Jain Irrigation Systems, the Jalgaon-based irrigation systems, pipes, food processing and agri products player, is planning to raise $45 million from the International Finance Corporation (IFC), said its managing director Anil Jain.

The company will receive a $30-million loan in two tranches for the period of eight years. It will also get $15 million from Washington-based IFC, which will pick a 2.69% of Jain's equity in the company through a preferential allotment.

The latest round of fund-raising is in addition to the $30-million debt the company raised from IFC in the last couple of years.

Jain said the loan would carry an interest of 250 basis points (bps) over London Interbank Offered Rate (Libor). "Earlier, we raised it at 200 bps over Libor, but in the current scenario it has gone up," he said. Libor is the world's most widely used benchmark for short-term interest rates and one basis point equals 0.01 percentage point. On Monday, the six-month Libor was 1.80%. "A majority of it would be invested in micro-irrigation and the rest in pipes," said Jain.

Nearly 40% of the company's Rs 700-crore order-book is in the irrigation space, with the rest coming from pipes, food processing and agricultural products. Jain said the company would continue to focus on irrigation and pipes given the number of irrigation projects being awarded in states such as Andhra Pradesh, Maharashtra and Tamil Nadu. "Out of the 50 million hectares of agricultural land, only 2.5 million hectares have drip or sprinkler irrigation, thereby giving us a huge opportunity," said Jain.

Asked about the firm's capex plans for the next fiscal, Jain said, "We will be investing about Rs 150 crore next fiscal compared with Rs 250 crore this year. That's because this year we built a few piping plants." On the food processing vertical, Jain said the company would remain an ingredient supplier to major processed foods companies instead of hitting the retail market.

G Seetharaman/ DNA-Daily News & Analysis Source: 3D Syndication