Fitch downgrades Jain Irrigation, due to delay in infusion of funds

MUMBAI: India Rating & Research, an arm of Fitch Rating has downgraded Maharashtra-based Jain Irrigation System Limited (JISL) to BB+ from earlier 'BBB' due to its stretched liquidity position led by a greater-than-expected delay in the infusion of funds amounting to $200 million into the company.

While putting JISL into ' rating watch negative' (RWN), rating agency says, "reflects refinancing risks for the company regarding major repayments due in FY13 (INR3.7bn) and FY14 (INR5bn) on a consolidated basis.

While JISL has made significant progress in arranging funds to reduce its refinancing risks, uncertainty remains regarding the exact timing and terms of the capital infusion."

Jain Irrigation manufactures Drip and Sprinkler Irrigation Systems and has a presence over 100 countries.

The rating agency expects to resolve the RWN by end-December 2012, and the rating outcome will depend on whether the capital infusion happens in Q3 FY 13 or not.

"The ratings continue to derive support from JISL's dominant position in micro-irrigation systems, strong brand image, well-diversified product portfolio, and its wide distribution network." says the report.

"The ratings also reflect the company's strong relationships with farmers, fast accrual of benefits through flexible and scalable production facilities, and break-even in most of its overseas subsidiaries."