History of Jain Plastics & Chemicals Ltd.
Mr. Bhavarlal Hiralal Jain commenced business in 1963, primarily marketing petroleum products, auto vehicles, farm machinery, tractors & implements, seeds, fertilizers, pesticides, cement and PVC pipes, on behalf of reputed corporates like ESSO, Escorts, Ashok Leyland, National Seeds Corporation, Indian Potash, Zuari, RCF, Rallis, CIBA, ACC & Chemplast.
This activity continued till 1978, during which period, the Jains accredited themselves with considerable distinction and were adjudged to be the highest sellers of ESSO Crude Oil, Zuari Fertilisers & NSC Seeds in Maharashtra in 1979 & the highest sellers of Escorts Tractors & Motorcycles in Maharashtra in 1975. The exposure to the agricultural sector in these formative years laid the base for future agro based industrial ventures of Jains.
In 1978, Jain Plastics & Chemicals Private Limited was incorporated to take over a disused banana powder plant & the same was converted by modification of machinery to be the first Indian industrial venture for production of refined papain, an industrial enzyme produced from papaya latex, which is used as an additive in the brewing industry, as a digestive enzyme. Jain Plastics and Chemicals Pvt Limited started export of papain in December 1979 & won several export awards over the years. The long track record of sustained high quality papain has created a very high brand equity for 'Jain Papain'. In fact, the product of Comp. is sold at a premium in the world markets. The Jain Group is today supplying the best quality Papain [measured in terms of activity per gram of Papains] & the second largest producer of refined papain in the world & caters to approximately 15/20% of global demand.
In 1980, the Group diversified into the manufacture of PVC pipes and established a range of plastic tubing/pipe products using state-of-the-art technology & further expanded its product range to include profiles & wood substitutes. The PVC operations today are under the Management of Jain Plastics and Chemicals Limited, the Issuer Company.
In December 1986, the Jains incorporated Jain Irrigation Systems Limited [JISLs] to' manufacture & distribute micro irrigation systems & in 1987 the Comp. entered into a technology transfer & collaboration agreement with James Hardie Irrigation [Italys] Srl. to produce & market micro irrigation systems [MISs] in India. The Comp. made its maiden Public Offering in October 1988 to establish facilities to manufacture state of art Micro Irrigation Systems in India for first time. In May 1991, the Comp. established a 100% EOU to manufacture Components of Micro Irrigation Systems & entered in new areas of manufacture & export of Injection Moulded Components & Extruded Plastic Sheets.
To finance the installation of increased production capacities, the Comp. raised an amount of Rs. 5432.62 lakhs in 1992 by way of a Rights Issue of 14% Secured Redeemable Partly Convertible Debentures & successfully met the Objects for which the funds were mobilised.
JISL also implemented a programme to manufacture polycarbonate sheets in 1993. In 1994, the Comp. made an offering of 26,96,600 European Depository Receipts [EDRss], representing 26,96,600 shares at a price of U.S. $11.125 per EDR aggregating US $30 million [Rs. 94.5 croress]. The Comp. raised these funds to finance its diversification plans into the areas of tissue culture, water soluble fertilisers, green houses, solar water heating system, HDPE pipes, advanced sub-soil micro irrigation tubings, addition of new varieties of polycarbonate and acrylic sheets to its existing range of products. The EDR is now quoting at a price of U.S. $7.50 on the Luxembourg Stock Exchange & the equity shares of Comp. are now traded at a price of Rs. 210/- on the Bombay Stock Exchange.
Jain Irrigation Systems limited is a recognised export trading house under the guidelines of Ministry of Commerce. Jain Irrigation Systems limited has also received top exporters awards for the year 1991-92 & 1992-93 from the Plastics and Linoleum Export Promotion Council [PLEXCONCILs] as a recognition of its concerted efforts to improve exports specially to developed countries of Western Europe & North America.
Today, the Jain Group manufactures a diverse range of products, including enzymes, extruded & moulded plastics, & drip and micro irrigation systems & high-tech agricultural inputs like tissue culture plants, water soluble fertiliers, green houses, etc.
Mr. Bhavarlal Jain heads the Jain Group of Industries which recorded an annual turnover of Rs. 1727.10 lakhs for year ended March 31, 1994. The Group Net Worth is Rs. 1716.20 lakhs with an asset base of 1469.05 lakhs valued at historical costs.
The Company
The Comp. was incorporated under the name & style of Aarbee Pipes & Profiles Private Limited on February 17, 1982, to carry on the business of manufacturers, processors, buyers, sellers, dealers, importers, exporters, of PVC Pipes and Fittings, PVC & other plastic material, plastic film, plastic paper, plastic foil, plastic jute, plastic textiles, plastic boards, plastic laminates & packaging material.
In the first four years of its existence, it concentrated on putting up its manufacturing facilities spread over land admeasuring 1.5 acres at Sendhwa in Madhya Pradesh.
In the same interregnum, various other group companies, notably Jain Compounding & Formulations Limited, JEF PVC Pipes Limited, Jalgaon Pipes Manufacturing Comp. Limited, & Jayee PVC Pipes Limited were also spun off mainly to take advantage of the various fiscal incentives, available to the small scale industries. Small scale industries enjoyed complete exemption from sales tax without any limit on turnover for a period of seven years. The other reason was to have a local presence in whichever areas the Comp. operated & to be at the production site to effect economies in transportation costs.
1987 was the first full year of operations of Comp. & it recorded a total income of Rs. 505.11 lakhs. In 1988, the Company [Jain Plastics and Chemicals Pvt. limited which subsequently was amalgamated into Jain Plastics and Chemicals Ltd.s] launched its range of corrugated pipes for sub-soil drainage of sizes 50mm, 110mm & 160mm in single & double wall construction. The response from the market was encouraging.
The Comp. [Jain Plastics and Chemicals Pvt. limited which subsequently was amalgamated into Jain Plastics and Chemicals Ltd.s] added on to its product range in 1989 with the introduction of PVC window profiles & the light weight and innovative Rib-Loc pipe range from 100 to 1000 mm dia for low pressure irrigation, sub soil drainage & sewer lining and storm water drain applications. Downstream equipment as well as dies, calibrators & winding machines used for manufacturing Rib-Loc pipes were also developed with technical support from Rib-Loc Australia. The Rib-Loc technology allows plastic pipes to compete with other pipes in the large diameter segment. The salient features of agreement dated December 29, 1988, with Rib-Loc are as follows:
1. Rib-Loc in consideration of all warranties & agreements would give JPCL an exclusive license of technology;
2. The duration of Agreement shall be for a period of six years from the date the Agreement is filed with Reserve Bank of India, or six years from the date of commercial production, provided production is not delayed beyond three years of the date the Agreement is filed with RBI.
3. RLG shall allow JPCL free access to manufacturing and marketing strategies & reports of RLG & RLG shall use its best endeavours to obtain free access of JPCL to manufacturing and marketing strategies & reports of RLG licensees or franchisees.
In the changed business & economic environment & with the expiry of sales tax benefits, the need was felt to form a single & powerful cohesive unit which would give the Management closer control over production planning, marketing operations & to identify new vistas for growth.
Consequently, APPL approached the Bombay High Court on October 8, 1992, for sanction of amalgamation scheme & the same was approved by their Order dated March 17, 1993. However, the amalgamation was made effective with retrospective effect from June 30, 1992.
Further, the Court Order states that with effect from June 30, 1992, the business of transferor companies, namely Jain Compounding & Formulations Limited, JEF PVC Pipes Limited, Jalgaon Pipes Manufacturing Comp. Limited, Jayee PVC Pipes Limited & Jain Plastics & Chemicals Private Limited, the first corporate body of Jain Group, stood dissolved.
Subsequently, the Comp. became a Public Limited Comp. and its name was changed from Aarbee Pipes & Profiles Limited to Jain Plastics & Chemicals Limited & a fresh certificate of incorporation consequent on change of name was obtained from the Registrar of Companies, Maharashtra, on April 30, 1993. The name Jain Plastics and Chemicals Limited was retained in view of the long history, goodwill & the brand equity associated with the name. Incidentally, Jain Plastics and Chemicals Pvt Limited incorporated in 1978 was the first corporate entity of Jain Group & had a major role to play in promotion of Jain Irrigation Systems Limited.
In the pre-amalgamation scenario, 1987 was the first full year of operations of Comp. in which it recorded a total income of Rs. 505.11 lakhs. In the next few years, the Company consolidated its earlier operations & for year ended March 31, 1992, had recorded total income of Rs. 1059.44 lakhs. In the post amalgamation scenario, the income from operations of the Comp. rose by 58% [annualised basiss] for period ended July 31, 1994, against the 17 month period ended August 31, 1993.
The Company exports increased from a level of Rs. 150 lakhs [through one of amalgamated Companiess] in 1991-92 to Rs. 11.93 crores in 11 month period ended on 31st July, 1994. During 1993-94, the Comp. was awarded top exporters award for the years 1991-92 & 1992-93 by Plastics and Linoleum Export Promotion Council [PLEXCONCILs] as a recognition of export drive launched by Company.
Plans are on the anvil to diversify into the business of vegetable dehydration, fruit processing & granite processing.
For the vegetable dehydration project, the Comp. has appointed M/s. Foodpro International Inc. of U.S.A. as the project design & erection consultants. M/s Foodpro are one of the leading consultants & have commissioned many plants worldwide. The services to be rendered by Foodpro encompass the following areas:
1. Foodpro would render assistance in the preliminary design study, including evaluation of proposed site, developing a site utilisation plan, preparing drawings for equipment supplies and layouts, & preparation of cost & volume estimates.
2. Foodpro will assist in the start-up of all equipment to ensure that all motors & controls are fully operational.
3. Assist in the training of all operational personnel and monitor operations to ensure that all the systems are brought to speed properly.
For the food processing project, the Comp. has entered into a Memorandum of Understanding with Chiquita Brands, Inc. of the U.S.A. for establishment of body corporate in India. The salient features of understanding with Chiquita are as follows:
1. An Indian corporation would be incorporated for purpose of producing processed products made from bananas, papayas, gnavas, mangoes & other mutually agreed upon products for export from India. The joint venture Comp. shall also establish facilities for fresh fruit exports.
2. A Chiquita entity & the Comp. would also enter into a marketing agreement pursuant to which the Chiquita entity contemplates serving as the Company exclusive agent for the marketing & sales of products outside India.
3. Chiquita & the Comp. will likewise expect to enter into a royalty bearing trademark licence agreement pursuant to which the Comp. will receive an authorisation to use certain trademarks & tradenames bearing the Chiquita brand in connection with the marketing & sale of products both in India & outside.
