The Members of
Arshiya International Ltd.
Your Directors are pleased to present the 32nd Annual Report together with the Audited Accounts for the financial year ended 31st March, 2013.
On a Consolidated basis your Company has recorded a loss after tax over the previous year. The general overall slow down in industrial growth and sluggish trend had its negative impact on your Company's operations. Besides, Your Company had to face various constraints in the day to day operations due to regulatory and other issues which have been severely impacting the progressive and profitable operations of the Company such as:
• Stoppage of Transhipment of cargo from Mumbai Port to FTWZ
• Delays in Duty Drawback
• Non availability of Customs EDI System in FTWZ
• Import General Manifest (IGM) approvals for FTWZs
• Non recognition of Arshiya FTWZ as a port for import of few items especially Cars
However, the Company has taken up these issues at the highest levels of Government and it is expected that the issues will be resolved early to enable smoother day to day operations and better performance.
In the mean time, several initiatives and measures to rationalise expenses, costs, improve effective utilisation of human and material resources to the optimum level have been taken. In view of the above, various steps have been taken viz. downsizing of excess personnel to make it a lean and effective organisation, termination of certain contractual arrangements at different locations across the country to be cost effective, monitoring utilisation of equipment more efficiently and overall general cost control, austerity measures etc. to list a few. Your Directors are contemplating to explore the Inventory/REPO financing of commodities by gobal financiers for clients in the Indian market, a non-existent business in India till now and which was being transacted out of Free Trade Zones in Singapore and Dubai to service the Indian market.
Your Directors felt it expedient to contain high finance costs, chanalise cash flow for operations leading to more productivity, Debt servicing and to make the resources available for the day to day operations of the Company, Your Directors felt the necessity to seek a Corporate Debt Restructuring (CDR) whereby the Company's obligations to pay interest and principal on borrowings could be deferred, availing of certain concessions like moratorium for payments etc. from the Bankers. Accordingly, the Company's CDR proposals are before the Bankers and the same are being favorably considered and the procedural process is under progress.
In view of losses, the Directors regret their inability to recommend dividend for the financial year ended 31st March 2013.
BUSINESS AND FUTURE OUTLOOK:
World class logistics infrastructure on a pan India basis created by your Company provides for unified supply chain as a unique concept and serves as a one stop shop for all the needs of logistics. There is no doubt this has revolutionised the logistics space in the country.
Arshiya plans to capitalize on India's mammoth logistics opportunity by being India's only Unified Supply Chain Infrastructure and Solutions Group. With a rich legacy in the logistics and supply chain industry in India, Arshiya's unique business model makes it a pioneering company, not just in India, but world over.
(I) Arshiya Free Trade & Warehousing Zones (FTWZ):
Over the last few decades, India has been losing investments to neighbouring economies, which were being used by global corporations as bases for feeding India, due to lack of comparable infrastructure availability in India.
With FTWZs developed by Arshiya, our country will be able to leverage 'Soft Infrastructure' such as skilled manpower, cost competitiveness, regulatory framework, IT connectivity, as well as 'Hard Infrastructure' such as dedicated state-of-the-art mega logistics parks FTWZs, rail connectivity, industrial & distribution hubs, transport & handling and world class supply chain management services. FTWZ will be a game changer for international as well as domestic companies which are importing, exporting or re-exporting products to and from India.
The first FTWZ developed in Maharashtra near Mumbai/Panvel is a credential for FTWZ concept in India. With over 500 customer base domestic as well as international, India can be proud of providing a successful unified supply chain concept in the country.
Arshiya Northern FTWZ Limited (ANFTWZ), a subsidiary has developed an FTWZ at Khurja to cater to the needs of North India.
FTWZ provides assistance to various potential clients for import and export, who struggle hard to recover taxes and duties paid while import of the inputs and other merchandise. They face the burden of spending heavy amounts towards recovery expenses apart from the time consumption or have to forego the duties paid because of lack of provisions. Through FTWZ they reduce their cost burden because it being a deemed foreign territory.
FTWZ clients can also make use of the ICD facilities at Khurja to reduce the overall logistics costs. The state of the art railway siding at Khurja will further reduce the overall logistics cost between gateway ports and FTWZ/ICD.
Being a pioneer in FTWZ business in India, ANFTWZ is facing a few regulatory challenges which have been taken up at the highest level with concerned Government authorities and the authorities are appreciative of the issues and your Management hopes to get most of the issues resolved early.
(II) Arshiya Rail & Rail Infrastructure:
Arshiya Rail Infrastructure Limited (ARIL) started its operations in February 2009. Our unique model has resulted in Arshiya Rail being the second largest Private Container Train Operator (PCTO) in India. This company is operating total 21 container trains at present and mostly in domestic sector. The company stands atop with regard to freight transportation per annum among all PCTO. Being a pan India operator, the company renders services across all parts of India including major ports.
(III)Arshiya Industrial & Distribution Hub:
Your Directors are glad to inform that Arshiya Industrial & Distribution Hub Limited (AIDHL), a subsidiary is in the process of setting up an Inland Container Depot (ICD) at Khurja, U.P.
ICD of AIDHL will be located just 35 km distance from Sikandrabad Industrial Area (SIA) and the said SIA is clustered with a large number of major industries like Kajaria Ceramic, Orient Ceramics, Berger Paints, food grains, meat products etc.,who presently are doing their Import/Export business through other ICD's. Once the proposed Arshiya ICD becomes operational, SIA imports and exports will be covered, besides the imports and export business of Rudrapur and Haridwar Industrial Area and also exports of wheat, rice, cotton and sugar from Bulandshahr region. In addition to handling export cargo, ICD will also provide direct Rail connectivity from gateway port: JNPT and Mundra to Khurja which will increase the consignment velocity and also reduce the overall logistics cost.
Pursuant to the efforts of AIDHL, the Government of India, Ministry of Commerce and Industry has recently issued a Letter of Intent (LOI) for setting up of the ICD at Khurja.
Central Board of Excise and Customs (CBEC) is in the process of issuing a gazette notification in this regard. (IV) Arshiya Supply Chain Management:
Arshiya Supply Chain Management Private Limited, a FTWZ Unit provides end-to-end supply & demand chain solutions and is committed to evolving end-to-end strategic solutions across supply chain management by using innovative technology.
As required under the listing agreements with Stock Exchanges, a consolidated Financial Statement of the Company and all its subsidiaries prepared in accordance with Accounting Standards 21 and 23 issued by the Institute of Chartered Accountants of India (ICAI) giving details of financial resources, assets, liabilities, income, profits, etc. of the Company, its associates and subsidiaries, after elimination of minority interest as a single entity, is annexed. In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India dated 8th February, 2012, the annual accounts and other documents of the Subsidiary Companies are not being attached with the Annual Report of the Company. The Annual Accounts of the above referred subsidiaries as at 31st March, 2013, and related detailed information will be made available to any member of the Company/its subsidiaries seeking such information at any point of time and the same will also be available for inspection by any Member of the Company/ its subsidiaries at the Registered Office of the Company. In addition, the Annual Accounts of the said subsidiaries will be made available for inspection at the Registered Office of the respective subsidiary companies.
AMALGAMATION OF SUBSIDIARY COMPANIES
During the year, Arshiya FTWZ Limited (AFWZL) and Arshiya Domestic Distripark Limited (ADDL)wholly owned subsidiaries have been merged with the Company pursuant to the order under Section 391 to 394 of the Companies Act, 1956 dated 7th December, 2012 passed by Bombay High.
PREFERENTIAL ALLOTMENT :
The Company, during the year issued and allotted 136,00,000 Warrants of Rs. 145 each Convertible into equal number of Equity Shares of Rs. 2/- each in the capital of the Company to Promoter/Promoter Group pursuant to the Special Resolution passed at the Extra-Ordinary General Meeting held on 18th October, 2012 . Out of the above, 30,50,000 Warrants being fully paid up were converted into Equity Shares of Rs. 2/- each at a premium of Rs.143 per share as per the terms of issue. The proceeds of issue of Warrants have been utilised for the purposes they were issued.
Your Company has been following the principles of good Corporate Governance over the years and lays strong emphasis on transparency, accountability and integrity. As per clause 49 of the Listing Agreement entered into with BSE and NSE, a separate section on Corporate Governance forms part of this Annual Report.
A Certificate from a Practising Company Secretary confirming compliance with the conditions of Corporate Governance under Clause 49 of the Listing Agreement is also attached to this Report.
Mr. Mukesh Kacker and Mr. Sandesh Chonkar, Directors, retire by rotation and being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting.
Major Suhas Thakar (Retd.) has been appointed as Additional Director with effect from 1st June 2013, pursuant to the provisions of Section 260 of the Companies Act, 1956 to hold office till the ensuing Annual General Meeting of the Company. The Company has received notice under Section 257 of the Companies Act, 1956 proposing his appointment as Director of the Company liable to retire by rotation. Members may approve the appointment of Major Suhas Thakar (Retd.) as Director of the Company.
Your Board has appointed Major Suhas Thakar (Retd.) as Executive Director of the Company for a period of 3 years with effect from 1st June 2013 upto 31st May, 2016 subject to approval of the Members at the forthcoming Annual General Meeting.
DIRECTORS RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 217 (2AA) of the Companies Act, 1956, with regard to the Directors' Responsibility Statement, the Directors confirm that:
a) in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departures;
b) the selected accounting policies were applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2013, and of the loss of the Company for the year ended on that date;
c) Proper and sufficient care has been taken 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;
d) the annual accounts have been prepared on a going concern basis.
SECRETARIAL AUDIT REPORT
Your Company had engaged Mr. P.K.B. Nambiar, Practising Company Secretary, to review Secretarial Compliance for the financial year ended 31st March, 2013. The Secretarial Compliance Certificate addressed to the Board of Directors of the Company forms part of this Annual Report.
The Secretarial Compliance Certificate, although not mandatory, is also obtained on a quarterly basis and reviewed by the Board.
For your Company, employees are the most valuable assets. Attracting, training, growing and retaining talented professionals continue to be the focus for Human Resources division of your Company. Pay for performance philosophy helps us in rewarding high performers thereby motivating talent and enhancing retention. Considering the current business need, there was rationalization of the human resource in the Company and accordingly the work force has been reduced during the year to make it to the optimum level.
HEALTH, SAFETY AND ENVIRONMENT:
As a responsible corporate citizen, your Company lays considerable emphasis on health, safety aspects of its human capital, operations and overall working conditions. Thus being constantly aware of its obligation towards maintaining and improving the environment, all possible steps are being taken to meet the toughest environmental standards on pollution, effluents, etc. across various spheres of its business activities.
Arshiya's Rail Infrastructure division especially plays a pivotal role in the mitigation of pollution and reduction of fuel used for road travel through its unique Rail solutions that it provides to corporations at pan-India level.
Your Company has implemented several proactive measures towards ensuring its logistics infrastructures especially the FTWZ in Mumbai and Khurja, along with the Industrial & Distribution Hub are environment friendly. Following measures are being implemented in Mumbai FTWZ, which will be followed across locations:
• Rainwater harvesting.
• Development of green area: Re-plantation of 7000 trees in the FTWZ.Conservation of top soil by removing and storing it before the digging/ piling work. The top soil was re-used for developing the green areas.
• Developed water bodies as natural storage and utilizing the water from it, throughout the year.
• Provision provided in the storm water drainage system to allow ground water recharging.
• Sewage treatment plant in all the facilities - Mumbai FTWZ, Khurja FTWZ as well as the Khurja Industrial and Distribution Hub. Water treated in these plants is being re-utilized for watering of the landscaping.
CORPORATE SOCIAL RESPONSIBILITY
Your Company sincerely believes that growth needs to be sustainable in a socially relevant manner. Today's business environment especially in India therefore demands that corporates play a pivotal role in shouldering social responsibility. Your Company is committed to its endeavour in social responsibilities for benefit of the community.
Under the Corporate Social Responsibility (CSR) initiative of the Company 'Arshiya Cares', your Company has pledged to join hands with organizations who are working towards finding simple solutions to the infrastructure problems that India faces. Following CSR initiatives have been undertaken by your Company on the social front:
Emergency Fire Fighting Service:
The Mumbai FTWZ at Sai Village, Panvel has a 24x7 emergency fire fighting vehicle (Foam Tender) inside the zone managed by trained personnel.
This service is supported by dedicated infrastructure which includes
• Fire extinguishers and Signage (Fire safety plans)
• Ceiling based water sprinklers for the stores and office space
• Beam Detectors for Smoke and Fire Detection
• Fire Hydrant System with hose reels and underground water storage tanks
• Emergency Fire exit doors and staircases
• Building Management System with Monitoring and Public address systems to provide emergency response
Available 24x7 to the residents in the vicinity of Sai Village and Panvel area, free of charge through a toll free number
Emergency Ambulance Service: The Mumbai FTWZ at Sai Village, Panvel has a 24x7 emergency ambulance service dedicated for residents in the vicinity of Sai Village and Panvel area. Stationed in the premise of the zone, it is equipped with expert staff trained in Trauma treatment. This service is available to the local population free of charge through a toll free number.
Electricity Distribution Facility:
At the Mumbai FTWZ at Sai Village, Panvel, your Company has created additional capacity in its electrical infrastructure to enable supply of electricity to the surrounding villages.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
• Information as required under Section 217(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 are set out as under:
Conservation of Energy: The operations of the company involve low energy consumption. Adequate measures have been implemented to conserve energy such as -
• Roof of the warehouses at our FTWZs and Industrial & Distribution Hubs have been designed with MR24 standards. A provision of installation of solar panels has been made on the roofs to generate renewable energy
• Orientation of the warehouse buildings has been done in such a way that there is less heat transmission resulting in saving the electricity consumption by minimizing heat loss in the HVAC system.
Technology Absorption: Arshiya sincerely believes in utilising technology to improve productivity, efficiency and quality of its business operations and working environment.
Foreign Exchange Earnings and Outgo:
• Foreign Exchange received - Rs. 12,064.66 lacs
• Foreign Exchange incurred - Rs. 5,946.71 lacs
• PARTICULARS OF EMPLOYEES
Pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of employees are set out in the Annexure to the Directors Report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all members of the Company. Any member, who is interested in obtaining such particulars about the employees, may write to the Company at Registered Office of the Company.
Though there are no qualifications in the Auditors Report there are certain issues which have been highlighted viz 1) Remuneration paid to the Chairman and Managing Director which has turned out to be in excess of the limits prescribed under Section 198 read with Schedule XIII of the Companies Act, 1956 hence it is subject to Central Government approval, the management is making necessary application to the Central Government in this behalf. 2) Financial stress on the Company which is reflected by an increase in receivables and payables, delay in full and final settlement dues, statutory dues are in arrears, dues to banks, a financial institution and a non banking institution are pending, certain lenders have filed cases against the Company and directors for dishonor of cheques, to mitigate this, Company has undertaken various cost cutting measures and have opted for a corporate debt restructuring plan which has been admitted and is under consideration of the CDR Cell and Company is also in the process of settling the full and final settlement dues. Weakness in Internal control systems has been observed and the management is taking steps to further strengthen the internal control systems.
M/s MGB & Co., Chartered Accountants, Mumbai, Auditors of the Company, retire at the ensuing Annual General Meeting and are eligible for reappointment.
The Company has received a certificate from M/s MGB & Co., Chartered Accountants, Mumbai, confirming that their appointment, if made, would be in accordance with the provisions of Section 224 (1B) of the Companies Act, 1956. ACKNOWLEDGEMENT
Your Directors would like to express their gratitude for the assistance, support and co-operation received from Government of India, the State Governments and other Government agencies and departments, investors, bankers, financial institutions and all other stakeholders.
Your Directors also wish to place on record their deep sense of appreciation for the committed services by the executives, staff and workers of the Company.
For and on behalf of the Board of Directors
Ajay S Mittal Chairman & Managing Director
ADDENDUM TO THE DIRECTORS' REPORT DATED 30TH MAY, 2013
The Members, Arshiya International Ltd.
CHANG E OF NAME OF THE COMPANY
Your Directors felt the need to change the name of the Company from "Arshiya International Limited" to "ARSHIYA LIMITED" to truly represent the current nature of business activities as the Company does not have any international business operations. Accordingly, the Board has decided to change the name of the Company subject to the requisite approvals of Members at the ensuing Annual General Meeting and the Central Government. i.e. the Registrar of Companies, Maharashtra, Mumbai.
Your Directors propose the enabling resolution for the approval of the members at the ensuing Annual General Meeting and accordingly this forms a special business in the Notice.
M/s MGB & Co., Chartered Accountants, Mumbai, the Auditors of the Company, have regretted their inability to be re-appointed as the Auditors of the Company at the ensuing Annual General Meeting.
Your Directors therefore, propose the appointment of M/s PKF Sridhar & Santhanam, Chartered Accountants (Firm Registration No. 003990S) as the Auditors of the Company at the ensuing Annual General Meeting. M/s PKF Sridhar & Santhanam, Chartered Accountants, have furnished a certificate in writing that their appointment as Auditors of the Company, if made, will be in accordance with the provisions of Section 224(1B).
The Members may appoint M/s PKF Sridhar & Santhanam, Chartered Accountants as the Auditors of the Company for the ensuing financial year.
Place: Mumbai. Dated: 30th May, 2013.
For and on behalf of the Board of Directors
Place: Mumbai. Dated: 3rd July, 2013.
Ajay S Mittal Chairman & Managing Director
ANNEXURE TO DIRECTOR'S REPORT
SECRETARIAL AUDIT REPORT
The Board of Directors Arshiya International Limited, 6th Floor, Twin Arcade "C" Wing, Military Road, Andheri (East), Mumbai - 400 059
I have examined the registers, records, books and papers of M/s. Arshiya International Limited (the Company) for the financial year ended on 31st March, 2013 (financial year) that are required to be maintained under the Companies Act, 1956 (the Act) and the rules made there under and also in compliance with the Listing Agreement of Stock Exchanges. In my opinion and to the best of my information and according to the examinations carried out by me and explanations furnished to me by the Company, its officers and agents, I certify that in respect of the aforesaid financial year:
1. The Company has kept and maintained registers as per the provisions of the Act and the rules made there under and the entries therein have been duly recorded.
2. The Company has filed the forms, returns and documents required to be filed with the Registrar of Companies and Central Government under the Companies Act and the rules made there under and also with the Stock Exchanges as per the listing agreement with them.
3. The Company has closed the Register of Members and Share Transfer Registers in accordance with the provisions of the Act and the Listing Agreement.
4. The Annual General Meeting for the financial year ended on 31st March, 2012 was held on 18th September, 2012 after giving due notice to the members of the Company and the resolutions passed there at were duly recorded in the Minutes Book maintained for the purpose.
5. One Extra Ordinary General Meeting was held during the financial year after giving due notice to the members of the Company and the resolutions passed thereat were duly recorded in Minutes Book maintained for the purpose.
6. The Company has made necessary entries in the register maintained under Section 301 of the Act.
7. The Company has not obtained any approvals from the Board of Directors, Members and the Central Government as there was no instance falling with in the purview of Section 314 of the Act.
8. The Company has complied with the provisions under the Act and rules made there under regarding transfer, transmission and issue of share certificates.
9. The Company has complied with the provisions of applicable laws in respect of transfer/transmission of shares.
10. The Company has complied with the provisions of the Act regarding composition of the Board and appointment of Directors on the Board of the Company.
11. The Directors of the Company have disclosed to the Board of Directors their interest in other firms / companies pursuant to the provisions of the Act and the rules made there under.
12. The Company has not bought back any shares during the year under report.
13. The Company has not invited / accepted any deposit including any unsecured loan falling within the purview of Section 58A of the Act .
14. The total borrowings by the Company from the financial institutions, banks and others are within the borrowing limits of the Company as laid down under Section 293(1)(d) of the Act.
15. The loans and investments made and guarantee or securities provided to other bodies corporate by the Company are within the limits and legal parameters .
16. The Company has generally complied with the provisions of the Act and Rules made under, where applicable .
P lace: Mumb ai D at e : 3 0 th M ay, 2 0 13
P. K.B.NAMBIAR Company Secretary C. P. 1090