Wednesday, May 25, 2011

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

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".

Saturday, May 07, 2011

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

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 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.