Jain Irrigation gains on buzz it may sell stake in food processing unit

Jain Irrigation Systems rose 2.17% to Rs 65.85 at 10:40 IST on BSE after a media report suggested that the company is planning to sell a stake in its food-processing business to private equity funds.

Meanwhile, the BSE Sensex was 66.76 points, or 0.30%, to 22,406.73.

On BSE, so far 5.36 lakh shares were traded in the counter, compared with an average volume of 3.23 lakh shares in the past one quarter.

The stock hit a high of Rs 67.05 and a low of Rs 65.10 so far during the day. The stock hit a 52-week high of Rs 75.10 on 27 December 2013. The stock hit a 52-week low of Rs 46.10 on 1 August 2013.

The stock had outperformed the market over the past one month till 28 March 2014, rising 8.87% compared with the Sensex's 5.78% rise. The scrip had, however, underperformed the market in past one quarter, falling 10.11% as against Sensex's 5.41% rise.

The small-cap micro irrigation company has an equity capital of Rs 92.48 crore. Face value per share is Rs 2.

According to the report, Jain Irrigation Systems is looking to sell a stake in its food-processing business to private equity funds to raise up to Rs 610 crore as it seeks to cut debt and boost growth. The company plans to divest 30-35% in the 10-year-old food-processing unit to strategic investors for $80-100 million, the report said.

The company has reportedly held preliminary talks with private equity funds, including Warburg Pincus. The money generated from the stake sale may be used to retire part of Jain Irrigation's substantial debt amounting to Rs 2924 crore. The company is likely to transfer its food-processing business to a separate company as part of the exercise, the report added.

On a consolidated basis, Jain Irrigation Systems reported a net profit of Rs 25.88 crore in Q3 December 2013 as against net loss of Rs 46.95 crore in Q3 December 2012. Net sales rose 27% to Rs 1352.37 crore in Q3 December 2013 over Q3 December 2012.

Jain Irrigation is a diversified company with product portfolio encompassing irrigation product, piping products, plastic sheets, dehydrated foods, fruit puree, juice concentrates and solar energy systems. Jain Irrigation has pioneered drip irrigation for small farmers in India and has a major market share in one of the fastest growing irrigation markets in the world and is also the second largest drip irrigation company in the world.

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