Inspiration Hlt Regulatory News (IHC)

23 Sep 2008 07:00

India Hospitality Corp. Reports Financial Results as of March 31, 2008

Consolidated Financial Statements prepared in accordance with International

Financial Reporting Standards India Hospitality Corp. and its subsidiaries March 31, 2008 LONDON, Sept. 23 -- Contents Page Independent Auditors' report 1 Consolidated Balance Sheet 1 Consolidated Statement of Income 3 Consolidated Statement of Changes in Shareholders' Equity 4 Consolidated Statement of Cash Flows 6 Notes to Consolidated Financial Statements 8 Independent Auditors' report To The Board of Directors of India Hospitality Corp.

We have audited the accompanying consolidated financial statements of India Hospitality Corp. (the Company) and its subsidiaries (together referred to as 'the Group'), which comprise of consolidated balance sheet as at March 31, 2008, and also the consolidated statement of income, the consolidated statement of changes in shareholders' equity and the consolidated statement of cash flows for the Period then ended, and a summary of significant accounting policies and other explanatory notes.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group as at March 31, 2008, and of its financial performance and the changes in the shareholder's equity and its cash flows for the period then ended in accordance with International Financial Reporting Standards.

Grant Thornton Mumbai Date: Consolidated Balance Sheet (All amounts in USD, unless otherwise stated) ASSETS Notes March 31, 2008 December 31, 2006 Non Current Goodwill 30,922,539 - Property, plant and equipment B 85,528,629 - Capital work in progress C 6,343,325 - Intangible assets D 55,987,070 - Deferred tax assets S 844,558 - Other financial assets E 5,212,618 - Prepayments and accrued income F 5,863,523 - Restricted cash G 1,043,516 - Investments H 2,617 - Total non current assets 191,748,395 - Current Inventories I 519,447 - Trade receivables, net J 8,133,181 - Other financial assets K 2,897,539 557,745 Prepayments and accrued income L 59,943 - Restricted cash M 8,772 - Cash and cash equivalents N 18,102,932 99,592,211 Total current assets 29,721,814 100,149,956 Total assets 221,470,208 100,149,956 LIABILITIES AND STOCKHOLDERS' EQUITY Stockholders' equity Issued capital 27,583 21,334 Additional paid in capital 147,369,662 98,523,828 Translation reserve 79,646 - Accumulated earnings (1,299,706) 1,266,390 Total stockholders' equity 146,177,185 99,811,552 Notes March 31, 2008 December 31, 2006 Non current liabilities Interest bearing loans and borrowings, net of current portion O 30,318,607 - Employee benefit obligations Q 558,007 - Deferred tax liability S 21,589,638 - Other liabilities 109,873 - Total non current liabilities 52,576,125 - Current liabilities Interest bearing loans and borrowings 7,622,718 - Trade and other payables P 14,780,768 338,404 Income tax payable R 313,411 - Total current liabilities 22,716,897 338,404 Total liabilities 75,293,023 338,404 Total liabilities and stockholders' equity 221,470,208 100,149,956

(The accompanying notes are an integral part of these consolidated financial statements)

Consolidated Statement of Income (All amounts in USD, unless otherwise stated) Fifteen months ended Period ended Notes March 31, 2008 December 31, 2006 Revenues Operating Revenues U 24,893,304 - Finance income 3,401,448 2,110,915 Other income 349,581 - Total 28,644,333 2,110,915 Expenses Direct Operating Expenses V 19,561,542 - Administrative Expenses W 10,030,670 844,525 Selling Expenses X 126,396 - Finance Charges 1,859,799 - Total 31,578,427 844,525 Result from continuing operations before tax (2,934,092) 1,266,390 Taxes T Current tax benefit 7,952 - Deferred tax benefit 360,044 - Net result attributable to shareholders of India Hospitality Corp. (2,566,096) 1,266,390 Earnings/(loss) per share Basic (in USD.) (0.10) 0.08 Diluted (in USD.) (0.10) 0.08

(The accompanying notes are an integral part of these consolidated financial statements)

Consolidated Statement of Changes in Shareholders' Equity (All amounts in USD, unless otherwise stated) Total stockholders' equity Common Additional Trans- Accumu- Total stock - paid in lation lated stockholders' Amount capital reserve earnings equity On incorporation - - - - - Net income for the period - - - 1,266,390 1,266,390 Total income and expense recognised for the period - - - 1,266,390 1,266,390 Issue of shares 23,417 102,982,835 - - 103,006,852 Redemption of shares (2,083) - - - (2,083) Share issue expenses - (4,459,007) - - (4,459,007) Balance as at December 31 2006 21,334 98,523,828 - 1,266,390 99,811,552 (All amounts in USD, unless otherwise stated) Total stockholders' equity Common Additional Trans- Accumu- Total stock - paid in lation lated stockholders' Amount capital reserve earnings equity Balance as at January 1, 2007 21,334 98,523,828 - 1,266,390 99,811,552 Translation adjustment - - 79,646 - 79,646 Income recognised directly in equity - - 79,646 - 79,646 Net income for the period (2,566,096) (2,566,096) Total income and expense recognised for the period - - 79,646 (2,566,096) (2,486,450) Issue of shares 4,688 28,120,312 - - 28,125,000 Shares issue expenses - (3,075,000) - - (3,075,000) Issue of shares in connection with business combination. 3,067 20,604,936 - - 20,608,003 Stock compensation reserve relating to share based payments 3,150,000 - - 3,150,000 Redemption of shares (1,505) (8,998,395) - - (8,999,900) Issue of sellers' option - 9,043,981 - - 9,043,981 Balance as at March 31, 2008 27,584 147,369,662 79,537 (1,299,706) 146,177,077

(The accompanying notes are an integral part of these consolidated financial statements)

Consolidated Statement of Cash Flows (All amounts in USD, unless otherwise stated) Fifteen months Period ended ended March 31, December 31, Particulars 2008 2006 (A) Cash inflow/ (outflow) from operating activities Net result before tax (2,934,092) 1,266,390 Adjustments to reconcile net income before tax to net cash provided by operating activities: Depreciation and amortization 4,739,110 - Interest expense 1,669,175 - Interest income (2,852,004) (2,110,915) Dividend received (219,377) - Profit/Loss on sale of asset (1,450) - Provision for diminutions in value of investments 1,223 - Profit on sale of investments (181,161) - Changes in operating assets and liabilities Increase in current liability 5,838,607 332,404 Decrease in current assets (3,308,242) (127,298) Net changes in operating assets and liabilities 2,751,789 (639,419) Direct Tax paid 16,065 - Net cash provided by operating activities 2,767,854 (639,419) (B) Cash inflow/ (outflow) from investing activities Interest income 2,852,004 1,680,468 Income from sale of investments 181,161 - Acquisition of subsidiaries (75,809,275) - Acquisition expenses (3,173,443) - Purchase of intangibles (4,900,000) - Purchase of tangible assets (27,957,874) - Proceeds from sale of assets 280,814 - Dividend received 219,377 - Net cash used in investing activities (108,307,237) 1,680,468 (C) Cash inflow / (outflow) from financing activities Proceeds from secured loan 9,084,910 6,000 Repayment of secured loans (562,536) - Proceeds from issue of share capital 28,125,000 103,006,252 Redemption of capital (8,999,900) (2,083) Interest paid (1,715,721) - Share issue expenses (1,500,000) (4,459,007) Net cash provided by financing activities 24,431,753 98,551,162 Net increase in cash and cash equivalents (82,497,288) 99,592,211 Effect of exchange rate changes on cash (381,650) - Cash and cash equivalents at the beginning of the period 100,981,870 - Cash and cash equivalents at the end of the period 18,102,932 99,592,211 Cash and cash equivalents comprise Cash in hand 134,876 - Balances with banks 1,635,347 99,592,211 Investment in highly liquid funds 16,332,709 - 18,102,932 99,592,211

(The accompanying notes are an integral part of these consolidated financial statements)

Notes to Consolidated Financial Statements (All amounts in USD, unless otherwise stated)

NOTE A - BACKGROUND INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. NATURE OF OPERATIONS

India Hospitality Corp. ('the Company') and its subsidiaries (together referred to as 'the Group'), the Company was formed on May 12, 2006 as blank- check Company to acquire Indian businesses or assets in the hospitality, leisure, tourism, travel and related industries, including but not limited to hotels, resorts, timeshares, serviced apartments and restaurants.

In July 2007, the Group completed the acquisition of India-based Mars Restaurants Private Limited ("MRPL" or Mars), an emerging hotel and restaurant company, and Sky Gourmet Catering Private Limited ("SCPL" or SkyGourmet), an airline catering company.

Mars was incorporated in the year 2000 with the objective of operating and managing restaurants. Since its incorporation, Mars has diversified into bakery outlets and operating and managing food courts and hotels.

SkyGourmet was incorporated in the year 2002 and currently provides inflight catering services to a number of domestic and international airlines. It has operations in Mumbai, Bangalore, New Delhi, Pune, Hyderabad and Chennai.

2. GENERAL INFORMATION

The Company was incorporated in the Cayman Islands on 12 May 2006 and its shares are publicly traded on the Alternate Investment Market of the London Stock Exchange. As of 31 March 2008, the Company had wholly owned subsidiaries incorporated in Mauritius, Netherlands and India . The Company expects to conduct business, including the making of acquisitions, through its Mauritius subsidiary.

To align Company's year end with those of acquired entities the Company has changed its financial year end from March 31 to December 31 and therefore is presenting 15 months financial statements. As the current financial statements are for 15 months and these also include operation of acquired entities from the date of acquisition, the comparatives presented for period ended December 31, 2006 may be not comparable.

The consolidated financial statements of the Group have been prepared in accordance with the International Financial Reporting Standards ('IFRS') issued by the International Accounting Standards Board effective for accounting periods commencing on 1 January , 2007. These financial statements include comparative financial information as at and for the period ended 31 December, 2006, as required by IAS 1 - Presentation of Financial Statements ('IAS 1'). The consolidated financial statements have been prepared on a going concern basis.

The consolidated financial statements of the Group are prepared and presented in United States Dollar ('USD'), the Company's Reporting currency.

The financial statements for the period ended 31 March, 2008 were approved by a committee of the board of directors on September 18, 2008 Financial statements once approved by the Board of Directors are generally not amended.

3. CHANGE IN ACCOUNTING POLICIES 3.1 Overall considerations

The Group has adopted for the first time IFRS 7 Financial Instruments: Disclosures in its 2007 consolidated financial statements. The Standard has been applied retrospectively, ie with amendments to the 2006 accounts and their presentation.

Other Standards or Interpretations relevant for IFRS financial statements have not become effective during the current financial year. Significant effects on current, prior or future periods arising from the first-time application of the standards listed below in respect of presentation, recognition and measurement of accounts are described in the following notes. An overview of Standards and Interpretations that will become mandatory for the Group in future periods is given in note 3.4.

3.2 Amendment of IAS 1 Presentation of Financial Statements

In accordance with the amendment of IAS 1 Presentation of Financial Statements, the Group now reports on its capital management objectives, policies and procedures in each annual financial report. The new disclosures that become necessary due to this change in IAS 1 can be found in note JJ.

3.3 Adoption of IFRS 7 Financial Instruments: Disclosures

IFRS 7 Financial Instruments: Disclosures is mandatory for all reporting periods beginning on 1 January 2007 or later. The new Standard replaces and amends disclosure requirements previously set out in IAS 32 Financial Instruments: All disclosures relating to financial instruments including all comparative information have been updated to reflect the new requirements.

The first-time application of IFRS 7, however, has not resulted in any prior-period adjustments of cash-flows, net income or balance sheet line items.

3.4 Standards and Interpretations not yet applied

The following new Standards and Interpretations, which are yet to become mandatory, have not been applied in the Group's 2008 Group Financial Statements.

Standard or Interpretation Effective dates IAS 1: Presentation of Financial Annual periods beginning on Statements (Revised) or after 1 January 2009 IAS 23: Borrowing costs (Revised) Annual periods beginning on or after 1 January 2009 IAS 27: Consolidated and Separate Annual periods beginning on Financial Statements (Revised 2008) or after 1 July 2009 IAS 32: Financial Instruments: Annual periods beginning on Presentation-Puttable Financial or after 1 January 2009 Instruments and Obligations Arising on Liquidation Amendment IFRS 2: Share-based Payment (Amendment) Annual periods beginning on or after 1 January 2009 IFRS 3: Business Combinations For acquisition dated on or (Revised 2008) after the beginning of the first annual reporting period beginning on or after 1 January 2009 IFRS 8: Operating Segments periods beginning on or after 1 January 2009 IRIC 11 IFRS 2: Group and Treasury Share Annual periods beginning on Transactions or after 1 March 2007. IFRIC 15 Agreements for the Construction Annual periods beginning on of Real Estate or after 1 January 2009. IFRIC 16 Hedges of a Net Investment in a Annual periods beginning on Foreign Operation or after 1 October 2008 IFRIC 13: Customer Loyalty Programmes Annual periods beginning on or after 1 July 2008 IFRIC 14: IAS 19. The limit on a Defined Annual periods beginning on Benefit Asset Minimum funding requirements or after 1 January 2008 and their interaction.

Based on the Group's current business model and accounting policies, management does not expect material impacts on the Group's consolidated Financial Statements when the Interpretations become effective.

The Group does not intend to apply any of these pronouncements early. 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 4.1 OVERALL CONSIDERATIONS

The significant accounting policies that have been used in the preparation of these consolidated financial statements are summarised below.

The consolidated financial statements have been prepared using the measurement basis specified by IFRS for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies below.

All accounting estimates and assumptions that are used in preparing the financial statements are consistent with the Group's latest approved budged forecast, where applicable. Judgements are based on the information available at each balance sheet date. Although these estimates are based on the best information available to management, actual results may ultimately differ from those estimates.

Estimates of life of various tangible and intangible assets, allowance for uncollectable amounts, and assumptions used in the determination of employee- related obligations represent certain of the significant judgements and estimates made by management.

The preparation of these consolidated financial statements are in conformity with IFRS and requires the application of judgment by management in selecting appropriate assumptions for calculating financial estimates, which inherently contain some degree of uncertainty. Management estimates are based on historical experience and various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the reported carrying values of assets and liabilities and the reported amounts of revenues and expenses that may not be readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

In the process of applying the Group's accounting policies, the following judgments have been made apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial information:

Leases

The Company has evaluated each lease agreement for its classification between finance lease and operating lease. The Company has reached its decisions on the basis of the principles laid down in IAS 17, "Leases" for the said classification. Also, the Company has used IFRIC 4, "Determining whether an arrangement contains a lease" for determining whether an arrangement is, or contains, a lease is based on the substance of the arrangement and based on the assessment whether:

a) fulfillment of the arrangement is dependent on the use of a specific asset or assets (the asset); and b) the arrangement conveys a right to use the asset. Deferred Tax

Management judgment is required in determining provisions for income taxes, deferred tax assets and liabilities and the extent to which deferred tax assets can be recognised. If the final outcome of these matters differs from the amounts initially recorded, differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Post employment benefits

The cost of post employment benefits is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, expected rate of return on assets, future salary increases, and mortality rates. Due to the long term nature of these plans such estimates are subject to significant uncertainty. For net employee liability at the end of the respective dates - Refer to note AA.

Allocation of Banyan Tree Company (BTC) option value

During the period, the Company has made certain share based payments to Banyan Tree Company against services rendered by them. The management estimates efforts of Banyan tree to be apportioned in following ratio

-- 50% towards share issue expenses -- 40% towards the successful completion of the acquisition of MRPL and SGCPL. -- 10% towards the efforts in relation to an acquisition opportunity, that wasn't ultimately completed. 4.2 BASIS OF CONSOLIDATION

The group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to the dates specified in Note 6. Subsidiaries are all entities over which The Company has the power to control the financial and operating policies. The Company obtains and exercises control through voting rights.

Unrealised gains and losses on transactions between the Company and its subsidiaries are eliminated. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment losses from the Group's perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Entities whose economic activities are controlled jointly by the Company and by other ventures independent of the Group are accounted for using proportionate consolidation.

4.3 INVESTMENT IN JOINT VENTURES

Entities whose economic activities are controlled jointly by the Company and by other ventures independent of the Company ("joint ventures") are accounted for using proportionate consolidation.

Unrealised gains and losses on transactions between the group and its joint venture entities are eliminated to the extent of group's interest. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment losses from the Company's group perspective.

Amounts reported in the financial statements of jointly controlled entities have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

4.4 FOREIGN CURRENCY TRANSLATION

The consolidated financial statements are presented in United States Dollar ('USD'), which is the functional currency of the parent company, India Hospitality Corp., being the currency of the primary economic environment in which it operates.

In the separate financial statements of the consolidated entities, foreign currency transactions are translated into the functional currency of the individual entity using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of remaining monetary balances at year-end exchange rates are recognised in the income statement under "other income" or "other expenses", as applicable.

In the consolidated financial statements, all separate financial statements of subsidiaries, originally presented in a currency different from the Group's presentation currency, have been converted into USD. Assets and liabilities have been translated into USD at the closing rate at the balance sheet date. Income and expenses have been converted into the Group's presentation currency at the average rates over the reporting period. The resulting translation adjustments are recorded under the currency translation reserve in equity.

4.5 REVENUE RECOGNITION

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, and other sales taxes or duty. The following specific recognition criteria must also be met before revenue is recognised:

Sale of goods

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on acceptance of the goods and other revenue recognition criteria is met.

Rendering of services

Revenue from rendering of services includes Handling Income, Transportation Income and Laundry Income. Revenue is recognised on these when the services are rendered to the customers.

Dividends

Revenue is recognised when the Group's right to receive the payment is established.

Revenue Sharing

Revenue from revenue sharing is recognised based on the contractual terms of the agreement.

Finance revenue

Revenue is recognised as interest accrues (using the effective interest method that is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset).

4.6 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost, excluding the costs of the day-to-day servicing, less accumulated depreciation and accumulated impairment in value. Such cost includes the cost of replacing part of such plant and equipment when that cost is incurred if the recognition criteria are met.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised. The asset's residual values, useful lives and methods are reviewed, and adjusted if appropriate, at each financial year end.

Capital work in progress

Capital work in progress includes assets under construction and capital advances.

Depreciation

Freehold land is not depreciated as useful life for land cannot be determined. Depreciation on other property plant and equipment is calculated on a straight-line basis over the estimated useful life of the asset less estimated residual value of property plant and equipment.

The useful lives of the assets are taken as follows: - Buildings 60 years Plant and machinery 8 years Kitchen Equipments 8 years Computers 4 years Electrical Fitting 7 years Furniture and Fixtures 7 years Commercial Vehicles 7 years Motor Vehicles 5 years Office equipments 3 years Leasehold improvements Lease period or the useful life whichever is lower 4.7 BORROWING COSTS

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use.

All other borrowing costs are recognised in the income statement in the period in which they are incurred.

4.8 INTANGIBLE ASSETS

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses.

Intangible assets include goodwill arising on consolidation, brand name, catering agreements; non compete agreement and concession agreements acquired through business combination.

Intangible assets are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortization method for an intangible asset with a finite useful life are reviewed at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognised in the income statement in the expense category consistent with the function of the intangible asset. These assets are currently amortized over a period of three to seven years and included under 'Depreciation and Amortization' in the statement of income. Certain intangible assets have an indefinite life and are evaluated for impairment tests at each reporting period.

The estimated useful lives of the intangibles are given as follows: - Designs 5 years Customer contracts 5-20 years Trade names Indefinite life Non compete agreement 7 years 4.9 GOODWILL

Goodwill represents the excess of the acquisition cost in a business combination over the fair value of the group's share of the identifiable net assets acquired. Goodwill is carried at cost less accumulated impairment losses. Refer to Note 4.10 for a description of impairment testing procedures.

4.10 IMPAIRMENT TESTING OF GOODWILL, OTHER INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT

The Group's intangible assets, goodwill on acquisition and property, plant and equipment are subject to impairment testing.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which management monitors goodwill.

Cash-generating units to which goodwill has been allocated are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. To determine the recoverable amount, the Group's management estimates expected future cash flows from each cash generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for the Group's impairment testing procedures are directly linked to the Group's latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect their respective risk profiles as assessed by the Group's management.

Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment charge that has been recognised is reversed if the cash- generating unit's recoverable amount exceeds its carrying amount

4.11. FINANCIAL ASSETS

Financial assets, other than hedging instruments, can be divided into categories such as loans and receivables, financial assets at fair value through profit or loss, available-for-sale financial assets and held-to- maturity investments. Financial assets are assigned to the different categories by management on initial recognition, depending on the purpose for which the investments were acquired.

Derecognition of financial instruments occurs when the rights to receive cash flows from the investments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred. An assessment for impairment is undertaken at least at each balance sheet date, whether or not there is objective evidence that a financial asset or a group of financial assets is impaired.

Available-for-sale financial assets include non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. All financial assets within this category are subsequently measured at fair value, unless otherwise disclosed, with changes in value recognised in equity, net of any effects arising from income taxes. Gains and losses arising from securities classified as available-for-sale are recognised in the income statement when they are sold or when the investment is impaired.

In the case of impairment, any loss previously recognised in equity is transferred to the income statement. Losses recognised in the income statement on equity instruments are not reversed through the income statement. Losses recognised in prior period consolidated income statements resulting from the impairment of debt securities are reversed through the income statement.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are initially recognised at fair values. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivables. Loans and receivables are subsequently measured at amortised cost using the effective interest method, less provision for impairment. Any change in their value is recognised in profit or loss.

Trade receivables are provided against when objective evidence is received that the Group will not be able to collect all amounts due to it in accordance with the original terms of the receivables. The amount of the write-down is determined as the difference between the asset's carrying amount and the present value of estimated future cash flows.

4.12 INVENTORIES

Inventory comprises food and provision, packing and other materials and is valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and conditions are included on a weighted average basis.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

4.13 ACCOUNTING FOR INCOME TAXES

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the balance sheet date. Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. Deferred tax is, however, neither provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the group and it is probable that reversal will not occur in the foreseeable future.

In addition, tax losses available to be carried forward as well as other income tax credits are assessed for recognition as deferred tax assets.

Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date. Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be offset against future taxable income. The Group's management bases its assessment of the probability of future taxable income on the Group's latest approved budget forecast, which is adjusted for significant nontaxable income and expenses and specific limits to the use of any unused tax loss or credit. The specific tax rules in the numerous legislations the Group operates in are also carefully taken into consideration. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be utilised without a time limit, that deferred tax asset is usually recognised in full. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed individually by the Group's management based on the specific facts and circumstances.

Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity.

4.14 CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

4.15 LEASING ACTIVITIES

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.

Assets held under finance leases are recognised as assets of the Group at their fair value or present value of minimum lease payments if lower at the date of acquisition. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are charged to the income statement over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

4.16 EQUITY

Share capital is determined using the nominal value of shares that have been issued.

Additional paid-in capital includes any premium received on the initial issue of share capital. Any transaction costs associated with the issue of shares is deducted from additional paid-in capital and stock based compensation costs, net of any related income tax benefits.

Foreign currency translation differences are included in the translation reserve.

Accumulated earnings include all current and prior period results, as disclosed in the income statement.

Due to non exercise of Seller's option by Navis such lapse of seller options has been reversed in APIC and disclosed in Statement Showing Changes in Equity.

4.17 EMPLOYEE BENEFITS

Employee benefits are provided through a defined benefit plan as well as certain defined contribution plans.

The Group provides for gratuity, a defined benefit plan, which defines an amount of pension benefit that an employee will receive on termination or retirement, usually dependent on one or more factors such as age, years of service and remuneration. The legal obligation for any benefits from this kind of plan remains with the Group.

The Group also provides for provident fund benefit, a defined contribution plan, under which the Group pays fixed contributions into an independent entity. The Group has no legal or constructive obligations to pay further contributions after payment of the fixed contribution.

The liability recognised in the balance sheet for defined benefit plans is the present value of the defined benefit obligation (DBO) at the balance sheet date less the fair value of plan assets, together with adjustments for actuarial gains or losses and past service costs. The DBO is calculated annually by independent actuaries using the projected unit credit method. The present value of the DBO is determined by discounting the estimated future cash outflows using interest rates of high quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related pension liability.

Actuarial gains and losses are recognised as an income or expense in the period in which they arise. Past-service costs are recognised immediately in the income statement, unless the changes to the plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past service costs are amortised on a straight-line basis over the vesting period.

The contributions recognised in respect of defined contribution plans are expensed as they fall due. Liabilities and assets may be recognised if underpayment or prepayment has occurred and are included in current liabilities or current assets as they are normally of a short-term nature.

Interest expenses related to pension obligations are included in "finance costs" in the income statement. All other pension related benefit expenses are included in "Employee benefit expense".

Short-term employee benefits are recognised for the number of paid leave days (usually holiday entitlement) remaining at the balance sheet date. They are included in employee obligations at the undiscounted amount that the Group expects to pay as a result of the unused entitlement. Paid leave days which are likely to be encashed at the time of retirement are valued at the rates at which they are estimated to be paid out, and the present value of the same is included under 'Long term Employee obligations'.

4.18 FINANCIAL LIABILITIES

The Group's financial liabilities include trade and other payables and borrowings, which are measured at amortised cost using effective interest rate method. They are included in balance sheet line items 'long-term financial liabilities' and 'trade and other payables'.

Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the instrument. All interest related charges is recognised as an expense in "finance cost" in the income statement.

Trade payables are recognised initially at their fair value and subsequently measured at amortised cost less settlement payments.

4.19 PROVISIONS AND CONTINGENT LIABILITIES

Provisions are recognised when present obligations will probably lead to an outflow of economic resources from the Group and they can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or constructive commitment that has resulted from past events.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the balance sheet date, including the risks and uncertainties associated with the present obligation.

In those cases where the possible outflow of economic resource as a result of present obligations is considered improbable or remote, or the amount to be provided for cannot be measured reliably, no liability is recognised in the consolidated balance sheet.

4.20 EQUITY BASED COMPENSATION

All goods and services received in exchange for the grant of any share- based remuneration are measured at their fair values. These are indirectly determined by reference to the fair value of the share options awarded. Their value is appraised at the grant date and excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets).

All share-based remuneration is ultimately recognised as an expense in statement of income or as allocable to issue of shares and costs of business combination with a corresponding credit to additional paid-in capital, net of deferred tax where applicable.

If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised, if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in current period.

Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share capital with any excess being recorded as additional paid-in capital.

5. BUSINESS COMBINATION

On 18 June 2007, India Hospitality Corp. entered into a share purchase agreement to acquire 100 per cent of the issued and outstanding stock of Sky Gourmet Catering Private Limited (SCPL) and Mars Restaurant Private Limited (MRPL). SCPL currently provides in-flight catering services to a number of domestic and international airlines. It has operations in Mumbai, Bangalore, New Delhi, Pune, Hyderabad and Chennai. MRPL is primarily into operating and managing restaurants. It has diversified into bakery outlets and operating and managing food courts and hotels. Pursuant to this agreement, the Group acquired 100% stake on 18 July 2007, India Hospitality Corp. acquired 100% of the equity instruments of SCPL and MRPL on fulfilment of certain conditions precedent to acquisition of majority stake. The acquisition of SCPL and MRPL was made as initiative to establish its presence into the hospitality and leisure industries. For accounting purposes, the date of acquisition is considered to be 31 July 2007.

The total cost of acquisition includes the components stated below. The purchase price was settled in cash and issuance of equity instruments of the Group. The Company issued 3,066,667 number of equity shares and the same were valued at prevailing market price on the date of issue.

Purchase price 99,053,369 Acquisition related cost 3,173,443 Total 102,226,812

The allocation of the purchase price to the assets and liabilities of SCPL and MRPL was completed in 2007. The amounts recognised for each class of the acquiree's assets, liabilities and contingent liabilities recognised at the acquisition date are as follows:

Non current assets: Goodwill 30,922,539 Other intangible assets 53,240,102 Property, plant and equipment 38,972,500 Capital work in progress 24,784,986 Current assets 24,155,252 Investments 250,000 Total assets 172,325,379 Current liabilities 26,764,826 Long term liabilities 43,333,771 Total liabilities 70,098,597

Assets acquired on the business combination also included Cash of USD 1,389,659.

Disclosure of the carrying amounts of the acquiree's assets and liabilities immediately before the combination in accordance with IFRS was impracticable. SCPL and MRPL has not applied IFRS prior to its acquisition as at 31 July 2007. Therefore, essential data needed for pro-forma IFRS accounts of SCPL and MRPL prior to the date of acquisition was not available.

No major line of business will be disposed of as a result of the combination.

A significant part of the acquisition costs can be attributed to the assembled workforce and the sales know-how of key personnel of SCPL and MRPL. At the acquisition however, no intangible asset qualified for recognition in this respect. These circumstances contributed to the amount recognised as goodwill.

Goodwill arising on the business combination had been allocated to cash- generating units by 31 March 2008.

6. BASIS OF CONSOLIDATION

The group companies which consolidate under India Hospitality Corp. comprise of the entities listed below:

Effective Group Share- Holding Country of holding Name of the Entity Year End Date Co. Incorporation (%) India Hospitality Corp. (IHC) March 31, 2008 BVI 100 IHC Mauritius (IHC M) March 31, 2008 IHC Mauritius 100 Mars Restaurants Private Limited (MRPL) March 31, 2008 IHC M India 100 SkyGourmet Catering Private Limited (SCPL) March 31, 2008 IHC M India 100 New India Glass Private Limited March 31, 2008 SCPL India 98 Gordon House Estates Private Limited March 31, 2008 MRPL India 100 Navigate India Investments B.V March 31, 2008 IHC M Netherlands 100 IBEA Mars and GHH Holdings B.V March 31, 2008 IHC M Netherlands 100 S.C. Ventures Ltd March 31, 2008 IBEA Mauritius 100 Karia Investments B.V March 31, 2008 Navigate Netherlands 100

MRPL holds a 49 % stake in Gourmet Restaurants Private Limited, a joint venture company. The remaining 51% shares are held by Tendulkar & family.

All of the above entities follow uniform accounting policies. NOTE B. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment comprise the following: March 31, 2008 December 31, 2006 Costs Freehold land 31,980,896 - Building 34,944,909 - Leasehold Improvements 1,179,202 - Plant and Machinery 7,761,376 - Computer 439,049 - Electrical fitting 1,196,871 - Kitchen equipments 4,910,627 - Furniture and fixture 1,423,661 - Commercial vehicles 3,066,281 - Motor vehicles 503,142 - Exchange gain 677,291 - 88,083,305 - Accumulated Depreciation Freehold land - - Building 477,328 - Leasehold Improvements 170,173 - Plant and Machinery 497,142 - Computer 91,019 - Electrical fitting 104,313 - Kitchen equipments 415,694 - Furniture and fixture 174,819 - Commercial vehicles 365,752 - Motor vehicles 56,102 - Exchange gain 202,336 - 2,554,677 - Net book value Freehold land 31,980,896 - Building 34,467,582 - Leasehold Improvements 1,009,029 - Plant and Machinery 7,264,233 - Computer 348,030 - Electrical fitting 1,092,558 - Kitchen equipments 4,494,934 - Furniture and fixture 1,248,842 - Commercial vehicles 2,700,529 - Motor vehicles 447,040 - Exchange gain 474,956 - 85,528,629 -

Movements in the cost and accumulated depreciation of property, plant and equipment are as follows:

Period ended Period ended March 31, 2008 December 31, 2006 Assets acquired on Cost acquisition Additions Disposals Additions Disposals Freehold land 2,935,182 29,045,714 - - - Building 24,277,147 10,667,762 - - - Leasehold Improvements 1,179,202 - - - - Plant and Machinery 3,882,467 3,880,335 1,427 - - Computer 328,329 119,242 8,523 - - Electrical fitting 455,193 741,678 - - - Kitchen equipments 2,056,417 2,854,211 - - - Furniture and fixture 1,344,800 78,861 - - - Commercial vehicles 1,987,147 1,079,134 - - - Motor vehicles 526,616 24,015 47,489 - - 38,972,500 48,490,952 57,439 - - Period ended Period ended March 31, 2008 December 31, 2006 Charge Adjustment Charge Adjustment Accumulated for the on for the on Depreciation period disposals period disposals Freehold land Building 477,328 - - - Leasehold Improvements 170,173 - - - Plant and Machinery 497,142 (1,365) - - Computer 91,019 (4,663) - - Electrical fitting 104,313 - - - Kitchen equipments 415,694 - - - Furniture and fixture 174,819 - - - Commercial vehicles 365,752 - - - Motor vehicles 56,102 (44,128) - - Exchange difference 580,767 - - - 2,933,109 (50,156) - -

Of the total depreciation expense, USD 2,191,283 is classified in direct operating expenses and USD 741,825 is classified in administrative expenses.

Please refer Note O for restrictions on titles and property, plant and equipment pledged as securities for respective loans.

NOTE C. CAPITAL WORK IN PROGRESS March 31, 2008 December 31, 2006 Balance acquired on acquisition 24,784,986 - Additions 508,346 - Capitalised during the period 18,950,007 - 6,343,325 - NOTE D. INTANGIBLE ASSETS Intangible assets are recognised at the stage of acquisition as part of the purchase price allocation. Carrying amount of intangible assets comprises of the following: March 31, 2008 December 31, 2006 Costs Designs 4,900,000 - Customer contracts 25,979,003 - Trade names 21,555,655 - Non compete agreement 5,705,444 - Exchange difference - - 58,140,102 - Accumulated Amortisation Designs 153,125 - Customer contracts 1,466,740 - Trade names - - Non compete agreement 547,184 - Exchange difference (14,017) - 2,153,032 - Net book value Designs 4,746,875 Customer contracts 24,512,263 - Trade names 21,555,655 - Non compete agreement 5,158,260 - Exchange difference 14,017 - 55,987,070 - Movements in the cost and accumulated amortisation of intangible assets are as follows: Period ended Period ended March 31, 2008 December 31, 2006 Assets acquired on Cost acquisition Additions Disposals Additions Disposals Designs - 4,900,000 - Customer contracts 25,979,003 - - - - Trade names 21,555,655 - - - - Non compete agreement 5,705,444 - - - - 53,240,102 4,900,000 - - - Period ended Period ended March 31, 2008 December 31, 2006 Charge Adjustment Charge Adjustment Accumulated for the on for the on Amortisation period disposals period disposals Designs 153,125 - - - Customer contracts 1,466,740 - - - Trade names - - - - Non compete agreement 547,184 - - - Exchange difference (14,017) - - - 2,153,032 - - - The amortisation charge has been classified as administrative expenses NOTE E. OTHER FINANCIAL ASSETS - NON CURRENT Other financial assets comprise of the following Particulars March 31, 2008 December 31, 2006 Deposits 4,623,991 - Others 588,627 Total 5,212,618 - NOTE F. PREPAYMENTS AND ACCRUED INCOME - NON CURRENT Particulars March 31, 2008 December 31, 2006 Prepaid lease rentals 5,619,644 - Others 243,879 Total 5,863,523 - NOTE G. RESTRICTED CASH - NON CURRENT Restricted cash comprise the following: Particulars March 31, 2008 December 31, 2006 Fixed deposits 1,043,516 - Total 1,043,516 -

The group has given bank guarantees for performance of air catering units. These bank guarantees have been given against fixed deposits pledged with the banks and the group is restricted to withdraw such funds until the guarantees are valid. The carrying value of restricted cash is representative of their fair values at the respective balance sheet dates.

NOTE H. INVESTMENTS- NON CURRENT Investments comprise of the following Particulars March 31, 2008 December 31, 2006 E-Quest India Private Limited 116 - Gordon House Estate Private Limited 2,501 Total 2,617 -

Investments represent equity investments which do not have a quoted market price and whose fair value cannot be reliably measured. Therefore, such investments are recorded at cost.

NOTE I. INVENTORIES Inventories comprise the following: Particulars March 31, 2008 December 31, 2006 Food and Provisions 271,895 - Packing and other materials 111,307 - Raw materials 92,045 - Share in joint venture 44,199 - Total 519,446 - NOTE J. ACCOUNTS RECEIVABLE, NET Particulars March 31, 2008 December 31, 2006 Trade receivables 8,123,183 - Share in joint venture 9,998 - Total 8,133,181 -

Trade receivables relate to catering, hotel and other food & provisions sales. These receivables are non-interest bearing and are generally on 30 to 60 day's terms. The carrying values of these receivables are representative of their fair values at the respective balance sheet dates. All trade receivables are subject to credit risk exposure.

Top customers account for following percentage of total accounts receivable. Particulars March 31, 2008 December 31, 2006 Top two customers 75 % - Others 20 % - Total 100 % - NOTE K. OTHER FINANCIAL ASSETS - CURRENT Other financial assets comprise the following: Particulars March 31, 2008 December 31, 2006 Other receivables 543,191 557,745 Other advances 613,150 - Advance tax paid 1,729,041 - Share in joint venture 12,156 - Total 2,897,538 557,745 NOTE L. PREPAYMENTS AND ACCRUED INCOME - CURRENT Other current assets comprise the following: Particulars March 31, 2008 December 31, 2006 Pre payments 59,943 - Total 59,943 - NOTE M. RESTRICTED CASH - CURRENT Particulars March 31, 2008 December 31, 2006 Fixed deposits 8,772 - Total 8,772 -

Fixed deposits are given to respective airport authorities for plying vehicles into the airport premises. These bank guarantees have been given against fixed deposits pledged with the banks and the group is restricted to withdraw such funds until the guarantees are valid. The carrying value of cash and current account balances in banks are representative of their fair values at the respective balance sheet dates.

NOTE N. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise the following: Particulars March 31, 2008 December 31, 2006 Cash in hand 134,876 - Balance with banks 1,619,563 99,592,211 Share of cash held by joint venture 15,784 - Investment in highly liquid funds 16,332,709 - Total 18,102,932 99,592,211

Investment in highly liquid funds comprise of amounts invested in liquid mutual funds.

NOTE O. LONG TERM DEBT Long-term debts comprise the following: Particulars March 31, 2008 December 31, 2006 Term loans from banks 30,991,474 - Less: Current portion of long term debt 2,521,303 - Total 28,470,170 - Vehicle loans from banks 2,989,951 - Less: Current portion of vehicle loans 1,141,515 - Total 1,848,436 -

Term loan from banks: The term loan from banks is secured on immovable properties of the Company and movable property being Plant and Equipment. The Loan is payable in 60 instalments by 2011-12.

Of all immovable properties, Delhi land and Mumbai lower basement is freehold and rest all are pledged for the term loan mentioned above.

Vehicle loans: Vehicle loans are for the purchase of commercial vehicles and are secured by way of charge on those vehicles. All of these loans are repayable in full within 3 or 4 years from the date on which these loans were availed.

Term Loan

An interest rate profile of long-term borrowings is charged on the monthly outstanding balances at prevailing SBAR rates less (1% to 1.25 %). The applicable interest rate as at 31 March 2008 was 11.75%.

The maturity profile of long-term borrowings outstanding at March 31, 2008 is given below:

Year ending 31 March, Amount 2009 2,521,303 2010 4,157,114 2011 5,317,515 2012 6,901,474 2013 12,094,068 Total 30,991,474

The fair value of long-term debt is estimated by the management to be approximate to their carrying value, since the average interest rate on such debt is within the range of current interest rates prevailing in the market.

NOTE P. TRADE AND OTHER PAYABLES Other liabilities comprise the following: Particulars March 31, 2008 December 31, 2006 Trade payables 9,310,930 - Payable to related parties 428,439 - Statutory liabilities 546,189 - Payable to employees 646,484 - Provision for expenses 453,027 - Other liabilities 3,395,699 338,404 Total 14,780,768 338,404 NOTE Q. EMPLOYEE BENEFIT OBLIGATIONS Employee benefit obligations comprise the following: Particulars March 31, 2008 December 31, 2006 Provision for compensated absences 287,200 - Provision for gratuity benefit plan 270,807 - Total 558,007 - NOTE R. INCOME TAX PAYABLE Particulars March 31, 2008 December 31, 2006 Provision for tax 313,411 - Total 313,411 - NOTE S. TAXES Taxes for the period comprise the following: Particulars March 31, 2008 December 31, 2006 Current income tax benefit 7,952 - Deferred income tax benefit 360,044 - Total 367,996 -

The relationship between the expected tax expense based on the applicable tax rate of the Company and the tax expense actually recognised in the income statement can be reconciled as follows:

Particulars March 31, 2008 December 31, 2006 Effective tax rate 33.99 % - Pre tax results (2,934,092) Expected tax expense at prevailing tax rate (997,298) - Adjustment for tax-exempt income - - Loss of IHC 231,694 - Adjustments for non-deductible expenses - - Prior period taxes 7,952 - - Unrecognised tax benefit on losses of subsidiaries 22,506 - - Impact due to rate change 145,636 - - Others 221,514 - Actual tax expense (367,996) -

The tax effect of significant temporary differences that resulted in deferred income tax assets and liabilities and a description of the items that create those differences are given below:

Particulars March 31, 2008 December 31, 2006 Deferred income tax assets - Non current Retirement benefits 407,808 - Other Accruals 189,667 - Bonus Accrual 230,046 - Loans 17,038 - 844,559 - Deferred income tax liabilities - Non current Difference in depreciation on Property, plant and equipment 4,029,049 - Intangibles 17,560,589 - 21,589,638 -

In assessing the reliability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. The amount of the deferred income tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.

NOTE T. EQUITY AND RESERVES a) Ordinary shares

The Company presently has only one class of ordinary shares. For all matters submitted to vote in the shareholders meeting, every holder of ordinary shares, as reflected in the records of the Company on the date of the shareholders' meeting, has one vote in respect of each share held. All shares are equally eligible to receive dividends and the repayment of capital in the event of liquidation of the Company.

The Company has an authorized share capital of 200,000,000 ordinary shares of USD 0.001 each.

The Company was incorporated and registered in the Cayman Islands on 12 May 2006. On incorporation, one subscriber share of $0.001 was issued at a price of $0.001. On 30 May 2006, 6,250,000 ordinary shares were issued at a price of $0.001 and one subscriber share was repurchased by the Company at $0.001

A unit comprises 1 ordinary share and 2 warrants. The nominal value of the shares is $.001 and the warrants are nil. There are 34,333,334 and 43,708,334 warrants outstanding at December 31, 2006 and March 31, 2008. Each warrant is exercisable for one ordinary share at $5. The warrants will become exercisable on the later of: 1) the completion of a Qualified Business Combination or 2) one year after the Admission Date.

b) Reserves

Additional paid in capital - The amount received by the company over and above the par value of shares issued (share premium) is shown under this head.

Translation reserve - Assets and liabilities of foreign subsidiaries are translated into USD at the rate of exchange prevailing as at the Balance Sheet date. Revenue and expenses are translated into USD by averaging the exchange rates prevailing during the period. The exchange difference arising out of the year-end translation is being debited or credited to Foreign Currency Translation Adjustment Account.

Accumulated earnings - Accumulated earnings include all current and prior period results as disclosed in the income statement.

NOTE U. OPERATING REVENUE Operating revenue comprises the following: Fifteen months ended Period ended Particulars March 31, 2008 December 31, 2006 Sale of Goods 20,504,915 - Rendering of Services 4,388,389 - Total 24,893,304 - Top customers account for following percentage of total revenue. Fifteen months ended Period ended Particulars March 31, 2008 December 31, 2006 Top two customers 66 % - Others 34 % - Total 100 % - NOTE V. DIRECT OPERATING EXPENSES Direct Operating Expenses for the period comprise the following: Fifteen months ended Period ended Particulars March 31, 2008 December 31, 2006 Material Consumed 8,024,125 - Credit Card Commission 41,867 - Band and music 77,127 - Laundry charges 99,284 - Rent and Hire charges 1,033,963 - Rates and Taxes 87,052 - Gas & Fuel 2,256,151 - Labour Charges 795,584 - Security charges 53,964 - Vehicle Expenses 316,966 - Replacement to linen, uniforms, etc. 116,662 - Hygiene and sanitation 394,360 - Repair & Maintenance 258,619 - Employee Costs (Refer to AA) 3,126,945 - Management Fees 138,385 - Revenue Sharing 220,654 - Depreciation and Amortisation (Refer to B) 2,191,283 - Share in Joint Venture 244,147 - Miscellaneous Expenses 84,404 - Total 19,561,542 - NOTE W. ADMINISTRATIVE EXPENSES Administrative costs comprise the following: Fifteen months ended Period ended Particulars March 31, 2008 December 31, 2006 Rates & Taxes 175,233 - Auditors' remuneration 298,409 102,404 Repair and maintenance 192,170 - Computer Expenses 24,299 - Legal and professional fees 3,300,324 210,507 Depreciation and amortization 2,894,857 - Printing and Stationery 131,664 - Water and Electricity Charges 128,007 - Vehicle expenses 82,097 - Service fees 384,297 - Travelling and conveyance 476,990 129,523 Postage and telephone 130,838 - Insurance 357,627 90,527 Employee Costs (Refer to AA) 920,895 - FBT Expense 23,980 - Interest on TDS 21,940 - Recruitment expenses 54,641 - Luxury Tax 27,683 - Sponsor fees 60,000 70,000 Share in joint venture 19,191 - Other Expenses 325,548 241,164 Total 10,030,670 844,525 NOTE X. SELLING EXPENSES Fifteen months ended Period ended Particulars March 31, 2008 December 31, 2006 Advertisement 126,182 - Share in joint venture 214 - Total 126,396 - NOTE Y. JOINTLY CONTROLLED ENTITIES

Gourmet Restaurants Private Limited ("GRPL") is the only jointly controlled entity within the Group. The financial statements GRPL have been incorporated into the Group's consolidated financial statements using proportionate consolidation. The aggregate amounts relating to GRPL that have been included in the consolidated financial statements are as follows:

Particulars March 31, 2008 December 31, 2006 Non-current assets 73,271 - Current assets 82,137 - Non-current liabilities 3,439 - Current liabilities 245,385 - Income 242,966 - Expenses 265,842 - NOTE Z. EMPLOYEE COST Employee costs comprise the following: Period ended Period ended Particulars March 31, 2007 December 31, 2006 Salaries & allowances 3,414,423 - Retirement benefit, contribution to provident & other funds 416,549 - Staff welfare expenses 216,868 - Total 4,047,840 -

Of the above USD 3,126,945 are included in direct operating expense and USD 920,895 in administrative expenses.

NOTE AA. EMPLOYEE RETIREMENT BENEFITS

The following are the employee benefit plans applicable to the employees of the Group.

a) Gratuity benefit plan

In accordance with applicable Indian laws, the Group provides for gratuity, a defined benefit retirement plan ("the Gratuity Plan") covering eligible employees. The Gratuity Plan provides for a lump sum payment to vested employees on retirement, death, incapacitation or termination of employment of amounts that are based on salary and tenure of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation.

The following table sets out the funded status of the Gratuity Plan and the amounts recognised in the Group's consolidated financial statements:

Particulars March 31, 2008 December 31, 2006 Change in Benefit Obligation Present Benefit Obligation ('PBO') on acquisition 144,127 - Interest Cost 11,530 - Service Cost 39,444 - Benefits paid (5,461) - Actuarial (gain) loss on obligations 81,167 - PBO at the end of the period 270,807 - Liability recognised Present Value of Obligation 270,807 - Fair value of plan assets - - Liability Recognised in Balance Sheet 270,807 -

Net gratuity cost for the fifteen month period ended March 31, 2008 included the following components:

Particulars March 31, 2008 December 31, 2006 Current Service Cost 39,444 - Interest Cost 11,530 - Net actuarial (gain) loss recognised in the period 81,167 - Expenses Recognised in the income statement 132,141 - The movement of the net liability can be reconciled as follows: Particulars March 31, 2008 December 31, 2006 Movements in the liability recognised Opening net liability 144,127 - Expense as above 132,141 - Contribution paid (5,461) - Closing net Liability 270,807 - For determination of the liability, the following actuarial assumptions were used: Particulars March 31, 2008 December 31, 2006 Discount Rate 8.00 % 8.00 % Rate of increase in Compensation levels 5.00 % 6.00 % Current service cost and interest cost are included in employee costs.

The development of Group's defined benefit scheme relating to Gratuity may also be summarised as follows:

Particulars Experience adjustments on plan liabilities 2004 41,852 2005 45,182 2006 62,803 2007 77,408

All actuarial gains and losses have been recognised in income statement under employee costs.

b) Provident fund benefit plan

Apart from being covered under the Gratuity Plan described earlier, employees of the Indian companies participate in a provident fund plan; a defined contribution plan. The Group makes annual contributions based on a specified percentage of salary of each covered employee to a government recognised provident fund. The Group does not have any further obligation to the provident fund plan beyond making such contributions. Upon retirement or separation an employee becomes entitled for this lump sum benefit, which is paid directly to the concerned employee by the fund. The Group contributed approximately USD 236,127 to the provident fund plan during the fifteen months period ended March 31, 2008.

c) Compensated absence plan

The Group permits encashment of leave accumulated by their employees on retirement, separation and during the course of service. The liability for encashment of privilege leave is determined and provided on the basis of actuarial valuation performed by an independent actuary at balance sheet date.

The following table sets out the status of the Compensated absence plan of the Group and the corresponding amounts recognised in the Group's consolidated financial statements:

Particulars March 31, 2008 December 31, 2006 Change in Benefit Obligation PBO at the beginning of the period 194,923 - Interest Cost 23,323 - Service Cost 109,228 - Benefits paid (25,228) - Actuarial (gain) loss on obligations (15,045) - PBO at the end of the period 287,201 -

Net compensated absence cost for the fifteen months period ended March 31, 2008 included the following components:

Particulars March 31, 2008 December 31, 2006 Current Service Cost 109,228 - Interest Cost 23,323 - Net actuarial (gain) loss recognised in the period (31,119) - Expenses Recognised in the income statement 101,432 - The actuarial assumptions used in accounting for the Compensated absence plan were as follows: Particulars March 31, 2008 December 31, 2006 Discount Rate 8.00 % 8.00 % Rate of increase in Compensation levels 5.00 % 6.00 % Rate of Return on Plan Assets - - NOTE BB. OPERATING LEASES

The subsidiaries have entered into commercial leases for certain properties which are either cancelable or non-cancellable. These leases have durations of 1 to 25 years with an option for renewal at the end of lease term. The lease terms includes payment of revenue sharing which in the nature of lease rental is based on the specified percentage of the revenue generated for using the property. As the revenue is variable every month this lease rental is in the nature of contingent rent.

There are no restrictions placed upon the lessee under these operating lease agreements except under the "In Flight Kitchen (IFK) agreement" entered on 11 September 2006 to construct, implement, operate and maintain in-flight kitchen facilities at Hyderabad Airport with rent payable of Rs.30/- per square meter per month. with an escalation clause of 5% every year. Under this lease no sale/transfer of shares of the SCPL shall be made by the Group to any third party without the prior written consent of lessor.

Lease payments made and future minimum rentals payable under non- cancellable operating leases are as follows:

Particulars March 31, 2008 December 31, 2006 Lease payments made during the period 1,027,155 - Minimum lease payments due not later than one year 416,114 - later than one year but not later than five years 65,869 - later than five years 49,586 - NOTE CC: SHARE BASED PAYMENTS

Banyan Tree Capital Limited has been appointed exclusive strategic advisor which will provide advisory services to the Company and its Mauritius subsidiary with regard to the acquisition of assets for a monthly fee capped at $20,000.

As part of the consideration for its advisory services, the Company shall issue to advisors 500,000 shares of common stock of the Company at the initial offering price of the units in the offering, subject to satisfaction of each of the following conditions:

-- The completion of a Qualified Business Combination; -- The company has consummated its "de-SPACing" in accordance with rules of the AIM and its obligation under the terms of offering, as the same are set forth in the offering circular of the Company (the date upon such "de-SPACing" occurs, the "de-SPACing" date) -- The date that is one year after the completion of a Qualified Business Combination (the "Trigger Date") has passed; and -- Company's ordinary share price is greater than 1.0x the Sensex hurdle rate on the Trigger Date or, if our ordinary share price is below the Sensex hurdle rate on the Trigger Date, the ordinary share price must have exceeded the Sensex hurdle rate for 20 consecutive trading days at any time prior to that date. The Sensex hurdle rate is defined as the Sensex index performance over the duration of time from the closing date of this offering to the Trigger Date. If the shares as set forth above have not vested prior to the date which is 36 months from the closing of the offering, such non vested shares shall expire. March 31 2008 December 31 2006 Weighted Weighted average average exercise exercise Number price Number price Outstanding at January 1 2007 - - - - Granted 500,000 6 - - Forfeited - - - - Exercised - - - - Lapsed - - - - Outstanding as at March 31 2008 500,000 6 - -

All share based remuneration would be settled in equity. The group has no legal or constructive obligation to repurchase or settle the options.

The fair values of options granted are determined using the Binomial valuation model. Significant inputs into the calculation are:

2008 2006 Weighted average share price 6.72 - Exercise price 6 - Weighted average volatility rate 52.03 - Dividend pay outs 0 - Risk free rate 5 % - Average remaining life 27 months -

The underlying expected volatility was determined by reference to historical data, adjusted for unusual share price movements. No special features inherent to the options granted were incorporated into measurement of fair value.

The Company has modified the option granted above on March 28, 2008 to waive off the offering price and the market related condition for vesting. Additional cost has been recognised based on fair value of IHC shares based prevailing market price on that date.

In total, USD 328,597 advisor's remuneration expense has been included in the consolidated income statement for 2008 (2006: Nil).

NOTE DD. RELATED PARTY TRANSACTIONS Related parties with whom the Group has transacted during the period Key Management Personnel Particulars Sanjay Narang Ajith Mathur Arvind Ghei Patrick Rodrigues Jaswinder Singh Ramesh Joshee

Enterprises over which significant influence exercised by key management personnel/ directors

Bullworker Pvt. Ltd Gourmet Restaurants Private Limited Mars Food Services Mars Enterprises Mars Corporation Mars Hotel & Resorts Private Limited Mars Catering Services Private Limited Gordon House Airport Hotels Pvt. Ltd Gordon House City Hotels Pvt. Ltd Gordon House Estate Pvt Ltd Gordon House Hotel & Resorts Pvt ltd Gordon House Properties Private Limited Summary of transactions with related parties during the period Nature of Transaction March 31, 2008 December 31, 2006 Transactions with key management personnel Remunerations Short term Employee Benefit - salary cost 224,629 - Long Term Employee Benefit - Defined Contribution 10,392 - Loan to Arvind Ghei 4,511 Transactions with enterprises over which significant influence exercised by key management personnel/ directors. Sale of Goods 168,114 - Purchase of Assets 67 - Sale of Assets 21,463 - Rendering of other services 213,953 - Service received 544,596 - Deposits given 13,963,033 - Loans granted 1,080 - Amount payable at the period end 136,236 - Amount receivable at the period end 433,026 -

The directors are covered under the Group's gratuity policy along with other employees of the Group. Proportionate amount of gratuity is not included in the aforementioned disclosures.

NOTE EE. EARNINGS PER SHARE

The basic earnings per share for the period ended March 31, 2008 and December 31, 2006 have been calculated using the net results attributable to shareholders of the Group as the numerator. None of the dilutive shares relate to interest or similar expense recognisable in profit or loss for the fifteen month period ended March 31, 2008 and period ended December 31, 2006.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

Calculation of basic and diluted EPS is as follows: Particulars March 31, 2008 December 31, 2006 Loss attributable to shareholders of the Group, for basic and dilutive (2,435,325) 1,266,390 Weighted average numbers Shares outstanding during the period for Basic 23,542,368 15,995,351 Effect of dilutive potential ordinary shares: Warrants 29,716,408 - Weighted average numbers Shares outstanding during the period for Dilutive 52,258,776 15,995,351 Basic EPS, in USD (0.10) 0.08 Diluted earnings per share, in USD (0.10) 0.08

Dilutive shares have not been considered for calculation of dilutive earnings per share as these are anti dilutive in nature.

NOTE FF. COMMITMENTS AND CONTINGENCIES A summary of the contingencies existing as at period ended is as follows: Particulars March 31, 2008 December 31, 2006 Counter guarantees given to bankers against guarantees issued by them 6,056,047 - Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 3,057,331 - NOTE GG. SEGMENT REPORTING Primary segments Business segments Air Restaurants Particulars catering Hotels and others Group Total Segment Revenue 19,395,489 2,057,769 5,999,633 - 27,452,891 Less: Inter segment revenue - - (2,553,771) - (2,553,771) Net revenue from operations 19,395,489 2,057,769 3,445,862 24,899,120 Segment Profit/ (loss) before tax and finance charges 914,936 498,444 (295,561) (5,622,745) (4,504,926) Add: Other Income (not allocable) - - - 349,581 - Less: Finance charges and other expenses (not allocable) - - - 1,448,561 - Total Profit before Tax 914,936 498,444 (295,561) (1,624,361) (2,706,784) Segment Assets and Liabilities Air Restaurants Particulars catering Hotels and others Group Total Segment assets 135,887,624 20,301,530 12,726,679 - 168,915,833 Unallocated - - - 50,332,444 50,332,444 Total 135,887,624 20,301,530 12,726,679 50,332,444 219,248,277 Segment liabilities 40,420,336 606,626 - - 41,026,963 Unallocated - - - 34,644,624 34,644,624 Total 40,420,336 606,626 - - 75,671,587 Capital expendi- ture * 42,372,359 - - 6,118,594 48,490,953 Total 42,372,359 - - 6,118,594 48,490,953

* Includes additions during the period and assets under construction. (Excludes assets acquired on acquisition)

Note: No disclosures are made for comparative periods as the company had no operations and all expenses represented group expenses.

Description of business segments

Air Catering: SkyGourmet acquired by the Group is identified as an independent business segment offering air catering services. SkyGourmet also provides handling, stores management, transportation of meals, loading/unloading of goods and other consumable and ancillary services however these services directly related and covered under the original meals supply contract and relates air catering.

Hotels: Currently this segment represents independent operations of Gordon House Hotel located at Mumbai. The Hotel is a modern boutique providing state of art facilities.

Restaurants and others: This segment comprises of operating speciality restaurants, chain of patisserie, cake shops and food courts.

Secondary segments

The Group has not presented geographical segments as its all operations are carried out in India.

NOTE HH. OTHER FINANCIAL ASSETS

Trade receivables comprise amounts receivable from the rendering of catering services. Other current assets include unbilled income, prepayments, accrued interest and deposits and advances receivable in cash and kind.

The directors consider that the carrying amount of trade and other receivables approximates their fair value.

Bank balances and cash comprise cash and short-term deposits held by the group treasury function. The carrying amount of these assets approximates their fair value.

The investments in short term included investment in daily dividend plan of reputed mutual funds, where the carrying value represents fair value.

Given below is the summary of financial assets as categorised in IAS 39: Particulars March 31 2008 December 31 2006 Non current assets Available for sale - - Held to maturity - - Current assets Available for sale Loans and receivables 11,090,663 557,745 Cash and cash equivalents 18,102,932 99,592,211 NOTE II. OTHER FINANCIAL LIABILITIES

Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs.

The directors consider that the carrying amount of trade payables approximates to their fair value.

Particulars March 31 2008 December 31 2006 Non current liabilities Borrowings: Financial liabilities at amortised cost 30,318,607 - Current liabilities Borrowings: Financial liabilities at amortised cost 7,622,718 - Trade payables: Financial liabilities at amortised cost 14,780,768 338,404 NOTE JJ. RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group is exposed to a variety of financial risks which results from the Group's operating and investing activities. The Group's risk management is coordinated its parent company, in close co-operation with the board of directors and the core management team of the subsidiaries, and focuses on securing the Group's short to medium term cash flows by minimising the exposure to financial markets.

The Group does not engage in the trading of financial assets for speculative purposes nor does it write options.

Financial assets that potentially subject the Group to concentrations of credit risk consist principally of cash equivalents, accounts receivables, other receivables, investment securities and deposits. By their nature, all such financial instruments involve risk including the credit risk of non- performance by counter parties.

The Group's cash equivalents and deposits are invested with banks, whereas investment securities represent investments in highly liquid securities traded actively on various stock exchanges.

The Group's trade and other receivables are actively monitored to review credit worthiness of the customers to whom credit terms are granted and also avoid significant concentrations of credit risks.

The Group's interest-rate risk arises from long-term borrowings. Borrowings obtained at variable rates expose the Group to cash flow interest- rate risk. Borrowings issued at fixed rates expose the Group to fair value interest-rate risk.

Foreign Currency sensitivity

The operating currency of the subsidiaries being Indian Rupee (INR) most transactions are incurred in Indian Rupees (INR). The subsidiaries incur certain foreign currency transactions however no significant exposure to currency exchange rate is noted. As the subsidiaries operate in India and therefore have a natural hedge to foreign currency exchange the group has not taken any steps to mitigate such risks.

Foreign currency denominated financial assets and liabilities, translated into USD at the closing rate, are as follows.

Nominal amounts March 31, 2008 December 31, 2006 USD INR USD INR Short term exposure Financial assets 17,293,100 689,644,698 - - Financial liabilities 22,296,055 889,612,611 - - Net short term exposure (5,002,955) (199,617,913) - - Long term exposure Financial assets 6,276,636 250,437,790 - - Financial liabilities 30,989,926 1,236,498,036 - - Net Long term exposure (24,713,289) (986,060,246) - -

If the INR had strengthened against the US Dollar by 3% (2006: 0%) then this would have had the following impact:

March 31, 2008 December 31, 2006 USD USD Net results for the period (9,590) -

If the INR had weakened against the US Dollar by 7% (2006: 0%) then this would have had the following impact:

March 31, 2008 December 31, 2006 USD USD Net results for the period (20,286) - Interest rate sensitivity

The Group's policy is to minimise interest rate cash flow risk exposures on long-term borrowing. Vehicles borrowings being at fixed rates, these are no sensitivity analysis on these. At 31 March 2008, the Group is exposed to changes in market interest rates through its long term bank borrowings, which are subject to variable interest rates - see note 4.7 for further information.

The following table illustrates the sensitivity of the net result for the period and equity to a reasonably possible change in interest rates of +1% and -1% (2006: +/-0%), with effect from the end of the year. These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on the Group's consolidated financial instruments held at each balance sheet date. All other variables are held constant.

March 31, 2008 December 31, 2006 + 1% - 1% + 1% - 1% Net results for the period (3,547,624) (3,504,468) - - Credit risk analysis

The Group's exposure to credit risk is limited to the carrying amount of financial assets recognised at the balance sheet date, as summarised below:

March 31, 2008 December 31,2006 Highly liquid investments 14,367,242 - Cash & cash at bank 1,770,223 - Trade receivables 8,133,181 - Other receivables 1,590,335 -

The Group continuously monitors defaults of customers and other counterparties, identified either individually or by the Group, and incorporates' this information into its credit risk controls. The Group's policy is to deal only with creditworthy counterparties.

The Group's management considers that all the above financial assets that are not impaired for each of the reporting dates under review are of good credit quality, including those that are past due.

None of the Group's financial assets are secured by collateral or other credit enhancements.

In respect of trade and other receivables, the Group's exposure to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics refer note J.

The credit risk for liquid funds and other short-term financial assets is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

Liquidity risk analysis

The Group manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-term financial liabilities as well as cash- outflows due in day-to-day business. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a rolling 30-day projection. Long-term liquidity needs for a 180-day and a 360-day lookout period are identified monthly

The Group maintains cash and marketable securities to meet its liquidity requirements for up to 30-day periods. Funding in regards to long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities and the ability to sell long-term financial assets.

As at 31 March 2008, The Group's liabilities have contractual maturities which are summarised below:

Current Non Current Within 6 to 1 to More than 6 months 12 months 5 years 5 years 2008 2006 2008 2006 2008 2006 2008 2006 Term loan from banks 1,260,652 - 1,260,652 - 28,470,170 - - - Vehicle loan 677,614 - 677,614 - 2,994,194 - - - Trade payable 9,305,107 - - - - - - - Other short term liabilities 4,101,461 - - - - - - -

The above contractual maturities reflect the gross cash out flows, not discounted at the current values thereby these values will differ to the carrying values of the liabilities at the balance sheet date.

NOTE KK. CAPITAL MANAGEMENT POLICIES AND PROCEDURES the Group' s capital management objectives are: -- to ensure the Group's ability to continue as a going concern; and -- to provide an adequate return to shareholders. by pricing products and services commensurately with the level of risk.

The Group monitors capital on the basis of the carrying amount of equity plus its subordinated loan (see note 22), less cash and cash equivalents as presented on the face of the balance sheet. Capital for the reporting periods under review is summarised as follows:

The Group's goal in capital management is to maintain a capital-to-overall financing structure ratio as low as possible.

The Group sets the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities other than its subordinated loan. the Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

March 31, 2008 December 31, 2006 Total equity 144,202,951 99,811,552 Add Subordinated loan - - Less Cash & cash equivalents (18,102,932) (99,592,211) Capital 126,100,019 219,341 Total equity 144,202,951 99,811,552 Add Borrowings 37,941,325 - Overall financing 182,144,276 99,811,552 Capital to overall financing 0.69:1.0 0.002:1 ratio NOTE LL. PREVIOUS PERIOD FIGURES

Previous period figures have been re-grouped and/or re-classified to conform to the current period figures. Previous period figures have been audited by another firm of accountants.

SOURCE India Hospitality Corp.

09/23/2008

/CONTACT: Investor Relations Contact, ICR Inc., William Schmitt, +1-203-682-8200, or Nominated Adviser and Broker, Deutsche Bank AG, Mumtaz Naseem, +44-20-7545-8000/

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