Karuturi to raise Rs 175 cr from PE fund, GDR issue

Bangalore-headquartered rose exporter Karuturi Global is planning to raise around Rs 175 crore by issuance a Rs 100 crore worth global depository receipt (GDR ) apart from raising Rs 75 crore from Tara Global Fund managed by IL&FS Investment Managers Ltd (IIML) to fund its future business growth in agriculture, the company said in a filing today.

In case of a fund infusion from IILM, the company will allot around 36.3 million equity shares of one rupee each at a premium of Rs 19.61 per share. As per industry sources, the promoter has to dilute 6.53 per cent of the present holding of 52 per cent post the fund raising by the company.

Earlier, the company planned to raise $150 million through a mix of debt and equity to fund its future growth. However, the company had to reduce the amount on the back of the prevailing market conditions, industry sources said.

In the meantime, the company's GDR issue will be open for subscription for those residing outside India on August 26. The company has plans to list the GDR on the Singapore Stock Exchange.

Karuturi Global, a Rs 700 crore firm, derives 95 per cent of its revenues from rose exports. Each stem is sold for 11-12 Euro cents, while its cost of production is around 7 Euro cents, a margin of around 60 per cent on each rose stem.

The company has around 550 acres under roses which is expected to expand by another 150 acres in the near future.

However, as part of the diversification drive, the company is betting big on agriculture and the present proceeds of the fund raising is expected to to be utilised in this vertical. Karuturi Global expects Rs 80 crore revenues from the agriculture business this fiscal.

The company had taken around 311,700 hectares on lease in Ethiopia to start agricultural cultivation in a phased manner. It plans to grow crops like cereals, sugar and palm for future exports.

In addition to this large-scale diversification, Karuturi Global has been into the business of cultivating gherkins which brought in revenues of Rs 15 crore last fiscal.

Karuturi Global reported an increase in revenues by 20 per cent in FY10 to Rs 532 crore from Rs 445 crore.