Jain Irrigation Profits Dip 98% In FY13

The country's largest micro irrigation company, Jain Irrigation announced a dismal performance for the elapsed fiscal. The net sales of the company were almost flat at Rs 5036.39 crore for FY13. However, the net profit dipped by more than 98% to only Rs 4.5 crore against Rs 228.22 crore in FY12.

The company's micro irrigation systems (MIS) division has seen a 20% decline on a yearly basis in Q4FY13 due to significant drought in Maharashtra and planned business model changes as a part of the its effort to reduce the high receivable levels and improve cash collection.

Jain Irrigation’s PVC business has expanded by 24.7% in this quarter, and the food processing and solar businesses have shown robust growth of 23.2% and 34.1% on a yearly basis. Its export business also showed considerable growth of 10.5% on a yearly basis in the fourth quarter.

The company's operational expenses have increased considerably on a yearly basis. Its EBITDA margins were down 431 basis points to 15.77% during the quarter on a yearly basis. The operational expenses increased by almost 8%. However, the operational expenses as a percentage of net sales have increased to 88.18% during Q4FY13 against 81.42% in Q4FY12. During this quarter, the net profit stood at Rs 41.90 crore, a 75% drop from that in the previous fiscal corresponding quarter.

Interestingly, the whole year's net profit was at a mere Rs 4.5 crore against that of Rs 228.22 in FY12 on a consolidated basis. This was mainly due to dismal performance on the revenue front, coupled with 7.41% higher operational expenses, 17.68% higher depreciation charges and 8.34% higher finance costs on a consolidated basis.

The management has recommended a dividend of Rs 0.50 per share. In any case, investors would do well to give this stock a miss.