Management Discussion and AnalysisGranite Industry-Structure and Developments
India is the proud home to vast resources of granite with more than 125 varieties ofdifferent colours and textures such as black, grey, pink, yellow, green, blue, multicoloured etc. These varieties are used to produce monuments, building slabs, titles,surface plates etc. Of these enormous deposits of granites discovered in the country,popular and famous varieties are mainly found in South India.
Granite is a non-scheduled industry and the granite is mostly exported. On realizingthe demand of the Indian color and variety as well as the export potential, Government ofIndia has been encouraging setting up of 100% Export Oriented Units in this sector topromote export of value added granite products.
Export of Granite is freely allowed and is exported mainly to USA, UK, Japan, Germany,Netherlands, Italy, West Asia, Eastern Europe, and Latin America.
Outlook
Year after year the demand for granites, both blocks and finished products, is on therise. The increase in export of blocks and finished products during the last year is anindication of the encouraging signs of market demand.
India, which is blessed with various types of unique colours and large deposits ofgranite, has already claimed its privileged status as the number one Country for granitesso far as color, variety, quality and pricing are concerned. With the availability ofnumber of new found color of granites coupled with skilled & quality labour, Indiawill continue to dominate the granite world in the years to come
Opportunities & Threats for the Indian Granite Industry
The Factors helping the growth of the industry are
1. Introduction of stones for new applications and utilities etc.
2. Spurt in demand for Indian granites worldwide.
3. Increased domestic demand
4. Availability of new deposits of granites with new color, texture etc.
The major threat areas include
1. Non-availability of good quality blocks for processing.
2. Frequent power disruptions and high dependency on diesel affecting the productionand the cost of raw materials and finished goods.
3. Absence of proper infrastructure.
4. Spiraling raw material cost coupled with the increase in other overheads
5. Paucity of Skilled Labour, ever increasing labour cost
Risks and Concerns
The increase in the Raw material cost along with other operating expenses blended withthe stagnation of selling price of the end products will shrink the profit margin .Theincrease in competition at both National and International level may result in lowerprofitability and reduction in selling price. Further unstable currency fluctuations tooaffect the profitability of the Company.
Product wise Performance
India's Export of Granite during the last two years is as follows.
| | | (Rs in Crores) |
| 2009-10 | 2010-11 | % in Growth |
| Total export of Granite products | 4992.75 | 5500 | 10.00 |
| | (approx.) | (approx.) |
| ARC'S Export of Granite Products | 122.67 | 137.48 | 12.07 |
Internal Control Systems and their adequacy
The Company has adequate system of internal control relating to the purchase of RawMaterials, Stores, Consumables and Packing Materials and for the sale of goodscommensurate with the size of the Company and the nature of business.
The system of internal control of the Company is adequate keeping in mind the size andcomplexity of your Company's business. Systems are regularly reviewed to ensureeffectiveness.
Discussion on Financial Performance with respect to operational Performance
The turn over achieved by the Company for the Year ended 31.03.2011 is Rs 151.39 Crorescompared to the Previous Year turnover Of Rs 131.99 Crores showing an increase of 14.70%.The sales in Quantity has also increased from 6,06,131 Sq. Mtrs. to 6,89,384 Sq. Mtrs. TheProduction during the year was 7,22,901 Sq. Mtrs. compared to 5,98,567 Sq. Mtrs. of thelast year. Profit before tax stands at Rs 12.51 Crores against Rs 13.85Crores of lastyear. The Profit after tax is Rs9.49 Crores compared to Rs 10.64 Crores of last year. TheEarning Per Share (EPS) is Rs 9.31against Rs 10.27.
Material developments in Human Resources / Industrial Relations front including thenumber of people employed
The Company continues to invest in training and education of its employees and has beenorganizing various training programme from time to time.
The Company emphasizes training and motivation as it is the key to improveproductivity. Intensive induction program of new recruits and skill based trainingprograms are being carried out. HR policies are being aligned with the current trends inthe market. Various welfare activities and incentives are being carried out for staff andworkers alike making ARO an enjoyable place to be associated with.
The Company maintains cordial relations with its employees and takes all possible carefor their welfare.