FOR a firm that has its roots in

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2 Agriculture Jain Irrigation Seeking fresh pastures The US$ 630 million, Maharashtra-based Jain Irrigation has emerged as the world s second-largest drip irrigation company and also the largest producer of fruits and vegetables and mango pulp in India. The group, which has been on an overseas acquisition spree, is diversifying into areas such as renewable energy, writes R. Nagesh. FOR a firm that has its roots in agri-business and considers the farmer as its primary customer, Jain Irrigation Systems Ltd (JISL) has indeed emerged as a multi-product, agro-industrial conglomerate with interests spanning a spectrum of fast-growing sectors and with a geographical presence across several countries. There is more to Jain Irrigation than irrigation, company executives keep emphasising all the time, especially at its sophisticated research labs, food processing plants, renewable energy facilities and at its sprawling manufacturing plants. JISL, based in Jalgaon, a quiet city in northern Maharashtra, today has a multi-product industrial profile. It manufactures drip and sprinkler irrigation systems and components; PVC, polyethylene (HDPE, MDPE) and polypropylene piping systems; and plastic sheets. It is also active in dehydrated onions and vegetables; processed fruits; tissue culture, hybrid and grafted plants; greenhouses; bio-fertilisers; solar water heating systems, solar photovoltaic appliances and bio-energy sources. We render consultancy for complete or partial project planning and implementation, explains a company spokesperson. These include watershed or wasteland 47

3 India s Banana Bowl JALGAON district in north Maharashtra, which accounts for more than 15 per cent of the country s banana production, is dubbed the banana capital of India. The main banana cultivating area is centred around four talukas (administrative divisions) in the district Raver, Yawal, Chopda and Bhusaval. According to Mahabanana, an agency set up in Jalgaon with the support of the Maharashtra State Agriculture Marketing Board to promote the fruit, banana is cultivated on about 50,000 hectares in Jalgaon district. The average productivity is 65 to 75 metric tonnes a hectare (as against 60 mt/ha elsewhere in the state); the national average is 33.5 mt/ ha, with the fruit grown on nearly half-a-million hectares. India is the largest producer of bananas in the world and Maharashtra is one of the largest banana-producing states in the country. Mahabanana has been encouraging growers in Jalgaon to export the fruit to regions such as the Middle East. It has also been supplying tissue cultured plants of banana varieties having export potential, besides setting up basic infrastructure such as pre-cooling facilities, cold storage and ripening chambers. Jain Irrigation Systems Ltd has a thriving tissue culture division, with its own primary and secondary hardening facilities and R&D laboratories. It supplies banana plantlets to thousands of farmers across India. Banana cultivators in Jalgaon have traditionally grown the Dwarf Cavendish varieties of the fruit. But following trials at the Jain Tissue Culture development facilities, new varieties were developed, including shrimanti, basrai, Williams, zeleig, robusta and grande naine (GN). An internationally-preferred table variety banana, GN has high fresh-fruit export potential. It also has a higher survival rate on planting, more uniform maturity and a shorter harvesting period. Bhavarlal Jain, chairman, Jain Group, says biotechnologists at his labs are working on ways to develop new varieties of bananas that would consume less water. On an average, you need about 30,000 litres per day for an acre of banana plantation, he explains. If we can reduce this to 20,000 litres, it will save a lot of water. Distribution of the world banana production by main actors Average for period Rest of the World 37% India 21% Indonesia 7% Ecuador 8% Philippines 9% China 9% Brazil 9% Source: UNCTAD Secretariat from FAO statistics 48

4 and/or crop selection and rotation. More importantly, JISL is the secondlargest micro-irrigation company globally and is the largest manufacturer of irrigation systems in India. It is also the largest manufacturer in the world of mango pulp, puree and concentrate, and also the third-largest manufacturer of dehydrated onions. JISL is also India s largest manufacturer of polyethylene pipes, one of the largest PVC pipe manufacturers and the largest producer of tissue culture banana plants in India. There is huge scope for expansion in our existing lines of business, explains Bhavarlal Jain, founder and chairman of the US$ 632 million conglomerate. JISL aims to be among the top-three global players in each of its major business segments, including micro-irrigation systems and agro-processed products. JISL has witnessed a compound annual growth rate (CAGR) of 41 per cent in its turnover over the last five years. But We are now focussing on renewable energy in a small way, but intend to scale up operations. Bhavarlal Jain, founder and chairman, Jain Irrigation besides organic growth, the group also plans to step up its overseas acquisitions. The rather low-profile company has been acquiring companies abroad in recent years; today, it has annual overseas revenues of more than US$ 100 million. Last year, JISL acquired The Thomas Machines, SA a Switzerland-based manufacturer of plastic extrusion equipment as part of its backward-integration move. JISL owns a per cent stake in the Swiss company and has a call option to acquire the remaining ownership over the next one year. JISL also has a per cent stake in NaanDan Jain Irrigation CS Ltd, Israel, a drip and sprinkler irrigation leader. It also has an per cent stake in US-based Cascade Specialities Inc, which is engaged in the onion and garlic dehydration business, with specialisation in natural low bacteria and organic dehydrated products. Wholy-owned subsidiary Jain Irrigation Inc, US, is a California-based entity that is engaged in drip tape manufacturing and distribution business. It reported revenues of US$ million in the 12 months to 49

5 I wanted to change the way Indian farmers do agriculture IT is a typical rags-to-riches story for Bhavarlal Jain, founder and chairman of the US$ 632 million Jain Irrigation Group. Way back in 1963, the young law graduate, who was selling kerosene in a push-cart in Jalgaon, decided to pool the family s savings to start a trading enterprise. He managed to raise about Rs 7,000 (about US$ 150 at today s exchange rate) and launched a small firm that began trading in agricultural inputs and equipment. Jain s forefathers had migrated from the deserts of Rajasthan in the later part of the 19th century and had settled in Wakod, at the foothills of the famous Ajanta caves, a UNESCO World Heritage site, located about 60 km from Jalgaon. The young Jain decided that agriculture was a profession with a future; he began acquiring dealerships for tractors, sprinkler systems, PVC pipes and other farm equipment. I wanted to change the way Indian farmers do agriculture, recalls Jain, sitting in his office at the lush Jain Hills complex located a few kilometres outside Jalgaon in north Maharashtra. The entrepreneur, who has been focussed on agriculture all these Bhavarlal Jain years, is now steering his group s diversification into renewable energy in a big way. We are now focussing on renewable energy in a small way, but intend to scale up operations, says Jain. We want to get into solar power generation and also utilise agricultural waste for generating gas. The group, which now makes solar panels, wants to go in for backward integration, producing solar wafers and later even solar cells. Another sector that Jain sees tremendous opportunities in is biotechnology. It will help address the problems related to food security in India and also improve agricultural production and yield, points out Jain. Water has also been a focus area for the Jain Irrigation Group for several years. Jain sees tremendous potential in irrigation, recycling water, watershed development, purification, drinking water and tackling floods. Asked about the group s future business plans, Jain says it will remain focussed on agriculture, irrigation, water management and purification, renewable energy and food processing. We will only get into businesses that help improve the state of the environment, explains Jain. According to him, businesses that are in areas such as agriculture need to have tremendous patience. Agriculture does not guarantee quarter-onquarter growth, he says. One has to have a long-term perspective, Jain concludes. 50

6 March The group has 13 manufacturing facilities abroad, including in the US, Israel, Switzerland, Peru, Chile, Brazil and Spain. It has 23 overseas offices and exports to more than 160 countries. In April 2009, the International Finance Corporation (IFC), part of the World Bank Group, acquired a 2.69 per cent stake in JISL. JISL, which started off as a company focussed on the agricultural sector, today derives a significant portion of its revenue from non-agricultural sources, including sales of piping systems, fruit pulp and onion to large global food companies and sales of PVC sheets to the construction industry. In fiscal 2009, non-agricultural sources accounted for more than 50 per cent of its revenues. 51

7 Promising Green Technology player THE Cleantech Group, which pioneered the clean technology investment category, recently ranked Jain Irrigation amongst the 100 most promising green technology companies on the planet. Jain Irrigation was one of only three Indian companies featuring in the listing by Global Clean Tech, instituted by Cleantech Group and the UK-based Guardian News and Media. It was also the only other agriculture company in the world to be featured in the list. Earlier, Jain Irrigation had been rated a Global Challenger by Standard & Poor s, an international rating agency, and featured amongst Asia s 200 Best Under Billion companies by Forbes Asia. Micro-irrigation systems and components produced by the company help in conserving water. Micro-irrigation also impacts the environment directly by increasing the green cover. Other products manufactured by the company also go a long way in saving natural resources such as forests and energy. For instance, the company produces PVC and PC sheets that replace wood in many applications. Its solar water heating and photovoltaic lighting systems lead to saving of electricity. The company also produces manure from agri-waste. Says Bhavarlal Jain, founder and chairman of the group: All our products and initiatives are always aligned with nature. Our guiding philosophy is: Leave the world better than we found it. The group s overseas foray began in the late 1970s, when Bhavarlal Jain travelled to the US in search of customers for its papain, an enzyme derived from papaya and used for a variety of purposes by the food industry. The company emerged as the leading supplier of refined papain in the US. In 1980, JISL ventured into manufacturing of PVC pipes; by the late 1990s, it emerged as the largest producer of PVC pipes. The group diversified into microirrigation systems in 1989 and five years later got into food processing. Today, our main businesses are microirrigation, piping and food processing, explains Anil Jain, managing director, JISL. Micro-irrigation constitutes almost 44 per cent of our sales. Jain says the company is also focussed on providing various products and services to farmers. We also buy back produce from them, to which we add value and sell domestically and overseas. So, ours is a farmer-centric business model and it has been growing very well. Nearly half-a-century after Bhavarlal Jain started the company, JISL is now transforming itself from an agrofocussed business to a multi-product and services conglomerate, which is increasingly expanding its global footprint. 52