You are here: Home » » Story

Jain Irrigation keen to tap new growth areas, geographies

New Delhi : Jain Irrigation Systems Ltd (JISL) has bagged a slew of water supply orders in recent weeks, with the company management maintaining that there would be significant growth in second half based on good monsoon and strong order book position.

The company has said that it has managed revenue growth despite GST disruptions and sluggish rural demand and going forward, it would increase sales in its non-traditional focus regions by expanding the reach of its distribution network and leveraging the existing marketing capabilities.

JISL has said it would continue to expand the geographic reach of its operations in India and overseas. Its sales of micro-irrigation systems (MIS) products and piping systems in India have historically been focused primarily in the Western and Southern parts of the country.

Also, it would continue to expand its sales of MIS products and expand the sales of solar pumping systems into African geographies, which the Company believes provide attractive opportunities for growth.

The company is looking to build multiple growth engines aside from its MIS and piping business. In a recent investor presentation, JISL Vice Chairman and Managing Director Anil Jain said solar pumps was a new market for the company and was expected to grow at double digits over the next decade. Also, the company's foray into food retail would offer significant scope to leverage back-end supply chain in food.

Recently, Jain Irrigation was awarded a Rs 183 crore contract of Jalgaon City Water Supply Scheme under the Amrut Abhiyan Yojana. The project involves design & construction of 661 Km of pipeline and requires elevated storage reservoirs and pump houses.

The Jalgaon project is the third major project in water supply sector - drinking & piped irrigation - that has been awarded to Jalgaon-based JISL.

It also bagged an order from state-run Tapi Irrigation Development Corporation. The Rs 125.70 crore order is for the Waghur Canal Integrated Irrigation Project, which will be implemented with pressurised HDPC/PVC pipe distribution in a command area of 16,536 acres in Jalgaon district.

The project has been planned to improve water-use efficiency by 50-55 per cent from the existing 35 per cent in canal command areas using the pressurised piped distribution network (PDN) and on-farm micro irrigation system in line with the Prime Minister Krishi Sinchai Yojana (PMKSY).

Jain Irrigation Joint Managing Director Atul Jain said the company has successfully commissioned many micro-irrigation projects on turnkey basis across Maharashtra, Karnataka, Gujarat and Himachal Pradesh.

This project has enlarged the company’s credentials for an upcoming agricultural and irrigation infrastructure upgrade in the country, he added.

JISL intends to continue expanding its capabilities to provide integrated irrigation solutions and turnkey services and capture the significant opportunities for growth provided by anticipated increases in infrastructure spending by governments in India and abroad, said Jain.

Jain Irrigation followed up the two Maharashtra orders with yet another one in Maharashtra. It has bagged the Bhusawal water supply project worth Rs 84.50 crore from Bhusawal Municipal Council, which had received funding under the AMRUT scheme for the project.

The project involves work from source to the customer's premises. The work envisages intake structures, water treatment plant, a 220km pipeline which includes raw water, pure water main pipelines & distribution system, 11 RCC elevated storage tanks.

The project is aimed at ensuring water supply to Bhusawal city for the next 30 years. Under the project, water will be delivered from the Tapi River to the people staying in the Bhusawal.

“This project is one more milestone in our progress to be a complete player in the entire water infrastructure space. We look forward to many more such opportunities as India invests in much-needed drinking water supply, treatment and distribution infrastructure,” Jain said.

Overseas, Jain Irrigation's subsidiary NaanDaan Jain, Mexico was also recently awarded two contracts worth $23.77 million in Honduras.

The contracts were awarded to NaanDan Jain’s Israel-based subsidiary in Mexico by the Ministry of Agriculture in Honduras. The projects envisage piped conveyance of irrigated water to farmers’ fields in the command areas of the two reservoirs. The projects envisage design, supply, installation and commissioning plastic pipe networks.

While MIS has remained the company's core strength, JISL has, over the past couple of years, been executing various projects in water supply sector including 24x7 water supply schemes in India and abroad. It is also executing various projects in piped irrigation and drip with solar pumping projects, besides integrated agriculture projects.

The company said it also intends to capitalize on growth opportunities and further strengthen its market position through the expansion of its product offering. It intends to leverage its R&D capabilities to diversify the application of the MIS products in India, with staple crops even though currently primarily concentrated in sugar cane, cotton, vegetables and fruits, to applications for wheat and rice.

"JISL intends to maintain its position as a leading agricultural technology player. The company intends to develop its current portfolio of high technology irrigation monitoring devices and software products to add features which enable data collection, processing and analysis, which will be sold as a service to customers", said Jain.

To expand its revenues, particularly in high-growth regions across the world, the company is also open to pursuing strategic merger & acquisitions (M&A) opportunities. The idea is to allow JISL to expand and complement its current portfolio of products, marketing capabilities and geographical footprint, said Jain.

However, the orders will get reflected in the third quarter results of the company, whose overall total revenue expanded by just 6.7 per cent in the second quarter ended September 2017. This was largely due to a robust 69.1 per cent growth in exports with the domestic revenue being maintained at last year's pace, due to what the company described as "GST disruption".

On a consolidated basis, the company's revenue from operations was up 5.3 per cent to Rs 3279.4 crore for first half of 2017-18 as against Rs 3114.2 crore in H1 of previous year. EBIDTA margin for first half on a consolidated basis was up 14.3 per cent at Rs 468.3 crore as against Rs 441.9 crore while there was a noticeable drop in profit after tax (PAT) at Rs 55 crore as against Rs 86.6 crore.

The company said PAT decreased primarily on account of higher depreciation and tax provisions.

Second quarter revenue on a consolidated basis was Rs 1598.2 crore as against Rs 1454.1 crore. Second quarter EBIDTA was Rs 219 crore as against Rs 190.5 crore while PAT dropped to Rs 10.6 crore as againt Rs 28.1 crore.

FROM GREECE TO INDIA, PEOPLE SAFEGUARD WATER FOR THE COMMON GOOD

The successes in Greece and Indonesia demonstrate civil society wants to keep water in public hands. And yet the World Bank continues its dogmatic promotion of privatization.

more...