ludlow jute specialities ltd Management discussions

Industry Structure and Developments

The jute industry has invested significantly in the past few years to improve efficiency through modernization and diversification. Initiatives have been directed towards product diversification and controlling ever increasing labour costs.

The Cabinet Committee on Economic Affairs, on the 10th of November, 2021, approved reservation norms for mandatory use of jute in packaging for the jute year 2021-2022 (1st July, 2021 to 30th June, 2022). The approved norms provide for 100% compulsory use of jute bags for packaging of food grains and 20% for sugar.

Driven by environmental degredation due to climate change and increased consumer preference for sustainable products the demand for jute based products is on the rise. Increasing environmental awareness has also led to a perceptible growth in jute lifestyle products.

Opportunities

Disposal concerns related to use of plastic has led to accelerated acceptance of Jute products which are biodegradable as well as eco friendly. There is opportunity in being able to effectively market Jute as a product with negative carbon footprint.

Jute is versatile and has application in lifestyle and promotional bags, decoratives, geo-textiles, apparels, composites, upholstery furnishings, and also non-wovens for both technical and non-technical purposes. Research and Developments is continuing to find newer uses for jute. The industry would do well to take advantage of such developments. Usage of eco-friendly jute sacks for packaging food grains under JPM Act 1987 is in sync with the government adopted UN sustainability goals of alleviating poverty, zero hunger, responsible consumption/production and climate change. Hence, continued compulsory jute packaging for food grains is likely to continue to be an environmental necessity.

Threats / Risks and Concerns

Some major areas of risk and concerns: a) The supply of raw jute is unable to keep pace with the demand for jute goods. The industry needs to engage itself in improving productivity and quality at the farm level. b) The maximum price capping for raw jute, resorted to by the Jute Commisioners office, has had a huge detrimental effect on the economics of the industry. The concern is that such interference may happen again. The Government needs to desist from such interference. c) Industry has a chronic problem of abnormal absenteeism, despite guaranteed minimum wages coupled with attendance bonus and other incentive schemes introduced by the mills. d) The movement of migrant workmen to their native states further impacts capacity utilization.

Segment-wise or Product-wise Performance

The Company is engaged in single segment product that is, manufacturing and sale of Jute Goods, therefore, Ind AS 108 regarding ‘segment reporting stands complied.

Outlook

Raw jute production for the crop year 2022-2023 is expected to be very good. This could also result in increased demand for jute products as some markets were affected by the high prices of jute in the year under review. There was competition from other natural _ber as well as plastics.

The companys efforts towards diversification, new product development and focus on efficient working promises a bright future.

Internal Control System and Their Adequacy

The Company has adequate internal control procedures, which provide reasonable assurance with regard to safeguarding the Companys assets, preventing revenue leakages, promoting operational efficiency by cost control and compliance with various statutory provisions. Audit reports are placed before the Audit Committee on a periodical basis, for review. The Committee actively reviews the adequacy and effectiveness of the internal control systems which are well supplemented by surveillance of Internal Auditors. The Companys Internal Financial Controls have been diligently studied and the required systems are in place.

Industrial Relations Front

Your Company maintained good industrial relations during the year under review. In addition to various staff welfare schemes, there was a renewed focus on sanitation and hygiene.

Financial Performance with respect to operational performance

During the year under review, the Companys sale was Rs. 568.56 crores (including exports of Rs. 123.05 crores) against sales of Rs. 414.35 crores (including exports of Rs. 94.70 crores) during the previous year.The production was higher at 47179 M.T. against 39009 M.T. during the previous year. Margins were under pressure as raw jute prices remained high during the financial year.

Key Financial Ratios

Particulars	31.03.2022	31.03.2021
Current Ratio	1.14	1.12
Debt Equity Ratio	0.55	0.61
Debt Service Coverage Ratio	1.49	1.17
Return on Equity (ROE)	0.07	0.00
Inventory Turnover Ratio	5.30	3.57
Trade Receivables Turnover Ratio	15.33	11.88
Trade Payable Turnover Ratio	8.19	5.24
Net Capital Turnover Ratio	29.50	23.09
Net Profit Ratio	0.02	0.00
Return on Capital Employed (ROCE)	0.08	0.03
Return on Investment	0.43	0.93

The Return of Operating Margin, Net Profit and Net worth has been increased due to impact of normalization of business after Covid 19 resulting in higher capacity utilization.

Cautionary Statement

Statements made in this section of the report are based on the prevailing position in the jute industry and market conditions. Actual results might differ from what we perceive with respect to Companys outlook and performance.

	For and on behalf of the Board	For and on behalf of the Board
	Rajya Vardhan Kanoria	Tonmoy Bera
Date: 7th May 2022	Chairman	ManagingDirector
Place: Kolkata	DIN: 00003792	DIN: 08342972