The Directors have pleasure in presenting the 28th Annual Reporttogether with Audited Accounts of the Company for the year ended on 31st March2016.
| || ||(Rs. in lacs) |
| ||31.03.2016 ||31.03.2015 |
|Gross Profit before Depreciation ||1590.32 ||2755.11 |
|Depreciation ||912.08 ||858.75 |
|Net Profit before Tax ||678.24 ||1896.36 |
|Provision for Tax || || |
|Current ||312.46 ||738.47 |
| MAT Credit ||132.39 ||336.43 |
| Deferred ||(87.97) ||(174.53) |
|Surplus available for appropriation ||586.14 ||1668.85 |
|Dividend (including Dividend Tax) ||184.15 ||179.00 |
|Amount transferred to General Reserve ||200.00 ||200.00 |
|Surplus carried to Balance Sheet ||201.99 ||1289.85 |
During the financial year 2015-16 the turnover was declined by 18% to Rs 216.00Crores. This was largely due to fall in the exports by 20% to Rs.202.00 Crores financialyear 2015-2016 as compared to financial year 2014-2015. EBDITA margins also dropped from11.18% in 2014-15 to 9.25% in 2015-2016. This was mainly due to stiff competition fromBrazil irregular supply of rough granite blocks and increasing popularity of engineeredstone i.e. Quartz. Our profitability was impacted due to high competition in our majormarkets especially USA and Poland and extra cost in sourcing raw material from newsources due to closure of traditional quarries in Tamil Nadu. Sales to USA which is amajor part of our total sales was hit by Brazilian exporters which now account for morethan 80% of US granite imports. The depreciation Brazilian currency against US Dollar hasallowed Brazilian exporters to offer heavy discounts. Our sales to Europe were also hitdue to the Euro Depreciating. The situation with the closure of over 100 quarries in TamilNadu has not changed. More than 25 traditional colours in White Cream Ivory and Goldbased are still not available and there is no respite in sight. With the current trendaround the world only Black Grey and White material are selling and the portfolio ofcolours that we can offer has been greatly reduced. Colours like green and brown arealmost out of the market. This has created a spike in the rough block prices and alsolimited the range of shades we can offer to our customers.
In-spite of the tough business conditions we took steps which will benefit ourbusiness in years to come. We have started sourcing raw material from Rajasthan for somenewer shades. Though the transport cost for these materials are high we have been able tocommand a reasonable price for these new colours. We have added a few new colours to ourportfolio from Rajasthan in white and blue tonalities which are in line with currentMarket trends. We started a new segment "CUT-TO-SIZE" and have receivedpositive response from our existing customers. We have partially commissioned our 11000square meter Granite studio with a capacity to store over one lakh square meters offinished granite slabs. We will be able to better display our inventory which will helpus better serve our customers in a shorter period of time. Post the full commissioning ofthe warehouse we further aim to expand our products offerings. We continue to search fornew business and foray into new countries like Slovakia Mongolia & Iran. Responsefrom these markets was encouraging and we expect more business from these countries inyear to come.
We have been awarded the Top Export Award for our exports in Natural Stone making usthe largest exporter of granite Tiles and Slabs from India. Though the business conditionsin granite industry remain challenging we are tracking them closely and aim to counterthem by improving our internal efficiency and productivity.
Your Directors have recommended a dividend of Re. 1/- (i.e. 10%) per Equity Share ofRs. 10/- each (last year Re. 1/- per Equity Share) for the financial year ended 31stMarch 2016 amounting to Rs.184.15 lacs /- (inclusive of tax of Rs.31.15 lacs ). TheDividend payout is subject to approval of members at the ensuing Annual General Meeting.
The dividend will be paid to the members whose names appear in the Register of Membersas on 10.09.2016 and in respect of shares held in dematerialised forms it will be paid tomembers whose names are furnished by National Securities Depository Limited (NSDL) andCentral Depository Services (India) Limited (CDSL) as beneficial owners as on that date.
The Company has not accepted any fixed deposit from the public.
LOANS GUARANTEES AND INVESTMENTS
The Company has not granted any Loan Guarantees and made any Investments during theyear.
RELATED PARTY TRANSACTIONS
All contract/arrangements and transactions entered by the Company with related partieswere in ordinary course of business and on arms length basis. Your Directors drawattention of the members to Notes to accounts of financial statement which sets outrelated party disclosures. The Related Party Transactions Policy as approved by the Boardis available on the website of the Company www.arotile.com.
Shri Pradeep Kumar Jain resigned from Board of Directors of the Company with effectfrom 4th August 2015. The Board record its appreciations for the valuable servicescontributed by him.
DIRECTORS RESPONSIBILITY STATEMENT
As required under Section 134(3)(c) of the Companies Act 2013 your Directors statethat:-
(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures; (b) theaccounting policies have been selected and applied consistently and judgments andestimates made are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company at the end of the financial year and of the profit and loss ofthe Company for that period; (c) proper and sufficient care has been taken for themaintenance of adequate accounting records in accordance with the provisions of the saidAct for safeguarding the assets of the Company and for preventing and detecting fraud andother 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 andthat 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 havebeen devised and that such systems were adequate and operating effectively.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Corporate Social Responsibility Committee has formulated and recommended to theBoard a Corporate Social Responsibility Policy (CSR Policy) indicating the activities tobe undertaken by the Company which has been approved by the Board. The CSR policy may beaccess from the website of the Company i.e www.arotile.com. The Annual Report on CSRactivities is annexed herewith marked as
AUDITORS AND AUDITORS REPORT
(a) Statutory Auditor
M/s Alok Mittal & Associates Chartered Accountants Statutory Auditors of theCompany hold office till the conclusion of the ensuing Annual General Meeting and areeligible for re-appointment. They have confirmed their eligibility to the effect thattheir re-appointment if made would be within the prescribed limits under the Act andthat they are not disqualified for reappointment. The Notes on the financial statementsreferred to in the Auditors Report are self explanatory and do not call for anyfurther comments. The Auditors Report does not contain any qualificationreservations or adverse remark.
(b) Secretarial Auditor
The Board has appointed Ms Latika Jetley Practising Company Secretary (CP No. 3074)to conduct the Secretarial Audit for the financial year 2016-17. The Secretarial AuditReport for the financial year 2015-16 is annexed herewith as Annexure II to thisreport. The Secretarial Audit Report does not contain any qualification reservations oradverse remark.
(c) Internal Auditor
The Board has appointed M/s Sreekantha & Co. Chartered Accountants Hosur as theInternal Auditor of the Company for the year 2016-2017.
Auditors Certificate on Corporate Governance
As required by SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015the Auditors Certificate on Corporate Governance is enclosed as Annexure IIIto the Boards Report. The Auditors Certificate for the year 2015-16 does notcontain any qualifications reservations or adverse remrks.
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 bythe Regulators or courts or tribunals which would impact the going concern status of theCompany and its future operations.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
Additional information on conservation of energy technology absorption foreignexchange earnings and outgo as required as per the provisions of Companies Act 2013 andRules 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 AnnexureV to this report.
PARTICULARS OF REMUNERATION
Statement of particulars of employee pursuant to the provisions of section 197 of theCompanies Act 2013 read with Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 for the year ended 31st March 2016.
Employed throughout the year ended 31st March 2016 in receipt ofremuneration not less than Sixty Lakh rupees per annum.
|Name ||Age ||Qualification ||Experience ||Date of Commencement Employment ||Designation ||Remuneration ||Last Employment |
|Mr. Sunil K Arora ||58 Years ||B.Sc ||29 Years ||03.05.1988 ||Managing Director ||14400000/- ||Since Inception |
Pursuant to the provisions of Section 197 (12) of the Companies Act 2013 read withRule 5 of Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014the details regarding the ratio of remuneration of each Director to the medianemployees 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 theemployees of the Company for the financial year: The Board of Directors of the Companycomprises of Non-executive Directors who does not draw any Remuneration form the Companyexcept sitting fee.
|SI. No. ||Name ||Ratio to median remuneration |
|1. ||Shri Sunil K Arora Managing Director ||494.285 |
|2. ||Shri Kasturi Lal Arora ||1.888 |
|3. ||Shri Dinesh Chandra Kothari ||5.320 |
|4 ||Shri Rahul Gupta ||6.865 |
|5 ||Shri Kanwaljit Singh ||3.433 |
|6 ||Smt Sujata Arora ||4.806 |
|7 ||Shri K Raghavendra Acharya Executive Director ||49.956 |
|8 ||Smt Vanita Sood ||3.604 |
2. The percentage increase in remuneration of each Director Chief Financial OfficerCompany Secretary in the financial year: The Board of Directors of the Company comprisesof Non-executive Directors who does not draw any Remuneration form the Company exceptsitting fee.
|SI. No. ||Name ||% Increase in Remuneration |
|1. ||Shri Sunil K Arora Managing Director ||6.25 |
|2. ||Shri Kasturi Lal Arora ||-35.29 |
|3. ||Shri Dinesh Chandra Kothari ||58.06 |
|4 ||Shri Rahul Gupta ||55.00 |
|5 ||Shri Kanwaljit Singh ||0.00 |
|6 ||Smt. Sujata Arora ||42.86 |
|7 ||Shri K Raghavendra Acharya Executive Director ||8.61 |
|8 ||Smt. Vanita Sood ||52.38 |
|9 ||Shri Sabyasachi Panigrahi Company Secretary ||8.61 |
|10 ||Shri S Sundara Rajan CFO ||8.61 |
3. The percentage increase in the median remuneration of employees in the financialyear: 7.32
4. The number of permanent employees on the rolls of company: 133
5. The explanation on the relationship between average increase in remuneration andCompany performance: The average increase in remuneration of employees is in line with theCompanys performance. The average increase in remuneration of employees is 0.13%.The average increase in Companys performance is -15.38%.
6. Comparison of the Remuneration of the Key Managerial Personnel against theperformance of the Company for the financial year 2015-16: (in Lacs)
|Aggregate remuneration of Key Managerial Personnel (KMP) ||186.46 |
|Revenue ||21558.84 |
|Remuneration of KMP (as % of revenue) ||0.86 |
|Profit Before Tax ||678.24 |
|Remuneration of KMP (as % of PBT) ||27.49 |
7. Variations in the market capitalization of the Company price earning ratio as atthe closing date of the current financial year and previous financial year:
|Particulars ||31st March 2016 ||31st March 2015 ||% Change |
|Market Capitalization (Rs. in Crores) ||63.27 ||93.33 ||-32.21 |
|Price Earnings Ratio ||10.80 ||5.59 ||93.20 |
8. Percentage increase or decrease in the market quotations of the shares of theCompany in comparison to the rate at which the Company came out with the last publicoffer:
|Particulars ||31st March 2016 ||9th January 1995 ||% Change |
|Market Price ||Rs. 41.35 ||Rs. 20.00 ||106.75 |
9. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the financial year ended 31st March 2016 was 3.06%.
10. Comparison of each remuneration of the Key Managerial Personnel against theperformance of the Company:
| || || || ||(in Crores) |
| ||Sunil Kumar Arora ||K Raghavendra Acharya ||S Sundara Rajan ||Sabyasachi Panigrahi |
| ||Managing Director ||Executive Director ||CFO ||Company Secretary |
|Remuneration in FY 2015-16 ||1.44 ||0.138 ||0.138 ||0.138 |
|Revenue ||215.59 ||215.59 ||215.59 ||215.59 |
|Remuneration as % of Revenue ||0.67 ||0.067 ||0.064 ||0.064 |
|Profit before Tax (PBT) ||6.78 ||6.78 ||6.78 ||6.78 |
|Remuneration as % of PBT ||21.24 ||2.13 ||2.05 ||2.05 |
11. No variable component of remuneration was availed by the directors during thefinancial year ended 31st March 2016.
12. The ratio of the remuneration of the highest paid director to that of the employeewho are not directors but receive remuneration in excess of the highest paid directorduring the year: Not applicable.
13. The Company affirms that the remuneration is as per the remuneration policy of theCompany.
CORPORATE GOVERNANCE-including details pertaining to Board Meetings Nomination andRemuneration Policy Audit Committee and Vigil Mechanism
Your Company re-affirms its Commitment to the highest standards of Corporate Governancepractices. Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 a Management Discussion and Analysis Corporate Governance Report and AuditorsCertificate regarding compliance of conditions of Corporate Governance are made a part ofthis Annual Report.
The Corporate Governance Report which form part of this report also covers thefollowing: (a) Particulars of the Four Board Meetings held during the financial year underreview.
(b) Policy on Nomination and Remuneration of Directors Key Managerial Personnel andSenior Management. (c) The details with respect to composition of Audit Committee andestablishment of Vigil mechanism.
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate Internal financial controls with reference tofinancial statements and no material reportable weakness was observed in the system.Further the Company has in place adequate internal financial controls commensurate withthe size and nature of its operations. The Company also has robust Budgetary ControlSystem and Management Information System (MIS) which are backbone of the Company forensuring that your Companys assets and interests are safeguarded.
The Equity Shares of the Company are listed in BSE Limited and National Stock Exchangeof India Limited. Listing fees for the year 2016-2017 have already been paid to BSELimited and National Stock Exchange of India Limited.
Your Directors wish to thank and acknowledge the Banks Government authoritiesdealers suppliers business associates and the Companys valued Customers for theirassistance and cooperation and the esteemed Shareholders for their continued trust andsupport. The Directors also wish to acknowledge the committee and dedicated team of AroGranite whose unstinted work efforts and ideas have taken the Company on a path of steadygrowth and development.
| || ||For and on behalf of the Board |
|Place: Hosur ||Sunil K Arora ||Kasturi Lal Arora |
|Date: 30.04.2016 ||Managing Director ||Director |