No added gain to jute industry on CCEA extension: Cheviot

HV Kanoria, Chairman and Managing Director, Cheviot, says the extension of CCEA order on mandatory usage of jute packaging for the food grain and sugar industries, will not lead to any incremental benefits to the jute industry.

Kanoria says, the jute industry is currently facing shortage of raw jute and the jute commissioner might appeal for dilution of the recommendation to some extent to overcome supply pressure.

The company is investing heavily in capex to meet the increasing demand, Kanoria says, adding that it is difficult to estimate growth numbers as the commodity prices are highly speculative. 

Below is the transcript of HV Kanoria’s interview with Mangalam Maloo and Reema Tendulkar on CNBC-TV18. Mangalam: We got a recommendation from the Cabinet Committee on Economic Affairs (CCEA) yesterday, which approves mandatory use of Jute packaging in agri-products upto 90 percent, and 20 percent for sugar production. This was in 2014-2015 as well. Now this is has been extended to 2015-2016. How does that change life for Cheviot? A: That does not really affect much because CCEA old recommendations continue and the industry would continue to get the benefit of the mandatory orders. In the current year, there is a shortage of raw jute and because of that, the industry is finding it difficult to supply the entire material and some short-fall will be there because of which some dilution is likely to be recommended by the jute commissioner. Reema: While we take you point that this is just purely an extension and therefore, on a year-on-year (Y-o-Y) basis, there will be no difference in the company’s outlook, but tell us if the extension had not taken place, then what the hit would have been? When it was first introduced, what was the benefit that companies like yours saw? A: Definitely, there is a benefit because there is a protection to the local industry and the main advantage is that food grains which are procured for packing rice and we are mandated to be used they are packed mostly in jute.