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Ludlow Jute & Specialities Ltd.

BSE: 526179 Sector: Industrials
NSE: N.A. ISIN Code: INE983C01015
BSE 00:00 | 22 Apr 61.65 1.00
(1.65%)
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64.90

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NSE 05:30 | 01 Jan Ludlow Jute & Specialities Ltd
OPEN 64.90
PREVIOUS CLOSE 60.65
VOLUME 3276
52-Week high 103.00
52-Week low 53.35
P/E 68.50
Mkt Cap.(Rs cr) 66
Buy Price 61.65
Buy Qty 10.00
Sell Price 62.45
Sell Qty 20.00
OPEN 64.90
CLOSE 60.65
VOLUME 3276
52-Week high 103.00
52-Week low 53.35
P/E 68.50
Mkt Cap.(Rs cr) 66
Buy Price 61.65
Buy Qty 10.00
Sell Price 62.45
Sell Qty 20.00

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 2018.

1. FINANCIAL SUMMARY

(Figs in ' in Crores)

Particulars 2017-18 2016-2017
Total Income 337.22 361.04
Profit before Finance Costs Depreciation Tax and Exceptional Items 12.38 18.23
Less : Finance Costs 4.18 2.85
Less: Depreciation and amortisation 5.23 5.31
Less/ (Add): Exceptional items - -
Profit before tax 2.97 10.07
Less: Tax expenses 1.17 3.32
Profit for the Year 1.80 6.75
Other Comprehensive income for the year net of tax 1.75 0.69
Total Comprehensive income for the year 3.55 7.44

2. DIVIDEND

The Board of Directors recommends for consideration of shareholders at the AnnualGeneral Meeting a Dividend @ 20 % ('2/-per share) on Equity Shares of '10/- each for theyear ended 31st March 2018.

3. TRANSFER TO RESERVES

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

4. OPERATIONS

During the year under review the Company's sale was '328.11 crores (including exportsof ' 75.74 crores) against sales of '354.28 crores (including exports of ' 57.45 crores)during the previous year. The production was 41968 M.T. against 40544 M.T. during theprevious year. Revenue from operations is lower mainly due to lower raw jute prices havingconsequential impact on prices of Finished Goods.

Raw jute market remained sedate with steady availability during FY18 after havingwitnessed extreme volatility in Q1/Q2 FY17. We have seen favorable weather conditionsduring the March/April 2018 sowing time (which saw record number of Kalbaisakhithundershowers) in the South Bengal belt which is the primary source for sacking jute forthe industry. However unconfirmed reports on sowing area reduction have offset theoptimism on raw jute availability. During FY18 Bangladesh imposed a ban on exports ofuncut jute to protect its own jute industry.

5. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

i) Industry Structure And Developments

The Government has extended (until June 2018) the Order for compulsory packaging ofFood Grains (90%) and Sugar(20%) vide Jute Packaging Materials (Compulsory use in packingcommodities) Act 1987. Extension of the same is essential to protect the interest ofmillions of people associated with jute cultivation and manufacture of jute products. Weare optimistic that this will continue.

Enhancement of export benefits w.e.f. 1st November 2017 announced by theGovernment under the MEIS Scheme coupled with a weakening Indian currency would give afillip to the country's export efforts.

The jute industry has seen significant increase in investments in the recent past dueto need for improved efficiencies and economies of scale in the face of increasing labourcosts and competition from dumped exports from Bangladesh.

Movement towards jute based consumer goods aided by increasing environmental awarenessand lifestyle changes is quite perceptible.

ii) Opportunities

With the theme of World Environment Day 2018 being "Beat Plastic Pollution"and as per the reportedly planned Govt. communications the awareness level about theharmful effects of synthetics would increase exponentially. The

8 Ludlow Jute & Specialities Limited

concept of Green Social Responsibility and green good deeds is gaining ground. This isthe right time to propagate our own theme of "Replace Responsibly" wherebyplastic products are replaced with eco-friendly products in areas deemed feasible.

Jute's status as the most sustainable renewable biodegradable and eco-friendlynatural fibre has been reinforced as the world continues to grapple with pollution controlproblems. There is rising awareness about disposal issues leading to high total cost ofusing synthetics; here lies the opportunity to offer jute consumer products including jutebags as a mass consumption product.

The time has come for Jute's versatile applications for lifestyle and promotional bagsdecoratives geo-textiles apparels composites upholstery furnishings and alsonon-wovens for both technical and non-technical purposes. The industry would do well totake advantage of various fabric-processing technologies available in for textiles.

Usage of eco-friendly jute sacks for packaging foodgrains under JPM Act 1987 is insynch with the government adopted UN sustainability goals of alleviating poverty zerohunger responsible consumption/production and climate change. Hence continued compulsoryjute packaging for foodgrains is likely to be an environmental necessity as well in timesto come.

iii) Threats/Risks And Concerns.

Following are the major areas of risks and concerns:

a) Attempt made for artificially lowering/capping the price being paid for sackingsupplied by the industry for packaging foodgrains to various government agencies is anarea of concern.

b) Despite its eco-friendly nature and ability to withstand multiple use jute industryis forced to plead its case each year for extension of JPM Act 1987.

c) Seasonal shortages of labour due to adhoc absenteeism change in new migrant labouravailability patterns shortage of skilled labour and union activism further add to highmanpower costs.

d) There is an urgent need for organised training facilities for attracting new workersto the industry at an early age.

e) Unbridled increase in wage costs without linkage to productivity in the face ofcompetition from Bangladeshi jute products produced with cheap de-unionised labour anddumped into India.

f) As an agricultural product Jute is at the mercy of the vagaries of weather.

iv) Segment-wise or Product-wise Performance.

The Company established a solar power plant w.e.f. 31.03.2017. Accordingly from Q1 FY18 the Company has started complying segment reporting as required by Ind AS-108.

v) Outlook.

Good agricultural production in India is expected to further boost demand for juteproducts in the medium term. With increased focus on increased farmer income and assuranceof a remunerative Minimum Support Price demand for packaging products would sustain.Indian Meteorological Department has again already predicted a third successive goodmonsoon.

With an election year 2019 coming up support for the Jute industry is expected toimprove at all levels. However continuous increase in Jute prices is not favourable forthe industry in face of competition from other natural fibres.

It is seen that jute-based consumer products are gaining increasing acceptance. Withthe increasing aversion to plastic bags owing to pollution threats increased usage ofjute products can be expected.

Sustained government demand for packaging materials for foodgrains coupled withincrease in worldwide offtake of eco-friendly diversified products is a pointer to thefact that barring any exigencies the jute industry is poised to move ahead.

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.

The Company's new ERP Software has been stabilised and further improvements areunderway.

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 sanitation and hygiene havebeen implemented.

The Company seriously propagated the importance of the Jute specific PGDJTM course atCalcutta University and has sponsored students for the course as well. We are happy toinform that a worker's daughter sponsored and regularly counselled by us throughout thetwo-year program would be qualifying as a Jute Technologist perhaps the first such casein the industry. We are hopeful that this will spur more girls to come forward for thesame.

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 Annual Return for theyear ended 31st March 2018 in Form No MGT 9 is annexed as Annexure II forming part ofthis 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.ludlowiute.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 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 upkeep allied services and facilitiesamenities etc. from Belvedere Gardens Limited.

10. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS 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 AND 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 and taking care of itssocial responsibilities and during the year the gross amount spent by the Company as CSRexpenditure is '5.62 Lacs.

In terms of provisions under Section 135 of the Companies Act 2013 the CSR expensesto be incurred by the Company during the year 2017-18 was ' 8.60 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.

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

Mr. A. C. Mukherjee Director of the Company has expressed his desire/intent to resignfrom the post of directorship of the Company w.e.f. 8th May 2018 due to his advancingage and on health grounds. He has been serving as Director since 14th March1996. The Board has taken note and accepted the same. The Board laces on record its deepappreciation of the invaluable contributions made by Mr. A. C. Mukherji during his tenorof 22 (Twenty-two) years as Directors of the Company.

Mr. Bharat Kumar Jalan has been appointed as the Additional Director of the Companyw.e.f. 7th May 2018.

The Board condoled the untimely demise of Mr. L.G. Toolsidass Director of the Companywho passed away on 18th April 2018. His contribution to the progress of the Company wasrecognised by the members.

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 Companies Act 2013 andListing 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 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 given 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 2018 the applicable Accounting Standards had been followed;

b) That the Directors have selected such accounting policies and applied themconsistently and made judgments 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 2018 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 ended 31stMarch 2018 at a gap not exceeding one hundred and twenty days as per Section 173 of theCompanies Act 2013. Details are available in the Corporate Governance Report forming partof this Report.

17. AUDIT COMMITTEE

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.

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 of Deposits) Rules 2014.

20. SUBSIDIARY COMPANIES

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 subsidiaries are as hereunder: ('in 000)

Financial Position Sijberia Industries Ltd. Ludlow Exports Ltd.
Reporting Currency INR INR
Share Capital 10440 2500
Other Equity 11372 715
Total Assets 21824 3268
Total Liabilities 21824 3268
% of Shareholding 53.91 100
Performance Sijberia Industries Ltd. Ludlow Exports Ltd.
Turnover 1148 188
Profit before Tax 193 146
Provision for Taxation 57 38
Profit after Tax 136 108

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 2018 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 2018-19.

24. STATUTORY AUDITORS

In the 38th AGM held on 4th September 2017 M/s. J. K. Agarwal& Associates. Chartered Accountants had been appointed as Statutory Auditors of theCompany for a period of five years. Ratification of the appointment of Statutory Auditorsis being sought from the members of the Company at the ensuing AGM.

Further the report of the Statutory Auditors along with notes to Schedules is enclosedwith this Annual Report. The observations made in the Auditors' Report are selfexplanatory and 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 there under the Company isrequired to carry out an audit of Cost Accounts maintained by the Company in respect ofeach financial year. Our serving Cost Auditors' firm M/s. Prasad & Co. had beendissolved due to the death of one of its partners. On recommendation of the Chairman ofthe Audit Committee M/s. SPK Associates. Cost Accountants having the surviving partnerof erstwhile M/s.Prasad & Co. as a Partner has been appointed as the new Cost Auditorof the Company to conduct the audit of Cost Records of your Company for the financial year2018-19. The remuneration proposed to be paid to them recommended for ratification by theAudit Committee requires ratification by the shareholders of the Company. In view ofthis your ratification for payment of remuneration to Cost Auditors is being sought atthe 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 initiatives to produce eco-friendly products while complying with environmentand pollution standards. Safety in all aspects of manufacturing is given full attentionby the Company. The Company has also obtained certification under ISO 14001:2004 for itsEnvironmental Management 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:
KCI Plaza 4th Floor
23C Ashutosh Chowdhury Avenue R.V. Kanoria Ajay Todi
Kolkata - 700 019 Non-Executive Chairman Managing Director
Dated: 7th May 2018

ANNEXURE I

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.

I. CONSERVATION OF ENERGY:

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 -

• Regular preventive maintenance of all machines including boiler and compressorto minimize power losses.

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

• Regular cleaning of panels of Roof Top Solar Power Plant.

• Use of energy efficient motors.

• Use of motion sensor based electrical switches. LED lights usage continued.

(b) Investments on continuous basis for the purpose of Energy Conservation.

II. TECHNOLOGY ABSORPTION:

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 value addition and being able to control costs.

(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.

III. FOREIGN EXCHANGE EARNINGS AND OUTGO:

(a) Export activities:

During the year under review the FOB value of the exports of the Company was ' 6775lacs as against ' 5115 lacs in the previous year.

(b) Total foreign exchange used and earned:

Used ' 4269 lacs
Earned ' 6775 lacs