Notes to Accounts of Arshiya Ltd.

Mar 31, 2018

Notes:

1) Freehold Land includes Rs. 9,735.11 Lakh situated at Nagpur, which is under possession of a lender as per the Order of Hon''ble High Court of Bombay dated 9 th May, 2013.

2) Land measuring 42.59 Acres amounting to Rs. 7,499.35 Lakh is used for Domestic warehousing purpose located at Khurja, Bulandshahr, Uttar Pradesh.

3) In accordance with the Indian Accounting Standard (IND AS -36) on "Impairment of Assets", the management during the year carried out an exercise of identifying the assets that may have been impaired in accordance with the said IND AS. On the basis of this review carried out by the management, there was no impairment loss on property, plant and equipment during the year ended 31st March, 2018.

4) The carrying value (Gross Block less accumulated depreciation and amortisation) as on 1st April, 2016 of the Property, plant and equipment is considered as a deemed cost on the date of transition.

(All the above equity shares are fully paid up)

@ As per debt covenents the Company is required to pledge 100% of the shareholding in favor lenders however the Comapny has pledged following number equity shares only:

i) 31st March, 2018 - 79,46,624 (31st March 2017 - 79,46,624, 1st April, 2016 - 79,46,624) equity shares in Arshiya Northern FTWZ Limited,

ii) 31st March, 2018 - 1,35,86,659 (31st March, 2017 - 1,35,86,659, 1st April, 2016 - 1,35,86,659) equity shares in Arshiya Industrial

& Distribution Hub Limited,

iii) 31st March, 2018 - 3,87,32,491 (31st March, 2017 - 3,87,32,491, 1st April, 2016 - 3,87,32,491) equity shares in Arshiya Rail Infrastructure Limited and

iv) 31st March, 2018 - Nil (31st March, 2017 - Nil, 1st April, 2016 - 1,10,50,000) equity shares in Arshiya Central FTWZ Limited

(a) Terms and rights

(i) Terms and rights attached to equity shares

The Company has one class of equity share having a par value of Rs. 2 per share. Each holder of equity share is entitled to one vote per share. The shareholders who held shares on the record date are entitled to dividend as may be proposed by the Board of Directors and is subject to approval of the Shareholders at the ensuing General Meeting.

In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in the proportion to the number of equity shares held by the shareholders.

(ii) Terms and rights attached to 0% Optionally Convertible Redeemable Preference Shares (OCRPS)

The Company has five class of optionally convertible redeemable preference shares (OCRPS I / II / III / IV / V) having a par value of Rs. 10 per share. Each holder of OCRPS has right / entitled to convert into equity shares within 18 months from the date of issue or redemption on or after 20 years in terms of special resolution passed on 29th April, 2017 and 29th January, 2018 as per applicable provisions of Companies Act, 1956/Companies Act, 2013 and SEBI (Issue of Capital and Disclosure Requirements) Regulation.

(b) Reconciliation of equity shares and optionally convertible preference shares

(d) During the year the Company had allotted to the Promoter Directors 1,00,00,000 equity shares and 1,00,00,000 share warrants of Rs. 2/- each at a premium of Rs.58.35 per share on preferential basis pursuant to the Restructuring Agreement dated 31st March, 2017 and in terms of special resolution passed on 29th April, 2017 as per applicable provisions of Companies Act, 1956/ Companies Act, 2013 and SEBI (Issue of Capital and Disclosure Requirements) Regulation. 85,00,000 share warrants out of1,00,00,000 share warrants have been converted into Equity shares on 8th November, 2017.

Subsequent to the year end, in the Board Meeting held on 20th April, 2018 the Company has allotted 15,00,000 Equity Shares of face value of Rs.2 each to the Promoter upon conversion of equal number of warrants.

Nature and purpose of Reserve and Surplus: (a) Securities Premium Account:

Securities premium account is created to record premium received on issue of equity shares. The reserve is utilized in accordance with the provision of the Companies Act, 2013.

(b) General Reserve:

General Reserve is used for time to time to transfer of profits from Retained Earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the General Reserve will not be reclassified subsequently to statement of profit and loss.

(c) Amalgamation Reserve:

Amalgamation reserve is created on account of scheme of amalgamation of erstwhile BDP (India) Private Limited with the Company approved by the Hon''ble High Court of Judicature at Bombay in earlier years.

d) Retained Earnings:

Retained Earnings are the profit/(loss) of the Company earned till date net of appropriations.

The details of security, terms of repayment and interest on non-current borrowings (which includes current maturities) obtained by the Company are given below: 18.1 Rupee Term loan from Bank

(1) Details of security

(a) Rupee term loan of Rs. Nil (31st March, 2017 - Rs. 2,771.93 Lakh, 1st April, 2016 - Rs. 55,575.17 Lakh) are secured by

(i) First charge on all the present and future movable and immovable property, plant and equipment including intangible assets, assignment of rights and benefits but excluding project assets for Khurja FTWZ project, Khurja Distripark Project, Nagpur project and Rail Project on pari passu basis.

(ii) Second charge on Current Assets of the Parent Company but excluding current assets for Khurja FTWZ project, Khurja Distripark Project, Nagpur project and Rail Project on pari passu basis.

(iii) The above loans are secured by personal guarantees of two Promoter Directors of the Company.

(iv) The loans are secured by pledged of shares held by the two Promoter Directors of the Company.

(2) Terms of Interest rate

(i) Rate of Interest is @ 13% p.a. for the 2016-17.

18.2 Rupee Term loans from Other Parties (1) Rupee term loan of Rs. 59,359.23 Lakh (31st March, 2017 - Rs. 70,863.53 Lakh, 1st April, 2016 - Rs. 46,782.87 Lakh): (a) Security provided:

(i) First charge in all the present and future movable and immovable property, plant and equipment including intangible assets, assignment of rights and benefits but excluding project assets for khurja FTWZ project, Khurja Distiripark Project, Nagpur project and Rail project on pari passu basis.

(ii) Second charge on current assets of the Company but excluding current assets for khurja FTWZ project, Khurja Distripark Project, Nagpur project and Rail project on pari passu basis.

(iii) first pari passu charge by way of hypothecation on the Panvel Receivables both existing and future of whatsoever nature.

(iv) The above loans are secured by personal guarantees of two Promoter Directors of the Company.

(v) The loans are secured by pledged of shares held by the two Promoter Directors of the Company.

(b) Terms of Interest rate

(i) Rate of Interest is @ 10% p.a. (2016-17 - 10% p.a.)

(d) The Company has been in default for the repayment of principal amount of Rs. 5,671.09 Lakh. (31st March, 2017 - Rs. Nil and 1st April, 2016 - Rs. Nil).

(e) The amortised cost disclosed above is net off incidental cost of borrowings aggregating of Rs. 717.82 Lakh (31st March, 2017

- Rs. 871.85 Lakh, 1st April, 2016 - Rs. Nil).

(2) Rupee term loan of Rs. 2,672.34 Lakh (31st March, 2017 - Rs. 2,443.49 Lakh, 1st April, 2016 - Rs. 4,935 Lakh)

(a) Securities provided

(i) Second charge by way of equitable mortgage/hypothecation on the entire immovable and movable property, plant and equipment of the Company on pari-passu basis.

(ii) The above loans are secured by personal guarantees of two Promoter Directors of the Company.

(b) Terms of Repayment:-

Rupee term loan is repayable in 13 structured quarterly instalments commencing from 31st January, 2018.

(c) The Company has been in default for the repayment of principal amount of Rs. 428 Lakh. (31st March, 2017 - Rs. Nil and 1st April, 2016 - Rs. Nil)

(d) The amortised cost disclosed above is net off incidental cost of borrowings aggregating of Rs. 405.66 Lakh (31st March, 2017

- Rs. 631.51 Lakh, 1st April, 2016 - Rs. Nil).

(3) Rupee loan of Rs. 3,189.79 Lakh (31st March, 2017 - Rs. Nil, 1st April, 2016 - Rs. Nil)

(a) Securities provided

(i) Second charge on movable and immovable Panvel assets of the Company except for the excluded properties under Lease Agreement dated 3rd February, 2018

(ii) Second charge on present and future receivables of the Company.

(iii) The above loans are secured by personal guarantees of two Promoter Directors of the Company.

(b) Terms of Interest rate

(i) Rate of Interest is @ 14.50% p.a.

(c) Terms of Repayment:-

Rupee term loan is repayable in Bullet payment at the end of the tenure of loan i.e. 36 months.

(d) The amortised cost disclosed above is net off incidental cost of borrowings aggregating of Rs. 10.21 Lakh (31st March, 2017 - Rs. Nil, 1st April, 2016 - Rs. Nil).

(22.1) Working capital facility (Cash Credit) from banks: Rs. Nil (31st March, 2017 - Rs. 3,996.91 Lakh, 1st April, 2016 - Rs. 5,996.91 Lakh)

(i) Securities provided :

- First charge on entire Current Assets of the Company but excluding current assets for Khurja FTWZ project, Khurja Distripark Project, Nagpur project and Rail Project.

- Second charge on all the present and future movable and immovable property, plant and equipment assignment of rights and benefits but excluding project assets for Khurja FTWZ project, Khurja Distripark Project, Nagpur project and Rail Project.

(ii) The above loans are secured by personal guarantees of two Promoter Directors of the Company.

(iii) The loans are secured by pledged of shares held by the two Promoter Directors of the Company.

(iv) Terms of interest:

Rate of interest on working capital is @ 13% p.a.(31st March, 2017 - 13% p.a.)

(22.2) Loan from Other Parties

(1) Loan of Rs. 8,474.04 Lakh (31st March, 2017 - Rs. Nil, 1st April 2016 - Rs. Nil)

(1) Securities provided

- First Ranking charges on all present and future cash flows, all assets and movable collateral available to the existing lenders of the Company as per the Deed of Hypothecation.

- The above loans are secured by personal guarantees of two Promoter Directors of the Company.

(ii) Terms of interest: @ 18% p.a.

(2) Loan of Rs. Nil, (31st March, 2017 - Rs. Nil, 1st April, 2016 -Rs. 4,935 Lakh) had been restructured into term loan as per consent term. (Refer Note No. 18.1.2)

(22.3) Loans from promoter directors are interest free and repayable on demand.

(22.4) Unsecured Loan from Inter Corporate Deposits:

(i) Interoperate Deposit of Rs. 77 Lakh (31st March, 2017 - 77 Lakh, 1st April, 2016 - 187 Lakh) is interest free and repayable on demand.

(ii) Interoperate Deposit of Rs. Nil (31st March, 2017 - Rs. 800 Lakh, 1st April, 2016 - Rs. Nil) : interest @ 20% p.a.

(iii) Loan of Rs. Nil (31st March, 2017 - Rs. Nil, 1st April, 2016 - Rs. 500 Lakh)

(a) The above loans are secured by personal guarantees of two Promoter Directors of the Company.

(b) Rate of interest on said loan is 12% p.a.

(A) Term loans from Bank - Rs. 1,491.67 Lakh (31st March, 2017 - Rs. Nil, 1st April, 2016 - Rs. Nil) - (Refer Note No. 46.1)

(i) Securities provided

- Second charge on movable and immovable property, plant and equipment’s of the Company, present and future on pari-passu.

(ii) The above loan is secured by personal guarantees of two Promoter Directors of the Company.

(iii) Terms of Interest rate:

Rate of interest is @ 12% p.a.

(iv) Terms of Repayment & Default

During the year bank has been recalled loan of Rs. 1,491.67 Lakh and interest (including penal interest) of Rs. 32.15 Lakh.

(B) Term loans from Other Parties

(1) Loan of Rs. 5,000 Lakh (31st March, 2017 - Rs. 6,900 Lakh, 1st April, 2016 - Rs. 6,900 Lakh) (Refer Note No. 37)

Secured by first and exclusive charge on land situated at Village Butibori at Nagpur, Maharashtra. The said loan carries interest @ 15.25% p.a.

(2) Loan of Rs. 1,951.52 Lakh (31st March, 2017 - Rs. 2,465.72 Lakh, 1st April, 2016 - Rs. 2,666.67 Lakh) (Refer Note No. 43)

(i) ''Secured by first and exclusive charge on land situated at Khurja, Bulandshahr, Uttar Pradesh.

(ii) The Company has been in default for the repayment of principal amount of Rs. 975 Lakh. (31st March, 2017 - Rs. Nil and 1st April, 2016 - Rs. Nil)

(iii) The amortised cost disclosed above is net off incidental cost of borrowings aggregating of Rs. 23.48 Lakh (31st March, 2017

- Rs. 200.95 Lakh, 1st April, 2016 - Rs. Nil).

1 Contingent Liabilities and Commitments

2 Contingent Liabilities (to the extent not provided for in respect of):

3. Capital commitments

Estimated amount of contracts remaining to be executed on capital and other accounts and not provided for (net of advances paid) are Rs. Nil (31st March, 2017 - Rs. Nil, 1st April, 2016 - Rs. 1,493.04 Lakh)

36 Certain lenders and creditors have filed winding up petitions/cases/other legal proceedings against the Company and its Directors 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. The financial implication of such claims will be recognized as and when finality in the matter is reached.

37 A Public Financial Institution (PFI) agreed to settle their outstanding loan constituting principle and interest of Rs. 16,700 Lakh. Settlement terms and conditions involves payment of Rs. 5,000 Lakh which is secured by land at Nagpur and for balance amount of Rs. 11,700 Lakh, allotment of Optionally Convertible Redeemable Preference Shares - V (OCRPS - V), convertible up to 15.50.000 equity shares at the option of the PFI. Considering the same, necessary effect has been given in the books of accounts during the year. As per shareholder approval in the EOGM dated 29th January 2018, the company has approved allotment of 11.70.000 OCRPS - V and the same was converted into 15,50,000 Equity shares on 22nd February, 2018 as per settlement terms agreed. Subsequently in the Honourable High Court of Bombay, the company has made the representation that post allotment of the equity shares as exercised by the PFI, the total outstanding debt remains at Rs. 5,000 lakhs and the same would be paid on or before 30th June, 2018 which is yet to be confirmed by the PFI. The matter is still to be concluded by the Honourable High Court of Bombay.

4. Employee Benefits

5. Disclosure pursuant to Indian Accounting Standard (IND AS) 19 - Employee Benefits

(a) Defined Contribution Plan:

Contribution to Defined Contribution Plan, recognised as expenses for the years are as under:

(b) 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.

(d) Defined benefit plan - Gratuity:

The employee''s Gratuity fund is managed by the Life Insurance Corporation of India. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognised each period of services as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up to final obligation.

(e) Salary escalation assumption has been set in discussions with the enterprise based on their estimates of overall long-term salary growth rates after taking into consideration expected earnings inflation as well as performance and seniority related increases.

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. In presenting the above sensitivity analysis, the present value of defined benefit obligation has been calculated using the projected unit credit method at the end of reporting period, which is the same as that applied in calculating the defined obligation liability recognised in the balance sheet.

These plans typically expose the Company to actuarial risks such as: longevity risk and salary risk.

(a) Interest risk - A decrease in the discount rate will increase the plan provision.

(b) Longevity risk - The present value of the defined benefit plan provision is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants. As such, an increase the plan''s provision.

(c) Salary risk - The present value of the defined plan provision is calculated by reference to the future salaries of plan participants. As such, as increase in the salary of the plan participants will increase the plan''s provision.

6. The weighted average duration of the defined benefit obligation at the end of the reporting period is 6 years (31st March, 2017 - 6.6 years).

7. Preparation of financial statements on “ Going Concern” basis

The Company has accumulated losses and certain creditors have initiated legal proceeding against the Company and its Directors for recovery of the amounts due. However in these cases, the Company has executed consent terms or is in the process of finalizing consent terms with the creditors.

The Company has given its warehouses on long term lease and received upfront lease payments. The management has also initiated various other steps such as construction and future development within the FTWZ, restructuring the Company and if s subsidiaries business operations. Considering the strength of Company’s locational advantages, future outlook as assessed by the management and business plan, the Company is confident to continue as a going concern. The long term prospects of the Company, however, are dependent on various factors and financial statements have accordingly been continued to be prepared on going concern basis.

8. Loans from various lenders have been assigned by banks to Edelweiss Assets Reconstruction Company Limited (EARC). EARC had restructured the loan and executed the Restructuring Agreement (RA) dated 31st March, 2017. In accordance with RA, EARC has converted part debt into restructured debt, balance assigned loan is to be converted into 3,21,62,304 equity shares and 64,23,329 zero percent optionally convertible redeemable preference shares (OCRPS - Series I) of face value of Rs.10 each at a price of Rs.1,000 each (including premium of Rs.990) of the Company, as per extant SEBI rules and regulations.

Certain lenders of wholly owned subsidiaries viz, Arshiya Rail Infrastructure Limited (ARIL), Arshiya Northern FTWZ Limited (ANFL) and Arshiya Industrial and Distribution Hub Limited (AIDHL) have also assigned their loan to EARC pursuant to Restructuring Agreement executed by respective subsidiaries dated 31st March 2017. Loan amounting to Rs. 43,200 Lakh have been restructured by allotment of 43,20,000 zero percent optionally convertible redeemable preference shares (OCRPS Series

II / Series III / Series IV) of face value of Rs. 10 each at a price of Rs. 1000 each (including premium of Rs. 990) of the Company. These OCRPS are allotted to EARC in exchange of OCRPS of subsidiaries issued to EARC. These OCRPS have right of conversion into equity shares of Company at the option of EARC. On conversion the entire amount of OCRPS Series II / Series III / Series IV shall be adjusted against allotment of 1,19,11,962 equity shares of Company to EARC.

During the year ended 31st March, 2018:-

(i) In aggregate 4,56,62,304 equity shares of 2 each (including equity shares on conversion of OCRPS Series I, II, III and IV) have been allotted to EARC.

(ii) Pursuant to RA, the promoters of the Company have also been allotted 1,85,00,000 equity shares, including 85,00,000 equity shares allotted on conversion of 85,00,000 warrants out of 1,00,00,000 warrants issued.

(iii) Allotted 25,00,000 equity shares on conversion of warrants to non-promoters.

9. The Company has made substantial repayment as agreed in amortisation schedule of Restructuring Agreement (RA) during the year ended 31st March, 2018. As per debt covenant, the Company is required to adhere to repayment schedule and any short payment gives Edelweiss Asset Reconstruction Company (EARC) the right to convert whole of the outstanding amount of restructured rupee loan and/or part of the default amount into fully paid up equity shares of the Company. No such notice of conversion in writing has been given by EARC and the Company continues to disclose the amount as non-current and current borrowings as per repayment schedule, in the Balance Sheet.

The Company is liable to pay penal interest of Rs. 1,065.91 Lakh on the unpaid and delayed amounts for the year ended 31st March, 2018 which has not been provided. Had the Company provided the above interest, the finance cost would have been higher to that extent for the year ended and total comprehensive income would have been lower to that extent having consequential impact on other equity and financials liabilities.

10. In respect of consent terms with a Non-Banking Finance Company (NBFC), the Company had signed Supplementary Consent Terms (SCT) with the NBFC in respect of settlement of borrowing. The SCT mainly stipulates revised "Schedule of Payments" and penal interest. The Company has defaulted in making payments as per the SCT. As per provisions of the SCT, if schedule of payment is not complied with, the entire debt prior to date of settlement of dues shall become payable along with interest as per transaction documents till the realisation of entire debt. However the Company has not reversed amount written back on settlement of first consent terms of Rs. 1719.59 Lakh and not accrued interest amounting to Rs. 237.50 Lakh. Had the Company reversed the amount written back and made provision for interest, finance cost and other income would have been higher by amount as mentioned above, having consequential impact on total comprehensive income, other equity and financial liabilities.

11 Corporate Guarantees

The Company has given corporate financial guarantees to the lead bank on behalf of one of the wholly owned subsidiary. This subsidiary has defaulted in repayment of its loan obligations and two lenders of the consortium have initiated legal recovery proceeding including invocation of corporate guarantees given by the Company for recovery of outstanding dues of Rs 23,563.38 Lakh. The Company has made its representation to the banks offering compromise settlement, which is under consideration and till date no adverse order has been received by the Company.

The Company is yet to assess the changes in risk/expected cash shortfall to determine any credit loss to be recognised in respect of these financial guarantees. No accounting impact of the same is recognised in the books of account at this stage pending settlement of the matter.

12. Investments

13. The Company has elected to apply previous GAAP carrying amount as deemed cost on the date of transition to Ind AS for its equity investments in subsidiaries. These subsidiaries are implementing their respective business restructuring and revival plans, hence based on the assessment carried out by the management of the Company, no impairment loss on investment in subsidiaries is considered necessary.

14. The Company has divested its entire investment in a subsidiary company namely Arshiya Supply Chain Management Private Limited (ASCM). As a result, the company has accounted net loss of Rs. 4,338.19 lakhs for the year ended 31st March, 2018 and this loss is grouped under exceptional item.

15. Mark to Market Losses (MTM)

16. Axis Bank

(i) The Company had terminated the cross currency swap derivative contract with Axis Bank Limited on 30th September, 2015 for an agreed value of Rs. 4,200 Lakh of which the balance as on 31st March, 2017 is Rs. 2,659.79 Lakh.

(ii) The Bank had restructured above liabilities are as under:

(a) Term Loan of Rs. 1,500 Lakh

(b) Investment in Equity shares of the Company for a balance amount of Rs. 1,159.79 Lakh as per SEBI (ICDR) Guidelines on Preferential Issue.

Shareholders in the Extra Ordinary General Meeting (EOGM) held on 29th January, 2018 approved the allotment of upto 10,50,000 Equity shares which have been issued on 22nd February, 2018.

17 Kotak Mahindra Bank Limited

In respect of derivative contracts entered into by the company with ING Vysya Bank (now amalgamated with Kotak Mahindra Bank Limited w.e.f. 1st April, 2015), the bank had prematurely terminated the contracts and had demanded termination and liquidation fees aggregating to Rs. 2,875 Lakh, which are disputed by the Company. However the Company had provided Rs. 1,621.93 Lakh.

The Company has entered into the consent terms with a Bank during the year ended 31st March, 2018. Pursuant to consent term, additional liability (net) amounting to Rs. 1,378.06 Lakh in respect of termination and liquidation fees of derivative contracts is accounted in the books of account. The Company has paid the amount as per the Consent Term during the year.

18 Cash Seized by Income Tax

The amount of Rs. 100 Lakh cash seized by the Income Tax department at the time of search on 13th June, 2014 is yet held with the department.

19 Remuneration of Rs. 114.82 Lakh paid/provided to the Executive Director for F.Y. 2013-14:

The Company had applied for waiver of recovery of excess remuneration of Rs. 83.52 Lakh paid to its Whole Time Director (Director) in the earlier year which was rejected by the Ministry of Corporate Affairs vide their letter dated 2nd June, 2016. In view of the same, as on 31st March, 2018 the Company has fully recovered the said amount.

20 Scheme of arrangement and amalgamation u/s 230 to 232 and other applicable provisions of the Companies Act, 2013 has been filed before the National Company Law Tribunal ("NCLT") between Arshiya Rail Infrastructure Limited (Transferee Company), Arshiya Industrial & Distribution Hub Limited (First Transferor Company) and Arshiya Transport & Handling Limited (Second Transferor Company) and their respective shareholders. The scheme is conditional on various approval / sanctions and is effective thereafter; accordingly no effect of the said Scheme is given in the consolidated financial results. Directions of NCLT are awaited for holding the creditor''s meeting in respective companies. No accounting impact and disclosures is considered and necessary at this stage pending requisite regulatory approvals.

21 The Board of Directors of the company in their meeting held on 24th May, 2018, has approved a scheme to further reorganize its corporate structure spread across various group companies, in order to integrate/consolidate its operations by reorganizing different businesses into two entities.

This Scheme is presented under Sections 230 to 232 read with Sections 66 and 52 and other applicable provisions of the Companies Act, 2013 for demerger of "Domestic warehousing business" of the company into Arshiya Rail Infrastructure Limited. This proposed scheme of arrangement is conditional upon approval of an on-going scheme of group companies i.e. merger of Arshiya Rail Infrastructure Limited, Arshiya Industrial and Distribution Hub Limited and Arshiya Transport & Handling Limited, which is pending with NCLT. No accounting impact and disclosures is considered and necessary at this stage pending requisite regulatory approvals.

22 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. 1,684.56 Lakh in respect of transactions prior to record date, as 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. 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 Rs. 1,684.56 Lakh. The petition has been admitted and issues are framed and further hearing and final disposal is pending. Accordingly, these financial statements reflect a sum of Rs. 1,684.56 Lakh 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.

23 As per Ind-AS 108 “Operating Segment”, information has been provided along with the consolidated financial statements of the Group.

24 During the year, the Company has entered into Business Conducting and Services Agreement with Arshiya Lifestyle Limited (ALL) (wholly owned subsidiary) in relation to operation of Six Warehouses taken on sub-lease from Arshiya Rail Siding and Infrastructure Limited (ARSIL) and operation of Container Yard and Open Yard owned by the Company. The aforesaid Business Conducting and Services Agreement is to be read in the overall context of Lease Deed dated 3rd February, 2018, Sub-Lease Deed dated 3rd February, 2018 and other agreements and documents entered into in connection with lease of Six Warehouses by the Company, being owner, to ARSIL and Sub-Lease of the said Six Warehouses by ARSIL to ALL and transfer of all rights and obligations under the Existing Unit Holder Agreements entered into by the Company to and in favour of ALL. The Company for the administration and operational expediency entrusted ALL to carry out operating and managing the open yard, the container yard and warehouses whereby ALL agreed to undertake and conduct the business of operating and managing the open yard and the container yard and warehouses and provide other services by utilizing the infrastructure facilities provided by the Company. ALL shall also received all the incomes generated from the warehouses and storage yard, bearing the cost and expenses to operate and maintain the warehouses and storage yard. Pursuant to the aforesaid Business Conducting and Services Agreement, the ALL will pay 99% of Excess Revenue / Total Income over all the expenses / charges / provisions to the Company as Business Conducting Fees. Accordingly, the Company has recognised as Business Conducting fees Rs. 972.91 Lakh during the year ended 31st March, 2018.

25 During the year, on 23 November 2017, the company, interalia, its subsidiaries and promoters had executed Share Purchase Agreement of Arshiya Rail Siding and Infrastructure Limited ( ''ARSIL", i.e. a step-down subsidiary/"SPV"), with Ascendas Property Fund (India) Pte Ltd (''Ascendas'') for sale of 100% of its equity holding, having Rs. 5 Lakh paid up equity capital, to Ascendas. This SPV holds the status of a co-developer.

During the year, the Company, interalia, if s subsidiaries and promoters has executed Lease Deed on 3rd February 2018, in favour of a SPV of Ascendas Property Fund (India) Pte. Limited (''Ascendas" - part of the Ascendas-Singbridge Group, Singapore) for grant of leasehold rights of six warehouses at FTWZ Panvel, along with underlying land of those warehouses, identified assets and infrastructure facilities on an initial lease term of 30 (thirty) years. The said transaction is for a total consideration of Rs. 53,400 Lakh (or Rupees Five hundred and thirty four crore), with an upfront lease payment/lump sum rent of Rs. 43,400 Lakh (or Rupees Four hundred and thirty four crore). The balance of Rs. 10,000 Lakh (or Rupees One hundred crore) will be received over four years from transaction closing based on certain performance milestones. The transaction also envisages the terms for construction funding by Ascendas for future growth of the company''s business. The company already possesses the requisite land for the future development.

On transaction closing date of 3rd February 2018, the SPV has acquired long-term leasehold rights from the Company and the same are leased back under an operating lease arrangement pursuant to execution of sub-lease deed dated 3rd February 2018 to Arshiya Lifestyle Limited ("ALL"), a wholly owned subsidiary of the Company, for a sub-lease term of 6 (six) years, renewable as per mutually agreed terms, in consideration of pre-agreed rentals.

Accordingly during the year ended 31st March, 2018 the Company has reduced the value of assets, granted on leasehold rights to ARSIL, from its fixed assets. The gain on grant of leasehold rights to ARSIL amounting to Rs. 15,633.29 lakhs has been credited to profit and loss account of the company and is disclosed as an exceptional item.

Based on the above, ALL would operate and manage these six warehouses and pay the lease rentals to ARSIL as defined in the sublease agreement. Hence from 3rd February, 2018 onwards all revenue from these assets will be accounted by ALL. However the company will recognise the net revenue in terms of a business conducting agreement entered into between the company and ALL.

In view of above the set of transaction during the year, the financial statement for the year ended 31st March, 2018 are not comparable with corresponding year to the extent.

26 Related party disclosures, as required by Indian Accounting Standard 24 “Related Party Disclosures” (IND AS-24) as given below:

Note:

@ Nil (31st March, 2017 - Nil, 1st April, 2016 - 5.27%) held through Arshiya Hong Kong Limited

$ Nil (31st March, 2017- Nil, 1st April, 2016 - 9.38 %) held through Cyberlog Technologies (UAE) FZE

$$ Nil (31st March, 2017 - 12.64%, 1st April, 2016 - 12.64%) held through Arshiya Northern FTWZ Limited

$$$ Nil (31st March, 2017 - 48.33%, 1st April, 2016 - 48.33%) held through Arshiya Hong Kong Limited

*Nil (31st March, 2017 - Nil, 1st April, 2016 - 90.11%) held through Cyberlog Technologies International Pte. Limited

(I) Person having significant influence over the Company

Mr. Ajay S Mittal - Chairman and Managing Director Mrs. Archana A Mittal - Joint Managing Director

(II) Key Management Personnel

Mr. Ashish Bairagra - Independent Director Mr. Mukesh Kacker - Independent Director Prof. G. Raghuram - Independent Director (till 15th May, 2017)

Mr. Rishabh Shah - Independent Director

Mrs. Savita Dalal - Company Secretary and Compliance Officer

Mr. S. Maheshwari - Chief Financial Officer (w.e.f. 8th February, 2017)

(III) Relative of Person having significant influence over the Company

Mr. Ananya Mittal - Corporate Strategy Officer (Arshiya Group)

(IV) Enterprise owned or significantly influenced by key management personnel or their relatives

Rudradev Properties Private Limited

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

* During the year, the Company has adjusted amount of Rs. 1,269.42 Lakh and Rs. 2,026.74 Lakh with receivable from Arshiya Rail Infrastructure Limited, which are payble by Arshiya Indusrial & Distribution Hub Ltd. (AIDHL) and Arshiya Northern FTWZ Ltd. (ANFL) to Arshiya Rail Infrastructure Limited.

During the year, the Company has adjusted amount of Rs. 90.18 Lakh with receivable from Arshiya Northern FTWZ Limited, which are payble by Arshiya Indusrial & Distribution Hub Ltd. to Arshiya Northern FTWZ Limited.

During the year, the Company has adjusted amount of Rs. 4.45 Lakh with receivable from Arshiya Rail Infrastructure Limited, which are payble by Arshiya Supply Chain Management Private Limited to Arshiya Rail Infrastructure Limited.

The Company has received Rs. 47.87 Lakh from Arshiya Industrial & Distribution Hub Limited for sales consideration of equity shares on behalf of Arshiya Northern FTWZ Limited.

# During the year, the Company has adjusted amount of Rs. 262.38 Lakh with receivable from Arshiya Supply Chain Management Private Limited, which are payble by Arshiya Northern FTWZ Limited to Arshiya Supply Chain Management Private Limited.

56 Loans and Advances in the nature of Loans to Subsidiaries (Pursuant to the SEBI (Listing Obligation and Disclosure Requirement) Regulations, 2015):

0% OCRPS and share warrants had an anti-diluting effect on earnings per share hence have not been consider for the purpose of computing dilutive earning per share during the year.

27 Taxation

28 In view of loss for the year, no provision for current tax has been made.

29 The Company has not recognised any deferred tax assets on deductible temporary differences, unused tax losses as it is not probable that the Company will have sufficient future taxable profit which can be available against the available tax losses.

Deferred tax assets as at 31st March, 2018 Rs.18,584.87 Lakh (31st March, 2017 - Rs. 26,264.24 Lakh, 1st April, 2016 - Rs. 19,961.03 Lakh) has not been recognised, as there is no convincing evidence that sufficient taxable profits will be available against which the unadjusted tax losses will be utilized by the Company. Details of deferred tax assets are mentioned below:

30 During the year, the Company has allocated certain common costs and expenses incurred by it, being the Holding Company, to its subsidiaries aggregating to Rs.1,403.20 Lakh (31st March, 2017 - Rs. 1,403.22 Lakh,) based on management''s estimates of such costs and expenses attributable to them. Hence, Employee benefit expenses (Refer Note No. 30) and certain expenses stated under Other expenses (Refer Note No. 33) are presented as net of allocation of certain common costs and expenses.

31 Financial Risk Management

The Company''s principal financial liabilities comprises of borrowings, trade and other payables and financial guarantees contracts. The main purpose of these financial liabilities is to manage for the Company’s and subsidiaries’ operations. The Company''s financial assets comprises of investment, loans, trade and other receivables, cash and deposits that arises directly from its operations.

The Company''s activities expose it to variety of financial risks including credit risk, liquidity risk and market risk. The Company''s risks management assessment, management and processes are established to identify and analyze the risks faced by the Company to set up appropriate risks limits and controls, and to monitor such risks and compliances with the same. Risks assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Company’s activities.

The Company''s risk management is carried out by a corporate finance team under the policies approved by the Board of Directors. The Board provides written principles for overall risk management as well as policies covering specific areas, such as credit risk, interest rate risk.

(a) Credit Risk

The Company is exposed to credit risk, which is risk that counterparty will default on its contractual obligation resulting in a financial loss to the Company. Credit risk arises from cash and cash equivalents as well as credit exposures to trade customers including outstanding receivables.

Trade receivables are typically unsecured and are derived from revenue earned from customers located in India. Credit risk has always been managed by the Company through continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. Outstanding customer receivables are regularly monitored. Credit risk is high as only few customers’ account for majority of the revenue in the year presented. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain.

(b) Liquidity Risk

Liquidity risk is the risk that the Company may not be able to meet its financial obligations without incurring unacceptable losses. The Company''s objective is to, at all times; maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company limits its liquidity risk by ensuring regular monitoring of funds from trade and other receivables. The Company relies on assets light business model through monetization of assets and tie-up of construction funding and operating cash flows to meet its needs for funds.

The table below provides undiscounted cash flows towards financial liabilities into relevant maturity based on the remaining period at the balance sheet to the contractual maturity date.

(c) Market Risk

Market Risk is the risk that the fair value of future cash flow of a financial instruments will fluctuate because of volatility of prices in the financial markets. Market risk can be further segregated as: 1) Foreign currency risk and 2) Interest rate risk

1 Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flow or an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities.

2 Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Majority of the Company''s borrowings is fixed rate borrowings carried at amortised cost, therefore not subject to interest rate risk as defined in IND AS - 107, since neither carrying amount nor the future cash flows will fluctuate because of a change in market interest rates. The Company’s interest rate risk arises from long term borrowings with variable rates, which expose the Company to cash flow interest rate risk. The Company''s borrowings at the variable rate were mainly denominated in Rupees.

(ii) Fair Valuation techniques used to determine fair value

The Company maintains procedures to value financial assets or financial liabilities using the best and most relevant data available.

The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The following methods and assumptions were used to estimate the fair values:

(a) The Company assessed that the fair value of cash and cash equivalent, trade receivables, trade payables, and other current financial assets and liabilities approximate their carrying amounts largely due to the short term maturities of these instruments.

(b) The fair values for loans to subsidiaries, security deposits and other financial liabilities were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the Fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.

(c) The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.

(d) Equity Investments in subsidiaries are stated at cost.

(ii) Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognised and measure at fair value. To provide an indication about the reliability of the inputs used in deterring fair value, the

Company has classified its financial instruments into three levels prescribed under the accounting standard.

(a) Level 1 - Level 1 hierarchy includes financial instruments measured using quoted prices.

(b) Level 2 - The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over the counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

(c) Level 3 - If one or more of the significant inputs are not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity shares, contingent consideration and indemnification assets included in level 3.

32 Capital Management

For the Company''s objective when managing capital is to safeguard the Company’s ability to continue going concern in order to provide the return to shareholders and benefit to other stakeholders and to maintain an optional capital structure to reduce the cost of capital, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares (if permitted). The Company monitors capital using a gearing ratio, which is debts divided by total equity.

Notes:-

(i) Debt is defined as long term and short term borrowings including current maturities of borrowings and interest accrued.

(ii) Total equity (as shown in balance sheet) includes issued capital and all other equity.

Debt Covenants

Under the terms of Restructuring Agreement (RA), the Company is required to comply with following financial covenants: Without prior approval of lender, the Company shall not:

(a) Loans, debenture & charge - Issue or subscribe to any debentures, shares, raise any loans, deposit from public, issue equity or preference share capital, change its capital structure or create any charge on its assets including its cash flow or give any guarantees.

(b) Dividend on equity shares - declare/pay dividend on equity shares unless otherwise approved by the Lender/Business Monitoring Committee in accordance with the provisions of RA.

In order to achie

achieve this overall objective, the capital management, amongst other thing, aims to ensure that it meets financial covenants attached to the interest bearing Loans and borrowings that define capital structure requirements, there have been breaches in the financial covenants of Interest bearing loans and borrowing in the current period and previous period.

The Company has not proposed any dividend in last three year in view of losses incurred.

33. Standards issued but not effective

On 28th March, 2018, the Ministry of Corporate Affairs (MCA) has notified IND AS 115 - Revenue from contract with customers and certain amendment to existing IND AS. These amendments shall be applicable to the Company from 1st April, 2018.

(a) Issue of IND AS 115 - Revenue from contract with customers

IND AS 115 will supersede the current revenue recognition guidance including IND AS 18 Revenue, IND AS 11 Construction Contracts and the related interpretation. IND AS 115 provides a single model of accounting for revenue arising from contracts with customers based on the identification and satisfaction of performance obligations.

(b) Amendment to Existing issued IND AS

The MCA has also carried out amendments of the following accounting standards:

(i) IND AS 21 - The Effect of Changes in foreign Exchange Rate

(ii) IND AS 40 - Investment Property

(iii) IND AS 12 - Income Tax

(iv) IND AS 28 - Investment in Associates and Joint ventures and

(v) IND AS 112 - Disclosure of interests in other entities

Applications of above standards are not expected to have any significant impact on the Company''s financial statements.

34 First Time Adoption of Ind As

These are the Company’s first financial statements prepared in accordance with Ind AS. The accounting policies set out in Note no. 3 have been applied in preparing the financial statements for the year ended 31st March, 2018, the comparative information presented in these financial statements for the year ended 31st March, 2017 and in the preparation of an opening Ind AS balance sheet at 1st April, 2016 (the Company''s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the company’s financial position, financial performance and cash flows is set out in the following tables and notes.

A. Exemptions and exceptions availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

Ind AS optional exemptions (i) Deemed cost of property, plant and equipment and intangible assets

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment and intangible assets covered by Ind AS 38 - Intangible Assets as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition.

Accordingly, the company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value as deemed cost.

(ii) Investments in subsidiaries

The Company has elected to apply Previous GAAP carrying amount as deemed cost on the date of transition to IND AS for its equity investment in subsidiaries.

(iii) Business combinations

Ind AS 101 provides an exemption for all transactions qualifying as business combinations, not to restate any business combinations under Ind AS 103, occurring before the transition date. The Company has elected to apply this exemption and accordingly the Company has not restated business combinations occurring before 1st April, 2016.

Mandatory exceptions applied

The following mandatory exception have been applied in accordance with IND AS 101 in preparing the financial statements.

(i) Estimates

The Company estimates in accordance with IND AS at the date of transition to IND AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. IND AS estimates as at 1st April, 2016 are consistent with the estimates as at the same date made in conformity with the previous GAAP except where IND AS required a difference basis for estimates as compared to the previous GAAP.

(ii) Classification and measurement of financial assets

The Company has classified the financial assets in accordance with Ind AS 109 "Financial Instruments" on the basis of facts and circumstances that exist at the date of transition to Ind AS.

B. Reconciliations between previous GAAP and Ind AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.

C. Notes to first-time adoption:

1 Loan to Subsidiaries

Under the Previous GAAP, interest free loan to subsidiaries are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognised at fair value. Accordingly, the company has fair valued loan to subsidiaries under Ind AS. Difference between the fair value and transaction value of the loan to subsidiaries has been increased in investment at the first time adoption. subsequently amortised as an interest income from loan to subsidiaries to the Statement of Profit and Loss. Consequent to this change, the amount of loan to subsidiaries decreased by Rs.558.93 Lakh as at 1st April, 2016 and investment increased by Rs. 558.93 Lakh as at 1st April, 2016. The profit for the year ended 31st March, 2017 increased by Rs. 165.64 Lakh.

2 Financial guarantee obligations

Under Ind AS, financial guarantee given by the Company for its subsidiaries are initially recognised as a financial liability at fair value which is subsequently amortised as a financial guarantees income to the Statement of Profit and Loss. This transaction was not recorded under the previous GAAP.

Accordingly, the Company has recognised financial guarantee obligations of Rs. 3,172.39 Lakh and increased by investment Rs. 3,172.39 Lakh as at 1st April, 2016. On account of the aforesaid adjustment, the Company has recognised other income of Rs. 759.54 Lakh in the Statement of profit and loss for the year ended 31st March, 2017.

Further the Company has recognised additional financial guarantee obligations of Rs. 525.67 Lakh and increased by investment Rs. 525.67 Lakh as at 31st March, 2017 due to movement in financial guarantee given by the Company for its subsidiaries.

3 Borrowings

Under the Previous GAAP, transaction costs were charged to profit or loss as and when incurred. Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognised in the profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method. Accordingly, Non-current borrowing and current maturities decreased by Rs. 1,704.31 Lakh as at 31st March 2017 (1st April, 2016 - Rs. Nil).

4 Security deposits

Under the Previous GAAP, interest free refundable security deposits from unit holders are recorded at their transaction value. Under Ind AS, all financial liabilities are required to be recognised at fair value. Accordingly, the company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognised as advance rent. Consequent to this change, the amount of security deposits decreased by Rs. 1,705.89 Lakh as at 31st March, 2017 (1st April, 2016 - Rs. 2,117.81 Lakh ). The advance rent increased by Rs. 1,631.48 Lakh as at 31st March, 2017 (1st April, 2016 - Rs. 2,117.81 Lakh). The profit for the year ended 31st March, 2017 increased by Rs. 74.41 Lakh due to amortisation of the advance rent of Rs. 492.36 Lakh which is partially off-set by the unwinding interest expenses of Rs.417.95 Lakh recognised on security deposits.

5 Fair value of financial instruments

Under the previous GAAP, settlement on account of derivatives contracts is recorded at its transaction value. Under Ind AS, all financial liabilities are required to be recognised at fair value which is subsequently amortised as an unwinding interest on financial instruments to the Statement of Profit and Loss over the tenure of financial liability. Accordingly, the company has fair valued this liability under Ind AS. Accordingly, the amount of settlement of account of derivatives contracts decreased by Rs. 513.57 Lakh as at 1st April, 2016. The profit for the year ended 31st March, 2017 decreased by Rs. 317.64 Lakh.

6 Expected credit loss on financial assets

Under the Previous GAAP, the company has created provision for impairment of trade receivables consists only in respect of specific amount for incurred losses. Under Ind AS, impairment allowance has been determined based on Expected Loss model (ECL). The Company is also required to account for loss allowance on trade receivables based on the Expected Credit Loss model. Total equity and trade receivables as at 1st April, 2016 decreased by Rs. 9.00 Lakh. The profit for the year ended 31st March, 2017 decreased by Rs. 0.36 Lakh.

7 Debt convertible into Equity classified as other equity

Debt convertible into Equity of Rs. 18,766.71 Lakh is classified as other equity under IND AS. Incidential expenses of Rs. 227.25 Lakh incurred towards restructuring of origination of debt deducted from the security premium account on initial recognition i.e. 31st March, 2017.

8 0% Optionally convertible redeemable preference shares (OCRPS)

The company has issued 0% optionally convertible redeemable preference shares (OCRPS). Under Ind AS, The fair value of the liability component is separated from the compound instrument and the residual value is recognised as equity component of other financial instrument. Interest on liability component is recognised using the effective interest method. Accordingly, the Company recoginsed as liability component of Rs. 17,511.54 Lakh as at 31st March, 2017 (1st April, 2016 - Rs. Nil) and as equity component of Rs. 88,620.84 Lakh as at 31st March, 2017 (1st April, 2016 - Rs. Nil). Transaction costs of Rs. 214.64 Lakh incurred on liability component deducted from the liability component and Rs. 1,086.26 Lakh incurred on equity component deducted from the equity component on initial recognition.

9 Remeasurements of post-employment benefit obligations

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended 31st March, 2017 decreased by Rs. 9.02 Lakh.

10 Prior Period Adjustments

During the year life of internal roads was changed retrospectively from 60 years to 10 years and accordingly depreciation amount and book value of internal roads have been changed.

11 Other comprehensive income

Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the statement of profit and loss as ''other comprehensive income'' includes remeasurements of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP

12 Retained earnings

Retained earnings as at April 1, 2016 has been adjusted consequent to the above Ind AS transition adjustments.

13 Cash Flow Statement

The Ind AS adjustments are either non cash adjustments or are regrouping among the cash flow from operating, investing and financing activities. Consequently, Ind AS adoption has no impact on the net cash flow for the year ended 31st March, 2017 as compared with the previous GAAP.

---

Mar 31, 2016

1. The above loans are secured by joint and several irrecoverable personal guarantees of two Promoter Directors of the Company.

2. Further the loam are secured by shares pledged by the Promoter Directors.

3. Rate of Interest:- ranges from 12% to 15% pa.

4.Term Loans from others

5. Loan of Rs. 4,67,82,86.789/-:

6. Securities provided

- First charge on all the present and future movable and Immovable fixed assets Including Intangible assets, assignment of rights and benefits but excluding project assets for Khurja FTWZ project Khurja Distripark Protect. Nagpur protect and Rail Protect.

-Second charge on Current Assets of the Company but excluding current assets for Khujla FTWZ project Khurja Distripark Protect Nagpur project and Rail Project.

7. The above loans are secured by Joint and several Irrevocable personal guarantees of two Promoter Directors of the Company.

8. Further the loans are secured by shares pledged by the Promoter Directors.

9. Rate of Interest:-ranges from 12% to 13.50% pa

10. Rs. 69,00,000/- (P.Y. Rs. 69,00,00,000/-) is secured by first charge on land belonging to company situated at village Butibori at Nagpur, Maharastra. The above loan carries interest @ 15.25% p.a. and penal interest of 4% p.a. Out of the above Rs. 39,00,00,000/-is repayable in a single instalment at the end of 3 year, 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. 30,00,00,000/- In single instalment 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 During the previous year, as per the terms of sanction letter the lender has excursed call option and recalled the above ton and the said loan Is overdue since 13 March 2013.

Rs. 26,66,66,668/- (P.Y: Rs. 69,00,00,000/-) is secured by first charge on land belonging to company situated at Kurja near Dheli. The above loans carries interest of @ 15.25% p.a. and penal interest of 4% p.a. out of the above Rs. 8,00,00,000/- is repayable in six equal monthly instalments after moratorium period of six months from the date of disbursement i.e. July 21. 2011 and balance in twelve equal monthly instalment starting from thirteenth month from the date of disbursement. During the year 2012-13. the Company had defaulted In making payment of four Instalments aggregating to Consequently In the year 2012-13, pursuant to the facility agreement the lender has recalled the balance outstanding amount of Rs. 16.00.00.000/- and the said loan Is overdue since 9^th February 2013.

11. Vehicle loan is secured by way of hypothecation of vehicle.

12. Corporate Guarantee

13. With respect to Arshiya Northern FTWZ Limited (ANFL) and Arshiya Industrial & Distribution Hub Limited (AIDHL) (subsidiaries). Punjab National Bank (Bank), on behalf of certain Consortium Banks of these subsidiaries, has initiated debt recovery action under Section 13(2) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act) vide notice dated 14th October, 2015 aggregating to * 3.22.23,46.819/- (being dues from ANFL) and notice dated 19th October. 2015 aggregating to * 5,86.57.51,992/ (being dues from AIDHL). The bank has invoked the Corporate Guarantees issued by the Promoter Company. Arshiya Limited and personal guarantees of Promoter Directors i.e. Mr. Ajay S Mittal and Mrs. Archana Mittal. Further on 19th January. 2016 the subsidiaries received a Notice of possession from the authorized officer of the bank under power conferred on the bank u/s 13(4) of the said Act read with Rule 8(1) of the Rules.

14. The subsidiaries have requested the banks to withdraw the said notices and support their revival efforts.

15. Given the above, the Company is of the view that:

16. at this juncture there is no obligation which is expected to result in an outflow of resources from the Company and hence not provided for

17. the disclosure, of the Corporate Guarantees Issued by the Company to the Consortium Banks on behalf of Its subsidiaries under the head Contingent Liabilities not provided for in respect of Guarantees given, is adequate.

18. Capital and other commitments

Estimated amount of contracts remaining to be executed on capital and other accounts and not provided for (net of advances paid) are Rs. 14.93,03,5S2/- (P.Y. Rs. 52.82.42.998/- ).

19. Details of dues to Micro, Small And Medium Enterprises as per MSMED Act. 2006

Note: Dues to Micro and Small enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Company and relied upon by the Auditors.

20. In the opinion of the Management, Current Assets. Loans and Advances and Current Liabilities are approximately of the value stated, if realized/paid in the ordinary course of business. The provisions for depreciation and for all known liabilities are adequate and are not in excess of the amounts considered reasonably necessary.

21. 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 the Revival plans referred to in Note No. 30.

22. Revival Plans

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

- expanding the business volumes by changing product mix.

- clarity and resolution of regulatory issues.

- increasing client base by Inducting more Fortune SOO companies.

- commencing Inland Container Depot (ICD) operations at Khurja in April 2016.

- support from ARC In terms of Growth Capital / Working Capital support granted to its subsidiary,

- revamping the entire business with an emphasis on operational efficiency.

23. Secured Lenders (Banks):

24. Loans other than assigned to Asset Reconstruction Company(ARC):

During the financial year 2013-2014. Secured Lenders (Banks) had approved the restructuring package under "Corporate Debt Restructuring Package" (CDR). The Company has not been able to generate sufficient cash flows to service the loan repayments/interest payments which resulted into Company''s borrowings becoming "Non-Performing Assets" (NPAs) with the Banks. Such defaults entitle the CDR lenders to revoke the CDR Package approved by them and hence the CDR Lenders decided to exit the CDR.

Further to the above. CDR-EG Issued a letter dated 29th December, 201S approving the exit from CDR on account of failure of the restructuring package Upon exit, lenders are entitled to exercise rights and remedies available under the original loan documents. In the absence of any communication from these lenders, the Company has not provided for additional interest from CDR cut-off date till 31st March 2016 estimated at Rs, 52,12,55,520/- which arises on account of difference between Interest rate as approved under CDR package and Interest rate decided as per original sanction terms and penal interest on overdue amount of interest and instalment. Had the Company provided for additional Interest, as stated above, on such loans, the loss before tax for the year ended 31st March. 2016 would have been higher by Rs, S2,12.55.520/-. Upon reconciliation and finalization of the estimated entitlements of these lenders, the Company will recognize the liability in its books during the year In which finality is reached.

25. Loans Assigned to Asset Reconstruction Company (ARC):

26. Some of the Secured CDR Lenders had assigned their outstanding dues to an ARC. aggregating to I 6,38,69,40,986/- on the same terms and conditions as per the original loan documents.

27. Pending finalization of the terms of restructuring with ARC, the Company has not provided for Interest aggregating to Rs.43,25,88,993/- on loans assigned to the ARC from the respective dates of assignment

28. Consequent to CDR exit, the Company has not provided for additional estimated interest (from CDR cut-off date till 31st March 2016) aggregating to Rs. 35,16.64.164/-.

Had the Company provided for interest on such assigned loans, the loss before tax for the year would have been higher by f78.42.53,157/-,

29. On finalization of the terms of restructuring with ARC. the Company will record the effect of the revised terms as to repayment of principal and Interest (Including penal Interest if any) as referred to in 31.2(H) and 31.2(Ui), In the period in which It Is completed.

30. A Bank has assigned Its dues to ARC aggregating to Rs, 86.92.68.625/- (being principle Rs.49,35,00,000/- and Interest f37,57,68,625/-) on the same terms and conditions as per the original financing documents. ARC and the Company have filed Consent Terms with the Hon''ble Bombay High Court. On the basis of said consent terms Company has not provided for Interest of Rs, 7.29.88,927/- on loan assigned to ARC from the date of assignment

Had the Company provided for Interest on above loan, the loss before tax for the year would have been higher by Rs, 7,29,88,927/-.

32 Fixed Assets and Depreciation

Consequent to the enactment of the Companies Act. 2013 (the Act) and its applicability for accounting periods commencing on or after 1st April, 2014. the Company has re-worked depredation with reference to the useful lives of Fixed Assets prescribed by PART C of Schedule II to the Act Where the remaining useful life of an asset Is nil. the carrying amount of the asset after retaining the residual value, as at 1st April. 2014 has been adjusted to the balance of Statement of Profit and Loss. In other cases the carrying values have been depredated over the remaining useful lives of the assets and recognized in the Statement of Profit and Loss.

Since then, as per the amendment dated 20th August. 2014. the useful life spedfied in Part C- of Schedule II has been defined to mean that If the cost of a part of asset is significant to the total cost of the asset and useful life of that part is different from the useful life of the remaining asset useful life of that significant part shall be determined separately and depredated accordingly.

In the opinion of the Management, the Company''s assets are such that there are no significant parts thereof whose life would be different than the useful life of the whole asset (Component accounting being a technical matter, the opinion of the Management is relied upon by the Auditors). Consequently, the Company has continued to provide depredation in respect of all Its assets on the basis as was followed in the financial year 2014-15. i.e. based on useful lives of the respective assets.

33 Investments

The Company holds strategic and long term investments by way of equity shares In its subsidiaries, the aggregate cost of which, is Rs.8 34 59 72 336/- as on 31st March. 2016. The present "net asset value" of the said investments are either negative/lower than their cost of acquisition. Considering that the said investments are long-term and strategic in nature and the said subsidiaries are implementing their respective Revival Plans along with the future business plans of the Company, the Management is of the view that the diminution In value of Its investments being temporary In nature, no further provision for diminution in value Is called for at this puncture. except In case of two subsidiaries as stated below, for which the Company has already made provision of Rs, 35,31.000/- for diminution in value of investments In the previous year.

34 Mark to Market Lesses (MTM)

35. Axis Bank

36.The Company has terminated the cross currency swap derivative contract with Axis Bank Limited on 30th September. 2015 for an agreed valuation of Rs. 42.00.00.000/- of which the balance as on 31st March 2016 Is Rs.38.49.99,999/-. The Company had already provided for an amount of Rs.25.52.18,817/- for the MTM loss up to 30th June, 2015. The balance amount of Rs.16,47.81.183/- was provided for as an exceptional item in the quarter ended 30th September. 2015.

37. The Company has entered into a new INR to USD Principal only Swap contract with Axis Bank Limited on 30thSeptember, 2020 with effect from 5th October, 2015, the maturity date being 30th September, 2020 for a notional amount of Rs.2.50.00,00,000/- (USD 3 80.74,931/-). During the year the Company has provided an amount of Rs.2.26.54.585/- in respect of MTM losses based on determination of fair market value of derivatives entered into by the Company. 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 Bank which has entered Into derivative contract with the Company has intimated that, the loss on account of MTM Is Rs.12.98,26,488/- as on 31st March, 2016 as against the amount of Rs. 2.26,54,585/-. determined by the Company, which is disclosed as Exceptional Item.

38. Kotak Mahendra Bank Limited

In respect of derivative contractsentered Into by the company with ING Vysya Bank (now amalgamated with Kotak Mahlndra Bank Limited w.e.f. 1st April. 2015). the bank had prematurely terminated the contracts and had demanded termination and liquidation fees aggregating o 28.75.00.000/-. which are disputed by the Company and hence not provided for.

39 Other Advances

Other Advances includes Rs. 61.66,529/- as on 31st March, 2016 comprising of cash seized by the Income Tax department from the Company and its subsidiaries at the time of search on 13th June. 2014. as detailed below:

During the year the Company has requested Income Tax Department to adjust cash seized by the Income Tax department as stated above against the outstanding tax dues of the Company for Assessment Year 2013-14.

40. Proceedings against Company

Certain tenders 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.

41. 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, land belonging to Arshiya Domestic Distripark Limited has yet not been transferred in the name of the Company.

42 Maharashtra VAT Refund Receivable

43. 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 116,84,56.227/- 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.

44. 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 116,84.56,227/-. The petition has been admitted and issues are framed and further hearing and final disposal is pending.

45. Accordingly, these financial statements reflect a sum of *16.84.56,227/- 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.

46. Taxation

47. 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.

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

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

50. 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.

51. Percentage given in bracket relates to previous year.

$ 12.64% (12.64%) held through Arshiya Northern FTWZ Limited $$ 4833 % (48.33 %) held through Arshiya Hongkong Limited $$$ 9.38 % (9.38 %) held through Cyber log Technologies (UAE) FZE 9 5.27 % (5.27%) held through Arshiya Hongkong Limited - 9.89 % (9.89%) held through the Company

52.Key Management Personnel

Mr. A|ay S Mittal - Chairman and Managing Director Mrs. Archana A Mittal - Joint Managing Director

Mr. Subhrarabinda Birabar - Chief Executive Officer (Resigned w.e.f. 17/03/2016)

Mrs. Savita Dalai - Company Secretary (w.e.f. 10/07/2015)

Mr. V. L Ganesh - Chief Financial Officer (w.e.f. 10/07/2015 to Resigned w.e.f. 19/02/2016)

Mr. Vaibhav Bhakhare - Company Secretary (Resigned w.e.f. 31/03/2015)

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

(II) Relative of Key Management Personnel

Mr. Ananya Mittal - Vice President Corporate Strategy (Arshiya Industrial & Distribution Hub Limited)

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.

53. Remuneration of Rs, 114.82 lacs paid/provided to the Executive Director for F.Y. 2013-14:

The Company had filed an application to the Central Government for waiver of excess remuneration paid. The Company has received final reminder dated 3rd March, 2016 received on 16th March. 2016 from the Central Government directing it to furnish certain information/document/clarification which has been provided to the Central Government on 1st April. 2016.

54. As per Provisions of sub section 4 of Section 203 of Companies Act 2013 the Company is required to appoint Chief Financial Officer (CFO) as Key Managerial Person. Mr. Shyam Rathi ceased to be CFO w.e.f. 14th November 2014 and Mr. V. L Ganesh was appointed in his place w.e.f. 10th July 2015. Further, Mr. V. L Ganesh has resigned w.e.f. 19th February 2016. The Company is in the process of identifying a suitable individual for this role. In the interim the Company has appointed Mr. Santosh Maheshwari as Group President who has extensive experience of over 26 years with very large Indian Corporate entities.

55. The Company is of the view that the provisions of Section 185 of the Companies Act 2013 as regards intercompany advances/loans/guarantees granted/received to/from group companies are not applicable, as the same are provided/received in the normal course of business.

56. Derivative contracts entered Into by the Company for hedging purpose and outstanding as at March 31,2016:

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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/-).

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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.

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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.

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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.

---

Mar 31, 2010

1. Secured Loans:

(a) Long Term loans from Banks:

(i) Rs 1,923,660,728/- (Rs Nil) Secured by First Charge on all the present and future movable and immovable assets including Plant and machinery, spares etc. except assets for Khurja Project, Cuttack Project and Nagpur Project. Further secured by first mortgage and charge on existing and future receivables arising out of the operations relating to the project at Sai Village near JNPT, Navi Mumbai, to be shared on paripassu basis with short term working capital loan to the extent of Rs 10 Crore.

(ii) Rs 40,471,814/- (Rs Nil) Secured by exclusive charges over the assets financed viz interiors, furnitures and fixtures, office equipments at MIDC office.

(iii) Rs 499,987,621/- (Rs Nil) Secured by equitable mortgage of land in the name of company at Khurja, near Noida, U.P.

(iv) All the above loans are secured by personal guarantee of the Promoter Directors i.e. Mr Ajay Mital and Mrs. Archana Mittal.

(v) Rs 500,000,000/- (Rs Nil) Secured by equitable mortgage of land admeasuring 108.87 acres situated at village But Bori, District Nagpur. This loan is secured by personal guarantee of the Promoter Director i.e. Mr. Ajay Mital.

(b) Short Term loans from Banks:

(i) Rs NIL (Rs 300,000,000/-) by hypothecation of land situated at village Bori near But railway station Taluk Nagpur Grameen, Nagpur District and personal guarantee of two directors of the Company.

(ii) Rs NIL (Rs 175,000,000/-) by first charge on equitable mortgage of land situated at Khurja district Bulandshar, U.P, term deposit of Rs 17,500,000/- and personal guarantee of two directors of the Company.

(c) Working Capital loan from banks:

Rs 93,227,672/- (Rs 62,876,569/-) Hypothecation of current assets, receivable arising out of the operations of the JNPT Andheri (East), Mumbai, immovable properties pertaining to FTWZ project in JNPT, term deposit of Rs 5,000,000/- and personal guarantee of two directors of the Company.

(d) Loan from Finance Company:

(i) Rs Nil (Rs 250,000,000/-) Hypothecation of rights under project agreements/documents, Rights under Insurance contracts/policies, specific assets including rail rakes. This loan is being utilised by wholly owned subsidiary, namely, Arshiya Rail Infrastructure Limited and these rakes are also in name of the aforesaid subsidiary.

(ii) Rs 2,790,317/- (Rs 2,039,871/-) Hypothecation of leased vehicles.

2. Unsecured Loans

(i) Rs 299,994,803/- (Rs Nil) is against the personal guarantee of the Promoter Directors i.e. Mr Ajay Mital and Mrs. Archana Mital.

(ii) Rs 200,000,000/- (Rs Nil) is against the security of shares of quoted company held by a promoter director.

3. (a) Contingent liability not provided for in respect of:

(i) Disputed income tax demands – Rs 6,609,841/- (Rs 21,967,977/-).

(ii) Claims against the Company not acknowledged as debts – Rs 29,702,022/- (Rs 15,542,002/-).

(iii) Guarantees issued by banks on behalf of the Company – Rs Nil (Rs 100,000/-).

(iv) Guarantees given to banks in respect of loan facilities granted to wholly owned subsidiaries of the company – Rs 4,358,800,000/- (Rs 608,800,000/-)

(v) Amount outstanding towards Letters of Credit given to bank – Rs 642,814,009/- (Rs 544,341,168/-)

(b) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances paid) – Rs 3,362,495,327/- (Rs 2,253,232,067/-).

4. 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.

5. (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. The provision for all known liabilities is adequate and is not in excess of amounts considered reasonably necessary.

(b) Debit and credit balance is subject to confirmation.

6. (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 285,593,810/- (Rs 159,991,786/-)

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

7. Employee Stock Option Plan (ESOP):

The Company has established “Arshiya Stock Option Plan 2007” for a grant of Options to the employees of the Company and its subsidiaries convertible into One Equity Shares of Rs.l 2 each. These Options vest over a period of 36 months from the date of grant and are to be exercised within a maximum period of 12 months from the date of vesting.

Out of the total employee stock compensation credit ofRs.l 18,075,573/- (Debit ofRs.l 23,977,352/-) recognized during the year, on account of the options outstanding at the end of the year, the Company has credited Rs.l 2,569,808/- (Debit of Rs.l 7,557,242/-) to the Profit and Loss account, reduced from project costRs.l 276,466/- (Debit ofRs.l 2,255,130/-) on account of options granted to employees employed exclusively for its new projects. The balance credit ofRs.l 15,229,299/- (Debit ofRs.l 14,164,980/-) pertaining to the options granted to the employees of the subsidiary companies has been transferred to these subsidiary companies.

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

The disclosures as required as per the revised AS 15 are as under:

(a) Brief descriptions of the plans:

The Company has various schemes for long-term benefits such as provident fund and gratuity. The Company’s defined contribution plan is provident fund since the Company has no further obligation beyond making the contributions. The Company’s defined benefit plans include gratuity. The employees of the Company are also entitled to leave encashment as per the Company’s policy.

(b) Defined contribution plan (Provident fund):

Amount of Rs 8,879,176/- (Rs 4,499,456/-) is recognized as expenses and included in Employees’ Remuneration – Schedule 15 in the Profit and Loss Account.

The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion, and other relevant factors such as supply and demand factors in the employment market. The expected rate of return on plan assets is based on the current portfolio of assets, investment strategy and market scenario.

9. Segment information:

Primary segment information

The Company operates in two primary reportable business segments, i.e. "Logistcs operations and related services" and "Free Trade Warehousing Zone (FTWZ) operatons" as per the defnition under Accounting Standard 17 – "Segment Reportng". The Company is in the process of setting up facilities for commencement of commercial operations in relation with FTWZ operations. The Company’s other business segments are not reported as separate reportable segment as the revenue, results

12. Capital Projects:

(i) Capital work-in-progress includes capital advances of Rs 999,427,581/- (Rs 718,203,937/-) and Preoperative Expenses Rs 645,036,509/- (Rs 144,021,145/-).

13. There is no amount due and outstanding to be credited to Investor Education and Protection Fund as at the year end. These amounts shall be credited and paid to the fund as and when due.

a. Key management personnel

Mr. Ajay S. Mital – Chairman and Managing Director Mrs. Archana Mittal – Whole Time Director Mr. V. Shivkumar – Executive Director Mr. Sandesh Chonkar– Executive Director

b. Enterprise owned or significantly influenced by key management personnel or their relatives Bhushan Steels 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.

15. Loans and Advances in the nature of Loans to subsidiaries (pursuant to Clause 32 of the Listing Agreement with Stock Exchange).

(b) Though there is no stipulated repayment schedule for the above loans given to the subsidiary companies, all the loans are repayable on demand.

(c) All loans and advances in the nature of loans are given in terms within the limits specified under Section 372A of the Companies Act, 1956.

16. Disclosure pursuant to Accounting Standard 19 – Leases Finance Lease

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

The Company has entered into operating lease arrangements for 2 to 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.

17. The Company has long term investment ofRs.l 16,000,000/- (Rs 8,160,000/-) in Arshiya Supply Chain Management Private Limited (ASCMPT) [Formerly known as Genco (India) Private Limited], a subsidiary of the company. The company has also given loans and advances of Rs 27,472,212/- (Rs 22,512,082/-) to the said subsidiary. As at balance sheet date, Net Worth of ASCMPT is eroded. The investments are strategic in nature and having regard to the future business plan and projected profitability, management perceives the erosion in the value of investment in ASCMPT as only a temporary diminution in value. Hence, no provision for diminution in value is considered necessary in respect of the company’s investment or of the loans and advance given ASCMPT.

18. The figures for the previous year have been regrouped where necessary to conform to current year classificaton. Previous year figures are given in bracket.