Aro Granite Industries Ltd Directors Report.
The Directors have pleasure in presenting the 31stAnnual Report together with Audited Accounts of the Company for the year ended on 31st March 2019.
|(Rs. in lacs)|
|Gross Profit before Depreciation||2078.10||993.63|
|Profit before Tax||1252.66||128.60|
|Provision for Tax||-||-|
| MAT Credit||-||-|
|Surplus available for appropriation||971.11||117.33|
|Dividend (including Dividend Tax)||184.45||-|
|Amount transferred to General Reserve||-||-|
|Surplus carried to Balance Sheet||786.66||112.35|
This year has been another tough year for the granite industry in India. Being the largest processed granite exporter in India our business was also impacted by the macro headwinds. While our revenue declined by 14.43% from Rs.201Cr in FY2018 to Rs.172Cr in FY2019, our net profit increased by 729.91% to Rs.9.71Cr in FY2019 from Rs. 1.17Cr in FY2018. The decline in revenue was largely on account of change in our strategy of focussing only on profitable customers and geographies. We also shifted our focus to sourcing colors which have demand in market. As we stopped slow moving shades which had low margins, this resulted in reduction in our volume and sales numbers. The profitability improved largely owing to strategy of doing business with customers and geographies with minimum margin, and due to our cost cutting initiatives. Our Cut-to-size segment is performing well and has contributed 10% in revenue during the year. Cut-to-size is a value-added product and commands higher margin. These jobs are very labour intensive and require a high level of precision and quality finish. We have been able to differentiate our offerings, and this has allowed this segment to profitably scale up. However, since the sales are project specific, it is difficult to forecast demand and challenging to maintain high utilisation levels. We have also started processing quartzite from our Hosur facility. Granite industry is also facing tough competition from engineered stone over the last few years. Our business has been also impacted due to this big trend shift towards engineered stone.
During the year, we also started the construction of our Jaipur plant to process granite slabs capacity of 1,50,000 square meters. We set up this plant to process the granite slabs being sourced from Rajasthan. Our plant is located in Mahindra world city SEZ Jaipur and shall be used for export market only.
Sourcing of raw granite blocks was another big challenge for us during the year. In last couple of years granite quarries are being shut down in large numbers due to environmental clearance in Tamilnadu and Karnataka. Last year the enforcement was much stricter and forced closure of many quarries, which in turn further aggravated the raw material sourcing problem. To reduce the dependability from Tamilnadu and Karnataka we have increased sourcing from Jaipur and import markets like Brazil, Norway, Finland, Africa, Iran and Ukraine.
Since our unit is an 100% EOU, it is exempt from GST. However, the way GST regime is structured we need to pay GST upfront and file for refunds. In the beginning of the year, our business was impacted materially due to delay in refunds. Our working capital was stuck in the system and we faced a liquidity crunch. The situation has improved now and GST refunds and process is smoother now.
Your Directors have recommended a dividend of Re.1/-(i.e.10% ) per Equity Share of Rs 10/-each for the Financial year ended 31st March 2019 amounting to Rs 184.45Lacs (inclusive of tax of Rs 31.45 Lacs).The Dividend payout is subject to approval of members at the ensuing Annual General Meeting.
The dividend will be paid to the members whose name appear in the Registrar of Members as on 31.08.2019 and in respect of shares held in dematerialised form, it will be paid to members whose name is furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited, as beneficial owners as on that date.
INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
During the year amount of Rs 205587 /- for the Financial Year 2010-11 transfer to Investor Protection Fund under sub-section (2) of section 125 of the Act and IEPF (Accounting, Audit, Transfer and Refund) Rules 2016.Shri Sabyasachi Panigrahi, Company Secretary is the Nodal Officer Appointed by the Company under the Provisions of the IEPF Act.
The Company has not accepted any fixed deposit from the public.
LOANS, GUARANTEES AND INVESTMENTS
The Company has not granted any Loans, Guarantees and made any Investments during the year.
RELATED PARTY TRANSACTIONS
All contracts/arrangements and transactions entered by the Company with related parties were in ordinary course of business and on arms length basis. Your Directors draw attention of the members to Notes to accounts of financial statement which sets out related party disclosures. The Related Party Transactions Policy as approved by the Board is available on the website of the Company www.arotile.com.
There was no change in the Board of the Company during the year.
DIRECTORS RESPONSIBILITY STATEMENT
As required under Section 134(3)(c) of the Companies Act, 2013, your Directors state that:
a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
b) the accounting policies have been selected and applied consistently and judgments and estimates made 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 profit and loss of the Company for that period;
c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the said Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the annual accounts have been prepared on a going concern basis;
e) the internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively; and
f) the proper systems to ensure compliance with the provisions of all applicable laws have been devised and that such systems were adequate and operating effectively.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Corporate Social Responsibility Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company which has been approved by the Board. The CSR policy may be access from the website of the Company i.e. www.arotile.com. The Annual Report on CSR activities is annexed herewith marked as Annexure I.
AUDITORS AND AUDITORS REPORT
(a) Statutory Auditor
M/s VAPS & Company., Chartered Accountants, New Delhi was appointed as the Statutory Auditors of the Company for a period of Five Years from the Conclusion of Twenty Ninth Annual General Meeting. The Notes on the financial statements referred to in the Auditors Report are self-explanatory and do not call for any further comments. The Auditors Report does not contain any qualifications, reservations or adverse remark.
(b) Secretarial Auditor
Practising Company Secretary Ms. Latika Jetley (CP No. 3074) was appointed as the Secretarial Auditor by the Board for the financial year 2018-19 to conduct the Secretarial Audit. The Secretarial Audit Report along with the Annual compliance secretarial Audit Report under SEBI Regulation for the year 2018-19 is annexed herewith as Annexure II. The Secretarial Audit Report does not contain any qualifications, reservations or adverse remark.
(c) Internal Auditor
The Board had appointed M/s Sreekantha & Co., Chartered Accountants, Hosur as the Internal Auditor of the Company for the year 2018-2019.
COMPLIANCE WITH SECRETARIAL STANDARDS
Compliance of Secretarial Standards on Meeting of Board of Directors (SS-1) issued by Institute of Company Secretary of India has been adopted by the Company
AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE
As required by SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Auditors Certificate on Corporate Governance is enclosed as Annexure III to the Boards Report. The Auditors Certificate for the year 2018-19 does not contain any qualifications, reservations or adverse remarks.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the period under review, there were no significant and material orders passed by the Regulators or courts or tribunals which would impact the going concern status of the Company and its future operations.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required as per the provisions of Companies Act 2013 and Rules there under is annexed herewith in Annexure IV and form part of this report.
EXTRACT OF THE ANNUAL RETURN The Extract of annual return of the Company in form MGT 9 is annexed herewith as Annexure V to this report. Web link www.arotile.com
PARTICULARS OF REMUNERATION
Statement of particulars of employee pursuant to the provisions of section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 for the year ended 31st March 2019.
Employed throughout the financial year, ended 31st March 2019 in receipt of remuneration not less than One Crore two Lakh rupees per annum.
|Name||Age||Qualification||Experience||Date of Commencement Employment||Designation||Remuneration||Last Employment|
|Mr. Sunil K Arora||60 Years||B.Sc||32 Years||03.05.1988||Managing Director||1,65,53829||Since Inception|
Pursuant to the provisions of Section 197 (12) of the Companies Act, 2013 read with Rule 5 of Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, the details regarding the ratio of remuneration of each Director to the median employees remuneration and such other details as required therein are as under:
1. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year: The Board of Directors of the Company comprises of Non-Executive Directors who has been paid commission in the form of Remuneration and sitting fee from the Company.
|SI. No.||Name||Ratio to median remuneration|
|1||Shri Sunil K Arora, Managing Director||973.755|
|2||Shri Sundareshwara G Sastry||13.529|
|3||Shri Dinesh Chandra Kothari||10.294|
|4||Shri Rahul Gupta||12.941|
|5||Smt. Sujata Arora||8.824|
|6||Shri K Raghavendra Acharya, Executive Director||93.155|
|7||Smt. Vanita Sood||5.294|
|8||Shri Sahil Arora||134.169|
2. The percentage increase in remuneration of each Director, Chief Financial Officer, Company Secretary, in the financial year: The Board of Directors of the Company comprises of Non-Executive Directors who has been paid Commission and sitting fee from the Company.
|SI. No.||Name||% Increase in Remuneration|
|1||Shri Sunil K Arora, Managing Director||0.40|
|2||Shri Dinesh Chandra Kothari||169.23|
|3||Shri Rahul Gupta||0.00|
|4||Smt. Sujata Arora||0.00|
|5||Shri K Raghavendra Acharya, Executive Director||0.00|
|6||Smt. Vanita Sood||-55.00|
|7||Shri Sabyasachi Panigrahi, Company Secretary||0.00|
|8||Shri Sahil Arora, Whole Time Director||118.58|
|9||Shri Sundareshwara G. Sastry||130.00|
|10||Shri S Balaji CFO||0.00|
3. The percentage increase in the median remuneration of employees in the financial year: (-) 32.01.
4. The number of permanent employees on the roll of Company: 148
5. Average percentile increase already made in the salaries of employees other than the managerial personnel in the financial year ended 31st March 2019 was 1.47%
6. The Company affirms that the remuneration is as per the remuneration policy of the Company.
CORPORATE GOVERNANCE including details pertaining to Board Meetings, Nomination and Remuneration Policy, Audit Committee and Vigil Mechanism
Your Company re-affirms its Commitment to the highest standards of Corporate Governance practices. Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, a Management Discussion and Analysis, Corporate Governance Report and Auditors Certificate regarding compliance of conditions of Corporate Governance are made a part of this Annual Report.
The Corporate Governance Report which form part of this report also covers the following: a) Particulars of the Four Board Meetings held during the financial year under review. b) Policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior Management. c) The details with respect to composition of Audit Committee and establishment of Vigil Mechanism.
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls with reference to financial statements and no material reportable weakness was observed in the system. Further, the Company has in place adequate internal financial controls commensurate with the size and nature of its operations. The Company also has robust Budgetary Control System and Management Information System (MIS) which are backbone of the Company for ensuring that your Companys assets and interests are safeguarded.
The Equity Shares of the Company are listed in BSE Limited and National Stock Exchange of India Limited. Listing fees for the year 2019-2020 have already been paid to BSE Limited and National Stock Exchange of India Limited.
Your Directors wish to thank and acknowledge the Banks, Government Authorities, Dealers, Suppliers, Business Associates and the Companys Valued Customers for their assistance and cooperation and the esteemed Shareholders for their continued trust and support. The Directors also wish to acknowledge the committed and dedicated team of Aro Granite whose unstinted work, efforts and ideas have taken the Company on a path of steady growth and development.
|For and on behalf of the Board|
|Place: Hosur||Sunil K Arora||Sujata Arora|
|Date: 11.05.2019||Managing Director||Director|
ANNEXURE III TO THE DIRECTORS REPORT
Auditors Certificate on Corporate Governance To, The Members, Aro granite industries limited,
We have examined the compliance of conditions of Corporate Governance by Aro granite industries limited, for the year ended 31stMarch 2019, as stipulated in Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above-mentioned Listing Regulations.
We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.
|For M/s VAPS & Company||Place: Hosur|
|Chartered Accountants,||Date: 11.05.2019|
|Firm Reg. No. 003612N|
|Partner M No. 082515|
ANNEXURE IV TO THE DIRECTORS REPORT
Particulars of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo required under the Companies (Accounts) Rules 2014
(i) CONSERVATION OF ENERGY
The plant installed by the Company is of latest technology and energy efficient. Power consumption of the Company is very low. During the year under consideration a total 1,00,94,889 units were consumed and the per Sq. mt. power consumption cost only Rs. 169.25
(ii) TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
Company has not imported any technology. Effective pollution control system has already been installed in the factory. Total Quality Management System has already implemented. Due to its consistent efforts the Company could achieve improvement & development in the quality of the product. It has also achieved process development, cost reduction etc.
(iii) FOREIGN EXCHANGE EARNINGS AND OUTGO:
Foreign Exchange earned in terms of actual inflows during the year and Foreign Exchange outgo during the year in terms of actual outflows.The details regarding foreign exchange earnings and outgo are given in Notes N and O.