Aro Granite Industries Ltd Directors Report.

The Directors have pleasure in presenting the 33rdAnnual Report together with Audited Accounts of the Company for the year ended on 31st March 2021.

FINANCIAL RESULTS

(Rs. in Lakhs)

31.03.2021 31.03.2020
Gross Profit before Depreciation 1904.66 1569.94
Depreciation 1106.90 1052.59
Profit before Tax 797.76 517.35
Provision for Tax
Current 133.16 86.36
- MAT Credit (133.16) (86.36)
- Deferred 192.95 156.72
Surplus available for appropriation 604.81 360.62
Dividend (including Dividend Tax) - (184.45)
Amount transferred to General Reserve - -
Surplus carried to Balance Sheet 604.81 176.17

WORKING RESULTS

FY2020-21 had been a Pandemic Year. With COVID-19 cases bringing most of the world to a complete standstill during various and numerous lockdown periods. The pandemic required Companies to think on their feet and adjust quickly to ever changing environment. Despite the challenges of COVID-19 and losing 1.5 months of sales to lockdown our sales grew from Rs. 177.71 Crores (FY19-20) to Rs. 179.37 Crores with our Net Profit After tax increasing by over 68% from Rs. 3.60 Crores in FY 2019-20 to Rs.6.05 Crores in FY 2020-21.

Our new unit in Jaipur has been a resounding success. The semi-exotic shades coming from the north of India and growing in popularity in many countries especially in North America. With the number of colours/shades from the south being limited for the American Markets, the Northern Colours have helped us grow our volumes by increasing our portfolio of colours. Other Countries as well have started to inquire about the new shades coming from India. Jaipur unit contributed to a sale of Rs 36 Crores and contributed 20% to our total sales.

We had planned to commission our quartz plant with a proposed capacity of 180,000m2 Per Annum by Q42020. The onset of the Pandemic and the restricted travel for the Chinese technicians to come and finalise the setup could not be carried out on time. Seeing the conditions we went ahead with an online setup with Veegoo (machine supplier) helping us through CCTV and Video Conferencing support and we were able to commission the plant in Q42021 with commercial production starting in January 2021. Being an engineered product perfection in quality is demanded. We have been successful in trial production and have started commercial production and exports and gradually scaling up. With the long term association we have with customers around the world, things are looking better for FY21-22 as some customers who have never carried quartz have started to try Quartz Engineered stones only because they have trust in our relatable support and quality

Labour Issues - Once the Country came out of the 45 days of Lockdown there were many issues to be tackled. Primary among those was the acute shortage of Labour. Initially, there was no Rail Service or Road Service and there were many interstate restrictions on travels, hence many of the migrant workers were not able to travel. This shortage of labour not only affected factory operations but also quarry operations, especially in the South of India. This reduced our production capacity in Hosur to a great extent and in Jaipur though to a lesser extent.

Containers - The Labour shortage, Raw material shortage made sales more complicated and to make things worse we went through an unprecedented World Shipping crisis with Containers and Ships in short supply. This led to an exponential increase in container costs. shipping costs (containers) increased by 2-4x to various destinations. Some customers were hesitant to accept these increases, while many accepted the new rates to be the new normal in the short term.

DIVIDEND

Your Directors have not recommended any dividend for the year 2020-2021.

INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

During the year amount of Rs 218175/- for the Financial Year 2012-13 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 there was no change in the directorship of 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 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 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 2020-21 to conduct the Secretarial Audit. The Secretarial Audit Report along with the Annual compliance Secretarial Audit Report under SEBI Regulation for the year 2020-21 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 2020-2021. 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) 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 2020-21 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 2021.

Employed throughout the financial year, ended 31st March 2021 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 62 Years B. Sc. 34 Years 03.05.1988 Managing Director 1,65,64,951/- 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 926.141
2 Shri Sundareshwara G Sastry 12.021
3 Shri Dinesh Chandra Kothari 12.021
4 Shri Rahul Gupta 11.461
5 Smt. Sujata Arora 7.548
6 Shri K Raghavendra Acharya, Executive Director 20.146
7 Smt. Vinita Sood 11.461
8 Shri Sahil Arora, Whole Time Director 161.011

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 0.07
2 Shri Dinesh Chandra Kothari 22.86
3 Shri Rahul Gupta -6.82
4 Smt. Sujata Arora -10.00
5 Shri K Raghavendra Acharya, Executive Director -77.25
6 Smt. Vinita Sood 127.78
7 Shri Sahil Arora, Whole Time Director 26.26
8 Shri Sundareshwara G. Sastry -6.52
9 Shri Sabyasachi Panigrahi, Company Secretary 7.90
10 Shri M. Madangopal CFO 8.89

3. The percentage increase in the median remuneration of employees in the financial year: 0.95

4. The number of permanent employees on the roll of Company: 296

5. Average percentile increase already made in the salaries of employees other than the managerial personnel in the financial year ended 31st March 2021 was 2.54%

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 Five 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 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 2021-2022 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.

For and on behalf of the Board
Place: Hosur Sunil Kumar Arora Sahil Arora
Date: 25.06.2021 Managing Director Whole Time Director