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Cheviot Company Ltd.

BSE: 526817 Sector: Industrials
NSE: N.A. ISIN Code: INE974B01016
BSE 00:00 | 26 Mar 674.00 -14.45






NSE 05:30 | 01 Jan Cheviot Company Ltd
OPEN 688.45
52-Week high 1106.67
52-Week low 640.00
P/E 9.30
Mkt Cap.(Rs cr) 436
Buy Price 674.00
Buy Qty 8.00
Sell Price 682.00
Sell Qty 13.00
OPEN 688.45
CLOSE 688.45
52-Week high 1106.67
52-Week low 640.00
P/E 9.30
Mkt Cap.(Rs cr) 436
Buy Price 674.00
Buy Qty 8.00
Sell Price 682.00
Sell Qty 13.00

Cheviot Company Ltd. (CHEVIOTCOMPANY) - Director Report

Company director report

Dear Members (Rs. in Lakhs)

The Board of directors present their report on the business and operations of theCompany along with the Audited Standalone Financial Statements for the financial yearended 31st March 2018.



For the year ended 31st March 2017

Revenue from operations 37611.67 39354.15
Operating profit after depreciation and amortisation 4999.12 3506.84
Add: Other income 2398.49 3075.43
Add: Exceptional items: Indirect taxes for earlier year - 60.51
Profit before tax 7397.61 6642.78
Tax expense 1990.00 1694.73
Profit for the year 5407.61 4948.05
Other comprehensive income 277.99 228.56
Total Comprehensive Income for the year 5685.60 5176.61
Retained earnings - opening balance 2643.29 2090.53
Profit for the Year 5407.61 4948.05
Transfer from other comprehensive income (remeasurement gain/loss net of tax) to retained earnings 125.21 155.67
Reclassification from other comprehensive income to retained earnings 63.93 (50.96)
Amount available for appropria!on 8240.04 7143.29
Out of above:
Transfer to special economic zone re-investment reserve account - (300.00)
Transfer to general reserve (4500.00) (4200.00)
Dividend including dividend distribution tax paid (54.29) -
Retained earnings - closing balance 3685.75 2643.29

The financial statements have been prepared in accordance with the Indian AccountingStandards (IND AS) notified under Section 133 of the Companies Act 2013 read withCompanies (Indian Accounting Standards) Rules 2015 as amended. The financial statementsfor the year ended 31st March 2017 have been restated in accordance with IND AS forcomparative information. For the purposes of transition to IND AS the Company hasfollowed the guidance prescribed in IND AS 101 "First-time adoption of IndianAccounting Standards" with 1st April 2016 as the transition date.


The Board of directors recommend a dividend of ' 1/- per ordinary share of face valueof ' 10/- each (i.e. 10 %) for the financial year ended 31st March 2018 aggregating to '43.11. Proposed dividend will be recognised as liability after approval of the members atthe ensuing annual general meeting.


We propose to transfer an amount of ' 4500 to the general reserve out of the profitfor the year.

(Rs. in Lakhs)


Revenue from operations profitability and earnings per share show under noted positionduring the year under review as compared to previous year :

For the year ended 31st March 2017
Revenue from operations 37611.67 39354.15
Export sales (C.I.F. value) 13029.12 11519.41
Operating profit 4999.12 3506.84
Other income 2398.49 3075.43
Profit before tax 7397.61 6642.78
Profit for the year 5407.61 4948.05
Earnings per ordinary share of face value of ' 10 (in ') 122.76 109.68

The overall performance of the Company during the year under review was much betterthan the previous year. The demand for Jute Goods remained good and steady. We witnessedsubstantial growth in production with better capacity utilisation during the year. Therewas significant growth in exports. However revenue from operations was down mainly due tolower prices of raw jute having consequential impact in prices of finished goods.

We are pleased to report that the Company achieved highest ever operating profit in itshistory which was higher by ' 1492.28 being ' 4999.12 during the year under review ascompared to ' 3506.84 in the previous year. Such excellent jump in operating profit isattributed to better margins on goods sold coupled with higher production due to bettercapacity utilisation and operational efficiency despite shortage of workers.

The bottom line was further improved by other income which was restricted to ' 2398.49on account of lower interest rates. Consequently profit for the year was higher by '459.56 being ' 5407.61 as compared to ' 4948.05 during the previous year.

The Company's export oriented unit at Falta Special Economic Zone has been runningsmoothly. Efforts are being made to increase customer base in conventional and diversifiedhessian fabrics and jute shopping bags.


a) Industry structure and developments

Under Jute Packaging Materials (Compulsory use in packing commodities) Act 1987(JPMA) order for compulsory packing of food grain at 90% and sugar at 20% continues up to30th June 2018. We are hopeful that the Government will further extend the Order andshall maintain the existing norms of packaging without further dilution in the largerinterest of Jute Industry.

The availability of raw jute was comfortable throughout the year at reasonable price.

In promoting the exports of Jute Goods from India Government has increased the rate ofrewards in the form of duty free scrips from 5% to 7% of realised FOB value in freeforeign currency under Merchandise Exports from India Scheme (MEIS) effective from 1stNovember 2017. Moreover National Jute Board is also continuing with scholarship schemefor children of jute mill workers export market development assistance and incentivescheme for acquisition of plant and machinery.

In order to achieve overall growth of the Jute Industry we are of the view that thereis a need to lay thrust on manufacturing more diversified jute goods carry out moreresearch and development and make required capital investments as a result thereof.

b) Opportunities and threats


• Jute Goods being bio-degradable and eco-friendly will always be preferredacross the world;

• Promotion of Jute diversified products by Government of India will help inincreasing market of jute goods.


• Shortage of workers posing threat to maintain stable capacity utilisation ;

• Continuation of JPMA on periodic extension basis and its dilution ;

• Farmers opt for alternate agricultural activities in absence of proper incentiveto grow jute crop on continuous basis.

c) Segment-wise or product-wise performance

The Company is engaged in a single business segment i.e. manufacturing and sale of JuteGoods. Hence disclosure requirements as required by Ind AS -108 are not applicable inrespect of business segment.

The geographical segments considered for disclosure are as under :


For the year ended 31st March 2018

For the year ended 31st March 2017

India Overseas Total India Overseas Total
Revenue 23618.01 13029.12 36647.13 27013.33 11519.41 38532.74
Non-current assets other than financial instruments * 15032.39 - 15032.39 15142.09 - 15142.09

• Non-current assets other than financial instruments include property plant andequipment capital work-inprogress investment property other intangible assetsintangible assets under development non-current tax assets (net) and other non-currentassets.

d) Outlook

As of now jute crop for the season 2018-19 appears to be lower despite favourableweather conditions as the initial reports of sowing percentage for the new crop are notvery encouraging. Moreover the carryover from last season would be lower than theprevious year. The cumulative effect of these adverse factors would lead to lesseravailability of raw jute in the next crop year. Consequently prices of raw jute areexpected to remain higher than previous year.

Demand of jute goods is buoyant. There has been regular flow of Government Orders andenquiries from overseas markets. The Company is making all efforts to maintain steadyproduction by incentivising and mobilising workforce in order to make effectiveutilisation of its production capacity to be able to execute orders.

Barring unforeseen circumstances the outlook for the current year appears to bepromising.

e) Risks and concerns

The key elements of business risks identified by the Company and measures taken tomitigate such risk are as under:

• Shortage of raw jute is a key element of risk. Availability of raw jute dependson crop size which in turn largely depends on weather conditions. The Company follows apolicy of regular procurement of raw jute in a planned manner linked with production andmaintains reasonable inventories.

• New generation machinery development and modernisation with latest technologyare the key to survival of Jute Industry. More efforts towards research and development inthis direction are required by the Jute Industry.

• Revenue concentration is an area of concern for the Company. The Company islargely dependent on Government Orders in domestic market. Efforts are being made toincrease the foreign customer base.

• Shortage of labour and rate of absenteeism remain a key area of concern. Theproductivity is affected by labour shortage. The Company is mobilising new workers andproviding them in-house training and incentivising workers on the basis of attendance fromtime to time.

• There is a possibility of new wage agreement which could have financial impacton account of increase in the wage cost.

f) Internal control systems and their adequacy

The Board has laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and operating effectively. Your Companyhas adopted policies and procedures for ensuring the orderly and efficient conduct of itsbusiness including adherence to the Company's policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial disclosures. The auditcommittee periodically reviews such control procedures to ensure that internal controlsare operating effectively.

M/s G.P. Agrawal Chartered Accountants Internal Auditor of the Company carried outnecessary checking in accordance with the aforesaid procedures and controls during theyear under review. The statutory auditors have also reviewed the laid down policies andprocedures of internal financial controls. No fraud was detected by the auditors.

g) Discussion on financial performance with respect to operational performance

The following are the significant areas of financial performance during the year underreview :

• Revenue from operations was at ' 37611.67 during the year as compared to '39354.15 during previous year;

• Operating profit of the Company increased by ' 1492.28 being ' 4999.12 duringthe year under review as against ' 3506.84 in previous year on account of better marginson goods sold coupled with higher production due to better capacity utilisation andoperational efficiency.

• Finance costs was ' 89.04 during the year under review as against ' 61.88 inprevious year.

• Inventories were valued at ' 6141.71 as at 31st March 2018 as against '6004.57 as at 31st March 2017. Increase in inventories was mainly due to higher stock ofraw material ;

• The Company had invested ' 351.36 in fixed assets inclusive of capital advancesduring the year.

h) Material developments in Human Resource / Industrial Relations front includingnumber of people employed

Industrial relations remained harmonious during the year under review. Shortage oflabour continues to remain an area of concern. Workers were incentivised for attendance.

As at 31st March 2018 the Company had 3926 employees (Previous year 3779 employees)on its roll.

Workers training program continue for the new incumbents in order to develop theirall-round skills and working knowledge. Besides the Company provides benefits andfacilities to deserving staffs under its various staff welfare schemes.

The Company has in place an anti-sexual harassment policy in line with the requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. All employees (permanent contractual temporary trainees) are covered underthis Policy. The Policy is gender neutral and is being monitored by a committeeconstituted by the Company for the said purpose. During the year under review nocomplaint of sexual harassment was received by the Company.

i) Cautionary statement

Statements made in this section of the report on future expectation performance andoutlook are based on the current perception of the Board. Actual results may differ fromthose expressed in the statements.


Pursuant to the approval of the Board at its meeting held on 24th May 2017 yourCompany completed Buy Back of 200000 fully paid-up ordinary shares of ' 10/- each(representing 4.43% of the total number of Ordinary Share capital of the Company as at31st March 2017) at the Buy Back price of ' 1500/- per ordinary share in September 2017for an aggregate amount of ' 3000. The Buy Back was made from all shareholders of theCompany holding shares as on record date for the Buy Back being 16th June 2017 on aproportionate basis under the tender offer route in accordance with the applicableprovisions of Securities and Exchange Board of India (Buy Back of Securities) Regulations1998 the Companies Act 2013 and the rules framed thereunder.


During the year the Company extinguished 200000 fully paid up ordinary sharesconsequent to Buy Back of 200000 ordinary shares in September 2017. Accordingly theissued subscribed and fully paid up ordinary share capital of the Company as at 31stMarch 2018 stood at ' 431.13 consisting of 4311250 fully paid up ordinary shares of '10/- each.


In terms of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("Listing Regulations") a separate report on corporategovernance together with a certificate from Ms. Aditi Jhunjhunwala practising companysecretary confirming compliance thereof is given in Annexure-I forming part ofthis report.


The extract of the annual return in the prescribed format (Form MGT-9) is annexedhereto as Annexure-II forming part of this report. The annual return of the Companyis available on the website of the Company (


Particulars of investments made by the Company have been disclosed in Note 9 and Note15 to the financial statements for the financial year ended 31st March 2018.


The Board of directors has developed a risk management policy for the Company andidentified therein the elements of risk and concern that may threaten the existence of theCompany. The audit committee and the Board of directors periodically review the riskelements and adopt a systematic approach to mitigate or reduce its impact. Discussion onrisks and concerns have been made in this report under the head 'management discussion andanalysis'.


All transactions with related parties were carried out in the ordinary course ofbusiness and on arm's length basis and are in compliance with the applicable provisions ofthe Companies Act 2013 and the Listing Regulations. No materially significant relatedparty transaction was made by the Company with its promoters directors or key managerialpersonnel etc. which may have potential conflict with the interest of the Company at largeor which warrants the approval of the shareholders. All related party transactions wereplaced before the Audit Commi"ee for approval on a quarterly basis. Prior omnibusapproval of the audit commi"ee was obtained for the transactions which were of arepetitive nature.

There was no material contract or arrangement or transactions at arm's length basiswith a related party during the year under review. Therefore disclosure in Form AOC-2 isnot required.


The information on conservation of energy technology absorption foreign exchangeearnings and outgo as prescribed under Section 134(3)(m) of the Companies Act 2013 readwith Rule 8(3) of the Companies (Accounts) Rules 2014 are provided in Annexure-III formingpart of this report.


During the year under review your Company had spent ' 90.56 towards CSR activities.The annual report on CSR activities as required under Section 135 of the Companies Act2013 read with Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules2014 and Rule 9 of the Companies (Accounts) Rules 2014 is given in Annexure-IVforming part of this report. The contents of Corporate Social Responsibility Policy of theCompany are available on Company's website(h"p:// ).


The Company has established a vigil mechanism / whistle blower policy and encouragesthe affected persons to report any genuine concern or misconduct for prompt redressal.Under the vigil mechanism / whistle blower policy the Company allows direct access to theChairman of the audit commi"ee in appropriate or exceptional cases to investigate thecomplaints on an anonymous basis with adequate safeguards. During the year no complaintwas reported to the audit commi"ee. The whistle blower policy is available on theCompany's website (h"p://


In terms of the provisions of the Companies Act 2013 Listing Regulations and theGuidance Note issued by Securities and Exchange Board of India annual performanceevaluation was conducted by the Board of directors of its own performance itsCommi"ees and independent directors. The nomination and remuneration commi"eecarried out annual performance evaluation of individual directors. The outcome of theannual performance evaluation showed an overall effectiveness in the performance of theBoard of directors its commi"ees and individual directors.

The evaluation of the Board of directors was based on criteria such as appropriatenessof Board composition and structure decisions passed by the Board of directors awarenesson Industry operations compliance with applicable laws succession planning strategicplanning implementation of guidelines or strategies decided by the Board of directorsetc.

The evaluation of the Commi"ees was based on composition functioningcompetencies of the members frequency of meetings procedures monitoring role advisoryrole timely reporting to Board of directors etc.

The evaluation of directors was based on criteria such as preparedness for boardmeetings a"endance judgments contribution to risk management adherence toCompany's code of conduct and corporate governance pro-activeness in highlighting areasof concern sharing of knowledge and business information disclosure of interest andlists of relatives in timely manner etc.


The members at the annual general meeting of the Company held on 25th August 2017appointed Mr. Utkarsh Kanoria (aged 25 years) (holding DIN 06950837) as the WholetimeDirector of the Company for a period of five years with effect from 24th May 2017 whoseoffice shall be liable to determination by retirement of directors by rotation.

Mr. Nawal Kishore Kejriwal (Mr. Kejriwal) (holding DIN 00060314) retires from the Boardof directors by rotation at the forthcoming annual general meeting and being eligibleoffers himself for re-appointment.

Mr. Kejriwal has been re-appointed as Wholetime Director of the Company by the Board ofdirectors for a period of one year with effect from 1st June 2018 subject to the approvalof the members at the forthcoming annual general meeting whose period of office shall beliable to determination by retirement of directors by rotation.

The present term of office of all the Independent Directors of the Company namely Mr.Navin Nayar (DIN 00136057) Mr. Sushil Kumar Dhandhania (DIN 00484489) Mr. Padam KumarKhaitan (DIN 00019700) and Mr. Parag Keshar Bha"acharjee (DIN 00081899) is due toexpire on 31st March 2019.

Based on the recommendation of nomination and remuneration commi"ee andperformance report of the independent directors the Board of directors at its meetingheld on 23rd May 2018 decided to re-appoint Mr. Navin Nayar (DIN 00136057) Mr. SushilKumar Dhandhania (DIN 00484489) and Mr. Padam Kumar Khaitan (DIN 00019700) as independentdirectors of the Company for a second term of five consecutive years to hold office from1st April 2019 to 31st March 2024 on the same terms and conditions subject to approvalof the members at the ensuing annual general meeting.

Mr. Parag Keshar Bhattacharjee (DIN 00081899) who has attained the age of 79 yearsshall retire from the Board of directors on completion of his term of office on 31stMarch 2019. The Board of directors places on record its appreciation to the servicesrendered by Mr. Parag Keshar Bhattacharjee during his association with the Company.

Brief details of directors seeking re-appointment have been given in the noticeconvening the annual general meeting.

All the independent directors have declared that they meet the criteria of independencelaid down in Section 149(6) the Companies Act 2013 and Regulation 16(b) and Regulation 25of Listing Regulations.


In compliance with the requirements of the Companies Act 2013 and Listing Regulationsthe nomination and remuneration committee follow the criteria laid down for identificationof persons who are eligible to hold the office of directorship key managerial personneland senior management personnel of the Company including determining qualificationspositive attributes and independence of the person and their remuneration and othermatters provided under Section 178 of the Companies Act 2013. The nomination andremuneration committee has affirmed that the remuneration paid to directors keymanagerial personnel and senior management personnel are as per the remuneration policy ofthe Company.

The remuneration policy including criteria for determining qualifications positiveattributes and independence of a director is available on the website of the Company( governance-jute/ ).


In terms of Section 134(5) of the Companies Act 2013 it is hereby stated to the bestof our knowledge and belief that :

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively;

(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.


The Board of directors met 4 times during the year under review. More details areavailable in the report on corporate governance.


The audit committee is constituted with three independent directors of the Company.More details on the audit committee are given in the report on corporate governance.


During the year under review Mr. Utkarsh Kanoria (holding DIN 06950837) was appointedas wholetime director of the Company. All the other key managerial personnel continue tohold their offices.


Information required pursuant to Section 197(12) of the Companies Act 2013 read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 has been provided in Annexure-V forming part of this report.

The details of employees prescribed under Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 forms part of the Annual Report. Howeverwith regard to the provisions of the second proviso to Section 136(1) of the CompaniesAct 2013 the Annual Report excluding the said information is being sent to the membersof the Company. The said information is available for inspection at the registered officeof the Company during working hours and any member interested in obtaining suchinformation may write to the Company Secretary and the same will be furnished on request.


The Company has not accepted deposits from Public under Section 73 of the CompaniesAct 2013 read with Rules framed thereunder.


Following disclosures are made under the Companies (Accounts) Rules 2014:-

(i) The financial summary or highlights are discussed at the beginning of this report;

(ii) There is no change in the nature of business;

(iii) There is no company which has become or ceased to be the Company's subsidiaryjoint venture or associate company during the year;

(iv) No significant and material order was passed by the regulators or courts ortribunals which impact the going concern status and its future operations;

(v) There have been no material changes and commitments affecting the financialposition of the Company which occurred between the end of the financial year to which thefinancial statements relate and the date of this report.


M/s Singhi & Co. Chartered Accountants (Firm Registration No. 302049E) wasappointed as statutory auditors of the Company by the members at the annual generalmeeting of the Company held on 25th August 2017 to hold office for a term of fiveconsecutive years from the conclusion of that annual general meeting until the conclusionof the sixth consecutive annual general meeting on a remuneration to be mutually agreedupon with the Board of directors.

There are no qualifications reservations or adverse remarks made by Singhi & Co.Statutory Auditors in their report for the financial year ended 31st March 2018.Pursuant to the provisions of section 143(12) of the Companies Act 2013 the StatutoryAuditors have not reported any incident of fraud to the audit committee during the yearunder review.


The cost accounting records maintained by the Company for the current financial yearending on 31st March 2019 are required to be audited pursuant to Section 148 of theCompanies Act 2013 read with Rules framed thereunder. In this regard the Board ofdirectors on the recommendation of audit committee had re-appointed M/s D. Radhakrishnan& Co. Cost Accountants (Registration No. 000018) to carry out the cost audit at aremuneration of ' 40000/- plus applicable taxes and re-imbursement of out of pocketexpenses incurred by them. The resolution included at Item No. 9 of the Notice conveningthe annual general meeting seek members' ratification to the remuneration payable to thecost auditor.


Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hadappointed M/s MR & Associates a firm of practising company secretaries (CoP 2551) toconduct Secretarial Audit of the Company. Report of the Secretarial Audit in Form MR-3 forthe financial year ended 31st March 2018 is enclosed as Annexure VI to thisreport. There are no qualifications reservations or adverse remarks made by theSecretarial Auditor in his report.


Your directors take this opportunity to convey their sincere gratitude to all thecustomers shareholders suppliers bankers financial institutions and the Government fortheir consistent support to the Company. The directors place on record their appreciationto all employees of the Company for their hard work and valued contribution.

For and on behalf of the Board CHEVIOT COMPANY LIMITED Harsh Vardhan Kanoria

Chairman and Managing Director Chief Executive Officer DIN :00060259

Place : Kolkata

Date : 23th May 2018