Aro Granite Industries Ltd Directors Report

The Directors have pleasure in presenting the 38th Annual Report together with Audited Accounts of the Company for the year ended on 31st March 2026.

FINANCIAL RESULTS

Amount in ^ lakh

Particulars	31.03.2026	31.03.2025
Gross Profit before Depreciation	(179.33)	308.95
Depreciation	982.72	994.12
Profit before Tax	(1162.05)	(685.17)
Provision for Tax	-	-
Current	-	-
- MAT Credit	-	-
- Deferred	19.70	(42.89)
Surplus available for appropriation	(1181.75)	(642.28)
Dividend (including Dividend Tax)	-	-
Amount transferred to General Reserve	-	-
Surplus carried to Balance Sheet	(1181.75)	(642.28)

WORKING RESULTS

The financial year 2025-26 was one of the most challenging years for the global natural stone industry. The Company operated in an environment marked by weak construction demand, an extraordinarily volatile U.S. trade policy environment, a Middle East conflict that disrupted global petrochemical supply, and continued uncertainty in global supply chains. These external developments significantly affected export demand, customer purchasing behaviour, raw material costs and working capital across the industry.

The United States remained the Companys largest export destination, accounting for approximately 65% of total exports, while Europe contributed around 25%. Consequently, developments in U.S. trade policy in particular had a direct and material bearing on the Companys performance through the year.

1. Global Market Conditions

Demand in the Companys key export markets remained subdued for much of the financial year, as the cumulative effect of U.S. tariff measures fed through into higher consumer prices for imported construction materials. This tariff-driven inflation added to the cost of renovation and construction projects in the United States and contributed to more cautious purchasing behaviour among customers through the year.

2. Impact of U.S. Trade Policy

The dominant development of the year was the introduction, escalation, and eventual invalidation of the U.S. reciprocal tariff regime.

Reciprocal tariffs on Indian exports were introduced in April 2025 at 27%, and were progressively revised over the following months, rising to a cumulative rate of approximately 50% by August 2025 once an additional duty linked to Indias purchases of Russian oil was layered on. For most of the financial year, this left the Company at a distinct disadvantage against competing origins. Vietnam, a key competing source for engineered quartz, was initially assigned a comparable rate of 46%, but subsequently negotiated this down to 20% in October 2025 - while Indias rate remained at or near 50% through this period. This gap was compounded by a further, longstanding freight- cost disadvantage: ocean freight from Vietnam to the United States has historically been cheaper than from India, meaning Indian-origin material was disadvantaged on both tariff and logistics cost simultaneously for the greater part of the year. Brazilian quartzite, a competing natural-stone category, secured an outright exemption from Brazils country- specific tariff, though Brazilian granite, marble and slate remained subject to separate duties.

A partial narrowing occurred in February 2026, when a bilateral trade framework between India and the United States reduced Indias reciprocal tariff to 18% and removed the additional Russian-oil-linked duty, briefly bringing Indias rate below Vietnams negotiated 20%. This improvement proved short-lived: on 20 February 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA) - the legal authority under which the entire reciprocal tariff programme, covering India, Vietnam and other trading partners alike, had been imposed - did not authorise the President to levy tariffs. All IEEPA- based tariffs were accordingly terminated with effect from 24 February 2026, and the U.S. administration replaced them with a uniform 10% import surcharge under Section 122 of the Trade Act of 1974, applicable to imports from nearly all countries for up to 150 days. A summary of the tariff position through the year is set out below.

Table: U.S. Tariff Position - India, Vietnam and Brazil, FY 2025-26

Period	India	Vietnam	Brazil (quartzite)	Brazil (granite/ marble/slate)
Apr 2025 ("Liberation Day")	27% reciprocal	46% reciprocal	Not yet targeted	Not yet targeted
Jul-Aug 2025	25%, then +25% oil-linked = 50% cumulative	46% (pre-deal)	Exempted from Brazils additional tariff	Proposed 25% Section 301 duty; combined burden reported up to 50%
Oct 2025	50% (unchanged)	Negotiated down to 20%	Exempt (unchanged)	Unchanged
Feb 2026 (bilateral deal)	Cut to 18%	20% (unchanged)	Exempt (unchanged)	Unchanged
24 Feb 2026 (IEEPA struck down)	Flat 10% Section 122 surcharge	Flat 10% Section 122 surcharge	Likely reverted, pending confirmation	Section 301 duties rest on separate authority - likely unaffected

As a result, the Company faced a genuine and sustained competitive disadvantage against key competing origins for most of FY 2025-26, followed by a brief and ultimately moot improvement, and the year closed with the reciprocal tariff structure that had shaped the entire period struck down by the courts - leaving no lasting structural advantage to point to, only a narrower, temporary, and still-unresolved tariff environment.

Throughout this period, the sheer unpredictability of the applicable tariff structure created additional difficulty for importers. Since shipments from India typically require 55 to 75 days to reach U.S. ports, customers were often unable to determine the landed cost of material at the time of placing orders. Many buyers responded by deferring procurement decisions, postponing shipment schedules and holding lower inventory levels, which contributed to slower order inflows, delayed dispatches and increased pricing pressure over the course of the year.

3. Impact of Middle East Conflict on Raw Material Costs

Toward the close of the financial year, a further disruption emerged in the Companys cost base. On 28 February 2026, the United States and Israel launched military action against Iran, and Iran responded by closing the Strait of Hormuz - a waterway carrying roughly a fifth of the worlds seaborne oil and LNG trade. This triggered an immediate tightening in global petrochemical supply, with early effects on resin markets visible before the financial year closed on 31 March 2026. Polyester resin, which constitutes approximately 60% of the raw material cost of the Companys engineered quartz slabs, is directly exposed to disruption of this nature, and the Company began to see upward cost pressure on this input in the final weeks of the year.

4. Domestic Business Environment

Domestic demand also remained under pressure during the year. In Bengaluru, one of the Companys key domestic markets, the real estate sector continued

to face significant delays in obtaining Occupancy Certificates and related regulatory clearances, including e-khata records, and no-objection certificates from the Fire and Emergency Services Department, the Karnataka State Pollution Control Board, utility providers and other approving authorities. Industry bodies such as CREDAI continued to press for faster approvals through the year, and while the Karnataka government exempted larger residential plots (1,200 sq ft and above, later extended to 2,400 sq ft) from the mandatory Occupancy Certificate requirement in September 2025, delays affecting a large number of existing and mid-sized projects persisted, holding back completions and handovers. This, together with cautious spending by developers and homeowners and increased competition from alternative construction materials, continued to weigh on demand for granite and quartzite products in the domestic market. Pricing remained competitive across several product categories, requiring continued focus on operational efficiency and product mix optimization.

5. Operational Response

Despite these conditions, the Company remained focused on protecting its long-term competitive position, undertaking tighter control over working capital, optimization of production planning, disciplined inventory management, and continued cost rationalization across operations.

6. Outlook and Subsequent Events

As at the date of this report, the U.S. tariff framework remains unsettled. The 10% import surcharge currently in effect under Section 122 authority is temporary, and no durable legal or negotiated framework has yet replaced the reciprocal tariff regime struck down by the Supreme Court.

Separately, the disruption arising from the conflict in the Middle East has intensified materially since the year end. Petrochemical and resin prices rose sharply through March to May 2026 - industry data indicates increases in the range of 30% to 60% across various resin categories over this period - as the Strait of Hormuz remained largely closed for extended stretches and as at the date of this report, the conflict remains unresolved; The Company is actively evaluating alternative sourcing arrangements and pricing pass- through measures in response, and will continue to monitor both the U.S. trade policy environment and the Middle East situation closely given their direct bearing on competitiveness and cost structure in the year ahead.

DIVIDEND

Your directors have not recommended any dividend for the year 2025-26.

INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Company has not declared any dividend in the Financial Year 2017-18 accordingly no transfer need to be done during the year 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 whereas Mr. Ayush Goel, 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.

ANNUAL RETURN

The Annual Return referred to Section 134(3)(a) as per the Companies Act 2013 is available on the website of the Company www.arotile.com

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 and were below the threshold prescribed under Schedule XII of regulation 23 of SEBI LODR Regulations, 2015 during the year. 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, Mr. G Sundareshwara (DIN: 00165762) has resigned as an Independent Director of the Company, with effect from November 11, 2025, due to his increased professional and personal commitments. Consequently, he shall also cease to be the Chairperson of the Audit Committee and Stakeholder Relationship Committee & Member of Nomination and Remuneration Committee and Corporate Social Responsibility Committee of the Company. To fill the vacant position, the Board appointed Mr. Varathan Arul (DIN: 11480624) as an Additional Directors on February 04, 2026 as per the recommendation of the Nomination and Remuneration Committee.

Subsequently, he was appointed as Non-Executive Independent Director upon receiving approval from the members through Postal ballot on March 24, 2026 for a consecutive period of five years effective from February 04, 2026.

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)

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. Alok Mittal & Associates, Chartered Accountants, New Delhi was appointed as the Statutory Auditor of the Company for a period of Five Years from the Conclusion of Thirty Fourth 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

Practicing Company Secretary M/s. S Panigrahi & Associates (CP No. 27507) was appointed as the Secretarial Auditor by the members for a continuous period of Five Years commencing from April 1, 2025 until March 31, 2030 to conduct the Secretarial Audit of the Company.

The Secretarial Audit Report along with the Annual Secretarial Compliance Audit Report under SEBI Regulation for the year 2025-26 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 2025-26 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.

PRACTICING COMPANY SECRETARYS CERTIFICATE ON CORPORATE GOVERNANCE

As required by SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Practicing Company Secretarys Certificate on Corporate Governance is enclosed as Annexure III to the Boards Report. The Auditors Certificate for the year 2025-26 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 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.

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 2026.

Employed throughout the financial year, ended 31st March 2026 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	67 Years	B. Sc.	39 Years	03.05.1988	Managing Director	1,81,85,792	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	Mr. Sunil Kumar Arora, Managing Director	508.425
2	Mr. G Sundareshwara	2.796
3	Mrs. Sujata Arora	4.054
4	Mr. Varathan Arul	1.957
5	Mr. Keshava Murthy Kalasachar	5.732
6	Mr. Sahil Arora, Whole Time Director	119.814
7	Mr. Ashish Jyotindra Bhuta	5.452

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	Mr. Sunil Kumar Arora, Managing Director	(2.73)
2	Mrs. Sujata Arora	31.82
3	Mr. Varathan Arul	100.00
4	Mr. Sahil Arora, Whole Time Director	(0.35)
5	Mr. G Sundareshwara	(50.00)
6	Mr. Keshava Murthy Kalasachar	127.78
7	Mr. Ashish Jyotindra Bhuta	116.67
8	Mr. C. Srinivasan, Chief Financial Officer	(2.40)
9	Mr. Ayush Goel, Company Secretary	66.00

3. The percentage increase in the median remuneration of employees in the financial year: 0.53

4. The number of permanent employees on the roll of Company: 150

5. Average percentile increase already made in the salaries of employees other than the managerial personnel in the financial year ended 31st March 2026. Nil

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.

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 2026-27 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
	(Sunil Kumar Arora)	Sahil Arora
Place: Hosur	Managing Director	Whole Time Director
Date: 15.05.2026	DIN:00150668	DIN: 07970622