To the Members of Arshiya Limited
Report on the Standalone Indian Accounting Standards (Ind AS) Financial Statements
We have audited the accompanying standalone Ind AS financial statements of ArshiyaLimited ('the Company') which comprise the Balance Sheet as at 31st March 2018 theStatement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofthe significant accounting policies and other explanatory information.
Management's Responsibility for the Standalone Ind AS Financial Statements
The Companys Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ('the Act') with respect to the preparation of thesestandalone Ind AS financial statements that give a true and fair view of financialposition financial performance including other comprehensive income cash flows andchanges in equity of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards ('Ind AS') prescribed underSection 133 of the Act read with relevant rules issued there under. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
Our responsibility is to express an opinion on these standalone Ind AS financialstatements based 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 there under.
We conducted our audit of standalone Ind AS financial statement in accordance with theStandards on Auditing specified under Section 143(10) of the Act. Those Standards requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether these standalone Ind AS financial statements are freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlsrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on these standalone Ind AS financial statements.
Basis for qualified opinion
(i) As mentioned in Note no. 42 of the standalone Ind AS FinancialStatements as per debt covenant of Restructuring Agreement (RA) the Company is requiredto adhere to repayment schedule and such event of default gives Edelweiss AssetsReconstruction Company Limited (EARC) right to convert whole of the outstanding amount ofrestructured rupee loan and/or part of the default amount into fully paid up equity sharesof the Company. Pending exercise of conversion right the Company continues to discloseamount bifurcated between non-current borrowing amounting to Rs. 53688.13 Lakh andcurrent maturity of borrowing amounting to Rs. 5671.08 Lakh and provide for interest.Further the Company is also liable to pay penal interest amounting to Rs. 1065.92 Lakhfor the year ended 31st March 2018 as confirmed by EARC. No provision for such interestis made in the books of account which is not in compliance with requirements of IndAS - 23 on "Borrowing Cost". Had provision for such amount would have beenmade finance
cost would have been higher by amount as mentioned above total comprehensive incomewould have been lower to that extent and having consequential impact on other equity andfinancial liabilities.
(ii) As mentioned in Note no. 43 of the standalone lnd AS FinancialStatement the Company failed to adhere to the repayment schedule prescribed in supplementconsent terms. As a result event of default has occurred and the entiredebt prior to date of settlement become payable along with interest. The Company has notreversed amount written back on settlement of first consent terms of Rs. 1719.59 Lakh andnot accrued interest amounting to Rs. 237.50 Lakh. Had the Company reversed the amountwritten back and made provision for interest finance cost and other expense would havebeen higher by amount as mentioned above having consequential impact on totalcomprehensive income other equity and financial liabilities.
(iii) We draw attention to the Note no. 44 of the standalone Ind AS FinancialStatement wherein it is mentioned that lenders of the one subsidiary have invokedcorporate guarantee given by the Company and no accounting impact of the same isrecognized in the books of account pending settlement of the matter. The same is not incompliance with requirements of Ind AS - 109 on "FinancialInstruments". We are unable to comment on the consequential impact if any onfinancial statements for the year ended 31st March 2018.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in Paragraphs above"Basis for Qualified Opinion" the aforesaid standalone Ind AS financialstatements give the information required by the Act in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia including Ind AS specified under Section 133 of the Act of the financial positionof the Company as at 31st March 2018 and its financial performance including othercomprehensive income its cash flows and the changes in equity for the year ended on thatdate.
The Company had prepared the audited financial statements for the corresponding yearended 31st March 2017 and transition date opening balance sheet as at 1st April 2016 inaccordance with the Companies (Accounting Standards) Rules 2006 referred to in Section133 of the Act on which M. A. Parikh & Co. Chartered Accountants (Firm registrationno. 107556W) vide their audit report dated 18th May 2017 and 25th May 2016 respectivelyhad issued an modified audit report. The financial statements for the year ended 31stMarch 2017 and transition date opening balance sheet as at 1st April 2016 are based onpreviously audited financial statements prepared in accordance with the Companies(Accounting Standards) Rules 2006 as adjusted for the differences in the accountingprinciples adopted by the Company on transition to Ind AS which have been audited by us.Our opinion is not modified in respect of above said matter.
Report on other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 issued by the CentralGovernment of India in terms of sub-section (11) of section 143 of the Act ("theOrder") and on the basis of such checks of the books and records of the Company aswe considered appropriate and according to the information and explanations given to uswe give in the "Annexure A" a statement on the matters specified in paragraphs 3and 4 of the Order.
2. Further to our comment in the Annexure A as required by Section 143 (3) of the Actwe 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. Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph above in our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books;
c. The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Cash Flow Statement and the Statement of Changes in Equity dealt with by thisreport are in agreement with the books of account;
d. Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph above in our opinion the aforesaid standalone Ind AS financialstatements comply with Ind AS prescribed under Section 133 of the Act read with relevantrules there under;
e. On the basis of the written representations received from the directors of theCompany as on 31st March 2018 and taken on record by the Board of Directors we reportthat none of the directors is disqualified as on 31st March 2018 from being appointed asa director in terms of 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";
g. The qualifications relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion paragraph above;
h. 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 ouropinion and to the best of our information and according to the explanations given to us:
i. The Company as detailed in Note no. 35.1 (i to iv) and 36 to the standalone Ind ASfinancial statements has disclosed the impact of pending litigations on its financialposition.
ii. The Company does not have any long term contracts including derivative contractsand hence there are no material foreseeable losses.
iii. There has been no delay in transferring amount which was required to betransferred to the Investor Education and Protection Fund by the Company.
For Chaturvedi & Shah Chartered Accountants Firm Registration No. 101720W
Vijay Napawaliya Partner
Membership No. 109859
Place: Mumbai Date: 24th May 2018
"Annexure A" to the Independent Auditors' Report
(Referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" of our report of even date to the members of the ArshiyaLimited on the standalone Ind AS financial statements for the year ended 31st March 2018)
(i) In respect of fixed assets:-
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of the fixed assets.
(b) As explained to us the Company has physically verified fixed assets in accordancewith a phased program of verification which in our opinion is reasonable having regardto the size of the Company and the nature of its assets. No material discrepancies werenoticed on such physical verification as compared with the available records.
(c) In our opinion and according to information and explanation given to us and on thebasis of our examination of available records of the Company the title deeds of immovableproperties are held in the name of the Company.
(ii) The Company is engaged in the business and development of Free Trade andWarehousing Zone (FTWZ) and Domestic Warehousing and does not have any inventory duringthe year therefore considering the nature of services; the Provisions of Clause 3(xii) ofthe Order are not applicable to the Company.
(iii) In respect of unsecured loans granted by the Company to companies firms Limitedliability partnerships or other parties covered in the register maintained under section189 of the Act. According to the information and explanations given to us:
(a) In our opinion and according to the information and explanations provided to usthe terms and conditions of the grant of such loans are prima facie not prejudicial to theCompany's interest.
(b) The schedule of repayment of principal and payment of interest has been stipulatedfor the loans granted and the repayment/ receipts are regular.
(c) There are no overdue amounts as at the year-end in respect of both principal andinterest.
(iv) In our opinion and according to the information and explanations provided to usprovisions of section 185 and 186 of the Companies Act 2013 in respect of loansinvestments guarantees and security as applicable have been complied with.
(v) The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76 of the Act and the Rules framed there under to the extentnotified. During the year no order has been passed by the Company Law Board or NationalCompany Law Tribunal or Reserve Bank of India or any court or any other Tribunal.
(vi) Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof services rendered. We have broadly reviewed the same and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or complete.
(vii) (a) According to the records of the company and information and explanationsgiven to us the Company has generally been
regular except slight delays in few cases in depositing undisputed statutory duesincluding provident fund employees' state insurance income tax sales-tax service taxduty of customs duty of excise value added tax goods and service tax cess and anyother statutory dues to the appropriate authorities as applicable during the year.According to the information and explanations given to us no undisputed amounts payablein respect of such statutory dues were outstanding as at 31st March 2018 for a period ofmore than six months from the date they became payable except Tax deducted at Sourceamounting to Rs. 256.43 Lakh and interest on tax deducted at source amounting to Rs.612.00 Lakh.
(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of income-tax sales-tax service-tax duty ofcustoms duty of excise value added tax and goods and service tax which have not beendeposited on account of any dispute except as mentioned below:-
(Rs. In Lakh)
|Name of the Statute ||Nature of Dues ||Amount Disputed ||Period to which Dispute Relates ||Forum where Dispute is Pending |
|Income Tax Act 1961 ||Income Tax ||7102.28 ||Assessment year 20092010 to 2014-2015 ||commissioner of income tax |
|Value Added Tax ||Maharashtra Value Added Tax ||20.51 ||Financial Year 20052006 ||Deputy commissioner of sales tax |
| ||Total ||7122.79 || || |
(viii) According to the records of the Company examined by us and the information andexplanation given to us the Company has not defaulted in repayment of loans or borrowingsto any financial institution or bank as at balance sheet date except as mentioned below.There are no dues to debenture holders and government as at the balance sheet date.
Defaults in respect of bank and financial institutions are as under:-
|Particulars || |
Amount of continuing default as on 31st March 2018
|Period of Default |
| ||Principal ||Interest || |
|Edelweiss Asset Reconstruction Company Limited - various trust ||5671.09 ||- ||Financial year 2017-2018 |
|Edelweiss Asset Reconstruction Company Limited - SC 162 ||428.00 ||- ||Financial year 2017-2018 |
|Axis Bank ||1491.67 ||32.15 ||Financial year 2017-2018 |
|Tata Capital Financial Services Limited ||975.00 ||- ||Financial year 2017-2018 |
|Total ||8565.76 ||32.15 || |
(ix) According to the information and explanations given to us the Company did notraise any moneys by way of initial public offer further public offer (including debtinstruments). In respect of term loan taken during the year moneys were applied for thepurpose for which it was raised.
(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.
(xi) In our opinion and according to the information and explanations given to us theCompany has not paid or provided managerial remuneration during the year.
(xii) As the Company is not a Nidhi Company and the Nidhi Rules 2014 are notapplicable to it the provisions of Clause 3(xii) of the Order are not applicable to theCompany.
(xiii) The Company has entered into transactions with related parties in compliancewith the provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required under IndianAccounting Standard (Ind AS) 24 Related Party Disclosures specified in the Companies(Indian Accounting Standards) Rules 2015 (as amended) under Section 133 of the Act.
(xiv) The Company has made preferential allotment of equity shares during the yearunder review and the requirement of Section 42 of the Companies Act 2013 have beencomplied with. The Company has not made private placement of shares or fully or partlyconvertible debentures during the year under review.
(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with him.Therefore the provisions of Clause 3(xv) of the Order are not applicable to the Company.
(xvi) The Company is not required to be registered under section 45-1A of the ReserveBank of India Act 1934.
For Chaturvedi & Shah
Firm Registration No. 101720W
Membership No. 109859
Date: 24th May 2018
"Annexure B" to the Independent Auditor's Report
Referred to in paragraph 2(f) under the heading "Report on Other Legal andRegulatory Requirements" of our report of even date to the members of the ArshiyaLimited on the standalone Ind AS financial statements for the year ended 31st March 2018.
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 2018 in conjunction with our audit ofthe standalone Ind AS financial statements of the Company for the year 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to Companys 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 Companies Act 2013.
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 Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the standalone Ind AS 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 standalone Ind AS financial statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standaloneInd AS financial statements in accordance with generally accepted accounting principlesand that receipts and expenditures of the Company are being made only in accordance withauthorizations of management directors of the Company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the Company's assets that could have a material effect on the standaloneInd AS 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.
According to the information and explanations given to us and based on the audit oftest of controls in our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31st March 2018 basedon 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 Institute ofChartered Accountants of India.
For Chaturvedi & Shah Chartered Accountants Firm Registration No. 101720W
Vijay Napawaliya Partner
Membership No. 109859
Place: Mumbai Date: 24th May 2018