Bhavarlal Jain
Award: The good company award
Age: 74
Why He Won: For impacting the lives of over three million farmers by helping them shift to more scientific and sustainable agriculture.
His Trigger: Inspired by the credo ‘Agriculture—a profession with a Future’, he gave up a career in law and moved towards trading and manufacturing agri products.
His Mission: To give back to society. Based on Gandhi’s notion of trusteeship, where wealth belongs not to an individual but should be used for the benefit of the community.
His Action Plan: Developing businesses and products that help farmers produce more with less.
His Next Move: More products and appliances for agriculture based on solar energy. Increasing contract farming, food processing and spice production. Building large irrigation projects for state governments.
It’s one of a kind. A train hitched to 50 or sometimes 70 specially designed container wagons that carries only bananas. Packed to the hilt once every week, it chugs along from Bhusawal in Maharashtra’s Jalgaon district to the markets at Azadpur Mandi in Delhi. Since it started regular services in September, the ‘Banana Express’ is fast becoming a symbol of the increasing agricultural abundance in the area. The region has been producing fruit for over a century, but harvests have rarely been as consistent or remunerative as in the last few years. Raver taluka in Jalgaon is recognised by the state government for generating agricultural income of over Rs 5,000 crore every year.
But it was not always like this. Much of the profusion can be attributed to changed agricultural practices in the last 10 years. Using tissue-cultured saplings to produce better quality fruit has enriched the 150 sq km area that produces a fourth of India’s bananas. Nearly all of the acreage is now irrigated by micro (or drip) irrigation systems. A lot of the change is driven by one man’s persistence and vision of creating shared value for his customers. For close to three decades, Bhavarlal Jain, founder and chairman of Jain Irrigation, has led the charge to convince farmers to change their ways to make them more sustainable and profitable.
He has also built a business that is unprecedented in terms of impact on the lives of millions of farmers around India. By now, power cuts and declining water tables all over the country have made the benefits of micro-irrigation apparent in various soil conditions. What was earlier limited to orchards has found acceptance in other crops. Bhau (as Jain is addressed by all and sundry), no longer has to preach to the converted. He works through a network of associates, who take dozens of other innovations in the entire food production chain to the farmer.
The systems that Jain pioneered are now being used in many other water-stressed states and have won global acclaim and innumerable awards. His farmers have been to Harvard Business School to present their story. His four sons—Ashok, Anil, Ajit and Atul—who look after operations have taken the company global. Some of the growth has been through acquisitions. Anil, managing director of Jain Irrigation, represented the company at the G8 summit on food security earlier this year—US President Barack Obama and the secretary of state were among the key speakers at the event.
Paradoxically, despite rapid growth in sales, keeping the business profitable has become tougher. The systems Jain Irrigation sells cost roughly $1,000 a hectare to install. Most small and medium farmers depend on liberal state subsidies, often to the extent of 50 percent to 70 percent of the cost, to fund the purchase. Recovering this from cash-strapped states is proving to be harder every year. Populism has seen some states promise 80 percent to 90 percent subsidy. But dues are not cleared for months, creating liquidity problems for the Jains who have already supplied the equipment. In the first quarter of this financial year (April to June 2012), Jain Irrigation posted a loss of Rs 16 crore. They came back into the black in the second quarter with a small net profit of Rs 36 crore, it is clear that the situation has reached a tipping point.
Tough Love and new beginnings
Fixing the model, without damaging the farmer’s interest, is a tough problem that Jain and his team have been grappling with for the past two years. The farmer is the pivot of Jain Irrigation’s business philosophy. Former Sebi chairman DR Mehta, who is on the board, says Jain’s concern for the farmer dictates his business. He recounts one board meeting last year, when profitability was under pressure. Jain surprised everyone by leading a discussion on whether the company should cut its margins, so that the farmer could benefit more. Mehta, who has spent a lifetime in philanthropic activities, says he had never heard of anything like this before. The sentiment is echoed down the line. Anil Jain says, “With uncertainties like weather or crop diseases, risks that farmers take are often much higher than any entrepreneur.”
But the problem for the Jains is that their customers have become used to buying the equipment by paying only 10 to 15 percent of the cost. The rest is usually a combination of credit from suppliers and state subsidy that they don’t have to bother about. With dues mounting to Rs 1,750 crore this year, Jain says there was no option but to change the business model. In June, he took the first step and stopped selling on credit.
The impact on product sales was immediate. Sales went down by almost 35 percent as farmers balked at the idea of paying the entire amount upfront. For many of them, loans were difficult to get or too expensive. On Dussehra day, Jain Irrigation launched its next move. A new Non Banking Finance Company (NBFC) called SAFL (Sustainable Agro-Commercial Finance Limited) began disbursing loans to their customers. The farmer receives subsidies directly from the government and can repay the amount. “The loan is like a bridge-finance till the farmer is able to pay,” explains Arvind Sonmale, a career banker, who heads the venture. SAFL will charge 2 percent more interest than commercial banks and the farmer has to bear the interest cost till the loans are repaid.
This improved focus was reflected in Jain Irrigation results for the next five years starting 2005. Revenues grew by 46 percent on average and earnings zoomed 70 percent. The group has been able to achieve scale on a variety of products. It is now the largest maker of plastic pipes in India and the second largest producer of drip irrigation equipment in the world. Of course, the run came to a grinding halt as cash-strapped state governments started delaying payments from 2011.
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(This story appears in the 07 December, 2012 issue of Forbes India. To visit our Archives, click here.)
We aii know JAIN Group\'s revolutionary vision in field of agriculture. Also want to request them to do experiment with famers of Rajasthan. Make another isreal in rajasthan. Kuldeep Kothari Rajasthan
on Jun 27, 2014Jain irrigation good job with farmers.thanks a lot.
on Mar 13, 2014I am impressed, i hope to be part of JAIN group, long life with us.all the best.thanks. Haresh Soni -mo-9687047161 Gujarat, Vadodara.
on Mar 8, 2014Very inspiring. I hope to be part of Jain\'s revolution some point in this lifetime as a humble farmer. All the best.
on Aug 13, 2013Impressed. wish Jain does miles to go to make millions smile . Jai(Kissa)n
on Aug 7, 2013Impressed.I wish Jain to bring changes in the lives of millions of farmers whose struggle is eternal.
on Aug 7, 2013Impressed.I wish Jain to bring changes in the lives of millions of farmers whose struggle is eternal.
on Aug 7, 2013Nice one
on Apr 29, 2013