Aro Granite Industries Ltd

The Directors have pleasure in presenting the 37^th Annual Report together with Audited Accounts of the Company for the year ended on 31^st March 2025.

( Rs. in Lakhs)

This past year has been far from easy. Indian exporters of Construction Material products like tiles, cement, granite, steel, and ceramics found themselves navigating through a complex web of global and domestic hurdles.

To begin with, global demand took a significant hit. Our major markets in Europe and the United States saw slowing construction activity amid recession fears and high interest rates. To make things worse, China's ongoing real estate crisis led to a flood of cheap materials in the global market, driving down prices and squeezing our margins. At the same time, logistics and currency fluctuations didn't do us any favors. While shipping costs had normalized somewhat since the COVID era, challenges like container shortages and fuel price volatility pushed costs up again. On top of that, the rupee's volatility against the US dollar added a layer of uncertainty to every export contract.

The geopolitical landscape only added to the pressure. The Red Sea crisis in early 2024 disrupted major shipping lanes, causing delays and rerouting headaches, particularly for exports heading toward Europe and North America.

The Liquidity crunch worldwide also impacted India with the Indian Domestic Market. India also saw a huge drop in Requirements of Granite and Quartzite as Cheap Ceramics were dumped more into the domestic market as budgets of many builders and home owners were strained.

In Q1 Though Shipping rates were lower than previous years, the high rates of Inflation and subsequently the interest rates to control inflation saw a sluggish Real estate and Renovation Market in USA and Western Europe.

Historical U.S. Federal Reserve interest rate movements for 2024:

With the US has not had a rate cut in the previous couple of years. With 2 rate cuts already done in Q3 the consumption levels are expected to go up. Real estate markets have been tricky as the demand for houses is growing, but due to high costs of Lumber & Steel and other construction materials from 2022 (caused by the shipping rates) the number of new house developments have reduced.

Now with the interest rates going down we see that new projects and developments are already in early planning phases and customers expect increase in demand accordingly. Though interest rates are not expected to go back to pre-covid levels the lowering of interest rates will push home owners to take up those loans and then refinance when rates eventually go down further.

With inflation slowing down further the ECB is moving towards lowering Interest rates to promote consumption. Further with the war in Ukraine causing energy crisis in the previous years the EU has taken measures to alleviate these concerns. This has further helped with the inflation slow down.

Here's a summary of shipping rates from India over the last 3 QUARTERS:

Due to the ongoing Red Sea Crisis many ships have started to take routes around Africa instead of taking the shorter Suez Canal. This has resulted in the container ships requiring more time to reach destinations (sailing time increased to as much as 3x of normal shipping durations). The durations mostly increased due to container vessels stopping over at transshipment ports.

The correction in shipping rates has started as many large mother vessels with capacity of 20,000 TEU (20' Equivalent units) have been introduced into operations. These Vessels with larger capacities will reduce the time that containers are waiting in Transit ports and in some cases eliminate the need for the transit port stopovers.

With rates expected to be between the USD 1,500 to 2,750 range for mist destinations, sales are expected to pick up of lower priced good. In the previous quarters more budget stones priced around USD 32 to 45 per m2 saw mooted demands as the container value of these is between USD 9000 to USD 12000 per container, With shipping rates of around USD 5,500 ( total landed cost of USD 16000) meant that the cost of transport on the landed cost was around 30%. With those rates expected to go down to 20% demand for these lower priced stones will increase.

Due to the longer shipping times, the payments from customers has gotten extended and which has resulted in lower volumes. With the new vessels coming into operations, shipping times are expected to reduce which help with the payment terms. Further with lower shipping costs the purchase budgets for the materials/ products will increase over the next couple of months.

However 2025 looks to be quite promising as MANY major challenges as mentioned above are already seeing corrective measure and we expect further corrections in 2025.

Recently with the Donald Trump being sworn into office in mid-January, many importers grew cautious about the potential policy shifts under the new administration, particularly within the critical first 100 days. During his inauguration speech on January 20, 2025, Trump referred to the day as "Liberation Day", signaling a bold shift in economic policy. Anticipating that new import duties could take effect immediately, many U.S. importers began to scale back shipments, particularly from countries like India. Given that container transit times from Asia to U.S. ports average between 55 to 75 days, importers chose to delay or hold certain shipments. As Trump followed through on his rhetoric—imposing tariffs even on close allies like Canada and Mexico—concerns intensified, leading to further hesitation across the import sector.

In quartz segment the main completion for India was from Vietnam where many Chinese companies had set up units. Now with the reciprocal duties coming in India has a good opportunity to export to USA as the duties on India are less than that of other quartz producing countries.

In summary, FY 2024–25 tested the resilience of Indian construction material exporters on multiple fronts -economic, geopolitical, operational, and regulatory.

But with every challenge comes the opportunity to adapt — to diversify markets, invest in value-added products, improve compliance, and embrace sustainability.

As we step into the next financial year, the road ahead is still uncertain, but Indian exporters have shown time and again that they can weather storms and come back stronger.

Your directors have not recommended any dividend for the year 2024-25.

During the year an amount of Rs. 3,98,217/- for the Financial Year 2016-17 transferred 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. Mr. Ayush Goel, Company Secretary is the Nodal Officer appointed by the Company under the Provisions of the IEPF Act.

The Company has not accepted any fixed deposit from the public.

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

The Company has not granted any Loans, Guarantees and made any Investments during the year.

All contracts/arrangements and transactions entered by the Company with related parties were in ordinary course of business and at arm's length basis. 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.

During the year, Mr. Dinesh Chandra Kothari (DIN: 00195609) and Mrs. Vinita Sood (DIN: 06926832) vacated their positions on the Board upon completion of their tenure as Non-Executive Independent Directors. To fill these vacancies, the Board appointed Mr. Keshava Murthy Kalasachar (DIN: 10694491) and Mr. Ashish Jyotindra Bhuta (DIN: 02149827) as Additional Directors on July 26, 2024.

Subsequently, both were appointed as Non-Executive Independent Directors upon receiving approval from the members at the Annual General Meeting held on September 18, 2024 for a consecutive period of five years effective from July 26, 2024.

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.

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.

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.

Practising Company Secretary Ms. Latika Jetley (CP No. 3074) was appointed as the Secretarial Auditor by the Board for the financial year 2024-25 to conduct the Secretarial Audit. The Secretarial Audit Report along with the Annual Secretarial Compliance Audit Report under SEBI Regulation for the year 2024-25 is annexed herewith as Annexure II. The Secretarial Audit Report does not contain any qualifications, reservations or adverse remark.

The Board had appointed M/s Sreekantha & Co., Chartered Accountants, Hosur as the Internal Auditor of the Company for the year 2024-25 Internal Audit report does not contain any qualifications, reservations or adverse remark.

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.

As required by SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Practising Company Secretary's Certificate on Corporate Governance is enclosed as Annexure III to the Board's Report. The Auditors' Certificate for the year 2024-25 does not contain any qualifications, reservations or adverse remarks.

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.

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.

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 31^st March 2025.

Employed throughout the financial year, ended 31^st March 2025 in receipt of remuneration not less than One Crore two Lakh rupees per annum.

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 employee's 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.

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.

3. The percentage increase in the median remuneration of employees in the financial year: 1.63

4. The number of permanent employees on the roll of Company: 229

5. Average percentile increase already made in the salaries of employees other than the managerial personnel in the financial year ended 31^st March 2025. NIL

6. The Company affirms that the remuneration is as per the remuneration policy of the Company.

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 Four 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.

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 Company's assets and interests are safeguarded.

The Equity Shares of the Company are listed in BSE Limited and National Stock Exchange of India Limited. Listing fees for the year 2025-2026 have already been paid to BSE Limited and National Stock Exchange of India Limited.

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 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