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Ludlow Jute & Specialities Ltd.

BSE: 526179 Sector: Industrials
NSE: N.A. ISIN Code: INE983C01015
BSE 00:00 | 22 Jun 79.95 0.55






NSE 05:30 | 01 Jan Ludlow Jute & Specialities Ltd
OPEN 78.35
52-Week high 132.90
52-Week low 74.55
P/E 47.87
Mkt Cap.(Rs cr) 86
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 78.35
CLOSE 79.40
52-Week high 132.90
52-Week low 74.55
P/E 47.87
Mkt Cap.(Rs cr) 86
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

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 2017.


Particulars 2016-2017 2015-16
Sales excluding excise duty 350.83 351.58
Profit before Finance Costs and Depreciation 18.90 17.64
Less : Finance Costs 2.83 3.14
Gross Profit 16.07 14.50
Less: Depreciation and amortisation 5.02 5.86
Profit before Exceptional Items and Tax 11.05 8.64
Less/ (Add): Exceptional items - -
Profit before tax 11.05 8.64
Less: Tax expenses 3.67 3.00
Profit for the Year 7.37 5.64
Add: Balance as per last Financial Statements 19.66 16.25
Profit available for appropriations 27.03 21.89
General Reserve - 0.28
Proposed Dividend on Equity Shares - 1.62
Corporate Dividend Tax - 0.33
Total - 2.23
Balance carried forward to Balance Sheet 27.03 19.66


The Board of Directors recommends for consideration of shareholders at the AnnualGeneral Meeting a Dividend @ 25% (' 2.50 per share) on Equity Shares of Rs 10/- each forthe year ended 31st March 2017.


The Company has not transferred any amount to General Reserves during the current year.


During the year under review the Company's sale was Rs 354.28 crores (includingexports of Rs 52.75 crores) against sales of Rs 355.07 crores (including exports of Rs45.93 crores) during the previous year. The production was 40544 M.T. against 45372 M.T.during the previous year. This was primarily due to higher production of lighter 580grams' Bags for Govt. supplies in FY17; and the significant impact of labour availabilityfollowing demonetisation in November 2016.

Raw Jute has seen major volatility in the year gone by. In the period Jan-July 2016jute availability was low as a fallout of lower raw jute production in the previous year(harvested in July/August 2015). This led to record high prices of jute in Q1/Q2 FY17.Favourable weather in the sowing season in March-April 2016 and satisfactory monsoonsstimulated high jute production following which jute prices dropped sharply aroundSeptember 2016. We are happy to report that the Company withstood this volatilityeffectively in FY17.


i) Industry Structure And Developments

Through concerted efforts the Jute industry conti nued to highlight the eco-friendlynature of Jute to all stakeholders; encouragement of eco-friendly jute packaging via JPM(Jute Packaging Materials) Act 1987 was continued in the year gone by.

Faced with rigors of poor jute quality disruption in labour supply followingdemonetisation in November 2016 and delayed Government orders in the Rabi Season theindustry sufferred lower production and higher labour costs. It is apt to menti on thatthe Gol's demonetisati on announcement enabled us to avoid the risks and difficultiesassociated with cash payments to workers and we extended all help to our workers forenabling direct wage payments in workers' bank accounts.

In FY17 we saw good foodgrain production whereby the jute bags offiake forecastremained healthy. Hence the year gone by witnessed sustained demand for jute sacking.

Continuous increase in wage costs coupled with labour productivity issues remain thesingle biggest worry for the industry burdened with competition from Bangladeshi juteproducts produced with cheap de-unionised labour.

ii) Opportunities

Gol's sustained effort for ensuring quality supplies by all Mills has given duecredence to Ludlow's age-old unstinted focus on quality and ethical operations.

Global awareness and focus on climate change is increasing day by day with naturalfibres finding favour with consumers all over the world. Jute's status as the mostsustainable renewable biodegradable and eco-friendly natural fibre has been reinforcedas the world grapples with pollution control problems wrought by synthetics and the risingawareness about the associated disposal issues leading to high total cost of usingsynthetics.

The Jute industry is still suffering from the import issues despite the imposition ofAnti dumping duty on jute imports from Bangladesh with free flow of sacking material stillcontinuing at the time of writing.

Use of Jute geotextiles for road applications received a major boost during the year.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.

We are seeing increased institutional support for inculcating modern Jute farmingpractices like use of certified seeds row-sowing and mechanised de-weeding which wouldhelp increase yields.

We have seen pro-active efforts from the Textile Ministry for supporting modernisationand exposure of the Jute Industry in the year gone by and this augurs well for the future.

iii) Threats/Risks and Concerns

Following are the major areas of risks and concerns:

a) With annual review of the Jute Packaging Material Act 1987 the jute industryconstantly faces uncertainty with respect to government supplies. Despite its eco-frientlynature and ability to withstand multiple use jute industry is forced to plead its caseeach year for jute packing for foodgrain which is a major part of the industry's demand.

b) Adhoc absenteeism shortage of skilled labour and union activism further add to highmanpower costs. There is an urgent need for organised training facilities for attractingnew workers to the industry at an early age.

c) Weather plays a vital role while sowing growth as well as in the post harvestperiod when water is required for reffing.

d) Bangladeshi Govt. supports its local jute industry by providing interest subventionsand export subsidy to its local industry. The fate of export benefits to the Indian Juteindustry especially Duty Drawback post-GST remains unclear.

e) Usage of credible mass communication for educating the masses about the benefits ofJute is essential for growing mass market applications in the domestic market.

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 conti nues to gain greater credibility with good governance in themonitoring of Government procurement of foodgrain sacking bags which augurs well for thefuture.

After the highs of January-September 2016 prices for jute used for making sacking havenormalised significantly whereby the Government has made substantial savings in bagprocurement costs. The weather forecast for the current year is also normal and we havealready seen favourable sowing season weather in March 2017. Good agricultural productionis expected to further boost demand for jute products in FY18.

The Indian Meteorological Department has again already predicted a good monsoon in 2017whereby record jute production is expected in 2017.

As seen in the last year with higher foodgrains production higher government sackingoffiake is expected. Hence Government sacking orders for jute would remain robust.However the export markets for India particularly Jute Yarn will continue to seeGovernment-supported low-wage Bangladeshi products providing stiff competition.

Increasing demand for natural fibre products and new applications of jute especiallyin technical areas like roads and erosion control is likely to give a fillip to the juteindustry.

Although the absolute numbers are still low we are witnessing a surge in use ofnatural fibres especially jute in lifestyle as well as technical areas. Use ofgeotextiles especially for road construction has received a great impetus in the lastyear with large allocations made by various states especially North East for the same.

Jute is gaining increasing popularity as the world's most sustainable natural fibrewith a crop cycle of a mere 120 days. Environment friendly products are likely to become afirst choice for an increasingly enlightened population in India as well.

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 preventi ng 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.

The Company's new ERP Software has also been implemented and trial runs in March 2017have been successful.

vii) Industrial Relations Front

Your Company maintained good industrial relations during the year under review. Inaddition to various staff welfare schemes a renewed focus on sanitati on and hygiene hasbeen taken up. The Company seriously propagated the importance of the Jute specific PGDJTMcourse at Calcutta University and has sponsored students for the course as well.

With full support from Ludlow management despite the initial difficulties faced byworkers in geffing cash during the demonetization period the workers have acceptedbanking channels enthusiastically.

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.


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.


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 Annual Return for theyear ended 31st March 2017 in Form No MGT 9 is annexed as Annexure II forming part ofthis Report.


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.


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. 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 had 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 Belvedere Gardens Limited.


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.


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.


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

The Company wishes to inform the members that it is well aware and taking care of itssocial responsibilities and during the year the gross amount spent by the Company as CSRexpenditure is Rs 8.47 Lacs.

In terms of provisions under Section 135 of the Companies Act 2013 the CSR expensesto be incurred by the Company during the year 2016-17 was Rs 3.70 lakhs. The Companycomplied with all the necessary provisions of the Companies Act 2013 by spending thesaid amount on the activities as identified and approved by the CSR Committee.


A Vigil Mechanism/Whistle Blower Policy has been formulated by the Company for itsDirectors and Employees.

The policy allows intimati on by affected persons in good faith of any concern ormisconduct through a written communication. The Audit Committee oversees the VigilMechanism for disposal of the complaints. The said policy may be referred to on theCompany's website


Ms. Minu Rohila resigned as the Company Secretary & Compliance Officer of theCompany w.e.f 17th September 2016 and in her place Ms. Madhuri Pandey was appointed asthe Company Secretary & Compliance Officer w.e.f 1st March 2017.

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 declarati ons 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 Companies Act 2013 andListi ng Agreement and recommends 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

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 Rati o of Remunerati on of each Director to the median employee's remuneration is annexed as Annexure IV forming part of this Report.


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 2017 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 2017 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.


The Board of Directors of the Company met four times during the financial year ended31st March 2017 at a gap not exceeding one hundred and twenty days as per Section 173 ofthe Companies Act 2013. Details are available in the Corporate Governance Report formingpart of this Report.


The composition and terms of reference of the Audit Committee have been furnished inthe Corporate Governance Report forming a part of this Report. There have been noinstances where the Board has not accepted the recommendations of the Audit Committee.


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


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


During the year no Company became or ceased to be a subsidiary joint venture partneror associate of the Company. The Performance and Financial position of the subsidiariesare as hereunder: (Rs in 000)

Financial Position Sijberia Industries Ltd. Ludlow Exports Ltd.
Reporting Currency INR INR
Share Capital 10440 2500
Reserves and Surplus 11028 607
Total Assets 21599 3173
Total Liabilities 21599 3173
% of Shareholding 53.91% 100%
Performance Sijberia Industries Ltd. Ludlow Exports Ltd.
Turnover 1274 212
Profit before Tax 353 186
Provision for Taxation 120 56
Profit after Tax 233 130
Proposed Dividend NIL NIL


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.


No material changes and commitments affecting the Financial Position of the Companyhave occurred between 31st March 2017 and the date of Board's Report.


Your Company is listed with Bombay Stock Exchange Limited and has paid listing fees forthe financial year 2017-18.


Section 139 of the Companies Act 2013 lays down the criteria for appointment andmandatory rotation of Statutory Auditors. Pursuant to Section 139 and the Rules madethereunder it is mandatory to rotate the Statutory Auditors on completion of two terms offive consecutive years. The Rules also lay down the transitional period that can be servedby the existing auditors depending on the number of consecutive years for which an auditfirm has been functioning as auditors in the Company.

The present auditors M/s Singhi & Co. Chartered Accountants who had beenappointed as Statutory Auditors of the Company will be completing their transitionalperiod i.e. a period of three years at the ensuing AGM. After deliberations at the AuditCommittee meeting held on 28th April 2017 Audit Committee Chairman recommended to theBoard the appointment of M/s. J. K. Agarwal & Associates as the Statutory Auditors ofthe Company for a period of 5 years to hold office from the conclusion of 38th AGM tillthe conclusion of 43rd AGM subject to approval by the members of the Company at theensuing AGM and same shall be subject to ratification in every subsequent Annual GeneralMeeting till the sixth such meeting by way of passing an ordinary resolution as perSection 139 of the Companies Act 2013 and Rule 3 (7) of the Companies (Audit andAuditors) Rules 2014 on a remuneration to be mutually agreed.

Further the report of the Statutory Auditors 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.


As per directives of the Central Government and in pursuance to the provisions ofSection 148 of the Companies Act 2013 read with Rules framed there under the Company isrequired to carry out an audit of Cost Accounts maintained by the Company in respect ofeach financial year. As per recommendation from Chairman of Audit Committee M/s Prasad& Co. Cost Accountants have been appointed as Cost Auditors to conduct the audit ofCost Records of your Company for the financial year 2017-18. The remuneration proposed tobe paid to them recommended for ratification by the Audit Committee requiresratification by the shareholders of the Company. In view of this your ratification forpayment of remuneration to Cost Auditors is being sought at the ensuing AGM.


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.


Pioneering green business practices is the buzzword today. Your Company firmly believesin environment protection and conservati on of natural resources to the extent possible.We have taken initiatives to produce eco-friendly products while complying withenvironment and pollution standards. Safety in all aspects of manufacturing is givenfull attention by the Company.

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


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

Registered Office: For and on behalf of the Board
KCI Plaza 4th Floor
23C Ashutosh Chowdhury Avenue
Kolkata - 700 019 R.V. Kanoria Ajay Todi
Dated: 28th April 2017 Non-Executive Chairman Managing Director

Information under Section 134(3)(m) of the Companies Act 2013 read with Companies(Disclosure of Particulars in the Report of Board of Directors) Rules 1988 and Rule 8(3)of Companies (Accounts) Rules 2014 and forming part of the Board's Report.


As reported earlier the Company accords high priority to Energy Conservation.

(a) During the year the Company has taken various measures to economize on Electricityconsumption by - 0 Use of LED lights to minimize energy consumption.

• Maintenance of all machines including boiler and compressor to make them energyefficient and minimize losses.

• Power Factor sustained at significantly high levels by adding capacitor bankswhere required.

• Optimizing transformer uses and load distribution.

• Installation & Commissioning of Roof Top Solar Power Plant.

• Installation of VFDs with bypass distribution panel.

(b) The Company has been making investment on continuous basis for the purpose ofEnergy Conservation.


Research & Development (R & D)

(a) Absorption of technology :

The Company is a member of the Indian Jute Industries Research Association (IJIRA) andNational Jute Board (NJB) the prime Research bodies for the Jute Industry and is gettingthe benefits thereof.

(b & c) Benefit and future plan of action :

The Company derives benefits by higher value addition and per unit realization of itsproducts.

(d) Expenditure on R & D :

The Company contributes to the Indian Jute Industries Research Association for Researchand Development. Development of new products to meet new customer requirements is anongoing process.


(a) Export activities :

During the year under review the FOB value of the exports of the Company was Rs 5115lacs as against '4531 lacs in the previous year.

(b) Total foreign exchange used and earned :

Used ' 6805 lacs
Earned ' 5115 lacs