Comments
Jain Irrigation Systems Ltd, a leading drip and micro irrigation company, is starting an NBFC in partnership with International Finance Corporation.
IFC will be investing $ 5 million for a stake in the company.
The new joint venture called “Sustainable Agro-commercial Finance Ltd” will be a non-deposit taking NBFC.
Some banks and financial institutions will participate in equity shareholding at a later stage, a company press release said. The NBFC will focus its activities on farms and farmers only and operate in the rural and semi urban geographies of India.
The NBFC will focus exclusively on farm and farmer-related activities, and will operate only in rural and semi-urban areas. It will finance the purchase of micro irrigation systems, solar pumps and appliances and other agro-productivity tools. It will also small business loans and fund contract farming ventures.
“The project is intended to create a viable player in the rural financing space with support from an established industrial player that has significant rural presence,” says IFC.
SAFL will be headquartered in Mumbai. It will open 25 offices in Maharashtra by the end of August and a further 15 branches in the State by the end of the year. Subsequent expansions will happen in Karnataka, Andhra Pradesh, Andhra Pradesh, Gujarat and Madhya Pradesh.
Jain Irrigation achieved a turnover of Rs 3,791.50 crore in 2011-12 on which it made a net profit of Rs 268.60 crore. Each equity share earned Rs 6.62. On the BSE, Jain Irrigation’s share, of face value of Rs 2, is now quoting at Rs 91.45, which is Rs 3.75 higher than the previous close.
Recently, the ratings agency, Fitch, had downgraded Jain Irrigation because the company has to pay back loans of Rs 460 crore in 2012-13 and Rs 370 crore in 2013-14. The company has to receive large amounts of subsidy from various State governments. There have been large delays in getting these funds. If there are further delays, Jain Irrigation will have to secure funds from other sources to pay back its loans. Fitch sees risks in Jain Irrigation securing refinancing.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.