Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil BBB-/Stable/Crisil A3’ ratings on the bank facilities and non-convertible debentures of Jain Irrigation Systems Limited (JISL).

 

Crisil Ratings has withdrawn its ratings on the non-convertible debentures (NCDs) amounting to Rs 28.37 crore at the company’s request and upon independent confirmation from third party, in line with Crisil Ratings policy on withdrawal of ratings.

 

The ratings continue to reflect the established business risk profile of the company supported by its leading position in the Micro Irrigation Systems (MIS) segment, long track record of operations and extensive dealer network. The ratings are, however, constrained by the modest financial risk and liquidity profiles owing to high project receivables, significant concentration of revenue in the agriculture sector and the direct impact of the government’s budget allocation for this sector on scale of operations. Operations remain exposed to volatility in the prices of key raw materials.

 

Standalone revenue has seen a de-growth of 14% in fiscal 2025 owing to the weak demand scenario impacted by central and state elections, modest infrastructure spending during the fiscal (under the Jal Jeevan Mission [JJM]) and extended monsoons. The plastic segment was impacted more with an on-year de-growth of 26%, while the Hi-Tech Agri segment witnessed a de-growth of 4% in fiscal 2025. The international plastics segment, on the other hand, continued to exhibit a steady 13% growth. Revenue recovered in the first quarter of the current fiscal with a standalone growth of 7% led by Hi-Tech Agri segment, which saw 30% on-year growth. Plastics segment de-grew in the first quarter owing to early monsoons, however, is expected to see recovery from the second half of this fiscal. Overall revenue is expected to grow in double digits in fiscal 2026 owing to strong traction in Hi-tech Agri, exports and solar pump segments, expected higher spending by the government in line with budgetary allocation, favourable monsoons and the expected release of government orders for infrastructure (e.g. JJM in Maharashtra). Standalone operating margin increased to 13.6% in fiscal 2025 compared to 12.8% in fiscal 2024 owing to low raw material prices, better mix and higher share of exports in the MIS segment. Operating margin is expected to sustain at ~13-14% over the medium term owing to better raw material prices, and energy cost reduction measures initiated by JISL.

 

Total debt outstanding was Rs 2662 crore as on June 30, 2025, including debt at JISL (standalone) (excluding acceptances) and the international plastics business. Of this, unsustainable debt was Rs 831 crore as on June 30, 2025, which was further reduced to Rs 827 crore as on September 30, 2025. With scheduled repayments likely to be supported by expected stable operating performance, sustainable debt to operating profit before interest, tax, depreciation and amortisation (OPBITDA) ratio is expected to remain at 3.0 -3.2 times in fiscal 2026 and at 2.8-3.0 times in fiscal 2027.

 

While sustainable term debt repayment will be completed by the end of fiscal 2026, a major portion of the repayment for unsustainable debt is scheduled in fiscal 2027, with the first repayment tranche of Rs 228 crore in September 2026 and Rs 460 crore subsequently in March 2027. The repayment of the remaining Rs 140 crore is scheduled in fiscal 2028. JISL is working on various avenues, apart from operational cash flows, to repay or prepay the unsustainable debt. The recovery of IOR, the recovery of project receivables, the sale of identified land parcels, and approved Government of Maharashtra incentives remain key avenues. Additionally, the company is exploring refinancing options, along with raising funds via monetising investments. Crisil Ratings will continue to monitor the progress towards these avenues over the next 3–4 months, and this will remain a key rating sensitivity factor.

 

Liquidity remains critical with sanctioned fund-based bank limit of Rs 1,505 crore being fully utilised and surplus being modest. The working capital intensive nature of operations has also constrained liquidity. While JISL has stopped taking up new EPC projects since September 2019, the recovery of receivables from such projects were slower. The receivables for EPC projects were Rs 924 crore as on June 30, 2025, compared to Rs 887 crore as on March 31, 2025, and Rs 880 crore as on March 31, 2024, keeping liquidity constrained. Project receivables increased in the first quarter of fiscal 2025, due to higher execution of pending projects. The timely enhancement of limits providing liquidity cushion and recovery of receivables remains a monitorable.

Analytical Approach

Crisil Ratings has combined the business and financial risk profiles of JISL (standalone) and its subsidiaries and step-down subsidiaries engaged in the international plastics business. The entities, collectively referred to as JISL, have same management, financial linkages and similar businesses. Crisil Ratings has not consolidated the agro-processing business under Jain Farm Fresh Foods Ltd (JFFFL) given the minimal business linkages and restrictions on cashflow between JISL and JFFFL, following debt restructuring undertaken at JISL.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers - Strengths 

Established market position and diversified revenue stream

JISL (standalone) has a diversified revenue profile with presence across multiple business segments, hi-tech agri inputs (contributing to 59% of revenue in fiscal 2025), consisting of MIS; tissue culture and plastics (41%), consisting of plastic pipes and sheets. The company has a strong market position in its business segments. In the MIS segment, it is the leader in the domestic market supported by a strong distribution network and in-house research and development (R&D) capabilities. It has an established position in the domestic pipes segment. It benefits from synergies among business segments, which are largely focused on the agricultural community.

 

Revamped business model with focus on leveraging the extensive dealer network

JISL has over 4,000 dealers and sales to dealers and institutional customers contribute to over 65% of revenue, as against less than 60% a few years ago. This is a focus segment for the company especially with no new EPC orders being taken up. The order book of JISL (including overseas plastic business) shrunk to Rs 599 crore as on June 30, 2025, from Rs 683 crore as on March 31, 2025 and Rs 811 crore as on June 30, 2024, as it only includes orders for ongoing EPC projects, export sales and sales to institutions, and does not factor in orders from dealer network (which are received on daily basis). Of the outstanding order book, ongoing EPC projects contribute around Rs ~150 crore, majority of which will be executed in fiscal 2026. The ability to identify new revenue streams to compensate for the loss of revenue from EPC projects will remain monitorable.

 

Extensive experience of the promoters

JISL was founded by the Late Mr Bhavarlal Jain who was the pioneer of micro irrigation in India. Currently, his sons Mr Ashok Jain (Chairman), Mr Anil Jain (Managing Director), Mr Ajit Jain (Joint Managing Director) and Mr Atul Jain (Joint Managing Director) are managing overall operations of the company and are assisted by professionals, agricultural scientists, engineers and technicians managing various business segments. Next generation of Jain family members are also actively involved into day-to-day operations of the business.

Key Rating Drivers - Weaknesses 

Working capital intensive operations

Operations have remained working capital intensive. Because of focus on EPC projects till fiscal 2019, the company’s working capital requirement was large. The EPC projects segment had issues related to design approval, water availability for testing and change in government. Also, slow realisation of subsidies from government-sponsored agencies and delay in completing procedural requirement contributed to sizeable stretch in receivables, which resulted in liquidity mismatch and subsequent default on debt obligations. The company has faced similar stretched liquidity situations in the past as well, owing to delay in release of subsidy by state governments. JISL has stopped taking up new EPC projects since September 2019. The receivables for EPC projects were at Rs 924 crore as on June 30, 2025, as against Rs 887 crore as on March 31, 2025, and Rs 880 crore as on March 31, 2024, indicating slower recovery of project receivables keeping liquidity constrained. Receivables increased in the first quarter of fiscal 2026 due to higher execution of pending projects. The completion of the pending EPC projects, which are expected to be completed over the next 12 months, and the recovery of their receivables will remain monitorable.

 

The last 1–1.5 years have seen a lower-than-expected pace of recovery, with an outstanding IOR of Rs 197 crore as of August 31, 2025, compared to Rs 199 crore as of March 31, 2025, and Rs 211 crore as of March 31, 2024. That being said, out of the total IOR (net of provision) of approximately Rs 660 crore at the RP stage, approximately Rs 468 crore has been realized by July 2025 (including some amount recovered from provisions), with the balance of Rs 197 crore targeted for collection in the fiscals 2026 and 2027. The collection of the pending IOR of Rs 197 crore over the next few months will remain monitorable.

 

Modest financial risk profile

Standalone outstanding debt at JISL was high around Rs 2,477 crore as on June 30, 2025, and includes unsustainable debt of Rs 831 crore (with coupon of 0.01%, Rs ~828 crore as on September 30, 2025). With scheduled repayments as well as repayment of unsustainable debt, the total debt to OPBITDA ratio is expected to improve to around 3 times in fiscal 2027 from around 5.7 times in fiscal 2025. The company is expected to incur moderate capex of Rs 120-140 crore per annum, which will be funded from internal accrual. 

 

While sustainable term debt repayment will be completed by the end of fiscal 2026, a major portion of the repayment for unsustainable debt is scheduled in fiscal 2027, with the first repayment tranche of Rs 228 crore in September 2026 and Rs 460 crore subsequently in March 2027. The repayment of the remaining Rs 140 crore is scheduled in fiscal 2028. JISL is working on various avenues, apart from operational cash flows, to repay or prepay the unsustainable debt. The recovery of IOR, the recovery of project receivables, the sale of identified land parcels, and approved Government of Maharashtra incentives remain key avenues. Additionally, the company is exploring refinancing options, along with raising funds via monetising investments. Crisil Ratings will continue to monitor the progress towards these avenues over the next 3–4 months, and this will remain a key rating sensitivity factor.

 

Susceptibility to volatility in raw material prices and risk related to foreign exchange fluctuations
JISL is exposed to fluctuations in the prices of polyethylene, polyvinyl chloride (PVC), polymer resins, which are used as raw materials. Prices of these commodities are determined by their demand-supply scenario and by the price of petroleum. While JISL is able to pass on the price volatility to customers for a large portion of sales, profitability remains exposed to raw material price volatility for fixed price contracts. Also, operations involve sizeable export sales as well as import of raw materials and are exposed to adverse fluctuations in foreign exchange (forex) rates. While there is a natural hedge from exports for part of the forex exposure, the company also hedges its forex risk using derivatives.

Liquidity Adequate

JISL (standalone) continues to operate on a tight rein, with sanctioned fund-based bank limit of Rs 1,505 crore being fully utilised over the 12 months through July 2025 and liquid surplus being modest. The working capital intensive nature of operations has also constrained liquidity. While JISL has stopped taking up new EPC projects since September 2019, the recovery of receivables from EPC projects was slower keeping liquidity constrained.

 

Crisil Ratings also notes that there is an Agency for Specialised Monitoring (ASM) appointed by the lenders, as part of the restructuring plan, to provide funds for timely debt servicing. A Trust and Retention Account (TRA) is maintained by lenders, wherein cash flow from operations is parked in advance against forthcoming obligation, and the balance is permitted to be utilised by the company. Continuation of the ASM led monitoring of the TRA provides comfort around timely debt servicing.

 

Annual cash accrual from JISL (standalone) and the international plastics business is expected at Rs 350-450 crore over fiscals 2026-2028, which will be sufficient to cover debt obligation of around Rs 182 crore in fiscal 2026 and capex. Company is looking at various avenues, while priority remains recovery of project receivables and IOR, incentives receivable of Rs ~152 crore from the Government of Maharashtra in next 12-18 months, Rs ~150 crore realisation from sale of land, amongst others in the medium term for funding debt obligation of Rs 702 crore for fiscal 2027 of which Rs ~232 crore is due in September 2025 and Rs ~Rs 464 crore in March 2027. Debt service coverage ratio (DSCR; OPBITDA divided by principal and interest obligation) of the company is expected at 1.2-1.4 times in fiscal 2026, however for fiscal 2027, the recovery of receivables and progress on other avenues remains critical and monitorable.

 

JISL has recently received a working capital sanction of Rs 40 crore from UCO Bank, comprising Rs 35 crore of fund-based and Rs 5 crore of non-fund-based limits. This will help the company tie up the balance untied portion out of the total assessment limit of Rs 1,540 crore (fund-based) and Rs 744 crore (non-fund-based limit), which is expected to be available soon for use, providing an additional liquidity cushion. Furthermore, the company has received conditional sanction approval from the lead bank for an enhancement in overall limits at a consortium level: Rs 100 crore (fund-based) and Rs 72 crore (non-fund-based). Out of the enhanced limit, the lead bank has already approved its share of the fund-based limit of Rs 45 crore and non-fund-based limit of Rs 27 crore. Approval from other consortium lenders (facilities to be provided as per pro-rata exposure of lenders in the consortium) is awaited and is currently in process.

 

Additionally, the company has received off-consortium limits totaling Rs 307 crore, of which Rs 257 crore is available, and the balance is linked to sanction conditions. These include Rs 100 crore e-vendor financing scheme (e-VFS) facility, of which Rs 50 crore is available; dealer financing limits of Rs 150 crore without any guarantee or recourse to the company; and e-Treds limits of Rs 57 crore. Banks have also extended an LCBD facility of Rs 160 crore, which helps the company with LC discounting. The conversion of warrants issued in November 2023 resulted in a fresh fund infusion of around Rs 150 crore in May 2025, which was utilised for working capital purposes. The timely enhancement of limits can provide a liquidity cushion, working capital flexibility, and will remain monitorable.

Outlook Stable

The business risk profile of JISL will remain healthy over the medium term, supported by its leading position in key operating segments and the extensive experience of the promoters. The financial risk profile remains modest with fully utilised bank lines and high overdue receivables and shall remain monitorable.

Rating sensitivity factors

Upward factors

• Better-than-expected operating profits resulting in healthy improvement in the sustainable debt/OPBITDA to 3.00-3.25 times
• Continued improvement in the working capital cycle with correction in debtor days resulting in improved liquidity cushion on a sustained basis

 

Downward factors

• Lower-than-expected operating profits or any increase in debt resulting in the sustainable debt/OPBITDA increasing to 4.00-4.25 times
• Any stretch in the working capital cycle on account of delays in recovery of receivables or any sizeable advances to JFFFL or any large debt-funded capex or acquisitions impacting liquidity and debt metrics
• Any change in management stance such as taking up of new EPC projects
• Any adverse or unexpected conditions impacting liquidity enhancement plans

About the Company

JISL was incorporated in 1986 by the Late Mr Bhavarlal H Jain. The company started operations by trading in agricultural inputs and equipment. In 1980, it began manufacturing PVC pipes and commenced MIS operations in 1987. JISL has diversified its presence across multiple segments throughout the agricultural value chain and operates across three broad business segments: hi-tech agri inputs, plastics and agro processing. The company underwent restructuring owing to liquidity issues and the resolution plan was implemented on March 25, 2022. As on June 30, 2025, on fully diluted basis considering conversion of outstanding warrants, the promoters held 26.66% stake in JISL, domestic banks held 6.63% (equity issued as part of restructuring), individuals held 37.32% and the remaining was held by others.

Key Financial Indicators (JISL standalone)

Particulars	Unit	2025	2024
Revenue	Rs crore	3227	3,794
Profit after tax (PAT)^	Rs crore	97	120
PAT margin	%	3.0	3.2
Adjusted debt/adjusted networth	Times	0.57	0.62
Adjusted interest coverage	Times	2.08	2.18

Crisil Ratings adjusted numbers

Note: International plastics business reported revenue of ~Rs 632 crore and Rs 557 crore in fiscal 2025 and fiscal 2024, respectively.

^ - Reported PAT is Rs 25 crore and Rs 56 crore for fiscal 2025 and fiscal 2024, respectively. The adjustment takes into account the fair value adjustment on NCDs.

Any other information: Not applicable