Once a promising financier Karaturi Global, on a verge of bankruptcy, says Reporter

Karuturi Global, which earlier agreed with the Ministry of Agriculture (MoA) to grow wheat on 300 thousand hectares of fertile land has fell to deliver its promises of becoming a leading agricultural company. 

Karuturi was almost foreclosed after failing to repay a 65 million birr (a little over USD three million) loan extended via overdraft facility from the state-owned Commercial Bank of Ethiopia (CBE). However, the company immediately settled the minimum, 25 percent of the debt. But government officials told The Reporter that Karuturi is no longer reputed in Ethiopia. 

Abera Mulat, director of agricultural investment and land administration agency, at the MoA told The Reporter that Karuturi no longer a reputable company in Ethiopia. According to Abera, the Indian giant has failed to deliver. The official went on to say that Karuturi is on the verge of collapsing in Ethiopia. “Karuturi has gone bankrupt following internal management crisis,” Abera said.

In a telephone interview from Bangalore, India, Ram Karuturi, CEO of the company, told The Reporter that he will continue investing in Ethiopia. Currently, he is selling out machineries and equipment worth some 15 million birr to repay debts the company has incurred here. Karuturi is known for borrowing from CBE, Dashen and Zemen banks. The loan extended to the company exceeds 170 million birr and the CEO said that his company is set to settle the debts by the end of this month.

The multimillion dollar company has been flouting stock shares at the international market intending to raise capital. Officials reason out that the rift among the 19 figures of the Karuturi Group at global level is the result for Karuturi to go down. But Karuturi pointed at government officials for some of the challenges his company is facing. The recent announcement of Karuturi’s selling out of machineries and equipment and other accessories prompted the concerns of local officials. However, Ram Karuturi denied that selling out those machineries is based on the intention of settling debts. Furthermore, he said that the company is selling out the surplus equipment it had in the farms. According to the CEO, the company has a USD 70 million worth of machineries in Ethiopia.

Abera recalled that the company was privileged to acquire massive farm land with the lowest level of lease agreements. The lease price was way below one dollar, according to Abera. In addition to that the government has provided huge duty free incentives, he mentioned. 

In its 2011 annual report to the shareholders, Karuturi claimed that its operation in Ethiopia was causing delays due to logistics and local clearances. But its investment was probed right from the beginning when it has flouted shares at stock markets for the sale of the massive farm land, in the Gambella Regional State.

Ambitious Karuturi again was in under the spotlight following its debt with Zemen Bank. Officials of the privately run bank confirmed to The Reporter some months ago that there were disagreement between the two regarding loans repayment. Though Karuturi is said to retain its international presence of floriculture business, back home its performance is at stake. According to the information The Reporter has obtained from the Ethiopian Horticulture Development Agency, Karuturi has been requested to report on its activities. Officials at the agency said that the request is still pending. Karuturi operates two flower farms called Surya Blossoms and Ethiopian Meadows in addition to the Karuturi Agro Products PLC and Shiva Packs PLC.

The 2012-13 annual report of the company indicated that Karuturi has developed some 14 thousand hectares of land. The report also indicated that some 21 thousand tons of maize has been harvested on four thousand hectares. However, that has been scrutinized by the government which the officials downplay that Karuturi has been unable to harvest in such scale. Most of all they want Karuturi to export more. The company was bullish to produce one million tons of maize and other produces in Ethiopia.

Few months ago, Tefera Deribew, minister of agriculture took a trip to India. In his statement to Indian media, the minister said that Karuturi and the like performed way below the expectation of the government. Minister of state Wondyrad Mandefro was also obliged to answer questions raised from MPs regarding the poor achievements of commercial farms. Source ( The Reporter )