Jain Irrigation System Case Study : Jain Irrigation is a variety one in the world in drip irrigation, pipe production, and tissue way of life production. It is range three in the world in onion and vegetable dehydration. There is a range of realities that make Jain Irrigation Systems a case to find out about in India’s agriculture sector.
For the sake of this column, it may additionally apply to listing some that make it an awe-generating company.
In a region, the place of specialization in micro-irrigation structures by myself would have guaranteed the organization of greatness. It prolonged to Polyvinyl chloride (PVC) and Polyethylene (PE) piping systems, plastic sheets, Green Houses, bio-fertilizers, photo voltaic merchandise, and meal processing.
In a house, the place would have been creditable to be variety one in the US or South Asia. Jain Irrigation Systems is quantity one in the world in drip irrigation, pipe production, tissue tradition manufacturing (banana and pomegranate plantlets), and mango processing. It is quantity three in the world in onion and vegetable dehydration.
In an enterprise the place most corporations would have targeted cost-plus pricing and left the farmer to fear about how to control costs. Jain Irrigation Systems centered on a discount of the delivered fee of farm options instead. Which explains why the organization resisted the temptation to expand tissue lifestyle plantlet expenses as a result of which costs are nevertheless at the identical degree the place they have been a decade ago.
In a commercial enterprise, the place farmers produced various vegetation by their whimsical standards. Jain Irrigation customized world pleasant farm practices that helped put together the output of marginal farmers for sale in world markets.
In a commercial enterprise, the place farmer realizations have been regularly affected by using overproduction. Jain Irrigation ventured into meal processing (including buyback). No longer as a great deal to maximize company income as a great deal as to decorate downstream profits predictability.
One would suppose that these compelling realities would have translated into a compelling stability sheet. They did not; in FY14, the corporation mentioned an EEITDA (earnings earlier than interest, taxes, depreciation, and amortization) (consolidated) of Rs 856.20 crore. However a PAT (consolidated) of Rs 39.80 crore. The organization paid Rs 457 crore as a finance cost. Hobby cowl used to be a modest 1.87 and debt-equity ratio an uncomfortable 1.87.
Central governments who anticipated paying the employer a subsidy in opposition to the sale are inevitably late, which makes it essential for Jain Irrigation to borrow and bridge.
I would have stated why waste time with a non-mover had it no longer been for two realities. One, the employer has chosen to average its publicity to three states, famous for late payments. Two (and extra radically), the organization set up a non-banking monetary organization (NBFC) to fund the subsidy supplied through governments to farmers for the buy of micro-irrigation systems. It entered into a tie-up with two pan-Indian banks for financing MIS purchases.
Result: receivables are possibly liquidated faster.
Thanks to what many would possibly see as an unrelated diversification (NBFC), what has no longer occurred for extra than a quarter of a century at Jain Irrigation.
It anticipated a step emerge: Receivables for the MIS enterprise declined from 369 days of turnover in 2011-12 to 243 days in June 2014. The share of cash-and-carry in the retail phase of the MIS enterprise is estimated at 70 percent currently. Working capital debt will be step by step moderated. The enterprise should virtually grow to be cash-rich.
For years, the professionals insisted the key to the most effective market capitalization resided in the first-rate micro-irrigation technology.
It may take simply a handful of persons with probable no understanding of agriculture to make the largest difference.
Drivers For JISL’s Inclusive Business Model:
- Market chance for MIS which will increase productiveness and profits for farmers, enabled by way of authorities subsidy.
- Need to make certain steady great and volume of produce for processed meals for export.
- Buyer and client worries related to meals security and farm-level practices.
- Water shortage and low productiveness of farmers in JISL’s grant chain
JISL’s Inclusive Business Model :
Jain Irrigation System tells that ,JISL’s enterprise mannequin makes nearly a full circle thru the fee chain. The company offers farmers inputs—micro-irrigation structures (MIS), seeds, saplings, PVC pipes— financing, and education on the right agricultural practices to produce extra and higher quality crops.
JISL additionally purchases fruits and veggies from farmers via its food processing division for processing and sale in export and home markets. In this way, JISL’s inclusive enterprise reaches farmers as each customer and producer.
Serving Farmers As Consumers | Jain Irrigation System:
JISL founder Mr. B.H. Jain’s underlying imagination and prescience to promote sustainable water management in agriculture, primarily based on his very own experiences with the challenges facing farmers in India are a robust driver for the company’s entry into and dedication to promoting MIS in India. Today, the founder’s imagination and prescience embody in the company’s mission assertion “to go away this world higher than you located it.”
Another driver is the giant and developing market for MIS, enabled via the government of India’s subsidy and with the aid of the accelerated production, income, and water use efficiency (WUE) that MIS makes feasible for the purchaser. India’s WUE in agriculture of 30-40% is amongst the lowest worldwide. MIS can enlarge India’s WUE to 80-90%. The government’s undertaking pressure on micro-irrigation endorsed that 17 million hectares of cultivated land deliver underneath MIS between 2004 and 2012. This will eventually save the authorities cash as it reduces the want for different sponsored farm inputs such as fertilizer and water.
Finally, as Jain Irrigation System’s meal processing enterprise procures fruits and greens from farmers, it is in JISL’s activity to make sure constant provide quantities, and the use of MIS is a key element in making sure farm productiveness mainly in water-stressed regions.
JISL’s MIS is enabling farmers to change from flood irrigation to greater water-and energy-efficient structures. Such as drip and sprinklers yielding water financial savings of over 30-65% over normal floor irrigation systems. Since 30% of agricultural land in India irrigates via canals. JISL created the thought of dinghies or farm ponds near canals for farmers to keep and channel water to their drip irrigation systems. The farm ponds make sure ongoing availability of water for MIS, especially when there are fluctuations in the water supply.
The drip irrigation merchandise is furnished through a community of extra than 2,000 distributors throughout India. JISL has additionally set up an institute to teach distributors, government officials, and others the ability to lay out and use MIS. All of JISL’s sellers and distributors educate with the aid of the company, which includes specialized coaching for engineers and fitters.
A Key Component In The Success of JISL :
A key component in the success of JISL’s MIS commercial enterprise is a subsidy furnished by the central and state governments of India. Farmers working much less than 5 hectares of land receive a 50% subsidy on MIS equipment. The subsidy route via banks in some states and administered thru distinctive motive motors set up by way of the government in different states. Farmers elevate the stability of the funding from their sources or from the banks accountable for routing the subsidy.
JISL works with several banks to facilitate get admission to financing for MIS, consisting of Yes Bank, Central Bank of India, IDBI Bank, and others.
These banks have developed indispensable procedures as nicely as structures for monitoring and reporting. A typical mortgage for buying a drip irrigation gadget is about $817 per farming household. In 2011, JISL launched Sustainable Agro Commercial Finance Ltd. (SAFL), a non-banking finance corporation, to in the beginning finance farmers as nicely as suppliers and distributors’ purchases of JISL’s products and finally different sorts of loans for the agriculture sector. Current loan tenors for JISL merchandise are one to three years.
Driver For Accomplishing Farmers As Producers:
Securing ordinary components of regular great and extent for its food processing business is a robust driver for JISL’s entry into contract farming. Contract farming is enabling the organization to boost a not pricey furnish chain in a market characterized with the aid of fragmented furnish chains with many intermediaries.
Further, compliance with meal security requirements for export markets and growing interest from consumers involving traceability and farm-level practices are the main JISL introduced structures such as Jain GAP into its furnish chain. Such measures are necessary to keep and develop the company’s client base over time, and they are simpler to introduce in a contract farming mannequin given the stage of monitoring required.
JISL procures fruits and veggies immediately from over 10,000 contract farmer suppliers—6,000+ for onions and 4,000+ for mangoes—and not directly through traders who supply from over 25,000 farmer suppliers.
Launched in 2002, JISL’s contract farming mannequin construct by deciding on progressive, receptive farmers and supplying them with top-notch seeds. And getting the right of entry to MIS, fertilizers, saplings, and different inputs. Agronomical education and practice on all aspects of planting, enter the application, and different farm features by using JISL’s 60 extension associates.
A necessary thing of JISL’s work is lookup and improvement so farmers’ can enhance yields. For example, JISL has produced a banana range that takes 11-12 months to develop as a substitute of 15-18 months and bears about 25-30 kilograms of fruit over its lifetime in contrast to 12-15 kilograms traditionally. In partnership with Coca-Cola India, an important consumer of JISL’s mango puree, JISL has launched an assignment on ultra-high density plantation for mangoes. Which predicts double output as well as limited water and pesticide intake.
For JISL, the blessings of contract farming encompass larger manipulation over the quality and extent of grants in contrast to ordinary procurement channels. JISL has thus far utilized the contract farming mannequin to onion and mango and plans to expand to tomato. Approximately 90% of JISL’s onion contract farmers are small, with an average farm dimension of much less than two hectares.
Additionally, farmers’ relationships with JISL frequently enable them to achieve credit from industrial banks to fund MIS and different purchases. Such as seeds, planting material, and packaging for sure crops. The organization then repurchases the produce at a minimal charge set up at the establishment of the developing season or at approximately market rate at harvest time, whichever is greater. Successful contract farms use a demonstration to motivate others to undertake true agricultural practices.
In response to its predominant buyers’ worries about meal protection and extended pastime in farm-level practices and traceability, JISL helps farmers meet worldwide standards. JISL’s farms are GLOBALGAP-certified and the business enterprise developed with IFC the Jain GAP is well-known for its farmer suppliers. The Jain GAP widespread helps the company meet its buyers’ worries barring notably growing prices for low-income farmers. By August 2012, 1,623 farmer suppliers of onions and mangos have certified on Jain GAP. JISL has additionally multiplied Jain GAP to an extra 1,249 farmers, bringing a complete of 5,427 acres of farmland beneath sustainable management.
Driven Through Customers :
Jain Irrigation System tells that ,The business enterprise will have unparalleled market insurance. Its with 25 factories and 3,300 personnel throughout six continents and 35 countries. The employer will proceed to wholly guide the manufacturers that growers and commercial enterprise companions have come to remember season after season: Rivulis, Jain, NaanDanJain, and Eurotrip by using Innovation.
Growers and enterprise companions will advantage of a large product and answer offering, consisting of relied-on enterprise manufacturers such as D5000 PC, Amnon, T-Tape, Chapin, Ro- Drip, Top, Excel, Compact, 5035, and Mankad. Eight a long time of R&D and product engineering will mix into a perpetual innovation engine, addressing the contemporary and future desires of growers worldwide.
Driven With The Aid Of Digital :
With digital farming offerings such as Jain Logic, Manna, and Reel-View, the enterprise poise to end up as a strong Agri-tech answer issuer with the most huge market coverage. Through its wide-ranging digital farming offering, growers will be in a position to finetune their irrigation operations in real-time, whilst growing yields and decreasing agri-inputs ensuing in increased livelihoods and safeguarding of their land.
Driven By Using Sustainability:
Jain Irrigation System tells that ,Beyond the recognized micro-irrigation advantages of water conservation and soil protection. The agency will proceed with its purpose-led ESG journey. Following the completion of the transaction, the business enterprise will commit to tangible carbon emission aims and launch its international program to assist growers and enterprise companions to decrease their carbon emissions and amplify their carbon sequestration. The business enterprise’s ambitions now are not only to make micro-irrigation available to growers and to feed the planet but additionally to allow an extra sustainable and climate-resilient future for all.
The corporation will be twin headquartered in Singapore and Israel and will proceed names Rivulis. For the functions of company branding, the agency will represent ‘Rivulis (In alliance with Jain International). Richard Klapholz, the modern-day Rivulis CEO, will proceed to lead the company. Top senior buddies from the IIB predict to proceed in management roles throughout the company.
The transaction concerns required regulatory approvals and different universal closing prerequisites and predicts to accomplish by using early 2023. Goldman Sachs acted as a monetary advisor, Baker McKenzie acted as a criminal marketing consultant and PWC acted as a tax and diligence guide to JITBV for the transaction.
Revenue Generation In Jain Irrigation :
Inspired by using the quote, “Agriculture an occupation with future” younger Jain introduced dealerships tractors, sprinkler systems, PVC pipes, and different farm equipment to huge base the agri-business, corporations for farm inputs such as Fertilizers, Seeds, and Pesticides had been additionally added. Sales grew from Rs. 1 million in 1963 to Rs. one hundred ten thousand and thousands in 1978, an extra special expansion of a hundred and ten times.
These formative years helped us construct a special and lasting enterprise. This used to finish via regular excessive requirements of overall performance and non-public conduct on the one hand and a sturdy experience of dedication for assembly-focused volumes and for a charge of money owed in time, on the other. Dealings with countrywide and global principles used to be a contributing thing closer to constructing these attitudes. In time, we got here to identify as a reputable, straightforward, and prestigious house. This history augured properly for an entry into industrial ventures.
Refined Papain :
We took over a 14-year-old in poor health Banana Powder Plant in April 1978 at an excessive public sale rate of Rs. three million whilst we solely had Rs. 0.2 million as an inevitable surplus. The plant used to be rapidly modified for the manufacturing of Papain from Papaya latex. In December 1978, the founder traveled to New York in search of clients for Jain Papain. The opposition for buy uncooked substances done domestically for the sale of Papain overseas used to be stiff and stifling. However, we developed purified Papain via ceaseless in-house R&D and emerged as the ‘Number One’ dealer of the best purity sophisticated Papain. Thus Papain put us on the global map.
PVC Pipes :
In 1980, manufacturing of PVC Pipes commenced with a small annual ability of 300 MTs which used to improve to over 35,600 MTs per annum by using 1997, making us the biggest single producer of PVC Pipes in the country. A close-knit provider distribution community in the rural areas coupled with non-stop automation and up-gradation of product amenities and in-house R&D for most ability utilization has stored us at the forefront. This similarly helped us to extend the vary to Casing & Screen Piping Systems thereby persevering with to make contributions to the developing export volumes.
Micro-Irrigation Systems :
Beginning in 1989, we toiled and struggled to pioneer Water-management thru Micro Irrigation in India. We have effectively added some hi-tech principles to Indian agriculture such as ‘Integrated System Approach’, One-Stop-Shop for Farmer, ‘Infrastructure Status to Micro Irrigation & Farm as Industry.’ We have come a lengthy way.
Food Processing :
In 1994, we set up world category meal processing amenities for dehydration of onion & different vegetables. And manufacturing of puree, pulp, and concentrates of tropical fruits such as Mango, Banana, Papaya, Guava, Tomato, and Aonla. These plant lives licensing for ISO 14001, ISO 45001, ISO 50001, BRC, Halal, Kosher, and SGF (Fruit Division). The spice processing plant is the largest in the USA.
And concerned with the manufacturing of spices such as Cumin, Chilli, Coriander, Black Pepper, Garlic, Turmeric, and Ginger powders. Combining the current applied sciences of the west with the vast, typically untapped agriculture sources of India, the use of the nearby human sources, and inculcating the subculture of excellence in exceptional and complete patron providers is our mandate. We have set ourselves an aim to come to be a principal and dependable world dealer of meals elements of best nice world-wide.
Today with over 11,848± dedicated worker energy worldwide. We have installed our management in numerous merchandise like Micro & Sprinkler Irrigation, Agricultural Inputs, Agro-Processed Products, Plastic Pipes & Sheets as properly as a discipline of renewable energy.
Revolutionary Thinking Of R & D Of JAIN Irrigation :
Few different unconventional thoughts. That are at least now not in serious consideration in the country – are additionally of excessive want at this juncture; like reuse of wastewater for farming. And altering the technique of irrigation for vegetation like rice and wheat in massive areas.
Using technological know-how to aid us. One has to amplify the water productiveness of these crops. And divert the water hence saved to different rain-fed vegetation the place of a small trade-in irrigation cowl and productiveness can make a giant impact!
On an Indian basis, whilst 65% of predominant cereals irrigate, solely 27% of oil seed and 16% of pulses irrigate. Research has proven very excessive yield hikes in each of these groups of quintessential commodities via restrained irrigation. Can we tilt the irrigation practices favoring oil seeds and pulses?
I additionally list right here a new method for our agriculture to attain food security thru useful resource security. The function of all of us such as farmers, consumers, and coverage makers is clear.
- Treat farmer as “Entrepreneur”.
- Focus on expertise switch and competency constructing of individual farmers.
- Convert agriculture to precision farming mannequin and perceive risks.
- Provide Causes mitigation answers thru the PPP model.
- Creation of furnish chain infrastructure thru cluster approach.
- Provide capital subsidies and now not consumption subsidies.
- Create decentralized irrigation and strong infrastructure for optimum productivity.
- Create Integrated Soil-Crop-Climate-Market Plan on a country-wide basis.
- Create a countrywide discussion board between Centre and State on strains of finance commission.
- Present a separate agricultural price range in the parliament. And create a committed organization for screen and comparison and well-timed path correction.
- Focus on growing per capita earnings as an alternative to productiveness alone.
This mannequin offers an integrated, complete strategy for reworking Indian agriculture. It expanded soils, excellent seeds, get entry markets and enabling policies. All are important and need to work collectively seamlessly to force results. Indian agriculture grows solely if the small farmers prosper. And turn out to be self- aiding and contributing individuals to the community. All our efforts are to allow him.
Transformation Is Perhaps In Jain Irrigation System :
There is a want to reinvent our existence in an ongoing way for some excellent reasons. With an amplification in the international population, prosperity and consumption are developing a larger demand. Its for meals than ever earlier in the world’s recorded existence. The finiteness of arable land is growing the want for ultra-modern technological know-how to include in farm solutions. There is a developing divergence between city and rural incomes, widening the monetary divide between-meal vendors and meal consumers.
At Jain Irrigation, we apprehend that, such a center of attention warrants an over-arching commitment to–
- Method the enterprise no longer simply with a feel of reason but a sense of passion;
- Strategy, the difficulty now not as a commercial enterprise however as a calling;
- Prolong from what recommended for farmers to what is true for all our stakeholders;
- Evolve from a focus solely on the worthwhile to the holistically sustainable.
- Transforming ourselves.
- Benefiting the world.
AT JAIN IRRIGATION, OUR OBJECTIVE IS TO INCREASE FARMER INCOMES, STRENGTHEN AGRICULTURAL VIABILITY AND CREATE A SUSTAINABLE SOCIETY
Jain Irrigation System tells that ,This is now not as easy as it appears. In a world, the place realities are evolving all the time. There is a developing top rate on our want to reinvent our existences. That our solutions can customize around the contemporary.
- Over the decades, we have helped radically change realities thru the following initiatives..
- Extended farmers from subsistence vegetation to industrial alternatives.
- Extended contemporary technological know-how to legacy farm practices.
- Widened our fee chain from seed to soil to meal processing to nonbanking monetary support.
- Right-balanced the use of herbal resources, demonstrating the principles of sustainable agriculture.
It is our conviction that when you fuse present-day innovation with one of the oldest livelihoods. You recognized to man, some outstanding transformation can happen. At Jain Irrigation System, we have been in a position to seriously change the agricultural prosperity of – whole regions, lift farmers out of relative poverty, stagger the rural-to-urban migration, strengthen national meals safety and enlarge India’s appreciation as a reliable processed food provider to the world. Transforming lives; improving prosperity.
Innovation Is The Way Of Life At JAIN Irrigation :
We pioneered a tailor-made drip irrigation technological know-how for smallholders in the 1990s. While technological know-how existed in the early sixties. Our innovation was once in an integrated approach with a view of developing shared value. It was once made feasible by marrying the crop agronomy and irrigation technological know-how for Indian conditions. We labored tirelessly in R&D Lab and Soil earlier than making the profitable trials at farmers’ fields.
Competitors Of Jain Irrigation System :
Jain Irrigation System pinnacle rivals consist of Empresa Agroindustrial Pomalca, AGRA, Parrish & Heimbecker, and Gramophone. Jain Irrigation Systems is an organization specializing in agricultural inputs. Jain’s top competitors include-
Finolex ,Plasson, Rungta Irrigation and Irritec, Netafim, Seneca Foods, JM EAGLE, JM EAGLE, Golden Circle, and Rivulis.
Compared to the turnover in 2016-17. JISL has registered 17% make bigger in the complete turnover in the monetary yr 2017-18. In 1988, Jain Irrigation was once a small listed corporation however now it has emerged as an international one.
Conclusion | Jain Irrigation System:
Jain Irrigation Systems Limited, a main agricultural conglomerate in India. It has an enviable song document of creating down-to-earth options for complicated troubles. Its with an experience of rustic commonsense Indians regards for. What makes Jain Irrigation system unique is its capacity to provide an entire variety of irrigation. Answers to the farmer and help him produce extra from much less via a built-in approach. JISL is no longer solely a large Agri enterprise house. However, 6-in-1. It is although such multidimensional activities that JISL nurtures the Agri price chain and will become a one-quit Agri shop.