Jain Irrigation to merge Rs 4,200-cr worth global irrigation biz with Temasek-owned Rivulis

Jain Irrigation Systems Ltd on Tuesday said its global irrigation business will be merged with Temasek-owned Rivulis in a cash-and-stock deal, a move that will help the company reduce its consolidated debt by Rs 2,700 crore or around 45 per cent.
Jain Irrigation's global irrigation business has been valued at Rs 4,200 crore, of which Rs 2,700 crore will be used to repay its all overseas debt and Rs 200 crore will come to the parent company, its Managing Director Anil Jain told reporters here.

In the merged entity, it will have 22 per cent equity stake while Rivulis will hold 78 per cent.

The deal is likely to be concluded in the next six months, he said, adding that the combined entity will have a revenue of USD 750 million.

At present, Rivulis has an annual revenue of USD 400 million while that of Jain Irrigation's global irrigation business is USD 350 million.

Jain Irrigation Systems Ltd's wholly-owned subsidiary Jain International Trading and Rivulis have entered into definitive transaction agreements.

The International Irrigation Business (IIB) of Jain Irrigation will now be merged with Rivulis to create a global irrigation and climate leader, being 2nd largest in the world with around USD 750 million in revenues.

In a regulatory filing, Jain Irrigation said "cash proceeds will be utilised for reduction of consolidated debt of Jain Irrigation by around 45 per cent which includes all the restructured overseas bonds to the tune of USD 225 million and complete debt of overseas operating companies comprising of IIB."

Jain Irrigation Systems Limited, a leading micro irrigation systems company, had a consolidated net debt of around Rs 6,000 crore at the end of March 2022 and out of that, Rs 3,300 crore pertained to the India business.

Jain Irrigation will also get to release its corporate guarantee of Rs 2,275 crore to bondholders and IIB lenders. It will have a long-term supply agreement with the merged entity, which would drive revenues and profits, it added..

"The merged entity will continue to use and promote prominent JAIN Brands in markets where they have significant presence and value," it said.

In terms of governance, Jain will have representative directors and observer on the board of the company and will be able to help its growth through its significant expertise in micro-irrigation.

The merged entity will be dual headquartered in Singapore and Israel and will continue to be named Rivulis Pte Ltd.

For the purposes of corporate branding, the company will be represented as 'Rivulis (In alliance with Jain International)'. Richard Klapholz, the current Rivulis CEO, will continue to lead the company.

Going forward, Jain Irrigation will focus on further improving the India business to drive higher growth and margins in one of the fastest growing irrigation markets in the world. It will aim to reduce debt on the standalone Indian business balance sheet as well as that agreed with the lenders in the recent restructuring undertaken in March this year.

Jain said the company has entered into this alliance with Temasek to create sustainable and impactful hi-tech agri businesses.

"We anticipate that the merger with Rivulis will create a world leading player ideally placed to serve its global customer base thanks to its geographic footprint, breadth of offerings as well as technological depth and expertise in micro irrigation," he added.

This will enable us all to address climate change and food security challenges with sustainable solutions and implement the critical knowledge transfer for water efficiency and productivity for growers, he noted.

Jain Irrigation Systems has manufacturing plants in 29 locations across the globe. It is engaged in manufacturing of Micro Irrigation Systems, PVC Pipes, HDPE Pipes, Plastic Sheets, Agro Processed Products, Renewable Energy Solutions, Tissue Culture Plants, and other agricultural inputs since more than 34 years.

Its consolidated revenues stood at Rs 7,119.5 crore while the net profit was Rs 358 crore in the last fiscal year.