Jain Irrigation hits 52-week low on 'mortgage' report

MUMBAI: The scrip of micro-irrigation player Jain Irrigation hit 52-week low in the opening trade today on news the company will seek shareholders' nod for mortgage of movable/immovable properties of the Company in favour of Trustees to ECB Lenders.

The explanatory statement issued by the company mentioned that the company had recently borrowed ECB worth $75 million in October 2012 from IFC and Rabo Bank. However, now the company is seeking to prepay and substitute $51 million of the ECB loans raised. This will increase the average maturity further while an additional $14 million will be borrowed as ECB. For this purpose the company has to secure the lenders / trustees.

Under the proposed arrangements, certain non-agricultural land in Jalgaon apart from the movable assets / properties created out of ECB proceeds will be hypothecated towards the lenders / trustees.

Jain Irrigation has long been suffering from funding crunch due to inordinate delays in government releasing subsidy payments. Last year in September the company came out with a fund raising plan to tide over the situation which included issuing fresh equity, FCCBs to overseas investors apart from raising external commercial borrowings and warrants to promoters totalling Rs 1150 crore. The company had mentioned these funds will come at an average cost of 3%-4% being a combination of equity and cheap debt and will be majorly used in repaying existing high cost borrowings, resulting in Rs 80-100 crore of annual savings in interest cost.