Arshiya Directors Report, Arshiya Reports by Directors
BSE: 506074|NSE: ARSHIYA|ISIN: INE968D01022|SECTOR: Transport & Logistics
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Directors Report Year End : Mar '13    « Mar 12
To The Members of Arshiya International Ltd.
 The Directors are pleased to present the 32nd Annual Report together
 with the Audited Accounts for the financial year ended 31st March,
                                                   (Rs. in Lacs)
                                      Year ended 
                                      31.03.13           Year ended 
 Income from operations and
  other Income                         72432.06          63000.79
 Expenditure                           70337.45          54438.59
 Profit/(Loss) Before Depreciation 
 & Tax ,                                2094.61           8562.20
 Depreciation                           1990.83           1642.79
 Profit/(Loss) Before Tax & 
 Exceptional Items                       103.78           6919.41 
 Exceptional Items                      1542.95
 Provision for Taxation                  (38.67)          2168.23
 Prof it/(Loss) After Tax              (1400.50)          4751.18
 Balance B/f                            7646.06           4332.11
 Amount adjusted pursuant to 
 scheme of amalgamation                (7646.06) 
 Amount available for Appropriation    (1400.50)         9083.29
 Proposed Dividend                                        823.61
 Dividend Tax                                             133.61
 Transfer to General Reserve * 480.00
 Balance Carried to Balance
 Sheet                                (1400.50)          7646.06
                                                 (Rs. in Lacs)
                                      Year ended 
                                      31.03.13          Year ended
 Income from Operations 
 and other Income                     114643.56         106487.38
 Expenditure                          127400.54          92300.74
 Profit/(Loss) Before Tax & 
 Exceptional Items                    (12756.97)         14186.63
 Exceptional Item                        542.77
 Tax Expense                            (584.42)          2106.64
 ProfitV(Loss) After Tax before 
 Minority Interest                    (12715.32)         12079.99
 Less: Minority interest
 Net Loss for the year                (12715.32)         12079.99
 On a Consolidated basis your Company has recorded a loss aftertax 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 ofTranshipment of cargo from Mumbai Portto 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
 In view of losses, the Directors regret their inability to recommend
 dividend for the financial year ended 31st March 2013.
 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.  (1) 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
 (lll)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
 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.
 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. 21-
 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. 21- 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 1s''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.
 - 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.
 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.
 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
 - 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
 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
 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
 - 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.
 - 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
 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
 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
 M/s MGB &Co., Chartered Accountants, Mumbai, Auditors of the Company,
 retire at the ensuing Annual General Meeting and are eligible for
 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 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
 Place: Mumbai.         A/ay S Mittal
 Dated: 30th May, 2013. Chairman & Managing Director
Source : Dion Global Solutions Limited
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