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 )
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