Sunday, February 10, 2008

The Kammas company blossoms as world’s biggest grower of roses

SR Karuturi, MD, Karuturi Network

“After acquiring Kenyan company Sher Agencies, we now have 5.5% of the rose business globally” - Sai Ramakrishna Karuturi, MD, Karuturi Networks

There is a school of thought that says that if you are going to get something done properly, then you have to do it yourself. It is a principle at the heart of many a great business and it is one that Ramakrishna Karuturi knows well.

He has risen to the top of the rose tree, becoming the world’s largest cultivator of the flowers, after Karuturi Networks, acquired the 188-hectare, Kenya-based Dutch rose farm Sher Agencies for US$73 million in 2007 and says it has plans to produce 1 million stems daily by March 2008.

KNL already has 50 hectares of rose fields in Ethiopia and has been allotted additional 450 hectares of land for its expansion by The Government of Ethiopia. Ethiopia is an ideal location for rose cultivation because of its climatic and soil conditions, cheap labor and better access to EU.

The mechanical engineer from Bangalore University, who returned to India from business school in Ohio in the United States a decade ago to run the family cables (Deepak Cables) and transmissions towers business, began his unlikely move into the flower industry one long, frustrating Valentine’s Day. Hunting for a rose bouquet for his wife across India’s IT hub, he drew a blank. Bangalore was a rose-free zone.

So he decided to start to grow them himself. In 1996, the entrepreneur opened two greenhouses on 3.2 hectares of land in the southern Indian city, which is renowned for its temperate climate, and began to export the flowers. Mr Karuturi’s roses are now sold in Africa, America, Europe, the Middle East, Asia, Australia and New Zealand. With the Sher acquisition, the fourth outside India and a deal financed through foreign currency convertible bonds, Karuturi’s annual production has jumped from 130 million stems to 650 million. Its target is one billion stems by 2010. To achieve that, the company will build more greenhouses in Ethiopia and will seek further acquisitions in the highly fragmented global flower business. It is in advanced takeover talks with a nursery in Ecuador.

Mr Karuturi, 42, believes that there is a large market in India, where Valentine’s Day is being celebrated increasingly. “There is huge potential in India. When I came back from the US, Valentine’s Day was unheard of as a festival, but now even on Mother’s Day, gifts are exchanged. I was surprised how quickly Western events have been assimilated into the culture,” Mr Karuturi said. About 20 per cent of Karuturi’s rose business is domestic, but he says that can be increased to 50 per cent. The company has 100 flower shops in India.

“We produce enough rose to fill up one 737 and one 727 plane everyday,” says Sai Ramakrishna Karuturi, Managing Director of Karuturi Networks. “We account for 5.5% of the total rose business globally.”

Karuturi also supplies bottled gherkins to European, American and Russian supermarkets and provides niche software and IT services.

The quietude in the farm at Naranahalli village, about 60 kilometers outside Bangalore city, belies the activities of the little-known Bangalore-based Karuturi Networks, the world's largest rose-producer, with offices in Bangalore, Dubai, Amsterdam, Nairobi and Addis Ababa. Worldwide, though, cut-roses from countries such as Ethiopia and Kenya, form the largest global suppliers.

An estimated 40,000 hectares of land are under rose cultivation world-wide, yet the biggest farm is no more than 200 hectares. Kenya has the world’s largest share of the rose trade - 4 per cent – because it has ideal growing conditions, including 12 hours of light a day. Horticulture is Kenya’s third-biggest foreign exchange earner, bringing about $100 million (£49 million) into the economy every year, with most flowers exported to Europe.

Valentine's Day (February 14) offer great potential to Karuturi Networlks because of climatic advantage during the period. Sale prices, usually around 20 US cents per stem off-season, sell for $3-4 per stem during the rose-happy holiday.
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