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SYNOPSIS

FUNDAMENTAL ANALYSIS
OF
JAIN IRRIGATION SYSTEMS LTD.

SUBMITTED BY SUBMITTED TO

Sonu Bishnoi Ms. Ruchi Bhandari


MBA-Insurance, 4th Sem. Asst. Professor
Roll No:235 NLU, Jodhpur.

WINTER SEMESTER: JAN 2011-MAY 2011

Acknowledgement
I would like to thank Ms. Ruchi Bhandari our Faculty in Charge of “Investment
Analysis and Portfolio Management” for giving me opportunity to venture into
“Fundamental Analysis Of Jain Irrigation Systems Ltd”. I admit that learning
that I acquired through out the journey of making my project was invaluable. I owe
my gratitude to Ms. Ruchi Ma’am who helped me to focus my approach during
making of my project

I thank my parents who supported me, the library of NLU, which help me to lay
the foundation of project and giving me plethora of literature to search on.

Last but not the least I thank all those people who contributed in one or the other
way to make this project, the way its look today.

SONU BISHNOI

INDEX
1. CHAPTER -1 COMPANY ANALYSIS

2. CHAPTER -2 ECONOMY ANALYSIS

3. CHAPTER -3 FINANCIAL ANALYSIS


Chapter-1 Company Analysis
Introduction-

Jain Irrigation Systems Limited (also known as Jain Irrigation, JISL, or Jains) is a
transnational organization headquartered at Jalgaon, Maharashtra, India. JISL employs
over 5,000 associates and manufactures a number of products, including drip and
sprinkler irrigation systems, PVC & PE piping systems, plastic sheets, greenhouses,
bio-fertilizers, solar products including water-heating systems, photovoltaic appliances
and solar pumps. JISL processes fruits and vegetables into aseptic concentrates,
frozen fruits and dehydrated vegetables respectively. JISL is a public company listed
on the Bombay Stock Exchange as 500219 and on the National Stock Exchange of
India as JISLJALEQS. The Company has a turnover exceeding Rs. 30 billion. JISL
also has 21 manufacturing plants spread over 5 continents. The
products are supplied to 110 countries through 3000 dealers and distributors
worldwide1.

The journey of Jain Irrigation Ltd. started when in 1887 forefathers of


Mr.Bhavarlal Jain left the deserts of Rajasthan, their home state, in search of water
and food and reached Wakod, at the foothills of the famous Ajanta Caves. They
started farming as a means of livelihood.

In 1963 selling kerosene in pushcart, the young law graduate, Bhavarlal Jain,
founded the family business in trading. The family partnership with a meager Rs.
7,000, accumulated savings of three generations, as capital. Soon, agencies for two
wheelers, auto vehicles and automobile accessories were established in quick
succession.
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Trading : Inspired by a quote, "Agriculture : a profession with future" young Jain
added dealership of tractors, sprinkler systems, PVC pipes and other farm
equipment. In order to broad base the agri-business, agencies for farm inputs such
as Fertilizers, Seeds, Pesticides were also added. Sales grew from Rs. 1 million in
1963 to Rs. 110 millions in 1978, a phenomenal increase of 110 times. These
formative years helped us build a unique and lasting enterprise. This was achieved
through consistent high standards of performance and personal behavior on the one
hand and a strong sense of commitment for meeting targeted volumes and for
payment of debts in time, on the other. Dealings with national and international
principals was a contributing factor towards building these attitudes. In time, we
came to be recognized as a reputable, trustworthy and prestigious house. This
background augured well for an entry into industrial ventures.

Refined Papain : We took over a 14 year-old sick Banana Powder Plant in April
1978 at a high auction price of Rs. 3 million while we only had Rs. 0.2 million as
inevitable surplus. The plant was quickly modified for the production of Papain
from Papaya latex. In December 1978, the founder traveled to New York in search
of customers for Jain Papain. The competition for purchase of raw materials at
home and for sale of Papain abroad was stiff and stifling. However, we developed
purified Papain through ceaseless in-house R&D and emerged as the `Number
One’ supplier of the highest purity refined Papain. Thus Papain put us on the
international map.

PVC Pipes : In 1980, manufacturing of PVC Pipes commenced with a small


annual capacity of 300 MT's which was increased to over 35,600 MT's per annum
by 1997, making us the largest single producer of PVC Pipes in the country. A
close-knit dealer distribution network in the rural areas coupled with continuous
automation and up gradation of product facilities and in-house R&D for maximum
capacity utilization has kept us at the forefront. This further helped us to expand
the range to Casing & Screen Piping Systems thereby continuing to contribute to
the growing export volumes.

Micro - Irrigation Systems: Beginning in 1989, we toiled and struggled to


pioneer Water-management through Micro Irrigation in India. We have
successfully introduced some hi-tech. concepts to Indian agriculture such as
`Integrated System Approach’, One-Stop-Shop for Farmer, and `Infrastructure
Status to Micro Irrigation & Farm as Industry’. We have come a long way.

Food Processing : In 1994 we set-up world class food processing facilities for
dehydration of onion, vegetable and production of fruit purees, concentrates and
pulp. These plants are ISO 9001 & HACCP certified and Meet International FDA
statute requirements. Combining the modern technologies of the west with the vast,
mostly untapped agriculture resources of India, using the local human resources
and inculcating the culture of excellence in quality and total customer service. We
have set ourselves a goal 'to become a major and reliable global supplier of food
ingredients of finest quality.'

Today with over 3000 committed employees strength worldwide, we have


established our Leadership in diverse products like Micro & Sprinkler
Irrigation, Agricultural Inputs, Agro-Processed Products, Plastic Pipes &
Sheets.2

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http://www.jains.com/Company/history.htm
PRODUCTS-

1. High-Tech Agri Input


Products-
The high-tech segment comprises micro-irrigation systems, turnkey services
and hi-tech agri consultancy, biotech tissue culture, greenhouses, poly
&shadehouses etc. JISL is the second largest micro irrigation company in the
world. The microirrigation division manufactures the full range of precision
products of drip and sprinkler irrigation. JISL nurtures a sprawling 700 acre hi-
tech agri institute, a farm resource R&D, demo, training & extension centre and
undertakes
turnkey projects for agricultural and irrigation development. Over 1000 agri and
irrigation scientists, engineers, technologists and technicians offer consultancy
for complete or partial project planning/implementation, e.g. watershed
development through wasteland transformation, including crop selection and
rotation. JISL also designs and implements comprehensive class-room as well
as on farm training courses for govt. officers, bank professionals, farm operators
and managers.

The tissue culture division produces Grande Naine banana plantlets at full
capacity and has established matching primary and secondary hardening
facilities. It has also established an independent, National Accreditation Board
for Testing & Calibration Laboratories (NABL) accredited R&D, virology and
microbiology lab. Also, a modern biotech lab equipped with PCR based and
other molecular markers, has been established to meet the needs of continuous
genetic improvement and validation programme in cultivars of onion, banana,
mango and some of the energy crops. The sales in tissue culture division grew
26% over the previous year. The output increased at 12.18 million plantlets.
2. Plastic Piping Products
Jain Irrigation Systems Ltd. is the largest plastic pipe manufacturer in India covering a
wide range of pipes and fittings. We annually process over 200,000 MT of various
polymers. We extrude and inject the mould of PVC, PE, PP along with other
engineering polymers like Polycarbonate, Polyamide, PBT, ABS etc. We are a ‘total
solution provider’ for various thermoplastic piping systems that are used in
transportation/conveyance of fluids, semi-solids, cables. In Piping Systems we have
systems from Water to Gas distribution; chemical to cable conveyance; groundwater
tapping to waste disposal; microirrigation to lift irrigation; hand pumps to house
service connections. In PVC piping, Jain Irrigation has 15% of the total market share
making it one of the biggest players in the organized sector. During FY 2008-09, this
business contributed 18% revenue to the Company. The business has grown at a
steady 43% in revenue and added 36,540 MT of capacity during the year under
review. The PE piping business witnessed de-growth in FY 2008-09. Revenue was
down by 11% and volumes were down by 16%, reflecting sluggish and subdued
capital expenditure by the infrastructure sector in general and telecom sector in
particular amid prevailing tight liquidity and poor sentiment during the major part of
FY 2008-09. However, with all user industries like telecom, gas, water and
sewerage having good plans for growth andcapital expenditure, the future is very
bright for this business. The business added 19860 MT of capacity during the year
under review.
3. Agri Processed Products

We process tropical fruits and vegetables into purees, concentrates, juices and
Individual Quick Frozen (IQF) products and dehydrated products and market these
under our brand name ‘FarmFresh’. This division forms an important part of the
company’s approach to the integrated farming model, wherein the company supplies
the farmer with high-tech agri inputs and buys back the output, thereby completing the
agri value chain.

To tap the huge opportunity in this segment of business, the company has added new
capacities, acquired a number of plants and also increased the product portfolio. Jain
Irrigation is now the largest processor of fruits and vegetables in India. Apart from
growth in mango pulp and the concentrate business, the company has set-up the most
modern and largest pomegranate processing facility at Jalgaon. The rationalization of
manufacturing locations was completed by the company in the year under review by
deciding to process mangoes in season only at two locations. The IQF and Bulk
Frozen (BF) fruit products have further diversified the basket of fruits being
processed by the company. The Dehydration Facilities are for onions and vegetables.
JISL accounts for more than 50% share in export of dehydrated vegetables from the
country. With the acquisition of controlling stake in Cascade Specialities Inc, JISL has
also established its manufacturing presence in the USA, the world’s biggest market for
dehydrated onion. We are the only producers in the world to have a manufacturing
base in two different countries and as a result are able to produce
dehydrated onions throughout the year3.

CORPORATE PHILOSOPHY
Mission

Leave this world better than you found it.

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Vision

Establish leadership in whatever we do at home and abroad.

Credo

Serve and strive through strain and stress;Do our noblest, that's success.

Goal

Achieve continued growth through sustained innovation for total customer


satisfaction and fair return to all other stakeholders. Meet this objective by
producing quality products at optimum cost and marketing them at reasonable
prices.

Guiding Principle

Toil and sweat to manage our resources of men, material and money in an
integrated, efficient and economic manner. Earn profit, keeping in view
commitment to social responsibility and environmental concerns.

Quality Perspective

Make quality a way of life.

Work Culture

Experience : 'Work is life, life is work'4.

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CHAPTER 2 ECONOMY ANALYSIS

1. Agriculture and monsoon

Company’s performance greatly depends on the seasonality in agriculture sector.


The recent climate change and fluctuation in the monsoon will also impair the raw
material availability for food processing industry . But the drip irrigation system has
the potential to solve the problem of food, energy and water security arising from the
climate change phenomenon.
Agriculture is greatly effected by the irrigation system adopted. Good irrigation
system on one hand increases the yield and on other hand saves wastage of water.
Jain Irrigation Systems Ltd. has dedicated themselves to the development of
agriculture and agro-processing by coming up with Jain Drip Irrigation Systems
and other products .

After detailed study of inter-relationship among soil, water, crop, land terrain and
related agro climatic conditions, Jains design a suitable and economically viable
system to deliver a measured quantity of water at the root zone of each plant at
regular intervals. This is to ensure that the plants do not suffer from stress or strain
of less and over watering.

Benefits of Jain Drip Irrigation Systems

• Has recorded increase in yield up to 230%.

• Saves water up to 70% compare to flood irrigation. More land can be


irrigated with the water thus saved.
• Crop grows consistently, healthier and matures fast.
• Early maturity results in higher and faster returns on investment.
• Fertilizer use efficiency increases by 30%.
• Cost of fertilizers, inter-culturing and labour use gets reduced.
• Fertilizer and Chemical Treatment can be given through Micro Irrigation
System itself.

• Undulating terrains, Saline, Water logged, Sandy & Hilly lands can also be
brought under productive cultivation5.

Moreover,as the production would increase out of fields using irrigation


products ,others would get attracted leading to increase in demand of irrigation
products of Jain Irrigation Systems Ltd.

2. Currency fluctuations- Adverse changes in the exchange rates may deliver


big jolts to an otherwise smooth runing business. It is the one factor that affects
sustainability adversely. If currency value of the country to which products are
being sold falls than the profits of the company would greatly take a hit.6

3. Aggressive strategies of competition -

With globalization competitors has increased .So to sustain in the market company
has to adopt aggressive strategies such as large sales force, credits, products offered at
multiple price points etc.and to competition from unorganized sector aggressive
pricing is used as a tool that results in pressure on sales/margins.

4. R&D

Research and analysis plays a very vital role in the sustenance of the company and its
5
http://www.jains.com/irrigation/drip%20irrigation%20system.htm
6
pg 40, http://www.jains.com/PDF/Sustainable%20Report%20Final.pdf
constant growth.Its helps to keep abreast with constant changes required and be ahead
with respect to competitors with regards to quality.

As per company's quality policy the management & staff of Jain Irrigation Systems
Ltd. strive for on - going continuous improvements in their products & product
range.

For supporting this process and for maintaining the high quality standards,
company has set up in-house R&D laboratories having state-of-the-art equipments.
In these Laboratories various plastic polymers & finished products are tested for
their quality parameters and performance. That's why Jain Irrigation Systems Ltd.
have been awarded by DSIR National Award for R&D Efforts in Agro Industries
Sector given by Department of Science and Industrial Research (DSIR),
Government of India for these facilities.
Agro-processed Products : Fruit pulp, purees & concentrate and dehydrated
vegetable processes are essentially undergoing development perpetually. The
product specifications are constantly changing.

Agri-irrigation Products : Work on Research & Development projects is


always in progress. The following are typical illustrations:

1. Different designs of casing/screen pipes, their jointing method and


fittings.
2. Design modifications in micro-irrigation technique such as in-line drip
irrigation system.
3. Design modification in sprinkler irrigation method such as floppy pop-
up sprinkler.
4. New designs of injection moulded parts in micro-irrigation system.

5. Process development and establishment of new formulations.


Environment Protection

1. Treating solid waste from food processing units and converting it to bio-
fertilizer.
2. Developing need-based bio-pesticide.
3. Utilizing solar heat through solar water heaters and solar stills.

4. Afforestation on increasingly more area by planting trees and providing


saplings for plantation7.

5. Government schemes and subsidy

Poor irrigation efficiency of conventional irrigation system reduces the anticipated


outcome of investments made towards water resource development and also
results in environmental problems like water logging and soil salinity thereby
affecting crop yields. This, therefore, calls for massive investments in adoption of
improved methods of irrigation such as drip and sprinkler, including fertigation.

The Ministry of Agriculture had initiated the programme for promoting drip
irrigation during the VIII Five Year Plan as a Centrally Sponsored Scheme on Use
of Plastic in Agriculture. Besides, program for micro irrigation has been taken up
through different schemes like Technology Mission for Integrated Development of
Horticulture in North East (TMNE), Integrated Scheme for Oilseeds, Pulses & Oil
Palm and Miaze (ISOPOM). Despite these efforts, the coverage of area under
micro irrigation is only about two million ha. whereas the Task Force on Micro
Irrigation (2004) has indicated a potential of 69 million ha. Launch of these
mission mode programmes envisages several other interventions in which
enhanced plastic use in Agriculture will pave the way for precision farming,
improved packaging, lowering cost of cultivation, and bridging gaps in technology.

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The scheme will be implemented by an identified Implementing Agency at the
district level with focus on the areas under horticulture crops being covered under
the National Horticulture Mission (NHM). The success of the Scheme will depend
on an effective delivery mechanism with close coordination between the farmers,
system suppliers and the Implementing Agency. The mechanism for achieving
such synergy has been detailed in these guidelines. Besides, attempts have been
made to provide details about cost norms, pattern of assistance,formats for
furnishing project proposals and the role of various national and state level
organizations for effective implementation of the scheme.

Key features of the Micro Irrigation (MI) Scheme

• It will be a Centrally Sponsored Scheme under which out of the total cost of
the MI System, 40% will be borne by the Central Government, 10% by the
State Government and the remaining 50% will be borne by the beneficiary
either through his/her own resources or soft loan from financial institutions.

• Assistance to farmers will be for covering a maximum area of five ha per


beneficiary family.

• Assistance for drip and sprinkler demonstration will be 75% for the cost for
a maximum area of 0.5 ha per beneficiary which will be met entirely by the
Central Government .

• The Panchayati Raj Institutions (PRIs) will be involved in selecting the


beneficiaries .

• All categories of farmers are covered under the Scheme. However, it need to
be ensured that at least 25% of the beneficiaries are Small & Marginal
farmers .
• The focus will be on horticultural crops being covered under the National
Horticulture Mission. A cluster approach will be adopted.

• The Scheme includes both drip and sprinkler irr igation. However, sprinkler
irrigation will be applicable only for those crops where drip irrigation is
uneconomical .

• There will be a strong HRD input for the farmers, field functionaries and
other stake holders at different levels. Besides there will be publicity
campaigns, seminars/workshops at extensive locations to develop skills and
improve awareness among farmers about importance of water conservation
and management.

• The Precision Farming Development Centres (PFDCs) will provide research


and technical support for implementing the scheme .

• At the National level, National Committee on Plasticulture Application in


Horticulture (NCPAH) will be responsible for coordinating the Scheme,
while the Executive Committee on Micro Irrigation (ECMI) will approve
the Action Plans (Para 35,36). At the State level the State Micro Irrigation
Committee will coordinate the programme, while at the District level the
District Micro Irrigation Committee will oversee the programme .

• The Scheme will be implemented by an Implementing Agency (IA)


appointed by the State Government, which will be the District Rural
Development Agencies (DRDA) or any identified Agency, to whom funds
will be released directly on the basis of approved district plans for each year.
• The IA shall prepare Annual Action Plan for the District, get it forwarded by
the DMIC & SMIC for approval by the Executive Committee (EC) of
NCPAH.

• Payment will be made through crossed cheque. If the cheque is in the name
of the system supplier, the same will be delivered through the
farmer/beneficiary .

• Registration of System Manufacturers will be done by the SMIC for use of


the Districts .

• Supply of good quality system both for drip and sprinkler irrigation having
BIS marking, proper after sales services to the satisfaction of the farmer is
paramount.

Most Indian state governments have increased their subsidy contribution


to30%-35% from the earlier 10% levels. Central government provides
40%subsidy to farmers who are adopting MIS for irrigation. These
subsidieschange as per crop variations, farm area held by the farmer and
resourceavailability. Recently, GoI has decided to provide subsidies for the
replace-ment demand in MIS installation from FY09 onwards. This will further
in-centivize farmers to switch to MIS based irrigation systems.

Industrial Promotion Subsidy (IPS) for New Capex-

Government of Maharashtra (GoM) has approved an IPS for JISL underwhich


waiver of actual tax to be paid to GoM, which includes VAT/CST,Stamp duty,
Electricity duty, to the extent of 100% of new capex done hereonwards will be
provided. Currently this tax rebate will continue for 7 yearsfor plastics business
and 12 years for Agro Processing. Incidentally, JISLgenerates 40% of its
revenue from Maharashtra.

Such government schemes when implemented on an effective scale would attract


more number of farmer to use irrigation products as the burden on pocket to
purchase these products would get reduced by contribution from government.This
increased demand would then lead to an increase in production and sales leading to
increase in profits of the company8.

6. Product prices

If irrigation products are priced high than the demand would be low .So, these
products needs to be competitively priced .

example-The unit cost of Drip Irrigation system varies with respect to plant
spacing and location of the water source. Moreover, the cost of the drip system
varies from State to State depending upon the existing demand and marketing
network. Accordingly, the States have been categorized into three categories,
viz., Category “A”, “B” and “C”. States where more than 10,000 hectares have

been brought under drip irrigation as on 1.4.2004 would come under ‘A’
Category. All the States except those covered under Category ‘A’ and those
falling in the Himalayan belt would come under Category ‘B’. All the North
Eastern States, Sikkim, Himachal Pradesh, Jammu & Kashmir, Uttaranchal and
Darjeeling district of West Bengal would come under Category ‘C’.Keeping in
view the level of awareness, proximity to the manufacturing units, distance
involved in transportation, potential for drip irrigation, the cost of drip system
in Category ‘B’ States is estimated to be 15% higher than Category ‘A’ States

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while for Category ‘C’ States it is estimated to be 25% higher than Category
‘A’ States.

So,this price when discounted by government under scheme,becomes


affordable to farmer.If priced more farmers would feel burdened and instead of
using this technique they would prefer conventional measures for irrigation
leading to wastage of water and not so good yield.Therefore irrigation products
should be well priced leading to benefits to irrigation system providing
company like Jain Irrigation Systems Ltd. and simultaneously benefitting
environment and people on a whole.

7. Excise duty-

To augment irrigation facilities and processing of agricultural products, duty on


drip irrigation systems, agricultural sprinklers and food processing machinery has
been reduced by .5% to 5% .This reduction in duty will make irrigation systems
more cheaper attracting more of farmers to opt for such systems leading to
increased demand.
8. Environment-JISL’s management is committed to proactively addressing
environmental, social, occupational health and safety (“EHS”) aspects
associated with its operations. The Sponsor and the Company
have received several international and national awards for
entrepreneurship, innovation and environmentally responsible
initiatives. JISL has articulated quality, health and safety,
environmental,and social accountability policies. The Company’s: (a)
dehydrated products unit has management systems certified to ISO
9000:2000, ISO 22000:2005 (HACCP and Food Safety standards),
British
Retailer Consortium standards, Codex Alimentarius, Kosher standards and
is USFDA registered; (b) fruit pulp & concentrate products division has
management systems certified to ISO 22000:2005 standards, SGF
International Standards, Codex Alimentarius, Kosher standards and is US-
FDA as also JAS registered; (c) the plastics division has management
systems certified to ISO 9000, ISO 14001 standards and is in the
process of obtaining a certification in accordance with OHSAS 18001
standards; (d) owned agricultural sites are EUREP GAP certified; and (e) its
tissue culture lab is ISO 9001 certified, and central laboratory operations
are certified to GLP standards and have applied for NABL certification.
While the above said management systems focus on quality and food
safety, barring at the plastics plant where the Company has implemented
an environment management system(EMS) as well, JISL also has
processes in place to manage environment, occupational health and
safety aspects associated with its operations. The Company will further
strengthen the processes for management of EHS aspects and will
implement, across all of its operating facilities, EHS management
system (EHSMS) certified to ISO 14001 and OHSAS 18001
standards, with IFC’s Performance Standards and EHS guidelines duly
embedded in the EHSMS, as per the time schedule detailed in the
Environmental and Social Action Plan (“ESAP”) appended to this
document. Further, the Company will evaluate the possibility of obtaining
an appropriate and internationally recognized Fair Trade certification.

The main business of the Company, MIS, promotes water conservation and
pollution prevention. Further, the Company also assembles and markets solar
heating and lighting systems. The Company has implemented various energy
efficiency and resource conservation measures on its own premises including
use of: solar heating and lighting systems; generation and use of biogas from
domestic sewage and process effluents; use of treated effluent in irrigation on
premises; biodiesel production pilot and vermicomposting of non hazardous
solid wastes with high organic content. At JISL’s facilities in Jalgaon: there is
an effluent treatment plant comprised of sequenced anaerobic and aerobic
treatment and the treated wastewater meets host country requirements;
domestic sewage is treated through septic tank and the overflow is led into
the ETP; furnace oil based boilers have bag filters and the emissions to air
meet host country requirements; there are diesel generator sets for backup
power; hazardous ETP sludge and other hazardous wastes are disposed
through authorized entities in a secure land fill or for regeneration or
recycling; management of scrap and other non hazardous wastes needs to be
upgraded though these are presently being segregated and sold to recyclers;
and the refrigerant gases in refrigeration systems and chillers are in accordance
with host
country regulations on ozone depleting gases.

By following such environmental friendly measures Jain Irrigation Systems Limited


fulfills its responsibility towards preserving the environment .

CHAPTER -3 FINANCIAL ANALYSIS

Financial Highlights Rs. in Million (except EPS) [31st March, 2010]

Particulars 2009-10 2008-09

Domestic Sales 21,735 16,623

Export Sales & Services 5,209 4,886

Other operating Income 285 280

Sales and Operating Income 27,229 21,789

Operating Proft 6,647 3,972

Interest and Finance Charges 1,943 1,611

Depreciation and Amortisation 686 473

Amounts written off and provisions 86 50

Profit before taxation & exceptional items 3,932 1,838

Exceptional items (Service tax disallowed) -- --


Provision for Tax

Deferred Tax (Asset)/Liability 317 615


Current Tax – provision 671 206

MAT Credit 232 -206

Fringe Benefit -- 21

Proft for the year 2,712 1,202

Profit b/f from the previous year 2,851 2,462

Balance available for appropriation 5,563 3,664


Out of which the Directors have
appropriated as under;

Proposed Dividend 357 219

Dividend Tax 61 37

General Reserve 271 120

Transfer to CRR 425 437

Balance to be carried forward 4,449 2,851

Earnings Per Share

Basic 35.84 16.12

Diluted 35.77 16.039

Analysis-

The net sales grew by 25% on yoy basis.These figures could have een better but
due to heavy rain witnessed across the country these figures has lowered down.
The domestic sales grew at an impressive 30.8% to Rs.21,735 mn on the back drop
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of a robust demand in MIS/SIS, Fruit processing and PE/PVC piping segments.
Exports grew 6.6% at Rs.5,209 mn despite a severe slowdown in the world
economy and specially in western world post October 2008 financial crisis. The
notional gain on account of foreign currency fluctuations at Rs.711.07 mn (as
against loss of Rs.777.23mn last year) does not impact the cash flows. Thus, the
operating profit at Rs.6,647 mn improved by 67.4% reflecting the continual
improvement in resource utilization and economies of scale.
The profit for the year is higher than the earlier year by about 125.7% at Rs.2,712
mn. For the first time the Company has reported free cash flows of Rs.530 mn.

Dividend-An amount of Rs.13.54 mn is payable as Dividend on the Redeemable


Preference Shares issued by the Company as per predetermined coupon
rate and an amount of Rs.2.30mn is payable as Dividend Distribution Tax
on the said Preference Dividend. The Board of Directors have recommended to
the Shareholders for declaration at the ensuing AGM a dividend of Rs.4.50 per
share to the eligible Shareholders. The said dividend is expected to result in a cash
outgo of Rs.343.32mn while the outgo on the Dividend Distribution Tax on the
said dividend works out to Rs. 58.35mn.

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Dividend Per 1.80 2.00 2.20 2.50 4.50

Share

The dividend has increased from year to year .Thus shareholders are
benefitted.Moreover it shows that company’s profit is increasing on year to year
basis.

Reason for increase in figures-In the micro / sprinkler systems division the
projects like Andhra Pradesh Micro Irrigation Project and Gujarat Green
Revolution Co. Ltd. have helped Company achieve historic growth levels.
Allocation of higher subsidy through Government Programs also enhanced growth
opportunities for the division. Acquisition of Chapin Watermatics USA, a pioneer
in drip irrigation in the world and Strategic stake in Eurodrip S.A. Greece, a drip
irrigation company with 5 plants worldwide; along with capacity expansion under
way, will further enhance growth in this division.10

Continuing telecom expansion and identification of new business opportunities in


the areas of water distribution have been highlights of growth in the PE pipes
business. PVC Pipes sales will maintain growth momentum due to aggressive
government programme’s for drinking water supply to all villages and additional
irrigation to 10 million hectares.

Exports of PVC Sheets have grown in a steady manner. Further, Company has
added significant new customers for building product applications. Recent
investment in Nucedar will also help the Company to take lead over competition
through newer applications in building industry.

The recent acquisitions in the Food Processing sector like Parle Bisleri’s mango
division, LMP Gujarat Agro Exports etc. have added capacity at low cost in the
two food related businesses of the Company.

Liquidity And Solvency Ratios


Mar07 Mar08 Mar09 Mar10
Mar06
Current Ratio 0.97 0.78 0.92 0.84 1.13
Quick Ratio 1.45 1.13 1.41 1.43 1.77
Debt Equity Ratio 2.90 2.17 1.18 1.55 1.33

10
http://www.jains.com/Company/News/Jain%20Irrigation%20Board%20to%20Declare
%20Dividend.htm
Long Term Debt Equity Ratio 1.97 1.29 0.67 0.86 0.93

• current ratio is increasing on yoy basis indicating that the current assets are
increasing in comparison to current liabilities.The company's ability to pay
back its short-term liabilities (debt and payables) with its short-term assets
(cash, inventory, receivables) is shown by current ratio. Higher current ratio
shows higher capability of the company in paying its obligations. The
current ratio gives a sense of the efficiency of a company's operating cycle
or its ability to turn its product into cash.

• Quick ratio is an indicator of a company's short-term liquidity. The quick


ratio measures a company's ability to meet its short-term obligations with its
most liquid assets. The higher the quick ratio, the better the position of
the company.Quick ratio of 1.77 shows that the position of Jain Irrigation is
pretty well when it comes to its ability to meet its short term obligations.

• Debt Equity ratio indicates what proportion of equity and debt the company
is using to finance its assets. A high debt/equity ratio generally means that a
company has been aggressive in financing its growth with debt. This can
result in volatile earnings as a result of the additional interest expense. If the
ratio is high (financed more with debt) then the company is in a risky
position - especially if interest rates are on the rise..
Here,the debt equity ratio is declining on yoy basis which indicates that the
company is raising funds from equity rather than from debts(yoy). If raised
from debts, a part of profit will have to be sacrificed as interest on debt but if
raised from equity then company is under no obligation to distribute surplus
to shareholders and can retain in order to increase the reserve.
Shareholding pattern-

Shareholding Pattern
As on 31st December 2010

Categ Category of Shareholders No. of Total no. Number of Total


ory Share of Shares in Sharehold
Shares Pledged
Code s Shares dematerializ ing as a %
or otherwise
holde ation form of Total
encumbered
rs number
of Shares

As
As a
a% As a
% of No. of
of percent
(A+B Shares
(A+ age
+C)
B)

A Shareholding of promoter and promoter Group

(1) Indian

20,638,2 11,196,6
a. Individuals / Hindu Undivided Family 30 20,638,245 5.45 5.41 54.25
45 05

b. Central Govt./State Govt. - - - - - - -

96,605,0 25.5
c. Corporate Bodies 1 96,605,000 25.34 - -
00 1

d. Financial Institutions / Banks - - - - - - -

e. Any Other - - - - - - -

117,243, 30. 11,196,


Sub-Total A(1) 31 117,243,245 30.76 9.55
245 95 605

(2) Foreign

a. Individuals(NRI/Foreign Individual) - - - - - - -

b. Bodies Corporate - - - - - - -

c. Institutions - - - - - - -

d. Any Others - - - - - - -

Sub-Total A(2) - - - - - - -
Total Shareholding of Promoters and 117,243, 30. 11,196,
31 117,243,245 30.76 9.55
Promoters Group (A)(1)+(A)(2) 245 95 605

B Public Shareholding

(1) Institutions NA NA

9,834,86
a. Mutual funds / UTI 54 9,799,659 2.60 2.58 - -
4

b. Financial Institutions / Banks 7 16,620 13,195 0.00 0.00 - -

c. Central Govt. / State Govt. - - - - - - -

d. Venture Capital Funds - - - - - - -

e. Insurance Companies 1 250 250 0.00 0.00 - -

210,564, 55.5
f. Foreign Institutional Investors (FIIs) 248 210,555,914 55.24 - -
414 9

g. Foreign Venture Capital Investors - - - - - - -

h. Any other 1 1,000 1,000 0.00 0.00 - -

220,417, 58.
Sub-Total B(1) 311 220,370,018 57.82 - -
148 19

(2) Non Institutions

7,857,59
a. Bodies Corporate / Trusts 915 7,766,879 2.07 2.06 - -
9

i. Individuals-shareholders holding
46,83 12,446,5
nominal Share Capital up to Rs. 1 9,136,551 3.29 3.27 - -
3 81
Lakh
b.
ii. Individuals-shareholders holding
3,343,48
nominal Share Capital excess of Rs. 1 28 3,140,440 0.88 0.88 - -
0
Lakh

Any Other

i). NRI 574 481,428 436,568 0.13 0.13 - -

15,659,8
ii. Non Domestic Company 3 15,659,800 4.13 4.11 - -
c. 00

1,308,70
iii. Clearing Members 174 1,308,709 0.35 0.34 - -
9

iv. Trusts 2 2,800 2,800 0.00 0.00 - -

48,52 41,100,3 10.


Sub total B (2) 37,451,747 10.78 NA NA
9 97 85
48,84 261,517, 69.
Total Shareholding B(1) + B(2) 257,821,765 68.61 NA NA
0 545 04

48,87 378,760,
Total A + B 375,065,010 100 99.36
1 790

Shares held by Custodians and


2,425,67 XX
d. against which Depository Receipts 2 2,422,920 0.64 NA NA
0 X
have been issued

48,87 381,186, XX 100.0 11,196,


Grand Total A + B + C 377,487,930 2.94
3 460 X 0 605

As on 30th September 2010

Categ Category of Shareholders No. of Total Number of Total


ory Share no. of Shares in Sharehold
Shares Pledged
Code s Shares dematerializ ing as a %
or otherwise
holder ation form of Total
encumbered
s number
of Shares

As
As a
a% As a
% of No. of
of percent
(A+B Shares
(A+ age
+C)
B)

A Shareholding of promoter and promoter Group

(1) Indian

4,127,64 2,239,3
a. Individuals / Hindu Undivided Family 30 4,127,649 5.45 5.41 54.25
9 21

b. Central Govt./State Govt. - - - - - - -

19,321,0 25.5
c. Corporate Bodies 1 19,321,000 25.34 - -
00 0

d. Financial Institutions / Banks - - - - - - -

e. Any Other - - - - - - -

23,448, 30. 2,239,


Sub-Total A(1) 31 23,448,649 30.76 9.55
649 95 321

(2) Foreign

a. Individuals(NRI/Foreign Individual) - - - - - - -

b. Bodies Corporate - - - - - - -

c. Institutions - - - - - - -

d. Any Others - - - - - - -

Sub-Total A(2) - - - - - - -
Total Shareholding of Promoters and 23,448, 30. 2,389,
31 23,448,649 30.76 10.19
Promoters Group (A)(1)+(A)(2) 649 95 321

B Public Shareholding

(1) Institutions

2,551,11
a. Mutual funds / UTI 60 2,544,259 3.37 3.35 - -
5

b. Financial Institutions / Banks 9 3,986 3,301 0.01 0.01 - -

c. Central Govt. / State Govt. - - - - - - -

d. Venture Capital Funds - - - - - - -

e. Insurance Companies 1 50 50 0.00 0.00 - -

41,415,0 54.6
f. Foreign Institutional Investors (FIIs) 256 41,413,309 54.32 - -
09 6

g. Foreign Venture Capital Investors - - - - - - -

h. Any other - - - - - - -

43,970, 58.
Sub-Total B(1) 326 43,960,919 57.68 - -
160 03

(2) Non Institutions

1,999,82
a. Bodies Corporate 698 1,985,538 2.64 2.62 - -
2

i. Individuals-shareholders holding 2,398,06


40,351 1,693,241 3.16 3.15 - -
nominal Share Capital up to Rs. 1 Lakh 0

b.
ii. Individuals-shareholders holding
nominal Share Capital excess of Rs. 1 27 653,812 613,204 0.86 0.86 - -
Lakh

Any Other

i). NRI 418 100,463 91,306 0.13 0.13 - -

c.
3,133,06
ii. Non Domestic Company 6 3,132,356 4.13 4.11 - -
6

iii. Clearing Members 101 65,803 65,803 0.09 0.09 - -

41,60 8,351,5 11.


Sub total B (2) 7,581,948 10.95 NA NA
2 26 02

41,92 52,321, 69.


Total Shareholding B(1) + B(2) 51,542,867 68.63 NA NA
8 686 05

Total A + B 41,95 75,770, 74,991,516 100 99.39


9 335

Shares held by Custodians and


466,95 XX
d. against which Depository Receipts 2 466,407 0.61 NA NA
7 X
have been issued

41,96 76,237, XX 100.0 2,239,


Grand Total A + B + C 75,457,923 2.94
1 292 X 0 321

Total number of shareholders and the number of shares have increased QoQ
basis showing that the fund are raised by equity rather than debts resulting in
lowering of debt equity ratio.

BIBLIOGRAPHY

• http://www.jains.com/Company/financial/shareholding.htm#As_on_31st
_December_2010

• http://www.business-standard.com/content/research_pdf/jain
%20irrigation-company%20update-050908.pdf

• http://www.moneycontrol.com/financials/jainirrigationsystems/ratios/JIS
02

• http://im.sify.com/sifycmsimg/jan2010/Finance/14926039_JainIrrigation
Systems_Sep09.pdf

• http://www.moneycontrol.com/financials/jainirrigationsystems/ratios/JIS
02

• http://www.jains.com/Company/financial/sskireport.pdf
• http://www.business-
standard.com/content/research_pdf/jisl_290111_02.pdf

• http://www.jains.com/PDF/Sustainable%20Report%20Final.pdf

• http://www.jains.com/Company/financial/Management%20Discussion
%20n%20Analysis.pdf