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Gargi Shah

Israel-based NaanDan is the third foreign buy

Mumbai May 30 With the acquisition of majority stake in the Israel based private irrigation company NaanDan Irrigation Systems C.S. Ltd for $ 21.5 million, Jain Irrigation Systems Ltd has marked its third overseas acquisition.

Lately, Jain Irrigation acquired two US-based irrigation companies Chapin Watermatics Inc and Aquarius Brands Inc.

"These acquisitions aim to give Jain Irrigation exposure to new product lines in areas where the company was not present," said Mr Anil Jain, Managing Director of Jain Irrigation. NaanDan offers irrigation products for field crops like oilseeds, potato, and cotton. Chapin along with being a brand name masters tape products in subsoil irrigation for raw crops such as sugarcane. While Aquarius with a dealer base of close to thousand is distinctly into to landscaping, home gardens, and golf courses.

Greenhouses

As a part of extending presence across different products, Jain also plans to venture into controlled agriculture or greenhouses. This expansion will also be by way of acquisition of a company offering such products, said Mr Jain.

Greenhouses are present in parts of Europe and West Asia where open farming is not possible.

Currently 92 per cent of Jain's products are sold in the Indian markets and 8 per cent account for exports. With these acquisitions, Jain's exports are expected to grow, as the company will produce certain outsourced products of the acquired companies in India on account of being cost effective, he added.

Although currently the company has opted for only a controlling stake in NaanDan, it has a call option expiring in 2 years for purchase of the balance stake from Kibbutz Naan, the cooperative society that owned NaanDan.

Out of the total deal value that Jain has paid to acquire majority stake in NaanDan, $10.5 million will be towards capital expenditure in manufacturing units in Chile, Brazil and Australia where there is huge potential for these products, said Mr Jain.

Australia has currently witnessed acute draught conditions. While in Brazil and Chile agriculture is growing at a rapid pace. NaanDan also has manufacturing units in the US, Spain and Mexico and marketing subsidiaries in France and Italy.

Further, funds for NaanDan's expansion will be raised by way of loans and guarantees to the extent of $7.5 million. Jain and Kibbutz Naan would jointly manage NaanDan. In 2006, Naandan posted revenues of $75 million. NaanDan will be renamed as `NaanDan Jain Irrigation C.S. Limited' post the acquisition.

NaanDan is the pioneer in the development of drip irrigation and sprinklers systems. NaanDan was formed in 2001 by a merger of two well-established and prominent irrigation companies. Naan, was established in 1937, while Dan was established in 1970. Both partners have agreed to provide long-term guarantees for maintaining the manufacturing facilities and employment in Israel.

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