JAIN IRRIGATION Presentation for IFC Inclusive Business Conference Washington DC September 22 nd, Dr. Dilip Kulkarni Jain Irrigation

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1 JAIN IRRIGATION Presentation for IFC Inclusive Business Conference Washington C September 22 nd, 2011 r. ilip Kulkarni Jain Irrigation

2 rip irrigation results in major improvements in productivity, incomes and water utilization for small farmers Commodity Increase in Income / Ha pa (US$) % Increase in Yields % Var. in Water Use Pomogranate Banana Tomato Cabbage Mango Paddy Onion Payback with investment in irrigation of US$500

3 Jain has become a global leader in drip irrigation by tailoring its system to farmer needs Plastic pipe manu. Financing w/ Banks Jain Irrigation Business R& on productivity Jain Agronomists Engineers 40% revenue from Maharashtra Irrigation Systems ealer network 40% revenue from UP, AP, TN, Karnataka F & V processing Training of 60,000 farmers pa Jain has revolutionized marketing of irrigation. Through its dealer network supported by Jain sales managers, agricultural engineers, R& and training, Jain works with each farmer. Through survey and design work, sculpting each irrigation system to meet the terrain, soil and crop needs of each farmer Consolidated revenues: US$761M FY2010, Jain Irrigation Ltd: US$606M, CAGR of 40% over 10 years Micro-irrigation Jain s main business, CAGR 72% over 10 years Average farmer has 1ha. Irrigation costs are about US$1,000/ha. With US$290M in irrigation sales, Jain supplied irrigation to over 250,00 Indian farmers in FY2010, and millions since inception

4 Jain has mobilized the banks to provide bridge financing on irrigation subsidies, but farmers fund the rest 260,000 farmers received irrigation at US$1,000/ha, totaling US$260 million Jain organizes bridge financing of US$130M by Central Bank IBI Bank Yes Bank against Jain receivables Jain receives subsidy for farmers and repays banks after 4 to 9 mo 50% 50% Government provides 50% subsidy--after 4 to 9 mo Farmers self finance 50% with about 30% usually financed by cooperative or rural banks, credit societies or material supplied on credit to contract farmers Jain s value proposition to farmers, including arranging bridge finance with banks Supplies the farmers with irrigation systems through Jain dealers, tailored to their terrain, soil, and crops. Top tier dealers do surveys, design, installation. Provides advice, through Jain agronomists, engineers Provides training, on site at Jalgaon and TN, to 60,000 pa Financing, through dealers, and by arranging bank bridge financing for subsidy portion. Farmers earn about US$500 to US$6,000 in incremental gross income per hectare w/ irrigation.

5 Jain Irrigation is well positioned to offer solutions to the problems of farmer finance in India Problems that need solving Only 50% of farmers have institutional finance. GOI and RBI see existing solutions not working Average amounts $100/ha vs. $1,000 needed for WC, $1,000 to $5,000 for INV Lower access and amounts for farmers with no irrigation MFIs, moneylenders and traders offer financing at 30%+ vs ag rates of 12-16% Private banks see lending to small farmers as costly, risky w/ lower returns Banks lend to safe segments eg bridge finance for irrigation subsidies, and through corporate or coop aggregators Jain Irrigation positioned to address these issues Jain has built relationships of value and trust with millions of farmers over 20 years. Jain has deep network of more than 2,000 dealers, backed by Jain team, who understand farmers and farming The key investment for farmers is irrigation. At present growth rates, Jain could be providing irrigation to over 14 million farmers in 2020, requiring finance of $1.4 billion With farmer finance, Jain could provide a full set of offerings: Irrigation equipment Advice on productivity and Financing to fit farmers needs

6 Options under consideration by Jain Irrigation for farmer finance Establish Commercial Bank Establish NBFC BC Network with Bank and ealers Pros Services eg savings, lending, insurance, payments Enables huge outreach, with adequate financial clout to reach tens of millions of farmers Jain has NBFC license Easy to provide minimum capital, with Jain already financing dealers and farmers Can focus on agricultural lending Infrastructure in place Could meet many of the farmer credit requirements, with bank partnership Cons Requires US$100 to US$200 million in initial capitalization Jain may not get bank license. Requires separate focus and leadership on bank operations Cannot mobilize savings, provide deposit or payments services. Reliance on foreign and local commercial capital at higher costs More difficult to diversify portfolio, risks. Constrained by partner bank s willingness to have major exposure to financing Could limit collaboration with other banks, as BC arrangements are exclusive

7 JAIN IRRIGATION The Best Bottom Line is a Farmer s Smile