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Aro Granite Industries Ltd.

BSE: 513729 Sector: Others
NSE: AROGRANITE ISIN Code: INE210C01013
BSE LIVE 15:40 | 17 Nov 65.55 0.50
(0.77%)
OPEN

65.60

HIGH

68.70

LOW

65.10

NSE 15:31 | 17 Nov 65.35 0.20
(0.31%)
OPEN

65.95

HIGH

67.00

LOW

65.10

OPEN 65.60
PREVIOUS CLOSE 65.05
VOLUME 3683
52-Week high 89.90
52-Week low 57.00
P/E 20.17
Mkt Cap.(Rs cr) 100
Buy Price 0.00
Buy Qty 0.00
Sell Price 65.55
Sell Qty 500.00
OPEN 65.60
CLOSE 65.05
VOLUME 3683
52-Week high 89.90
52-Week low 57.00
P/E 20.17
Mkt Cap.(Rs cr) 100
Buy Price 0.00
Buy Qty 0.00
Sell Price 65.55
Sell Qty 500.00

Aro Granite Industries Ltd. (AROGRANITE) - Chairman Speech

Company chairman speech

Dear Stakeholders

FY2016-17 was a challenging year for natural stone industry. Inspite of many headwindsit has turned out to be a reasonably good year for Aro Granite Industries. We weresuccessful in improving the profitability of our business after a particularly challengingFY2015-16.

Our display warehouse got fully operational during the year which was instrumental forus to remain profitable in this challenging environment. Our volumes fell by 4.17% to 6.2lakh Sqm but our revenue increased by 10.70% to Rs.238 Cr indicating a better productmix. In the Slab segment our revenues increased by 15.40% to Rs 202 Cr during the year.The tiles segment though remained challenging during the year and the revenue dropped by10.40% to Rs 36 Cr. Competitive pricing from other products like engineered stone andporcelain impacted the volumes in Tiles

Our warehouse has given us a competitive edge over our competitors. It helped usincreasing our products under display and in a way it has become our USP. Our clientsreally like the way our products are displayed and we have seen an uptick in slabpurchases by those customers who spend some time at our warehouse. It has also reduced thetime consumed by our clients during selection of slabs across various designs and colours.

During the year we started our CUT-TO-SIZE segment by installing 2 CNC bridge cuttingmachines. We participated in international bids for many real estate commercial projectsand successfully generated business for this division. As a conscious strategy we aregradually ramping up our production so that our team gets used to delivering the rightquality product on time. Many other companies have spoiled their reputation by takinglarge orders and subsequently underperformed in the fulfillment of the orders a scenariowe want to avoid at all costs. We are very optimistic about this segment and over the next2 years aim to scale it to 15-20% of our overall business. The margins in this segment aremuch higher and over time this will help us improve our overall margins.

Business environment was tough during the year. In our exports markets preference forengineered stone (Quartz and Porcelain) dominance of Brazilian granite and declininginterest in coloured materials impacted the prospects of our company. Number of graniteshades in demand has reduced significantly. Earlier there was demand for 40-50 shadeswhich has reduced to only 10-12 shades now. Only the white grey and black colours are invogue as per current trends. The competition in buying blocks of these shades are intenseas good quality blocks in these shades are scarce.

Our business increased in Germany Libya and Japan. We forayed into new market likeSingapore Vietnam Slovakia Serbia and Croatia. The markets in US has been challengingdue to increased competition from Brazilian granite and severe price erosion. This year weshifted our focus to Europe which contributed more than 40% in our revenues. Europe isfavourable market for company as the Brazilian colours are not that popular there and alsogranite is more in demand than quartz.

We took various steps for cost optimisation and one such initiative was to reduce ourpower cost. Our regular power requirement is 5 MWh. Earlier we were buying the entirepower from TNEB at prescribed tariffs . Now we have signed a contract for wind powersupply with a private party under the open access scheme. We are hopeful that this newarrangement is likely to save us Rs.10-11 lakhs a month for 11 months of the year. For themonth of April alone we must draw power from TNEB.

Domestic sales are 8% of our revenue. These sales were impacted during the year bydemonetisation and Kaveri water issue. Protest over the Kaveri water issues impacted themovement of our products and delayed our shipments and raw material sourcing. It alsoimpacted our Inter State DTA sales as we were unable to dispatch trucks to other states.

The outlook for the new year is uncertain. We face challenges in sourcing the rawblocks as it's a seller's market. Globally the Net realisations of processed granite slabsare declining due to the demand shift to engineered stones. The increased competition fromBrazilian granite and the harsh economic environments in some of our core markets makethings challenging. To counter these headwinds we will continue to foray into newermarkets and go deeper in existing markets. We hope that our cost control measures andfocus on new product lines will help us maintain our margins.

Sunil K. Arora

Managing Director