. crores Particulars Current Previous Year Year Not later than one year 1.90 2.10 Later than one year but not later than five years 1.33 1.39 Later than five years - -

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15. Interest expense is net of interest income and comprises of : Rs. crores Particulars Current Previous Year Year Interest Expense Fixed loans# 119.15 97.18 Other loans @ 3.06 4.12 Total expense (A) 122.21 101.30 Interest Income (Gross)* Inter-Corporate Deposits 21.85 2.75 Deposits with Banks 0.64 0.19 On Deposits from related parties 0.73 0.65 Interest on Income Tax Refund 3.79 2.20 Others 4.76 1.23 Total Income (B) 31.77 7.02 Interest (net) (A-B) 90.44 94.28 * Tax deducted at source 5.15 0.77 # Interest on Fixed Loans includes Rs. 0.59 crore (previous year - Rs. 0.57 crore) being expenses on loans amortised over the tenure of the loan. @ Includes interest on luxury tax - Nil (previous year - Rs. 2.14 crores). 16. Auditors' Remuneration: Rs. crores Particulars Current Previous Year Year 1) As Auditors 1.12 1.12 2) For Tax Audit 0.18 0.18 3) For Company Law matters (Rs. 25,000) - - 4) For Other Services 0.06 0.07 5) For out of pocket expenses 0.01 0.03 6) Service tax on above [Net of credit availed - Rs. 0.15 crore (Previous Year - 0.17 crore)] - - Total Auditors' Remuneration 1.37 1.40

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Professional fees include - Nil (previous year - Rs. 0.03 crore) paid to a firm in which partners of one of the audit firms are partners. The above excludes Rs. 0.69 crore (previous year - Rs. 0.05 crore) paid to auditors for Other Services and debited to the Securities Premium Account. 17. Derivative Instruments : The Company uses forward exchange contracts, interest rate swaps, currency swaps and options to hedge its exposure in foreign currency and interest rates. The information on derivative instruments is as follows:- (a) Derivative Instruments outstanding: Current Year Previous Year Particulars Currency (USD million) Rs. crores (USD million) Rs. crores Principal - only swaps INR/USD 22.73 100 22.73 100.00 Option Contracts INR/USD 30.00 153 -- (b) Foreign currency exposure receivables (net), not covered by forward exchange contracts as at March 31, 2009 - US$ 52.95 (previous year - US $ 41.2 million). 18. The Company has exercised the option granted vide notification F.No.17/33/2008/CL-V dated March 31, 2009, issued by the Ministry of Corporate Affairs and, accordingly, the exchange differences arising on revaluation of long term foreign currency monetary items for the year ended March 31, 2008 and 2009 have been recognised over the shorter of the maturity period or March 31, 2011. The unamortised balance as at the year end is presented as "Foreign Currency Monetary Item Translation Difference Account". Accordingly an amount of Rs. 3.82 crores has been adjusted from the General Reserve and an aggregate amount of Rs. 11.63 crores has been deferred and recognised as an asset. Consequently, the profit of the current year is higher by Rs. 15.45 crores. 19. Employee Benefits: (a) The Company has recognised the following amounts in the Profit and Loss Account under the head Company's Contribution to Provident Fund and Other Funds.- Rs. crores Particulars Current Previous Year Year Provident Fund 13.89 12.18 Superannuation Fund 4.49 3.92 Total 18.38 16.10 (b) The Company operates post retirement defined benefit plans as follows :- i. Funded :  Post Retirement Gratuity  Pension to Employees - Post retirement minimum guaranteed pension scheme for certain categories of employees, which is funded by the Company and the employees.

99 The Indian Hotels Company Limited

Schedules forming part of the Balance Sheet Schedule 14 : Notes to the Balance Sheet and the Profit and Loss Account ii. Unfunded :  Pension to Executive Directors and Employees - Post retirement minimum guaranteed pension scheme for certain retired executive directors and certain categories of employees, which is unfunded. (c) Details of gratuity plan are as follows :- i. Amount to be recognised in Balance Sheet and movement in net liability Rs. crores Particulars Current Previous Year Year Present Value of Funded Obligations 94.22 74.80 Fair Value of Plan Assets (72.94) (73.34) Net Liability recognised in the Balance Sheet and included under Provisions 21.28 1.46 ii. Expenses recognised in the Profit & Loss Account Particulars Current Previous Year Year Current Service Cost 4.90 4.40 Interest Cost 5.99 4.94 Expected return on Plan Assets (5.25) (4.38) Actuarial Losses 23.21 2.67 Net gratuity expenses included in Payments to & Provision for Employees 28.85 7.63 Actual Return on Plan Assets (2.61) 10.32 iii. Reconciliation of Defined Benefit Obligation Particulars Current Previous Year Year Opening Defined Benefit Obligation 74.80 62.42 Current Service Cost 4.90 4.40 Interest Cost 5.99 4.94 Actuarial Losses 15.33 8.61 Benefits Paid (6.80) (5.57) Closing Defined Benefit Obligation 94.22 74.80

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Schedules forming part of the Balance Sheet Schedule 14 : Notes to the Balance Sheet and the Profit and Loss Account iv. Reconciliation of Fair Value of Plan Assets Particulars Current Previous Year Year Opening Fair Value of Plan Assets 73.34 60.84 Expected return on Plan Assets 5.25 4.38 Actuarial Losses (7.87) 5.94 Contributions by Employer 9.02 7.75 Benefits Paid (6.80) (5.57) Closing Fair Value of Plan Assets 72.94 73.34 Expected Employer's contribution next year 10.00 2.00

v. Description of Plan Assets (Managed by the Insurance Company) Particulars Current Previous Year Year Government of India Securities 12% 17% Corporate Bonds 59% 45% Special Deposit Scheme 1% 1% Equity 15% 28% Others 13% 9% Grand Total 100% 100%

vi. Experience Adjustments Rs crores Particulars Year Ended March 31, 2005 2006 2007 2008 2009 Defined Benefit Obligation - 50.32 62.42 74.80 94.22 Plan Assets - 59.06 60.84 73.34 72.94 Surplus / (Deficit) - 8.74 (1.58) (1.46) (21.28) Exp. Adj. on Plan Liabilities - - 11.87 9.26 9.06 Exp. Adj. on Plan Assets - - 0.93 5.94 (7.87)

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vii Summary of Actuarial Assumptions Particulars Current Previous Year Year Discount Rate 7.00 % 7.85 % Expected rate of return on Assets 7.50 % 7.50 % Salary Escalation Rate 5.00 % 5.00 % Attrition rate 1 - 2 % 1 - 2% Mortality Published notes under the LIC (1994-96) mortality tables

(d) Details of unfunded post retirement defined benefit obligation are as follows :- i. Reconciliation of Defined Benefit Obligation Rs. crores Particulars Current Previous Year Year Opening Defined Benefit Obligation 5.73 2.55 Current Service Cost 0.78 5.01 Interest Cost 0.49 0.56 Actuarial (Gain) / Losses 2.73 (1.60) Benefits Paid (1.35) (0.79) Closing Defined Benefit Obligation 8.38 5.73

ii. Expenses recognised in the Profit & Loss Account Rs. crores Particulars Current Previous Year Year Current Service Cost 0.78 5.01 Interest Cost 0.49 0.56 Actuarial (Gain) / Losses 2.73 (1.60) Net expenses included in Payments to and 4.00 3.97 Provision for Employees

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iii. Experience Adjustments Rs crores Particulars Year Ended March 31, 2005 2006 2007 2008 2009 Defined Benefit Obligation - 2.53 6.82 5.73 8.38 Plan Assets ---- - Surplus / (Deficit) - (2.53) (6.82) (5.73) (8.38) Exp. Adj. on Plan Liabilities - - 0.06 (1.70) 1.85 Exp. Adj. on Plan Assets ---- -

iv. Summary of Actuarial Assumptions Particulars Current Previous Year Year Discount Rate 7.00% 7.85 % Pension Increase Rate 4.00% 4.00% Salary Escalation Rate 5.00% 5.00% Attrition rate 1 - 2 % 1 - 2% Mortality Published notes under the LIC (1994-96) mortality tables

(e) Pension Scheme for Employees: The Company has formulated a funded pension scheme for certain employees. The actuarial liability arising on the above after allowing for employees contribution is determined as at March 31, 2009, under the basis of uniform accrual benefit with demographic assumptions taken as Nil is as follows: i). Amount to be recognised in Balance Sheet Rs. crores Particulars Current Previous Year Year Present Value of Unfunded Obligation 3.44 3.04 Unrecognised Past Service Cost (2.66) (3.04) Net Liability 0.78 -

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ii). Expense to be recognised in the Profit & Loss Account Rs. crores Particulars Current Previous Year Year Current Service Cost 0.11 - Interest on Defined Benefit Obligation 0.24 - Net Actuarial Losses / (Gains) recognised in Year 0.05 - Past Service Cost 0.38 - Total, Included in "Employee Benefit Expense" 0.78 -

iii). Reconciliation of Benefit Obligation & Plan Assets for the period Rs. crores Particulars Current Previous Year Year Changed in Defined Benefit Obligation Opening Defined Benefit Obligation 3.04 - Unrecognised Past Service Cost - 3.04 Current Service Cost 0.11 - Interest Cost 0.24 - Actuarial Losses / (Gain) 0.05 - Closing Defined Benefit Scheme 3.44 3.04

iv). Experience Adjustments Rs crores Particulars Year Ended March 31, 2005 2006 2007 2008 2009 Defined Benefit Obligation - - - 3.04 3.44 Surplus/ (Deficit) - - - (3.04) (3.44) Exp. Adj. on Plan Liabilities ----(0.37)

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v). Financial Assumption at the Valuation date Rs. crores Particulars Current Previous Year Year Discount Rate 7.00 % 7.85 % Expected rate of return on Assets 0.00 % 0.00 % Salary Escalation Rate 0.00 % 0.00 %

The past service liability is being amortised over the average vesting period of 8.02 years. (f) Provident Fund In keeping with the Guidance on implementing Accounting Standard (AS) 15 (Revised) on Employee Benefits notified by the Companies (Accounting Standards) Rules, 2006, employer established provident fund trusts are treated as Defined Benefit Plans, since the Company is obligated to meet interest shortfall, if any, with respect to covered employees. According to the Management, the Actuary has opined that actuarial valuation cannot be applied to reliably measure provident fund liabilities in the absences of guidance from the Actuarial Society of India. Accordingly, the Company is currently not in a position to provide other related disclosures as required by the aforesaid AS 15 read with the Accounting Standards Board Guidance. However, having regard to the position of the Fund (for covered employees) and confirmation from the Trustees of such Fund, provision has been made for such shortfall as at the year-end. The estimate of future salary increases, considered in actuarial valuation, takes into account inflation, seniority, promotions and other relevant factors. The above information has been certified by the actuary and has been relied upon by the Auditors. 20. As the turnover of the Company includes sale of food and beverages, it is not possible to give quantitative details of the turnover and food & beverages consumed. The Company has been exempted from giving these particulars vide order no. 46/20/2008-CL-III dated May 23, 2008, issued by the Department of Company Affairs,. 21. Consumption of raw material: Rs. crores Particulars Current % Previous % Year Year Imported 7.99 6.98 5.91 4.61 Indigenous 106.55 93.02 122.33 95.39 Total 114.54 100.00 128.24 100.00

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22. CIF Value of imports is as follows: Rs. crores Particulars Current Previous Year Year Raw Materials (Food and Beverages) 5.96 7.52 Stores, Supplies and Spare Parts for Machinery 5.68 9.79 Capital Goods 45.60 28.59

23. Earnings in Foreign Exchange are as follows : Rs. crores Particulars Current Previous Year Year (a) Royalty, Know-how, Professional and Consultation Fees - 7.64 (b) Interest - 0.60 (c) Sale of Rooms / F&B Income 627.16 802.30 The earnings in foreign exchange, as reported in 23 (c) above, are on the basis of actual receipts during the year, as certified by the Management. 24. Expenditure in Foreign Exchange: Rs. crores Particulars Current Previous Year Year Membership Fees 1.26 1.27 Advertising 20.82 19.05 Professional Consultancy Fees 7.51 5.49 Others 13.78 10.04

25. Remittance in Foreign Currencies for dividends to non-resident shareholders: The Company has not remitted any amount in foreign currencies on account of dividends during the year and does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividends have been made by/on behalf of non-resident shareholders. The particulars of dividends paid to non-resident shareholders during the year, are as under:

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Rs. crores Particulars Current Previous Year Year Year to which dividend relates 2007-08 2006-07 Numbers of non-resident shareholders 1,785 1,492 Number of Ordinary Shares held by non-resident shareholders 7,573,235 7,612,056 Gross amount of dividend (Rs. crores) 1.44 1.22 Net amount of dividend (Rs. crores) 1.44 1.22

26. The Company has an investment of Rs. 0.30 crore (previous year - Rs. 0.30 crore) and advances outstanding (including interest) of Rs. 9.42 crores (previous year - Rs. 9.42 crores) in a Joint Venture, Taj Karnataka Hotels and Resorts Limited (TKHRL). TKHRL has accumulated losses in excess of its paid-up capital and reserves. Considering the inherent value of TKHRL's assets, based on a valuation of the property and its proposed financial restructuring, for which the Company is in talks with the JV partner - the Government of Karnataka, the Management is of the view that there is no diminution, other than temporary, in the value of the investment and that the amount outstanding after the financial restructuring will be fully recovered. 27. The Company, on a review of its foreign operations had, in the past, made voluntary disclosures to the appropriate regulator, of what it considered to be possible irregularities, in relation to foreign exchange transactions relating to the period prior to 1998. Arising out of such disclosures, the Company received show cause notices. The Company has replied to the notices and is waiting for the directorate to return its files, after which it will complete the replies. Adjudication proceedings are in progress. 28. Provision for Doubtful Debts : Particulars Current Previous Year Year Opening Balance 10.32 11.47 Add : Provision during the year 2.98 2.40 13.30 13.87 Less : Bad debts written off 1.89 2.33 Less : Provision no longer required, written back 1.02 1.22 Closing Balance 10.39 10.32

29. Provision for Loyalty Programmes : The Company has loyalty programmes, which enable its customers to accumulate points based on their spends at the hotels. Such points can be encashed either by stay at the Company's hotels or by purchase of merchandise. The estimated liability against the loyalty schemes is as under:

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Rs. crores Particulars Current Previous Year Year Opening Balance 10.96 8.82 Less : Redeemed during the year 0.90 0.77 10.06 8.05 Add : Provision during the year 2.51 2.91 Closing Balance 12.57 10.96

30. Long Term Deposits and Loans and Advances in the nature of loans to Subsidiaries, Jointly controlled entities and Associates:- Rs. crores Particulars Maximum Balance Maximum Balance amount Outstanding amount Outstanding outstanding as on March outstanding as onMarch during the year 31, 2009 during the 31, 2008 previous Subsidiaries IHMS Inc. 346.79 195.64 212.11 212.11 Innovative Foods Limited 4.25 - 2.75 2.75 Residency Food & Beverages Limited 10.57 1.82 6.77 6.77 Taj International Hotels (HK) Ltd. 312.64 312.64 223.76 207.76 Roots Corporation Ltd. 12.00 - 16.00 12.00 Jointly Controlled Entities IHMS Hotels (SA) (Proprietary) Ltd. (formerly known as Taj International Hotels (South Africa)(Pty) Ltd.) 15.92 14.62 15.86 13.35 Taj Karnataka Hotels & Resorts Ltd. 5.35 5.35 5.35 5.35 Taj Asia Ltd. 25.47 25.47 19.14 17.76 Taj GVK Hotels & Resorts Ltd. 5.00 5.00 5.00 5.00 Associates Oriental Hotels Limited 25.00 12.00 -- Taj Air Ltd. 24.5 24.5 --

108 Annual Report 2008-2009

Schedules forming part of the Balance Sheet Schedule 14 : Notes to the Balance Sheet and the Profit and Loss Account

31. Investments made in the Equity Shares of the Company and its subsidiaries by a loanee as at March 31, 2009: Rs. crores Company Current Previous Year Year Oriental Hotels Ltd. 2.74 2.14 Piem Hotels Ltd. 6.80 1.42 32. Micro and Small Enterprises: (a) There is no interest paid/payable during the year by the Company to the suppliers covered under Micro, Small, Medium Enterprises Development Act, 2006. (b) The above information takes into account only those suppliers who have responded to the enquiries made by the Company for this purpose. 33. Related Party disclosures: (a) The names of the related parties of the Company are as under: i) Subsidiary Companies Name of the Company Country of Incorporation Domestic TIFCO Holdings Ltd. (formerly Known as Taj Investment and Finance Company Ltd.) India KTC Hotels Ltd. India United Hotels Ltd. India Roots Corporation Ltd. India Taj SATS Air Catering Ltd. India Residency Foods & Beverages Ltd. India Innovative Foods Ltd. India International Taj International Hotels (H.K.) Ltd. Hong Kong IHMS (HK) Ltd. Hong Kong Chieftain Corporation NV Netherlands Antilles IHOCO BV Netherlands St. James Court Hotels Ltd. United Kingdom Taj International Hotels Ltd. United Kingdom International Hotel Management Services Inc. United States of America Samsara Properties Ltd. British Virgin Islands IHMS (Australia) Pty. Ltd. Australia IHMS (Restaurants) Pty. Ltd. Australia Apex Hotel Management Services (Pte) Ltd. Singapore

109 The Indian Hotels Company Limited

Schedules forming part of the Balance Sheet Schedule 14 : Notes to the Balance Sheet and the Profit and Loss Account

ii) Jointly Controlled Entities Name of the Company Country of Incorporation Domestic Taj Madras Flight Kitchen Pvt. Ltd. India Taj Karnataka Hotels & Resorts Ltd. India Taj Kerala Hotels & Resorts Ltd. India Taj GVK Hotels & Resorts Ltd. India Taj Safaris Ltd. India International Taj Asia Ltd. Hong Kong IHMS Hotels (SA) (Proprietary) Ltd. (formerly known as Taj International Hotels (South Africa)(Pty) Ltd.) South Africa

iii) Associates Name of the Company Country of Incorporation Domestic Benares Hotels Ltd. India Taj Air Ltd. India Piem Hotels Ltd. India Taj Trade and Transport Ltd. India Taj Enterprises Ltd. India Inditravel Pvt. Ltd. India Oriental Hotels Ltd. India Taj Madurai Ltd. India Taida Trading & Industries Ltd. India Ideal Ice & Cold Storage Co. Ltd. India International Taj Lanka Resorts Ltd. Sri Lanka Taj Lanka Hotels Ltd. Sri Lanka BJETS Pte Ltd., Singapore Singapore

110 Annual Report 2008-2009

Schedules forming part of the Balance Sheet Schedule 14 : Notes to the Balance Sheet and the Profit and Loss Account

Key managerial personnel comprise whole-time directors, who have the authority and responsibility for planning, directing and controlling the activities of the Company. The remuneration paid to such directors is disclosed in Note 13 on Page 97 and the dues from such persons are disclosed in footnotes 1 and 2 (i) of Schedule 8 Current Assets, Loans and Advances, forming part of the Balance Sheet. Presently Mr. Raymond N Bickson, the Managing Director, Mr. Anil P. Goel, the Executive Director - Finance and Mr. Abhijit Mukerji, the Executive Director - Hotel Operations are the Key Management Personnel. (b) The details of transactions with related parties are as follows: Rs. crores Particulars Subsidiaries Associates Joint Ventures Current Previous Current Previous Current Previous Year Year Year Year Year Year Interest paid / provided 0.61 0.68 0.21 0.96 - - Interest received/accrued 1.97 1.54 2.93 0.72 1.04 0.89 Dividend received 6.51 4.75 8.75 4.38 7.50 5.00 Operating / Licence fees paid 0.53 0.43 0.15 - - - Operating fees received 6.21 8.95 47.64 48.55 23.91 28.05 Purchase of goods and services 0.59 0.49 45.63 35.36 0.20 0.36 Sale of goods and services 0.57 0.75 5.00 4.59 0.98 1.03 Due from/(to) on Current Account 12.54 4.75 0.91 (3.11) 1.09 1.56 Purchase of Shares 474.19 12.50 102.59 - 1.25 2.81 Sundry Debtors 4.69 5.99 13.04 8.31 13.53 15.70 Deposits (Net) 513.21 428.36 36.50 (28.00) 50.45 41.47

(c) Statement of Material Transactions Rs. crores Name of Company Current Previous Year Year Subsidiaries TIFCO Holdings Ltd. (formerly known as Taj Investment and Finance Co. Ltd. - ICDs raised 15.90 22.00 - ICDs repaid 29.95 7.95 - ICDs encashed - 17.00 - Interest paid 0.60 0.68 - Interest received - 0.60 - Deposits taken - 14.05

111 The Indian Hotels Company Limited

Schedules forming part of the Balance Sheet Schedule 14 : Notes to the Balance Sheet and the Profit and Loss Account

Name of Company Current Previous Year Year KTC Hotels Limited - Licence Fees paid 0.53 0.43 - ICDs raised 0.41 - - Due to - Current Account 2.45 2.10 United Hotels Ltd. - Dividend received 2.52 0.76 - Operating fees received 3.20 3.51 Taj SATS Air Catering Ltd. - Dividend received 3.99 3.99 - Due from - Current Account 1.68 2.47 Roots Corporation Ltd. - Purchase of shares - 12.50 - ICDs placed 41.00 24.50 - ICDs encashed 53.00 23.50 - Interest received 0.96 0.64 - Sundry Debtors 1.90 3.61 Taj International Hotels (HK) Ltd. - ICD/Shareholder's Deposit 312.65 205.53 - Purchase of shares 109.11 - - Due from - Current Account 8.15 - - ICDs placed 157.48 - International Hotel Management Services Inc. - Due from - Current Account 4.48 2.09 - Purchase of shares 365.08 - - Deposits given outstanding 195.65 212.11 - ICDs placed 325.23 - - ICDs encashed 365.08 -

112 Annual Report 2008-2009

Schedules forming part of the Balance Sheet Schedule 14 : Notes to the Balance Sheet and the Profit and Loss Account

Name of Company Current Previous Year Year IHMS (Australia) Pty. Ltd. - Due to - Current Account 0.85 1.08 Residency Food & Beverages Ltd. - Interest received 0.68 - - ICDs placed 1.82 6.77 Associates Taj Air Ltd. - Interest received 1.77 0.72 - Purchase of Goods & Services 24.06 4.78 - ICDs placed 42.00 29.00 - ICDs encashed 17.50 29.00 Piem Hotels Ltd. - Dividend received 4.41 - - Operating Fees received 27.11 27.89 - Interest paid 0.12 0.40 - Due to - Current Account 0.59 3.05 - ICDs raised - 39.50 - ICDs placed 9.00 - - ICDs repaid 18.00 21.50 - Sundry Debtors 4.45 1.04 - Sale of Goods & Services 1.76 1.92 - Deposits taken - 18.00 Taj Trade & Transport Ltd. - Sale of Goods & Services 1.25 0.94 - Licence Fees Paid 0.12 - Inditravel Pvt. Ltd. - Purchase of Goods & Services 19.02 27.43 - Sale of Goods & Services 0.89 0.86

113 The Indian Hotels Company Limited

Schedules forming part of the Balance Sheet Schedule 14 : Notes to the Balance Sheet and the Profit and Loss Account

Name of Company Current Previous Year Year Oriental Hotels Ltd. - Dividend received 3.55 3.21 - Operating Fees received 18.31 18.17 - ICDs placed 56.00 - - ICDs raised - 36.00 - ICDs repaid 44.00 37.00 - Interest paid 0.09 0.56 - Interest received 1.04 - - Due to - Current Account (0.15) 0.33 - Sundry Debtors 6.94 6.73 - Sale of Goods & Services 0.59 0.70 - Deposits taken 5.00 10.00 - Deposits Repaid 15.00 - BJETS Pte Ltd. - Purchase of shares 102.59 - Jointly Controlled Entities Taj Madras Flight Kitchen Pvt. Ltd. - Dividend received 2.38 0.02 Taj GVK Hotels & Resorts Ltd. - Operating Fees received 19.62 22.31 - Dividend received 5.12 4.80 - Interest received 0.35 0.35 - Sundry Debtors 5.55 9.20 Taj Asia Ltd. - Interest received 0.69 0.54 - Sundry Debtors 3.34 -

114 Annual Report 2008-2009

Schedules forming part of the Balance Sheet Schedule 14 : Notes to the Balance Sheet and the Profit and Loss Account

34. In compliance with Accounting Standard 27 - 'Financial Reporting of Interests in Joint Ventures' - (AS-27), notified by the Companies (Accounting Standards) Rules, 2006, the Company has interests in the following jointly controlled entities: Rs. crores Name of the Company County of Holding Amount of Interest based on the Last Incorporation (%) Audited Accounts for the year ended March 31, 2009 Assets Liabilities Income Expenditure Contingent Capital Taj Safaris Ltd.* India 33.33 7.27 4.34 2.37 4.44 0.12 0.12 (33.33) (5.38) (1.66) (2.10) (2.98) (0.06) (1.26) Taj GVK Hotels and Resorts Ltd. India 25.52 108.02 38.86 60.79 39.66 2.91 2.59 (25.52) (80.72) (21.28) (66.11) (38.48) (4.59) (6.92) Taj Karnataka Hotels and 40.00 2.85 5.61 1.57 1.62 - 0.02 Resorts Ltd. India (40.00) (2.58) (5.73) (1.68) (1.67) - - Taj Kerala Hotels Ltd. India 28.30 15.49 0.14 9.78 8.57 0.58 0.51 (28.30) (13.70) (0.74) (11.42) (9.33) (0.33) (0.28) Taj Madras Flight Kitchen India 50.00 18.84 0.90 21.48 15.93 5.61 0.31 Pvt. Ltd. (50.00) (17.63) (0.98) (23.88) (15.93) (0.22) (0.34) Taj Asia Ltd. Hong Kong 26.66 103.06 46.86 32.80 33.43 13.59 0.11 (26.66) (77.19) (35.50) (41.17) (31.49) (10.68) (0.01) IHMS Hotels (SA) (Proprietary) Ltd. (formerly known as Taj International Hotels (South Africa)(Pty) Ltd.). South Africa 50.00 39.81 38.08 2.08 0.16 - 20.94 (50.00) (13.92) (14.07) (0.03) (0.07) - - * Based on Unaudited financial statements. Note : Figures in the brackets relate to the previous year. 35. The Company's only business is hoteliering and hence disclosure of segment-wise information is not applicable under Accounting Standard 17 - 'Segmental Information' (AS-17) notified by the Company's (Accounting Standards) Rules, 2006. There is no geographical segment to be reported since all the operations are undertaken in India.

115 The Indian Hotels Company Limited

Schedules forming part of the Balance Sheet Schedule 14 : Notes to the Balance Sheet and the Profit and Loss Account

36. Earnings Per Share (EPS) : Earnings Per Share is calculated in accordance with Accounting Standard 20 - 'Earnings Per Share' - (AS-20), notified by the Company's (Accounting Standards) Rules, 2006. Particulars Current Previous Year Year Profit after tax - (Rs. crores) 234.03 377.46 No of Equity Shares - Basic and Diluted 71,35,64,442 65,43,30,117 Earnings Per Share - (In Rupees) Basic and Diluted 3.28 5.77

Note: Since the exercise price of the Warrants Option issued by the Company is more than the fair value of the Equity Shares, these have not been considered for the calculation of Diluted Earnings per share being anti-dilutive in nature as at the year end. 37. Previous year's figures have been regrouped, wherever necessary, to conform to the current year's presentation.

For and on behalf of the Board R.N. TATA Chairman R.K. KRISHNA KUMAR Vice Chairman RAYMOND N. BICKSON Managing Director ANIL P. GOEL Executive Director - Finance ABHIJIT MUKERJI Executive Director - Hotel Operations N.A. SOONAWALA Director S. K. KANDHARI Director JAGDISH CAPOOR Director SHAPOOR MISTRY Director ARNAVAZ AGA Director NADIR GODREJ Director SANKER PARAMESWARAN Vice President - Legal & Company Secretary

Mumbai, June 12, 2009

116 Annual Report 2008-2009

Information Pursuant to Part IV of Schedule VI of the Companies Act,1956 Balance Sheet Abstract and Company’s General Profile Registration Details Registration No. 183 State Code : 11 Balance Sheet Date 31 03 09 Capital Raised during the year ( Amount in Rs. Thousands) Public Issue Rights Issue Nil 120,554 Bonus Issue Private Placement Nil Nil Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) Total Liabilities Total Assets 49,845,640 49,845,640 Sources of Funds Paid-up Capital Reserves & Surplus 723,405 29,752,858 Secured Loans Unsecured Loans 15,980,238 1,684,460 Deferred Tax Liability Trade Deposits 1,469,400 235,278 Application of Funds Net Fixed Assets Investments 18,004,908 20,268,801 Long Term Deposits Net Current Assets 6,777,840 4,670,500 Misc. Expenditure Accumulated Losses 123,591 Nil Performance of Company (Amount in Rs. Thousands) Turnover Total Expenditure 17,065,234 13,380,246 + / - Profit / Loss before Tax + / - Profit / Loss after Tax + 3,684,988 + 2,340,189 Earnings Per Share in Rs. (Basic) Dividend Rate % 3.28 120 Earnings Per Share in Rs. (Diluted) 3.28 Generic Names of Principal Product / Services of the Company ( as per monetary terms ) Product Description Item Code No. (ITC Code) Hoteliering & Catering Not Applicable

117 The Indian Hotels Company Limited

Statement Pursuant To Section 212 Of The Companies Act, 1956

TIFCO KTC Hotels United Taj SATS Roots Residency Innovative Taj Chieftan Holdings Ltd Ltd Hotels Ltd Aircatering Corporation Food and Foods Ltd International Corporation Ltd Ltd Ltd Beverages Ltd Hotels Hotels (H.K) NV Ltd. 1 The Financial Year of the Company 31st March 31st March 31st March 31st March 31st March 31st March 31st March 31st March 31st March ends on : 2009 2009 2009 2009 2009 2009 2009 2009 2009 2 Fully paid-up shares held by IHCL in the Subsidiary Company or by Subsidiary Company in the Sub-subsidiary Company at the end of the Financial Year of the Subsidiary or Sub-subsidiary Company as the case may be a) Number 81,500,000 6,04,000 4,620,000 8,874,000 51,000,000 18,750,000 7,886,423 26,755,000 9,923 Equity Equity Equity Equity Equity Equity Equity Equity Equity Shares of Shares of Shares of Shares of Shares of Shares of Shares of Shares of Shares of Rs. 10/- each Rs. 10/- each Rs. 10/- each Rs. 10/- each Rs. 10/- each Rs. 10/- each Rs. 10/- each US$ 1 each UK£ 1 each fully paid-up fully paid-up fully paid-up fully paid-up fully paid-up fully paid-up fully paid-up fully paid-up fully paid-up b) Extent of holding 100.00% 100.00% 55.00% 51.00% 100.00% 98.68% 67.94% 100.00% 100.00% 3 Changes in the interest of the Company Does Not Does Not Does Not Does Not Does Not Does Not Does Not Does Not Does Not or the Subsidiary Company between the Arise Arise Arise Arise Arise Arise Arise Arise Arise end of the Financial Year of the Subsidiary Company or Sub-subsidiary Company and 31st March, 2009 Number of Shares acquired 4 The net aggregate of Profit of the Subsidiary Company/Sub-subsidiary Company so far as they concern the Members of the Company a ) Dealt with in the accounts of the Company Nil Nil Nil 39,933,000 Nil Nil Nil Nil Nil for the year ended 31st March, 2009 b) Not dealt with in the accounts of the Rs. Rs. Rs. Rs. Rs. Rs. Rs. US$ UK£ Company for the year ended 31st March, 2009 169,859,000 4,254,550 55,072,841 49,391,970 (223,105,000) (1,377,367) (33,312,732) (1,517,464) (96,276)

5 The net aggregate of profits/(losses) of the Subsidiary/Sub-subsidiary Company for previous financial years, so far as they concern the Members of the Company a ) Dealt with in the accounts of the Company Nil Nil 46,200,000 13,311,000 Nil Nil Nil Nil Nil for the year ended 31st March, 2009 b) Not dealt with in the accounts of the Rs. Rs. Rs. Rs. Rs. Rs. Rs. US$ UK£ Company for the year ended 31st March, 31st March, 2009 732,951,000 14,772,524 31,924,789 888,377,160 (224,358,000) (50,603,583) (38,049,131) 3,862,797 (603,925) 6 Material changes between the end of the Financial Year of the Subsidiary or Sub- subsidiary Company as the case may be and 31st March, 2009 a) Fixed Assets b) Investments c) Moneys lent by the Subsidiary Company d) Moneys borrowed by the Subsidiary Does Not Does Not Does Not Does Not Does Not Does Not Does Not Does Not Does Not Company other than for meeting Current Arise Arise Arise Arise Arise Arise Arise Arise Arise

118 Annual Report 2008-2009

Statement Pursuant To Section 212 Of The Companies Act, 1956 (Contd.)

IHOCO B.V. ST. James Taj IHMS INC. Samsara IHMS (AUS) IHMS (REST) Apex Hotel Court Hotel International Properties Ltd Pty Ltd. Pty Ltd. Management. Hotel Ltd. (U.K.) Services Pte.

1 The Financial Year of the Company 31st March 31st March 31st March 31st March 31st March 31st March 31st March 31st March ends on : 2009 2009 2009 2009 2009 2009 2009 2009 2 Fully paid-up shares held by IHCL in the Subsidiary Company or by Subsidiary Company in the Sub-subsidiary Company at the end of the Financial Year of the Subsidiary or Sub-subsidiary Company as the case may be a) Number 41,000 30,527,912 2 100 20,001,000 5,000,000 1 2 Equity Equity Equity Equity Equity Equity Equity Equity Shares of Shares of Shares of Shares of Shares of Shares of Shares of Shares of DFL 100 each UK£ 1 each UK£ 1 each US$ 1 each US$ 1 each AUD$ 1 each AUD$ 1 each S$ fully paid-up fully paid-up fully paid-up fully paid-up fully paid-up fully paid-up fully paid-up fully paid-up b) Extent of holding 100.00% * 54.01% # 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 3 Changes in the interest of the Company Does Not Does Not Does Not Does Not Does Not Does Not Does Not Does Not or the Subsidiary Company between the Arise Arise Arise Arise Arise Arise Arise Arise end of the Financial Year of the Subsidiary Company or Sub-subsidiary Company and 31st March, 2009 Number of Shares acquired 4 The net aggregate of Profit of the Subsidiary Company/Sub-subsidiary Company so far as they concern the Members of the Company a ) Dealt with in the accounts of the Company Nil Nil Nil Nil Nil Nil Nil Nil for the year ended 31st March, 2009 b) Not dealt with in the accounts of the EUR UK£ UK£ US$ US$ AUD$ AUD$ S$ Company for the year ended 31st March, 2009 (25,317) 730,636 121,560 (29,455,996) (17,432,897) (1,658,440) 48,453 - 5 The net aggregate of profits/(losses) of the Subsidiary/Sub-subsidiary Company for previous financial years, so far as they concern the Members of the Company a ) Dealt with in the accounts of the Company Nil Nil Nil Nil Nil Nil Nil Nil for the year ended 31st March, 2009 b) Not dealt with in the accounts of the EUR UK£ UK£ US$ US $ AUD$ AUD$ S$ Company for the year ended 31st March, 31st March, 2009 9,978,059 (6,383,667) 1,670,332 (43,572,218) (10,314,267) (14,161,338) (50,106) Nil 6 Material changes between the end of the Financial Year of the Subsidiary or Sub- subsidiary Company as the case may be and 31st March, 2009 a) Fixed Assets b) Investments c) Moneys lent by the Subsidiary Company d) Moneys borrowed by the Subsidiary Does Not Does Not Does Not Does Not Does Not Does Not Does Not Does Not Company other than for meeting Current Arise Arise Arise Arise Arise Arise Arise Arise Liabilities

* Indirect holding as per Hong Kong Law For and on behalf of the Board # Inclusive of indirect holding of 21.23% as per Hong Kong Law R. N. TATA Chairman R. K. KRISHNA KUMAR Vice - Chairman RAYMOND N. BICKSON Managing Director ANIL P. GOEL Executive Director - Finance ABHIJIT MUKERJI Executive Director - Hotel Operations N. A. SOONAWALA S. K. KANDHARI JAGDISH CAPOOR Directors SHAPOOR MISTRY ARNAVAZ AGA NADIR GODREJ } Mumbai, June 12, 2009 SANKER PARAMESWARAN Vice President - Legal & Company Secretary

119 The Indian Hotels Company Limited Ltd. (88.82) (88.82) 151.96 1,431.45 1,431.45 Properties Rs. Crores (1.34) (1.34) Service Inc. Australia ment ment Hotel Hotel 2.08) (56.41) (141.37) 2.78) (61.87) 0.05) (5.91) 0.08) (5.91) tional tional 14.25 - - Interna- Interna- Samsara Services 0.89 (15 1.02 (57 tional 13.06 (37 13.19 1,036.24 13.19 1,036.24 Hotels Manage- Manage- Interna- 0.17 1.39 (15 rants) IHMS Taj (0.01) (0.01) (0.01) (0.01) (Restau- 0.03 - 0.51 0.03 - - 2.12 IHOCO 84.09 78.81 (5.09) (0.70) (0.14) (0.70) (0.17) - hieftain Ltd. NV Pty Ltd. 9.84 9.86 Court Corpo- BV (0.02) - Hotels ration (76.26) (328.03) St. James C Ltd. Ltd. ional (H.K.) 11.95 64.99 (7.73) 0.01 Hotel Internat- Apex Taj ement (0.02) Manag- ServicesPTE ltd Ltd. Inno- vative Foods Food (0.13) (4.84) (0.14) (4.90) - (7.73) (5.16) (10.50) - Beverages Air- and Ltd. Ltd. 7.83 ------27.38 17.51 185.15 catering Ltd. 2.90 ------ration Roots Taj Residency 99.13 21.00 - 7.85 ------290.42 37.25 764.25 (44.75) (22.11) (22.31) 0.37 ------United 3.500.804.30 - - - - - 99.13 - 28.38 7.38 18.27 18.27 15.08 - 7.23 - - - 472.53 472.53 ------0.14 - 493.77 - 203.35 37.25 0.14 1,470.92 - - 706.67 - - Hotels Hotels Corpo- SATS ------Ltd. Ltd. Ltd. 0.51 0.04 5.45 0.20 9.87 0.01 0.06 0.01 - 1.05 3.64 6.09 221.43 217.85 0.09 10.83 0.02 99.74 663.64 - - - 12.17 1,594.78 60.54 - 17.5717.46 0.54 0.47 36.36 15.46 38.83 208.27 33.52 26.93 1.99 23.56 192.80 - 0.00 0.18 46.45 346.55 33.33 3.10 16.95 0.43 10.01 81.5090.28 0.60 1.90 8.40 24.33 191.00 17.40 19.30 11.61 0.00 254.75 411.86 0.07 12.55 0.00 0.00 914.55 17.83 101.91 41.62 3.16 20.01 21.05 13.08 14.31 5.06 TIFCO KTC 171.78 6.80 32.73 245.38129.11 230.93 - 32.41 6.26 16.19 0.00 - 739.23 335.60 84.16 - 91.36 18.01 0.30 - 574.50 - 89.25 89.24 - - - - 1,279.49 171.78 6.80 32.73 245.38 230.93 32.41 16.19 0.00 739.23 335.60 84.16 91.36 Holdings otal Income Summary of Financial Information Subsidiary Companies Name of Subsidiary Reserves Funds Employed Capital Profit Before Taxation Deferred Tax LiabilityDeferred Tax LiabilitiesTotal Funds Employed Total - - LiabilitiesSecured LoansUnsecured Loans -Application of Funds - - Assets Fixed Assets (Including CWIP) - - DepositsLong Term - - - - Investments Net Current Assets Profit After Taxation Provision for Taxation Provision for Deferred Tax Assets Deferred Tax - - Proposed / Interim Dividend Total Assets (Net) Total T Miscellaneous Expenditure (to the extent not written off)

120 Annual Report 2008-2009

Financial Statistics (Rs. Crores)

CAPITAL ACCOUNTS REVENUE ACCOUNTS

Year Share Reserves Borrow- Gross Net Invest- Gross Expen Depre- Profit Tax Profit Net Divi Rate of Capital and ing Block Block ment Revenue diture ciation before Prov. after Transfer dend Dividend Surplus (Including Taxes Taxes to on Interest Reserves Ordinary Shares %

1972-73 2.35 0.76 5.38 10.06 8.12 0.02 4.35 3.50 0.45 0.40 0.04 0.44 0.29 0.16 6.00

1973-74 2.35 1.12 5.32 10.58 8.14 0.16 5.82 4.82 0.50 0.50 0.01 0.51 0.35 0.17 6.40

1974-75 2.35 1.94 4.55 10.99 8.09 0.20 7.26 5.79 0.49 0.98 0.00 0.98 3.61 0.37 18.00

1975-76 2.35 2.21 4.21 11.82 8.42 0.20 8.61 6.73 0.50 1.38 0.33 1.05 0.64 0.41 20.00

1976-77 3.07 2.38 3.98 12.21 8.30 0.25 10.77 8.45 0.52 1.80 0.75 1.05 0.49 0.56 20.00

1977-78 3.07 3.39 4.73 13.14 8.69 0.34 13.92 9.76 0.53 3.63 1.94 1.69 1.01 0.68 25.00

1978-79 3.07 5.41 6.17 17.81 12.68 0.55 18.42 13.63 0.69 4.10 1.40 2.70 2.02 0.68 25.00

1979-80 5.09 5.58 5.56 20.48 14.31 0.74 26.49 18.59 1.04 6.86 3.63 3.23 2.18 1.05 25.00

1980-81 5.01 8.53 7.76 25.01 17.60 1.10 31.54 23.13 1.24 7.17 3.17 4.00 2.95 1.45 22.00

1981-82 6.90 9.20 8.87 28.79 20.06 1.13 36.09 26.72 1.33 8.04- 4.10 3.94 2.49 1.45 22.00

1982-83 6.35 12.34 26.71 49.54 39.22 2.65 42.98 36.87 1.62 4.49 0.00 4.49 2.99 1.50 23.00

1983-84 6.35 17.45 32.25 58.48 44.40 3.77 54.69 43.79 3.80 7.10 0.40 6.70 5.11 1.59 25.00

1984-85 6.35 22.23 42.20 67.77 44.55 11.70 65.50 55.39 2.66 7.45 1.08 6.37 4.78 1.59 25.00

1985-86 7.85 28.70 38.82 71.69 53.72 6.21 78.48 69.32 3.44 7.66 1.60 6.06 4.22 1.84 25.00

1986-87 7.85 32.73 53.58 89.73 67.56 5.53 93.05 79.68 4.25 9.12 2.75 6.37 4.02 2.35 30.00

1987-88 9.86 41.97 63.47 107.70 80.08 6.90 105.69 90.98 5.55 9.16 2.40 6.76 4.23 2.53 30.00

1988-89 9.86 48.54 74.06 127.39 93.56 9.34 117.72 100.61 6.24 10.87 1.50 9.37 6.42 2.96 30.00

1989-90 14.78 51.44 97.13 161.28 119.95 11.19 141.50 120.93 7.80 12.77 1.25 11.52 7.83 3.70 25.00

1990-91 14.78 56.77 121.07 178.61 128.43 12.37 159.11 139.42 9.11 10.58 1.55 9.03 5.33 3.70 25.00

1991-92 14.78 73.72 123.53 194.44 135.89 13.76 206.79 169.52 8.85 27.58 6.50 21.08 16.75 5.17 35.00

1992-93 19.96 124.44 106.86 210.68 142.53 16.93 239.21 188.24 9.77 41.20 9.00 32.20 24.86 8.68 50.00

1993-94 19.96 165.65 100.86 234.64 156.21 32.54 301.92 223.49 10.90 67.53 15.50 52.03 41.21 13.97 70.00

1994-95 39.92 205.84 245.05 293.59 201.92 36.04 381.88 263.20 13.67 105.11 23.00 82.11 60.15 21.96 55.00

1995-96 45.12 567.16 200.18 384.01 273.21 142.09 547.42 347.42 20.37 179.57 39.00 140.57 107.10 33.47 75.00

1996-97 45.12 671.86 219.75 500.10 364.08 214.80 613.33 405.67 27.18 180.48 33.60 146.48 104.70 38.35 85.00

1997-98 45.12 767.68 197.31 581.48 414.57 218.09 623.91 427.53 32.42 163.96 26.00 137.96 95.78 38.35 85.00

1998-99 45.12 844.35 178.42 665.67 466.77 259.09 623.34 435.36 33.84 154.14 35.00 119.14 76.57 38.35 85.00

1999-00 45.12 913.96 432.32 842.01 606.86 337.75 650.91 482.49 37.69 130.73 17.50 113.23 70.66 38.35 85.00

2000-01 45.12 980.10 555.31 942.16 665.06 422.13 742.92 560.47 45.16 137.29 20.50 116.79 67.07 45.12 100.00

2001-02 45.12 844.13 809.21 946.15 655.08 541.34 617.55 589.81 47.49 98.14 17.44 80.70 40.00 36.09 80.00

2002-03 45.12 842.17 799.50 985.71 677.77 571.64 609.91 575.43 39.98 53.80 13.72 40.48 7.50 31.58 70.00

2003-04 45.12 844.79 1412.46 1159.69 813.13 600.83 727.09 646.89 48.58 80.20 19.55 60.65 8.57 36.09 80.00

2004-05 50.25 1081.80 1052.03 1290.70 885.20 607.01 896.23 754.55 56.77 141.68 35.82 105.86 11.00 50.25 100.00

2005-06 58.41 1657.83 544.34 1308.34 843.01 656.57 1154.80 890.90 65.90 272.00 88.22 183.78 20.00 77.95 130.00

2006-07 60.29 1738.39 943.94 2014.34 1360.05 962.81 1618.83 1146.47 91.44 474.64 152.25 322.39 35.00 96.46 160.00

2007-08 60.29 1956.29 1134.18 2072.16 1371.60 977.58 1823.16 1254.11 85.48 580.47 203.01 377.46 38.00 114.54 190.00

2008-09 72.34 2975.29 1766.47 2362.23 1585.40 2026.88 1706.52 1348.42 94.46 362.30 128.27 234.03 30.00 86.81 120.00

121 The Indian Hotels Company Limited

AUDITORS’ REPORT

TO THE BOARD OF DIRECTORS OF THE INDIAN HOTELS COMPANY LIMITED ON THE CONSOLIDATED FINANCIAL STATEMENTS 1. We have audited the attached Consolidated Balance Sheet of THE INDIAN HOTELS COMPANY LIMITED ("the Company"), its subsidiaries and jointly controlled entities, (the Company, its subsidiaries and jointly controlled entities together constitute "the Group") as at March 31, 2009, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement of the Group for the year ended on that date, both annexed thereto. The Consolidated Financial Statements include investments in associates, accounted for on the equity method in accordance with Accounting Standard 23 (Accounting for Investments in Associates in Consolidated Financial Statements) (AS 23) and financial statements of the jointly controlled entities accounted for in accordance with Accounting Standard 27 (Financial Reporting of Interests in Joint Ventures) (AS 27) as notified by the Companies (Accounting Standards) Rules, 2006. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these Consolidated Financial Statements based on our audit.

2. We conducted our audit in accordance with the generally accepted auditing standards in India. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

3. (i) We did not audit the financial statements of sixteen subsidiaries and three jointly controlled entities whose financial statements reflect total assets (net) of Rs. 3,077.61 crores as at 31st March, 2009, total revenues of Rs. 734.38 crores and net cash flows amounting to Rs. 68.43 crores for the year then ended as considered in the Consolidated Financial Statements. We have also not audited the accounts of any of the associates, which reflect the Group's share of profit (net) for the year amounting to Rs. 49.97 crores as considered in the Consolidated Financial Statements. These financial statements have been audited by other auditors, whose reports have been furnished to us and our opinion, in so far as it relates to the amounts included in respect of these subsidiaries, jointly controlled entities and associates, is based solely on their reports.

(ii) The Consolidated Financial Statements include the unaudited financial statements of a jointly controlled entity having total assets (net) of Rs. 94.61 crores as at 31st March, 2009, total revenues of Rs. 32.80 crores and cash flows amounting to Rs. 12.42 crores for the year then ended, as considered in the Consolidated Financial Statements. The Consolidated Financial Statements also include the Group's share of loss of an associate for the year, amounting to Rs. 24.48 crores as considered in the Consolidated Financial Statements. The financial statements of these entities have not been audited but have been certified by the Management.

4. (i) We report that the Consolidated Financial Statements have been prepared in accordance with the requirements of Accounting Standard 21, (Consolidated Financial Statements), AS 23 and AS 27 as notified by the Companies (Accounting Standards) Rules, 2006 and on the basis of the separate audited/unaudited financial statements of

122 Annual Report 2008-2009

the Company, its subsidiaries, jointly controlled entities and associates included in the Consolidated Financial Statements, referred to in paragraph 3 above. (ii) Based on our audit and on consideration of the separate audit reports on individual financial statements of the Company, its aforesaid subsidiaries, jointly controlled entities and associates referred to in paragraph 3 (i) above and to the best of our information and according to the explanations given to us, we are of the opinion that the aforesaid Consolidated Financial Statements, subject to our comments in paragraph 3 (ii) above regarding a jointly controlled entity and an associate whose accounts have not been audited, 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 Group as at March 31, 2009;

(b) in the case of the Consolidated Profit and Loss Account, of the profit of the Group for the year ended on that date and (c) in the case of the Consolidated Cash Flow Statement, of the cash flows of the Group for the year ended on that date.

For DELOITTE HASKINS & SELLS Chartered Accountants Nalin M. Shah Partner (Membership No.15860) MUMBAI, 26th June, 2009

123 The Indian Hotels Company Limited

Consolidated Balance Sheet as at March 31, 2009 March 31, 2008 Schedule Rupees Rupees Rupees crores crores crores SOURCES OF FUNDS Shareholders' Funds Share Capital 1 72.34 60.29 Share Application Money - 19.97 Reserves and Surplus 2 3,105.55 2,188.83 Preference shares issued by a subsidiary (Refer Note 6, Page 147 ) 120.00 - Total 3,297.89 2,269.09 Minority Interest 274.11 282.01 Loan Funds Secured Loans 3 2,659.60 1,631.57 Unsecured Loans 4 1,987.28 1,835.26 Total 4,646.88 3,466.83 Long Term Trade Deposits 23.80 23.63 Deferred Tax Liabilities (Refer Note 10 (b), Page 148 ) 160.52 148.88 8,403.20 6,190.44 APPLICATION OF FUNDS Fixed Assets 5 Gross Block 5,392.38 4,646.45 Less : Depreciation 1,304.08 1,132.08 Net Block 4,088.30 3,514.37 Capital work-in-progress 727.27 435.17 Total 4,815.57 3,949.54 Goodwill on consolidation 361.15 297.03 Investments 6 2,407.68 1,541.94 Long Term Deposits for Hotel Properties 174.99 165.71 "Foreign Currency Monetary Item Translation Difference Account 11.63 - “(Refer Note 18, Page 154 )" Deferred Tax Assets (Refer Note 10(c), Page 148 ) 0.37 0.35 Current Assets, Loans and Advances 7 Inventories 64.10 53.33 Sundry Debtors 177.77 207.91 Cash and Bank Balances 252.84 257.60 Loans and Advances 886.48 366.20 1,381.19 885.04 Less: Current Liabilities and Provisions 8 Liabilities 555.55 572.20 Provisions 201.47 86.12 757.02 658.32 Net Current Assets 624.17 226.72 Miscellaneous Expenditure (to the extent not adjusted or written off) 9 7.64 9.15 8,403.20 6,190.44 The accompanying notes form an integral part of the Balance Sheet 12

As per our report attached. For and on behalf of the Board For DELOITTE HASKINS & SELLS Raymond N. Bickson Managing Director Chartered Accountants Anil P. Goel Executive Director - Finance Abhijit Mukerji Executive Director - Hotel Operations Nalin M. Shah Partner

Mumbai, June 26, 2009

124 Annual Report 2008-2009

Consolidated Profit and Loss Account for the year ended March 31, 2009 Previous Year Schedule Rupees Rupees Rupees crores crores crores INCOME Rooms, Restaurants, Banquets and Other Income 10 2,756.63 3,012.62 EXPENDITURE Operating and General Expenses 11 2,196.92 2,046.90 Depreciation 188.53 167.62 Interest (net) (Refer Note 15, Page 153) 230.46 202.32 Total 2,615.91 2,416.84 Less : Unallocated Expenditure during construction period transferred to Fixed Assets 22.55 18.90 2,593.36 2,397.94 PROFIT BEFORE EXCEPTIONAL ITEM AND TAX 163.27 614.68 Less : Exceptional item (Refer Note 3 (b) & 3 (c), Page 147 ) 6.79 54.16 Add : Profit on sale of a hotel property (Refer Note 7, Page 147 ) 2.03 - PROFIT BEFORE TAX 158.51 560.52 Less : Provision for Tax (Refer Note 10(a), Page 148) 151.97 242.63 Less : Short Provision of Tax of earlier years (Net) 3.80 4.35 PROFIT AFTER TAX 2.74 313.54 Less : Profit attributable to minority interest (net) 15.77 22.74 Add : Share of Profits of Associates (Net) 25.49 64.18 PROFIT AFTER MINORITY INTEREST AND SHARE 12.46 354.98 OF PROFIT OF ASSOCIATES Add : Balance brought forward from previous year 680.17 497.20 AMOUNT AVAILABLE FOR APPROPRIATION 692.63 852.18 Appropriation : Interim Dividend - 114.54 Tax on Interim Dividend - 19.47 Proposed Dividend 86.81 - Tax on Dividend 14.75 - Transfer to Debenture Redemption Reserve 100.00 - Transferred to General Reserve 30.00 38.00 Balance carried forward 461.07 680.17 692.63 852.18 Earnings Per Share before Exceptional Item - (In Rupees) (Refer Note 26, Page 164) Basic & Diluted 0.17 5.43 Face Value per equity share - (In Rupees) 1.00 1.00 The accompanying notes form an integral part of the 12 Profit and Loss Account

As per our report attached. For and on behalf of the Board For DELOITTE HASKINS & SELLS Raymond N. Bickson Managing Director Chartered Accountants Anil P. Goel Executive Director - Finance Abhijit Mukerji Executive Director - Hotel Operations Nalin M. Shah Partner

Mumbai, June 26, 2009

125 The Indian Hotels Company Limited

Consolidated Cash Flow Statement for the year ended March 31, 2009 Previous Year Rupees Rupees Rupees Rupees crores crores crores crores Cash Flow From Operating Activities Net Profit Before Tax 158.51 560.52 Adjustments For : Depreciation 188.53 167.62 Amortisation of VRS Expenditure 0.30 1.36 Profit on sale of investments (0.04) (39.12) Profit on sale of a hotel property (2.03) - (Profit) / Loss on sale of assets disposed / discarded (2.71) 8.54 Provision for Doubtful Debts and advances 4.50 4.46 Dividend Income (48.74) (7.55) Interest (Net) 230.46 202.32 Unrealised Exchange Loss / (Gain) on financing activities 20.90 (15.03) Provision for Loyalty Programmes (net of Redemptions) 1.61 2.14 Provision for contingencies 0.20 - Provision for Employee Benefits 11.09 2.63 404.07 327.37 Cash Operating Profit before working capital changes 562.58 887.89 Adjustments For : Trade and Other Receivables (71.47) (26.30) Inventories (9.22) (8.99) Trade Payables 48.50 (25.82) (32.19) (61.11) Cash Generated from Operating activities 530.39 826.78 Direct Taxes Paid (191.42) (246.93) Net Cash From Operating Activities 338.97 579.85 Cash Flow From Investing Activities Purchase of Fixed Assets (793.64) (677.73) Sale of Fixed Assets 12.83 4.32 Purchase of Investments (including advance paid) (352.11) (1,042.64) Sale of Investments 12.00 44.17 Interest Received 32.55 17.14 Dividend Received [including Rs. 20.63 crores from associates, (Previous Year Rs.9.42crores)] 69.45 13.91 Deposits Refunded by / (Placed with ) Other Companies (Net) (142.13) (10.15) Net Cash Used In Investing Activities (1,161.05) (1,650.98) Cash Flow From Financing Activities Debenture issue / Loan arrangement costs (12.87) (0.69) Interest Paid (230.10) (217.75) Repayment of long term Loans and Debentures (192.63) (417.97) Proceeds of long term Loans and Debentures 1,287.40 463.17 Short Term Loans Raised (Net) (449.47) 1,403.91 Long Term Trade Deposits Raised 30.67 8.20 Share application money 0.15 19.97 Proceeds from issue of Equity Shares 823.90 - Proceeds from issue of Preference Shares by a subsidiary 120.00 - Debenture Application Money Collected - 3.88 Dividend Paid (Including tax on dividend) (145.49) (116.53) Net Cash Used In Financing Activities 1,231.56 1,146.19 Net Increase / (Decrease) In Cash and Cash Equivalents 409.48 75.06 Cash and Cash Equivalents Opening 1st April - (Refer Note 20, Page 154) 260.21 190.23 Impact of Exchange Fluctuations on Cash and Cash Equivalents 8.88 (5.08) Cash and Cash Equivalents Closing 31st March - (Refer Note 20, Page 154) 678.57 260.21

As per our report attached. For and on behalf of the Board For DELOITTE HASKINS & SELLS Raymond N. Bickson Managing Director Chartered Accountants Anil P. Goel Executive Director - Finance Abhijit Mukerji Executive Director - Hotel Operations Nalin M. Shah Partner

Mumbai, June 26, 2009

126 Annual Report 2008-2009

Schedules forming part of the Consolidated Balance Sheet Schedule 1 : Share Capital March 31, 2008 Rupees Rupees crores Crores AUTHORISED SHARE CAPITAL Ordinary Shares 100,00,00,000 Ordinary Shares of Re. 1/- each 100.00 100.00 Preference Shares 1,00,00,000 Cumulative Redeemable Preference Shares of Rs. 100/- each 100.00 100.00 200.00 200.00 ISSUED SHARE CAPITAL 72,34,21,792 (Previous Year 60,28,51,493) Ordinary Shares of Re. 1 /- each, Fully Paid 72.34 60.29 72.34 60.29 SUBSCRIBED AND PAID UP 72,34,05,288 (Previous Year 60,28,51,493) Ordinary Shares of Re. 1 /- each, Fully Paid 72.34 60.29 72.34 60.29

Notes: (i) 12,05,53,795 Ordinary Shares, of the face value of Re 1/- each, were allotted on May 23, 2008 as fully paid shares, pursuant to Rights Issue of Equity Shares by the Company (Refer Note 4, Page 147 ). (ii) 16,504 Ordinary Shares have been issued but not subscribed to as at the end of the year and have been kept in abeyance pending resolution of legal dispute.

127 The Indian Hotels Company Limited

Schedules forming part of the Consolidated Balance Sheet Schedule 2 : Reserves and Surplus March 31, 2008 Rupees Rupees crores crores

Capital Reserve 43.91 43.91

Capital Redemption Reserve 1.12 1.12

Securities Premium Account (Refer Notes 4 and 5, Page 147 ) 1,675.28 851.37

General Reserve 430.81 404.63

Investment Reserve 5.00 5.00

Investment Allowance Utilised Reserve 4.03 4.03

Export Profits Reserve 0.41 0.41

Debenture Redemption Reserve 188.67 88.67

Foreign Exchange Earnings Reserve 7.51 7.51

Foreign Exchange Earnings Utilised Reserve 2.31 2.31

Foreign Currency Translation Reserve (Refer Note 2 (f), Page 144) 76.99 10.55

Foreign Currency Translation Reserve on Consolidation 180.89 12.13

Share of Post Acquisition Reserves of Group Companies 27.55 77.02

Profit and Loss Account 461.07 680.17

3,105.55 2,188.83

128 Annual Report 2008-2009

Schedules forming part of the Consolidated Balance Sheet Schedule 3 : Secured Loans March 31, 2008 Rupees Rupees crores crores

Non - Convertible Debentures 1,452.77 550.00 Term loans 1,168.93 1,045.48 Bank Overdraft 34.98 35.38 Interest accrued & due 1.13 0.68 Others (Finance Lease) (Refer Note 14 (c), Page 152) 1.79 0.03 TOTAL 2,659.60 1,631.57

129 The Indian Hotels Company Limited

Schedules forming part of the Consolidated Balance Sheet Schedule 4 : Unsecured Loans March 31, 2008 Rupees Rupees crores crores Fixed Deposits 27.18 3.08 Foreign Currency Term Loan from Banks 140.86 179.29 Long Term Loans from Others - 7.89 Long Term Loans from Banks 366.84 288.14 Short Term Loans from Banks 849.09 166.61 Short Term Loan from Others 597.22 1,069.49 Inter - Corporate Deposits 2.36 67.89 Commercial Paper - 50.00 Bank Overdraft 3.73 2.87 TOTAL 1,987.28 1835.26

130 Annual Report 2008-2009

Schedules forming part of the Consolidated Balance Sheet Schedule 5 : Fixed Assets Rupees crores

Gross Block Translation Additions Deductions Gross Block Opening Translation Depreciation Deductions Accumulated Net Particulars (at cost ) Adjustment for the for the (at cost ) Depreciation Adjustment for the for the Depreciation Block as at year year as at as at Year year as at as at 01.04.2008 31.03.2009 01.04.2008 31.03.2009 31.03.2009 (Refer Note 4) (Refer Note 4) (Refer Note 5)

TANGIBLE ASSETS LAND (Freehold) 379.27 59.32 10.53 0.06 449.06 3.88 - - - 3.88 445.18 333.80 (12.41) 57.88 - 379.27 3.88 - - - 3.88 375.39 LAND (Leasehold) 247.15 (14.66) 1.56 3.31 230.74 21.80 0.47 2.74 2.48 22.53 208.21 259.81 (14.55) 2.08 0.19 247.15 20.41 (1.27) 2.66 - 21.80 225.35 ------BUILDINGS 2,441.25 149.40 263.96 6.06 2,848.55 267.94 2.63 62.02 1.88 330.71 2,517.84 2,290.57 (79.28) 232.11 2.15 2,441.25 221.19 (4.98) 52.08 0.35 267.94 2,173.31 PLANT AND MACHINERY 973.20 3.38 206.11 21.32 1,161.37 482.95 1.69 68.16 14.27 538.53 622.84 919.54 (3.43) 84.66 27.57 973.20 447.92 (1.57) 61.58 24.98 482.95 490.25 FURNITURE , FIXTURES 475.07 8.51 56.66 11.81 528.43 287.96 1.84 43.81 10.00 323.61 204.82 AND OFFICE EQUIPMENTS. 463.58 (8.29) 34.50 14.72 475.07 261.30 (4.04) 40.29 9.59 287.96 187.11 VEHICLES 36.71 0.43 9.46 0.80 45.80 15.74 0.35 3.94 0.62 19.41 26.39 34.54 (0.12) 3.77 1.48 36.71 13.46 (0.09) 3.33 0.96 15.74 20.97 INTANGIBLE ASSETS LEASEHOLD PROPERTY RIGHTS 10.17 2.40 1.81 - 14.38 1.85 (0.13) 0.88 - 2.60 11.78 10.95 (0.78) - - 10.17 1.26 (0.09) 0.68 - 1.85 8.32 WEBSITE DEVELOPMENT COST 4.61 - - - 4.61 4.55 - 0.01 - 4.56 0.05 4.53 - 0.08 - 4.61 4.53 - 0.02 - 4.55 0.06 CUSTOMER RESERVATION 6.53 0.26 2.69 - 9.48 1.52 0.08 1.38 - 2.98 6.50 SYSTEM AND LICENSED SOFTWARE 17.18 - 4.19 14.84 6.53 13.31 - 2.02 13.81 1.52 5.01 MANAGEMENT CONTRACTS 55.48 11.73 16.27 - 83.48 37.50 7.27 2.90 - 47.67 35.81 64.04 (8.56) - - 55.48 41.64 (2.19) 2.93 4.88 37.50 17.98 NON COMPETE FEES 17.01 (0.24) 1.12 1.41 16.48 6.39 (0.07) 2.69 1.41 7.60 8.88 17.55 - 2.04 2.58 17.01 5.11 - 2.03 0.75 6.39 10.62 TOTAL 4,646.45 220.53 570.17 44.77 5,392.38 1,132.08 14.13 188.53 30.66 1,304.08 4,088.30 4,416.09 (127.42) 421.31 63.53 4,646.45 1,034.01 (14.23) 167.62 55.32 1,132.08 3,514.37

Notes : 1 Figures in italics are in respect of the previous year. 2 Gross block includes improvements to leased buildings - Rs. 1,103.43 crores ( Previous Year - Rs. 1,077.24 crores). 3 Plant and Machinery as at the year end includes Fixed Assets on finance lease: Gross Block - Rs. 3.41 crores; (Previous year - Rs.0.05 crore), Accumulated Depreciation - Rs. 1.52 crores (Previous year Rs.0.01 crore), Depreciation for the year - Rs.0.05 crore (Previous year Rs.0.01 crore). 4 Adjustment on account of foreign exchange translation difference on opening balance and depriciation charge for the year is reflected as "Translation Adjustment". 5 Accumulated Depreciation includes adjustment for impairment of Rs. 9.4 crores made in the earlier years.

131 The Indian Hotels Company Limited

Schedules forming part of the Consolidated Balance Sheet Schedule 6 : Investments March 31, 2008 Rupees Rupees crores crores Long Term Trade Investments In Associate Companies 518.66 396.12 [Includes Goodwill (Net of capital reserve of Rs. 1.18 crores) {Previous Year - Rs. 0.70 crore} of Rs.103.04 crores {Previous Year - Rs.76.05 crores } arising on the acquisition of Associates]

In Shares a Quoted (refer notes below) (Refer Note 8, Page 147) 1,263.27 992.31 b Unquoted (Refer Note 13(b), Page 149) 200.52 151.39 Other Investments - Shares - 0.01 Current Investments - Units of Liquid Mutual Funds 425.73 2.61

TOTAL 2,408.18 1,542.44

Less : Provision for Diminution in Value of Investments 0.50 0.50 2,407.68 1,541.94

Notes: (i) Investments in Quoted Shares include 50,900 shares of the Company held by a subsidiary, at a cost of Rs. 73,950, which were acquired by it prior to it becoming a subsidiary. (ii) Aggregate of Quoted Invesments - Gross : Cost - 1,417.13 1,137.21 Market Value - 336.23 1,269.36

132 Annual Report 2008-2009

Schedules forming part of the Consolidated Balance Sheet Schedule 7 : Current Assets, Loans and Advances March 31, 2008 Rupees Rupees Rupees crores crores crores Inventories Stores and Operating Supplies 36.77 26.46 Food and Beverages 27.33 26.87 64.10 53.33 Sundry Debtors (Unsecured) (net of provision) 177.77 207.91 Cash and Bank Balances Cash on hand [Including Cheques on Hand - Rs. 5.02 crores 14.25 23.85 (Previous Year - Rs. 3.01 crores)] Balances with Banks : In Current Accounts 59.05 198.09 In Short Term Deposit Accounts 179.54 35.66 238.59 233.75 252.84 257.60

494.71 518.84 LOANS AND ADVANCES Deposits with Public Bodies and Others 43.21 39.94 Advance payment of Tax (net of provision) 161.25 118.69 Other Advances (net of provision) 505.59 163.16 Deposits with Companies 176.43 44.41 886.48 366.20 TOTAL 1,381.19 885.04

133 The Indian Hotels Company Limited

Schedules forming part of the Consolidated Balance Sheet Schedule 8 : Current Liabilities & Provisions March 31, 2008 Rupees Rupees Rupees crores crores crores CURRENT LIABILITIES Sundry Creditors 296.78 260.22 Other Liabilities 115.52 90.60 Sundry Deposits 8.89 8.36 Advance from customers 72.13 60.29 Interest accrued but not due 62.23 14.84 Non-Convertible Debentures Application money - 3.88 Interim Dividend - 114.54 Tax on Interim Dividend - 19.47 TOTAL CURRENT LIABILITIES 555.55 572.20 PROVISIONS Employee Benefits 69.21 58.12 Contingencies (Refer Note 22, Page 155) 1.40 1.20 Loyalty programmes (Refer Note 21, Page 154) 12.57 10.96 Taxation (net of advance) 16.73 15.84 Proposed Dividend 86.81 - Tax on Dividend 14.75 - TOTAL PROVISIONS 201.47 86.12 TOTAL 757.02 658.32

134 Annual Report 2008-2009

Schedules forming part of the Consolidated Balance Sheet Schedule 9 : Miscellaneous Expenditure (to the extent not adjusted or written off) March 31, 2008 Rupees Rupees Rupees crores crores crores Borrowing Costs Opening Balance 8.85 11.08 Add : Incurred during the year 1.76 1.60 Add : Translation Adjustment 0.62 - Less : Amortised during the year 3.59 3.83 Closing Balance 7.64 8.85 Voluntary Retirement Scheme Expenses Opening Balance 0.30 1.66 Less : Amortised during the year 0.30 1.36 Closing Balance - 0.30 TOTAL 7.64 9.15

135 The Indian Hotels Company Limited

Schedules forming part of the Consolidated Profit and Loss Account Schedule 10 : Rooms, Restaurants, Banquets and Other Income Previous Year Rupees Rupees Rupees INCOME crores crores crores Rooms, Restaurants, Banquets and Other Services 2,600.59 2,920.03 Other Operating Income (Refer Note 3 (a), Page 146) 85.54 - 2,686.13 2,920.03 Other Income Dividend Income (Refer Note 9 Page 147 ) 48.74 7.55 Profit on sale of assets (Net) 2.71 - Profit on sale of investments (net) 0.04 39.12 Miscellaneous Income [Including Exchange gain - Rs. Nil (Previous year Rs. 15.03 Crores)] 19.01 45.92 70.50 92.59 TOTAL 2,756.63 3,012.62

136 Annual Report 2008-2009

Schedules forming part of the Consolidated Profit and Loss Account Schedule 11 : Operating and General Expenses Previous Year Rupees Rupees Rupees crores crores crores Operating Expenses Payments to & Provisions for Employees Salaries, Wages, Bonus etc 617.71 527.86 Group's Contribution to Provident & Other Funds 97.42 105.50 Payment to Contractors 58.88 49.62 Staff Welfare Expenses 81.15 81.46 855.16 764.44 Food & Beverages Consumed 277.22 278.19 Other Operating Expenses Linen & Room Supplies 46.57 45.93 Catering Supplies 22.84 28.18 Other Supplies 15.92 9.48 Fuel, Power & Light 167.74 154.68 Repairs to Buildings 27.78 28.60 Repairs to Machinery 35.51 31.75 Repairs to Others 30.69 31.36 Linen, Uniform Washing and Laundry Expenses 16.64 24.37 Payment to Orchestra Staff, Artistes and Others 11.15 8.27 Guest Transportation 11.59 13.04 Travel Agents' Commission 25.79 30.95 Discount to Collecting Agents 29.55 32.93 Other Operating Expenses 42.28 24.00 484.05 463.54 General Expenses Rent 45.59 55.34 Licence Fees 106.42 113.64 Rates & Taxes 52.35 47.97 Insurance 16.31 17.91 Advertising & Publicity 88.86 83.75 Printing & Stationery 13.94 15.43 Passage & Travelling 22.57 22.79 Provision for Doubtful Debts and Advances 4.50 4.46 Professional Fees 61.70 51.91 Exchange Loss (Net) 46.59 - Loss on Sale of Assets (Net) - 8.54 Other Expenses 113.47 108.49 Auditors' Remuneration (Refer Note 16, Page 153 ) 4.14 4.46 576.44 534.69 Amortisation of Voluntary Retirement Scheme Expenses 0.30 1.36 Directors' Fees and Commission 3.75 4.68 TOTAL 2,196.92 2,046.90

137 The Indian Hotels Company Limited

Schedules 12 NOTES ON CONSOLIDATED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

1. BASIS OF CONSOLIDATION: (a) The Consolidated Financial Statements relate to The Indian Hotels Company Ltd. (‘the Company’) its Subsidiaries, Jointly Controlled Entities and Associates. The Company, its subsidiaries and jointly controlled entities together constitute ‘the Group’. 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, intra-group transactions and unrealised profits or losses as per Accounting Standard 21 ‘Consolidated Financial Statements’, as notified by the Companies (Accounting Standards) Rules, 2006. - In case of foreign subsidiaries and foreign jointly controlled entities, revenue items are consolidated at the average exchange rate prevailing during the year. The opening balance in Profit and Loss Account and the opening balance in Reserves and Surplus have been converted at the rates prevailing as at the respective Balance Sheet dates. All assets and liabilities as at the year-end are converted at the rates prevailing as at the end of the year. Any exchange difference arising on consolidation is shown under Foreign Currency Translation Reserve on Consolidation. - Investments in Associate Companies have been accounted for under the equity method, as per Accounting Standard 23 ‘Accounting for Investments in Associates in Consolidated Financial Statements’, as notified by the Companies (Accounting Standards) Rules, 2006. - Interests in Jointly Controlled Entities have been accounted for by using the proportionate consolidation method, as per Accounting Standard 27 ‘Financial Reporting of Interests in Joint Ventures’, as notified by the Companies (Accounting Standards) Rules, 2006. - The financial statements of Subsidiaries, Jointly Controlled Entities and Associates used in the consolidation are drawn upto the same reporting date as that of the Company except in the case of an Associate Company where the accounts have been drawn upto December 31, 2008. - The excess of cost to the Company, of its investment in the Subsidiaries and Jointly Controlled Entities over the Company’s portion of equity as at the date of making the investment is recognised in the financial statements as Goodwill. - The excess of Company’s portion of equity of the Subsidiaries and Jointly Controlled Entities over the cost of acquisition of the respective investments as at the date of making the investment is treated as Capital Reserve. - Goodwill / Capital Reserve arising on investments in Associate Companies is retained / adjusted under the head “Investments in Associate Companies”. - Goodwill arising out of consolidation is not amortised. However, the same is tested for impairment at each Balance Sheet date. - Minority Interest in the net assets of Subsidiaries consists of : i. the amount of equity attributable to the minorities at the date on which investment in Subsidiary is made and ii. the minorities’ share of movements in equity since the date the parent-subsidiary relationship came into existence.

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(b) The list of Subsidiaries, Jointly Controlled Entities and Associates, which are included in the consolidation with their respective country of incorporation and the Group’s holdings therein, is given below: - i. Subsidiary Companies Name of the Company Country of Holding (%) Incorporation Current Previous Year Year Domestic TIFCO Holdings Ltd. (formerly known as Taj India 100 100 Investment and Finance Company Ltd.) KTC Hotels Ltd. India 100 100 United Hotels Ltd. India 55 55 Roots Corporation Ltd. India 100 100 Taj SATS Air Catering Ltd. India 51 51 Residency Foods & Beverages Ltd. India 98.68 98.68 Innovative Foods Ltd. India 67.94 67.94 International Taj International Hotels (H.K.) Ltd. (TIHK) Hong Kong 100 100 Chieftain Corporation NV Netherlands Antilles 100 100 IHOCO BV Netherlands 100 100 IHMS (HK) Ltd. Hong Kong 100 - St. James Court Hotels Ltd. United Kingdom 54.01 54.01 Taj International Hotels Ltd. United Kingdom 100 100 International Hotel Management Services Inc. United States 100 100 and its Limited Liability Companies (IHMS Inc.) of America Samsara Properties Ltd. British Virgin Islands 100 100 IHMS (Australia) Pty Ltd. Australia 100 100 IHMS (Restaurants) Pty. Ltd. Australia 100 100 Apex Hotel Management Services (Pte) Ltd. Singapore 100 100

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ii. Jointly Controlled Entities Name of the Company Country of Holding (%) Incorporation Current Previous Year Year Domestic Taj Madras Flight Kitchen Pvt. Ltd. India 50.00 50.00 Taj Karnataka Hotels & Resorts Ltd. India 40.00 40.00 Taj Kerala Hotels & Resorts Ltd. India 28.30 28.30 Taj GVK Hotels & Resorts Ltd. India 25.52 25.52 Taj Safaris Ltd. India 33.33 33.33 International Taj Asia Ltd. Hong Kong 26.66 26.66 IHMS Hotels (SA) (Proprietary) Ltd. (formerly South Africa 50 50 known as Taj International Hotels (South Africa) (Pty) Ltd.) iii. Associates Name of the Company Country of Holding (%) Incorporation Current Previous Year Year Domestic Ideal Ice & Cold Storage Co. Ltd. ** India 34.99 34.99 Benares Hotels Ltd. India 49.53 49.53 Taj Air Ltd. India 45.64 45.64 Piem Hotels Ltd. India 46.20 46.20 Taj Trade and Transport Ltd. India 46.62 46.62 Taj Enterprises Ltd. India 44.60 44.60 Taida Trading and Industries Ltd. ** India 41.50 41.50 Inditravel Pvt. Ltd. India 47.08 47.08 Oriental Hotels Ltd. India 33.80* 33.80* Taj Madurai Ltd. India 26.00 26.00 International Taj Lanka Resorts Ltd. (TLRL) Sri Lanka 24.16 24.16 Taj Lanka Hotels Ltd. (TLHL) Sri Lanka 24.62 24.62 BJETS Pte Ltd. Singapore 44.44 - * Including 5.25% of the shares held in the form of Global Depository Receipts (GDR) ** Investments in these Associates have been reported at NIL value as the Group’s share of losses exceeds the carrying amount of its investments.

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(c) In the case of the following entities, unaudited financial statements as certified by the Management have been considered in the consolidated financial statements. The adoption of the accounts by the Board of Directors of these companies is pending : i. Taj Asia Ltd. (Jointly Controlled Entity) ii. BJETS Pte Ltd. (Associate Company) (d) The following amounts are included in the Financial Statements in respect of the Jointly Controlled Entities based on the proportionate consolidation method prescribed in the Accounting Standard relating to ‘Financial Reporting of Interest in Joint Ventures’ (AS 27) as notified by the Companies (Accounting Standards) Rules, 2006 :- Rs. crores Particulars Current Year PreviousYear Assets Fixed Assets (Net Block) 255.75 169.07 Investments 3.75 0.28 Working Capital : Current Assets, Loans and Advances 55.95 63.68 Less :- Current Liabilities and Provisions 35.48 29.02 Net Current Assets 20.47 34.66 Miscellaneous Expenditure (to the extent not written off or adjusted) 0.42 0.46 Liabilities Loan Funds : Secured Loans 84.08 31.35 Unsecured Loans 30.32 33.58 Deferred Tax Liability 5.26 3.44 Contingent Liabilities 22.79 15.87 Capital Commitments 24.61 8.81

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Rs. crores Particulars Current Year Previous Year Income Operating Income 127.37 144.83 Other Income : Dividend 0.10 0.06 Profit on sale of assets (net) 0.01 0.01 Miscellaneous Income 1.19 1.17 Expenses Operating Expenses : Payment to & Provisions for Employees 25.54 21.41 Food & Beverages consumed 15.34 16.32 Other Operating Expenses 24.61 22.51 General Expenses 19.85 26.90 VRS amortisation expenses - 0.20 Directors’ Fees 0.03 0.03 Depreciation 11.41 10.12 Interest (net) 3.09 2.32 2. Significant Accounting Policies: The financial statements are prepared under historical cost convention on an accrual basis and comply with the Accounting Standards (AS) notified by the Companies (Accounting Standards) Rules, 2006. The preparation of the financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses. The Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. The significant accounting policies adopted in the presentation of the financial Statements are as under:- (a) Rooms, Restaurants, Banquets and Other Services: Rooms, Restaurants, Banquets and Other Services comprise of sale of rooms, food and beverages, allied services relating to hotel operations, including net income from telecommunication services and management and operating fees. Revenue is recognised upon rendering of the service. (b) Export Benefits Entitlement: Benefits arising out of Duty Free Scrips utilised for the acquisition of fixed assets are being adjusted against the cost of the related fixed assets. (Refer Note 19, Page 154)

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(c) Employee Benefits: i. Defined Contribution Schemes Employee benefits arising out of contributions to recognised Provident Fund, Superannuation, Social Security etc. paid/payable during the year are recognised in the Profit and Loss Account. The shortfall, if any, between the return guaranteed by the statute and actual earnings of the Provident Fund is provided for and contributed to the Fund. The Group also has separate funded and unfunded schemes, which guarantee a minimum pension to certain categories of employees. The Group accounts for the net present value of its obligation therein, based on an independent external actuarial valuation carried out annually. Certain international subsidiaries operate a defined contribution pension scheme and the pension charge represents the amounts paid/payable by them to the Fund. ii. Gratuity The Group has separate funded and unfunded schemes for gratuity benefits. In respect of funded schemes, annual contributions are made to funds administered by the trustees and managed by insurance companies for amounts notified by the said insurance companies. The Group accounts for the net present value of its obligations for gratuity benefits based on an independent external actuarial valuation, determined on the basis of the projected unit credit method, carried out annually. Actuarial gains and losses are immediately recognised in the Profit and Loss Account. iii. Post Retirement Benefits The net present value of the Group’s obligation towards post retirement pension scheme, wherever applicable, is actuarially determined based on the projected unit credit method as at the Balance Sheet date. Actuarial gains and losses are recognised immediately in the Profit and Loss Account. iv. Compensated Absences The Group has a scheme for compensated absences for employees, the liability for which is determined on the basis of an actuarial valuation carried out at the end of the year. v. Other Employee Benefits Other benefits, comprising of Long Service Awards and Leave Travel Allowance, are determined on an undiscounted basis and recognised based on the likely entitlement thereof. (d) Fixed Assets: Fixed assets are stated at cost less depreciation/amortisation and impairment losses, if any. Cost includes expenses incidental to the installation of assets and attributable borrowing costs.

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(e) Depreciation and Amortisation: i. Depreciation: Indian Entities In respect of assets acquired before December 16, 1993, depreciation is provided under the straight-line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956, as existing on that date. In respect of assets acquired on or after December 16, 1993, depreciation is provided at the rates as specified in Schedule XIV to the Companies Act, 1956, as revised with effect from that date. In respect of Leasehold Land, depreciation is provided for, from the date the land is put to use for commercial operations, over the balance period of the lease. In respect of Improvements to Building, depreciation is provided @ 6.67%. In respect of one subsidiary, depreciation is provided under the written down value method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956, amounts in respect of which are not material. International Entities Assets are depreciated based on the estimated useful life determined by the Management of the respective Subsidiaries, whereof the average rates of depreciation for each category are equal to or higher than the rates prescribed in Schedule XIV to the Companies Act, 1956. ii. Amortisation: Intangible assets are amortised on a straight-line basis at rates specified below: Leasehold Property Rights 6.67% * Website Development Cost 20.00% Cost of Customer Reservation System and Licensed Software 16.67% Management Contract Acquisition Costs 5% to 33.33% ** Others Service & Operating Rights 10.00% Non-Compete Fees 14.29% Lease Acquisition Costs of a Jointly Controlled Entity 5.00%

* - Over the term of the lease.

** - Based on the terms of the Contract. (f) Transactions in Foreign Exchange: Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. In respect of integral foreign operations:- i). Monetary items outstanding at the Balance Sheet date are translated at the exchange rate prevailing at the Balance Sheet date and the resultant difference is recognised as income or expense.

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ii). Non-monetary items outstanding at the Balance Sheet date are reported using the exchange rate at the date of the transactions. In respect of non-integral foreign operations:- Both monetary and non-monetary items are translated at the closing rate and the resultant difference is accumulated in a Foreign Currency Translation Reserve, until the disposal of the net investment. The exchange differences arising on revaluation of long term foreign currency monetary items for the year ended March 31, 2008 and 2009 are being amortised over the shorter of the maturity period or March 31, 2011. The unamortised balance as at the year end is presented as “Foreign Currency Monetary Item Translation Difference Account”. (g) Derivative Instruments: The Group has an exposure to derivative contracts in the nature of currency swaps and interest rate swaps which are in respect of some of the underlying rupee borrowings. Exchange differences arising on repayment/ revaluation of such contracts are recognised as income or expense in the period in which they arise. (h) Impairment of Assets: Impairment is ascertained at each Balance Sheet date in respect of the Group’s fixed assets. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, based on an appropriate discount factor. (i) Assets taken on lease: i. In respect of finance lease arrangements, the assets are capitalised and depreciated. Finance charges are debited to the Profit and Loss Account of the year in which they are incurred. ii. Operating Lease payments are recognised as expenditure in the Profit and Loss Account on a straight line basis, representative of the time pattern of benefits received from the use of the assets taken on lease. (j) Inventories: Stock of food and beverages and operating supplies are carried at cost (computed on weighted average basis) or Net Realisable Value, whichever is lower. (k) Investments: i. Long term investments are carried at cost. However, provision is made for diminution in value, other than temporary, on an individual basis. ii. Current investments are carried at the lower of cost and fair value determined on a category-wise basis. (l) Miscellaneous Expenditure: Payments made under the Voluntary Retirement Scheme, including the additional liabilities towards leave encashment and gratuity arising pursuant to the Voluntary Retirement Scheme, are amortised over a period of 60 months, commencing from the month in which the Scheme is implemented.

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(m) Taxes on income: i. Income tax is computed in accordance with Accounting Standard 22 - ‘Accounting for Taxes on Income’ (AS-22), notified by the Companies (Accounting Standards) Rules, 2006. Tax expenses are accounted in the same period to which the revenue and expenses relate. ii. Provision for current income tax is made for the tax liability payable on taxable income after considering tax allowances, deductions and exemptions determined in accordance with the prevailing tax laws. The differences between the taxable income and the net profit or loss before tax for the year as per the financial statements are identified and the tax effect of timing differences is recognised as a deferred tax asset or deferred tax liability. The tax effect is calculated on accumulated timing differences at the end of the accounting year based on effective tax rates substantively enacted by the Balance Sheet date. iii. Deferred tax assets, other than on unabsorbed depreciation or carried forward losses, are recognised only if there is reasonable certainty that they will be realised in the future and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date. In situations where the Company has unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits. (n) Accounting for Provisions, Contingent Liabilities and Contingent Assets: Provisions are recognised in terms of Accounting Standard 29 – ‘Provisions, Contingent Liabilities and Contingent Assets’ (AS-29), notified by the Companies (Accounting Standards) Rules, 2006, when there is a present legal or statutory obligation as a result of past events, where it is probable that there will be outflow of resources to settle the obligation and when a reliable estimate of the amount of the obligation can be made. Contingent Liabilities are recognised only when there is a possible obligation arising from past events due to occurrence or non-occurrence of one or more uncertain future events, not wholly within the control of the Company, or where any present obligation cannot be measured in terms of future outflow of resources or where a reliable estimate of the obligation cannot be made. Obligations are assessed on an ongoing basis and only those having a largely probable outflow of resources are provided for. Contingent Assets are not recognised in the financial statements. (o) Borrowing Costs : i. Interest and other borrowing costs on specific borrowings, attributable to qualifying assets are capitalised. ii. Interest not attributable to qualifying assets is charged to revenue account in the year in which it is incurred. iii. Debenture issues cost adjusted against the Security Premium Account in accordance with Section 78 of the Companies Act, 1956. iv. Other Borrowing Costs are charged to revenue account over the tenure of the borrowing. 3. (a) The Taj Mahal Palace & Tower in Mumbai was attacked by terrorists on November 26, 2008 amongst the other targets in the city, due to which the heritage wing of the property was severely damaged. No adjustments have been carried out in the books of account of the Company, with regard to the value of the damage to property, as the Company is adequately insured for property restoration under its insurance policy. The Company is also insured for Loss of Profits to cover the period of interruption for up to 12 months from the date of the incident.

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Accordingly, the Company has recognised a claim for Business Interruption upto March 31, 2009 amounting to Rs. 85.54 crores on an estimated basis and is at an advanced stage of finalising the claim with the insurers. (b) Exceptional item for the current year includes Rs. 6.21 crores relating to annuities purchased from the Life Insurance Corporation of India for pension payments to legal heirs of the employees deceased in the above mentioned incident. (c) Exceptional item of Rs. 0.58 crore (Previous Year: Rs. 54.16 crores) pertains to expenditure incurred by a subsidiary, IHMS Inc towards Employee severance costs consequent to closure of one of its properties for extensive renovation. 4. Rights Issue of Simultaneous but unlinked issue of Equity Shares and Non-Convertible Debentures with Detachable Warrants to the equity shareholders of the Company During the year, the Company completed its simultaneous but unlinked issue of Equity Shares at a price of Rs. 70 each and 6,02,76,898, 6% Non-Convertible Debentures with Detachable Warrants aggregating Rs. 1,446.65 crores. The warrant holders can exercise their right to apply for the Equity Shares at the Exercise Price of Rs. 150 at any time during the Warrant Exercise Period i.e. September 2009. Consequently, the Share Capital of the Company increased from Rs. 60.29 crores to Rs. 72.34 crores on allotment of 120,553,795 Equity Shares. The expenditure of Rs. 7.04 crores (net of tax of Rs. 1.08 crores) in connection with the Rights Issue has been set off against the ‘Securities Premium Account’ in accordance with Section 78 of the Companies Act, 1956. 5. Non-Convertible Debentures: The Company has, during the year, issued 11.86% Secured Non-Convertible Debentures, having a face value of Rs. 10,00,000 each, aggregating Rs. 300 crores. The expenses in relation to the said issue, amounting to Rs. 0.87 crore (net of tax of Rs. 0.45 crore), have been set off against the ‘Securities Premium Account’, in accordance with Section 78 of the Companies Act, 1956. 6. During the year, a Subsidiary of the Group has issued 1,40,00,000, 5% Cumulative Convertible Preference Share of Rs. 100 each, aggregating Rs. 140.00 crores. Each Preference Share shall be compulsorily and automatically converted into one fully paid-up equity share of Rs. 10 each of the subsidiary at a premium of Rs. 90 per share at the end of 3 years from the date of allotment without any further act on the part of the shareholders. Out of the total issue, 20,00,000 shares have been issued to another Subsidiary of the Group which has been eliminated on consolidation. 7. Profit on sale of a hotel property relates to sale of a unit located at Thekkady by a Jointly Controlled Entity. 8. The Group has an investment of Rs. 1,263.05 crores (USD 247.9 million) in a company listed on the New York Stock Exchange. On the basis of the market price of this company on the Balance Sheet date, there is a significant diminution in the value of the Group’s investment in this company. The Group’s investment in this company is for long-term and is strategic in nature. This company is a venerable, more than 70-years old Company which has consistently made profits and provided healthy return to its shareholders. All its assets are unique, iconic, strategically located and of world class quality. On the basis of the Company’s long-term commitment and on consideration of the valuation report of an independent valuer and other long-term strategies of the Company, in the opinion of the Management, the diminution in value of its shareholding of this company is of a temporary nature. 9. Dividend Income: Dividend Income consists of income on long term investments – Rs. 10.13 crores (Previous Year: Rs. 6.64 crores) and on current investments – Rs. 38.61 crores (Previous Year: Rs. 0.91 crore)

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10. Provision for Current Tax & Deferred Tax: a. Provision for Tax Includes Rs. crores Particulars Current Year Previous Year Current Tax 133.05 234.67 Wealth Tax 1.00 0.91 Fringe Benefit Tax 6.30 5.30 Deferred Tax charge 11.62 1.75 Total 151.97 242.63 b. The net deferred tax liability comprises of the following components: Rs. crores Particulars Current Year Previous Year Deferred tax Liability Depreciation on fixed assets 184.94 168.16 Deferred revenue expenditure - 0.10 Total 184.94 168.26 Deferred tax Assets Provision for doubtful debts 4.51 4.31 Employee Benefits 10.51 9.17 Others 9.40 5.90 Total 24.42 19.38 Net Deferred Tax Liabilities 160.52 148.88 c. The net deferred tax assets comprises of the following components : Rs. crores Particulars Current Year Previous Year Employee Benefits 0.07 0.02 Depreciation 0.30 0.33 Others - - Total 0.37 0.35 Deferred Tax Assets 0.37 0.35

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11. Estimated amount of contracts remaining to be executed on capital account and not provided for (including share of Jointly Controlled Entities) is Rs. 458.06 crores (previous year - Rs. 408.69 crores.) 12. Contingent Liabilities (Includes share of Jointly Controlled Entities) a) On account of Income Tax matters in dispute: i) In respect of appeals pending before Appellate Authorities for matters which have been decided in the Group’s favour in earlier assessment years - Rs. 58.07 crores (previous year - Rs. 64.66 crores). ii) In respect of other matters for which appeals are pending - Rs. 33.90 crores (previous year - Rs. 45.57 crores). b) On account of dispute in respect of: i) Luxury tax – Rs. 0.38 crore (previous year - Rs. 0.48 crore) ii) Entertainment tax – Rs. 0.53 crore (previous year - Rs. 0.53 crore) iii) Sales tax – Rs. 9.89 crores (previous year - Rs. 7.20 crores) iv) Property tax – Rs. 9.34 crores (previous year - Rs. 8.97 crores) v) Stamp Duty – Rs 2.34 crores (previous year - Rs 2.34 crores) vi) Others – Rs. 22.24 crores (previous year - Rs. 19.19 crores) c) Other claims against the Group not acknowledged as debts - Rs. 108.60 crores (previous year - Rs. 57.90 crores). d) Guarantees given by the Group in respect of deposits received and loans obtained outstanding as on March 31, 2009 - Rs. 37.64 crores (previous year - Rs. 33.04 crores). e) A subsidiary has reported a contingent liability in respect of a labour dispute, the amount of which is unascertainable. 13. Guarantees and Undertaking Given a) Guarantees given to bankers: St. James Court Hotel Limited owns the leasehold interest in a property in London, such interest having been assigned to it in an earlier period by an erstwhile subsidiary company on the basis of a licence granted by the landlord of the property, Scottish Widows’ Fund and Life Assurance Society. The licence was granted for such assignment upon the guarantee from the Company for the due performance and observance by St. James Court Hotel Limited of the covenants and conditions contained in the licence. The obligations of the Company in favour of the landlord shall remain in force throughout the full term of the lease, including any renewals. b) Undertakings given: The Group has given the following undertakings as at the Balance Sheet date: i. An undertaking to the bankers of TLRL by TIHK., for non-disposal of its shares in TLRL in consideration of the banks providing loan facilities to TLRL. TIHK holds 24.16% ordinary shares of TLRL as at March 31, 2009.

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ii. TIHK has agreed to subordinate 50% of its basic management fees and 100% of its incentive fees due from TLRL in lieu of a bank having extended loan facilities to TLRL. No amount of fee has remained unpaid on account of this subordination as at March 31, 2009. iii. The Group has confirmed its intention to make financial support to a subsidiary, St James Court Hotels Limited(“SJCHL”) to meet its liabilities as they fall due for a period of at least one year from the date of approval of SJCHL’s financial statements for the year ended March 31, 2009. iv. The Group has confirmed its intention to make available financial support to a subsidiary, IHMS (Restaurants) Pty Limited for a period of at least one year from the date of approval of IHMS (Restaurants) Pty Limited financial statements for the year ended March 31, 2009 or until such time as the Company resumes profitability and is financially self sufficient. v. The Group has entered into a Share Retention Agreement with International Finance Corporation, Washington, USA (“IFC”) in November 2003, in consideration of IFC having provided loan facilities to a subsidiary of a jointly controlled entity, Taj Maldives Private Limited (“TMPL”). The Group, of which TIHK is a member, has also agreed to maintain at least a 26% aggregate effective shareholding in TMPL and to retain effective control of TMPL, so long as any amount remains outstanding under the loan agreement between TMPL and IFC. vi. The Group has given an undertaking to a lender of Taj Air Limited (TAL) not to transfer, assign, dispose of or encumber its holding in the shares of TAL without the said lender’s prior written approval, except for changes in the shareholding of TAL between specified entities 14. Finance and Operating Leases: (a) IHMS formed IHMS LLC (“New York LLC”) under the laws of the State of Delaware, U.S.A. The New York LLC was formed to acquire the lease with 795 Fifth Avenue Corporation, its affiliates 795 Fifth Avenue Limited Partnership, Barneys New York and individual apartment owners, which encompass the facilities of the Hotel Pierre. The New York LLC has entered into lease agreements for the use of various facilities at the Hotel Pierre for the purpose of operating a hotel business. Under the terms of the various Agreements, the New York LLC is required to: i. provide an irrevocable unconditional letter of credit in the amount of $ 5 million, as to be renewed annually until expiration of the lease. ii. spend not less than $35 million on renovations of the property not later than June 30, 2007. iii. In November 2007, the New York LLC entered into a lease modification agreement with its landlord. The principal modification extended the lease term for an additional 10 years, to June 30, 2025, and increased the New York LLC’s renovation commitment to $80 million. In order to expedite the renovation, the New York LLC closed the hotel rooms and restaurant operations of the Hotel Pierre effective December 31, 2007, and entered into a severance arrangement with the union to offer eligible employees enhanced severance payments with no recall rights or normal severance payments with recall rights. The company paid approximately $12.25 million in severance payments in January 2008.

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The lease modification requires the New York LLC to complete the renovation by January 30, 2009. As of March 31, 2008, the New York LLC has expended approximately $ 85,692,000. On December 10, 2008, the New York LLC sent a letter request to 795 Corp. to extend the renovation completion dated to June 30, 2009 which 795 Corp. agreed to through a letter dated December 19, 2008 to the New York LLC. Also as part of the renovations, 795 Corp. required the New York LLC to post a $20 million performance bond. As the renovations were almost substantially completed, on April 8, 2009, 795 Corp. reduced the required performance bond to $10 million. Future fixed and minimum rentals, exclusive of formula or percentage rentals for the period ending March 31, are approximately as under :- Year Rs. crores 2010 10.03 2011 10.03 2012 10.03 2013 10.03 2014 10.03 Thereafter (per annum) 12.54 Total 62.69 iv. Lease on cooperative apartments and ballroom The New York LLC assumed a lease agreement with Barney’s New York, currently scheduled to expire in June 2013, for the use of Hotel Pierre’s ballroom, and with some other individuals for the use of their cooperative apartments as hotel rooms and suites. Such leases require the New York LLC to pay minimum rent which increase annually by the change in the Consumer Price Index and to reimburse the owners for their actual cooperative maintenance charges. Future fixed minimum rentals, exclusive of formula or percentage rentals for the years ending March 31, are approximately as follows: Year Rs. crores 2010 4.20 2011 4.20 2012 4.20 2013 4.20 2014 1.73 Thereafter (per annum) 1.01 Total 19.54

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(b) IHMS New York LLC and IHMS Boston LLC, as lessors under various operating leases, will receive base rents over the next five years and, in the aggregate, over the remaining terms of the leases as follows :- Rs. crores March 31 Boston LLC New York LLC Total 2010 2.22 1.56 3.78 2011 2.22 1.85 4.07 2012 2.22 1.91 4.13 2013 2.22 1.98 4.20 2014 2.22 - 2.22 Thereafter 7.02 - 7.02 Total 18.12 7.30 25.42 (c) The Group has taken assets on finance lease, certain assets, the minimum future lease rentals and present value of minimum lease rentals payable are as follows: Rs. crores Particulars Current Year Previous Year Minimum lease rentals payable as on Balance Sheet date 1.79 0.03 Present value of Minimum lease rentals payable at discounted 1.62 0.02 rate implicit in lease agreement Rs. crores Particulars Minimum lease Present value of payment minimum lease payment at discounted rate implicit in lease agreement Current Previous Current Previous Year Year Year Year Not later than one year 0.88 0.02 0.77 0.01 Later than one year but not later than five years 0.91 0.01 0.85 0.01 Total 1.79 0.03 1.62 0.02

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(d) The Group has taken on operating lease, certain assets, the minimum future lease rentals payable on which are as follows: Rs. crores Particulars Current Year Previous Year Not later than one year 3.68 3.39 Later than one year but not later than five years 10.62 5.82 Later than five years 90.56 65.98 15. Interest expense is net of interest income and it comprises of: Rs. crores Particulars Current Year Previous Year Interest Expenses Fixed Loans * 265.79 208.90 Other Loans ** 15.74 15.84 281.53 224.74 Less : Interest Capitalised 10.44 4.45 Total Expenses 271.09 220.29 Interest Income (Gross) Inter-Corporate Deposits 23.82 1.94 Deposits with Banks 3.60 7.43 Interest on Income Tax Refund 3.79 2.20 Others 9.42 6.40 Total Income 40.63 17.97 Interest (net) 230.46 202.32 * Interest on Fixed Loans includes Rs. 3.59 crores (Previous year - Rs. 3.83 crores) being expenses on loans amortised over the tenure of the loan. ** Includes interest on luxury tax amounting to Nil (previous year – Rs. 2.14 crores). 16. Auditors’ Remuneration: Rs. crores Particulars Current Year Previous Year 1) Audit Fees 3.02 3.12 2) Payment for Other Services 1.02 1.21 3) Expenses and incidentals 0.10 0.13 Total Auditors’ Remuneration 4.14 4.46

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Professional fees include - Nil (previous year – Rs. 0.03 crore) paid to a firm in which partners of one of the audit firms are partners. The above excludes Rs. 0.69 crore (previous year – Rs. 0.05 crore) paid to auditors for Other Services and debited to the Securities Premium Account. 17. Derivative Instruments : The Group uses forward exchange contracts, interest rate swaps, currency swaps, forward contracts and option contract to hedge its exposure in foreign currency borrowings and interest rates. The information on derivative instruments outstanding as on Balance Sheet date is as follows: Particulars Risk CurrentYear PreviousYear Hedged (USD Rs. crores (USD Rs. crores Million) Million) Currency swaps INR/USD 22.73 100.00 22.73 100.00 Option Contracts INR/USD 30.00 153.00 -- Forward Contracts INR/USD 0.50 2.52 -- Interest Rate Swaps USD/GBP LIBOR 214.17 1,091.17 168.43 674.06 18. The Company has exercised the option granted vide notification F.No.17/33/2008/CL-V dated March 31, 2009, issued by the Ministry of Corporate Affairs and, accordingly, the exchange differences arising on revaluation of long term foreign currency monetary items for the year ended March 31, 2008 and 2009 have been recognised over the shorter of the maturity period or March 31, 2011. The unamortised balance as at the year end is presented as “Foreign Currency Monetary Item Translation Difference Account”. Accordingly an amount of Rs. 3.82 crores has been adjusted from the General Reserve and an aggregate amount of Rs. 11.63 crores has been deferred and recognised as an asset. Consequently, the profit of the current year is higher by Rs. 15.45 crores. 19. Benefits arising out of Duty Free Scrips, utilised for the acquisition of fixed assets are, with effect from April 1, 2008, being adjusted against the cost of the related asset, as against the practice hitherto followed of recognising the same as income. Consequent upon the change, miscellaneous income for the year is lower by Rs. 17.90 crores, with a corresponding deduction in the value of fixed assets, as also reduction in the depreciation thereon. 20. Details of Cash and Cash Equivalents: Rs. crores Particulars Current Year Previous Year Cash and Bank Balances (as per Schedule 7) 252.84 257.60 Add : Investments in Liquid Mutual Funds (as per Schedule 6) 425.73 2.61 Cash and Cash Equivalents 678.57 260.21 21. Provision for Loyalty Programmes : Rs. crores Particulars Current Year Previous Year Opening Balance 10.96 8.82 Less : Redemption during the year 0.90 0.77 10.06 8.05 Add : Provision for the year 2.51 2.91 Closing Balance 12.57 10.96

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22. Provision for Contingencies: The Group is carrying provisions for contingencies towards various claims against the Company not acknowledged as debts towards disputed statutory claims. Rs. crores Particulars Current Year Previous Year Opening Balance 1.20 1.12 Add: Provision made during the year 0.20 0.08 1.40 1.20 Less : Amounts Utilised during the year - - Closing Balance 1.40 1.20 23. Employee Benefits: (a) The Group has contributed the following amounts towards domestic defined contribution plans in the Profit and Loss Account under the head Group’s Contribution to Provident Fund and Other Funds.- Rs. crores Particulars Current Year Previous Year Provident Fund 15.93 14.35 Superannuation Fund 5.09 4.08 Total 21.02 18.43 (b) The Group has contributed Rs.42.06 crores (Previous Year: Rs.77.88 crores) towards foreign Defined Contribution Plans in the Profit and Loss Account under the head Group’s Contribution to Provident Fund and Other Funds. (c) The Group operates post retirement defined benefit plans as follows :- a. Funded : i. Post Retirement Gratuity ii. Pension to Employees – Post retirement minimum guaranteed pension scheme for certain categories of employees, which is funded by the Company and the employees. b. Unfunded : i. Pension to Executive Directors and Employees – Post retirement minimum guaranteed pension scheme for certain retired executive directors and certain categories of employees, which is unfunded. ii. Post Retirement Gratuity (d) Details of funded gratuity plans are as follows :- i. Amount to be recognised in Balance Sheet and movement in net liability Rs. crores Particulars Current Year Previous Year Present Value of Funded Obligations 112.51 90.57 Fair Value of Plan Assets (86.99) (88.32) Net Liability recognised in the Balance Sheet 25.52 2.25

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ii. Expenses recognised in the Profit & Loss Account Rs. crores Particulars Current Year Previous Year Current Service Cost 5.95 5.29 Interest Cost 7.24 5.94 Expected return on Plan Assets (6.35) (5.35) Actuarial Losses 26.19 3.23 Past Service Cost 0.12 0.03 Net gratuity expenses included in Payments to & Provision for Employees 33.15 9.14 Actual Return on Plan Assets (3.88) 12.52 iii. Reconciliation of Defined Benefit Obligation Rs. crores Particulars Current Year Previous Year Opening Defined Benefit Obligation 90.57 75.01 Current Service Cost 5.95 5.29 Interest Cost 7.24 5.94 Actuarial Losses 16.02 10.52 Benefits Paid (7.27) (6.19) Closing Defined Benefit Obligation 112.51 90.57 iv. Reconciliation of Fair Value of Plan Assets Rs. crores Particulars Current Year Previous Year Opening Fair Value of Plan Assets 88.32 73.49 Expected return on Plan Assets 6.35 5.35 Actuarial Gains/(Losses) (10.17) 7.29 Contributions by Employer 9.76 8.37 Benefits Paid (7.27) (6.18) Closing Fair Value of Plan Assets 86.99 88.32 Expected Employer’s contribution next year 11.83 2.60 v. Description of Plan Assets Particulars Current Year Previous Year Government of India Securities 10.06% 14.12% Corporate Bonds 49.48% 37.37% Special Deposit Scheme 0.84% 0.83% Insured Managed Funds 28.72% 40.21% Others 10.90% 7.47% Grand Total 100% 100%

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vi. Summary of Actuarial Assumptions Particulars Current Year Previous Year Discount Rate 7.00 % - 8% 7.85 % - 8.3% Expected rate of return on Assets 7.50 % - 9.15% 7.50 % - 9.15% Salary Escalation Rate 3.00 % - 10% 5.00 % - 10% Attrition rate 1 – 2 % 1 – 2% Mortality Published notes under the LIC (1994-96) mortality tables (e) Pension Scheme for Employees: The Company has formulated a funded pension scheme for certain employees. The actuarial liability arising on the above after allowing for employees contribution is determined as at March 31, 2009, under the basis of uniform accrual benefit with demographic assumptions taken as Nil is as follows: i) Amount to be recognised in Balance Sheet Rs. crores Particulars Current Year Previous Year Present Value of Unfunded Obligation 3.44 3.04 Unrecognised Past Service Cost (2.66) (3.04) Net Liability 0.78 - ii). Expense to be recognised in the Profit & Loss Account Rs. crores Particulars Current Year Previous Year Current Service Cost 0.11 - Interest on Defined Benefit Obligation 0.24 - Net Actuarial Losses / (Gains) recognised in Year 0.05 - Past Service Cost 0.38 - Total, Included in “Employee Benefit Expense” 0.78 - iii). Reconciliation of Benefit Obligation & Plan Assets for the period Rs. crores Particulars Current Year Previous Year Changed in Defined Benefit Obligation Opening Defined Benefit Obligation 3.04 - Unrecognised Past Service Cost - 3.04 Current Service Cost 0.11 - Interest Cost 0.24 - Actuarial Losses / (Gain) 0.05 - Closing Defined Benefit Scheme 3.44 3.04

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iv) Financial Assumption at the Valuation date Particulars Current Year Previous Year Discount Rate 7.00 % 7.85 % Expected rate of return on Assets 0.00 % 0.00 % Salary Escalation Rate 0.00 % 0.00 % The past service liability is being amortised over the average vesting period of 8.02 years. (f) Details of unfunded post retirement defined benefit obligation are as follows :- i. Reconciliation of Defined Benefit Obligation Rs. crores Particulars Current Year Previous Year Opening Defined Benefit Obligation 6.23 2.94 Current Service Cost 0.89 5.08 Interest Cost 0.53 0.59 Actuarial (Gain) / Losses 2.76 (1.59) Benefits Paid (1.51) (0.79) Closing Defined Benefit Obligation 8.90 6.23 ii. Expenses recognised in the Profit & Loss Account Rs. crores Particulars Current Year Previous Year Current Service Cost 0.89 5.08 Interest Cost 0.53 0.59 Actuarial (Gain) / Losses 2.76 (1.59) Net expenses included in Payments to and 4.18 4.08 Provision for Employees (g) Provident Fund In keeping with the Guidance on implementing Accounting Standard (AS) 15 (Revised) on Employee Benefits notified by the Companies (Accounting Standards) Rules, 2006, employer established provident fund trusts are treated as Defined Benefit Plans, since the Company is obligated to meet interest shortfall, if any, with respect to covered employees. According to the Management, the Actuary has opined that actuarial valuation cannot be applied to reliably measure provident fund liabilities in the absences of guidance from the Actuarial Society of India. Accordingly, the Company is currently not in a position to provide other related disclosures as required by the aforesaid AS 15 read with the Accounting Standards Board Guidance. However, having regard to the position of the Fund (for covered employees) and confirmation from the Trustees of such Fund, provision has been made for such shortfall as at the year-end. The estimate of future salary increases, considered in actuarial valuation, takes into account inflation, seniority, promotions and other relevant factors. Experience Adjustments are not disclosed since the information from a group’s perspective is not readily available with the Company. The above information has been certified by the actuaries and has been relied upon by the Auditors.

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24. Related Party Disclosures : (a) Associates The names of all the associates are given in Note no. 1 (b) (iii) on Page 140 (b) Investing Parties Singapore Airport Terminal Services Ltd. (SATS) Malaysian Airline Systems Tourism Resorts Kerala Ltd. Cigen Corporaton The Conservation Corporation of South Africa Ltd. (c) Key Management Personnel. Key managerial personnel comprise the whole-time directors of the Company, who have the authority and responsibility for planning, directing and controlling the activities of the Company. Following are the Key Management Personnel : a) Mr. Raymond N. Bickson b) Mr. Anil P. Goel c) Mr. Abhijit Mukerji (d) The details of transactions with related parties (Associates and investing parties) are as follows : Rs. crores Particulars Associates Joint Ventures Total CY PY CY PY CY PY Interest paid/provided 2.33 1.75 - - 2.33 1.75 Interest received/accrued 5.88 1.40 1.04 0.66 6.92 2.06 Dividends received 20.62 8.90 7.50 11.17 28.12 20.07 Operating/Licence fees paid 0.15 - - 0.74 0.15 0.74 Operating fees received 50.73 49.96 26.15 21.31 76.88 71.27 Purchase of goods and services 46.37 40.67 0.21 3.30 46.58 43.97 Sale of goods and services 6.39 7.94 1.12 5.81 7.51 13.75 Due from / (to) 1.33 (7.46) 1.06 0.97 2.39 (6.49) Sundry Debtors 13.04 8.31 13.53 11.27 26.57 19.58 Purchase of shares 102.59 - 1.25 5.03 103.84 5.03 Issue of Shares 100.00 - - - 100.00 - Security Deposits - - - 1.50 - 1.50 Deposits 67.45 (28.00) 50.45 26.64 117.90 (1.36) Key managerial Personnel comprise whole time Directors, who have the authority and responsibility for planning, directing and controlling the activities of the Company. The remuneration paid to such directors is disclosed in note 13 of page 97 of the standalone financial statements and the dues from such persons are disclosed in footnotes 1 and 2 (i) of Schedule 8 Current Asset, Loan and Advances forming part of the standalone Balance Sheet.

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(e) Statement of Material Transactions Rs. crores Name of Company Current Year Previous Year Associates Inditravel Pvt. Ltd. - Purchase of Goods & Services 19.20 27.75 - Sales of Goods & Services 0.89 0.86 - Dividend Received 4.11 0.73 - Due to - Current Account - 0.89 Oriental Hotels Ltd. - Dividend Received 6.40 5.72 - Operating & reimbursement fees 19.95 18.17 - Purchase of Goods & Services - 5.67 - Sale of Goods & Services 1.98 3.73 - ICDs Raised 70.50 43.05 - ICDs Repaid 44.00 37.00 - Interest paid 0.80 1.35 - Interest Received 1.48 - - Deposits Taken 5.00 10.00 - Deposits Repaid 15.00 - - Due to – Current Account 0.15 4.96 - Sundry Debtors 6.94 6.73 - Loan Given 1.00 - - Issue of Shares 50.00 - Piem Hotels Ltd. - Dividend Received 8.81 1.76 - Operating Fees Received 27.11 27.89 - Interest paid 1.53 0.40 - Sale of Goods & Services 1.76 1.92 - Deposits Taken - 18.00 - Deposits repaid 18.00 - - Due to - Current Account 1.03 3.05 - ICDs raised - 39.50 - ICDs repaid 9.00 21.50 - Sundry Debtors 4.45 1.04 - Issue of Shares 50.00 - Taj Air Ltd. - Interest Received 4.18 1.40 - Purchase of Goods & Services 24.16 4.78 - ICDs Placed 81.00 45.00 - ICDs Encashed 17.50 29.00 - Sundry Creditors 0.28 -

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Name of Company Current Year Previous Year Associates Taj Trade & Transport Ltd. - Sale of Goods & Services 1.25 0.94 - Due from - Current Account - 0.32 - Licence Fees paid 0.12 - Benares Hotels Ltd. - Due to - Current Account - 0.20 Taj Lanka Resorts Ltd. - Due from - Current Account 0.70 0.49 Taida Trading & Industries Ltd - Due from - Current Account 1.03 1.02 Taj Enterprise Ltd - Due from - Current Account - 0.21 Taj Lanka Hotels Ltd. - Due From – Current Account 1.15 0.74 BJETS Pte Ltd. - Purchase of Shares 102.59 - Joint Ventures Taj GVK Hotels & Resorts Ltd. - Deposit Given - 3.72 - Interest Received - 0.26 - Operating Fees Received 19.62 16.62 - Dividend Received 5.12 3.58 - Due from - Current Account 1.36 0.14 - Sundry Debtors 5.55 6.85 Taj Madras Flight Kitchen Pvt. Ltd. - Deposits Taken - 1.50 - Due to - Current Account - 1.00 Taj Kerala Hotels & Resorts Ltd. - Due to – Current Account - 0.28 Taj Karnataka Hotels & Resorts Ltd. - Deposits Given - 3.21 - Due from - Current Account - 0.18

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Name of Company Current Year Previous Year Joint Ventures Taj Safaris Ltd. - Purchase of shares - 2.01 - Due from - Current Account 0.83 0.80 Taj Asia Ltd. - Interest Received - 0.40 - Sundry Debtors 3.34 1.97 - Deposits Given - 13.03 - Due from - Current Account - 0.81 - ICDs Placed - 0.18 Taj International Hotels (SA) (Pty) Ltd. - Deposits Given - 6.67 Singapore Airline Terminal Services - Dividend Paid 3.83 6.55 - Due Fmrom – Current Account - 0.73 Malaysian Airlines Systems - Dividend Paid - 0.95 Cigen Corporation - Purchase of Shares - 3.02 Tourism Resorts Kerala Ltd. - Licence Fees Paid 0.44 - The Conservation Corporation of South Africa Ltd. - Due to – Current Account - 1.41 25. Segmental Information: The Group regards the business segment as the primary segments. The business segments have been classified as follows: • Hoteliering • Air Catering • Others – comprising of Food Processing and Investing activities.

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The disclosure in respect of the above business segments are as under: Business Segments Rs. crores Particulars Hoteliering Air Catering Others Total CY PY CY PY CY PY CY PY Segment Revenue 2,364.25 2,641.15 281.65 298.87 59.24 25.93 2,705.14 2,965.95 Dividend 48.74 7.55 Profit on sale of Assets 2.71 - Profit on sale of investments 0.04 39.12 Total Revenue 2,756.63 3,012.62 Segment Results 306.23 713.17 36.19 62.91 2.53 (5.75) 344.95 770.33 Add: Unallocable Income 48.78 46.67 Interest (net) 230.46 202.32 Profit before tax and Exceptional Item 163.27 614.68 Exceptional Item 4.76 54.16 Profit before tax 158.51 560.52 Provision for tax 155.77 246.98 Profit after tax 2.74 313.54 Segment Assets 5,841.45 4,717.17 239.08 213.95 129.97 69.20 6,210.50 5,000.29 Unallocated Assets 2,949.72 1,848.47 Total Assets 9,160.22 6,848.77 Segment Liabilities 700.91 618.41 51.15 52.38 28.76 11.16 780.82 681.95 Unallocated Liabilities (including Minority interest) 5,081.51 3,897.72 Total Liabilities 5,862.33 4,579.67 Other Information Depreciation 172.33 154.46 14.87 11.73 1.33 1.43 188.53 167.62 Significant non-cash expenditure other than depreciation 8.58 5.50 4.32 1.12 - 0.36 12.90 6.98 Capital Expenditure 501.67 410.59 67.78 9.34 0.72 1.38 570.17 421.31

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The disclosures in respect of the above geographic segments are as under : Geographic Segments Rs. crores Particulars Domestic International Total CY PY CY PY CY PY Segment Revenue 2,033.53 2,167.68 671.61 798.27 2,705.14 2,965.95 Segment Assets 3,429.33 2,928.21 2,781.17 2,072.08 6,210.50 5,000.29 Capital Expenditure 521.53 163.34 48.64 257.97 570.17 421.31

Figures pertaining to Subsidiaries and Jointly Controlled Entities have been reclassified wherever necessary in order to conform to the presentation in the Company’s financial statements. 26. Earnings Per Share (EPS) : Earnings per share is calculated in accordance with Accounting Standard 20 – ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006. Particulars Current Year Previous Year Profit after tax after Minority Interest and Share of Profits 12.46 354.98 of Associates (Rs. crores) No. of Equity Shares – Basic and Diluted 71,35,64,442 65,43,30,117 Earnings Per Share – Basic and Diluted (In Rupees) 0.17 5.43

Note: Since the exercise price of the Warrants Option issued by the Company is more than the fair value of the Equity Shares, these have not been considered for the calculation of Diluted Earnings per shares being anti-dilutive in nature as at the year end.

27. Previous year’s figures have been regrouped wherever necessary to conform to the current year’s presentation.

For and on behalf of the Board

Raymond N. Bickson Managing Director

Anil P. Goel Executive Director - Finance

Abhijit Mukerji Executive Director - Hotel Operations

Mumbai, June 26, 2009

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Notes

165 The Indian Hotels Company Limited

Notes

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