Jain Irrigation: Jain Irrigation’s merged int’l biz to be 2nd biggest | India Business News – Times of India

MUMBAI: Jain Irrigation Systems will merge its international business with Rivulis, part of Singapore-based investment fund Temasek, to create the world’s second largest irrigation player with revenues of $750 million (Rs 5,860 crore).
Jain will hold 22% in the merged entity, with Temasek owning the remaining 78%. The proposed deal will lower Jain’s debt, which stood at Rs 6,000 crore in FY22.
Jain said, the transaction once closed will result in substantial reduction of the company’s debt by 45% or about Rs 2,700 crore and will also pare interest costs. Moreover, the merger will enable the company to refocus its efforts in growing the India business.
Rivulis too has a presence in India but the local unit is not part of the transaction. In India, both Jain and Rivulis will compete with each other. The Indian company will have representative directors and an observer on the board of the merged entity, which will be dual headquartered in Singapore and Israel and will continue to be named Rivulis. However, the merged entity will continue to use the Jain brand in international markets where it has significant presence and value.
Jain’s international irrigation business is valued at Rs 4,200 crore, said its MD Anil Jain. Anil’s father Bhavarlal founded the irrigation company in Jalgaon, Maharashtra, in 1986. Jain landed up in financial trouble in recent years due to high debt coupled with delays in getting receipts from the government. The company, said Anil, has changed its business model by selling directly through dealers, among other moves.
“We are not dealing with the government except in two states, Gujarat and Andhra Pradesh.” Even after the completion of the merger, the company will deleverage its balance sheet further, as agreed with the lenders at its restructuring meetings, and focus on sustainable cash flows.
“We will focus on collecting old government receivables, which will help in repaying debt,” said Anil. The MD further said that the Indian company has signed a 10-year supply agreement with the merger entity. “This would ensure that the India unit will continue to export.”