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Arshiya Ltd.

BSE: 506074 Sector: Others
NSE: ARSHIYA ISIN Code: INE968D01022
BSE 16:01 | 16 Jul 52.20 -4.25
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56.50

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NSE 15:57 | 16 Jul 51.80 -4.55
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OPEN 56.50
PREVIOUS CLOSE 56.45
VOLUME 5825
52-Week high 119.95
52-Week low 41.05
P/E
Mkt Cap.(Rs cr) 1,199
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 56.50
CLOSE 56.45
VOLUME 5825
52-Week high 119.95
52-Week low 41.05
P/E
Mkt Cap.(Rs cr) 1,199
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 2017 theStatement of Profitand Loss and the Cash Flow Statement for the year thenended and a summary of the significant accounting policies and other explanatoryinformation.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Amendment Rules 2016. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgements and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit

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 standalone financial statements are free from material misstatement

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone financial statements. The procedures selected depend onthe auditor's judgement including the assessment of the risks of material misstatement ofthe standalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company spreparation of the standalone financial statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone financial statements.

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

Basis for Qualified Opinion:

We draw attention to the following:

1. In respect of non-provision of interest aggregating to Rs. 54423141/- on loansexcluding loans assigned to Asset Reconstruction Company as referred to in Note no. 33.1

2. In respect of non-provision of interest of T202908631/- and dues writtenback of Rs. 558768625/- (including interest Rs. 375768625 upto the date ofassignment) on loans assigned to Asset Reconstruction Company as referred to in Note no.

33.2

3. In respect of non-provision of interest of Rs.61860443/- and interest writtenback of Rs.171959475/- on loan from a NonBanking Financial Company as referred to inNote no. 33.3

As stated above in items 12 and 3 the records of the Company indicate that it hasnot provided for interest aggregating to r 319192215/- and dues writtenback aggregating to Rs. 730728100/-. Had the Company provided for saidinterest of Rs. 319192215/- and had not written back said dues ofRs. 730728100/-:

i. Finance cost would have been higher by Rs. 319192215/-

ii. Exceptional items would have been higher by f730728100.-

iii. Loss for the year Deficit in the Statement of Profit and Loss and Other CurrentLiabilities would have been higher by Rs. 1049920315/-.

4. In respect of non-compliance with the provisions of sub section 1 of Section 203 ofthe Act relating to delay in appointment of Chief Financial Officer as referred to in Noteno. 52

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 standalone financial statements give the information required by the Actin the manner 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 at 31stMarch 2017;

(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 banks(See Note no. 25)

(b) Dues to banks and others being recalled by lenders aggregating to ((1583522962/-(See note no. 11)

(c) Creditors for capital expenditure Rs. 205776385/- (See Note no. 11)

(d) Unpaid employee dues Rs. 27165792/- (See Note no. 11)

(e) Unpaid Statutory dues1113347839/- remaining unpaid (See Note no. 11)

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

(a) Note no. 34 Re: Tax Deducted at Source.

(b) No provision for diminution in value of investments in/loans to subsidiaries havingbeen made for the reasons as stated in Note nos. 36(a) and 47.

(c) Note no. 37.2 Re: Mark to Market Losses.

(d) Note no. 40 Re: Legal Proceedings against the Company.

(e) Note no. 53 Re: Intercompany Advances/Loans/Guarantees granted/received.

(f) Note no. 57 Re: Pending balance confirmations

Our Opinion is not modified in respect of these matters.

Despite the foregoing these accounts have been prepared on a " GoingConcern" basis as referred to in Note no. 30 of the standalone 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.

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) Amendment Rules 2016;

(e) On the basis of the written representations received from the directors as on 31stMarch 2017 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 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) Amendment Rules 2017 inour opinion and to the best of our information and according to the explanations given tous:

(i) The Company has disclosed the impact of pending litigation on its financialposition in its standalone financial statements - Refer to Note No. 24(i) to 24(iv) and 40of notes to the standalone financial statements.

(ii) The company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term derivative contractsexcept to the extent disputed and hence not provided for (Refer Note no. 37.2).

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

(iv) The Company has provided requisite disclosures in its standalone financialstatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom 8 November 2016 to 30 December 2016 and these are in accordance with the books ofaccounts maintained by the Company (Refer Note no. 39).

For M. A. Parikh & Co.

Chartered Accountants

(Firm's Registration No. 107556W)

Mukul Patel

Partner

Membership No. 032489

Place: Mumbai Date: 18th May 2017

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.

(iii) The Company has granted interest free unsecured loans to six 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 rupees 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.53)

(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 mainten ance 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 cost recordswith 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. 61838711 /- which isoutstanding as of the year-end for a period of more than six months from their due datesof payment

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

Name of the Statute Nature of Dues Amount Involved (Rs) Period to which the amount relates Forum where the dispute is pending
Income Tax Act 1961 Income Tax 19095525 Assessment Year 2008-2009 to 2010-2011 Income Tax Appellate Tribunal
591835030 Assessment Year 2009-2010 to 2014-15 Commissioner of Income Tax
Value Added Tax Maharashtra Value Added Tax 2051279 Financial Year 2005-06 Deputy Commissioner of Sales Tax-(Appeal)

(viii) The Company has not issued any debentures. Based on our audit procedures andaccording to the information and explanations given by the management during the yearthe Company has defaulted in repayment of dues to Banks and Financial Institutions thedefaults whereof are stated hereunder:

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

Name of the Lenders

Period of Default

Tamilnad Mercantile Bank

Karur Vysya Bank

FY 2012-13

1879998

2462486

FY 2013-14

14316185

10000000

FY 2014-15

23348766

10000000

FY 2015-16

29513952

-

June-16

10833581

-

September-16

10833581

-

December-16

10833581

-

March-17

9183580

-

TOTAL

110743224

22462486

• Default on account of non-pavment of principal of working capital from a“Bank" as stated below:

Period of Default Kotak Mahindra Bank
FY 2014-15 399691418
TOTAL 399691418

• Default on account of non-pavment of principal of Term Loan from“Others" as stated below:

Period of Default

Tata Capital*

SICOM

EARC Trust SC 162#

FY 2012-13

-

690000000

December-16

266666668

-

-

March-17

-

-

307500000

TOTAL

266666668

690000000

307500000

* Refer Note no. 33.3

# Refer Note no. 33.2

Default on account of non-pavment of interest from “Banks" asstated below:

Name of the Lenders

Period of Default

Tamilnad Mercantile Bank

Karur Vysya Bank

Kotak Mahindra Bank

FY 2012-13

44326514

4070998

-

FY 2014-15

17075149

2530484

24719638

FY 2015-16

40796706

3722027

68473713

April-16

3813760

350316

6076662

May-16

3982994

365861

6356632

June-16

3897068

357969

6229949

July-16

4069999

373853

6516981

August-16

4114936

377980

6600006

September-16

4026164

369826

6468473

October-16

4204823

386237

6766495

November-16

4114112

377905

6631643

December-16

4296672

394674

6937184

January-17

4344113

399032

7025561

February-17

3967038

364395

6426510

March-17

4435877

407461

7196937

TOTAL

151465925

14849018

172426384

Default on account of non-pavment of interest on Term Loan from“Financial Institutions" as stated below:

Period of Default

Tata Capital*

SICOM

FY2012-13

-

36997844

FY 2013-14

-

141266271

FY2014-15

-

182704021

FY 2015-16

-

221810568

April-16

-

20809061

May-16

-

21149275

June-16

-

21495050

July-16

-

21846480

August-16

-

22203654

September-16

-

22566669

October-16

-

22935619

November-16

-

23310600

December-16

23333332

23691713

January-17

-

24079056

February-17

-

24472732

March-17

-

24872844

TOTAL

23333332

856211457

* Refer Note no. 33.3

(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. Thus paragraph3 (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. Thus paragraph 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. Thus paragraph 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 standalone financial statements as required by theapplicable accounting standard (Refer Note no. 46)

(xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company during the year the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures. Thus paragraph 3 (xiv) of the Order is not applicable

(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. Accordingly paragraph 3(xv) ofthe Order is not applicable.

(xvi) According to the information and explanations given to us and based on ourexamination of the records of the Company it is not required to be registered undersection 45-IA of the Reserve Bank of India Act 1934.

For M. A. Parikh & Co.

Chartered Accountants

(Firm's Registration No. 107556W)

Mukul Patel

Partner

Membership No. 032489

Place: Mumbai Date: 18th May 2017

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 Company") as of 31st March 2017 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on 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 (TCAI'). 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 N ote 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 2017based 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 Patel

Partner

Membership No. 032489

Place: Mumbai

Date: 18th May 2017