Extraordinary curve of this share, almost back to Dec 2019 levels after touching historic low past few weeks. Maybe the moratorium on loans helps, agriculture is evergreen and lowest ever crude is positive as RM.
Even if loans are discounted by asset sales planned, book should remain at half the current value, a price target at a conservative estimate of half of that seems reasonable.
Hmm, just noticed, it is now in 100% delivery segment, to curb volatility hitting much of the markets, even Dmart is in same category. Hence, the constant UC, maybe.
Disc: averaged since past 3 years, no trades in past 3 months, 3% of portfolio
As per the news lenders will meet up this month end to discuss on Debt restructuring …Hopefully it will come out with a deal . But with severe liquidity crunch and no working capital and with upcoming bond redemption not much steam left out
Honestly speaking no company has ever come out of such huge crisis and one should never bet their hard earned capital on companies which are headed to get delisted from exchanges.
I have read in some financial analysis reports that one way of checking the quality of earnings of a listed company is to plot a comparative landscape and list down the net profit per year and operating cash flow. They usually vary, but over a period of time generally, the expectation is that net profits will approximate and tend to be parallel with the cash flow from operations. Found this very interesting graphical analysis for JISL in that context :
Yeah, even in the historically worst previous quarter, the only thing management seemed to be happy about and emphasized many times was the fact that they managed to turn cash positive. The lack of working capital is choking them quite literally. Jain Farm Fresh foods has applied for moratoriums, maybe it was the only one not covered by ICA signed since June 2019.
Stock is now back to Oct-Nov 2019 levels but may overshoot and dip again, quite low volumes.
“However, since the central government has now decided to suspend all fresh insolvency proceedings for 12 months, the banks are willing to consider the option to restructure Jain Irrigation’s debt.”
“The lending consortium is mulling a resolution plan which involves extending the repayment period for Rs 4,600 crore in outstanding debt from two years to five years, said two people with direct knowledge of the discussions. Lenders will not need to take any haircut on the principal amount as part of the plan, they said. A final proposal is likely to be submitted to the lending consortium in a few days. After that, the lenders will vote on the proposal and the restructuring plan will be implemented, the people cited earlier said.”
JISL has enough fire-power/resources (to sell) to beat-the-odds and survive. The length of time it takes is quite long, but expected sunrise in about 1 year or less.
Disc: 4% of PF, averaged since past 3 years, close to CMP.
Yes, sudden postponement is of concern, hardly 3 days before actual date and 2 days after announce. Now, they have 1 more month to see how situation develops if in fact something is going on for near term.
The one year chart shows an interesting head-shoulder like pattern, but future move here totally depends on results!
Uptick in agriculture in general might help this agri-focused irrigation company.
Stock is up 4x already from the bottom. Markets totally ignored the results postponement!
Meanwhile as books are bulged up with debt -
The sales are not growing and it’s not increasing
The interest are raising
Net Profit are going far too negative
Understanding that the cash inflow needs to be 1000 cr given a debt restructuring : ideally the company still needs some time of recovery. Off course the silver lining can be expected but there are other set of peers who has also gained market share in drip irrigation.
They are sure of finalizing the deals for reducing debt with creditors in this quarter, delayed by COVID.
Wrote off receivables hence the large loss reported.
Are optimistic about the biz growth, seeing green shoots.
Personally I am not sure about their timelines to show any good numbers. This one can really test your patience.
I personally exited after waiting 2 years, they are themselves publishing info saying the debt has crossed networth and will keep on mounting, unless the consortium of lenders agree to take large hair-cuts on the debt, liquidation might be the next step. (so far the consortium has not approached NCLT but case can be triggered anytime and is big risk).
Disc: not a reco or advice, I am not SEBI registered advisor. not tracking updates since 3 months now
Yes, agree they seem to be top-player in several segments such as pipes and food-processing but that did not prevent such a crisis. The ‘small-push’ of restructuring is the plan to sell-off almost all overseas assets, this is to pay-off half the pile of debts. The remainder is still big enough to strain the balance sheet. For the biggest part of the business, the micro-irrigation, they are dependent on govt. subsidies etc. and do not see any moat here. The sale of businesses to lighten debt is still 1-2 quarters away. Somehow they have got managed liquidity from own efforts and bankers agreement, to help their poor working-capital levels which was choking business. None of this sounds good. Covid related guidelines perhaps pushed the liquidation threat to next year, that’s all. Mostly agriculture related biz have been a bright spot. Guess what Jain has done in these times?
Yes, some metrics are looking better and they are making the effort it seems, but how far they succeed and how much time it take is the risk and looks like the long-haul at least.
Jain Irrigation Systems Limited (“the Company”) has successfully implemented the Debt Resolution effective on March 25, 2022. It was approved and announced in
the Joint Lenders Meeting on March 29°", 2022 after fulfilling all Conditions
Precedent as per the Master Restructuring Agreement (MRA) signed on
10" February 2022.
Key highlights -
RP has been implemented as per the Notification of Prudential
Framework for Resolution of Stressed Assets issued by Reserve Bank of India
on June 7, 2019.
The plan has received RP4 rating from ICRA and CRISIL.
Debt Restructuring has been completed with unanimous approval of all
secured lenders.
The total amount of the debt restructured is INR 3,878 crores.
About 40% of the total debt has been converted into long term NonConvertible Debentures at an interest rate of 0.01%.
Proposed infusion of equity by promoters along with investors ~ INR 267
crores ~ 40% already infused; balance infusion expected over the period of
18 months.
Approximately 7.89 crores ordinary equity shares issued to the lenders.
During this period the Company has also restructured overseas bonds of
200 million USD.
Impact on the Company & its performance going forward:
Access to additional working capital facilities of approximately 300
crores.
Significantly reduced Interest cost
Deferred payments to the lenders, improved fund flow for business.
Overall improvement in the operations and performance of the
company.
Anil Jain, MD & CEO said | am very pleased to say that “Consortium of lenders led
by State Bank of India and the Company have worked together to protect the
interest of all the stakeholders. The journey of this RP from its inception till
implementation has been arduous. However, the belief and trust of all the
stakeholders and more particularly of the lenders in the management; and the
untiring efforts at everyone’s end involved in the process has helped the company
and its management to sail through this phase and achieve successful
implementation of the Resolution Plan.
The Debt Resolution exercise involved a series of chronological steps and
evaluations by lenders and financial agencies. The period coincided with the onslaught of COVID-19 and, hence, certain steps in the process took extended time to closure. However, the Company and the lenders and agencies found
ingenious/workable solutions to coordinate and communicate during the
challenging period. There were several iterations of certain processes and the
Company is pleased to mention that these were concluded satisfactorily at all
stages. The demand environment for the core business of Micro Irrigation Systems and Plastic Pipes is very robust and the Company is confident to regain and increase market share in future.
The Debt Resolution exercise has also been a learning for the Company in two
critical areas - working capital management and cost control. Various measures are
being implemented to improve these metrics. On the operational front, the
Company has identified areas of business which offer high growth and are in sync with available production capacity and plans to focus on the same. The Company
has reconstructed its business model towards a more sustainable and profitable
direction.
As we move in next phase, | would like to state that the Company and it’s
management continue to be committed to fulfill all its obligations towards each of
its stakeholders; and with this correction in the debt structure and strengthening
of balance sheet, we will strive to create shareholder value. | would like to thank
all stakeholders for their continued faith and support in the Company and the work
that we do.”
Disc: Invested and planning to add more once things improve further on operations front.
