The hub of this expansion is Ethiopia. In 2009, Karuturi acquired 10,700 ha of land in Bako for maize, rice and vegetable production. In 2010, it got an additional 300,000 hectares for expansion in Gambela. The company aims to farm a total of 750,000 ha in Ethiopia. This land is leased from the government at bargain prices, but local communities consider it their own. As a result, many conflicts have emerged around compensation, displacement and the relocation of villagers and herders who suddenly found themselves fenced off of their lands by the Indian company. The company is taking steps to settle these disputes at the earliest. The stock would invariably cross Rs.5, in the next 3-6 months time. Have patience and keep buying all dips.
Some days back, I suggested through this blog, not to buy the shares of Jenson and Nicholson Ltd, at around 8-9, when a couple of operators were trying to push the scrip for distribution. Many heard my call and did not buy, congratulations to them as the scrip today closed at Rs.5.88, down 9.26% in the BSE. It will slowly move below Rs.5, in the coming days.
Valuations are not stretched because earnings are depressed. The key call is whether earnings are going to normalise. We recently surveyed our global investors and 76 per cent of them are overweight on India. The consensus is bullish and that, at times, acts as an overhang. Valuations are no longer at a level where it is the only criteria to invest. This is not December 2007, when valuations were at 30 times earnings.
The world has been grappling with an ageing population. It is dealing with debt levels never seen in the past. Global debt is approaching three times of gross domestic product, which is staggering. There is not much appetite left to borrow from future earnings, which is creating deflationary pressures. The world has these problems but India does not have any of these. It still looks like one of the brightest stars in the universe.