Naivasha’s Karuturi seals debt buyout deal, planning comeback
NAIVASHA, March 27, 2015: Deposed Indian flower firm is planning a major comeback to Kenya next month, after entering a debt deal that would enable it retake its vast farms currently under control of its creditor CFC Stanbic Bank.
Karuturi, accused of evading over Sh1 billion in taxes in Kenya, has convinced one of India’s biggest lenders Axis Bank to bail it out. The flower grower billed as the World’s largest cut rose supplier at over a million stems a day, has had a tough run punctuated by employee unrest at its Naivasha farms and land grab claims in its Ethiopian sister operation.
Managing Director Ram Karuturi last week told an Indian investment analyst that his board had successfully restructured the company’s debt to pave way for the retake of the Kenyan business. “ Karuturi Global will settle the dues and get the farm back; Axis Bank has agreed to take over the outstanding to be paid to CFC,” the analyst identified as Vijay reported following a meeting with Mr Karuturi.
Steve Luseno, Karuturi’s lawyer based in Nairobi, confirmed the fresh bailout and that the officials of Axis Bank had even visited the Naivasha farm to assess its viability, adding the officials had also met up with CFC bankers, a position we could, however, not confirm immediately.
“We are certain that the new deal will have CFC hand back control of the farm to Karuturi, within weeks,” Luseno told the Standard on phone. The company had its annual general meeting Friday last week, where Man Mohan Agrawal - a former executive of Axis Bank was appointed as a non-executive director.
A return for Karuturi will be a significant milestone for the company which lost the Kenyan operation last year to local and international lenders and suppliers, including CFC Stanbic Bank. Before the lenders brought in receiver managers, Karuturi had experienced significant cash flow problems with staff going without salaries.
BAD BLOOD
But Karuturi’s possible return, following its annual general meeting in Bangalore India last week, could be a major turning point given the bad blood that preceded the exit.
CFC appointed Ian Small and Kieran Day as joint receiver managers as it sought to recover its outstanding loans.
Karuturi has since claimed that the receiver managers were running down the firm with an aim of eventually selling it on the cheap. Just last week, Karuturi accused its other debtor ICICI, through Receiver Manager Lolluri Kamasastry, of demolishing Sh270 million-worth house on the flower farm in a bid to damage the company’s brand equity.
In a separate suit also playing out in court, Karuturi has accused CFC of seeking to dispose of the flower business rather than continuing operations to recover its outstanding loans.
Now, Karuturi has threatened to institute a forensic audit on the operations of the flower farm covering the 16-months period when the business was under receivership. Karuturi Global will get a forensic audit done by one of the top consulting firms, Mr Karuturi is quoted to be saying.
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