DIRECTORS' REPORT The Directors' have pleasure in presenting the 27th Annual Report together with Audited Accounts of the Company for the year ended on 31st March 2015 WORKING RESULTS During the year the sales grew up by 1.6% to Rs 260.09 Crores from Rs 256.01 Crores in FY 2013-14. Net Profit of the company declined from Rs. 21.10 Cr last year to Rs. 16.69 Crores in FY2015. Last year the profits included the onetime gains from the divestment of Unit I and so adjusting for that profits grew by 15.83%. The year started on a good note with demand reviving in our major exports markets. However the second half of the year was challenging due to Russia, which was a large market for us, was hit by sanctions last year due to Ukraine issue. That demand vanished and with the European countries also struggling to grow, the overall demand scenario has remained weak. The fall in Euro and Brazilian Currency also hit the competitiveness of the Indian granite industry. We decided to invest in improving the overall operational efficiencies for the future. For this purpose we placed orders for 2 Mono wire, 1 Polishing line to replace the first polishing line which completed 15 years and a Gantry crane to Load and Unload blocks. These investments were done largely to de-bottleneck our existing capacity and the effect of these will be seen in the coming years. We are also in the midst of constructing a new 110,000 Sqft (~ 11,000 sqm) Warehouse/Showroom, where we will be able to better display our inventory to customers who visit us. This will also help us streamline our Inventory Management Systems and Dispatch Systems which will be helped by introducing a new ERP (Enterprise Resource programming). All this should result in a better and quicker customer experience enhancing our clients overall satisfaction. We have also planned to enter the highly Quality Conscious CUT-to-SIZE market where we will cut our random slabs to the size, dimensions and shapes to the custom orders of our clients. This will enable us to add more product ranges to our current portfolio (including Steps & Risers, Custom Counter tops, Window Sills, Larger Format Tiles etc). This should lead to a better rate of Raw material recovery. This project will kick off by January 2016. DIVIDEND Your Directors have recommended a dividend of Re. 1/- (i.e. 10%) per Equity Share of Rs. 10/- each (last year Re. 1/- per Equity Share) for the financial year ended 31st March 2015 amounting to Rs. 1,79,00,235/- (inclusive of tax of Rs. 26,00,235). The Dividend 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 Members as on September 11, 2015 and in respect of shares held in dematerialised forms, it will be paid to members whose names are furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), as beneficial owners as on that date. FIXED DEPOSIT 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 the year. RELATED PARTY TRANSACTIONS During the financial year ended 31st March 2015, company has not entered into any contracts or arrangement or transaction with related party. In view of above AOC-2 is not applicable. The Related Party Transactions Policy as approved by the Board is available on the website of the Company. DIRECTORS (i) Shri K. Raghavendra Acharya (DIN 06923476) was appointed as an Additional Director w.e f. 31.10.2014 and subsequently appointed as a Wholetime Director with designation of Executive Director of the Company with effect from 1 st November 2014 for a period of three consecutive years subject to approval of the members at the ensuing Annual General Meeting. (ii) Ms Vanita Sood (DIN 06926832) was appointed as an Additional Independent Director w.e f. 31.10.2014 subject to approval of the members at the ensuing Annual General Meeting. (iii) Shri Kanwaljit Singh (DIN 01388140) was appointed as an Additional Independent Director w.e f. 25.04.2015 subject to approval of the members at the ensuing Annual General Meeting. 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 controls to be followed by the Company have been laid down and 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 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 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 AUDITOR'S REPORT (a) Statutory Auditors M/s Alok Mittal & Associates, Chartered Accountants, Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. They have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for reappointment. The Notes on the financial statements referred to in the Auditor's Report are self explanatory and do not call for any further comments. The Auditor's Report does not contain any qualification, reservations 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 2014-15. The Secretarial Audit Report for the financial year 2014-15 is annexed herewith as Annexure II to this report. The Secretarial Audit Report does not contain any qualification, reservations or adverse remark. (c) Internal Auditor The Board has appointed M/s Sreekantha & Co., Chartered Accountants, Hosur as the Internal Auditor of the Company for the year 2014-2015. 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 thereunder is annexed hereto in Annexure III and forms 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 IV to 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 2015. 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 Clause 49 of the Listing Agreement with the Stock Exchanges, a 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. 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 and Senior Management. (c ) The details with respect to composition of Audit Committee and establishment of Vigil mechanism. The Company has in place adequate Internal financial controls with reference to financial statements and no material reportable weakness was observed in the system. Further ,the Company has in place adequate internal financial controls 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 Company's assets and interests are safeguarded. The Equity Shares of the Company are listed in Bombay Stock Exchange Limited and National Stock Exchange of India Limited. Listing fees for the year 2015-2016 have already been paid to The Bombay Stock Exchange 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 Company's valued Customers for their assistance and cooperation and the esteemed Shareholders for their continued trust and support. The Directors also wish to acknowledge the committee 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 K Arora Managing Director Sujata Arora Director Date: 25.04.2015 Place: Hosur |