aro granite industries ltd Directors report

The Directors have pleasure in presenting the 34thAnnual Report together with Audited Accounts of the Company for the year ended on 31st March 2022.

FINANCIAL RESULTS

	(Rs. in Lakhs)	(Rs. in Lakhs)
	31.03.2022	31.03.2021
Gross Profit before Depreciation	2351.31	1904.66
Depreciation	1273.74	1106.90
Profit before Tax	1077.57	797.76
Provision for Tax	-	-
Current	190.57	133.16
– MAT Credit	(190.57)	(133.16)
– Deferred	186.98	192.95
Surplus available for appropriation	890.59	604.81
Dividend (including Dividend Tax)	-	-
Amount transferred to General Reserve	-	-
Surplus carried to Balance Sheet	890.59	604.81

WORKING RESULTS

The Financial Year 2020-21 ended strong with a superb last Quarter. However, the challenges of COVID amplified in Q1 2022 with COVID second wave hitting India extremely hard. Tamil Nadu was one of the last states to announce restrictions and this cased COVID numbers to Spike. Many workers fearing Lockdowns like 2020 returned to home towns and there was a Shortage of workers. Our Hosur factory is an EOU and Jaipur is in a SEZ hence we work under lesser restrictions. We were working at 30-40% capacity due to workers shortage. This impacted our new Quartz project as well. Jaipur on the other hand had sufficient labour to operate at high capacity as the work force required is smaller. The lockdown in both North and South greatly affected our purchases of raw material as most quarries were closed well beyond the lockdown as they faced severe labour shortages. Many quarries with 50+ workers were operating with only 15% of the staff and it became a very slow process.

In July the shipping rates crossed $9,000 from Chennai to most US ports. With most granite containers being valued between $9000-$18,000 dollars the cost of sea freight was anywhere between 50% to 33% of the costs. Customers with long term shipping contracts were better off but most smaller companies were relying on spot rates as in the first half of 2021 the best way to get containers early was to accept spot rates. This caused a disruption in our sales. By August the rates to most parts of Europe also crossed USD 8500 which resulted in close to 250 Containers being sold and waiting for Empty containers to get dispatched. This "Sold Inventory" resulted in further orders being delayed or reduced in quantity and many Budget colours were no longer in demand or being approved for shipments. By October the Availability of containers improved drastically and the higher rates of upto USD 10500 per container was being accepted by many customers. Budgeted colours were purchased on a need be stock basis and our sales in Budgeted colours dropped drastically. Customers focused more on High end as the freight rate in High end is more flexible as it is a smaller component of the total landed cost.

The container issues (world supply chain crisis) continued into Q4, with container rates being 4-5x of 2020. To further intensify the issues the transit times increased to 2-3x. This was mainly due to congestions at various ports casing container roll overs. As our payments are calculated based on the shipping timelines, there were delays in receiving the payments. Typically, the lead time from India to East Coast USA was 32 days, however in Q4 that reached up to 95 days. Despite the many challenges, we have been growing our business and we see an uptake in our Quartz unit and as more and more colours are introduced in Jaipur we see our sales growing. We have taken up expansion on the Jaipur unit as per the Master Plan layout we prepared in 2019. This expansion was also delayed by 2 months due to Semi conductor shortages at our suppliers end and then delayed shipping time due to the on going shipping Crisis. The New multiwire is installed and operational.

DIVIDEND

Your directors have not recommended any dividend for the year 2021-2022.

INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

During the year amount of Rs 3,25,822/- for the Financial Year 2013-14 transfer to Investor Protection Fund under sub-section (2) of section 125 of the Companies Act 2013 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.

FIXED DEPOSIT

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 at 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.

DIRECTORS

During the year Shri Rahul Gupta, Independent non-executive Director resigned from the Board. Board acknowledges the invaluable contributions made by the Shri Rahul Gupta during his tenure and appreciates his long association with the Company.

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 control to be followed by the Company have been laid down and that such internal financial control 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 been re-constituted. 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 Auditor 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 2021-22 to conduct the Secretarial Audit. The Secretarial Audit Report along with the Annual compliance Secretarial Audit Report under SEBI Regulation for the year 2021-22 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 2021-2022. Internal Audit report does not contain any qualifications, reservations or adverse remark.

COMPLIANCE WITH SECRETARIAL STANDARDS

Compliance of Secretarial Standards on Meeting of Board of Directors (SS-1) and General Meeting (SS2) issued by Institute of Company Secretary of India has been adopted by the Company.

PRACTISING COMPANY SECRETARYS CERTIFICATE ON CORPORATE GOVERNANCE

As required by SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Practising Company Secretarys Certificate on Corporate Governance is enclosed as Annexure III to the Boards Report. The Auditors Certificate for the year 2021-22 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 and form part of this report and can be accessed at 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 2022. Employed throughout the financial year, ended 31st March 2022 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 Kumar Arora	63 Years	B. Sc.	35 Years	03.05.1988	Managing Director	18487844	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 Kumar Arora, Managing Director	597.597
2 Shri Sundareshwara G Sastry	6.788
3 Shri Dinesh Chandra Kothari	6.303
4 Shri Rahul Gupta	4.525
5 Smt. Sujata Arora	5.980
6 Smt. Vinita Sood	7.596
7 Shri Sahil Arora, Whole Time Director	140.204

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 Kumar Arora, Managing Director	11.61
2 Shri Dinesh Chandra Kothari	10.26
3 Shri Rahul Gupta	-31.71
4 Smt. Sujata Arora	37.04
5 Smt. Vinita Sood	14.63
6 Shri Sahil Arora, Whole Time Director	50.62
7 Shri Sundareshwara G. Sastry	-2.33
8 Shri Sabyasachi Panigrahi, Company Secretary	18.31
9 Shri M. Madangopal CFO	0.13

3. The percentage increase in the median remuneration of employees in the financial year: 0.58

4. The number of permanent employees on the roll of Company: 319

5. Average percentile increase already made in the salaries of employees other than the managerial personnel in the financial year ended 31st March 2022 was 4.27%

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, 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 Seven Board Meetings held during the financial year via video conferencing.

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 CONTROL

The Company has in place adequate internal financial control with reference to financial statements and no material reportable weakness was observed in the system. Further, the Company has in place adequate internal financial control 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.

LISTING

The Equity Shares of the Company are listed in BSE Limited and National Stock Exchange of India Limited. Listing fees for the year 2022-2023 have already been paid to BSE Limited and National Stock Exchange of India Limited.

ACKNOWLEDGEMENT

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.