Karuturi Global, better know as India’s largest rose exporter, is moving ahead with its plans to expand its agriculture export business from the fields of Ethiopia and the vertical may soon overtake rose exports revenues by the end of next fiscal.
According to a two-year roadmap prepared by the company, it is expected to raise Rs 1,150 crore over the timeframe through a mix of debt and equity on top of the recently-raised Rs 480 crore.
Sai Ramakrishna Karuturi, MD, Karuturi Global, confirmed the fund-raising plans and said that clarity of the route and instruments will be in by December 2009. Industry sources indicate that the company is also mulling a GDR on the Kenyan or the Johannesburg exchanges to raise the equity part of the Rs 1,150 crore.
The company had earlier this year raised Rs 480 crore, with debt accounting for around Rs 275 crore and the rest through equity.
The Rs 500 crore Karuturi Global has been allotted a little over 840,000 acres in Ethiopia to develop the agriculture land in which the company will be growing cereal crops (maize, wheat, rice), fresh vegetables, palm oil and then at a later stage will be getting into sugarcane.
Company officials told Business Standard that they will be kick-starting the cereal crop cultivation to start with and this will be sold to the African markets, while the fresh vegetables will be exported to the UK.
While palm oil will find its way to Asian countries, sugar, which will be cultivated later, will be shipped to various African countries while ethanol, a by-product of sugar manufacturing will be exported to fuel the hungry United States. Karuturi Global will raise close to $50 million debt for sugarcane cultivation.
The company expects around Rs 80 crore of revenues from the agriculture business during the present fiscal, the first year of this diversification. In addition to this large scale diversification, Karuturi Global has been in the business of cultivating gherkins, which brought in revenues of Rs 15 crore last fiscal.
Karuturi Global has been deriving 95 per cent of its revenues from rose exports and has been doing this business at a healthy profitable rate. While each stem is sold for 11-12 Euro cent, its cost of produce is around 7 Euro cent, a margin of around 70 on each stem of rose. The company has around 550 acres under cultivation for roses which is being expanded by adding another 150 acres in the near future.
Karuturi Global is in advanced discussions with a global food-processing major to set up a 1 million tonne unit for contract farming of tomatoes.
According to industry sources, the deal is expected to be announced this quarter and will involve value addition on top of farming. Sources indicate that Karuturi may be looking at Kolar to set up the unit.
