India’s largest micro irrigation firm Jain Irrigation Systems Ltd is hiving off its food business to a wholly owned subsidiary Jain Farm Fresh Foods Ltd in what could be a precursor to independent fundraising or a sale of the unit.
VCCircle had first reported in March 2014 that the firm is looking to bring in external investors for the food business.
The Jalgaon-based company, which is backed by World Bank’s private investment arm IFC, said it has taken the decision to create a strategic focus on the fast-growing food business and consequent value creation opportunities.
The food business of the company comprises food manufacturing units at Jalgaon (Maharashtra), Vadodara (Gujarat) and Chittoor (Andhra Pradesh) besides the indirect subsidiaries carrying on food business activities namely: SQF2009 Ltd UK and Cascade Specialities Inc, the US.
Jain Irrigation is one of the largest players in the agro-industrial business controlling a large chunk of the irrigation market, particularly in micro and drip irrigation segment.
Early this year, its agri-NBFC subsidiary Sustainable Agro-commercial Finance Ltd (SAFL) raised Rs 112 crore ($17.9 million) from Mandala Capital, which invests in agri-focused companies in India.
Mandala Capital holds 20 per cent stake in SAFL, which also counts IFC as another investor.
Founded in 2011, Mumbai-based SAFL provides loans to small-scale farmers to help them install micro-irrigation systems and improve productivity. The company has so far served over 15,000 farmers since its inception.