Jain Irrigation to raise $200 million to improve financial health

MUMBAI: Jain Irrigation Systems Ltd (JISL) today said it plans to raise around $ 200 million (about Rs 1,100 crore) by issuing shares and other securities to IFC, Rabo bank and others to strengthen the balance sheet and reduce interest costs.

In a communique to the BSE, JISL said it has announced "plan for fund raising of approx $ 200 million to deleverage and strengthen its balance sheet, to reduce interest cost and to balance its currency exposure with long-term maturities".

The Securities Issuance Committee of the company's Board met today and decided to raise long term funds.

"...total combined funds being raised shall be in excess of $ 200 million. Funding is expected within the next 60 days after completion of necessary formalities and approvals etc," the filing said.

It added, "IFC, part of the World Bank group, is contributing significantly in the convertible bond issue, apart from participating in equity as well as ECB (External Commercial Borrowings), part of equity funds are being raised from private equity firm, Mount Kellett.

"External commercial borrowing will come from combination of European Global Development Financial Institutions and Rabo Bank."

The funds will be utilised for repayment of high cost short-term loans of JSPL and its subsidiaries and the long term loans of the company and its subsidiaries due in 2012-13 fiscal, JISL said.

The funds will also be utilised for investment into JISL's overseas subsidiaries to enable continued growth and also for capital expenditure, the filing added.

The company will also use the funds for equity investment into its recently created non banking financial company (NBFC), Sustainable Agro Commercial Finance Ltd (SAFL), it said.

"We believe equity issuance is value accretive and shall help us to deleverage our balance sheets, convert short term liabilities into long-term liabilities and also provide liquidity for operations while strengthening and re-rating our balance sheet," JISL managing Director Anil Jain said.

The company expects annualised savings on interest alone to be in range of Rs 80 to 100 crore resulting in better bottom line and expect to improve our gearing which shall further improve our credit rating in market, he added.

Jain said JISL will be able to match it currency liabilities with its foreign currency earnings from exports as well as overseas subsidiaries thus nullifying any impact of rupee depreciation.