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".

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 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

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

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

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

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

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 ?

¨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

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

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

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

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.