business with latin america

Godrej makes yet another aquisition in Latin America

2012-01-29T08:19:00.001-08:00

Godrej Consumer Products Ltd (GCPL) announced on 21 January that it has entered into an agreement to acquire 60% stake in Cosmetica Nacional, a market leading hair colorant and cosmetics company in Chile. The company has a strong portfolio of brands in the hair care and color cosmetics segments. With its brands well positioned across income and age levels, Cosmetica Nacional enjoys greater than 30% market share (by volume) in the hair colorant space. With this move, GCPL continues to expand its focused presence in emerging markets in line with its global 3 x 3 strategy.

Cosmética Nacional (CN) was founded in 1979 by Fernando García, a chemist by training. He continues to lead the company as its Chief Executive Officer. CN had sales of about 36 million US dollars in the year 2011 and enjoys EBITDA margins of about 20%. The company exports its products to seven countries in the region.

In 2010 Godrej acquired two Argintine cosmetics companies.

Latin America will continue its growth in 2012- ECLAC Report

2011-12-27T03:23:00.000-08:00

• The Latin America and the Caribbean (LAC) region had a GDP growth of 4.3% (estimate) in 2011 and is projected to grow by 3.7% in 2012 despite the continuing crisis in Europe, uncertain outlook in USA and the slow down of the Asian markets.

Both Imports and exports of LAC crossed the trillion dollar mark in 2011. Imports increased by 23% to 1.038 trillion dollars.

Foreign Direct Investment leaped to a record level of 130 billion dollars from 75 billion in 2010.

Foreign exchange reserves increased to 761 billion dollars as of October 2011 from 655 billion dollars in 2010.

The total external debt as a percentage of GDP declined to 19.2% in 2011 from 20% in 2010. The fiscal accounts of Latin America closed in 2011 with a small primary surplus.

These are the highlights of the 21 December 2011 report of the Economic Commission for Latin America and Caribbean ( ECLAC) based in Santiago. More from the report as follows.

GDP growth projection in 2012

Latin America and the Caribbean GDP is projected to grow by 3.7% in 2012 . South America is expected to grow by 3.9% and Central America by 3.5%.

The highest growth is projected for Panama (6.5%) followed by Peru and Ecuador at 5% each. Brazil is expected to grow by 3.5%, Mexico by 3.3%, Argentina by 4.8%, Colombia by 4.5%, Chile by 4.2% and Venezuela by 3%. El Salvador has the lowest growth projection of 2%.

GDP growth in 2011

The provisional GDP growth of LAC is estimated to be 4.3%. South America had grown by 4.6% and Central America by 4.1%. Panama had the highest growth of 10.5%. Argentina grew at a Chinese rate of 9%, in 2011 slightly down from its impressive 9.2% growth in 2010. Brazil, the largest Latin American market grew by 2.9% while the second largest market, Mexico grew by 4%. Colombia had increased its growth to 5.5% in 2011 from 4.3% in 2010. Peru had grown by 7% in 2011, down from 8.8% in 2010. Chile had increased its growth to 6.3% in 2011 from 5.2% in 2010. Venezuela recovered from its recession in 2009 and 2010 and showed positive growth of 4.2% in 2011.

The main driver for the growth is domestic demand and underpinned by high commodity prices and demand.

Trade

Both imports and exports of goods of LAC crossed the trillion dollar mark in 2011. The imports in 2011 reached 1.038 trillion dollars increasing by 23.5% from 846billion in 2010. Exports increased by 23.1% to 1.097 trillion dollars from 891 billion dollars in 2010. Among the major countries, Brazil´s imports increased to 228 billion dollars in 2011 from 182 billion dollars in 2010. Mexican imports in 2011 reached 352 billion dollars from 302 billion dollars in 2010. Argentine imports increased to 71 billion dollars in 2011 from 54 billion dollars in 2010. 

Foreign Exchange Reserves

Foreign exchange reserves swelled by 106 billion dollars reaching a record 761 billion dollars as of October 2011 from 655 billion dollars in 2010. Argentina was the only major country which lost (5 billion dollars) reserves in 2011. Brazil's forex reserves were the highest with 353 billion dollars followed by Mexico-141 bn, Peru- 49 bn, Argentina-48 bn, Chile- 39 bn and Colombia-33 bn.

Foreign Direct Investment (FDI)

The FDI reached a record level of 130 billion dollars in 2011 jumping from 75 billion in 2010. Brazil attracted 81 billion dollars in 2011 from 37 billion dollars in 2010. FDI in Mexico reached 9.8 9.8 billion dollars in 2011 from 6.2 billion dollars in 2010. FDI in Argentina fell to 3.9 billion in 2011 from 6 billion dollars in 2010. Peru was the third largest destination of FDI with 7.3 7.3 billion dollars in 2011. Chile received 5.9 billion dollars, Venezuela 3.6 billion dollars and Colombia 2.6 bn. It is noteworthy that Costa Rica had attracted 1.76 billion dollars of FDI in 2011 and had consistently been receiving over one billion dollars of annual FDI since 2006. Dominican Republic, Uruguay and Panama are the other small countries which have also been receiving over one billion dollars of annual FDI since 2005.

External Debt

The total external debt as a percentage of GDP declined to 19.2% in 2011 from 20% in 2010. Since 2010, the bulk of the debt of the government across most of the region has been domestic, in clear contrast to the situation in the past when external debt was more. In the case of Brazil, the ratio of external debt to GDP is 12.8% while for Mexico it is 18.3%, Colombia-21.3%, Peru-23.8%, Venezuela- 28.6%, Argentina- 31.5%, and Chile- 40.9%. The highest is in the case of Nicaragua, which is 56.7% but even this is very low in comparison to that of USA and many European countries. The total external debt of LAC stood at 1.03 trillion dollars in July 2011. Brazil's debt was 291 bn $, Mexico-206 bn, Argentina-133 bn and Chile- 98 bn.

Inflation

The average rate of inflation of the region increased marginally to 6.9% in 2011 from 6.5% in 2010. But it is expected to decline in 2012. It may be noted that the rate of inflation has remained in single digit since 2003. In 2011, Only Venezuela and Argentina had inflation in double digits.

Fiscal Policy

The fiscal accounts of Latin America will close 2011 with a primary surplus of 0.3% after last year´s deficit of 0.3%. The overall deficit declined on average from 1.9% of GDP in 2010 to 1.5% in 2011. This slight improvement was the result of an increase in revenues of 0.4% of GDP, while spending remained nearly constant as a proportion of GDP. Most countries reduced their deficits, transformed them into surpluses, or expanded existing surpluses.

Exchange rates

In the first ten months of 2011, currencies of 11 countries in the region had appreciated but the trend has reversed since then.

Risks and Challenges

What will be the impact of deterioration of the European crisis?

Impact on Latin American exports will not be significant since Europe accounts only for an average of 13% of Latin American exports. Brazil is dependent upon Europe for 23% of its exports, Chile 21% and Argentina 17.8%. Mexico will be least affected since only 5.3% of its exports go to Europe. However, Latin American growth will slow down if the situation in Europe deteriorates further dragging the world into another crisis.

Slowdown in the US market will affect Mexico which is dependent upon USA for 80% of its exports. It will also impact Central America from whom US is the destination of about 40% of exports.

But the good news is that the Latin American policy makers are well prepared to deal with external shocks, having gone through such situations in the past and having learnt lessons from them. It may be recalled that the region rebounded more rapidly than expected from the impact of the 2008/2009 crisis. Most of the countries of Latin America find themselves in a reasonably well placed in macroeconomic terms to cope with the expected deterioration in the global economy and are in a strong position to weather external shocks of the kind a deepening of the debt crisis in the euro zone is expected to bring. Compared with many of the more developed countries, levels of external and public debt in the region are low and international reserves are high.

Latin America is in a happy position to say.. cheers 2012 ! This is also reconfirmation of the Decade of Growth for the New Latin America.

The New Latin America and The New India - seminar

2011-12-15T02:17:00.000-08:00

¨Palabras de Pasion¨ ( words of passion) was the title of my opening speech in Spanish.

I said,

-The New India is the one in which a TCS nerd has the nerve to tell God ¨Why dont you outsource your mandate? TCS will do it at half the cost and twice the efficiency

- The New Latin America is the one which does not tremble when IMF officials visit. Now it is the IMF which trembles while requesting Brasil for funds to rescue Europe.

- The New Latin America sings

Dejanos imaginar

que no existe el pasado

que nacimos el mismo instante en que nos conocimos

Let us imagine

that there was no past

that we were born at the moment in which we met each other..

-India is more than a commerical partner for Latin America. It is a democratic partner with spiritual synergy ( Bikini- Bindi ) and cultural complementarity ( Soya and Yoga)

- Latin Americans come back from visit to india with their spirit and soul enriched. Indians return from Latin America...happier and younger. Some do not return...stay on ..fall in love .. and marry Latin Americans..

Full speech of 18 minutes in Spanish in Youtube

This seminar is the first of its kind. It is the first one which has covered commercial, economic, political and cultural aspects of the relations between India and Latin America comprehensively. We had put together economists, policy makers, businessmen, academics, diplomats and a journalist on the dais. The focus was on the future...promise and potential. Not wasting time on the forgettable past.

Osvado Rosales of ECLAC ( Economic Commission for Latin America and Caribbean based in Santiago - our partner in organising the seminar) released a new publication ¨India and Latin America and Caribbean- Opportunities and Challenges in trade and economic relations¨ This is the first- ever ECLAC publication on India. Here is their Press Release.

India could become an important trading partner for Latin America and caribbean

Their Press Release got wide coverage in Latin American media as well outside. The full report in their website.

Marisol Argueta, Head of Latin America and Senior Director of World Economic Forum ( former foreign minister of El Salvador) talked about ¨Latin America- the decade ahead¨ and recalled the conclusions of the last WEF Latin America Summit held in Rio in April 2011 which were optimistic about the prospects in this decade. She exhorted the Latin American policy makers to make use of this historic opportunity by focussing on education, innovation, poverty alleviation, infrastructure and policy reforms.

Mr Samuel Guimaraes, the High Representative of Mercosur and ex-vice foreign minister of Brasil spoke ( humour and irony about IMF and some hard truth about China too) on India- Mercosur partnership.

Horacio Salvador from the Argentine foreign ministry highlighted the common approaches of Argentina and India in multilateral economic issues.

Jai Shroff, CEO of UPL, is planning to increase his agrochemicals and seed business in Latin America from the current turnover of 350 million dollars to a billion in the next 4 years. He is a prime example of the new mindset of Indian entrepreneurs who are going global with confidence, vision and optimism.

In the business session, the five Indian speakers

-were upbeat about the opportunities in Latin America

-outlined their plans for more investment and expansion of business

-expressed happiness with the Latin American human resources

-highlighted the cultural aspects of interaction between Indian and Latin American staff.

Arvind Sharma from Punjab who is settled down in Santa Cruz, Bolivia for the last 20 years, talked about the 2 billion dollar Jindal iron ore mining project.

Satya Muley who has built up from scratch a 50 million dollars business of adhesives and chemicals for Pidilite exuded confidence about his Brasil-expertise. He is a Guru for those who want to know the ropes of doing business in this large but complicated market. Brasil, they say, is not for beginners...

GV Mani was happy with the quality of Argentine human resources for the high-end financial research business of Crisil which wants to recruit more people.

Kapil Gulati wants to increase his business of lighting equipments to 600 million dollars from the current 200 million in the region.

Ram Karuturi has no business in the region..yet. He seeks South American expertise, technology, equipments and partnership for farming of his 300,000 hectares of land in Ethiopia.

Gabriel Rozman, the uruguayan wizard behind the success of TCS in Latin America ( employing 7000 Latin Americans in 8 countries ) inspired the audience with his humorous anecdotes and was proud of his association with Tata the legendary group of India.

Gustavo Grobocopatel's eyes were shining while he talked about the huge potential for South America ( lot of fertile land, abundant water, best practices, professional, scientific and large scale commercial farming) to supply protein and food requirements of India ( growing population and food consumption but losing agricultural land, water table going down, constraints of small scale farming) in the long term. Gustavo is called as the King of Soya and pioneer of APO- Agri Process Outsourcing. Playing on his name, he claims(jokingly) to be a relative of Sardar Vallabhai Patel !! For sure, he is Gujrati in his enterprising spirit.

Left to right- Arvind Sharma ( Jindal Steel Bolivia), Ram Karuturi ( Karuturi Global- largest cut rose producer in the world), Satya Muley ( Pidilite Brasil), Sergio Suarez ( Ayurvedic specialist and more Indian than me), Gabriel Rozman (TCS), GV Mani ( Crisil), Kapil Gulati ( Havells Sylvania) and Gustavo Grobocopatel ( Los Grobo Group).

Jorge Heine, who is writing a book on India ( to be released in the first half of 2012) and who was the Chilean Ambassador to India, talked about the unique aspects and advantages of India over China.

Oliver Stuenkel, the professor from Getulio Vargas Foundation, Sao Paulo

- One cannot understand India using the western norms and theories. India's democracy, growth and promise defy conventional wisdom.

Siddharth Varadarajan, Editor The Hindu

- India's rise as a power is peaceful unlike the old powers which wanted to dominate and caused wars. India and Latin America should work together in setting global agenda ( to the extent possible) rather than reacting to the agenda of the fading old powers who try to manipulate.

Raul Rivera, author of the new book ¨Nuestra Hora ¨ ( our time ), who was the last speaker mesmerised the audience with his unconventional and humorous comparison of Latin America with the rest of the world. He entertained the audience with his wit, satire and colourful language.

Left to right: Raul Rivera ( Chile), Oliver Stuenkel ( Brasil), Jorge Heine ( Chile) and Siddharth Varadarajan ( India)

We raffled 4 Qatar Airways tickets to India among the participants in the seminar and the guests at the Gala evening. The seminar has stimulated new enthusiasm, energy and vision among Indians and Latin Americans about the growing win-win long time partnership based on cultural and spiritual bonds.

The seminar was followed by a cutural programme with Rabindra Sangeet and Manipuri groups which came from India. While the Argentine artistes danced Bharatnatyam, Kuchipudi and Bollywood dances, an Indian Sharukh Merchant danced Tango. Cultural complementarity...

The India- Latin America spiritual synergy flourished in the cocktail with the wine made by a Vietnamese- speaking, French passport-holding Pondicherry Tamil Aziz Abdul in his winery in Mendoza, Argentina.

¨The New India and the New Latin America – Synergies and Complementarities¨ Seminar on 5 December 2011

2011-12-03T02:17:00.000-08:00

India is the fastest growing democratic free market set to be the world´s third largest economy in the next three decades. Latin America too has undergone a paradigm shift and 2011 is said to be the dawn of the ¨Latin American Decade¨. The two sides, in their latest reincarnations as The New India and The New Latin America, have synergies and complementarities for growth and prosperity.

¨India : Latin America´s next big thing ?¨ was the title of the study published by the Inter American Development Bank (IADB) in 2010. India represents more than just investment and trade for Latin America The growth story of India within a pluralistic democracy amidst a vast diversity resonates among Latin American democracies. India adds value to Latin America by its spiritual and cultural richness and the Indians and Latin Americans bond with each other easily.

Bilateral trade in 2010 was 23 billion US dollars. India has invested 12 billion US dollars in the region in sectors such as IT sector, pharmaceuticals, agro-chemicals, energy, mining, steel and manufacturing employing 35,000 Latin Americans.

What is the scenario of India and Latin America in the coming decades? What are the new complementarities and synergies? How can they be leveraged for mutual growth? What are the challenges? What should be the strategies? What could they learn from each other from their successes, failures and best practices? What makes Indians and Latin Americans bond with each other? These will be discussed and analysed by economists, policy makers, businessmen and intellectuals in the proposed seminar, which is the first event of its kind to look at all aspects comprehensively.

Programme

1400 hrs. Arrival of guests

1430 hrs. Ambassador Viswanathan ¨Adding passion to the Synergies and Complementarities¨

1450 hrs. Osvaldo Rosales, Director of International Trade and Integration, ECLAC ¨Latin American economies - an overview¨

1510 hrs. Jai Shroff, CEO, United Phosphorus Limited (UPL) ¨The new mindset of Indian entrepreneurs¨

1530 hrs. Ambassador Horacio Salvador, Director General, Ministry of External Affairs of Argentina

1540 hrs. Samuel Pinheiro Guimaraes, Secretary General, Mercosur, Montevideo

¨India-Mercosur Partnership¨

1600 hrs. Marisol Argueta de Barillas, Senior Director – Head of Latin America, World Economic Forum ¨Latin America - the decade ahead¨

1620 – 1630 hrs. Coffee break

1630 -1800 hrs. Session on India- Latin America business

Moderator: Dr. Sergio Lais-Suarez, Honorary Consul of India, Cordoba

Speakers:

1. Gustavo Grobocopatel, President, Los Grobo Group,

Argentina

2. Kapil Gulati, Director for Americas, Havells Sylvania, San Jose, Costa Rica

3. G.V. Mani, Senior Director, CRISIL, Mumbai

4. Gabriel Rozman, Executive Vice-President, TCS , Mumbai

5. Satya Muley, CEO, Pidilite Brasil, Sao Paulo

6. Ramakrishna Karuturi, founder &Managing Director, Karuturi Global, Bangalore

7 Arvind Sharma, Director Jindal Steel, Santa Cruz, Bolivia

1800 – 1810 hrs. Coffee break

1810 - 1920 hrs. Session on the markets and mindsets of the New India and New Latin America

Moderator : Dr. Jorge Heine, Distinguished Fellow, Centre for International Governance Innovation, Waterloo, Ontario

Speakers:

1. Oliver Stuenkel Assistant Professor, Fundaçao Getulio Vargas (FGV), Sao Paulo

2. Mr. Siddharth Varadarajan, Editor, ´The Hindu´ newspaper of India, Chennai

3. Raul Rivera, President, ForoInnovacion, Santiago

1920 hrs. Raffle of two Qatar Airways tickets to India

1930 – 2100 hrs. Indian classical music & dance, Bollywood and Tango (by an Indian) Dances

2100 – 2230 hrs. Cocktail

The seminar is being organized by the Embassy of India in Buenos Aires in collaboration with the Economic Commission for the Latin America and Caribbean (ECLAC) based in Santiago (Chile).

The Seminar is part of the IV Festival of India 3-13 December, organized by the Embassy. This includes performances by Indian classical music and dance groups, bollywood dance by Argentines, food festival, yoga and meditation sessions, film festival, tourism workshops, painting and photo exhibitions, cultural seminars, handicraft exhibition by 50 Indian companies and India Cup golf tournament.

Singh is King ....in Argentina

2011-11-05T15:36:00.000-07:00

I wrote a blog in 2009 describing Simmarpal Singh as the Peanut Prince of Argentina.

http://businesswithlatinamerica.blogspot.com/2009/05/simmarpal-singh-peanut-prince-in.html#links)

The prince has now become a king. He has a kingdom of 20,000 hectares of peanut farms. He is growing soya and corn in 10,000 hectares. He is now into rice. This year he has leased 1700 hectares of land in Concordia in the Entre Rios province for rice cultivation. His target for farming in Argentina is atleast 100,000 hectares....

I visited his rice farms on Thursday 3 November with him. I saw the process of planting of rice. As in the case of other crops, the Argentines use the No-Till method, also called as Direct Seeding. The seeds are directly planted in the land with the direct seeding machines. The fertiliser containing nitrogen, potassium and phosphorous is also added into the same hole where rice is put. They do not follow the Indian practice of ploughing the land nor the method of developing a nursery first and then transplanting the rice plant. They spray glyphosate herbicide to kill the weeds before planting rice. The spraying is done from an aircraft. They prepare a kind of embankment after every three metres to hold the water evenly in the parcel of the land which comes in very large pieces. They use a special equipment for making the embankment of mudwalls. Then they start watering the rice field with ground water pumped by a motor. The water pump works almost non-stop for 90 days till the rice seeds ripen. They have water pumps for every 70 hectares and there is a person to take care of the watering for every 140 hectares.

But the watering of the fields is expensive, costing almost 500 dollars per hectare due to the high cost of diesel. There is a proposal to electrify the motors with a World Bank loan. When this is done the cost will come down. At present the total cost of rice cultivation is 1800 dollars per hectare.

After the harvest, the paddy is dried and stored in the huge silos of a rice mill. The paddy is milled into rice and packed in 100 kilo bags for exports.

Coming from a small farming family, the Argentine cutivation appeared to me more like a civil engineering project with heavy machines, huge land parcel and high cost.

Here is a field with 25-days old rice plants

This is a direct seeding machine which plants 12 rows at a time

The Argentine yield per hectare is 7 tons, which is double that of India. Argentina produces about 1.5 million tons of rice of which one million is exported. Simmarpal's objective is to export the rice. His company Olam ( based out of Singapore and run by persons of Indian origin ) is one of the major rice traders of the world.

Simmarpal has now gained sufficient expertise and confidence in farming in Argentina. His company Olam has recognised this and is encouraging him to go for more acreage and scale up the operations.

Simmar's and Olam's ambition coincides with those of the Entre Rios government which wants to increase the rice acreage and production. The government sees value addition to the province by Olam which contributes to production,exports, employment and human resource development. The Entre Rios province has large uncultivated tracts of fertile land with plenty of water since the province is located between the large Parana river on one side and the Uruguay river on the other side. Besides rice, there is cultivation of blueberries, soya, wheat, citric fruits and even eucalyptus plantations in the province.

I discovered one of the secrets of success of Simmarpal but at a high cost to my comfort. He made me leave Buenos Aires by car at 6 am in order to reach Concordia by 1030 am and join a conference call with his colleagues at 11 am. He inflicted the same pain on return too. We left Concordia at 6 am to enable him to attend a meeting at 11 am in Buenos Aires. I wanted a short break after the long four hour journey but he did not need and plunged straight into work.

Simmar had himself driven 36,000 kms during his first six months of his arrival in 2005 in Argentina to look for farms, recruit people and supervise the operations. Now with the luxury of a chauffeur-driven vehicle, he works in his blackberry, iPad and laptop non-stop.

I was impressed by this Indian-style hard work and also the pleasant Latino way in which he manages his Argentine employees. He has cultivated commendable rapport with the Argentines in the same efficient way with which he cultivates the land. The Argentines admire this young Indian's dynamism and adore his turban, thinking that he is a Maharaja.

Gammon India invests in Ecuador

2011-10-31T04:11:00.000-07:00

I had known Gammon India as an engineering and construction company when I was posted in Libya in 1983-85. I was pleasantly surprised to see that they have diversified into petroleum and other sectors and have even entered Latin America.

Gammon has established a subsidiary company Campo Puma Oriente SA ( based in Panama ) which operates the Puma oil fields in Ecuador which consists of eleven wells with proven reserves of 8 million barrels. So far, they have drilled seven wells which produce 1,500 bpd. The contract for the 20-year lease of Puma fields was signed in March 2008.

The Puma field investment is a joint venture with Joshi Technology International of USA. Gammon has 66.4% and Joshi 33.6%. The joint venture company in Ecuador is called as Consorcio Pegaso They have invested 50 million dollars till December 2010 and plan to invest 51 million dollars more in the next five years.

Joshi company, founded by Dr Joshi produces 5000 bpd of oil in Colombia. They also have oil fields in India and USA.

The Puma block is in the orient basin located 400 km from the capital Quito. The block has an area of 166 sq kms.

According to a June 2011 Reserve Bank of India report, Gammon has invested 1.8 billion dollars in their Panama subsidiary which will diversify into agriculture, fishing, hunting and forestry. Hmm.... Interesting ...

Argentine company Arcor entering India

2011-10-29T08:20:00.000-07:00

Last April, when I was in Trichy, the nearest town to my village, I went to a small supermarket to buy chocolates for the kids in my place. The kids liked the chocolates and thanked me for bringing them all the way from Argentina. I was taken aback and sheepishly confessed that I had bought them in Trichy. But they showed me the label ¨Made in Argentina¨. Yes. These were in fact made in Argentina and exported to India by an Argentine company Arcor. Last year their exports to India were 10 million dollars.

The CEO of Arcor Mr Luis Pagani is right now in India on a two-week tour. He had an interactive meeting organised by CII in Delhi. He is also visiting Mumbai and Bangalore. The purpose of his visit is to open an office in Delhi in the next few months. Later, Arcor is planning to establish a plant in India to manufacture for the Indian market and for exports to rest of Asia. They are looking for a site in India to put up the plant. This will be the first ever Argentine investment in India.

Arcor is an Argentine multinational company exporting to 120 countries. They are a leader in Latin America and have 41 plants in five countries of the region.It is a family-owned company with a turnover of 2.5 billion dollars.

Wipro of India had done some IT work for Arcor.

Mr Pagani has two guides to show him around in India. His sister and daughter. Both have travelled to India many times and like Indian culture and spiritualism.

Argentine hair colour for Indian men

2011-10-26T04:15:00.000-07:00

Last year Godrej bought two Argentine hair colour companies ( Issue Group and Argencos ) for about 50 million dollars. These two companies are doing well in the local market and are also exporting their products to other Latin American markets. The entry of Godrej into Latin America is not surprising, given the global ambitions of this large and established firm.

What took me by surprise was when I came to know that a small Argentine company Plumari has entered the Indian market with men's hair colour products. The Plumari products are sold in the Mens & Boys retail stores in India. At the moment, the Indian company has six retail outlets but is planning to open 100 stores by 2016. Plumari is keen to market their products for women also in India. They are excited by their entry into the large, growing and promising market of India.

Plumari is a family-run company with a turnover of 30 million dollars. They specialise in hair colour and export their products to over 30 countries. . More information in http://www.plumari.com

The success of Plumari should be an inspiration for other small Argentine and Latin American companies. This should also be seen in the context of the comments by some Latin American and other economists that Latin America is dependent upon exports of primary commodities. The Latin American companies which have consumer products should explore the large Indian market seriously and systematically.

A Brazilian company Surya Brasil is already exporting their Henna products to India. My blog on this http://businesswithlatinamerica.blogspot.com/2010/11/surya-shines-in-brasil-exports-henna-to.html#links

Brazil and India - Synergy between Bikini and Bindi

2011-10-08T15:42:00.001-07:00

A Brazilian firm with an Indian name ¨Surya¨ is marketing its henna products in India. Renuka, an Indian company is a major producer of sugar in Brazil.

Clélia Cecilia Angelon, the president of Surya Brasil and Narendra Murkumbi, vice chairman of Renuka Sugars are the trendsetters in the new paradigm of synergy between the New Brazil and the New India. Economists of the old school used to consider Brazil and pre-reform India as more competitive than complementary to each other.

Cecilia started off with a shop in Sao Paulo selling henna powder made with raw materials imported from India. To make it look authentic she named her company Surya Henna. She had once invited me to her stall in a Cosmetics Fair which drew large crowds attracted by the scantily clad Brazilian beauties tattooed all over their bodies with henna. I realised then that India not only stirred the Brazilian soul with spiritualism but also gave a touch to their bodies as well. This combination convinced me that it was going to be a winner in business and win-win for India and Brazil. The turnover of the company, which changed its name to Surya Henna, has now reached twenty million dollars. They export to twenty countries including USA, Australia, UK and France. In an audacious move, Cecilia decided to export her henna products to India. The marketing team of the company thought this was like a Brazilian trying to teach an Indian Guru. How would the Indian consumers living with a long tradition of henna accept a Brazilian henna product? How could a Brazilian company find a place in the space crowded by so many Indian companies in their home market? Cecilia would not take no for an answer. She opened an office in India in 2005 and sent a marketing executive Fernanda Drumond who spent four years to study and understand the Indian market. She has achieved sales of 1.5 million dollars in 2010 and plans to double it in 2011. She has placed the products in beauty parlours and stores in shopping malls in the major cities. Now she is reaching out to the smaller towns. Surya Brasil plans to open a production plant in India from which it will export to Japan, Korea, Taiwan, Australia and other Asian countries. They also plan to open an organic SPA in India like the one they have in Brazil. Besides henna Surya uses in their cosmetic products other Indian ingredients such as Amla.

Surya goes beyond henna in its India connection. The company´s website says ¨Surya is guided by Ayurvedic principles: know and respect individuality; pursue well being with emotional and physical balance¨. The website of Surya has a section, ¨moment of meditation ¨.

How does one explain the success of Surya in India and in the world? The answer lies in the fact that the Brazilians, with their sensual expertise, understand and practice body care better than the Indians whose focus is more on the spirit and the soul.

Cecilia’s interest in henna started with her love for an Indian Raj Malhotra who had employed her as a salesperson in his shop in London. Raj could not resist the Brazilian charm and married her. She became Cecilia Malhotra. They had a daughter Vandana. Raj lived for some time in Sao Paulo. After a few years, Raj and Cecilia separated. Later, she had relationship with another Indian Kanwaljit Singh.

When Murkumbi wanted to enter the Brazilian sugar sector, it was like Cecilia trying to penetrate the Indian henna market. Sugar industry was the holy cow of Brazil. It was controlled by the sugar barons and traditional families of Brazil. They were formidable as the global leaders in sugarcane farming, sugar and ethanol production and the pioneers in the use of fuel ethanol and flexifuel vehicles. But Murkumbi who believes in ¨Rewriting rules and Reinventing paradigms ¨ and ¨contrarian philosophy in a conventional business¨ ventured boldly . He has acquired two Brazilian sugar groups with an investment of 350 million dollars. Renuka is now the seventh largest producer of sugar in Brazil with a cane-crushing capacity of 14 million tons a year in its four sugar mills. It is also a leading producer of ethanol (one million litres) and co-generated power (221 MW). Renuka is investing 70 million dollars in 2011-12 more to expand the capacity. The goal of Murkumbi is to take the company from seventh to third rank in Brazil.

Murkumbi sees strategic synergy between India, the largest sugar consumer and Brazil, the largest sugar producer in the world. He believes in the complementarity between India whose sugar production faces increasing challenges of agricultural land and water scarcity and the advantage of Brazil with ample land and water resources, conducive climate and efficient farming and manufacturing, low operating cost and high scalability. Murkumbi has also become successful in marketing the Brazilian sugar in many countries besides India.

From time to time Indian domestic production goes down due to weather and other cyclical circumstances which make India import sugar. In 2009-10 India imported 2 billion dollars of sugar from Brazil.

The success of Cecilia and Murkumbi have become inspiration for other Indian and Brazilian entrepreneurs to seek such win-win opportunities.

India imported from Brazil soya oil worth 71 million dollars and pulses worth a few million dollars in 2010. These two imports are likely to increase in the coming years since India's production of these two items are inadequate to cope with the growing demand.

There is an evolving agricultural complementarity between Brazil which is poised to become a global agricultural powerhouse and India which is likely to face more challenges arising from increasing food demand and decreasing agricultural land and depleting water resources. According to a statement in March 2011 by the Brazilian Agriculture minister Wagner Rossi, Brazil has 120 million hectares of degraded land that could be converted to agriculture, which would triple the total area under cultivation.

In 2010, Reliance, the top Indian company accounted for about 38% of the Indo- Brazil trade. They exported 1.7 billion dollars of diesel and imported 1.25 billon dollars of petroleum crude. While India imports about 70 percent of its crude oil requirements, Brazil has become a net exporter. With the recently discovered pre-salt reserves, Brazil is expected to produce 6 million barrels per day by 2020. Given the need to fuel the projected high growth rate, India would import more Brazilian crude in the future. Besides imports, Indian companies have invested in oil exploration and production in Brazil.

Hopefully India will learn from Brazil's successful experience of fuel ethanol and flexifuel vehicles to meet the rising need for fuels. Brazil is also a source of minerals and timber and manufactured products as well as regional jets made by Embraer which are needed by the fast growing Indian market.

Renuka and Reliance have positioned themselves in the middle of the complementary partnership between India and Brazil in food and fuel. Brazil is becoming important for India's food and energy security.

What does India contribute to Brazil? There are several Indian IT and BPO companies which operate in Brazil employing 3000 Brazilians. This is more than employment. The Indian companies train and prepare these young Brazilians for the new Age of Information and Knowledge society. The Brazilians working in the Indian IT and BPO companies acquire multicultural skills through their interaction with US and European clients besides Indians. Fabio from Curitiba has become the regional manager of WIPRO for the whole of Latin America. Guess who is the new country manager of WIPRO in Argentina. Another Brazilian, Valdo.

The Indian pharmaceutical companies have helped the government and people of Brazil to reduce their cost of health care. In the nineties, Jose Serra, the Brazilian health minister invited the Indian companies to enter the Brazilian market and facilitated registration of their products. Thanks to this wise initiative, there are twenty Indian pharma companies which sell their products in Brazil through local production and distribuition besides exports. The low cost generic medicines from India have put pressure on the multinationals and local companies of Brazil to lower their prices and to increase the volume of less expensive generic products. The success of the Indian companies have inspired the Brazilian pharma companies which are aggressively expanding their domestic production and also extending their presence in the rest of Latin America and Africa.

India supplies embryos to the Brazilian cattle industry. Brazil has a large stock of cattle developed as a cross between Indian and European breeds. They had to do this cross breeding since the original cattle brought from Europe could not survive the hot and tropical climate of Brazil. The Brazilians had earlier imported cattle from Ongole, Gir and Nellore in India and named the cross breed as Nelore and Indubrasil. About 90% of Brazilian cattle meat production comes from Nelore. The Brazilians have also exported this Nelore breed to Paraguay, Argentina, Venezuela, Mexico, Central America and to USA.

The Indian manufacturers who make low cost products for the price sensitive Indian masses using ¨frugal engineering¨ (a term coined by Carlos Ghosn, the Brazilian who is the CEO of Renault and Nissan) and ¨reverse innovation¨ can supply such products to the Brazilians with low income. Micromax, a low cost Indian cellphone maker has just started marketing its products in north eastern Brazil. Tata has announced plans to assemble their Nano cars in Brazil.

The trade between India and Brazil have more than tripled in the last five years from 2.3 billion dollars in 2005 to 7.7 billion in 2010. This is set to increase significantly given the complementarity in food and energy security and the change in the mindset of Indian and Brazilian businessmen who have started taking each other’s markets more seriously.

Around 40 Indian companies have invested in Brazil in IT, BPO, pharmaceuticals, agribusiness, agrochemicals, oil, mining and manufacturing. On the other hand, eight Brazilian companies have invested in India in sectors such as assembly of buses, steel, electrical motors and shoes.

The 2014 World Cup, the 2016 Olympics, the 224 billion dollar investment plan of Petrobras in this decade and the 270 bn $ investment planned in the mining sector in the next 20 years in Brazil offer unprecedented opportunities for exports and contracts for Indian companies. The Brazilian companies too can take advantage of the huge investment opportunities and the growing size of the large consumer market of India.

The Indians admire and cheer the Brazilian football team during world cups. With more exchanges with Brazilian clubs, training and getting more Brazilians to play in Indian teams, there is hope and scope for Indian football which is becoming more popular.

The air-connectivity problem between the two countries has been partly solved with the flights of Qatar Airways and Emirates Airlines who link Sao Paulo with Indian cities through Doha and Dubai. Besides providing better service, these airlines have spared the Indians the need for transit visas at European airports.

The academic world too is catching up and has started focussing on the evolving partnership between the two countries. India has established a chair in Getulio Vargas Foundation, Sao Paulo and there is a Brazilian professor in Jawaharlal Nehru University. The centre for Latin American Studies at the University of Goa is organising a major conference on Brazil on 28-30 October 2011.

The governments of India and Brazil have a number of programmes of bilateral cooperation. Faced with similiar developmental challenges such as poverty alleviation and improvement in education and health care, the two governments could learn from the best practices of each other. A number of Indian delegations have visited Curitiba city which is a role model for urban bus transportation service. On the other hand Brazilian delegations visit Bangalore to get inspiration from the Indian IT companies.

India and Brazil are part of the trilateral alliance of IBSA alongwith South Africa. They are members of BRICS, G-20 and take common stand in a number of multilateral fora. The two countries work together to realize their aspiration to become permanent members of the UN security council.

Some might say that India's trade with Brazil was just 13% of China's trade with Brazil which reached 56.6 billion dollars in 2010. Chinese companies have invested much more than Indian firms in Brazil. But India is different. It is more than a commercial partner. India and Brazil share common values of democracy, freedom and culture.

At the level of people, there is cultural complementarity between the two countries. The Brazilians admire the culture and spirituality of India. There are thousands of Brazilian followers of Sai Baba and other such Indian Gurus. Yoga and meditation are no longer passing fads. They have become part of everyday life for several million Brazilians. While Sri Sri Ravi Shankar's Art of Living is popular in Brazil, the Indians admire the way the Brazilians have made enjoyment of life as an art. The new generation of Indians are attracted to the Brazilian spirit of samba and carnival.

¨Camino das Indias¨, the Globo TV soap opera based on an Indian theme topped the viewer ratings in 2009 and has stimulated the interest of the Brazilian masses in India. This Indian story with Brazilian actors had a profound impact. Indians are greeted with Namaste and are asked if they are Brahmins or Dalits. Ganesh idols for good luck adorn the offices and homes of many Brazilians. Exports of Indian ethnic dress and handicrafts have skyrocketed. The number of Brazilian tourists to India have gone up.

There are a number of Brazilians who perform Indian classical music and dances. One of them, called as Juliana has even come to teach in Buenos Aires. Her interest in Indian dance was inspired by Father Joachim Andrade, a catholic priest in Curitiba. Father Andrade himself had learnt classical dances in India. In Brazil, he did his masters in Anthropology on the topic “Dance as a ritual: a case study of Indian Dance”. For his doctorate, he chose the topic of “Bharatnatyam as the medium of diffusion of Hinduism in Brazil ¨.

Brazilians are embracing the principles of Non-Violence of Mahatama Gandhi as a preventive remedy for the young minds which are being infected by the serious crime and violence in their cities. Palas Atena, a NGO from Sao Paulo is celebrating the birth anniversary of Gandhi every year for the last 30 years and spreading Gandhi’s teachings on non-violence among children and youth in particular.

Romance is in the air between Bollywood and Brazil. The Indian film Dhoom II was shot in Rio de Janeiro. Some Indian Reality TV shows were also filmed there. There is a Brazilian model Giselle Monteiro who has taken new avatar as a Bollywood actress. She acted in two films ¨Love Aaj Kal¨ and ¨Always Kabhi kabhie¨. She has featured on the covers of Indian women's and fashion magazines and is the Brand Ambassador for some Indian products including jewellery. Her success has inspired a number of Brazilian girls and boys who are queuing up at the Indian consulate in Sao Paulo for visa to go to Mumbai for modelling and to have a shot at Bollywood. One of the reasons for the acceptability and success of the Brazilians in Bollywood is their café con leite (coffee with milk) complexion in which they look like Indians with the same blend of coffee and milk colour in their skin. Many Indians who saw Giselle in the Bollywood films mistook her as a Punjabi. Does'nt she look like one?

Giselle is romancing a Punjabi in the Bollywood film in the picture below

Brazilians have taken to Indian fashion too. Indian ethnic dress, jewellery and accessories are popular in Brazil. Girls from Ipanema are putting bindis in their foreheads matching with their bikinis. This Bikini-Bindi combination is the symbol of the synergy between the sensual Brazil and the spiritual India. This is more than synergy. Bindi is an auspicious sign of marriage.

Resurgent Latin America swims against the current of Recurring Global crisis

2011-08-21T14:16:00.000-07:00

¨This is the second time crisis affects the world, and for the second time Brazil is not trembling¨, declared Brazilian President Dilma Roussef last week.

“This is our time and we must help them (EU and US) solve their problems. Because when Brazil, Paraguay and Bolivia were in trouble a group of ‘gringos’ landed every time to tell us what to do.. now it’s their turn to listen to us.. North-American and European leaders should know that a politician should have character, I think they are lacking political initiative¨ said former President Lula.

"When did the American dream become a nightmare? When will USA learn to control financial speculation, which has brought ruin on the world?¨, asked Argentine President Cristina Fernandez in a speech at the Buenos Aires Stock Exchange last month. She said, ¨The Americans thought that money just reproduces by itself, and only in the financial sector, without having to produce any goods or services". In 2002, the US Treasury Secretary Paul O'Neill had mocked Argentina saying , "They like it that way. Nobody forced them to be what they are." The Argentines ask who forced USA now?

The Latin American Schadenfreude is understandable. They used to be on the receiving end of lectures and taunts by the Europeans and Americans in the past. They are now in a position to return the favour.

Crisis, Debt, Default, Deficit – the bad news from US and Europe since September 2008 does not seem to stop…. The prospects for them in the near future are not bright either. Contrast this with the Latin American bullishness.

¨Will 2011 be the dawn of the Latin American decade?¨ is the title of the webcast by Standard and Poors in January 2011.

¨Laying the foundation for a Latin American Decade¨, was the theme of the World Economic Forum on Latin America held in Rio de Janeiro in April 2011.

“The decade of Latin America and the Caribbean- a real opportunity¨ is the title of the new book of Luis Alberto Moreno, President of the Inter American Development Bank launched in July.

"This can and should be the decade for Latin America," declared Colombian President Juan Manuel Santos during his speech on 17 August at the Economic Commission for Latin America and the Caribbean (ECLAC) headquarters in Santiago, Chile.

¨Nuestra Hora (our time) ¨is the title of a new book by Raul Rivera who talks about the new Latin American mindset of the Twenty First century.

¨The New Latin America and the New India- synergies and complementarities, is the title of the seminar to be held by the embassy of India in Buenos Aires on 5 December.

In the olden days, if US and Europe caught cold, Latin America would sneeze. Not any longer. During the global financial meltdown of 2008-9 not a single bank or financial institution collapsed in Latin America. The region weathered the storm without any serious damage and bounced back quickly with an impressive GDP growth of 6% in 2010. BBVA, the Spanish Bank in its ¨Latin America Report¨ of August, says that in spite of the global turbulences, the Latin American economy will expand by 4.8% (same estimate as those of ECLAC and World Bank ) in 2011 and is optimistic about the region’s growth possibilities in the coming years.

Earlier this month, the World Bank's chief economist for Latin America and the Caribbean, De la Torre, remarked, “ Latin American economies have developed strong immune systems against global contagion. Over the last 20 years the region has experienced a silent economic revolution that has provided a shield against external shocks, as we have witnessed in the previous crisis and those reforms are still in place. Latin America could absorb the financial shocks from the global turmoil through greater exchange rate flexibility, maintaining reasonable growth rates.” The Latin American economies have become more resilient and less vulnerable to external shocks. The policy makers are better prepared now, after having having gone through hell in the olden days. According to the 13 August issue of Economist, ¨they have more policy weapons available than most rich-world economies¨.

Some economists have suggested that US and Europe could learn from the experience of Latin America which has successfully resolved their debt crisis. The title of a blog of the Washington DC- based Council on Hemispheric Affairs on 18 August is ¨Mounting Debt: the U.S. could Learn from Latin America¨. The US public debt to GDP ratio has increased from 60% in 2003 to 96%in 2010 while in the case of Latin America the ratio of external debt to GDP has decreased from 39.9% in 2003 to 19.2% in 2010.

The main driver for the ongoing growth in Latin America is the domestic demand. The Inclusive Development policies have lifted 40 million people out of the poverty line in the period 2003-8 alone and the middle class has been expanding significantly. In the case of South America, the high Asian demand and the soaring prices of commodities have offset the negative impact of EU and USA.

According to the UN Economic Commission for Latin America and Caribbean (ECLAC), the GDP growth rates of some of the Latin American countries in 2010 were: Argentina (9.2%), Brazil (7.5%), Paraguay (15.0%) and Uruguay (8.5%), Panama (7.5%), Dominican Republic (7.8%) and Peru (8.8%). The growth figures of Latin America are not just one-time wonders. In the period 2003-8 the region had a consistent growth which was an annual average of over 5%. The growth is only one part of the new story of Latin America. The region has been strengthened by sound macroeconomic fundamentals of the economies and the prudent policy disciplines of the governments.

Here are some indicators of the fundamentals, from the July 2011 report of ECLAC :

- Sustained economic growth is enhancing the economies’ employment-generating capacities and the unemployment rate is expected to come down again in 2011, to between 6.7% and 7%. What is more, indicators for the first part of 2011 show formal wage employment rising as a proportion of total employment in several countries, suggesting that the new jobs being created are of better quality. Continued economic growth and jobs rising in both numbers and quality should usher in fresh gains in poverty reduction.

-GDP growth was driven by strong domestic demand in the form of both consumption and investment and by buoyant external demand.

-Inflation of the region in 2010 was 6.6% and is expected to increase to 7.5% in 2011 due to the higher global prices of food and fuel. The average inflation of the region is in single digit since 2003 and it had gone down to 4.7% in 2009.

-Current account deficit of the region in 2010 was just 1.2% and is expected to increase slightly to 1.5% in 2011, although it was much lower at 0.4% in 2009. From 2003 to 2007, Latin America experienced an unprecedented current account surplus that averaged 1% of GDP.

-Eleven countries of the region recorded nominal appreciation of their currencies in 2010 and early 2011, in particular Brazil, Colombia and Uruguay but also, to a lesser extent, Chile, Costa Rica, Mexico and Peru.

-Foreign Exchange reserves of the region reached a record level of 715 billion dollars in June 2011 from 160 billion in 2002.

-Total gross external debt of the region as a percentage of GDP declined to 19.2% in 2010 from 39.9% in 2003.

-Net Foreign Direct Investment increased to 70 billion dollars in 2010 from 38 billion in 2003.

Even with all these strong points, obviously Latin America cannot escape the adverse impact of the ongoing global crisis. Mexico and Central America, which are more exposed to the US market will suffer more than South America which can count on continued exports of commodities to China and India. The region has also its own longterm challenges such as poverty, education, infrastructure, corruption, urban crime, drug trafficking. The Latin American economies need to go further down the road of structural reforms.

The Argentines say that they ended up in a mess after implementing the IMF prescriptions in the eighties. After 2002, they refused to listen to IMF advice and did exactly the opposite of what they were told. The result speaks for itself. Argentina came out of its historic crisis of 2001-2 remarkably and has shown consistent growth since 2003 and is flourishing. The Latin Americans who transitioned from dictatorship to democracies in the eighties were advised to follow neoliberal policies by the Washington Consensus at that time. As a consequence, the Latin American situation became worse and the eighties came to be known as the Lost Decade for Latin America. This triggered an anti-neo liberal reaction and turn to the Left.

Having seen and suffered the consequences of the flaws and follies of US and Europe, the Latin Americans no longer look up to them as role models. They are now diversifying their economic relations and reaching out to new markets. They are inspired by the success stories of India and China. They want to learn from the value system of these new Gurus. In his latest book ¨Basta de historias (enough of the past)¨, launched in Buenos Aires on 16 August in Buenos Aires, Andres Oppenheimer, the popular columnist of Miami Herald has advised the Latin Americans to focus on education which has unlocked the potential of countries such as India

The Latin Americans have now found their own home-made solution and their own path to development based on their experience. They are moving towards the centre with polices of Inclusive Development along with market-friendly approach. It is a pragmatic balance of pro-Favela and pro-Wall Street policies as practised by the former Brazilian president Lula. Lulaism, as some describe, has become not only the new dominant trend but also a vote winner. Ollanta Humala, the radical leftist won the Presidential elections in Peru in June this year because of the promise that he would follow Lulaism. In 2009, the Mujica, the ex-guerilla fighter of Uruguay won the elections by assuring the voters that he would govern like Lula. Lulaism is also called as ¨Brasilia Consensus ¨ as against the externally imposed ¨Washington Consensus¨. This is the new mindset of the resurgent Latin America. It is based on this solid foundation of new confidence, vision and optimism that a New Latin America is emerging.

The risk of doing business with Colombia is …falling in love….

2011-08-02T04:12:00.000-07:00

The risk of visiting Colombia is that you might stay on… Says the Colombian tourism advertisement. But there is also another greater risk … The risk of ...falling in love...

This is what happened to three Indian IT guys Mohan, Atul and Kaushik who went to Colombia for an IT project. All three were captured, kidnapped ...and taken to the altar... The Indians were, of course, not innocent. They were willing victims.. and now lead happy married life with their Colombian wives.

The three went to Colombia as employees of an IT company. Soon, they quit their jobs and founded their own company Sophos Banking Solutions. They will not tell me which came first - love or entrepreneurship. It does not matter. They conquered the market but let themselves be conquered by the Colombian women.

Colombian women are among the most beautiful in Latin America. Those from Medellin and Calli are the prettiest in the region. When I was in Medellin in July this year, my eyes almost popped out while sitting in the outdoor cafes and bars. The streets of Medellin are like catwalks. The women walk ...parade ..as though they are models. It was like watching Fashion TV - a non-stop out door fashion show. It reminded me of the Brazilian composer Antonio Jobim and poet Vinicius de Moraes who used to sit in a bar in Rio de Janeiro and saw a girl passing by often. This inspired them to compose the famous song, ¨Garota de Ipanema- the girl from Ipanema¨. The bar is located near the Ipanema beach and known as the Garota de Ipanema bar.

The Colombian women are like the emeralds of the country- exquisite and sparkling. They are charming, sweet, elegant, graceful and intensely feminine. Besides their natural endowments, some get cosmetic surgeries done to enhance their attractiveness. Cosmetic surgery is a thriving business in Colombia.

Colombian women make good wives and parners with their committment, loyalty and sincerity. They are family oriented, affectionate and caring. I have a number of Indian and foreign friends who are married to Colombian women happily for many years with more mature love, as described in the song in the film ¨Love at the time of cholera¨ based on the novel of Gabriel Garcia Marquez.

Hay amores que se vuelven resistentes a los años,

como el vino que mejora con los años,

There are loves that come to be resistant to years

Like the wine becoming better with years.

Here is the song http://www.youtube.com/watch?v=uZ53MAEaoyQ

It was this book ¨Love at the time of cholera¨ which put a spell on me and got me passionate about Latin America for the last fifteen years. I was fascinated by the incurable romantic Florentino who is hopelssly in love with Fermina even when she rejects him and gets married to another. He waits for over fifty years with the same pure love and comes to propose to her at the age of seventy after the death of her husband.

Oops.. I got carried away…. I forgot to mention the fourth member of the Sophos team, Amitt. He is the exception. His parents seemed to have had knowledge of Colombia. They were not taken in by the title of the book ¨One hundred years of solitude¨ by Marquez. They knew it was just magical realism. They would not believe that there could be any solitude for bachelors in Colombia. So they made Amitt marry an Indian girl Vidushree before he could also fall a victim to the Colombian magic. She speaks fluent spanish and has become almost a Colombian.

Sophos provides IT solutions for banks and financial instituitions besides BPO and other services. They work with partners such as Infosys and Oracle. They have 90 Colombian and 12 Indian employees and are adding more.

I visited the Sophos office in Bogota. In the picture below you can see Amitt in the left and Mohan in the right with their Colombian staff, whom they describe proudly as their extended family.

The office of Sophos is strategically located in the heart of the financial district of Bogota. They own the office and recently bought an adjacent space also as part of their expansion. The company is growing as the Colombian clients have gained more confidence in Sophos. Atul told me the secret…If he and a Colombian were to compete for a IT contract from a Colombian client, he as an Indian, had a better chance. Yes.. Indian name gives a competitive edge in the IT business in Colombia as in US.

Atul Malhotra is from Chandigarh, Mohanraj is from Coimbatore, Amitt is from Agra and Kaushal is from Mumbai. All the four guys work like Indians and have fun like the Colombians. They work typically an average of 13 hours a day. Every Sunday they have a video conference to review the past week and plan the next one. Guess what time.. At 0630 hrs. I am sure the video line will be absolutely clear and uncongested at this ungodly time when the whole of Colombia will be enjoying their Sunday morning sleep.

Atul who lives and works in Medellin is a connoisseur of the night life in Parque Lleras , where he took me out for an incredible evening. Mohan, who has the typical conservative and quiet Coimbatore smile was transformed completely into a Colombian Fiestero (party man) after a couple of aguardientes (local spirit) at the famous Andres DC Bar in the Zona Rosa of Bogota.

The Colombian wives have adapted well to their hard working husbands, confused in-laws and curious Indian relatives. They have learnt Indian cooking and know how to make their Indian husbands cry …with their hot Indian food.

I asked the Sophos guys about the experience of their Colombian employees. They are happy with the quality of Colombian human resources and their commitment. The Colombians are willing to work late in the evening or on a weekend whenever there is need. This has reconfirmed my own opinion that the Colombians have the best work culture in the Andean Community region and among the best in Latin America.

These days, Colombia is the hottest destination in Latin America for foreign investment with lots of opportunities and investor-friendly government policies. President Santos surprised the Indian Ambassador Warjri when he himself came forward to meet all the Indian participants in an Indian engineering exhibition last year. The Colombian embassy is the only Latin American mission in India to have an Investment Promotion Officer. The Colombian Ambassador in India Juan Alfredo Pinto is known for his proactive Economic Diplomacy with his background as an economist and entrepreneur. With the third largest population (48 million) in Latin America, Colombia is the third largest destination of Indian exports to the region. Reliance, ONGC, United Phosphorous Ltd, and Havells Sylvania are the major Indian investors in Colombia.

So here is a strategy for Indian companies to conquer the Colombian market. Send the bachelors in your export departments. They will have an extra motivation to establish long term exports and business of your company with Colombia.They will be inspired by Shakira's song ¨Sale el sol¨

uno y uno no siempre son dos

Cuando menos piensas sale el sol

One plus one is not always two

The sun starts shining , when one least expects

Here is the full song

http://www.youtube.com/watch?v=mqqLoUcLX5I

Role Reversal between Latin America and USA

2011-07-24T07:58:00.000-07:00

Debt, Default, Deficit and Rescue – are the headline news these days in USA and Europe…. not in Latin America which has come out of these nightmares since 2003. The Latin Americans who were lectured by the Europeans and Americans in the past are now returning the favours. "When did the American dream become a nightmare?" ¨When will USA learn to control financial speculation, which has brought ruin on the world?¨, asked Argentine President Cristina Fernandez in a speech at the Buenos Aires Stock Exchange on 18 July. She said, ¨ The Americans thought that money just reproduces by itself, and only in the financial sector, without having to produce any goods or services". She had every right to say so. In 2002, the US Treasury Secretary Paul O'Neill had mocked Argentina saying , "They like it that way. Nobody forced them to be what they are." The Argentines ask who forced USA now?

The Argentines say that they ended up in a mess after listening to IMF in the eighties and nineties. After 2002, they refused to listen to IMF advice and did exactly the opposite of what they were told. The result speaks for itself. Argentina has shown consistent growth since then and is flourishing. The Latin Americans who transitioned from dictatorship to democracies in the eighties were advised to follow neoliberal policies by the Washington Consensus at that time. As a consequence of following these policies the Latin American situation became worse and the eighties came to be known as the Lost Decade for Latin America. This triggered a anti-neo liberal reaction and election of Leftists to govern the region. It is now the turn of Europe and USA to face the prospects of a Lost Decade in contrast to the Latin Americans who are prospering and celebrating this period as their Growth Decade. While Europe and USA are expected to grow by 1.85% and 2.6% in 2011, South America is projected to grow by 5.1% in 2011, according to the July 2011 report of ECLAC ( Economic Commission for Latin America and Caribbean of the United nations). Even Mexico which is tied to USA as a NAFTA partner is projected to grow by 4% while Central America's growth is predicted as 4.3%. President Christina was able to talk so boldly since Argentina's own growth in 2011 is projected to be an impressive 8.3% coming after a sizzling 9.2% in 2010.

The Latin Americans have found their own ¨Brasilia Consensus ¨ and given up on the externally imposed ¨Washington Consensus¨. Another name of the Brasilia Consensus is Lulaism, which means pragmatic balance of pro-Favela and pro-Wall Street policies as practised by the former Brazilian president Lula. Lulaism has become not only the new dominant trend but also a vote winner. Ollanta Humala, the radical leftist won the Presidential elections in Peru in June this year because of the promise that he would follow Lulaism. In 2009, the Mujica, the ex-guerilla fighter of Uruguay won the elections by assuring the voters that he would govern like Lula.

The growth figures of Latin America are not just one-time wonders. Look at the GDP growth rates of some of the Latin American countries in 2010: Argentina (9.2%), Brazil (7.5%), Paraguay (15.0%) and Uruguay (8.5%), Panama (7.5%), Dominican Republic (7.8%) and Peru (8.8%). In the period 2003-7 the region had a consistent growth which was an annual average of over 5%. The growth is only one part of the new story of Latin America. The region is marked by sound macroeconomic fundamentals of the markets and the prudent policy disciplines of the governments.

Here is more news on the fundamentals, from the July 2011 report of ECLAC:

-GDP growth was driven by strong domestic demand in the form of both consumption and investment and by buoyant external demand.

-Inflation of the region in 2010 was 6.6% and is expected to increase to 7.5% due to the higher global prices of food and fuel. The average inflation of the region is in single digit since 2003 and it went down to 4.7% in 2009.

-Current account deficit of the region in 2010 was just 1.2% and is expected to increase slightly to 1.5%, although it was much lower at 0.4% in 2009. From 2003 to 2007, Latin America experienced an unprecedented current account surplus that averaged 1% of GDP.

-The region’s continued financial inflows, access to financial markets and historically high levels of international reserves show that its external financial position remains solid.

-Foreign Exchange reserves of the region reached a record level of 719 billion dollars in May 2011 from 164 billion in 2002.

-Total gross external debt of the region as a percentage of GDP declined to 19.2% in 2010 from 39.9% in 2003.

-Net Foreign Direct Investment increased to 70 billion dollars in 2010 from 38 billion in 2003.

Latin American market

For those Indian businessmen who still think Latin America is not that important, here are some facts to correct their perceptions:

-The GDP of Latin America has reached 5 trillion dollars in 2011. There are two Latin American members in the Trillion Dollar club. Brazilian GDP has crossed 2 trillion dollars while Mexican GDP is over one trillion.

-The population of the region is 550 million of which 350 million are middle class.

-In 2010 the Latin American imports were 844 billion dollars and exports 889 billion.

-Latin Americans have over 500 billion dollars of investment projects in the coming years in energy, mining, infrastructure and industry. The Brazilians account for the bulk of it with their own projects relating to World Cup 2014, Olympics 2016 and the projects of Petrobras.

Of course, the region faces a number of challenges and is marked by a few aberrations and deviations from the main trends, just as in India and other countries.

India - Bolivia Encounter of civilisations in El Mutun

2011-06-05T15:51:00.000-07:00

¨Hermano… Yo tambien soy Indio ¨– Brother ...I am also an Indian. This is how President Evo Morales greeted Naveen Jindal, Managing Director of Jindal Group when they met first time in 2006. Naveen responded ¨Your Excellency , We from India believe in Karma. It is the Karma which has brought together the brothers from India and Bolivia ¨. Evo asked, ¨ how long are you here?¨. Naveen replied, ¨for the next seven reincarnations¨. Evo burst out laughing and gave a 40 year lease of the El Mutun iron ore mine which has one of the largest reserves in the world with an estimated 40 billion tons.

The Jindal investment of 2.1 billion dollars is significant for Bolivia whose GDP is just 18 billion dollars and population 10 million. It is the biggest investment Bolivia has ever received. The steel plant to be set up by Jindal is the first- ever in the country. The Jindal Project will contribute to the industry, economy and export earnings of Bolivia besides to the exchequer by way of taxes and royalty. They will provide jobs and training to thousands of Bolivians. It is, therefore, no surprise that Jindal steel is the talk of the town all over Bolivia from El Mutun where the mine is located to Santa Cruz the provincial capital and to La Paz the capital of Bolivia. At the Santa Cruz airport, you can just tell the taxi driver to take you to Jindal office and need not worry about the address. They all know it. The only thing is you have to say Hindal since J is pronounced as H in Spanish.

The Jindal investment is not just another project. It is a civilisational encounter between the millenial India and the ancient native Indians of Bolivia. Evo Morales is the first native Indian to be elected as president of Bolivia which has sixty percent Indians in the total population. In fact, he is the first native Indian President to be elected in Latin America. This historic empowerment is a celebration for the 40 million indigenous Indians of Latin America spread from Chile to Mexico.

The indigenous population of Bolivia and the region were also called (mistakenly) as Indians by the Spanish colonisers. Besides being called as Indians, the people of India and Bolivia have many similiarities. Many gods and goddesses bless the indigenous people of Bolivia as in India. Evo went to thank the native God in the mountains and had a special religious ceremony before assuming office like the Indian politicians go to Tirupati temple. The indigenous communities of Bolivia offer Coca leaves as part of the worship to their gods and also chew coca leaves as people do in south India with betel leaves. The Bolivians garland their VIPs just as the Tamils do. Bolivia has many indigenous groups speaking different languages. Evo belongs to the Aymara group which he calls as Aymara nation. He has even changed the official name of the country as Estado Plurinacional de Bolivia – Plurinational State of Bolivia. It is in the context of these common rich traditions that the Mutun project assumes importance as a historic link between the civilisations of India and Bolivia.

Here are the brothers Evo Morales and Naveen Jindal in the picture below:

The Jindal project has the following components:

-production of 25 million tons of iron ore a year

-a pellet plant with capacity of 10 m tons

-Sponge Iron Plant: 6 m tons

-Steel Plant: 1.7 m tons

-Power Plant: 450 MW

Part of the production of iron ore and steel will be exported. To start with, iron ore will be exported in the next few months. The ore will be transported by trucks to Puerto Busch 100 km away from El Mutun. From there, barges will be used on the Paraguay-Parana rivers for about 1800 kms to an Argentine river port near Rosario. Each barge will carry 2500 tons and 16 barges will go together in a convoy. From the Argentine port there will be transshipment on ships with capacity of around 45,000 tons. These ships will go through the river for another 400 kms through Buenos Aires to reach the Atlantic ocean and then on to China and other countries. The steel to be produced will be supplied mostly to the domestic market as well as to the neighbouring countries.

Vikrant Gujral, President of Jindal Bolivia is the one who manages the project. He is a veteran with 48 years in the steel industry. He rose from a management trainee of the Indian Iron and Steel Company (IISCO) in 1963 to become the Chairman of IISCO as well as Managing Director of Bhilai steel plant and a senior director in SAIL. He is passionate about steel and motivates and entertains his team with stories and anecdotes over Argentine and Chilean wines at the dinner table. He has a team of about 20 hard working and innovative Indian engineers and experts who interact with the Bolivians enthusiastically in their broken Spanish. They have spanish classes in the evenings. The Bolivians working in the project greet the Indians with Namaste and keep saying Achha hai. They enjoy the chappatis, basmati rice, dals and even the pickles at the Jindal guest house.

Gujral has found out another cultural similiarity of Bolivia with India but an uncomfortable one. Bolivians queue up in front of his offices in Puerto Suarez and Santa Cruz for jobs and contracts. He receives numerous calls from political leaders seeking favours. He has delegated this job of dealing with political leaders to his Director Arvind Sharma who flies the Indian flag as the Honorary Consul of India in Santa Cruz. He is a permanent resident of Santa Cruz since 1990 and is more Bolivian than many natives.Both are conscious of the high expectations of the Bolivians and corporate social responsibility. They work with the local communities contributing to the socioeconomic development of the region. They have donated medical equipments worth 300,000 dollars to local hospitals and ambulances to villages. They are building roads and renovating public plazas and schools. Jindal has started a vocational training centre in Puerto Suarez to train the Bolivians. This week they are leading a campaign to plant trees in collaboration with local schools and NGOs as part of their commitment to preservation of environment. Naveen Jindal is literally raising the Bolivian flag, as he has done with Indian flags in India. He has put up a huge Bolivian flag on a 100 feet tall steel pole in Puerto Suarez which can be seen even from across the border in Brazil. He is going to put up another one in La Paz too. Jindal banners are all over the roadsides proclaiming their commitment to partner with Bolivia to make steel.

Vikrant Gujral, the President of Jindal Bolivia in front of his office in Puerto Suarez, the nearest town 40 km from Mutun:

The mine is working 24 hours and seven days a week. Picture of the work in the mine below:

Jindal has already produced 400,000 tons of iron ore which are waiting for exports. The stocks can be seen in the picture below:

Puerto Suarez where Jindal has their operational headquarters is a quiet town with a population of 25,000 people, who are all excited about the transformation in their lives to be brought about by the steel project. The owner of a local restaurant has got a large and lucrative contract to feed the people at work in the mine and had to abandon his restaurant in the town. Traffic in the small and charming airport of Puerto Suarez has increased. This should be the most civilised airport in the world. The passengers can walk from the check in counter to the plane without the botheration of X Rays, metal detectors, baggage check and groping. The airline operating from Puerto Suarez is called as TAM... Not the Brazilian one. It is Transport Aereo Militar. Their punctuality and services are better than the Brazilian TAM.

While the Jindal is proceeding with the project seriously, they face some challenges. These are technological, logistic, infrastructural, administrative and political challenges too. But the Indian team, with its innovative skills is overcoming them. The most formidable challenge is, of course, political. There are some vested interests who do not want to see the success of this project and progress of Bolivia. These were the same forces who had ruthlessly kept the indigenous people of Bolivia backward and excluded them from political power and economic opportunities for the last several centuries. They spread misinformation about the Jindal project and poison the minds of policy makers and put obstacles at every possible opportunity. But these vested interests underestimate Naveen Jindal who himself is a politician and a champion shooter. And then there is Vikrant Gujral, the Iron Man who has dealt with mafias and politicians in the interior of India and succeeded in making the public sector steel plants profitable. He is optimistic that the dark forces cannot stop the project which is so important for the Bolivian economy and society. Gujral faced his first challenge while bidding for the project. He had difficulty in breathing when he went for the first time to meet the Bolivian authorities at La Paz which is at an altitude of 3100 metres. He was aware that Bolivian football teams had beaten Brazil and Argentina using their altitude advantage. In the world cup qualifying match on 1 April 2009 Bolivia beat Argentina 6-1, the worst defeat Argentina had suffered. The Bolivians trounced the Brazilians 2-1 on 11 October 2009.

Vikrant Gujral was given the following advice to survive the altitude problem in La Paz:

Come poquito

Bebe poquito

Durme solito

Eat less

Drink less

Sleep alone....

Gujral followed this advice, survived the altitude and succeeded in winning the contract ...and now he has decided to continue to sleep alone till he completes the project......

Havells Sylvania's business in Latin America - an enlightening story

2011-05-25T14:29:00.000-07:00

Havells Sylvania, an Indian company with the widest presence in Latin America, employing 850 Latin Americans is managed by a single Indian staying in Costa Rica. This is the new paradigm of Indian business in Latin America.

The name of the company got me curious. It does not sound Indian!. The original name of the company was “ Haveli’s “ of ‘Haveli Ram Gandhi'. Mr. Qimat Rai Gupta – Chairman, who is now 73 years old, acquired this brand in early seventies. He was a teacher who became a trader in wires and cables in 1958 in Bhagirath Place, Delhi's electrical market. As the business grew, the name became “Havells”. When Havells bought the global assets of Sylvania in 2007 for 230 million Euros, the company became Havells Sylvania. The global assets of Sylvania included those in Latin America.

The total turnover of Havells Sylvania is 1.2 billion dollars of which 55% is in India.The remaining 45% of income is generated in 50 countries around the world. The global headcount of the company is 8000 and it has 18 manufacturing plants in India, Europe, Latin America and Africa.

What is their presence in Latin America? They have operations in 13 out of the 19 Latin American countries: Chile, Argentina, Brazil, Peru, Colombia, Venezuela,Ecuador, Bolivia,Panama, Costa Rica, El Salvador, Guatemala,Dominican Republic and Mexico. They are planning to add Uruguay and Cuba shortly. No other Indian company is spread out so much in Latin America as Havells Sylvania. The other Indian company which has the second widest presence in the region is TCS which has operations in eight Latin American countries.

Kapil Gulati (in the picture above- in his Costa Rica plant) is the only Indian in the Latin American operations and the other 850 are Latin Americans of which 400 are Colombians and 200 Costa Ricans(some of them in the picture below). This includes 13 country managers besides sub regional managers for Southern Cone, Andean and Central American. This reconfirms the confidence of Indian companies in the human resources of Latin America. Indian companies do not bring hundreds and thousands of expatriates as some other country does.The Indian companies not only employ Latin Americans but also give training and help them to grow as leaders.

Kapil does not say hello when I call him on the phone. He says ¨Pura Vida¨… And he uses this word as part of his signature in emails too. Pura Vida (full of life) is a typical salutation in Costa Rica where he lives since August 2007. The Ticos, as the Costa Ricans are nicknamed, are one of the happiest people on the earth. They have reached the next level of civilisation by having abolished armed forces in 1948. Costa Rica generates ninety percent of its energy through renewable sources and their government declared in 2007 that it intended to become carbon neutral by 2021. It has the highest literacy rate in Central America and is known as the Silicon valley of Latin America with its IT leadership in the region. It also gives happiness to women who want enlargement of busts. Yes, it is a large exporter of silicones.

Kapil and his family have become true Ticos and have adopted perfectly to Pura Vida.His two daughters, aged 13 and 7 speak fluent Spanish and help the parents with interpretation.Kapil is fascinated with the Latin American culture and admires the way the Latinos enjoy life. He himself looks much happier and younger now than when he came to the region in 2007. He believes that both Indians and Latinos can enrich each other with their distinct culture and ways of living. It is with this belief that he sent 75 Latin American distributors to India on a business cum tourist trip recently. They have come back thrilled with their discoveries and experience. Kapil plans to send more such groups to India.

Oops.. I forgot to explain the enlightening part. Havells Sylvania is in lighting business. They are a full spectrum provider of lighting solutions. They manufacture lights, fixtures, ballasts, switchgear for houses, commercial and public buildings and spaces. They have a plant in Colombia and another one in Costa Rica. They do research in India, UK and Belgium to develop new energy saving devices and solutions. The company works with the governments of Argentina, Costa Rica and Ecuador in Latin America to execute their Energy Saving Programmes.

Havells Sylvania is the market leader in Colombia with 30% market share and 40% market share in Costa Rica. In Argentina it is 35% and in Brazil 14%. In the region as a whole, Havells Sylvania is just behind Philips the market leader.

Kapil has a simple target… To increase his turnover to one dollar for each Latin American in the next three years. This means 556 million dollars for the population of 556 million of Latin America. His 2010 turnover was 200 million dollars. One billion dollars is his ultimate goal by 2018. The growth will be both organic and inorganic. His company’s Mantra : "If your mind can conceive it and your heart can believe it - You can achieve it".

Latin America had the strongest growth in incoming and outgoing FDI in 2010

2011-05-07T07:43:00.000-07:00

Latin America and Caribbean was the region with the strongest growth in incoming and outgoing Foreign Direct Investment( FDI) in 2010. The region had the highest percentage increases as a recipient and source of FDI, according to a report presented by the Economic Commission for Latin America and the Caribbean (ECLAC) on 5 May. FDI inflows were up by 40% with respect to 2009 and stood at a total of US$ 113 billion.This is the third highest for the region after the 134 bn FDI in 2008 and the 114 bn in 2007.Outflows increased almost fourfold to reach an all-time high of US$ 43 billion.

For 2011, FDI flows to Latin America and the Caribbean are expected to maintain this trend and increase by between 15% and 25%.

Is this not remarkable considering the uncertain times in the developed markets? It is a reflection of the new paradigm of Latin America whose companies went out investing 43 bn $ when bailout is the cry heard in Europe. There are not anymore IMF cases in Latin America..They have shifted to Europe... Brazil is a net creditor to IMF !

The region's main FDI recipient was Brazil, where FDI inflows posted a record surge of 87%, going from 25.949 billion dollars in 2009 to 48.462 billion dollars in 2010.

The second main recipient was Mexico (17.726 billion dollars), followed by Chile (15.095 billion dollars), Peru (7.328 billion dollars), Colombia (6.760 billion dollars) and Argentina (6.193 billion dollars).

The only country which bucked the trend and had a negative inflow of FDI is..no prize for guessing… Venezuela.

In 2010, Chinese companies invested 15 billion dollars in Latin American and Caribbean countries, mainly in the form of mergers and acquisitions. For 2011 China has announced plans for investment of 22 billion dollars.

In 2010 China became the third largest investor in Latin America and the Caribbean, with a share of 9%, behind the United States (17%) and the Netherlands (13%).

Chinese investment has mainly been in Brazil, Argentina and Peru. Over 90% has targeted the extraction of natural resources, particularly the hydrocarbon sector and, to a lesser degree, mining. The State petroleum company Sinopec carried out the largest investment by acquiring 40% of the Brazilian operation of Repsol-YPF for 7.111 billion dollars. The oil companies CNOOC and Sinochem also announced major acquisitions in Brazil and Argentina, respectively. In terms of mining, the major companies are Chinalco and Minmetals (Peru) and Wuhan (Brazil).

The main drivers for the incoming FDI in Latin America are the boom in the demand and prices of oil, minerals, agroproducts as well as the growing domestic demand.

The outward FDI of 43 bn$ is the highest in the history of the region. The last highest was 41 bn$ in 2006 and the thrid highest was 36 bn in 2008. Mexico was the country that invested the most abroad in 2010 (12.694 billion dollars). This was followed by Brazil (11.5 billion dollars), Chile (8.744 billion dollars) and Colombia (6.504 billion dollars).Most of the investment went into other countries of the region.

The large Latin American companies investing abroad are called as Multilatinas or TransLatins. These are companies such as Vale, Petrobras, JBS and of course, the companies of the world's richest man Carlos Slim from Mexico.

The Indian companies which made major investment in the region in 2010 include Renuka Sugar, Godrej and Aegis. In 2011 UPL has already invested 600 million dollars in Brazil.The latest investment is by Glenmark whose new pharma plant in Buenos Aires was inagurated by Minister of State for Commerce and Industry on 3 May 2011 along with Argentine Minister of Industry Debora Giorgi.

Peru announces plans for 15 billion dollar investment in hydroelectric plants- April 2011

2011-04-28T05:21:00.000-07:00

The plan is to produce 12000 MW in the following 20 projects: Vizcarra (140 Mw), Llata 1 (210 Mw), Llata 2 (200 Mw), Puchca (140 Mw), Yanamayo (160 Mw), Pulpería (220 Mw), Rupac (300 Mw), San Pablo (390 Mw), Patas 1 (320 Mw) y Patas 2 (240 Mw).

Igualmente, Chusgón (240 Mw), Bolívar (290 Mw), Balsas (350 Mw), Santa Rosa (340 Mw), Yangas (330 Mw), Pión (350 Mw), Cumba (410 Mw), Rentema (1,500 Mw), Escuprebraga (1,800 Mw) y Manseriche (4,500 Mw).

Peru has lot of untapped potential in the hydroelectric sector.

Peruvian economy is a star performer in Latin America and is projected to have the highest GDP growth in 2011. Peru has been attracting a lot of investment in mining in recent years.

Indian companies should target Peru and make us of the opportunities.

Argentina has world's third largest shale gas reserves

2011-04-24T15:14:00.000-07:00

According to a April 2011 report of the US Department of Energy, Argentina has 774 trillion cubic feet ( tcf ) of technically recoverable reserves which is the third largest in the world. China has the largest reserves of 1275 tcf followed by USA with 862 tcf. Commercial production has already started in USA where shale gas is considered as the ¨Game Changer¨in the gas market of USA. In China, shale gas project is a priority in the current five year plan.

Reliance has acquired some shale gas blocks in USA.

Mexico has the fourth largest shale reserves of 681 tcf. Brazil has 226 tcf. The rest of Latin America does not have significant reserves.

Most of the shale gas find in Argentina is in the patagonian region where oil and gas are produced already.

The Argentine shales are said to be two or three times thicker than the North American ones. This means production volume could be higher.

At present Argentina is producing natural gas and is supplementing it with imports from Bolivia.

Shale gas could be a Game Changer for Argentina too. Many foreign companies are already making moves. Exxon Mobile has already acquired a block. Repsol, Petrobras, Total and Apache are making entries.

IFFCO of India has invested 25 million dollars in a Canadian company Americas Petrogas which has a shale gas block in Argentina. They are looking for financial and technological partners for exploration and production.

Brazil and Argentina - sources of edible oil and pulses for India

2011-04-10T03:51:00.000-07:00

Here is my article published by Economic Times on 8 April 2011

At present India is not dependent on Brazil and Argentina , as the title says. But the two countries could be reliable long term sources of edible oil, pulses and other products such as wheat and sugar whenever domestic production falls short.

My original title was
Argentine and Brazilian agriculture complement India's import needs

India dependent on Brazil & Argentina for edible oil and pulses

India imported a record $2 billion worth of soy oil from South America in 2010, most of which came from Argentina, the largest soy oil exporter of the world. In the last two years, India's imports of sugar were $2 billion from Brazil, the largest sugar exporter. India has been regularly sourcing small quantities of sunflower oil and pulses from the two countries.

India is expected to continue to be dependent on imports of edible oils and pulses and is likely to import wheat and sugar in future whenever domestic productions fall short. India could count on Argentina and Brazil as reliable long-term sources since the two have the potential to increase production in the future.

What will be the scenario of the production of the items of our interest in Brazil and Argentina in the next 10 years? The June 2010 report of the Brazilian agriculture ministry and the September 2010 report of an Argentine agricultural foundation give the following predictions for 2020:

Combined soy oil production of Argentina and Brazil is projected to increase from 10.8 million tones (mt) in 2010-11 to 16.9 mt in 2019-20. Their exports will increase from 6.5 mt in 2009-10 to 8.7 mt in 2020-21. Argentina will continue to be the largest exporter of soy oil and increase its share of global trade from 48% in 2009-10 to 58% by 2020-21. Soybean production of the two countries is expected to reach 150 mt in 2019-20 from 108 mt in 2010-11. The soybean area will increase from 40 million hectares to 48 million hectares in the same period.

Brazilian sugar production will increase to 46.7 mt from 34.4 mt and exports will go upto 32 mt from 23 mt. Brazil will continue to maintain its share of 46.5 % of the global sugar trade in the next decade. Sugarcane production will reach 893 mt from 732 mt. Argentine wheat production will go up from 9.3 mt to 16 mt and export surplus will be 5.8 mt in 2020. The detailed figures are given in the tables below.

India has been importing limited quantities of pulses from Brazil and Argentina whose production of the items required by India is small. Farmers of the two countries have shown keenness to increase production of pulses of interest to India as part of their strategy of diversification of crops and export markets.

According to reports mentioned above, Brazil will add 10 million hectares (60 million hectares in 2010 to 69.7 m hectares in 2020) and Argentina 8 million ( from 31.2 m hectares to 39.5 million by 2020) of land for cultivation in the next 10 years. The projections for Brazil, in my view, are very conservative. Brazil has the largest surplus arable land in the world and they could easily add another 50 million hectares to the crop area.

Besides increasing the area, Brazil and Argentina are increasing the yield by innovations in technologies and practices, using their world-class research and development facilities. The two countries practice no-till cultivation in over 75% of the land under crops. This practice, implemented in the last two decades, has helped in better preservation of moisture and organic matter, prevention of soil degradation and erosion, increase in productivity and decrease in expenditure, making their agriculture sustainable.

Argentina is a global leader in agricultural process outsourcing and is also a pioneer in the system of Silobag storage of grains. An Argentine expert of this system visited India in November 2010 to advise the Food Corporation of India and Central Warehousing Corp as well as the Indian authorities. India could learn from the best practices of the two countries.

Clearly, Argentina and Brazil are emerging as agricultural superpowers with their large fertile land, abundant water resources, best technologies and practices, globally competitive production and large exportable surplus. It should be noted here that agriculture is not subsidised in these countries unlike in the US and the EU. In fact, Argentina imposes export taxes on agriproducts and still they are competitive in global trade. The second point to note is that most of the cultivation in these two countries is rain-fed. If they choose to irrigate like India, they can increase the production even more significantly.

Given the growing demand in India and the challenges faced by our agriculture sector such as depletion of ground water, loss of agricultural land to industrial, residential and commercial use and uncertainties due to the vagaries of monsoon, it would be useful for India to keep track of the agriculture of Brazil and Argentina which complement Indian market. Indian companies could enter the agribusiness in the region following the lead shown by Renuka Sugar which has made investment of $350 million in the Brazilian sugar sector.

(The author is Indian Ambassador to Argentina. Views are personal)

Latin American Outsourcing Summit 14-15 April, Montevideo

2011-03-21T18:08:00.000-07:00

The Latin American and Caribbean (LAC) Outsourcing and Offshoring Summit aims at creating a space for outsourcing industry stakeholders in LAC to showcase their capabilities to the global market and identify the necessary steps the region must take to enable long-term growth and development in the industry. Hence, the goal of the Summit is to present an opportunity for buyers, suppliers, investors and Trade and Investment Promotion Organizations from LAC to learn about the current trends in the global Outsourcing and Offshoring Industry and identify the real world opportunities present for the region. More than 300 services companies from around the globe are expected to attend the Summit, including representatives from large service provider and investor nations such as India, the Philippines, the United States and Europe, plus delegates from the Trade and Investment Promotion Organizations from more than 15 LAC countries.

Speakers attending the event include:

Gigi Virata, Executive Director, Business Processing Association of the Philippines (BPAP)

Harsh Manglik, Chairman, National Association of Software and Services Companies (NASSCOM)

Michal Zálešák, Executive Director of Central and Eastern European Outsourcing Association (Czech ICT Alliance)

Joel Mari Yu, Managing Director, Cebu Investment and Promotion Center, Philippines

Antonio Gil, President, Brazilian Association of Information Technology and Communication Companies (BRASSCOM)

Anupam Prakash, Partner & Regional Leader - Cross Border Consulting, Mercer

Warren Gallant, President & Founder, Sourcing Board

Bobby Varanasi, Head of Marketing & Branding, Outsourcing Malaysia Executive Committee

Martín Migoya, CEO &Co-Founder, Globant (Argentina)

This is being organised by Inter American Devolpoment Bank in collaboration with private sector.

More info in: www.outsource2lac.com
contact imejiarivas@iadb.org.

Indian outsourcing companies are encouraged to participate in this summit.

Twenty Indian companies have established software development centres, BPOs, KPOs and Call Centres in ten countries (Argentina, Brazil, Chile, Uruguay, Mexico, Colombia, Peru, Ecuador, Costa Rica and Guatemala) of the region employing 18,000 Latin Americans. The Indian companies have developed a new near-shore business model of 12/12 in which they service their North American clients for 12 hours from the same time zone operations in Latin America and the remaining 12 hours from India. The Indian companies leverage the multilingual skills of Latin Americans who speak Spanish, Portuguese and Italian to service European clients. They use the Latin Americans to reach out to the 40 million strong Hispanic market of US. The Indian companies have also got contracts from local Latin American companies.

TCS is the pioneer and has the largest presence in the region with Global Delivery Centres in eight Latin American countries employing 7000 local staff in Chile (2000), Brazil (2000), Uruguay (900), Mexico (1000), Colombia (300), Argentina (300), Peru and Ecuador.

Among the others, the most notable is Aegis (part of Essar Group) which has 5000 staff in Argentina. It is the largest Indian BPO in Latin America.

Brazil plans 270 billion dollars investment in the mining sector

2011-02-09T03:24:00.000-08:00

The Minister of Mines and Energy Edison Lobao announced on 8 february that Brazil would invest 270 billion dollars in the next two decades in the mining sector and triple the production of gold, iron and copper by 2030. As part of the new policy, the government will discourage exports of crude raw materials and encourage value addition. The plan document notes the concerns on excessive dependence on China and calls for diversification of markets. There will also be reforms in the mining laws.

The targets of production increase from 2008 to 2030 in million tons are as follows:

Iron ore 351 to 1098

Gold 55 to 200 ( not in million, of course)

Copper 216 to 1000

Alumina 7.8 to 25.7

Aluminium 1.6 to 3.2

Raw Steel 33.7 to 116

Nickel 25000 tons to 132,000 tons

The Mining investment plan is the third in the series of mega investment plans of Brazil. The first was the 220 billion dollar investment in petroleum sector and the second, an equal amount of investment in infrastructure including for the 2014 World Cup and the 2016 Olympics.

Indian companies should target Brazil for projects and also for export of mining equipments and machinery.

Besides Brazil, they should focus on Peru, Colombia, Chile, Boilivia and Argentina which are also rich in mineral resources. Jindal, Aditya Birla group and Essar have already made entry into the region.

This week, Tega Industries Limited of Kolkatta announced acquisition of a Chilean company Acotec S.A. which is a $35 Mn company providing products and solutions for abrasion, corrosion and fluid transportation systems to the mining industry in Chile, Peru, Argentina and Bolivia.
Tega Industries specialises in mineral processing and material handling technlogies and equipments for the mining industry. It has global presence including in Brazil, USA, Australia and South Africa.

Will 2011 be the dawn of the Latin American decade ?

2011-02-03T15:43:00.000-08:00

¨Will 2011 be the dawn of the Latin American decade ?¨ is the title of the webcast by Standard and Poors on 11 January 2011.

Joydeep Mukherji, Senior Director and Lisa Schineller, Director of Sovereign Ratings and Latin American Economist of Standard & Poor's Ratings Services have been interviewed in this 50 minute show

I liked it. My answer to the title of the show is,
Yes.. this is going to be the growth decade for the region, which had experienced a lost decade in the eighties.
I agree with the observations and conclusions of Joydeep, who despite his pasioncito ( little passion) for the region, is objective and balanced. I tend to see the half full..given my unbound passion.

Joydeep has said, ¨the elections in latin america have become boring ¨. This is great news. Boring means no turn to the opposite direction or drastic changes in policies when governments change. There is a growing consensus on major policies even when governments are formed by parties of different ideologies.

Following up on Joydeep´s statement I would say that even the economies of the region are becoming boring. No more hyperinflation, debt overburden or exchange rate volatility. No booms and busts. No more adventurous or experimental economic policies or IMF rescue operations. Macroeconomic indicators have become more stable and predictable. The policy makers are more disciplined and pragmatic ( exceptions are there !!). I like this boring situation and expect to see the economies becoming even more boring.

Here is the link to the webcast

http://mcgraw-hill.mediasite.com/mcgrawhill/Viewer/?peid=67e94c7ad8b141f79a7851084473cb0f

Entertainment is the latest business of India with Latin America

2011-01-30T12:23:00.000-08:00

Images of Argentina will appear when Shahrukh Khan hosts the ¨ Wipe Out ¨( Zor ka Jhakta ) show from 1 to 16 February at 9 pm in the Indian TV Channel ¨Imagine¨. Before each episode, there will be videos of Argentina. Hmmm...Indians will be surprised by Sharukh Khan's Argentine connection. Here is the secret... All the 16 episodes of the show were shot in Buenos Aires. A team of 28 Indian TV film stars and celebrities and a supporting crew of 20 spent 40 days in Buenos Aires in December- January. The Indian cameramen were fascinated with the fantastic sceneries of the El Calafate Glacier and the Iguazu Waterfalls and could not stop shooting....

Another surprising Argentine connection...It is not only the images of Argentina which will be seen in India these days. The Indians have also started listening to the music composed by an Argentine in the Amir Khan film ¨Dhobi Ghat¨released on 21 January 2011. Yes...Gustavo Santaolalla, the music director of the film, is an Argentine. Gustavo is a pioneer in the rock music scene of Argentina in the late sixties and seventies. He later moved to Los Angeles and started working with Hollywood. He won two Oscar awards for his music in the films ¨Broke back mountain¨and ¨Babel¨.

The Director of the film Kiran Rao is visiting Argentina in March 2011 for the screening of her film at the Pinamar Film Festival.

These two are the latest examples of the exploration of Latin America by the Indian entertainment industry. The region has exotic and attractive locations for Indian film shootings. Dhoom II was shot in Rio and a scene for Robot was shot in Machu Pichu in which Rajnikant danced with Aishwar Rai. In August 2010 Priyanka Chopra was in Rio for shooting the show ¨Fear factor¨.

Latin America has also offered stars for Bollywood. Mexican actress Barbara Mori was the heroine with Hrithikesh Roshan in the film ¨Kites¨released in 2010. A Brazilian actress Giselle Monteiro has acted in the film Love aaj kal in a supporting role. Many in India thought she was an Indian because of her café con lech ( coffee with milk ) colour of the skin. The success of these two have given rise to a new category of Latin American visa applicants at the Indian embassies. Young boys and girls want to go to Bollywood and also for modelling in India.

Illusion Studios of Buenos Aires in technical collaboration with Toonz Animation Ltd of Trivandrum produced a cartoon film ¨Gaturro¨ which was a box office hit in Argentina in 2010.This is now being dubbed in English for the global audience. Gaturro is the product of Argentine humour and imagination combined with Indian software and technology. It is a 90 minute 3D animated cartoon film, the first-ever to be produced in Latin America.

Gaturro is a popular comic character created by the famous Argentine cartoonist Christian Dzwonik (Nik ). He has used Gaturro to make jokes on Argentine politics, society and everyday life. The Embassy of India organised a Children´s Festival with this film during the Festival of India in November 2010.

The prime time Brazilian soap opera ¨Camino das Indias¨ telecast for eight months in 2009 by the Brazilian TV network Globo was a huge hit. It was a story about India with Brazilian actors. It had a profound impact. The Brazilians have started greeting Indians with Namaste and taking them by surprise by asking if they are Brahmins or Dalits. The Girls from Ipanema are now putting bindis matching with their bikinis. Exports of Indian ethnic dress, decoration items and Ganesh idols have skyrocketed. The soap opera has been dubbed in Spanish and is being shown in the rest of Latin America.

Bollywood Dancing is the latest craze in Latin America. The Bollywood Dance shows in the last two Festivals of India in 2009 and 2010 in Buenos Aires were the top hits.

Latin Americans have started taking Indian films seriously and enjoying them. The video rental stores in Buenos Aires have a number of Bollywood films. The Indian Film shows during the last three Festivals of India attracted long queues of Argentines and the Embassy had to extend the film festivals for about a month. My biggest surprise was when the 13-year old Margarita, the daughter of the Argentine Patel ( see my blog on him ) who visited India with her parents recently, showed me proudly her two favourite DVDs: Three idiots and Water.... The facebook of the Embassy has messages from Argentine girls asking about Shah Rukh and Salman Khans.

An Argentine director Pablo Cesar is working on a coproduction film ¨Thinking of Him¨ based on the romantic story of Tagore´s encounter with Victoria O´Campo in Buenos Aires. He is looking for an Indian coproducer. This film would be one of the highlights of the 150th birth anniversary of Tagore being celebrated this year.

Samba and salsa, tango and carnival and the Latino way of having fun and fiestas have caught the imagination of Indians and especially the globalising IT generation. Salsa classes are proliferating in Indian cities along with spanish language institutes. On the other hand, the younger generation of the 530 million population of Latin America have started getting excited by the Bollywood films. My bet ...this blossoming mutual interest and excitement is a fantastic business opportunity for the Indian entertainment industry which is looking for new ideas, faces and shooting locations....

Latin America - India Investors Forum

2011-01-18T15:18:00.000-08:00

This is being launched by LatinFinance,the Latin America focused subsidiary of Euromoney Institutional Investor, UK. It was founded over 20 years ago and is headquartered in Miami and New York. LatinFinance in addition to being a leading source of value added financial markets intelligence for Latin America and the Caribbean also runs a series of high-level international forums with the objective of exploring and promoting the relationships driving investment, finance and trade flows between Latin America and non-traditional capital providers globally. They had a series of successful events in Abu Dhabi, Dubai, Qatar, Moscow, Europe, Hong Kong and China.

The demand for commodities in Asia, especially India, has created a natural pipeline for Latin American and Indian companies to do business together. This in turn has led to the development of fascinating capital flows between the two regions. Additionally, our clients in Latin America have shown keen interest and enthusiasm in investing in India and therefore, keeping this synergy in mind, LatinFinance, have taken a strategic decision to launch the "Latin America India Investors forum" in India.

The Forum will seek to facilitate and advance the evolving strategic relationship between Indian and Latin American government, corporate and financial leaders. The decision to launch the event in India is two-fold: Firstly, to help develop the existing synergies between the two dynamic regions, and secondly, to educate their clients in Latin America on opportunities to do business in India and with Indian partners.

Mr. Stuart Allen, CEO, LatinFinance will be visiting India keeping this objective in mind. Mr. Allen's mission would be to meet companies in India active in Latin America region or wanting to explore newer markets for expansion of their businesses. The purpose of these meetings would be to seek guidance and advice for the proposed forum and explore synergies with LatinFinance and the proposed India event. Mr. Allen will be in Delhi on 14th and 15th February 2011 and in Mumbai on 17th and 18th February 2011. It will be his pleasure to meet with companies interested in exploring LatinFinance's objective and sharing their thoughts on this very interesting opportunity.

The meetings are being coordinated by Ms. Aarti Bhatnagar, Conference Programmer, LatinFinance. To coordinate meetings or for any further information, she can be contacted by phone at +1.305.428.6284 or by email at abhatnagar@latinfinance.com

Hola Business News - December 2010

2010-12-26T13:11:00.000-08:00

Latin American GDP growth in 2010 exceeeds expectations
The GDP growth in 2010 is estimated to be six percent, according to the Annual Report on the region released by ECLAC (Economic Commission for Latin America and Caribbean of UN) last week. In its December 2009 report, ECLAC had projected 4.3% growth for 2010, revised this in July 2010 to 5.2% and now finally to six percent.

Welcome to the New Latin America which has started surprising experts positively.
Such a high growth coming after a GDP contraction of 1.9% in 2009 caused by the global economic and financial crisis of 2008-9 and in the backdrop of the crisis in Europe and uncertain outlook in USA is commendable. This shows the new resilience and strengthening internal fundamentals of Latin American markets. The main driver for the growth is domestic demand although South America has benefitted from high commodity prices and increase in exports to Asia.

Another surprise. The country which has the highest growth in 2010 is Paraguay with 9.7%. This is followed by Uruguay with 9%, Peru-8.6%, Argentina-8.4% and Brazil-7.7%. The four Mercosur countries are among the top five in the whole region. This reminds us of the World Cup 2010 when the four Mercosur countries reached the quarter finals.

South America has shown a growth of 6.6% despite the 1.6% GDP contraction of Venezuela ( which is an exception to the new paradigm of the region) this year. The only other country which sufffered negative growth this year is Haiti with 7%.

Mexico, the second largest market of the region has grown by 5.3% bouncing back from a 6.1% contraction in 2009. Central America has grown by 3.5% in 2010.

Unemployment rate in the region has come down to 7.6% from 8.2% in 2009. This is expected to decline further to 7.3% in 2011.

Inflation has gone up from 4.7% in 2009 to 6.2% in 2010. It should be noted that inflation is in single digit in all but two countries. Venezuela has not only the highest inflation ( 29%) in the region…but also in the world. Argentina also has a double digit inflation.

ECLAC has predicted 4.2% GDP growth for the region in 2011. Some country-wise projections for 2011 are: Haiti-9%, Panama-7.5%, Peru and Chile -6%,Argentina-4.8%, Brazil-4.6% and Mexico-3.5%.

One should not be surprised if the Latin American markets exceed these expectations again…

The growth in 2010 is not a one-off wonder. Except for 2009, the region has shown a new trend of consistent growth since 2003. The average growth in the last eight years is 4.2%. The highest growth was 6.1% in 2004.

According to another report, Latin America’s growth rate could outstrip the global average for the next seven years. This means the second decade of this century is going to be the growth decade even when there is talk of a ¨lost decade¨ in Europe. Some experts suggest that Europe should learn from Latin America which has bounced back from its own Lost Decade of the eighties and the debt crisis. There are no more IMF cases in Latin America. Brazil has become a net creditor to IMF now.

More cheerful news from some markets
Brazil has overtaken Germany as the fourth-biggest car market in the world with a 2010 sale of 3.45 million vehicles, 10 percent more than last year. There are now 30 million vehicles in Brazil which means there is one for every seven inhabitant of the 191 million population.

Brazil has discovered huge oil reserves with a potential to produce 5 million barrels per day. Argentina has discovered a large gas field in 2010. They are just starting the off-shore exploration. Colombia, Peru, Ecuador and Cuba have intensified exploration. With these, Latin America is going to be an important source of oil and gas for the world.

In the case of renewable energy sector, Brazil is the leading exporter of fuel ethanol and Argentina is the largest exporter of biodiesel. Some other countries in the region are following their examples.
Latin American pharma market, which is worth 50 billion dollars and its imports of 10 bn $ are expected to increase in 2011 and coming years, especially in the generic sector.

Colombia is a hot destination for energy investment and Peru for mining.

Panama has got investment grade in 2010. The others who have already got are: Brazil, Chile, Mexico and Peru. Future candidates are Uruguay and Colombia.

Higher commodity prices and increase in demand have stimulated investment in mining and agribusiness. For example Vale, world’s largest iron-ore producer of Brazil is expected to invest $68 billion in 27 projects over the next five years. Peru is expecting 40 bn$ investment in the mining sector in the coming years.

Trade in 2010

Last year our trade with Latin America was 17.2 billion dollars. In 2010, it should cross 20 billion dollars. My next newsletter will have the trade figures for the whole year. Meanwhile here are some trade figures which will give an idea of the boom in our trade.
-India- Brazil bilateral trade in the period January- October 2010 reached a record 6.2 billion dollars. India´s exports- 3.4 bn and imports 2.8 bn
-India´s exports to Mexico in Jan-Sept 2010 jumped to 1227 million dollars from 850 million in the same period last year.
-India- Argentina trade reached a record 2.1 bn $ in jan-oct 2010 doubling from the 2009 figures. India´s exports increased from 374 m$ in the period Jan- Nov 2009 to 511 m $ in the same period in 2010.
- India´s exports to Colombia increased to 491 m$ in the period Jan- sept 2010 from 365m $ in the same period last year.
- India´s exports to peru in the period Jan- Oct 2010 were 410 m$ as against 263 m$ in the same period last year
- India´s exports to Chile were 301 m$ in Jan- oct 2010 as against 233 m$ in the same period last year.

Petroleum crude, soy oil and copper are the principal items of our imports. Latin America is becoming a significant source of crude oil for India. India imported around 300,000 barrels per day in the period jan- oct 2010.

Chemicals, pharmaceuticals,engineering products, textiles and diesel oil are our major exports.

Suggested Focus of exports in 2011

Indian companies need to target the small and medium countries for trade besides the large ones. Small countries does not mean small trade. Example ..China´s exports to Costa Rica were 767.1 million dollars and imports 711.6 million dollars in 2010. Chinese export to Costa Rica is double the export of India to Argentina.

Autoparts to Brazil is emerging as a growth area for India´s exports.

Exports of equipments and machinery for mining,oil and gas exploration and production and infrastructure projects in the region.

Because of the strong Real ( 1US$= 1.7 Reais) Brazilian exports have become less competitive and imports cheaper. Indian exporters should take advantage of this and intensify their exports to Brazil.

Major investment by Indian companies in Latin America in 2010

- Renuka sugars acquisition of two sugar groups in Brazil for 350 million$
-Godrej acquisition of 2 Argentine cosmetic cos for about 40 m$
- Aegis group (part of Essar) acquisition of Argentine BPO company Actionline which has 5000 staff. This is the largest Indian BPO in Latin America. With this, the number of Latin Americans working in Indian IT, BPO and KPO companies in the region has gone upto 17,000.

Suggestions for focus of Indian Companies in 2011

Investment in the mining sector in Peru, Bolivia, Colombia, Brazil, Argentina and Chile.

Investment in agribusiness in Argentina, Brazil and Uruguay. The Mercosur region has the potential to bring 100 million hectares of additional land for cultivation, increase agriproduction and become an agircultural super power. Indian companies can source soy and sunflower oil, sugar, ethanol and pulses through investment in the region

Investment in commercial forestry and paper pulp in Argentina, Brazil, Uruguay and Chile and take back timber and paper pulp.

Establishment of IT, BPO and KPO operations in Argentina, Brazil, Mexico and follow the new trend of Indian IT companies getting contracts from Latin American clients.

Acquisition of pharma companies in Argentina, Brazil and Mexico

Contracts, subcontracts and supply of equipments and materials to Brazil which is embarking on massive infrastructure development for the 2014 World Cup and 2016 Olympics

Contracts and supplies to the 224 billion dollar five year investment plan of Petrobras for exploration and production of off-shore oil. This is the largest corporate investment plan in the world at this moment.

Investment in the petroleum exploration and production sectors of Brazil,Colombia,Argentina. Colombia expects investment of 28 billion dollars in oil exploration and production in the next four years and increase the oil production to 1.4 million bpd by 2014 from 963,000 bpd in June 2010. Colombia is emerging as South America's third-largest oil producer behind Brazil and Venezuela.
Look at the Chinese companies who have spent $20 billion this year in the following deals:
CNOOC paid $3.1 billion for a 50% stake in Argentina’s Bridas Energy in March.
Sinochem Group, paid $3 billion to Statoil for 40% of its Brazilian offshore field, Peregrino, in May.
Sinopec, made a $7.1 billion investment into the Brazilian subsidiary of Repsol YPF in October.
CNOOC agreed to pay $7.06 billion for a 60% stake in Argentina’s Pan American Energy in November.
In addition, China has invested in Venezuela, which include
· 40% stake in Junin 4 block of Orinoco belt expected to produce 400,000 bpd
· Another 40% in Junin 1 with capacity to produce 200,000 bpd
· A refinery with capacity to process 200,000 bpd

Opening of more embassies

India has opened embassy in Guatemala-2010.

Costa Rica has opened embassy in New Delhi-2010

More embassies likely to be opened from both sides..

Presidential Elections in 2011

Peru – April
Nicaragua – June
Guatemala- September
Argentina – October

Forthcoming events in 2011

Rio Carnival 4-8 March
Made in India Exhibition of CII in Sao Paulo 8-11 March
What a coincidence ! Exihibitors can dance samba at the carnival in Rio and move on to Sao Paulo for the business…

Indo-LAC business conclave of CII in New Delhi, 24-25 February 2011. Mr Danilo Astori, Vice President of Uruguay expected to be the guest of honour.

Ongoing negotiations to expand and widen the India-Mercosur PTA . Indian companies, export promotion councils and trade and industry bodies should approach Commerce Ministry with their wish lists and contact Anil Mukhim JS a.mukim@nic.in

Business Plus

My favourite Latin American author Mario Vargas Llosa from Peru won the Nobel prize for literature in 2010. My blog on this..
http://latinamericanaffairs.blogspot.com/2010/10/mario-vargas-llosa-peruvian-nobel-prize.html#links

For those who want to understand the new Latin America I recommend the following two books:
- Brazil on the rise by Larry Rohter
- What if Latin America ruled the world by Oscar Guardiola Rivera

The Argentine film ¨The secret of your eyes¨ won the Oscar in 2010.

An Argentine musician Martin Felix Folatelli, living in Benares for the last several years is producing fusion music …Benares Milonga and Mate- Chai…

Latin America is the latest flavour in Bollywood.
Mexican actress Barbara Mori was the heroine with Hrithikesh Roshan in the film Kites released in 2010.
Dhoom II film and TV reality show ¨Fear factor¨ were shot in Rio de Janeiro.
Rajnikanth danced with Aishwar Rai in Machu Pichu (in Peru) for the film Robot.
A 28- member team of Indian TV stars are in Buenos Aires right now (staying here for 40 days) to shoot a reality show ¨Zor Ka Jhatka¨ (Wipe Out). This will be hosted by Shahrukh Khan in Imagine channel in January 2011.
The music director of Dhobi Ghat , the film directed by Kiran Rao and produced by Aamir Khan ( being released on 21 January) is an Argentine, Gustavo Santaolalla.
Giselle Monteiro, the Brazilian Bollywood actress of Love Aajkal fame is acting in another film ¨Always kabhi kabhi¨ being produced by Shah Rukh Khan
An Argentine- India coproduction film on Tagore and Victoria Ocampo is on the works and is likely to materialise in 2011.

Loca loca loca….

The most anticipated event in 2011…. Shakira´s tour of Latin America starting in March 2011 covering Argentina (Shakira´s boyfriend is Argentine..), Brasil, Colombia, Costa Rica, Chile, Ecuador, Guatemala, México, Paraguay, Perú, Puerto Rico, República Dominicana and Venezuela (with even more countries to be announced). The tour will be part of The Pop Festival, a brand new festival that will bring international music stars to Latin America, and which will also showcase the latest in contemporary art and technology. Here is her latest song to celebrate the new year..
Loca loca loca…. Loca means crazy
http://www.youtube.com/watch?v=XAhTt60W7qo

cheers….for more business and businessplus with Latin America in 2011…

Increasing reliance of Reliance Petroleum on Latin American crude oil

2010-12-08T01:52:00.000-08:00

Reliance imported about 300,000 barrels a day of crude on average from Latin America during the first ten months of 2010. This accounted for about a quarter of the company’s total imports during the period, compared with 13 percent in the same period of 2009.

Reliance refinery complex in Jamnagar in Gujrat, India has refining capacity of 1.24 million barrels a day, the largest at a single location.

About two-thirds of Reliance’s imports from Latin America during the first 10 months of 2010 came from Venezuela which accounted for 59 percent, Mexico 21 percent and Brazil 14 percent.

Reliance is expected to increase crude imports from Latin America as it seeks better refining margins by processing heavier and cheaper grades of oil.

In 2009 Reliance bought 155,000 bpd from Latin America. This went up to 380,000 barrels a day in the first four months of 2010.

In dollar terms Reliance imports of crude oil from Latin America in 2010 ( Jan-Oct) are about 7.5 billion dollars and in 2009 imports were 4.2 billion dollars.

The crude oil imports of Reliance accounts for over forty percent of India´s imports from Latin America. Crude oil is the leading item of India´s imports from latin America.

Reliance´s export of diesel oil to Brazil in the period Jan-Oct 2010 was 1.4 billion dollars. This topped India´s exports to Brazil and constituted 41 percent of India´s exports to Brazil. In the same period Reliance imported 900 million dollars of crude oil from Brazil which accounted for 32 percent of India´s total imports from Brazil. Overlall, Reliance accounted for 30 percent of India´s trade with Brazil in the period Jan-Oct 2010.

Reliance is also investing in oil exploration in Colombia and Peru.

Brazilian Surya.. Argentine Satya .. and Latin American Karma

2010-11-01T04:44:00.000-07:00

Exporting Henna to India from Brazil ?... It sounds as incredible as exporting Caipirinha ( the strong Brazilian alcoholic drink which makes you dance Samba after two glasses) to Brazil from India. Clélia Cecilia Angelon, the founder President of Surya Brasil dared to think outside the box and has exported Henna powder to India. She started off with a shop in Sao Paulo selling Henna powder formulated with raw materials imported from India. To make it look authentic she named her company Surya Henna. This gave a touch of Indian magic and appealed to the Brazilians who are fascinated by Indian yoga, meditation and spiritual gurus. During my stay in Sao Paulo I had the opportunity to interact with Clelia. Once I saw her stall in a Cosmetics Fair which drew large crowds with Brasilian beauties tattooed all over their bodies with henna. I realised then that India was not only touching the Brazilian soul but also gave a touch to their skin. The combination convinced me that it was going to be a winner in business and win-win for India and Brazil.

As the sales picked up, Clelia expanded the business into other haircolouring and cosmetic products and dreamed of going global. She changed the name of her company into Surya Brasil. The company started the Amazônia Preciosa Line, enriched with ingredients from the Amazon forest biodiversity. The turnover of the company has now reached twenty million dollars. Surya Brasil has established its niche in the market as a cosmetic producer with natural and organic ingredients and eco-friendly. The company is exporting to twenty countries including USA, Australia, UK and France.

In an audacious move, Surya Brasil decided to export its Henna products to India . The marketing team of Clelia thought this was like a Brazilian trying to teach an Indian Guru. How would the Indian consumers living with a long tradition of Henna accept a Brazilian Henna product? How could a Brazilian company find a place in the space crowded by so many Indian companies in their home market? Clelia would not take no for an answer. She opened an office in India in 2005 and sent a marketing executive Fernanda Drumond who spent four years understanding the Indian market. Fernanda who has now become the head of India operations has achieved sales of 1.5 million dollars and plans to double it this year. She has placed the products in beauty parlours and stores in shopping malls in the major cities. Now she is reaching out to the smaller towns and cities. Surya Brasil plans to start a factory in India from which it will export to Japan, Korea, Taiwan, Australia and other Asian countries. They also plan to open an organic SPA in India like the one they have in Brazil.

Surya goes beyond Henna in its India connection. The company´s website says ¨Surya is guided by Ayurvedic principles: know and respect individuality; pursue well being and both emotional and physical balance. ¨ Surya also uses Amla as an ingredient in some of its products. The website of Surya has a section ¨moment of meditation ¨.

They say, behind every successful man there is a woman. The secret behind the success of Clelia is a man…..an Indian man. Raj Malhotra had employed Clelia as a salesperson in his shop in London. Raj could not resist the Brazilian charm. He left his wife and married Clelia. She became Clelia Malhotra. They had a daughter Vandana. Raj lived for some time in Sao Paulo. After a few years, Raj and Clelia got separated. Clelia had other men in her life thereafter including another Indian Kanwaljit Singh.

Clelia´s story reminds me of the other story of the Argentine woman Monica Socolowsky who was inspired by Saibaba and went into the Fashion business using Indian fabrics and designs. Monica is a staunch devotee of Saibaba and her company is called as Satya Fashion. Here is my blog on Monica http://latinamericanaffairs.blogspot.com/2009/03/from-faith-to-fashion-story-of-monica.html#links

So we have Surya in Brasil and Satya in Argentina. The other day I was asked in a TV interview,¨what is your Karma? ¨. I replied, ¨Latin America¨.

Aegis group of India acquires BPO firm in Argentina

2010-10-21T04:02:00.000-07:00

Aegis of India has acquired Argentine BPO company Actionline from Young and Rubicam Inversiones Publicitárias, S.A. and its business partner.

Founded in 1994, Actionline is one of the largest BPOs in Argentina with about 5,000 associates, spread across seven centres in five cities and has a turnover of around $50 Million dollars per year. It is domestic market focussed, serving leading telecom, banking, insurance, and energy clients in the region. It has operations in Brazil and Chile also. Actionline has expanded at a healthy pace, registering a compounded annual growth rate of 65 per cent from 2003-2009. Actionline Argentina's senior management, lead by CEO Fernando Pedron will continue to spearhead the business.

Actionline has become the largest Indian BPO in Latin America

With this entry Aegis joins the other Indian companies which have BPOs in Argentina. These are TCS, Cognizant, Irevna, HCL, Global Sourcing Solutions, Cellent and other BPOs owned by Indians from USA. Aegis stands out , of course, as the largest among them.

Aegis is part of the 15 billion dollar Essar group of India. This is the 16th acquisition for Aegis over the last five years. It is one of the fastest growing BPO companies in the world. With workforce of 5,000 that Actionline has, Aegis' total headcount goes up to 47,000. The company has a target of 50,000 workforce and is looking to expand its footprint in various markets including America, Latin America, Africa and Middle East. Aegis serves more than 135 clients from 42 delivery centers with more than 39,000 employees across India, Philippines,United States, Costa Rica, New Zealand, SriLanka, Australia, Kenya and South Africa. In United States Aegis employs 4000 Americans.

The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel, Oil & Gas, Power, Communications, Shipping Ports & Logistics, Construction and Minerals. With operations in more than 20 countries across five continents, the group employs 60,000 people, with revenues of about USD 15 billion. They have acquired a Canadian steel mill, a iron ore mine in Minnesota and a coal mine in USA for over two billion dollars. They have a project to build a Steel plant in Trinidad and Tobago with an investment of 1.5 billion dollars.

Mercosur ...GDP champion in 2010

2010-10-09T05:18:00.000-07:00

Readers of my blogs will recall my euphoria and celebration when the four member countries of Mercosur reached the quarter finals of the 2010 World Cup.

Don’t ask me what happened afterwards. I had to drown my sorrow with lots of Brazilian Caipirinha and Brahma and Argentine Malbec.

Ask me now about the economy. Mercosur has emerged as the GDP growth champion in 2010. Brazil and Argentina will have 7.5% growth each, Paraguay will grow by 9% and Uruguay by 8.5%. These figures put the four Mercosur members among the top five in the whole region of Latin America and Caribbean.

The country which is projected to have the highest growth in Latin America and Caribbean in 2010 is… hold on… a surprise… even for me. It is Paraguay ...with 9%. Viva Paraguay !!!.

These are the figures mentioned in the World Economic Outlook report released by the International Monetary Fund on 6 October. According to this report, the economies of Latin America and the Caribbean will grow by 5.7% in 2010. This is higher than earlier predictions. The IMF has said, ¨ the LAC region is exiting the global crisis at a faster pace than anticipated. This reflects solid macroeconomic policy fundamentals, sizeable policy support, favourable external financial conditions and strong commodity revenues¨.
The July 2010 report of the UN Economic Commission for Latin America and Caribbean( ECLAC) had predicted GDP growth of 5.2 % for the region while its December 2009 report had predicted 4.3%. Here is what ECLAC says in its September2010 report ¨Output and trade in Latin America and the Caribbean have recovered more quickly than expected. This solid revival is largely based on the dynamism of domestic demand, a pick-up in investment and robust exports driven by demand from China and the rest of Asia, and by the normalization of demand in the United States¨.
As part of the current fashion to group countries into G-20, G-8 etc, the IMF has labelled Brazil, Chile, Colombia and Peru as " LA-4 " This foursome's policy framework is described as more market-friendly than the others in the region.
"Impressive improvements in macroeconomic policy frameworks over the past two decades, combined with accommodative policies, easy external financing conditions, and strong commodity prices, are driving a robust recovery in the LA-4," the report said.

The IMF forecast of GDP growth for other countries and sub-regions are: Chile - 5 %, Peru- 8.3% Colombia - 4.7%, Mexico - 5%, Central America -3.1% and Caribbean 2.4%. South America is projected to grow by 6.3%. Of course, South America, which is rich in natural resources has benefitted from its commodity exports.
The only country in the region which has gone against the growth trend is Venezuela which faces an ecoonomic contraction of 1.3%. The consolation is that this is better than the contraction of 3.3% in 2009.

The IMF has projected that the average inflation of the region in 2010 would be 6.1% which is up slightly from 6% last year. The inflation in 2011 is projected to decline to 5.8%. The average inflation of the region has remained in single digit in the last ten years.

But again Venezuela is an exception. It has the highest inflation of 29.2% this year. This is said to be the highest in the world this year. Venezuela is projected to carry on this distinction in 2011 too with 32%. The only other country in the region with a double digit inflation is Argentina with 10.6%. But the good news is that these are just small double digits. The region will not go back to hyper inflation in four digits as it happened in some countries till 1990.

Brazil adds one more superlative....

2010-09-25T05:00:00.000-07:00

Brazil,the largest market of Latin America is on a roll these days adding one superlative after another. Here is the latest one. Petrobras raised $70 billion in the world’s largest share sale last week. With this, Petrobras has become the fourth-biggest company in the world, behind Exxon Mobil , Apple and PetroChina . Petrobras now has a market value of $214 billion, which is more than that of Microsoft and Wal-Mart.

Sao Paulo which has been the financial capital of Latin America, has now become a super capital with this deal. It was with justifiable pride that President Lula said ¨It wasn’t in Frankfurt, it wasn’t in New York, it was in our Sao Paulo exchange that we carried out the biggest capitalization in the history of capitalism,”

Petrobras has budgetted $224 billion of spending over the next five years in exploration and production. This is the largest corporate investment plan in the world at this moment.

With this investment, Brazil aims to increase its production to 5.38 million barrels a day and overtake Venezuela and Mexico. Brazil will add the most oil production of any country outside of the Organization of Petroleum Exporting Countries ( OPEC) over the next 25 years

Petroleum is only one part of the story. Brazil is all set to become an agricultural superpower too. It has the largest surplus land that can be brought under cultivation to feed the growing population of the world. It can add atleast 130 million hectares of land which is equal to the total area cultivated by India to feed its one billion population.

Here is the leadership position of Brazil in the global food sector:
Chickens: 1st in the world, 41% of export market share

Coffee: 1st in the world, 27% of export market

Orange juice: 1st in the world, 82% of export market

Soybeans: 1st in the world, 38% of export market

Beef: 1st in the world, 26% of export market

Sugar: 1st in the world, 39% of export market

Ethanol: 1st in the world, 52% of export market

Tobacco: 2nd in the world, 17% of export market

Bananas: 2nd in the world, behind India

Pork: 3rd in the world, 15% of export market

Corn: 3rd in the world (behind USA and Argentina)

Black pepper: 3rd in the world (behind Vietnam and Indonesia)

Cotton: 5th in the world (USA is the leader)

Brazil is a pioneer and global leader in fuel ethanol. Most of the cars produced in Brazil have flexifuel engines which can use etahnol or/and petrol. Brazil is thus straddling the two worlds of conventional fuels and biofuels. Brazil has a secure and enviable position in the world which is increasingly concerned with food and energy security.

Brazil has plenty of water resources and the largest forest cover in the world. It is not prone to natural disasters. It has a agreeable climate and does not suffer from extreme heat or cold.

Brazil is embarking on massive investment to prepare for the World Cup football in 2014 and Olympics in 2016.

Brazil which used to be an IMF case is now a net creditor to IMF. Brazilian market now has Investment Grade rating.

Here are the other factors which distinguishes it from the other members of BRIC.

- Democracy has been instituitionalised irreversibly and strongly

- free from terrorism .. no ethnic , linguistic or religious conflicts. One language, religion and one skin colour of cafe con leite ( coffee with milk- some have more milk ...others have less..)

- free from unstable and evil neighbours who can pull it down and hurt.

Skeptics used to say Brazil was always a country with a future and will remain as a country with future. It was also called as a sleeping giant. But now Brazil has become a country of the ¨present¨and a giant who has woken up. What makes the Brazil story different this time is the paradigm shift in the politics and mindset of the Brazilians. Brazil follows a new pragmatic policy which pleases the Wall Street and at the same time has brought hope and smiles in the Favelas ( slums) with its Inclusive Agenda and market- friendly policies. This is what makes Brazil as the moral leader and role model for Latin America. Brazilians now have a strong conviction that their time has come…..

pharmaceutical market of Central America

2010-08-29T18:48:00.000-07:00

The pharma sales of the seven countries of central america are expected to reach US$2.53bn in 2010, a 7.9% increase from US$2.35bn in 2009. The sales are expected to maintain a compound annual growth rate (CAGR) of 8.6% over a five-year period, and 8.4% over a ten-year period. The pharmaceutical sales are expected to reach US$5.27bn by 2019. This is according to a report of CompaniesandMarkets.com
For more info on the Central America Pharmaceuticals and Healthcare Report Q4 2010: http://www.companiesandmarkets.com/r.ashx?id=852G62254342128&prk=dc9464d426ba854d3af301ceab8fa0e4

World cup and Olympics - Game Changers for Brazil

2010-08-22T07:31:00.000-07:00

Brazil is going to host the World Cup football in 2014 and Olympics in 2016. These are not just games... but are game changers for the New Brazil. The Brazilians are using these two events to build the foundations for a New Brazil and showcase their arrival as a global economic and political power.

Brazil is the eighth largest economy in the world with a GDP of 1.5 trillion dollars and is expected to climb up to the fifth rank by 2016. In the first quarter of 2010, the Brazilian GDP grew by a record 9% and the estimated growth in 2010 is 7.6%, the highest in Latin America. Brazil is a superpower in agriculture with its growing output, exports and increase in the area of production. With the recent discoveries of large new off-shore oil fields, Brazil is emerging as an important global supplier of petroleum. Brazil is already a pioneer and leader in fuel ethanol programme with 90% of cars running with flexi fuels of petrol and ethanol.

The preparation for the games opens up projects worth $220 billion from 2011 to 2014.
Here are some samples:
-US$ 5.5 billion to improve transportation in Rio in preparation for the Olympic games
-A high speed bullet train at a cost of 18.7 billion $ is being developed and is expected to be completed in time for the World Cup
-plans for 11,700 miles of railroads facilitating improved access to the 12 cities hosting the World Cup
- US$ 43 billion will be spent on commercial and tourism construction in preparation for the 2014 World Cup
-US$ 3 billion in airport expansion and improvement.
-restoration of historic buildings and renovation of Rio de Janeiro city
- budget for the Games alone will be about $15 billion

A Conference is being organised in Sheraton Hotel, Rio de Janeiro on 31 August- 1 September on the infrastructure projects for the two events. Federal and provincial authorities, bankers and local and foreign companies will participate in the conference.

President Luiz Inacio Lula da Silva launched on 29 March 2010, a $878 billion program to upgrade Brazil's infrastructure in the period 2011-2014. The plan will improve access to clean water, medical posts and energy as well as modernize the country's air, road and rail system.

The energy part of the plan envisages investment of 257 billion dollars. This includes the five year plan of Petrobras, the Brazilian energy giant to invest 220 billion dollars, the largest corporate investment in the whole world at this time. In 2010, Petrobras will invest 20 billion dollars in exploration and production and 17 billion dollars in refining and petrochemicals, with the remainder going toward areas such as distribution and biofuels.

Some of the other infrastructure projects are:
-construction of Angra III nuclear power plant
- construction of The Belo Monte 11.2GW, US$ 4.1 billion hydropower plant
- Jirau hydropower plant costing US$ 3.1 billion
- US$ 152 billion for the construction of low income housing over the next 15 years

The Indian exporters and business houses should focus on Brazil for exports and projects for the games projects. India´s exports were 2.19 billion dollars in 2009. The target should be atleast 7 billion dollars by 2014.

Colombia bullish on foreign investment

2010-08-16T08:19:00.000-07:00

Colombia has become a favorite destination for foreign investment in Latin America. The foreign investors are getting into petroleum, mining, services and manufacturing. Colombia's foreign trade ministry expects $10 billion in foreign investment this year, approaching the record $10.6 billion of 2008. In 2009 FDI was 7.2 billion dollars.

The Colombian Minister of Energy and Mining announced on 15 August 2010 that he expected investment of 28 billion dollars in oil exploration and production in the next four years and increse the oil production to 1.4 million bpd by 2014 from 963,000 bpd in June 2010. Colombia is emerging as South America's third-largest oil producer behind Brazil and Venezuela. About 5.6 billion dollars of direct foreign investment went into petroleum and mining in 2009. Colombia's known oil reserves rose 22 percent in the last eight years to 1.9 billion barrels with production jumping 45 percent.

The foreign investors who were deterred by the internal problems of Colombia in the past are now encouraged by the improving siuation of the country. Farc is irreversibly fading out. There is steady reduction in kidnapping, crime and narcotraffic. In any case, the Colombian economy has been stable and growing even despite those challenges. Politics has also been mature and there is a general political and economic consensus on the future of the country. The election of Manuel Santos, the new president , who had earlier served in the cabinet of Uribe means continuation of the policies of crackdown on crime and market-friendly approach.

Colombia is the only Latin American country to have an Investment Promotion Officer (Alejandro Pelaez) in their embassy in Delhi. Mr Juan Alfredo Pinto Saavedra, the Colombian Ambassador is one of the most active Latin American diplomats, reaching out to Indian business and media.

OVL and Reliance have already invested in the petroleum sector of Colombia. TCS, Infosys, United Phosporous, NIIT, Bajaj, TVS, Hero Honda, Havells, Essel Propack and Praj have operations in Colombia. In 2009 India´s exports to Colombia reached 504 million dollars. Colombia is the third largest destination of India´s exports to latin America. More Indian companies should enter this market which offers lot of potential for India´s investment and trade.

Agriculture Process Outsourcing by an Argentine Patel

2010-07-31T16:04:00.000-07:00

This article was published by Financial Express of 1 August 2010
http://www.financialexpress.com/news/agri-process-outsourcing-by-an-argentine-patel/654277/

During my meeting with Gustavo Grobocopatel, the founder President of the Argentine farming company Los Grobo which cultivates 270,000 hectares, I told him that I came from a small farming family which owned just an acre of land. Gustavo responded, ¨Lucky you…. I am a landless farmer ¨. He is right. He does not own a single hectare. It is all leased land.

Los Grobo does not own any tractor or harvester either. They outsource all the operations such as planting, fertiliser spraying, weeding, harvesting, storage and transportation to contractors who own the machineries. The firm has a system of technical leaders each of whom manage 7000 hectares. They are not employees but are partners who share the profit and risk. Even the agronomists who work with the company are contractors, who get a share of the crops they raise.

The 270, 000 hectares of land spread over Argentina, Brazil, Paraguay and Uruguay are managed by the headquarters staff of about 100 people who are connected in a network with the land owners, agronomists, the international traders and the 4000 service providers. Grobocopatel who believes in social capital says, ¨We are not big… but many¨

Here is Mr Patel working on the fields with his laptop...

Grobocopatel´s Agriculture Process Outsourcing (APO) is similar to the BPO (Business Process Outsourcing) and Knowledge Process Outsourcing (KPO) operations of the Indian IT companies. Los Grobo office looks like a BPO of Infosys with young people in casual dress glued to their computer screens and working with their blackberries. The only difference with the Infosys office is that Los Grobo is located in a remote rural area in the middle of soya and wheat fields near Carlos Casares, a small village 300 km from Buenos Aires city....seen in the foto below...
Los Grobo office ...like a BPO of Infosys...

Grobocopatel says he was inspired by ¨Information Age¨, the book of the Spanish sociologist Manuel Castells which helped him to understand how networks could be used to generate wealth with the least investment. Grobocopatel describes his new model of farming as ¨Agribusiness in the new era of Knowledge Society¨. He points out at the young people behind the computers and says proudly that the human resources are the main asset of his company. Training and empowerment of the employees, the service providers and partners is an integral part of the value creation of the company. Los Grobo has arrangements with universities to give courses in agribusiness and management of small and medium family-owned companies at their headquarters in Carlos Casares. Los Grobo encourages its employees to become enterpreuners and even provides seed funding. Through its Rural Entrepreneurship Foundation, the company participates in projects to improve the standard of living in villages and small towns. Los Grobo, together with other partners, has created Bioceres, a biotechnology research and development organization.

Los Grobo farms scientifically by satellite mapping of every hectare of the land using a vast database of agricultural metrics. They do ¨Precision Farming¨ in which monitors are used to control input distribution of seeds and different fertilisers for each parcel of land on the basis of information generated by software calculating the dosage needed, depending on satellite location of the seeding and sprayer machines. The best practices of Los Grobo include ¨No-Till Farming ¨ (direct seeding) in which the crop residues are left to decompose and enrich the organic matter and maintain soil moisture. The land is always covered by straw and residues. There is no ploughing of the land and exposing it to sun and wind and erosion and degradation. This method improves physical and chemical soil structure, reduces carbon emission, cost of production and labour and increases productivity and helps in the conservation of soil.

The innovative business model of Los Grobo has been studied and commended by Harvard University, among others. Los Grobo has been sought out for consultancies by other countries. It is the first company worldwide to obtain ISO 9001 certification on grain production processes. It is establishing its APO business model in Brazil, Paraguay and Uruguay. Other Argentine farming companies are following the example of Los Grobo. This includes the company El Tejar which has emerged as the largest farming company in the world with cultivation of one million hectares this year. Such scale does not exist even in Brazil or USA. El Tejar´s goal is to reach two million hectares in the next five years. Out of the one million, 800,000 hectares are leased and 200,000 owned. El Tejar operates in Uruguay, Paraguay, Bolivia and Brazil where they cultivate 600,000 hectares. With such emerging global pioneering leaders in farming, best practices, advanced technologies and abundance of water and fertile land, Argentina is set to become a significant global player in the future when the world is going to be more concerned about food security.

I call Grobocopatel as ¨Senor Patel¨. He has no connection to Gujrat. He is of East European origin and his grandfather had emigrated to Argentina in 1912. Grobocopatel founded the company in 1984 and has achieved a turnover of 700 million dollars in 2009-10. His target is 1.5 billion dollars in the next five years. Grobocopatel is an agronomist and had taught the subject in the Buenos Aires University before becoming an enterpreneur. His agronomist wife is also a director in the company. For them, farming is not just business. It is passion. Grobocopatel has admiration for Indian culture and practises meditation and yoga. He is planning to visit India for a month in December. He has agreed to give talks in India on his new business model and also meet Indian companies interested in strategic partnership with his company.

South America offers opportunities for Indian companies to invest in farmland and source edible oil, pulses, sugar and biofuels needed in India for the growing population and consumption. The Indian investors do not need farming expertise or invest in machinery since they can outsource all the farming operations to local service providers. A Non-Resident Indian company Olam is at present cultivating 30,000 hectares in Argentina growing peanuts, soya and beans and are planning to double the acreage in the next three years. All of their land is leased and their operations outsourced. Simmarpal Singh is the young country manager behind this success of Olam. I told Grobocopatel that we have an Indian Singh following in the footsteps of the Argentine Patel.

TCS plans for increase in Latin America business

2010-07-30T04:36:00.000-07:00

Tata Consultancy Services (TCS) plans to increase its turnover in Latin America to one billion dollars in the medium term , according to a statement by Chandrashekar, CEO of the company in July2010. At present their annual revenue is over 300 million dollars. They have close to 8000 Latin American employees in eight Latin American countries: Argentina, Brazil, Uruguay, Chile, Mexico, Ecuador, Peru and Colombia.
TCS will recruit 40,000 more staff this year around the world to increase its global staff strength to 200,000.

Mid-year review of Latin American markets

2010-07-24T15:21:00.000-07:00

The July 2010 report of the UN Economic Commission for Latin America and Caribbean( ECLAC) has revised its estimate of the 2010 GDP growth of the region upwards to 5.2 % from its earlier projection of 4.3% in its December 2009 report. The highlights of the report are:

Brazil will be the top performer in the region with GDP growth of 7.6%. Parabens Brasil !!
Uruguay and Paraguay will grow by 7% and Argentina by 6.8%. The Mercosur countries are the top four performers of the region as a whole. Oops.. it is like the 2010 World Cup quarter finals in which all the four were in.
Mexico will grow by 4.1%, Colombia- 3.7%, Peru-6.7%, Chile-4.3%
Venezuela will be the only country which will go against the trend. No surprise...Its GDP is expected to suffer contraction of 3%.

The credit for the quick and robust recovery from the economic contraction of 1.9% in 2009 goes to the resilience and strong macroeconomic fundamentals of the markets and the pragmatic policies and prudent fiscal and monetary management by the governments. Following are some of the examples:

- Gross public debt of the region as a percentage of GDP has been brought down to 30.2% in 2009 from 58.2% in 2002. The highest is Argentina with 48.5% which is very low in comparison to the situation in USA and Europe. Credit should be given to Argentina which had brought down the percentage from 145.9% in 2002.

-The governments rely less on external resources and have been raising more funds from domestic sources. They have been reducing external debt burden consciously.

-The current account deficit of the region was brought down to 0.4% in 2009 from 0.6% in 2008.

-Flexible exchange rates, inflation targetting and sound financial regulations of the banking sector helped the region to withstand the global crisis of 2008-9 better than during the previous global downturns.

-Gross international reserves of the region has been steadily increasing from 163 billion dollars in 2001 to 563 billion in the second quarter of 2010. The reserves of Brazil are 253 billion dollars, Mexico- 104 billion and Argentina -49 billion.

-Inflation was brought down to 4.7% in 2009 from 8.2% in 2009. The average inflation rate of the region has stayed in single digit every year since 2003. Venezuela stands out as the only country with double digit inflation. It was 26.9% in 2009.

-Five countries namely Chile, Mexico, Brazil, Peru and Panama have been upgraded in recent years to investment grade by the Sovereign Rating Agencies.

Of course, the growth of China, India and Asia and the high commodity prices also contributed to the growth of Latin America.

Lupin looking for acquisitions in Latin America

2010-06-28T18:50:00.000-07:00

According to newspaper reports Lupin Ltd., the Indian generic-drug maker, is looking for acquisitions in Brazil and Mexico to expand its revenue from the Latin American region.
The company plans to spend $50 million to $75 million on each purchase, according to S. Ramesh, president of finance and planning. Lupin is looking for companies that have a strong marketing relationship with physicians and will make the acquisitions soon, he said, without providing a more specific timeframe.
Lupin generates 10 percent of revenue from a sales region that includes Latin America and Europe. Ramesh was quoted as saying “Latin America is the next stop for us, in so far as of acquisitions...Recognition with the doctor is the most important consideration for the purchases¨.

panama gets investment grade rating

2010-06-12T03:13:00.000-07:00

Panama’s credit rating has just been raised to investment grade by Moody’s Investors Service, which cited “significant improvement” in the country’s fiscal policies and strong economic growth.
Moody’s upgraded the country’s debt ratings to Baa3 from Ba1, matching moves that Fitch Ratings made in March and Standard & Poor’s made in May. The outlook on Panama’s rating is stable, Moody’s said.
With this Panama joins the club of investment grade Latin American countries Brazil, Chile, Mexico and Peru.
GDP of Panama is expected to grow by 6% this year. The Panama Canal expansion project and investment in infrastructure add to long term prosperity.

Enlightening interview of Kapil Gulati

2010-06-02T04:49:00.000-07:00

The conventional wisdom is that Brazil, Mexico or Argentina are the platforms to launch pan-latin american business. Kapil Gulati loves defying conventions. He is the new breed of Indian executives with a new mindset. He operates from the small country of Costa Rica and manages a business of 160 million dollars in 13 Latin American countries as well as in USA. And he wants to expand the business with new acquisitions.

During our lunch in Buenos Aires last month, I found him sharing my optimism and confidence about the prospects of Latin America for Indian business. He has adapted well to the Costa Rican ¨Pura Vida ¨. http://latinamericanaffairs.blogspot.com/2009/05/costa-rica-pura-vida-country.html#links

Here is Gulati´s enlightening ( ... his company Havells is in the lighting business..) interview in Financial Express of today.

INTERVIEW: KAPIL GULATI
We are scouting for acquisitions & tie-ups in Latin America.

Costa Rica is the America headquarters of Indian company, Havells Sylvania. Kapil Gulati, the company’s director of America, manages the $160-million operations in the region, including the US. Havells had bought the lighting and fixtures business of American firm Sylvania worldwide and Gulati is in the process of consolidating and streamlining the business. He discusses the company’s inorganic growth strategy for the region with FE’s Huma Siddiqui. Excerpts:
How do you plan to expand in the region?
Havells Sylvania is among the top-four lighting companies in the world owned by Havells India since 2007. In Latin America, we now have two manufacturing plants, in Colombia and in Costa Rica. We have local operations in 13 Latin American countries, from Mexico to Chile. We employ more than 750 locals and generate about $200mn revenue, 16% of the business of Havells India.
After India, Latin America has highest growth for the corporation. Chile is a developed and stable country with highest per capita GDP ($15,000). Peru is among the highest growth rate countries of the region. The countries touched 9.8% real GDP growth in 2008. These were a perfect fit in our phase-1 regional geographical expansion. In phase-II, besides improving our reach within the existing countries, we are improving our export business in Uruguay, Paraguay, The Caribbean & other Central American countries (Nicaragua & Honduras).
Last year, we formed local companies in Chile & Peru, but due to the global economic situation decided to put the process on slow track. This year in Q1, we started team building activity and local product validation process. In May, our local business in Chile was started.We are scouting for strategic tie ups, joint ventures and acquisitions to strengthen our position, especially in the biggest Latin American economies — Brazil, Mexico and Argentina.
What are the opportunities available to Indian companies in the region?
Over the last seven-10 years, the Indian business community has increased its participation in Latin America. The region has stabilised economically. With success stories like Havells, other Indian business houses can keep Latin America on their high-priority expansion list.
What is your company’s participation in energysaving programmes?
Some of the Latin American countries (Ecuador, Colombia, Argentina, Brazil) have announced banning and phase-out schedule for high-energy consumption products like incandescent lamps. Most Latin American countries are now giving subsidy or even distributing free compact fluorescent lamps.
Have you identified partners for joint ventures in the region?
We are looking at local companies, with the objective of expanding our manufacturing base for energy-efficient products. Since we are a public-listed company, we have to follow certain guidelines, therefore cannot give more details.

Hola Business News - May 2010

2010-05-29T14:22:00.000-07:00

This is the time of …¨ sonrisa de esperanza y sollozo de pasion¨…. Means ….¨smile of hope and cry of passion¨.
…for the football teams and the soccer-crazy people of latin america
Between 11 june and 11 july , watching football will take precedence over business meetings and office work. .. especially in Argentina and Brazil, the super powers of football.
While the Latinos are watching the football scores… the Indian exporters can plan and formulate strategies for market entry and expansion in Latin America..
Here is the Hola Business News…to help in the preparations of plans and strategies..

Expansion of India- Mercosur PTA
In the next India- Mercosur meeting to be held in New Delhi on 15-16 June 2010, the deepening and widening of the India- Mercosur PTA will be discussed.
The current India - Mercosur PTA which has become operational since June 2009, covers 450 itmes of our exports and 450 items of Mercosur exports. These lists are in the businesswithlatinamerica website. It has now been decided to expand the lists. Mercosur has already drawn up their list of 1600 items. Our commerce ministry is starting the list collection.Indian exporters, export promotion councils and trade and industry bodies can present their cases to the Indian commerce ministry..mentioning the items with the HS codes and percentage of preference you desire. Also you might like to check how much preferrence is being sought by Mercosur for the items which are of interest to your company.
Contacts in commerce MinistryAnil Mukhim, JS a.mukim@nic.inShubha Sarma DS shubha.s@nic.in
CII is planning to hold an interactive meeting with the visiting Mercosur delegation, which will have officials from all the four member countries of Mercosur.

Prospects of Latinamerican markets in 2010
According to ECLAC, the region is set for a GDP growth of 4.1% in 2010. IMF and Word Bank also predict 4% growth. Brazil, the largest market of the region is geared up for an admirable 7% growth, the highest since 1986. In the first four months of 2010, Brazil has generated almost a million jobs. The next football World Cup and Olympics in Brazil mean more investment, infrastructure and business in the coming years…

Peru, Chile, Panama and Mexico are expected to post growth in the 4 percent range. Other countries, such as Argentina, Bolivia, Colombia, Costa Rica, Dominican Republic, Paraguay, and Uruguay ,will grow closely below the regional projected average of 4 percent. Venezuela is the only country which will suffer an economic contraction. Hmmm… Instead of feeling bad and guilty …someone … you know.. who ..is celebrating this as the ¨death of capitalism ¨ !

In the past, Latin America was known as the region of crisis and debtand they were given bitter medicine and condenscending sermons. Oops .. now the doctors have got the disease and the priests have become the sinners. Latin American economies have learnt from their past mistakes and have become wiser. They have withstood the crisis of US and Europe with their resilience and strong macroeconomic fundamentals. The Latino markets are stable and growing …while Europe is in crisis and USA had undergone worse in 2008-9. Since these developed markets do not bring smile to our exporters , it is time they should focus on new markets such as Latin America.

FDI in Latin America in 2009
Foreign Direct Investment ( FDI) in 2009 in Latin America was 77 billion dollars. Brazil, as usual, was the top recepient of FDI with 26 biilion dollars. What was unusual was.. Chile emerged as the second most preferred FDI destination with 12.7 billion dollars, taking over the usual number two slot of Mexico, which attracted 11.4 billion. Peru seems to be the most attractive destination for mining investment in Latin America. Venezuela is the least attractive destination for FDI...no surpise...Here are the figures of FDI in billion dollars...
USA continued to be the largest investor in Latin America ( 37%) followed by Spain ( 9%) and Canada ( 7%).
Outward Foreign Direct Investment by Latin America in 2009 stood at 11.4 billion dollars. Chile replaced Brazil as the largest investor with 7.9 billion dollars. Mexico was the second largest with 7.6 billion ( dont forget.. the world´s richest man is a Mexican ! ) and Colombia invested 3 billion. The surprise in 2009 was that Brazil which was the traditional number one missed out the top spots. The Brazilian companies received more from their subsidiaries abroad in 2009 than their fresh investment.

Since American and European companies are less active in Latin America at this time, the Indian companies should focus on this region to get access to edible oil, pulses, wheat, sugar, minerals and crude oil which are going to be needed more and more by the growing Indian market. Agribusiness, mining and petroleum should be the priority areas for Indian companies.

More Indian companies invest in Latin America
Renuka Sugar bought another Brazilian company for US$ 329 million in February 2010. In November 2009, Earlier, Renuka had acquired sugar and ethanol producer Vale Do Ivai S.A. Acucar E Alcool for $240 million. With these Brazilian acquisitions, Renuka has become the third biggest sugar company in the world, the number one sugar firm in India and among the top five in Brazil.
Godrej has acquired the Issue Group of Argentina which is a national leader in the cosmetics business. The turnover of the company is 35 million dollars which includes exports of 12 million dollars. Besides Argentina, the Issue Group cosmetics have a presence in a number of Latin american countries. The Group has a manufacturing plant in Buenos Aires.
Patni Computer Systems opened a new IT Delivery Center in Queretaro, Mexico to Serve North and Latin American Markets. Jose E. Calzada Rovirosa, Governor of the Queretaro State cut the ribbon on 12 march.
IFFCO ( Indian Farmers Fertilisers Cooperative ) has invested 25 million dollars in Americas Petrogas, a Canadian company, which has oil and gas projects in Argentina and a potash mine in Peru. IFFCO is keen on the potash project in Peru, as part of their global fertiliser production strategy. They are considering the construction of a potassium chloride plant in Bayóvar (Piura) which will involve an investment of 200 milion dollars. They are also considering a Urea production plant in Argentina based on the gas produced by Americas Petrogas in La Pampa province of Argentina.Kirloskar is exploring the possibility of manufacture of pumps in one of the countries to be selected in Latin America.

Latin American investment in India
Cinepolis, a Mexico-based multiplex operator, is rolling out its investment of 350 million dollars. The company started operations in India last year and is planning to operate 500 screens in 40 cities in the next five years in cities like Jaipur, Pune, Thane, Amritsar, Bangalore, Thane, Patna, Bhopal, Surat and Ahmedabad. It is the world’s fifth largest movie theatre circuit, operating 2,257 screens across 240 cinemas in six countries.
During my leave in India in April, I bought some chocolate candies in a super market in Trichy for the kids in my village. I was in for a surprise..the candies were made in Argentina by Arcor, the Argentine company !

India opens an embassy in Guatemala
This has enhanced the presence of India in Central America. Guatemala is the largest market of central america with 10 million population and is the entry point for the region. Panama is the other central american country where India has embassy.The embassy became functional from April 2010 with the following address.
Embassy of India
16 Street 4-88
Zone-14, Guatemala city
Telephone: 00502-23682988, 23683230,23633295,23633305,23682974
Mr Achal Sharma, Second Secretary - mobile number 00502 4891 4477Mr Mishra, Attache - mobile 00502 4965 0857

Third Festival of India 4-14 November 2010
The Embassy will organise the third edition of the festival in collaboration with EPCH ( export promotion council for handicrafts) of India as done in 2008 and 2009. The festival will include a handicraft exihibition with 60 Indian companies, classical and folk dance and music, films, food festival, exihibitions, seminars, literary events etc. Centro Cultural Borges is the main venue of the festival. Food festival will be at the Sheraton Hotel. The second Festival of India attracted 50,000 visitors and the Argentines are anxiously waiting for the next edition.

Participation in AutoMechanica Fair Buenos Aires 17-19 November
CII will bring 40 Indian autoparts companies and this is the first-ever Indian participation in this Fair

Made in India exihibition in Sao paulo, March 2011
CII is organising this first-ever exihibition in Brazil. Hmm.. we tried to get it for Buenos Aires but lost to my dear Brazil…no hard feelings..

India Business Seminar in Buenos Aires - 16 November
CII and the embassy will organise this mega event to promote Brand India in Hotel Sheraton. There will be speakers and presentations on Indian industry and on Argentine market. Over 200 Argentine CEOs, chambers of commerce and industry, government authorities and media will attend this event. Minister of State for Commerce from India will be the key note speaker at the seminar.

Golf and Polo tournaments
As part of the Festival, the third India Cup golf tournament will be organised in Jockey Club with about 100 golfers on 8 November.
The first India- Argentina Polo tournament will be held on 16 November in Buenos Aires. Players from India will come specially for the tournament.

Game for more…
Yes, we are game… to organise more trade promotion events, receive delegations and visits of individual exporters….

FDI in Latin America in 2009

2010-05-19T09:27:00.000-07:00

Foreign Direct Investment ( FDI) in 2009 in Latin America was 77 billion dollars ( down from 132 billion in 2008 ) . Brazil, as usual, was the top recepient of FDI with 26 biilion dollars. What was unusual was.. Chile emerged as the second most preferred FDI destination with 12.7 billion dollars, taking over the usual number two slot of Mexico, which attracted 11.4 billion. It is interesting that Colombia had attracted more FDI than Argentina, the third largest market of the region. Peru is the largest attractive destination for mining exploration investment in Latin America and the third largest in the world. Venezuela is the least attractive destination for FDI...no surpise...
Here are the figures of FDI in billion dollars...

USA continued to be the largest investor in Latin America ( 37%) followed by Spain ( 9%) and Canada ( 7%).

Outward Foreign Direct Investment by Latin America in 2009 stood at 11.4 billion dollars. Chile replaced Brazil as the largest investor with 7.9 billion dollars. Mexico was the second largest with 7.6 billion ( dont forget.. the world´s richest man is a Mexican ! ) and Colombia invested 3 billion. The surprise in 2009 was that Brazil which was the traditional number one missed out the top spots. The Brazilian companies received more from their subsidiaries abroad in 2009 than their fresh investment.

Indian companies have also been showing enthuisasm for investment in the region. Notable case was Renuka Sugars which made a half billion dollar investment in Brazil recently. But still there is inadequate realisation among Indian corporates about the advantages and need for investment in the region. Agribusiness, mining and petroleum should be the priority areas for Indian companies. Investment in these sectors will get us access to edible oil, pulses, wheat, sugar, minerals and crude oil which are going to be needed more and more by the growing Indian market.

More Indian companies invest in Latin America

2010-05-18T13:46:00.000-07:00

IFFCO has invested 25 million dollars in Americas Petrogas, a Canadian company, which has oil and gas projects in Argentina and a potash mine in Peru. IFFCO is keen on the potash project in Peru, as part of their global fertiliser production strategy. They are also considering a Urea production plant in Argentina based on the gas produced by Americas Petrogas in La Pampa province of Argentina.

Godrej is in talks with the Issue Group of Argentina to acquire their cosmetics production business.

Kirloskar is exploring the possibility of manufacture of pumps in one of the countries to be selected in Latin America.

Expansion of India- Mercosur PTA

2010-05-17T14:14:00.000-07:00

The India - Mercosur PTA which has become operational since June 2009, covers 450 itmes of our exports and 450 items of Mercosur exports. It has now been decided to expand the lists. The next India- Mercosur meeting to be held in New Delhi in June 2010 will discuss these lists. Mercosur has already drawn up their list of 1600 items. Our commerce ministry is starting the list collection. Indian exporters, export promotion councils and trade and industry bodies can present their cases to the Indian commerce ministry..mentioning the item with the HS code and percentage of preference you desire.Contacts in commerce MinistryAnil Mukhim, JS a.mukim@nic.inShubha Sarma DS shubha.s@nic.in

Simmarpal Singh- target of pursuit of models and journalists

2010-05-14T05:05:00.000-07:00

Exactly a year back, I wrote a blog on the peanut prince Simmarpal Singh saying that he is a role model for success in agribusiness in Argentina. http://businesswithlatinamerica.blogspot.com/search?q=peanut+prince

Since then, the role model has become the target of pursuit of hot Argentine models....when they see his flashy red turban...they chase him..follow his car...and stalk him everywhere.

He is also being chased by Indian journalists ...for interview. He has been interviewed and written about in many newspapers and magazines in India. Here is his latest interview in the Financial Express of today written by Huma Siddiqui, .... the Latina of Indian media...

Quote...

He started with leasing of 700-ha of land in Argentina and grew peanuts. It was a success. His company Olam International let him lease additional acreage. He has plans to continue the increase in acreage and grow other crops such as wheat, soya and pulses. Simmarpal Singh, Gerente General, Olam Argentina, today employs 140 people in Argentina, most of them in the processing plants. What Pal is doing in Argentina has a lesson for India which is going to face, in the long term, a shortage of agricultural land and water for irrigation to feed its population which is increasing by 15 million per year. Following are excerpts from an interview of Simmarpal Singh by Huma Siddiqui.
Realistically speaking, is contractual farming a concept for India?
Contractual farming applied in India may not work the same way as it does in Argentina because it is not about just getting an access to assured supply by giving some new seeds and a price cover to small farmers. All the while, you have to stay away from the operational part of the farm management. I think this is the way some companies are engaged in India. The higher plane of contractual farming is also about employing newer technology in planting, spraying and harvesting for which one needs large tracts of land to make the initial investment viable. We all know the kind of fragmentation that exists in India.
However, contractual farming in countries where large tracts of land are available can surely be an opening for Indian-based companies if they look at it from a long-term perspective and are ready to make some initial investments.
Agriculture ministry is planning to set up a task force which has members from MEA, Ficci and APEDA to help Indian farmers wanting to go to Latin America for contractual farming. What are your views on this?
A very good initiative looking at the entities engaged in the task force. Ficci along with MEA has organised quite a few conferences in LatAm in the recent past and they are in a position to access the right information in the region. However, everything will depend on how fast the task force is able to come up with a viable format for engagement and support.
The modalities of participation will be quiet different in each of these countries within the LatAm cluster and the country-specific social and cultural issues should equally be a focus area for the task force. It is also important to evaluate the segment this task force will be looking at within the ‘Indian Farmers’ category because that will go a long way in creating the initial acceptance locally which will be instrumental in the success of the venture—finally enhancing or destroying the brand India.
What has been the success mantra for your Argentinean venture?
Success, I believe, is all about the environment one happens to be in. Also, the level of effort one is willing to put in to achieve the objectives is also a crucial factor. I consider myself fortunate to be in Olam. It encourages risk taking under a properly-measured and evaluated framework. That gave me a ground to try something new.
Then, it was all about taking the plunge into it—ownership of the project, adaptability and readiness to take on new things.
When and how did you start in that country? How long did it take for you to establish yourself?
I came to Argentina in May 2005 to start the peanut operations in the country. I started from zero in a new place in my own way all the while aligning with and ensuring compliance with the core processes of Olam.
Starting up the operation had all its challenges related to understanding the business environment, the statutory, the labour and the tax-related laws, getting the governmental and institutional approvals and licenses.
Which are the commodities that can be grown in Argentina?
Argentina has fertile soil and good rainfall distribution which can allow one to grow all types of crops—soybeans, corn, wheat, beans, rice etc. One can go into citrus plantations or into vineyards too. It is all there.
What are the typical problems an Indian farmer can run into?
For me it is difficult to give a ready answer on this without getting a feel of what kind of a typical farmer it will be. The profile of a farmer in Punjab (95% farms with Irrigation) and some other state could be quite different. Again, within Punjab the profile of a farmers can differ. However, without generalising on the Indian farmer, I do think that there will be lot of starting problems but any educated person with a bit of meticulous planning can rough it out. The bigger challenge, however, will be the language and the ability to quickly adapt to the local culture.
What kind of food processing/exporting facilities are provided?
You can find everything there. However, most of the businesses are vertically integrated and depending upon which crop one may go into, there could be some specific infrastructure needed for stocking after a certain volume level. Generally speaking, it would not be so much of a challenge.
What are the laws of the land for the farmers/contractual farming?
Like any other place, the procedure is tedious on this aspect. But there is always a path available. I would say that one who has gone through the process with the Patwaris and Tehsildars in India is well trained for the situation here. Rather, he may find it slightly easier.

India- Latin America trade in 2009

2010-04-01T08:06:00.000-07:00

The trade between India and Latin America was 15 billion dollars in 2009. India´s exports were 5.8 billion dollars and imports 9.2 billion.
Brazil remained as the top trading partner of India with 5.6 billion dollars, followed by Venezuela with 2.4 billion and Mexico 2.2 billion.

Below are the trade figures of 2009

Chemicals, pharmaceuticals, engineering equipments, vehicles and autoparts, textiles and software were the main exports.
Crude oil, edible oil, sugar, copper and other minerals were the major imports of India in 2009. Major sources of imports of
crude oil -Venezuela
sugar- Brazil
edible oil- Argentina
copper- Chile
India´s trade with Latin America has decreased from 17 billion dollars in 2008. This was not unexpected in the light of the global crisis last year.
India´s exports have already resumed growth in the beginning of 2010 and the trade is expected to increase in 2010 and in the coming years.

Brasil plans massive investment

2010-03-31T16:43:00.000-07:00

President Luiz Inacio Lula da Silva launched on 29 March a $878 billion program to upgrade Brazil's infrastructure in the period 2011-2014. The plan will improve access to clean water, medical posts and energy as well as modernize the country's air, road and rail system. The energy part of the plan envisages investment of 257 billion dollars. This includes the five year plan of Petrobras, the Brazilian energy giant to invest 220 billion dollars, the largest corporate investment in the whole world at this time.
This is besides the investment being made for Olympic games 2016 and World Cup Football 2014.
Indian companies should rush in to get projects, contracts, subcontracts and orders for supply of equipments, machinery and materials.

Bajaj three wheelers in Colombia

2010-03-31T11:06:00.000-07:00

Bajaj three wheelers were launched in Colombia on 24 March by the Colombian company Auteco. The vehicle which is being assembled in Medellin, Colombia, will be marketed at a little over US$4,000/- for the basic model. Apart from this model, there will be other versions including fully enclosed vehicles and others for carrying cargo. Auteco expects to import 3000 SKD kits of the vehicle this year and increase the numbers in the years to come. The vehicle has been homologated and has received the approvals from the Government of Colombia. It will, however, only serve as a taxi for the present in towns with less than 50,000 population, but will be allowed for private use in other cities.
Auteco also markets eight different brands of Bajaj motor cycles in Colombia. Their imports exceed US$50 million per year.
Bajaj three wheelers are also exported to Peru and Central America.

Wipro opens a new global delivery centre at Curitiba

2010-03-28T05:06:00.000-07:00

The Indian IT major Wipro opened a new global delivery centre at Curitiba in Brazil, last week.
It was inaugurated by the mayor of Curitiba, Beto Richa, and the Consul General of India in Sao Paulo, Jitendra K Tripathi.
Though the company has been operating in Brazil for past three to four years, it is for the first time the company has established a delivery centre in the region. The Curitiba Centre would be a hub of the firm in the region and would serve as the regional headquarters for other Wipro offices located at So Paulo in Brazil and Buenos in Aires Argentina. Serving global and domestic clients, the centre would cater to 20 clients in IT and BPO sectors. The centre which started with 60 people currently employs around 350 people.

Indian petroleum companies to invest 2.18 billion dollars in Venezuela

2010-03-25T17:34:00.000-07:00

The Government of India approved on 19 March an investment of $2.18 billion by three state-run companies - ONGC Videsh Ltd (OVL), Indian Oil Corporation and Oil India - in Venezuela's Carabobo oil block.
The three companies, which together have an 18 percent equity interest in the project were awarded the block in consortium with Spain's Repsol YPF SA (REP) and Malaysia's Petroliam Nasional Bhd. Venezuala's state-run Petroleos de Venezuela SA holds the remaining stake in the block.
OVL has already invested over a billion dollars in oil fields in Brazil and Colombia

Panama gets investment grade rating

2010-03-24T05:26:00.000-07:00

Panama won the coveted investment-grade rating on its debt on 23 March. Fitch Ratings raised its credit rating for Panama by one notch to BBB-minus, putting it in a club of creditworthy countries. This is a reward to the Central American country for years of rapid economic growth, trim budgets and recent tax system overhauls. The other credit rating agencies are also expected to upgrade panama.

Brazil, Mexico and Chile are the other three Latin American countries with investment grade ratings.

The upgrade of Panama, coming at a time some Southern European countries are risking downgrades, is likely to attract more investment.

Panama uses the U.S. dollar as its currency and has emerged as a big winner from the growth in global trade , domestic construction boom and the vibrant banking sector. The average annual growth between 2000-09 was 8 percent, the fastest pace in Latin America.

About 4 percent of international commerce flows through the Panama Canal, which is now being widened to accomodate bigger ships with an investment of 5.25 billion dollars.

After running a deficit equivalent to 4.9 percent of GDP in 2004, Panama ran surpluses between 2006-08.

The country's debt as a percentage of gross domestic product has fallen to 45 percent in 2009 from 71 percent in 2004.

Congrats Panama... Keep going...

India starts importing coal from Colombia

2010-03-22T13:34:00.000-07:00

This first ever import of thermal coal from Colombia is being done by Adani Enterprises Ltd, India’s biggest coal importer. The first cargo of fuel will be imported in a capesize, a vessel that has a carrying capacity of at least 110,000 deadweight tons. The company is said to be negotiating a long-term contract.

Colombia’s Cerrejon, the world’s largest open-pit mine producing coal for export, may make its first sales to India this year. Colombian coal may land in Mundra and Dahej ports on India’s west coast because they can handle capesizes.

Colombian coal supplies, which account for about 10 percent of global trade, may rise by 7.7 million tons in 2010 to 71 million after falling by about 8.7 percent last year.

Indian thermal coal imports surged last year to a little less than 60 million tons from about 30 million in 2008. India plans to almost double electricity generation capacity by 2012, when the shortage of coal will exceed 200 million tons.

India imports around 5 million tons a month from Australia, Indonesia and South Africa.

agricultural production up in Argentina and Brazil in 2010

2010-03-18T04:52:00.000-07:00

Brazilian agroproduction is estimated to reach 145.1 million tons in 2010, 8.5% larger than that obtained in 2009 (133.8 million tons), according to Brazilian official statistical agency report of 9 March 2010. The area to be harvested, 47.9 million hectares, presents a 1.5% increase in relation to 2009, which was 47.2 million hectares.

The three main crops (rice, corn and soybeans), which account for 81.5% of the planted area, present variations of -3.8%, -4.1% and +5.9%, respectively, when compared to the 2009 harvest. As regards production, corn and soybeans recorded increases of +2.6% and +17.4%, whereas rice presents a decrease of -5.0%.

soy production in 2010 is expected to reach 66.9 million tons. The estimate for the coffee harvest is 2.8 million tons (14.4% larger than that of 2009).

Argentine soy production is estimated to reach 53 million tons in 2010 from 32 million tons in 2009.

This is good news for India since increased production especially soy will keep prices from going up. India imports soy oil and sunflower oil from Argentina, Brazil and Paraguay in large quantities.

Patni Computer Systems Opens New IT Delivery Center in Queretaro, Mexico on 12 March

2010-03-12T03:56:00.000-08:00

Patni Computer Systems is opening a new IT Delivery Center in Queretaro, Mexico to Serve North and Latin American Markets. Jose E. Calzada Rovirosa, Governor of the Queretaro State is cutting the ribbon on 12 march.

Patni is moving from its temporary facility into a permanent location in a high-rise building at ITESM Technological Park of Tech de Monterrey. The new center occupies 11,000 square feet on two floors in ITESM Technological .Patni currently employs 40 in Queretaro. The company has plans to increase employment in the local facility to 200 by the end of 2010, with the bulk of the new hires coming from the local area.
Queretaro is Patni's 22nd development center, expanding a global presence which already features near-shore centers in the United States and Europe. Patni has an employee strength of around 14,000; multiple global delivery centers spread across 13 cities worldwide; 28 international offices across the Americas, Europe and Asia-Pacific; Patni has registered revenues of US $656 million for the year 2009.
For more information on Patni, visit www.patni.com.

Petrobras plans investment of 44 billion dollars in 2010

2010-03-09T17:09:00.000-08:00

Brazil's Petrobras is investing $44 billion in 2010 as part of its 2009-13 Five-year investment plan of 174 billion dollars. This is the world´s largest corporate investment plan at this moment. Petrobras had invested 28 billion dollars in the first nine months of 2009.

In 2010, Petrobras will invest 20 billion dollars in exploration and production and 17 billion dollars in refining and petrochemicals, with the remainder going toward areas such as distribution and biofuels.

This is a great opportunity for Indian companies to get project and supply contracts.

The investment in the petroleum sector will make Brazil as a significant exporter in the coming years.

Strides Arcolab acquires pharma assets of Aspen in Brazil for $ 75 million - March 2010

2010-03-04T16:34:00.000-08:00

Strides Arcolab has bought Aspen's ( south african company ) facility in Campos, Brazil, with related products and intellectual properties for about $75 million. It is an all-cash acquisition.
The facility makes Penems and Penicillins and has annual turnover of $40 million.
Strides Arcolabs is already operating in Brazil as Cellofarm with a manufacturing unit in the port city of Vitoria near Rio de Janeiro.
Strides has a manufacturing facility in Mexico City in the name of Solara and has a marketing & trading operation in Venezuela as Sumifarma.

Renuka Sugar buys another Brazilian company for US$ 329 million

2010-02-22T02:12:00.000-08:00

India's biggest sugar refiner Shree Renuka Sugars Ltd has signed a definitive agreement for a 51 percent stake in Brazil's Equipav SA Acucar e Alcool for $329 million. The Brazilian firm, which holds the sugar and alcohol assets of Equipav Group, owns two large sugar mills with integrated co-generation facilities, in southeastern Brazil. The sugar mills have a combined annual cane-crushing capacity of 10.5 million tonnes, co-generation capacity of 203 MW and 115000 hectares of cane growing land..The Indian firm will expand the co-generation capacity to 295 MW and cane-crushing capacity to 12 million tonnes annually with additional capital expenditure.

In November 2009, Renuka had acquired sugar and ethanol producer Vale Do Ivai S.A. Acucar E Alcool for $240 million.

With these Brazilian acquisitions, Renuka has become the third biggest sugar company in the world, the number one sugar firm in India and among the top five in Brazil.

Hydrocarbon investments in Peru to total US$ 2 billion in 2010

2010-01-26T13:37:00.000-08:00

Investments in the hydrocarbon sector projects in Peru would amount to 2 billion dollars taking into account the implementation of various ongoing projects and those in the planning stage, reported Peru's National Mining, Petroleum & Energy Society (SNMPE).

According to the president of the SNMPE Hydrocarbon Committee Guillermo Ferreyros, the biggest investment in the hydrocarbon sector this year is the execution of a liquefied natural gas project of Peru LNG in the country.Export operations are scheduled to commence in the second quarter of 2010. In 2009, Peru's hydrocarbon sector received $1.6 billion and if the works are carried out according to schedule, the accumulated investment in 2010 would be higher.

The Peru LNG project is set to be one of the most important resources of the Peruvian government's future energy strategy. The project, which was launched in January 2007, will also be one of the largest industrial projects ever to be undertaken in Peru.

The international project consortium for the project consists of Hunt Oil Company of the United States, SK Corporation of Korea and Repsol YPF of Spain. The operator for the Peru LNG gas export project will be Hunt Oil Company as the subsidiary Hunt Oil Peru.

The hydrocarbon project offers opportunities for supply of inputs for the project.

Reliance from India has entered Peru for exploration of oil and gas.

Falabella expands with 1.74 billion dollar investment

2010-01-16T08:12:00.000-08:00

Chile's Falabella Department store chain announced on 14 January that it would invest $1.74 bn 2010 to 2012 to expand its operations. Falabella is one of South America's top retailer. It has 65 department stores, 95 Home Depts and 33 supermarkets located in Chile, Argentina, Colombia and Peru. It has eight stores in Buenos Aires itself.

It plans to invest around $492 million this year, $620 million in 2011 and $632 million in 2012. Falabella invested $280 million in 2009. The company has expanded its businesses in the region over the years.

Falabella sells clothes, hometextiles, electronics, furniture, healthcare products and other such consumer goods. India is an important source of their purchases. Indian companies can expect more business from Falabella in the coming years.

Devaluation of Venezuelan currency Bolivar – 8 January 2010

2010-01-11T12:02:00.000-08:00

This was announced by the President of Venezuela on 8 January. Besdies devaluation, the President also introduced a two tier exchange rate system. The bolivar will now have two government-set rates: 2.6 to the dollar for transactions deemed priorities by the government, and 4.3 to the dollar for other transactions.

The priority exchange rate of 2.6 Bolivar for a dollar will apply to imports of priority items such as food, machinery and equipment for economic development, health care items and books and supplies for schools, family and pensioner remittances as well as public sector imports. For all other imports and non essential items the exchange rate of 4.3 will apply.

Before this devaluation, the official exchange rate had been held by the government at 2.15 bolivars to the dollar after the last devaluation in March 2005. President Chavez imposed exchange controls in 2003 after the coup attempt against him. At that time the exchange rate was 1600 Bolivars to a dollar. In February 2004 the rate was changed to 1920 Bs for a dollar and later in 2005 it was further devalued to 2150 Bs to a dollar. In January 2008, the government changed the currency to a a strong Bolivar ( Bolivar Fuerte) and fixed the new rate at 2.15 to a dollar, eliminating three zeros from the old currency.

The black market rate in January 2010 is 6.25 Bs to a dollar. Because of the foreign exchange restrictions and complicated procedures to get foreign exchange, there has been a thriving black market in foreign exchange transactions since 2003.

According to observers, the new exchange regime is a reminder of a similar situation in 1983, when President Luis Herrera Campins devalued the bolivar and established a multi-tiered exchange system, known as Recadi, after oil prices plunged. Inflation soared to 40 percent in 1987 from 7 percent in 1983 as capital flight led Herrera Campins’s successor, Jaime Lusinchi, to devalue the currency further. By the time Carlos Andres Perez replaced Lusinchi in early 1989, the system had collapsed. The country was running out of foreign reserves and food shortages were mounting. Perez eliminated the multi-tiered system, unifying the currency at the free-market rate, and lifted price controls. Consumer prices soared 21 percent in one month alone, leading to the “Caracazo” riots that killed hundreds and spurred a military coup attempt.

Venezuela has the highest inflation in Latin America and one of the the highest in the world. The inflation was 29.5 % in 2009 and is expected to worsen and reach 30% in 2010. It may be noted that the average inflation of Latin America was 6.1% in 2009 and is projected to decline to 5.2% in 2010

The government of President Chavez sets retail prices on hundreds of products and threatens strong action against violations. The President announced this week that the military would monitor prices of essential items in shops.

There is an energy and water crisis in the country. President Chavez has advised the Venezuelans to shorten the shower time and not sing in the bathroom. The crime rate has reached unprecedented proportions.

Poor Venezuela... so rich in oil, minerals and natural resources...and yet so poor...

Scores of 2009 and Promises of 2010 for Business in Latin America

2010-01-07T10:42:00.000-08:00

2009 Scores
Messi won the best football player award of the year
Del Potro won US Open tennis
Luciana Aymar was selected as world´s best woman hockey player for the fifth time this year
Loreena Ochoa retained number one ranking in women´s golf
Cambiasso, the world´s best polo player won the Polo Open
Cabrera won the Masters Golf
And… Brazil won the Olympics venue, beating the heavyweights. ¨Sim Podemos¨ overtook ¨Yes we Can ¨.

The Latin American market could not score that well in 2009, since it got hit by the global crisis. GDP of the region fell by 1.8% in 2009, after having had an annual average growth of 4.8% in the previous six years. In 2009, ten countries managed to grow between 0.2% and 3.5%( Bolivia) while ten countries suffered GDP contraction ranging from -0.4% to -6.7%( Mexico). Exports and imports decreased by about thiry percent.

The good news is that the region did not go under due to the external shock as badly as it would have done in the past. Here is what Pamela Cox, vice president of the World Bank Vice President Latin America & The Caribbean wrote on 28 December 2009 under the title ¨Latin America enters new decade with more clout ¨,
“What a difference a decade can make. Ten years ago, Latin America and the Caribbean received the new century in the midst of tremendous uncertainty. …Today, the picture looks very different. News of default jolts other regions - not Latin America. Thanks to sound fundamentals, such as improved financial regulation and supervision, budget surpluses, and high international reserves, the region has weathered the current crisis without massive currency devaluations, bank collapses, debt defaults, inflationary spikes or capital flights. In other words, the region has learned from its past and is on track toward a better future¨

The OECD Latin American Economic Outlook 2010 says,
“ Latin America has not escaped the global economic crisis, but it has stood up to it with a new resilience. However, it is already apparent that Latin America is rebounding from the shock more rapidly than the majority of developed economies. Most importantly, it is doing so without compromising its significant progress towards its long-term development goals.”

Growth in domestic demand helped many countries to tide over the global crisis. For example, auto sales in Brazil increased to an impressive record of 3.01 million units in 2009 from 2.66 million in 2008. The sales are expected to increase by 10% in 2010. What is more… General Motors Volkswagen and Ford plan to invest a combined 14.2 billion reais ($8.3 billion) in the coming years to increase production capacity. More .. in my article ¨ "Brazil: Short skirts and Big B arouse Global Interest" published in Miami- based Latin Business Chronicle - 17 December.

Average inflation of the region is estimated to have declined to 4.5% in 2009 from 8.3% in 2008. The currencies and exchange rates remained stable. Some currencies such as Brazilian Real strengthened while Mexican peso maintained its rate and Argentine peso depreciated.
External debt was within manageable limits. The Brazilians rewrote the history of Latin America by becoming Creditors from Debtors. They lent US$ 10 billion to IMF in 2009 !

Politics
The region continued its consolidation and strengthening of democracies with regular elections and peaceful transfer of power with the exception of Honduras. In the 2009 elections held in Ecuador, Bolivia Uruguay, and El Salvador Leftist presidents were reelected / elected. In Panamá a centre right candidate became the President and in Chile´s first round a centre right candidate got more votes.
In 2010 Brazil, Costa Rica, Chile (second round) and Colombia will go for elections.
It does not matter whether the presidents are left or right. The general trend and consensus in the region is towards pragmatism with agenda for the poor and pro business policies. There are of course a few exceptions…
2010 is the year of bicentennary of independence from Spain for Venezuela (16 April), Argentina (25 May),Colombia (20 July),Chile (18 September) and Mexico (16 September)

The coup in Honduras in June 2009 was an unpleasant reminder of the past. President Zelaya was put in a plane at gun point and sent out of the country. But the Golpistas did not go all the way to install a classical dictatorship by military or by a Caudillo. They held elections in which a new President has been elected.

India´s score in Latin America in 2009
India´s exports to the region went down by about 30 percent in 2009 in comparison to 2008. This was expected, after the global crisis and local import restrictions by the governments which wanted to protect domestic industries and minimise outflow of foreign exchange.
Chemicals, engineering products and textiles were the major exports from India. Crude oil, edible oil and minerals were the main imports.
The India- Mercosur PTA, became effective from June 2009. This should give a boost to our trade with the four Mercosur countries.

Indian IT companies expanded operations in Latin America including in Brazil, Mexico, Argentina and Chile
These companies which set up operations in the region initially to service their North American and European clients, have now started focussing on local cients and have been getting local contracts

Renuka sugar mill made an investment of 240 million in the acquisition of two sugar factories and sugar cane estates in Brazil. This is the first agribusiness investment by an Indian company in the region.

Panama liberalised its business visa system for Indians. Indian business visitors holding US or Schengen visas do not need visa to visit Panama under a Presidential decree issued in July 2009. The decree is for all foreigners including Indians. The visitors can stay for 30 days during each visit. Earlier Panama embassy in Delhi had to send every visa application to their immigration authorities which would take months for clearance. Ecuador, Costa Rica and Honduras are the other countries which have waived visa requirement for Indian business visitors.

During the visit of Argentine President to India in October 2009, we signed a visa agreement under which Argentina has agreed to give five year multientry visas free of cost with validity of 90 days during each visit.
Visa is no longer an obstacle for Indian business visitors to Latin America……

Promises of 2010
Market
Latin America will grow by 4.3 % in 2010, according to ECLAC estimate in their report of 10 December. The growth of Latin America in 2010 is higher than the growth projected for developing countries ( 4%) except China and India.
Brazil will be the 2010 champion of the region with the highest growth of 6%. Ooops... I do not recall Brazil topping the growth chart of the region in recent times. Uruguay and Peru will be runners-up with 5% each. Mexico will grow by 3.5%. Argentina, the third largest market will grow by 4%.It is no surprise that the least growth in 2010 in the region will be in Honduras, which is in a political crisis.While South America is expected to grow by 4.7% in 2010, the Caribbean and Central America are projected to grow by around 2%.

Opportunities for Indian companies
Projects
Petrobras, the state oil company of Brazil is investing 174 billion dollars in the period 2009-13 in exploration and production of the recently discovered offshore oil fields. This is the world’s largest corporate investment plan at this moment.
The ongoing Panama Canal expansion project is over 5 billion dollars.
Venezuela , Argentina, Mexico, Colombia, Ecuador and Bolivia also have investment plans in their oil and gas sectors.
Projects related to Olympics and World Cup in Brazil
Exports
The manufacturing sector in the big and medium countries of the region are modernising to survive in this time of globalisation and against the competition from Chinese goods.This opens up opportunities for supply of equipments, machinery and spare parts.
Agricultural production in South America is steadily increasing thanks to the growing world demand and high prices. This means more scope for exports of inputs for agribusiness such as agrochemicals.
The new area opening up for Indian exports is Defence equipments and items. India has sold helicopters to Ecuador air force. Other countries have shown interest.
Imports
India will be importing more edible oil, crude oil and minerals from the region in 2010 and in the coming years.
Investment
Indian companies should consider buying/ leasing farmland in south america to grow oilseeds, grains, sugarcane and pulses, which are needed in India. Thousands of hectares of productive land are available in the private sector at prices less than in Punjab. There is no local government restriction.
Indian companies can also consider investment in commercial forestry in order to have direct access to wood and paper pulp whose imports are also growing in India
Mining sector is another area for Indian entry.
Investment in petroleum sector can be increased
Operations of Indian IT companies can be expanded
Entertainment Industry
Indian films were shot in Rio and Machu Pichu. There are other attractive shooting locations in the region. Latin Americans are keen to collaborate with Indians for coproduction of films and exchanges of soap operas and TV productions.

brazil pioneers technology using ethanol to generate power

2009-12-21T07:53:00.000-08:00

Petrobras, the public sector petroleum company of Brazil has developed this technology. It is starting in December 2009, commercialisation of this technology in a plant at Juiz de Fora in Minas Gerais state. Capacity of the plant is 45 MW. The turbines are made by GE.

Brazil is the first country to produce power from sugarcane ethanol. Brazil already leads the world in the use of ethanol as fuel for cars. Brazil is well prepared to straddle successfully both the worlds of fossil fuels ( having discovered enormous petroleum reserves) and the renewable sources of energy.

Latin America will grow by 4.3 % in 2010

2009-12-17T03:45:00.000-08:00

This good news comes from ECLAC ( Economic Commission for Latin America and Caribbean- which is part of the United Nations) in their 10 December 2009 report.

The GDP of the region which fell by 1.8% in 2009 due to the global crisis will resume growth in 2010 with 4.3 %. The region had an annual average growth of 4.8% in the period 2003-2008. In this period, the region enjoyed a current account surplus as well as primary surplus, accumulated foreign exchange reserves, reduced external debts, booming exports and strong macroeconomic fundamentals. This is the strength which helped the region to withstand the global crisis in 2008-9 with only moderate adverse impact and bounce back in 2010.

The 4.3% growth of Latin America in 2010 is higher than the growth projected for developing countries ( 4%) except China and India.

Brazil will be the 2010 champion of the region with the highest growth of 6%. Ooops... I do not recall Brazil topping the growth chart of the region in recent times. Uruguay and Peru will be runners-up with 5% each.
Mexico, the second largest economy which suffered the worst GDP contraction of the region in 2009 with 6.7% will grow by 3.5%. Argentina, the third largest market will grow by 4%.
It is no surprise that the least growth in 2010 in the region will be in Honduras, which is in a political crisis.
While South America is expected to grow by 4.7% in 2010, the Caribbean and Central America are projected to grow by around 2%.
Inflation in the region in 2009 is estimated to have declined to 4.5% from 8.3% in 2008.

Peru gets third investment grade rating in December 2009

2009-12-17T03:22:00.000-08:00

Peru clinched its third investment grade rating from Moodys, a major credit evaluation agency which has praised the country's ability to withstand the global downturn better than some of its peers. The new rating is Baa3 from the earlier Ba1
Moody´s said " the decision to raise Peru's foreign currency ratings was driven by indications of increased shock-absorption capacity relative to similar or higher-rated sovereigns.¨ This will help Peru to lower its borrowing costs and attract foreign investment flows, which will contribute to higher growth.

Fitch and Standard & Poor's had given investment grading to peru last year. Peru´s economy has been a shining star in the last few years.

Peru and Brazil are the other Latin American economies with investment grade ratings.

Chile is becoming a OECD member in January 2010

2009-12-17T03:05:00.000-08:00

The Organisation for Cooperation and Development (OECD) has announced that Chile has been invited to become the 31st member of the Organization. Chile will formally accept this invitation when an Accession Agreement is signed in the presence of Secretary-General Angel Gurría and President Bachelet on January 11, 2010. The country has been in negotiations to join the organization for two years. This eans that Chile´s investment and tax policies will have to be in conformity with OECD standards.
Currently, Mexico is the only Latin American member of the organization.

short skirts and Big B arouse global interest in Brazil

2009-12-05T02:32:00.000-08:00

A quick clarification before the reader lets his imagination fly….
B....stands for Business.
Last month, Geisy Arruda (seen below), a 20-year old student of Bandeirantes University in Rio de Janeiro aroused global media attention with her short skirt.

The Brazilians say that a ¨speech should be like a miniskirt…short enough to arouse interest and just long enough to cover the area of interest.¨

Brazil has always aroused the interest of the outsiders with tiny bikinis and mammoth carnival, sexy Samba and lusty Lambada, balmy Bossanova and fantastic football, amazing Amazon and bewitching beaches of Copacabana and Ipanema.

But now the country has started attracting a new kind of attention from global business leaders who find it as irresistible. Here is an example. Petrobras, the state oil company of Brazil plans to invest 174 billion dollars in the period 2009-13 in exploration and production of the recently discovered offshore oil fields. This is the world´s largest corporate investment plan at this moment. Obviously this news is sheer excitement for companies from around the world.

Which city in the world has the world´s largest fleet of private jets and helicopters? Not Newyork nor Tokyo. It is Sao Paulo. Tiffany and Bulgari have more stores in Sao Paulo than in any other city in the world. Sao Paulo has the largest Ferrari sales and the second largest sales of Lombarghini and Porsche in the world.

Brazil´s riches go beyond the salons of Sao Paulo. Brazil is becoming a global player and provider of energy and food to the world which is getting increasingly concerned with energy and food security and climate change.

Brazil is well positioned in both the sectors of fossil fuels and renewable energy. It has recently discovered very large offshore oilfields which will make it as a significant oil exporter. Brazil is the global leader and pioneer in the use of fuel ethanol for automobiles. Today more than ninety percent of the cars produced in Brazil have flexifuel engines running in petrol or ethanol or any combination of the two. Embraer has even produced some aircrafts running in ethanol. Eighty percent of the electricity generated in Brazil comes from hydroelectric source. The 12,000 MW Itaipu hydroelectric station is one of the largest in the world. Brazil has the highest share of renewable energy in power generation, among the large economies.

The Amazon forest of Brazil contributes twenty percent of earth´s oxygen and has become the Lungs of our planet. Brazil is also blessed with twenty percent of the fresh water supply of the world.

Brazil has the largest surplus land availble for agriculture. It is using currently 52 million hectares for crops. It can increase agricultural land by another 100 million hectares, without touching Amazon or the sensitivity of environmentalists. Besides the land under crops, Brazil has 172 million hectares under pasture for cattle. Brazilian agriculture is big business with its huge farm sizes which lend themselves to large scale commercial farming using heavy machineries, investment and innovation. Most cultivation is rainfed and don’t need irrigation canals or borewells as is the case in India. Brazilian productivity is one of the highest in the in the world thanks to the fertile soil, scientific and commercial farming practices and constant innovation and research and development. Brazil is the world´s largest exporter of beef, chicken, sugar, soya, orange juice and coffee.

Brazil is also rich in mineral resources. Vale, the Brazilian company is among the top global mineral players.

With such rich natural resources, Brazil was considered as a country of the future. But the joke in the past was that it would always remain as a country of the future. Now, the Brazilians have woken up. They are convinced that their time has come. They are determined to unlock their potential. There is a paradigm shift in the mindset of Brazilians. There is a new confidence, optimism and vision among the political and business leaders.

The Brazilians have liberated the country decisively and irreversibly from the past curses of hyper inflation, excessive external debt and unstable currency and exchange rates. They have made macroeconomic fundamentals as strong, healthy and predictable. They have even started lending money to IMF !. The government policies are based on a broad consensus. The government has found an equilibrium between pro-poor and pro-business policies. There is no ideological polarisation nor extremist political parties. Whoever wins the next presidential elections in October 2010 after Lula, the country is not going to change its pragmatic direction. Brazil is now the role model for Latin America where there is a resurgence of Left in recent years.

It is therefore, not surprising that Brazil is part of the BRIC which is increasing its weight in the global balance. But Brazil has some distinct advantages in comparison to the other three BRIC countries. It has one language and one faith and does not face any ethnic, religious, linguistic conflicts , terrorism or troublesome neighbours. Although Brazil has got more people of African origin (70 milion) than USA, there are no hyphenated Brazilians as the Afro Americans in the US. Brazil is a true melting pot, a perfect blend of café com leite… coffee with milk ( black and blonde), as the Brazilians describe skin colour. Brazil has borders with ten countries but it does not have any border disputes. On the other hand Brazil has been enthusiastically taking initiatives for integration of the region through Mercosur and Unasur (south american union, with all the 12 countries of the region) and makes use of this collective strength for its regional leadership.

Sure… Brazil faces other kind of problems such as poverty, crime, drugs and arms. But these can be controlled internally since there are no external trouble makers.

It is this new profile of Brazil which has aroused the interest of the global political and business leaders who have started courting Brazil seriously. The thirty percent increase in FDI in Brazil in 2009 is a reflection of the new confidence of global business in Brazil. The award of the World Cup 2014 and Olympics in 2016 are stamps of recognition of the New Brazil.

Realising the growing importance of Brazil, the Government of India has established a bilateral strategic partnership and a trilateral alliance in the form of IBSA. India has been working closely with Brazil in the Doha Round and in the issue of expansion of the permanent membership of the UN Security Council. India´s bilateral trade with Brazil reached 5 billion dollars in 2008 and is set to increase rapidly in the coming years. Indian companies have invested in Brazil in sectors such as IT, pharmaceuticals, energy, agribusiness and engineering. Even Bollywood has been attracted by the carnival land. The film Dhoom II was shot in Rio.

India has become a household experience in the last one year because of the prime time soap opera Camino das Indias ( route to India), telecast Monday to Saturday in the popular Brazilian TV channel Globo. This Indian story with Indian costumes and customs with Brazilian actors has generated tremendous interest in India. Camino in Portuguese means route or way. Brazil was discovered accidentally by Pedro Alvares Cabral who wanted to find the route to India. Now the Indians and Brazilians have found their own and common routes to a new promising future.

Bharat Petroleum and Videocon consortium strike offshore oil in Brazil - November 2009

2009-11-25T02:20:00.000-08:00

The consortium has discovered additional oil in an exploration acreage in the Campos basin, off the Brazilian coast. The discovery is more than 90 feet of high-quality oil in their Wahoo-2 well block, also identified as BM-C-30, The well is five miles to the north from the original Wahoo discovery well. In October 2008, the consortium had made its first discovery in the block during drilling of Wahoo well.

The original cost of acquisition of the ten offshore blocks was 280 million dollars.

ONGC Videsh Limited ( OVL) of India has invested almost a billion dollars in the acquisition of offshore blocks in Brazil

Renuka Sugars of India acquires Brazilian firm for US$ 240 million in November 2009

2009-11-12T03:32:00.000-08:00

Shree Renuka Sugars Ltd (SRSL), one of the largest Indian producers , has acquired Brazil’s Vale Do Ivaí SA Açúcar e Álcool (VDI) at an enterprise value of $240 million.

SRSL will pay $82 million now and the balance over eight years. It plans to finance the acquisition by leveraging the $105 million it raised through a qualified institutional placement (QIP) of shares in July.
The company operates eight sugar mills, five owned and three leased, with a cumulative daily crushing capacity of 35,000 tonnes.
The acquisition of VDI includes two sugar and ethanol production facilities in the southern Brazilian state of Parana, with a combined cane crushing capacity of 3.1 million tonnes a year. VDI holds strategic stakes in several logistics assets, including terminals for storage and loading of sugar and ethanol at the port of Paranagua.
The acquisition also includes 18,000 hectares of cultivable land under VDI, through which the company meets the larger part of its sugarcane requirements. The land is on long-term lease and used to cultivate cane with an average yield of 95 tonnes a hectare, with recovery of 13 per cent. In India, the yield (around 60-65 tonnes per hectare) and the recovery (a maximum of 11.5 per cent) are lower.

More Indian companies are planning to enter the Brazilian sugar sector

Argentine President´s Visit to India 14-15 october- outcome for Indian business

2009-10-25T16:32:00.000-07:00

Liberalisation of Argentine Visa
Under the visa Agreement signed on 14 october during the visit of President of Argentina to Delhi, the Argentine government has agreed to grant five year multientry business visas to Indian visitors....and that too free of cost. Stay during each visit is 90 days extendable by another ninety days. Fantastic... Let us thank the President and the Foreign Ministry of Argentina. The embassy of India in Buenos Aires will do the same thing for Argentine business visitors ...plus give free coffee under their Cafe con Visa system

Trade target of 3 billion dolars for 2012
The two governments have set 3 billion dollars as the target. The exports of India should double to one billion dollars from 492 million in 2008 and Argentine exports to reach 2 billion by 2012 from 836 million in 2008.

Invitation to invest in Argentina
The Argentine President in her adddress at the busines seminars and meetings in Delhi and Mumbai invited Indian cos to invest in Argentina. She spoke of the new paradigm of stability and growth of the economy, availability of natural resources and creative human resources of Argentina.

She had a meeting with Rattan Tata in Mumbai and in this meeting also the discussion focussed on investment in Argentina.

Joint Ventures
During the business seminar in Delhi, Ashok Leyland signed a JV with TBA of Argentina for making buses and trucks.

Sonali Tractors of India signed agreement with Apache of Argentina for collaboration in assembling agro machinery in India.

Pharma issue
This was taken up strongly by the Prime Minister of India himself with the Argentine President that India should be included in the list of 26 countries from which Argentina allows imports of pharmaceuticals. This is mentioned in the joint statement too.

Inflation in Latin America

2009-10-07T11:38:00.000-07:00

Inflation used to be a curse in Latin America. Many countires of the region have suffered Hyperinflation in four digits and three digits. The joke in those days was that one could never tell the exact figure of Latin American inflation and Indian population. By the time one finishes the sentence, both would have gone up !

The governments of the region have tamed it decisively in the last decade. The average inflation of the region has remained in single digit in this decade.

The projection of average inflation in 2009 is 6.1% and in 2010 it is 5.2%, by Latin Business Chronicle and IMF. In an act of extraordinary courage they have even projected the inflation for the period 2010-14 as 5. 2%. This is remarkable. This is the twenty first century Latin America, which I call as the New Latin America, in which things have become predictable. No one would have dared to do such a five year projection even as lates as 1989, when the Argentine inflation was over 3000 percent.
There are , of course, exceptions to the single digit inflationary trend in the region. Venezuela is on the top with the highest inflation in the region with 29.5%. It is expected to increase to 30% in 2010 and more to 32.4% in 2010-14.
Argentina has the second highest inflation with 20%. Costa Rica is third with 8.4%.
Brazil is little over 4 percent in the next five years.
Mexico´s inflation of 5.4% this year is projected to go towards 3 percent in the coming years.
Colombia´s inflation of 4.6% this year is expected to decline to slightly over 3% in the next five years.
Besides inflation, the Latin American governments have also brought under control external debt and exchange rates which have also become predictable.

Gaturro - Cartoon film - Argentine humour with Indian technology

2009-09-30T18:24:00.000-07:00

Gaturro is the product of Argentine humour and imagination combined with Indian ingenuity and technology. It is a 90 minute 3D animated cartoon film.

Gaturro is a popular comic character created by the famous Argentine cartoonist Christian Dzwonik (Nik ). He has used Gaturro to make jokes on Argentine politics, society and everyday life. Gaturro is an ingenious cat, with interesting and funny perspectives of the world and the Argentine political situation. Gaturro is presented as an antihero, observer of the world and eternally in unrequited love with Agatha, the female cat character. Some say that Gaturro is like a typical Argentine macho.... lot of show and lot more madness !! There are more than 30 Gaturro books. They have become popular not only in Latin America but even in France, Norway and Spain. Gaturro has its own website http://www.gaturro.com/

Here is the 39 year-old Nik

Here is a sample of Gaturro cartoon, in which the change of his mood from Tuesday to Monday is depicted. Monday at the end is the dead day !!

The Gaturro film is the story of his love with Agatha. Since Agatha is hard-to-get, Gaturro tries all kinds of brave and foolish tricks to catch her attention. In this pursuit, Gaturro makes a mess of himself, gets into all kinds of troubles, passes through hilarious situations and finally realises that it is better to be oneself rather than role playing.

Here is Gaturro, the showman..

Illusion Studios of Argentina are coproducing this six million dollar film in collaboration with Toonz Animation of India. They signed the coproduction agreement in May 2009. The production has already started and the movie will be released in 2010. Jose Luis Massa CEO of Illusion Studios, the two-year old firm of Buenos Aires , is excited like Gaturro with the Indian collaboration. It has ambitious plans to be a major player in Latin America
http://www.illusionstudios.com/

For Jayakumar, CEO of Toonz Animation, Trivandrum-based company, this is the first joint venture with Latin America. Toonz Animation is an established global player and has a staff of over 500.
More http://www.toonzanimationindia.com/

I am sure Gaturro is going to inspire more such joint ventures between the Argentine talents and Indian technology. The Argentine human resources are very creative, imaginative and inventive. This is the assessment of the seven Indian IT companies which employ 800 Argentine staff in Buenos Aires. The city of Buenos Aires inspires imagination with its the largest number of theatres, music concerts, literary and cultural activities in Latin America. The Colon Theatre of Buenos Aires is one of the best in the world.

I hope Nik will start a new series of Gaturro going to India in search of a Bollywood actress......

Mexican company invests in Indian cinema halls

2009-09-21T04:27:00.000-07:00

Mexican cinema chain Cinépolis will invest 160 million dollars in south India for setting up multiplexes across the four states. This will make India the country with their largest market outside Mexico. They will open around 500 screens, 50 per cent of which will be in the southern cities, in the next seven years and for every screen, they will be spending around $700,000.” Most of the funds would go in rentals and in developing screens. The amount would be funded through internal accruals. Cinépolis is in talks with 200 mall developers and had signed up for around 110 screens in eight cities, of which 62 per cent are in the south. It would commence operations by the second half of 2009. Its first screen is scheduled to be launched in November at Amristar. The company, the fifth largest theatre chain in the world, is aiming to move up to the fourth slot. It operates more than 2,000 screens in six countries.

Brazil ...out of the crisis induced by global meltdown

2009-08-03T18:25:00.000-07:00

According to a cover story in Exame magazine (one of Brazil´s main business publications) Brazil is getting out of the crisis. Various key indicators confirm that economic activity and job creation have already undertaken a recovery process.

While in the United States General Motors is facing all kinds of problems, and selling part of their European assets, in Brazil a R$ 2 billion investment plan is in place to expand production. The Brazilian auto industry expects to sell 3 million units in 2009, a historic record in a year in which everyone expected the worst.

A recessionary scenario was looming in the last 6 months, with reduction of the GDP, absence of credit, lack of confidence, production interruption and slowing of sales. This reality is now only seen in the rearview mirror. Brazil is, in fact, experiencing the next phase: recovery and growth.

Employment is also entering a considerable recovery process, after predictions pictured a dark. 300,000 new jobs were created on the first 6 months of 2009, in the economy as a whole. In the end of last year 800,000 jobs were lost in the country, but in 2009 a positive balance of 600,000 is expected.

It is interesting to note that a country that has always been hit hard by the world´s economic turmoils, this time is keeping its head out of the water based mostly on internal demand. In the survey conducted by the magazine, most businessmen have expressed optimism about growth.

Confident Indian company achieves success in Latin America

2009-07-29T06:03:00.000-07:00

Confident is both adjective and noun in this story.

It is the name of a small but confident company from Coimbatore which has inspired confidence among Latin American clients and got 500,000 dollars of orders for its textile machinery in Peru, Ecuador, Dominican Republic and Argentina.

Confidence is embedded in the name of the company itself.
It is Confident Engineering Pvt Ltd. http://www.confidentengineering.com/
Their email is confidentindia@gmail.com

More precisely it is the self confidence of Rathnakumar, the Managing Director of the company who has managed to inspire the confidence of the textile companies of South America.

Hardwork and perseverance have complemented the confidence of Rathnakumar in bringing about success in Latin America. He has spent the last one month in Argentina, Peru and Ecuador. He came with the CII delegation on 28 June and is leaving from Buenos Aires on 31 July. He spent ten days in each country. He is planning to come back to the region in the next three months and target Brazil and Colombia.

Rathnakumar has appointed dynamic and proactive agents in these three countries. These agents had taken him to visit over 30 textile plants. He convinced the technical staff and management of some of these companies that he could help them reduce their cost of production with his dyeing and finishing and effluent treatment machinery which costs just half the price of those which they import from Europe.He carried a small prototype of his Effluent water treatment plant and gave demonstration to the clients using their plant waste water. Confident Engineering has innovated a new technology to treat waste water of dyeing plants through an electrocoagulation method without the use of chemicals. They are applying for patent for this.

Rathnakumar wanted to participate in an exihibition in Buenos Aires in 2008 and paid 1500 dollars for the stall. But the Argentine embassy in Delhi did not give him visa. He lost the money and the opportunity. The Embassy wanted him to produce a original invitation from an Argentine client attested by an Argentine notary public. This is an unauthorised procedure being adopted by some corrupt elements in the Argentine embassy in Delhi, in violation of the Argentine government procedure. Was Rathna Kumar deterred. No! He waited and got the visa now without an invitation letter. He does not have any rancour. He is focussed on the future potential and does not bother about past setbacks.

In Peru, he got order for 70.000 dollars for a machine which he has never made so far. He showed the client a French machine in a Peruvian plant and told him he could make a similiar one. The client was convinced by the confident competence of Rathnakumar and gave him the order.

What difference did he find in business with South American clients? He says here they dont want to open LC . Most of them prefer to deal in cash. They pay an advance amount by TT and the rest they pay later. They retain a percentage of payment as guarantee for performance of his machine. Of course, Latin American importers open LCs for large orders.

Confident Engineering is a small scale enterprise with a turnover of just 1.5 million dollars and 40 employees. Their machines cost from 20,000 to 100,000 dollars. The company was started by Rathnakumar, an electronics engineer and his partner in 2003 with an investment of 20,000 dollars. Rathnakumar had worked with Larsen and Tubro for six years but left it to follow his enterpreunerial instinct. He got a breakthrough in Bangladesh for his dyeing and finishing machines. Now he has set up a fullfledged office in Dhaka to manage supply of machines and service them. Then he got some orders from Indonesia and Srilanka.

Now his focus is on Latin America. He expects to get orders worth five million dollars in the next few years. He has already established his reputation in Peru, Ecuador and Dominican Republic and now in Argentina. His next targets are Colombia and Brazil.

How did the Latin Americans treat Rathnakumar in his business and personal interactions in the last one month, I asked him. He found the Latin Americans pleasant and friendly. Of course, they needed to be convinced that they could risk their money with a small company in a remote corner of India. But they were willing to listen to him with open mind.

The Latin American textile industry had been importing from Europe and Japan. But now they want to try lesser expensive sources such as China and India. In these days of global financial crisis, local credit crunch, tough market conditions and globalised competition, the Latin Americans are focussing on cutting the cost of production. For this, they are turning to ess expensive import sources such as China and India. They mentioned to him about their preference for India over China beacuse of cultural reasons. They told him that they could understand and communicate and trust the Indians better. They looked at him as a person from the well-known land of Yoga, Meditation, Sai Baba, Hare krishna, Mahatma Gandhi....

What about language and food? I ask him.
This mild mannered Sambar- Idly South Indian smiles and says ¨No problem. I have already picked up some basic spanish in my two trips. I can understand the technical and price parts of the negotiations. Now I plan to take a crash course for a couple of weeks.¨I advised him to try the Instituto Hispania in Chennai.

Food. He eats whatever Latin America offers except beef. He does not miss Iddly Sambar in this one month absence from India. He liked the ceviche of Peru and empanada ( latino samosa ) of the region.

In my last blog story I wrote about the Latin American success of TCS, which is a big company. But in the case of Confident Engineering, it is the story of success of a small Indian company. I hope this will inspire and motivate the small and medium exporters of India.

What our exporters need for business with Latin America is ....Confidence ! Confidence in Latin America !

Indian exports to Latin America increased by 50 percent in 2008 to 7.5 billion dollars from 5 billion in 2007. What else is needed to inspire confidence?