Dear Members,

It gives us immense pleasure to share with you the highlights of the developments and the progress that your company has achieved so far under Thirty-Seventh Annual Report together with the Audited Statement of Accounts for the financial year ended 31st March, 2018.

1. FINANCIAL HIGHLIGHTS

(Rs, in Lakhs)

The Consolidated Financial Statements of the Company are prepared in accordance with relevant Accounting Standards notified under the Companies (Indian Accounting Standards) Rules 2015 (as amended).

i.) Reserves

During the year under review your company has reported a profit of Rs, 5,196.39 Lakh on standalone level and that of Rs, 5,037.77 on consolidated level which has been further carried to other Equity.

ii.) Dividend

In order to conserve & build resources towards reserves for the future growth of your company the Directors of your Company regret their inability to recommend dividend for the financial year ended 31st March, 2018.

iii.) Capital Structure

A detailed capital structure forms part of corporate governance section of this Annual Report.

iv.) Particulars of loans, guarantees or investments by Company

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to Financial Statements under this report.

v.) Deposits

The Company has not accepted any deposits, within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of deposits) Rules, 2014.

vi.) Particulars of Contracts or arrangements made with related party (ies)

Particulars of contracts or arrangement with related parties referred to in Section 188 (1) of the Companies Act 2013, in the prescribed Form No. AOC-2, is appended as an Annexure - I to the Board's report.

vii.) Material changes and commitment, if any, affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate and the date of the report

Your Company has aligned its business strategy & implementation of asset light business model wherein it was considered necessary that Capex in warehouse, be now classified as Stock in trade instead of fixed assets. Apart from the above there are no material changes and commitments affecting the financial position of the Company occurred between the end of the Financial Year to which this financial statements relate and on the date of this report.

2. BUSINESS AND FUTURE OUTLOOK: Business Segments: FREE TRADE WAREHOUSING ZONE (FTWZ)

Your Company is a pioneer and has the first mover advantage in setting up the FTWZs in the country, offering huge fiscal and other benefits to its customers.

FTWZ facility at Panvel near Mumbai, with its best in class warehousing infrastructure of global standards is in close proximity to country’s busiest container port, JNPT, well connected to the National and State Highways, and the proposed International Airport in Navi Mumbai. This facility also offers a wide range of 3 PL services besides various value optimisation services to its customers.

The second FTWZ facility in NCR at Khurja, in the state of Uttar Pradesh is a part of the India's first operational integrated multimodal logistics park including Domestic warehousing facility, 3PL services, Rail and Rail Infrastructure along with a 6 lane Private Freight and Container Rail Terminals and Inland Container Depot (ICD),.

Your Company is glad to inform that the FTWZ facility at Panvel is operating closer to full capacity and has achieved highest ever capacity utilisation. The increasing acceptance of the FTWZ with various benefits it offers is increasing and your company is witnessing increasing enquiries for bigger space. With various Government reforms and increasing economic activities in the country, the warehousing sector is witnessing increasing participation from institutional investors.

Your Company is glad to inform a successful completion of transaction with Ascendas Property Fund (India) Pte Ltd ("APFI"), moving towards an asset-light business model. Your Company has monetised six warehouses in Free Trade Warehousing Zone admeasuring 8,32,000 sq.ft located at Panvel near Mumbai by leasing them on long term basis to APFI for Rs, 534 crore. Out of this first tranch of Rs, 434 crore has been received on 3 February 2018 and the balance Rs, 100 crore to be received over 4 years in equal instalments on achieving certain milestones. APFI has further leased these warehouses on a long-term lease basis to Arshiya Lifestyle Ltd ("ALL") which is wholly owned subsidiary of your Company at pre-agreed rentals. Your subsidiary company, as a developer also provides various services in managing and operating these warehouses. This transaction establishes the growing acceptance of the FTWZ in the country and the intended objective of your Company to achieve an asset light model, going forward.

DOMESTIC WAREHOUSING FACILITY

Your Company is also offering domestic warehousing facility in NCR at Khurja in the State of Uttar Pradesh. This facility is part of India’s first operational integrated multi-modal logistics park. This facility offers built-to-suit warehouses along with value optimisation services and first & last mile transport services to the customers on long term arrangements.

SUPPLY CHAIN MANAGEMENT

Your subsidiary Company is in the business of providing 3PL and other value optimisation services such as handling and transportation, packaging, consolidation, palletisation, labelling, kitting, bagging, bottling, cutting-slitting, survey, quality assurance, refurbishment, repairs and maintenance, washing, etc., to its various clientele. Your Company also provides Information Technology (IT) enabled services to its clients.

RAIL INFRASTRUCTURE & TRANSPORT HANDLING

Your subsidiary Company is providing the containerised Rail Transportation services on a Pan-India level with its fleet of 18 Rakes and around 3,000 containers. Your subsidiary Company has taken various initiatives to reduce empty movement, improved availability of required type of containers, cost reduction measures and improved turnaround time.

During the year, the Management of your Company reviewed the overall investment strategy of your Company in terms of overall business objectives, capital allocation, and other focus areas for investment.

In view of the above the Board of Directors of your Company considered, reviewed and approved a scheme of amalgamation between Arshiya Industrial & Distribution Hub Limited ("AIDHL") & Arshiya Transport and Handling ("ATHL") with Arshiya Rail Infrastructure Limited ("ARIL") all of which are wholly owned subsidiaries of Arshiya Limited under Sections 391 to 394 of the Companies Act, 1956 and under Section 230 to 233 of the Companies Act, 2013. Since the businesses of your subsidiary Companies complement each other; ARIL offering rail infrastructure, including modern rakes, customized containers, rail sidings, port connectivity with a pan-India presence, AIDHL providing domestic warehousing facility including value added services and Inland Container Depot ("ICD") for inward and outward movement of EXIM cargo; and ATHL facilitating the transport and handling business. The management intends to have a better synergy of the businesses, avail other common benefits and to widen the market reach of the rail and container businesses. Thus, in order to rationalize the holding structure, the management of your Company seeks to have a single consolidated entity, i.e., AIDHL and ATHL are proposed to be amalgamated with ARIL.

Further, on May 24th, 2018 your Company announced its intentions with regards to a proposed scheme of arrangement ("Scheme") that provides for a De-merger of Domestic Warehousing (DW) segment of the flagship Company Arshiya Limited into ARIL. The management of your company basis this scheme to re-organise the businesses of all the Group companies, believes that the demand in market for providing integrated services is much higher than that of providing individual services. In order to increase its revenue and cater to the needs of the market, the management of your company intends to consolidate the rail infrastructure, transport handling business, domestic warehousing segment and ICD businesses. Further, the management of your company also envisages the transfer of Domestic business of Arshiya into ARIL. However, the above scheme of Demerger is Conditional upon the aforesaid merger scheme becoming effective first.

PRIVATE FREIGHT TERMINAL

Your subsidiary Company has a 6 lane Private Freight and Container Rail Terminals in NCR at Khurja in the state of Uttar Pradesh, notified for handling all types of inward and outward cargo traffic, attracting cargo from Indian Railways and other Private Container Train Operators (PCTOs).

Your Company has improved the performance of Private Freight Terminal (PFT) segment whereby the non-containerised cargo is being handled at the Rail siding. With the large infrastructure development in the region, such as extension of Yamuna-expressway, new State highways and the proposed Jewar Airport, the utilisation of the PFT is increasing.

INLAND CONTAINER DEPOT (ICD)

Your Company's facility of Inland container depot in NCR at Khurja boasts of being the only such facility connected to the Rail network & Private Rail Siding and FTWZ providing inter-connected solution-based EXIM services. ICD also provides connectivity to major western ports, such as Mundra, Pipavav and JNPT for EXIM cargo movement.

A detailed discussion on the other focus areas is set out in the Management Discussion and analysis section, which forms integral part of this Report.

SOME OF THE KEY INITIATIVES HAVE BEEN: - Debt Reduction Post Restructuring

A majority of debt of your Company has been restructured by Banks through assignment to Edelweiss Asset Reconstruction Company Limited ("EARC"), (acting in its capacity as a trustee of various trusts in respect of debt acquired from various banks). The debt of your Company and its subsidiaries has reduced by 40% from its peak level.

The restructured debt and its proportionate conversion into equity were as informed in the notice to the extra ordinary general meeting dated 29th April, 2017. A brief summary on the allotments made during the year under review is as stated in the Governance section of this Report.

- Improving liquidity position through monetisation of warehouses so to reduce debt and liabilities of your Company.

- Improved marketing efforts attracting clients requiring large space (including full warehouse)

- Providing solutions to the e-commerce, telecom, pharmaceuticals and chemical industry which is increasing the capacity utilisation and improved demand for additional warehouses.

- The conversion of containers to side-access meeting the customer needs and improving the availability of containers.

- Cost reduction measures across all business segments.

- Improving the information technology platform to provide the IT enabled services to the clients.

- Organisational development, attracting the new talent for the day-to-day management.

Subsidiaries and Associates

During the year under review your company had certain alterations in the structure of its investment in its subsidiaries. Arshiya Supply chain Management Private Limited which was wholly owned subsidiary of Arshiya Limited has discontinued its business operations and hence management found it suitable to disinvest from that Company. As on March 31, 2018 the Company has 7 subsidiary companies, including 1 Material Subsidiary. During the year following changes have taken place in subsidiary companies.

Subsidiary Acquired:

During the year under review, your Company has acquired Laxmipati Balaji Exim trading Ltd (The name of the company has been changed to Arshiya Logistics Services Limited w.e.f. May 23, 2018)

Material Subsidiary:

Arshiya Rail Infrastructure Limited

Company ceased to be Subsidiaries:

- During the year under review your Company has transferred its step down subsidiary Arshiya Rail Siding and Infrastructure Limited on 3rd February, 2018

- Disposed -off Arshiya Supply Chain Management Private Limited, its wholly owned subsidiary on 21st March, 2018.

Consolidated Financial Statements

The financial statements of your Company are prepared in accordance with Indian Accounting Standard ("IND AS") and the guidelines issued by SEBI The IND AS are prepared under section 133 of the Companies Act, 2013 read with Rules 3 of the (Indian Accounting standards) Rules 2015 and that of Companies (Indian Accounting Standards) amendment Rules 2016, your company has adopted all the applicable standards and the adoption was carried out in accordance with applicable transition guidelines. During the year, the Board of directors reviewed the affairs of the subsidiaries. Further, in accordance with Section 129(3) of the Companies Act, 2013, your company has prepared the Consolidated Financial statements, which forms part of this Annual Report. A statement containing salient features of the financial statement of our subsidiaries in the prescribed Form No. AOC-1 is appended as an Annexure - II to the Board's Report. The Statement also provides the details of performance and financial positions of each of its subsidiaries.

Also that in accordance with Section 136 of the Companies Act, 2013, and Regulation 46 of the SEBI (Listing Obligation and Disclosure requirements) Regulations, 2015 ("Listing Regulations") the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on our website www.arshiyalimited.com.

These documents will also be available for inspection during business hours at the Registered Office in Mumbai, India.

3. CORPORATE GOVERNANCE

Corporate Governance is the system by which companies are directed and controlled. The purpose of Corporate Governance is to facilitate effective, entrepreneurial and prudent management that can deliver the long-term success of the Company. The goal of Corporate Governance is to ensure fairness of every stakeholder. We always seek to ensure that our performance is driven by integrity. We believe sound Corporate Governance is critical to enhance and retain investor trust. This is ensured by taking ethical business decisions and conducting business with a firm commitment to values, while meeting stakeholders’ expectations. The Company has been following the principles of good Corporate Governance over the years and lays strong emphasis on transparency, accountability and integrity.

A separate section on Corporate Governance practices followed by the Company, together with a certificate from Company's Auditors confirming compliances, as per SEBI Regulations, forms part of this Annual Report.

i.) Board Diversity

The Company recognises and embraces the importance of a diverse board in its success. We believe that a truly diverse board will leverage difference in thought, perspectives, knowledge, skill, regional and industry experience, cultural and geographical background. The Board has adopted the Policy on Board Diversity which sets out the approach to diversity of the Board of Directors and the same is available on our website http://www.arshiyalimited.com/assets/pdf/policy-on-board-diversity20160407104216.pdf

ii.) Number of meetings of the board

During the year Thirteen Meetings were held. The details of the meetings of the Board held during the financial year 2017-18 forms part of the Corporate Governance Report. The intervening gap between any two meetings did not exceed 120 days as prescribed by Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 & amendments thereof plus the Companies Act, 2013 & its amendments thereof.

iii.) Policy on Director's Appointment and Remuneration

The Current policy of Board of Directors of the Company has an optimum combination of Promoter Directors and Non-Executive Independent Directors, who have in depth knowledge of the business and industry. The composition of the Board is in conformity with the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 and the Companies Act, 2013.

The policy of the Company on Directors’ appointment and remuneration, including criteria for determining qualifications, positive attributes, independence ofa director and other matters, as required under sub-section (3) of Section 178 of the Companies Act, 2013, is available on our website http://www.arshiyalimited.com/assets/pdf/nomination-and remunerationpolicy20160407103702. pdf .There has been no change in the policy since the last Financial Year. We affirm that the Remuneration paid to the Directors is as per the terms laid out in the Nomination and Remuneration Policy of the Company.

iv.) Declaration by Independent Directors

The Company has received necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013 to meet the criteria of their independence as laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015.

v.) Board evaluation

SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, mandates that the Board shall monitor and review the Board evaluation framework. A structured questionnaire was prepared after taking into consideration of the various aspects of the Board’s functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, obligations and governance.

The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of Independent Directors shall be done by the entire Board of Directors, excluding the director being evaluated.

The evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The performance evaluation of the Chairman and the non-independent Director(s) was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the evaluation process.

vi.) Familiarisation Program for Independent Directors

All new Independent Directors whenever inducted in the Board attend the orientation program. The details of training and familiarisation program for Independent Directors with the Company, nature of the Industry in which the Company operates, business model of the Company and related matters are available on our website http://www.arshiyalimited.com/assets/pdf/ familarisation-programmes20160407103729.pdf

Further, at the time of the appointment of Independent Director, the Company issues a formal letter of appointment outlining his/ her role, function, duties, and responsibilities. The format of the letter of appointment is available on our website http://www. arshiyalimited.com/assets/pdf/appointment-letters20160407091114.pdf

vii.) Code of Conduct for prevention of Insider Trading

The Board of Directors has adopted the Insider Trading Policy in accordance with the requirement of SEBI (Prohibition of Insider Trading) Regulation, 2015. The Insider Trading Policy of the Company lays down guidelines and procedures to be followed, and disclosures to be made while dealing with the shares of the Company, as well as the consequences of violation. The policy has been formulated to regulate, monitor and ensure reporting of deals by employees and to maintain the highest ethical standards of dealing in Company securities.

The Insider Trading Policy of the Company covering code of practices and procedures for fair disclosure of unpublished price sensitive information and code of conduct for prevention of insider trading is available on our website http://www.arshiyalimited. com/assets/pdf/insider-trading-code20160407090651.pdf

viii.) Policies

The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandated the formulation of certain policies for all listed companies. Also the Companies Act, 2013 requires the Company to formulate few policies. All our corporate governance policies are available on our website http://www.arshiyalimited.com/corporate-governance.html. The Policies are reviewed periodically by the Board and updated based on need and new compliance requirement.

ix.) Directors and Key Managerial Personnel Appointment and Resignation

Board of Directors of the Company has an optimum combination of Promoter Directors and Non-Executive Independent Directors, who have in depth knowledge of the business and industry.

During the year review Prof. G Raghuram has resigned from the Board effective May 18th, 2017 and Mr. T. S. Bhattacharya has joined the Board of your Company as an (Additional) Independent Director w.e.f. May 24th, 2018. In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Company's Articles of Association, Mr. Ajay S Mittal - Managing Director retires by rotation at the ensuing Annual General Meeting and being eligible he has offered himself for re-appointment. Your Board recommends his reappointment.

Brief details of the Director proposed to be appointed / Re - appointed as required under Regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 is provided in the notice of the Annual General Meeting and forms an integral part of this Annual Report.

x.) Committees of the Board

Currently the Board have Five Committees namely Audit Committee, Nomination and Remuneration Committee, Share Transfer, Investor Grievances & Stakeholders Relationship Committee, Corporate Social Responsibility Committee and Committee of Directors. A detailed note on Board and its committees is provided in the corporate governance repo

section of this Annual Report.

xi.) Significant and material orders passed by the regulators or courts

There are no significant and material orders passed by the Regulators or Courts or Tribunals that would impact the going concern status of the Company and its future operations.

xii.) Extract of Annual Return

In accordance with Section 92 and Section 134 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, an extract of Annual Return in Form No. MGT-9 is appended as an Annexure- III to the Board’s Report.

xiii.) Internal control systems

- Internal Control systems and their adequacy

Your Company has an effective internal control and risk mitigation system, which are constantly assessed and strengthened with new/ revised standard operating procedures. The Company’s internal control system is commensurate with its size, scale and complexities of its operations. The internal audit is entrusted to M/s. M. A. Parikh & Co., Chartered Accountants, a reputed firm of Chartered Accountants. The main thrust of internal audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry.

The Audit Committee actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Company has a robust Management Information System, which is an integral part of the control mechanism.

The Audit Committee, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken by the management are presented to the Audit Committee. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee.

- Internal Controls over financial reporting

Your Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. During the year such controls were tested and no reportable material weakness in the design or operations were observed. The Company has policies and procedures in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the adequacy and completeness of the accounting records and the timely preparation of reliable financial information.

The Company has adopted accounting policies which are in line with the accounting standards and the Act. These are in accordance with the generally accepted accounting principles in India.

The Company has a robust financial closure, certification mechanism for certifying adherence to various accounting policies, accounting hygiene and accuracy of provisions and other estimates.

xiv.) Directors' responsibility statement

To the best of knowledge and belief and according to the information and explanations obtained by them, the Board pursuant to Section 134 (5) of the Companies Act, 2013, confirm that:

a.) In the preparation of the annual accounts for the year ended March 31, 2018, the applicable accounting standards have been followed and no material departures have been made from the same.

b.) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for that period.

c.) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d.) They have prepared the annual accounts on a going concern basis.

e.) They have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

f.) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

4. AUDIT AND AUDITORS' REPORT

i.) Statutory Auditors

M/s. Chaturvedi & Shah, Chartered Accountants, was appointed as Statutory Auditors of the Company for a period of five year from the conclusion of 36th Annual General Meeting till the conclusion of 41st Annual General Meeting to be held in the year 2022, subject to ratification by shareholders at the general meeting or as may be necessitated by the Act from time to time. Accordingly, the appointment of M/s. Chaturvedi & Shah is being placed before the shareholders for ratification.

Auditors' Report Management's response to the qualifications in the Auditors' Report is as under: Audit Report on Standalone Financial Statement a. In respect of Non - adherence to repayment schedule of EARC and non-provision of penal interest of ' 1,065.92 lakh for the year ended March 31, 2018 as referred in Point (i) of Audit Report.

Though EARC has charged the penal Interest to the company, the penal interest rate was under further negotiation with the EARC in respect of waiver of penal interest and management is hopeful of waiver/reversal of the same. Therefore no provision of penal interest amount has been made in the books of accounts. With respect to the non-adherence of repayment schedule, since Company is yet to receive communication from EARC for conversion of the defaulted debt/ interest repayment obligations into equity, the Company continues to classify the restructured rupee loan in noncurrent and current borrowings.

b. In respect of non-reversal of settlement gain of Rs,1,719.59 lakh and not accrued interest amounting to Rs, 237.50 lakh in compliance with repayment schedule as per supplement consent terms as referred in Point (ii) of Audit Report.

The Company has made partial payment under the consent terms and is under active negotiations with the NBFC for extension of time for balance outstanding amount. Moreover in the revised consent terms executed between the company and NBFC, past settlement gains are not mentioned yet. In view of the stated facts the company has not reversed the settlement gain recognized initially.

c. In respect of Invocation of Corporate Guarantee of one subsidiary and no accounting impact of the same as referred in Point (iii) of Audit Report.

The subsidiary has submitted the compromise proposal to the lenders for resolution of the debts by way of debt restructuring which is at advanced stage of acceptance by the respective lender, therefore the company do not envisage any liability on the same and considers it prudent not to provide for it at this stage. The company will re-assess the outcome of the same in forthcoming quarterly reporting and give necessary effect in the books of accounts, if any.

d. In respect of non-depositing of Tax deducted at source of Rs, 256.43 lakh and interest on tax deducted at source amounting to Rs, 612.00 lakh, refer point no (vii) (a) of Annexure “A"

The company is coming out of severe financial crunch and have paid large amounts of old outstanding statutory dues during the year ended 31st March, 2018 and the management is hopeful to pay all the remaining statutory dues on priority basis. Moreover in cases where the vendors/services providers/employees have paid the TDS dues at their own, the company have reimbursed these amounts to the respective vendor/service provider/employees and have maintained necessary documents in this regard for statutory compliances.

e. In respect of defaults in repayment of outstanding dues to Financial Institution, Bank and NBFC, refer point no

(viii) of Annexure “A"

The company has made substantial repayment as agreed in amortization schedule of Restructuring Agreement (RA), sanction letter and consent terms with other lenders during the year ended March 31, 2018. Since the company is not in receipt of any adverse notice from any of the lenders (Financial Institutions, Bank and NBFC) the company does not foresee necessity for any provision for the same at this stage as the company is hopeful of fulfilling its repayments obligations to lenders in future considering the various measures taken for assets monetization and new business development.

Audit Report on Consolidated Financial Statement

a. In respect of Non adherence to repayment schedule of EARC and non-provision of penal interest of Rs, 1,099.43 lakh for the year ended March 31, 2018 as referred in Point 7.1 of Audit Report

Though EARC has charged the penal Interest to the Group, the penal interest rate/amount is not agreed by the Group. The Group is negotiating with the EARC for waiver of penal interest and is hopeful of waiver/reversal of the same. Therefore no provision of penal interest amount has been made in the books of accounts. With respect to the nonadherence of repayment schedule, since company has not received any communication from EARC for conversion of the defaulted debt/interest repayment obligations into equity, the company continue to classify the restructured rupee loan in non-current and current borrowings.

b. In respect of non-reversal of settlement gain of Rs, 1719.59 lakh and not accrued interest amounting to Rs, 237.50 lakh in compliance with repayment schedule as per supplement consent terms as referred in Point 7.2 of Audit Report

The Parent Company has made partial payment under the consent terms and is under active negotiations with the NBFC for extension of additional time for balance amount payment. Moreover in the revised consent terms executed between the parent Company and NBFC, there is no mention of past settlement gains. In view of the stated facts the Parent Company has not reversed the settlement gain recognized earlier.

c. In respect of revocation of Corporate Debt Restructuring (CDR) package in July, 2015 in subsidiaries and these subsidiaries continuing to account for the interest on such borrowings at interest rate prescribed in CDR package instead of original loan documents as reffered in point no. 7.3 of Audit Report.

Post CDR exit, lenders are entitled to exercise the rights and remedies available under the original loan documents. However majority of borrowings of the Group had already been assigned to the EARC and balance borrowings are in the process of either assignment to EARC or sometime settlement with respective lenders. In the absence of any communication from these lenders, the Group has not provided for additional interest (difference between CDR package and as per original sanction letter) from CDR cut-off date.

ii.) Cost Auditor

As per the requirement of Central Government and pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company has been carrying out audit of cost records. The Board of Directors, on the recommendation of Audit Committee, appointed M/s. Prashant Karlekar & Associates, Practicing Cost Accountants (Firm Registration No. 16075) as Cost Auditors to audit the cost accounts of the Company for the financial year 2017-18 at a remuneration of Rs, 60,000/- (Rupees Sixty Thousand only) plus applicable taxes and reimbursement of out of pocket expenses. The Board has approved the remuneration payable to the Cost Auditors subject to approval of the shareholders at the ensuing Annual General Meeting.

Auditors' Report There is no qualification in the Cost Audit Report. iii.) Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made thereunder, the Company has appointed M/s. Aabid & Co. Company Secretaries to undertake the Secretarial Audit of the Company for the Financial Year 2017-18. The Secretarial Audit Report for the Financial Year 2017-18 forms part of this Annual Report as an Annexure-IV to the Board's Report. Further, the secretarial Auditor has also certified that your Company has complied with the applicable Secretarial Standard, i.e. SS-1 and SS-2.

Secretarial Auditors' Report

There are no qualifications in the Secretarial Audit Report

5. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company sincerely believes that growth needs to be sustainable in a socially relevant manner. Today’s business environment especially in India therefore demands that corporates play a pivotal role in shouldering social responsibility. Your Company is committed to its endeavour in social responsibilities for benefit of the community.

Under the Corporate Social Responsibility (CSR) initiative of the Company 'Arshiya Cares’, your Company has pledged to join hands with organizations who are working towards finding simple solutions to the infrastructure problems that India faces.

As per the provisions of the Companies Act, 2013, the Company was not required to make a mandatory spending for the CSR Activities. The CSR policy is available on the website of the Company at http://www.arshiyalimited.com/arshiya/assets/pdf/csr-policy_120160620105217.pdf

6. HUMAN RESOURCES

Building people capabilities and providing them platforms and opportunities to grow and spread their wings have always been a unique strength of our organization. While on the one hand, your Company is committed in strengthening its human resources by induction of experienced and competitive professionals, on the other hand your Company is formulating appropriate policies, systems and schemes which will create adequate opportunities for growth in career and create a working environment which enhances productivity. The Company has a structured induction process at all locations and management development programs to upgrade skills of managers. Objective appraisal systems based on Key Result Areas (KRAs) are in place for all the employees.

The Company is committed to nurturing, enhancing and retaining top talent through superior Learning and Organizational Development. This is a part of Corporate HR function and is a critical pillar to support the organization’s growth and its sustainability in the long run. The Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business.

Your Company continues to enjoy cordial and harmonious relations and not a single man hour was lost on account of any Industrial disturbance during the year 2017-18.

Further statutory disclosures w.r.t. Human Resources are as under:

i.) As required by the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has formulated and implemented a policy on Sexual Harassment at workplace with a mechanism of lodging complaints. Its redressal is placed on the intranet for the benefit of its employees. During the year under review, no complaints were reported to the Board.

ii.) Information pursuant to remuneration as per Section 197(12) of the Companies Act, 2013 read with Rule 5(1) & 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of Board Report and is as annexed as an Annexure - V.

None of the employees listed in the said Annexure is a relative of any director of the Company. None of the employees hold (by himself or along with his spouse and dependent children) more than two percent of the equity shares of the Company.

Key Managerial Personnel

7. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is presented in a separate section forming part of the Annual Report.

8. RISK MANAGEMENT

Tough it is not possible to completely eliminate various risks associated with the business of the Company, Your Company is well aware of risks associated with its business operations and various projects under execution. The management is making efforts to minimise such risks on the operations of the company. The Company has established a well - defined process of risk management which includes identification, analysis and assessment of various risks, measurement of probable impact of such risks and a strong mechanism to deal with potential risks and situation leading to rise of risks in an effective manner.

The Company has put in place various internal controls for different activities to minimise the impact of various risks. Further as mandated by the Companies Act the Company has implemented the Internal Financial Controls to ensure proper control over financial reporting.

9. HEALTH, SAFETY AND ENVIRONMENT

As a responsible corporate citizen, your Company lays considerable emphasis on health, safety aspects of its human capital, operations and overall working conditions. Thus being constantly aware of its obligation towards maintaining and improving the environment, all possible steps are being taken to meet the toughest environmental standards on pollution, effluents, etc. across various spheres of its business activities.

Conservation of Energy: The operations of the company involve low energy consumption. Adequate measures have been implemented to conserve energy such as -

- Roof of the warehouses at our FTWZs have been designed with MR24 standards with roof insulation which gives temperature variation of 8Degree with ambient temperature. A provision of installation of solar panels will be made on the roofs to generate renewable energy in all new warehouses.

- Orientation of the warehouse buildings has been done in such a way that there is less heat transmission resulting in saving the electricity consumption by minimizing heat loss in the HVAC system.

- Ridge ventilators are installed at the roof of all WHs, whereby there is no need of power run turbo ventilators, which saves the huge amount of power.

- Cold rooms are having the best quality insulations in roofs/sides/top and floor so as to ensure no leakage of cooling and thus saving a lot of power. The doors of the cold rooms have been installed with air curtains so that during operation, internal temperatures is maintained without any loss of cooling.

- The central control room have been installed with the control panels which controls the temp of cold rooms and monitor automatically so to achieve the pre-set temperature requirement. The chiller units are also centrally controlled.

- Office air conditioning system is having VRV units, which adjust the power requirement as per the required heat load. This saves a lot of power requirement.

- All peripheral and yard lighting is having auto on and off system, set with the timings, which saves lot of wasteful energy.

- The docking doors are placed to ensure the minimum run by the fork lifts, which reduces large power required for recharging.

Sewerage treatment plant: Company has installed sewerage treatment plant for reuse of water generated from toilet. After treatment, water is used for the gardening purpose.

EHS Policy: Site specific Environment Health and Safety policy is in place. Risk assessment analysis and emergency response plans are on ground. Dedicated Safety team audits the working & facility and train staff on all the aspects of safe working.

10. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo etc. are furnished in "Annexure-VI" which forms part of this Report.

APPRECIATION

Your Directors wish to place on record their appreciation for the assistance, support and co-operation received from Government of India, the State Governments and other Government agencies and departments, investors, bankers, financial institutions and all other stakeholders.

Your Directors also wish to place on record their deep sense of appreciation for the committed services by the executives, staff and workers of the Company.

For and on behalf of the Board of Directors of Arshiya Limited

Ajay S Mittal Archana A Mittal

Chairman and Managing Director Joint Managing Director

DIN: 00226355 DIN: 00703208

Place: Mumbai

Dated: May 24th, 2018