Jain Irrigation sees FY08 CAGR at 40-42%

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Atul Jain , Director Marketing, Jain Irrigation said that the company has been growing at almost 40-42% CAGR for the last four years and that, going forward, they plan to maintain the same growth for a year or two.      

 

"Water is getting scarce by the day. Hence, the water management segment is definitely in need of these kind of technologies where you scientifically manage to conserve water," he added.                        

 

Talking about acquisitions, he said that in the last 12-14 months, the company has done four to five acquisitions. These have primarily been in the micro irrigation side, which has now made Jain Irrigation the second largest irrigation company in the world.

 

Excerpts of CNBC-TV18's exclusive interview with Atul Jain:

 

Q: What are the business prospects looking at, at this juncture. Do you see a quantum leap in the amount of business that the country is able to provide at this point in time in irrigation?

 

A: Most certainly, we do see that quantum leap to be continued and maintained as we have been doing it for the last couple of years. Strategically there are two booms that we are talking about; one is the agriculture field where company exists and then the infrastructure.

 

Both the companies have another product line which goes very strong into infrastructure, that is more on piping etc. So on that basis, we do see quite a quantum jump going forward as well. The company has been growing at almost 40-42% CAGR for the last four years.

 

Q: Can you give us an idea of how business looks going forward, and what are the triggers for this expanded interest or business?

 

A: We definitely intend to maintain the same growth - that is what we have budgeted and are planning for. The same growth of around 40-42% CAGR will continue for at least a year or two to come.

 

Primarily, as we see, water is getting scarce by the day. Hence, the water management segment is definitely in need of these kinds of technologies where you scientifically manage to conserve water. It does not only stop at conserving water using the drip irrigation systems that we basically are pioneers of in this country, but it also aids farmers to have higher productivity.

 

So it's a kind of a double impact that drip irrigation gives to the farming sector, essentially in the horticulture and vegetables and those sorts of fields. So, because of these substantial amounts of value additions it does to the farming community, there is a lot of demand that we see.

 

Plus, the Government of India has supported this particular venture to farmers by extending a certain amount of capital subsidiaries to them so that more and more penetration of drip irrigation can take place and overall, there is a conservation of water, conservation of energy.

 

Q: Who are your customers, are they farmers or do you have government as a customer?

 

A: It is essentially the farmers; the government is extending that subsidy element to the farmers.

 

Q: Also talk a little bit about your inorganic moves, you have made acquisitions, give consolidation of the same and revenue you see coming out from that domain?

 

A: In the last 12-14 months, the company has done four to five acquisitions in different sectors that we are in. They have primarily been in the micro irrigation side, which has now made Jain Irrigation the second largest irrigation company in the world.

 

However, the acquisitions have been done over a period, so the full consolidation will take some more time to come in. Overall, with all the acquisitions, we see our topline for another Rs 650 crore to be added to the organic growth that is envisaged in this country.

 

Q: What is the kind of percentage growth you see in infrastructure and how much of the percentage growth in agriculture?

 

A: On the agriculture part, we are looking at around more than 62% compounded growth on the irrigation side and around 30-35% growth on the infrastructure side.