A REPORT ON

ANALYSIS OF JUTE INDUSTRY IN INDIA

             Submitted in partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

BY

G.M.SHAJAHAN

MBA III SEMESTER

R.NO: O8931E0034

Under the esteemed guidance of

P.GUNA SHEELA

Assistant Professor

Department of MBA

SRI KOTTAM TULASI REDDY MEMORIAL COLLEGE OF ENGINEERING

KONDAIR, ITIKYALA MANDAL,

MAHABOOB NAGAR- DISTRICT-519125 (AP)

DEPARTMENT OF MASTER OF BUSINESS ADMINISTRATION    

1

DEPARTMENT OF MASTER OF BUSINESS ADMINISTRATION

SRI KOTTAM TULASI REDDY MEMORIALCOLLEGE OF ENGINEERING

KONDAIR, ITIKYALA (MANDAL)

MAHABOOBNAGAR (DIST)-509125(A.P)(Affiliated to J.N.T.U.H)

CERTIFICATE

This is to certify that the industry analysis report on “Software Industry

in India” submitted by MS.G.M.SHAJAHAN in partial fulfillment of the

requirements for the award of degree of MASTER OF BUSINESS

ADMINISTRATION in Jawaharlal Nehru technological university –Hyd is a

record of bonafied work carried out by her in this department.

Internal guide Head of the department

Examiner:

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                                    ACKNOWLEDGEMENT

      I am thankful to our guide, for his motivation, help and continuous support which

made this industry analysis happen. I am also indebted to him for his invaluable

suggestions, which made me to correct my faults and improve myself.

      I express my deep sense of gratitude and thanks to B.PARIMALADEVI (Head of

Department) for her consistent support and guidance.  I am also thankful to her for

helping me find and overcome many problems faced during the period.

 I am very much obliged to “SRI KOTTAM TULASI REDDY MEMORIAL

COLLEGE” which has given me opportunity to carry our industry analysis in its

premises.I feel privileged to thank wholeheartedly our Director Dr.K.S.NAYANTHARA

for giving me this opportunity.

 

3

   

DECLARATION

  I here by declare that this project entitled “A STUDY OF REPORT ON JUTE

INDUSTRY IN INDIA” is a bonafied work carried out by me under the guidance of

P.GUNA SHEELA Assistant professor, Dept. of Management SKTRMC, Kondair. I

also declare that report is original and not submitted to any other university/ Institution

for the award of any degree / Diploma. 

Date:

Place:

                                           Signature of the student. 

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CONTENTS

S.NO TITLE PAGE NUMBER

1 INTRODUCTION1-4

2OBJECTIVES

5-6

3INDUSTRY STRUCTURE

6-9

4INDUSTRY PERFORMANCES

10-15

5INDUSTRY PRACTICES

16-17

6INDUSTRY ENVIORMENT

17-18

7NATURE OF COMPETION

19-20

8SWOT ANALYSIS F INDUSTRY

21-27

9LABOUR CONDITIONS

27-28

10RECENT ISSUES AND DEVELOPMENTS

29-30

11EXPORT GROWTH

30-31

12MAJOR PLAYERS OF JUTE INDUSTRY

32-43

13FINANCIAL ANALYSIS

44-48

14CONCLUSION

48-49

15 FINDINGS AND BIBILOGRAPHY49-50

5

6

7

INDUSTRY ANALYSIS

INDUSTRY

Definition

A basic category of business activity. The term industry is sometimes used to describe a

very precise business activity (e.g. semiconductors) or a more generic business activity

(e.g. consumer durables). If a company participates in multiple business activities, it is

usually considered to be in the industry in which most of its revenues are derived

INDUSTRY ANALYSIS

Definition

A market assessment tool designed to provide a business with an idea of the complexity

of a particular industry. Industry analysis involves reviewing the economic, political and

market factors that influence the way the industry develops. Major factors can include the

power wielded by suppliers and buyers, the condition of competitors, and the likelihood

of new market entrants

JUTE INDUSTRY ANALYSIS8

Jute is the most versatile fiber gifted to man by nature. Known mainly as the raw material

for making sacks, jute finds extensive use in the making of handicrafts today.

The products like bags, home furnishing, apparel, textile industrial goods, carpets &

handicrafts are made of the ECO-friendly natural fiber are JUTE PROD UCTS

HISTORY OF JUTE INDUSTRY

9

Indian Jute Industry

The jute industry occupies an important place in the Indian economy. Providing direct

employment to about 0.26 million workers and around 4.0 million workers indirectly in

the allied sectors, Indian jute industry is an integral part of the Indian Textile Industry. It

is a very old industry, predominant in the eastern part of India. The Government has

included the Jute Sector for special attention in its National Common Minimum

Programme.

Jute Technology Mission

The Government of India has started the "Jute Technology Mission" keeping in view the

growing contribution of the industry to the economy. This will benefit jute growers, the

workers engaged in the sector, jute entrepreneurs and others employed in related

activities. It will play a vital role in modernizing the jute industry and help the country to

reap the benefits of enhanced levels of jute diversification.

Jute Mills

Jute mills comprising the industry are located in West Bengal (the maximum number of

mills is here), Andhra Pradesh, Assam, Orissa, Uttar Pradesh, Bihar, Tripura and

Chhattisgarh. India has around 78 jute mills and the eastern state of West Bengal alone

has around 61 jute mills. The central government owns 6 jute mills, the state government

4, 2 jute mills are under cooperatives, and 64 jute mills are under private ownerships.

Earnings

This industry today accounts for a turnover of Rs 6,500 crore annually, contributing to

exports to the tune of nearly Rs.1000 crore. In the financial year 2006-07 (April-

September) exports of total jute products was at 104.3 thousand M.T whose value was

Rs. 583.55 crore.

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Organizations

Organizations which control the Indian Jute Industry are as follows:

National Centre for Jute diversification, Kolkata Jute Manufacturers Development Council, Kolkata National Jute Manufacturers Corporation Jute Corporation of India Ltd., Kolkata Birds jute & Exports Ltd. Institute of Jute technology, Kolkata Indian Jute Industries Research Association, Kolkata

Acts and Rules

The various Acts and Rules which govern the Indian Jute Industry are as follows: Jute & Jute Textiles Control Order, 2000 Jute Packaging Materials (Compulsory use in Packing Commodities), Act, 1987 Jute Manufactures Cess Act, 1983 Jute Manufactures Development Council Act, 1983

Advantages of Indian Jute Industry Largest production of raw jute in the world Largets production of jute finished goods Environment friendly packaging material Availability of large scale skilled and cheap labor Availability of entrepreneurial skills Huge export potential of jute products Large domestic market Flexible textile manufacturing systems

Demerits of Indian Jute Industry

Imports of cheap and alternative textiles from other Asian countries Use of old methods of manufacturing Poor supply chain management Huge decentralized and unorganized sector High production cost

OBJECTIVES

1) Enable millions of jute farmers to produce better quality jute fibre for

value added diversified jute products and enable them to enhance per hectare

yield of raw jute substantially.

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2) Facilitate the Jute Sector to attain and sustain a pre-eminent global

standing in the manufacture and export of jute products. 

3) Enable the jute industry to build world class state-of-the-art

manufacturing capabilities in conformity with environmental standards, and,

for this purpose, to encourage Foreign Direct Investment, as well as research

and development in the sector.

4) Sustain and strengthen the traditional knowledge, skills, and capabilities

of our weavers and craftspeople engaged in the manufacture of traditional as

well as innovative jute products.

.5) Expand productive employment by enabling the growth of the industry;

Make Information Technology (IT), an integral part of the entire value chain

of jute and the production of jute goods, and thereby facilitate the industry to

achieve international standards in terms of quality, design, and marketing.

.Increase the quantity of exports of jute and jute products by achieving a

CAGR of 15% per annum.

6) Involve and ensure the active co-operation and partnership of

State Governments, Financial Institutions, Entrepreneurs, and Farmers;

organization  in the fulfillment of these objectives.

JUTE INDUSTRY STRUCTURE

PRODUCTS

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Jute BagsJute bags imprinted with designs can be used for promotion of a company or as a corporate and personal gift.

Cotton BagsCotton bags in various shapes, styles and sizes are ideal for almost all occasions and can be put to number of uses.

Wine BagsWine bags in eco friendly materials are a perfect choice for storing your best wine and also for gifting purpose.

Designer BagsJute designer bags are manufactured in every possible design and have an inimitable style.

Christmas BagsChristmas bags are ideal for both personal use and corporate promotion and gifting.

Jute DressesWe manufacture an exclusive range of dresses in unusual patterns including stripes, checks and in different color combinations.

Jute Cushion CoversMade from eco friendly material, Jute cushion covers have been an inherent part of the home furnishings.

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Jute MatsAttractive jute mats in bright shade combinations and attractive weaves are easy to wash and maintain.

Jute TraysInnovatively designed and easy to clean, maintain and durable jute trays can last for years to come.

Jute PlacematsAttractive jute placemats in spectrum of shades and attractive weaves are easy to wash and maintain.

Jute CarpetsHand woven and machine made jute carpets are in innovative designs and patterns are in demand the world over.

Jute Fashion AccessoriesWe design and create elegant and highly fashionable jute accessories from superior quality and eco friendly jute.

Jute StationeryOur collection of jute stationery is both stylish and handy. These products are designed for both corporate and personal use.

JUTE NECKLACE

JUTE BANGLES AND CLIBS

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INDUSTRY PETFORMANCE

PRODUTION

15

Production of jute goods during 2000-01 was an all time record of 16.78 lakh tonnes as

against 14 lakhs tonnes in 1998-99. Production during 1999-2000 (April/Oct.) also

recorded a marginal increase by 1% to reach 9.37 lakh tonnes from 9.32 lakh tonnes

during the same period of last year. This increase in production is attributable to

comfortable raw jute availability at reasonable rates at the beginning of the current year,

stable domestic demand and consequent normal functioning of jute mills. If the current

trend is maintained, production of jute goods is likely to touch around 16 lakh tonnes.

PRODUCTION OF JUTE GOODS QTY : IN 000' M.T. VALUE : Rs / Crores

(APRIL / MARCH) HESSIAN SACKING CBC OTHERS TOTALCORRESPONDING CONSUMPTION OF RAW JUTE IN '000 BALES

1998– 99 413.9 676.3 30.5 5312.3 1433 8290

1999– 00 368.7 666.6 25.2 340.4 1400.9 8023

2000– 01 392.4 864.6 19.8 401.6 1678.4 9598

2001– 02 344.1 903.3 18.5 330.3 1596.2 9068

2002 – 03 344.5 909.2 8 328.5 1590.2 9087

2003 – 04 337.9 952.9 6.6 327.5 1624.9 9280

2004– 05 275.3 1034.3 5 286.2 1600.8 9142

2006 – 08 338.3 1000 5.4 278.1 1621.8 9262

2008 – 09 305.2 979.3 5.7 281.1 1571.3  

SALES

The sales of the top three jute companies have shown below. ( Rs ,in crores)

companies 2005 2006 2007 2008 2009GLOSTER JUTE MIL

LTD 1318 1362 1539 2782 2964JANTA JUTE MIL LTD 1129 1329 1456 1829 2041SADAT JUTE MIL LTD 1492 1812 2011 2930 2930

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Interpretation

GLOSTER JUTE MIL LTD: This is Public Sector Company. These company sales are continuously increased from 1318 cr in 2005 to 2964 cr in 2009.

JANATA JUTE MIL LTD: This is public Sector Company. These company sales are continuously increased from 1129 cr in 2006 to 2041 cr in 2009.

SADAT JUTE MIL LTD: This is Private Sector Company. These company sales are continuously increased from 1318 cr in 2006 to 2964 cr in 2009.

Jute company sales are increased year_by_year.

TURNOVER

Jute industry alone accounts for an annual turnover of Rs 6,500 crore and the value of

export of total jute products is nearly Rs1000 crore.

The Indian jute industry with a turnover of Rs 5,500 crore is finding more takers for

bio-degradable, eco-friendly jute made-ups both in the domestic and international

17

markets. The rising demand for value-added jute products has encouraged SME jute

players to go for diversification and modernization of their product base.

“Although the jute sector’s mainstay will be packaging material for agro-food

commodities, the small-scale units in the industry also need to expand their product

lines and enter into the production of non-traditional jute items such as soil saver,

decorative fabrics and special Hessian,” said Hukmi Chand Bang, proprietor of India

Jute Mills, a small-sized jute mill in Murshidabad, West Bengal.

Some small-scale jute mills in the country have already started using the natural fibre

to make a variety of items including fancy party bags, stylish clutch bags, laundry

bags, rucksacks, branded totes, shopping bag s and wine bags.

“Given that the market demand for value-added jute products is robust, most small-

scale units in the industry are looking at ways to take up product diversification,

while many are also making sincere attempts to revamp their stores and modernise

their machineries and equipments,” said Sanjay Dhelia, proprietor of Aaltex

International, a leading Kolkata-based manufacturer and exporter of jute products,

especially different types of fashionable jute bags.

Besides small jute players making an attempt to modernise their units, the Jute

Manufactures Development Council (JMDC) is also doing its bit by initiating a

massive modernisation drive in the jute sector to enable jute units to diversify their

product portfolio.

PROFITABILITY

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The Indian jute industry, which dates back to over a century, is one of the oldest

industries in the country. Dominated primarily by small-sized players, the industry is

an important generator of revenue and employment for a large section of the rural

population. Over the years, owing to increasing demand in international markets, the

industry has become largely export-oriented.

Although the market for Indian jute products has witnessed moderate growth in the

last decade, several factors have prevented it from expanding further. Some of these

factors include poor technology and stiff competition from Bangladeshi exporters.

In addition, the global economic recession has led to declining sales for most jute

exporters.

Notwithstanding the turmoil in the international markets, Indian jute exporters have

been reporting healthy margins in recent times. This can be attributed largely to the

sudden surge in demand for Indian jute products in the UK.

India’s jute exports in 2008-09 stood at an impressive Rs 200 crore, significantly

higher than the Rs 120 crore reported in 2007-08. Notably, a considerable share of

Indian jute products was exported to the European market.

According to market experts, the ban on plastic and non-biodegradable bags in the

UK has been the key factor behind the sudden increase in jute exports from India.

Moreover,

The volumes of jute exports from Bangladesh have been low due to poor monsoons

and crop failures. This has put the Indian SMEs in the jute segment in an

advantageous position.

To capitalise on the rising popularity and demand for Indian jute products, Indian

SMEs should focus on producing different varieties of jute items. They should also

ensure that their products are competitively priced in order to compete with the

Bangladeshi

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TOTAL DEMAND AND SUPPLY OF JUTE INDUSTRY

Though jute and jute products are enjoying growth in global demands, its production

has not increased accordingly, since paddy is coming out as a more lucrative harvest

for jute producers.

Even if the current market price for raw jute is Rs. 2,000-2,200 per quintal, the

harvesters are switching over to paddy production as they can generate more income

through it.

This is creating an acute gap between the demand and supply of jute, said Mr. AK

Barua, Marketing Manager Jute Corporation of India (JCI). Demand of various

procurement agencies for raw jute has increased to 2.4-2.5 million bales per year,

which was around 1.5 million bales before 2 years.

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IN CRORES

2003-044%

2004-058%

2005-0616%

2006-0724%

2007-0820%

2008-0928%

Demand for jute and jute products is rising across the world due to the awareness among

people regarding the benefits of the products made from eco-friendly materials such as

jute, said Mr. TK Mandal, Deputy Director, office of the jute commissioner

Around 70-75 percent of total jute production of the country is consumed domestically,

however, according to the Textile Minister Mr. Dayanidhi Maran, markets for jute should

also be developed in foreign countries as it’s a right time for jute fiber to cash on the

global trend in support of natural fibre.

He added that the stakeholders need to take efforts, such as modernizing work process

21

and exploring new markets, to make jute products price competitive. Jute producers have

not exploited the benefits of the technology up-gradation funds scheme, he added

INDUSTRY PRACTICES

DISTRIBUTION

. Under the Jute Packaging Materials Act, 1987

(JPM Act), the Government is empowered to consider and provide for the compulsory

of jute packaging material in the supply and distribution of certain commodities in

theinterests of production of raw jute and jute packaging material and of persons

engaged in

the production thereof and for matters connected therewith.

Sacking of Food grain and Sugar consumes approximately 58% of the raw jute produced

in the country. The jute sector occupies an important place in the economy of India in

General and eastern sector in particular. It is estimated that the jute industry provides

Directs employment to 0.37 million workers in organized mills and in diversified units

Including tertiary sector and allied activities and supports the livelihood of around 4.0

Million farm families. Therefore, there is a need for protection in the form of reserving

22

Certain commodities for packaging in jute.

PROMOTION

Promoting arrangements for better marketing and sale of jute.

Suggesting norms of efficiency for jute industry aiming at optimum production, cost

reduction, quality improvement and product standardization.

Devising marketing strategy for maintaining and improving of existing markets and

development of new markets outside India for jute manufactures.

Sponsoring and co-ordinating technilogical and economic research on matters directly

beneficial to the development of jute sector.

Promoting or undertaking the collection and formulationof statistics regarding jute

industry.

Propagating information useful to the growers,dealers and exporters of jute and

producers or manufacturers of jute goods.

Council in its effort towards prioritising promotional activities with focus on product-market linkage conducts or commissions product, market and entrepreneurs specific survey and studies.

-

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INDUSTRY ENVIORMENT

JUTE INDUSTRY LIFE CYCLE

Till 1947 Indian jute mills dominated the world jute market with 70% of its products

finding place in the global market. It was after the partition in 1947 when almost all jute

producing area went under East Pakistan (now Bangladesh) causing decline to Indian jute

market. At the same time, major jute consuming nations switched to bulk handling

systems and developed alternate synthetic packing materials. Two other issues faced by

Indian jute industry were:

(a) Dependence for raw jute on East Pakistan.

(b) Rapid decline of export market.

Gradually, jute goods exports declined by 30% from 70%. In spite of constraints, jute

goods production showed a gradual increment. In 1947, the total jute production was 10

lakhs MT and the same figure was 16.2 lakhs in 2003 MT respectively. In five decades,

Indian Jute industry expanded by 62%. In recent times plastic bags substituted jute bags

and thus jute was in the verge of extinction. In order to revamp jute industry, in 1987

Government of India reserved the packing of traditional commodities, viz, sugar, food

grains with jute material by proclaiming the Mandatory Jute Packaging Act (PJMA)

1987. Today PJMA is restricted to 100% coverage for sugar & foodgrains, which is the

main bread earner for the industry. Now, in the face of multidimensional threats this

industry is again confronted with danger of extinct.

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.

NATURE OF COMPETITION

. There is an expansion of the market for jute composite products and geo-textiles in both

the domestic and International sectors. Continued and focused attention will be given to

handicrafts, which will include the upgradation of skills, the creation of a better work

environment, design and technology intervention, and the development of clusters for

specific crafts with common service facilities, and the overall improvement of

infrastructure, and market development.

• A full-fledged Design and Development Centre, and dedicated retail outlets in public-

private initiative mode for diversified jute products in all the towns and cities with a

population of more than 5 lakhs will be established

Domestic Marketing:

Considering the immense potential of jute products in the domestic market, focused

attention will be given to untapped sectors.  The thrust will be on adopting suitable

market promotion programmes for increasing consumer awareness, and highlighting the

environmental advantages of jute by working closely with environment groups.

International Marketing

With the objective of increasing exports to Rs.5000 crore by 2010 from the present level

of Rs.1000 crores:

• A multi-disciplinary institutional mechanism will be established to formulate policy

measures and specific action plans, including those relating to the WTO and for closely

monitoring financing proposals;

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• Strategic alliances will be forged with an aim to gain access to technology;

• A brand equity fund, exclusively for jute and jute products will be set up.  This will be

consistent with WTO norms;

• The proposed Jute Board will incorporate an Export Promotion Council which will play

the role of facilitator and professional consultant for dealing with disputes under various

agreements of the WTO, establishing warehousing facilities in major jute and jute

product importing countries, and identifying the existing patent issues with a  view to

patenting Indian R&D efforts

MARKETING STRATEGIES

HC Bang, Proprietor, India Jute Mills, says, “Earlier, jute items were used as

sacks for packing food grains, cement, wheat and sugar, but today it is used for

different purposes and is considered very fashionable. Designers and handicraft

artisans are using the natural fibre for making a variety of items including fancy

party bags, stylish clutch bags, laundry bags, rucksacks, branded totes, shopping

bags and wine bags.

The rising popularity of jute items has prompted small and mid-sized

companies to revamp their processes, introduce better designs and adopt new

marketing strategies. Jute companies have begun exploring various solutions

to improve their process technology and expand their product base to woo

international buyers. 

 

As M Mukherjee, Spokesperson, Basu Exports, says, “Keeping in view the

increasing market demand for green goods, we are largely focusing on the

optimum usage of eco-friendly geo-jute and soil savers. In addition, we are also

working towards increasing our productivity and diversifying our product

range.”

 

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Besides, the government has also begun taking initiatives to help small jute

companies upgrade their manufacturing processes and modernise their units.

The Jute Manufactures Development Council (JMDC) has already initiated a

massive modernisation drive in the jute sector to enable jute units to diversify

their product portfolio.

SWOT analysis of jute industry

Despite its fortune on decline, jute is an emerging niche market with plenty of

opportunities for growth and the future of jute lies in its scope of work, declare

Pooja Sharma, Neeraj Kaushik and K N Chaterjee, mooting proposals for the

industry's revamp.

Twenty-first century witnessed a new resurgent and resolute Indian industry in

terms of volume as well as in quality. India has become a hub of not only

Information Technology, Textile, Bio-Technology but also of Leather,

Automobile and other Industries. India experienced the economic growth of 8 -

9% per annum. The progress of industry has not been achieved overnight but it is

the effect of sustained and gradual efforts by the government & its associate

bodies.

Textile & garment industry is among the second highest employment provider in

India after agriculture. It is the mother industry in India, like most of the

industrialised nations, and given the present economic development, it has the

potential to propel the economy at least for next few decades. With the ATC

(Agreement on Textile & Clothing) agreement under WTO (World Trade

Organisation), the global textile industry is presenting enormous potential, at the

same time challenges for nations.

Traditionally India's core competence is in garment sector, however increasing

competition necessitates her to explore new arena and develop her competence

there. Jute industry in this regard presents a vast scope. Jute exists in nature as

27

weeds. The word jute was used by Roxburgh, Superintendent, Botanical Garden,

Shibpur, West Bengal in 1795 in his letter to the Board of Directors, East India

Company. At that time Oriya word 'Jote' or 'Jhuta' was used for this type of fibre.

Thus, the word jute was the anglicised version of these words. Jute is a natural

vegetable fibre under the category of bast fibres like flax, hemp, kenaf and ramie.

Jute is annually renewable plant belonging to the genus Corchorus of the order

Tiliacea. For commercial use two species, viz, Corchorus olitorious and

Corchorus capsularis, commonly known as Tossa and white jute respectively are

produced.

In the year 1832 - 33, a spinner in Dundee, UK successfully spun jute yarn of

acceptable quality using machinery in blends with other fibres. After a year or

two, 100% jute yarn was spun easily by applying whale oil and water in the

process. Later in 1855, the first jute mill was established in India, near the present

Hasting Jute Mill.. In a span of 10 years Indian jute goods took over the Dundee

jute goods in world market. Thus started decline of Dundee jute mills and last mill

was closed down in 1996.

At present, an average of 9,71,000 hectares of land is under raw jute cultivation,

and the production of raw jute has been 10,940 thousand bales for last four years.

There are 77 jute mills in India out of which 60 are in West Bengal followed by

Andhra Pradesh where 7 mills are established. The average production of jute has

been 1,597 thousand tons per year and its domestic demand has been 1,372

thousand tons per annum. There are 9 units of jute which are working as 100%

export oriented units, and the average export of jute for last four years have been

286 thousand tons or Rs 10,746 million per annum.

Jute Industry: Growth & Decline

Till 1947 Indian jute mills dominated the world jute market with 70% of its products

finding place in the global market. It was after the partition in 1947 when almost all jute

28

producing area went under East Pakistan (now Bangladesh) causing decline to Indian jute

market. At the same time, major jute consuming nations switched to bulk handling

systems and developed alternate synthetic packing materials. Two other issues faced by

Indian jute industry were:

Gradually, jute goods exports increased by 30% to 70%. In spite of constraints, jute

goods production showed a gradual increment. In 1947, the total jute production was 10

lakhs MT and the same figure was 16.2 lakhs in 2003 MT respectively [6]. In five decades,

Indian Jute industry expanded by 62%. In recent times plastic bags substituted jute bags

and thus jute was in the verge of extinction. In order to revamp jute industry, in 1987

Government of India reserved the packing of traditional commodities, viz, sugar, food

grains with jute material by proclaiming the Mandatory Jute Packaging Act (PJMA)

1987. Today PJMA is restricted to 100% coverage for sugar & foodgrains, which is the

main bread earner for the industry. Now, in the face of multidimensional threats this

industry is again confronted with danger of extinct

For the successful revamp of Indian Jute Industry, a turnaround strategy is the need of the

hour. The authors have endeavoured to critically analyse the strengths, weaknesses,

opportunity and threats (SWOT Analysis) of this industry.

STRENTHS

Jute is a labor intensive industry, which engages 4.35 million people.

Jute industry has lot of potential of providing employment especially in East

Indian region. The industry offers employment opportunity to 7,500 persons per

year, besides more opportunity lie ahead in expansion of existing capacity in new

mills that are coming up in SSI and MSI.

Jute is an eco-friendly and biodegradable product. With the pressure from green

movement, it is going to sustain through consumer's preference.

29

WEAKNESS

Frequent revision of PJMA guidelines (to add or dilute items for jute packing)

leaves the industry in confusion whether to invest further on the Jute technology

development/product development/market expansion or wait for new policies etc.

Though jute industry is a labour intensive, wages represent 35% of total

conversion cost of jute industry, which evades the profit margins.

Multi unionism is one of the major problems faced by jute industry and engages

major concentration of routine management in resolving labour dispute.

The machinery used in jute industry is old and obsolete with age of machinery

ranging between 40 - 150 years. They have lost their capacity to produce quality

products and in spite of routine maintenance, fail to yield standard machine

production. In fact, the 150 years old industry with 75% obsolete machinery is

tagged as "Sunset industry" with "Vintage machinery". Though National Jute

Policy, 2005, aims at revamping the domestic jute industry through modernisation

& by upgrading technology, only a few mills could utilise the fund provided by

Jute Manufacturers and Development Council (JMDC) for modernising theirplant

and machinery plant partly. Thus JMDC had to return major part of the fund, ie,

Rs 80 crores after using less than Rs 10 crores. The Government has ear-marked

Rs 75 lakhs per year per mill for capital investment in modernisation but industry

feels it is inadequate for an average mill and wants it to be raised to Rs 2 crores.

Another weakness of jute industry is poor Research & Development (R&D)

initiation, invention/reverse engineering effort has been grossly neglected in this

sector. The reasons for this are lack of farsightedness & forward planning on the

part of government and industry.

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Marketing has been another weak point of jute industry. It has been maintaining a

very slow pace in coming out of traditional way of marketing. Time has come for

the industry to think how to market this versatile, eco-friendly and natural fibre.

Government can only give initiation in product development and test marketing

but the follow-up rests on the industry.

Within the country, wage for workers varies from Rs 50 - Rs 250 per manday.

Government must take immediate steps in this concern and formulate need based

wage structure for jute sector. While doing so, there should be productivity linked

payment. Payment by result is a universally accepted phenomenon and accepted

by ILO. Trade Unions in the jute sector agree on it but at plant level, same unions

resist, thereby causing labour productivity to be lower than standard.

Indian jute has not been able to build brand image for jute that goes with the

quality.

Opportunites:

In many areas Indian Jute industry is ahead of other jute producing and manufacturing

countries viz.

It has learned how to upgrade a lower grade fibre in the batch mix.

It also leads in diversified value added products.

The Government at the centre and at state has pro-jute mindset. They have plans

for taking jute industry to new horizon. This is evident from National Jute Policy

2005 which targets to reach export Rs 5,000 crores in the 11th fine year plan

from present amount of Rs 1,000 crores.

Brazil is one of the major importers of Indian Jute, and is estimated to have a

market of 25,000 tonnes of foodgrains, and few of Indian jute bag producers have

been awarded zero duty which opens new doors to other industry producers[12].

31

Industry should accomplish Total Quality Management so as to build quality in

the products.

One of the major threats faced by Indian jute industry/producers is from

Bangladesh Jute industry, which is armed with 7% cash subsidy on all items of

jute products without any string.

Withdrawal of Export Subsidy Assistance (ESA) from 1 April, 2007 has been a

setback to the export of Indian Jute industry.

The Union Cabinet Committee for Economic Affairs (EA) has approved the

continuation of Technical Upgradation Fund Scheme (TUFS) for next 5 year plan

2007 - 12 for Indian Textile industry including jute industry. The size of

investment is projected at Rs 1,506 crores for this period but it is understood that

jute sector may not get its due share from TUFS money, particularly for jute

machinery modernisation and for upgrading technology.

The Department of Food and Public Distribution (DFPD) has issued orders for

packaging paddy and coarse grains in used gunny bags which is a violation of

Jute Packaging Material Act, 1987, which is considered as threat by jute industry.

As the synthetic lobby is gaining power there is a pressure on government to

dilute jute reservation norms from existing 70% to 30% for grains and from 75%

to 25% for sugar. Though the government has not made the revision yet, this

pressure on government is a threat to jute industry.

Recent government decision to withdraw 10% import duty on jute and jute

products to nil with effect from January 1, 2008, is seen as a threat by the

industry..

The competitive environment that international business face is, to a certain

extent, a function of technological environment and the degree of technological

innovations attributed to the competitive environment. With markets and

32

competition going global, firms and nations are trying to understand the

implications for their competitive strategies. Indian Jute industry .

Jute is a golden fibre. Being a natural, bio-degradable and eco-friendly fibre, jute

can be blended with other compatible fibres for providing better

physicalchemical, thermal, comfort and other important properties required for

other applications.

The inherent negative surface characteristics of jute fibres like itching problem,

comfort characteristics, etc, can be modified through bio-technology and

scientific techniques.

Till today, jute fibre is being considered as a cheap fibre, and its uses are only

restricted to the jute granny bags, low-quality house-hold articles. It is the

requirement of the whole world for producing value added products out of jute

material.

The application area of jute need to be enlarged, ie, jute should be used in new

areas like agro-textile, geo-textile, technical textile as well as home textile.

Marketing and promotion of jute has been a major problem, and so the

government and industry should come forward and take adequate steps in this

direction like highlighting its eco-friendly and biodegradable characteristics.

Labour problem is one of the major problems faced by the jute industry. For its

solution government and industry should device a tri-party agreement between

government, mill owners and the trade unions, so as to overcome loss of work by

strikes, lockouts, law off, closure of mill, etc.

Jute Research Association such as JTRL, IJIRA, Institute of Jute Technology

should come forward for better utilisation of resources like jute raw material,

manpower and machinery and equipment for the betterment of jute industry.

33

The future of jute lies in its scope of work. A detailed research by government

organisations like JRTL, IJIRA and Institute of Jute Technology, Research

Scholars and students in the following areas like Survey on Raw Material, Survey

on Fibre and Survey on Marketing need to be undertaken. Research on

cultivation and marketing of jute, jutefibre, jute promotion and jute blended

products is required to be done, not merely to enhance the sphere of jute but also

to give the industry a new zone to expand.

The Indian jute industry is having lots of opportunity by its side; It is not only

one of the oldest industries of India but also among the major employer of the

nation. There are a lot of strengths and also much opportunity to grab them but it

could only be done if it overcomes its weaknesses and threats. Jute, the golden

fibre, has a potential of reaching the height where it used to be in the past, but it

is only possible through constant efforts by government and a proper follow-up

by the industry. After all, converting your threats into your opportunities is the

success mantra for the millennium.

HR PRACTICES

There are 73 jute mills in the country, of which 59 are situated in West Bengal, 3

each in Bihar and UP, 4 in Andhra Pradesh and 1 each in Assam, Orissa, Tripura

and MP. At the end of October, 1998, the total number of looms installed in the

industry stood at 44035 and installed spindles at 546836 on the fine side and

84612 on the coarse side. These jute mills employ around 2.32 lakh workers. The

maximum achievable spinning capacity in the organised mill sector is estimated

to be of the order of 18.6 lakh tonnes per annum. As on 23.11.98, only six mills

were lying closed. Out of these six mills two mills namely , Kanpur Jute Udyog

in UP and Katihar Jute in Bihar are lying closed for more than 12 years. These

two closed mills had employed a total of 2340 workers before closure.

34

With the rise of inescapable competition facing the Indian jute sector, both in the

international and domestic markets, it will be the endeavour of the Government

to facilitate upgrading the skills of both workers, and supervisors and managerial

staff who are employed in the jute industry.   The Government will support

programmes of organisations and institutions engaged in HRD that address the

professional manpower needs of the industry, as well as at the cutting edge level

of workers and shop-floor supervisors. Institutions will be encouraged to

network and pool their resources and co-operate amongst themselves. IT will

become an integral part of the HRD effort recognizing its vital role in a

progressively IT driven global economic environment.

RECENT ISSUES AND DEVELOPMENT

The a view to streamline the supply of jute bags, the Indian Jute Mills Association

(IJMA) has sought third party study on logistics issues connected with the

despatch of jute goods.

The association has pointed out that the third party study needs to be

commissioned at the earliest by the Directorate General of Supply and Disposal

(DGS&D) to overcome the problem

The issues pertaining to logistics of the dispatch of jute bags were taken up in a

meeting held on Monday between VP Gupta, deputy director general (S&D) and

the representatives of IJMA.

Domestic Market Development

Promoting arrangements for better marketing and sale of jute.

Organisation of domestic exhibitions and sales.

35

Collaboration with the apex state and central marketing agencies and jointly

organising show rooms, exhibition etc.

Holding of seminars, workshops and live demonstration.

Grant of financial support to jute training institutions.

Running of promotional offices.

    Export Market Development

Implementation of External Market Assistance (EMA) scheme.

Providing trade intelligence services to the manufacturer exporter.

Partnership in the specialised trade shows and fairs.

Sponsoring of market exploratory mission.

Organisation of buyer-seller meets.

Commissioning of product specific and market specific studies.

Carrying out of publicity and promotional campaigns.  Release of informative 

Running of common textiles promotional offices a strategic cities abroad.

Changing scenario of Jute industry

At present, jute has been defined as an eco-friendly natural fiber with utmost

versatility ranging from low value geo-textiles to high value carpet, apparel,

composites, decoratives, upholstery furnishings etc.

36

In future, a number of jute mills and mini-jute plants have been seen to be

engaged in jute products and jute blended yarns. We all know that the uses of jute

are manifold, with the traditional usage pattern remaining constricted to packing,

hessian and carpet backing.

The jute sector in India engages a key role in the Indian economy, providing

direct employment to about 0.26 million workers, and supporting the lives of

around 4.0 million farm families. Around 0.14 million people are believed to be

engaged in the tertiary sector, that supports the jute industry. Currently it also

contributes to exports to the tune of about Rs. 1000 crore.

EXPORT GROWTH

India's jute goods export increased by over 45 per cent in March 2009 to 15

million dollar as compared to 28 million dollar in the same period last year owing

to poor off take in major markets of the US and Europe. During 2008-09, the jute

product shipments fell 9.5 per cent to 296 million dollar from 327 million dollar

in the previous fiscal, according to the official data.

The major jute exportable items from India are Hessain, floor coverings and

shopping bags. Industry experts feel that besides less orders from the US and

European  markets, hit by the global economic crisis, the sector is also facing

37

tough competition from its neighbour -- Bangladesh -- which enjoys an 

advantage of natural fibre and commands a bigger share than India in the  global

jute market

Export Promotion Bureau (EPB) statistics shows that jute goods worth US$30.20

lakh exported to Australia in fiscal year 2008-09 while the total export to the

country was US$901.39 lakh. The country’s overall export of jute goods in fiscal

year 2008-09 was US$269.25 million

Jute sector employs about four million farm families, besides providing direct

employment to about 2.6 lakh industrial workers and livelihood to another 1.4

lakh persons in the tertiary sector and allied activitie.

TOP TEN COMPANIES OF JUTE INDUSTRY

GLOSTER JUTE MIL LTD COMPANY

SADAT JUTE MIL LTD

JANTA JUTE MIL LTD

SANJOY INTERNATIONALCOMPANY

MNR EXPORTS PVT LTDC

38

BIRDS JUTE & EXPORTS LTD.

CHEVIOT COMPANY LTD.

NAKHAT & CO.

DINESH GUPTA LTD

MAJOR PLAYER OF JUTE INDUSTRY

Gloster Jute Mills Ltd

PROFILE

Gloster Jute Mills Ltd is a Public Company having its registered office at 21 Strand

Road Kolkata 700 001 incorporated on 18th February 1992.It is a professionally managed

company engaged in the manufacture of Jute & Jute allied products. The factory is

situated at Bauria, P.O. Fort Gloster, Dist. Howrah. The present management has an

experience of over 50 years in running large jute manufacturing units. The unit has

extensively been modernized to produce value added diversified jute products like floor

39

covering, geo-textiles, processed decorative and industrial fabrics, Food grade quality

jute cloth and bags apart from traditional jute products including yarn/twin.

Gloster Jute Mills is one of the few ISO Certified Companies in the jute industry. It is

one of the fast growing Jute manufacturing & exporting company and is a Recognized

Export House.

The company presently has two business units along with one Captive Power Plant (CPP)

which is used as standby situated in the district of Howrah. The Domestic Tariff Area

unit is in operation since 1890 and was taken over by the Bangur Group in the year

1954.   A 100% Export Oriented Unit (EOU) started its commercial production in jute

industry

Profit loss account

Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

IncomeOperating income 169.15 159.57 130.05 136.98 122.94

ExpensesMaterial consumed 91.63 77.21 74.57 79.06 68.79

Manufacturing expenses 9.42 11.59 8.76 9.89 5.89Personnel expenses 33.28 33.85 23.43 26.16 1.21

Selling expenses - 4.25 3.38 3.68 0.73Adminstrative expenses 14.64 6.40 6.02 5.57 36.31

Expenses capitalised - - - - -Cost of sales 148.98 133.30 116.15 124.37 112.93

Operating profit 20.17 26.26 13.90 12.62 10.01Other recurring income 2.47 0.20 0.19 0.20 3.21

Adjusted PBDIT 22.64 26.47 14.09 12.81 13.22

40

Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05Financial expenses 2.67 3.31 4.32 3.62 2.75

Depreciation 5.11 5.12 4.51 3.64 2.96Other write offs - - - - -Adjusted PBT 14.86 18.04 5.26 5.55 7.51Tax charges 5.78 6.70 1.97 2.02 3.46

Adjusted PAT 9.08 11.33 3.29 3.54 4.05Non recurring items - -0.51 0.39 0.46 -

Other non cash adjustments - 0.21 0.55 0.37 -Reported net profit 9.08 11.04 4.23 4.36 4.05

Earnigs before appropriation 11.20 12.89 5.97 5.83 4.99Equity dividend 1.31 0.65 0.52 0.52 0.46

Preference dividend - - - - -Dividend tax 0.22 0.11 0.09 0.07 0.06

Retained earnings 9.67 12.12 5.35 5.23 4.47

Balance sheet

 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Sources of funds

Owner's fundEquity share capital 2.62 1.31 1.31 1.31 1.31Share application money - - - - -Preference share capital - - - - -Reserves & surplus 48.75 42.51 32.40 27.28 23.51

Loan funds

Secured loans 30.33 25.26 22.93 25.38 23.81Unsecured loans - 5.77 12.22 11.35 6.95Total 81.69 74.84 68.86 65.31 55.58

Uses of funds

Fixed assetsGross block 86.43 79.95 74.49 62.32 54.98Less : revaluation reserve - - - - -Less : accumulated depreciation 29.94 24.96 19.92 15.51 11.93Net block 56.49 54.99 54.57 46.81 43.05Capital work-in-progress 1.00 2.55 1.30 5.10 0.78Investments 0.35 0.35 0.15 0.15 1.60

Net current assets

Current assets, loans & advances 50.50 42.18 29.91 29.07 24.39Less : current liabilities & provisions 26.66 25.23 17.07 15.97 14.52Total net current assets 23.84 16.95 12.84 13.10 9.86Miscellaneous expenses not written - - - 0.14 0.29

41

 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Total 81.69 74.84 68.86 65.31 55.58

Notes:

Book value of unquoted investments 0.20 0.20 - - -Market value of quoted investments 0.15 0.15 0.15 0.15 1.14Contingent liabilities 5.84 6.51 4.87 4.26 -

Number of equity sharesoutstanding (Lacs) 26.17 13.08 13.08 13.08 13.08

INTERPRETATION: The net profit of GLOSTER JUTE MIL LTD COMPANY to

is increased to 5.29 in 2009 as comparing to previous year. company growth is high

comparing to previous year

Ratios

  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Per share ratios

Adjusted EPS (Rs) 34.70 86.64 25.13 27.03 30.94

Adjusted cash EPS (Rs) 54.22 125.80 59.59 54.83 53.53

Reported EPS (Rs) 34.70 84.34 32.35 33.35 30.94

Reported cash EPS (Rs) 54.22 123.51 66.81 61.16 53.53

Dividend per share 5.00 5.00 4.00 4.00 3.50

Operating profit per share (Rs) 77.08 200.75 106.22 96.42 76.54

Book value (excl rev res) per share (Rs) - 334.88 257.63 217.39 187.49

Book value (incl rev res) per share (Rs.) - 334.88 257.63 217.39 187.49

Net operating income per share (Rs) 646.42 1,219.61 994.00 1,046.99 939.64

Free reserves per share (Rs) - 313.42 236.16 207.39 -2.21

Profitability ratios

Operating margin (%) 11.92 16.45 10.68 9.20 8.14

Gross profit margin (%) 8.90 13.24 7.21 6.55 5.74

Net profit margin (%) 5.29 6.90 3.25 3.18 3.20

Adjusted cash margin (%) 8.26 10.30 5.98 5.22 5.55

Adjusted return on net worth (%) 17.67 25.87 9.75 12.43 16.50

Reported return on net worth (%) 17.67 25.18 12.55 15.34 16.50

Return on long term funds (%) 21.46 34.38 16.36 21.80 18.46

Leverage ratios

Long term debt / Equity 0.59 0.41 0.73 0.47 1.24

Total debt/equity 0.59 0.70 1.04 1.28 1.24

Owners fund as % of total source 62.87 58.54 48.94 43.76 44.65

Fixed assets turnover ratio 1.96 2.00 1.75 2.20 2.24

Liquidity ratios

Current ratio 1.89 1.67 1.75 1.82 1.68

Current ratio (inc. st loans) 1.89 0.83 0.79 0.56 1.68

Quick ratio 0.58 0.63 0.67 0.49 0.52

Inventory turnover ratio 4.84 6.80 8.75 7.37 7.33

Payout ratios

Dividend payout ratio (net profit) 16.85 6.93 14.46 13.67 12.89

Dividend payout ratio (cash profit) 10.78 4.73 7.00 7.45 7.45

Earning retention ratio 83.15 93.25 81.38 83.13 87.11

42

  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Cash earnings retention ratio 89.22 95.36 92.15 91.69 92.55

Coverage ratios

Adjusted cash flow time total debt 2.14 1.89 4.51 5.12 4.39

Financial charges coverage ratio 8.47 8.00 3.26 3.54 4.80

Fin. charges cov.ratio (post tax) 6.31 5.89 3.02 3.21 3.54

Component ratios

Material cost component (% earnings) 56.72 51.83 53.17 61.51 55.00

Selling cost Component - 2.66 2.59 2.68 0.59

Exports as percent of total sales 22.61 20.65 19.60 18.70 -

Import comp. in raw mat. Consumed 3.36 9.79 35.81 14.23 -

Long term assets / total Assets 0.53 0.57 0.65 0.64 0.65

Bonus component in equity capital (%) 75.00 50.00 50.00 50.00 50.00

JANATA JUTE MILL Ltd

PROFILE

Janata  Jute Mills Ltd., is a public limited company, which was established in the year

1966, in the wake of Bengali nationalism. The factory is located in Polash, Ghorashal in

the district of Narsingdi. It is situated on the bank of river Sita-Lakshya, which is about

45 k.m. north-east of Dhaka city on the Dhaka-Sylhet highway covering an area of

50acres of land. 

The factory’s trial production commenced in 1968 and commercial production in

1969.The unit had an installed capacity of 150 Hessian and 100 sacking looms primarily

weaving to produce and export Hessian cloth and sacking bags having annual weaving

production capacity of 9,000 tons per annum.

After the emergence of Bangladesh, government’s policy towards socialism it was

nationalised in May, 1972. For long ten years it was under government management. But

in 1982 the then government took a bold decision to denationalise the jute mills which

were 100% owned  by Bangladeshis. So Janata Jute Mill Ltd, was handed over to its

original Bangladeshi owners on 10th, January 1983.

After denationalization, the company immediately went into expansion by adding 18

Hessian looms under its expansion plan. But due to change in the global economic

43

scenario and closing down of the jute spinning in Europe, the company took the

opportunity to import second-hand jute mill machinery for producing jute yarn for the

carpet industries in Europe. This is how the jute yarn manufacturing section came into

existence.

The first yarn unit started production in 1986 with 16 spinning frames and a  production

capacity of  12 tons per day of specialized jute yarn for the carpet industries. The unit has

the capacity to manufacture jute yarn from 3.5 lbs. (8.2nm) to 16 lbs (1.8nm) of 1 to 3

plies for specialized carpet industrie

Profit loss account

  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

IncomeOperating income 158.24 156.45 135.06 125.87 133.83

ExpensesMaterial consumed 80.52 79.32 75.48 68.05 57.68Manufacturing expenses  8.31 12.48 8.65 8.78 5.78Personnel expenses 32.27 32.74 22.32 25.15 1.20Selling expenses - 3.14 3.27 2.57 0.62Adminstrative expenses 14.53 6.39 6.06 5.56 35.20Expenses capitalized - - - - -Cost of sales 137.87 123.29 115.14 123.26 101.82Operating profit 22.16 26.18 13.70 12.51 11.00Other recurring income 2.36 0.22 0.15 0.22 2.10Adjusted PBDIT 21.55 25.36 13.58 12.70 12.11Financial expenses 2.56 3.34 3.21 2.51 2.64Depreciation  5.15 5.97 4.58 3.53 2.85Other write offs - - - - -Adjusted PBT 13.75 17.23 5.15 5.34 6.40Tax charges  5.67 6.69 1.86 2.01 3.35Adjusted PAT 10.17 10.32 2.18 2.43 3.64Non recurring items - -0.51 0.39 0.35 -Other non cash adjustments - 0.29 0.34 0.26 -Reported net profit 9.09 12.03 4.12 3.25 3.14Earnigs before appropriation 11.29 11.76 5.78 5.84 4.90

44

  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Equity dividend 1.29 0.54 0.41 0.41 0.35Preference dividend - - - - -Dividend tax 0.21 0.10 0.08 0.06 0.05Retained earnings 8.56 11.91 4.24 4.12 3.36

Balance sheet

  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Sources of funds

Owner's fundEquity share capital 2.42 1.41 1.39 1.36 1.31Share application money - - - - -Preference share capital - - - - -Reserves & surplus 47.74 41.49 31.40 26.28 23.49

Loan funds

Secured loans 30.29 25.26 21.93 24.38 23.81Unsecured loans - 4.77 11.22 10.35 6.92Total 82.55 72.74 68.86 65.31 55.58

Uses of funds

Fixed assetsGross block 85.43 72.95 71.49 68.32 57.98Less : revaluation reserve - - - - -Less : accumulated depreciation 28.94 23.95 20.82 14.51 10.92Net block 66.49 64.98 53.57 45.81 43.05Capital work-in-progress 2.00 2.44 1.37 5.18 0.76Investments 0.37 0.37 0.18 0.15 1.60

Net current assets

Current assets, loans & advances 59.51 41.17 28.92 28.08 22.38Less : current liabilities & provisions 26.67 24.33 18.09 15.82 14.51Total net current assets 21.73 15.84 12.73 13.28 9.75Miscellaneous expenses not written - - - 0.13 0.23Total 80.58 63.73 57.75 64.20 54.47

Notes:

Book value of unquoted investments 0.19 0.19 - - -Market value of quoted investments 0.16 0.12 0.15 0.15 1.14Contingent liabilities 5.73 6.50 4.76 3.25 -

Number of equity sharesoutstanding (Lacs) 25.1613.27

13.18 13.08 13.08

INTERPRETATION:

The net profit of JANATA JUTE MIL LTD is decreased in 2009 as comparing to previous .the company growth and profit is decreased

45

RATIOS

  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Per share ratios

Adjusted EPS (Rs) 9.89 8.22 7.53 6.45 6.03

Adjusted cash EPS (Rs) 21.74 16.88 14.76 11.56 10.33

Reported EPS (Rs) 9.56 10.61 9.63 6.45 6.03

Reported cash EPS (Rs) 21.42 19.27 16.85 11.56 10.32

Dividend per share 0.75 1.20 1.40 1.20 1.20

Operating profit per share (Rs) 41.16 28.63 23.97 19.02 17.90

Book value (excl rev res) per share (Rs) - 2.52 60.13 51.28 44.38

Book value (incl rev res) per share (Rs.) - 2.52 60.13 51.28 44.38

Net operating income per share (Rs) 150.96 115.68 107.13 90.14 91.73

Free reserves per share (Rs) 55.46 54.39 47.64 38.59 32.92

Profitability ratios

Operating margin (%) 27.26 24.74 22.37 21.10 19.51

Gross profit margin (%) 19.41 17.26 15.63 15.43 14.83

Net profit margin (%) 8.25 8.18 8.12 7.52 7.19

Adjusted cash margin (%) 14.00 13.81 13.42 13.23 11.84

Adjusted return on net worth (%) 12.20 11.65 12.52 12.57 13.59

Reported return on net worth (%) 11.80 15.03 16.02 12.58 13.58

Return on long term funds (%) 8.82 7.60 8.92 8.95 11.98

Leverage ratios

Long term debt / Equity 3.69 3.93 2.70 2.21 1.70

Total debt/equity 4.13 4.37 3.26 2.74 2.36

Owners fund as % of total source 19.48 18.63 23.48 26.73 29.76

Fixed assets turnover ratio 0.66 0.65 0.77 1.01 1.41

Liquidity ratios

Current ratio 4.92 4.88 4.53 4.63 5.52

Current ratio (inc. st loans) 1.22 1.84 1.27 1.34 1.43

Quick ratio 4.15 3.88 3.46 3.43 4.04

Inventory turnover ratio 3.28 3.34 4.29 4.26 3.72

Payout ratios

Dividend payout ratio (net profit) 9.17 13.22 17.06 22.24 24.07

Dividend payout ratio (cash profit) 4.09 7.28 9.75 12.41 14.05

Earning retention ratio 91.13 82.93 78.18 77.74 75.95

Cash earnings retention ratio 95.97 91.69 88.86 87.59 85.95

Coverage ratios

Adjusted cash flow time total debt 15.40 18.26 13.23 11.31 8.98

Financial charges coverage ratio 2.41 2.71 3.25 4.00 3.62

Fin. charges cov.ratio (post tax) 2.14 2.49 3.03 3.42 3.12

Component ratios

Material cost component (% earnings) 65.14 59.63 63.63 63.79 70.49

Selling cost Component 2.09 2.94 2.23 2.32 2.11

Exports as percent of total sales 32.78 45.07 33.32 25.76 22.25

Import comp. in raw mat. Consumed 8.77 8.46 3.05 0.31 0.21

Long term assets / total Assets 0.70 0.56 0.58 0.57 0.39

Bonus component in equity capital (%) 0.38 0.40 0.44 0.47 0.55

SADAT JUTE MIL LTD

46

Sadat Jute MIL Ltd., is a public limited company, which was established in the year 1984 as a 100% export oriented Jute Yarn producing unit. The factory is located in

Jafarpur, Debidwar, in the district of Comilla. It is situated on the road side of Dhaka-Chittagong Highway, which is about 85 k.m. north-east of Dhaka city  and 12 k.m. South-West from Comilla town covering an area of 15 acres of land.

The factory’s trial production commenced in 1986 and commercial production in 1987.  The unit had an installed capacity of 18 spinning frame.  Since then, a new yarn unit has been added in 1994 which had an installed capacity of 23 spinning frame and primarily both the unit produces and export yarn/twine having production capacity of 10,000 tons per annum. 

In addition to that the company had undertaken a new industrial project of 100% export oriented for manufacturing special type of Jute Fabrics (Lenoleum hessian) based on its backward linkage industry in the name of Weaving Plant of which production commenced in the year 2000. This plant produce and export Linoleum Hessian (special types of Jute Fabrics) having production capacity of  2.25 million linear meters per annum.

The first yarn unit started production in 1986 with 18 spinning frames and a  production capacity of  12 M.tons per day of specialized jute yarn for the carpet industries. The unit has the capacity to manufacture jute yarn from 4.00 lbs. ( 7.25 nm) to 30 lbs (0.96 nm) of 1 to 5 plies for specialized carpet industries.

In the backdrop of good demand of its yarn in the foreign market an expansion of the existing yarn unit was undertaken for manufacture of yarns of 8 lbs. ( 3.60 nm)  to 72 Lbs. (0.40 nm).  This expansion yarn unit of 23 spinning frames with second-hand machinery went into production in 1994. It has a capacity to produce 20 M.Tons per day of yarn.

 

Profit loss account

  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Income

47

  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05Operating income 170.26 160.68 151.26 147.09 133.05

ExpensesMaterial consumed 91.63 88.32 85.68 73.17 70.90Manufacturing expenses  10.53 12.60 9.67 9.98 6.90Personnel expenses 34.39 33.86 27.54 27.27 2.32Selling expenses - 5.37 4.59 3.79 0.84Adminstrative expenses 15.75 12.58 9.13 5.68 37.42Expenses capitalized - - - - -Cost of sales 149.09 134.41 127.26 125.48 123.04Operating profit 22.28 25.28 14.01 13.73 11.12Other recurring income 2.88 0.31 0.10 0.31 3.32Adjusted PBDIT 23.45 25.58 16.06 13.82 13.33Financial expenses 2.78 3.52 4.43 3.73 2.64Depreciation  5.23 5.23 4.62 3.55 3.07Other write offs - - - - -Adjusted PBT 15.97 17.15 5.37 5.56 7.62Tax charges  6.89 7.69 1.78 2.13 2.55Adjusted PAT 10.09 12.34 4.30 3.65 3.16Non recurring items - -0.62 0.40 0.57 -

Other non cash adjustments - 0.22 0.76 0.38 -

Reported net profit 12.25 11.04 4.26 4.48 4.09

Earnigs before appropriation 12.87 13.90 7.97 5.94 4.97

Equity dividend \2.31 0.68 0.63 0.53 0.57Preference dividend - - - - -Dividend tax 0.84 0.72 0.69 0.53 0.16Retained earnings 14.26 13.23 6.46 6.34 5.58

Balance sheet

  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05Sources of fundsOwner's fundEquity share capital 3.60 2.41 2.41 2.41 2.41Share application money - - - - -Preference share capital - - - - -Reserves & surplus 59.86 43.62 42.51 28.29 25.51

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  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05Loan fundsSecured loans 40.44 34.27 33.94 26.49 23.81Unsecured loans - 5.78 14.23 12.46 7.96Total 81.69 74.84 68.86 65.31 55.58Uses of fundsFixed assetsGross block 86.43 82.76 75.50 63.43 58.99Less : revaluation reserve - - - - -Less : accumulated depreciation 28.85 26.07 20.83 16.62 13.94Net block 57.60 55.90 55.68 47.92 44.36Capital work-in-progress 1.21 2.56 1.31 6.11 0.79Investments 0.39 0.37 0.17 0.16 1.71Net current assetsCurrent assets, loans & advances 52.61 42.29 29.02 27.18 25.40Less : current liabilities & provisions 27.87 24.34 18.48 15.18 14.63Total net current assets 22.73 16.06 14.95 12.11 10.97Miscellaneous expenses not written - - - 0.17 0.38Total 82.67 70.85 69.97 66.42 66.69Notes: Book value of unquoted investments 1.24 1.24 - - -Market value of quoted investments 0.18 0.15 0.17 0.18 1.15Contingent liabilities 6.95 6.62 4.98 3.35 -

Number of equity sharesoutstanding (Lacs) 26.1715.52

13.38 13.17 13.09

INTERPRETATION:

The net profit of SADAT JUTE MIL LTD in 2009 is increased, as comparing to

previous year. company growth is high comparing to previous year.

Ratios

  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Per share ratios

Adjusted EPS (Rs) 11.19 17.78 18.56 28.92 19.46

Adjusted cash EPS (Rs) 28.66 32.63 31.46 47.59 32.93

Reported EPS (Rs) 14.46 25.58 24.11 31.21 18.99

Reported cash EPS (Rs) 31.93 40.44 37.01 49.88 32.46

Dividend per share 4.00 5.75 5.50 5.00 4.00

Operating profit per share (Rs) 59.42 61.55 58.33 68.51 41.70

Book value (excl rev res) per share (Rs) 394.09 383.79 334.87 364.67 226.11

Book value (incl rev res) per share (Rs.) 394.09 383.79 334.87 364.67 226.11

Net operating income per share (Rs) 503.75 413.96 366.62 441.78 311.58

Free reserves per share (Rs) 378.80 370.52 321.61 346.34 206.90

Profitability ratios

Operating margin (%) 11.79 14.86 15.91 15.50 13.38

Gross profit margin (%) 8.32 11.28 12.39 11.28 9.21

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  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Net profit margin (%) 6.97 6.45 6.04 6.12 2.83

Adjusted cash margin (%) 5.62 7.80 8.42 10.63 10.49

Adjusted return on net worth (%) 2.84 4.63 5.54 7.93 8.60

Reported return on net worth (%) 3.67 6.66 7.20 8.55 8.39

Return on long term funds (%) 7.13 8.75 10.16 11.08 11.15

Leverage ratios

Long term debt / Equity 0.71 0.50 0.52 0.37 0.21

Total debt/equity 1.20 0.75 0.90 0.71 0.36

Owners fund as % of total source 45.42 57.06 52.45 58.27 73.30

Fixed assets turnover ratio 1.55 1.35 1.39 1.17 1.52

Liquidity ratios

Current ratio 2.33 2.31 2.22 2.41 1.84

Current ratio (inc. st loans) 0.71 1.04 0.63 0.93 0.90

Quick ratio 1.54 1.44 1.46 1.61 0.93

Inventory turnover ratio 7.51 5.99 8.40 5.78 5.93

Payout ratios

Dividend payout ratio (net profit) 30.87 26.29 26.01 25.46 24.06

Dividend payout ratio (cash profit) 13.98 16.63 16.94 15.93 14.07

Earning retention ratio 60.10 62.18 66.22 72.52 76.51

Cash earnings retention ratio 84.42 79.39 80.07 83.30 86.13

Coverage ratios

Adjusted cash flow time total debt 16.52 8.85 9.65 5.49 2.50

Financial charges coverage ratio 2.14 3.04 3.10 6.48 11.49

Fin. charges cov.ratio (post tax) 2.04 2.88 2.77 5.36 9.47

Component ratios

Material cost component (% earnings) 57.44 56.87 56.04 57.11 55.95

Selling cost Component 6.69 6.48 6.41 7.52 9.24

Exports as percent of total sales 13.39 16.00 14.31 17.39 23.83

Import comp. in raw mat. Consumed 61.00 59.49 58.39 55.62 62.40

Long term assets / total Assets 0.75 0.71 0.77 0.61 0.64

Bonus component in equity capital (%) 24.59 24.59 25.04 39.02 39.02

FINANCIAL ANALYSIS

CURRENT RATIO:

. Current ratio may be defined as the relationship between current assets and current

liabilities. This ratio is also known as "working capital ratio". It is a measure of general

liquidity and is most widely used to make the analysis for short term financial position or

liquidity of a firm. It is calculated by dividing the total of the current assets by total of the

current liabilities

FORMULA: CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILTIES

CURRENT RATIOYEAR 2005 2006 2007 2008 2009

GLOSTER JUTE MIL LTD 3.68 3.82 2.75 3.67 3.89JANATA JUTE MIL LTD 5.52 4.63 4.53 4.88 4.99

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SADAFT JUTE MIL LTD 4.84 3.41 4.22 3.37 4.37

INTERPRETATION:

GLOSTER JUTE MIL LTD: This ratio has increased from 3.68 in 2005 to 3.89in 2009.

JANATA JUTE MIL LTD: This ratio has increased in both 2005 & 2006, but decreased in 2007 & 2008 i.e. 4.53, 4.88 and increased in 2009 to 4.99.SADATH JUTE MIL LTD: This ratio has continuously decreased from 4.84 in 2005 to 0.4.33 in 2009.

Debt-Equity Ratio:

This ratio establishes a relationship between total long-tern Debts and share holder’s funds.

Formula: Debt-Equity Ratio = Total long term debts / share holder’s funds

EQUITY RATIOYEAR 2005 2006 2007 2008 2009

GLOSTER JUTE MIL LTD 1.24 1.28 1.04 1.21 1.59JANATA JUTE MIL LTD 4.13 4.37 3.26 2.74 2.36SADAT JUTE MIL LTD 1.21 0.75 0.91 0.71 0.36

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INTERPRETATION

GLOSTER JUTE MIL LTD: This ratio has increased from 1.24 in 2005 to 1.59 in 2009.

JANATA JUTE MIL LTD: This ratio has increased from 4.13 in 2005 to 4.37 in 2006, but it has decreased in 2008&2009TO 2.74&2.36.

SADAT JUTE MIL LTD: This ratio has increased from 1.24 in 2005 to 1.59 in 2009

The reason for fluctuations in the debt equity ratio is depending upon risk and returns taken by various companies.

Net Profit Ratio:

The ratio indicates that margin of sales which s available to share holders in the farm of dividend its shows the efficiency and profitability to a limited extent.

Formula; Net Profit Ratio = Net Profit after Tax / Sales

NET PROFIT RATIOYEAR 2005 2006 20007 2008 2009

GLOSTER JUTE MIL LTD 3.21 318 3.25 6.21 5.29JANATA JUTE MIL LTD 8.25 8.18 8.12 7.52 7.19SADAT JUTE MIL LTD 6.97 6.45 6.04 6.12 2.83

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INTERPRETATION:

GLOSTER JUTE MIL LTD: This ratio has increased from in 2005 to 3.21 in 2006, it decreased from 3.18 in 2007 to 31.07and in 2008 increased to 3.25 again increased in 2009 to 5.21

JANATA JUTE MIL LTD: This ratio has decreased from 8.25 in 2005 to 8.18 in 2006, it has decreased from 8.12 in 2008 to 7.52 in 2009 and again decreased in 2009 to 7.19.

SADAT JUTE MIL LTD: This ratio has continuously decreased from 6.97 in 2005 to 2.83 in 2009.

The reason for fluctuations in the Net profit ratio is management expenses and resource utilization.

OPERATING PROFIT RATIO:

This Ratio indicates that margin of sales. It is a measure of operating efficiency which indicates net margin.

Formula: Operating Profit Ratio = Operating Profit / Net Sales

OPERATING RATIOYEAR 2005 2006 20007 2008 2009GLOSTER JUTE MIL LTD 8.14 9.21 10.68 16.45 11.92JANATA JUTE MIL LTD 24.74 24.74 21.37 21.11 19.51

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SADAT JUTE MIL LTD 11.76 14.86 15.91 15.51 13.38

INTERPRETATION:

GLOSTER JUTE MIL LTD: This ratio has increased from in 2005 to 8.14 in 2006, it increased from 9.21 in 2007 to 10.68 and in 2008 increased to 16.45 again increased in 2009 to 11.92.

JANATA JUTE MIL LTD: This ratio has decreased from 24.74 in 2005 to 24.47 in 2006, it has decreased from 21.37 in 2008 to 7.52 in 2009 and again decreased in 2009 to 19.51

SADAT JUTE MIL LTD: This ratio has continuously increased from 11.76 in 2005 to 16.21 in 2009.

The reason for fluctuations in the operating profit ratio is operating expenses incurred by management of above companies.

RETURN ON INVESTMENT:

This is most important test of profitability of a business. Its measures the overall profitability. It is ascertained by comparing profit earned and capital employed to earn.

Formula: ROI = PBIT / Capital employed

COMPANIES 2005 2006 2007 2008 2009GLOSTER JUTE MIL LTD 11.25 13.58 14.13 12.16 11.42JANATA JUTE MIL 6.71 8.69 7.21 7.43 7.52

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LTDSADAT JUTE MIL LTD 7.81 6.46 6.96 6.97 7.26

INTERPRETATION:

GLOSTER JUTE MIL LTD: Under this company above Ratio increased from 11.25 in 2005 to 13.58 in 2006 and it has decreased from 12.16 in 2008 to 11.49 in 2009.

JANATA JUTE MIL LTD: Under this company above Ratio decreased from 8.69 in 2005 to 6.71 in 2007 and if increased from 7.21 i n 2008 to 7.52 in 2009.

SADAT JUTE MIL LTD: Under this company above Ratio has decreased from 7.81 in 2005 to 7.26 in 2009.

The reason for the fluctuations in the Return on investment is the efficiencies of management of different companies.

CONCLUSION

CONCLUSION ON JUTE INDUSTRY ANALYSIS

BASED ON THE ABOVE REPORT,THE FOLLOWING CONCLUSION IS

DRAWN :

55

Human Resource in jute industry is mainly increased by manpower strength

is increased in 2009 as compared to 2008.

Production of Jute Goods is increased in jute industry.

Turnover of jute industry is increased to 6,500 corers as compared to

previous year of 5,500.

Total demand and total supply of jute goods are also so increased.

Export growth of jute Products

Labor Wages are increased in the jute industry due to good profits.

Market strategies have created new opportunities for new entrepreneurs to

enter into the jute industry.

Net profit is also increased.

Current period of jute industry is in increasing order and profits are also

increased.

Yield on investments and funds are improved.

Net interest income increased in 2009.

Business growth of jute industry is increased.

THE FINANCIAL POSITION OF JUTE INDUSTRY GROWTH IS

INCREASING YEAR TO YEAR.NET PROFIT IS INCREASED

JUTE INDUSTRY GROWTH IS HIGH.

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FINDINGS

At present the supply chain management is poor and it is making its

impact to improve in future.

At present production cost of jute industry is high; cost of production

should be decreased.

As the jute products are eco-friendly to the nature and, these

products does not harm to the environment. So, these products have

good demand in current period and future.

BIBILOGRAPHY

WWW.JUTE-INDUSTRY.COM/

WWW.JUTE-INDUSTRY.COM/JUTE-INDUSTRY-INDIA/JUTE-TRADE-

ASSOCIATIONS.HTML.

WWW.JUTE.COM/HTML/OTHER_ORG.HTM.

WWW.WORLDJUTE.COM/JUTE_NEWS/NEWS_INDUSTRY_01.HTML.

WWW.JUTE-INDUSTRY.COM/JUTE-INDUSTRY-INDIA.

WWW.ARTICLESBASE.COM/BUSINESS.../JUTE-INDUSTRY-IN-FAVOUR-OF-

DIVERSIFICATION-1492985.HTML - UNITED STATES - CACHED.

EN.WIKIPEDIA.ORG/WIKI/JUTE

WWW.JUTE.COM/HTML/CITIZENS%20CHARTER

W.FINANCIALEXPRESS.COM/...JUTE-INDUSTRY

WWW.WORLDJUTE.COM/ABOUT_JUTE/JUTHIST.HTML

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