Jain Irrigation

Jain Irrigation, the largest Micro Irrigation Company in the country and the second largest globally, was back in the red after it had posted a net profit of Rs.42 crore in Q4FY13. In the current Q1FY14, the company posted a higher net loss at Rs.46.51 crore, up from the YoY loss of Rs.17 crore.  This loss was mainly, once again on account of its forex loss of Rs.113 crore. The company’s revenue at Rs.966 crore was up over 14% (YoY).

The big issue with the company remains it debt which currently stands at Rs.1500 crore. Its interest outgo for the quarter was at Rs.98 crore, , which has come down from Rs.104 crore in Q4 and Rs.103 crore in previous Q1. The company is indeed looking at ways and means to bring down its debt and in early July this year, it had said that it was looking at selling its non-core wind power business, which as such is not contributing much to the company. In current Q1, this business contributed around 3% to the total revenue and a little over 3% to the EBIT. By selling this wind power business, the company hopes to bring down foreign currency debt of around Rs.70 crore from the books of the company. Its aim is to reduce over debt by Rs.500 crore this fiscal. Receivables, which has been the other big issue for the company is getting tamed. It was down over Rs.400  crore in FY13 and this fiscal, it hopes to bring it down further. The aim of the company is to increase revenue by 20% this fiscal. And MIS, its mainfray, which saw a 25% degrowth in FY13 is estimated to see a growth of 20% in FY14 with an upside potential of 25%. The company stated that it is seeing good business in Maharashtra where the state Govt has made it mandatory for banana and sugarcane cultivators to use drip irrigation. And the company feels that this could mean a business worth Rs.10,000 crore spread over the next few years. But for now, concerns over this loss remain and unless we see these things happening – reduction of debt and sale of wind business, the stock could remain under a cloud.