Saturday, 9 July 2016

From selling kerosene to pioneering Drip Irrigation in India, This is the story of Bhavarlal Jain and his brainchild, Jain Irrigation Systems

"We rise by lifting others"

When Bhavarlal Jain, a lawyer and with a safe and guaranteed government job in hand, got this advice from his mother, he was definitely intrigued. Belonging originally to a family of farmers by profession, his mother was deeply driven that his son do good for millions of fellow farmers. It is amazing what the need for making a difference can do. Thus came into existence, Jain Irrigation Systems, with a capital of meager Rs 7000, which was the accumulated savings of 3 generations, in 1963. The company's mission, business vision and managerial expertise has turned the initial capital of Rs 7000 into a revenue of Rs 1424 crore. In their existence of 50+ years, the company has 10,000 employees working in 28 manufacturing plants across the globe (United States, Turkey, Switzerland, Ireland and others.), dedicated to achieving the company mission. The company has 50 flagship products spread across 9 product lines wholeheartedly devoted to ease the process of agriculture in India. Here is a video describing their company and their vision.

Products of Jain Irrigation Systems : 

Financials :

JISL is listed in NSE-Mumbai at JISLJALEQS  and in BSE at code 500219.
Daily traded quantity is 42.37 lakh shares.
52 week high - 79
52 week low - 47

As the sales of the company’s products are directly related to the uncertainties of monsoon, the last two years have seen virtually no growth in sales, as those years monsoons have been well below average. However, the company managed to increase its profit for the year ending March-16 to Rs 71 crores mainly due to reduction in raw material cost. For the quarter ending March 16, the net profit has moved substantially higher at 64 crores. This is mainly due to the fact that this year ; 2016 -17 monsoon is expected to be above average and this expectation has led to higher yield on margin.

On the Balance Sheet front, there hasn’t been any major changes in Long Term Assets and Labilities. The Current Assets ratio is at a reasonable level of 1.25.

Cash flows.
Cash Flow from business operations more or less remain the same as last year at approximately 500 crores. The company, it seems, had made sufficient investment since last four years, the fruits of which will probably be seen in the coming years.
As regards the financing activities, the company probably had to resort to more financing activities for the year ending 2013, 2014 and 2015 as these years had seen very weak monsoon and consequently very fluctuating sales. However for the year ending March 2015, there has been a decrease of 25% in financing activity compared to the earlier year ending March 2014. Hence this year; 2016-17, a substantial increase in cash flow from operations can be expected.

Equity Capital

Equity Capital of the company is held as below :

  • 1.       Promoters (including foreign promoters) – 32% (Approx)
  • 2.       FII – 32%
  • 3.       Financial Institutions – 11%
  • 4.       Banks and mutual funds – 3%
  • 5.       Public – 17%
  • 6.       Others – 5%
      Considering all the above mentioned factors, I expect considerable increase in sales for the year 16-17 and consequently increase in profits, and accordingly I expect the share price to move in the range of Rs 100 to Rs 120 in the medium term from the present price of Rs 74. I feel this investment is likely to fetch a return of approx 40 to 50 %. I shall update on ensuing factors as they unfold.
Happy Investing!

DISCLAIMER : The above views are the opinions of the author. Please consult your financial adviser before taking any investment decisions. 

Monday, 5 October 2015

Do Long Term Investments Really Need To Be Long?

Long term funds are invested in companies after a detailed research of the company's prospects, future business estimation, and detailed analysis of its Balance Sheet, Profit & Loss Account. But does this analysis guarantee safety of funds? Not always.
On June 5th 2015, Indian Government banned Nestle India's flagship product, Maggi. It contained 17 times more lead than permitted. Nestle is the 33rd largest company India in terms of market capitalization. Amid the controversy, Nestle India's share prices fluctuated from Rs 7246.5 on 31st March 2015 to going as low as 5574.87 on 8th June, 2015. Falling off 1700 points in just 9 weeks is unpredictable. The fact that Indians were manipulated to consume 17 times more lead than permissible limit, remained covered for years and years together. 

Or take the case of Amtek Auto, which has a fallout with CARE. On August 7th 2015, CARE suspended Amtek Auto of its AA- Investment rating as the company failed to furnish information for the monitoring of the rating. As a result of this controversy, the price of Amtek Auto tanked from Rs 350 on 13th July 2015 to Rs 100 on 17th august 2015. Its been on a continuous fall and closed at Rs 20.95 on 2nd October 2015. This is more than 90% erosion of investments. Unbelievable but true. 

These instances call for a need to revise the concept of being invested for a very long term. It also emphasizes on decision to dis-invest a part of portfolio. This actually would  help in more than one way. If proceeds from a stock are received after just one year of investment, it is treated as long term capital gain, which is tax free. It increases liquidity and funds can be deployed to safer investment avenues like Fixed Income, or if the sum received is large enough, it can be invested in property which in turn would fetch rental income.  
In essence now: 
It make sense to divest part of the portfolio, as all the scrips in the portfolio may not get impacted as above, and the value of the remaining part of the portfolio may increase in the due course of the time.

Monday, 14 September 2015


Indian Share Market is one interesting place. The Bombay Stock Exchange and The National Stock Exchange have the largest number of listed companies in the world. However, only 2% of Indian household savings go into Equity (Shares) Investments. Clearly, not everyone is aware of the important things to keep in mind while investing in shares. 

·        Are you a short term investor or a long term investor? 

The first step is to determine if you would invest for a time span of a few months to an year (Short term) or for more than a year (Long term). 

·        How much would you invest?

That's a tough one. How much to invest? We either invest too much or too little. Ideally, it shouldn't be more than 25% of your liquid net worth. Btw Liquid Net worth is: Cash or cash equivalents - Short term liabilities. Say the value of  your liquid assests is Rs 12,00,000 and  your short term liabilities is Rs 5,00,000. So your liquid Net Worth would be (12,00,000-5,00,000) = 7,00,000 and 25% of this would be 1,75,000/-. 
According to me, this is the ideal amount of investment. Not a single rupee more than this should be invested in share  market. 

·        Can you identify stocks? 

People interested in share market are updated about the changing rates and fates of stocks. But if you cannot identify stocks or have no time for it, Systematic Investments Plan (SIP) managed by mutual funds and brokerage houses plays the role for you. However, the choice of brokerage house is a crucial decision too. 

·        No Cash

This is the era of NEFT and internet banking. DO NOT hand cash over to anyone for investments in shares. The transaction of money is account to account only, and that too through banking channel only.

·        Who Do You Approach? 

A DEMAT and TRADING ACCCOUNT should be opened only with a registered member of a recognized stock exchange. There are other stock exchanges in India but not every stock exchange is registered with the regulator. 

Friday, 11 September 2015


Stock Market is one particularly wild place. While SENSEX was booming at 21000 and odd level in January 2008, by the time we sipped coffee and geared up for events for February, it had a break neck fall to 8300 and gave rise to the infamous "2008 Stock Market Crash", which every investor swears by for having them unnerved. The fall was gradual but severe.

 It took a few months time to create the devastation that the globe took 4 years to recover from. When you see the highly adorned shares of Blue Chip companies being traded at half their all-time-high rates in a desperate bid to bail themselves out ASAP, you know there is something terribly wrong.

The fall happened with profit booking on the heavy weights sensex stocks followed by unabated selling by local Mutual Funds and Foreign Institutional Investors (FIIs), probably due to very serious redemption pressure.