War of Roses

They poke, they tag, they write on walls, all while saying it with flowers. With Indians becoming increasingly expressive and finding expensive ways to woo, it was inevitable that the paths of Ferns ‘N’ Petals (FNP), the largest flower retailer in India, and Karuturi Global, the world’s largest grower of cut roses, would cross.

While FNP is planning to venture into floriculture, Karuturi wants to create the “Café Coffee Day of the floristry world”, says Sai Ramakrishna Karuturi, managing director, Karuturi. For this purpose, in December 2010, it acquired a 54% stake in Mumbai-based Florista, a chain of flower boutiques. It then merged its retail business, Karuturi Flower Express (present in all major airports in India), with Florista.

In the next two years, Karuturi will invest Rs 15 crore in Florista and open 200 stores (including franchises), a five-fold rise from the present 40 Flower Express and Florista stores, with a targeted topline of Rs 150 crore. (FNP has 110 stores in 42 cities). Karuturi says, “The company will provide strategic inputs and finances for a nationwide rollout. My ambition is to make this a $100 million
(Rs 453.4 crore) business by 2016.”

Almost simultaneously, FNP, with revenues of Rs 100 crore and facing little competition in the organised sector so far, plans to take baby steps in floriculture. Pawan Gadia, CEO of FNP, says, “We are looking to start cultivating from the next financial year. Till now we have contracts
with growers around the country.

We tell them what and when to grow. But now our requirement is large enough to warrant some amount of backward integration.”

The company, privately held by Vikas Gutgutia, is looking at various locations in Himachal Pradesh as well as farms around Bangalore to cultivate gladioli, chrysanthemums and some varieties of roses.

Gadia doesn’t appear ruffled by the impending competition from Karuturi. “We should be able to double our retail presence in the next three years. We are a debt-free and cash-rich company in a growing market.”

But Karuturi too has money to burn. It made a profit of Rs 143 crore on sales of Rs 546 crore in fiscal 2010. Armed with this cash, Karuturi hopes to pose a challenge to FNP. Karuturi says that unlike FNP, which diversified into event management—wedding planning contributes 30% to FNP revenues—Florista will stick to retail, particularly targeting the metros, which account for almost 70% of cut flower consumption in India.

The challenge for Karuturi and FNP will be to not only learn but also master the tricks of each other’s trade.