Karuturi Global, the Bangalore-based publicly-held cereals, vegetables and flower exporter, has said it has applied to ROC-Bangalore (registrar of companies) seeking permission to extend the date of the AGM to a maximum period of three months from early September 2014. This move to delay complying with the listing regulations comes after the company’s subsidiary in Kenya has been in legal tangles with its banker in recent times.
“The CFC Stanbic Bank Limited, Kenya, the banker of the subsidiary company has appointed receivers for the subsidiary company and on all the properties of the subsidiary in Kenya. Due to this issue, the company does not have any access to the accounts of its subsidiary in Kenya. In spite of several requests to the appointed receivers, the company has not received any inputs on the accounts of the company for year-ended March 31, 2014 till date. In these circumstances, it would be difficult for the company to prepare the consolidated accounts of its subsidiaries at this point of time,” Karuturi said in a regulatory disclosure.
The company further added that the said subsidiary has transactions with other subsidiaries too due to which even other subsidiaries account finalisation is also not complete.
“However, the company after failing to get the accounts of the Kenyan subsidiary from the receivers has approached the Kenyan High court seeking to compel the receivers/managers appointed by the CFC Stanbic Bank Ltd to provide the audited accounts of the company,” Karuturi added.
This step by Karuturi to seek an extension comes after a series of issues it has been facing at its expansive roses farms in Kenya including delay of salaries to its workers there. Karuturi employed 4,000 workers and at its peak, exporting 1.5 million cut-roses per day to Europe. Its farm in Naivasha was home to 40 species of roses. The management of Karuturi Global was not available for their comments on Wednesday. The flagship roses exports business of Karuturi Global started to get into trouble after a winding-up petition filed by a packaging company which is part of the Aga Khan Development Network.
Karuturi Global, which rose dramatically onto the global stage as among the leading rose exporters to Europe from Africa, is already in various stages of extricating itself from the issues over its ambitious agriculture foray in Ethiopia, which is facing backlash and is midst of various problems.
Karuturi Global expanded its base in Africa by acquiring Kenya-based Sher Agencies in September 2007 from Dutch horticulturists Gerrit & Peter Barnhoorn. The acquisition brought into Karuturi’s fold a 188-hectare farmland in the rich Naivasha region of Kenya. Of this, about 135 hectares were under greenhouse cultivation and 42 hectares in open cultivation and has an average daily output of about 1.5 million stems that are exported from Kenya to Europe.
These series of setback for Karuturi is compounding the problems for the company, which over the past four years, has been trying to establish an expansive agriculture exports business in Ethiopia. It had embarked on an ambitious $300 million agriculture foray in Ethiopia by growing a range of cereals and plantation crops in which it suffered a severe setback in late 2011 due to heavy floods in the region and had to take a hit of $15 million as its first maize crop was hit severely.
The company had acquired 311,000 hectares on a lease-hold basis from the Ethiopian government in the Baka and the Gambela region to cultivate short, medium and long-gestation crops. In the first phase, the company intended to cultivate cereal crops (rice and maize) on 70,000 hectares and oil palm on 20,000 hectares.
Even as the company was going through a painful recovery, it had been facing allegations of land grab. Human Rights Watch (HRW), a global independent organisation dedicated to defending and protecting human rights, had earlier raised a red flag on corporates from India, including Karuturi, expanding in Ethiopia. Karuturi had strongly refuted the allegations stating they are empowering the locals with jobs.