Indian Stock Market

Karuturi Global raises cut rose prices by 15-20 per cent

“Prices may move upwards this year by at least 15-20 per cent,” said Sai Ramakrishna Karuturi, founder and managing director of the world’s largest rose plantation, spread over 300,000 hectares in India, Ethiopia and Kenya. The head office is in Bangalore.

Currently, the short cut rose is sold at 10 euro cents (Rs 6) per stem) while the large cut rose is quoted at 18 euro cents (Rs 10.50) per stem).

There has been a sharp increase in transportation cost, linked to oil prices. High labour cost is also forcing many European floriculture units to close operations. Several floriculture producers in Spain have converted their rose farms into holiday villas, leading to the growth of newer floriculture hubs across Latin America, Africa, and Asia, including in Ethiopia, Ecuador, Colombia, India, China, Kenya and Tanzania.

Demand has risen faster than supply, pushing prices up. The average US cut rose price increased from $0.377 per stem to $0.430 per stem in the past year.

Recently, the demand for cut roses has re-emerged from European countries, especially from Eastern Europe and the United Kingdom after over a year of lull. Hence, a price rise is imminent, said Karuturi on the sidelines of a seminar organised by ICICI Bank here on Wednesday.

Europe contributes about 80 per cent of the company’s annual turnover of over Rs 500 crore. KGL is the global leader in cut rose production, with a current capacity of 650 million stems a year. The company is implementing a plan to raise annual capacity to a billion stems. Most of the production comes from Ethiopia and Kenya, due to favourable climate, support from the government, a tax advantage given to these countries, proximity to the European markets, availability of land and, above all, cheap labour.

Currently, KGL has 250 hectares (a ha is 2.5 acres) under cut rose cultivation of which 174 ha is in Kenya, 70 ha in Ethiopia and 10 ha in India.

The government of Ethiopia has allocated 450 ha to the company and they are planning to bring all these under cultivation in the next two to three years. The company has another 311,700 ha in Ethiopia and Kenya and it plans to use these for other agricultural forays over the next two years.

The sales target is Rs 2,500 crore by financial year 2011. Karuturi sees no further need for land acquisition in African countries: in the past decade, land prices in Ethiopia and Kenya have surged. The global cut rose business, now $70 billion, has been growing at 10-15 per cent for the past two years and this pace is likely to continue, he said.

Karuturi Global in investing Rs.450 crores for sugarcane crushing plant in Ethiopia

Karuturi Global Ltd , the world’s largest organised player in the floriculture industry said that it would invest $ 100-mn for setting up a sugar-cane crushing plant in Ethiopia (Africa).

“We will invest $100-mn in a phased manner to set up a sugar-cane plant in Ethiopia. The first phase of the plant is expected to be operational by October this year,” KGL’s Promoter and Managing Director, Ramakrishna Karuturi, told reporters on the sidelines of an event here today.

The plant will have a capacity to crush 7,000-tonnes per day, he said. The company will use 15,000-hectares of its three-lakh hectares of land it recently bought in Ethiopia for sugar-cane plantation, he said.

KGL is a global market leader in production and export of cut roses. It caters to the domestic and international markets through its Indian, Ethiopian and Kenyan operations.

The company exports cut roses to Europe, south-east Asia, the Middle-East, North America, Australia, Japan and New Zealand, besides sales in India. Exports constitute about 90 per cent of its revenues.

Karuturi overseas to raise Rs.1500 crores for its African arm.

Reliance capital is also looking to buy some stake.

Company is growing crops , cereals , sugar in the farm it has leased in Ethiopia

World’s largest rose buds producer Karuturi Global is raising $100 million by selling a 15 per cent stake in its Dubai-based subsidiaryThe company will sell the stake in Karuturi Overseas to a private equity player valuing the Dubai-based subsidiary at over $650 million after the acquisition. The Dubai-based entity is the holding company for all the African business of Karuturi Global and contributed around 90 per cent of its revenues and net profit. The entity is currently valued at less than $250 million.“The PE firm has valued the company for its underlying potential which would be achieved in the long term,” said an investment banking source familiar with the development. He refused to divulge the name of the PE firm.The term sheet for the deal has already been signed and the formalities would be finished by early November. Managing Director Sai Ramakrishna Karuturi confirmed the fund raising plan through divesting stake to a private equity player. But he refused to divulge the details. Yes Bank is the advisor to the company for the deal.The Bangalore-based company became the world’s largest grower of roses after acquiring Ethiopia’s Sher Agencies for $68 million last year, which took its annual production to 685 million stems from 150 million earlier.The African business of Karuturi Overseas includes all the floriculture business in Kenya and Ethiopia. And it also includes its foray into agriculture products in Ethiopia. The products include palm oil, sugarcane, fresh-cut vegetables and cereal crops.The company intends to expand cultivation to 1,20,000 hectares in the next five years, which is three times the size of Mumbai having 44,000 hectares of land. Karuturi Global, the parent company of the Dubai subsidiary, was down by 2.41 per cent to Rs 20.25 a share on the BSE on Monday.

Aries Agro IPO : Four units to come up in FY08

Aries Agro IPO, a micronutrient and other nutritional products for plants and animals manufacturing company, is entering the capital market with its IPO of 45,00,000 equity shares of Rs 10 each for cash at a premium to be decided through the 100 per cent book building process.

Jimmy Mirchandani, Joint MD speaks to CNBC-TV18 about their expansion plans. He said four new units will come up in phases up to 2008.

Excerpts from CNBC-TV18′s exclusive interview with Jimmy Mirchandani:

Q: You are looking to raise about Rs 58 crore and you are setting up about four plants; when will the expansion be complete and when will the four units come on board?

A: We expect it to be completed in phases going up to 2008, when our last plant should be in operation.

Q: It is interesting to note that bulk of your money raised from the IPO will go into working capital unlike for most companies it goes into expansion?

A: In the agri-business space most of the products are sold to the farmers on credit and it’s the business that typically demands a lot of working capital.