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Ludlow Jute & Specialities Ltd.

BSE: 526179 Sector: Industrials
NSE: N.A. ISIN Code: INE983C01015
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(-1.26%)
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NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 85.00
PREVIOUS CLOSE 87.20
VOLUME 6119
52-Week high 132.00
52-Week low 66.70
P/E 14.25
Mkt Cap.(Rs cr) 93
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 85.00
CLOSE 87.20
VOLUME 6119
52-Week high 132.00
52-Week low 66.70
P/E 14.25
Mkt Cap.(Rs cr) 93
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Ludlow Jute & Specialities Ltd. (LUDLOWJUTE) - Director Report

Company director report

Board's Report

Dear Members

Your Board takes pleasure in presenting its Annual Report on the business andoperations of the Company together with the Audited Financial Statements for the yearended 31st March 2016.

1. FINANCIAL SUMMARY

Particulars 2015-16 2014-15
Sales excluding excise duty 351.58 230.20
Profit before Finance Costs and Depreciation 17.64 (4.58)
Less : Finance Costs 3.14 4.26
Gross Profit 14.50 (8.84)
Less: Depreciation and amortisation 5.86 7.13
Profit before Exceptional Items and Tax 8.64 (15.97)
Less/ (Add): Exceptional items - 9.31
Profit before tax 8.64 (6.66)
Less: Tax expenses 3.00 2.12
Profit for the year 5.64 (4.54)
Add: Balance as per last Financial Statements 16.25 22.21
Adjustment for Depreciation (net of tax) - (0.96)
Add: Adjustment for tax of earlier year - 0.19
Profit available for appropriations 21.89 16.90
Appropriations :
General Reserve 0.28 -
Proposed Dividend on Equity Shares 1.62 0.54
Corporate Dividend Tax 0.33 0.11
Total 2.23 0.65
Balance carried forward to Balance Sheet 19.66 16.25

2. DIVIDEND

The Board of Directors recommends for consideration of shareholders at the AnnualGeneral Meeting a Dividend @ 15% (' 1.50 per share) on Equity Shares of Rs. 10/- each forthe year ended 31st March 2016.

3. TRANSFER TO RESERVES

In view of the gains earned by the Company this year Rs. 28.20 lacs has beentransferred to the General Reserve.

4. OPERATIONS

During the year under review the Company's sale was Rs. 355.07 crores (includingexports of Rs. 45.93 crores) against sales of Rs. 232.51 crores (including exports of Rs.44.53 crores) during the previous year. The production was 45372 M.T. against 37195 M.T.during the previous year.

Your Company coped with the challenge posed by the serious dearth of orders in Q1 FY 16by adopting a proactive approach whereby advance orders booked in Q4 FY15 were serviced inQ1 FY16 at a time when Government orders had dried up. This enabled us to increaseproduction as well as tide over an otherwise difficult situation when several other millsclosed down in the period May-July 2015.

On the export front yarn exports continue to suffer from competition from Bangladeshiexport subsidy supported yarn produced with unregulated exploited low cost labour. Thespurt in raw jute prices in India in Q3 FY16 coupled with the ban on raw jute exports fromBangladesh in November 2015 further caused an unfavorable situation.

5. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

i) Industry Structure And Developments

Encouragement of eco-friendly jute packaging via JPM (Jute Packaging Materials) Act1987 was continued in the year gone by. However due to acute shortage of raw jute after asecond successive poor crop year prices of raw jute increased rapidly from December 2015.As a corrective measure Government of India diverted orders equivalent to 5.5 lac balesof jute sacking to synthetics. The jute industry also responded proactively in FY16 and alighter 580 gms jute sacking bag was developed to replace the 665 grams bag therebyconserving raw jute and also substantially reducing the cost of Jute sacks being procuredby the Government.

The massive increase in wage costs due to steep increases in Dearness Allowance in FY16continued to hugely impact the jute Industry.

ii) Opportunities

With increasing focus on climate change and growing environmental awareness naturalfibres are finding favour with the consumers world over. Jute is the most sustainablerenewable biodegradable and eco-friendly natural fibre with a crop cycle of only 120 daysand thus it provides sustenance as a extra soil-strengthening cash crop for farmers. Itis high time that instead of looking at short term material costs all stakeholders factorin the huge savings from jute resulting from its biodegradability thereby avoiding themassive ecological problems that lie ahead due to non-biodegradable toxic waste generatedout of synthetic sacking.

We are seeing increased exploration of Jute's versatile applications for lifestyle andpromotional bags decoratives geo-textiles apparels composites upholstery furnishingsand also non-wovens for both technical and non technical purposes.

Greater focus on Jute farming practices like use of certified seeds row-sowing andmechanised de-weeding would help increase yields thereby enabling reduction in cost of rawjute.

iii) Threats/Risks And Concerns

Following are the major areas of risks and concerns:

a) Dilution of the Jute Packaging Material Act 1987 remains a primary area of concernand uncertainty; inadequate leverage of the environment-friendly nature of Jute has been abane for the industry.

b) Availability of skilled labour due to the rigorous nature of work involved. Uncappedincreases in dearness allowance (with a 190% of DA payment liability imposed on the juteindustry).

c) Lack of ground level direct linkage between wages and productivity in real terms inthe jute industry due to legacy issues. Ad hoc absenteeism of workmen in jute millscompounds the problem. Existence of multiple trade unions due to which resolution ofworkers related issues is time consuming and difficult.

d) As an agricultural product availability of raw jute depends on the vagaries ofnature. Adverse weather conditions may adversely affect raw jute pricing and availability.

e) Continuous canvassing for Government support is essential. Bangladeshi Govt.supports its local jute industry by providing a 10% export subsidy on Jute goods exportsalongwith moratorium on interest payments for investments in jute sector.

f) Duty-free imports dumped from Bangladesh are causing harm to the Indian JuteIndustry while Indian Raw Jute importers have to pay 4% Duty on raw jute imports fromBangladesh.

iv) Segment-wise or Product-wise Performance

As the Company's business activities fall within a single primary business segment thedisclosure requirement of Accounting Standard AS-17 issued by the Institute of CharteredAccountants of India stands complied.

v) Outlook

The industry has welcomed good governance in the monitoring of government procurementof foodgrain sacking bags which augurs well for the future.

With raw jute prices attaining historically highest levels last year increased sowingacross all jute producing areas in the current crop year has been reported. The IndianMeteorological Department has already predicted a good monsoon in 2016. Given this theexpectation of higher jute production in 2016 brings solace and optimism. We expect recordjute production (even beyond 100 lac bales) in case actual weather conditions match METpredictions.

With higher foodgrains production also expected higher government sacking offiake isexpected. Hence we expect adequate Government sacking orders for jute despite thepossibility of diversion of some quantities to synthetics. However the export markets forIndia particularly Jute Yarn remain highly competitive for reasons stated earlier.

In the Non-Government domestic markets serious competition is expected due to dumpingby the export subsidy aided and low wage cost assisted Bangladeshi Jute Industry.Increased focus on jute diversifieds would be the flavor of the year.

vi) Internal Control System and Their Adequacy

The Company has adequate internal control procedures which provide reasonableassurance with regard to safeguarding the Company's assets preventing revenue leakagespromoting operational efficiency by cost control and compliance with various statutoryprovisions. Audit reports are placed before the Audit Committee on a periodical basis forreview. The Committee actively reviews the adequacy and effectiveness of the internalcontrol systems which are well supplemented by surveillance of Internal Auditors. TheCompany's Internal Financial Controls have been diligently studied and the requiredsystems are in place.

vii) Industrial Relations Front

We are happy to inform that industrial relations at your Company remained cordialduring the year under review. In addition to various staff welfare schemes a renewedfocus on sanitation and hygiene has been taken up. The Company seriously propagated theimportance of the Jute specific PGDJTM course at Calcutta University and we plan tosponsor students for the course as well.

viii) Cautionary Statement

Statements made in this section of the report are based on the prevailing position inthe jute industry and market conditions. Actual results might differ from what we perceivewith respect to Company's outlook and performance.

6. CORPORATE GOVERNANCE

The Company has complied with the corporate governance requirements under the CompaniesAct 2013; and as stipulated under the SEBI (Listing Obligations & DisclosureRequirements) 2015 a separate section on corporate governance along with a certificatefrom the Statutory Auditors of the Company confirming the compliance is annexed and formspart of this Report.

7. EXTRACT OF THE ANNUAL RETURN

As required pursuant to Section 92(3) of the Companies Act 2013 and Rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of the Annual Return forthe year ended 31st March 2016 in Form No. MGT 9 is annexed as Annexure II forming partof this Report.

8. PARTICULARS OF LOANS GUARANTEE OR INVESTMENTS

The Company has not given any loan guarantee or made any investments exceeding sixtyper cent of its paid up share capital free reserve and securities premium account or onehundred per cent of its free reserves and securities premium account whichever is moreas prescribed in Section 186 of the Companies Act 2013.

9. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTY

A Related Party Policy has been devised by the Board of Directors for determining themateriality of transactions with related parties and dealings with them. The said policymay be referred to at the website of the Company

www.ludlowjute.com. The Audit Committeereviews all related party transactions quarterly. Necessary approval of the AuditCommittee and the Board of Directors were taken wherever required.

Further the members may note that the Company has entered into the following relatedparty transactions at arm's length price :

- Property taken on lease from Kirtivardhan Finvest Services Limited.

- Availing of services like maintenance upkeepment allied services and facilitiesamenities etc. from Belvedre Gardens Limited.

10. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNIGS ANDOUTGO

Information in accordance with the provisions of Section 134(3)(m) of the Companies Act2013 read with Rule 8 of the Companies (Accounts) Rules 2014 regarding conservation ofenergy technology absorption and foreign exchange earnings and outgo is annexed asAnnexure I forming part of this Report.

11. RISK & MITIGATING STEPS

The Company has identified various risks faced from different areas. As required underthe SEBI (Listing Obligations & Disclosure Requirements) 2015 the Board has adopteda Risk Management Policy whereby a proper framework is set up. Appropriate structures arepresent so that risks are inherently monitored and controlled. A combination of policiesand procedures attempts to counter risk as and when they evolve.

The Company has also formed a Risk Management Committee which monitors the riskelements and mitigation procedures at periodical intervals. The constitution and terms ofreference are set out in details in the Corporate Governance Report. The risks and itsmitigating factors are discussed by the Committee and subsequently placed before theBoard.

12. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The composition and terms of reference of the Corporate Social Responsibility Committeehave been furnished in the Corporate Governance Report forming part of this Report. Thesaid policy may be referred to on the Company's official website www.ludlowjute.com.

The Company wishes to inform the members that it is well aware of its socialresponsibilities. However CSR in terms of Section 135 of the Companies Act 2013 was notmandated by the Board in view of impact on the shareholders given the then economicsituation of the Company in FY 15 and going into FY 16.

The Board took note that there has been an improvement in the Company's performancebut the jute industry being volatile in nature the performance stability would beobserved. Identification of activities for CSR is in process and is to be studied andpresented to the Board.

13. VIGIL MECHANISM/WHISTLE BLOWER POLICY

A Vigil Mechanism/Whistle Blower Policy has been formulated by the Company for itsDirectors and Employees. The policy allows intimation by affected persons in good faith ofany concern or misconduct through a written communication. The Audit Committee overseesthe Vigil Mechanism for disposal of the complaints. The said policy may be referred to onthe Company's website www.ludlowjute.com.

14. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mrs. Puja Guin resigned as the Company Secretary of the Company w.e.f. 16th May 2015and in her place Ms. Minu Rohila was appointed as the Company Secretary and ComplianceOfficer w.e.f. 2nd November 2015.

None of the Directors of the Company are disqualified for being appointed as aDirector as specified in Section 164(2) of the Companies Act 2013.

I. Declaration from Independent Directors on Annual Basis

The Company has received necessary declarations from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 that they meet the criteria ofIndependence laid down in Section 149(6) of the Companies Act 2013.

II. Nomination and Remuneration Policy

The Company follows a policy on nomination and remuneration of Directors and SeniorManagement Employees. The Nomination and Remuneration Committee reviews the compositionand diversity of the Board keeping in view the requirements of the Companies Act 2013and Listing Agreement and recommands to the Board appointment/re-appointment of eligiblepersonnel including their terms of appointment and remuneration. The Nomination andRemuneration Policy including criteria for determining qualifications positive attributesand independence of a Director has been formulated. The said policy may be referred to onthe Company's website www.ludlowjute.com.

The performance of the Board has been evaluated as per the policy laid down in thatregard.

III. Ratio of Remuneration of each Director

Details of Ratio of Remuneration of each Director to the median employee's remunerationis annexed as Annexure IV forming part of this Report.

15. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 of the Companies Act 2013 with respectto Directors' Responsibility Statement it is hereby confirmed:

a) That in the preparation of the annual accounts for the financial year ended 31stMarch 2016 the applicable Accounting Standards had been followed;

b) That the Directors have selected such accounting policies and applied themconsistently and made judgements and estimates that were responsible and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit/loss of the Company for that period;

c) That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

d) That the Directors have prepared the accounts for the financial year ended 31stMarch 2016 on 'a going concern' basis;

e) That the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and operating effectively;

f) That the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.

16. BOARD MEETINGS

The Board of Directors of the Company met four times during the financial year ended31st March 2016 at a gap not in exceeding one hundred and twenty days as per Section 173of the Companies Act 2013. Details are available in the Corporate Governance Reportforming part of this Report.

17. AUDIT COMMITTEE

The composition and terms of reference of the Audit Committee have been furnished inthe Corporate Governance Report forming part of this Report. There have been no instanceswhere the Board has not accepted the recommendations of the Audit Committee.

18. PARTICULARS OF EMPLOYEES

No employee of the Company was in receipt of remuneration exceeding the limit asprescribed under Section 134 of the Companies Act 2013.

19. FIXED DEPOSIT

Your Company has not accepted any deposits from public in terms of Section 73 of theCompanies Act 2013 read with the Companies (Acceptance and Deposits) Rules 2014.

20. SUBSIDIARY COMPANIES

During the year no Company became or ceased to be a subsidiary joint venture orassociate of the Company.

The Performance and Financial position of the subsidiaries are as hereunder:

Financial Position Sijberia Industries Ltd. Ludlow Exports Ltd.
Reporting Currency INR INR
Share Capital 10440 2500
Reserves and Surplus 10795 489
Total Assets 21401 3172
Total Liabilities 21401 3172
% of Shareholding 53.91% 100%
Performance Sijberia Industries Ltd. Ludlow Exports Ltd.
Turnover 1351 241
Profit before Tax 453 219
Provision for Taxation 151 68
Profit after Tax 302 151
Proposed Dividend Nil Nil

21. CONSOLIDATED FINANCIAL STATEMENTS

As stipulated by Regulation 33 of the SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 the Consolidated Financial Statements have been preparedby the Company in accordance with the applicable Accounting Standards. The AuditedConsolidated Financial Statements together with Auditors' Report form part of the AnnualReport.

22. EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

No material changes and commitments affecting the Financial Position of the Companyhave occurred between 31st March 2016 and the date of Board's Report.

23. LISTING WITH STOCK EXCHANGE

Your Company is listed with Bombay Stock Exchange Limited and has paid listing fees forthe financial year 2016-17.

24. STATUTORY AUDITORS

In the 35th AGM held on 5th September 2014 M/s Singhi & Co. CharteredAccountants had been appointed as Statutory Auditor of the Company for a period of threeyears. Ratification of the appointment of Statutory Auditors is being sought from themembers of the Company at the ensuing AGM.

Further the report of the Statutory Auditor along with notes to Schedules is enclosedto this Annual Report. The observations made in the Auditors' Report are self explanatoryand therefore do not call for any further comments.

25. COST AUDITORS

As per directives of the Central Government and in pursuance to the provisions ofSection 148 of the Companies Act 2013 read with Rules framed thereunder the Company isrequired to carry out an audit of Cost Accounts maintained by the Company in respect ofeach financial year. In view of the same M/s Prasad & Co. Cost Accountants have beenappointed as Cost Auditors to conduct the audit of Cost Records of your Company for thefinancial year 2016-17. The remuneration proposed to be paid to them recommended forratification by the Audit Committee requires ratification of the shareholders of theCompany. In view of this your ratification for payment of remuneration to Cost Auditorsis being sought at the ensuing AGM.

26. SECRETARIAL AUDIT

In terms of Section 204 of the Act and Rules made thereunder Mr. B. N. KhandelwalPracticing Company Secretary has been appointed as Secretarial Auditor of the Company. Thereport of the Secretarial Auditor is enclosed as Annexure III to this Report. The Reportis self explanatory.

27. ENVIRONMENT AND SAFETY

Pioneering green business practices is the buzzword today. Your Company firmly believesin environment protection and conservation of natural resources to the extent possible. Wehave taken initiative to produce eco-friendly product while complying with environment andpollution standards. Safety in all aspects of manufacturing is given full attention bythe Company.

The Company has also obtained certification under ISO 14001:2004 for its EnvironmentalManagement Systems.

28. APPRECIATION

Your Directors wish to place on record their appreciation for the commitment andcontributions made by the employees. We would like to express our sincere gratitude to theBanks Government Authorities Customers Dealers and all Stakeholders for theircontinued support to the Company. We value the enduring relation and co-operation from allassociates.

For and on behalf of the Board
Registered Office :
6 Nandalal Basu Sarani
(formerly: Little Russell Street) R. V. Kanoria Ajay Todi
Kolkata - 700 071 Non-Executive Chairman Managing Director
Dated : 9th May 2016