jute report

7/26/2019 Jute Report

1/32

PROJECT REPORT SUBMITTED IN PARTIAL FULFILMENT OF

THE REQUIREMENTS OF THE COURSE ON

INDUSTRY & COMPETETIVE ANALYSIS

Jute Industry Analysis

(Declining Industry)

SUBMITTED TO

Prof. Ranjan Das

B

!nindita Sa"#at$ (%&'*)

!nita +u"ar (%&,*)

!rc$ana -agannat$an (%,*)

B$aya /and0is$ore (%,1*)

P.Sinna +ris$nan (2P'1'&)


2/32


Table ! Cntents

%. Introduction

&. -ute Industry Definition

. Industry Structure

,. 3eogra#$ical location of t$e "ills

4. -ute 5 6$y a declining industry

7. -ute 8alue 9$ain

:. Ste#s in -ute #roduction

1. -ute #roducts

*. E;#orts of jute goods during &''% 5 &''&

%'. Researc$ < Deelo#"ent

%%. Porter=s 2ie>2orce !nalysis

%&. 9o"#etition analysis

%. Strategic 3rou#s and Mo?ility Barriers

%,. Diersification

%4. -ute in Banglades$

%7. 2uture Strategy

!##endi; ! 5 2acts at a glance

!##endi; B 5 3eogra#$ical distri?ution of -ute "ills in India

!##endi; 9 5 9o"#any Ealuation

IIM Calcutta Page 2 of 32


3/32


"# Intrdu$tin

Jute% Te 'lden (iber

-ute@ t$e A3olden 2i?erA as it is called@ is a #lant t$at yields a fi?er used for sac0ing and cordage.

+non as t$e ra "aterial for sac0s t$e orld oer@ jute is truly one of t$e "ost ersatile fi?ers

gifted to "an ?y nature t$at finds arious uses in t$e for" of Candicrafts. /e;t to cotton@ jute is t$e

c$ea#est and "ost i"#ortant of all te;tile fi?ers.

)# Jute Industry De!initin

T$e jute industry includes ?ot$ ra jute as ell as jute #roducts> included in t$e entire alue c$ain

are #rocesses starting rig$t fro" $aresting of jute for yarn #re#aration to #rocessing of ra jute for

#re#aration of gunny ?ags@ jute $andicrafts and ot$er diersified jute #roducts.

*# Industry Stru$ture

T$e jute industry in India is frag"ented and co"#rises of around :4 "ills.

Ta?le % ?ring out t$e folloing c$aracteristics of t$e industry

T$e largest jute "ill i.e. Dal$ousie accounts for a##ro;i"ately ,* of t$e ca#ital e"#loyed in

t$e industry. Coeer t$e re"aining 4' of t$e industry is frag"ented.

T$e second ?iggest fir" in t$e industry accounts for only * of t$e ca#ital e"#loyed.

T$e to#4 fir"s in t$e industry account for 1% of t$e ca#ital e"#loyed@ of $ic$ 7' ?elongs

to Dal$ousie alone.

Cence e conclude t$at a#art fro" one fir"@ $ic$ is do"inant in t$e industry@ t$e industry is

frag"ented. T$is one fir" is li0ely to $ae a #oerful influence on t$e Indian jute industry as

a $ole.



4/32


+# 'e,ra-i$al l$atin ! te .ills

S"all jute "ills 5 around :4 "ills in India@ out of $ic$ 4* are in 6est Bengal alone. It $as ?een

t$e do"inant jute #roducing state in t$e country #ri"arily ?ecause of t$e easy aaila?ility of ra

"aterial.

State Dec-99 Jun-00 Dec-00 Jun-01 Dec-02 Jun-02

West Bengal 59 59 59 59 59 59

Andhra Pradesh 7 7 7 7 7 7

U.P. 3 3 3 3 3 3

Bihar 3 3 10 3 3 3

Tripura 1 1 1 1 1 1

Orissa 1 1 1 1 1 1

M.P. 1 1 1 1 1 1

Assam 1 1 1 1 1 1

/# Jute 0 A de$linin, industry

Production

!t a first glance@ it a##ears t$at t$e #roduction of jute $as re"ained sta?le oer t$e #ast 4 years.

Coeer@ t$e folloing ta?le s$os t$e ?rea0u# of t$e total #roduction@ $ic$ furt$er $el#s us in

understanding t$e #attern of #roduction it$in t$e jute industry.

! continuously declining trend $as ?een o?sered in Cessian@ 9B9 and ot$ers. T$e only area@ $ic$

$as s$on an i"#roe"ent@ is sac0ing. T$is@ e ?eliee is due to t$e -ute Pac0aging Materials

(9o"#ulsory use of #ac0ing 9o""odities) !ct@ %*1:. Under t$e #urie of t$is act@ "ajor

industrial users@ li0e t$e ce"ent@ fertiliFer@ food grains and sugar industry> ere reGuired to use jute



5/32


as a #ac0aging "aterial in certain s#ecified ratios. Coeer@ t$is !ct ill ?e re"oed in &'', and

$ence@ e e;#ect t$is seg"ent too to decline after t$is #eriod.

1APRIL 2 MARC34 3ESSIAN SAC5IN' C6C OT3ERS TOTAL

%**4 > *7 ,%.* 7:7. '.4 %&. %,.'

%**7 > *: 71.: 777.7 &4.& ,'., %,''.*

%**: > *1 *&., 17,.7 %*.1 ,'%.7 %7:1.,

%**1 > ** ,,.% *'. %1.4 '. %4*7.&

%*** > '' ,,.4 *'*.& 1.' &1.4 %4*'.&

&''' > '% :.* *4&.* 7.7 &:.4 %7&,.*

&''% > '& &:4.' %'.: 4.' &17.: %7''.,

Consumption

T$e consu"#tion #atterns too s$o a si"ilar trend. 9onsu"#tion of $essain@ 9B9 and ot$ers is

reducing gradually. !lso@ as "entioned earlier t$e increasing de"and for sac0ing "ay ?e due to t$e

goern"ent regulations goerning t$e use of #ac0ing "aterial. Decreasing de"and co"?ined it$

continuing #roduction of jute is resulting in $ig$ inentory ?uild>u#.

1APRIL 2 MARC34 3ESSIAN SAC5IN' C6C OT3ERS TOTAL

%**4 5 *7 &77.* 774.4 &. &&7.7 %%7%.

%**7 5 *: &4*.1 74&.' %.: &&&.4 %7.'

%**: 5 *1 &14.1 1,&., %.4 &4:.4 %1:.&

%**1 5 ** &17.& 117. %. &'.4 %,',.

%*** 5 '' &1:.' *':., %., &'.* %,&7.:



6/32


&''' 5 '% &7*.: *4.& '.1 &&*., %,4.%

&''% 5 '& &,.' %'&%., '.* %*4.4 %,7'.1

Exports

E;#ort statistics for t$e #eriod %**:>*1 to &''%>'& are as in t$e folloing ta?le (8alue Rs. Million4

Imports

I"#ort of jute fro" arious countries are gien for t$e #eriod &''%>'& in t$e folloing ta?le

(8alue Rs. Million)

Cuntry Value

US! %&7.'

Belgiu" 1%1.:%

U+ ,%1.7*

Egy#t ! RP &7.'1Tur0ey &*.71

Saudi !ra? &'.,4

-a#an &'&.,%

Italy %,%.7:

3er"an 2 Re# %&.1%


Ite.s

Year

"778079 "779077 "7770)::: ):::0:" )::"0:)

Value Value Value Value Value

Car-et 6a$;in, Clt ,'7.*1 ,71.:7 &'7 %,'.& *1.7,

De$rati > 1.:* &4%.1 %:*.47

'i!t Arti$les ,.14 17.1* :1.:, %'&.%7 *&.,%

3and And S--in,

6a,s%7%.&, %*'.1, &17.%* ,77.,, **.:%

3essian &*,&.,& %**.17 %*&'.': &'41., %1:.4*

Jute 'e0te=tiles 1.%1 ,'.%1 7&.,* 4*.: 7%.%,

Sa$;in, ,'4.:* &',.,* *&., *'., :.44

>all 3an,in,s 1.*4 44.:* :.4* 44.41 7.1,

Yarn &%*.71 %14, %*%:.% &74%.1 &&%&.7

Jute Di


7/32


!ustralia %%7.:1

United !ra? E"irates 1*.'&

2rance 1,.&,

S#ain 7%.*

9anada 41.11

/et$erlands 4%.%

! furt$er o?seration to su##ort t$e fact t$at jute is a declining industry is t$at in t$e #ast decade@

only one "ill as s$ut don in %**1. T$is is in s$ar# contrast to t$e fact t$at t$e year &''& sa t$e

s$utting don of jute "ills.

MILLS DATE OF SUSPENSION OFWORK

J K KANPUR (U.P.) 13 / 4 / 1987

GOURIPORE 4 / 9 / 1998

NEW CENTRAL 29 / 12 / 2

UNION (NJMC) 1! / 1 / 22

EASTERN 9 / ! / 22

ALE"ANDRIA 1 / 9 / 22

Installed Capacity

Year

Installed $a-a$ity

a-art !. "::?

EOU

Prd# ! @ute

,ds

D.esti$

De.and

Dec>** %*'% %7&& %,'7

-un>'' %*'% %7&& %,'7

Dec>'' %*'% %7&& %,'7

-un>'% %11: %7&4 %,4

Dec>'% %*,' %7'4 %,&&

-un>'& &'1' %7'% %,7%

T$e installed ca#acity (e;cluding %'' EOU) far e;ceeds t$e #roduction of jute goods.

T$is is ?ecause

a. T$is is a declining industry

?. It is a co""odity industry.



8/32


# Jute Value Cain

(lB ! raB @ute

8arious #layers in t$e -ute industry are -ute groers@ 8illage 9ollection #oints@ inter"ediaries@

dealers@ co>o#eraties and "ills. T$e flo of ra jute a"ong t$ese #layers is de#icted in t$e

folloing figure.

Possi?le #layers $o co"e into #lay after t$e ra jute reac$es t$e ter"inal "ar0ets are gien in t$e

folloing figure



9/32




10/32


8# Ste-s in Jute -rdu$tin

Plantation: -ute seeds are son anyti"e ?eteen Marc$ 5 May. T$e cro# #refers a $ot < $u"id

cli"ate. It is lo laying and ta0es a?out 4 to 7 "ont$s to gro.

Harvesting: Trees are cut fro" t$e ?otto"H leaes are stri##ed off fro" t$e to# and accu"ulated in

?undles.

Retting: Retting is t$e #rocess of e;traction of t$e fi?re. Bundles are t$en su?"erged in ater for :

to %' days. Retting ta0es #lace due to joint action of ater@ aGuatic and #lant surface organis"s@

"ostly ?acteria and t$e ca"?iu" and t$e corte; gets deco"#osed.

Stripping: T$e la?ourer $olds t$e ste" in one ?unc$ and ta#s t$e rood end lig$tly it$ a "allet. T$isfrees t$e fi?re at t$e foot of t$e stal0. T$e fi?re is t$en gras#ed < ?y las$ing < jer0ing t$e ste" in

t$e ater t$e rest of t$e fi?re loosens and co"es off.

Drying: -ute fi?ers are 0e#t $anging on "a0es$ift $angers for drying. T$is #rocess ta0es a?out & to

days. /o t$e fi?re is ready to ?e "ar0eted. Cere 3rading ?eco"es i"#eratie de#ending on t$e

fineness@ color@ density@ clearness etc@ t$ey are all score. Cig$er t$e score t$e ?etter t$e #r for a

$ig$er #rice. T$is is done at t$e ?uyers (li0e -9I) T$e cro# ne #rocess to t$e $ands of ?uyer

Grading: -ute is t$en ?roug$t to -9I godons. T$e ?undles are scanned and jute fi?res are

categoriFed as #er grades (TD% to TD:). 3radeise t$ese are stoc0ed at se#arate locations

Pressing: 3radeise ?undles are su?jected to "ac$ine #ress to conert t$e" in Bales. Een t$e

ro#es used to tie t$e ?ales are #re#ared fro" t$e jute astes. T$e ?ales are finally stored in t$e

are$ouse as #er t$eir grades for sale.



11/32


9# Jute Prdu$ts

T$e conentional jute #roducts includes

Jute yarn0of arious counts

Jute tBine 0 "ade ?y inding to or "ore yarn strings

Jute $lt0 of different ariety and for different a##licationsli0e

Car-et ba$;in, $lt

'eneral -a$;a,in, -ur-se

9onerting into sa$;sfor carrying foodgrain@ egeta?le@ sugar@ fertiliFer@ ce"ent etc.

!not$er area $ere jute $as ?een #ut to use of late is t$e diersified sector $ere a ide

range of tec$nologies $as ?een deelo#ed. -ute $as an infinite ran,e ! a--li$atinsiF.

o (ine uality ! yarn@$ic$ is used in eaing finer Guality of fa?ric. Blended fa?ric

$ere een ?etter Guality of fa?ric is oen ?lending jute yarn it$ ot$er su#erior

yarn.

o Jute !abri$could ?e c$e"ically #rocessed@ dyed and #rinted to #roduce colorful

fa?ric for "anufacturing s$o##ing ?ags@ designer ?ags@ ?rief cases and suitcases.

o Jute -ul-for a##lications li0e "a0ing #a#er. Moulds etc.

o Jute -arti$les bardsor ?oards "ade of jute stic0s. T$is in no ?eing used in $ouse

$old interior a##lications and 0noc0don furniture.

o Jute nn0B


12/32


arn

-ute tine in arying eig$ts and t$ic0ness is@ $oeer@ used extensivel !ot" in India and a!#oad

for seing@ tying@ and for a ariety of industrial a##lications suc$ as #ac0ing #i#e joints@ ca?le

?inding@ etc

Hessian !ags

Totally ?iodegrada?le and easily ?lend it$ t$e eniron"ent. -ute Cessian ?ags are used for #ac0ing

of a ariety of co""odities iF. 2ood < 3rains@ Potatoes@ Onions@ Sugar@ To?acco@ 9offee@ 9ocoa@

Peanut@ Sand@ 9e"ent etc. T$ese ?ags are tailored so as to $old goods u# to %'' 0gs of eig$t.

Sac"ing !ags

Sac0ing ?ags@ oen $olly fro" jute fa?rics@ are aaila?le as #lain and till ?ags. -ute ?ags@ t$e

ot$er na"e for sac0ing ?ags are "ainly used to #ac0 ce"ent@ sugar and ot$er ?ul0y articles@ $ic$

are #ac0ed in eig$t range fro" 4' to %'' 0gs

Jute Hydrocar!on #ree clot$

Sac0ing ?ags treated it$ egeta?le oil "a0ing it free fro" t$e $ar"ful effects of $ydrocar?ons.

T$is renders it %'' ?io degrada?le and ery safe to store edi?les in.

Bot$ Cessian ?ags and sac0ing ?ags are e;#orted to !ustralia and /e ealand

Jute geotextiles and Hessian

-ute 3eo>te;tiles are fle;i?le@ folda?le@ not ery ?iodegrada?le@ and ater>resistant in nature@

#articularly suita?le for rain>fed@ flood>#rone cli"atic conditions. T$ey can ?e used as geo>tec$nical

engineering #roducts li0e fi?re drains@ se#arators@ filters and reinforcing "aterials.

-ute Cessian (Burla#) "atting is e;tensiely used in controlling soil erosion and usually laid along

t$e rier e"?an0"ents@ sides@ canal ?an0s and $ill slo#es >

Cel#s sto# erosion da"age

!ct as an aid to good egetation grot$ on difficult terrain

Easy to lay and to re#osition



13/32


T$ey are also called Erosion 9ontrol Matting. T$ey are su##lied in large Guantities$ t"#oug"out t"e

%o#ld.

Carpet %ac"ing Clot$

9B9 as it is co""only 0non as@ co""ensurate to its na"e@ is used as ?ase "aterial for car#ets or

as t$e ?ac0ing "aterial of car#ets. Manufacturers and e;#orters su##ly 9B9 in large Guantities to

"any car#et industries t$roug$out t$e orld. 9ar#et Bac0ing 9lot$ is "ainly used and is in great

de"and in t$e car#et industry. 9B9 calls for e;#ort oriented "ar0et and jute "ills in India are ell

0non in t$e e;#ort "ar0et for t$eir #roduce

Home #urnis$ings and textiles

Sil0y lustre@ $ig$ tensile strengt$@ lo e;tensi?ility@ considera?le $eat and fire resistance@ long sta#le

lengt$ and ine;#ensie nature are t$e c$aracteristics of jute t$at $as i""ense designer #otentials.

Manufacturers and e;#orters $ae discoered t$e $ig$ ersatility of t$e fi?er@ $ic$ can ?e easily

co"?ined it$ ot$er "aterials. 2inding a lot of usage in u#$olstery@ t$e "onotonous ?ron $ue of

t$e fi?er can ?e transfor"ed to e;otic colors@ suited to a #ersonAs c$oice and style. Een t$e

coarseness of t$e fa?ric can ?e c$anged to a soft@ sil0y fa?ric@ $ic$ is eniron"ent friendly@

lig$teig$t@ dura?le@ e;tre"ely fas$iona?le and ery easy>to>use. -ute is used for "a0ing coers and

stuffing etc. necessary for doing u# furniture.

Industrial uses o# &ute

-ute felt > Cig$ Guality jute felt is an e;cellent insulating "aterial. Jong lasting -ute felt is "ade to

sere t$e #ur#ose effectiely for a long ti"e.

Jute 'e!!ing

-ute e??ing is used in "any industries. It $as t$e folloing usage

In t$e 9a?le industry

!s ?inding ta#es for t$e car#ets

2or u#$olstery



14/32


(ain Products ) Present (ar"ets

Products Mar0etsarn

Jig$ter Pac0aging

2ood 3rade -ute Products for #ac0aging

9ocoa < 9offee Beans@ S$elled < Pea nuts

3eo>te;tiles

S$o##ing Bags

2loor 9oering

Ot$er Diersified Products

Belgiu"@ Tur0ey@ Egy#t

India@ !frican < Jatin !"erican 9ountries

!frican < Jatin !"erican 9ountries)@ US!@ !rgentina@

Tur0ey

US!@ 6est Euro#e

US!@ -a#an@ Saudi !ra?ia

US!@ 6est Euro#e

US!@ 6est Euro#e

7# EPORTS O( JUTE 'OODS DURIN' )::" 0 )::)


SACKING

1#

OT$ERS

8#

C%C

2#

$ESSIAN

31#

&ARN

3'#

JDPS

22#


15/32


EPORT O( / MAJOR JDPS (ROM INDIA DURIN' )::"0:)

":# Resear$ & Defree -ute Products for #ac0ing food grade #roducts li0e cocoa@ coffee@ s$elled

nuts etc.

Major R < D or0s in DRE2 S#inning Syste".

Production of jute ?lended yarns it$ jute as t$e "ajor co"#onent>using -ute8iscose@

-ute!crylic@ and -ute9otton>>jute content arying fro" 7' to :' ?y eig$t. Suc$ yarns

suita?le for ?lan0ets@ s$als@ #ulloers and as also t$ic0 dress "aterials.


Wall

Hangings

5%

Gift

Articles

7%

Hand &

Shopping

Bags

30%

Floor

Coverings

5%

!ecorative

Fa"rics

#%


16/32


Production of fine ?lended yarns using -ute9otton@ -uteSil0@ -ute6ool etc. for a##arel use

-ute 9ontent is '>,'.

-ute ?ased fa?rics used #articularly in areas of furnis$ing@ u#$olstery@ car#ets@ ?lan0ets and ot$er

$o"e te;tiles. R < D Institutions $ae deelo#ed -ute Reinforced 9o"#osites in t$e for" of

fle;i?le@ se"i rigid s$eet and rigid ?oard to su?stitute ood@ ti"?er@ and #lyood.

U/DP jute #rogra" $as also facilitated diersification of jute sector ?y deelo#ing ne tec$nology@

#ro"otion of e"#loy"ent o##ortunities ?y encouraging ne entre#reneurs to set u# #roduction

units and deelo#"ent of indigenous "ac$ine "anufacturing sector. So"e of t$e on>going #rojects

are use of jute for #a#er #roductionH jute ?ased needle>#unc$ed car#ets@ deelo#"ent of "ulti>

co"#onent yarn fro" ool@ jute and ot$er fi?ers for floor coerings ?lan0ets and 0nitear.

""# Prters (i


17/32


folloing a differentiating strategy is ?y trying to "a0e jute "ore of a lifestyle #roduct and t$erefore

esta?lis$ing so"e 0ind of a fas$ion state"ent. Cere@ t$e ?uyers are ?ig su#er"ar0ets li0e S$o##er

Sto#@ $ic$ sell a $ole range of #roducts and -ute ?ags and accessories are just a "iniscule #art of

t$eir total ?usiness. Cence it is not as i"#ortant for t$e" to ?uy t$e jute #roducts as it is for t$e jute

industry to sell t$e". Of t$irty "ajor #ri"ary co""odities traded internationally@ only a?out si;

$ae as "uc$ #rice and su##ly insta?ility as jute. De"and is $ig$ly sensitie to #rice increases@ ?ut

not nearly as sensitie to decreasesH once a #ortion of t$e "ar0et is lost to synt$etics@ it is ery

difficult to in it ?ac0 t$roug$ #rice co"#etition.

!#art fro" t$ese@ significant #ortions of ?uyers are foreign i"#orters.

Oerall@ t$e ?uyer #oer see"s significant.

Entry %arriers

Profita?ility 5 Jo

Inest"ent 5 /ot too $ig$@ foreign inest"ent aaila?le including joint enture o#tions

Tec$nology 5 /ot a ?arrier@ no s#ecialiFed 0no $o

Ja?our 5 s0illed or0ers $o are aaila?le in #lenty or can ?e trained es#ecially in India

E;ce#t for lo #rofita?ility and t$e fact t$at jute industry as a $ole is declining@ t$ere are no entry

?arriers as suc$. !ll t$e "ajor #layers in t$e jute industry are re#orted to $ae #lanned fres$

inest"ents@ $ic$ ill not ?e restricted to 6est Bengal. Coeer@ according to a section of t$e

industry@ t$e jute sector $as not gron enoug$ to a?sor? suc$ $uge #roduction ca#acities. It is "ore

li0ely t$at t$e ne units ill only re#lace so"e of t$e older ones. 9urrently@ t$e oerall ca#acity of

t$e jute industry is a?out %''@''' tonnes #er day. T$e annual turnoer is Rs ,@''' crore and t$ere

are altoget$er : integrated jute "ills@ of $ic$ 4* are in 6est Bengal. 2res$ ca#acity to t$e tune of

&4@''' tonnes #er day is ?eing currently i"#le"ented@ creating jo? o##ortunities for "ore t$an

&4@''' #eo#le@ ?ot$ s0illed and uns0illed.

Su!stitutes

Eac$ category of jute #roducts faces a nu"?er of su?stitutes. T$e t$reat of su?stitutes is ery large

?ecause jute is "ainly used as a fi?er in t$e #roduction of t$e end #roduct and t$ere are a nu"?er of

"an "ade ad natural fi?res t$at can act as ery close su?stitutes. It is true t$at jute $as a nu"?er of



18/32


c$aracteristics@ $ic$ s$ould #ro"#t its usage ?ut lac0 of 0noledge of its Gualities or0s in its

disfaour. Joo0ing at su?stitutes in its "ain categories

Pa$;a,in, -ur-ses% -ute is a fle;i?le #ac0aging "aterial. It faces ?eing su?stituted ?y

ot$er fle;i?le #ac0aging "aterials li0e #lasticH nylon and ot$er "an "ade fi?res and also

for" non>fle;i?le #ac0aging "aterials 5 ?o;es@ cartons@ and alu"iniu". !#art fro" $ic$

latest innoations li0e "odified at"os#$ere #ac0aging cans@ $ic$ seal in t$e air to retain

fres$ness@ or s"art "aterials t$at can K?reat$eL selectie gases and 0ee# food uns#oilt are

?eing introduced $ic$ #ose a ?ig t$reat to using jute as agro #roduct #ac0aging.

Te=tiles% 9otton is t$e closest su?stitute $aing t$e sa"e KnaturalL a##eal@ $ic$ is t$e "ain

"ar0eting #lan0 of jute te;tiles. 9onsidering t$at currently all oer t$e orld@ t$ere is an

oer ca#acity of cotton #roduction and falling de"and@ donard trend of cotton #rices ill

tend to loer de"and for jute te;tiles. Besides in t$is area Indian jute faces stiff co"#etition

fro" Banglades$i jute 5 0non for its su#erior Guality. T$e range of colours t$e dull ?ron

of natural jute can ?e dyed into 5 not faced ?y synt$etic "aterials@ $ic$ are regularly $at

is used@ restricts -ute usage for furnis$ings.

Jute ba,s%Cere su?stitutes co"e fro" t$ree areas a) Plastic 5 eit$er ery lo cost or co"es

free it$ #urc$ases since it is "ore econo"ical for co"#anies to use #lastic ?ags for#ro"otional #ur#oses. ?) 9lot$ ?ags c) Jeat$er ?ags 5 "a0es a stronger fas$ion state"ent

t$an jute !gain since t$e leat$er industry is going t$roug$ a slu"# donard #rice "a0es it

a lot "ore difficult to re#lace. 9otton and Jeat$er are "ore t$e "ore regular "ediu"s of

e;#ression as far as fas$ion goes. De"and for jute fro" ?ot$ te;tiles and ?ags $as de#ended

on fads rat$er t$an sustaina?le trends.

Competition

(a&or Players in t$e industry +India,

T$e entire jute industry@ $ic$ is geogra#$ically concentrated in 6est Bengal is do"inated ?y a fe

0ey #layers@ as can ?e easily seen fro" Ta?le %.%. ! ?rief introduction of t$e o#erations and "ajor

strategies folloed ?y t$ese #layers is gien ?elo.



19/32


-a!le ./. (a&or Players

%ased on turnover:

9o"#any /a"e Turnoer

9$a"#dany Industries Jtd. %::.47

9$eiot 9o"#any Jtd. %%.:'/ational -ute Manufacturers 9or#oration Jtd. %&4.:&

!e0ta Jtd. %%.4,

3loster -ute Mills Jtd. *'.7&

%ased on (ar"et Capitalisation:

9o"#any /a"e Turnoer

9$eiot 9o"#any Jtd. ,7.1

9$a"#dany Industries Jtd. &,.%,Cora$ Mills 9o"#any Jtd. 1.'1

!e0ta Jtd. ,.&

3loster -ute Mills Jtd. .7'

C$ampandy Industries 0td/

T$is co"#any $as t$e $ig$est turnoer and o#erates t$e "a;i"u" nu"?er of #lants i.e 1 in 6est

Bengal and & in Orrisa. It is loo0ing to furt$er e;#and t$roug$ ta0eoers and acGuisitions.

9$a"#andy $as recently diersified fro" ra jute and sac0ings only to #roduction of "ore non>

standard jute #roducts.

T$is co"#any see"s to ?e concentrating too "uc$ on scale and see"s to ?e concentrating on

?eco"ing t$e ?iggest #layer turnoerise. Coeer@ it $as t$e second loest #rofit "argin a"ong

t$e to# 4 #layers. It=s ca#acity utiliFation is t$e loest at 7&.4 in t$e last financial year. It also

suffers fro" ery #oor industrial relations and $ad to close it=s factory for as long as : "ont$s due to

a stri0e in %**7>*:.

C$eviot Company 0td/

!s co"#ared 9$a"#andy@ 9$eiot=s ca#acity is loer@ ?ut it=s utiliFation is t$e $ig$est in t$e

industry. 9$eiot is into %'' "anufacture of finis$ed goods. Recently it as #lagued ?y #oer

#ro?le"s and $ence is ertically integrating into #oer generation to "eet it=s ca#tie de"and. In



20/32


order to "eet t$e lo@ cyclical de"and for jute@ 9$eiot also #lans to diersify into non>jute

#roducts. It $as t$e $ig$est net #rofit "argin in t$e industry of %.,4

Gloster Jute (ills 0td/

'loster o#erates only % jute "ill in 6est Bengal and co"#ared to t$e ot$er co"#anies@ focuses less

on e;#orts. It is a %'' jute #roducts co"#any and $as recently "ore u# t$e alue c$ain onto "ore

alue>added jute #roducts. It $as a "ajor focus on tec$nology and stries to ac$iee #roductiity

i"#roe"ents t$roug$ ?etter tec$nology.

Ae"ta

T$is co"#any @ $ic$ is "ajority> oned ?y t$e +anoria grou#@ is also a %'' jute #roducts

co"#any. !n interesting fact a?out t$is co"#any is t$at it o#erates a #lant in 3urgaon for

"anufacture of it=s diersified jute #roducts. /o ot$er jute "ill $as any factories in nort$ern India.

T$is gies a signal of it=s focus on e;#orts of diersified goods to a great e;tent. Cence @ it=s

strategic sta0e and focus in t$e diersified jute>#roduct industry see"s to ?e $ig$.

Ho*ra$ (ills

Cora$ Mills #roduces ?ot$ ra jute as ell as a ariety of jute goods. It #roduces yarn for internal

use and for sale . T$is "ill as under t$e BI2R @ ?ut is no on t$e road to recoery. It $as

underta0en large>scale retrenc$"ent under BI2R #rotection. It is targeting grot$ t$roug$

diersification it$in jute as ell as "oderniFation. It is targeting neer #roductssuc$ as soil

saers@ sori" clot$@ e;#ort yarn@ s$o##ing ?ags@ ?leac$ed and dyed $essian.! noteort$y fact is t$at

it $as an e;tre"ely $ig$ de?t>eGuity ratio of %., . T$is is su#rising gien t$e fact t$at "ost of t$e

s"all #layers in t$e jute 5industry are non>diidend #aying@ #riately oned co"#anies. Cora$

"ills $as also a##lied for ISO *''& certification for it=s #roducts it$ a ie to ?uilding it=s ?rand

identity.



21/32


")# C.-etitin Analysis

! detailed analysis of t$e co"#etition ?eteen t$e #layers is gien ?elo.

2inancial #erfor"ance

Le


22/32



Para.eter Ca.-dany Ce ' of

reenues

'rBt Plans

3rot$ t$roug$

e;#ansion and

ta0eoers

I"#roe"ents in

#roductiity

Productiityincrease t$ru

tec$nology H alue>

add final goods

E;#orts of

diersified jute

goods

Diersification

it$in jute@

"odernisation

6rrBin,

Ca-a$ity

Joan >7.* cr.

DE ratio of '.7

Joan >*.7 cr.

Int. coerage

7*.'*

Joan of 4., cr@

Int.coerage ,.%:

Joan of 4.1, cr.

Int. coerage

.7%

Joan of %.%, cr.

Int. coerage &.'%

'e,ra-i$al

-resen$e

1 in 6.B@ & in

Orissa

& #lants in 6.

Bengal

% #lant in 6est

Bengal

% in 6.B@ % in

3urgaon

% #lant in 6est

Bengal

Presen$ea$rss

$ate,ries

7' alue>add#roducts N ,'

jute < sac0ings

Sac0ing > Jo8alue>add goods

5 Cig$

Sac0ing 5Jo8alue 5add goods

5 $ig$

Sac0ings 5

Moderate alue>

add #roducts>

Cig$

Ra jute Nsac0ings N 8alue

add #roducts

'


23/32


C.-any Strate,y%

Diersification into alue>added jute #roducts li0e jute ?ags@ footear etc. see"s to ?e t$e #rofit

#ool in t$is industry. !s o?sered in t$e diagra" a?oe@ t$e co"#anies it$ t$e $ig$est #rofita?ility

are t$e ones $o o#erate entirely in t$e diersified jute goods "ar0et. Since #roduction of ra jute

is a co""odity industry and #rices are regulated t$ere is not "uc$ differentiation ?eteen #layers.

But@ in t$e #roduction of alue>added jute #roducts@ t$e "ajor #layers are trying to differentiate

t$e"seles fro" t$e rest eit$er t$roug$ #roing su#erior Guality (ISO*''&) or t$roug$ tec$nological

su#eriority. Coeer@ according to us t$ere are & "ain issues t$at ill $ae to ?e addressed ?y t$ese

co"#anies in t$e future

%. Profit ?ased on t$e #ara"eters "entioned a?oe (ca#acity utiliFation and diersification)

does not lead to sustaina?le co"#etitie adantage as t$ese can easily ?e i"itated. 9a#acity

utiliFation in fact deals it$ o#erational efficiency and not it$ strategic #ositioning of a

fir". !s s$on ?y t$e data@ fir"s li0e Cora$ Mills $ic$ are diersifying into $ig$>end

#roduct and at t$e sa"e ti"e ?ringing in efficiency t$roug$ layoffs and tec$nological

i"#roe"ents an easily #ose a t$reat to 9$eiot in t$e future.


Capacity UtilisationHighLow

Categories

Raw jute

Jutegoods

Small fragmentedplayers

C*+,-

C0$,5 M+66

G6,-5A-


24/32


&. 9artelisation to increase t$e generic de"and for jute #roducts "ay ?e a good o#tion for t$e

e;isting #layers. T$is can ?e done t$roug$ e;$i?itions@ fairs etc.

"+# Di?ased #roducts to "a0e successful inroad into t$e te;tiles sector@ jute $as

?een largely e;#eri"ented it$. In ie of c$allenge faced fro" c$ea#er #rices of synt$etic

su?stitutes@ "ore t$rust $as ?een gien on diersification of jute #roducts.

Major t$rust areas of alue>added diersified jute #roducts include -ute Candloo"s and Candicrafts@

/on>oen and Industrial !##lication@ -ute Rigid Pac0aging@ Decoratie #roducts and 3eo>-ute etc.

"/# Jute in 6an,lades

T$is is t$e traditional source of e;#ort earnings as ell as one of t$e "ost i"#ortant sectors in ter"s

of e"#loy"ent. Coeer@ co"#etition fro" ot$er countries@ consu"#tion su?stitutions it$

synt$etic #roducts@ and #u?lic sector "anage"ent of "any of t$e "ills $ae all led to financial

#ro?le"s in t$is sector. 6it$ adice and $el# fro" donor agencies@ $alf of t$e #u?lic sector jute

"ills ere #riatiFed in %*1& (B$as0ar and +$an@ %**4). T$e goern"ent still $as eGuity in oer

t$ree>Guarters of t$e sector. !fter #riatiFation@ "ore "anual la?or as $ired ?ut out#ut fell

steadily. Muc$ of t$e decline in out#ut since t$e %*1's as ?ecause of falling orld de"and.

!lt$oug$ jute "anufactures still account for t$ree>fourt$s of total jute e;#orts@ t$e #ro#ortion of ra

jute and jute "anufactures in total e;#orts $as fallen fro" 71., in %*1' to %% in %**4 (Ra$"an@

%**:). T$e a##reciation of t$e Ta0a against !sian co"#etitors in t$e orld "ar0et also $ad aderse

effects on out#ut. More recently@ t$e alloance of Fero duty on "ac$inery i"#orts $as $el#ed jute

industries to re>orient t$e"seles to so"e degree. T$e goern"ent $as #artici#ated in a sectoral

adjust"ent sc$e"e it$ t$e 6orld Ban0 to close don a t$ird of t$e #u?lic "ills@ donsiFe to

large "ills@ and #riatiFe t$e re"aining "ills@ ?ut la?or union and #olitical o##osition $as led to t$e

cancellation of t$is #rogra" (T$e 6orld Ban0@ %***).

"# (uture Strate,y



25/32


!t t$e "argin@ any grot$ in t$e jute industry ill ste" fro" groing e;#orts. T$e to# ten jute

i"#orting countries across t$e orld are Belgiu" @ US!@ Egy#t@ Tur0ey @U+@ -a#an@ Saudi !ra?ia@

!ustralia@ Italy@ and Syria

Jute Geo1-extiles

3eote;tiles $ae seen unrialled grot$ it$ a forecast ?y t$e United /ations International Trade

9enter (U/IT9) of %@,'' "illion "roduced ?y t$e ne "illenniu". Euro#e and /ort$ !"erican

"ar0ets eac$ account for ,' it$ t$e re"aining &' attri?uted to -a#an@ !sia and !ustralia. T$e

"ain a##lications are se#arators in eart$ or0s@ drainage and linings as ell as controlling soil

erosion and esta?lis$ing #lant grot$.

!s jute accounts for suc$ a s"all #ro#ortion of geote;tile use in t$e 6est t$ere is enor"ous sco#e

for increased usage. Most land "anagers in Euro#e are generally unaare of t$e releance of jute

#roducts@ as t$ey consider te;tiles as t$e "ain out#ut of t$e industry. -ute accounts for less t$an %

of total geote;tile use@ des#ite t$e tec$nical adantages and lo cost of jute geote;tiles@ $ic$ $as

?een de"onstrated ?y researc$ and t$e results of full>scale use. ! #ro"otion #rogra" t$at ai"s to

#roide #roduct infor"ation in readily usea?le for" $as ?een initiated ?y U/IT9@ U/DP and

-MD9.

6$ilst t$e cost of geote;tiles (selling in Euro#e for '.,' to '.1' #er "&) is loer t$an synt$etic

geote;tiles ( %.%' to %.4 #er "&a##ro;) and ot$er natural fi?re geote;tiles ( '.:4 to &.'' #er

"&) t$eir usage is ery lo. S.+.B$attac$arya of t$e Indian -ute Mills !ssociation stressed jute as

co"#etitie on #rice@ and ot$er delegates co""ented t$at tec$nical c$aracteristics ere also

su#erior to ot$er "aterials in #articular a##lications. -ute degrades in oer & to , years@ ?ut t$is is

usually a sufficiently long #eriod for egetation grot$ to ?eco"e esta?lis$ed@ and trials $ae s$on

t$at degraded ?y>#roducts are ?eneficial #lants. 6or0 is #rogressing to #roduce treated jute $ic$

$as a longer life ?efore degradation.



26/32


Gro*ing t$e domestic demand

T$e de"and for jute is $ig$ly concentrated in 6est Bengal and t$e nort$ east states 5 around t$e

regions $ere t$ey are #roduced. In ot$er #arts of t$e country t$ere is an e;clusiity associated it$

jute on account of a) its #rice ?) aaila?ility only in $ig$ class fas$ion s$o#s li0e S$o##er=s sto# or

Jifestyle@ $ere t$e "ar0u# is "ore due to ?rand na"e rat$er t$an cost of t$e #roduct itself. To

drie $o"e t$is #oint a s$o##ing ?ag $ic$ costs around Rs 44 5 %'' in +ol0ata costs any$ere

u#ards of Rs.&'' in t$e lifestyle s$o#s in Bangalore. Ma0ing jute ?ags "ore aaila?le to t$e

consu"er at #rices closer to t$e #roduction #rice ill increase its oerall usage

C$anging li#estyles > G2 GREE3

Increasing eniron"ent consciousness and a #erce#ti?le c$ange toards eco friendly goods ?ot$ ?y

t$e general #u?lic and t$e cor#orations ill increase t$e de"and for jute #roducts as co"#ared to its

strongest non ?io degrada?le su?stitutes. !lso goern"ent regulations all oer t$e orld lean

toards #ro"oting "ore eco clean #roducts 5 su##lying "oney for R


27/32


APPENDI "

Indian Jute Industry H (a$ts at a ,lan$e

Te Or,aniFed Se$tr

/o of -ute Mills :7

!nnual Production %.7 Million MT

6or0ers E"#loyed &77 T$ousand (direct < indirect)

2a"ilies de#endant , "illion $ouse$old(direct < indirect)

Main Products Manufactured Sac0ing@ Cessian@ 9ar#et Bac0ing 9lot$@ arn@ 2ood 3rade

Products@ 3eo>te;tiles

Te In!r.al Se$tr

/u"?er of registered units around :'' units

Total E"#loy"ent around 7'''

Main Products Manufactured -ute Bags@ -ute Blended 2a?rics@ -ute Blended 9ar#ets@

3iftare@ Candicrafts@ Decoratie !rticles



28/32


APPENDI )

'e,ra-i$al distributin ! @ute -rdu$tin

2olloing "a# s$os t$e arious regions in $ic$ jute is gron in India.



29/32


APPENDI *

E


30/32


RaJutescenario India

India e;tended all>out goern"ent su##ort to far"ers in #roiding fruit of researc$ > C8 seeds

deelo#"ent@ seed "ulti#lication@ #reseration and distri?ution.

Indian&ute"ill oners #ay@ on t$e aerage@ Ru#ees ,4' #er "aund to groers of&ute$ic$contri?utes to u#lift"ent of far"ersA econo"ic condition and encourages t$e" to go for&utecultiation it$ ent$usias". T$at is $o@ India $as ?een a?le to increase &uteacreage fro" a?out

1 la0$ acre #roducing a?out %7 la0$ ?ales of&utein %*,: $en India as diided@&utefieldsfalling in East Pa0istan. /o in a?out 4 la0$ acres s$e is #roducing a?out 1' la0$ of ?ales&ute@

?eco"ing al"ost inde#endent of&utesu##lies fro" Banglades$.

Banglades$ Ra&utescenario Result of researc$ done in Banglades$JuteResearc$ Institute for

deelo#"ent of ra&ute#roduction@ $as re"ained confined in t$e la?oratory.

3oern"ents of Banglades$ $as not done anyt$ing eer in assisting far"ers it$ "ulti#licationand distri?ution of C8 seeds. @ Banglades$ "ar0et is no flooded it$Indianseeds loering

Guality of Banglades$&ute. 9ost of #roduction of&utein t$e field is ery $ig$ for far"ers in

Banglades$. Cad&ute?een #urc$ased fro" far"ers during t$e $arest season and $ad t$e gang of

&ute#urc$ase officer@ "anager and 9B! leaders not indulged in corru#t #ractices@&utecost for

"ills ould@ at t$e "a;i"u"@ ?e T0. ,4' #er "aund and far"ers ould get re"uneratie #rice of

T0. ,'' or "ore #er "aund.

Resultant effects of&ute#urc$asing #attern folloed in nationalised&ute"ills

(i)Jutefar"ers ?eco"ing #oorer getting less and less for t$eir #roduce and are ?eing discouraged

to go for&utecultiation.

!s a result@&uteacreage $as co"e don fro" "a;i"u" of a?out la0$ acres #roducing oer :'

la0$ ?ales don to "ini"u" of a?out %4 la0$ acres #roducing "ini"u" of a?out 4 la0$ ?alesof&ute@ it$ fluctuations fro" year to year. 6$en far"ers get good #rice in one year@ t$ey gro

"ore ne;t year and ice>ersa.

(ii) T$e ind>fall #rofit earners are t$e "iddle "en@ suc$ as farias@ ?e#aris and stoc0ists@ at t$e

cost of far"ers and "ills@ "ainly ?ecause goern"ent ?an0s inaria?ly fail to #roide funds to"ills in -une-uly. Parado;ically@ $oeer@ sa"e ?an0s@ at goern"ent instructions@ ulti"ately

adance funds to sa"e&ute"ills for&ute#urc$ase in Se#te"?er@ $en&uteis no longer it$

far"ers@ ?ut is it$ stoc0ists. T$is $a##ens eery year.

(iii) T0. %'' #er "aund ill>gotten gain against&ute#urc$ase is s$ared ?y "ill "anager@&ute#urc$ase officer and 9B! leaders@ and a #art is also si#$oned u#.

(i) 9ost of #roduction of&utegoods #roduced ?y&ute"ill is increased ?y a?out T0. 4@''' #er

ton@ only on account of ra&ute@ ?ut for $ic$&ute"ills ould $ae gone into #rofit.

MaintenanceIndian#riate&ute"ill oners $ae ?een ery careful in regularly "aintaining



31/32


t$eir&ute"ill "ac$inery $ic$ $as ena?led t$e" to secure $ig$>#roductiity efficiency fro"t$eir "ac$ines and or0ers@ at 7& "an>$ours>ton.

T$eir&ute"ills are oer $undred years old@ on t$e aerage@ ?ut due to regular "aintenance t$e

efficiency of t$eir "ac$inery is a?out tice "ore t$an t$at of #oorly>"aintained Banglades$i

&ute"ills "ac$inery@ $ic$@ on an aerage@ are only forty years old.

!l"ost entire "oney s$on on "ills "aintenance account as e;#enditures for s#are #arts@ oil etc.are neit$er actually #urc$ased nor used@ and no "aintenance is done in nationalised&ute"ills

resulting in reduced #roductiity of "ac$ines and or0ers.

Sales Sales of all nationaliFed&ute"ills are centraliFed at cor#oration. T$ey conduct 4 to %' #ercent as state>to>state and ?ul0 sales@ often at discounted #rice.

T$e test of sales are conducted t$roug$ e;#ort ?ro0ers in $ic$ case also AdiscountsA are alloed

for t$e sa0e of Aco"#etitionA it$ local #riate "ills and it$ i"aginaryIndianco"#etitors.

!ll t$ese AdiscountsA are not$ing ?ut under>inoicing t$e sales@ for #ersonal ?enefit of salesofficers. T$e net result is t$at nationaliFed&ute"ills get sale #roceeds at least 4 #er cent loert$an ruling orld #rice@ as o?tained ?y #riate oners.

9ost of #roducing one ton 6orld ruling #rice and sale ProfitJoss sac0ing (&ute?ags) #roceeds

#er ton of sac0ing #er ton of sac0ing

IndianPriate Mills

a) !erage cost of one ton of ra&ute#ur c$ased fro" far"ers rig$t in "ar0et reason &7.4 "dsQ Ru#ees ,:4 Ru#ees %&@4*'

?) !erage cost of age of or0ers on 7& "an>$ours>ton ?asis Ru#ees *'

c) Ot$er costs Oil@ starc$@ trans#ortation "aintenance@ #oer@ financing@ oer$ead@ etc. Ru#ees

7@:'

Total 9ost Ru#ees %*@1*' #er ton

/ationalised Mills of Banglades$

a) !erage cost of one ton ra&ute@ #urc$ased fro" stoc0ists after "ar0et season is oer@ &7.4

"ds Q T0. 74' T0. %:@&&4

?) !erage cost of age of or0ers on %4' "an>$ours>ton ?asis T0. &@&4'

c) Ot$er costs Oil@ starc$@ #oer@ trans#ortation@ financing @ "aintenance@ oer$ead@ etc.

T0. :@4''



32/32


Total 9ost T0. &7@*:4 #er ton

6orld Ruling Price Ru#ees &&@'''

Sale #roceeds Ru#ees &&@'''

6orld ruling #rice T0. &7@'''

!ctual sales #roceeds T0. &,@4''

Profit #er ton Ru#ees &@%%'

Joss #er ton T0. &@,:4

articles

#a#e cuttings to ?e filed

#$otogra#$s

jute report

Documents