Jain Irrigation Systems Ltd FY19 Credit Report

02 July 2019

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Jain Irrigation Systems Ltd (JISL) has approached its 14-lender onshore working capital consortium to raise its strained working capital limit by a further INR 3.15bn (USD 45.2m) and has delayed the payment of certain salaries, highlighting the liquidity crunch the Indian irrigation-products maker is facing, Debtwire reported on 21 June.

JISL reported cash of only INR 1.17bn as of 31 March 2019. It had committed undrawn credit lines of INR 10.5bn, according to an S&P report. Against that, the company had INR 19.17bn of short-term debt.
Its ability to generate cash is hampered by large interest payments relative to its EBITDA (56% of Debtwire-calculated EBITDA in FY19 through 31 March 2019), and working capital outflows (INR 8.8bn in FY19). Working capital has been draining JISL’s cash for a decade, but the problem turned worse in FY19, which management blamed on difficulty in collecting receivables from the Indian government, poor rainfall and tight liquidity in rural markets.