Infosys sets up subsidiary in Mexico

Infosys today announced the creation of its first Latin American subsidiary, and the opening of the development center and office for the region based in Monterrey, Mexico.
The subsidiary, Infosys Technologies S. De RL De CV, provides the company’s full range of business consulting and information technology services for clients in all industries including banking, financial services, retail, consumer packaged goods, resource, energy and utilities.

The Monterrey facility provides Infosys with the dedicated resources to service clients in North America, Latin America and Europe with bi-lingual talent.

After examining several countries in the region, Infosys chose to establish a presence in Mexico because of the broad language skills available in the region, its geographical proximity to Canada, the U.S. and Europe. Latin America is a strong emerging market and one where many of Infosys’ clients have operations already.

For the first year, Infosys Technologies S. De RL De CV will have more than 250 seats. By its third year of operation, the Monterrey facility is expected to employ nearly 1,000 employees. Local and international hires will participate in the standard Infosys training programs to ensure global consistency.

Infosys has appointed Mohit Joshi to head the new subsidiary. Joshi, formerly a group engagement manager with the company’s banking and capital markets organization, has more than 12 years of client and leadership experience. Congrats Mohit !

TCS has already inagurated a Global delivery Centre at Gudalajara.

Pidilite India acquires Pulvitec of Brazil

Pulvitec do Brasil (http://www.pulvitec.com.br/) has been acquired by Pidilite do Brasil, a subsidiary of Pidilite Industries India. Pulvitec has consistently maintained its number 2 position in Brasil market for the product segments of consumer adhesives and maintenance products catering to construction, and industrial segments. The company is operational since 1972. Pulvitec has one of the largest distribution networks in Brasil, with its products available/sold at over appx 50,000 number of sales points. The turnover of the company in 2006 was about 29 million dollars. Pulvitec has its own manufacturing plant in the city of Sao Paulo in the neighborhood of Jaguare. The company has over 180 employees. With this acquisition Pidilite now has a significant market presence in Brasil, and is in 2nd position in most of its product segments. Pulvitec will provide a launch pad for Pidilite to capture significant market share in its segment of products in entire Latin American market.

Pidlite India has a turnover of over 350 million dollars and has presence in USA, Singapore and Middle east, Russia, Indonesia and south africa.
The acquisition was completed on 3 July 2007. Credit for this goes to Satya Muley, chief of Latin American operations in Brazil, who has worked on this acquisition for the last several months.
Congrats Satya !

agribusiness opportunities in Paraguay

On sunday 5 August, there is a presentation on the agribz opportunities in Paraguay
venue- Chandigarh at Hotel Shivalik View at 7.30 pm. Presentation will be made by Mr Papalardo, Ambassador of paraguay and Dr S.Yaadav, who is developing agribz projects in Paraguay. dr Yaadav (agri scientist turned enterpreneur, mobile 9911110397) has been to paraguay 4 times since 2005. He, along with other investors is planning to buy land, grow soya and biofuel plants and process them. Land cost, according to him is about 800 dollars per hectare.

The solvent extractors association of india, which sent a delegation to paraguay recently, is also pursuing a proposal to buy 15000 hectares of soya farm for about 40 million dollars.

Paraguay is among the top ten producers of soya and the price of land and labour cost are relatively low. no restriction on foreign investment in land and farm sector.

My article on Argentina in today's Business Line

Advantage Argentina

While Indian companies in recent years have established their presence in Brazil, Mexico and other Latin American countries, Argentina, the third largest market, has missed their attention. The main reason is the negative perception after the Argentine economic crisis and debt default of 2001. However, in the last four years, the Argentine economy has recovered, stabilised and turned around remarkably. Remarkable recovery
The cumulative growth since 2003 has been over 40 per cent. The growth projection for 2007 is 7.5 per cent and for 2008 over six per cent. This growth is comprehensive and inclusive; unemployment and poverty rates have fallen.
External debt has been brought down to a manageable $113 billion in June 2007 from $171 billion in 2004. In January 2006, Argentina paid its entire $9 billion IMF debt ahead of schedule and freed itself of external policy prescriptions.
Exports have been booming, touching a record $46 billion in 2006, and are set to cross $50 billion in 2007. Since 2002, the country has been recording trade surpluses of over $10 billion annually. Foreign exchange reserves have been growing steadily; they touched $43 billionin July 2007.
The devaluation of the currency from one peso to a dollar in 2001 to 3.07 pesos to a dollar in July 2007 has made exports competitive and attracted more tourists. Inflation was contained at 9 per cent in 2006 and is likely to decline in 2007.Recovery after crisis?
This is not yet another cycle of recovery after crisis, as has happened many times in the past. This time around there seems to be a paradigm shift in mindset. Politicians, business leaders and the public seem determined to create a new future. This is evident from the new economic trends.
Since 2003, and for the first time in four decades, Argentina has posted current account and fiscal surpluses every year. Investment rate reached 23.5 per cent of GDP in 2006, a record in the country’s economic history. Also, the domestic savings rate of 26.5 per cent of GDP in 2006 was unprecedented. These are clear signs of the new discipline and determination, which have been complemented by an increasingly stable political set-up that is providing a conducive environment.Historic turning point
The 2001 crisis was a historic turning point for Argentina not only economically but also politically and culturally. It shook the fundamental psyche of the Argentines. They learnt an unforgettable lesson. No country or financial institution was willing to help them during their most difficult period. They saw the contrasting cases of Mexico, Thailand and Korea which were promptly rescued by the financial powers and institutions. The Argentines had to suffer and resolve the crisis on their own. Driven to the wall, they managed to settle the bond repayment of $80 billion , offering an audacious 30 cents to a dollar. No one expected this to succeed and many thought it was a bluff. But Argentina managed to pull it off. This has given the Argentines a new sense of achievement, pride and responsibility. And has established a solid foundation for a new future based on realism, pragmatism, discipline and self-reliance.
Indian businesses need to understand this paradigm shift and focus on the future. They should look at the opportunities offered by this large market, of 40 million people, a GDP of $290 billion and a land area of 2.7 million sq km, almost equivalent to that of India. It is an agricultural powerhouse and a large exporter of wheat, corn, soya, edible oils and meat.
Argentina is self-sufficient in energy. It has 31 billion barrels of oil reserves and produces 800,000 bpd (barrels per day), of which, 300,000 bpd is exported. It is the second largest gas producer in Latin America and exports to Chile. It is rich in mineral resources such as iron, bauxite, zinc, lead, copper, potassium, silver and gold. The manufacturing industry is relatively large and diversified and is strong in automobiles, auto parts, consumer goods, pharmaceuticals, paper, cosmetics and food processing. Besides its own market, Argentina has duty-free access to the larger market of Mercosur as a member of this customs union. India has concluded a PTA (Preferential Trade Agreement) with Mercosur for 450 items of exports and an equal number for imports.
In 2006, India’s trade with Argentina was $1,239 million, of which, $290 million constituted exports and $949 million imports. Argentina was the largest source of imports of India in Latin America in 2000, 2001 and 2003 and is now the second largest. India’s main exports are chemicals, vehicles, engineering products, textiles and traditional items. Edible oil accounts for 75 per cent of imports, and the others include paper pulp, leather, wool and minerals. Business deals
Indian companies have started exploring investment and joint venture opportunities. United Phosporous has acquired an agrochemical plant. Glenmark took over Argentine pharma company Servycal SA in November 2005. Tata Motors is in a joint venture with Fiat in Argentina for production of small cars. ICICI has a BPO in Buenos Aires and other Indian IT companies are looking at the possibility of BPO and ITES operations making use of the high literacy rate and low cost of operations.
Indian companies are pursuing mining and railway projects and are also looking at agribusiness. They can buy soya farms and produce soya oil to supply to India, which imports edible oils worth $12 billion annually. This is a good time to buy assets, factories and farms, as the prices now are half of what they were before the devaluation in 2002.

Link
http://www.thehindubusinessline.com/2007/08/02/stories/2007080250220800.htm

Colon Free Zone- market study

Colon Free Zone- market study, commissioned by the Embassy of India, Panama, has been circulated to export promotion councils and chambers.
Highlights:
the largest Free Trade Zone in the western hemisphere and the second largest in the world. It has an area of 400 hectares and has 2000 companies. US Dollar circulates freely.
The zone offers free movement of goods and complete exemption from taxation on imports and exports. no corporate income tax, dividend tax,customs duty or federal or municipal taxes.

Trade in 2006 in the zone

total trade 14.5 billion dollars. imports 6.8 billion and reexports 7.6 billion dollars.

source of imports: 63% of total imports come from far east. China 1.9 billion$, Hongkong-1.2 bn$, Taiwan-0.7 bn $, Japan-250 million$ and South Korea-166 million$.

destination of reexports: south america-3.75 bn$ and central america-3.2 bn$
venezuela- 1.58 billion$, Colombia-1.24 bn$, Ecuador-341 million$, Brazil- 145 m$, Peru- 136 m$,Chile-140m$, Guatemala-411m$, Honduras-235 m$, El Salvador-209m$, Costa Rica-359 m$, Dominican Republic-404 m$, Cuba-215m$, Nicaragua-122 m$, Haiti-129 m$, Jamaica-110 m$, Trinidad and Tobago-91 m$, Mexico-170 m$ and USA-275 m$
Imports from India -57 million$

main items of trade: textiles, electronics,shoes,pharma and cosmetics

Indian companies are invited to take advantage of this Zone for their exports to central and south american regions.

Jindal group gets 2.1 billion Dollar contract in Bolivia

The Indian company Jindal Steel and Power Ltd. signed an agreement on 18th July 2007 with the Government of Bolivia for an integrated project involving mining of iron ore and a steel plant. The iron ore will be mined from “El Mutun” which has one of the biggest reserves (40 billion tons) in the world. Jindal group will exploit 50% of the oron ore and will export about 10 million tons per year. They will put up a steel plant in Bolivia to produce 1.5 million tons of steel products. They will also put up a 450 MW gas power plant as part of the project. The investment of 2.1 billion dollars will be spread over a period of 8 years and the contract is for a period of 40 years.

The Government of Bolivia will earn 200 million Dollars annually from this project, which will generate 12000 jobs. President Evo Morales himself announced the signing of this largest investment project in Bolivia.

This is the biggest ever contract secured by an Indian company in Latin America. The fact that an Indian company has got such a big contract in a small, poor and less well known country, such as Bolivia, should now send a strong signal to the Indian corporate sector who have started looking at opportunities in Latin America in recent years. The Jindal project would also have other spin-off opportunities in railways, infrastructure, etc., for other Indian companies in Bolivia.

Congrats Jindals !

Indian BPO venture in Argentina

First Source, the BPO wing of ICICI bank has established a BPO in Buenos Aires since october 2006. This is their first-ever venture in Latin America. They employ 360 Argentines and do work in telecom sector mainly. They have plans to expand and diversify operations including in financial services and increase staff strength to 500. There is only one Indian , Mr Tarak Ghosh, who is the chief of the BPO operations.

Argentina has one of the highest literacy rates ( 97%) and low cost of operations. The Argentinian industry and business are diversified and have depth. The economy has turned around and has been growing around 9 % in the last four years. These strengths make it an ideal country for entry of more Indian IT companies, who are now entering Latin America seriously.

Chile has joined Andean Community as Associate member

Chile became an Associate member of Andean Community (CAN) on 8 June 2007.

Hmmm.. how did i miss this and discovered only now?

The Associate membership is important for both CAN and Chile. The exit of Venezuela from CAN in 2006 has now been compensated. CAN was in a depressed mood when Venezuela, the richest member left the club to join Mercosur. The Chilean economic stability, growth and success will now inject new life into CAN and make it more vibrant besides inspiring the other members namely peru, bolivia, colombia and ecuador. Chile will be able to use this Association to improve its relations with Bolivia and Peru with whom it has historical border problems. The Chilean president Madam Bachelet attended the CAN summit on 11-14 june in Tarija, Bolivia.
It may be recalled that Chile had left CAN in 1976 when it came under military dictatorship.

Chile is now Associate member both in Mercosur and CAN. It is the only Latin American country which has signed a FTA with China. Chile has signed FTAs with about 40 countries and is pursuing more. No wonder Ambassador Jorge Heine said the other day in his speech in Calcutta that India is conservative in its approach to FTAs.

This Associate membership of Chile in CAN is good news for Indian business for their Pan- Andean strategy.

IBSA Ministerial meeting 17 July 2007

Foreign Ministers of India- Brazil-South Africa(IBSA) met today in delhi. This trilateral partnership , formed in 2003 is becoming stronger and stronger. The three cooperate in a number of areas and take common positions on WTO, intellectural property and other issues of common interest.

In the first IBSA meeting in delhi in 2004, they had set a trilateral trade target of 10 billion dollars in 2007, which is being exceeded. They are facilitating trade between the three through harmonisation of standards, customs cooperation and participation in trade fairs. They are trying to improve air connectivity and shipping.

IBSA has decided to initiate talks for a FTA between India, Mercosur and SACU. When this comes about, it will become one of the largest economic spaces in the world with a GDP of 3 trillion dollars and 1.3 billion people.

The next IBSA summit will be held in South Africa in october 2007. During the last IBSA summit in sept 2006 in Brazil, there was a summit of IBSA businessmen.

I call the IBSA alliance as a " cafe con leche" ( coffee with milk) partnership.

Brazilian bank fraud

Recently some Indian exporters have been cheated by a non-existent Brazilian bank called as

BRISTOL & WEST,
RUE ESCOBAR NUMBERO 53,CHUI,
BRAZILTEL Nos. 651207, 651698 & 651236TELEX No : 40349BRSTLWE BREmail : bristolwest@bristolwest.com bristolwestmix@mixmail.com

MR. SAUCEDO(CHIEF FOREIGN DIVISION DEPT.)BRISTOL WESTBRAZILEvery mail Bank indicated : WHOLESALE PRIVATE BANKINGBuyer's Business Account No. : 0 1 6 9 0 4 3 9 9 (Martin Internacional)

Indian exporters should cross check with the embassies in such cases of unknown and small banks.

Latin American pharma market is worth 41 billion$ and growing

It is expected to grow to a market value of USD63 billion at retail prices by 2012.
Highlights of the leading markets:
ARGENTINA
The pharmaceutical market is valued at USD4.7 billion at retail prices in 2007. Pharmaceutical production, distribution and sales are dominated by the leading 20 pharmaceutical manufacturers. Loca accounts for 51% of the market. Foreign producers of branded pharmaceuticals are still recovering from the peso’s devaluation and some have sold their manufacturing plants. In 2005, generic prescribing represented 79% of the total in the federal capital and Gran Buenos Aires, and 71% in the rest of the country.
BRAZIL
The pharmaceutical market is rapidly recovering, with 18% growth in net dollar values in 2006. Including taxes, the market is estimated at USD13.6 billion in 2007, equivalent to USD72 per capita. Generics are expected to represent 20% of the pharmacy sector by 2009.

CHILE
The pharmaceutical market is valued at USD1.5 billion at retail prices in 2007. The pharmacy sector was estimated to be USD735 million at manufacturers’ prices by August 2005. By value, domestic manufacturers have 60% of the pharmacy sector and 90% of the hospital sector. Tough competition arises from the three pharmacy chains controlling 90% of the pharmacy sector. Most of the international producers are importers in Chile. The Ministry of Health and the Institute of Public Health are performing bioequivalence tests in selected active ingredients.
COLOMBIA
The pharmaceutical market is estimated at USD1.8 billion in 2007. At manufacturers’ prices, the pharmacy sector was valued at USD891 million and the institutional sector at USD410 million in 2004. The healthcare reform programme has been instrumental in boosting consumption of pharmaceuticals, but growth has been largely in volume terms. The majority of the market is supplied by the relatively well-developed domestic industry. If ratified, the Free Trade Agreement (FTA) between the USA and Colombia will result in further intellectual property enforcements which might affect the indigenous industry.
MEXICO
The pharmaceutical market is the leading Latin American market, valued at USD14.1 billion at retail prices in 2007. In 2005, the Senate approved the reform of Article 376 of the General Health Law, which means that product registrations are valid for a five-year period. Only a few products are registered as interchangeable generics, but there is a wave of generic producers looking for business opportunities in Mexico. As the market is becoming less competitive, distributors are demanding higher wholesale margins. The retail pharmacy sector, traditionally highly fragmented, is being consolidated by large pharmacy chains.
PERU
The pharmaceutical market is valued at USD1.0 billion at retail prices in 2007. At manufacturers' prices, the pharmacy sector accounts for 72% of the market in 2007, equal to USD562 million, and the hospital sector for 28%, equal to USD219 million. Preferential customs duties and product registration continue towards Latin American countries. The market is still dominated by imports of original drugs, almost exclusively consumed by the pharmacy sector, and locally produced branded generics and generics under International Common Denomination (ICD), consumed by the pharmacy and hospital sectors. The FTA with the USA will result in further intellectual property standards for the pharmaceutical industry.
VENEZUELA
Venezuela is the fourth largest market in the region, valued at USD4.0 billion at retail prices in 2007. In spite of price controls, the pharmacy sector grew by 18.8% in 2005, reaching USD2.1 billion at manufacturers’ prices. Future market expansion will depend heavily on imports, which are controlled. As a percentage of the pharmacy market, domestic production has decreased in recent years, from representing 95% in 1995 to 55% in 2004. In the hospital sector, domestic production accounts for 60% of the total. GMP standards, under WHO Technical Report Series No. 823, were expected to be enforced in February 2005, but the domestic industry has asked for a transition period of three to five years.

For the full research report
(http://www.researchandmarkets.com/reports/c62096)

Latin America turns into magnet for outsourcing-More outsourcing jobs going to Latin America

This is an article by Tom McGhee in The Denver Post. This would be of interest to Indian IT companies who are exploring Latin American markets.
Cheap labor and a Spanish-speaking population are making Argentina and other Latin American countries rising stars among companies looking to save money by sending jobs overseas. South America is an ideal base for services targeting the Latino population in the U.S., said Probir Ghosh, president of Denver-based Virtual Source Networking, a consulting company that helps companies outsource. ''Many countries like Colombia, Venezuela . . . still depend mainly on language-related work. A good amount of business that goes to South America would have a direct or indirect connection to language,'' Ghosh said. Colorado-based outsourcing provider TeleTech Holdings, which has worked for Latin American companies in Argentina, Brazil and elsewhere for at least a decade, has seen demand from U.S. companies for services in those countries rise, said KC Higgins, a Teletech spokeswoman. American companies, which rushed to India - a 600-pound gorilla among offshoring destinations - over the past 10 years, are looking elsewhere as wages have risen in that country, said Peter Ryan, senior analyst at market research company Datamonitor. India and China still lead the pack as locations for offshore jobs, but other countries are emerging as alternatives. Health care and financial services are among a host of industries that are sending jobs to such far-flung locations as Brazil,
Colombia, Ireland, Israel, Hungary, South Africa and Egypt.

Argentina has been aggressive in seeking trade agreements that have enhanced its ability to win work from American companies, said Marcus Courtney, president of WashTech CWA, the Communications Workers of America's organizing arm for tech workers. Industry ''wants to develop a global supply chain of labor; they are equating offshoring to an assembly line. More and more workers are competing for fewer and fewer jobs, and this drives down wages,'' Courtney said.

The collapse of the peso in 2002 sent Argentine wages plummeting below the level paid in India and helped to attract U.S. business to the South American country. TeleTech's Latin American revenue rose from $91.7 million in 2004 to $171.7 million in 2006. Much of the new work is in Argentina, Higgins said. ''In 1997, 100 percent of the work we did in Argentina was for Argentine companies, and that is no longer the case. We started with one site; now we have three, and we continue to expand,'' Higgins said. TeleTech also is expanding into other emerging nations. The company recently opened its first Costa Rican ''delivery center,'' where workers provide both front- and back-office functions, and expects to begin operating another in South Africa soon.