Jain Irrigation Systems, the world’s second-largest drip irrigation systems company after Israel’s Terafin, says it seeks to buy global companies.
MUMBAI: Jain Irrigation Systems, the world’s second-largest drip irrigation systems company after Israel’s Terafin, says it seeks to buy global companies that make irrigation accessories such as filters, controllers and valves in an attempt to rein in costs.
The company, which has already made five acquisitions (four in the US and one in Israel) in the last two years spending Rs 200 crore, will also increase focus on the water management segment.
Managing director Anil Jain said some firms, which have been targeted, have products that are used in other industries too —so acquiring them will help Jain even service these non-irrigation segments.
Jain Irrigation, which expects net profit and revenue to grow more than 60% in the year to March 2008 to Rs 150 crore and Rs 2,200 crore, respectively, plans to spend more than $100 million over the next two years on expansion.
Analyst Priyanko Panja of Deutsche Bank Global Markets, in a note to clients on December 5, said a strong product portfolio, presence in key growth markets and increasing demand backed by greater governmental focus on agriculture are likely to keep Jain Irrigation’s earnings trajectory in the 40% range (between FY07-10E), led primarily by inorganic growth.
Jain Irrigation plans to bid for large irrigation projects worth up to $10 million in Latin America along with the acquired Israel firm NaanDan, he said.
“NaanDan has a presence there and we see project orders from bio-fuel sector flowing from the third quarter of next year.”
Jain bought a 50.001 percent stake in NaanDan in May and plans to piggyback on the firm to foray into untapped markets of Africa and East Europe. NaanDan’s net profit grew six times to $3 million and revenue by a fourth to $68 million in the nine months to September 2007. It is on target to post revenue of $90 million for the year, Jain said. The company is also focusing on water management segment in a big way.
The Eleventh Five-Year Plan has earmarked $58 billion for enhancing the water sector where irrigation is one of the priorities, including $750 million for micro irrigation-based schemes and other government initiatives such as Bharat Nirman.
Anil Jain said the plan is to be the main player in the water management space. The company has drawn up a conceptual strategy and plans for water management, which will be discussed further and implemented in the coming quarters. It has plans to set up a facility in the north India by the end of current fiscal with an investment of Rs 30 crore.
The location is yet to be decided but the toss-up is between Punjab, Haryana and Uttarakhand.
r_mithun@dnaindia.net
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