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Jain Irrigation turns around business

Jain Irrigation has the option of taking its stake in the merged company to 20% .

Jain Irrigation Systems, Temasek, Jain Irrigation debt,
The company's total debt before the merger deal was Rs 6,404.90 crore.

Jain Irrigation Systems (JIS), the country’s largest micro-irrigation systems company, has completed the merger of its overseas business with Rivulis, a company owned by Singapore-based sovereign fund Temasek. With this deal, Jain Irrigation’s consolidated debt has reduced by 41.9% to Rs 3,721 crore. JIS has retained an 18.7% stake worth $ 137.50 million in the merged company. Temasek acquired Jain’s international business for around Rs 4,200 crore.

Jain Irrigation has the option of taking its stake in the merged company to 20% . The merged entity revenues are projected to grow from 750 million to $ 1 billion and create further value for the company, Anil B Jain, CEO and vice chairperson, Jain Irrigation said.

The company’s total debt before the merger deal was Rs 6,404.90 crore. This merger has significantly reduced the debt of Jain Irrigation by Rs 2,683 crore and also resulted in a one-time gain of Rs 1,234.66 crore. It has brought the company back on track with growth in revenue and profitability expected to be at 30% in FY24, Jain said. With the successful implementation of the restructuring plan during FY23, Jain said the company had reduced interest costs by Rs 200 crore FY23. A corporate guarantee of $ 300 million was also off the balance sheet, Jain said.

On the domestic front, the company has reduced the working capital cycle from 314 days to 250 days and plans to go down to 150 days this fiscal. This would bring down the need for working capital significantly. Jain said they had changed their business strategy of selling more directly to dealers and ensuring improved cash flows.

The one-time gain pushed the company’s Q4FY23 consolidated profit after tax up by 250% to Rs 976.90 crore while revenue grew by 27.8% to Rs 1,745.4 crore.

JIS’s credit rating was upgraded to Standard Asset (BBB-) by CRISIL and ICRA on March 31, 2023. Further, the company’s bank account has become a standard asset and transferred to commercial branches.

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First published on: 27-05-2023 at 02:45 IST
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