Meet the world's largest exporter of roses

He is the world's largest exporter of roses. His company has leased 3,000 sq km of land (that is five times bigger than Mumbai, which is 603.4 sq km in size!) in Ethiopia. Here is his amazing story...

After completing his engineering and MBA, it was but natural for Sai Ramakrishna Karuturi to join his family business. A three-year stint and he realised that he wanted to explore new pastures and not stick to his father's business.

After toying with various options he finally settled for floriculture -- he decided to cultivate and export roses.

But cultivating flowers in India is an expensive affair. After a chance meeting with a former colleague he moved to Africa, where the seeds of his fortune were sown.

With 15 per cent of the global market in his grasp, Karuturi, today, is the world's largest exporter of roses.

Three years ago, he added agriculture to his bandwagon. Today, his company Karuturi Global Ltd has 3,000 sq km of agricultural land in Ethiopia (that is 5 times the size of Mumbai!) and 239 hectares of land for rose cultivation.

The company's turnover in 2009 was Rs 650 crore (Rs 6.5 billion).

Here's his story in his own words:

The beginning

Since I come from a business family, entrepreneurship was the only option open to me. My father, though he is 76 years old, still runs many businesses, including power transmission. It was like I was in a business school from age three!

After I completed engineering, I went on to do MBA in the United States. While my father taught me the essence of business, the management degree added a structured dimension to the existing knowledge and taught us all about supply chain and marketing.

I came back and joined the family business and worked with my father from 1990 to 1993.

Starting own enterprise- the flower business

In 1994, I zeroed in on the flower business. I was immensely influenced by management guru Michael Porter's theory of 'Sustainable Competitive Advantage'. I was looking at any business that has sustainable competitive advantage from India into the global market.

I never looked at a business that supplied into India or into a particular region. I wanted to start an enterprise that would sustain itself globally. I was looking at a variety of businesses and the flower business appealed to me the most.

When I visited Israel, I perceived the enormity of the flower businesses, and it left a mark on me. I fell in love with this business, and my passion for it has not dimmed in all these years.

I started with a shoe-string budget of Rs 133,000 which was what I had in my bank account then. Bank loans were easy to get for this sector and many others were also getting into the business with crores of rupees. Then, my father gave me a seed capital of Rs 50 lakh (Rs 5 million). I approached IDBI and they sanctioned Rs 5 crore (Rs 50 million).

I completed the project by 1996. I bought around 28 acres of land in Doddabellapur, 40 km from Bengaluru, and built a couple of green houses.

Mind you, I did not import them. I got my green houses built on the footpaths of Bengaluru, literally. They were designed by the Indian Institute of Science. I bought steel from the market and got it fabricated at a roadside workshop. We made it at a third of the cost at which our competitors were importing it.

When our competitors were importing rose shrubs at Rs 80 per plant, I got them from the local nurseries. They wanted me to import the basic bud wood so that they could make the varieties here in Bengaluru itself. I got them imported from Germany and Holland and it cost me only Rs 5 a plant.

The building block of our success started with frugality and the Indian way of stretching the rupee thin. Our capital and revenue costs were kept very low.

I built this business on very strong foundations of keeping costs low and that has helped us reach where we are today!

Moving to agriculture

Three years ago in 2007, we decided to buy land in Ethiopia for agriculture. Today, we have 3,000 sq km of land which is 5 times the size of Mumbai, and it makes us one of the world's largest landlords! I never thought of becoming a landlord, much less one of the world's largest. That was not a goal at all.

We harvest rice, maize, vegetables, palm oil, and sugarcane. We produce about 5 million tonnes of rice which we export to many countries. That is about one per cent of the world's rice production and 20 per cent of the traded volume in the global market.

We also hope to be a significant player in the maize, sesame, soya and sorghum markets. Palm oil also will be produced in around 100,000 hectares and we will be one of the top five palm oil producing companies.

We have already been rated by UNCTAD (United Nations Conference on Trade and Development) as a member of the 25 largest transnational corporations in agriculture. I want to be ranked among the top 5 and make every Indian proud that one of their own has reached the heights, not in IT but in agriculture.

Future plans

Though horticulture is the main driver of our business, in the next 24 months, agriculture will be twice as big as horticulture.

We expect incremental revenues from agriculture to go past $600-700 million and I don't see horticulture revenues going past $200 million (it is currently $150 million).

My target is to take this company to the billion-dollar club by 2015. So, the next five years' journey is going to be very enjoyable and fulfilling.

Advice to entrepreneurs

My advice to young entrepreneurs is that there is no substitute for hard work and passion. If you are passionate about your work, you can excel in it. You cannot just be passionate and not be hard working; they go hand in hand.

Cadbury India’s share valuation issue heats up

Chocolate and confectionery maker, Cadbury India has rejected the 30% premium recommended by the court-appointed valuer Ernst & Young on share valuations fearing that it might jack up the share prices further upwards.

The company had informed the Bombay High Court about its objection with the 30 per cent premium recommended on share valuation of Rs.1340 suggested by earlier valuators was not acceptable to them. Earlier, valuators Bansi Mehta & Co and SSPA & Co had suggested per share valuation at Rs.1,340.

Cadbury is considering to buyback 2.5% shares owned by minority shareholders, who were not satisfied with the offer made by the company and felt the valuation was low and did not offer value for money at such low rates.

Following to the minority shareholder’s appeal in the Investors Grievances Forum to oppose low valuations, the court appointed Ernst & Young as fresh valuers.

In the latest development the Bombay High Court has asked counsel of both sides to give their submissions on the matter on Wednesday.

According to Investors Grievances Forum (IGF), Cadbury has 8,088 shareholders in the country and abroad. Of them, 800 are minority non promoter shareholders.

Tax exemption allowed in bonds of IFCI, IDFC, LIC and NBFCs

The deduction will be in addition to the deduction of rupees one lakh allowed under sections 80C, 80CCC and 80CCD of the Act.

The Central Government has specified bonds to be issued by (i) Industrial Finance Corporation of India (IFCI); (ii) Life Insurance Corporation of India (LIC); (iii) Infrastructure Development Finance Company Limited (IDFC); and (iv) a Non-Banking Finance Company (NBFC) classified as an infrastructure finance company by the Reserve Bank of India; as “Long-term Infrastructure Bond” for the purpose of section 80CCF of the Income Tax Act, 1961. Investment in these bonds up to Rs20,000 will be eligible for deduction from the total income of the assessee. The deduction will be in addition to the deduction of Rs1 lakh allowed under sections 80C, 80CCC and 80CCD of the Act. The tenure of the Bonds shall be a minimum of 10 years with a lock-in period of five years for an investor. It will be mandatory for the subscriber to furnish permanent account number to the issuer for investment in the bonds.

India’s 9.5% growth to push gold sales

Gold demand in India is all set to soar in the coming months as the International Monetary Fund has predicted a very high 9.5 per cent growth for the country in 2010.

According to IMF, India’s growth will accelerate to about 9.50 per cent in 2010 as robust corporate profits and favourable financing conditions fuel investment, and then settle to 8.50 per cent in 2011.

The 9.5% growth is set to give people more money to buy gold and jewellery. Large domestic demand bases in India, China, and Indonesia, which contribute substantially to Asia’s growth, could also provide the region a cushion in the event of external demand shocks, the IMF said.

This means, India and China will lead the world in growth and will have a bigger say in the market especially in bullion. If Indians and Chinese buy more gold, that will make a huge impact on the gold prices in global level.

As Asia’s strong recovery from the global financial crisis continues, despite renewed tension in global financial markets, world growth is projected at about 4.50 per cent in 2010 and 4.25 per cent in 2011.

Noting that economic activity in Asia has been sustained by continued buoyancy in exports and strong private domestic demand, the IMF has revised gross domestic product (GDP) growth forecasts for the region upward for 2010, from about 7 per cent in the April WEO to about 7.50 per cent.

For 2011, when the inventory cycle will have run its full course and the stimulus is withdrawn in several countries, Asia’s GDP growth is expected to settle to a more moderate but also more sustainable rate of about 6.75 per cent.

In China, given the strong rebound in exports and resilient domestic demand so far this year, the economy is now forecast to grow by 10.50 per cent in 2010, before slowing to about 9.50 per cent in 2011, when further measures are taken to slow credit growth and maintain financial stability, the IMF said.

In a separate Global Financial Stability Report Update, the Fund noted that despite generally improved economic conditions and a long period of healing after the failure of Lehman Brothers, progress toward global financial stability has recently experienced a setback.