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Granite Industry-Structure and Developments:

India is one of the leading countries in the production and export of granite and other stones. Granite is a very hard crystalline, igneous or metamorphic rock primarily composed of feldspar, quartz and lesser amounts of dark minerals. India has vast resources of granite with about 110 varieties of different colours and textures such as black, grey, pink, multi coloured etc. These varieties are used to produce monuments, building slabs, titles, surface plates etc. About 110 variety of granites have been identified for processing as products for exports. The deposits are widely spread over the entire country. However, popular varieties are mainly found in South India.

Granite is a non-scheduled industry and hence entrepreneurs are only required to submit Industrial Entrepreneur Memorandum. Looking at its .export potential, Government of India has been encouraging setting up of 100% Export Oriented Units in this sector to promote export of value added granite products.

Export of Granite and Marble is freely allowed. Granite is exported mainly to Japan, USA, UK, Germany, Netherlands, Italy, West Asia.

Over the last three decades the Indian granite industry has modernised to global standards. Sculptures and monuments made in India are being exported all over the world.

With its skilled manpower and stone technology, India has contributed to the world prestigious monuments such as the Holocaust Museum and the Vietnam War Memorial in Washington; Hiroshima Atom Bomb Memorial in Japan and Black Forest of Germany. However, the global recession has dampened India's hopes for bigger exports.


Todays subdued market situation is due to several factors. The economic crisis in USA, Europe , and other countries affected the exports to these countries. Also the recent introduction of synthetic stone like materials is affecting exports. The competition from China for rough blocks and finished products like slabs and monuments has contributed to the slow growth of exports from India.

However the future for the granite industry for both blocks and finished

products is encouraging. India can improve its export performance as the processing capacity is very low, with less than 5% of gangsaws installed in the world. The increase in export of blocks and finished products during the last year is an indication of the encouraging signs of market improvement. In spite of so many problems, the demand for granite products is increasing everywhere with consistent growth rate of consumption.

India, which is blessed with various types of unique colours and large deposits of granite, is certain to get its due share in the ever-growing world market. Many countries are worried about the strong entrance of China in the market but the fact is that China landed up importing more rough blocks and finished products due to high domestic demand.

The world wide improvement of transportation system with more and more bulk vessels will also help many countries to import more thereby boosting our exports.

The market potential is abundant and there are excellent prospects for the Indian granite industry to get its due share in the world market. The professional and realistic approach towards solving the practical problems and careful planning of facilities by the Industry and Government can make India the leading exporter of the world market. We have challenging years ahead but the potential for growth is beyond any reasonable doubt.

Opportunities & Threats for the Indian Granite Industry:

The Factors helping the growth of the industry are;

1. Introduction of Stones for new applications and utilities etc.

2. Spurt in demand for Indian Granites Worldwide.

3. Increased domestic demand.

The major threat areas include:

1. The Economic slow down in major countries.

2. Non Availability of best quality blocks for processing.

3. Frequent power disruptions and high dependency on diesel affecting the production and the cost of Raw materials and Finished goods.

4. Lack of Proper infrastructure.

Risks and Concerns:

The world economic slow down in major countries has affected the stone industry. This slow down may result in the delayed collection of receivables thereby affecting the liquidity and increasing the financial


The increase in Competition at both National and International level may result in Lower profitability and reduction in selling price. Further unstable Currency Fluctuations too affect the Profitability of the company.

Product wise Performance:

India's Export of Granite during the last two years is as follows.

(Rs in Crores) 2007-08 2008-09 % in Growth

Total export of Granite products






ARO'S Export of Granite Products




Internal Control Systems and their adequacy:

The Company has adequate system of internal control relating to the purchase of raw materials, Stores, Consumables and Packing Materials, and for the sale of goods commensurate with the size of the Company and the nature of business.

The system of internal control of the Company is adequate keeping in mind the size and complexity of your Company's business. Systems are regularly reviewed to ensure effectiveness.

Discussion on Financial Performance with respect to operational Performance:

The turn over achieved by the Company for the Year ended 31.03.2009 is Rs.116.11 Crores compared to the Previous Year turn over of Rs. 101.42 Crores showing an increase of 14 %. The sales in quantity has also increased from 4,87,240 Sq Mtrs to 5,51,234 Sq Mtrs. The Production during the year was 5,89,795 Sq Mtrs compared to 5,74,012 Sq Mtrs of the last year. Profit before lax stands at Rs 14.19 Crores against Rs 11.93 Crores of Last Year. The Profit after Tax is Rs 11.98 Crores compared to Rs 8.00 Crores of Last Year. The Earning Per Share is Rs 10.81 against Rs 11.40. The decrease in the EPS is due to the issue of Bonus shares in the ratio of 1: 2 during the year.

Material Developments in Human Resources / Industrial Relations, Front, Including the Number of people Employed.

The Company continues to invest in training and education of its employees and has been organizing various training programme from time to time.

The Company emphasizes training and motivation as it is the key to improved productivity. Intensive Induction program of new recruits and skill based training programs are being carried out. HR policies are being aligned with the current trends in the market. Various welfare activities and incentives are being carried out for staff and workers alike, making ARO an enjoyable place to be associated with. The Company maintains cordial relations with its employees and takes all possible care for their welfare. NOVA GRANITES (INDIA) LIMITED




The financial statements have been prepared in compliance with the requirements of the Companies Act, 1956, guidelines issued by the Securities and Exchange Board of India (SEBI) and other statutory requirements. Our Management accepts responsibility for the integrity and objectivity of these financial statements, as well as for various estimates and judgments used therein. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, so that the financial statements reflect in a true and fair manner the form and substance of transactions and reasonably present our state of affairs, profits and cash flows for the year.

Your Company has identified few countries as its market areas for its export market, which it proposes to concentrate to increase its exports and market share. Your Company is one of the exporters of Granite Products and it is striving hard to improve its position in the overseas market.. The Company has the mechanism to combat the risks of exposure to Business, Assets and Financial Risks in the form of competition, accidents, natural calamities, obsolescence, fluctuations in foreign currency etc.


The products of the Company have a very restrictive export market, which is confined to some countries only, coupled with that the demand for granites is heading south globally. The competition in the International market has also increased to an alarming proportion. The company being aware of these fast developing scenario is constantly striving to come up with suitable technological innovations and investments. The management of your company is on constant vigil to combat any eventuality that may pose threat to the company's business.


The Company has only one reportable business segment and hence no further disclosure is required under Accounting Standard 17 on Segment Reporting.


The philosophy we have with regard to internal control systems and their adequacy has been formulation of effective systems and their strict implementation to ensure that assets and interests of the Company are safeguarded; checks and balances are in place to determine the accuracy and reliability of accounting data. The Company has a well defined organization structure with clear functional authority, limits for approval of all transactions. The Company has a strong reporting system, which evaluates and forewarns the management on issues related to compliance. Company updates its internal control system from time to time, enabling it to monitor employee adherence to internal procedures and external regulatory guidelines.


Your Company achieved a Turnover of Rs. 284.58 Lacs when compared to Rs.599.88 lacs during the previous year. The operations of the Company resulted in a loss of Rs.430.05 lacs when compared to Rs.48.28 lacs before taxes during the previous year.

The major cause for the huge loss is on account of the high cost of goods sold, The Board is striving hard to improve the performance of the Company.

The management has done well to ensure sustain operations. However, due to

high cost and expenditure, the operations resulted in Loss. Efforts are being made to reduce the costs involved. The Management is also looking at breaking even in the ensuing financial year.


Human wealth is the ultimate wealth in for any industry. The Company recognizes this fact and understands that employees are one of the most important sources for sustained growth of any business. Quality personnel delivering their optimum potential for the organization is the key differentiator. The Company maintained good relations with its employees

and there was no unrest in the Company at any point of time.






The Indian economy after growing at 9% during the first two quarters of

2008-09 moderated to 6% during the latter half of the fiscal. In this scenario, the granite industry which exports 80% to 90% of the total production of its products was the first to feel the hit, of the sub-prime crisis. According to data provided by CAPEXIL, the value of granite export from India was Rs 2,738 crore in 2008-09 as compared to Rs 3,367 crore and 4,086 crore respetively in 2007-08 and 2006-07.


By general consensus, India has been blessed by nature for its wide varieties of granite which, are not found anywhere in the world. Also the market demand for granite products is increasing in countries with high annual growth rate, like Spain, China, Hong Kong, East Europe etc. The market potential is abundant and there are excellent prospects for the Indian granite industry to get better share in the world market.

Your Company is predominantly engaged in the manufacturing of High Quality Polished Granite Slabs and Tiles. Your Company's brand name 'Pacific' has built up a better. image over the other brands available in the domestic market. Your Company. makes sustainable efforts to provide beautiful,and durable varieties of Granite to the whole world and in the process nurtures long-term relations with customers.

All this taken together heralds a bright future for your Company


Indian Granite industries are being forced to invest not only in (increasingly expensive) modern equipment, but also in extraction for access to the raw materials and moreover, also in expensive commercial investments such as opening their own warehouses. This strategy has its own risks; it places huge demands on management skills, in an industry where, presently, all decisions were made by the owners at the top of the hierarchy. In other words,the granite industry is evolving into a highly capital intensive and complicated industry.

The market share of China in the international trade in granite has been steadily increasing in recent years. If that ever happens the threat to the survival of the elaboration of this industry in other countries will be real.

This is the age of technology. Resist it and you are dead. Invest in it and there is still no guarantee of success. Your Company has developed a strong and persistent work culture to operate successfully in diverse business environments by adapting to new technologies and complexities in different spheres of work. Adjustability and adaptability thus have become a part of day-to-day work. Cost effectiveness is directly and ultimately linked up with. our Economies of Scale and Total Integration. This is what keeps your Company moving forward with agility and dynamism.


India is the world's third largest producer of natural stones and fifth in export of finished. products. Even today the Indian share of world market is less than 10%. There is however, a bright future for increasing the Indian share in the world market with its vast area of granite deposits spreading over more than 15 states and with wide variety of colours and skilled work force. The growth of the granite sector, which provides a lot of employment, particularly, for the rural masses, is important for the socio-economic development of the country.

Moreover with the production of Pacific Red Granite, your Company shall command dominance in the global market.


Your Company has in place proper and adequate system of internal controls to provide reasonable assurance that all assets are safeguarded, transactions are authorised, recorded and reported correctly arid to ensure compliance with policies, statutes; rules and regulations. The internal control system provides for documented procedures covering all financial and operating functions.


Despite the challenges of the environment and the strategic drive to integrate and transform, the organization financial performance was strong. Operating Profit was Rs. 14.04 crore during the year under review compared to Rs.10.30 crore during the last fiscal year 2007-08 showing approx. 30% growth. Profit After tax for the year under review was Rs.12.37 crore compared to Rs. 8.90 crore during the last fiscal year 2007-08 showing approx. 39% growth.


Your Company has 192 employees on its rolls as on 31st March, 2009. Your Company value human resource as one of its most important assets, they being vital to the Company's performance and growth. The human resource systems promote co-operation and innovation within the employees and flexibility to adapt with the changing business needs.

With an enlightened workers union, industrial relations in your Company continue to be healthy and cordial.


Statements in the Management Discussion and Analysis describing the Company's objectives, projections, estimates, expectations maybe 'forward-

looking statements' within the meaning of applicable securities laws and regulations. The Company can not guarantee that-the se assumptions and expectations are accurate or will be realized. Actual results could differ materially. from those expressed or implied. Important factors that could make a difference to the Company's operations include economic conditions affecting demand /supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes applicable to the Company and incidental factors.

For Pacific Industries Limited

Sd/PLACE : Bedla, Udaipur DATED : 25.08.2009 (P. Agarwal) Chairman & Managing Director