Jain Irrigation To Merge Global Irrigation Business With Temasek-Owned Rivulis

Seeking to reduce debt, Jain Irrigation Systems Ltd. on Tuesday said its global irrigation business will be merged with Temasek-owned Rivulis in a cash-and-stock deal and the combined entity will have a revenue of $750 million.

Jain Irrigation Systems and Rivulis Pte, Singapore announced that Jain International Trading, a wholly-owned subsidiary of Jain Irrigation, and Rivulis have entered into definitive transaction agreements.

The International Irrigation Business of Jain Irrigation will now be merged with Rivulis and create a global irrigation and climate leader, being the second largest in the world with around $750 million in revenues, Jain Irrigation said in a regulatory filing.

It added that "cash proceeds will be utilised for reduction of consolidated debt of Jain Irrigation by around 45% which includes all the restructured overseas bonds to the tune of $225 million and complete debt of overseas operating companies comprising of IIB."

Jain International Business will continue to hold around 22% stake in the merged entity, with Singapore's sovereign wealth fund Temasek holding the balance 78%.

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 said.

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

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

"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," its Managing Director Anil Jain told reporters.

"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.

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.

Jain Irrigation Systems Limited, a leading micro irrigation systems company, had a consolidated net debt of around Rs 6,000 crore as on March 31, 2022.

Its consolidated revenues stood at Rs 7,119.5 crore while net profit was Rs 358 crore in FY22.

The company 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 agricultural inputs since more than 34 years.