Your Directors are pleased to present the 34th Annual Report together with the Audited Accounts for the financial year ended 31st March, 2015.
In view of losses, the Directors regret their inability to recommend dividend for the financial year ended 31st March 2015.
iv.) Particulars of loans, guarantees or investments by company
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to Financial Statements.
v.) Fixed Deposits
The Company has not accepted any deposits, within the meaning of section 73 of the Companies Act, 2013 read with the Companies (Acceptance of deposits) Rules, 2014.
vi.) Particulars of Contracts or arrangements made with related party(ies)
All transactions entered with Related Parties for the year under review were on arm's length basis and in the ordinary course of business and that the provisions of Section 188 of the Companies Act, 2013 are not attracted. Thus disclosure in Form AOC-2 is not required. Further, there are no material related party transactions during the year under review with Promoters, Directors or Key Managerial Personnel. The Company has developed a Related Party Transactions framework through Standard Operating Procedure for the purpose of identification and monitoring of such transactions.
All Related Party Transactions are placed before the Audit Committee as also before the Board for approval. Omnibus approval was obtained on a quarterly basis for transactions which are of repetitive nature. Transactions entered into pursuant to omnibus approval are audited and a statement giving details of all Related Party Transactions are placed before the Audit Committee and Board for review and approval on a quarterly basis.
The Policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company. The web link of the same has been provided in the Corporate Governance Report. None of the Directors has any pecuniary relationship or transactions vis-a-vis the Company.
vii.) Material changes and commitment, if any, affecting the financial position of the company occurred between the end of the financial year to which this financial statements relate and the date of the report
No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate on the date of this report.
viii.) Share Capital
The paid- up equity share capital of the Company as at March 31, 2015 stood at Rs.25,48,58,944/- (Rupees Twenty Five Crores Forty Eight Lakhs Fifty Eight Thousand Nine Hundred Forty Four only). During the Year under review the Company has alloted 53,00,000 shares to the Promoters upon Conversion of Warrants into equity and also 5,50,00,000 equity Shares to the Promoters on Preferential basis pursuant to the CDR Scheme as approved by the CDR-EG.
2. BUSINESS AND FUTURE OUTLOOK:
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 in the country.
a.) Rail and Rail Infrastructure:
Arshiya Rail Infrastructure Limited started its operations in February 2009. Our unique model has resulted in Arshiya Rail being the second largest Container Train Operator (CTO) and largest in Private sector in India. This company is operating total 20 container trains along with 4000 multipurpose domestic containers at present and mostly in domestic sector at more than 25 locations in pan India. The company stands atop with regard to freight transportation per annum among all PCTO. Arshiya Rail is giving customized and long term freight services to corporate clients.The company has also recently started EXIM freight services for various gateway ports like Vizag, Kolkata, Mumbai and Haldia.
Private freight terminal at Khuria
Arshiya Rail Siding at Khurja took one more step towards addressing the growing demand of the business and subsequently got notified as Brownfield Private Freight Terminal for handling all types of inward and outward traffic in full rakes, also being the First to be notified in NCR.
Apart from the existing container trains coming into Arshiya Rail Infrastructure, Khurja (ARIK) with commodities such as Ingots, Billets and Sponge Iron, the cement Industry looks at this terminal as strategic for feeding the plants and end users considering the growing demand for Infrastructure in and around Delhi NCR. With investments increasing in setting up of Cement (Grinding and Mixing) Plants in and around Khurja, ARIK sees its utilization in inwarding of raw material from various sectors and outwarding of finished product in times to come.
The terminal opens itself to other commodities also which will be critical to the growth of business in that region such as Iron & Steel, Salt, essential commodities, etc.
Also, Arshiya Industrial & Distribution Hub Limited, a fellow subsidiary has got the approval of the Government for setting up of Inland Container Depot (ICD) at Khurja, Uttar Pradesh. This development will give a boost to the rail operations of the Company.
b.) Free Trade and 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 and 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.
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 of available special provisions in Law.
The first FTWZ developed by Arshiya 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 (ANFL), a subsidiary has developed a FTWZ at Khurja, Uttar Pradesh, to cater to the needs of Northern India. The state of the art railway siding, rail connectivity and ICD at Khurja will further reduce the overall logistics cost between gateway ports and FTWZ/ICD.
Being a pioneer in FTWZ business in India, Arshiya FTWZ 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 all of the issues sorted out at the earliest.
c.) Industrial and Distribution Hub:
During the year under review Arshiya Industrial & Distribution Hub Limited, a subsidiary has got the approval of the Government for setting up of Inland Container Depot (ICD) at Khurja, Uttar Pradesh. This approval is a booster for the affairs of the Company and group as a whole because of its impact of integrating Rail, FTWZ and ICD operations at Khurja.
d.) Supply Chain Management
Arshiya Supply Chain Management Private Limited is a FTWZ Service Unit at Arshiya FTWZ, Panvel. The main activities of the company is serving Indian and foreign clients and carry out optimisation services as per clients requirement.
ii.) Subsidiaries and Associates
Your Company has 12 subsidiary companies, including 1 Material Subsidiary and 3 step down Subsidiaries as on 31.03.2015.
During the year, the Board of Directors reviewed the affairs of the subsidiaries. In accordance with section 129(3) of the Companies Act, 2013, we have prepared consolidated financial statements of the Company and all its subsidiaries, which form part of the Annual Report. Further a statement containing salient features of the financial statement of our subsidiaries in the prescribed format AOC-1 is appended as Annexure-I to this Report. The Statement also provides the details of performance, financial positions of each of the subsidiary.
In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on our website www.arshivalimited.com. These documents will also be available for inspection during business hours at the Registered Office in Mumbai, India.
3. CORPORATE GOVERNANCE
Corporate Governance is an ethically driven business process that is committed to values aimed at enhancing an organisation's brand and reputation. This is ensured by taking ethical business decisions and conducting business with a firm commitment to values, while meeting stakeholders' expectations. The 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.
i.) Number of meetings of the board
The details of the number of meetings of the Board held during the financial year 2014-15 forms part of the Corporate Governance Report. The intervening gap between any two meetings was within the period prescribed by Clause 49 of the Listing Agreement and the Companies Act, 2013.
ii.) Committees of the Board
Currently the Board have five Committees namely Committee of Directors; Audit Committee; Nomination and Remuneration Committee; Share Transfer, Investor Grievances & Stakeholders Relationship Committee and Risk Management Committee. A detailed note on Board and its committees is provided under the corporate governance section to this Annual Report.
iii.) Board Diversity
The Company recognises and embraces the importance of a diverse board in its success. We believe that a truly diverse board will leverage difference in thought, perspectives, knowledge, skill, regional and industry experience, cultural and geographical background. The Board has adopted the Policy on Board Diversity which sets out the approach to diversity of the Board of Directors and the same is available on our website <http://www.arshivalimited.com/investors/Corporate> Governance.
iv.) Remuneration and Nomination Policy
The Board of Directors of the Company has an optimum combination of Promoter Director and Non-Executive Independent Directors, who have in depth knowledge of the business and industry. The composition of the Board is in conformity with the Listing Agreement with the Stock Exchanges and Companies Act, 2013.
The Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Policy Personnel and Senior Management of the Company. This Policy also lays down criteria for selection and appointment of Board Members. The policy is attached as Annexure - II to this Report.
v.) Declaration by Independent Directors
All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.
vi.) Board evaluation
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a structured questionnaire was prepared after taking into consideration of the various aspects of the Board's functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, obligations and governance.
The evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The performance evaluation of the Chairman and the non- independent Director(s) was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the evaluation process.
None of the independent directors are due for re- appointment.
vii.) Programmes for familiarisation of Independent Directors
The details of programmes for familiarisation of Independent Directors with the Company, nature of the Industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company i.e. <http://www.arshivalimited.com/investors/Corporate> Governance
viii.) Retirement by rotation
In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Company's Articles of Association, Mrs. Archana A Mittal - Joint Managing Director retire by rotation and being eligible, offer herself for re-appointment at the ensuing Annual General Meeting.
Brief details of the Director proposed to be appointed/Re - appointed as required under Clause 49 of the Listing Agreement is provided in the notice of the Annual General Meeting and forms an integral part of this Annual Report.
ix.) Auditors' Certificate on Corporate Governance
A Certificate from a Practising Company Secretary confirming compliance with the conditions of Corporate Governance under Clause 49 of the Listing Agreement is attached as annexure to Corporate Governance Report to this Report.
x.) Directors Responsibility Statement
To the best of knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134(3)(c) of the Companies Act, 2013:
a) in the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
b) they have selected such accounting policies and applied them consistently and 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 at the end of the financial year and of the loss of the company for the year ended on that date;
c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 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;
e) that the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively and
f) that the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
4. AUDIT AND AUDITORS'
i.) Statutory Auditors
M/s M.A Parikh & Co., Chartered Accountants, Mumbai, Statutory Auditors of the Company, retires at the ensuing Annual General Meeting and are eligible for reappointment.
Your directors recommend the appointment of M/s. M.A Parikh & Co., Chartered Accountants (Firm Registration No.: 107556W) as Statutory Auditors of the Company, subject to approval of the members at the ensuing Annual General Meeting. The Company has received letter from M/s. M.A Parikh & Co, Chartered Accountants, to the effect that their appointment, if made, would be within the prescribed limits under section 141 of the Companies Act, 2013 and that they are not disqualified for such appointment. The necessary resolution seeking your approval for appointment of Statutory Auditor has been incorporated in the Notice convening the Annual General Meeting.
ii.) Cost Auditor
As per the requirement of Central Government and pursuant to Section 148 of the Companies act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company has been carrying out audit of cost records. The Board of Directors, on the recommendation of Audit Committee, appointed M/s. Prashant Karlekar & Associates, Practicing Cost Accountants (Firm Registration No. 16075) as Cost Auditors to audit the cost accounts of the Company for the financial year 2014-15 at a remuneration of Rs. 40,000/- plus applicable taxes and reimbursement of out of pocket expenses. As required under the Companies Act, 2013, a resolution seeking member's approval for the ratification of remuneration paid to the Cost Auditor forms part of the Notice convening the Annual General Meeting.
iii.) Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made there under, the Company has appointed Aabid & Co, Company Secretaries to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is included as Annexure-lll to this Report.
There is no Secretarial Audit qualification for the year under review.
iv.) Significant and material orders passed by the regulators or courts
There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the Company and its future operations.
v.) Internal control systems and their adequacy
Your Company has an effective internal control and risk mitigation system, which are constantly assessed and strengthened with new/ revised standard operating procedures. The Company's internal control system is commensurate with its size, scale and complexities of its operations. The internal and operational audit is entrusted to M/s S. K. Sheth & Associates, a reputed firm of Chartered Accountants. The main thrust of internal audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry.
The Audit Committee actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Company has a robust Management Information System, which is an integral part of the control mechanism
The Audit Committee, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken by the management are presented to the Audit Committee. To maintain its objectivity and independence, the internal Audit function reports to the Chairman of the Audit Committee.
vi.) Extract of Annual Return
The details forming part of the extract of Annual Return in Form MGT-9, as required under Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, is included in this Report as Annexure- IV and forms an integral part of this Report.
5. 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 in 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
The above facilities are 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.
The Company has under taken above CSR activities on its own and has not developed and implemented any Corporate Social Responsibility Policy as required under Section 135 of the Companies Act, 2013, as the said provisions are not applicable.
6. HUMAN RESOURCES
The Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business.
The Company has a structured induction process at all locations and management development programs to upgrade skills of managers. Objective appraisal systems based on Key Result Areas (KRAs) are in place for senior management staff.
The Company is committed to nurturing, enhancing and retaining top talent through superior Learning and Organizational Development. This is a part of Corporate HR function and is a critical pillar to support the organization's growth and its sustainability in the long run.
Further statutory disclosures w.r.t. Human Resources are as under:
i.) As required by the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has formulated and implemented a policy on Sexual Harassment at workplace with a mechanism of lodging complaints. Its redressal is placed on the intranet for the benefit of its employees. During the year under review, no complaints were reported to the Board.
ii.) None of the Managerial personnel is being paid any remuneration and hence the information required under Section 197(12) of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not relevant.
iii.) One person employed throughout the year, was in receipt of remuneration of Rs.60,00,000/- lacs per annum or more amounting to Rs. 62,56,771/- and three employees for the part of the year were in receipt of remuneration of Rs. 5,00,000/- per month or more amounting to Rs. 1,34,93,520/-. As on 31st March, 2015, the Company had 138 employees.*
*The above annexure is not being sent along with this Report to the members of the company in line with provision of Section 136 of the Companies Act, 2013. Members who are interested in obtaining these particulars may write to the Company at the Registered office of the Company. The aforesaid annexure is also available for inspection by Members at the Registered Office of the Company, 21 days before the ensuing Annual General Meeting and upto the date of Annual General Meeting during the Business Hours on working days.
None of the employees listed in the said Annexure is a relative of any director of the Company. None of the employees hold (by himself or along with his spouse and dependent children) more than two percent of the equity shares of the Company.
7. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.
8. VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The Vigil Mechanism of the Company, which also incorporates a Whistle Blower Policy in terms of the Listing Agreement to report genuine concerns or grievances. The Vigil Mechanism/Whistle Blower Policy may be accessed on the Company's website i.e. <http://www.arshivalimited.com/investors/Corporate> Governance
9. RISK MANAGEMENT
Your Company is well aware of risks associated with its business operations and various projects under execution. Comprehensively risk management system is being put in place involving classification of risk, adoption of risk mitigation measures and a strong mechanism to deal with potential risks and situation leading to rise of risks in an effective manner.
Senior Professionals conversant with risk management systems have been entrusted with the said task with a brief to implement the risk management
10. 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 and Distribution Hub which are environment friendly. Following measures are being implemented in Mumbai FTWZ, which will be followed across locations:
• Development of green area: Re-plantation of 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
• Provision of storm water drainage system to allow ground water recharging
• Sewage Treatment Plant- Water treated in these plants is being re-utilized for watering of the landscaping.
11. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The Information under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of Company (Accounts) Rules, 2014 for the year ended March 31, 2015 is 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 with roof insulation which gives temperature variation of 8Degree with ambient temperature. 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 of electricity consumption by minimizing heat loss in the HVAC system.
• Ridge ventilators are installed at the roof of all WHs, whereby there is no need of power run turbo ventilators, which saves the huge amount of power.
•Cold rooms are having the best quality insulations in roofs/sides/top and floor so as to ensure no leakage of cooling and thus saving a lot of power. The doors of the cold rooms have been installed with air curtains so that during operation, internal temperatures is maintained without any loss of cooling.
• The central control room have been installed with the control panels which controls the temp of cold rooms and monitor automatically, so to achieve the pre-set temperature requirement. The chiller units are also centrally controlled.
• Office air conditioning system is having VRV units, which adjust the power requirement as per the required heat load. This saves a lot of power requirement.
• All peripheral and yard lighting is having auto on and off system, set with the timings, which saves lot of wasteful energy.
• The docking doors are placed to ensure the minimum run by the fork lifts, which reduces large power required for re- charging
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.7, 73, 50,314/-
• Foreign Exchange incurred - Rs. 27, 97,229/12. STATUTORY INFORMATION
The Business Responsibility Reporting as required by Clause 55 of the Listing Agreement with the Stock Exchanges is not applicable to your Company for the financial year ended March 31, 2015.
Your Directors wish to place on record their appreciation 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 of Arshiya Limited
Ajay S Mittal
Chairman and Managing Director
Dated: 15th May, 2015