Aro Granite Industries Ltd. — Capital/Financing Update 2020

Mar 16, 2020

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Aro granite industries ltd.

OPERATIONAL UPDATE

We have been receiving queries from our investors about the impact of Corona Virus on our business. Given the general concern around the impact on the business activity, we are releasing an operational update.

Hosur Plant

The struggle for sourcing raw material continues. This shortage has been driven due to the closure of Granite Quarries due to non-compliance with environmental laws. In this environment we have been able to keep our production running at last year levels in all of our 3 segments i.e. slabs, tiles and Cut-To-Size.

Jaipur Plant

We set up the new plant in Jaipur due to its proximity with large number of granite quarries in Rajasthan. The plant has done well and has helped maintain our competitiveness in the market. The raw material availability in Rajasthan is good and prices of raw blocks are stable. We have a growing portfolio of 26 colors with 6-7 shades being core colors. The uptake of customers especially in North America is good and we expect the sales from this plant to grow further in the coming years

Quartz Plant, Hosur

Over the last decade, engineered stone - especially Quartz has become very popular. We planned to set up a plant for Quartz in Hosur to become more competitive and balance our product portfolio. As on date all the machinery that we bought from china has been installed. Unlike Granite machinery which get ready for production just after installation, engineered stone machines require a start up phase where they need to be calibrated to reduce raw material wastage and to fix the production quality. This requires the Chinese technicians to visit the plant and do the calibration and trial production. The Chinese technicians were not able to travel to India due to travel ban on Chinese Citizens by India government due to COVID-19 virus precautionary measures. Effectively the commissioning of the Quartz plant is linked to lifting of travel ban from China.

Corona Virus

Our business has been marginally impacted by COVID-19. Many of our customers visit the factory to see new shades and place orders in the first half of the calendar year. But this year, due to the COVID-19 related travel bans, the number of visitors are comparatively lesser as compared to previous years. To some extent, this is mitigated for us due to our long and sustained relationships with most of our

CORP. OFF. & WORKS

KONERIPALLI VILLAGE. SHOOLAGIRI (VIA). HOSUR TALUK • 635 117. KRISHNAGIRI DIST. TAMIL NADU. INDIA. TEL : 91 . 4344 . 2521 oo FAX : 91 - 4344 - 252217 E-mail · aro@arotile.com Web : www.arotile.com CIN : L74899DL 1988PLC031510

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Aro granite industries ltd.

customers. Over the years we have developed good trust with them, and so inspite of limited visits our business with them is continuing as usual. At the time of this press release we are dispatching containers to all our customers including Italy which is the most affected country after China. We do not have any commercial dealings for sales or purchase of consumables with China. Except for the quartz plant commissioning the situation in China does not affect our current business of Natural Stones.

Oil Prices

The big fall in Oil prices may lower the transportation cost of raw materials but this will not be a big impact, as over time the benefits will be passed on to the customer. Furthermore, we do not have large sales volume in the Middle East and other Oil producing countries so we will see a minimal impact in demand from the dropping oil prices.

To conclude, we would like to say that though the global market is volatile, we are doing business as usual and our relationship with clients remain strong. As of now we expect our performance shall be in line as per our expectations.

For Aro Granite Industries Ltd

tl�rora Managing Director

Date.: 16.03.2020

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CORP. OFF & WORKS KONERIPALLI VILLAGE, SHOOLAGIRI (VIA). HOSUR TALUK · 635 117, KRISHNAGIRI DIST. TAMIL NADU, INDIA. TEL: 91 . 4344. 252100 FAX : 91 - 4344 - 252217 E-mail : aro@arotile.com Web : www.arotile.com CIN: L74899DL1988PLC031510