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Notes to Accounts of Arshiya Ltd.

Mar 31, 2015

Note 1: Corporate Information

Arshiya Limited (formerly known as Arshiya International Limited) (the Company) is a unified supply chain and integrated logistics infrastructure provider and is engaged in the business of Free Trade and Warehousing Zone (FTWZ) and value added services along with development, operations and maintenance of FTWZ.

FTWZ'e are developed under the provisions of Special Economic Zone Act 2006 and the Special Economic Zone Rides, 2006.

The Company's equity shares are listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) of India.

The Company has on data of capacity there having a par value per share. Each holder of eqully share la armed to one vote par share. The shareholders who held shares on the record date are erttHed to cMdend as may be proposed by the Board of Directors and for subject to approval of the Shareholders at the ensuring General Meeting.

In the event of liquidation of the Company, the holders of Equally Shares will be entitled to receive remaking assets of the Company, after distribution of all preferential amounts. The distribution will be h the proportion to toe number of capacity aha tea held by the shareholders.

2. In of convertable/warrants

The Company had alloted 1,36,00,000 corwertiNa warrants at T146/- per warrant to promotars /promoters group on preferential basis pursuant to a special resolution passed by the members of tire Company at their agdm ordnary general meeting. held on October 16, 2012. Out at these warrants 53,00,000, 52,50,000 and 30,50,000 were converted (to the ratio of 1 share tor 1 warrants) kite equity shares aggregating to 1,36,00,000 equity shareeofT2A each at a premium of T143/- per shore during the fluency year 2014-15, 2016-14 and 2012-13 respectively.

(a) During the year Company tee allotted to the promoters 5,50,00,000 equity she roe off 2A each at a premium at V1Z80 per share on preferential beds pursuant le the CDRpagkegesnd Interms of special resolution passed on 12th Use, 2014 as per applicable provision of Compiles Act, 1966/Companies Act 2013 and other applicable law .

Term loan from Banks

(I) Securities provided

* First charges the protect aid the future removeble and immovable fixed assets including intangible assets, assignment of rights and benefits but excluding project assets for Khurja FTWZ project, Khruja District park Project, Nagpur project and Roll Project.

* Second charges on current assets of the Company auditor current assets for Khurja FTWZ Project, Nagpur project.

The above loans are accured by Joint aid several Irrevocable personal gisinuTtaas of two Promoter Director of the Company.

(1) Further the loans are accured by here pledged by the promotor Directors.

(iv) Rate of Internet - on Bank loan interest 012% p.a. upto March 2018 and thereafter @ 13% p.a.

Arshiya Limited (Formerly Known as Arshiya international Limited)

Notes forming pert of the Financial statements.

b) TsnnLoreiftpm after parties L Loan of T8453.34SB7/-:

[1} Securities provided

* First changes on all the present future and immovable fvad Meets Indudnp tntangltate eaaati, managements of joint and barrens lation auditing project assets tor Khurje FTWZ project, Kjurh DMripeik Project, Naur project roil RrtlPropwt.

* Second charge on CurrorC Assets of tie Company but excluding aimrt itsset* far Khurje FTWZ prelect, Khirpi OShlpaik Project, Nsflpur project and M Project (Z) The elioiro karw ere teased by Jett ml lenroor Knwwtto penwral giaineilBee «f too Promoter Hectare of tie Campany.

(3) Further the kiens era secured by rtiarae pledged by the Promoter Obectas.

(4) Ratio of Interest; - on Bank :oan Interest 612 % p.a, upto Meroh 20'6 «md thereafter ® 13% p.a.

II. 769,00,00,001V- (P.Y.t786,00,00,000/-) le secured by first charge on land batoning to company situated at VIlags Buttoil at Nagpur, Mahwsatitra. The shove loan cantos Interest ® 15.25% pja. md penal Interest of 4% p.a. Out of the above, 139,00,00,000/- la repayable In a single Instalment at the end of 3years from the date of dhbursament l.e. October 13, 2011 or on exaretse of putfcsl option altar 1 year from the date of dWxnamsnt and balance 30,00k00,000/- In single Instalment at the end of 3 years from tie debt of disbursement le, January 02, 2012 or on exsrdse of put/oall option after 1 year from the date of dsbunwnent. During the preview year, as per the terms of sanction letter the lender has excerched call option and (scaled the above loan and the eald loan Is over** tinea 13 Urotii, 2018.

II <25,66,67,658/- (P.Y.: 7 26,66/17,666/-) Is seared by first and swdutive charge by way of mortgage of Company's land at Khurja near Delhi. The above loan cantea Merest of 15% pjs. plus panel Interest of 2% pa. Out of the above, 7 6,00,00,0001- la repayable h star equal monthly Installments altar a moratorium period of 6 months from the date of dabureamer* l.e. Jtiy 21, 2011 and balance In twelve etpre! monthly Inatalmants etarthg from thirteenth month from the date of disbursement During the year 2012-13. the Ccmpery had detailed h making payment of four Installments segregating to 710,08,66,666/-. Consequently In the year 2012-13, pursuant to the tod ley agreement the lender has rood kid the balance outstendng amount of 716,00,01,000/-and Ibeeati bn 1$ overdue slnoe 9th February, 2013

5. Loan of 7 78,74,32,468/. la aocurod by:

* Enofceks charge on all reasivabfes and cash Bow of he company, as IrrVtod to Ptnvsi FTWZ buslnses.

* Corporale Guarantee of Arshlye Supply Chain Management Private Lhitad tor the fadlty extended to the company.

* Personal Guarantee erf Promoters of m- Company I a. Mr. Ajay s Mttal and Mrs. Arctana A MltaL

* Radge of minimum 49% aha re hording of Aishtya Northen FTWZ Limited & Second charge on el Aaeats ofArsbtya Northern FTWZ Lhitad. v. Term Loan oarrte# Intareat rata of 15.50% pa On non compliance of sanction tern# within the adpulated period, 2% p-a. penal Interest Is payable, vt. Vohldo loan end finance leaeo ctitgetions are secured by way of hypothecation of vehIdee

6. Contingent Liabilities not provided for In respect of: (Amount In

S. Particular. 2015 2014 no.

(I) Disputed Income Tax demands 14,05,53,059 19,76,10,994

(II) Disputed Sales Tax demands 20,51,279 20,51,279

(III) Disputed Local Body Tax demands 1,60,33,355 Nil

(Iv) Claims against the Company not acknowledged as debts 30.05,79,048 19,51,59,355

(v) Right to recompense by Secured Lenders 73,35,00.000 40,38,00,000

(vt) Guarantees given on behalf of subskSaries Outstanding balances 17,73/47,19,332 17,84,35,19,332

(Including Interest accrued and due) against such guarantees is 815,71,94,05,538/- (P.Y. 813,57,95,11,538/-)

7. Capital and other commitments

Estimated amount of contracts remaining to be executed on capital and other account and not provided for (net of advances paid) k 8 52,82,42,968/- (P.Y7 79,000/-).

8. MSMED Act - Creditors

The Company has not received any Intimation from 'suppliers' regarding Ihelr status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence the disclosures, If any, relating to amounts unpaid as at the year-end together with Interest payable as required under the said Act have not been given. This has been relied upon by the auditors.

9. (I) In the opinion of the Management, Current Assets, Loans end Advances and Current Liabilities are approximately of the value stated, If realtzed/peld In the ordinary course of Business. Provision for all known liabilities Is adequate and Is not In excess of the amounts considered reasonably necessary.

(II) The company has sought confirmation of balances as on March 31, 2015 In respect of Trade Receivables, Trade Payables, Advances and Loene/Credlt Faculties from Banke/Flnandal Institutions which are subject to confirmation and reconciliation. The differences, II any, will be adjusted on final reconcHlation/determlnation,

10. Preparation of financial statements on " Going Concern" basis

The financial statements of the Company have been prepared on a "Going Concern" basis in view of:

(a) Package under Corporate Debt Restructuring approved by the Secured Lenders

(b) The Restructuring of the Business Operations (Refer Note No. 30)

11. Revival Plane

The management of the Company b In the process of restructuring Its business operations as also those of Its subsidiaries to which it has substantial investments, by

* expanding the business volumes.

* establishing an Inland Container Depot,

* Infusion of fund by promoters through subscribing of equity capital and providing siterest free unsecured loans. The above steps shall enable the Company to Improve Company's Net worth and Its abSty to discharge Its debts/llaMWes In near fubse.

12. Corporate Debt Restructuring (CDR)

31.1 During the previous year, Secured Lenders (Banks) have approved the restructuring package under "Corporate Debt Restructuring Package" (CDR), which Inter-ala provides for

(a) (i) Reachedulement of the P rind pat amounts of the loans and dates thereof.

(ii) Funding of unpaid interest on the Term Loans due from October 2012 to September 2014 into Funded Interest Term Loans.

(i) Waiver of all liquidated demagea/penal chargea/penal interest/excess interest i.e. in excess of documented rate of all the faculties from the cut-off date I.e. 1* October, 2012 till the Implementation of the package.

(b) A right to recompense In favor of Secured Lenders.

13 This year, the Company has not bean able to generate sufficient cash flows to service the loan repayments/lnterest payments which resulted into Company's borrowings becoming "Non Performing Assets" (NRA's) with the some of the Banks.

14. Such defaults entitle the CDR lenders to reverse the walver/sacrl flees granted by them, which Is estimated to be 773,35,00,000/- as on 31" March, 2015.

31A During the year, a lender, State Bank of Pati8la (SBP) which was part of the "Corporate Debt Restructuring" (CDR) has

assigned Its respective outstanding dues In favor of Edelweiss Asset Reconstruction Company (EARC) on the same terms and conditions as applicable to said lender.

15. Depredation

Consequent to the enactment of the Companies Act, 2013 (the Act) and Its appScaMIty for accounting periods commencing on or after 1 st April, 2014, the Company has re-worked depredation with reference to the useful lives of fixed aseets prescribed by Part 'C of Schedule II to the Act Where the remaining useful life of asset is nil, the carrying amount of the assets after retaining the residual value, as at 1st AprS, 2014 amoimting to 7 2,15,32,821/- has been adjusted to the balance of Surplus in Statement of Profit and Loss. In other cases the carrying values have been depreciated over the remaining uBetel lives of the assets and recognised In the Statement of Profit and Loss. As a result the charge for depredation Is higher by 7 8,13,01,625/- for the year ended 31st March 2015.

16 Provision for Internet

The Company has provided Interest for the year

(a) In respect of loans from banks, on the basis of statements received from them and m absence thereof as per the concessional rates (excluding penal interest) as mentioned in Letter Of Approval (LOA) under the CDR.

(b) In respect of loans assigned to EARC, on the basis of balance confirmations received from them.

17 Tax Deducted at Source

During the year:

(a) The Company had deducted Income tax at source (TDS) aggregating to 711,42,71,793/- during the earlier years from the amounts payable to various parties. The Company has not paid the said TDS to the government on assumption that such parties would have paid their income tax dues on the income declared by them in the respective years. Accordingly, during the year, the Company has transferred an amount of 7 11,42,71,793/- back to the respective parlies.

(b) The Company has written back an aggregate amount of 7 3,04,24,584V- representing Interest on unpaid tax deducted at source provided in earlier years on the premise that since the corresponding tax deducted is not payable as mentioned in Note no.(a) above, interest thereon is not payable.

18 Capital Expenditure:

(a) Fixed Assets:

In view of revival plans of the Company as refeired to In Note 29, In the opinion of the management, the carrying value of the Fixed Assets of the Company Is not lower than their recoverable amounts and hence, no provision for impairment of Fixed Assets is called for.

(b) Capital work-in-progress:

The Company has suspended -further capital expenditure and incurrence of other expenses in connection therewith due to non-optimum utilization of the existing capacity sis also non-avaSabllty of funds for Incurring the balance expenditure. The management expects that In future, the company shell be able to tie up business agreements as also the required funds which will enable It to complete the Prefect Work- In- Progress.

19. Investments

The Company holds strategic and long term Investments by way of equity shares Si its subsidiaries, the aggregate cost of which is 7 8,34,59,72,336/- as on 31*1 March. 2015. The present 'net asset value" of the said investments are lower than their costa of acquisition. Considering that the said Investments are long-term and strategic In nature as also the aald subsidiaries are in the process of Implementing their respective Revival Plane alongwtth the future business plane of the Company, the Management Is of the view that the diminution in value of Its Investments Is temporary In nature and no provision for dmlnutfon in value is caled for at this juncture except in respect of the following subsidiaries:-

20. Hark to Market Looses

Axis Bank

In respect of Derivative contracts assigned to foreign currency assets and liabiSties, an amount of 7 2,23,31,581/- in respect of MTM losses upon determination of fair market value of derivatives entered Into by the Company has been charged to the Statement of Profit and Loss. The Company Is of the view that MTM loss has to be worked out taking Into account the spot exchange rate(e) on the reporting date as It Is committed to continue derivative contracts till their maturity and hence, applying the fair market values presuming that the derivative contracts would be canceled on the reporting date, shall not reflect the correct financial position. However, the Bank which has entered Into derivative contracts with the Company has Intimated that, the loss on aoooisit of MTM Is 7 36,47,77,182/- as upto 31st March, 2015 89 against the amount of7 23,84,63,890/- determined as per the Company's view.

21 INO Vysya Bank

In respect of derivative contracts entered into by the company with ING Vysya Bank (now amalgamated with Kotek Mahlndra Bank Limited w.e.f.1*1 April, 2015) the contracts have been prematurely terminated by the Bank, which Is disputed by the company.

However In the meantime, pending dispute, the Company has made provision on account of MTM fossae amounting to 717,96,43,021/- as ij to 31*' March, 2015, as per peat practice of providing MTM losses taking Into account the spot exchange rate(9) on the reporting date.

22. Other Advances

Other Advances includes 7 31,01,228/- being cash seized by the Income Tax Department at the time of search on 13* June, 2014. The company shall be lodging necessary dakn for refund of the same as according to It, the said cash on hand was duly accounted for In Its books of accounts and tallied with balance on hand as on date of search.

23. Proceedings against Company

Certain lenders end creditors have filed winding up petitions/cases/other legal proceedings for recovery of the amounts due to them which are at different stages before the respective Judicial fonjma/authorttiee. Claims by the said lenders and creditors have been contested by the Company ki those proceedkigs and not acknowledged as debts. It Is not possible at this Juncture to estimate the financial Implications of such claims.

24. Scheme of Amalgamation of Amhiya FTWZ Limited and Amhlya Domestic Dlstrlpark Limited

The Scheme of Amalgamation of Arehlya FTWZ Limited and Arehlya Domestic Dlstrlpark Limited with the Company became effective from 401 January, 2013.The entire undertaking of the transferor companies Including al assets, liabilities and reserves vested in the Company on the appointed dated, i.e.1*1 April. 2012 for which necessary impact had been given In the accounts for the year ended 31* March. 2013. However, land belonging to Arehlya Domestic Dlstrlpark Limited has yet not been transferred In the name of the Company.

25. Logistic Operations

During the year, the Company has decided to phase out Its logistics operations. The book debts and trade payables aggregating to 7 57,75,28,915/- and 7 61,66,84,399/- respectively of which 7 57,20.31,603/- and 7 57,05,06,058/- respectively have been assigned on 30th June, 2014.

26. Maharashtra VAT Refund Receivable

42.1 As per the Notification dated 18th May. 2013, Issued by the government of Maharashtra, MVAT exempt!on/rafund Is

available to SEZ Developer after 15th October, 2011 (record date). However, the Company has claimed refund of 717,43,34,100/- in respect of transactions prior to record data. The Company is of the view that the state government has exempted It from local taxes, levtea and duties on goods required for authorized operations by a Developer vide GR dated 12th October, 2001 passed by Industries, Energy and La bo is Department, Government of Maharashtra.

27 The Company has filed a writ petition in the High Court of Bombay challenging the constitutional validity of MVAT on

various grounds and has claimed refund of 7 17,43,34,100/- which Is pending hearing and disposal.

42.3 Accordingly, these financial statements reflect a sum of 7 17,43,34,100/- as refund receivable on account of MVAT. In case the refund Is not granted, the necessary adjustment entries shall be recorded In the year In which finality Is reached.

28. Taxation

43.1 In view of loss tor the year as calculated as per the provisions of the I ncome Tax Act, 1961 (The "Act*), no provision for taxation has been made.

29 Deferred Tax Assets consist of substantial amounts of carry forward losses and unebsorbed depredation under the Income Tax Act, 1961. However, since the availability of sufficient future taxable Income against which the said benefits can be set off is not possible to be ascertained with virtual certainty, the Deferred Tax Assets have not been recognised as a measure of abundant caution.

The Company Is primarily engaged In providing end to end supply and demand chain solutions to Its customers In FTWZ. In the opinion of the Company, the entire business is governed by same set of risks and returns and hence, the same hes been considered as representing a single primary segment The Company provides service within India and hence, doesn't have any operations In economic environments with different risks and returns. Hence, It Is considered that the Company Is operating In alngle geographical segment.

a. (l)K®y Management Personnel

Mr. AJay S Mittal - Chairman and Managing Director Mrs. Arch ana A Mittal - Joint Managing Director

Mr. SuhaeThakar - Executive Director (w.e.f 1/06/2013 to Resigned w.e.f. 31/03/2014)

Mr. Subhrarabinda Birabar - Chief Executive Officer (w.e.f. 02/02/2015)

Mr. Vafchav Bakhara - Company Secretary (w.e.f. 14/11/2014 to Resigned w.e.f. 31/03/2015)

Mr. Shyam Rathi - Chief Financial Officer (Resigned w.e.f. 14/11/2014)

(l)Reiattve of Key Management Personnel

Mr. Arranya Mittal -Management Trainee (Business Development)

b. Other related parties with whom transactions have taken place during the year or balances outstanding as at the reporting date.

Mega Management Service Private Limited Well done Software Consultancy Private Limited Bhuehan Steel Limited

30. The Company Is of the view that the provisions of Section 185 of the Companies Act, 2013 as regards Inter company advances/loans/guarantees granted/received ta/from group companies are not applicable, as the same are provided/ received in the normal course of business.

31. Operating Lease

The Company has taken certain office on cancellable operating lease, which are renewable on a periodic basis at the option of both the lessor and the lessee. Rental payments under such lease and 7 3,23,32,784/- (7 6,66,67,487/-).


Mar 31, 2014

1. Contingent Liabilities not provided for in respect of:

(Amount in Rs)

Sr. 2014 2013 Particulars no.

(i) Disputed income tax demands 197,610,994 122,197,838

(ii) Claims against the Company not acknowledged as debts 513,460,331 167,741,290

(iii) Guarantees/ Letters of credit issued by banks (net of liabilities provided) Nil 4,499,004

(iv) Guarantees given on behalf of subsidiaries Loans and other borrowings. 17,843,519,332 15,291,519,332

Outstanding balances (including interest accrued and due) against such guarantees is Rs. 13,579,511,539/- (P.Y. - Rs 12,613,786,374/-)

2. Capital and other commitments

Estimated amount of contracts remaining to be executed on capital and other account and not provided for (net of advances paid) is Rs.79,000/- (Rs 987,560,296).

3. MSMED Act - Creditors

The Company has not received any intimation from "suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence the disclosures, if any, relating to amounts unpaid as at the year-end together with interest payable as required under the said Act have not been given. This has been relied upon by the auditors.

4. (i) Management''s Opinion - Current Assets and Liabilities

In the opinion of the management, current assets, loans and advances and current liabilities are approximately of the value stated, if realised / paid in the ordinary course of business. Provision for all known liabilities is adequate and is not in excess of amounts considered reasonably necessary.

(ii) Confirmations

The company has sent confirmation letters for confirming the balances as on March 31, 2014 of trade receivables, trade payables, advances and loans/credit facilities from banks/financial institutions. However, certain trade receivables, trade payables and advances are subject to confirmation and reconciliation. The differences, if any, will be adjusted on final reconciliation/determination.

5. Revival Plans

The management of the Company is in the process of restructuring its business operations as also those of its subsidiaries in which it has substantial investments, by -

* expanding the business volumes,

* converting Free Trade Warehousing Zone into Sector Specific Special Economic Zones,

* establishing an Inland Container Depot,

* tying up the requisite funds for the said purposes.

The above steps shall enable the management to improve Company''s Net worth and its ability to discharge its debts/liabilities in near future.

6. Corporate Debt Restructuring (CDR)

During the year, Secured Lenders (Banks) have approved the restructuring package under "Corporate Debt Restructuring Package" (CDR), which inter-alia provides for:

(i) Reschedulement of the Principal amounts of the loans and dates thereof.

(ii) Funding of unpaid interest on the Term Loans due from October 2012 to October 2014 into Funded Interest Term Loans.

(ii) Waiver of all liquidated damages/penal charges/penal interest/excess interest i.e. in excess of documented rate of all the facilities from the cut-off date i.e. 1st October, 2012 till the commencement of the package.

(b) Secured Lenders have a right to recompense.

(c) The CDR as aforesaid has been recognized in the Accounts for the year ended 31st March, 2014 whereby -

(i) Balance standing to the credit of interest accrued and due on loans (net of waiver) as of 31st March, 2013 and interest for the year aggregating to Rs. 175.65 crores have been transferred to Funded Interest Term Loan (FITL).

(ii) Interest on Secured Loans of Rs. 3.05 crores waived by the Secured Lenders (Banks) has been disclosed in the Statement of Profit & Loss as "Exceptional Item".

(d) Financial impact, if any, in the rights of Secured Lenders (Banks) to recompense shall be accounted upon crystallization of such rights. 31. Capital Expenditure:

(a) Fixed Assets:

In view of revival plans of the Company as referred to in Note 29, in the opinion of the management, the carrying value of the Fixed Assets of the Company are not lower than their recoverable amounts and hence, no provision for impairment of Fixed Assets is called for.

(b) Capital work-in-progress as at the year-end of Rs. 4,420,700,536 /- includes :

(i) Borrowing cost (net) capitalized or transferred to capital work-in-progress Rs. NIL (Previous year Rs. 565,205,200)

(ii) Pre-operative expenses of Rs. 1,313,245,060/- (Previous Year - Rs. 1,313,245,060/-). Details of Pre-operative expenses capitalized/transferred to Capital Work-in-Progress includes:-

(iii) The Company has discontinued its earlier practice of charging borrowing costs as attributable to Projects and pre-operative expenses incurred in connection therewith as was done in the earlier years on account of its decision to putting on hold of the incurrence of expenditure in relation to the project work in progress/projects.

(iv) During the year, the Company has put on hold further capital expenditure and incurrence of other expenses in connection therewith due to non-optimum utilization of the existing capacity as also non-availability of funds for incurring the balance expenditure. The management expects that in near future, the company shall be able to tie up business agreements as also the required funds which will enable it to complete the Project Work- in- Progress.

7. Unamortised Expenditure

Ancillary costs incurred in connection with the arrangement of borrowings were amortized over the tenure of borrowings till previous year. This year, the Company has written off Rs. 252,205,039/- in respect of the same to the Statement of Profit and Loss as the said costs are "period costs". If the Company had continued its earlier practice, the charge for the current year in respect of the same would have been lower by Rs. 214,602,226/- and the loss for the year lower by Rs. 214,602,226/-.

8. Investments

(i) The Company holds strategic and long term investments in its subsidiary companies, the aggregate cost of which is Rs. 834.60 crores as on 31st March, 2014. The present "net asset value" of the said investments are lower than their costs of acquisition. However, keeping in view that the said investments are long-term and strategic in nature as also the said subsidiaries are in the process of implementing their respective Revival Plans alongwith the future business plans of the Company, the Management is of the view that the diminution in value of its investments is temporary in nature and no provision for diminution in value is called for.

(ii) The Company has reversed the provision of Rs.5,00,000/-, made in earlier year for fall in the value of its investments in Arshiya Transport and Handling Limited in view of the Revival Plans of the investee company as also proposed scheme of amalgamation of that company with two other fellow subsidiaries viz. Arshiya Northern FTWZ Limited and Arshiya Industrial & Distribution Hub Limited.

9. Provision for Loan

The Company has reversed the provision made for doubtful recovery of loan of Rs. 9.95 Crores granted to its subsidiary, Arshiya Transport and Handling Limited, made in the earlier year as the management expects to recover the same in near future in view of its revival plans and its proposed amalgamation with the fellow subsidiaries Arshiya Northern FTWZ Limited and Arshiya Industrial & Distribution Hub Limited.

10. Mark to Market Losses

(i) This year, the Company has changed its accounting policy of capitalising / deferring its Reserve for Mark to Market Losses (MTM) on its derivatives (for conversion of rupee loan liability into foreign loan) as done hereto before following announcement by the Institute of Chartered Accountants of India on "Accounting for Derivatives" by charging MTM losses relating to earlier years in the Statement of Profit & Loss. Due to the said change, an amount of Rs. 393.08 lacs from tangible assets (net of depreciation) and Rs.85.60 Lacs from Foreign Currency Translation Reserve Account have been charged to the Statement of Profit and Loss for the year, which have been shown as "Exceptional Item".

(ii) Further, during the year, an amount of Rs. 3,231.14 lacs in respect of MTM losses upon determination of fair market value of derivatives entered into by the Company has been charged to the Statement of Profit and Loss. The Company is of the view that MTM loss has to be worked out taking into account the spot exchange rate(s) on the reporting date as it is committed to continue derivative contracts till their maturity and hence, applying the fair market values presuming that the derivative contracts would be cancelled on the reporting date, shall not reflect the correct financial position. However, the Banks who have entered into derivative contracts with the Company have, intimated that the loss on account of MTM is Rs. 7,088.73 lacs as upto 31st March, 2014 as against the amount of Rs. 3,391.57 lacs determined as per the Company''s view.

(iii) If the Company had continued to follow the policy of deferring the write off of MTM losses, the charge for the year would have been lower by Rs. 3,134.32 lacs.

11. Interest from Subsidiaries

In the earlier year, the Company charged interest amounting to Rs. 220,751,518/- in respect of loans given to its subsidiary companies. In the current year, in view of management''s decision to treat such loans as "quasi equity in terms of the requirements of the Corporate Debts Restructuring Scheme sanctioned by the Secured Lenders (Banks) no interest has been charged to its subsidiaries in respect of said loans. Such Interest chargeable to the subsidiaries for the current year has not been ascertained.

12. Proceedings against Company

Certain lenders and creditors have filed winding up petitions/ cases / other legal proceedings for recovery of the amounts due to them which are at different stages before the respective judicial forums / authorities. Claims by the said lenders and creditors have been contested by the Company in those proceedings and not acknowledged as debts. It is not possible at this juncture to estimate the financial implications of such claims.

13. Scheme of Amalgamation of Arshiya FTWZ Limited and Arshiya Domestic Distripark Limited

The Scheme of Amalgamation of Arshiya FTWZ Limited and Arshiya Domestic Distripark Limited with the Company became effective from 4th January, 2013. The entire undertaking of the transferor companies including all assets, liabilities and reserves vested in the Company on the appointed dated, i.e.1st April, 2012 for which necessary impact had been given in the accounts for the year ended 31st March, 2013. However, certain assets belonging to the amalgamating companies have yet not been transferred in the name of the Company.

14. Logistic Operations

The Company has decided to phase out its logistics operations. In the wake of said decision, the Company assigned certain outstanding book debts aggregating to Rs. 262.66 crores and certain outstanding trade payables aggregating to Rs. 262.12 crores in respect of its logistics operations for the period upto December 31, 2013.

Such book debts and trade payables aggregating to Rs. 57.2 crores and Rs. 57.05 crores respectively in respect of its logistics operations outstanding as on 31st March, 2014 have been assigned on 30th June, 2014 which shall be accounted in the subsequent year.

15. Maharashtra VAT Refund Receivable

As per the notification dated 16th May, 2013, issued by the government of Maharashtra, MVAT exemption/refund is available to SEZ Developer after 15th October, 2011. (Record date). However, the Company has claimed refund of Rs. 17.43 crores in respect of transactions prior to record date. The Company is of the view that the state government has exempted it from local taxes, levies and duties on goods required for authorized operations by a Developer vide GR dated 12th October, 2001 passed by Industries, Energy and Labour Department, Government of Maharashtra. Accordingly, these financial statements reflect a sum of Rs.17.43 crores as refund receivable on account of Maharashtra VAT. In case the refund is not granted, the necessary adjustment entries shall be recorded in the year in which finality is reached.

16. Taxation

(i) In view of loss for the year as calculated as per the provisions of the Income Tax Act, 1961 (The "Act"), no provision for taxation has been made.

(ii) ShonV(Excess) provision for prior year (net) Rs. 14.73 crores comprises of Rs. 0.43 crores being write back of tax provisions relating to prior years and provision of Rs. 15.16 crores relating to Financial Year 2012-13.

The Provision for the financial year 2012-13 is a consequence of the Company not being able to pay the Tax Deducted at Source in respect of certain expenses and certain statutory liabilities on or before their respective due dates resulting into higher taxable income requiring additional tax provision therefor.

(iii) In view of substantial losses incurred as upto 31st March, 2014, the Company has reversed the Deferred Tax Liability of Rs. 15.69 crores and written off MAT credit entitlement of Rs. 0.23 crore.

17. Disclosure pursuant to Accounting Standard 15 (Revised) - Employee Benefits a. Brief descriptions of the plans

The Company''s defined contribution plans are Provident Fund and Employees State Insurance where the Company has no further obligation beyond making the contributions. The Company''s defined benefit plans include gratuity. The employees are also entitled to leave encashment as per the Company''s policy.

18. Disclosure pursuant to Accounting Standard 17 - Segment Information

Primary Segment Information

The Company operates in two primary reportable business segments, i.e. "Logistics operations and related services" and Free Trade Warehousing Zone (''FTWZ'') operations" as per Accounting Standard 17 - "Segment Reporting"

Notes:

Geographical segment and its composition are India and Rest of the world

i) The Company has identified India and Rest of the World as geographical segments for secondary segment reporting. Geographical sales are segregated based on the location of the customer who is invoiced or in relation to which the sale is otherwise recognized.

ii) Capital expenditure includes expenditure incurred on capital work in progress and capital advances.

a. (l)Key Management Personnel

Mr. Ajay S. Mittal - Chairman and Managing Director

Mrs. Archana A. Mittal - Joint Managing Director

Mr. Suhas Thakar - Executive Director (W.e.f 1/06/2013) (Resigned W.e.f. 31/03/2014)

(ll)Relative of Key Management Personnel

Mr. Ananya Mittal -Management Trainee (Business Development)- W.e.f. 01-04-2013

b. Other related parties with whom transactions have taken place during the year or balances outstanding as at the reporting date.

Bhushan Steel Limited Arshiya Lifestyle Limited

Note:

The related party relationships have been determined by the management on the basis of the requirements of AS-18 and the same have been relied upon by the auditors.

The nature and amount of transactions with the above related parties are as follows

Operating Lease

I. In respect of assets taken on cancellable operating lease

The Company has taken certain offices and equipments on cancellable operating lease, which are renewable on a periodic basis at the option of both the lessor and the lessee. Rental payments under such lease are Rs. 2,765,674/- (Rs. 72,344,612/-).

II. In respect of assets taken on non-cancellable operating lease

The Company has taken office premises on non-cancellable operating lease arrangements for a period of 5 years. The operating lease rental payments/provision under non-cancellable agreements aggregate to Rs. 63,901,813/- (Rs. 66,383,894/-). Details of contractual payments under non-cancellable operating leases are given below:

III. Total Lease rental payments in respect of operating leases recognized in the Statement of Profit and Loss are Rs. 66,667,487/- (Rs. 138,728,506/-) and capitalized during the year is Rs. Nil (Rs. 35,885,511/-).

(i) The Chairman and Managing Director of the Company decided not to draw any remuneration for the financial years 2012-2013 and 2013- 2014. Consequently, the Board of Directors of the Company at their meeting held on 2nd April, 2014 decided that the Company''s application to the Central Government for approval of excess remuneration of Rs. 340.76 lacs paid/provided in the financial years 2012-2013 and 2013- 2014 be withdrawn and accordingly, the same was withdrawn. The entire remuneration paid/provided to the Chairman and Managing Director for 2012-13 has been recovered during the year ended 31st March, 2014 and shown as "Write Back of Managerial Remuneration" and no provision has been made for the year ended 31st March, 2014.

The Board of Directors of the Company at their meeting held on 2nd April, 2014 at the instance of the Chairman and Managing Director has revised his remuneration to a token amount of Rs.1,000/- per anum effective from April, 2014.

(ii) In view of absence of profits as also the company not being able to repay its debts and interest payable thereon to lenders, the remuneration paid/provided to Mr. Suhas Thakar, Ex-Executive Director, is in excess of limits prescribed under section 198 read with Schedule XIII of the Companies Act, 1956. The Company is in the process of filing an application to the Central Government for approval of excess remuneration.


Mar 31, 2013

Note 1.1: Company Information

Arshiya International Limited (the ''Company'') is engaged in the business of providing end-to-end logistics solutions by way of unified supply chain infrastructure and warehousing facilities along with value added services and end-to-end transportations.

The Company has developed a Free Trade Warehousing Zone at Sai village, Panvel in the state of Maharashtra. Government of India vide its notification no. S.O. 1158(E) dated May 4, 2009 has notified the aforesaid area as a Free Trade Warehousing Zone under the provisions of Special Economic Zone Act, 2005 and the Special Economic Zone Rules, 2006.

The Company''s equity shares are listed on the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange (NSE).

2. a. Contingent liabilities not provided for:

(Amount in Rs

Sr. 2013 2012 No

i) Disputed income tax demands 122,197,838 4,350,076

ii) Claims against the Company not acknowledged as debts 167,741,290 55,222,057

iii) Guarantees/ Letter of credit issued by banks (net of liabilities 4,499,004 9,576,448 provided)

iv) Guarantees given on behalf of subsidiaries. Loans outstand- 15,291,519,332 12,119,332 ing (including interest accrued and due against such guaran-

tees is Rs 12,613,786,374 (Rs 11,256,501,746)

b. Capital and other commitments

i) Estimated amount of contracts remaining to be executed on capital and other account and not provided for (net of advances paid) is Rs 987,560,296 (Rs 1,214,173,468).

ii) The Company has also provided security (included in 22(a)(iv) above) to the lenders for loan granted of Rs 4,000,000,000 (Rs 4,000,000,000) to its subsidiary viz. Arshiya Rail Infrastructure Limited.

iii) The company has committed to provide continued need based financial support to subsidiaries.

3. The Company has not received any intimation from "suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence the disclosures, if any, relating to amounts unpaid as at the year end together with interest payable as required under the said Act have not been given. This has been relied upon by the auditors.

4. a. In the opinion of the management, current assets, loans and advances and current liabilities are approximately of the value stated, if realised / paid in the ordinary course of business. Provision for all known liabilities is adequate and is not in excess of amounts considered reasonably necessary.

b. The company has sent confirmation letters for confirming the balances as on March 31, 2013 of trade receivables, trade payables, advances and loans/credit facilities from banks/financial institutions. However, certain trade receivables, trade payables and loans/credit facilities from banks/financial institutions are subject to confirmation and reconciliation. The difference, if any, will be adjusted on final reconciliation/determination.

5. a. Revenue from logistic operations (Refer note 17) mainly comprises of freight and forwarding income, clearing and handling charges, other related income and also includes related commission income of Rs. 212,760,595 (Rs. 470,380,202).

b. Cost of logistic operations (Refer note 19) mainly comprises of freight and forwarding expenses, clearing and handling charges and other related expenses.

6. Disclosure pursuant to Accounting Standard 15 (Revised) - Employee Benefits

a. Brief descriptions of the plans

The Company''s defined contribution plans are Provident Fund and Employees State Insurance where the Company has no further obligation beyond making the contributions. The Company''s defined benefit plans include gratuity. The employees are also entitled to leave encashment as per the Company''s policy.

b. Defined benefit plan - Gratuity (Funded)

7. Segment information

Primary Segment Information

The Company operates in two primary reportable business segments, i.e. "Logistics operations and related services" and Free Trade Warehousing Zone (''FTWZ'') operations" as per Accounting Standard 17 - "Segment Reporting".

8. There is no amount due and outstanding to be credited to Investor Education and Protection Fund as at March 31, 2013.

9. Related party disclosures, as required by Accounting Standard 18 "Related Party Disclosures" as given below.

Note : Percentage given in bracket are of previous year.

@ 6.63 % (6.63%) held through Arshiya Hongkong Limited

* 9.89 % (9.89%) held through the Company

$ 48.33 % (48.33 %) held through Arshiya Hongkong Limited

$S 14.05 % (16.44 %) held through Cyberlog Technologies (UAE) FZE

# Merged with the Company w.e.f 1 April 2012 pursuant to the Scheme of Amalgamation as referred in Note 40 ## Deregistered / dissolved on March 28, 2013

a. (I) Key Management Personnel

Mr. Ajay S. Mittal - Chairman and Managing Director

Mrs. Archana A. Mittal - Joint Managing Director

Mr. Sandesh R Chonkar- Chief Financial Officer and Executive Director

Mr. V. Shiykumar- Executive Director (resigned w.e.f. May 14, 2012)

(II) Relative of Key Management Personnel

Mr. Ananya Mittal - General Manager (Business Development) - August 6, 2012 to September 30, 2012.

b. Other related parties with whom transactions have taken place during the year or balances outstanding as at the reporting date.

Bhushan Steel Limited, Arshiya Lifestyle Limited.

Note:

The related party relationships have been determined by the management on the basis of the requirements of the AS-18 and the same have been relied upon by the auditors

The nature and amount of transactions with the above related parties are as follows

10. Disclosure pursuant to Accounting Standard 19 - Leases

Finance Lease

The Company has acquired vehicles under finance lease. Details of lease rentals payable are as follows

Operating Lease

a. In respect of assets given on cancellable operating lease

The company has entered into an agreement with its wholly owned subsidiary and others for leasing of part of the Pallet positions, Open yard area, Temperature Controlled Warehouse, Warehouse Floor space, Warehouse mezzanine floor space at its FTWZ Sai Village Panvel- Maharashtra.

Lease income recognised in respective of operating leases is Rs. 746,297,499 (723,724,037).

b. In respect of assets taken on non-cancelable operating lease

The Company has entered into operating lease arrangements for 3-5 years renewable at the option of the lessor and lessee. The lease arrangement provides escalations clause for increase in rent during the tenure of the lease. Under certain arrangements, refundable interest free deposits have been given.

11. Taxation

In view of loss for the year as calculated as per the provisions of the Income Tax Act, 1961 (The "Act"), no provision for taxation has been made. However, while computing the provision for taxation, income tax, if any, payable due to disallowance of expenses u/s 40(a)(i) of the Act on account of non-payment / non -deduction of Tax Deducted at Source as per chapter XVIIB and disallowances of certain expenses, if any, u/s 43B due to non-payment on or before due date of filing return of income has not been considered, as according to the management, all above dues will be paid before due date of filing of return of income.

12. Scheme of Amalgamation of Arshiya FTWZ Limited ("AFTWZL") and Arshiya Domestic Distripark Limited ("ADDL") with the Company.

a) A Scheme of Amalgamation ("The Scheme") of Arshiya FTWZ Limited ("AFTWZL") and Arshiya Domestic Distripark Limited ("ADDL") with the company as sanctioned by Hon''ble High Court, Bombay on 07 December 2012. The Scheme became effective on 04 January 2013 on filing with the Registrar of Companies and consequently, the entire undertaking of the transferor companies including all assets, liabilities and reserves, vested in the Company on appointed date 01 Aprii 2012.The Scheme is, accordingly given effect in these accounts.

b) The Amalgamation is accounted for as per "Pooling of Interest" method prescribed under Accounting Standard 14

"Accounting of Amalgamations". Pursuant to the Scheme:

i) Assets and liabilities of AFTWZL and ADDL as at 1 April 2012 have been taken over at their book values.

ii) The book value of Company''s investments in the equity shares of the AFTWZL and ADDL and inter-company loans and advances have been cancelled. Accordingly, nosharesareallottedtoshareholdersof AFTWZLandADDLrespectively as all the shares of AFTWZL and ADDL are held by the Company on record date.

iii) The difference being shortfall of the net assets and reserves of ADDL and AFTWZL transferred to the Company, cancellation of inter-company investments etc., after making the above adjustments has been accounted as under:

13. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with current year''s classifications / disclosures. Current year''s figures are not comparable with that of previous year''s figure due to Scheme of Amalgamation as referred in note 40 and in view of capitalization in current and previous years.


Mar 31, 2012

(a) Terms and rights attached to equity shares

The company has only one class of equity shares having a par value of Rs. 2 per share. Each equity shareholder is entitled to one vote per share. The final dividend proposed by the Board of Directors is subject to the approval of shareholders in the Annual General Meeting.

(b) Employee Stock Option Plan (ESOP)

The Company has instituted an Arshiya Stock Option Plan 2007 for grant of Options to the employees of the Company and its subsidiaries, convertible into one equity share of Rs. 2 each. These Options vest over a period of 36 months from the date of grant and are to be exercised within a period of 12 months from the date of vesting.

The Compensation committee formed by Board of Directors has approved the grant of Options. Each Option confers on the employee a right to one equity share of Rs. 2 each at an exercise price of Rs. 210 per share. Under Arshiya Stock Option Plan 2007 1,411,700 and 133,900 options were granted under Tranche I (Date of grant February - 15, 2008) and Tranche II (Date of grant - April 24, 2008) respectively.

Out of the total employee stock compensation credit of Rs. 4,994,598 (Rs. 2,959,692) recognized during the year, the Company has credited Rs. 3,268,091 (Rs. 225,848) to the Statement of Profit and Loss and reduced from project cost Rs. 1,227,375 (Rs. 890,478) on account of options granted to employees employed exclusively for its new projects. The balance credit of Rs. 499,131 (Rs. 1,843,366) pertaining to the options granted to the employees of the subsidiary companies has been transferred to the subsidiary companies.

a) Term Loan from Banks

i) Rs. 8,791,549,269 (Rs. 5,303,491,665) is secured by way of first charge on all the present and future movable and immovable assets including intangible assets, assignment of rights and benefits other than project assets for Khurja FTWZ project, Khurja Distripark Project, Rail Project and Nagpur Project. The loan is also secured by second charge on company s current assets other than project assets for Khurja FTWZ project, Khurja Distripark Project, Rail Project and Nagpur Project. Out of the above, Rs. 4,779,992,009 (Rs. 4,871,791,665) is repayable in 32 quarterly installments after moratorium period of 8 quarters from the date of first disbursement i.e. December 31, 2010 along with interest ranging from 12.25% to 15% p.a. and balance Rs. 4,011,557,260 (Rs. 431,700,000) is repayable in 30 quarterly installments after moratorium period of 8 quarters from the date of first disbursement i.e. March 17, 2011 and carries interest ranging from 12.25% to 15% p.a.

ii) Rs. 30,000,000 (Rs. 40,000,000) is secured by way of hypothecation charge over the assets financed viz leasehold improvements, furniture and fixtures, office equipments at MIDC, Andheri. The loan carries interest @ 15.25% and is repayable in 20 equal quarterly installments starting from April 30, 2010.

iii) Rs. Nil (Rs. 369,445,156) is secured by equitable mortgage of land at Khurja, near Noida, UP. The loan carries interest @ 14 % and is repayable in six equal monthly installments after moratorium period of 18 months from September 1, 2009.

iv) Rs. Nil (Rs. 333,242,189) is secured by equitable mortgage of land situated at village Buti Bori, District Nagpur. The loan carries interest @ 16% and is repayable in 24 equal monthly installments commencing from August 31, 2010.

b) Term Loan from other parties

i) Rs. 690,000,000 (Rs. Nil) is secured by first charge on land belonging to company situated at Village Butibori at Nagpur, Maharashtra. Out of the above, Rs. 390,000,000 is repayable in a single installment at the end of 3 years from the date of disbursement i.e. October 13, 2011 or on exercise of put/call option after 1 year from the date of disbursement and balance Rs. 300,000,000 in single installment at the end of 3 years from the date of disbursement i.e. January 02, 2012 or on exercise of put/call option after 1 year from the date of disbursement. The above loan carries interest @ 15.25% p.a.

ii) Rs. 373,333,334 (Rs. Nil) is secured by first and exclusive charge by way of mortgage of land at Khurja near Delhi. Out of the above, Rs. 80,000,000 is repayable in 6 equal monthly installments after moratorium period of 6 months from the date of disbursement i.e. July 21, 2011 and balance in 12 equal monthly installments starting from 13th month from the date of disbursement. The above loan carries interest ranging from 14% to 15% p.a.

c) Unsecured term loan from other parties

Rs. 1,100,000,000 (Rs. Nil) is against pledge of 49% equity shares of Arshiya Northern FTWZ Limited held by its holding company Arshiya FTWZ Limited (wholly owned subsidiary of the company) and by way of charge on all the receivables of Panvel FTWZ operations of one of its subsidiaries and by way of corporate guarantee issued by one of its subsidiaries. The loan carries interest @ 15.5% and is repayable in 36 equal montly installments after moratorium period of 24 months from the date of disbursement i.e. March 27, 2012

d) All the above loans are also personally guaranteed by two Directors

e) Finance lease obligations are secured by way of hypothecation of leased vehicles

a) Short term loan from banks

i) Rs. 549,980,053 (Rs. Nil) is secured by way of second charge on pari-passu basis on entire movable and immovable fixed assets of the company. The loan is also secured by way of personal guarantees of Directors.

ii) Rs. Nil (Rs. 109,705,321) is secured by first charge on all the present and future movable and immovable assets including intangible assets, assignment of rights and benefits other than project assets for Khurja FTWZ project, Khurja Distripark Project, Rail Project and Nagpur Project. Second charge on current assets other than project assets for Khurja FTWZ project, Khurja Distripark Project, Rail Project and Nagpur Project.

iii) Rs. Nil (Rs. 200,000,000) is secured by first charge ranking pari passu by way of hypothecation of current assets of the Company and second pari passu charge on entire fixed assets of the company, both present and future.

b) Working capital loan from banks of Rs. 20,491,633 (Rs. 198,672,152) is secured by way of first charge on company s current assets other than project assets for Khurja FTWZ project, Khurja Distripark Project, Rail Project and Nagpur Project and second charge on all the present and future movable and immovable assets including intangible assets, assignment of rights and benefits other than project assets for Khurja FTWZ project, Khurja Distripark Project, Rail Project and Nagpur Project.

1. a. Contingent liabilities not provided for:

(Amount in Rs.)

Sr 2012 2011

i) Disputed income tax demands 4,350,076 4,350,076

ii) Claims against the Company not acknowledged as debts 55,222,057 268,373,394

iii) Guarantees/Letter of credit issued by banks (net of liabilities provided) 9,576,448 162,618,636

iv) Guarantees given on behalf of subsidiaries. Loans outstanding against such guarantees is Rs. 11,097,061,782 (Rs. 7,621,991,123) 12,147,600,000 11,282,075,240

b. Estimated amount of contracts remaining to be executed on capital and other account and not provided for (net of advances paid) isRs. 1,214,173,468 (Rs. 1,341,367,174).

c. The Company has provided security and guarantee (included in 22(a)(iv) above) to the lenders for loan granted of Rs. 4,000,000,000 (Rs. 4,000,000,000) to its subsidiary viz. Arshiya Rail Infrastructure Limited.

d. The company has committed to provide continued financial support to subsidiaries, based on the requirement from time to time.

2. The Company has not received any intimation from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence the disclosures, if any, relating to amounts unpaid as at the year end together with interest payable as required under the said Act have not been given. This has been relied upon by the auditors.

3. a. In the opinion of the management, the current assets, loans and advances and current liabilities are approximately of the value stated, if realised / paid in the ordinary course of business. Provision for all known liabilities is adequate and is not in excess of amounts considered reasonably necessary.

b. Certain debit and credit balances are subject to confirmation/reconciliation.

4. a. Income from logistics operations and related services mainly comprises of freight and forwarding income, clearing and handling charges, other related income and also includes related commission income of Rs. 470,380,202 (Rs. 373,775,995).

b. Cost of logistics operations and related services mainly comprises of freight and forwarding expenses, clearing and handling charges and other related expenses.

5. Disclosure pursuant to Accounting Standard 15 (Revised) ? Employee Benefits a. Brief descriptions of the plans

The Company's defined contribution plans are Provident Fund and Employees State Insurance where the Company has no further obligation beyond making the contributions. The Company's defined benefit plans include gratuity. The employees are also entitled to leave encashment as per the Company's policy.

b. Defined Contribution plan - Provident Fund

Rs. 19,109,718 (Rs. 11,367,806) is recognized as expense and included in Employees benefits expense ? Note 19 in the Statement of Profit and Loss.

Notes: Geographical segment and its composition are India and Rest of the world

i) The Company has identified India and Rest of the World as geographical segments for secondary segment reporting. Geographical sales are segregated based on the location of the customer who is invoiced or in relation to which the sale is otherwise recognized.

ii) Capital expenditure also includes expenditure incurred on capital work in progress.

6. Capital Projects

a. Capital work-in-progress includes Pre-operative expenses Rs. 608,125,676 (Rs. 593,102,313).

b. Borrowing costs (net) capitalized or transferred to capital-work-in-progress Rs. 397,321,404 (Rs. 401,928,537).

7. There is no amount due and outstanding to be credited to Investor Education and Protection Fund as at March 31, 2012.

@ 6.63 % (Nil) held through Arshiya Hongkong Limited

* 9.89 % (9.89%) held through the Company

$ 48.33 % (48.33 %) held through Arshiya Hongkong Limited $$ 16.44 % (3.55 %) held through Cyberlog Technologies (UAE) FZE

# Ceased to exist as a subsidiary w.e.f. August 3, 2011 ## Ceased to exist as subsidiaries w.e.f. March 30, 2012

a. Key Management Personnel

Mr. Ajay S. Mittal ? Chairman & Managing Director

Mrs. Archana A. Mittal ? Joint Managing Director

Mr. V. Shivkumar ? Executive Director

Mr. Sandesh R. Chonkar ? Chief Financial Officer & Executive Director

b. Other related parties with whom transactions have taken place during the year or balances outstanding as at the reporting date.

Bhushan Steels Limited, Arshiya Lifestyle Limited (Formerly known as Arshiya Realty Limited)

Note:

The related party relationships have been determined by the management on the basis of the requirements of the AS-18 and the same have been relied upon by the auditors.

Notes:

The following is the general description of significant clauses of above finance leasing arrangement by the Company.

a. Rights, ownership, title or interest in assets would not pass to the lessee and the lessee cannot assign, sublet, hypothecate or otherwise encumber the assets.

b. The lessor has a right to delegate to any person any of its rights under the agreements. Whereas, the lessee cannot assign its rights or obligations to any other person without the prior written consent of the lessor.

c. The lessee has no entitlement to terminate the lease during the lease period. Premature termination of lease can be done by the lessee only with the consent of the lessor and after making payment of discounted value of future lease rentals.

Operating Lease

a. In respect of assets given on non-cancelable operating lease

The company has entered into an agreement with its subsidiary company Arshiya Supply Chain Management Private Limited for of part of the pallet positions at its FTWZ Sai Village Panvel- Maharashtra.

b. In respect of assets taken on non-cancelable operating lease

The Company has entered into operating lease arrangements for 3-9 years renewable at the option of the lessor and lessee. The lease arrangement provides escalations clause for increase in rent during the tenure of the lease. Under certain arrangements, refundable interest free deposits have been given.

Notes:

i) Salaries and allowances include basic salary, house rent allowance and leave travel allowance.

ii) Provision for post retirement benefits which is based on actuarial valuation done on an overall company basis and is excluded from the above calculation.

8. Taxation

Current tax is provided as per the provisions of the Income Tax Act, 1961.

c. During the year, the Company has adopted amended provisions of AS -11 as per Companies (Accounting Standards) Amendment Rules relating to "Effects of the changes in Foreign Exchange Rate". Accordingly, the Company has adjusted exchange gain of Rs. 10,518,105 to the cost of fixed assets and exchange gain of Rs. 2,749,820 is transferred to "Foreign Currency Monetary Item Translation Difference Account" to be amortized over the balance period of long term liabilities but not beyond March 31, 2020. Out of the above Rs. 165,534 has been credited to the statement of profit and loss during the year and Rs. 2,584,286 has been carried over.

9. Scheme of Amalgamation

The Board of Directors in its meeting held on March 12, 2012 has approved Scheme of Amalgamation of Arshiya FTWZ Limited (AFTWZL), Arshiya Domestic Distripark Limited (ADDL) and Arshiya Central FTWZ Limited (ACFTWZL) (Transferor Companies) with the Company, with the Appointed Date as April 1, 2012. The transferor companies have filed their petitions before the Hon ble High Court of Bombay for sanction of the said Scheme of Amalgamation. Subsequently, one of the transferor Companies namely ACFTWZL withdrew from the Scheme of Amalgamation with the company. Accordingly, AFTWZL and ADDL will file amended Scheme of Amalgamation with the Hon ble High Court of Bombay for approval.

10. Information pursuant to 5 (viii) of Revised Schedule VI of the Companies Act 1956.

11. The Company has long term investment of Rs. 500,000 (Rs.. 500,000) in Arshiya Transport & Handling Limited, a wholly owned subsidiary of the company. As at balance sheet date, Net Worth of the said subsidiary is eroded. The Company has also given loans and advances of Rs. 50,884,669 (Rs. Nil) to the said subsidiary. Investment in the said subsidiary is strategic in nature and having regard to the future business plan and projected profitability, management perceives the erosion in the value of investment in the said subsidiary as temporary in nature. Hence, no provision for diminution in value of investment is considered necessary and loans and advances are considered as good and recoverable.

12. The figures of the current year are not comparable with that of previous year in view of the commencement of commercial operations of the Free Trade Warehousing Zone at Sai Village, Panvel. Figures in bracket pertain to previous year.

13. Schedule VI to the Companies Act, 1956 is revised effective from April 1, 2011 which has significantly impacted the disclosures and presentation in the financial statements. The figures for the previous year have been regrouped where necessary to conform to current year classification.

 
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