INTRODUCTION
JAIN IRRIGATION SYSTEMS LIMITED (JISL) was found in 1963 by Dr. Bhavarlal H. Jain. The company originally sold agricultural inputs around the world and in India mainly. It had expanded its operations abroad. It also moved itself into the business of food processing, biotechnology and energy. However, since 1980 the company has mainly focused on the India’s farmers and had expanded itself in the agricultural business sector. The company has since then focused on the farmers’ quality of life, income and their productivity. The company had also developed a system known as the micro-irrigation system (MIS), which helped each individual farmer to look after his crops and maximize the production potential of their lands. After the introduction of MIS in 2010 the company has acquired almost 60% market share of the total market and 15% market share of the global market which is a very big share.
The agricultural industry was a big industry in India. It was also consistently changing and is very volatile in nature. The company was now looking to develop a long-term plan for its agricultural business. As the company expanded its initial vision of developing the quality of life of each farmer and making him more productive had not changed. The company had always focused to satisfy its customers by creating value. It was now looking for ways to add further value to its all product offerings. The revenue of the company had just increased from $138m in 2005 to $765m in 2010. Today with a market capitalization of $72,864m the company is profitable and successful in its business.
SWOT ANALYSIS
A SWOT Analysis is a tool to evaluate the strengths, weaknesses, opportunities and threats of a company. It is basically comprised of the internal and external analysis of the company. The strengths and weaknesses are part of the internal analysis, while opportunities and threats are part of the external analysis of the company. Once the analysis is completed and all the four areas are evaluated, the firm, then identifies where the organization needs to devise strategies to remove its threats and overcome its weaknesses by using its strengths. It will also make plans and formulate strategies to grab all the opportunities. These are the opportunities which will increase the shareholder value. The assessment of strengths, weaknesses, opportunities and threats is done below:
1. STRENGTHS
JISL has a 60% market share in the agriculture market of India. It has a strong brand name in India. Out of the global market share, the company has 15% of market share. The company has implemented business model. The company has worked for small farmers of India to increase their productivity and quality of life. The company has implemented customized MIS systems which serve as a guide to individual farmers to increase their productivity. The company over the time has won the trust of its farmers.
The company has built a training and research center in 1989. It has always focused to research and development as the tools for innovation. Also when the company began to build its MIS, the majority of the portion of the finance for this investment was paid by the government. The government has subsidized of about 50% to 70% of the total cost of the project. This shows that the company has always maintained good relationships with the government also. The company has 3000 networks in the world with 2100 networks in India alone. This made possible for the company to move forward its products to rural areas. The distribution network at JISL was efficient.
2. WEAKNESSES
JISL has always relied on its banks for credit. The company is dependent on the subsidies provided by the company. The company debt to equity ratio, which represents its leverage is around 3 in 2009 and 2010 which means the company is highly levered. This means the company might have problem in raising additional loans in future. The company will need additional funds to expand its business in the area of food processing especially. The company, therefore, needs to maintain its debt level in the company.
It has been also noted that the company has no proper recruitment policies. Also the company had a good top management, but still there was no layer of middle managers in the company. The company has also weak position and has not created a good return on capital employed, return on assets and return on equity in 2009 and 2010.
3. OPPORTUNITIES
The company is now looking and planning for long-term international expansion of the business. The company had an opportunity in the area of MIS. The company had anticipated that the business would grow by 35% to 50% in India and 10% to 15% in the global market within the next three years. The company..................
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