Annual Report 2008 - 2009 - · PDF fileThe Management Discussion and Analysis Report forms...

Annual Report 2008 - 2009

STERLING HOLIDAY RESORTS (INDIA) LIMITED

Sterling Holiday Resorts (India) Limited

BOARD OF DIRECTORS Mr.R.Subramanian Chairman & Managing Director Mr.S.Sidharth Shankar Joint-Managing Director Mr.K.Chandrasekaran Director Mr.M.N.Rangamani Director Mr.E.S.Ganapathy Director Mr.G.Sundaram Director Mr.S.Sethuraman Director Mr.Amit Jatia Director

COMPANY SECRETARY Mr.M.Balasubramaniyan

BANKERS Syndicate Bank HDFC Bank Limited Axis Bank Limited ICICI Bank Limited AUDITORS M/s. R.Subramanian and Company Chartered Accountants Chennai – 600 004.

M/s.V.SANKAR AIYAR & CO., Chartered Accountants Chennai - 600 024.

REGISTERED OFFICE No.163, T.T.K. Road, Alwarpet, Chennai - 600 018.

REGISTRAR & SHARE M/s.Cameo Corporate Services LimitedTRANSFER AGENTS “Subramanian Building”, No.1, Club House Road, Chennai - 600 002.

CONTENTS PAGE NO.

1. Notice 012. Directors’ Report 053. Management Discussion and Analysis Report 09 4. Report on Corporate Governance 115. Auditors’ Report 166. Balance Sheet 187. Profit and Loss Account 198. Schedules 21 9. Notes on Accounts 2610.Balance Sheet Abstract and Company's General Business Profile 33


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Notice to ShareholdersNOTICE is hereby given that the 22nd Annual General Meeting of the Members of M/s.Sterling Holiday Resorts (India) Limited will be held on Tuesday, the 29th day of September, 2009, at 2.30 p.m., at RANI SEETHAI HALL, NO.603, ANNA SALAI, CHENNAI - 600 006 to transact the following businesses:

ORDINARY BUSINESS

1. To receive, consider and adopt the Audited Balance Sheet as at 31st March, 2009 and the Profit and Loss Account for the Financial Year ended 31st March, 2009 and the Reports of the Board of Directors and Auditors’ thereon.

2. To appoint a Director in the place of Mr.G.Sundaram, who retires by rotation, and being eligible, offers himself for re-appointment.

3. To appoint a Director in the place of Mr. K.Chandrasekaran, who retires by rotation, and being eligible, offers himself for re-appointment.

4. To appoint Statutory Auditors for the current financial year and to fix their remuneration. M/s.R.Subramaniam and Company, Chartered Accountants and M/s.V.Sankar Aiyar & Co., Chartered Accountants, the retiring Joint-Statutory Auditors are eligible for re-appointment.

SPECIAL BUSINESS

5. To consider and if thought fit, to pass, with or without modification, the following resolution as an Ordinary Resolution :

“RESOLVED THAT Mr.Amit Jatia, be and is hereby appointed as a Director of the Company, liable to retire by rotation.”

6. To consider and if thought fit, to pass, with or without modification, the following resolution as an Ordinary Resolution :

“RESOLVED THAT pursuant to the provisions of Section 198, 269, 309 and 310 read with Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956, and subject to such other approvals as may be necessary, consent of the Company be and is hereby accorded for the re-appointment of Mr.R.Subramanian as Chairman and Manag-ing Director of the Company for a Period of five years with effect from 16-11-2009 without remuneration.”

7. 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 81(1-A) and other applicable provisions, if any, of the Companies Act, 1956 (including any amendment thereto or re-enactment thereof), and in accordance with the provisions of the Memorandum and Articles of Association of the Company and the regulations / guidelines, prescribed by the Securities and Exchange Board of India (SEBI) or any other relevant authority, from time to time, to the extent applicable and subject to such approvals, consents, permissions and sanctions, the Board of Directors of the Company (hereinafter referred to as the ‘Board’), which term shall be deemed to include any Committee including ‘Compensation Committee’ or any ‘Sub-Committee’ thereof constituted by the Board to exercise its powers, (including the powers conferred by this resolution) be and is hereby authorised, on behalf of the Company to grant from time to time, options to apply for equity shares of the Company to or for the benefit of Directors of the Company whether Whole-time Directors or not and the employees in the grade of Assistant General Manager and above and who are in the permanent employment of the Company, or to any Trust, Society or any entity or any combination thereof that may be existing or created for the benefit of such employee(s) at any time under a Scheme titled “EMPLOYEES STOCK OPTION SCHEME-2009” (hereinafter referred to as the “ESOS-2009”) to be evolved in this regard, and consequently create, issue, offer, allocate and allot at any time and from time to time, equity shares in terms of such options. The options and the consequential issue, offer, allocation and allotment of shares shall be

By Order of the Boardfor Sterling Holiday Resorts (India) Limited

M.BALASUBRAMANIYANCOMPANY SECRETARY

Place: Chennai

Date : 01.09.2009

at such price, in such manner, during such period in one or more tranches and on such other terms and conditions as the Board may decide. The Board is further authorised to grant such options in the form of warrants with an option exercisable by the warrant holder to subscribe to equity shares / equity securities and / or bonds, debentures, preference shares or any other securities convertible in equity shares, (collectively referred to as equity-linked securities) at a price, or grant such options in any other manner whatsoever, provided the total number of options granted in the aggregate, and the consequential creation, issue, offer, allocation and allotment, shall not exceed 15,00,000 equity shares of Rs.10/- each (3.57% of Paid-up Capital of the company .)”

“RESOLVED FURTHER THAT subject to the terms stated herein, the equity shares allotted pursuant to the aforesaid resolution shall in all respects rank pari passu inter-se as also with the then existing equity shares of the Company save and except their entitlement to dividend which will commence only from the date of allotment of such equity shares and pro-rata for the Financial Year for which the dividend is declared.”

“RESOLVED FURTHER THAT the Board be and is hereby authorised to make a fair and reasonable adjustment to the number of options and to the exercise price in case of rights issue, bonus issues, stock splits and other corporate actions.”

“RESOLVED FURTHER THAT to determine all other terms and conditions for the purpose of giving effect to any offer, issue or allotment of equity shares or securities or instruments representing the same, as described above, under Employees Stock Option Scheme (ESOS-2009), the Board be and is hereby authorised on behalf of the Company to do all such acts, deeds, matters and things as it may, in its absolute discretion, deem necessary or desirable for such purpose with power on behalf of the Company to settle all questions, difficulties or doubts that may arise in this regard to such issue(s) or allotment(s) including to amend or modify any of the terms of such issue(s) or allotment(s), without being required to seek any further consent or approval of the members in its sole discretion, deem fit.”

“RESOLVED FURTHER THAT the Board be and is hereby authorised to determine all other terms and conditions of the issue of the said options as the Board may in its absolute discretion determine and decide.”

“RESOLVED FURTHER THAT with regard to ESOS-2009, the Board be and is hereby authorised to delegate all or any of its powers to any Sub-Committee consisting of Directors of the Company and such Sub-Committee shall report periodically to the Board the action taken consequent to the delegation.”

“RESOLVED FURTHER THAT the Board / Compensation Committee be and are hereby authorised to take necessary steps for listing of the shares allotted under the Employees Stock Option Scheme on one or more recognised Stock Exchanges, in India or abroad, where the Company’s Shares are listed, as per the terms and conditions of the Listing Agreement with the Stock Exchanges concerned, and in accordance with such other guidelines, rules and regulations as may be applicable with regard to such listing.”

“RESOLVED FURTHER THAT the Board shall have powers to amend, vary, or modify any of the terms and conditions of the ESOS-2009 pertaining to the grant of options, pricing of options, issue or allotment of equity shares or warrants pursuant to the options, without being required to seek any further consent or approval of the Members. The powers granted by the Members pursuant to this resolution will include powers to withdraw, recall, accept, surrender or cancel options issued/to be issued pursuant to this resolution and to issue fresh options in lieu thereof at such price, in such manner, during such period in one or more tranches and on such other terms and conditions as the Board may decide in the best interest of the Company and its employees.

NOTES :


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1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE ABOVE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF/HERSELF (PROXY FORM IS ANNEXED HEREWITH).

2. Such Proxy need not be a Member of the Company.

3. The proxy form duly completed and in order to be effective should be duly stamped, completed and signed and must be deposited at the Registered Office of the Company, not later than 48 hours before the time fixed for the commencement of the Meeting.

4. The Register of Members and Share Transfer Books of Equity Shares of the Company will remain closed from Wednesday, the 23rd day of September, 2009 to Tuesday, the 29th day of September, 2009 (both days inclusive).

5. As per Clause 49(G) of the Listing Agreement with the Stock Exchanges, the brief resume, functional expertise of the Directors proposed for appointment are furnished below along with the details of Companies in which they are Directors and the Board Committees of which they are members.

(i) Mr.G.Sundaram, aged about 59 years, is a Company Secretary and Advocate with corporate experience of 33 years in various fields and Practicing as an Advocate in Civil, Writ and Corporate Laws. He joined the Company’s Board on 29.10.2001. He has been a Member of the Audit Committee effect from 29.10.2001. He is also a Member of the Investors Grievance Committee and took over as Chairman of the said Committee.

Details of other Directorships / Committee Memberships held by him – Nil.

Shareholding in the Company

Mr.G.Sundaram, holds 50,000 equity shares in the Company.

(ii) Mr. K. Chandrasekaran, aged about 59 years, is a Fellow Member of the Institute of the Company Secretaries of India and also a Law graduate with corporate experience of more than 34 years in various fields and is the Managing Director of M/s Sterling Holiday Financial Services Limited. He joined the Company’s Board on 04.07.2005. His academic qualification and experience would be a boon to the Company.

Details of other Directorships / Committee Memberships held by him are given hereunder:

Sl.no. Name Of The Companies Nature Of Interest

1. M/S STERLING HOLIDAY FINANCIAL Managing Director

SERVICES LIMITED

2. M/S STERLING RESORTS HOME Director

FINANCE LIMITED

3. M/S.STERLING SECURITIES Director

& FUTURES LIMITED

4. M/S STERLING HOLIDAY Director

FINVEST LIMITED

5. M/S C.G.K. FINVEST (MADRAS) Director

PRIVATE LIMITED

6. M/S MADURAI MEENAKSHI FARMS Director

(PRIVATE) LIMITED

Sl.no. Name Of The Companies/Firms Nature Of Interest

1 Hardcastle Petrofer Pvt. Ltd Director

2 Horizon Impex Pvt. Ltd Director

3 Saubhagya Impex Pvt. Ltd Director

4 Subh Ashish Exim Pvt. Ltd. Director

5 Anand Veena Twisters Pvt. Ltd. Director

6 Achal Exim Pvt. Ltd DirectorShareholding in the Company

Mr.K.Chandrasekaran, holds 2,72,828 equity shares in he Company.

6. Under the provisions of the Companies Act, 1956, as amended, with effect from 31st October, 1998, Members may file Nomination Forms in respect of their shareholdings. Any Member who has not yet availed of this facility may submit the prescribed Form 2B to the Company’s Registrar and Share Transfer Agent: M/s.Cameo Corporate Services Limited, “Subramanian Building”, No.1, Club House Road, Chennai - 600 002.

7. Members are requested to notify immediately any change of address to their Depositories Participants (DPs) in respect of their electronic share accounts and to the Company’s Registrar and Share Transfer Agent : M/s.Cameo Corporate Services Limited, “Subramanian Building”, No.1, Club House Road, Chennai - 600 002, in respect of their physical share folios, if any.

8. Members who are desirous of seeking any further information or clarification, if any, particularly with regard to the accounts are requested to write to the Company atleast seven days in advance of the meeting so that the information can be made available at the meeting.

9. Members are requested to note that the Company’s Equity Shares are under Compulsory Demat trading with effect from 28.08.2000 for all investors. Members are therefore requested to demat their shareholding to avoid inconvenience in future

ANNEXURE TO THE NOTICE

Explanatory Statement pursuant to the provisions of Section 173(2) of the Companies Act, 1956, read with clause 49 of the Listing Agreement with Stock Exchanges

As required by Section 173(2) of the Companies Act, 1956, read with clause 49 of the listing agreement with the stock exchanges the following explanatory Statement sets out all material facts relating to the business mentioned under the item Nos. 5, 6 and 7 of the accompanying notice.

ITEM NO.5

Mr.Amit Jatia, graduated in Business Administration from the University of Southern California, Los Angeles and in Humburgerology from the Hamburger University, Oak Brook (lllinois, USA) has 15 years of experience in the Corporate Sector in various fields. He was appointed as an Additional Director of the Company by the Board of Directors in their Meeting held on 12-02-2009, pursuant to Section 260 of the Companies Act, 1956, and he will hold office up to the ensuing Annual General Meeting.

A notice under Section 257 of the Companies Act, 1956 along with a deposit of Rs.500/- has been received from a Member of the Company proposing the name of Mr.Amit Jatia for appointment as a Director of the Company, liable to retire by rotation.


7 Acacia Impex Pvt. Ltd. Director

8 Akshay Ayush Impex Pvt. Ltd. Director

9 Vandeep Tradelinks Pvt. Ltd. Director

10 Triple A Foods Pvt. Ltd. Director

11 Hardcastle Restaurants Pvt. Ltd. Managing Director

12 Shringar Cinemas Ltd Director

13 West Pioneer Properties (India) Pvt. Ltd Director

14 Westfield Entertainment Pvt. Ltd. Director

15 West Pioneer Properties Ltd Director

16 Winmore Investments Ltd Director

17 Global Trendz Retail Pvt. Ltd. Director


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A copy of the existing Memorandum and Articles of Association of the Company and the notice under section 257 of the Companies Act, 1956 received from a Member are kept open for inspection of the shareholders at the Registered Office of the Company on any working day between 10.00 a.m. to 1.00 p.m.

Mr.Amit Jatia, is interested in the resolution to the extent of his appointment. None of the other Directors is concerned or interested in the Resolution.

Accordingly, an Ordinary Resolution is set out under Item No.5 of the Notice. The Directors’ commend this Resolution to the Members for their approval.

ITEM NO.6

Members are informed that the Board of Directors at their meeting held on 16-11-2004 appointed Mr.R.Subramanian as Chairman and Managing Director of the Company for a period of 5 years from 16-11-2004 and the same was approved by the Members at the Extraordi-nary General Meeting held on 15-04-2005, under Section 198, 269, 309 and 310 read with schedule XIII to the Companies Act, 1956, Mr.R.Subramanian also expressed to the Board his desire not to draw remuneration from the Company.

Mr.R.Subramanian, aged about 67 years, is a Fellow Member of the Institute of Chartered Accountants of India and the Institute of Cost and Works Accountants of India with vast experience and expertise in financial and general management. He has worked for large industrial houses both in India and abroad as head of Finance and Chief Executive. His academic qualification, national and international experience would be a benefited by the Company immensely.

Mr.R.Subramanian is the Member of the Share Transfer Committee and Committee of Directors, of the Company.


The terms of appointment of Mr.R.Subramanian, as Chairman and Managing Director is mentioned under the item No.6 of the notice and the same be treated as disclosure as required under Section 302 of the Companies Act, 1956.

A copy of the existing Memorandum and Articles of Association of the Company is kept open for inspection of the shareholders at the Registered Office of the Company on any working day between 10.00 a.m. to 1.00 p.m.

Mr.R.Subramanian, Chairman and Managing Director and Mr.S.Sidharth Shankar, Joint-Managing Director, being related to each other, are concerned or interested in this resolution. No other Directors is concerned or interested in this Resolution.

Accordingly, an Ordinary Resolution is set out under Item No.6 of the Notice. The Directors’ commend this Ordinary Resolution to the Members for their approval.

ITEM NO.7

Your Company is engaged in developing and marketing of Time share and hotel products. The Employees Stock Option envisages in incentivising the employees. Keeping this objective in mind and in order to attract, motivate and retain the key employees in the Company, the Board of Directors of your Company has recommended an Employees Stock Option Scheme (ESOS-2009).

The ESOS-2009 will be administered by the Compensation Committee of the Board of Directors. The Compensation Committee will formulate the detailed terms and conditions of the ESOS-2009. The Scheme shall be formulated in accordance with the guidelines laid down by the Securities and Exchange Board of India and such other authorities as may be applicable in this regard.

Approval of members is being sought in terms of Section 81(1-A) and all other applicable provisions of the Companies Act, 1956 for the grant of options and the consequential issue of equity shares under the ESOS-2009 on the expanded capital of the Company.

The issue of options under ESOS-2009 is a ongoing process and the Company is required to commit and issue options under ESOS-2009 to various recruits joining the Company. As the recruitment keeps happen-ing continuously, it is being proposed that the Board / Compensation Committee be authorised to delegate its powers to any Sub-Committee consisting of one or more Directors of the Company for issuing Stock Options in accordance with the ESOS Schemes. These decisions could be subsequently ratified at the Meeting of Board / Compensation Commit-tee at regular intervals.

Under the “Employees Stock Option Scheme – 2005” the Company allotted 12,00,000 numbers of Equity Shares of Rs.10/- each of the Company to some of the Directors and key employees.

Under the “Employees Stock Option Scheme – 2007” the Company has granted 25,00,000 number of options and the same are vested.

The information as required under Regulation 6 of the SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 are given below:

Sl.no. Name Of The Companies Nature Of Interest

1. Sterling Tree Magnum (India) Limited Director

2. VServe India Manpower Limited Director

3. Srivari Farms Private Limited Director

4. Sterling Holidays (Ooty) Limited Director

5. Sterling Holiday Resorts (Kodaikanal) Director Limited

6. Brindavan Farms Private Limited Director

7. Sterling Resorts Home Finance Limited Director

8. Madurai Meenakshi Farms Director Private Limited

9. Manchanda Resorts Private Limited Director

10. Maxworth Investments Private Limited Director

11. Omega Feeds and Nutrients Director Private Limited

12. Maxworth Orchards (India) Limited Director

13. Nature Biotech And Health Director Research Limited


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(a) Total Number of options to be granted:

Not exceeding 15,00,000 options of Rs.10/- each in number can be granted under the ESOS-2009.

(b) Identification of classes of employees entitled to participate in the ESOS:

Options are offered to Directors including Whole Time Directors and permanent employees in the grade of Assistant General Manager and above of the Company, but excluding Promoter Director(s) or Director(s) who either by himself / themselves or through his/their relative or through any body corporate, directly or indirectly hold(s) more than 10% of the outstanding equity shares of the Company.

(c) Requirements of vesting and period of vesting:

The Compensation Committee shall formulate the requirements of vesting which may interalia include efficiency or productivity. The grant of options shall be made as per the Employees Stock Option Scheme, 2009 (ESOS-2009) to be framed by the Compensation Committee. The options shall be vested in employees on expiry of One (1) year from date of grant(s) of options and vest progressively over a period of Five (5) years or such period as may be determined by the Compensation Committee. The share option may vest in tranches subject to the terms and conditions as may be stipulated by the Compensation Committee.

(d) Maximum period within which options shall be vested:

The maximum period within which the options shall be vested is upon the completion of Five (5) years from the date of grant of option or such period as may be determined by the Compensation Committee.

(e) Exercise price or pricing formula:

The exercise price will be Rs.10/- (Rupees Ten only) per share.

(f) Exercise period and process for exercise:

The exercise period shall commence from the date of vesting and expire not later than 10 years from such date of vesting. The mode or process of exercise of the option shall be framed by the Compensation committee. The Allotment of shares on exercise of options by the eligible employees on satisfying the required conditions of ESOS-2009 shall be in accordance with the terms and conditions framed by the Compensation Committee.

(g)The appraisal process for determining the eligibility of employees to the ESOS-2009:

The eligibility criteria for the employees under ESOS-2009 will be determined by the Compensation committee based on past and present performance, technical knowledge, professionalism, period of service, designation, responsibility, other qualities and traits or such other basis as the Committee may deem fit.

(h) Maximum number of options to be issued per employee and in aggregate:

The maximum number of options granted to any one employee in a year will not exceed 1% of the issued equity capital of the Company (excluding outstanding warrants and conversions) at the time of granting the Option. As such, it is proposed that options not exceeding 15,00,000 of Rs.10/- each in the aggregate can be granted under ESOS-2009.

(I) Accounting Policies:

The Company shall comply with the Disclosure and Accounting Policies prescribed by the SEBI and any other appropriate authority in this regard.

(J) Method of Valuation

The Company shall use one of the applicable methods (intrinsic value or fair value) to value the options issued under “EMPLOYEES STOCK OPTION SCHEME- 2009”.

(K) Statement

In case the Company calculates the employee compensation cost using the intrinsic value of the Stock options, the difference between the employee compensation cost so computed and the employee compen-sation cost that shall have been recognised if it had used the fair value of the options, shall be disclosed in the Directors Report and also the impact of this difference on profits and on Earnings Per Share (EPS) of the Company shall be disclosed in the Directors Report.

The provisions of the Companies Act, 1956 contemplate consent of the members by way of special resolution in General Meeting for further issue of shares to persons other than the existing holders of shares.

The Board of Directors is of the opinion that the above Scheme would be suitable to meet the growing challenges in business and for attracting and retaining talented, qualified and experienced employees and therefore recommends the Special Resolution for adoption.

A copy of the existing Memorandum and Articles of Association of the Company is kept open for inspection of the shareholders at the Registered Office of the Company on any working day between 10.00 a.m. to 1.00 p.m.

The Directors of the Company to whom the Employees Stock Option Scheme is applicable are interested to the extent of the allotment as per the scheme.

Accordingly, a Special Resolution is set out under Item No.7 of the Notice. The Directors’ commend this Resolution to the Members for their approval.

By Order of the BoardFor Sterling Holiday Resorts (India) Limited

M.BALASUBRAMANIYANCOMPANY SECRETARY

Place : ChennaiDate: 01.09.2009


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Directors’ ReportThe Directors of your Company hereby present the 22nd Annual Report of the Company together with the Accounts for the Year ended 31st March, 2009.

FINANCIAL RESULTS

Sales

Profit before Interest Depreciation & Tax

Less: Interest

Profit / (Loss) before Depreciation & Tax

Less : Depreciation

Profit / (Loss) before tax

Less Provision for fringe benefit tax

Profit / (Loss) for the year

31.02

(14.35)

2.84

(17.19)

4.48

(21.67)

0.15

(21.82)

36.85

7.01

2.72

4.29

4.80

(0.51)

0.39

(0.90)

2008- 2009Rs. in Crores

2007 - 2008Rs. in Crores

OPERATIONSDuring the year, your company has achieved the total sale of Rs.31.02 crores, comprising the sale of Time Shares Rs.7.58 crores and through Resort operations Rs.23.44 crores.

Your Company has raised Rs.17,02,22,220/- through issue of 45,63,492 equity shares of Rs.10/- each at a price of Rs.35/- (including the premium of Rs.25/- per equity share) and 30,00,000 Warrants of Rs.35/- each (allotment money Rs.3.50 per warrant) on 12-02-2009. Also your Company raised Rs.33,78,02,500/- through issue of 95,26,500 equity shares of Rs.10/- each at price of Rs.35/- (including the premium of Rs.25/- per equity share) and 5,00,000 warrants of Rs.35/- each (allotment money Rs.8.75 per warrant) on 04-06-2009.

SETTLEMENT OF LOANS AND LIABILITIES Your Company has settled substantial creditors including Banks and Financial Institutions and other trade creditors, with the money raised in the above allotment of Equity Shares on preferential basis. In addition, a part of the money raised was used for refurbishing some of the resorts.

REFURBISHMENT OF RESORTSAs reported in previous report, internal painting, change of upholstery, replacement of furniture, changing of flooring and up-gradation of Toilets and other Amenities were taken up wherever required. All out efforts have been taken to complete the balance developmental work with the funds available and the same is expected to be completed within a year. The customer feed back on the developmental work, amenities provided and renovation of resorts are satisfactory and encouraging.

DIRECTORSYour Directors, Mr.G.Sundaram and Mr.K.Chandrasekaran retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Mr.Alan David Whitehouse ceased to be Director on 30.01.2009.

Mr.Amit Jatia has been appointed as Additional Director of the Company with effect from 12.02.2009 and shall hold office upto the date of this Annual General Meeting. A notice under Section 257 of the

Companies Act, 1956, along with a deposit of Rs.500/- has been received from a member proposing Mr.Amit Jatia as a Director of the Company.

The tenure of appointment of Mr.R.Subramanian as Chairman and Managing Director of the Company expires on 16-11-2009. The Board of Directors propose the re-appointment of MR.R.Subramanian as Chairman and Managing Director for a period of five years with effect from 16.11.2009.

EMPLOYEE STOCK OPTION SCHEME – 2007Under the Employees Stock Option Scheme 2007, 25,00,000 Stock Options were vested by the Compensation Committee at its Meeting held on 15-07-2008 in favor of the grantees.

The details of options granted under ESOS – 2007 are given in Annexure “A” in accordance with SEBI (Employees Stock Option Scheme & Employ-ees Stock Purchase Scheme) Guidelines 1999 and any modifications thereto.

ISSUE OF 30,00,000 WARRANTS ON PREFERENTIAL BASIS. The Members at the Extraordinary General Meeting held on 28-01-2009 have passed the special resolution for issue and allotment of 30,00,000 warrants at a price of Rs.35/- per warrant on preferential basis. Subse-quently, 30,00,000 Warrants were allotted at the Board Meeting held on 12-02-2009. The In-principle approval was granted by both Bombay Stock Exchange Limited (BSE) and Madras Stock Exchange Limited (MSE).

ISSUE OF 45,63,492 EQUITY SHARES ALLOTTED ON PREFERENTIAL BASIS. The Members at the Extraordinary General Meeting held on 28-01-2009 have passed a special resolution for issue and allotment of 58,83,276 Equity shares of Rs. 10/- each at a price of Rs.35/- per share (including the premium of Rs.25/- per equity share). Subsequently, 45,63,492 Equity shares were allotted at the Board Meeting held on 12-02-2009. The said Equity Shares are listed with Madras Stock Exchange Limited and Bombay Stock Exchange Limited.

PROCEEDS OF PREFERENTIAL ISSUESThe details of utilization of proceeds of Preferential issues upto 31st March, 2009 are setout in the statement attached herewith in Annexure - B STATUS OF PROCEEEDINGS UNDER SECTION 408 OF THE COMPANIES ACT, 1956The Members are informed that the Hon’ble High Court was pleased to pass an Order, granting stay of the Orders of the Hon’ble Company Law Board, Chennai, until further Orders of the Hon’ble High Court of Madras, pending disposal of the Appeal under CMA No.3647 of 2005. The stay is still in force.

FIXED DEPOSITYour Company has not accepted any fresh Deposits from the public during the current year.

AUDITORSThe Joint-Auditors of the Company M/s.R.Subramanian and Company, Chartered Accountants, Chennai, and M/S.V.Sankar Aiyar & Co., Chennai, retire at the Conclusion of this Annual General Meeting and are eligible for re-appointment.

For and on behalf of the Board

R.SUBRAMANIANCHAIRMAN AND MANAGING DIRECTOR



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The Company has received confirmation that their appointment will be within the limits prescribed under Section 224(1B) of the Compa-nies Act, 1956. The Audit Committee of the Board has recommended their appointment. The necessary resolution is being placed before the shareholders for approval.

AUDIT, INVESTOR GRIEVANCES, REMUNERATION AND COMPENSA-TION COMMITTEESIn terms of Clause 49 of the Listing Agreement of the Stock Exchanges and pursuant to the provisions of Section 292A of the Companies Act, 1956, the details pertaining to Audit Committee, Investor Grievances Committee, Remuneration Committee, Share Transfer Committee and Compensation Committee are furnished in the Report on Corporate Governance which is annexed herewith.

MANAGEMENT DISCUSSION AND ANALYSIS REPORTIn terms of Clause 49 of the Listing Agreement of the Stock Exchanges, Management Discussion Analysis Report is annexed herewith and forms part of this Report.

REPORT ON CORPORATE GOVERNANCEThe Company has complied with the Corporate Governance Code as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges. A separate section on Corporate Governance, along with a certificate from the Statutory Auditors of the Company confirming the compliance is annexed.

DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to Section 217(2AA) of the Companies Act, 1956, the Directors’ to the best of their knowledge and belief confirm that:

1. in the preparation of the Profit and Loss Account for the Financial Year ended 31st March, 2009 and the Balance Sheet as at that date (“Annual Accounts”), the applicable accounting standards have been followed; 2. that the Directors’ had selected such accounting policies and 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 at the end of the financial year and of the profit and loss of the Company for that year; 3. that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; 4. that the Directors had prepared the Annual Accounts for the Financial Year ended 31st March, 2009 on a going concern basis.

COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988In terms of the above Rules, the particulars relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in Annexure – “C” which forms part of the Directors’ Report.

PARTICULARS OF EMPLOYEESDetails of remuneration paid for the Financial Year ended 31.03.2009, as per Section 217(2A) of the Companies Act, 1956 read with Compa-nies (Particulars of Employees) (Amendment) Rules, 2002, are

provided in Annexure-“D” which forms part of the Directors’ Report.

DEMATERIALISATION OF EQUITY SHARESAs mentioned in our earlier Annual Reports, the Company’s Equity Shares are in the compulsory demat mode with effect from 28th August, 2000, as per Circular No.SMDRP / Policy / CIR-23/2000 dated 29th May, 2000 issued by Securities and Exchange Board of India (SEBI). This has been facilitated through arrangement with M/s.National Securities Depository Limited (NSDL) and M/s.Central Depository Services (India) Limited (CDSL). A large number of our shareholders have taken advantage of dematerialisation facility. M/s.Cameo Corporate Services Limited, Chennai, has been appointed as the Registrar and Share Transfer Agents of the Company.

SHIFTING OF REGISTERED OFFICE OF THE COMPANYThe Registered office of the Company has been shifted to No.163, T.T.K. Road, Alwarpet, Chenai – 600 018, with effect 02-03-2009.

CEO / CFO CERTIFICATION The Joint-Managing Director and the Senior Vice President – Finance have submitted a certificate to the Board regarding the Financial statements and other matters as required under clause 49. V. of the Listing Agreement.

“OPEN OFFER” ANNOUNCED BY M/S.INDUS HOSPITALITY FUND LTD AND M/S.INDIA DISCOVERY FUND LTD.The Board of Directors of the Company at their meeting held on 04-06-2009 have allotted 78,82,200 equity shares to M/s.Indus Hospitality Fund Ltd, pursuant to the Special resolution passed at the Extraordinary General Meeting held on 25-05-2009. M/s.Indus Hospitality Fund Ltd along with M/s.India Discovery Fund Ltd have issued Public Announcement on 08-06-2009, to acquire 95,85,717 fully paid Equity Shares of the Company at an offer price at Rs.36.25/- per share in accordance with the Regulations and Guidelines issued by SEBI.

M/s.Gujarat Industrial Investment Corporation Limited (GIIC) have filed a Civil suit in the Hon’ble Court of 2nd Additional Senior Civil Judge at Gandhinagar, Gujrat in connection the convening of Extraordi-nary General Meeting on 25th May, 2009, wherein the allotment of Equity Shares on preferential basis to M/s.Indus Hospitality Fund Limited and M/s.Blue Ocean Investment Trust was approved by the Shareholders. However, the Company has taken necessary legal action to defend the case in this regard.

ACKNOWLEDGEMENTSThe Board of Directors take this opportunity to express their sincere thanks to the Central and State Governments, Financial Institutions and Bankers and other Creditors for their valuable support and assistance during this period. The Directors also wish to thank the Shareholders and Timeshare Customers who have supported the Company in this hour of need. Our Directors look forward to receiving continued support from them.

The Directors also wish to thank the employees of the Company for their dedicated performance and also place on record their wholehearted commitments to the Company and combined efforts to turnaround the Company.


| Page 07 |

ANNEXURE – “A” FORMING PART OF THE DIRECTORS’ REPORT

ANNEXURE - B TO THE DIRECTORS’ REPORTDetails of Utilization of Preferential Issues up to 31st March, 2009

Disclosures in compliance with Regulation 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme) Guidelines, 2005, as amended, are set below.

S. No.

ESOS – 2007

1 Total number of options under the Plan 25,00,000 2 Options granted 25,00,000 3 Pricing formula Face Vale 4 Options vested 25,00,000 5 Options exercised NIL 6 Total number of shares arising as a result of exercise of option NIL 7 Options lapsed during the year NIL 8 Variation of terms of options NIL 9 Money realised by exercise of options NIL

10 Total number of options in force 25,00,000 11 Employee wise details of options granted to:

(1) Senior Management personnel Name of Employees

(2) Employees holding 5% or more of the total number of options granted during the year

(3) Identified employees who were granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant.

Mr.K.ChandrasekarnMr.M.N.RangamaniMr.E.S.GanapathyMr.G.SundaramMr.R.MohanMrs.R.RajakumariMr.V.SekarMr.M.AsokanMr.P.Subbaiyan

NIL

NIL

2,78,0002,78,0002,78,0002,78,0002,78,0002,78,0002,78,0002,78,0002,76,000

12 Diluted Earnings Per Share pursuant to issue of shares on exercise of opt ion calculated in accordance with Accounting Standard (AS) 20 -

13 Where the Company has calculated the employee compensation cost using the intrinstic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognised if it had used the fair value of the options. The impact of this difference on profits and on EPS of the Company.

-

14 Weighted average exercise prices and weighted average fair values of options separately for options whose exercise either equals or exceeds or is less than the market price of the stock.

15 A description of the method and significant assumptions used during the year to estimate the fair values of options, including the following weighted-average information: (1) risk free interest rate (2) expected life (3) expected volatility (4) expected dividends and (5) the price of the underlying share in market at the time of option grant

Name No. of options

Particulars As on 31st March, 2009

(Rs. in Lakhs)

Allotment of 45,63,492 Equity Shares to other than Promoter 1597.22

Allotment of 30,00,000 Warrants to Promoter’s Group - 10% amount received (Rs.3.5/- per warrant) 105.00

Total Funds received 1702.22

Settlement of Loans & Liabilities 1661.82

-

market priceat the time of option grant


R. SUBRAMANIANChairman and Managing Director


ANNEXURE - C TO THE DIRECTORS’ REPORTCOMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988

ANNEXURE - D TO THE DIRECTORS’ REPORTINFORMATION AS PER SECTION 217 (2A) OF THE COMPANIES ACT, 1956 READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) (AMENDMENT) RULES, 2002 AND FORMING PART OF THE DIRECTORS’ REPORT - DETAILS OF REMUNERATION PAID FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2009

Note :

1. Remuneration as shown above includes Salary, Allowances, Leave Travel Assistance, Medical facilities and perquisites valued in terms of actual expenditure incurred by the Company in providing the benefits to the employee excepting in case, perquisites value as per Income Tax Rules, has been adopted. In addition to the above the Employees are eligible for Provident Fund and Gratuity in accordance with the rules of the Company.

2. The employees are the whole-time employees of the Company and the employment is subject to the rules and regulations of the Company.

3. None of the employee is related to any Director of the Company.


| Page 08 |

A. Conservation Energy : Not ApplicableB. Technology Absorption : Not ApplicableC. Foreign Exchange Earnings and Outgo :

(i) Activities relating to exports : NIL incentives taken to increase exports development of new export and markets for products and servicesand export plans

(ii) Total Foreign exchange earned : NIL

(iii) Total Foreign exchange used : NIL

Sl.No.

(1)

1

2

(2) (3) (4) (5) (6) (7) (8)

Name ofthe Employee

Mr.R.MohanSr. Vice President-

FinanceB.Com, ACA & 21 Years

04-04-2005RegimanualGrey Ltd.,

Ghana, W.AfricaRs.28,98,990/-46

Mrs.R.RajakumariSr. Vice President-

Hotel Sales B.A. – 22 years 04-10-2004

Wellness Communes

Pvt. Ltd.,Rs.21,81,810/-50

Designation of the Employee /

Nature of duties

Qualification & Experience

Date of Commencement of employment

PreviousEmployment

Remuneration(Rs. P.)

Age


| Page 09 |

MANAGEMENT DISCUSSION AND ANALYSIS REPORTWorld Tourism Scenario

The world tourism scenario during the financial year 2008 – 09 can be summed up thus;

International tourism grew at around 5% during the first four months of the year - one percentage point above the long-term trend.All sub-regions had positive results - fastest growth in the Middle

East, North-East and South Asia, and Central and South America.Uncertainty over the global economic situation is affecting

consumer confidence and could hurt tourism demand.UNWTO maintained a cautiously positive forecast.

According to the June edition of the UNWTO World Tourism Barom-eter, the first results for 2008 suggest the relative stability of interna-tional tourism. In spite of uncertainties posed by the global economy, international tourist arrivals grew at around 5% between January and April 2008, compared to the same period of 2007.

”The extent of any tourism demand adjustment and its consequences for the sector will depend on how the economy evolves and consum-ers react, both of which are directly interrelated to oil and food prices. UNWTO is monitoring this evolving situation closely. Given current circumstances we are cautious, although we remain positive for the overall industry perspectives in 2008”, said UNWTO Secretary-General Francesco Frangialli.

The 280 members of the UNWTO Panel of Tourism Experts confirmed this outlook. Though the UNWTO Tourism Confidence Index has weakened, the positive expectations still clearly outnumber the negative ones in the worldwide consultation done for this latest UNWTO World Tourism Barometer.

On the regional growth front, a variety of destination countries all around the globe reported double-digit growth rates in the first three to five months of 2008, among which in Asia and the Pacific: China, Japan, Republic of Korea, Macao (China), Cambodia, Indonesia, Vietnam, Fiji, India and Nepal; in the Americas: the USA, Cuba, Jamaica, Costa Rica, El Salvador, Panama, Chile, Peru and Uruguay; in Europe: Sweden, Bulgaria, Latvia, Lithuania, Israel, Malta, Montenegro and Turkey; and in Africa and the Middle East: Bahrain, Egypt and Morocco.

However this good news comes with its own challenges that the industry expects to face in the coming months and years.

The anticipated softening of international tourism growth in 2008, yet still clearly at a positive level, follows four historically strong years. Between 2004 and 2007 international tourism grew at an extraordinary above average rate of 7% a year, boosted by a buoyant world economy and pent-up demand after the challenges in 2001-2003.

The current economic imbalances, in particular the rising energy prices, are very likely to influence tourism spending. But specific

demand shifts – determined by disposable income, travel budgets and confidence - will vary from country to country, and from region to region, depending on their local economies, labour markets and consumer confidence.

On the whole, though consumer confidence indices show an increasing degree of uncertainty, international tourism has proven to be resilient in similar circumstances in the past and able to cope with various types of shocks, including security threats, geopolitical tensions or natural and man-made crisis. Accounting for these factors, coupled with a slower but still positive

economic growth, international tourism is as yet expected to keep growing at a solid pace in the mid-term, broadly in line with UNWTO’s Tourism 2020 Vision forecast long-term growth rate of about 4%.

Indian Tourism Industry

Tourism in India has seen exponential growth in the recent years. India has emerged as one of the most preferred destinations for both overseas and domestic travelers.

According to official estimates the Indian tourism industry has out performed the global tourism industry in terms of growth in the volume of foreign tourists as well as in terms of revenue.

The main reason for the growth in tourism in India is the tremendous progress made by the Indian economy. Though it must be said that infrastructure is still a constraint. To propel growth the industry has invested in new technology like CRM tools and state of the art security systems.

Talking about the future of The Indian Tourism Industry, the real GDP growth for travel and tourism economy is expected to be 0.2 per cent in 2009 and is expected to grow at an average of 7.7 per cent per annum in the coming decade.

Earning through exports from international visitors and tourism goods are expected to generate 6.0 per cent of total exports (nearly $16.9 billion) in 2009 and expected to increase to US$ 51.4 billion in 2019.

According to the Ministry of Tourism, Foreign Tourist Arrivals (FTAs) for the period from January to March in 2009 was 1.461 million. For the month of March 2009 the FTAs was 472000.The reason for the decline is attributed to the ongoing economic crisis.

In spite of the short term and medium term impediment due to the global meltdown the revenues from tourism is expected to increase by 42 per cent from 2007 to 2017.

India is poised to emerge as the 2nd fastest growing (8.8%) tourism economy in the world over 2005-14 according to the World Travel & Tourism Organization Council. India is now recognized as a year round destination. According to World Tourism Organization estimates, India will lead in South Asia with 8.9 million arrivals by 2020. India slated to have the third largest Internet population by 2013, a report by Forrester Research, indicates an immense scope for distribution of tourism products and services to domestic travelers.


| Page 10 |

MANAGEMENT DISCUSSION AND ANALYSIS REPORTThe Government has come up with a wide variety of Policy Initiatives to create a conducive business climate in Tourism. The objectives of this policy stated by the Ministry of Tourism are:

To increase the share in international tourist arrivals, this is estimated at around 0.5 %. To have active participation and investment from private sector in

tourism industry. Special attention for infrastructure development in North East India

and Jammu & Kashmir.To have improvement and environmental up-gradation of the

protected monuments. To give greater focus to rural tourism with the objective of eliminat-

ing poverty and creating employment, with specific emphasis on the status of the women and to encourage tribal and local crafts. To impart a special thrust to eco tourism in all developmental

activities.To give due importance to domestic tourism, particularly tourism

connected with pilgrimages. To encourage Adventure Tourism for the new class of young tourists,

having marked preference for adventure sports and distant destina-tions. To effectively encourage special products that can attract tourists i.e.

Yoga, Siddha , Ayurveda, Indian cuisine etc. To conduct effective training programs for capacity building of

tourism service providers and to increase employability of existing tourism service providers. Training of State Police to act as “Tourist Police.To actively participate in activities of international organizations

related to tourism such as UN World Tourism Organization and World Tourism and Travel Council.

In addition to the above, the Policy Measures Road Map drawn by the Government indicates activities in the below areas;

Product infrastructure development for Destinations and Circuits Development of mega destinations and circuitsInter-ministerial coordinationAssistance to central agencies for infrastructure development

Sterling’s Strategies and Plans

The company has started its focus on marketing operations by reorga-nizing the timeshare and hotel sales teams to ensure undivided focus, support and management. The company continued its plans of settling its liabilities and has settled most of its liabilities and has commenced discussions for settlement of the remaining liabilities that the company hopes to settle in the current financial year.

As a part of the timeshare marketing strategy and plans, the company has embarked on an elaborate training of its field sales force and has started aggressively selling its timeshare products to the target market. The company is currently working out market appropriate products to tap the huge Indian middle class market that has by far remained insulated from the current economic turmoil and thereby providing the company an immense opportunity to re-launch and


R. SUBRAMANIANChairman and Managing Director


position itself as a leader in the category. The hotel sales vertical has continued its strong growth with more corporate houses preferring Sterling Resorts as their preferred holiday and resort conferencing destination. The company is currently working on rationalizing rates and to introduce more packages to attract the burgeoning domestic travel market.

The company has also commenced work on a state-of-the art software for Resort Operations and Customer Services that will enable online reservations facility for our customers over a period of time and manage the resort operations and customer services real time.

The Company has also initiated action to implement ISO 22000 : 2005 for Food Safety and Hygiene Standard

The FutureThe company is currently finalizing the vendors for its proposed resort refurbishment plan and expects to commence work once the initial research on customer preferences is over and the results analyzed.

Comprehensive training is being planned for the operations and customer services teams to ensure the customer gets the best service in the product category. Plans are underway to renew activity in key destinations where construction of resorts had been halted due to operational and financial reasons. New destinations are being identified to increase the number of resort destinations offered to the customers in future.

The company is embarking on a recruitment and expansion plan for its sales force, both for timeshares as well as its hotel sales verticals. The company also proposes to enter the franchisee model to penetrate the market faster and better. With all the above activities the company hopes to increase its sales and revenues during the current fiscal.


| Page 11 |

REPORT ON CORPORATE GOVERNANCE FOR THE YEAR 2008-2009(As required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges)

The Directors have pleasure in presenting the Corporate Governance Report for the Financial Year ended 31st March, 2009.1. COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE

The Board of Directors and the Management of Sterling Resorts commit themselves to:· Strive towards enhancement of shareholder value through - sound business decisions - prudent financial management, and - high standards of ethics throughout the organisation· Ensure transparency and professionalism in all decisions and transactions of the Company· Achieve excellence in Corporate Governance by - conforming to, and exceeding wherever possible, the prevalent mandatory guidelines on Corporate Governance - regularly reviewing the Board processes and the Management systems for further development.The Company has implemented the new Code of Conduct for members of the Board and senior management to the extent it is applicable to the Company.

2. BOARD OF DIRECTORS (‘BOARD’) 2.1 Composition and Category of Directors & Number of other Directorships and Membership on other Board Committees

The Board of Directors of the Company have an optimum combinations of Executive and Non-Executive Directors with not less than 50% of the Board comprising of Non-Executive Directors. The Board of your Company consisted eight Directors as on 31.03.2009 comprising of a Chairman and Managing Director, a Joint-Managing Director, Two Non-Executive Directors and Four Independent Directors.The composition of the Board of Directors as at 31st March, 2009 and the number of other Directorships / Committee Memberships held by them and attendance particulars for the Board / AGM are as under:

3. AUDIT COMMITTEE 3.1 Terms of Reference

The terms of reference of this Committee cover the matters specified for Audit Committee under Clause 49 of the Listing Agreements as well as in Section 292A of the Companies Act, 1956. This inter-alia, includes overseeing the Financial Reporting Process and disclosure of Financial Information, reviewing any change in Accounting Policies and Practices, Compliance with Accounting standards and reviewing the adequacy of Internal Control System.During the Financial Year, there was no such incident that necessitated the Audit Committee to investigate according to the Whistle blower Policy

3.2 Composition & MeetingsThe Audit Committee comprised of Four Non-Executive Directors. All the members have a sound Financial knowledge. The Committee met 5 times during the Financial Year ended 31st March, 2009, on 30.04.2008, 31.07.2008, 02.09.2008, 31.10.2008, and 30.01.2009.

The composition of the Audit Committee and the attendance of the members are given below:

2.2 Number of Board of Directors Meeting held and the dates on which held:The Board of Directors met 13 times during the Financial Year - 2008 – 09 (12 Months), i.e. on 01.04.2008, 30.04.2008, 16.05.2008, 31.07.2008, 02.09.2008, 31.10.2008, 26.11.2008, 17.12.2008, 22.12.2008, 30.12.2008, 30.01.2009, 11.02.2009 and 12.02.2009.

Name of Director

Mr.R.Subramanian

Mr.S.Sidharth Shankar

Mr.K.ChandrasekaranMr.M.N.RangamaniMr.E.S.GanapathyMr.G.SundaramMr. Alan D whitehouse *Mr.S.SethuramanMs.Amit Jatia **

* Ceased to be Director from 30-01-2009.** Mr.Amit Jatia, appointed as Additional Director from 12-02-2009.

Position

Chairman and Managing Director,Executive, PromoterJoint-Managing Director,Executive, PromoterNon ExecutiveNon ExecutiveNon Executive IndependentNon Executive IndependentNon Executive IndependentNon Executive IndependentNon Executive Independent

Total Number ofBoard Meeting

Held duringtenure of Directors

13

13

1313131311131

Board

12

12

12121013Nil10Nil

Whetherattended

the last AGMYes

Yes

YesYesYesYesNoYesNil

Directorship inother

companies13

1

64

NilNil-

Nil17

Chairman-

-

-------

Membership-

-

-------

Committee

Other Boards / CommitteesAttendance

Sl. No.

1.2.3.4.

Name of the Member

Mr.E.S.GanapathyMr.M.N.RangamaniMr.G.SundaramMr.S.Sethuraman

Position

ChairmanMemberMemberMember

Number of MeetingsHeld Attended5 55 55 55 3

The Company Secretary acts as the Secretary of the Audit Committee. As and when necessary, Senior Officials are called to attend the meeting to assist the Committee.

4. REMUNERATION COMMITTEE 4.1 Terms of Reference

The terms of reference of this Committee cover the matters specified for Remuneration Committee under Clause 49 of the Listing Agreement. This interalia, includes determining the remuneration packages of the executive directors including pension rights and any compensation payment.


| Page 12|

4.2 Composition & MeetingsThe Committee comprised of Non-Executive & Independent Directors. All the members have a sound Financial knowledge. The Committee met on 01.04.2008 during the Financial Year ended 31st March, 2009. The details of composition and attendance of the members are given below:

4.3 Remuneration for the YearNo remuneration was paid to Mr.R.Subramanian, Chairman and Managing Director, Mr.S.Sidharth Shankar, Joint-Managing Director, for the services rendered by them to the Company for the Financial Year ended 31st March, 2009.The details of remuneration provided to Non-Executive Directors who are entitled only to Sitting Fees for attending the Meetings of the Board / Committee(s) thereof for the Financial Year ended 31st March, 2009 are as follows:

Sl. No.

1.2.3.

Name of the Member

Mr.E.S.GanapathyMr.G.SundaramMr.S.Sethuraman

Position

ChairmanMemberMember

Number of MeetingsHeld Attended1 11 11 1

Sl. No.

1.2.3.

Name of the Member

Mr.G.SundaramMr.E.S.GanapathyMr. Alan D Whitehouse *

Position

ChairmanMemberMember

Number of MeetingsHeld Attended4 44 44 Nill

Sl. No.

1.2.3.4.

Name of the Member

Mr. S.SethuramanMr.G.SundaramMr.E.S.GanapathyMr. Alan D Whitehouse *

Position


Number of MeetingsHeld Attended1 11 11 11 Nil

Sl. No.

1.2.3.4.

Name of the Member

Mr. R.SubramanianMr.K.ChandrasekaranMr.G.SundaramMr.E.S.Ganapathy

Position


Number of MeetingsHeld Attended15 1515 1515 1415 15

Sl. No.

1234567

Name of the Member

Mr.E.S.GanapathyMr.G.SundaramMr.K.ChandrasekaranMr.M.N.RangamaniMr.S.SethuramanMr.Alan D WhitehouseMr.Amit Jatia

Sitting Fees Paid (Rs.)

65,00065,00030,00060,00045,000NilNil

5. SHAREHOLDERS / INVESTORS GRIEVANCE COMMITTEE 5.1 Terms of Reference

The role of the committee includes formulation of shareholders servicing Plans and Policies, monitoring and reviewing the mechanism of Share Transfers and Demate-rialization of shares, payment of Dividends, etc., and looking into the redressing of shareholders’ complaints and to determine, monitor and review the standards for resolution of shareholders grievances.

5.2 Composition & MeetingsThe Committee comprised of Non-Executive Directors and Independent Director. During the Financial Year ended 31st March, 2009, the Committee met 4 times on 15.04.2008, 31.07.2008, 15.10.2008 and 30.12.2008 to review the shareholders’ correspondence including the grievances received from the shareholders and their redressal. The details of the Members of the Committee and their attendance at the above meetings are given below:

6. COMPENSATION COMMITTEE 6.1 Terms of Reference

The role of the Compensation Committee includes powers to decide on the matters relating to giving Equity Options / Shares to the permanent employees (including the Directors of the Company whether Whole-time Directors or not).

6.2 Composition & MeetingsThe Committee comprised of Non-Executive & Independent Directors. All the members have a sound Financial knowledge. The Committee met on 15-07-2008, during the Financial Year ended 31st March, 2009. The details of composition and attendance of the members are given below:

7. SHARE TRANSFER COMMITTEE 7.1 Terms of Reference

The role of the committee includes power to approve Transfers and Transmission of shares / debentures and Transpositions, Issue of new share certificates, Issue of powers of attorney and such other powers the Board may delegate.

7.2 Composition & MeetingsThe Committee consists of One Executive Director and Three Non-Executive Directors. The Committee met 15 times on 15.04.2008, 15.05.2008, 13.06.2008, 30.06.2008, 22.07.2008, 20.08.2008, 15.09.2008, 30.09.2008, 17.10.2008, 14.11.2008, 10.12.2008, 31.12.2008, 30.01.2009, 16.03.2009 and 31.03.2009 during the Financial Year ended 31-03-2009. The details of composition and attendance of the members are given below:

* Ceased to be Director from 30-01-2009The Shareholders / Investors’ Grievance Committee has prescribed norms for attending to the shareholders’ requests and these norms have been complied with. The Committee generally meets every quarter to review the Investor query / complaints.The Company received 18 complaints during the Financial Year ended 31st March, 2009 and all the complaints were resolved to the satisfaction of the shareholders. There were no queries pending to be replied / sorted out as at 31st March, 2009. There were no Grievances pending as at 31st March, 2009.

* Ceased to be Director from 30-01-2009


| Page 13 |

8. GENERAL BODY MEETINGS

10. DISCLOSURES

Accounts.

11. SECRETARIAL AUDIT

Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The audit inter-alia confirms that total issued / paid-up capital is in agreement with the total number of shares held in physical form and the total number of dematerialized shares held with NSDL and CDSL.

12. MEANS OF COMMUNICATIONThe Quarterly Results published in the proforma prescribed by the Stock Exchanges are approved and Taken on Record by the Board of Directors of the Company within

Further, the results in the prescribed proforma are published within 48 hours in the English daily Newspaper - Trinity Mirror and Tamil daily Newspaper - Makkal Kural.

the Stock Exchanges.

The Management Discussion and Analysis Report forms part of the Annual Report.

13. GENERAL SHAREHOLDER INFORMATION

9. POSTAL BALLOTS:

Year31.03.200631.03.200731.03.2008

VenueRani Seethai Hall, No.603, Anna Salai, Chennai – 600 006Rani Seethai Hall, No.603, Anna Salai, Chennai – 600 006Sathguru Gnanandha Hall, Narada Gana Sabha, New No.314, (Old No.254), T.T.K.Road, Chennai - 600 018

Date28.12.2006 29.09.200730.09.2008

Time11.00 A.M.11.00 A.M.02.30 P.M.

1Nil1

(a) Registered Office No.163, T.T.K. Road Alwarpet, Chennai - 600 018.

Tuesday, the 29th September, 2009 Date, Time and Venue of at 2.30 p.m., at RANI SEETHAI HALL NO.603, ANNA SALAI CHENNAI - 600 006.

1st April, 2009 to 31st March, 2010

(d) Book Closure Date Wednesday the 23rd day of September, 2009 to Tuesday, the 29th day of September, 2009 (Both days inclusive)

(e) Dividend Payment Date No dividend has been recommended by the Board of Directors of the Company.

Demat ISIN Code for NSDL & CDSL INE657A01019

I Quarter ended 30.06.2009

II Quarter ending 30.09.2009III Quarter ending 31.12.2009IV Quarter ending 31.03.2010Audited Results for the Financial Year ending 31.03.2010

Name of Stock Exchange

The Madras Stock Exchange Limited [MSE]Bombay Stock Exchange Limited [BSE]

Address

11, Second Line Beach, Chennai 600001Dalal Street, Fort, Mumbai 400001

Stock Code (Equity)

STERLHOLID523363

fees for the year 2008-09PaidPaid

31.07.200929.09.2009Last week of October, 2009Last week of January, 2010Last week of April, 2010Last week of August, 2010


| Page 14 |

(j) Share Transfer SystemA Committee of the Board constituted for this purpose approves the share transfers in the Physical Form on Fortnightly basis, subject to the documents being valid and complete in all respects. The Board has also authorised the Members of the Share Transfer Committee to approve the Transfers, Transmissions and Transpositions. As per the directions of SEBI, the Company immediately on transfer of shares, endorse their name on the Share Certificates and send them to the investors and also inform them simultaneously about the dematerialisation option available for the shares transferred to their names. The Committee met 15 times during the Financial Year commencing from 1st April, 2008 to 31st March, 2009.

(k) Shareholding Pattern / Distribution of Shareholding Shareholding Pattern as on 31st March, 2009

A

B

No. of Shares held

6730374--

74504650

5775717

451911113722136

429920500

119835813869

32402085

CategoryPROMOTER’S HOLDING(i) Indian Promoters(ii) Acquirers & PACNON-PROMOTER HOLDING1. Institutional Investors(a) Mutual Fund(b) Banks, Financial Institutions, Insurance Companies (c) Foreign Institutional Investors2. Others(a) Private Corporate Bodies(b) Indian Public(c) Non Resident Indians / Overseas Bodies Corporate(d) Foreign Nationals(e) Trusts(f) Clearing MemberTotal

% of Shareholding

20.771--

0.0230.014

17.825

13.94742.350

1.3270.0023.6980.043

100.000

Distribution of Shareholding as on 31st March, 2009

Category 1 - 500

501 - 10001001 - 2000 2001 - 30003001 - 40004001 - 50005001 - 10000 Above 10000

Total

No. of Holders20019

1185567204

87116157211

22546

% to Total88.792

5.2562.5150.9050.3860.5140.6960.936

100.000

No. of Shares26707791002133

894312524350314954555621

12233972521653932402085

% to Total8.2433.0932.7601.6180.9721.7143.776

77.824100.000

(h) Performance in comparison to broad-based indices

(i) Registrar & Share Transfer Agents

There was no trading on the Equity Shares of the Company on the Madras Stock Exchange Limited for the period 1st April, 2008 to 31st March, 2009.

Sterling Holiday Resorts share price performance relative to BSE Sensex during the year 2008-2009.

(% change)Sterling Holiday’s Share price (% change) in Sensex (% change)Sterling Holiday’s to Sensex

BSE Sensex 18.70% 42.18% 0.09%

M/s.Cameo Corporate Services Limited “Subramanian Building”No.1, Club House Road, Chennai - 600 002. Phone: 044 - 28460390 (5 Lines) Fax : 044 - 28460129 E-mail: [email protected]

(g) Market Price DataHigh, Low during each month in the last Financial Year

Month M/s. Bombay Stock Exchange Limited BSE SENSEX HIGH Rs. P. LOW Rs. P. HIGH Rs. P. LOW Rs. P.

April 2008 36.90 28.55 17378.46 15343.12

May 2008 36.10 31.45 17600.12 16275.59

June 2008 30.75 22.60 16063.18 13461.60

July 2008 29.60 20.45 14942.28 12575.80

August 2008 30.10 26.45 15503.92 14048.34

September 2008 27.20 19.15 15049.86 12595.75

October 2008 24.65 9.10 13055.67 8509.56

November 2008 19.87 12.81 10631.12 8451.01

December 2008 22.15 14.40 10099.91 8739.24

January 2009 28.40 18.55 10335.93 8674.35

February 2009 30.70 22.45 9647.47 8822.06

March 2009 30.00 26.30 10048.49 8160.40


| Page 15 |

(n) Outstanding GDRs / ADRs / Warrants or any Convertible Instruments, Conversion date and likely impact on equity. The Company has not issued any GDRs / ADRs The Board of Directors at their meeting held on 12-02-2009 have allotted 30,00,000 convertible warrants of Rs.35/- and the same shall be convertible within 18 months from the date of allotment.

(o) Resort Locations Ooty, Kodaikanal, Yercaud, Munnar, Darjeeling, Kulu Manali, Puri, Mussoorie and Goa.

(p) Address for Correspondence Shares and Secretarial Department Sterling Holiday Resorts (India) Limited NO.163, T.T.K. Road, Alwarpet, Chennai - 600 018. Phone No.044 - 66937000 (5 Lines) Fax No.044 - 24998043 E-mail - [email protected]

Days taken for Processing

1 – 10 days

11 – 15 days

After 15 days

Total

No.of requisitions Accepted

241

6

3

250

No. of shares accepted

39949

928

300

41177

% to Total

0.123

0.003

0.001

0.127

No. of shares rejected

14049

-

-

14049

No. of requisitions rejected

30

-

-

30

% of Total

0.044

0.044

For the period 01.04.2008 to 31.03.2009

(l) Nomination FacilityThe Shareholders may avail themselves of the nomination facility under Section 109A of the Companies Act, 1956. The Nomination Form (Form 2B) along with instructions will be provided to the members on request. In case the members wish to avail this facility, they are requested to write to Mr. M.Balasubramaniyan, Company Secretary at the Registered Office of the Company.

(m) Dematerialization of Equity Shares and Liquidity

The Equity shares of the Company are compulsorily traded in dematerialized form with effect from 28th August, 2000 as per the directives issued by SEBI. The Code Number allotted by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) to Sterling Holiday Resorts (India) Limited is ISIN - INE 657A01019.

As on 31st March, 2009, 70.47% of the Company’s total Equity Shares representing 22832309 Equity Shares were held in Dematerialized Form and the balance 29.53% representing 9569776 Equity Shares were held in Physical Form.

The Company has received 280 requests for Dematerialization of shares during the 12 months’ period commencing from 1st April, 2008 to 31st March, 2009. The time taken for processing the dematerialization requests is detailed below.

For V. Sankar Aiyar & Co Chartered Accountants

S VenkataramanPartnerMembership No: 23116

For R.Subramanian and CompanyChartered Accountants

A.S. RamanathanPartner

Membership No: 011072

Place: ChennaiDate: 01.09.2009

CONFIRMATION ON CODE OF CONDUCT

CORPORATE GOVERNANCE COMPLIANCE REPORT AUDITOR’S REPORT ON CORPORATE GOVERNANCE

To

The Members of the M/s.Sterling Holiday Resorts (India) Limited

This is to inform that the Board has laid down a Code of Conduct for all Board Members and Senior Management of the Company. It is further confirmed that all Directors and Senior Management personnel of the Company have affirmed compliance with the Code of Conduct of the Company as at 31st March, 2009, as envisaged in Clause 49 of the Listing Agreement with Stock Exchanges.

To the members of Sterling Holiday Resorts (India) Limited,

We have examined the compliance of the conditions of Corporate Governance by Sterling Holiday Resorts (India) Limited for the financial year ended 31st March, 2009, as stipulated in Clause 49 of the Listing Agreement of the said Company, with Stock Exchanges.

The Compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to procedures and implementation thereof adopted by the Company for ensuing the compliance of the condition 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 the information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreements.

Based on the information and explanations given to us there are no investor grievances pending for a period exceeding one month against the Company.

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

For and On Behalf of the Board

R. SUBRAMANIANCHAIRMAN AND MANAGING DIRECTOR


REPORT OF THE AUDITORS TO

THE MEMBERS OF STERLING

HOLIDAY RESORTS (INDIA) LIMITED

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE.


| Page 16 |

1. We have audited the attached Balance Sheet of Sterling Holiday Resorts (India) Limited as at 31st March, 2009 and the Profit and Loss Account for the year ended on that date and the cash flow statement of the Company thereto. These financial statements are the responsi-bility of the Company’s management. Our responsibility is to express an opinion on the financial statements based on our audit.

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

3. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956 we enclose in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the annexure referred to above, we report that:

i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our Audit;

ii. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examina-tion of those books;

iii. The Company’s Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of Account;

iv. In our opinion, the Balance Sheet and Profit and Loss Account and cash flow statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 to the extent applicable;

v. On the basis of written representations received from the Directors and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st March 2009 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts and read with the significant accounting policies and other notes thereon, give the information required by The Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2009,

1. (a) The Company has maintained records showing full particulars including quantitative details and situation of Fixed Assets except in respect of plant and machinery office equipments and furniture and fixtures

(b) We are informed that during the year, that the Fixed Assets located at Resorts and at Head office have been physically verified by Management According to the information and explanations given to us, no material discrepancies were noticed on such verification. In our opinion, frequency of verification is reasonable.

(c) As per information and explanations given to us, the disposals of fixed assets during the year were not substantial and hence it does not affect the going concern.

2. (a) The inventory has been physically verified at the end of the year by the management. In our opinion, the frequency of verification was reasonable.

(b) In our opinion, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c ) On the basis of the records examined by us and relying on the information provided to us, in our opinion, the Company is maintaining proper records of inventories and no material discrepancies were noticed on physical verification as compared to the record of inventories.

3. (a) The Company has not granted any loans secured or unsecured to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(b) The Company has not taken any loans secured or unsecured from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956. Therefore, reporting under sub clauses (e) to (g) of clause 4 (iii) does not arise.

4. In our opinion and according to the information and explana-tions given to us, the internal control procedures are commensurate with the size of the Company and the nature of its business for purchase of inventory, fixed assets, sale of goods and services. During the course of audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

(b) In the case of the Profit and Loss account of the loss for the year ended on that date and

(c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.





Membership No: 011072Place: ChennaiDate: 01.09.2009


| Page 17 |

5. Based on the audit procedures applied by us, to the best of our

knowledge and belief and according to the information and explana-

tions given to us, the company has not entered into contracts or

arrangements referred to in Section 301 of the Companies Act, 1956

and consequently reporting under clause 4 (v) (a), (b) does not arise.

6. In our opinion and according to the information and explanations

given to us, the Company has not accepted any deposits from the

public. We are informed by the Management that no order has been

passed by the Company Law Board or National Company Law Tribunal

or Reserve Bank of India or any Court or any other Tribunal under

Sections 58A and 58AA of the Companies Act, 1956.

7. The Company has an internal audit system which needs to be

strengthened to make it commensurate with the size of the Company

and the nature of its business.

8. According to the information and explanations given to us, the Central

Govt. has not prescribed maintenance of cost records under Section

209(1) (d) of the Companies Act, 1956 for the services rendered by the

Company.

9. (a) According to the information and explanations given to us, the

Company has not been generally regular in depositing,

undisputed statutory dues representing, Provident Fund,

Employees State Insurance, Income Tax, Fringe Benefit, ,

Service tax, cess. The Company has generally been regular in

depositing Sales Tax (VAT) Investor Education and Protection

Fund other statutory dues, with appropriate authorities. We

are informed that there is no liability to remit Wealth tax,

customs duty and Excise duty.

(b) According to the information and explanations given to us,

undisputed statutory dues were outstanding at the year end

for a period of more than 6 months from the date they become

payable were as follows:

(c) According to the information and explanations given to us and

the basis of examination of records of the Company the dues of

income tax/wealth tax/service tax/cess as at 31st March 2009

which have not been deposited on account of any dispute are

as follows:

Statutory dues

Provident Fund

Employees State Insurance

Fringe Benefit Tax

Income tax deducted at source

Service tax

Outstanding for a period more than six months as on 31st March 09

Sum paid subsequent to 31st March 09

25.53

45.32

101.34

94.49

0.67

25.53

1.26

-

94.49

-

$ Appellate Tribunal includes STAT, ITAT

@ Appellate Authority includes Commissioner Appeals, Assistant Commis-sioner Appeals, Deputy Commissioner Appeals, and Joint Commissioner Appeals

10. In our opinion, the accumulated losses of the Company have not exceeded fifty percent of its net worth as at the end of the financial year. The Company has not incurred cash losses during the current financial year (by considering the ‘Provision for Doubtful Advances and Debts’created, as non cash nature)as well as in the immediate preceding financial year.

11. In our opinion and according to the information and explanations given to us, the company has defaulted in the repayment of dues to Financial Institutions and Banks as per details given below:

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The provisions of clause 4 (xiii) of the Order are not applicable to the Company.

14. In our opinion, the Company is not dealing or trading in shares, securities, debtors and other investments. Therefore, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

15. According to the information and explanations given to us, the Company has not given any guarantee for any loan taken by others from any bank or financial institution.

16. According to the information and explanations given to us, the Company has not availed any term loan during the year.

17. According to the information and explanations given to us, based on an overall examination of the balance sheet of the Company, related information made available to us and as represented to us by the Management, funds raised on short term basis, prima facie, have not been used during the year for long term investment.

18. According to the information and explanations given to us ,the Company has during the year made preferential allotment of shares warrants to parties covered in register maintained under section 301 of the Compa-nies Act, 1956. The price of share warrants has been determined in accordance SEBI (Disclosure and Investor Protection) Guidelines 2000. Hence, it is not prejudicial to the interest of the Company.

19. The Company has not issued any debentures during the year and therefore the question of creating security or charge in respect thereof does not arise.

20. The Company has not made any public issue of any securities during the year and therefore the question of disclosing the end-use of money raised by any public issue does not arise.

21. Based on the audit procedures performed and on the basis of representa-tion obtained from the management, we report that no instance of fraud on or by the Company, have been noted or reported by the management, during the year.

Name of Statute /nature of dues Period

Appellate Tribunal $

Appellate Authority @ Grand total

Forum where dispute is pending

Income Tax Act, 1961 ( Income tax including penalty & interest wherever applicable)

Central Excise Act, 1944( Service tax including penalty & interest wherever applicable)

2006-07

16.06.05 to

30.09.06

38.34

257.03

-

257.03

38.34

S.no

01.

02.

03.

Nature of loan

Term Loan from Banks

Term Loan from Financial

Institutions

Short Term Loan From

Financial Institution

Amount – Rs. In lacs

720.00

1323.84

674.35

Period of default

Since January 1998

Since January 2001

Since June 1997





Membership No: 011072Place: ChennaiDate: 01.09.2009



This is the Balance Sheet referred to in our report of even date.


| Page 18 |

Balance Sheet as at 31st March 2009

Significant Accounting Policies and Notes on AccountsThe Schedules referred to above form an integral part of the Balance Sheet

SCHEDULE NO.

Rs.

As at 31stMar-2009

Rs.

As at 31stMar-2008

Rs.SHAREHOLDERS FUNDS

Share Capital

Equity Share Warrant

Reserves & Surplus

LOAN FUNDS

Loans : Secured

Loans : Unsecured

DEFERRED INCOMEAdvance Subscription towardsCustomer Facilities ( B18 of Schedule 13)

Total

APPLICATION OF FUNDS

FIXED ASSETS

Gross BlockLess: DepreciationNet BlockCapital work in progress (at cost)

Investments

Current Assets , Loans & Advances(a) Inventories(b) Sundry Debtors(c) Cash and Bank Balances(d) Loans and advances

Less : Current Liabilities and Provisions(a) Current Liabilities(b) Provisions

Net Current Assets

Miscellaneous Expenditure (to the extent notwritten off or adjusted)Profit & Loss Account

1

2

3

4

5

6

7

8

13

2,47,31,74,807 69,22,39,901

1,78,09,34,906 48,40,59,135

41,96,552 1,71,28,045 1,43,02,518

28,58,85,270 32,15,12,385

26,01,22,101 2,93,78,572

28,95,00,673

1,64,05,67,164

32,40,21,600

1,05,00,000

1,27,40,29,436

23,23,22,653

6,84,60,801

2,12,60,71,427

4,03,54,05,917

2,26,49,94,041

9,78,33,000

3,20,11,712

1,64,05,67,164

4,03,54,05,917

27,83,86,680

-

1,68,02,59,076

34,20,61,343

10,54,11,947

2,16,10,81,421

4,56,72,00,467

2,80,06,38,961 67,08,98,364

2,12,97,40,597 81,70,88,374

2,94,68,28,971

9,78,33,000

50,76,069 3,30,25,947 6,98,16,377

43,83,69,407 54,62,87,800

82,77,18,866 1,29,50,439

84,06,69,305

(29,43,81,505)

1,81,69,20,001

1,81,69,20,001

4,56,72,00,467

R. SUBRAMANIAN Chairman & Managing Director

S.SIDHARTH SHANKARJoint Managing Director

M.BALASUBRAMANIYANCompany Secretary

Place: Chennai

Date: 01.09.2009




R. MOHANSenior Vice President - Finance

Total




| Page 19 |

Profit and Loss Account for the year ended 31st March 2009

The schedules referred to above form an integral part of the Profit and Loss Account

SCHEDULE NO. For the Year ended 31st March 2009

Rs.

For the Year ended31st March 2008

Rs.

Sales

Other Income

DEDUCT

Consumption of Food & Beverages / Products

Administration and other expenses

Discount

Profit before Interest and Depreciation

Interest

Depreciation

Profit/(Loss) for the year before tax

Less

Fringe Benefit Tax

Profit/(Loss) for the year after tax

Add: Deficit brought forward from previous year

Add: Transfer from General Reserve

Balance carried to Balance Sheet

Basic Earning per Share

Diluted Earning per Share

(Face Value Rs.10/-)

Significant Accounting Policies and Notes on Accounts

9

10

11

12

5

13

31,01,77,021

15,89,49,503

46,91,26,524

3,78,65,298

57,29,66,008

17,79,678

61,26,10,984

(14,34,84,460)

2,84,11,210

4,47,79,173

(21,66,74,843)

15,12,319

(21,81,87,162)

(1,81,69,20,002)

39,45,40,000

(1,64,05,67,164)

(6.73)

(7.68)

36,84,64,083

9,68,16,362

46,52,80,445

3,06,28,308

36,15,25,729

30,64,756

39,52,18,793

7,00,61,652

2,72,08,646

4,79,91,111

(51,38,105)

38,65,708

(90,03,813)

(1,80,79,16,188)

-

(1,81,69,20,001)

(0.32)

(0.32)




Place: Chennai

Date: 01.09.2009

This is the Profit & Loss Account referred to in our report of even date.





| Page 20 |




Cash Flow Statement - Financial Year ended on 31.03.2009

Rs in Lakhs2009

Rs in Lakhs2008

Rs in Lakhs

Cash flow from operating activities

Loss/ Profit before Tax & Extra-ordinary items

Adjustments forDepreciation

Interest Employee compensation - ESOPProvision for Doubtful Advances and DebtsProvision no longer required written backInterest earned

Profit on sale / repossession of assetsLoss on sale / retirement of assets

Operating Profit/(Loss) before Working Capital changes

Adjustments for:Decrease/(Increase) in Advance Subscription towards Customer FacilitiesIncrease/(decrease) in Trade ReceivablesDecrease/(Increase) in Trade Payables Inventories

Net Cash from Operating activities

Cash flow from investing activities

Advance received for sale of propertySale/(Purchase) of Fixed Assets (Net)

Net Cash used in Investing activitites

Interest earned / Income from InvestmentsIssue of equity shares Interest paidRepayment of Loan

Net Cash used in Financing activitites

Net increase / (decrease) in Cash & Cash equivalents

Cash and cash equivalents as at 31st March 2008

Cash and cash equivalents as at 31st March 2009

Increase/Decrease in cash equivalents

447.79

284.11 538.00

2,100.34

(155.29)

(1,418.30) -

(350.10) (416.52)

(5,526.81) 8.80

-5,993.09

155.29 1,702.22 (284.11)

(1,466.90)

(2,166.75)

1,796.65

(370.10)

(6,284.63)

(6,654.73)

5,993.09

106.51

(555.13)

698.16

143.03

(555.13)

(51.38)

479.91

272.09 134.50

- (877.20)

(35.66)

--

(26.36)

(77.74)

(153.34) 630.72 190.37

8.98 676.73

598.99

4,911.00 (104.09)

4,806.91

35.66 -

- (5,612.72)

(5,577.06)

(171.16)

869.32

698.16

(171.16)

(A)

(B)

(C)

(A+B+C)




This is the Cash Flow Statement referred to in our report of even date.





Notes:1. Above statement has been prepared in indirect method 2. Cash and Cash equivalents consists of cash on hand and balance with banks3. Trade and other receivables include other current assets and loans and advances4. Additions to fixed assets and Capital work-in-progress in between beginning at the end of the year are treated as part of Investing activities.5. Previous year figures have not been regrouped

Place: ChennaiDate: 01.09.2009

branavan

Typewritten Text

*


| Page 23|

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| Page 24 |

Schedule 6 - Investments at Cost - Long Term(Vide note 13 (a), (b) of schedule 13)

Schedule 7 - Current Assets, Loans & Advances

Rs.

As At 31st Mar-2009

Rs.

As At 31st Mar-2008

Rs. INVESTMENTS IN FULLY PAID SHARES Unquoted - Trade4,56,500 (4,56,500)equity shares of Rs.10/- each in Manchanda Resorts Pvt Ltd Investment in Associate Company - Trade75 (75) equity shares of Bahrain Dinars 50 each in Sterling Middle East WLL - a foreign companyOthers - Trade:

1,00,000 (1,00,000) equity shares of Rs.10/- each in Sterling Holiday Finvest Ltd1,00,000 ( 100000)equity shares of Rs.10/- each in Sterling Securites and Futures Ltd520000 (520000) equity shares of Rs.10/- each in Sterling Resorts Home Finance LtdQuoted - Trade:

700000 (700000) equity shares of Rs.10/- each in Sterling Holiday Financial Services Ltd Quoted - Non - Trade:1100 (1100) equity shares of Rs.10/- each in Tourism Finance Corporation of India LtdUnquoted - Non-Trade28765 No. of Teak units of Sterling Tree Magnum (India) Ltd.

Less: Provision for dimimution in value

Aggregate cost of quoted Investments, net of provision Aggregate market value of quoted investments

45,65,000

3,13,523

10,00,000 10,00,000 52,00,000

95,00,000

33,000

9,78,00,000 11,94,11,523 2,15,78,523 9,78,33,000

33,000 14,905

45,65,000

3,13,523

10,00,000 10,00,000 52,00,000

95,00,000

33,000

9,78,00,000 11,94,11,523

2,15,78,523 9,78,33,000

33,000 26,290

INVENTORIES (as certified by management)Food & Beverages / Consumables

SUNDRY DEBTORS - unsecured (vide note B19 of Sch.13)(a) Debts outstanding for a period exceeding six months Considered Good Considered Doubtful(b) Other Debts - considered good

Less: ProvisionConsidered Good

CASH AND BANK BALANCESCash balances

Balances with Scheduled BanksOn current accountsOn deposit accounts

'* - Includes Margin Deposited with Banks Rs. 15,76,359/- (Rs.15,76,359/-)

LOANS AND ADVANCES - UNSECURED (considered good unless otherwise stated vide note B14,B15, B19 of Sch.13)Advances recoverable in cash or in kindor for value to be received Secured -considered GoodUnSecured -considered Goodconsidered Doubtful

Less: Provision

Advance Income Tax and TDS Receivable

Deposits -with Govt. Dept. and others

Total

1,29,31,518 18,47,63,700

41,96,527 20,18,91,745

18,47,63,700

99,13,903 41,39,273

11,91,17,941 13,81,38,256 34,15,36,119 59,87,92,316

34,15,36,119

41,96,552 41,96,552

1,71,28,045

2,49,342

1,40,53,176

3,14,30,563

25,72,56,197

1,45,36,237

1,40,92,836

28,58,85,270

50,76,069 50,76,069

2,00,78,664 18,47,63,700

1,29,47,283 21,77,89,647

18,47,63,700 3,30,25,947

7,30,267

1,58,45,308 5,32,40,802 6,90,86,110

6,98,16,377

16,92,44,679 24,61,03,252 13,70,02,409 55,23,50,340

13,70,02,409 41,53,47,931

77,03,147

1,53,18,329

43,83,69,407


| Page 25 |

Schedule 8 - Current Liabilites and Provisions

Schedule 9 - Sales Less Returns

As At 31st Mar-2009

Rs.

As At 31st Mar-2008

Rs. Rs.

CURRENT LIABILITIES

Acceptances

Sundry Creditors - Total outstanding of micro enterprises and small enterprises

Sundry Creditors - others

Other liabilities

Balances with Scheduled Banks

On current accounts -Cheques over issued

Advance received against Sale of Property

PROVISIONS

For Gratuity

For Leave Encashment

For Fringe Benefit Tax

For Contigencies

Total

41,92,500

-

8,31,17,322

15,84,54,902

21,97,277

1,21,60,100

26,01,22,101

1,01,39,762

36,04,481

1,01,34,329

55,00,000

2,93,78,572

41,92,500

-

10,33,56,707

22,90,69,659

49,11,00,000

82,77,18,866

21,60,285

21,62,711

86,27,443

-

1,29,50,439

Time Shares and Others

Less :Sales Return Resort Operations (Note B28 of Sch.13)

Total

7,58,01,066

23,43,75,955

31,01,77,021

8,25,63,427

67,62,361

11,54,73,827

25,29,90,256

36,84,64,083

Schedule10 - Other IncomeInterest on Deposits (Tax Deducted at Source Rs. 4,50,299/- (Prev. Year Rs.7,84,889/-))

Profit on sale of assets (Net)

Credit balances written back on account of OTS

Provision no longer required written back

Miscellaneous Income

Total

1,55,29,410

14,18,30,027

-

-

15,90,066

15,89,49,503

35,66,019

-

7,63,00,740

1,14,18,700

55,30,903

9,68,16,362

Schedule 11 - Consumption of Food and Beverages/StoresOpening stock of materials

Add : Purchases during the Year Food & Beverages

Less: Closing Stock

Total

50,76,069

3,69,85,781 4,20,61,850

41,96,552

3,78,65,298

59,74,187

2,97,30,190 3,57,04,377

50,76,069

3,06,28,308


| Page 26 |

Schedule 12 - Administration and Other Expenses

SCHEDULE - 13

For the Year ended 31st March 2008

Rs.

For the Year ended 31st March 2009

Rs.

Salaries, Wages & Bonus Contribution to Provident Fund / ESI/ GratuityAmortisation of deferred stock compensation cost RentRates & TaxesRepairs & MaintenanceStaff WelfareRecruitment & TrainingInsuranceDirector's Sitting FeesAudit Fees ( Note B28c)Postage & TelegramTelephone & TelexPrinting & stationeryTravelling & ConveyanceProfessional ChargesResort Operational ExpensesAdvertisementSales Commission, Brokerage & IncentiveProvision for Doubtful AdvancesManagement ChargesLease Rentals & Finance ChargesSales PromotionFreight ChargesMiscellaneous Expenses

Total

11,73,47,408 62,84,167

5,38,00,000 1,60,08,205

50,68,074 1,19,88,573

15,24,187 8,09,223 6,08,081 2,66,545

11,36,333 22,32,333 50,96,778 16,51,935 75,90,739

1,47,70,612 7,13,64,693

2,45,761 36,49,377

21,00,33,710 1,61,62,371

47,48,261 25,19,353

72,408 1,79,86,881

57,29,66,008

11,81,99,526 38,66,338

1,34,50,000 1,99,92,836

36,59,851 5,15,30,091

42,30,738 29,16,446

4,94,563 2,55,000

11,27,793 33,39,110 76,10,390 30,42,574

1,64,17,274 1,25,14,211 4,93,33,877

25,32,788 43,92,160

- 1,36,80,169 1,10,22,168

30,30,383 6,96,628

1,95,24,815

36,15,25,729

SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2009.

A. SIGNIFICANT ACCOUNTING POLICIES

1. SYSTEM OF ACCOUNTING A.The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis.

The financial statements have been prepared in all material respects in compliance to with accounting standards as notified in the Companies (Accounting Standards) Rules, 2006 and relevant provisions of the Companies Act, 1956.

B. Financial statements are prepared on historical cost basis and as a going concern.

2. USE OF ESTIMATES.

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial-statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialize.

3. FIXED ASSETS AND DEPRECIATION : A)Fixed Assets Fixed Assets are stated at their original cost (including expenses related to acquisition and installation) less depreciation. Certain lands, owned by the Company

have been re-valued. The surplus on revaluation amounting to Rs. 2081.96 lacs determined by an external valuer based on the then prevailing market value,in the years 1989, 1992 and 1999, stands credited to Revaluation Reserve.

B) Depreciation and Amortization

Depreciation is charged in the Accounts on straight line method as under:

a)On fixed assets of the company at rates specified in Schedule XIV to the Companies Act, 1956 on the original cost.

b)On fixed assets added/disposed of during the year, on pro- rata basis with reference to the month of addition/disposal;

c) Cost of leasehold land is amortized over the period of lease.

4. BORROWING COSTS

Borrowing costs attributable to acquisition, construction or production of a qualifying asset are capitalized as part of the cost of that asset, where it is possible-that they will result in future economic benefit. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.


| Page 27 |

5. REVENUE RECOGNITION

Revenue is recognized to the extent that it can be reliably measured and is probable that the economic benefit will follow to the company.

a. In respect of Sterling Silver Streak Holiday Plan, Sterling Happy Vistas Holiday Units and Sterling Holiday Flexi Club Units & TRUMPS the cost portion of the time share consideration (net of discount) namely 45% specified in the agreement is treated as income in the year of sale.

b. Advance subscription towards customer facilities, being the balance 55%, in respect of Holiday products is accounted as income, in equal proportion, from the year in which the Holiday entitlement is allotted over the period for which the customers are entitled for holidays.

c. Income from resorts comprising of room rent, food and beverages sales, other services, etc., are recognized when the items are sold and services are

rendered. Income in respect of amenity charges are accrued during the year but reversed at the end of the year, if not recovered, in view of uncertainty in collection.

d. Dividend is accounted for when the right to receive the same is established. Interest is accounted on the time proportionate basis.

6. INVESTMENTS

Long term investments are stated at cost. Provision for diminution in value is considered if in the opinion of the management such a decline is considered, other than temporary.

7. INVENTORIES

Inventories comprising of provisions, perishables, beverages and consumables are valued at lower of cost or net realizable value. Cost is computed on First in First out basis.

8. FOREIGN CURRENCY TRANSACTIONS

Transactions in Foreign Currency are recorded at the exchange rates prevailing on the date of Transactions. Monetary items denominated in foreign currencies (such as cash receivables, payables, etc.) outstanding at the year end, are translated at exchange rate applicable as of that date. Non-monetary items denomi nated in foreign currency (such as investments, fixed assets, etc) are valued at the exchange rate prevailing on the date of transaction. Any gains or losses arising due to exchange differences at the time of translation or settlement are accounted in the Profit & Loss Account.

9. EMPLOYEE BENEFITS

a) Short term employee’s benefits are charged at the undiscounted amount to profit and loss account in the year in which the related service is rendered.

b) Contributions to defined contribution schemes towards retirement benefits in the form of Provident Fund and Pension Scheme are remitted to Government Provide Fund, are charged to profit and loss account, as incurred.

c) In respect of the existing employees in Corporate Pay roll, the company has established an Employees’ Group Gratuity Fund and Leave Encashment Scheme with the Life Insurance Corporation of India and the premium levied is charged to revenue. In respect of previous year, for Corporate Pay roll employees and in respect of employees in the Resorts division the liabilities in respect of defined benefit plans are determined based on the actuarial valuation made by an independent actuary using projected unit credit method as at the balance sheet date. The actuarial gains or losses are recognized immediately in the profit and loss account.

d) Contributions to Employee Pension Scheme 1995 are accounted on accrual basis with corresponding remittance made to Government Provident Fund authority.

10. PROVISIONS & CONTINGENCIES

a) A provision arising out of a present obligation is recognized when it is probable that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated

b) Wherever there is a possible obligation that may, but probably will not require an outflow of resources, the same is disclosed by way of contingent liability.

c) Show Cause Notices are not considered as Contingent Liabilities unless converted into demand.

11. TAXES ON INCOME

Current tax is determined in accordance with Income Tax Act 1961 on the amount of tax payable in respect of the income for the year. Deferred tax assets / liabilities are measured by applying tax rate and tax laws that have been enacted or substantially enacted by the Balance Sheet date. Deferred tax asset arising on account of loss and unabsorbed depreciation under tax laws is recognized only to the extent there is virtual certainty of its realization supported by convinc-ing evidence. Deferred tax assets on account of other timing differences are recognized only to the extent there is reasonable certainty of its realization. At each Balance Sheet date, the carrying amount of Deferred Tax Asset is reviewed based on developments to reassess realization.

12. IMPAIRMENT OF ASSET The carrying amounts of assets are reviewed at each balance sheet date for indication of any impairment based on internal / external factors. An impairment

loss is recognized wherever the carrying amount of the assets exceeds its recoverable amount. Any such impairment loss is recognized by charging it to the profit and loss account. A previously recognized impairment loss is reversed where it no longer required and the asset is restated to that effect

13. SEGMENT REPORTING:

Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment Revenue and expenses which relate to the enterprise as a whole and are not allocable to segments on a reasonable basis have been included under “Unallocated Corporate Expenses:

There are no inter segment revenues and therefore their basis of measurement does not arise

14. EMPLOYEE STOCK OPTION SCHEME (ESOS)

The Company measures the compensation cost relating to ESOS using the fair market value of equity shares. The compensation cost is amortized on a straight line basis over the total vesting period of the stock options.

15. LEASE ACCOUNTING

The lease payments made on the assets comprising of land and building taken on operating lease, are recognized as an expense on a straight line basis over the lease term.


| Page 28 |

B. NOTES ON ACCOUNTS

1. Estimated amount of Contracts remaining to be executed on Capital Account and not provided for is Nil (previous year Rs. 6.66 Lacs)

2. Claims against the company not acknowledged as debts for:

Interest and charges, claims of Financial Institutions, Banks and creditors as quantified in point 8 (b).

3. Contingent liabilities not provided for :

a) Rs.492.26 lacs (previous year Rs.255 lacs), in respect of cases relating to Consumer forum, civil cases, Cheques dishonored and other criminal cases, Property related, employee related disputes, which are pending in various Courts and Forums, wherein proceedings are at various stages and not concluded.

b) Rs.312 lacs, (previous year Rs.312 lacs), in respect of a suit field by NOIDA creditors, in which company was included as one of the defendants. 4. In the case of Service Tax and Education Cess thereon, the Service Tax `Department has demanded taxes aggregating to Rs. 257.03 lacs and interest thereon and penalty

of Rs 300 lacs and further additional penalty for non registration, etc, demanded by Department. The company has appealed against the order before CESTAT and pre-deposited Rs. 30 lacs. No provision is considered necessary as the Company is confident and as advised by the legal counsel that the stand taken by the Company will be upheld and further the matter is at appeal stage.

5. The Company has gone on appeal in the income tax case for the assessment years 1996-97 to 2000-01 in High Court of Madras against the ITAT ruling relating to disallo ing the treatment of deferring the revenue. There is no tax liability in respect to these years on account of business loss. For the assessment year 2006-07, the Company has appealed to CIT (Appeals) towards the demand of Rs. 38.34 lacs on the similar grounds.

6. Gujarat Industrial Investment Corporation. (GIIC) has filed a civil suit for recovery of Rs. 775 lacs including interest in the High Court of Gujarat. The Company has pre-deposited the suit amount in the High Court of Gujarat. Pending adjudication of the suit, any additional liability or reduction towards the interest and charges will be accounted in the year of settlement.

7. In the opinion of the management and to the best of their knowledge and belief the value on realization of current assets and loans and advances would not be less than the amount they are stated in the balance sheet.

8. a) The company has received notice under the Securitization and Reconstruction of financial asset and enforcement of security interest act (SARFAESI) from two institutions for the default in repayment of principal of Rs.385 Lacs plus interest/penal interest. The company is in the process of negotiating with the institutions for one time settlement. The incremental liability to pay additional sum or amount receivable pursuant to the OTS negotiation will be accounted in the year of such settlement.

b) Interest / Penal Interest claims by certain companies, banks and financial institutions are given below :

Particulars

Interest on :ICDOthersTOTAL

Penal Interest :Financial InstitutionsOthersTOTAL

31.03.09

502.0061.73563.73

438.89137.66576.55

31.03.08

502.00209.20711.20

438.89344.68783.57

No provision is considered necessary in respect of above interest / penal interest as the company has obtained or in the process of taking waiver of such interest / penal interest and expects favorable outcome in all the above cases, as occurred in the past or provision already created.

9. Free hold land at Cochin-Vypeen, for which the company had entered into an agreement for sale in the year 2001 and the buyer has the possession of the same. Due to non compliance of certain terms of the agreement, the company has filed a suit for repossession of the property which has been dismissed against the company. The company has gone on appeal against the same to High Court of Kerala.

10. Registration of Lease hold lands and buildings situated at Peermedu (Rs.1684 lacs), Shirdi (Rs. 80 lacs) and Kulumanali (Rs.1656 lacs) taken on lease are pending and legal action being taken to get it registered.

11. Five cottages located at Ooty and shown under ‘Buildings’ are given on lease for a period of 99 years.

12. The capital work in progress (CWIP) represents the value of buildings under construction for more than 10 years. In the opinion of the company (supported by a valuation report taken earlier), the estimated market value together with the land on which it is constructed exceeds the book value and hence the CWIP is not impaired.

13. a) The Company has invested Rs. 978 lacs in teak units of Sterling Tree Magnum Co. Ltd. (STM) acquired from the unit holders. It has paid Rs. 93.77 lacs towards further investment and is pending for transfer of teak units by STM. A scheme of settlement in this regard has been recommended by the committee appointed and forwarded for the approval of the High Court of Madras. Pending approval of the scheme and considering the long term association with STM, in the opinion of the Company there is no permanent diminution in the value of investment and hence no provision is considered thereon.

b) Fall in value of quoted investments are considered to be in temporary nature and no provision is made.

14. The company has transferred land and buildings at Goa and Himachal Pradesh as per the arbitration award in respect of disputes with builder and buyers. As per the terms of the Arbitration the buyer has agreed to hand over possession of certain building valued at Rs. 130.00 lacs (previous year Rs. nil) and shown as receivable which in the opinion of the Company is good and recoverable.

15. Against the dues of Rs. 1191.18 lacs (previous year Rs. 1692.44 lacs) from Sterling Holiday Resorts International Limited, the company holds the documents relating to the property for equal value. In the opinion of the company, the due is good and recoverable.

S.No

1.

2.

Particulars

Balance outstanding as on 31.03.2009-Advances - Payable- Investments- Long term lease of propertyTransactions during the year: - Professional and Consultancy - Advances Given- Advances Recovered-Rooms Revenue- Investment -Long Term Lease of Property

5.560.01 Nil Nil

Nil1.681.21

0NilNil

6.280.019.78

16.56

Nil0.91

26.420.05 NilNil

Enterprise owned by/over which KMP is able toexercise significant influence

2008 - 2009 2007 - 2008

(Rs. In crores)

There were no transactions with key management personnel during the year.


| Page 29 |

16. Securities offered as Hypothecation/mortgage for borrowings referred to in schedule 3 are as follows.

a) Term Loans from Banks and Financial Institutions are secured by: -

i) A first charge on the whole of the movable and immovable properties of the Company situated at Munnar and Cochin-Vypeen.

ii) Deposit of title deeds of the immovable assets (Non-Time share portion) both present and future at Fernhill – Ooty.

iii) Guarantee of the Managing Director and a former Director of the Company.

b)Hire Purchase Loans are secured by:

Hypothecation of various assets taken on hire purchase, and Guarantees given by the Managing Director / former Director.

c) Inter Corporate Deposits are secured by way of deposit of title deeds of certain properties of the company and of another company to whom the Company has given advances.

17. Zero percent term loan (ZTL) borrowed from ICICI Bank Ltd and carved out of existing term loan carries an option of conversion into equity share by company/promoters/Bank, of the whole or part the loan, within a maximum period of 18 months from the date of sanction of ZTL namely 31.12.2007. In the event of conversion option not exercised, the term loan will have to be repaid on 30.09.2015 by way of a bullet payment.

18. Advance Subscription towards Customer Facilities (ASCF) referred to under Accounting policies represent income to be taken credit for in the profit & Loss Account of future years, spread over the holiday entitlement period and the same is shown under the head “Deferred Income” in the Balance Sheet under “Sources of Funds”. The Company has made an application dated 28.06.2002, under section 211 (4) of the Companies Act, 1956, to the Department of Company Affairs, New Delhi, seeking their opinion for the presentation of the same.

19. Balances from the Debtors, Creditors and appearing under Loans and advances are subject to confirmation.

In respect of the suit filed accounts of Financial Institution, confirmation of balance has not been received.

20. The Company has not recognized the net deferred tax asset comprising of tax loss and the timing difference of depreciation, since in the opinion of management it cannot be said with virtual certainty that sufficient future taxable income will be available against which such net deferred tax assets can be realized.

21. RELATED PARTY INFORMATION. Disclosure of related party transactions in accordance with Account Standard (AS - 18) “Related Party Disclosure” issued by the Institute of Chartered

Accountants of India.

(a) The list of Related Parties as identified by the Management is as under:

Key Management Personnel1) Mr.R.Subramanian2) Mr. S.Sidarth Shankar3) Mr.K.Chandrasekaran4) Mr.M.N.Rangamani

b) The following transactions were carried out with the related parties:

1) Sterling Tree Magnum India Limited

2) Sterling Hotels (Madurai) Private limited

3) Sterling Holiday (Ooty) Limited

4) Sterling Holiday Resorts (Kodaikanal) Limited

5) Brindavan Farms Private Limited

6) Sterling Resort Home Finance Limited

7) Madurai Meenakshi Farms Private Limited

8) Manchanda Resorts Private Limited

9) MYTV Network India Private Limited

10) Srivari Aromatics Private Limited

11) Omega Feeds and Nutrients Private Limited

12) STM Investments Private Limited

13) Maxworth Orchards (India) Limited14) Maxworth Investments Private Limited15) Sterling Holiday Financial Services Limited16) Sterling Securities and Futures Limited 17) Sterling Holiday Finvest Limited 18) CGK Finvest (Madras) Private Limited19) Premier Farms Private Limited 20) Emmennar Information Technology Pvt Ltd 21) Kamadhenu Business Fortune Limited 22) Sai Castings Private Limited23) Concorde Digital Technologies Pvt.Ltd24) Sterling Holiday Travels (India) Ltd25) STM Management Services Limited

Enterprise owned by/ over which Key Managerial Personnel is able to exercise significant influence


| Page 30 |

22. SEGMENT REPORTING

Notes on Segment Reporting

a. Business Segments

The Company has considered business segment as the primary segment for disclosure.

The business segments are: Time Share Sales & Resorts and Hotel Sales.

The above segments have been identified taking into account the organization structure as well as the differing risks and returns of the segments

b. Segment Assets include all operating assets used by the respective segment and consist principally of operating cash, debtors, inventories and fixed assets net of allowances and provisions. Segment Liabilities include all operating liabilities and consist primarily of creditors and accrued liabilities. Segment Assets and Liabilities do not include Income Tax Assets and Liabilities

23. The lists of undertaking covered under the “Micro, Small and Medium Enterprises Development Act (MSMDA), 2006” were determined by the company on the basis of information available with the company. As explained by the company, there were no principal and /or interest due remaining unpaid as at 31st March 2009 in respect of undertakings covered by the MSMDA.

24. Disclosure pursuant to Accounting Standard – 15 (Revised) “Employee Benefits”

a. Effective 1st April’07, the company has adopted accounting standard 15 (revised 2005) “Employee Benefits” issued by ICAI. The Company has classified the various benefits provided to employees as under:

b. Defined Contribution Plans:

The Company has recognized the following amounts in the Profit & Loss Account which are included under contribution to Provident Fund and Other Funds:

Particulars (Rs.in Crores) Time Share Resorts & Hotels Total 31.03.09 31.03.08 31.03.09 31.03.08 31.03.09 31.03.08 1.Revenue External Sales 7.58 11.55 23.44 25. 30 31.02 36.85 2.Result Segment Results (Gross Profit / (Loss))

Before tax and interest) (38.13)

(12.08)

3.40

4.61

(34.73)

(7.47)

Unallocated (Expenses)/Income

-

14.34

9.32

Interest Expenses - - (2.84)

(2.72)

Interest/ Dividend income

- - 1.55 0.36

Fringe Benefit Tax

-

- (0.15)

(0.39)

Net Profit/(Loss)

-

-

(21.83)

(0.90)

3. Other Information:

Segment Assets

193.99

236.35

64.66

78.78

258.65

315.13 Unallocated 34.18 Corporate Assets 9.78 9.78

Total Assets

193.99 236.35 64.66

78.78

268.43

359.09

Segment Liabilities

43.37 59.14

14.45

19.71

57.82

78.85

Unallocated 0 .86 Corporate Liabilities

1.21 49.11

Total Liabilities 43.37 59.14 14.45 19.71 59.03 128.82

Capital Expenditure

Depreciation 3.36 3.60 1.12 1.20 4.48 4.80

Rs. In Lacs

Provident Fund 5.28

Employees Pension Scheme, 1995 11.99


| Page 31 |

c. Defined Benefit Plans, in respect of time share employees in service

* - as per LIC (1994-96) (ultimate) Mortality Table

25. Earnings per share (EPS) as per Accounting Standard – 20

26. Share capital includes 12,00,000 Equity Shares of Rs.10 each allotted to Employees / Directors under Employees Stock Option Scheme 2005 on 31.03.2007.

In 2007 – 2008, the Company instituted Employee Stock Option Plan 2007 (ESOS – 2007). The Board of Directors and the Shareholders approved the scheme in April 2007 and November 2007 respectively. The plan provides for issue of 25,00,000 options convertible into one Equity Share of Rs.10 each at part to the Employees / Directors. The Compensation Committee administers the Employees Stock Option Scheme 2007. During the year 2007 - 2008, the Company has recognized a sum of Rs.6,72,50,000 as Deferred Employee Compensation Expense, being the difference between Fair Value of Options and the Exercise Price, of which a sum of Rs.1,34,50,000 has already been recognized as expense, being 1/5th of the Deferred Employee Compensation, as per SEBI Guidelines. Since the entire 25,00,000 options were vested on 15.07.2008, the balance in Deferred Employee Compensation Expense amounting to Rs.5,38,00,000 has been recognized as expenses during the year as per SEBI Guidelines, pending allotment of options.

1 Change in Benefit Obligation Liability at the beginning of the year 1st April’08 Interest cost Current Service Cost Benefit Paid Actuarial (gain) / Loss on obligation Liability at the end of the year Changes in the Fair Value of Plan Assetsa) Present Value of Plan Assets as at 1st April, 2008b) Expected Return on Plan Assetsc) Actuarial (Gain)/Lossd) Employers’ Contributionse) Benefits Paidf) Present Value of Planned Assets as at 31st March, 2009 Amount Recognized in the Balance Sheet including a reconciliation of the Present Value of Defined Benefit Obligation and the Fair Value of Assetsa) Present Value of Defined Benefit Obligation as at 31st March, 2009b) Fair Value of Plan Assets as at 31st March, 2009c) Net Liability recognized in the Balance Sheet (as at 31st March,2009) Expenses Recognized in the Profit and Loss Accounta) Service Costb) Interest Costc) Expected Return on Plan Assetsd) Curtailment Cost/(Credit)e) Settlement Cost/(Credit)f) Net Actuarial (Gain)/Lossg) Total Expenses recognized in the Profit and Loss A/c Actual Return on Plan Assets Estimated Contribution to be made in the next annual year The Composition of Plan Assets : i.e. Percentage of each Category of Plan Assets to Total Fair Value of Plan Assets as at 31st March,2008a) Govt of India Securitiesb) Corporate Bondsc) Special Deposit Schemed) Equity Shares of Listed Companiese) Propertyf) Insurance Managed Fundsg) Others Total Actuarial Assumptions Retirement age Discount rate Mortality Withdrawal rate Salary escalation

Net Loss for the year (Rs in Lacs)

No. of Equity shares of Rs.10 each as the year end – Basic

Diluted

EPS – Basic (Rs.)

EPS – Diluted (Rs.)

(2181.82)

3,24,02,160

3,24,02,160

(6.73)

(7.68)

(90.03)

2,78,38,593

2,78,38,593

(0.32)

(0.32)

62.904.977.33(4.24)(13.12)57.79

10.650.96-1.55-13.16

57.79

13.16

44.63

7.334.92(0.96)----

0.96-----100-100

588.00%*2.00%5.00%

8.570.6419.89(1.14)(0.07)27.89

------

27.89-

-

--------

588.00%*2.00%5.00%

Gratuity FundedRs. lacs

Leave Wages FundedRs. Lacs

2008-09 2007-08


| Page 32 |

The Board of Directors of the Company at their meeting held on February 12, 2008 and as already approved by the shareholders of the Company on January 28, 2009 has allotted 30,00,000, convertible into 30,00,000 Equity Shares of face value Rs.10 each to the promoters of the Company on a preferential allotment basis, pursuant to Section 81 (1A) of the Companies Act, 1956, at a conversion price of Rs.35 per Equity Share of the Company, arrived at in accordance with SEBI (Disclosure & Investor Protection) Guidelines, 2000 and 10% application money amounting to Rs.1,05,00,000 was received from them.

During the year 2008 – 2009, the Company has allotted 45,63,492 numbers of Equity Shares of Rs.10 each on preferential basis in pursuant to Section 81 (1A) of the Companies Act, 1956 at a price of Rs.35 Equity Share as per SEBI (Disclosure and Investor Protection) Guidelines, 2000.

27. Due from companies in which Directors of the company are directors are interested – Rs.Nil (previous Year Rs. Nil)

28. Additional information required under Schedule VI of the Companies Act, 1956, to the extent applicable:

Options granted during the year

Options Vested

Options Exercised

Options Forfeited

Options Outstanding at the end of the year

Nil

25,00,000

Nil

Nil

Nil

25,00,000

Nil

Nil

Nil

25,00,000

Year ended 31.03.2009

Year ended31.03.2008Number of Options Granted, Exercised and Forfeit

Room Revenue

Food & Beverage

Annual Amenity Charges

Minor Operating Department

Total

10.16

5.42

5.38

2.47

23.43

9.89

6.47

6.04

2.90

25.30


Year ended31.03.2008Number of Options Granted, Exercised and Forfeit

a) Resort Operations Income comprises of

d) Value of Imports calculated on CIF basis – Rs.Nil (Previous Year Rs. Nil) e) Expenditure in foreign currency – Rs.NIL (Previous Year Rs. Nil)

f) Earnings in foreign currency – Rs.NIL (Previous Year Rs. Nil)

29. The figures are rounded off to the nearest rupee. Previous year figures, are regrouped wherever necessary, to match with current year’s grouping

Interest on Term Loan

Others

Total

2.35

0.61

2,96

1.72

1.00

2.72


Year ended31.03.2008

b) Interest

Statutory Audit

Tax Audit

Certification

Expenses

Total

11,36,333

-

16,853

-

11,53,186

8,98,880

97,920

1,30,993

-

11,27,793


Year ended31.03.2008Particulars

c) Remuneration to Auditors






Place: Chennai

Date: 01.09.2009

This is the Profit&Loss Account referred to in our report of even date.






| Page 33 |

Balance Sheet Abstract and Company's General Business ProfileStatement pursuant to Part IV of Schedule VI to the Companies Act,1956

REGISTRATION DETAILS

Registration No.

State Code

Balance Sheet Date

CAPITAL RAISED DURING THE YEAR (AMOUNT RS IN LAKHS)

Public Issue

Rights Issue

Bonus Issue

Private Placement

POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS(AMOUNT IN RS in LAKHS)

Total Liabilities

Total Assets

SOURCE OF FUNDS

Paid-up Share Capital

Equity Share Warrant

Reserve & Surplus

Secured Loans

Unsecured Loans

Deferred Income

APPLICATION OF FUNDS

Net Fixed Assets

Investments

Net Current Assets

Profit and Loss Account

PERFORMANCE OF THE COMPANY (AMOUNT RS IN LAKHS)

Turnover/ Other Income

Total Expenditure

Profit before Tax

Profit After Tax

Earning per Share (in Rs)

Dividend Rate (%)

18-13044

18

31-03-2009

NIL

NIL

NIL

1,702.22

40,354.06

40,354.06

3,240.22

105.00

12,740.29

2,323.23

684.61

21,260.71

22,649.99

978.33

320.12

16,405.62

4,691.27

6,858.01

(2,166.75)

(2,181.87)

(6.73)

-




Place: Chennai

Date: 01.09.2009



ATTENDANCE SLIP

PROXY FORM

Regd. Office : No.163, T.T.K. Road, Alwarpet, Chennai – 600 018.

STERLING HOLIDAY RESORTS (INDIA) LIMITEDRegd. Office : No.163, T.T.K. Road, Alwarpet, Chennai – 600 018.

__________________________MEMBER'S FOLIO NUMBER

SIGNATURE OF SHAREHOLDER / PROXY*

SIGNATURE BY THE SAID ____________________________________

# Applicable for investors holding shares in electronic form*Strike out whichever is not applicable

__________________________No. of Shares held

____________________________________________________Name of the attending Member (In Block Letters)

__________________________D P ID#

_______________________________________________________________________Name of Proxy (In Block Letters)

To be filled in if the Proxy attends instead of the Member)__________________________

CLIENT ID#

TO BE HANDED OVER AT THE ENTRANCE OF THE MEETING HALL

FOLIO NO.

DP ID #

CLIENT ID #

No. of Shares:

I hereby record my presence at the 22nd Annual General Meeting at Rani Seethai Hall, No.603, Anna Salai, Chennai – 600 006 on Tuesday, the 29th September, 2009 at 02.30 p.m

Note: For the convenience of the Member / Proxies attending the AGM and to facilitate quicker registration of attendance, Member / Proxy holders are requested to bring Attendance Slips duly filling Folio Number / DP ID and Client ID and affixing signature in it to the AGM. For immediate reference Folio Number / DP ID and Client ID is given address slip of the envelope.

Note: The Proxy Form must be deposited at the Registration Office of the Company not less than 48 hours before the time for holding the meeting.

I / We _________________________________________________________________ of __________________________________

being a Member / Members of STERLING HOLIDAY RESORTS (INDIA) LIMITED do hereby appoint __________________________

_______________________________________ of ______________________________________________________ or failing him

______________________________________________ of ________________________________________________ as my / our

proxy to attend and vote for me / us on my / our behalf at the 22nd Annual General Meeting at Rani Seethai Hall, No.603, Anna

Salai, Chennai – 600 006 at 02.30 p.m. on Tuesday, the 29th September, 2009 and at any adjournment thereof.

Date:

...................................................................................................................................................................................................................................................................

AFFIX1 RUPEEREVENUE

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