Wednesday, June 8, 2011

Roses for the world: An Indian success story in Ethiopia

Holeta (Ethiopia): The world’s largest exporter of roses is an Indian who grows and ships hundreds of varieties of the prized flowers — not just out of India but mostly out of farms in Ethiopia and Kenya.

Just 45 km out of Addis Ababa, the Ethiopian capital, a drive across rolling grasslands at the foothills of the Entoto range brings you to a large encampment, spread over 100 hectares, of greenhouses, cottages and huts from where Karuturi Global (Sai Ramakrishna Karuturi, Chairman & MD) has spawned its phenomenal growth.

‘Favourable government policies and environmental conditions, flood-safe geographic location and abundant low-cost labour, coupled with its proximity to the global markets, made Ethiopia an ideal location for our business,’ says chief executive Nagesh Karuturi, who overseas the two east African farms.

The Bangalore-based company, which has a 10-hectare farm near the new international airport, forayed into Ethiopia in 2004 through its 100 percent subsidiary, Ethiopian Meadows Plc.

It leased two farms near Addis Ababa — the other larger 385 hectare farm is in Wolisso, about 90 km from Addis Ababa — employed over 3,000 local workers and laid the foundation for its successful business that has become the showpiece foreign investment for the Ethiopian government.

With the global floriculture industry witnessing significant growth in the past few decades, driven by the demand from Europe, the US and Japan, Karuturi Global smelt its opportunities at the right time.

‘The decision has paid off. For the past four years, we are deriving significant cost benefits from our Ethiopian operations. And a series of such strategic decisions enabled us to become the world’s largest and the cheapest producer of cut roses,’ Karuturi said.

It acquired Kenya-based Sher Agencies in September 2007 for $46 million to emerge as the world’s largest producer and exporter of all varieties of cut roses with 13 percent of the global marketshare.

The bulk of its exports comes from its farms in Kenya and Ethiopia. Its clients are some of the leading names among auction houses, boutique manufacturers across Europe, South and East Asia and the Gulf.

‘It’s a 365-day, recession-proof industry,’ says Karuturi, explaining how the temperate climate of east Africa was highly conducive to the business.

Besides being used for decoration and adornment, cut roses finds uses across various sectors of the economy. Its extracts are used in perfumes and natural dyes, food and beverages, hotels and healthcare and also skincare products, Karuturi said.

Karuturi Global produces a total of about 550 million stems annually from its African farms — 200 million in Ethiopia and about 350 milllion in Kenya.

‘When nobody dared to go to Ethiopia, Karuturi Global ventured into unchartered waters,’ said Karuturi.

‘Our business operations in Kenya and Ethiopia have created employment opportunities for skilled and unskilled labour. Through our business and social welfare activities, we are well accepted in the Sub-African countries as a change agent for growth and prosperity.
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