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Rosy outlook

August 21, 2008

Remember how the Chinese demand for iron ore turned mine owners of Bellary district in Karnataka into plane owners? There is a similar Olympic spin to Bangalore’s cut flowers business.

KGL’s Karuturi: Windfall gains
KGL’s Karuturi: Windfall gains
The cut roses of one such company, Karuturi Global Limited (KGL), are being grabbed at a premium in global markets. “A flower is a product that reacts to events such as Olympics and we have benefited in the last two to three weeks. Our roses are quoting 25 per cent higher than the prices quoted around this time of the year,’’ says Ramakrishna Karuturi, Managing Director, KGL.

Just as Bangalore is India’s leader in software exports, Karuturi is the global leader in cut rose production. From a four hectare rose farm in Bangalore in 1994, the company has moved to manage 220 hectares of rose farms in Ethiopia, Kenya and India, three low-cost production centres. It is adding 450 more hectares—all in Ethiopia—to its floriculture basket. This year, Karuturi will produce 650 million stems and targets 1 billion by 2010. That’s not an impossible feat in a $64-billion (Rs 2.7 lakh crore) industry, that’s growing annually at 10-12.5 per cent.

What took KGL to global heights was a strategic acquisition it made last year. The Kenya-based Sher Agencies, a cut rose major, was six times the size of KGL, but Karuturi bought it over for $60 million (Rs 240 crore). He now has big plans for Ethiopia. The company plans to grow sugar, cereals, vegetables and palm.

Agriculture is Ethiopia’s mainstay, accounting for 47 per cent of GDP and 85 per cent of employment. As of now, floriculture makes up 97 per cent of Karuturi’s top line. But the company is determined to skew that ratio by going far beyond roses. The product portfolio is being broadbased so that the company is de-risked from the sole business of floriculture. “We have a larger agriculture basket to look at to protect our margins as we grow,’’ Karuturi says.

K.R. Balasubramanyam


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