The Directors have pleasure in presenting the 38^th Annual Report together with Audited Accounts of the Company
for the year ended on 31^st March 2026.

FINANCIAL RESULTS

Amount in ^ lakh

WORKING RESULTS

The financial year 2025-26 was one of the most
challenging years for the global natural stone industry.
The Company operated in an environment marked
by weak construction demand, an extraordinarily
volatile U.S. trade policy environment, a Middle East
conflict that disrupted global petrochemical supply,
and continued uncertainty in global supply chains.
These external developments significantly affected
export demand, customer purchasing behaviour, raw
material costs and working capital across the industry.

The United States remained the Company's largest
export destination, accounting for approximately 65%
of total exports, while Europe contributed around 25%.
Consequently, developments in U.S. trade policy in
particular had a direct and material bearing on the
Company's performance through the year.

1. Global Market Conditions

Demand in the Company's key export markets
remained subdued for much of the financial year, as
the cumulative effect of U.S. tariff measures fed through
into higher consumer prices for imported construction
materials. This tariff-driven inflation added to the cost
of renovation and construction projects in the United
States and contributed to more cautious purchasing
behaviour among customers through the year.

2. Impact of U.S. Trade Policy

The dominant development of the year was the
introduction, escalation, and eventual invalidation of
the U.S. reciprocal tariff regime.

Reciprocal tariffs on Indian exports were introduced
in April 2025 at 27%, and were progressively revised
over the following months, rising to a cumulative

rate of approximately 50% by August 2025 once an
additional duty linked to India's purchases of Russian
oil was layered on. For most of the financial year,
this left the Company at a distinct disadvantage
against competing origins. Vietnam, a key competing
source for engineered quartz, was initially assigned a
comparable rate of 46%, but subsequently negotiated
this down to 20% in October 2025 - while India's rate
remained at or near 50% through this period. This gap
was compounded by a further, longstanding freight-
cost disadvantage: ocean freight from Vietnam
to the United States has historically been cheaper
than from India, meaning Indian-origin material
was disadvantaged on both tariff and logistics cost
simultaneously for the greater part of the year. Brazilian
quartzite, a competing natural-stone category,
secured an outright exemption from Brazil's country-
specific tariff, though Brazilian granite, marble and
slate remained subject to separate duties.

A partial narrowing occurred in February 2026, when
a bilateral trade framework between India and the
United States reduced India's reciprocal tariff to
18% and removed the additional Russian-oil-linked
duty, briefly bringing India's rate below Vietnam's
negotiated 20%. This improvement proved short-lived:
on 20 February 2026, the U.S. Supreme Court ruled
that the International Emergency Economic Powers
Act (IEEPA) - the legal authority under which the entire
reciprocal tariff programme, covering India, Vietnam
and other trading partners alike, had been imposed -
did not authorise the President to levy tariffs. All IEEPA-
based tariffs were accordingly terminated with effect
from 24 February 2026, and the U.S. administration
replaced them with a uniform 10% import surcharge
under Section 122 of the Trade Act of 1974, applicable
to imports from nearly all countries for up to 150 days.
A summary of the tariff position through the year is set
out below.

As a result, the Company faced a genuine and
sustained competitive disadvantage against key
competing origins for most of FY 2025-26, followed by
a brief and ultimately moot improvement, and the
year closed with the reciprocal tariff structure that had
shaped the entire period struck down by the courts
- leaving no lasting structural advantage to point to,
only a narrower, temporary, and still-unresolved tariff
environment.

Throughout this period, the sheer unpredictability of the
applicable tariff structure created additional difficulty
for importers. Since shipments from India typically
require 55 to 75 days to reach U.S. ports, customers
were often unable to determine the landed cost of
material at the time of placing orders. Many buyers
responded by deferring procurement decisions,
postponing shipment schedules and holding lower
inventory levels, which contributed to slower order
inflows, delayed dispatches and increased pricing
pressure over the course of the year.

3. Impact of Middle East Conflict on Raw
Material Costs

Toward the close of the financial year, a further
disruption emerged in the Company's cost base. On 28
February 2026, the United States and Israel launched
military action against Iran, and Iran responded by
closing the Strait of Hormuz - a waterway carrying
roughly a fifth of the world's seaborne oil and LNG
trade. This triggered an immediate tightening in
global petrochemical supply, with early effects on
resin markets visible before the financial year closed
on 31 March 2026. Polyester resin, which constitutes
approximately 60% of the raw material cost of the
Company's engineered quartz slabs, is directly
exposed to disruption of this nature, and the Company
began to see upward cost pressure on this input in the
final weeks of the year.

4. Domestic Business Environment

Domestic demand also remained under pressure
during the year. In Bengaluru, one of the Company's
key domestic markets, the real estate sector continued

to face significant delays in obtaining Occupancy
Certificates and related regulatory clearances,
including e-khata records, and no-objection
certificates from the Fire and Emergency Services
Department, the Karnataka State Pollution Control
Board, utility providers and other approving authorities.
Industry bodies such as CREDAI continued to press
for faster approvals through the year, and while the
Karnataka government exempted larger residential
plots (1,200 sq ft and above, later extended to 2,400
sq ft) from the mandatory Occupancy Certificate
requirement in September 2025, delays affecting
a large number of existing and mid-sized projects
persisted, holding back completions and handovers.
This, together with cautious spending by developers
and homeowners and increased competition from
alternative construction materials, continued to
weigh on demand for granite and quartzite products
in the domestic market. Pricing remained competitive
across several product categories, requiring continued
focus on operational efficiency and product mix
optimization.

5. Operational Response

Despite these conditions, the Company remained
focused on protecting its long-term competitive
position, undertaking tighter control over working
capital, optimization of production planning,
disciplined inventory management, and continued
cost rationalization across operations.

6. Outlook and Subsequent Events

As at the date of this report, the U.S. tariff framework
remains unsettled. The 10% import surcharge currently
in effect under Section 122 authority is temporary, and
no durable legal or negotiated framework has yet
replaced the reciprocal tariff regime struck down by
the Supreme Court.

Separately, the disruption arising from the conflict in
the Middle East has intensified materially since the
year end. Petrochemical and resin prices rose sharply
through March to May 2026 - industry data indicates
increases in the range of 30% to 60% across various resin

categories over this period - as the Strait of Hormuz
remained largely closed for extended stretches and
as at the date of this report, the conflict remains
unresolved; The Company is actively evaluating
alternative sourcing arrangements and pricing pass¬
through measures in response, and will continue to
monitor both the U.S. trade policy environment and
the Middle East situation closely given their direct
bearing on competitiveness and cost structure in the
year ahead.

DIVIDEND

Your directors have not recommended any dividend
for the year 2025-26.

INVESTOR EDUCATION AND PROTECTION FUND
(IEPF)

Company has not declared any dividend in the
Financial Year 2017-18 accordingly no transfer need
to be done during the year 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 whereas Mr. Ayush Goel, Company
Secretary is the Nodal Officer appointed by the
Company under the Provisions of the IEPF Act.

FIXED DEPOSIT

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

ANNUAL RETURN

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

LOANS, GUARANTEES AND INVESTMENTS

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

RELATED PARTY TRANSACTIONS

All contracts/arrangements and transactions entered
by the Company with related parties were in ordinary
course of business and at arm's length basis and
were below the threshold prescribed under Schedule
XII of regulation 23 of SEBI LODR Regulations, 2015
during the year. 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.

DIRECTORS

During the year, Mr. G Sundareshwara (DIN: 00165762)
has resigned as an Independent Director of the
Company, with effect from November 11, 2025, due to
his increased professional and personal commitments.
Consequently, he shall also cease to be the
Chairperson of the Audit Committee and Stakeholder
Relationship Committee & Member of Nomination
and Remuneration Committee and Corporate Social
Responsibility Committee of the Company. To fill the
vacant position, the Board appointed Mr. Varathan

Arul (DIN: 11480624) as an Additional Directors on
February 04, 2026 as per the recommendation of the
Nomination and Remuneration Committee.

Subsequently, he was appointed as Non-Executive
Independent Director upon receiving approval from
the members through Postal ballot on March 24, 2026
for a consecutive period of five years effective from
February 04, 2026.

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 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.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

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.

AUDITORS AND AUDITORS’ REPORT

(a) Statutory Auditor

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.

(b) Secretarial Auditor

Practicing Company Secretary M/s. S Panigrahi &
Associates (CP No. 27507) was appointed as the
Secretarial Auditor by the members for a continuous
period of Five Years commencing from April 1, 2025
until March 31, 2030 to conduct the Secretarial Audit
of the Company.

The Secretarial Audit Report along with the Annual
Secretarial Compliance Audit Report under SEBI
Regulation for the year 2025-26 is annexed herewith
as Annexure II. The Secretarial Audit Report does not
contain any qualifications, reservations or adverse
remark.

(c) Internal Auditor

The Board had appointed M/s Sreekantha & Co.,
Chartered Accountants, Hosur as the Internal Auditor
of the Company for the year 2025-26 Internal Audit
report does not contain any qualifications, reservations
or adverse remark.

COMPLIANCE WITH SECRETARIAL STANDARDS

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.

PRACTICING COMPANY SECRETARY’S
CERTIFICATE ON CORPORATE GOVERNANCE

As required by SEBI (Listing Obligations and Disclosure
Requirements) Regulations 2015, the Practicing
Company Secretary's Certificate on Corporate
Governance is enclosed as Annexure III to the Board's
Report. The Auditors' Certificate for the year 2025-26
does not contain any qualifications, 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 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 there under is annexed
herewith in Annexure IV and form part of 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 31^st
March 2026.

Employed throughout the financial year, ended 31^st March 2026 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:
0.53

4. The number of permanent employees on the roll
of Company: 150

5. Average percentile increase already made in the
salaries of employees other than the managerial
personnel in the financial year ended 31^st March
2026. Nil

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

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 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 Five 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.

INTERNAL FINANCIAL CONTROL

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 d 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.

LISTING

The Equity Shares of the Company are listed in BSE
Limited and National Stock Exchange of India Limited.
Listing fees for the year 2026-27 have already been
paid to BSE 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 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

(Sunil Kumar Arora) Sahil Arora

Place: Hosur Managing Director Whole Time Director

Date: 15.05.2026 DIN:00150668 DIN: 07970622