To The Members of
Arshiya International Ltd.
Your Directors are pleased to present the 31st Annual Report together with the Audited Accounts for the financial year ended 31st March, 2012.
The Directors recommend a dividend @ 70%. i.e. Rs. 1.40 per equity share of Rs. 2 for the financial year ended 31st March, 2012 The Dividend on Equity Shares, if approved by the Members, would involve a cash outflow of Rs. 957.22 Lacs including dividend tax.
TRANSFER TO RESERVES
Your Directors propose to transfer a sum of Rs. 480 Lacs to the General Reserve Account for the year ended 31st March, 2012.
BUSINESS AND FUTURE OUTLOOK
Your Company has over the past few years continuously and steadily strived to improve the logistics landscape in our country. Beginning with a strong foothold in the asset light logistics services industry, your Company embarked on a journey to create world class logistics infrastructure on a pan India basis which would provide natural integration to its core logistics business and revolutionize the logistics space in India.
Arshiya plans to capitalize on India’s mammoth logistics opportunity by being India’s only Unified Supply Chain Infrastructure and Solutions Group. With 11 year legacy in the logistics and supply chain industry in India servicing over 1,500 customers including over 275 at Arshiya’s FTWZs alone, Arshiya’s unique business model makes it a pioneering company, not just in India but world over. With a planned investment outlay of USD 1.6 billion, your Company will be the industry pioneer in development and operations of state-of-the-art logistics infrastructure solutions across strategic locations in India. Your Company s sole mission is to provide India with the logistics infrastructure solutions that would allow this great nation to capitalize on its true macroeconomic potential.
The Mumbai FTWZ has seen phenomenal growth over the year gone by and the Khurja FTWZ near New Delhi too has seen a strong traction of customers. In the rail space, your Company has signed a long term deal with GATX India to lease its rakes to Arshiya Rail. This move will help Arshiya Rail migrate its business to a capex lean model, resulting in lower gearing and improved margins. With this development and the commissioning of our logistics hub in Khurja, your Company extremely positive about the coming year.
(I) Arshiya Free Trade & Warehousing Zones (FTWZ):
The FTWZ regulatory framework has given India the much needed impetus to drive its economic growth to the next level, truly leveraging the nation’s vast domestic market and growing purchasing power parity. 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.
(II) Arshiya Rail & Rail Infrastructure:
Arshiya Rail Infrastructure started its operations in February 2009. As at 31st March, 2012, Arshiya Rail has 20 trains to its pan India operations in Phase 1. Our unique model has resulted in Arshiya Rail being the second largest and the most profitable Private Container Train Operator (PCTO) in India.
(III) Arshiya Industrial & Distribution Hub Ltd.
Arshiya Industrial & Distribution Hub is a venture designed to provide companies with a strategic hub warehousing for domestic consolidation of goods. These rail-connected mega consolidation hubs will result in considerable time and cost reduction.
The first of Arshiya’s five planned Industrial & Distribution Hubis strategically located at the confluence of the Eastern and Western freight corridors at Khurja (near Delhi), in the state of Uttar Pradesh. It is further benefited by the adjoining presence of the modern high-capacity Rail Terminal developed by Arshiya Rail infrastructure and Arshiya’s FTWZ. It will allow companies to access ports and the hinterland through both the freight corridors. This debottlenecked location, helps companies to cut down drastically on so-called inevitable transportation expenses, prevalent in India.
(IV) Arshiya Forwarding
With a decade of lineage in integrated logistics solution Arshiya forwarding offers end-to-end Freight Management, Transportation, Document Management, Customs Clearance and Project Logistics services across the network of 150+countries worldwide.
(V) Arshiya Supply Chain Management
Arshiya Supply Chain Management 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.
Group Subsidiary Companies and Consolidated Financial Results
The Company has following subsidiaries as on 31st March, 2012.
Arshiya Domestic Distripark Ltd
Arshiya Industrial & Distribution Hub Limited (formerly known as Arshiya Northern Domestic Distripark Limited)
Arshiya FTWZ Limited
Arshiya Central FTWZ Limited
Arshiya Northern FTWZ Limited
Arshiya Rail Infrastructure Ltd
Arshiya Rail Siding & Infrastructure Limited
Arshiya Supply Chain Management Pvt Ltd
Arshiya Transport and Handling Ltd
Arshiya Hongkong Ltd. and its following subsidiary
Arshiya Logistics LLC, Dubai
Arshiya International Singapore Pte Ltd
Cyberlog Technologies International Pte Ltd
Cyberlog Technologies Hongkong Limited
Arshiya Technologies (India) Pvt. Limited
Cyberlog Technologies (UAE) FZE
The Group also include Ajay & Archana Mittal Family Private Trust as defined in erstwhile MRTP Act, 1969.
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 21and 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, 2012, 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 and will be available on the website 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.
During the year under report /review, seven step down subsidiaries of the Company, viz. Arshiya Southern Domestic Distripark Ltd., Arshiya Eastern Domestic Distripark Ltd., Arshiya Western Domestic Distripark Ltd., Arshiya Central Domestic Distripark Ltd., Arshiya Exim Trading Ltd., Arshiya Eastern FTWZ Ltd., Arshiya Western FTWZ Ltd. have ceased to be step down subsidiaries of your Company. Further, another step-down subsidiary of your Company, Cyberlog Technologies Inc., USA has been dissolved.
AMALGAMATION OF SUBSIDIARY COMPANIES
The wholly owned subsidiaries of your Company viz. Arshiya FTWZ Limited (AFTWZL) and Arshiya Domestic Distripark Limited (ADDL) are in the process of getting merged with your Company and necessary petitions have been presented before the Bombay High Court.
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. Ashish Bairagra and Mr. Rishabh P. Shah, Directors, retire by rotation and being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting.
Mr. V. Shivkumar opted for retirement from the Board w.e.f. 14th May, 2012. The Board acknowledges and places on record its deep appreciation of the valuable contributions made by Mr. V. Shivkumaras an Executive Director of the Company.
ARSHIYA EMPLOYEE STOCK OPTION PLAN 2007
Employee Stock Option Plan 2007 is now administered by the Compensation Committee of the Board. The applicable disclosures required under Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as at 31st March, 2012, are set out in Annexure I to this Report.
Your Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the shareholders. The certificate would be placed at the Annual General Meeting for inspection by members.
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, 2012, and of the profit 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, 2012. The Secretarial Compliance Certificate addressed to the Board of Directors of the Company forms part of this Annual Report. The Secretarial Compliance Certificate confirms that the Company has complied with the applicable provisions of the Companies Act, 1956, Depositories Act, 1996, Listing Agreement with Stock Exchanges and all the Regulations of SEBI as applicable to the Company including SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and the SEBI (Prohibition of Insider Trading) Regulations, 1992.
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. This division focuses on creating an organization which nurtures continuous improvement and innovation in management practices. Your Company recognizes the need to attract best-in-class talent from diverse domains and industries. Accordingly, hiring practices have been improvised to help identify the best talent in a cost effective manner. Pay for performance philosophy helps us in rewarding high performers thereby motivating talent and enhancing retention. Over the year, your Company has added key senior management as well as middle management resources across divisions. The Arshiya Global Internship Program has helped international management students to work on live projects on a real time basis and get hands on experience of working in India. The Human Resources at Arshiya will continue its focus on enhancing the service levels and creating a culture of employee friendly environment.
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:
• Rain water 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 not only needs to be profitable and competitive, but also 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
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.
Empowering Villages Everywhere (EVE) Solar Lamps for Villages:
Your Company supported a novel initiative by school children based in Mumbai, for providing solar lamps to villages at a subsidized rate. Under the EVE program portable solar lamps were provided to villages where electricity is not available. By subsidizing the cost, EVE was able to offer villagers an opportunity to increase productivity and improve their quality of life. At Arshiya we have pledged to join hands with EVE and support them in this initiative to help light lives.
CODE OF CONDUCT
The Board has laid down a Code of Conduct for all Board Members and Senior Management of the Company. The Code of Conduct has been posted on the Company s website.
Board Members and Senior Management personnel have affirmed compliance with the Code for the financial year 2011-12. A separate declaration to this effect is annexed to the Corporate Governance Report.
Junoon Celebrity Charity Cricket Match:
Your Company supported EVE in a celebrity charity cricket match Junoon which was organized for the benefit of the physically challenged. The ticket proceeds of this match were used to provide artificial limbs to the physically handicapped living in the rural district of Satara, Maharashtra.
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 utilizing technology to improve productivity, efficiency and quality of its business operations and working environment.
Foreign Exchange Earnings and Outgo:
• Foreign Exchange received - Rs. 878,065,074/
• Foreign Exchange incurred - Rs. 198,609,328/
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 employees, may write to the Company at Registered Office of the Company.
The observations in the Auditors Report are self explanatory and need no further explanations.
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.
Your Directors would like to express their gratitude for the assistance, support and co-operation received from the Government of India, the State Governments and the other Government agencies and their 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
Dated: 07th July, 2012