RUNGTA IRRIGATION Ltd. - In a Space with Huge Potential.

                                               
About the Industry 
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Micro irrigation technology is rapidly expanding all

over the world especially in the water scarce areas

of developing  countries.This system is best utilized

in India and China but still there is ample market

potential with changing trend in agriculture. 

Water scarcity is the most important driving

factor of the Micro Irrigation Systems (MIS)industry

in India. Along with this ,the area available for

crop production,growing population in the country

and GDP of the agriculture sector also contributes

to the growing demand for MIS.
The water use efficiency under conventional  method 

of irrigation, which is predominantly practiced in

Indian agriculture, is very low due to substantial

conveyance and distribution losses. Recognizing the

fast decline of irrigation water potential and

increasing demand for water from different

sectors, a number of demand management strategies

and programmes have been introduced to save water

and increase the existing water use efficiency in

Indian agriculture. One such method 

introduced relatively recently in Indian

agriculture is micro-irrigation, which includes

both drip and sprinkler method of irrigation.

Micro-irrigation is proved to be an efficient method

in saving water and increasing water use efficiency as

compared to the conventional surface

method of irrigation, where water use efficiency 

is only about 30 percent. Micro-irrigation is also

found to be reducing energy (electricity) requirement,

weed problems,soil erosion and cost of cultivation. 

Investment in microirrigation also appears to be
economically viable .Despite this, as of today, the coverage
of drip (2.13 percent) and sprinkler (3.30 percent) method
of irrigation is very meager to its total potential, which is 
estimated to be 21.01 million hectares fordrip and 50.22 million
hectares of sprinkler irrigation method.

About the Company
--------------------
There are mainly three listed players in this space, 
JAIN IRRIGATION ,EPC INDUSTRIES and RUNGTA IRRIGATION.
There is also some other small players like Sturdy 
Industries,Tulsi Extrusion ..etc.But these two can be
avoided - first one due to lack of quality of
management and Tulsi Extr.due to the small share 
of micro irrigation products to its total turnover.
There is no justification for comparing an elephant
with an ant ,so no question of comparing 
Jain Irrigation and  Rungta.Incorporated
in 1986, Rungta Irrigation Ltd
is engaged in manufacturing, designing, assembling
and marketing of Micro irrigation systems 
(including sprinkler and drip irrigation systems). 
Rungta’s Manufacturing units located in the Sirmour
district of Himachal Pradesh,Ghaziabad in 
Uttar Pradesh, and in the Yanam district
within the Union Territory of Pondicherry with 
combined installed capacities of 4,500 MTPA HDPE
pipes, 200,000 HDPE pipes with couplers, 
5,000 MTPA rigid PVC pipes and profiles, 
750 MTPA linear low density polyethylene tubes,
and 350,000 aluminum pipes with couplers.The company
is focused on PVC Pipes as well as its core product
Sprinkler Irrigation System and Drip Irrigation
System to the retail segment, were margins
are high.It is expected  that recovery  in economy
and thrust of  the  government in agriculture area
will together result in ample business opportunities
for the  company.



Recent Developments
-------------------
Rungta Irrigation Ltd has at its meeting
held on January 12,2010 has allotted 20,50,000
equity shares of Rs. 10/-each at a premium
of Rs. 25/-each against the conversion of 20,50,000
convertible warrants.Samara Realty Pvt.Ltd got
9,50,000 shares and Pleasure Investment Pvt.Ltd to
allotted 11,00,000 Number of shares. Moreover
the main promoter of the company Mr M P Rungta is
consolidating his holdings through off market
transactions within the promoter group itself.
Such activities can be taken as a  proof of the
management’s confidence in the growth potential
of the company’s business.


Financials
-------------
For the last FY, the company has reported a sales income of Rs. 35 crore and net profit of Rs. 63 lakhs. For the nine month ended Dec.2009 company already  posted a NP of 77 lakhs and expected to post more than 1 crore in this full year. At present the results are not encouraging but the notable point is that ,for the last three years company’s NP is growing steadily. Considering the immense thrust of the government in agriculture sector and huge potential for  the company’s products along with increasing promoter/big share holders commitment, we can expect a bright future for Rungta Irrigation. Currently it is trading at Rs.58/-