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Home > Equity Market > Arshiya International Ltd. share price- Notes To Account >

Arshiya International Ltd. share price- Notes To Account

Industry: Logistics
BSE Code :506074
NSE Code :ARSHIYA
Business Group:Arshiya Group
LTP (Rs.) :20.9  (4.76%) [NSE]
ISIN No :INE968D01022
Face Value/M Lot :2.00/1
P/E Ratio : 0.00
Market Cap : 245.43 Cr
You can view the entire text of Notes to accounts of the company for the latest year.
Year End : 03 / 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.

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