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10 January 2013

Update : Arshiya International Ltd


News update
“ Ajay Mittal, Group Chairman and Managing Director, Arshiya International, in an interview to ET Now clarified that the company is right-sizing and plans to lay off 200 employees out of which 99 employees have been asked to leave.
On financial irregularities in company, Mittal said that allegations are false and baseless.
Mittal said that the company has gone through an audit process and NBFCs who are funding company are confident and not concerned. Financial institutions invested in the company are not worried. It is business as usual and there is no financial problem.
There have been some delays in salary payments and the company will be clearing all salary dues for employees today.
To allay the investors concerns, the company is planning to pump in additional Rs 42 crore in the company”

Quarterly company comes out with nice presentation - “Investor Updates” Company could have updated with comprehensive presentation at this junction.

Company deny "financial irregularities" Promoters are investing 42 crore. As per consolidated financial Fy 2011-12 company has borrowing close to 2095 crore & current liability of 494 crore.

Today’s clarification confirms 200 people fired & delay in payment of salary. To an extent this is conflicting with yesterdays stock exchange update “(company) continue to remain operationally strong.”

Delay in payment of salary indicates strain on working capital. Lay off & delay in salary may lead to low moral to employee. If salaries are getting delayed, there may be instances of delayed payment to creditors too.

Clarification does not states to what extent there is strain on working capital, cause of strain & future action plan to pacify. Clarification is short to clear the ambiguity on current state of affair of company. We recommend to exit / book loss.

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