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Jain Irrigation plans to focus on non-government linked projects and sell non-core assets as part of recovery plans.
The company ran into trouble after executing irrigation projects based on government subsidies. After completing the projects, it failed to recover money from the government and receivable piled up over the years amid increasing debt burden.
Following this, rating agencies downgraded the company’s rating further tightening the credit flow.
Now, the company’s lenders in India have signed an Inter Creditor Agreement on July 6 and have undertaken the task of discussing and formalising a Debt Resolution Plan.
Jain Irrigation expects a debt resolution plan to be finalised soon. It has an order book of ₹4,300 crore.
Besides reducing government-linked business, it is altering the credit policies to improve cash flows and focussed on cost optimisation which would bear visible results once operations reach normalcy in the second half of the current fiscal year, said the company.
The de-leveraging exercises would start once the situation becomes normal to get appropriate value for the assets on the block.
The company, which has delayed its financial results, has announced a net loss of ₹324 crore in the March quarter against net profit of 56 crore in the same period last year.
Revenue was down 37 per cent at ₹16,362 crore (₹25,831 crore).
As of March end, the company’s consolidated gross debt was at ₹6,780 crore (₹5,099 crore) while net debt was at ₹6,532 crore (₹4,954 crore).
Liquidity concerns
Anil Jain, Vice-Chairman and Managing Director, Jain Irrigation, said the company’s performance was affected due to liquidity constraints.
Admittedly, he said this is the worst financial performance in the history of the company.
The Covid pandemic is also a reason for the adverse performance, since the fourth quarter is usually the biggest for Jain Irrigation historically.
The company's food related operations in unlisted subsidiary also suffered an uphill task of procuring food raw materials as shortages and high prices of onions and mangoes for processing led to lower processing and sales.
The pandemic further brought to standstill most of its Indian operations since mid-March. However, the operations are coming back on stream slowly from April-end.
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