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Arshiya Ltd.

BSE: 506074 Sector: Others
NSE: ARSHIYA ISIN Code: INE968D01022
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VOLUME 3574
52-Week high 52.95
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OPEN 28.15
CLOSE 28.30
VOLUME 3574
52-Week high 52.95
52-Week low 16.00
P/E
Mkt Cap.(Rs cr) 445.17
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Arshiya Ltd. (ARSHIYA) - Auditors Report

Company auditors report

To

The Members of

Arshiya Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of ARSHIYA LIMITED("the Company") which comprise the Balance Sheet as at 31st March 2016 theStatement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors are responsible for the matters stated in Section134(5) of the Companies Act 2013 ("Act") with respect to the preparation andpresentation of these ftnancial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecifted under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgements and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgement including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.

Basis for Qualified Opinion:

We draw attention to the following:

1. In respect of non-provision of interest aggregating to Rs. 1575054021/- on loansexcluding loans assigned to Asset Reconstruction Company as referred to in Note no. 32.1

2. In respect of non-provision of interest aggregating to Rs. 1821514317/-on loansassigned to Asset Reconstruction Company as referred to in Note no. 32.2 and 32.2.1

The Companies records indicated that the management had not provided for interest asstated in item nos 1 and 2 above. Had the management done so an aggregate amount of Rs.3396568338/- would have been required to be provided. Accordingly finance cost lossfor the year and other current liabilities would have been higher and shareholder's fundswould have been lower by

3. In respect of pending approval from Central Government in relation to excessremuneration paid to Ex-Executive Director of the Company for F.Y 2013-14 as referred toin Note no. 46.

4. In respect of non-compliance with the provisions of sub section 4 of Section 203 ofthe Act relating to appointment of Chief Financial Officer.

Qualified Opinion:

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effect of the matters described in Basis for Qualified Opinionparagraph these financial statements give the information required by the Act in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

(a) in the case of the Balance Sheet of the state of affairs of the Company as atMarch 312016;

(b) in the case of the Statement of Profit and Loss of the loss for the year ended onthat date; and

(c) in the case of the Cash Flow Statement of the cash flows for the year ended onthat date.

Emphasis of Matters

1. The Company continues to be under severe financial stress as reflected by:

(a) Guarantees given on behalf of subsidiaries being invoked by the consortium of banks(See Note no. 24)

(b) Dues to banks and others being recalled by lenders aggregating to Rs.7613878542 (See note no. 10)

(d) Unpaid employee's dues Rs. 29678312 (See Note no. 10)

2. Further to above we draw attention to the following matters:

(a) No provision for diminution in value of investments in/loans to subsidiaries havingbeen made for the reasons as stated in

(b) Note no. 34.1(ii) and 34.2 Re: Mark to Market Losses.

(c) Note no. 36 Re: Proceedings against Company.

Our Opinion is not modified in respect of these matters.

Despite the foregoing these accounts have been prepared on a "Going Concern"basis as referred to in Note no. 29 of the financial statements.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure "A" a Statement on the matters specifiedin paragraphs 3 and 4 of the Order to the extent applicable.

2. As required by section 143(3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

(c) The Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account;

(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014;

(e) On the basis of the written representations received from the directors as on 31stMarch 2016 and taken on record hy the Board of Directors none of the directors isdisqualified as on 31st March 2016 from being appointed as a director in termsof Section 164(2) of the Act;

(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in Annexure "B"; and

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

(i) The company has disclosed the impact of pending litigation on its financialposition in its financial statements (Refer to Note No. 23(i) to 23(iv) and 36)

(ii) The company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term derivative contracts(Refer Note no. 34)

(iii) There has been no delay in transferring amount required to be transferred tothe Investor Education and Protection Fund by the Company.

For M.A.Parikh & Co.

Chartered Accountants

(Firm's Registration No. 107556W)

MUKUL M. PATEL

Partner

Membership No. 32489

Place: Mumbai

Date: 25th May 2016.

Annexure - A to the Auditors' Report

Annexure referred to in paragraph 1 of our report on Other Legal and RegulatoryRequirements of even date

(i) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The fixed assets were physically verified during the year by the Management inaccordance with a regular programme of verification which in our opinion provides forphysical verification of all the fixed assets at reasonable intervals. According to theinformation and explanations given to us discrepancies noticed on such verification havebeen accounted for.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the company the title deeds of Freehold Land are held inthe name of the company.

(ii) Considering the nature of the business the Company is not required to purchaseany inventory and hence the provisions of clause 3(ii) of the Order are not applicable tothe Company.

(iii) The Company has granted interest free unsecured loans to four parties covered inthe register maintained under Section 189 of the Companies Act 2013. According to theterms of arrangement the loans are receivable after one year but within five years hencethe question of repayment during the year does not arise. There are no overdue amountsexceeding Rs.One lakh as of year-end with respect to such loans granted.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and guarantees made (Refer Note no. 48)

(v) The Company has not accepted any deposits from the public and hence clause 3(v) ofthe Order is not applicable.

(vi) We have broadly reviewed the books of accounts maintained by the Company inrespect of services rendered pursuant to rules made by Government of India with regard tothe maintenance of cost records as prescribed under section 148 (1) of the Companies Act2013 and are of the opinion that prima facie the prescribed basic cost records have beenmade and maintained. We have however not made a detailed examination of the costrecords with a view to determine whether they are accurate or complete.

(vii) In respect of statutory dues:

(a) The Company is generally regular in depositing undisputed applicable statutorydues except tax deducted at source of Rs.66228741/- which is outstanding as of theyear-end for a period of more than six months from their due dates of payment.

(b) There are no disputed dues in respect of wealth tax service tax customs duty andexcise duty which have not been deposited on account of any disputes. Details of disputeddues of Income Tax and Value Added Tax which have not been deposited are as under:

Name of the Statute Nature of Dues Amount Involved Period to which the amount relates Forum where the dispute is pending
Income Tax Act 1961 Income Tax 19095345 Assessment Year 2008-2009 to 2010-2011 Income Tax Appellate Tribunal
71178440 Assessment Year 2013-2014 Deputy Commissioner of Income Tax
Value Added Tax Maharashtra Value Added Tax 2051279 Assessment Year 2005-06 Deputy Commissioner of Sales Tax-(Appeal)

(viii) The Company has not issued any debentures.

Based on our audit procedures and according to the information and explanationsgiven by the management during the year the Company has defaulted in repayment of duesto Banks and Financial Institutions the defaults whereof are stated hereunder:

• Default on account of non-payment of principal of Loans from "Banks"as stated below:

Name of the Lenders

Period of Default Punjab National Bank UCO Bank Tamilnad Mercantile Bank Oriental Bank of Commerce Karur Vysya Bank Kotak Mahindra Bank
FY 2012-13 17064600 38389400 1879998 17850000 2462486 -
FY 2013-14 95670180 182728542 14316185 103311000 10000000 -
FY 2014-15 140942720 441247964 23348766 154984000 10000000 399691418
June-15 37083820 61761661 6226790 40949000 - -
September-15 37083820 61761661 6226790 40949000 -
December-15 37083820 61761661 6226790 40949000 -
January-16 - 1545217168 - - -
February-16 - - - 1232208000 -
March-16 62552240 - 10833581 - -
TOTAL 427481200 2392868057 69058900 1631200000 22462486 399691418

Default on account of non-pavment of principal of Term Loan from"Others" (Edelweiss Asset Reconstruction Company - EARC Trust) as statedbelow:

Period of Default

Name of the EARC Trust

EARC Trust SC-144 EARC Trust SC-174 EARC Trust SC-141 EARC Trust SC-176 EARC Trust SC-126 EARC Trust SC-152
FY 2012-13 4078744 8058639 6807136 9020968 - -
FY 2013-14 53476235 54273977 51386143 53316427 19942577 15035388
FY 2014-15 88374881 80732613 85365890 80076440 49171080 37172641
April-15 - - 5000000 - - -
May-15 - 697939314 5000000 - - -
June-15 23472823 - 26184540 21101840 14048880 477933958
July-15 - - 5000000 - - -
August-15 - - 5000000 - - -
September-15 23472823 - 26184540 21101840 14048880 -
October-15 - - 5000000 - - -
November-15 - 5000000 - - -
December-15 23472823 - 26184540 21101840 14048880 -
March-16 40465646 - 35889080 35723680 28097760 -
TOTAL 256813975 841004543 288001869 241443035 139358057 530141987

• Default on account of non-payment of principal of Term Loan from *Others"(Non Banking Financial Company - NBFC) as stated below:

Period of Default NBFC Tata Capital NBFC SICOM
FY 2012-13 266666668 690000000
TOTAL 266666668 690000000

• Default on account of non-pavment of interest on Term Loan from *Banks"as stated below:

Period of Default

Name of the Lenders

Punjab National Bank UCO Bank Tamilnad Mercantile Bank Oriental Bank of Commerce Karur Vysya Bank Kotak Mahindra Bank
FY 2012-13 258779214 376660705 44326514 281137019 4070998 -
FY 2014-15 209403549 311662581 17075150 215196305 2530484 24719638
April-15 18980766 28396837 3134991 20999291 288623 5239902
May-15 19806906 29632813 3277849 21913227 301185 5481676
June-15 19363329 28969185 3210527 21422479 294440 5372674
July-15 20206120 30230072 3377854 22354896 307256 5620155
August-15 20412057 30538170 3377328 22582732 310387 5691860
September-15 19954928 63913150 3328648 22076989 303436 5578264
October-15 20823468 33737943 3480558 23037893 316643 5826073
November-15 20357126 32984504 3409300 22521958 309552 5709798
December-15 21243172 34422306 3567664 23502229 323025 5973253
January-16 21459677 34775373 3611310 23676890 326317 6049463
February-16 20279784 32865479 3419634 22435774 308376 5730834
March-16 21885077 35469166 3601043 24211729 332786 6199760
TOTAL 712955173 1104258284 102198370 767069411 10323508 93193350

• Default on account of non-payment of Interest on Term Loan from "Others'/Edelweiss Asset Reconstruction Company - EARC Trust) as stated below:

Period of Default

Name of the EARC Trust

EARC Trust EARC Trust EARC Trust EARC Trust EARC Trust EARC Trust
SC-144 SC-174 SC-141 SC-176 SC-126 SC-152
FY 2012-13 145181289 145597537 145653519 144911540 122281011 92383190
FY 2014-15 43436275 113001767 75054066 118057678 98871381 71557295
April-15 11146250 10859735 11596070 10810467 6854690
May-15 11633550 11332407 11375278 11280994 7153042
June-15 8805309 11078617 11120529 11028355 6992849
July-15 11860200 11560815 - 11508366 7297213
August-15 - 11678640 11625656 7371585
September-15 - 11417096 11365299 5284765
October-15 - 11914027 11859975 -
November-15 - 11647212 11594370 -
December-15 - 11370018 12099017 -
January-16 - - 10645253 -
TOTAL 232062873 361457871 254799462 376786970 221152392 204894629

Default on account of non-payment of interest on Term Loan from"Others" (Non Banking Financial Company - NBFCI as stated below:

Period of Default NBFC Tata Capital NBFC SICOM
FY2012-13 10522510 36997844
FY2013-14 45504320 141266271
FY2014-15 52888250 182704021
April-15 4708064 16628332
May-15 4925407 17454471
June-15 4827681 17167587
July-15 4828262 18020519
August-15 5051457 18315141
September-15 5116357 18014111
October-15 5014706 18909100
November-15 5246519 18598307
December-15 4283810 19522320
January-16 5379993 19841497
February-16 5449114 18864866
March-16 5162595 20474319
TOTAL 168909045 582778706

(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year and hence clause3 (ix) of the Order is not applicable.

(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during thecourse of our audit.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not paid/provided during theyear for managerial remuneration and hence clause 3 (xi) of the Order is not applicable.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company and hence clause 3 (xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standard (Refer Note no. 42).

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company during the year the Company has madepreferential allotment of shares viz. in compliance with sections 42 of the Act.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him and hence clause 3(xv) of theOrder is not applicable.

(xvi) According to the information and explanations given to us and based on ourexamination of the records the Company is not required to be registered under section45-IA of the Reserve Bank of India Act 1934.

For M.A.Parikh & Co.

Chartered Accountants

(Firm's Registration No. 107556W)

MUKUL M. PATEL

Partner

Membership No. 32489

Place: Mumbai

Date: 25th May 2016.

Annexure - B to the Auditors' Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of ARSHIYALIMITED ("the Company1') as of 31st March 2016 inconjunction with our audit of the financial statements of the Company for the year endedon that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditure of the Company are being made only in accordance with authorisations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of theCompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2016based on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the ICAI.

For M.A.Parikh & Co.

Chartered Accountants

(Firm's Registration No. 107556W)

MUKUL M. PATEL

Partner

Membership No. 32489

Place: Mumbai

Date: 25th May 2016.

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