The money would be raised as a combination of debt, equity and convertibles and will help the company reduce its debt burden and meet working capital requirement.
Jain Irrigation on Thursday said it plans to raise $200 million overseas by October.
“We are in a fairly advanced stage of discussion with overseas players to raise close to $200 million and will finalise a deal in the next couple of weeks. The money is likely to come to us by October,” said Anil Jain, managing director, Jain Irrigation.
The money would be raised as a combination of debt, equity and convertibles and will help the company reduce its debt burden and meet working capital requirement.
Jain did not divulge details of the companies he is talking to, but said the International Finance Corporation, its long-time lender and an equity holder in the company, will be a part of the deal.
The company’s mainstay micro-irrigation systems business has become a major drag on its financials over the past year or so, mainly due to non-disbursal of timely subsidy by the government. This has swelled its receivables and forced it to take on more debt to fund working capital needs.
Much of the burden will reduce by the end of this fiscal, Jain hoped. “We have subsidy pending to the tune of Rs1,100 crore for FY12 and FY13 so far. The FY12 part is expected to be disbursed in the next 3-4 months and by the year-end, all of it would be cleared.”
Simultaneously, the company expects to kick-start its non-banking financial company venture by October, which will also help reduce the pain of receivables.
This will be in addition to the company’s focus on exports, which has started contributing to the bottomline and is expected to grow in excess of 10%, he said.
Analysts said that the company’s business model remains attractive, though non-disbursal of subsidy on time has taken a toll.
“If you wipe off the subsidy concern, the company can grow at a CAGR of 20% over the next 3-5 years,” said an analyst with a domestic brokerage, who did not wish to be named.
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