The Hindu Business Line : Karuturi sees Ethiopia entry as vehicle to expand biz globally

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Karuturi sees Ethiopia entry as vehicle to expand biz globally

‘We already have strong presence in the African country through floriculture’

Mr Sai Ramakrishna

V.K. Varadarajan

Bangalore, June 6

As India Inc’s expansionist programme has been focusing on luxury car companies, manufacturing and services sector for stretching its global footprints, a Bangalore-based entrepreneur chose to tread the traditional farm sector and announce the acquisition of 1,00,000 acres of agricultural land in Ethiopia, a country whose long history of famine refuses to impress the remarkable economic growth it has witnessed in recent years.

And Mr Sai Ramakrishna, Managing Director of Karuturi Global, which started as a floriculture company, said he saw an opportunity with the global commodity market at an inflection point to use Ethiopia as a vehicle to expand his business globally with additional product lines.

The $100-million Karuturi is the largest exporter of roses. It has farms in Kenya and Ethiopia, in addition to India.

In an interview to Business Line, Mr Ramakrishna, an engineering graduate and MBA from the US, says Ethiopia has left behind its past and boasts of an annual 12 per cent growth, largely contributed by agriculture.

Its foreign trade is worth $1.4 billion. But it needs to strengthen its economy, hence, the encouragement to foreign investment in agri sector.

What prompted you to choose Ethiopia for your agri venture? Will it be a sustainable business proposition?

We chose this country because we already have a strong presence there through our floriculture business. Ethiopia offers a competitive edge over India, with its membership in COMESA (Common Market of Eastern and Southern Africa) giving it duty-free access to the European markets.

The company hopes to leverage this advantage for the agri business. Though the European market had a quantity restriction for agri commodities such as sugar and oil seeds, the African countries had hardly reached their quota.

But how will the agricultural products that you are planning to grow help in expanding your business?

The company has acquired one lakh acres of land and is in the process of adding 6.5 lakh acres on long lease for an initial period of 45 years with an option for renewal. We will be paying $14 per acre per annum for the land. We have tied up funds of $250 million through debt and equity for the purpose.

We plan to grow paddy, palm and sugarcane for both sugar and ethanol, while other crops such as sorghum and vegetables would be rotated to take advantage of the growing global demand for these commodities.

We will be exporting rice to, West Asia, Asia and African countries while the other commodities will be targeted at the European and American countries.

We are also planning to set up processing centres to produce crude palm oil for trading for ethanol.

With the global energy crisis getting serious, there are plans for tapping the big oil companies selling ethanol for blending with petrol.

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Karuturi to grow paddy, vegetables in Ethiopia

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