Agro Shares - Quick Overview

       Jain Irrigation System

Jain Irrigation System
Greater emphasis on agriculture, under penetration of modern agritechnologies and rising farm incomes make Jain Irrigation Systems a long term play in this space. Jain Irrigation’s business can be classified into three broad categories viz. micro irrigation systems, food processing and plastic pipes and sheets.

Its micro irrigation systems division, which accounts for 50 per cent of total revenues, is the fastest growing business among the three, having grown at about 80 per cent annually in last four years. The company expects this segment to continue to grow at about 45-50 per cent for the next two years. This could be attributed to higher demand from the existing markets such as Andhra Pradesh, Maharashtra and Gujarat and its entry into other emerging markets such as Chattisgarh, MP, Rajasthan, Haryana, Punjab and Himachal Pradesh.

More importantly, the penetration levels in new markets are very low at about 1-1.5 per cent even as compared to 5-8 per cent in existing markets, offering good growth opportunities. Also, with state governments now providing subsidy on these equipment (ranging 50-70 per cent of the cost), the demand should pick up further. As a part of its future growth strategy, the company is also diversifying its product offering to suit different crops helping create new markets.

Jain Irrigation is also the largest domestic food processor, which accounts for over 15 per cent of its total revenues. This business has grown three-fold during FY05-08 to Rs 303 crore. The company is expecting this segment to grow at about 40-45 per cent annually over the next two years on the back of growing opportunities in food processing space (fruit juices, etc), entry into new fruits (bananas, oranges) and expansion of capacities. Meanwhile, key developments such as falling interest rates, lower raw material prices and expected improvement in the future cash flow are key positives in the near term.
source - businessstandard

(updated - Feb 2009)

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