Jain Irrigation plans paddy ride
To make rice cultivation equipment

Varun Sharma.
Mumbai
Jain Irrigation Systems Ltd is planning a foray in paddy cultivation, Anil Jain, managing director, said.
"We are doing a lot of work on rice... how to use drip (irrigation) on rice... it could really click and it could be a huge market for us."
He said paddy cultivation is traditionally carried out with the flood irrigation technique, and the company is now looking for ways to economise the use of water.
"...we say you won't see water... So, it is a huge mind shift. We have done trial plants and we are working with research institutions."
He said that if successful, the business could see a growth rate of 45% year on year.
"These things (a foray into paddy irrigation systems) can add a lot of incremental growth to the company...we still think we can maintain a CAGR of 20% revenue growth in the future."
In July-September, the company's net sales were up 19% on year at Rs 549 crore.
Jain, however, did not provide a timeframe for completion of research activity for paddy cultivation.
The company currently makes irrigation equipment for vegetables, cotton, sugarcane and some oil seeds.
Jain Irrigation plans to set up a unit to manufacture pipes and irrigation equipment in north India.
"It has been delayed a little bit... sometime in next 6-8 months, one plant in north India will come up for drip irrigation as well as piping. It could be somewhere in Punjab, Uttarakhand, Haryana region."
He said the company was currently talking to the government to set up knowledge transfer centres to explain new technologies to farmers.
"The investment (in the new plant) will be Rs 20-30 crore to start with," Jain said.
The company also has an agro-processing division, with a current order-book of Rs 250 crore.
"All these orders will be supplied and shipped and then you get new orders...some customers have said they want to increase orders," Jain said.
He said the agro-processing unit's order book could grow 20-30% year on year. Currently, the division accounts for 16-17% of annual revenues of the company.
Jain believes raw material prices are at comfortable levels right now, and will remain benign in the future.
"One cannot comment on food raw material prices, but on polymer side, which is used for raw materials for piping and irrigation...the level at which prices are now, these are quite comfortable levels," he said.
"We saw last time when oil went up from $30 to $150 (a barrel), our polymer prices increased by 1.5 times, so it is not a direct derivative in that sense," Jain said.
He said the counter balance for prices will be the huge capacity addition from West Asian countries. Most of these units will begin operations this year or next year.
Polyvinyl Chloride is currently priced around $850 per tonne. It had risen to a high of $1,250 in July last year. Polyethylene, priced at $1,200 per tonne currently, was at its peak at $1600-$1700 per tonne.
Both PVC and polyethylene are major raw materials for Jain Irrigation Systems.
The company is confident of maintaining earnings before interest, taxes, depreciation and amortisation margins at 23% for 2009-10 (April-March). NW18



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