The Board of Directors hereby submits the reports of the business and operations ofyour Company ("the Company" or 'Arshiya Limited") alongwith the auditedfinancial statements for the financial year ended March 31 2020. The consolidatedperformance of the Company and its subsidiaries have been referred to wherever required.
1. FINANCIAL HIGHLIGHTS:
(Rs. In Lakhs)
|Particulars ||Standalone ||Consolidated |
| ||Financial Year Ended ||Financial Year Ended ||Financial Year Ended ||Financial Year Ended |
| ||31.03.2020 ||31.03.2019 ||31.03.2020 ||31.03.2019 |
|Income from Operations ||23868.15 ||13139.98 ||29448.35 ||28937.38 |
|Total Expenditure ||7793.95 ||5429.45 ||20040.47 ||26324.03 |
|Operating Profit/(Loss) ||16074.20 ||7710.53 ||9407.88 ||2613.35 |
|Other Income ||1229.28 ||2192.48 ||1317.06 ||2460.09 |
|Profit before interest Finance Cost depreciation amortization exceptional item and tax ||17303.48 ||9903.01 ||10724.94 ||5073.44 |
|Finance Cost ||13122.32 ||11236.53 ||33625.39 ||27559.39 |
|Cash Profit/(Loss) ||4181.16 ||-1333.52 ||-22900.45 ||-22485.95 |
|Depreciation and Amortization Expenses ||1571.09 ||1482.22 ||14284.97 ||9419.56 |
|Profit/(Loss) Before Exceptional Items Prior Period Adjustment and Tax ||2610.07 ||-2815.74 ||-37185.42 ||-31905.51 |
|Exceptional Items (Net) ||108062.25 ||700.75 ||7810.00 ||-5167.04 |
|Profit/(Loss) Before Tax ||-105452.18 ||-3516.49 ||-44995.42 ||-26738.47 |
|Tax Expenses ||1102.96 ||- ||1109.93 ||6.98 |
|Net Profit/(Loss) After Tax from Continuing Operations ||-106555.14 ||-3516.49 ||-46105.35 ||-26745.45 |
|Net Profit/(Loss) After Tax from Discontinuing Operations ||- ||- ||-111.10 ||-12.40 |
|Net Profit/(Loss) After Tax ||-106555.14 ||-3516.49 ||-46216.45 ||-26757.85 |
|Add: Other Comprehensive Income (Items that will not be re classified to profit and loss) ||26.35 ||8.11 ||55.26 ||-28.57 |
|Total Comprehensive Income carried to other equity ||-106528.79 ||-3508.38 ||-46161.19 ||-26786.42 |
2. RESULTS OF OPERATIONS:
During the year under review your Company has reported a standalone total income of '23868.15 Lakhs as compared to ' 13139.98 Lakhs for the previous year. Further yourCompany has reported loss of ' 106555.14 Lakh as compared to the loss of ' -3516.49Lakhs in previous year.
During the year under review your Company has reported a consolidated total income of '29448.35 Lakhs as compared to ' 28937.38 Lakhs for the previous year. Further yourCompany has reported loss after tax of ' 46216.45 Lakh as compared to the loss of '26757.85 Lakhs in previous year.
In view of losses the Directors regret their inability to recommend dividend for thefinancial year ended March 31 2020.
4. CHANGE IN CAPITAL STRUCTURE:
The Authorised Share Capital of your Company was reclassified to ' 605000000/-(Rupees Sixty Crores Fifty Lakh only) divided into 287500000 (Twenty Eight CroresSeventy Five Lakh) Equity Shares of ' 2/- (Rupees Two only) each and 3000000 (ThirtyLakhs Only) Zero Percent Optionally Convertible Redeemable Preference Shares of ' 10/-(Rupees Ten Only) vide Special Resolution passed by the shareholders of the Companythrough postal ballot on 23rd July 2019 during the year under review. Further yourCompany has made preferential allotment of equity shares and compulsory convertibledebenture during the year and the requirement of Section 62 of the Companies Act 2013& all other relevant applicable provisions have been complied with. These allotmentswere made against conversion of outstanding dues of creditors. The details of changes incapital structure forms part of corporate governance section of this Annual Report.
5. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS BY COMPANY:
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to Financial Statements under thisreport.
During the year under review your Company did not accept any deposits in terms ofSection 73 of the Companies Act 2013 read with the Companies (Acceptance of Deposit)Rules 2014. No amounts were outstanding which were classified as 'Deposits' under theapplicable provisions of Companies Act 2013 as on the date of Balance Sheet and hencethe requirement for furnishing of details of deposits which are not in compliance with theChapter V of the Companies Act 2013 is not applicable.
7. MATERIAL CHANGES AND COMMITMENT - IF ANY AFFECTING FINANCIAL POSITION OF THECOMPANY FROM THE END OF THE FINANCIAL YEAR TILL THE DATE OF THIS REPORT:
There has been no material change and commitment affecting the financial performanceof the Company which occurred between the end of the financial year of the Company towhich the financial statements relate and the date of this Report.
8. SUBSIDIARIES AND ASSOCIATES COMPANIES:
As on March 31 2020 the Company has 10(ten) subsidiary Companies and 3(three) stepdown subsidiaries. Further that 4(Four) out of the ten subsidiaries companies namelyArshiya Rail Infrastructure Limited Arshiya Northern FTWZ Limited Arshiya LifestyleLimited and Arshiya Logistics Services Limited are identified to be the Materialsubsidiaries in terms of listing regulations. There are no associates or joint ventureCompanies within the meaning of Section 2(6) of the Companies Act 2013 ("Act").
Pursuant to the provisions of Section 129(3) of the Act a statement containing thesalient features of financial statements of the Company's subsidiaries in Form AOC-1 isattached to the financial statements of the Company as an Annexure I.
Further pursuant to the provisions of Section 136 of the Act the financial statementsof the Company consolidated financial statements along with relevant documents andseparate audited financial statements in respect of subsidiaries are available on thewebsite of the Company http://www.arshiyalimited.com/annual-reports-subsidiaries.html.
During the year following changes have taken place in the subsidiary companies.
Subsidiary Incorporated/Acquired/ Disposed off:
During the year under review your Company has neither incorporated any SubsidiaryCompany nor any Step-down Subsidiary Company.
Your Company has acquired one Subsidiary namely Arshiya Data Centre Private Limited on3rd September 2019.
Also your Company disposed off one of its subsidiary namely Laxmipati Balaji SupplyChain Management Limited on 3rd September 2019.
Further during the year under review the Company two subsidiaries namely ArshiyaIndustrial & Distribution Hub Limited & Arshiya Transport and Handling Limitedhave been merged into Arshiya Rail Infrastructure Limited pursuant to order of theNational Company Law Tribunal (NCLT) dated 6th December 2019.
9. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTY(IES):
Particulars of contracts or arrangement with related parties referred to in Section 188(1) of the Companies Act 2013 in the prescribed Form No. AOC-2 is appended as anAnnexure - II to the Board's report.
10. BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:
As per the requirements of Section 149 152 of the Companies Act 2013 (the Act) andsuch other applicable provisions of the Act and as per provisions of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 which defines the compositionof the Board the Board of Directors of the Company have been constituted in compliancewith the said Sections.
Further at the time of appointment of an Independent Director the Company issues aformal letter of appointment detailing their role and function in the Company. The formatof the letter of appointment is available on our website http://www.arshiyalimited.com/assets/pdf/appointment-letters20160407091114.pdf
As on the date of this report the Company's Board consists of the followingIndependent Directors:
Mr. Ashishkumar Bairagra
Mr. Rishabh Shah
Mr. Manjari Kacker
Mr. Ved Prakash
i. Appointment Reappointment and Resignation:
During the year under review Mr. Ajay S Mittal was reappointed as Managing Directorw.e.f.April 202019 and Mrs. Archana A Mittal was reappointed as Joint Managing Directorw.e.f. April 202019
Also Mr. Ashsishkumar Biaragra and Mr. Rishabh Shah was reappointed as IndependentDirector for second term of 5 years w.e.f September 10.2019.
During the year review Mrs. Manjari Kacker has joined the Board of your Company as an(Additional) Independent Director w.e.f. 30th January 2020 whose appointment is subjectto approval at the 39th Annual General Meeting scheduled to be held on 25th day ofSeptember 2020 hold office for a period of 5 years until the conclusion of 44th AnnualGeneral Meeting as his First Term of Appointment.
During the year review Mr. Ved Prakash has joined the Board of your Company as an(Additional) Independent Director w.e.f. 27th June 2020 whose appointment is subject toapproval at the 39th Annual General Meeting scheduled to be held on 25th day of September2020 to hold office for a period of 5 years until the conclusion of 44th Annual GeneralMeeting as his First Term of Appointment.
In accordance with the provisions of Section 152 of the Companies Act 2013 and theCompany's Articles of Association Mr. Ajay S Mittal - Managing Director retires byrotation at the ensuing Annual General Meeting and being eligible he has offered himselffor re-appointment. Your Board recommends his reappointment.
Brief details of the Director proposed to be appointed / Re - appointed as requiredunder Regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is provided in the notice of the Annual General Meeting and forms anintegral part of this Annual Report.
B. KEY MANAGERIAL PERSONNEL
Mr. Ajay S Mittal- Managing Director Mrs. Archana A Mittal- Joint Managing DirectorMr. and Dinesh Kumar Sodani - Chief Financial Officer are the Key Managerial Personnel ofthe Company in terms of Section 2(51) read with Section 203(1) of the Companies Act2013.
Mrs. Savita Kodain has resigned w.e.f. 26th April 2020 from her position as CompanySecretary & Compliance Officer of the Company.
Mrs. Yesha Maniar has been appointed as Company Secretary & Compliance Officer ofthe Company w.e.f. 25th August 2020.
i. Declaration by Independent Directors
The Company has received necessary declaration from each Independent Director underSection 149(7) of the Companies Act 2013 to meet the criteria of their independence aslaid down in Section 149(6) of the Companies Act 2013 and Regulation 25 of SEBI (ListingObligations and Disclosure Requirements) Regulation 2015.
ii. Committees of the Board
The Board have Five Committees namely Audit Committee Nomination and RemunerationCommittee Share Transfer Investor Grievances & Stakeholders Relationship CommitteeCorporate Social Responsibility Committee and Committee of Directors.
A detailed note on Board and its committees is provided in the corporate governancereport section of this Annual Report.
iii. Board Diversity
The Company recognises and embraces the importance of a diverse board in its success.We believe that a truly diverse board will leverage difference in thought perspectivesknowledge skill regional and industry experience cultural and geographical background.The Board has adopted the Policy on Board Diversity which sets out the approach todiversity of the Board of Directors and the same is available on our websitehttp://www.arshiyalimited.com/assets/ pdf/policy-on-board-diversity20160407104216.pdf
iv. Number of meetings of the Board of Directors of the Company:
During the year Nine Meetings were held. The details of the meetings of the Board heldduring the financial year 201920 forms part of the Corporate Governance Report. Theintervening gap between any two meetings did not exceed 120 days as prescribed byRegulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 & amendments thereof plus the Companies Act 2013 & its amendments thereof.
v. Policy on Director's Appointment and Remuneration
The Current policy of Board of Directors of the Company has an optimum combination ofPromoter Directors and NonExecutive Independent Directors who have in depth knowledge ofthe business and industry. The composition of the Board is in conformity with the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and the Companies Act2013.
The policy of the Company on Directors' appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a directorand other matters as required under sub-section (3) of Section 178 of the Companies Act2013 is available on our website http://www.arshiyalimited.com/assets/pdf/ nomination-andremunerationpolicy20160407103702.pdf .
We affirm that the Remuneration paid to the Directors is as per the terms laid out inthe Nomination and Remuneration Policy of the Company.
vi. Board Evaluation
The Board has carried out an annual evaluation of its own performance the Directorsindividually as well as the evaluation of the working of its Committees in the manner asenumerated in the Nomination and Remuneration Policy in accordance with the provisions ofthe Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulation 2015 mandates that the Board shall monitor and review the Board evaluationframework. A structured questionnaire was prepared after taking into consideration of thevarious aspects of the Board's functioning composition of the Board and its Committeesculture execution and performance of specific duties obligations and governance.
The Companies Act 2013 states that a formal annual evaluation needs to be made by theBoard of its own performance and that of its committees and individual directors. ScheduleIV of the Companies Act 2013 states that the performance evaluation of IndependentDirectors shall be done by the entire Board of Directors excluding the director beingevaluated.
The evaluation of all the directors and the Board as a whole was conducted based on thecriteria and framework adopted by the Board. The performance evaluation of the Chairmanand the non-independent Director(s) was carried out by the Independent Directors. TheBoard of Directors expressed their satisfaction with the evaluation process.
Your Directors express their satisfaction with the evaluation process and inform thatthe performance of the Board as a whole its Committees and its member individually wereadjudged satisfactory.
vii. Familiarisation Program for Independent Directors
All new Independent Directors whenever inducted in the Board attend the orientationprogram. The details of training and familiarisation program for Independent Directorswith the Company nature of the Industry in which the Company operates business model ofthe Company and related matters are available on our website http://www.arshiyalimited.com/assets/pdf/familarisation-programmes20160407103729.pdf
Further at the time of the appointment of Independent Director the Company issues aformal letter of appointment outlining his/her role function duties andresponsibilities.
C. DIRECTORS' RESPONSIBILITY STATEMENT
To the best of knowledge and belief and according to the information and explanationsobtained by them the Board pursuant to Section 134 (5) of the Companies Act 2013confirm that:
a. ) In the preparation of the annual accounts for the year ended March 31 2020 theapplicable accounting standards have been followed and no material departures have beenmade from the same.
b. ) They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the loss ofthe Company for that period.
c. ) They have 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. ) They have prepared the annual accounts on a going concern basis.
e. ) They have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively.
f. ) They have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
D. AUDITORS AND AUDITORS' REPORT:
i. ) Statutory Auditors:
Chaturvedi & Shah LLP Chartered Accountants was appointed as Statutory Auditorsof the Company for a period of five year from the conclusion of 36th Annual GeneralMeeting till the conclusion of 41st Annual General Meeting to be held in the year 2022.
The requirement of Annual ratification of Auditors' appointment at the AGM has beenomitted pursuant to the Companies Amendment Act 2017 notified on May 7 2018.
ii. ) Auditors' Report:
The reports of the Statutory Auditors Chaturvedi & Shah LLP Chartered Accountantson the standalone and consolidated financial statements of the Company for the year 2020form part of this Annual Report. The statutory auditors have submitted modified opinion onthe audit of Standalone financial statements for the year 2020.
Management's response to the qualifications in the Auditors' Report on StandaloneFinancial Statement is as under:
Audit Report on Standalone Financial Statement:
As mentioned in the Note No. 44 to the statement the Company has provided penalinterest at 8% on borrowing from Edelweiss Assets Reconstruction Company Limited (EARC) asagainst the documented rate of 18%. Interest provisions in earlier period / years wereaccounted based on the confirmations received from EARC. It has resulted in the shortprovision of interest amounting to ' 1497.96 Lakh till the year ended 31st March 2019 andfor the quarter and year ended 31st March 2020 amounting to ' 174.24 Lakh and ' 700.78Lakh respectively which is not in compliance with Ind AS-23 "Borrowing Cost"read with Ind AS-109 "Financial Instruments". In aggregate interest provisionsare lower by ' 2198.74 Lakh till 31st March 2020. Had interest been recognised at itsdocumented rate finance cost for the quarter and year ended 31st March 2020 and earlieryears would have been higher and net loss after tax for the year and total comprehensiveincome would have been higher by equivalent amount having consequential impact on otherequity.
The management of the Company has clarified that representations have been made to EARCseeking revision in rate of penal interest and the same is under process.
Audit Report on Consolidated Financial Statement:
Details of Qualification:
As mentioned in the Note No. 51 to the statement the Group has provided penal interestat 8% on borrowing from Edelweiss Assets Reconstruction Company Limited (EARC) as againstthe documented rate of 18%. Interest provisions in earlier period / years were accountedbased on the confirmations received from EARC. It has resulted in the short provision ofinterest amounting to ' 1711.75 Lakh till the year ended 31st March 2019 and for thequarter and year ended 31st March 2020 amounting to ' 337.95 Lakh and ' 1359.21 Lakhrespectively which is not in compliance with Ind AS-23 "Borrowing Cost" readwith Ind AS-109 "Financial Instruments". In aggregate interest provisions arelower by ' 3070.96 Lakh till 31st March 2020. Had interest been recognised at itsdocumented rate finance cost for the quarter and year ended 31st March 2020 and earlieryears would have been higher and net loss after tax for the year and total comprehensiveincome would have been higher by equivalent amount having consequential impact on otherequity.
The management of the Group has clarified that representations have been made to EARCseeking revision in rate of penal interest and the same is under process.
As mentioned in Note No. 54 of the consolidated financial statement a subsidiarycompany failed to make payment as prescribed as per one time settlement with lender. As aresult event of default has occurred and the entire debt prior to date of settlementbecome payable along with interest. The subsidiary has not reversed the gain recorded inearlier year and not provided for additional interest till 31st March 2019 Rs. 3500.76Lakh and for the year ended 31st March 2020 Rs. 2475.19 Lakh aggregating to Rs. 5975.95Lakh till 31st March 2020. Had the subsidiary Company reversed the gain recorded inearlier year and provided for additional interest exceptional item would have been lowerby Rs. 6604.55 Lakh and finance cost would have been higher by Rs. 5975.95 Lakh byequivalent amount as mentioned above having consequential impact on total comprehensiveincome and other equity.
The subsidiary Company is re-negotiating the One Time Settlement (OTS) with the Bankincluding the extension of time limit for payment of OTS amount.
iii.) Cost Auditor:
Your Company has been voluntarily carrying out Cost Audit in Compliance with Section148 of the Companies Act 2013 read with the Companies (Cost Records and Audit) Rules2014 as amended from time to time your Company has been carrying out audit of costrecords.
The Board of Directors on the recommendation of Audit Committee has decided todiscontinue the said audits in line with the change in business line to being a morefocused asset light business model. Your Company had carried out Cost Audit for the yearunder review and there are no qualifications in the Cost Audit Report for the FinancialYear 2019-2020.
iv.) Secretarial Auditor:
Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethereunder the Company has appointed Aabid & Co. Company Secretaries to undertake theSecretarial Audit of the Company for the Financial Year 2019-20. The Secretarial AuditReport for the Financial Year 2019-20 forms part of this Annual Report as an Annexure-IIIto the Board's Report. Further the secretarial Auditor has also certified that yourCompany has complied with the applicable Secretarial Standard i.e. SS-1 and SS-2.
The Company is in compliance with Regulation 24A of the Listing Regulations. TheCompany's unlisted material subsidiaries undergo Secretarial Audit. Copy of SecretarialAudit Reports of these subsidiaries are annexed to this Annual Report. as an Annexure-IIIA The Secretarial Audit report ofthese subsidiaries does not contain any qualificationreservation or adverse remark or disclaimer.
Secretarial Auditors' Report
The said report does not contain any adverse observation or qualification requiringexplanation or comments from the Board under Section 134(3) of the Companies Act 2013.However a matter was placed in emphasis by the Auditor which is as under:
As per the provisions of Rule 12(2) of The Companies (Prospectus and allotment ofSecurities) Rules 2014 list of allottees shall be certified by the signatory of the FormPAS-3 however 2 Form PAS-3 filed by the Company for conversion of outstanding amount inEquity Shares/Other Securities has been signed by Mr. Ajay Mittal and List of Allotteeshas been signed by Ms. Savita Kodain.
The same was signed by the Company Secretary & Compliance Officer of the Companybased on authority given to her by the Board of Directors of the Company vide resolutiondated 7th December 2019.
E. DISCLOSURE ON COMPLIANCE WITH SECRETARIAL STANDARDS
Your Directors confirm that the Secretarial Standards issued by the Institute ofCompany Secretaries of India have been complied with.
F. INTERNAL CONTROL SYSTEMS
Your Company has an effective internal control and risk mitigation system which areconstantly assessed and strengthened with new/ revised standard operating procedures. TheCompany's internal control system is commensurate with its size scale and complexities ofits operations. The internal audit is entrusted to M. A. Parikh & Co. CharteredAccountants a reputed firm of Chartered Accountants. The main thrust of internal audit isto test and review controls appraisal of risks and business processes besidesbenchmarking controls with best practices in the industry.
The Audit Committee actively reviews the adequacy and effectiveness of the internalcontrol systems and suggests improvements to strengthen the same. The Company has a robustManagement Information System which is an integral part of the control mechanism.
The Audit Committee Statutory Auditors and the Business Heads are periodicallyapprised of the internal audit findings and corrective actions taken by the management arepresented to the Audit Committee. To maintain its objectivity and independence theInternal Audit function reports to the Chairman of the Audit Committee.
G. REPORTING OF FRAUDS:
There was no instance of fraud during the year under review which required thestatutory auditors to report to the audit Committee and / or board under section 143(12)of the Act and the rules made thereunder.
H. EQUITY SHARES WITH DIFFERENTIAL RIGHTS:
During the year the Company has not issued any equity shares with differential rights /sweat equity shares or not made any provision of its own shares by employees or bytrustees for the benefit of employees during the financial year 2019-2020.
The Company has not made any purchase or provision of its own shares by employees or bytrustees for the benefit of employees during the financial year 2019-2020.
Employee Stock Options:
The Company in accordance with its approved employee stock option scheme-2019(hereinafter referred to as the "Scheme 2019") the company approved grant of1750000 (Seventeen Lakhs Fifty Thousand Only) Employee Stock Options to some of theeligible and deserving employees of the Company & its Subsidiaries under the Scheme2019 on 30th January 2020. During the year under review compliance of all applicablerules & regulation pertaining to the same have been complied with. In compliance withthe requirements of the SEBI (Share Based Employee Benefits) Regulations 2014 acertificate from Statutory auditors confirming implementation of ESOP Scheme in accordancewith the said regulations and shareholder's resolution will be available electronicallyfor inspection by the members during the annual general meeting of the Company.
The scheme is in compliance with the SEBI (Share Based Employee Benefits) Regulations2014. In terms of the provisions of Regulation 14 of the SEBI (Share Based EmployeeBenefits) Regulations 2014 the details of the Stock Options granted under the aforesaidESOP Scheme are uploaded on the website of the Company www.arshiyalimited.com.
Business Responsibility Reporting ("BRR"):
The Listing Regulations mandate the inclusion of the BRR as part of the Annual Reportfor the top 1000 listed entities based on market capitalization. In compliance with theListing Regulations we have integrated BRR disclosures into our Annual Report.
The Company's sustainability initiatives as provided in the Business ResponsibilityReport are in line with the key principles enunciated in "National VoluntaryGuidelines on Social Environmental and Economic Responsibilities of Business" framedby the Ministry of Corporate Affairs. Pursuant to the provisions of Regulation 34 of theListing Regulations the said report is attached separately which forms part of thisAnnual Report.
Secretarial Standards Compliance
During the year under review the Company has complied with all the applicableSecretarial Standards issued by The Institute of Company Secretaries of India and approvedby the Central Government pursuant to Section 118 of the Companies Act 2013.
Significant and material orders
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and the Company's operations in future.
I. BUSINESS AND FUTURE OUTLOOK:
Impact of COVID-19
During the last quarter of FY 2020 COVID-19 spread globally and in India. This had animpact on the business operations of the Company. We started our preparation to respond tothis crisis from early March. The company implemented various precautionary measures ateach workplace to ensure personal safety and business continuity such as temperaturemonitoring frequent use of hand sanitisers use of face masks frequent sanitation offrequently touched surfaces etc. Our Corporate Office switched to working with much lowerattendance. We also enabled more than 70% key employees across the Company to a Work fromHome set-up. This ensured continuity and constant ability to support the business.
COMPANY AFFIRMATION OF READINESS TOWARDS COVID-19
Arshiya's businesses being categorized under essential services were uninterruptedlyfunctional even during lockdown. Arshiya's FTWZ in Panvel and Khurja (NCR) have beencontinuously operational as per the guidelines issued by government of India andrespective state governments. Currently amidst partial relaxation of lockdown TheCompany's workforce is dealing with removal of container congestion at JNPT / CFS and ICDin NCR attracting much appreciation from port authorities domestic and internationalclients. As mentioned above the operations of the Company's FTWZ's in Panvel as well asKhurja were Completely operational. The Company's ICD and Rail operations were alsofunctional though the movement with certain Clients was affected due to theirmanufacturing plants were under shut down.
However the Registered Office of the Company in Mumbai and other offices in India wereclosed in accordance with the Government directives and/or as a precautionary measuresince March 23 2020. Amidst the crisis the safety of our employees has been our top-mostpriority and the Company has taken several measures to ensure their well-being. TheCompany also formed a Covid-19 response team at all sites and offices where PPE Kits andmasks were made available. All of the key employees in of the Company have been workingfrom home in accordance with the guidelines issued by the Central/State/Municipalauthorities. The Company is fully functional using Video Conferencing and other tools.
The Company is well positioned to fulfil its obligations and existingcontracts/arrangements except for transactions involving sale of its business assets asthe arrangements for the same are delayed due to COVID-19 related restrictions. Apart fromthe said the Company does not foresee any contract/agreements which will have significantimpact on the business.
Arshiya is striving to seek positive attributes in the area of capturing e-commercebusiness in its FTWZ business arena. Since e-commerce is the future globally and is goingto be used extensively the Company is taking measures to persuade the government to allowe-commerce trade through FTWZ for which certain formalities and permission are yet to begranted by concerned authorities. Once the same is in place it will not only allowpromotion of international trade but also generate employment opportunities earn foreignexchange etc. The Company has all its plans set in motion in order to enhance and capturethe future opportunities. Arshiya FTWZ solution will be a game changer with e-commercespecially post Covid-19.
FREE TRADE WAREHOUSING ZONE (FTWZ)
Your Company is a pioneer and has the first mover advantage in setting up the FTWZs inthe country offering huge fiscal and other benefits to its customers.
FTWZ facility at Panvel near Mumbai with its best in class warehousing infrastructureof global standards is in close proximity to country's busiest container port JNPT wellconnected to the National and State Highways and the proposed International Airport inNavi Mumbai. This facility also offers a wide range of 3 PL services besides various valueoptimisation services to its customers.
The second FTWZ facility in NCR at Khurja in the state of Uttar Pradesh is a part ofthe India's first operational integrated multi-modal logistics park including Domesticwarehousing facility 3PL services Rail and Rail Infrastructure along with a 6 lanePrivate Freight and Container Rail Terminals and Inland Container Depot (ICD).
Your Company is glad to inform that the FTWZ facility at Panvel is operating closer tofull capacity and has achieved highest ever capacity utilisation. The increasingacceptance of the FTWZ with various benefits it offers is increasing and your company iswitnessing increasing enquiries for bigger space. With various Government reforms andincreasing economic activities in the country the warehousing sector is witnessingincreasing participation from institutional investors.
3 PL Services
Your Company's subsidiary Company is in the business of providing 3PL and other valueoptimisation services such as handling and transportation packaging consolidationpalletisation labelling kitting bagging bottling cutting-slitting survey qualityassurance refurbishment repairs and maintenance washing etc. to its variousclientele. Your Company also provides Information Technology (IT) enabled services to itsclients.
DOMESTIC WAREHOUSING FACILITY
Your Company commenced offering domestic warehousing facility in NCR at Khurja. We arepleased to that one warehouse which was domesticated has been completely leased out alongwith almost 300000 sq. ft. open yard space. Second warehouse has now been domesticated ofwhich more than 50% is already leased out and the rest will be leased out in near future.We see good potential of domestic warehousing at Khurja after the GST implementation andare exploring ways to further increase this business by using the available assets.
RAIL INFRASTRUCTURE & TRANSPORT HANDLING
Your subsidiary Company which is providing the containerised Rail Transportationservices on a Pan-India basis with its fleet of 18 Rakes and around 3000 containerscontinued a steady performance in FY19-20 and benefitted from various initiatives toreduce empty movement improved availability of required type of containers costreduction measures and turnaround time.
PRIVATE FREIGHT TERMINAL
Your subsidiary Company has 6 lane Private Freight and Container Rail Terminals and 2sidings for bulk cargo in NCR at Khurja in the state of Uttar Pradesh.
Your facility being just about 12 Kms from the proposed Jewar Airport site is expectedto be the hub of receiving massive quantities of construction material thereby makingmore than full use of your Private Freight Terminal
INLAND CONTAINER DEPOT (ICD)
Your Company's facility of Inland container depot in NCR at Khurja boasts of being theonly such facility connected to the Rail network & Private Rail Siding and FTWZproviding inter-connected solution-based EXIM services. ICD also provides connectivity tomajor western ports such as Mundra Pipavav and JNPT for EXIM cargo movement.
Your ICD currently handles about 1500 containers a month and plans are being worked outto increase this volume to around 5000 containers a month in near future.
Some of the key initiatives have been:
Reduction in debt of your Company and its subsidiaries.
Improving liquidity position through monetisation of warehouses so to reducedebt and liabilities of your Company.
Improved marketing efforts attracting clients requiring large space (includingfull warehouse).
Providing solutions to the e-commerce telecom pharmaceuticals and chemicalindustry which is increasing the capacity utilisation and improved demand for additionalwarehouses.
The conversion of containers to side-access meeting the customer needs andimproving the availability of containers.
Cost reduction measures across all business segments.
Improving the information technology platform to provide the IT enabled servicesto the clients.
Organisational development attracting the new talent for the day-to-daymanagement.
At present the Company's Equity Shares are listed at BSE Limited and National StockExchange of India Ltd and the Company has paid Listing Fees to the above Stock Exchangesfor the year 2020-2021.
K. CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING:
The Board of Directors has adopted the Insider Trading Policy in accordance with therequirement of SEBI (Prohibition of Insider Trading) Regulation 2015. The Insider TradingPolicy of the Company lays down guidelines and procedures to be followed and disclosuresto be made while dealing with the shares of the Company as well as the consequences ofviolation. The policy has been formulated to regulate monitor and ensure reporting ofdeals by employees and to maintain the highest ethical standards of dealing in Companysecurities.
The Insider Trading Policy of the Company covering code of practices and procedures forfair disclosure of unpublished price sensitive information and code of conduct forprevention of insider trading is available on our website http://www.arshiyalimited.com/assets/pdf/insider-trading-code20160407090651.pdf
The SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 mandatedthe formulation of certain policies for all listed companies. Also the Companies Act 2013requires the Company to formulate few policies. All our corporate governance policies areavailable on our website http://www.arshiyalimited.com/corporate-governance.html. ThePolicies are reviewed periodically by the Board and updated based on need and newcompliance requirement.
In addition to its Code of Conduct and Ethics key policies that have been adopted bythe Company are as follows:
|Name of the Policy ||Brief Description ||Web Link |
|Nomination and Remuneration Policy ||The purpose of this policy is to lay down a framework in relation to remuneration of directors KMP senior management personnel and other employees. ||http://www.arshiyalimited.com/assets/ pdf/nomination-and-remuneration- policy20160407103702.pdf |
|Related Party Transaction Policy ||The purpose of this policy is to regulate all transactions between the Company and its related parties. ||http://www.arshiyalimited.com/ assets/pdf/related-party-transaction- policy20160407103809.pdf |
|Code of conduct for prevention of insider trading & Code of corporate disclosure practices ||The purpose of this Policy is to provide the framework for dealing in securities of the Company. ||http://www.arshiyalimited.com/assets/pdf/ insider-trading-code20160407090651.pdf |
|Policy on Material Subsidiary ||The purpose of this policy is to determine the material subsidiaries and to provide the governance framework for them. ||http://www.arshiyalimited.com/ assets/pdf/policy-on-material- subsidiaries20160407103840.pdf |
|Risk management Policy ||The purpose of this policy is to lay down the framework of the Risk Management. ||http://www.arshiyalimited.com/assets/pdf/ risk-management-policy20160407103904. pdf |
|Whistle Blower Policy (Policy on Vigil Mechanism) ||The purpose of this policy is to provide mechanism for Directors and Employees to report concerns about unethical behaviour actual or suspected fraud or violation of the Company's code of conduct and ethics. ||http://www.arshiyalimited.com/assets/ pdf/vigil-mechanism-whistle-blower- policy20160407104143.pdf |
|Policy on Board Diversity ||The purpose of this policy is to have optimum combination of Directors from different areas and fields. ||http://www.arshiyalimited.com/assets/pdf/ policy-on-board-diversity20160407104216. pdf |
|Archival Policy ||The purpose of this Policy is to archive any of the material events or information which are disclosed by the Company to the Stock Exchanges. ||http://www.arshiyalimited.com/assets/pdf/ archival-policy120160613145605.pdf |
|Policy for determination of Materiality of any event / information ||The purpose of this Policy is to determine materiality of events and information and to ensure that the Company shall make disclosure of events / information. ||http://www.arshiyalimited.com/assets/pdf/ policy-for-determination-of-materiality-of- any-event--information_120160613145521. pdf |
|Policy for preservation of documents ||The purpose of this Policy is to ensure that all the necessary documents and records of the Company are adequately protected and preserved as per the statutory requirements. ||http://www.arshiyalimited.com/ assets/pdf/policy-for-preservation-of- documents_120160613145057.pdf |
|Policy on Corporate Social Responsibility ||The purpose of this policy is to identify the activities wherein the Company can contribute for fulfilling its Corporate Social Responsibility. ||http://www.arshiyalimited.com/arshiya/ assets/pdf/csr-policy_120160620105217.pdf |
M. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company sincerely believes that growth needs to be sustainable in a sociallyrelevant manner. Today's business environment especially in India therefore demands thatcorporates play a pivotal role in shouldering social responsibility. Your Company iscommitted to its endeavour in social responsibilities for benefit of the community.
Under the Corporate Social Responsibility (CSR) initiative of the Company 'ArshiyaCares' your Company has pledged to join hands with organizations who are working towardsfinding simple solutions to the infrastructure problems that India faces.
As per the provisions of the Companies Act 2013 the Company was not required to makea mandatory spending for the CSR Activities.
The CSR policy is available on the website of the Company athttp://www.arshiyalimited.com/arshiya/assets/pdf/csr- policy_120160620105217.pdf
N. HUMAN RESOURCES
Building people capabilities and providing them platforms and opportunities to grow andspread their wings have always been a unique strength of our organization. While on onehand your Company is committed in strengthening its human resources by induction ofexperienced and competitive professionals on the other hand your Company is formulatingappropriate policies systems and schemes which will create adequate opportunities forgrowth in career and create a working environment which enhances productivity. The Companyhas a structured induction process at all locations and management development programs toupgrade skills of managers.
The Company is committed to nurturing enhancing and retaining top talent throughsuperior Learning and Organizational Development. This is a part of Corporate HR functionand is a critical pillar to support the organization's growth and its sustainability inthe long run. The Company takes pride in the commitment competence and dedication shownby its employees in all areas of business.
Your Company continues to enjoy cordial and harmonious relations and not a single manhour was lost on account of any Industrial disturbance during the year 2019-20.
O. PARTICULARS OF EMPLOYEES AND REMUNERATION:
The table containing the names and other particulars of employees in accordance withthe provisions of Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is appendedas Annexure- IVto the Board's report.
P. PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:
The Company has in place the "Policy on Prevention of Sexual Harassment at theWorkplace" in line with the requirements of The Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013.
During the year under review no complaints were received by the Committee forRedressal.
Q. VIGIL MECHANISM/ WHISTLE BLOWER POLICY:
The Company has adopted a Whistle Blower Policy to provide a formal mechanism to theDirectors and employees to report their concerns about unethical behavior actual orsuspected fraud or violation of the Company's Code of Conduct or Ethics Policy. The Policyprovides for adequate safeguards against victimization of employees who avail of themechanism and also provides for direct access to the Chairman of the Audit Committee. Itis affirmed that no personnel of the Company have been denied access to the AuditCommittee. The Whistle Blower Policy has been posted on the website of the Company athttp://www.arshiyalimited.com/assets/pdf/vigil-mechanism-whistle-blower-policy20160407104143.pdf
R. CORPORATE GOVERNANCE REPORT:
Your Company is in compliance with all the applicable provisions of CorporateGovernance as stipulated under Chapter IV of the Listing Regulations. A detailed report onCorporate Governance as required under the Listing Regulations is provided in a separatesection and forms part of the Annual Report. Certificate from the Practicing CompanySecretary regarding compliance with the conditions stipulated in the Listing Regulationsforms part of the Corporate Governance Report.
S. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
Management Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is presented in a separate section forming part of the Annual Report.
T. RISK MANAGEMENT:
Tough it is not possible to completely eliminate various risks associated with thebusiness of the Company Your Company is well aware of risks associated with its businessoperations and various projects under execution. The management is making efforts tominimise such risks on the operations of the company. The Company has established a well -defined process of risk management which includes identification analysis and assessmentof various risks measurement of probable impact of such risks and a strong mechanism todeal with potential risks and situation leading to rise of risks in an effective manner.
The Company has put in place various internal controls for different activities tominimise the impact of various risks. Further as mandated by the Companies Act the Companyhas implemented the Internal Financial Controls to ensure proper control over financialreporting.
U. HEALTH SAFETY AND ENVIRONMENT:
As a responsible corporate citizen your Company lays considerable emphasis on healthsafety aspects of its human capital operations and overall working conditions. Thus beingconstantly aware of its obligation towards maintaining and improving the environment allpossible steps are being taken to meet the toughest environmental standards on pollutioneffluents etc. across various spheres of its business activities.
Conservation of Energy: The operations of the company involve low energy consumption.Adequate measures have been implemented to conserve energy such as -
Roof of the warehouses at our FTWZs have been designed with MR24 standards withroof insulation which gives temperature variation of 8Degree with ambient temperature. Aprovision of installation of solar panels will be made on the roofs to generate renewableenergy in all new warehouses and Skylights have been provided at 3% area of roof to avoidartificial light in the warehouse during day time.
Orientation of the warehouse buildings has been done in such a way that there isless heat transmission resulting in saving the electricity consumption by minimizing heatloss in the HVAC system.
Ridge ventilators are installed at the roof of all WHs whereby there is no needof power run turbo ventilators which saves the huge amount of power.
Cold rooms are having the best quality insulations in roofs/sides/top and floorso as to ensure no leakage of cooling and thus saving a lot of power. The doors of thecold rooms have been installed with air curtains so that during operation internaltemperatures is maintained without any loss of cooling.
The central control room have been installed with the control panels whichcontrols the temp of cold rooms and monitor automatically so to achieve the pre-settemperature requirement. The chiller units are also centrally controlled.
Office air conditioning system is having VRV units which adjust the powerrequirement as per the required heat load. This saves a lot of power requirement.
All peripheral and yard lighting is having auto on and off system set with thetimings which saves lot of wasteful energy.
The docking doors are placed to ensure the minimum run by the fork lifts whichreduces large power required for recharging.
Following environment friendly measures are being implemented in Mumbai FTWZ
Development of green area: Re-plantation of trees in the FTWZ.
Conservation of top soil by removing and storing. The top soil was re-used fordeveloping the green areas
Provision of storm water drainage system along with recharging bore holes indrain bottom to allow ground water recharging. Battery operated materials handlingequipment are being utilized inside the warehouse to control the pollution instead fuelbased MHE.
Sewerage treatment plant: Company has installed sewerage treatment plant for reuse ofwater generated from toilet. After treatment water is used for the gardening purpose.
EHS Policy- Site specific Environment Health and Safety policy is in place. Riskassessment analysis and emergency response plans are on ground. Dedicated Safety teamaudits the working & facility and train staff on all the aspects of safe working.
Technology Absorption: Arshiya sincerely believes in utilizing technology to improveproductivity efficiency and quality of its business operations and working environment.
V. EXTRACT OF ANNUAL RETURN:
In accordance with Section 92 and Section 134 of the Companies Act 2013 read with Rule12 of the Companies (Management and Administration) Rules 2014 an extract of AnnualReturn in Form No. MGT-9 has been placed on the website of the Company and can be accessedat http://www.arshiyalimited.com
W. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:
The particulars as required under the provisions of Section 134(3) (m) of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 in respect ofconservation of energy technology absorption foreign exchange earnings and outgo etc.are furnished in "Annexure-V" which forms part of this Report.
X. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:
There are no significant and material orders passed by the Regulators or Courts orTribunals that would impact the going concern status of the Company and its futureoperations.
However Further during the year under review the Company two subsidiaries namelyArshiya Industrial & Distribution Hub Limited & Arshiya Transport and HandlingLimited have been merged into Arshiya Rail Infrastructure Limited pursuant to order of theNational Company Law Tribunal (NCLT) dated 6th December 2019.
ACKNOWLDGEMENTS & APPRECIATIONS
Your Directors wish to place on record their appreciation for the assistance supportand co-operation received from Government of India the State Governments and otherGovernment agencies and departments investors bankers financial institutions and allother stakeholders.
Your Directors also wish to place on record their deep sense of appreciation for thecommitted services by the executives staff and workers of the Company.