KARUTARI GLOBAL - ROSY???

Karuturi Global has obtained an annual contract for supply of 50 million roses, starting January ’09, from one of the largest supermarket
networks in Germany, named Edeka. The company has secured a price hike between 20% and 33% on the earlier contract, which priced the roses between 9 and 20 euro-cents . This contract is expected to generate over Rs 50 crore over the next one year for the company, constituting around 12% of its annual consolidated turnover. The company has the capacity to produce 650 million stems annually.

Karuturi is investing heavily in expanding its capacities and has entered new businesses such as food processing and retail. The company plans to sell at least 15% stake in its Dubai subsidiary, Karuturi Overseas, to a private equity
player to raise $100 million for investing in its agricultural sites in Ethiopia, where it has commenced operations over 30,000 acres.

The company also plans to foray into bottling of baby corn, jalapenos and green ball pepper. Under its retailing plans, it has set up one boutique store at the new Bangalore International Airport and plans to set up 50 more such shops over the next couple of years.

The company’s business is seasonal in nature due to higher demand for flowers on occasions like Valentine’s Day, Mother’s Day etc. Hence, the second quarter is usually slack for the company. Karuturi’s operating profit margin (OPM) stands at around 40%, while its net profit margin (NPM) hovers around 30%.

During the 12-month period ended September ’08, the company generated a net profit of Rs 123 crore on net sales of 426 crore on a consolidated basis. At the current price of Rs 13.6, this translates into a P/E of 3.8.





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