Aro Granite Industries Ltd.
|BSE: 513729||Sector: Others|
|NSE: AROGRANITE||ISIN Code: INE210C01013|
|BSE 00:00 | 07 Dec||81.20||
|NSE 00:00 | 07 Dec||81.25||
|Mkt Cap.(Rs cr)||124|
|Mkt Cap.(Rs cr)||124.24|
Aro Granite Industries Ltd. (AROGRANITE) - Director Report
Company director report
The Directors have pleasure in presenting the 32"d Annual Reporttogether with Audited Accounts of the Company for the year ended on 31sRs.March 2020.
(RRs. in Lakhs)
The Business environment for the natural stone industry continues to be a mixed bag.Though our Sales grew 3.06% from Rs. 172cr in FY2019 to Rs.177cr in FY2020 our Net Profitdeclined by 62.87% from Rs.9.71cr in FY2019 to Rs.3.61Cr in FY2020. The decline inprofitability is due to the fact that our bank loan and working capital limits being inforeign currency are exposed to currency fluctuations and during the year the exchangeloss was approximately Rs.9.00 Crores as per the AS 11 Accounting Standard which is anotional entry only. Our focus on only core colours some specialised shades andcut-to-size has helped us in improving our efficiency. Our Cut-to-size segment isperforming well and is working at good capacities. We are getting regular and repeatorders from Europe. Cut-to-size is a value-added product and commands higher margin. Thesejobs are very labour intensive and require a high level of precision and quality finish.We have been able to differentiate our offerings and this has allowed this segment toprofitably scale up.
On August 1 2019 we exported the first Container from our Jaipur Unit located inMahindra World SEZ. During the 8 months of operations we faced some small teething issueswhich ware sorted out over the following months. The response of customers for theRajasthan factory has been strong and over the 8 months of operations Jaipur Unit hascontributed 8% of our total yearS sales turnover.
The sales would have been higher if we had not lost 2 weeks in March 2020 to the Lockdown in our Jaipur unit.
Had it not been for the Jaipur Unit we would have lost all our sales of the RajasthanColours from our Portfolio. As more factories opened in the North of India thetransportation cost of bringing blocks to the South makes the prices unviable. With thequarries in Rajasthan for granite bring only in its Nascent Stages we expect the futureto be bright for the North Indian Shades.
Over the year there was no improvement in Quarry positions in the South of India. Thereare still thousands of quarries closed due to the lack of Environmental Clearance. Thishas continued to affect our business over the last 5 years.
With the raw materials issue continuing to impact sales in Hosur we decided to put upa Quartz (Engineered Stone) unit in Hosur. The proposed installed capacity of the unitwould be 180000Sqr. mtr. per annum. We started work on constructing the factory in March2019 and we expected to start trial runs by March 2020. However the Chinese techniciansresponsible for Commissioning the plant returned to China in late January to celebrate theChinese New Year. Following the Chinese festival the technicians were unable to return toIndia due to the travel ban in force due to the COVID-19 Pandemic.
With all of our current resources and infrastructure and part of the granite machinerybeing designated for the quartz production our Fixed Cost is not very high. Hence the Costburden due to Covid-19 delay in Quartz plant commissioning has been marginal and islargely an opportunity cost/loss.
Ever since the implementation of GST cash flows have been tied up in pending GSTrefunds. However during the year we were able to clear up large chunks of these refundsand bringing our current refund status up to date. This has helped us with a better CashFlow.
Moreover with relentless customer service and focus on quality over the years thecompany has built trust and reputation in the export market which has helped betterpositioning even in the unprecedented situation created due to pandemic.
Your Directors have not recommended any dividend for the year 2019-2020.
INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
During the year amount of Rs 228937/- for the Financial Year 2011-12 transfer toInvestor Protection Fund under sub-section (2) of section 125 of the Companies Act 2013and IEPF (Accounting Audit Transfer and Refund) Rules 2016. Shri Sabyasachi Panigrahi
Company Secretary is the Nodal Officer appointed by the Company under the Provisions ofthe IEPF Act.
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 theyear
RELATED PARTY TRANSACTIONS
All contracts/arrangements and transactions entered by the Company with related partieswere in ordinary course of business and at 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 K Raghavendra Acharya Executive Director passed away on 15062020 The Boardexpresses its condolences and acknowledges the invaluable contribution made by Late ShriAcharya as an Executive Director of the Company during his tenure and association with theCompany His sudden and unexpected passing away will be an irreparable loss to theCompany
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) the accounting policies have been selected and applied consistently and judgmentsand estimates made are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year and of the profit andloss of the Company for that period;
c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the said Act for safeguarding the assets ofthe 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 controls to be followed by the Company have been laid downand that such internal financial controls are adequate and were operating effectively; and
f) the proper systems to ensure compliance with the provisions of all applicable lawshave 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 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 ie www.arotile.com . The Annual Report on CSRactivities 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 StatutoryAuditor of the Company for a period of Five Years from the Conclusion of Twenty NinthAnnual General MeetingThe Notes on the financial statements referred to in the AuditorsReport are self-explanatory and do not call for any further comments The Auditors Reportdoes not contain any qualifications reservations or adverse remark
(b) Secretarial Auditor
Practising Company Secretary Ms Latika Jetley (CP No 3074) was appointed as theSecretarial Auditor by the Board for the financial year 2019-20 to conduct the SecretarialAudit The Secretarial Audit Report along with the Annual compliance Secretarial AuditReport under SEBI Regulation for the year 2019-20 is annexed herewith as Annexure IIThe Secretarial Audit Report does not contain any qualifications reservations or adverseremark
(c) Internal Auditor
The Board had appointed M/s Sreekantha & Co Chartered Accountants Hosur as theInternal Auditor of the Company for the year 2019-2020 Internal Audit report does notcontain any qualification reservations or adverse remark
COMPLIANCE WITH SECRETARIAL STANDARDS
Compliance of Secretarial Standards on Meeting of Board of Directors (SS-1) issued byInstitute 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 2015the Auditors Certificate on Corporate Governance is enclosed as Annexure III to theBoard's Report. The Auditors Certificate for the year 2019-20 does not contain anyqualifications 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 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 formMGT 9 is annexed herewith as Annexure V and form part of this report and can beaccessed at web link www.arotile.com :-
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 2020.
Employed throughout the financial year ended 31stMarch 2020 in receipt ofremuneration not less than One Crore two Lakh rupees per annum.
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 median employeeSremuneration 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 has been paid commission in the form ofRemuneration and sitting fee from the Company.
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 has been paid Commission and sitting fee from the Company.
:b. The percentage increase in the median remuneration of employees in the financialyear: 14.04
4. The number of permanent employees on the roll of Company: 286
5. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the financial year ended B1sRs. March 2020 was 12.75%
6. 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 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 under review.
b) Policy on Nomination and Remuneration of Directors Key Managerial Personnel andSenior Management.
c) The details with respect to composition of Audit Committee and establishment ofVigil 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 Company's 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 20202021 have already been paid to BSE Limitedand National Stock Exchange of India Limited.
Your Directors wish to thank and acknowledge the Banks Government AuthoritiesDealers Suppliers Business Associates and the Company's Valued Customers for theirassistance and cooperation and the esteemed Shareholders for their continued trust andsupport. The Directors also wish to acknowledge the committed and dedicated team of AroGranite whose unstinted work efforts and ideas have taken the Company on a path of steadygrowth and development.