The Hindu Business Line : Karuturi to grow paddy, vegetables in Ethiopia

Bangalore, May 29 Floriculture and food processing firm Karuturi Global Ltd is planning to raise $250 million through debt and private equity route to finance acquisition of 7,50,000 acres of land in Ethiopia crop cultivation. The company on Thursday announced that it had already acquired 1,00,000 acres of land and would soon start cultivation of paddy, sugarcane, palm and vegetables. The entire acquisition of 7,50,000 acres of land is expected to be completed by 2008-end, said Mr K.S.Ramakrishna, Managing Director. The impact of the acquisition will begin to be reflected in the company’s balance sheet from the third quarter of the current financial year, he said. He said Karuturi Global Ltd had already firmed up $100 million from private equity firms and the debt portion was being raised through consortium of banks in Ethiopia.

Karuturi Global will be diluting up to 10 per cent of its stake in its wholly-owned, Dubai based subsidiary, Karuturi Overseas Ltd to raise the equity.

This company will serve as a special purpose vehicle for all its investment needs in Kenya, Ethiopia, Europe and Dubai, he said. Announcing the plans, Mr Ramakrishna said entering grains cultivation was par of the company’s expansion of its agri portfolio and emerge as a strong Indian multinational in the farm sector. Stating that 50 per cent of the land would be deployed for growing paddy, Mr Ramakrishna said Karuturi would be producing five million tonnes of rice.

The remaining part of the land would be utilised for long term crops like palm, sugarcane, he said adding about 10,000 acre would be set aside for vegetables.

He said the expansion, though, a long term plan, had come at the right time when the demand for crucial agri products was growing globally. The produce from the Ethiopian land would be targeted for exports to Europe, West Asia and the common market for Eastern and Southern Africa.

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