Gloster Jute Ltd and Cheviot company Ltd: Golden Fibre From The Ganga

Shahrukh Khan played the role of the great King Asoka in Asoka Movie in 2001. Although he nearly killed the soul of the King with his soulless acting because he could not gasp the soul of King Asoka.  King Asoka was a great warrior who felt the uselessness of the material things after the bloody fight of Kalinga. After the war, the great King transformed into a Buddhist and there is a legend that he created a society of Nine Unknown to preserve the most crtitical and sacred knowledge of his time so that wrong minds could not misuse it. Those Nine unknown men produced precious Nine books related to different fields of knowledge like Alchemy, Physiology, microbiology etc. One account says that Judo is leaked from the book related to physiology. There are also talks that these books are still hidden in some unknown place and Nine Unknown are kept changing from time to time. Don’t get excited as there is no book related to STOCK MARKET :).

Another account related to microbiology book says that the water from Great River The Ganga was purified by special microbes by these nine at secret base of Himalayas. Indeed Ganga is a special river. It has bewildered scientist since ages with its unique bacterial properties. Ganga has unique anti bacterial properties and no bacteria can survive in its water. In fact the word Bacteriophage was created during study of this anti bacterial properties of Ganga in 1896.

Bacteriophage are those microbes which kill bacteria. What a cat is to a mouse, the bacteriophage is to a bacterium. The bacterium Vibrio Cholerae which causes the deadly Cholera disease, when put into the waters of Ganga died within three hours! The same bacteria continued to thrive in distilled water even after 48 hours!

Water from Ganga remains fresh for a very long time sometimes for years while ordinary water will rot in few days. It happens due to very high levels of oxygen in Ganga which is around 25 times more than the normal water. The waters of Ganga when added to other water resources in adequate amount, causes the bacteriophage in it to quickly multiply cleaning the new water resource of any bacteria present in it. Which is why the ancient Indians used to take Ganga jal back home to clean their local water resources! People practice it even today, except that most of them don’t know the actual reason!

Scientists were amazed when they saw that only a few feet below the bodies of persons floating in the Ganga who had died of dysentery and cholera, where one would expect millions of germs, there were no germs at all.

So I have no doubt that something very unique is going on with Ganga since ages. And we Indians just Love Ganga, it is in our life all the time from birth to end.

Moving forward; a mother cannot feed rotten or stale food to her child. If she does the same, we are certain of one thing that she does not love her child. These two things can’t coexist. But we are doing the same to Ganga everyday for years. We are putting the maximum possible garbage in Ganga and yet we claim that Ganga is our mother, we love it, we adore it. But this garbage and our respect just can’t coexist. Garbage is real so we can say our love is only at the surface. I don’t think that we are doing this to Ganga because we know its uniqueness but because we can’t see beyond our selfishness.

And we are doing the same to our mother earth at a much grand scale. Our earth is dying. I am limiting this macro level damage to usage of plastic bags. These bags are a disaster as they take almost hundreds of years to degrade. Also there are yet no Unknown Nine who can design a way for speedy degrading of these plastic bags. But there is no need for the same as we already have a remedy existing and that is Biodegradable bags which can be made of paper or JUTE.

Paper is not a solution as it requires cutting of trees etc and it is not that strong. Jute fulfills all these. It is a tough crop requiring minimum of care and inputs like fertilizers and pesticides, has very high acreage per acre. It just needs warm weather, tropical rainfall and high humidity; so fertile delta of Ganga is most suitable for it. So we find Ganga here again.

Jute is also a textile but most of textile like cotton has cellulose fibers but jute is part cellulose and part lignin. Cellulose is a plant fibre but liglin is a wood fibre. That’s why jute has flexibility of cellulose with strength of wood.

We think that plastic bags are cheaper because they are produced cheap but we never add the environmental costs. I have always found the current methods of calculation of GDP inaccurate because they do not deduct the depreciation caused by us to “Natural Capital”. Natural capital is also a part of our manufacturing and living process and it comprises of our environment, forests, water bodies, soil etc. All these are vital for our existence, so if I destroy a forest and extracts iron ore from it we add this iron ore to GDP but we never deduct the damage caused to Natural capital by this activity which is as real as iron ore. So all our GDP figures are overstated. And unless we design a way to calculate this damage we will never understand the value of Natural capital.

In fact I think, every industry should be charged with this cost of natural capital and should be rewarded if they add into it. You will see that most of our industries will become loss making.

So bags, mats and geo textiles made from jute can really save our earth. Geo textiles are used in construction of roads, dams, river slopes, soil savers etc to stabilize loose soil and reduce soil erosion. Geo textiles made from jute were used in village road projects in Kerala, Tamilnadu and Karnatka and they shown good results. Government has written to all the states to use these as they are very environment friendly and require less maintenance with greater durability. Center has asked states to use at least 15% geo textiles made from jute or coir in making these roads under Pradhan mantri Gram Sadak Yojna.

I studied Gloster jute last year but I was waiting for some positive work from Government in promoting jute bags for daily use and for storing wheat and rice in the godowns of FCI. In fact government has mandated the use of jute bags for wheat and rice storage but these govt agencies prefer plastic bags as they are cheap. So stern steps are required from government in directing these agencies to use jute. Plastic bags are made from petrochemicals which are produced from imported crude oil so using jute can save foreign exchange apart from providing employment.

Gloster Jute is the largest jute product manufacturer from india and it manufacture all type of jute products from bags, mattress to geo textiles. It is having a turnover of around 320 cr with net profit of 13 cr last year. It is getting around 90 cr from exports which I think can be a huge market in the future as Jute is only grown in india and Bangladesh so world is not aware of it yet. It can really took off with a bang if world bodies decide to use jute for storage purposes only. Jute mills in india are living in very tough times due to reduced demand for storage bags from government agencies and they are working around 50% of their capacity. Gloster is liberal in dividends even in this difficult times and giving dividends of 6/- every year. It is having very low debt of around 47 cr. Its modernization project for its plants is about to complete at a cost of 22 cr.

But just today I have read the news that Government is likely to make the use of technical and geo-textiles mandatory in construction of infrastructure like roads, ports and dams, as well as in sectors like defense and railways. So I think good time for this sector is just near. I also feel that government is also going to announce something big and serious in banning plastic bags just like its swatch bharat abhiyaan. Anything like this will pave the golden path for jute. There are many countries where plastic ban is enforced very seriously with huge fines; even a small country like Rwanda is free of this mess due to huge fines on plastic bags. Jute is even now being used in clothes also apart from making high quality mattress. 

Last time I studied Gloster it was around 215 and today it is at 275/- but I think it can be bought at every fall without caring much for the current price because even a small ruling can open the gates of heaven. One can study its annual report for more details about its products.

Another company which is related to the jute is Cheviot  with turnover of 263 cr and net profit of 34 cr , dividend payout and yield is 17/- and 3%, cash and investments in the books is 200 cr while its market cap is just 240 cr. Current market price is 537. All this look too good to be true. I have not studied it fully just had a small look due to a query posted by one of our reader. But it also looks like worth investing.

I want to write more on this subject but it has already gone very lengthy. So some other time.

Update Gloster: Gloster has given a bonus of 1:1 on 20th May 2016, hence adjusted price on the day of this Blogpost is around 137/-

(Views are personal and should not be taken as a recommendation for buy or sell a stock. Stock markets are inherently risky so kindly do your Due Diligence before investing)