LETTER TO SHAREHOLDERS
A YEAR OF SUSTAINED MOMENTUM
It is my pleasure to be writing to you again on the performance of the
last year and update you on the outlook for the year ahead. The last
financial year was a year of consolidation and one of sustained
investments as far as our foray into agriculture is concerned. We
continued our leadership position in the floriculture, retail and food
Overall, it has been a satisfying year for your Company and we hope
that the investments made into the Company in the current fiscal will
translate to accelerated growth overa period of time.
Agriculture continues to be the thrust of your Company and as
communicated to you in the earlier communiques, we have made
substantial progress at the project implementation sites at Bako and
Gambella in Ethiopia. We have in the first phase commenced our
operations on 110,000 ha of land. The Company has cleared and developed
over 50,000 Ha of land out of which 20,000 Ha of land is ready for
sowing of cereal crops and additional 10,000 Ha is being made ready.
As I write this we have 12000 ha planted with Maize and Rice and we
expect to get our 1st big harvest in September/October this year. We
are currently concentrating on cultivating paddy and maize in the area
so described above. In Gambella, a nursery was established for Palm,
which currently has V2 million Palm plants ready for transplanting on
4,000 Ha of land with each hectare of palm plantation having a
potential of yielding 4,000 Kgs of crude oil. We have also started the
Sugarcane Nursery on 100 Ha of land and expect to keep growing it and
have sugarcane available for processing by 2nd half of 2013.
Given the size and scale of our operations, we did face some delay with
respect to getting equipment on site on time due to logistic overheads,
local clearances. However despite the delays, we have seen
considerable amount of progress in development of the land &
Infrastructure and we are now ready to harvest our first major crop
later this year.
The Company has taken proactive steps to ensure that the complete
ecosystem required for development of the land parcel is in place as we
move forward. To this effect, we have taken on board various experts
from fields like Oil Palm, Irrigation and Water Management, Cotton,
Rice and Sugarcane to help us with our efforts. Further, we have also
enlisted the support of several farmers from Punjab in India to lend
their expertise to the process of growing crops in Ethiopia through the
latest technology. Plans are also afoot to set up joint ventures for
agro-processing plants near the farming area. This includes amongst
others rice milling units, sugar mill and oil extraction units.
We believe that our efforts at producing over half a million tons of
cereals and 100,000 tonnes of oil palm will significantly alter the
demand situation in favor of the African consumer.
As far as floriculture is concerned, we have reached an almost steady
state with about 9% of the market share of the European cut rose
industry. We are planning to bring another 25 Ha under production this
year at Walliso in Ethiopia. During the year, we saw good visibility
for cut roses with a bumper Valentine day and Mother''s day demand from
our major markets.
On the domestic front, we also reached an understanding to pick up 54%
stake in Mumbai based Florista which has a chain of floral designing
boutique stores spread across India. Florista specializes in designing
exquisite flower arrangements and decorations made from exotic flowers
imported from across the world. Florista currently has more than 15
retail boutique stores in India and also has a strong network to
deliver flowers anywhere in the world through its online portal. By
acquiring majority stake in Florista, Karuturi''s retail presence in
India is further consolidated. Karuturi Global has merged its retail
operations carried out under the brand name Flower Xpress with
Florista, so now its entire retail operations is under one umbrella. We
are going international with our 1st outlet outside India opening at
Bhutan this month.
Karuturi Foods Pvt. Ltd. (KFPL) a 100% subsidiary of Karuturi Global
Limited has seen the markets recovering this year. We are working on to
increase our processing capacity to capture newer markets. The company
has got the LOA for 1500 acres of farmland from the government of
Karnataka for a long term lease to grow vegetables for its captive
consumption. This farmland will also be utilized for growing seasonal
vegetables to sell in the Bangalore and surrounding markets. There is a
great potential to venture into fresh vegetable retailing in the days
to come due to excessive price increase in last two years for the fresh
vegetables in the domestic market.
For the year under review, the Company posted a total income of Rs.
645.2 crore; an increase of about 18% over the last fiscal. Our Net
profit after tax is Rs. 154.97 crores and EBITDA in FY 2011 is 38%. The
margins were sustained primarily due to consistent margins from our
CORPORATE SOCIAL RESPONSIBILITY:
We have always been socially responsible as a corporation and have
placed immense importance on sustainable development in a manner that
our environment around us is not affected in anyway. We have focused on
many programs on environment, education and safety in all the
geographies we operate in. This has been supplemented with partnerships
with non- governmental organizations in the communities where we have a
major presence. We continue to get various awards for our efforts. We
have been nominated for the Global Business Council Awards for
leadership in the workplace category for initiatives in healthcare.
DRIVING AFRICAN INTEREST:
We have been actively driving issues related to Agriculture and Trade
in the Eastern Africa in the recent past. The Company has been at the
forefront of action during the 2nd India Africa Forum Summit held in
Addis Ababa, Ethiopia in May 201 1 .Tanzania India Friendship
Association(TIFA) Symposium in June 201 land FICCI''s agri-business
delegation to Tanzania, Uganda, Ethiopia during August 2011 and also in
world economic forums.
We believe that we have put in place the building block for success in
terms of our investments into Ethiopia and Kenya on both the
agriculture and floriculture fronts. This has been further
supplemented by the latest technological innovations being used at the
sites, a good marketing and supply chain for efficient distribution of
our products and most importantly a motivated and hard working team
that is one of the key reasons for our success to date.
I would like to place my heartfelt thanks to the stakeholders who
continue to be invested in us, the customers who are the primary reason
for our existence and most importantly my fellow employees who have
been a part of this great success story called Karuturi.
Sai Ramakrishna Karuturi