Expect healthy sales momentum in FY15: Jain Irrigation

Anil Jain, managing director,  Jain Irrigation expects sales to be robust in the current financial year- FY15.

In an interview to CNBC-TV18, Jain says the company has good days ahead of it now that the realization is setting in that micro irrigation is the way to go.

Also read: Monsoon to pick up in central, northwestern India by Jul 15

"When the government says 'water in every field' as a new program over next decade that means they want to provide irrigated farming. So, whether monsoon comes or not, a farmer would be able to grow crop. That can only be done with drip irrigation," he adds optimistically.

In his maiden Union Budget, Finance Minister Arun Jaitley proposed initiating the scheme Pradhan Mantri Krishi Sinchayee Yojana. He said that there was a need to provide assured irrigation to mitigate risk to the farmer since bulk of the farm lands are rain-fed and depend on monsoon.

Below is the verbatim transcript of Anil Jain's interview to CNBC-TV18's Latha Venkatesh and Sonia Shenoy.

Sonia: First if you could clarify whether or not the micro irrigation subsidy has been cut and if not what exactly is the absolute figure?

A: The absolute figure as we have inquired with the agriculture ministry in Delhi is that it is about Rs 1560 crore and last year utilization was only Rs 1300 crore. So, there is a growth of about close to 20 percent and over the period the whole micro irrigation subsidy regime had changed.

Now that subsidy surrounded under two particular central government programs, one called National Mission Of Sustainable Agriculture and another called Mission On Integrated Horticulture Development.

Overall the availability of subsidy is far more than the last year. Apart from that, the government has come out with a new program called Pradhan Mantri Gram Sinchai Yojana, they have provided additional Rs 1000 crore. There is no clarity exactly how Rs 1000 crores are going to be used but there is a good possibility that it is going to be used along with micro irrigation.

Latha: There is also the drought to tackle now, barely 43 percent of rains due up until July 11 have been received. Does that increase or decrease your opportunities this season itself?

A: That does increase the opportunity. The way the business works it is about water management. So, if farmers get less water, they need to use drip irrigation more to manage their sowing within the same amount of water. If they don't have any water then there won't be any sale.

But what we have seen during this quarter the sales have been strong. We expect sales to continue as we go along. But as we think through medium to long-term, there is more and more realisation that micro irrigation is a way to go. When government says 'water in every field' as a new program over next decade that means they want to provide irrigated farming. So, whether monsoon comes or not, a farmer would be able to grow crop. That can only be done with drip.

Apart from this, under the water resource ministry, there is more and more growing solution concept of what is called integrated irrigation solutions and for that they have this program called accelerated irrigation benefit program called AIPP and the outlay for that is now around Rs 9000 crore. Within the government policy regime there is a definite focus on positivity and also at the state level to go for more integrated irrigation solutions and use micro irrigation which would ultimately help productivity of small farmers. So we feel very confident of moving forward and the domestic business for this division within India which is major market for us looking to be very positive.

Sonia: In your press release you have mentioned that even for other divisions of the company like pipes, agro processing and solar pump, the FY15 Budget has been positive. Can you take us through the exact details?

A: Solar pump which is comparatively smaller division for us today, the government has talked about 100,000 pumps to be there. And all of that solar pumps being sold, will get connected again with micro irrigation. Now 100,000 pumps does happen because it is a very ambitions figure, that creates a new business market of almost Rs 5000 crore and we have more than 40 percent market share is solar water pumps. So I am just giving you the likely scenario. If it does happen then it is a very big business opportunity.

Apart from that if you look at piping business, government has increased the outlay for drinking water in villages, that is where the pipes gets sold. In food processing industry they have reduced excise etc for the new capital expenditure you do into food processing. And when they say that they are going to make one national market etc, that does allow us to buy raw material on a more competitive basis which can improve the margins for the company. So many of these initiatives should help most of our businesses on a consistent basis.

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