Food processing biz to grow considerably: Jain Irrigation

Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » RELATED NEWS Jain Irrigation moves forward Jain Irrigation Q1 net profit at Rs 17.6cr ALSO READ See latest News about Jain Irrigation See previous management interviews See what other Experts & Brokerages are saying about Jain Irrigation Jain Irrigation BSE | NSE 25/05/12 Are Mutual Funds betting on Jain Irrigation?

Managing Director of Jain Irrigation , Anil Jain says that usually the second quarter is the liniest quarter because the irrigation and pipeline business is very slow but food and sheet will do well.

He further adds that food processing as an area will grow considerably but all businesses are in fixed part.

Excerpts from CNBC - TV18's exclusive interview with Anil Jain:

Q: We would like to know the picture going forward on the operating profit margin side, 16.5% is what you had in the first quarter last year, where does it stand now?

A: Our operating margins are almost at similar levels. Overall, we have made about Rs 42 crore at EBITDA as against Rs 28 crore last year. So that is about 50% growth overall in absolute numbers over the last year. Our sales also grew 49% but because of better absorption of fixed cost and lower interest cost. Our PBT is 94% more than last year while net profit is about 64%.

Q: What is the total value of the irrigation orders currently with the company?

A: The total value of irrigation order is in excess of about Rs 150 crore right now.

Q: What is the value of the pipeline that the company has bid for?

A: The pipeline of all businesses put together is about Rs 250 crore. So overall last year as a company, we had a about Rs 900 crore in sales.

We have seasonality, for example micro irrigation in this quarter has grown more than 100% compared to last year because there is such a great momentum in orders coming in from various states like Andhra Pradesh, Gujarat, Karnataka, Tamil Nadu and so on.

Our piping unit has grown 40%, our plastic sheet, which is export oriented product, has grown 50%. Our food has grown only 8% this quarter but this is production season and sales takes place in Q2, Q3 and Q4 for that particular business.

Q: Will you be focusing more on the food processing business with the acquisition that you have just made?

A: We see food processing as an area to grow considerably but all businesses are in fixed part. As I said micro irrigation has doubled this quarter and we expect same level of growth.

Even pipes and sheets are growing at 40-50% so all businesses overall on an annual basis should be average. The company should be growing at the same level, which is about 50%.

Q: Take us through the US acquisition and what contribution has it made in the current quarter and going ahead what is the contribution you expect for Jain Irrigation?

A: These numbers what you see are standalone. The US acquisition is through a subsidiary so that has not been consolidated.

The second company, which we acquired in plastic sheet business, will start contributing from the fourth quarter approximately.

Q: Given the seasonality in some of the businesses like the food processing business, what numbers can you expect for the second quarter?

A: Usually, the second quarter is the lean quarter because the irrigation and pipeline business is very slow but food and sheet will do well. Overall, we expect similar level of growth compared to the corresponding quarter of last year.

This number should be similar to the first quarter but our major growth usually comes in the Q3 and Q4 where 66% of sales come in third and fourth quarter and one third of sales comes in the first quarter.