The Members of Arshiya Limited
Your Directors are pleased to present the 33rd Annual Report together with the Audited Accounts for the financial year ended 31st March, 2014.
On a Consolidated basis your Company has recorded a loss during the previous year. The general overall slowdown 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 severely impacted the performance of the Company. The regulatory & operational hurdles impacting the operations of the company are as under:
• 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.
However, the Company has been consistently taking up these issues at the highest levels of Government and with the new Government in place, it is expected that the issues will be resolved sooner than later to enable smoother day to day operations and better performance.
In the meantime, several initiatives and measures to rationalise expenses, costs, improve effective utilisation of human & material resources to the optimum level have been taken.
Your Management considered it expedient to contain high finance costs so that cash flow can be channelised to operations for further productivity. To effectively service the borrowings and at the same time make the resources available for the day to day operations of the Company, your Management thought it advisable to undertake a Corporate Debt Restructuring (CDR) whereby the Company's obligations to pay interest and principal on borrowings has been deferred by availing certain concessions like moratorium etc. from the Bankers.
In view of losses, the Directors regret their inability to recommend dividend for the financial year ended 31st March, 2014.
BUSINESS AND FUTURE OUTLOOK:
World class logistics infrastructure on a pan India basis, created by your Company provides for unified supply chain as an unique concept and serves as an one stop shop for all the needs of logistics.
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.
(I) Arshiya Rail & Rail Infrastructure:
Arshiya Rail Infrastructure 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 20 container trains at present and mostly in domestic sector. The company stands atop with regard to freight transportation per annum among all PCTO.
(II) 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.
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 (ANFTWZ), a subsidiary has developed an FTWZ at Khurja to cater to the needs of North India. 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 all of the issues sorted out at the earliest.
(III) Arshiya Industrial & Distribution Hub:
Your Directors hereby inform you that the operations of AIDHL, a subsidiary has remained sluggish through out the year as its business model was based on implementation of Goods & Services Tax as also FDI in retail taking off. However, both the events have not happened and accordingly your Directors are hereby converting the AIDHL into sector specific SEZ pertaining to IT/ITES/Electronics/Hardware equipments etc. as also setting up an Inland Container Depot and proposes to merge this company into Arshiya Transport and Handling Limited another group company. The necessary Scheme of Amalgamation has been filed with the Hon'ble Bombay High Court and the approvals from concerned authorities have been applied for.
(IV) Arshiya Northern FTWZ Ltd. (ANFTWZ)
Your Directors hereby inform you that the operation of ANFTWZ have remained sluggish due to the regulatory issues being faced by the company and accordingly your Directors are hereby converting the ANFTWZ into sector specific SEZ pertaining to Chemicals/Pharmaceuticals/Bio-technology and proposes to merge this company into Arshiya Transport & Handling Ltd.another group company. The requisite Scheme of Amalgamation has been filed with the Hon'ble Bombay High Court and the approvals from concerned authorities have been applied for.
(V) Arshiya Supply Chain Management Private Limited
Arshiya Supply Chain Management Private Limited 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.
Subsidiary Companies [As on 31st March, 2014]
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. The statement pursuant to section 212(1)(e) of the Companies Act, 1956, containing details of subsidiaries of the Company forms part of the Annual Report.
In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India dated 8th February, 2011, 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, 2014, 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.
The Company had allotted 1,36,00,000 convertible warrants at Rs.145/- per warrant to promoters/ promoters group on preferential basis pursuant to the special resolution passed by the members of the Company at their meeting held on 18th October, 2012. These warrants have been converted into equity shares (in the ratio of 1 share for 1 warrant) of Rs. 21- each at a premium of Rs.143/- per share in three tranches i.e. 53,00,000, 52,50,000 and 30,50,000 during the financial years 2014-2015, 2013-2014 and 2012-2013 respectively.
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. Suhas Thakar - Executive Director ceased to be the director of the Company consequent to the superannuation w.e.f. 31st March, 2014. Mr. Sandesh Chonkar and Mr. James Beltran ceased to Directors consequent to resignation w.e.f. 21s' August 2013 and 6th September 2013 respectively. Mr. Ajay S Mittal - Managing Director retire by rotation and being eligible, offer himself for re-appointment at the ensuing Annual General Meeting. In accordance with the provisions of Sections 149 of the Companies Act, 2013 these Directors are being appointed as Independent Directors to hold office as per their tenure of appointment mentioned in the notice ensuing Annual General Meeting of the company.
The Company has received declarations from all the Independent Directors of the Company confirming that, they meet the with the criteria of Independence as prescribed both under Section 149(6) of the Companies Act, 2013 & Clause 49 of the Listing Agreement with the Stock Exchanges.
Brief details of the Directors proposed to be appointed / Re - appointed as required under Clause 49 of the Listing Agreement are provided in the notice of the Annual General Meeting forming part of this Annual Report.
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, 2014, 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. Manoj Mimani, Practising Company Secretary, to review Secretarial Compliance for the financial year ended 31st March, 2014. 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.
Human Resource Department of your company is instrumental in building employees capabilities through structured talent acquisition and its development through technical and need based training. 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.
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:
• 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 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 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.
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 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 the electricity consumption by minimizing heat loss in the HVAC system.
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. 108,794,746
• Foreign Exchange incurred - Rs. 11,999,650
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.
The observations in the Auditors Report are self explanatory and need no further explanations.
With respect to the comment of the Statutory Auditors in note 48(H) to financial statement your Directors wish to clarify that the company is in process of making an application to the central Government in the respect and that the said executive director was a professional non-promoter Director of the Company.
Further notes to the financial statements, as referred in the Auditors Report, are self-explanatory and therefore do not call for any further comments and explanations under section 217(3) of the Companies Act, 1956.
M/s M.A Parikh & Co., Chartered Accountants, Mumbai, Auditors of the Company, retire 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.
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
Dated: 9th July, 2014