Two reasons have affected the net profitability of Jain Irrigation Systems Ltdin the September quarter— higher interest expenses and depreciation of the rupee against the dollar, which led to a mark-to-market forex loss of 59 crore. Accordingly, net profit declined sharply by 81% compared with the year-ago period to 11.57 crore.

Anil Jain, MD, Jain Irrigation.File photo.

For the September quarter, two-thirds of the revenue came from the farm products business, while the remaining came from the industrial products business.

Operating profit increased at a much faster pace of 28.6%, helped by slower rate of growth in employee costs and other expenditure. Jain Irrigation’s operating profit margins increased by 151 basis points to 23.3%. One basis point is one-hundredth of a percentage point.

Also See | Quarterly performance (PDF)

Of course, the company’s performance in the September quarter looks a tad disappointing compared with the three months ended June, when it had reported good financials.

In the June quarter, total revenue and operating profit had increased by 31% and 38%, respectively. However, the September quarter has been historically a lean one for the company.

Meanwhile, Jain Irrigation’s stock has underperformed the BSE-200 index since the beginning of the fiscal year, mainly due to balance sheet concerns.

As of September, the company’s receivables stood at about 1,700 crore, while loan funds were around 2,700 crore. Delay in subsidy disbursements from the government has put pressure on receivables.

Of course, it would help if the proposed non-banking financial company (NBFC), which is expected to be operational towards the end of this fiscal year to March, offers some respite.

Investors are likely to keep a close tab on how the NBFC pans out.

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