Jain Irrigation Systems Ltd., a major extruder and vertically integrated force in India's agricultural sector, is moving to boost its injection molding capacity, all while seeing demand for its plastics products grow in the United States.
Marketing director Atul B. Jain, one of founder Bhavarlal Jain's four sons involved in the business, outlined the firm's plans at Plastindia, held Feb. 9-14 in New Delhi. Already India's largest PVC pipe extruder, Jain Irrigation, based in Jalgaon, also extrudes polyethylene pipe, injection molds its own connectors, fittings and sprinkler nozzles, and extrudes drip tubing as well as PVC foam and polycarbonate sheet.
The firm focuses on three primary businesses - agricultural products, food processing and plastics - from producing tissue-culture plants and hybrid seeds, to fertilizers, micro-irrigation systems and providing contract farming services. Jain said about two-thirds of JISL's 3,000 employees work in its plastics division, most at Jalgaon headquarters.
In the U.S., the firm markets its sheet - widely used in advertising signage and for architectural applications such as trim boards and roofing - under the Excel brand name via a sales and distribution subsidiary in Columbus, Ohio. That unit, known as Excel Manufacturing Inc. in February changed its name to Jain (Americas) Inc. to align it with the parent's other sales, Atul Jain said. The sheet products continue to carry the Excel brand name.
In the mid-1990s, Jain over-diversified and became too highly leveraged. It defaulted on loans and failed to record a profit from fiscal 1997-2003. But one Mumbai, India-based securities firm, S.S. Kantilal Ishwarlal Securities Pvt. Ltd., said in a March 2005 report: ``We believe the worst is over.''
The $38 million purchase of a 43 percent stake in the firm in 2002 by San Francisco private-equity investor Aqua International Partners ``has given the company financial and operational stability,'' SSKI said. It now refers to Jain as ``a focused player in agriculture, particularly strong in micro-irrigation systems and plastics.'' It says the firm is well-positioned to benefit from India's huge thrust into agricultural reforms.
Meanwhile, sales continue to soar, with Atul Jain suggesting sales may hit 9 billion rupees ($203.8 million) for the year ending March 31, a huge leap over its last fiscal year, when the firm reported sales of 6.05 billion rupees ($135 million) and net profit to 323.9 million rupees ($7.2 million). Of the group's $80 million or so in export sales in its recent fiscal year, about half has gone to Europe and 40 percent to the U.S.
Sales growth is prompting its need to boost capacity, especially in injection molding.
``We acquired a small, ailing molding shop in India two weeks ago,'' he said Feb. 10. That unit runs 10 presses. JISL had four more ordered, all Ferromatiks, that were to be delivered in February.
JISL also runs more than 50 extruders and processes more than 220,000 pounds of mostly PVC and PE. By September, it expects to have installed the capacity to process twice that amount of resin.
In a March 2005 management analysis included with JISL's latest fiscal report, its directors estimate that their firm holds about 50 percent of the domestic sprinkler and drip irrigation markets, while noting the industry is mostly unorganized and has overcapacity.
``The industry has about 100 players throughout the country ... about 30 are active, and only about 15 are capable of surviving a shakeout,'' the report stated.