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ARSS Infrastructure Projects Ltd.

BSE: 533163 Sector: Infrastructure
NSE: ARSSINFRA ISIN Code: INE267I01010
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VOLUME 13909
52-Week high 86.25
52-Week low 38.75
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Mkt Cap.(Rs cr) 135
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
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ARSS Infrastructure Projects Ltd. (ARSSINFRA) - Director Report

Company director report

To

The Members of

ARSS Infrastructure Projects Limited

Your Directors have pleasure in presenting before you the 17th Annual Reportof the Company together with Audited Statements of Accounts for the Financial Year ended31st March 2017:

1. Financial Results:

The performance during the period ended 31st March 2017 has been as under(Standalone):

(` In Crores)
Particulars 2016-17 2015-16
Sales 850.36 623.30
Profit before Depreciation Interest and Tax (221.48) 207.21
Less : Depreciation 32.59 36.14
Interest 82.15 164.84
Profit Before Tax (336.23) 6.23
Less : Tax Expenses
a) Current Year - 1.27
b) Earlier Year 0.20 1.30
c) Deferred Tax (5.81) (1.36)
Profit/Loss After Tax (330.63) 5.02
Balance brought forward from previous year 197.64 192.62
Amount Available for Appropriation (132.99) 197.64
Appropriations
a) Dividend - -
b) Tax on Dividend - -
c) Transfer to General Reserve - -
Balance Carried to Balance Sheet (132.99) 197.64
Earnings per Share (In Rs.) Basic (222.75) 3.38
(Equity Shares of face value of Rs. 10)
Earnings per Share (In Rs.) Diluted (145.41) 2.21
(Equity Shares of face value of Rs. 10)

2. Dividend

Your Directors have not recommended any dividend for the financial year ended March 312017.

3. Operating Result :

The turnover of the Company in the year is Rs. 850.36 crores as compared to Rs. 623.30crores in the previous year. The profit before tax is Rs. (336.23) as compared to Rs. 6.22(profit) crores for the previous year.

4. Details of Subsidiary Joint Venture or Associates A. Details of Subsidiary andAssociate Companies

During the year under review no companies have become or ceased to be company'ssubsidiary joint ventures or associate companies. A report on the company's subsidiaryjoint ventures or associate companies as per Companies Act 2013 is provided hereunder

Sl. No. Name of the Company Address of the Company CIN/GLN/ PAN Holding / Subsidiary / Associate % of shares held/ share in JV Applicable Section
1 ARSS Damoh- Hirapur Tolls Private limited Plot No-38 Sector-A U45201OR2011PTC013524 Subsidiary Company 99.82% 2 (87)
Zone-D Mancheswar
Industrial Estate
Bhubaneswar- 751010
2 ARSS Developers Limited Plot No-38 Sector-A U45209OR2007PLC009201 Associate Company 38.41% 2 (6)
Zone-D Mancheswar
Industrial Estate
Bhubaneswar- 751010

B. Joint Venture (AOP)

Sl. No. Name of the Company Address of the Company CIN/GLN/ PAN Holding /Subsidiary / Associate % of shares held/ share in JV
1 NIRAJ-ARSS JV. Plot No-38 Sector-A AAAAN5116B Joint Venture 40.00%
Zone-D Mancheswar
Industrial Estate
Bhubaneswar- 751010
2 ARSS-ATLANTA JV. Plot No-38 Sector-A AAQFA8726P Joint Venture 51.00%
Zone-D Mancheswar
Industrial Estate
Bhubaneswar- 751010
3 ATLANTA-ARSS JV Plot No-38 Sector-A AABAA0048E Joint Venture 49.00%
Zone-D Mancheswar
Industrial Estate
Bhubaneswar- 751010
4 ARSS-HCIL CONSORTIUM Plot No-38 Sector-A AAOFA4560D Joint Venture 60.00%
Zone-D Mancheswar
Industrial Estate
Bhubaneswar- 751010
5 ARSS-TRIVENI JV Plot No-38 Sector-A AABAA1081H Joint Venture 51.00%
Zone-D Mancheswar
Industrial Estate
Bhubaneswar- 751010
6 PATEL-ARSS JV Plot No-38 Sector-A AAAAP8266E Joint Venture 49.00%
Zone-D Mancheswar
Industrial Estate
Bhubaneswar- 751010
7 BACKBONE- ARSS JV. Plot No-38 Sector-A AAAAB7056Q Joint Venture 49.00%
Zone-D Mancheswar
Industrial Estate
Bhubaneswar- 751010
8 SOMDATT BUILDERS- ARSS JV Plot No-38 Sector-A AADAS6434L Joint Venture 49.00%
Zone-D Mancheswar
Industrial Estate
Bhubaneswar- 751010
9 ARSS-ANPR JV Plot No-38 Sector-A AABAA1158M Joint Venture 51.00%
Zone-D Mancheswar
Industrial Estate
Bhubaneswar- 751010
10 HCIL- ADHIKARYA- ARSS JV Plot No-38 Sector-A AAEFH3757R Joint Venture 30.00%
Zone-D Mancheswar
Industrial Estate
Bhubaneswar- 751010
11 ARSS GVR JV Plot No-38 Sector-A AACAA1049A Joint Venture 51.00%
Zone-D Mancheswar
Industrial Estate
Bhubaneswar- 751010
12 HCIL-ARSSSPL- TRIVENI JV 113-A Kamala Nagar AADFH8758B Joint Venture 30.00%
Delhi-110007
13 HCIL- KALINDEE- ARSS JV 113-A Kamala Nagar AAEFH1678M Joint Venture 30.00%
Delhi-110007
14 HARISH CHANDRA- ARSSSPL JV Plot No-38 Sector-A AAAAH1493H Joint Venture 49.00%
Zone-D Mancheswar
Industrial Estate
Bhubaneswar- 751010
15 ARSS-MVPL JV Plot No-38 Sector-A AABAA1497P Joint Venture 51.00%
Zone-D Mancheswar
Industrial Estate
Bhubaneswar- 751010
16 ARSS-BALAJI JV At / P.O : Belpahar AABAB1071G Joint Venture 30.00%
R.S. Belpahar
17 ARSS - SIPS (JV) 129 Transport Centre AAEAA3620K Joint Venture 51.00%
Rohtak Road Punjabi
Bagh New Delhi –
110 035
18 ARSS - SCPL (JV) Plot No-38 Sector-A AAEAA3621J Joint Venture 51.00%
Zone-D Mancheswar
Industrial Estate
Bhubaneswar- 751010
19 ARSS - BMS (JV) Plot No-38 Sector-A AAEAA4835G Joint Venture 51.00%
Zone-D Mancheswar
Industrial Estate
Bhubaneswar- 751010

5. Consolidated Financial Statements:

Consolidated financial statements (consolidating financials of ARSS Damoh - HirapurTolls Private Limited being its subsidiary company and of ARSS Developers Limited beingits associate company) in terms of Section 129 (3) of the Companies Act 2013 read withrule 6 of Companies (Accounts) Rules 2014 and under Regulation 33 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 and Accounting Standard AS 21issued by the Institute of Chartered Accountants of India are provided in this AnnualReport.

Pursuant to the Section 129 (3) of the Companies Act 2013 read with rule 5 ofCompanies (Accounts) Rules 2014 a statement containing the salient features of thefinancials statements of each of the subsidiary and associate company in the prescribedform AOC-1 is annexed to this annual report.

Pursuant to the Section 136 of the Companies Act 2013 financial statements ofsubsidiary/ associate companies are kept for inspection by the shareholders at theRegistered Office of the Company. The said financial statements of the subsidiaries arealso available on the website of the Company www.arssgroup.in under the Investors Section.

6. Reserve

No amount was proposed to be transferred to general reserve.

7. Operations- Work Orders

Your Directors are pleased to inform that during the year under report the Company(alongwith its JVs) has secured the following contracts (work order):

a. Execution of work of Track Linking (Excluding supply of Rails Thick Web Switchesand PSC Line Sleeper) OHE S&T and other allied works from Haridaspur (KM 0.00) toKendrapara (KM 43.873) including Kendrapara Yard in connection with construction of New BGRailway Line from Haridaspur to Paradeep (KM 81.200) in Khurda Road Division of East CoastRailway in the State of Odisha INDIA awarded in favour one of our Joint Venture (JV)named "ARSS-SIPS (JV) awarded by Chief Project Manager-II Rail Vikas Nigam LimitedB Block West Wing Ground Floor Rail Vihar Chandrasekharpur Bhubaneswar Orissa –751023 on 03rd March 2017 with a Contract Value of `140.52 Crores.

b. Bhadrak-Nergundi 3rd Line: Supply of machine crushed hard stone ballastin connection with doubling between Byree and Kapilas Road stations under KUR Division ofE. Co. Railway awarded in favour of our Company awarded by Chief Engineer/Con/IIBhubaneswar-23 on 20th February 2017 with a Contract Value of Rs. 2.12Crores.

c. Widening of existing 2 lane to 2 lane with 1.5 m wide paved shoulder from KM 0/0 to81/0 and Km. 83/0 to 119/0 of NH 157 in the State of Odisha on EPC Mode" awarded infavour of our Company by Office of Chief Engineer National Highways Odisha Bhubaneswaron 22nd December 2016 with a Contract Value of Rs. 164.50 Crores.

d. Widening of existing two lane to two lane with 1.5 mt wide paved shoulder from KM50/0 to 140/9 of NH 57 on EPC Mode awarded in favour of our Company by Office of ChiefEngineer National Highways Odisha Bhubaneswar on 22nd December 2016copy of which was received by us on 23rd December 2016 with a Contract Valueof `164.00 Crores.

e. Canal Lining and System Rehabilitation Programme (CLSRP) of Parjang Branch Canal ofRengali Irrigation Project (PBC from RD 00 km to 11.587 km with its off takingdistribution systems-Reach-I) in favour of our Company awarded by PD Cum Chief Engineer& Basin Manager Brahmani Left Basin Sukinda Jamuposhi Ampolaba Jajpur - 755018 on08th December 2016 with Contract value of Rs. 20.39 Crores.

f. Construction of Major Bridges (07 Nos.) and Earthwork in approaches includingprotection and other ancillary works in Bina-Lalitpur Section (62.66 Km) in connectionwith Bina-Jhansi 3rd Line Project (Zone-A) awarded in favour one of our JointVenture (JV) named "ARSS-SIPS (JV)" by North Central Railway Office of the Dy.Chief Engineer (Const.) Jhansi on 21st November 2016 with Contract Value ofRs. 51.44 Crores.

g. Construction of Important Bridge No. 1086/01 on Betwa River having 20/24.40 m. spansof composite girders including earthwork & construction of Minor bridges on approachesin connection with Bina-JHS 3rd Line project awarded in favour one of our Joint Venture(JV) named "ARSS-SIPS (JV)" by North Central Railway Office of the Dy. ChiefEngineer (Const.) Jhansi on 07th October 2016 with Contract Value of Rs.63.80 Crores.

h. Earthwork in embankment/ cutting including blanketing side drains retaining/ toewall construction of Minor bridges and removal of infringements of signalingcables/equipments with other allied works in Bijroutha-Babina Section ( 35.58 Kms) inconnection with Bina-JHS 3rd Line project (Zone-IV) awarded in favour one ofour Joint Venture (JV) named "ARSS-SIPS (JV)" by North Central Railway Officeof the Dy.Chief Engineer (Const.) Jhansi on 20th October 2016 with ContractValue of Rs. 84.66 Crores.

i. Earthwork in embankment/ cutting including blanketing side drains retaining/ toewall construction of Minor bridges and removal of infringements of signalingcables/equipments with other allied works in Bina-Dharua Section (34.52 Kms) in connectionwith Bina-JHS 3rd Line project (Zone-I) awarded in favour one of our Joint Venture (JV)named "ARSS-SIPS (JV)" by North Central Railway Office of the Dy. ChiefEngineer (Const.) Jhansi on 14th October 2016 with Contract Value of Rs.112.42 Crores.

j. Earthwork in embankment/ cutting including blanketing side drains retaining/ toewall construction of Minor bridges and removal of infringements of signaling cables/equipments with other allied works in Babina-Jhansi Section (25.35 Kms) in connection withBina-JHS 3rd Line project (Zone-V) awarded in favour one of our Joint Venture (JV) named"ARSS-SIPS (JV)" by North Central Railway Office of the Dy. Chief Engineer(Const.) Jhansi on 14th October 2016 with Contract Value of Rs. 53.35Crores.

k. Soil investigation design of bridges execution of earth work minor bridges majorbridges RUBs extension of FOB Staff Quarters and other service buildings supply ofballast and other miscellaneous works in Lajkura-Raigarh section in connection with theconstruction of 4th line between Jharsuguda - Bilaspur awarded in favour one ofour Joint Venture (JV) named "ARSS-SIPS (JV)" by South East Central RailwayOffice of the Chief Admn. Officer (Con.) Bilaspur on 21st September2016 with Contract value of Rs. 135.45 Crores.

l. Jagdalpur-Koraput Doubling Project- Execution of Earthwork in formation Minorbridges Protection works and other allied works from Km. 263.300 to Km. 223.500 of KotparRoad (Excluding) – Charamula Kusumi (Including) – Khadapa (Including) –Dhanapur (Including) – Jeypore (Including) – Chatariput (Including) section inconnection with KK line doubling of WAT Division East Coast Railway awarded in favour oneof our Joint Venture (JV) named "ARSS-BMS (JV)" by East Cost Railway on 23rdJune 2016 with Contract value of Rs. 44.04 Crores.

m. Construction of Six lane ROB in lieu of L.C. 70 Sitapura on JP-SWM Railway Line hasbeen awarded in favour one of our Joint Venture (JV) i.e. "ARSS-SIPS (JV)" byJaipur Development Authority on 2nd May 2016 with Contract Value of Rs. 87.43Crores.

n. Execution works of package-1 of private railway siding with all Contractor'smaterials (except Rails for plain track free of cost) for coal transportation system forDarlipali STPP of NTPC Limited in Sundergarh Dist Odisha State (from Ch. 6.000 to Ch.12.460- Pkg.1) in Darlipali – Dulanga MGR section has been awarded in favour one ofour Company by The Project Head/Darlipali IRCON International Limited Jharsuguda-768201Odisha on 29th April 2016 with Contract Value Rs. 53.91 Crores.

o. Widening & Strengthening of Jamujhadi - Basudevpur - Dhamara Road (S.H) to 2Lane without paved shoulder from 18/800 Km to 22/750Km & from 27/100Km to 60/470 Km isawarded in favour to the Company ‘ARSS Infrastructure Projects Limited' by Office ofthe Executive Engineer Bhadrak (R&B) Division Bhadrak on April 18 2016 withContract Value Rs. 64.73 Crores.

p. Khurda Road – Bolangir New B. G. Link Project- Execution of Earthwork information Minor bridges and other allied works from Km. 80.00 to Km. 93 from Khurda endin between Nayagarh- Nuagaon and Daspalla of East Coast Railway awarded in favour one ofour Joint Venture (JV) named "ARSS-SIPS (JV)" by Chief Engineer/Con/HQBhubaneswar-23 on 13th April 2016 With Contract Value Rs. 38.45 Crores.

q. Budhapank-Salegaon Via- Rajathagarh – 3rd & 4th line:Execution of earthwork minor bridges & other allied works (Km: 483.047 to Km.398.166 i.e 2 x 85 =170 km approx awarded in favour one of our Joint Venture (JV) named"ARSS-SIPS (JV)" by East Coast Railway Bhubaneswar on 08th April2016 with Contract Value Rs. 156.85 Crores.

8. Performance and financial position of each of the subsidiaries and associatescompanies are included in the consolidated financial statement.

9. Listing with stock exchanges:

The Company confirms that it has paid the Annual Listing Fees for the year 2017-18 toThe Bombay Stock Exchange Limited and National Stock Exchange of India Limited where theCompany's Shares are listed.

10. Management Discussion and Analysis Report:

As required under regulation 34 SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Management Discussion and Analysis Report is enclosed as a part ofthis report as ‘Annexure-A'.

11. Corporate Governance and Shareholders Information:

The Company is committed to maintain the highest standards of Corporate Governance andadheres to the Corporate Governance requirements as stipulated by Securities and ExchangeBoard of India (SEBI). The report on Corporate Governance as prescribed in Schedule V (C)of the SEBI Listing Regulations forms an integral part of this Annual Report. Therequisite certificate from the Auditors of the Company confirming compliance with theconditions of Corporate Governance along-with a declaration signed by Managing Directorstating that the members of the Board of Directors and Senior Management personnel haveaffirmed compliance with the respective codes of conduct of the Board of Directors andSenior Management is attached to the report on Corporate Governance. A report on CorporateGovernance is included as a part of this Annual Report as ‘Annexure-B'.

12. The extract of the annual return as provided under sub-section (3) of section 92;

The details forming part of the extract of the Annual Return in Form MGT-9 is annexedherewith as ‘Annexure – C'. 13. Number of Board Meetings:

Five Board Meetings were held during the year and the gap between two meetings did notexceed four months. The dates on which the Board Meetings were held are as follows: 02ndMay 2016 (adjourned) 27th May 2016 (Resumed) 12th August 201614th November 2016 11th February 2017 and 28th March2017.

14. Committees of the Board of Directors

a. Audit Committee

The Company has in place an Audit Committee in terms of the requirements of theCompanies Act 2013 read with the rules made there under and Regulation 18 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. The details relatingto the same are given in ‘Annexure B' of the Board Report on the Corporate Governanceforming part of this report. Members are requested to refer to point No. 4 of CorporateGovernance Report attached with this Annual Report.

b. Nomination and Remuneration Committee

The Company has in place Nomination and Remuneration Committee in terms of therequirements of the Companies Act 2013 read with the rules made there under andRegulation 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.The details relating to the same are given in ‘Annexure B' of the Board Report on theCorporate Governance forming part of this report. Members are requested to refer to pointNo. 5 of Corporate Governance Report attached with this annual report.

c. Corporate Social Responsibility Committee (CSR):

The Company has in place Corporate Social Responsibility Committee (CSR) in terms ofthe requirements of section 135 and Schedule VII of the Companies Act 2013. The detailsrelating to the same are given in ‘Annexure B' of the Board Report on the CorporateGovernance forming part of this report. Members are requested to refer to point No. 6 ofCorporate Governance Report attached with this annual report.

d. Shareholders Relationship Committee

The Company has in place Shareholders Relationship Committee in terms of therequirements of the Companies Act 2013 read with the rules made there under andRegulation 20 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.The details relating to the same are given in ‘Annexure B' of the Board Report on theCorporate Governance forming part of this report. Members are requested to refer to pointNo. 7 of Corporate Governance Report attached with this annual report.

15. Dematerialization of shares:

As on 31st March 2017 99.91% of the company's paid up Equity Share Capitalis in dematerialized form and balance 0.09% is in physical form. The Company's Registrarsare Bigshare Services Private Limited 1st Floor Bharat Tin Works BuildingOpp. Vasant Oasis Makwana Road Marol Andheri East Mumbai – 400059 Maharashtra.

16. Public deposits covered under Chapter V of the Act

Your Company has not invited any deposit from public and shareholders. So theprovisions of the Chapter V of the Companies Act 2013 are not attracted.

17. Auditors:

Statutory Auditors:

As per the provisions of Section 139 142 and all other applicable provisions of theCompanies Act 2013 (the ‘Act') read with Rule 3(7) of the Companies (Audit andAuditors) Rules 2014 M/s Ajay B Garg Chartered Accountants Mumbai (Membership No.32538) Statutory Auditors of the Company was appointed for a term of 4 years i.e. till theconclusion of 19th Annual General Meeting (AGM) which was subject toratification at every AGM hold office until the conclusion of ensuing Annual GeneralMeeting.

Cost Auditors:

M/s. Asutosh & Associates Cost Accountants Bhubaneswar were appointed as CostAuditors for auditing the Cost Accounts of your Company for the year ended 31stMarch 2017 by the Board of Directors pursuant to the Section 148 of the Companies Act2013 and Companies (Audit and Auditors) Rules 2014.

Secretarial Auditors:

M/s. Deba Mohapatra & Co. a firm of practicing Company Secretaries Bhubaneswar(FRN: P2002OR002800) were appointed as Secretarial Auditors of the Company for theFinancial Year 2016-17 by the Board of Directors pursuant to the Section 204 of theCompanies Act 2013 read with Rule 9 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014. The Secretarial Audit Report submitted by CompanySecretary in Practice is enclosed as a part of this report ‘Annexure-D'.Qualifications or remarks made by the Secretarial Auditor in his Report are selfexplanatory.

Internal Auditors:

M/s. PR & Associates Cost Accountants Bhubaneswar were appointed as InternalAuditors of the Company for the Financial Year 2016-17 by the Board of Directors pursuantto the Section 138 of the Companies Act 2013 read with Companies (Accounts) Rules 2014.

18. Report of Auditors: Statutory Auditors

Our reply to the qualifications of Auditors: - a. In absence of relevant recordsContract-wise surplus/loss has neither been ascertained nor recognized in compliance withthe requirements of para 34 and 35 of AS-7 "Construction Contracts" issued bythe Institute of Chartered Accountants of India.

Company Reply: The Company's secured debts are under Corporate Debtrestructuring and the liability and interest payable does not commensurate with theturnover and cannot be justified as there is limited support from Financial Institution.During the execution period there is also escalation claim revision of contract valueextension of completion period etc. due to which unpredictable variation in reliableestimation of revenue and cost. Also the allocation of combine Operating overhead Headoffice overhead and financial cost is not possible due to combine use or high swapping ofresources size of the Contracts. In absence of the overheads and financial costallocation the Company is unable to determine Contract wise surplus / deficit. b. In theabsence of audited books of accounts of Balaji-ARSS (JV) ARSS-MVPL JV and ARSS-SIPS JVdiscrepancies if any between the said accounts with that of the Company is notascertainable.

Company Reply: The Joint Venture has completed the object for which it wasformed No transaction has been entered into during the year. The accounts of the JVs areunder the control of respective JV partners i.e. Balaji Engicons Pvt. Ltd. and MateshweriVanijya Pvt. Ltd. and the same has not been yet finalized from their end. Hence financialimplication for the JV is not quantifiable. However the accounting effects of thediscrepancies if any after the finalization of its accounts will be given at currentdate. c. No interest has been charged form July 2016 on loan outstanding of Rs. 1471.00Crores to the Profit & Loss account resulting in understatement of loss to thatextent.

Company Reply: The loan account of the above loan became NPA since July 2016.That's the reason for non-charging of interest. d. Interest on Service Tax payable of Rs.182.83 lakhs has not provided resulting to underreporting of loss to that extent.

Company Reply: Input credit on above payables was not ascertainable. That's thereason of non charging of interest on Service Tax payables.

Secretarial Auditors:

Report of the secretarial auditors as attached is self explanatory in terms ofqualifications.

19. Directors /Key Managerial Personnel Appointed / Resigned During the Year:

The following were appointed/ reappointed/ Resigned as Directors /Key ManagerialPersonnel during the financial year under review:

Sl. No. Name Designation Date of Appointment Date of Resignation
1 Mr. B. K. Makhija Independent Director 31st March 2015 (Position regularized on 29th September 2015) 3rd September 2016
2 Mr. K. K. Sharma Independent Director 4th May 2015 (Position regularized on 29th September 2015) 3rd May 2017 (term of appointment got completed)
3 Mr. Pareswar Panda Independent Director 9th August 2017 (to be regularized by the shareholders in ensuing AGM scheduled to be held on 25th September 2017) -

20. Director's Responsibility Statement:

Pursuant to the section 134 sub-section (3) clause (c) Directors confirm and statethat—

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had laid down internal financial controls and such internal financialcontrols are adequate and are operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

21. Code of Conduct

The Code of Conduct (hereinafter referred to as ‘Code') is applicable to all itsBoard Members and Senior Management Personnel of the Company. A Code of Conduct for theDirectors and Senior Management Personnel has already been approved by the Board ofDirectors of the Company. All Board Members and Senior Management Personnel had affirmedcompliance with the Code during the year and no violation of the same was reported. Adeclaration to the effect that all Board Members and Senior Management Personnel havecomplied with the Code during the financial year 2016-17 duly signed by Managing Directorof the Company is herein below enclosed with Corporate Governance Report. The Code hasalso been posted on the Company's Web-site.

22. Remuneration ratio of the Directors / Key Managerial Personnel (KMP) / Employees& Particulars of employees:

The information required pursuant to Section 197 (12) read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and Companies(Particulars of Employees) Rules 1975 in respect of employees of the Company andDirectors is furnished hereunder:

(i) The ratio of the remuneration of each Director to the median remuneration of theemployees of the company for the financial year. a. Mr. Subash Agarwal- Chairman- 1: 27.5b. Mr. Rajesh Agarwal- Managing Director- 1: 25

(ii) The percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year - 0%

(iii) The percentage increase in the median remuneration of employees in the financialyear- 0%

(iv) The number of permanent employees on rolls of the company.

Total 780 employees as on 31st March 2017.

(v) The explanation on the relationship between average increase in remuneration andcompany performance.- NA

(vi) Comparison of the remuneration of the Key Managerial Personnel against theperformance of the company.-NA

(vii) Variations in the market capitalization of the company price earnings ratio asat the closing date of the current financial year and previous financial year andpercentage increase over/ decrease in the market quotations of the shares of the companyin comparison to the rate at which the company came out with the last public offer in caseof listed companies and in case of unlisted companies the variations in the net worth ofthe company as at the close of the current financial year and previous financial year;

Variations in the market capitalization of the company: The market capitalization ofthe company as on 31.03.2017 was Rs. 103.06 crores and as on 31.03.2016 marketcapitalization was Rs. 49.28 crores.

Price earnings ratio of the company: Price earnings ratio of the company as on31.03.2017 is (0.31) and as on 31.03.2016 it was 9.82.

Percentage increase over/ decrease in the market quotations of the shares of thecompany as compared to the rate at which the company came out with the last public offerin the year: The Company had come out with initial public offer (IPO) in 2010 with issueprice per share of Rs. 450/-. Share price as on March 31 2017 with NSE is Rs. 69.43 pershare indicating decrease in the market quotation of shares.

(viii) Average percentage increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration- 0%

(ix) Comparison of the each remuneration of the Key Managerial Personnel against theperformance of the company- Same response as in point (vi) above .i.e. 0%.

(x) The key parameters for any variable component of remuneration availed by thedirectors; - No Director has received any variable component of remuneration.

(xi) The ratio of the remuneration of the highest paid director to that of theemployees who are not directors but receive remuneration in excess of the highest paiddirector during the year: 0.79: 1

(xii) The remuneration paid to employees is as per the remuneration policy of theCompany.

As required under the provision of Section 197 (12) read with Rule 5 (2) of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and Companies(Particulars of Employees) Rules 1975 as amended there was no employees who have drawnsalary or appointed under this category during the financial year 2016-17.

23. Company's Policy On Directors' Appointment And Remuneration Including Criteria ForDetermining Qualifications Positive Attributes Independence of A Director And OtherMatters Provided Under Sub-Section (3) Of Section 178;

The same has been provided in detail in the Corporate Governance Report attached withthe board report.

24. Declaration given by independent directors under sub-section (6) of section 149;

The Company has complied with the definition of Independence as per regulation SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and according to theProvisions of section 149(6) Companies Act 2013. The company has also obtaineddeclarations from all the Independent Directors pursuant to section 149 (7) of theCompanies Act 2013.

25. Industrial Relation:

Employee relations continued to be cordial throughout the year. The whole-heartedsupport of employees and a sense of belongingness with the organization and solidaritywith the management of the Company have helped to cope with the present challenges of theCompany during the year.

26. Adequacy of internal financial controls with reference to the Financial Statements.–

Management has put in place effective Internal Control Systems to provide reasonableassurance for:

• Safeguarding Assets and their usage.

• Maintenance of Proper Accounting Records and

• Adequacy and Reliability of the information used for carrying on BusinessOperations.

• Key elements of the Internal Control Systems has been provided & explainedin MDA report attached with Director's report.

27. Annual Evaluation by the Board of Its Own Performance (Including Committees andIndividual Directors)

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a separate exercise was carried out toevaluate the performance of individual Directors including the Chairman of the Board whowere evaluated on parameters such as level of engagement and contribution and independenceof judgment thereby safeguarding the interest of the Company. The performance evaluationof the Independent Directors was carried out by the entire Board. The board also carriedout annual performance evaluation of the working of its Audit Nomination and Remunerationas well as stakeholder relationship committee. The Directors expressed their satisfactionwith the evaluation process.

28. Independent Directors Meeting

The Independent Directors of the Company met on 27th May 2017 inter-aliato discuss:

i) Evaluation of performance of Non-Independent Directors and the Board of Directors ofthe Company as a whole.

ii) Evaluation of performance of the Chairman of the Company taking into account theviews of Executive and Non-Executive Directors.

iii) Evaluation of the quality content and timelines of flow of information betweenthe Management and the Board that is necessary for the Board to effectively and reasonablyperform its duties.

29. Familiarisation Programme of Independent Directors

In compliance with the requirements of SEBI Listing Regulations the Company has put inplace a familiarization program for Independent Directors to familiarize them with theirrole rights and responsibility as Directors the operations of the Company businessoverview etc. The details of the familiarization program are explained in the CorporateGovernance Report and the same is also available on the website of the Company.

30. Details of significant and material orders:

There are no significant and material order passed by the regulators or courts ortribunals impacting the going concern status and company's operations in future.

31. Particulars of Loans Guarantees or Investments under Section 186

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.

32. Particulars of Contracts or Arrangements with Related Parties Referred To InSub-Section (1) of Section 188 in the Prescribed Form AOC-2

All related party transactions attracting compliance under Section 188 and / or SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 are placed before theAudit Committee as also before the Board for approval. Prior omnibus approval of the AuditCommittee was also sought for transactions which are of a foreseen and repetitive nature.The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board of Directors of the Company is uploaded on thewebsite of the Company i.e www.arssgroup.in. The particulars of contracts entered intowith related parties during the year as per Form AOC-2 is enclosed as ‘Annexure-E'.

33. Material changes and commitments affecting the financial position of the companywhich have occurred between the end of the financial year of the company to which thefinancial statements relate and the date of the report:

a. Recovery notice was served by SBI dated 29.03.2017 by PNB dated 25.08.2016 by Bankof India dated 08.05.2017 IDBI dated 22.06.2017 and SBBJ dated 03.11.2016 under Section13 (2) in The Securitisation And Reconstruction Of Financial Assets And Enforcement OfSecurity Interest Act 2002.

b. SEBI directive for Shell Companies The recent directive of SEBI dated 7thAugust 2017 has classified and placed our Company in the list of purported "ShellCompanies". The Company is fully operational and is doing its utmost to review fromthe general financial crunch engulfed in the Infrastructure Segment in India. And yourcompany has been complying with all the requirements of SEBI Law Rules & Regulationsand other applicable Acts & laws. Company is very much a going concern. Company isseeking best legal advises/ opinions from top most professionals in the matter andplanning to file an appeal against the Impugned order of SEBI before the Hon'bleSecurities Appellate Tribunal Mumbai.

c. Share Allotment on Preferential Basis pursuant to the CDR to promoters and theirassociates The company at the meeting of its "Share Allotment Committee" ofBoard of Directors of the company held on 9th August 2017 has allotted 7894736 numbers ofEquity Shares to promoters and their associates on preferential basis pursuant toCorporate Debt Restructuring Scheme in accordance with provisions specified under ChapterVII of SEBI (ICDR) Regulations 2009 and SEBI (LODR) Regulations 2015.

34. Compounding status

Nine Sections out of thirty eight sections for which show cause notices were issued bythe office of Regional Director Eastern Region and Registrar of Companies of Odisha atCuttack Pursuant to the inspection held under section 209(A) of The Companies Act 1956were compounded till 31st March 2017 and further 4 sections were compounded ason date of this report. Please refer point No. VII of MGT-9 attached with this report forfurther details.

35. Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo

During the year under review the Company has taken adequate measures for conservationof energy and also has not gone for any technology absorption whatsoever in accordancewith the provisions of Sub-Section (3) (m) section 134 of the Companies Act 2013 readwith the Companies (Accounts) Rules 2014.

The Company has neither earned any income nor incurred any expenditure in foreigncurrency during the financial year ended 31st March 2017.

36. Development and Implementation of Risk Management Policy:

The Company has established risk management framework. The Company has been addressingvarious risks impacting the Company. In accordance with the provisions of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Board of Directors of theCompany at its Meeting held on February 2015 has constituted a Risk Management Committeeand has approved the Risk Management Policy of the company. This Committee has beendelegated the authority by the Board to review and monitor the implementation of the riskmanagement policy of the Company.

37. Corporate Social Responsibility

i) Terms of reference:

The Committee formulates CSR Policy. The role of the Committee is as under: a.Formulate and recommend to the Board a Corporate Social Responsibility Policy which shallindicate the activities to be undertaken by the Company as specified in Schedule VII ofthe Companies Act 2013. b. Recommend the amount of expenditure to be incurred on theactivities referred in the CSR policy. c. Monitor the CSR Policy of the Company and itsimplementation from time to time. d. Such other functions as the Board may deem fit fromtime to time.

ii) Composition name of Members and attendance during the year:

The CSR Committee of the Company consists of 2 Non-Executive Independent Directors and1 Executive Director.

Name of the Member Position No. of Meetings held No. of Meetings attended
Mr. Rajesh Agarwal Chairman 1 1
Mr. Swarup Chandra Parija Member 1 1
Ms. Rima Dhawan Member 1 1

iii) No. of Meetings held during the year:

During the year the Committee had met once i.e. on 12th August 2016. iv) Amountincurred on CSR activities during the year:

The average net profits of the company made during the three immediately precedingfinancial years was positive and as per section 135 of the Companies Act 2013 company wasrequired to spend Rs. 16 lakhs i.e. at least two per cent of the average net profits ofthe company made during the three immediately preceding financial years on CSR activitiesbut company could spend the entire amount rather company could spend only a sum of Rs.487893/- on CSR activities during the financial year 2016-17 as the company wassuffering huge loss of Rs. 336.23 crores in the FY 2016-17 and is facing a large cashcrunch. CSR activities was performed / undertaken by the company during the year includesrunning a girl school named ‘Mohanlal Girls High School' Khurda for ‘educationof the girl child' which was also the part of the activities approved and mentioned in theCSR Policy of the company as reproduced below: "Promoting education includingspecial education and employment enhancing vocational skills especially among childrenwomen elderly and the differently livelihood enhancement projects."

38. Whistle Blower Policy of the Company:

In accordance with requirement of Companies Act as well as listing agreement a vigilmechanism has been adopted by the board of directors and accordingly a whistle blowerpolicy has been formulated with a view to provide a mechanism for employees of the companyto approach Internal Auditor or Chairman of the Audit Committee of the Company to reportany grievance. There were no complaints under the whistle blower during the year underreview. A link to such policy is also provided in the website of the company.

39. Reporting of Frauds:

There have been no instances of fraud reported by the Statutory Auditors under Section143(12) of the Act and Rules framed there under either to the Company or to the CentralGovernment.

40. Acknowledgement:

Your Directors would like to acknowledge and place on record their sincere appreciationfor assistance and co-operation received from the financial institutions banksGovernment authorities customers and members during the year under review. Your Directorsalso place on record their deep sense of appreciation for the committed services by theexecutives employees at all levels.

For and on behalf of the Board of Directors
Sd/-
Place: Bhubaneswar (Subash Agarwal)
Dated: 09th August 2017 Chairman