Moneycontrol PRO
Contest Alert:1 day left to win Amazon vouchers worth Rs 5000. Take the MCPRO Quiz today to grab yours!

Jute could be among priority industries to bet on in next rally

Although currently, diversified jute products account for a small percentage of the total demand, this segment could expand rapidly in a couple of years.

December 07, 2019 / 08:02 AM IST

Image: IDSFFK Twitter handle

 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Rudra Shares and Stock Brokers

Jute, known as the Golden Fibre, is slowly grasping market share. The government has been taking a series of initiatives for promoting this particular sector. It recently retained the scope of mandatory packaging norms under the Jute Packaging Material (JPM) Act, 1987, as per last year. These norms mandate packaging of 100 percent of food grains and 20 percent of sugar in diversified jute bags.

Also, between FY2014-15 and FY2018-19, the National Jute Board had released a capital subsidy of Rs 4,971 lakh to jute mills and Jute Diversified Product (JDP) units. Moreover, schemes such as Amended Technology Upgradation Fund Scheme (ATUFS) and Jute-Smart are being introduced to support and boost the golden fibre.

Sadly, the potential of jute has been ignored for quite a long time now. But interestingly, seeing its usage and benefits, this industry is expected to come out as a hidden gem in the next decade.

Close

Having a higher capacity production than cotton, jute is the second most important vegetable fibre only after cotton. Its usage extends not only to textile but also to non-textile products due to some of its unique physical properties, which have not yet been fully discovered globally. For instance, Cheviot Ltd., one of the leading companies in this industry, had started manufacturing and sale of customised jute bags within and outside India. Moreover, it is a debt-free company with sound financials and low equity.

Looking at the changing lifestyles of consumers, this fibre is also expected to gain traction in home furnishing and decor in the coming years. Jute furniture is highly stylish and long-lasting. Items such as curtains, chair coverings, jute beds, chairs, carpets, area rugs, hessian cloth, are slowly and gradually gaining popularity. Since it is cheaper than wood, the demand for this kind of furniture is expected to gradually increase all over the world.

In addition to this, diversified byproducts from jute can be used in the manufacture of cosmetics, medicines and paints. Also, jute sticks are a good substitute for forest wood and bamboo in the production of particle boards, pulp and paper.

However, it is unfortunate that jute is still behind voguish silk, cotton or wool. But now, the golden fibre is becoming popular both in the domestic and international markets. Jute saris and shoes have become consumers' latest fancy and are in demand. In the international fashion world, too, this fibre is becoming groovy. More interestingly, it lowers the burden on natural oil reserves as plastic and polybags are made from petroleum.

Jut and jute-products are 100 percent biodegradable, eco-friendly and organic, hence, in the coming years, it may contribute a higher share in packaging industry instead of synthetic fibre. Also, the younger generation takes an interest in the environment and environment-friendly products. Thereby, looking at their changing lifestyle and buying habits, these products will soon become trendy. As India is the largest producer of Jute, hence it is available at competitive prices here.

No doubt that the jute industry has remained an underperformer for decades. Therefore, the surge in demand for the natural fibre blend would simultaneously increase the demand for jute and its variants. Although currently, diversified jute products account for a small percentage of the total demand, this segment could expand rapidly in a couple of years. We believe, in the next rally, it could be one among the top priority industries to bet on. Ludlow Jute, Cheviot and Gloster are some listed companies to look at.

Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Moneycontrol Contributor
first published: Dec 7, 2019 08:02 am

stay updated

Get Daily News on your Browser
Sections
ISO 27001 - BSI Assurance Mark