At a time when companies are struggling to survive the downturn in economy, home grown irrigation major – Jain Irrigation Systems (JIS) – is quite bullish and confident about clocking growth rate of at least 30% in 2009-10.
Based in Jalgaon, Maharashtra, JIS, also the second biggest irrigation company in the world, is aiming at turnover of Rs 3,100 crore during 2008-09. The company had reported a turnover of Rs 2,300 crore during 2007-08.
?The outlook for agriculture is positive and due to various support schemes provided by the government to farmers, the demand of irrigation equipment is going to rise over the next few years,? Anil Jain, managing director,JIS, told FE.
JIS, which focuses on a wide range of equipment for use in agricultural activities like irrigation, pipes, sprinklers, and plastic sheets, has at present a healthy order book of Rs 592 crore. Jain said that during last few years of economic growth, the rural areas were mostly untouched.
?With various mega schemes like the increased minimum support price (MSP) to farmers, Bharat Nirman, drinking water supply programmes and the National Rural Employment Guarantee Act (NREGA), the rural economy has received a boost to a large extent,? he said.
The company, since its inception in the 1960s, has been operating in the mostly western and southern parts of the country. But during the last few years, JIS?s customer-base has expanded to the eastern and northern parts of India.
According to Jain, the domestic market remains strong, except for a slowdown of piping applications in the infrastructure sector. He also stated that for last five decades, successive governments have not paid enough attention to agriculture. However, various measures have been taken by central and state governments towards boosting agricultural productivity.
As the company exports irrigation equipment to countries like the US, Israel, Australia, Brazil and be Spain may be impacted by the global economic slowdown.
?During last two months, we experienced a lower offtake from our US and European customers,? Jain said. He also acknowledged that the period between October – December 2008 was one of the most challenging.
For the third quarter of 2008-9, JIS reported a revenue growth of 29%, to Rs 531 crore as against Rs 410 crore in the same period last year. The company also reported a net profit of Rs 55 crore during the quarter as against Rs 44 crore achieved last year, posting a rise of 24%.
?We expect lower costs on all fronts and better working capital management for sustaining growth, despite a negative and deflationary economic environment,? Jain observed.