The Company was formed with an object of taking over of firm namely M/s Hotel Rugby. The partners of the firm were Smt.Kantaben Thacker Mrs. Darshana Thacker Shri Mihir Thacker and Master Maunik Thacker. The company has entered into a Memorandum of Understanding (MOU) with M/s Hotel Rugby on 16-9-91. The summary of the important terms andconditions of the said MOU are as under:-

a) The company has taken over all the assets and liabilities without revaluing the same of the ongoing firm M/s. Rugby Hotel at book value as per audited Balance Sheet and Profit and Loss Account on 16/09/91.

b) Total purchase consideration for taking over of the firm was decided to be Rs. 12 53 774/-.

c) The consideration was paid as under:

The company has issued and allotted 99 800 equity shares to the erstwhile pioneers of M/s. Rugby Hot and had adjusted and appropriated the amount payable by the Company to the respective erstwhile partners. The balance credit of Rs. 2 55 774/- was treated as contingent reserve which is to be appropriated for any liabilities which may arise in future. The excess liability if any other than specified anddisclosed as per the accounts so arising shall be borne by the partners in the erstwhile profit sharing ratio and if surplus remaining shall be distributed amongst the partner in their profit sharing ratio. As on today there is balance of Rs. 768.37 which will be paid to partners as stated above.

The Company took over hotel Rugby at Matheran on incorporation i.e. 16-9-1991. The hotel is spreaded over 13 acres of land maintained in a natural settling with lush trees and minimal but attractive land scaping. The hotel has total 57 rooms including 2 softs 3 duplex units and 32 super deluxe rooms. Seven rooms suits and duplex areair-conditioned.

The hotel is also having facilities of indoor and outdoor games children play ground conference hall for 100 persons dining hall to serve 125 persons at a time and a library.

The Company has also taken over the business on conducting basis of M/s Naivedyam and M/s.Thackers Caterers with effect from 1-9-93. In both the firms the promoters of the Company Mr. Mahendra Thacker is interested as he or his wife or his sons are partners in it. Both the firms are 100% owned by Mr. Mahendra Tacker either by himself orthrough his wife & sons.

Thackers Caterers have been established in the year 1974 as partnership firm in Bombay Mr. Mahendra Thacker (HUF) & Mrs. Darshana Thacker are the Present partners of the firm. Firms (1974) main objective is to provide catering services to private clubs and various marriage receptions/ parties. Firm has three ongoing contracts since ftsestablishment. They are for :-

(i) Cricket Club of India (CCI) at Churchgate Bombay. Western India Automobile Association (W.I.A.A.) at Hanging Garden Bombay

(iii) Jalaram Hall at. Juhu Vile-Parle Scheme Bombay.

The business of the firm has been taken over by Hotel Rugby Limited for a period of 10 years commencing from 1.9.93.

The period of 10 years can be further renewed on such terms and conditions as mutually agreed by and between the parties. Since this firm undertakes only the catering contracts there is no need for any fixed assets like building etc. Thackers caterers will transfer kitchenequipments and utensils to Hotel Rugby Ltd. for conducting its business at an annual fees of Rs.1.5 lacs or 1 1/2% of gross turn over whichever is higher and an interest free deposit of Rs.50 lacs payable by Hotel Rugby Limited to the said Partnership Firm. Company would have to pay much more amount to get rights to provide catering services at abovementioned places. The Company therefore decided to acquire business of Thacker Caterers on conducting basis.

FINANCIAL PERFORMANCE OF THE COMPANY & OF THE ERSTWHlLE PARTNERSHIP FIRM M/S HOTEL RUGBY

The financial performance of the erstwhile partnership firm for the years ended on 31/3/90 and 31/3/91 and for the period upto 16/9/91 and that of the company for the period ended on 31/3/92 31/3/93 30/9/93 and further period of six monthshinded on 31.3.94 are given below. The financial statement of the partnership firm has been worked out as per schedule Vi of the Companies Act 1956 applying the principles of accrual system of accounting and confirmity to the guidelines issued by the Institute of Chartered Accountants of India

NAIVEDYAM SWEET SHOP

Naivedyam Sweet Shop is an existing partnership firm specialising in manufacturing and marketing Indian Sweets and Savouries. Mr. Mahendra Thacker Mr. Mihir Thacker & Mr. Maunik Thacker are the partners of the firm. The firm transferred its business along with equipments to Hotel Rugby Ltd. w.e.f. 1/9/93 for a period of 10 years at anannual consideration of Rs.1.5 lacs per annum or 1 1/2% of Gross turn over whichever is higher and Rs.50 lacs interest free deposit payable by Hotel Rugby Ltd to the said Partnership Firm. The name of the Naivedyam enjoys goodwill & therefore the Company has paid the securitydeposit. The agreement can be renewed on such terms and conditions as may be mutually agreed by and between the parties.

The performance of the said Partnership Firm and the Company on financial front was encouraging. The business of the Partnership Firm and the Company had grown steadily since As inception.

The financial performance of both these firms are given as under :

FINANCIAL HIGHLIGHTS OF M/s NAIVEDYAM

1-4-93toParticulars 31-3-91 31-3-92 31-3-93 31-3-94

Gross Income 23 44 143 29 16 482 85 51 836 46 34 722Gross Profit 40 506 1 19.404 3 81 845 3 00 062Net Profit 32 450 1 15 376 3 36 376 2 72 132

NOTE: The Board of Directors of the Company has decided to have separate accounting year for the purpose of Income Tax and Companies Act. Accordingly the Company has changed its current Accounting Ye March ending to September ending and accordingly the Accounting is ended on 30/9/93.

AUDITORS NOTES ON ACCOUNT'S

FOR THE PERIOD ENDED 31ST MARCH 1992

1 . As per the Memorandum of Understanding executed at Bombay on 16/09/91 the company has taken over all the assets and liabilities of the going concern firm M/s.Rugby Hotel at book value as per audited Balance Sheet and Profit and Loss Account on 16/09/91.

2. The company has issued and allotted 99 800 equity shares to the partners of M/s.Rugby Hotel and had adjust and appropriate the amount payable by the Company. The balance credit is treated as take over contingent reserve which is to be appropriated for any liabilities which may arise in future. The excess liability so arising shall beborne by the partners in the erstwhile profit sharing ratio and if surplus remains shall be distributed amongst the partner.

To the best of knowledge there is no such liability.

FOR THE YEAR ENDED 31 ST MARCH 1993

1. The Company has vide a lease agreement w.e.f. 1st April 1 992 taken the lease hold rights at certain terms to a period of 3O years with an option to renew further for 10 years for the land and structure thereon situated at Matheran. The leasehold rights are capitalised @ 14% p.a. to enable the company to discharge fts lease liability overthe lease period.

FOR THE YEAR ENDED 30TH SEPTEMBER 1993

1. SIGNIFICANT ACCOUNTING POLICIES

SYSTEM OF ACCOUNTING

The Company follows the mercantile system of accounting.

Sales

Sales comprise of sale of room food and beverage and allied services relating to hotel stay and also sales effected on the takeover of running business on conducting basis of M/s.Naivedyam & M/s.Thacker Cederers w.e.f. 01/09/93.

Gratuity

Gratuity is accounted and paid as and when employee terminates his service. No provision for the gratuity is made on accrual basis. The amount of accrued liability on this account is unascertained.

Fixed Assets

i) Fixed assets (including leasehold rights) have been revalued as on 1.4.93 as per valuers report and shown accordingly (refer notes below):

ii) The fixed assets acquired during the year are valued at cost plus incidental expenses if any relating to the same are capitalised.

Depreciation

i) Depreciation is provided under the straight line method at rate specified in Schedule XIV to the Companies Act 1956.

ii) The depreciation on revalued assets to the extent of enhanced value on account of revaluation (excluding leasehold rights) is charged to revaluation reserve a/c.

Investments

Original investments are stated at cost except that bonus shares received on investments are capitalised at face value by crediting capital reserve a/c.

Inventories

Stock of raw material food and beverages and operating supplies are stated at cost and as per inventory taken valued and certified by the Managing Director.

Proposed Dividends

Dividends proposed by the Directors as appropriation of profits are provided for in the books of account pending approval of the shareholders at Annual General Meeting.

2. The Company has changed the accounting year from 31st March to 30th September and accordingly these accounts are closed and made up to 30th September 1993 i.e. for a period of 6 months. The current year accounts are therefore for 6 months only as compared to previous year of12 months and therefore these are not comparable with those of previous year figures. The figures have also been regrouped and rearranged wherever necessary.

3. The Company has taken over w.e.f. 1st September 1993 the running business (on conducting basis) of M/s. Naivedyam and M/s. Thackers Caterers and certain inventory of raw material at book value and/or estimated market value.

4. a) The Company has vide a lease agreement w.e.f. 1st April 1992 taken the lease hold rights at certain terms for a period of 30 years with an option to renew further for 10 years for the land and structure thereon situated at Matheran. The leasehold rights are capitalised @ 14% p.a. rate of return basis to enable the company to discharge fts lease liability over the lease period by crediting to leasehold assets fund a/c sum of Rs.3 50 133/-.

b) The lease hold rights as referred in (a) above is further increased on company deciding to revalue the leasehold rights as professional valuer. such increase on revaluation of leasehold rights is by Rs.4 14 91 867/- over and above to fts original capitalisation value (based on 14% p.a. rate of return to discharge lease liability) as atthe beginning of the year of Rs.3 50 133/- and such increase is credited correspondingly to revaluation reserve a/c. The said amount of revaluation has been already accounted in over all figure of revaluation reserve as mentioned herein below.

5. (a) Based on valuation report submitted by professional valuer appointed for the purpose all the fixed assets of the company including leasehold rights are revalued as on 1.4.93 on current replacement cost basis to reflect more accurately their intrinsic value. The net resultconsequent to this was an increase in the book value of the fixed assets including of leasehold rights by Rs.7 04 78 565.24 (gross) and accumulated depreciation of Rs.73 76 025/- resulting in a net increase of Rs.6 31 02 540.24 which was credited to revaluation reserve as on 01 /04/93.

(b) Depreciation charge of Rs.5 13 919.24 for the period of 01 /04/93 to 30/09/93 (pro-rata on the basis of rates prescribed in schedule XIV to the Companies Act 1956) on increased value of assets on revaluation is charged to revaluation reserve a/c. No depreciation/write off isprovided for leasehold rights.

6. The leasehold rights as appearing in balance sheet are written off during the lease period out of revaluation reserve. Accordingly a sum of Rs.7 32 883/- is debited to revaluation reserve a/c to discharge leasehold rights to the extent of expired period of Lease.

7. a) Rugby Foods and Beverages Pvt. Ltd became fully owned subsidiary of Hotel Rugby Ltd. by purchasing of 69 849 Equity Shares @ Rs.10/- each which is held in the name of company and its nominees consequently Rugby Foods and Beverages Pvt. Ltd. became a Public Limited as pursuant to Section 43A of the Companies Act 1956. Thecompany has received 977886 bonus shares during the period from Rugby Foods & Beverages Ltd. in the ratio of 14 Bonus shares for every one share held of face value of Rs. 10/- each. Thereby the total number of shares held has increased to 10 47 735/- shares of Rs.10/- each fully paid up. In accordance with a legal opinion the aforesaid bonus shares are capitalised at face value by crediting capital reserve account and correspondingly increase in investment value by Rs.97 78 860/-.

b) The adequate funds for meeting out any liability on decrease in investment value will be created in the year of disposal of investments.

8. As per the legal opinion the company issued bonus shares of face value of Rs. 10/- each fully paid (as on record date 29/09/93) in the ratio of 21:1 at par by capitalising a total sum of Rs.2 94 00 000/- as under:

a) Rs.97 78 860/- out of capital reserve which was created on capitalisation of bonus shares from the subsidiary company.

b) Rs.1 96 21 140/- out of revaluation reserve. Thus making total Rs.2 94 00 000/- for issue of 29 40 000 fully paid bonus shares in the ratio of 21:1.

The bonus shares issued as aforesaid out of revaluation reserve and capital reserve shall rank pari passu in all respect with existing capital except dividend.

9. As legally opined the company has utilised fts revaluation reserves for payment of bonus to shareholders.

10 The Company Hotel Rugby Pvt Ltd was converted to Public Limited Company by a Special Resolution passed at the EGM held on 25th October 1993 and has since obtained fresh certificate of incorporation and accordingly became Public Limited Company vide certificate of change of name issued by ROC on 9th December 1993.

11. Contingent liability not provided for the litigationsregarding property tax payable to the Municipal Committeeof Matheran which is sub-judice for last three years. Thematter is pending before Karjat & Alibag Court. Theestimated liability on this account may amount to approx.Rs. 11. 10 lacs.

MAIN OBJECTS OF THE COMPANY

The main objects of the company as set out in theMemorandum of Association of the Company are as under :

1. To enter into Partnership in and/or to take overacquire or purchase as a going concern the assets andliabilities of the Hotel Rugby engaged in the business ofrunning a hotel as such take over of the firm shall standdissolved after the agreement.

2. To carry on the business of Hotelier restaurantor toprovide lodging and boarding catering houses bar swimmingpooland other facilities to the Public including tourists visitors and other delegate coming to India from foreigncountries and to members of delegations and missions fromforeign countries.

3. To own construct run render technical advice inconstructing furnishing and running of take over.manage carry on the business of hotel restaurant cafe tavern bars refreshment rooms boarding and lodging house keepers clubs in India or any other part of theworld.

SUBSIDIARIES OF THE COMPANY:

Rugby Foods and Beverages Limited is a fully ownedsubsidiary of the Company within the meaning of Section 4of the Companies Act 1956. Rugby Foods and BeveragesLimited has been promoted by Mr. Mahendra Thacker in theyear 1991. In 1993 Hotel Rugby Ltd. has purchased sharesfrom Thacker family which resulted in Rugby Foods &Beverages Ltd. becoming 100% subsidiary of Hotel RugbyLtd.

The said subsidiary Company had no business operations forthe period ended on 31.3 93 but commenced its activities ofproviding consultancy services in the business of HotelManagement for the accounting year 1993-94.