| MANAGEMENT
DISCUSSION AND ANALYSIS REPORT
A. Industry Structure and Development
:
During the year, the Jute Industry witnessed an industry wide strike from 14th Dec 2009 to 12th Feb 2010 resulting
in loss of production for 61 days thereby adversely effecting the entire jute Industry and the terms of settlement
with Workers Unions has also resulted in a steep hike in wage cost of nearly 20% without any corresponding
benefit in the productivity and such continuous steep increases in wage cost without any linkage with productivity
is a cause of concern for everyone connected with the Industry.
The Demand for Jute goods was also affected because of partial dilution of the Jute Packaging Materials (Compulsory
use of packaging Commodities) Act, 1987 (JPMA) by the Government of India due to disruption in supply of Jute
Bags during the strike period. After end of strike, the Industry body is continuing its efforts with the Government
of India for restoration of JPMA to the pre-strike level of 100% Packaging for Food grains & Sugar & it is hoped
that as in the past the Government may favourably consider the same in the interest of farmers, workers,
environment etc.
B. Opportunities/Threats, Risks &
Concerns :
Opportunities
Jute being natural & environmental friendly fibre, opportunities has to be created by the Industry through R&D
and modernization of equipments so as to produce diversified & substitute products which are Cost Competitive
compared to other similar products available in the market or have potential for newer applications. Your Company
having created R&D facility & infrastructure over a long period of time for development of these products is
focusing more on such products & endeavouring to create opportunities in this segment of the Industry wherever
feasible.
Threats/Risks & Concerns
a) Continuous increase in Raw Jute Prices which has reached at an all time high level of Rs.3,500/- per
quintal for Standard TD-4 variety.
b) Frequent strikes in the Jute Industry causing erosion in regular demand of finished goods, which in
the long term would have an adverse impact on the Industry.
c) Steep increase in Wage Cost resulting from tripartite settlement in February 2010 without any
linkage to productivity.
d) Threat of dilution in the Jute Packaging Materials (Compulsory use for Packaging Commodities)
Act, 1987.
e) High Volatility in the foreign currencies & credit risk crisis in developed countries.
C. Outlook:
Raw Jute prices have reached to a record level of Rs.3,500/- per quintal for Standard Variety TD-4 and the
increasing trend of rising raw Jute prices since last year seems to have encouraged farmers to go for an higher
cultivation of Jute this year. Barring unforeseen circumstances it is therefore expected that there could be about
20% to 25% increase in Raw Jute production in the ensuing crop season compared to last season and that may
have some softening effect on the Raw Jute prices which have been rising unabated. The Union Government has
also announced about 15% increase in Minimum Support Price (MSP) for raw Jute for the ensuing season and
this step is also expected to encourage farmers to step up investment in the Jute Cultivation although the
current ruling market Price is much above the MSP.
On the domestic demand side of finished goods there is an expectation of good orders of B-Twill Bags for food
packaging from the Government whereas on the export side of late there has been sign of revival in the demand
particularly for jute yarn.
As in the earlier years your Company is continuously making efforts to plan its manufacturing capacity &
product mix in such a way so that these could be structured as per market requirement from time to time in the
shortest possible time frame. Simultaneously the Company is also making constant endeavours to restructure
some of its closed units so as to not only save on their overhead Costs which is being continuously incurred but
to also derive some return out of such Assets as may be feasible.
D. Internal Control System & Adequacy:
The Company has a proper internal control system in place of all across its operations. Internal audit work has
been assigned to a professional firm of Chartered Accountants and they have expressed their satisfaction about
the adequacy of internal control systems and procedures followed by the Company. The audit committee
reviews the observations of the internal auditors and implementation aspects on a regular basis.
E. Financial & Operating Performance:
During the year under review, production and sales/related income was 45586 MT and Rs. 24476 lacs respectively
compared to 56678 MT and Rs. 30660 lacs respectively in the previous year. Export Sales (CIF) was Rs. 4688
lacs compared to Rs. 14509 lacs in previous year.
The performance was affected due to loss of production for 61 days because of industry wide strike in the Jute
Industry from 14.12.2009 to 12.02.2010 and suspension of work at 100% EOU (Yarn) and (Weaving) Units
located at Rishra from 30.08.2009 to 08.12.2009 and from 06.09.2009 to 11.12.2009 respectively.
On 17.12.2009 the company got its 100% EOU (yarn) located at Rishra debonded from EOU scheme and
accordingly the said unit has become the Domestic Tariff Area (DTA) Unit.
As in the past your Company continued its focus on modernization, expansion and diversification hence during
the year a sum of Rs. 699 lacs was added to the block.
F. Material Development in Human Resources/Industrial
Relations front:
The Company continues to rationalize its workforce and put emphasis on providing quality training under Company’s
programme.
Shalimar Unit at Howrah remained closed since 18.05.2005, has now been permanently closed with due process
of law. Operations at Yarn Unit and Libra Carpet Unit located at Choudwar, District. Cuttack, Orissa and 100%
EOU Yarn Unit at Konnagar, West Bengal also continued to be under suspension.
There was an Industry wide strike in West Bengal Jute Industry from December 14, 2009 to February 12, 2010.
G. Cautionary Statement :
Certain statements in this report may be construed as forward looking statements which have been made as
required by laws and regulations, as applicable. There are several factors, which would be beyond the control of
management and as such, may affect the actual results, which could be different from that as envisaged.
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