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GLOBAL PRESENCE. GLOBAL SUCCESS. GLOBAL PRESENCE. GLOBAL SUCCESS. Sai Ramakrishna Karuturi: My Story

My story Ramakrishna Karuturi

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Mr. Ramakrishna Karuturi's My Story Presentation at TES 2011

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Page 1: My story Ramakrishna Karuturi

GLOBAL PRESENCE. GLOBAL SUCCESS. GLOBAL PRESENCE. GLOBAL SUCCESS.

Sai Ramakrishna Karuturi: My Story

Page 2: My story Ramakrishna Karuturi

GLOBAL PRESENCE. GLOBAL SUCCESS. GLOBAL PRESENCE. GLOBAL SUCCESS. 21990: MBA from Case Western Reserve University with the prestigious Dean’s honor’s listing

1990-1994: Managed family Cable business Explored Opportunities in Israel for building Green HousesFell in love with what was inside

-Karuturi : An idea was born!1994: Floriculture Startup –Incorporated Karuturi for cut Rose production

2006: Food Processing Startup

2001 Telecom Startup

2008: Flower Retail Startup

2009: Agriculture Startup

StillLooking

My Journey so far

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Business Overview Floriculture – cut rose stems & plants production and distributionAgriculture – corn, rice, oil palm, sugarcane Food-processing – gherkins production and distribution

Floriculture• World’s largest producer of roses producing 650 million rose stems per annum

over 292 hectares in India, Kenya and Ethiopia. • EBITDA Margin ~41%

Agriculture• One of the Top 25 Transnational Corporations as per UNCTAD• Cultivating 311,700 Ha in Ethiopia for agriculture;

100,000 Ha under implementation for corn/rice and oil palm Food Processing• Gerkins,bottled pickles,Processed 4,000 MT in FY2010• Cost of production is one-tenth that in developed economies, with significantly

lower freight costs

CompanyHighlights

Financial Highlights

Businesses

FY06 – FY10 CAGR• Revenues 87%, EBITDA 84% Share Holder funds 114%

PAT USD 34 million(2011) on $143 Mil Revenue(2011) Market Capitalization : 404 Crore ~ 70 times growth in 16 years

Page 5: My story Ramakrishna Karuturi

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Karuturi Growth Roadmap

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1995 First production facility

Bangalore (4 Ha)

2001ISP Division

The largest cut rose producer in the world

transforming to become

Global Top 5 Agriculture Companies

1994Incorporation

1996IPO of 3 million

shares at INR 10 each

2007Kenyan Acquisition (200 Ha)Ethopian Expansion (50 Ha)

2005Ethiopian acquisition

Additional Capacity: 50 Ha

1999Capacity : 10 Harose.bazaar.com

2011Commenced

Maize cultivation and initiated Palm plantation

2009Foray into agriculture

Acquired 311,700 Ha land in Gambela & Bako, Ethopia

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FLORICULTUREThe world’s largest, producer and exporter of quality cut roses with production base in 3 countries and a client base of 15+ countries across the globeAnnual production capacity of around 650 million stems Lowest cost producer of cut roses in the world.Production base in multiple countries like India, Kenya and Ethiopia with total 292 ha under cultivation

AGRICULTUREOne of the top 5 transnational companies as per UNCTADLeased 311,000 ha land in Bako and Gambela region in EthiopiaImplementation on 90000 ha – Cereal Crop (70000 ha) & Oil Palm (20000 ha)We are clear proponent of food security in Africa rather than food security from Africa

Company snapshot

Revenues of 143 Million USD and a goal of 1 Billion USD in another5-6 years

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FOOD PROCESSINGFood processing plant with an installed capacity of 6,000 tonnes per annum at Tumkur, near Bangalore bulk processing and bottling of gherkins Caters to the export market of Europe and the U.S.Plan to diversify into various other products like Jalapeno, Baby Corn, Bell Pepper, Banana Pepper. To increase to 30,000 MTPA with 1500 acre own land cultivation.

INFORMATION TECHNOLOGYISP SERVICES: Prominent internet services provider (ISP) to large MNCsAcquired Estel Communications, an ISP with pan-India presence, robust network and excellent client-base.Entering hosting services through the establishment of Data Center

Company snapshot (contd)

10000+ working partners across the globe, Expected to be 50000+ in 5-6 years time

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Strategic Decision

Floriculture:Cut rose Industry: $13 Billion

Agriculture: Global Food Industry : ~ $6 Trillion

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Diversification into Agriculture

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Africa : Lion on the move – Mckinsey Report June 2010

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Agriculture in Africa: Abundant opportunities

•“Six of the Worlds Ten fastest growing countries during the past decade are from Africa”- ‘Africa Rising ‘-Economist (December 2011)

•Annual COMESA Maize Imports ranges between a total of $ 1 billion and that sourced from within COMESA was less than 10% of it.

•Current Commercial Food demand in urban Africa is over $50 Billion market and is expected to cross $ 150 Billion by 2025.

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Large scale commercial farming

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South – South Strategy for Global food security

In the coming 30 years, World will need an extra 120 million ha for crops, an overall increase of 12.5 percent in cultivated land.

Tropical Latin America and sub-Saharan Africa are the only answers Nearly all African countries are net food importers, currently import

about 25% of their food (circa US$ 19 billion) Africa’s current population of ~800 million, would become 1 billion by 2015 & 1.5 billion by

2030. World GDP 3.6% growth, Africa 4.7%, Contribution Global trade India , China over 14%, Latin 6 % Africa 1.6% Hence,Africa’s

potential green revolution, if realized, would make it world’s breadbasketKaruturi has been present in Africa since 2004 -and could contribute almost 4% of incremental new land

requirement of 7 million Ha to be brought under cultivation

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Global Agro Companies (per UNCTAD) El Tejar Los Grobo Cresud Karuturi

Global Ltd Adecoagro Calyxagro Louis

Dreyfus Agrifirma

Brazil SLC Agricola Tiba Agro Cosan Radar Cargill

Olam Wilmar Archer Daniels Midland Sunrice Bunge Nidera Noble group Zennoh Ekoniva Asian Plantations US Sugar Corporation Heyleys

326,000 ha

329,000 ha

311,700 ha

300,000 ha

1.1 million ha

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Vision 2025 : 3 Million Hectare Food production

Roses

Processed Food

Cereals, Sugar & Palm oil

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Challenges faced and Insights

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1. Keep things Simple. Simple is not easy but it is scalable and sustainable.

2. Basic premise: Believe in economic cycles, all ships sail in high tide, plan not to be sand banked in low tide!.

3. Create a culture of competitiveness, challenge, passion for the workplace so that your employees are satisfied and happy.

4. To tolerate and learn from failure.

5. Adapt key personnel to handle ambiguity and develop systematic flexibility while constantly striving to lower the risk profile.

6. Never give up, believe in the impossible: From less than 700 share holders we have 78,000 share holders and from a

market cap of 6 crore we are at 404.4 crore and even in these depressed markets have a value that is 70 X growth over 16 years

Insights and learnings

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Black swan events have tested the tenacity of our business model time and again

• Introduced nano roses.• shifted from a centralized controlled system to a

decentralized and delegating-style system• Replanted large tracks of land with min loss of

revenue.• Redundancy/down sizing.• Developed new markets and procurement from

source.

Financial meltdown

• Keep the operations running was the critically imperative

• 70% of our employees stay in our colony hence we got support from the family members

• Made arrangements for meals onsite. • Dispatched flowers to the Airport in the middle of

the night under protection of the police and Armed Private security

Kenya Riots in 2007

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Experiential Learning My Father , My Hero: Greatest Inspiration and a Role Model

As a child was fascinated with my father's entrepreneurial spirit. My first flight was on a helicopter he leased for crop spraying in 1974. My Father was a farmer far ahead of his times, who had migrated places in pursuit of bigger land parcels and cheaper cost of cultivation. He later went on to provide auxiliary agro services such as Fertilizers, pesticides, tractors etc and built a company called Deepak Cables into Power Transmission Tower business and is today worth over $400 Mill

Understanding the essence without getting over awed with personality, experience or stature.

Roger White of UNDP: throwing a ball of earth into the sky and seeing it land without shattering said “ You cannot grow roses here!“ We went on to become the world's biggest rose grower

Speed and Agility Ex Employee walks in for a coffee and chat. Talks of Africa and it's potential. Went on a drive with him, half way to Doddbellapur, had organized my flight, and was in Ethiopia in 3 weeks and formed a Company in 5 weeks and hit the ground running.

Calibrated risk taking and no wild Casino risk taking.

Cautiously bought over company in India and relocated Green House to Ethiopia at 20% of new cost to keep risk of failure low. Went with 18 lakhs to Africa, now our investments are over 1000 cr, the decision to go to Africa was our best decision and a turning point for our growth.

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Persistent diligence NHB: subsidy, disbursement was denied. Prevailed by sitting in Krishi Bhavan for nearly 2 weeks and finally fed up with me, they released my 1 crore.

Crafting and altering public policy to be sensitive to the sector

Charter: Got APEDA to underwrite the cost against our export subsidies and the rest was history! At 3 am we were told by control tower the flight cannot take off! We had over stayed, rushed on a scooter across the Tarmac to Control tower to beg plead and persuade! Luckily ATC relented

Altering perceptions of India and Indian investments by taking a high profile. Creating the brand equity missing for Indian businesses

When the Minister in Ethiopia refused to give me land, I asked him. Do I need to go get a can of white paint! Because he was giving large chunks to Europeans. Now I have the largest land concession in Ethiopia and am the Honorary counsel general of Ethiopia

Taking the bull by the horns to change status quo when needed

Told RK Hegde when he was commerce minister of the futility of the cold storage he inaugurated earlier in the year, he was so upset he ordered a high level inquiry headed by a JS in ministry of commerce and since than the cold storage functions smooth as Mysore Silk

Experiential Learning

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Financing the Ventures

Internal Accruals

Capital Markets

Private Equity

Bond Market

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Corporate Social Responsibility

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Building an eco-system of trust and economic prosperity

Social Welfare in Kenya• School of employees and locals (~2,200 students!)• Healthcare services to locals (not only employees) • Food to drought victims • Sponsored a village mortuary and the regional WWF • Provided infrastructure to the local policeSocial Welfare in Ethiopia• Contributed $75,000 towards drinking water supply for Holetta town • Free food every Sunday to 100 destitutes for the past two years • Drinking water supply to Sadamo village

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Ethiopia• BAN THE CAN - A Social Initiative by Karuturi to provide

water on tap. • Distributed woolen blankets to poor and elderly people

Eco-Friendly Policies• Using indigenous Greenhouses • In-house power generation from biomass • Rainwater harvesting • Use of environment-friendly fertilizers and chemicals • Fertigation technique for irrigation • Hydroponics method of cultivation

Building an eco-system of trust and economic prosperity

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• Karuturi Football Team plays the Kenyan Premier League and is among the Top 5 teams

• The Kenya National Cricket team received a multi-million shillings sponsorship package from Karuturi Global

Nurturing Local Sports

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Awards and Accolades

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Awarded the Ernst & Young Business Entrepreneur of the year 2009

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• Certificate of Achievement Awarded by INC 500 for being one of the 50 medium sized companies to be watched out in 2010

• Business Excellence Award in Agribusiness in Africa by Corporate Council on Africa• The 2009 GBC Business Excellence Awards – SHER Karuturi Ltd in the Category of Workplace• US AID Aptha Gold Award – Leadership in Employee Healthcare • Sher Academy Private – M.Score & 21 - Best Private Secondary School in Naivasha Region • NHIF – Quality in Health Care Awards Certificate 2008 for Sher Agencies Hospital in the Private Category

of Health Institutions• MD, Sai Ramakrishna Karuturi - a Finalists for the Edition of Annual Ernst & Young Entrepreneur of the

Year Award Program, 2009, 2010• MD, Sai Ramakrishna Karuturi - nominated as a Top 20 CEOs from Africa for the Class of Frontier 100,

2009 by the Initiative for Global Development (IGD) for commitment towards poverty reduction in Africa• 2010 Platinum award from US aid for HIV and AIDS awareness

Awards & Accolades

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Page 30: My story Ramakrishna Karuturi

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“It is not the strongest of the species that survive,nor the most intelligent: it is the one that is mostadaptable to change.”

Charles Darwin

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Page 31: My story Ramakrishna Karuturi

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Thank Youemail : [email protected] | website : www.karuturi.com

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KGL KARG:IN

For further information, please contact:Sai Rama Krishna KaruturiManaging DirectorEmail: [email protected]