Professional Documents
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Sector: Agri
Jain Irrigation
Jain Irrigation
Investors are advised to refer through disclosures made at the end of the Research Report.
19 May 2014
Initiating Coverage
| Sector:
Agri
Jain
Irrigation
Jain Irrigation
S&P CNX
7,264
BSE Sensex
24,363
CMP: INR100
TP: INR140
Buy
JI IN
443.1
100/46
37/33/27
M.Cap. (INR b)
44.9
M.Cap. (USD b)
0.8
PAT
EPS (INR)
4.6
6.6
10.0
Growth (%)
368.9
45.2
51.0
BV/Share (INR)
51.6
57.5
66.5
RoE (%)
9.1
12.1
16.1
RoCE (%)
11.0
13.0
15.4
P/E (x)
21.9
15.1
10.0
1.9
1.7
1.5
P/BV (x)
28.7
27.5
27.5
Dom. Inst
2.2
1.6
1.3
54.0
15.2
57.6
13.2
56.2
15.1
Foreign
Others
JIs management has moved away from doing business in TN, Karnataka and AP
due to substantial delays in payments. As a result, revenue contribution from
these states has declined from 21% in FY12 to 8% in FY14 and is further slated to
decline to 3% of total MIS revenue in FY16E. Growth over FY14-16E will be
driven by higher contribution from progressive states like Maharashtra and
Gujarat whose revenue contribution is expected to increase from 47% in FY14E
to 53% in FY16E.
19 May 2014
Jain Irrigation
GGRCs role has been a strong positive for MIS players like JI
JIs experience in Gujarat has been highly favorable ever since the formation of
GGRC in 2006. The state is the third largest (~10% of MIS revenues) and fastest
growing market for MIS. JIs MIS receivables in Gujarat are ~120-140 days,
compared to >300 days for AP and TN, and the average of 250 days companywide. The new government at the Center can possibly replicate GGRC model
across other states which can be a game changer event for MIS players like JI.
Jain Irrigation
55%
90%
78%
65%
25%
20%
55%
52%
10%
Netafim
Jain Irrigation
Others
Israel
Russia
Spain
US
369
255
India
2.0
352
343
China
Brazil
3%
1.7
247
1.6
1.3
200
181
34,442
35,854
37,510
1.0
34,363
31,620
FY09
FY10
FY11
FY12
FY12
FY13
FY14E
% of food processed
80%
80%
FY16E
FY15E
RoE (%)
70%
16.1
13.5
12.1
9.1
30%
2.2
2%
USA
Malaysia
France
Thailand
India
19 May 2014
FY12
FY13
FY14E
FY15E
FY16E
Jain Irrigation
JI is Indias largest player in India's organized micro irrigation sector, with a dominant
market share of 55%.
Focus on progressive states and NBFC-based model to drive gross debtor days lower
from 255 days to 181 days over FY14-16E.
With majority of the subsidy being contributed by the Center, possibility of direct
credit of subsidy to the farmer can be a game changer for JI
Similarly, with new government at the Center, steps towards replicating successful
models like Gujarat Green Revolution Corporation (GGRC) across other states can
reduce working capital requirements for JI.
JI is the largest player in India's organized micro irrigation sector, with a dominant
market share of 55%. The second largest player with a 20% market share is Netafim,
which is the global leader in MIS. Other key players include EPC Industries, Deere &
Company, Finolex Industries and Supreme Industries.
JI is the market leader with 55% market share
Market share of key players in micro irrigation systems in India
55%
25%
20%
Jain Irrigation
Netafim
Others
JI has a strong sales network of 3,400 dealers in the domestic market, with 300 more
expected to be added every year. Most dealers come from farming background and
are influential in their respective regions. This strong local sales force helps the
company increase reach in deep suburbs and also helps improve after sales service.
At present, Maharashtra accounts for close to 44% of its total dealership, followed
by AP (16%), Rajasthan (15%), Gujarat (10%) and TN (9%).
JI has a strong delaership network comprising 3,400 and adds 300 dealers annually
Dealers
1,000
FY07
1,500
FY08
1,800
FY09
2,200
FY10
2,500
FY11
2,800
FY12
3,100
FY13
3,400
FY14
19 May 2014
Jain Irrigation
Payment delays in states like TN,
AP and Karnataka where
receivable days had expanded
to 644 days as against 265 for
other states
Revenue contribution from TN,
Karnataka and AP has declined
from 21% in FY12 to 8% in FY14
and is further slated to decline
to 3% of total MIS revenue in
FY16E
343
316
352
255
FY09
247
FY10
FY11
FY12
FY13
FY14E
200
181
FY15E
FY16E
19 May 2014
FY13
41%
9%
15%
9%
10%
85%
FY14E
38%
20%
15%
9%
9%
92%
Change (FY12-14E)
-8%
13%
3%
3%
0%
12%
FY15E
41%
22%
15%
9%
8%
95%
FY16E
44%
22%
15%
9%
8%
97%
10%
5%
0%
15%
5%
4%
0%
8%
-9%
-1%
-3%
-12%
2%
2%
0%
5%
1%
2%
0%
3%
Change (FY14-16E)
6%
1%
0%
1%
-2%
6%
-4%
-2%
0%
-6%
Source: Company, MOSL
Jain Irrigation
With a focus on improving the current working capital cycle, JI floated an NBFC
named Sustainable Agro
commercial Finance Ltd (SAFL) in 2012 to encourage
funding towards MIS systems. JI and IFC (a member of World Bank Group) are the
initial promoters of the venture. JI has invested ~INR930m in the NBFC while IFC has
invested ~INR70m. Going forward, JIs stake in the NBFC will be diluted to <49%.
SAFL focuses on farmers and operates in rural India. Thus, it gets funds at
attractive rates as this brings it in the ambit of priority sector lending (PSL).
Earlier, JI was getting ~3050% amount from the farmers and they had to wait
for the balance subsidy amount till the state governments disburse subsidies,
which took six months to a year and resulted in an increase in working capital.
With the advent of this model, JI no longer has to wait for disbursal of subsidies
from state governments. SAFL funds the farmer the subsidy amount at net
interest rate of 12% (gross interest rate is 16%, which is offset by JI as it
contributes 4% by forgoing 4% margin from MIS business).
The farmer repays the loan to SAFL on receipt of subsidy from the government.
19 May 2014
Jain Irrigation
JI in March 2014 entered into a
national level tie-up with Dena
Bank to fund farmers for
MIS purchase
instance, JI in March, 2014 entered into a national level tie-up with Dena Bank to
fund farmers for MIS purchase. JI has a similar arrangement with State Bank of India.
GGRCs intermediation has been a strong positive for MIS players like JI
JIs MIS receivables in
Gujarat are ~120-140 days,
compared to >300 days for
AP and TN
GGRC functions in an
effective manner with final
funds released to suppliers
within 120 days
JIs experience in Gujarat has been highly favorable ever since the formation of
GGRC in 2006. The state is the third largest (~10% of MIS revenues) and fastest
growing market for MIS. GGRC conducts education and training programs for
farmers with help from the suppliers. GGRC is also responsible for subsidy followups and collection from both the central and state governments. Thus, JIs MIS
receivables in Gujarat are ~120-140 days, compared to >300 days for AP and TN, and
the average of 250 days company-wide. The new government at the Center can
possibly replicate GGRC model across other states which can be a game changer
event for MIS players like JI.
19 May 2014
Companies such as JI, Netafim, Finolex, Supreme etc are registered with GGRC
to implement MIS in states.
Pricing is regulated by GGRC and is fixed on an annual basis.
Companies such as JI through dealers source business and register each farmers
application with GGRC.
Once approved by GGRC, farmer pays 100% of dues to GGRC
GGRC releases 25% of total amount upfront to suppliers like JI.
Post implementation, suppliers like JI will receive the balance 75% from GGRC.
Final funds will be released in 120 days by GGRC.
Jain Irrigation
17,447
14,248
FY12
FY13
FY14E
21,139
FY15E
FY16E
5,635
3,802
30%
FY12
35%
30%
25%
20%
15%
10%
5%
0%
4,651
3,838
27%
FY13
22%
22%
22%
FY14E
FY15E
FY16E
Inventory
Current liabilities
NWC
287
215
181
95
90
247
200
181
-71
-70
-80
-90
FY13
FY14E
FY15E
FY16E
52
123
262
267
-90
FY12
110
19 May 2014
10
Jain Irrigation
No of countries
35
35
46
53
5
174
1
Available irrigated Sprinkler irrigated Drip irrigated area Total irrigated area
% of available
area (Mha)
(Mha)
irrigated area
area (Mha)
(Mha)
41.9
13.3
1.9
15.2
36.3
25.2
10.1
1.8
11.9
47.2
194.0
6.8
1.8
8.6
4.4
12.5
1.9
0.4
2.3
18.4
2.6
0.9
0.2
1.1
42.3
276.2
33.0
6.1
39.1
14.2
140.0
5.0
3.6
Source: Company, MOSL
78%
65%
55%
52%
10%
Israel
Russia
Spain
US
Brazil
China
3%
India
19 May 2014
11
Jain Irrigation
MIS is commonly used in developed countries in areas with water paucity. These
systems aid the judicious use of water and improve productivity, raise incomes
through good crop yields and enhance food security of households. A number of
states have thus started encouraging MIS with a key objective to save water. In
India, water scarcity due to ground water depletion is a major concern. The
country's rainfall has been estimated at 4,000 cubic kms annually, of which only 690
cubic kms is harnessed for useful purposes. Against this backdrop, micro irrigation
practices such as drip and sprinkler irrigation can help ease the problems of water
scarcity. In both drip and sprinkler irrigation, savings in water range from ~30-70%
post implementation.
Crop-wise water savings post implementation of drip irrigation
Water supplied (cm)
Conventional
Drip
% Saving in water
Banana
176
97
45
Grapes
53
28
48
Sugarcane
215
94
65
Tomato
30
18
39
Watermelon
33
21
36
Cotton
90
42
53
Chillies
110
42
62
Papaya
228
73
68
Source: Company, MOSL
In both drip and sprinkler irrigation, the yield per acre for all crops increases
substantially by ~20-100%, post implementation. This ensures that the payback
period for farmers is less than one season.
Crop-wise yield enhancements post implementation of drip irrigation
Yield(Quintal/Ha)
Banana
Grapes
Conventional
Drip
% Increase in yields
575
875
52
264
325
23
1,280
1,700
33
Tomato
320
480
50
Watermelon
240
450
88
Cotton
23
30
27
Chillies
42
61
44
Papaya
13
23
75
Wheat
46
54
Sugarcane
17
Source: Company, MOSL
19 May 2014
12
Jain Irrigation
The National Mission on Micro Irrigation (NMMI) was launched as a mission in June
2010. Prior to this, it was implemented as a centrally sponsored scheme where
budget allocations were done annually. With the onset of NMMI, allocations are
now done under the five year planning, which is a long term commitment from the
government. Under NMMI scheme, farmers are educated on the use of micro
irrigation system through demonstration, training and awareness programmes.
Budget allocation to MIS has risen over the past few years and has clocked 26%
CAGR over FY09-14. The amount earmarked for MIS subsidies stood at INR16.9b for
FY14. Given the advantages of MIS and an increased government focus on
propagation of MIS systems, we expect its strong growth to continue.
Budget allocation for MIS clocks 26% CAGR
Budget allocation - MIS (INRm)
9,700
4,300
4,800
FY08
FY09
FY10
11,300
FY11
13,000
FY12
15,000
FY13
16,930
FY14E
19 May 2014
13
Jain Irrigation
Combined central and state government subsidies range from ~45-70%, which are
driving more farmers to adopt MIS even as the initial cost is substantially higher in
MIS than in traditional irrigation.
Drip (%)
Sprinkler (%)
Maharashtra
50
50
65
41%
Rajasthan
70
70
50
15%
Gujarat
50
50
30
9%
Andhra Pradesh
70
70
35
9%
Karnataka
75
50
60
5%
Tamil Nadu
50
50
60
1%
Madhya Pradesh
70
70
60
< 1%
Chattisgarh
70
70
50
< 1%
Punjab
75
75
50
< 1%
Bihar
60
60
60
< 1%
Himachal Pradesh
50
50
50
< 1%
Kerala
50
50
50
< 1%
Uttar Pradesh
75
75
50
< 1%
Uttarakhand
50
50
50
< 1%
Source: Company, MOSL
The Maharashtra government has made it mandatory for sugarcane growers to use
drip irrigation systems over the next three years, a move prompted by the drought
that created a severe shortage of drinking water in the Marathwada region and
some parts of western and northern Maharashtra. Maharashtra produces one-third
of Indias sugar and nearly three million farmers are engaged in sugarcane farming.
Around one million hectares is under sugarcane cultivation in the state, of which
only 100,000 hectares (ha) has drip irrigation systems, making drip irrigation
penetration stand at 10%. This opens up a large growth opportunity over the next
two to three years for leading MIS players like JI.
Almost all the sugarcane in the state is produced in the rain shadow areas using
canal water. This method of sugarcane production is neither economically
sustainable nor environmentally sustainable. The rain shadow areas are places
which receive 700mm or less rain annually and sugarcane requires around 2,000mm
of rain. According to government officials, sugar factories consume ~1.5-3 lakh litre
water per day during the crushing season. Recent estimates state the water
requirement from sugarcane plantation to sugar production is 3,500 litre per kg.
Pertinently, nearly 17% of water from the command area of irrigation project is
consumed by sugarcane cultivation alone, compared with 2% by oil seeds and 4.5%
by pulses. Thus, the governments proposal for drip irrigation is crucial.
Currently, the state government gives a 50% subsidy to farmers and 60% to marginal
farmersthose who own less than 2hato buy drip irrigation systems. Given that a
drip irrigation system costs ~INR90,000 per hectare, the state will have to provide
19 May 2014
14
Jain Irrigation
MWRRA directive on drip irrigation for cash crops to further drive growth
MIS demand is expected to surge in Maharashtra due to recent initiatives by the
Maharashtra Water Resources Regulatory Authority (MWRRA). In its bid to prevent
wastage of irrigated water and make irrigation system effective, MWRRA has
decided to make drip irrigation mandatory for farmers growing cash crops with
effect from July 1, 2015, giving a one-year timeframe to farmers. More than 75% of
the irrigated water is utilized by agriculture consumers, 15% water goes to domestic
use, while the remaining 10% is for industrial use. The proposal is to charge only
75% of tariff from farmers growing cash crops like cotton, soyabean, sugarcane and
horticulture. Farmers will get 25% extra rebate if they adopt drip irrigation. But they
will have to pay 150% tariff on failure to set up drip irrigation in the prescribed time
limit.
This move by MWRRA is a strong positive for JI as Maharashtra contributes ~40% to
its domestic MIS revenue. Earlier, Maharashtra made it mandatory for the use of
MIS in sugarcane crops. With these dual initiatives, we expect strong growth in
Maharashtra over the next 2-3 years.
19 May 2014
15
Jain Irrigation
JI, with a 15% market share, is the second largest player in the organized market,
offering pipes in 20mm to 560mm diameter range.
Center's allocation of INR2.3t (USD38b) on water management and INR5t (USD83b) in
the 12th Five Year Plan is expected to provide significant growth opportunities for
rigid PVC pipes manufacturers in India.
JI has a domestic market share of 35% in polyethylene pipes (PE) business, with a
sheer domination in gas distribution business.
Post the implementation of GST, we believe that the pricing difference between
organized and unorganized players will not be significantly different, which will allure
customers to choose quality over price.
Plastic sheet has its major application in the housing sector. This sector was affected
due to a slowdown in the US housing segment post subprime crisis. We believe that
with the recovery of housing sector, JI will be the major beneficiary.
Polyvinly Chloride (PVC) pipes find application in agri and construction segments.
Agriculture/rigid PVC pipes account for over 60% of industry's size, with the balance
being catered by building/plumbing pipes (~40%). The agricultural pipes industry
(size INR100b) has been posting 10% CAGR. It is largely unorganized, with a large
number of fragmented/unorganized players accounting for over 60% of industry's
size. PVC pipes are majorly used in portable water supply, domestic and
international plumbing, drainage system etc. They are sold to the retail market,
government bodies and corporates. JI has current capacity utilization of 80% and we
believe that the current capacity of 295,000 MT will suffice the upcoming growth
and thus no additional capex will be required.
Capacity utilization of Piping business
Capacity (MT '000)
226
205
97
260
113
121
47%
50%
47%
FY09
FY10
FY11
295
295
230
117
78%
295283
325317
96%
98%
FY15E
FY16E
40%
FY12
FY13
FY14E
19 May 2014
16
Jain Irrigation
Polyethylene pipes (PE) have major applications in telecom ducts, gas distribution,
water pipelines and dust suppression. JI has a domestic market share of 35% in the
PE business, with a sheer domination in the gas distribution business. It has 60%
market share in gas distribution business due to its ability to execute large and
complex government projects. This segment has shown a slowdown due to a slump
in infrastructure projects. Hence, revenue de-grew by 10% from INR1.7b in FY09 to
INR1.5b in FY13. Growth is likely to pick up with acceleration in telecom
infrastructure projects to connect rural India.
PE pipes product portfolio
JI is primarily present in the agri-piping segment of PVC pipes (derives more than
90% from agri). Agri-pipes are used for connecting the farmland with the nearest
river/canal to ensure water supply. Since JI already has a strong foothold in the
agriculture space through its dominance in the MIS business, agri-pipes is a
complimentary business for the company. The PVC pipe industry is comprised of a
small number of players in the organized sector. JI, with a 15% market share, is the
second largest player in the organized market, offering pipes in the 20mm to
560mm diameter range. While Finolex Industries is the largest player, other key
players include Supreme Industries, Prince Pipes & Fittings and Kisan Mouldings.
Even as plastic piping is a low margin business (~6% in FY13), it makes strategic
sense for JI to be present in this segment due to low capex and working capital
requirements and high scale of operations.
At present, only 40% of the total arable land is under irrigation, with the balance
being rain fed. With the continuous depletion of water tables across the country,
farmers are increasingly being forced to source water from faraway places. Thus,
demand for rigid PVC pipes is expected to increase. Center's allocation of INR2.3t
(USD38b) on water management and INR5t (USD83b) in the 12th Five Year Plan is
expected to provide significant growth opportunities for rigid PVC pipes
manufacturers in India.
19 May 2014
The unorganized market has gained advantage on price due to tax evasion. JIs
products sell at a premium of 12% due to the impact of excise duty, which
unorganized players do not pay due to tax evasion. However, GSTs implementation
can reduce the pricing difference between organized and unorganized players. Thus,
all organized players, including JI, will be significantly benefitted from this shift.
17
Jain Irrigation
36
36
36
48%
39%
14
39%
14
41%
15
17
37%
13
44%
16
FY09
FY10
FY11
FY12
FY13
FY14E
40
46%
18
FY15E
40
54%
21
FY16E
9,856
FY12
11,269
FY13
13,016
FY14E
17,321
15,015
FY15E
FY16E
Margins hit due to rising global PVC prices and INR depreciation
With PVC resin being largely linked to global crude oil prices and currency
fluctuations, piping segment has taken a hit on margins due to surge in raw material
costs and INR depreciation. Piping segments margins slumped from 9.9% in FY09 to
6.6% in FY13.
19 May 2014
18
Jain Irrigation
PVC spot price has seen sharp rise since 2009
PVC spot price (USD)
3/1/2014
12/1/2013
9/1/2013
6/1/2013
3/1/2013
12/1/2012
9/1/2012
6/1/2012
3/1/2012
12/1/2011
9/1/2011
6/1/2011
3/1/2011
12/1/2010
9/1/2010
6/1/2010
3/1/2010
12/1/2009
9/1/2009
6/1/2009
1,700
1,550
1,400
1,250
1,100
950
800
650
500
6.6%
5.4%
726
742
703
FY12
FY13
FY14E
5.7%
6.0%
856
1,258
FY15E
FY16E
Inventory
Current liabilities
NWC
138
16
39
112
100
100
100
115
38
55
50
40
50
40
50
40
FY12
-19 FY13
-10
FY14E
-10
FY15E
-10
FY16E
19 May 2014
19
Jain Irrigation
Plastic sheets business was started in 1990 in India. In 1995-96, JI started exporting
to US markets. Sheets became very popular in the US housing market as was used as
partition material replacing plywood. It has major applications in the housing sector.
Sheets are used for roofing, interior designing, home sliding, advertising billboards
etc. Traditional lumber had major application in the housing furniture and roofing
etc. However, due to its vulnerability to pests attack and water absorption, plastic
sheets proved a sustainable alternate. Majority of the plastic sheets revenue come
from exports. The US and Europe are the major export markets for JI. Company
acquired NuCedar in 2006 for USD4m, paving the way for US markets. However,
sheets business took a big hit arising from the crash in US housing sector, post
subprime crisis in 2008. As US housing markets are on the way to recovery, we
believe JI will be the major beneficiary, and plastic sheets business will gain traction.
US housing index on an uptick
US Housing Index
600
500
400
300
200
100
0
May-09
May-10
May-11
May-12
May-13
as a % of net sales
4%
3%
3%
1,826
1,543
1,859
FY12
FY13
FY14E
3%
2,241
FY15E
3%
2,700
FY16E
19 May 2014
20
Jain Irrigation
EBITDA Margin %
7%
5%
121
73
FY13
FY12
5%
99
FY14E
6%
123
FY15E
6%
157
FY16E
Sundry debtors
138
112
106
106
FY12
NWC
100
140
100
125
112
60
105
70
100
70
95
70
FY13
FY14E
FY15E
FY16E
137
83
Current liabilities
100
120
19 May 2014
21
Jain Irrigation
JI is Indias largest player in the food processing sector with a market share of ~30%
and is third largest in the world.
The world DHO market is ~180,000MTPA growing at ~4-5%. JI is India largest and
worlds 3th largest player in onion dehydration space. It has 7% of world market share
in dehydrated onions market.
JI produces high quality seeds at its in-house facilities which it supplies to the contract
farmers.
JI accounts for ~50% of India have dehydrated vegetable exports and ~40% of
dehydrated onion exports. With acquisition of Cascade Specialities Inc, Jain has
established its manufacturing presence in the US.
JI is involved in the processing of fruits like Mango (80%), Guava, Papaya and Tomato.
India is the largest producer of Mangoes with a 60% share of the world market. JI is
the largest producer of mango pulp, puree and concentrate in the world with 35% of
the world production.
Only 2% of the total produce is processed as compared to ~60-80% in some developed
countries.
JI has procurement contracts with over 6000 farmers which helps it source over 70% of
its requirements. The balance 30% is sourced from open markets.
JI is Indias largest player in the food processing sector, with a market share of ~30%
and is the third largest in the world. Its food business is involved in the processing of
onion, vegetable dehydration and fruits. JI has 6 processing facilities, 4 in India and 1
in the US and UK each. In India, it has fruit processing units in Jalgaon, Maharashtra
and in Chittor and Hyderabad in AP.
The world DHO market is ~180,000mtpa and growing at ~4-5%. The US is the largest
producer of DHO, while India is the other major producer. Of the total onion
production, only 2% is dehydrated. Thus, it provides immense opportunity for
players like JI to capture on the global presence. JI is India largest and worlds 3th
largest player in onion dehydration space. It has 7% of the world market share in
dehydrated onions market. Due to ease of use and relatively long shelf life, its
popularity is expected to increase. JI has a capacity of 28,000mt, of which it
recorded a sale of 19,000mt as in FY13.
Companys DHOs are exported under the brand 'Farm Fresh'. JI employs contract
farming in Maharashtra to procure its white onion supply. It produces high quality
seeds at its in-house facilities, which it supplies to the contract farmers. The onions
produced from these seeds have a 17-18% TSS (total soluble solids), as compared to
a normal 12-13% TSS. These seeds have better germination rate and give good yields
with lower bacteria count. This helps JI get better yields while processing onions. JI
also provides MIS support to its contract farmers, ensuring high quality onion
produce. Companys ability to ensure a good quality white onion supply via contract
19 May 2014
22
Jain Irrigation
JI procures 60-70% of its onion requirements through contract farming with >2,000
farmers and 5,000 acres of land under coverage and the rest through open market
purchases. Onion prices in India have historically been volatile, thereby leading to
uncertainties in margins for dehydration industry. However, to reduce uncertainty,
JI contracts part of its onion requirements at fixed prices during middle of the
season (thus having a greater control on input costs, compared to entering into
contracts at the beginning of season), with the rest being negotiated depending on
realizations for dehydrated onions. On the revenue side, JI sells finished products at
contracted rates, which get determined a year in advance.
JI has also made good inroads in offering related vegetables like garlic, capsicum,
dehydrated leeks etc, the results of that will be visible in the coming years. The
major application for companys dehydrated products is in pizzas, chips, burgers,
noodles etc. Globally, demand for dehydrated vegetables has increased due to their
longer shelf life. JI accounts for ~50% of Indias dehydrated vegetable exports and
~40% of dehydrated onion exports. With the acquisition of Cascade Specialities Inc,
JI has established its manufacturing presence in the US. The US market is protected
by tariff barriers and hence this acquisition becomes even more significant as it
allows JI access to the US as a local producer and opens up the global customer base
for JIs products.
19 May 2014
JI is involved in the processing of fruits like mango (80%), guava, papaya and tomato.
India is the largest producer of mangoes, with a 60% share of the world market. JI is
the largest producer of mango pulp, puree and concentrate in the world, with 35%
of the world production. Processed mango is used in beverages, fruit juices and as a
base in jams. JI processes both Totapuri and Alphonso mangoes. Around 70% of the
mango pulp produced goes to 'Coca-Cola India' for its famous mango drink 'Maaza'.
Coca-Cola expects to triple its mango pulp sourcing for Maaza over the next 5 years,
which gives strong visibility for this segments revenue over medium term. JI also
supplies banana pulp to HUL for its fruit jam products etc. It exports the rest to
Middle East, China and the US. Recently, company entered into a JV with 'Coca-Cola
India' to implement UHDP (ultra high density plantations) for mango. This initiative
will help improve the productivity of farmers and help JI source better and larger
mango produce.
23
Jain Irrigation
Although mango processing remains the main product for JI in the fruit processing
segment (~80%), it also processes other fruits such as guava, pomegranate and
tomato. Tomato provides a strong opportunity as presently most of the tomato
paste requirements are met via imports from China. Also there is a marked shift in
consumer preference from the more traditional fruit juices such as citrus and apple
to the more exotic ones like mango and guava. Company is also working on setting
up a processing line for mosambi and other citrus varieties. This will help JI diversify
its revenue base and tap a larger segment of fruit processing market, thus negating
the seasonal nature and overdependence on mango processing.
India has the second largest arable land in the world and with diverse agro-climatic
zones across the country, has tremendous production advantages in agriculture.
India produces 15% and 8% of world's total vegetables and fruits respectively.
However, due to the lack of adequate storage facilities and transportation, it is in
the bottom in terms of food processing. Only 2% of the total produce is processed,
compared to ~60-80% in some developed countries (80% US and Malaysia). Also,
India's share in the global food trade is a miniscule 1.5%. Given the growing demand
for processed food, due to lifestyle changes and storage advantages, the segment is
witnessing a strong growth. For example, the packaged juices segment is witnessing
a CAGR of ~25%. JI is well placed to capture this strong growth opportunity in the
fruit processing segment.
Food processing in India largely under penetrated
% of food processed
80%
80%
70%
30%
2%
USA
Malaysia
France
Thailand
India
Unorganized
Total
Products
1.4%
0.8%
2.2%
13.0%
22.0%
35.0%
21.0%
21.0%
Poultry
6.0%
6.0%
Marine Products
8.0%
8.0%
19 May 2014
24
Jain Irrigation
JI has procurement
contracts with over 6,000
farmers which helps it
source over 70% of
requirements
Food processing contributes 20% to JIs consolidated revenue. With strong growth
opportunity in exports, we expect that agro processing revenue will post 24% CAGR
from INR6.7b in FY14 to INR10.2b in FY16E. We expect EBITDA to clock 25% CAGR to
INR1.8b in FY16E, with margins expanding by 30bp to 17.6%. While fruit processing
enjoys margins of 20%, onion dehydration is a relatively lower margin business of
12.5%. On the working capital front, dehydrated onions enjoy negative working
capital, while fruit processing has a working capital cycle of 70 days, largely due to
higher inventory requirements in this business.
Revenue to post 24% CAGR
Revenue (INR m)
YoY Growth
24%
24%
23%
17%
5%
5,441
FY12
EBITDA (INR m)
19.9%
1457
19.1%
8,329
6,739
1085
1097
1166
17.3%
17.5%
17.6%
FY12
FY13
FY14E
FY15E
FY16E
10,295
5,736
FY13
FY14E
FY15E
FY16E
Inventory
Sundry debtors
Inventory
Current liabilities
NWC
Current liabilities
NWC
223
62
240
200
286 95
290 130
49
32
40
FY12
FY13
FY14E
252
200
250 90
40
FY15E
200
230 70
40
FY16E
19 May 2014
58
44
100
114
FY12
195
41
106
-48
FY13
150
150
150
40
100 -10
40
100 -10
40
100 -10
FY14E
FY15E
FY16E
25
Jain Irrigation
The above solutions protect the crop from high intensity of light, high rainfall, winds,
insects through structure, polyethylene film/polycarbonate sheet, shading nets/
thermal nets, insect net, cooling pad, exhaust fan, foggers and drip systems,
fertigation equipment etc. The above structure controls light, temperature, humidity
and irrigation with fertigation and other required growth substances directly into
the root zone of the plant.
Water and nutrients enter the soil from emitters, moving into the root zone of the
plants through the combined forces of gravity and capillary. In this way, the plants
withdrawal of moisture and nutrients are replenished almost immediately, ensuring
that the plant never suffers from water stress, thus enhancing quality, its ability to
achieve optimum growth and high yield. JI has been exporting various components
of Green House/Poly House/Poly Tunnels/Net House to Asia, Africa and Far East Asia
and also is supplying within India.
19 May 2014
26
Jain Irrigation
JI also sells plantlets which are grown with indigenous technology, resulting in
improved yields. It provides agronomic and extension support, after sales services
and all technical supports for getting better crop return. It has more than 500
technocrats, engineers, agronomists, horticulturists and regional offices and trained
dealers, distributors all over India and abroad. There are 7-8 major products -banana, mango, pomegranate, onion etc.
Benefits of Jain Green House
Disease-free plantation.
Increase in yield up to 5 to 8 times. For mangoes, yield has improved up to 4
times.
Crop grows consistently, healthier, uniform quality fruits and matures fast.
Early maturity results in higher and faster returns on investment.
Saves water up to 50%, compared to open filed flood irrigation. Higher yield
from smaller area.
Fertilizer use efficiency increases by 30%.
Cost of fertilizers, inter-culturing and labor use get reduced.
as a % of net sales
2%
2%
2%
1%
457
FY12
699
FY13
954
FY14E
1,177
FY15E
1,357
FY16E
19 May 2014
27
Jain Irrigation
With energy prices climbing in India, and supply not keeping up pace with steep
demand, solar power is becoming a huge opportunity
Ministry of New and Renewable Energy (MNRE) launched The Jawaharlal Nehru
National Solar Mission on the 11th January, 2010. The Mission has set the target of
deploying 20,000 MW of grid connected solar power by 2022
Solar energy business of Jain Irrigation is similar to its MIS business which is largely
subsidy driven.
Revenue and working capital model are similar to MIS business. It has long working
capital cycle. For FY13 net working capital stood at 406 days which is expected to
improve to 370 days going forward.
With energy prices increasing in India and supply not keeping up pace with steep
demand, solar power is becoming a huge opportunity. Indias solar potential is huge.
It is estimated that over the decade, market for solar equipments will be USD6-7b
and annual revenue for grid connected solar generators will be USD4b. We believe
that JI is poised to capture this growth. Companys renewable energy division is
working with Solar thermal, Solar photovoltaic, Wind, Solar + Wind hybrid systems
and bio-energy related manufacturing and application development. The current
range includes domestic, commercial and industrial solar powered pumping
systems, CFL/LED based home lighting, CFL/LED based street lighting, blinkers,
advertising boards, power packs (inverters), traffic signals, wind + solar hybrid
systems, biogas plants and turnkey projects based on all the above technologies.
Solar systems demand comes from both farmers and government projects.
However, majority of the business is through government projects which is subsidy
driven. Government announces various welfare schemes under which budget is
allocated for solar system. The lack of focus by Government resulted in slow growth
in this business. However, management believes that once the new government is in
office, fresh budget will be allocated to this segment, which will be a huge boost to
JIs revenue.
19 May 2014
The Ministry of New and Renewable Energy (MNRE) launched The Jawaharlal
Nehru National Solar Mission on January 11, 2010. The mission has set the target of
deploying 20,000mw of grid connected solar power by 2022. It is aimed at reducing
the cost of solar power generation in the country through (i) long term policy, (ii)
large scale deployment goals, (iii) aggressive R&D and (iv) domestic production of
critical raw materials, components and products, to achieve grid tariff parity by
2022. Objective of the mission is to make India a global leader in solar energy. Jain
Solar Powered Pumping systems are empanelled with MNRE. This initiative, we
believe, will create enough demand for JI's solar products.
28
Jain Irrigation
JIs solar energy business is similar to its MIS business, which is largely subsidy
driven. Subsidy is received by the dealer and farmer buys products at a subsidized
rate. Dealer passes the subsidy back to JI and thus transaction is completed.
However, the time taken to monetize receivables from the Government is very long,
which makes this segment less attractive. Similar to its MIS business, renewable
energy business has long working capital cycle. For FY13, net working capital stood
at 406 days, which is expected to improve to 370 days, going forward. Solar business
revenue has grown 8x from a mere INR288m in FY09 to INR2.5b in FY14. We expect
revenue to post 13% CAGR to INR3.2b by FY16E primarily driven by Governments
objective to boost renewable energy resource.
4%
2%
1%
1%
1,804
288
358
785
FY09
FY10
FY11
as a % of net sales
4%
4%
2,259
2,519
2,863
3,221
FY13
FY14E
FY15E
FY16E
19 May 2014
Inventory
Current liabilities
NWC
4%
116
110
210
FY12
Sundry debtors
204
FY12
135
219 406
130
200 370
130
200 370
130
322
300
300
300
FY13
FY14E
FY15E
FY16E
200
370
29
Jain Irrigation
Led by acquisitions, JI is now the second largest MIS player globally with a market
share of 20% as against 30% market share held by Netafim.
We expect improvement in profitability of international MIS business on the back of
greater degree of sourcing from low-cost countries like India and focus on higher
margin project business.
On the back of 10% revenue CAGR, we expect EBITDA for the international operations
to post 28% CAGR over FY14-16.
JIs MIS acquisitions over the years have enabled it to gain market share on a global
basis. Globally, JI is now the second largest MIS player with a market share of 20% as
against 30% market share held by Netafim. JI has acquired companies globally to
gain distribution reach and access new technologies. In MIS in the US, JI has
conducted two major acquisitions during FY07-09, with total cost of USD29m.
Aquarius was acquired by JI in FY07 for USD7m and Chapin Watermatics was
acquired for USD22m.
Aquarius is a leading manufacturer of micro irrigation systems for agriculture,
landscape and nursery applications. Chapin is a pioneer and leading manufacturer of
drip tape and is known as a complete source for field crop, nursery and green house
drip irrigation systems. Both these acquisitions have given JI a technology advantage
(especially Chaplins subsoil irrigation technology which is the best in case of
sugarcane crop) and helped it introduce new product categories in Indian markets
and bring more crops under MIS. Aquarius and Chapin have been integrated to form
Jain Irrigation Inc. JII primarily caters to the US MIS market, and for FY13 reported
revenues of USD61m posting 10% growth.
19 May 2014
MIS export growth for JI has been strong led by Africa and increase in contribution
from projects. JI is increasingly sourcing more MIS products from low cost centers
like India to cater to international markets, which is expected to drive profitability
for overseas subsidiaries. Also, JI is actively working on more project business (~10%
of revenue) in places like Latin America where margins are higher, compared to
selling tubing or tape products through dealers, which are comparatively lower
margin. Further, JIs Greenfield capacity in Turkey is expected to ramp up revenue
over the next couple of years, thus translating into better profitability from Turkish
operations. Management expects overseas business profitability to improve with
the current 7% margin expected to expand to 12% over the next 3-4 years.
30
Jain Irrigation
Cascade Specialties
Cascade Specialties (USA) was acquired in 2006 for USD4.75m for strengthening JI's
dehydrated onion business. It is engaged in onion, garlic dehydration and frozen
foods business, with specialization in natural low bacteria and organic dehydrated
products. We believe Cascades acquisition offers perfect synergies as it gives JI an
opportunity to market Indian onion basket to Cascades ready clientele (like Tesco)
and use the marketing network of the company effectively.
Turnover
130
62
61
51
33
24
19
16
2
398
PAT
1
1
-1
0
0
-4
1
-2
0
-4
Net worth
11
5
14
-4
7
39
7
7
-1
86
PAT margin (%
RoE (%)
1%
12%
1%
14%
-1%
-6%
0%
-3%
0%
2%
-17%
-11%
4%
11%
-14%
-33%
-2%
6%
-1%
-5%
Source: Company, MOSL
19 May 2014
Segment
MIS
MIS
MIS
Food
MIS
MIS
Plastics
Food
Current Stake
100.00%
7.40%
100.00%
100.00%
100.00%
50.00%
69.80%
85.00%
Subsidiary Country
USA
Greece
USA
USA
USA
Israel
Switzerland
UK
Date of acquisition
Feb-06
Feb-06
Apr-06
Nov-06
Feb-07
May-07
Mar-08
Nov-10
Acquisition Price
USD 2.1 mn
NA
USD 7 mn
USD 4.75 mn
USD 22 mn
USD 22 mn
N.A
N.A
Source: Company, MOSL
31
Jain Irrigation
17,695
19,568
21,651
14,291
9,605
FY12
FY13
FY14E
FY15E
FY16E
EBITDA to clock 28% CAGR on the back of new initiatives to improve margins
EBITDA (INR m)
7%
6%
831
10%
7%
8%
1,957
1,779
993
10%
6%
4%
1,192
2%
0%
FY12
FY13
FY14E
FY15E
FY16E
Inventory
Current liabilities
NWC
157
155
145
60
65
70
70
133
140
140
140
76
84
80
75
70
FY12
FY13
FY14E
FY15E
FY16E
89
207
140
19 May 2014
32
Jain Irrigation
49,206
50,217
FY12
FY13
60,430
FY14E
70,533
FY15E
82,407
FY16E
8,155
FY12
Margins (%)
13.8%
14.8%
7,419
FY13
13.8%
13.8%
8,326
9,718
11,354
FY14E
FY15E
FY16E
19 May 2014
33
Jain Irrigation
2,074
442
FY12
FY13
FY14E
FY15E
FY16E
Source: MOSL
Debtor Days
Creditor Days
211
234
213
168
142
127
110
101
108
125
121
113
109
-121
-116
-108
-113
-117
FY12
FY13
FY14E
FY15E
FY16E
160
179
Source: MOSL
Operating and free cash flows to improve led by improving working capital;
capex to be limited to maintenance related over FY14-16E
Operating cash flows are expected to improve significantly to INR8.9b, while free
cash is expected to improve to INR6.8b over FY14-16E led by an improvement in
working capital in MIS business. We expect capex to be limited to maintenance
related and be capped at INR2b for FY14-16E.
Operating cash flow to improve led by working capital
7,491
6,812
FY15E
FY16E
3,006
5,156
3,217
518
781
FY12
FY12
FY13
FY14E
FY15E
FY16E
FY13
FY14E
-4,420
Jain Irrigation
2.0
1.7
1.6
1.3
34,442
1.0
37,510
35,854
34,363
31,620
FY12
FY13
FY14E
FY15E
FY16E
RoE (%)
RoCE (%)
14.0
11.1
11.0
RoE (%)
13.0
15.4
16.1
13.5
12.1
9.1
2.2
FY12
FY13
FY14E
FY15E
FY16E
19 May 2014
FY12
FY13
FY14E
FY15E
FY16E
35
Jain Irrigation
With a focus on progressive states and switch to cash-based model, we expect JIs
working capital concerns to be allayed over FY14-16E.
Hence, we expect strong free cash generation which should help in reducing debt to
equity from 1.6x in FY14 to 1x in FY16E.
Policy impetus from the new Government in the form of direct credit of subsidy or a
reduced working capital model on the lines of GGRC can be potential game changer
events.
We value JI at 14x FY16E EPS of INR10 and arrive at a target price of INR140, implying
40% upside. We initiate coverage with a Buy rating.
Price to Earnings
Price to Book
P/E (x)
5 Yrs Avg(x)
12 Yrs Avg(x)
10 Yrs Avg(x)
30
1.5
1.4
Mar-14
Jan-13
Nov-11
Oct-10
Aug-09
Jun-08
Feb-06
Dec-04
0.0
Oct-03
Apr-14
Feb-13
Jan-12
Nov-10
Sep-09
Aug-08
Jun-07
May-06
Mar-05
Feb-04
Dec-02
2.8
2.3
Aug-02
17.1
2.9
3.0
13.9
Jun-01
19.0
Apr-07
Negative
Earnings
Cycle
20
Oct-01
12 Yrs Avg(x)
10 Yrs Avg(x)
4.5
20.9
10
P/B (x)
5 Yrs Avg(x)
6.0
Apr-00
40
EV/EBITDA
EV/EBDITA(x)
41
Peak(x)
Avg(x)
33
Median(x)
34.8
Min(x)
25
17
13.7
7.2
11.3
Apr-14
Feb-13
Dec-11
Oct-10
Aug-09
Jun-08
Feb-06
Dec-04
Oct-03
Aug-02
Jun-01
Apr-00
Apr-07
6.3
19 May 2014
36
Jain Irrigation
Key assumptions (INR m)
Business segments
1. Micro Irrigation Systems
% growth (YoY)
% of net sales
EBITDA Margin %
2. Plastic Piping Systems
% growth (YoY)
% of net sales
EBITDA Margin %
3. PE & PVC sheets
% growth (YoY)
% of net sales
EBITDA Margin %
4. Agro Processing
% growth (YoY)
% of net sales
EBITDA Margin %
5. Solar Systems
% growth (YoY)
% of net sales
EBIDTA margin
6. Tissue Culture Plants
% growth (YoY)
% of net sales
EBIDTA margin
7. Net Subsidiary Sales
% growth (YoY)
% of net sales
EBIDTA margin
8. Others
% growth (YoY)
% of net sales
EBIDTA margin
Total Sales
19 May 2014
FY12
18,848
11%
38%
30%
9,856
4%
20%
7%
1,826
30%
4%
7%
5,441
23%
11%
20%
1,804
130%
4%
22%
457
64%
1%
22%
9,605
41%
20%
7%
1,367
3%
22%
49,206
FY13
14,248
-24%
28%
27%
11,269
14%
22%
7%
1,543
-15%
3%
5%
5,736
5%
11%
19%
2,259
25%
4%
18%
699
53%
1%
18%
14,291
33%
28%
6%
172
-87%
0%
18%
50,217
FY14E
17,447
22%
29%
22%
13,016
16%
22%
5%
1,859
21%
3%
5%
6,739
17%
11%
17%
2,519
12%
4%
18%
954
37%
2%
18%
17,695
10%
29%
8%
200
17%
0%
18%
60,430
FY15E
FY16E
21,139
25,661
21%
21%
30%
31%
22%
22%
15,015
17,321
15%
15%
21%
21%
6%
6%
2,241
2,700
21%
21%
3%
3%
6%
6%
8,329
10,295
24%
24%
12%
12%
17%
18%
2,863
3,221
14%
13%
4%
4%
18%
18%
1177
1357
23%
15%
2%
2%
18%
18%
19,568
21,651
10%
10%
28%
26%
7%
7%
200
200
0%
0%
0%
0%
18%
18%
70,533
82,407
Source: Company, MOSL
37
Jain Irrigation
High receivables
JI has large receivables equivalent to 247 days of sales. This is a drag on the
company's balance sheet. Most of these receivables are subsidies pending from the
respective state government. We believe that with the formation of NBFC, company
will be able to improve its receivable scenario. However, if the receivables burden
deteriorates, JI's balance sheet could pose a risk.
Resins form ~64% of the total raw material cost. Any fluctuations in resin prices in
the short term will impact margins negatively. However, as most of the raw material
price rise is pass-on, we believe such price fluctuations should not have any
significant impact on margins in the long run. JI procures white onions from farmers
at market price. Any price rise in onions will negatively impact margins in DHO
business as the price rise cannot be passed on easily in the export market where
prices are determined based on global white onion availability.
Subsidy removal
19 May 2014
38
Jain Irrigation
Management
Mr Bhavarlal H Jain, Chairman
Mr Bhavarlal H Jain is the founder of the Jain group of companies and Chairman of
the company. He began his business in 1963 by trading in agricultural inputs and
equipments. In 1978, he acquired a sick unit which he used to manufacture Papain.
In 1980, he commenced PVC pipe manufacturing operations. Post 1986, he
pioneered the concept of micro irrigation in India. He has received many awards and
accolades for outstanding work in agriculture, including the prestigious Crawford
Reid Memorial Award instituted by Irrigation Association, U.S.A. for Significant
Contribution to the Irrigation Industry outside the United States. Three honorary
doctorates have been conferred on him from different universities acknowledging
path breaking work he has done for improvement of agriculture in India.
19 May 2014
39
Jain Irrigation
Company overview
Corporate structure
Established in 1986, JI is a transnational organization headquartered at Jalgaon,
Maharashtra, India. JI employs over 5,000 associates and manufactures a number of
products, including drip and sprinkler irrigation systems, PVC & PE piping systems,
plastic sheets, green houses, bio-fertilizers, solar products including water-heating
systems, photovoltaic appliances and solar pumps. JI processes fruits and vegetables
into aseptic concentrates, frozen fruits and dehydrated vegetables, respectively. It
has 21 manufacturing plants spread over 5 continents and its products are supplied
to 110 countries through 3,000 dealers and distributors worldwide.
Product-wise revenue contribution
Solar
Products,
4.4%
Other
Products,
7.5%
Food
Products,
20.4%
Rest of
World,
14.7%
North
America,
11.1%
Micro
Irrigation,
45.5%
India,
57.2%
Europe,
17.0%
Piping
Products,
22.2%
FY09
FY10
FY11
FY12
FY13
Mix (2013)
CAGR
Micro Irrigation
15,084
18,722
23,311
26,798
22,903
45.5%
11.0%
Piping Products
7,425
8,418
9,464
9,855
11,154
22.2%
10.7%
Food Products
3,701
5,015
5,875
8,352
10,260
20.4%
29.0%
Solar Products
276
352
744
1,691
2,203
4.4%
68.1%
2,682
2,072
2,240
2,704
3,766
7.5%
8.9%
29,167
34,579
41,634
49,400
50,286
100.0%
14.6%
Other Products
Total
FY09
FY10
FY11
FY12
FY13
Mix (2013)
CAGR
17,484
22,567
28,263
31,280
31,280
57.2%
13.2%
Europe
3,258
4,110
4,243
7,222
7,222
17.0%
27.3%
North America
2,715
3,934
4,389
4,590
4,590
11.1%
19.7%
Rest of World
5710
3968
4739
6,308
6,308
14.7%
6.7%
29,167
34,579
41634
49,400
49,400
100.0%
14.6%
India
Total
19 May 2014
40
Jain Irrigation
19 May 2014
41
Jain Irrigation
Geographical reach
JI has a strong supply chain within and outside India. It has a strong dealership
network of over 2,700 pan-India, 81 offices and 40 depots and 12 manufacturing
facilities. Similarly, JI has a strong global network aggregating over 900 distributors,
23 warehouses and sales offices and 15 manufacturing facilities.
JIs Indian network
19 May 2014
42
Jain Irrigation
JIs corporate structure
19 May 2014
43
Jain Irrigation
Annexure
Drip irrigation
Drip irrigation is a method of micro irrigation, which saves water and fertilizers by
allowing
water to drip slowly and directly to the roots of plants through a network
Pump
of pipes, valves, tubing and emitters/drippers. The dripping of water can happen
Water filter (sand separator like
hydro-cyclone, screen filter, media either onto the soil surface (normal drip irrigation) or directly onto the root zone
filters)
(subsurface drip irrigation where the laterals and drippers are buried under the
Fertigation systems and
surface). The emitters/drippers allow for a uniform and controlled supply of water
chemigation equipment
directly into the root zone of the plant. This helps the plant to absorb only the
Backwash controller (backflow
required amount of water, thus resulting in saving the plants from water stress,
preventer)
Main line (larger diameter pipe and saving of water and increased yield of plants. Drip irrigation also provides the option
of having a fertigation unit, which helps supplying growth nutrients like fertilizers to
pipe fittings)
Control valves and safety valves
plants in a controlled fashion, helping the yield of plants and also in saving the
(hand-operated, electronic, or
wastage of fertilizer.
Key components
hydraulic)
Laterals (smaller diameter
polytube)
Poly fittings and accessories (to
make connections)
Emitter/ Drippers
We shall briefly see how the drip irrigation mechanism functions. First, the pump is
connected to the water source which pumps water into the water filters. These
water filters help in increasing the yield by providing cleaner water to plants as well
as in protecting the tubing from clogging, thus decreasing the maintenance cost. The
water then enters into the fertigation system to take up the plant nutrients fed into
this unit and then enters into the main lines. From the main line, the water would
travel into sub-main lines and then further into polytubes/laterals. These polytubes
run along the rows of plants and have emission points where drippers are arranged
for the purpose of dripping of water. From these drippers, water drips directly near
the root area of individual plants.
19 May 2014
44
Jain Irrigation
Sprinkler irrigation
Sprinkler systems help distribute water over a large area above the surface. A
sprinkler irrigation system, unlike a drip irrigation system, operates above the
surface and distributes water through emitters to simulate a rainfall.
Sprinklers contain nozzles and a rotating part. The most important component of a
sprinkler irrigation system is, as the name suggests, the sprinkler. This is the emitting
device which typically comes with nozzles for emitting water and rotating parts so
that water can be sprinkled over large areas depending on aperture size of the
nozzle, angle at which nozzles are fixed and the water pressure in the system. When
many sprinklers are used, a pipe network similar to that used in drip irrigation
systems, is required.
% of total
Maharashtra
7.4
11
Andhra Pradesh
3.2
Gujarat
2.9
Tamil Nadu
1.6
Karnataka
3.5
Rajasthan
5.9
Madhya Pradesh
7.2
10
Punjab
4.2
Haryana
3.8
13.9
20
16
23
69.5
100
UP
Others
Total
19 May 2014
45
Jain Irrigation
Drip (m ha)
Sprinkler (m ha)
Total (m ha)
Cereals
27.6
27.6
Pulses
7.6
7.6
Oil seeds
3.8
1.1
4.9
Cotton
7.0
1.8
8.8
Vegetables
3.6
2.4
6.0
1.4
1.0
2.4
1.0
1.0
Sugarcane
4.3
4.3
Fruits
3.9
3.9
3.0
3.0
42.5
69.5
Flowers
Total
27.0
Drip (% area)
Sprinkler (% area)
Total (% area)
Cereals
65
40
Pulses
18
11
Oil seeds
14
Cotton
26
13
Vegetables
13
Flowers
Sugarcane
16
Fruits
14
11
100
100
100
Total
Jain Irrigation
Netafim
Maharashtra
65
n.a.
Andhra Pradesh
35
12
Gujarat
30
35+
Tamil Nadu
60
n.a.
Karnataka
60
n.a.
Madhya Pradesh
60
n.a.
Others
50
10
India
50
15
Source: Industry sources, MOSL
19 May 2014
46
Jain Irrigation
(INR Million)
2011
41,528
21.4
7,480
18.0
1,222
6,258
3,270
1,106
0
4,094
1,213
29.6
2,881
2,881
16.2
-74
2,807
2012
49,206
18.5
8,155
16.6
1,441
6,714
4,768
345
0
2,290
4
0.2
2,286
2,286
-20.6
-51
2,235
2013
50,217
2.1
7,419
14.8
1,696
5,723
5,166
668
1,100
125
80
63.9
45
442
-80.7
-14
428
2014E
60,430
20.3
8,326
13.8
1,843
6,482
4,590
181
1,800
274
0
0.0
274
2,074
368.9
-14
2,059
Balance sheet
Y/E March
Share Capital
Reserves
Net Worth
Debt
Deferred Tax
Total Capital Employed
Gross Fixed Assets
Less: Acc Depreciation
Net Fixed Assets
Capital WIP
Investments
Current Assets
Inventory
Debtors
Cash & Bank
Loans & Adv, Others
Curr Liabs & Provns
Curr. Liabilities
Provisions
Net Current Assets
Total Assets
19 May 2014
2015E
70,533
16.7
9,718
13.8
1,939
7,779
4,226
212
0
3,764
753
20.0
3,012
3,012
45.2
-14
2,997
2016E
82,407
16.8
11,354
13.8
2,034
9,320
3,881
247
0
5,686
1,137
20.0
4,549
4,549
51.0
-14
4,534
(INR Million)
2011
772
14,787
15,558
29,842
1,239
47,164
28,467
8,050
20,417
956
211
41,396
14,864
16,924
4,144
5,463
16,394
15,674
720
25,002
47,164
2012
810
16,726
17,537
37,986
1,755
57,775
33,528
9,793
23,735
1,980
236
48,180
14,614
22,712
3,308
7,546
17,073
16,365
708
31,107
57,775
2013
910
20,770
21,680
38,251
1,841
61,772
37,738
11,640
26,098
737
38
50,405
17,231
19,547
2,359
11,269
16,436
15,895
541
33,970
61,772
2014E
910
22,563
23,473
38,251
1,841
63,565
39,738
13,483
26,255
887
38
53,756
19,992
20,975
703
12,086
18,300
17,807
493
35,456
63,565
2015E
2016E
910
910
25,241
29,350
26,151
30,259
35,251
32,251
1,841
1,841
63,243
64,352
41,738
43,738
15,422
17,456
26,316
26,282
1,035
1,209
38
38
57,325
62,967
21,846
24,690
21,227
22,851
850
593
13,401
14,833
22,400
27,075
21,801
26,311
599
764
34,924
35,893
63,243
64,352
E: MOSL Estimates
47
Jain Irrigation
2011
2012
2013
2014E
2015E
2016E
7.5
10.6
40.3
1.0
15.6
5.6
9.2
43.3
1.0
20.6
1.0
4.7
47.7
0.6
588.3
4.6
8.6
51.6
0.6
97.2
6.6
10.9
57.5
0.7
10.6
10.0
14.5
66.5
0.9
9.4
13.4
9.4
2.5
1.7
9.5
1.0
17.7
10.8
2.3
1.6
9.8
1.0
102.6
21.2
2.1
1.6
11.0
0.6
21.9
11.6
1.9
1.4
10.0
0.6
15.1
9.2
1.7
1.1
8.2
0.7
10.0
6.9
1.5
0.9
6.8
0.9
20.2
18.0
13.5
14.0
2.2
11.1
9.1
11.0
12.1
13.0
16.1
15.4
0.9
145.6
130.6
136.1
0.9
165.4
108.4
121.7
0.8
139.0
125.2
114.6
1.0
124.2
120.8
103.9
1.1
107.7
113.1
110.0
1.3
99.2
109.4
114.3
1.9
2.2
1.8
1.6
1.3
1.1
2011
4,094
1,222
0
2,717
1,047
-6,069
1,059
-4,930
-142
34
-5,038
780
5,507
-2,717
-355
3,183
-796
4,940
4,144
2012
2,286
1,441
0
4,157
938
-6,166
850
-5,270
-114
44
-5,340
14
8,143
-4,051
-448
3,684
-805
4,114
3,308
2013
125
1,696
0
4,855
295
-3,164
3,460
-2,943
-459
-15
-3,418
3,903
266
-4,843
-469
-982
-939
3,298
2,359
2014E
2,074
1,843
0
4,409
0
-3,142
5,183
-2,150
0
181
-1,969
0
0
-4,590
-266
-4,871
-1,656
2,359
703
19 May 2014
(INR Million)
2015E
2016E
3,764
5,686
1,939
2,034
0
0
4,015
3,634
753
1,137
679
-1,225
9,644
8,991
-2,148
-2,174
0
0
212
247
-1,937
-1,927
0
0
-3,000
-3,000
-4,226
-3,881
-319
-426
-7,560
-7,321
147
-257
703
850
850
593
E: MOSL Estimates
48
Jain Irrigation
NOTES
19 May 2014
49
Disclosures
Jain Irrigation
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