Jain Irrigation down 3 percent after board approves fundraising proposal

Shares of Jain Irrigation Systems were down 3 percent to Rs 54.55 at 11 am on August 18. The company on August 17 approved a proposal to raise funds to meet its short term and medium term financial obligations.

The micro irrigation company aims to raise Rs 76.12 crore by issuing share warrants to its promoter, Stocks and Securities India.

Additionally, the company will also issue share warrants worth Rs 123.43 crore to Alpha Alternatives Structure Credit Opportunities Fund, an SPV of Alpha Alternatives Holdings. Both the share warrants will be converted to equity shares within 18 months from allotment at Rs 46.64 per share.

“The upfront 25 percent deposit on warrants is expected to help Jain Irrigation to repay its ICD obligation to its associate NBFC SAFL (Sustainable Agro Commerical Financial). This will enable SAFL to honor its obligation to its lenders where its loans have become sub-standard. Also Jain Irrigation has issued corporate guarantee for some of the loans of SAFL. This payment will also help to ensure that corporate guarantee will be released. Post all the corporate actions we are taking today we expect that SAFL will become debt free and no additional funding or support will be required from parent company”, the company said in a press release.

Plus, the company’s subsidiary Jain Farm Fresh Foods is looking to raise funding through Non Convertible Debentures amounting to Rs 145 crore along with Redeemable Preference shares worth Rs 20 crore. The company said the funding is used to enhance the subsidiary’s working capital.

For the June quarter, the company’s net profit jumped nearly six fold to Rs 35.43 crore. However, revenue fell around 17 percent year on year to Rs 1701.04 crore. Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) similarly declined around 16 percent to Rs 220.83 crore. The shares of the company have risen 90.62 percent in the last 6 months.

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