A

GLOBAL / COUNTRY STUDY AND REPORT

ON

BRAZIL

Submitted to

Gujarat Technological University

IN PARTIAL FULFILLMENT OF THE

REQUIREMENT OF THE AWARD FOR THE DEGREE OF

MASTERS OF BUSINESS ADMINISTRATION

UNDER THE GUIANCE OF

Faculty Guide

Prof. Kruti Desai

Submitted by

MBA SEMESTER III/IV

Batch: 2011 - 13

Parul Institute of Management

MBA PROGRAMME

Affiliated to Gujarat Technological University

August, 2012-2013

TABLE OF CONTENT

Sr. No. Particulars Page No.

1. Agriculture Industry 1

2. Telecommunication Industry 14

3. Airlines Industry 26

4. Automobile Industry 38

5. Coffee Industry 49

6. Media & Entertainment Industry 59

7. Mining Industry 70

8. Textile Industry 83

9. Oil and Gas Industry 96

10. Cement Industry 106

Annexure 123

1  

1. AGRICULTURE INDUSTRY OF BRAZIL

Brazil’s potential to become a major agricultural player in the international trade market is

seen by their untapped fertile land and advanced farming techniques. Brazil’s historic

economic decisions have shown it to be aggressive in pushing economic reform to boost

output. Through its biotechnology research and untapped resources, Brazil is looking to

continue its agricultural output with particular emphasis on the soybean, as it is currently

only second to the United States as the leading producers and exporters of soybean. This

paper explores the history agriculture in Brazil, its use of genetically modified crops and

the untapped potential that exists within Brazil to continue growth as a large soybean

producer.

Brazil’s historical agricultural policies have placed an emphasis on agribusinesses. These

farming operations are large-scale business operations embracing the production,

processing, and distribution of agricultural products and the manufacture of farm

machinery, equipment, and supplies. This enabled the agriculture output to increase

dramatically with the advent of new technologies to allow for increased efficiencies.

Brazil’s position in international agricultural trade and its position in biotechnology places

it an interesting crossroads with regards to genetically modified crops. As one of the last

GM-free producers of soybean, it provides an alternative to other producers using GM

seeds. But on the other hand its strong biotechnology research into genetically modified

crops gives it an edge for GM crop usage. Furthermore the pull toward the use of

genetically modified soybean seeds by farmers and the lobbying by private firms investing

in research.

The future of Brazil’s agricultural role is dependent on utilizing their untapped resources.

Transportation infrastructure is particularly important to Brazil because of the large amount

of under-utilized land in central savannah. These lands are poised to be converted into

fertile plots through the use of different farming techniques and irrigation. Further accent

on increased efficiency and mechanization could continue to bolster the agricultural output.

2  

History of Agriculture of Brazil

Brazil began as an agricultural player post World War II. And in two time periods, Brazil

has managed to grow from simply a player to that of an agricultural force to be reckoned

with. There was first the horizontal expansion from 1949 to 1969 and then the conservative

modernization from 1970 to today. Right after World War II, Brazil’s president was

overthrown and democratic rule was established. But “the overvalued foreign-exchange

rate, established in 1945, remained fixed until 1953. This, combined with persistent

inflation and a repressed demand, meant sharp increases in imports and a sluggish

performance of exports.” (Country Studies – “Brazil”) The new government became

worried about the future of their exports and this would potentially have a negative impact

on inflation. So as a result, the new government adopted an import-substitution

industrialization strategy to increase economic growth. Heavy export taxes were levied on

export commodities, and as a result, Brazil’s economy began growing at a tremendous

pace.

This required that the agricultural sector generate most of the economy’s foreign exchange

and as a result, agricultural GDP increased 4.2 percent each year between 1949 and 1969.

This was seen as a direct consequence of “horizontal expansion,” which was the

incorporation of new land, especially along the agricultural frontier, with the advent of

aggressive road construction. Moreover, the disincentives of the import-substitution

industrialization policies were avoided by providing access to land at concessionary terms

for the landowning elite and for commercial farmers.

In the late 1960s, it was seen that the horizontal agricultural growth was reaching its limits.

The government implemented a “conservative modernization strategy” which provided

incentives for the formation of agribusiness complexes. At this point the government began

investing in the adaptation and development of green-revolution technologies. This had an

important side-effect for mechanization and chemical inputs. The government provided

strong incentives for the creation and expansion of processing industries and for the

development and modernization of agricultural input industries. These agribusiness

complexes received subsidized credit, guaranteed prices, and tax exemptions and subsidies

when exported. Traditional, unprocessed, agricultural products, however, were subjected to

3  

heavy taxation and to price and other controls. Brazil’s government thus pushed the growth

of agribusinesses. Their production methods underwent considerable technical change, and

their production and yields increased markedly. Crop production between 1970 and 1990

showed that the components of the modern segment grew considerably, both in production

and in yield, while those of the traditional segment stagnated or declined. The growth in

export crops allowed Brazil to become one of the world's largest soybean producers and to

earn needed foreign exchange. (Country Studies – “Brazil”)

The promotion of soybeans by the Brazilian government was for much more than simply

saving and increasing foreign exchange. The government wanted to not only increase

soybean exports, but to also decrease soybean oil imports. The government subsidized and

provided production credit to farmers growing soybeans. They recognized soybeans as

important to capture a new market in exports, to enhance public health and spur the

economy. The government even used soybeans to indirectly increase animal protein

consumption. This was done by increasing animal production which expanded soy meal

demand. And according to the Economic Research Service and the USDA, soybean

production was even a matter of national security when the government began noticing the

increasing strength of neighboring nations, the GOB felt compelled to better integrate

western States into the national economy by opening this area to agricultural production.

(ERS/USDA – “Agriculture in Brazil and Argentina”)

4  

The Role of agriculture in Brazilian economy

After two decades of stagnation, the Brazilian economy recovered and experienced

relatively high rates of economic growth over the period 2000‐2010. According to Fraga

(2004) the Latin America countries, including Brazil, adopted economic reforms based on

fiscal and monetary tightness, economic openness, privatization and deregulation that were

mostly implemented by 1995. However, the relatively high rates of growth in real GDP

exceeding 3.0% per annum in the early 1990s declined near the end of this decade and

returned to rates of growth averaging about 3.7% per annum over the period 2000‐

10. Despite the recovery of higher rates of growth, growth performance lies below that of

the average rate of the BRICs. This relatively poor performance may be linked to

fundamental features and institutional impediments of the economy. One fundamental

feature is that Brazil, being a natural resource‐rich country, is experiencing a phenomenon

known as the “natural resource curse.” As shown by Gaitan & Roe (2011), countries with

abundant natural resources can grow less rapidly than those countries without when the

abundant resource sector faces an inelastic demand for a primary resource (in this case,

primary agricultural goods).

They show that growth in trade revenues can induce the resource‐abundant country to

invest relatively less than the country lacking in exhaustible resources” (Gaitan & Roe,

2011, p.1). Studying constraints to growth, Pinto (2011) fits to Brazilian data a Ramsey

growth model with four sectors. The results suggest that the country´s potential to double

real income per capita from transition growth will require about 79 years (compared to 8 to

15 years for other leading emerging market economies). The key constraints limiting the

country’s growth, following Rodrik (2006)and Hausman et al (2005)are the low rate of

domestic savings (17% of GDP), transportation infrastructure, and the low stock of human

capital. The relatively low savings could result from capital market rigidities, as suggested

by Rodrik, or from disincentives linked to the natural resource course.

 

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6  

The macroeconomic data suggests that at least part of the Brazilian economic growth is

sustained by the international market (commodities prices) through the agricultural sector.

Alvares‐Cuadrado & Poschke (2011) suggest that the “labor push” out of agriculture is due

to

improvements in agricultural technology that combined with the Engel´s law release

resources

from agriculture to the rest of the economy as development occurs and per capita incomes

grow. Gasques et al. (2011) estimated the Brazilian agricultural GDP growth, over the

1975‐2010 period. They conclude that growth in agricultural output has been driven by

growth in TFP that was particularly pronounced in the last decade (4.75% aa).

7  

In the Brazilian case, despite an overvalued national currency and high real interest rates,

the economy has grown faster than it did in the late 1990s because, in part, the

improvements in agricultural technology (supply shocks) and the higher international

commodities prices (demand shocks) has compensated for the constraints identified by

Hausmann et al (2005),and the potential negative effects of the exchange rate overvaluation

and high interest rates.

However, this literature lacks a structural model of economic growth to help verify these

hypotheses. So, this paper proposes a dynamic multisector model to analyze the Brazilian

economic growth, and the role of agricultural sector on its evolution.

The second section of this paper presents a neoclassical multisector growth model with

three sectors and intermediate factors. Its intra and inter‐temporal equilibrium is

characterized. The third section presents the results and conclusion. The appendix presents

the fitting the model data including its validation with time series data.

The Agricultural Sector

Brazilian agriculture is well diversified, and the country is largely self-sufficient in food.

The sector contributes 14% of the GDP, and all the agricultural chain 27%, employing

almost 17,900,000 people. Of these, 67% are male and 14% are under 14 years of age.

Brazil produced 119.294 million tons of grains in 2004, harvested from 47.329 million ha,

particularly soybean, maize, rice, bean and wheat (Table 1).

8  

Table 1. Production of the main grain crops in Brazil (IBGE 2004, in

tons)

Cotton Rice Bean Maize soybean Wheat

3,612,176 13,262,373 2,978,240 41,872,304 49,221619 5,814,603

Other important crops are sugar cane (330 million tons), citrus fruits (32 million tons) and

coffee (30 million bags). Cocoa, tobacco, and banana are also important. Forestry accounts

for 4 percent of the GDP.

In 2005, a decrease in cultivated area of about 4.68% lead to a production of 112.715

million ton, 5.51% lower than 2004.

The largest agricultural exports (in value) in 1998 were coffee, soybeans, soybean cake,

orange juice and sugar. Soybean is the major agricultural commodity when all of its

products (raw soybean, meal, oil, etc) are added. The total value of agricultural exports in

1998 was US$15.3 billion, while the total value of agricultural imports in 1998 was US$

6,306.4 million. Wheat and dairy products are the main agricultural imports. Brazilian

agribusiness and policies are strongly oriented towards international markets due to the

need to achieve a positive commercial balance and because agriculture is one of the main

sources of income.

AGRICULTURAL CONTRIBUTION TO INDIAN ECONOMY

During 1990-91, the contribution of agriculture to the country's GDP output was at 32%,

which was decreased to 20% by 2005-06. While the industry and services sectors

contributed to 80% of the GDP which would increase further, with all of India's big

corporate houses focusing on infrastructure and IT segments. The GDP contribution for

sector depends on how much investments it can attract from the people, and the

overdependence on industrial sectors would mean that India is slowly shifting from an

agrarian based economy to that dependant on imports and exports.

9  

Indian Agricultural industry also assumes significance owing to India's sizable agrarian

economy, which contributes over 35% of GDP and employs around 65 % of the population.

The consumer food segment goods have top priority both in terms of foreign investment

and number of joint- ventures / foreign collaborations. Indian agricultural industry that have

the capacity to lure foreigners with promising benefits are the deep sea fishing, aqua

culture, milk and milk products, meat and poultry segments.

PRESENT TREND IN THE AGRICULTURAL SECTOR

Organic farming is the latest trend in agricultural bisiness.both the countries focused on

organic farming to cope with problems pertaining with traditional farming. Such as soil

pollution due to excessive usage of fertilizers ,wastage of water, technological changes,

lack of skilled workers etc.

Organic agriculture has grown out of the conscious efforts by inspired people to create the

best possible relationship between the earth and men. Since its beginning the sphere

surrounding organic agriculture has become considerably more complex. A major

challenge today is certainly its entry into the policy making arena, its entry into anonymous

global market and the transformation of organic products into commodities.

During the last two decades, there has also been a significant sensitization of the global

community towards environmental preservation and assuring of food quality. Ardent

promoters of organic farming consider that it can meet both these demands and become the

mean for complete development of rural areas. After almost a century of development

organic agriculture is now being embraced by the mainstream and shows great promise

commercially, socially and environmentally. While there is continuum of thought from

earlier days to the present, the modern organic movement is radically different from its

original form. It now has environmental sustainability at its core in addition to the founders

concerns for healthy soil, healthy food and healthy people.

Asia - The total organic agricultural area in Asia is nearly 3.3 million hectares.This

constitutes nine percent of the world’s organic agricultural land. 400’000 producers were

reported. The leading countries by area are China (1.9 million hectares) and India (1 million

hectares). Timor Leste has the most organic agricultural area as a proportion of total

10  

agricultural land (seven percent). Organic wild collection areas play a major role in India

and China, while Aquaculture is important in China, Bangladesh and Thailand.

TRADE POLICES OF AGRICULTURE SECTOR OF BRAZIL

In the late 1980s, Brazil started to adopt liberal and arketoriented policies, which

significantly impacted the performance of its food and agricultural (henceforth agrifood)

sector. The agrifood sector is now among the most dynamic in the Brazilian economy.

Grain production doubled from 58 to 120 million metric tons (MT) and meat production

surged from 7.5 to 20.7 million MT etween1990 and 2005. The agrifood economy

generated R$534 billion S$183 billion) in 2004, which is equivalent to30% of the country’s

GDP. In addition, it represented35% of total employment and 40% of total exports in 2004.

Concurrent with these significant institutional and policy changes, the Brazilian agrifood

system transitioned from a traditional to an increasingly global and industrial model.

Fostered by rising incomes, urbanization, economic liberalization, and access to

competitive raw materials, multinational food processors and retailers entered or increased

their investments in the Brazilian

Market during the 1990s. Increased foreign direct investment (FDI) by large, private

agribusinesses in Brazil displaced domestic competitors, increased industry concentration,

and eliminated many medium and small companies. As a result, the market share of

multinational corporations in the domestic food market increased. For instance, Brazilian

affiliates of multinational agrifood companies generated 137,000 jobs, almost US$5 billion

in exports, and

TRADE POLICY OF INDIAN AGRICULTURAL SECTOR

Indian agriculture has, since Independence, made rapid strides. In taking the annual

foodgrains production from 51 million tonnes in early fifties to 206 million tonnes at the

turn of the century, it has contributed significantly in achieving self-sufficiency in food and

in avoiding food shortages.

The National Policy on Agriculture seeks to actualise the vast untapped growth potential of

Indian agriculture, strengthen rural infrastructure to support faster agricultural

11  

development, promote value addition, accelerate the growth of agro business, create

employment in rural areas, secure a fair standard of living for the farmers and agricultural

workers and their families, discourage migration to urban areas and face the challenges

arising out of economic liberalization and globalisation.

BUSINESS OPPORTUNITIES IN FUTURE

Many countries from South America, Asia and East Europe are able to provide agri-food

products in response to the increasing demand in regions such as East and North Asia, the

Middle East, and African countries. However, few countries are global traders like Brazil,

providing a large range of commodities and processed products to a large range of

countries. The growth of consumption of agri-food is far from stabilizing. The availability

of land, water scarcity, low productivity and protectionist policies signal that developed

and developing countries will necessarily resort to the world market to guarantee food

security for their urban populations by procuring agri-food products at reasonable prices

for the domestic consumer. Brazil is a central variable in that equation.

Two great challenges remain for Brazilian agriculture: trade negotiations and transport

infrastructure. As Brazil is a global player, with its trade flux roughly evenly distributed

among various importers, trade negotiations are a major issue for Brazil, particularly in

view of the fact that trade barriers and distortions in agriculture are much greater than in

manufactured products. Brazil is now engaged in an unprecedented effort of negotiating on

three major fronts: WTO, MERCOSUR-European Union, and the Free Trade Area of the

Americas.

The Brazilian agricultural sector is also paying the price of being market-oriented. The

sector is being affected by an overvalued exchange rate; lack of investments in

infrastructure; reduction of expenditure in research and development; and low priority of

sanitary policies, not only to meet importers’ standards, but also to protect domestic

production against unsafe imported products.

With the development of bio-energy, agriculture is becoming a more complex economic

and social activity. Old mechanisms such as trade-distorting subsidies, intervention prices,

and production quotas, although still in use, tend to lose sense as feed and energy markets

12  

converge. Agricultural production will be completely transformed in the future and Brazil

is a major candidate to play a central role on this process. It is, therefore, no coincidence

that Brazil has been playing a very active role in the Doha Development Agenda

negotiations.

As coordinator of the G-20, which consists of developing countries from three continents

as the country with the largest trade surplus in agriculture; and having had to reform its

own agricultural policies, Brazil is particularly well-placed to continue to influence the

pace of the reform of agriculture.

SUGGETIONS

From economic perspective, an export-oriented production system is considered more

important than those that supply domestic demands. The Indian organic produce market is

mainly export oriented.Focusing on export alone involves hidden costs including transport

and risks to local food security. Policies considering domestic demands particularly food

security as equally important are needed for a rationale balance of trade.

Agriculture is the main source of employment for rural people.Specialized and mechanized

practices reduce rural employment. Sustainable agriculture, as witnessed through organic

farming system, being labor-intensive helps overcome such problems.

The growth of Brazilian agriculture has been built with a strong market orientation, rather

than by government intervention. Brazil undertook major reforms of its agricultural policies

during the 1990s, and the productive sector reacted swiftly to become more efficient and

competitive.

The growth of consumption of agrifood is far from stabilizing. The availability of land,

water scarcity, low productivity and protectionist policies signal that developed and

developing countries will necessarily resort to the world market to guarantee food security

for their urban populations by procuring agrifood products at reasonable prices for the

domestic consumer. Brazil is a central variable in that equation.

13  

The technological development plays significant role in development of agricultural trade

between two countries. India can import new technology from brazil like irrigation,

warehousing, harvesting, fertilizers etc. to improve production of agriculture.

Some trade barriers should be eliminated for better trade relation between two countries.

Like import duty on coffee, and norms of trade should be kept easy to encourage small

marketer. to enter at international agricultural market.

14  

2.TELECOMMUNICATION INDUSTRY

Thirteen years after the Brazilian telecoms industry was privatized, its revenues for 2010

were US$114bn, which represented 5% of the gross domestic product. The political and

economic stability in Brazil over the last few years has been critical in the growth of the

telecom market. The increased purchasing power of the poorer classes of the population has

significantly changed Brazilian consumption standards—both qualitatively and

quantitatively—and has positively affected the industry. The National Broadband Plan,

regulation of mobile virtual network operators and new laws for cable TV provision are

some of the recent changes that will bring even more opportunity to this exciting market.

The Brazilian telecommunications industry, as it is today, results from a process of

deregulation and the opening of trade that began in the second half of the 1990s. At that

time, a series of laws were approved that redefined the principles of competition and

universalization for the telecoms industry, as well as allowed foreign companies to invest in

Brazil.

Reorganizing Telebrás into three companies to provide local landline service accompanied the

division of Brazil into three large regions. Each one of these regions was to be served by one of the

new incumbent companies. When the companies were sold to private investors in 2001, the

regulatory body began the process of approving new authorizations so that competitors also could

provide local landline services.

When the sector was privatized, one present operator, Embratel, was certified to provide

national and international long distance service. Different from the local landline service,

this segment reached such a high level of competition that the regulatory body began

discussing, in early 2011, deregulating the pricing system for international calls as of 2016.

Initially, eight privatized companies operating in eight regions of the country formed the

mobile segment. Four major companies now dominate the segment, and they offer service

nationally to 97.2% of the Brazilian municipalities.

The growth of broadband in Brazil has accelerated, due mainly to mobile broadband. The

1.7m subscribers to mobile broadband in 2008 grew to 20.6m at the end of 2010, reflecting

the increasing demand for content through mobile devices.

15  

Brazilian cable TV reached 9.8m subscribers in 2010, representing a density of 5

subscribers per 100 inhabitants. That number is low compared to the potential market of

57.5m homes occupied, according to data from the 2010 census published by the Brazilian

Institute of Geography and Statistics.1

Introduction to Telefonica

Telefónica is one of the world leaders’ integrated operators in the telecommunication

sector, providing communication, information and entertainment solutions, with presence in

Europe and Latin America.

Telefónica has one of the most international profiles in the sector with 76% of its business

outside its home market and a reference point in the Spanish and Portuguese speaking

market.

In Latin America, Telefónica gives service to more than 211.9 million customers as of the

end of December 2012 becoming the leader operator in Brazil, Argentina, Chile and Peru

and has substantial operations in Colombia, Costa Rica, Ecuador, El Salvador, Guatemala,

Mexico, Nicaragua, Panama, Puerto Rico, Uruguay and Venezuela. In Europe, on top of the

Spanish operations, the Company has operating companies in the United Kingdom, Ireland,

Germany, Czech Republic and Slovakia, providing services to more than 103.1 million

customers as of the end of December 2012.

Introduction of Bharti Airtel

Bharti Airtel Limited is a leading global telecommunications company with operations in

20 countries across Asia and Africa. Headquarters in New Delhi, India, the company ranks

amongst the top 4 mobile service providers globally in terms of subscribers. In India, the

company's product offerings include 2G, 3G and 4G wireless services, mobile commerce,

fixed line services, high speed DSL broadband, IPTV, DTH, enterprise services including

national & international long distance services to carriers. In the rest of the geographies, it

offers 2G, 3G wireless services and mobile commerce. Bharti Airtel had over 267 million

customers across its operations at the end of February 2013 airtel was born free, a force

unleashed into the market with a relentless and unwavering determination to succeed. A

                                                            1 www.telefonica.com 

16  

spirit charged with energy, creativity and a team driven “to seize the day” with an ambition

to become the most admired telecom service provider globally. airtel, in just ten years of

operations, rose to the pinnacle of achievement and continues to lead.2

Social Impact of Telefonica

At the close of 2011, we employed a total of 291,027 professionals, 2.1% more than

in 2010, and we had invested 66.4 million Euros in their training.

Telefonica was chosen as one of 25 best global companies to work at by the Great

place to work.

We developed nearly 50 initiatives for social innovation by means of ICT ideas and

solutions to meet the social needs of the elderly, the disabled and those at the foot of

the pyramid.

Swot Analysis of Telephonica

Strength

Significant Market Position

Focus on Research and Development

Strong Growth in Mobile and Broadband Segment

Weakness

Lack of presence in Asia Pasific

Opportunities

Agreement with Deutsche pst world Net

Business Expansion

Growth of broadband and pay TV services in Latin America

New Collaboration

Threats

Exchange rate Fluctuations

Declining ARPU

Regulatory Environment

SWOT Analysis of Airtel

Strengths                                                             2 www.airtel.in 

17  

BhartiAirtel has added more than 65 million customers. It is the leading cellular

provider in India, and also has provisions of broadband and telephone services - as

well as many other telecommunications services to both domestic and corporate

customers.

Other stakeholders in BhartiAirtel include Sony-Ericsson, Nokia - and Sing Tel,

with whom they seize a strategic alliance. This means that the business has

admittance to knowledge and technology from other parts of the

telecommunications world.

The company has covered the entire Indian nation with its network. This has

underpinned its huge and increasing customer base.

Weaknesses

A frequently cited original weak spot is that when the business was started by Sunil

Bharti Mittal over 15 years ago, the business has small knowledge and experience

of how a cellular telephone system actually worked. So the start-up business had to

outsource to industry experts in the field.

Until justAirtel did not its own towers, which have a particular strong point of

several of its competitors such as Hutchison Essar. Towers are important if your

company wishes to provide wide coverage nationally.

The fact that the Airtel has not pulled off a deal with South Africa's MTN could

signal the lack of any real emerging market investment opportunity for the business

once the Indian market has become mature.

Opportunities

The company possesses a modified version of the Google search engine which will

enhance broadband services to customers. The tie-up with Google can only enhance

the Airtel brand, and also provides advertising opportunities in Indian for Google.

Global telecommunications and new technology brands see Airtel as a key strategic

player in the Indian market. The new iPhone will be launched in India via an Airtel

distributorship. Another strategic partnership is held with BlackBerry Wireless

Solutions.

in spite of being forced to outsource much of its technical operations in the early

days, this allowed Airtel to work from its own blank sheet of paper, and to question

industry approaches and practices - for example replacing the Revenue-Per-

18  

Customer model with a Revenue-Per-Minute model which is better suited to India,

as the company moved into small and remote villages and towns.

The company is investing in its operation in 120,000 to 160,000 small villages

every year. It sees that less well-off consumers may only be able to afford a few

tens of Rupees per call, and also so that the business benefits are scalable - using its

'Matchbox' strategy.

BhartiAirtel is embarking on another joint venture with Vodafone Essar and Idea

Cellular to create a new independent tower company called Indus Towers. This new

business will control more than 60% of India's network towers. IPTV is another

potential new service that could underpin the company's long-term strategy.

Threats

Airtel and Vodafone seem to be having an on/off relationship. Vodafone which

owned a 5.6% stake in the Airtel business sold it back to Airtel, and instead invested

in its rival Hutchison Essar. Knowledge and technology previously available to

Airtel now moves into the hands of one of its competitors.

The quickly changing pace of the global telecommunications industry could tempt

Airtel to go along the acquisition trail which may make it vulnerable if the world

goes into recession. Perhaps this was an impact upon the decision not to proceed

with talks about the potential purchase of South Africa's MTN in May 2008. This

opened the door for talks between Reliance Communication's Anil Ambani and

MTN, allowing a competing Inidan industrialist to invest in the new emerging

African telecommunications market.

BhartiAirtel could also be the target for the takeover vision of other global

telecommunications players that wish to move into the Indian market.3

Licensing of Telefornica

Peru’s unit of Telefónica has accepted the requirements imposed that the Peruvian

government for renewing its operating licenses. Telefónica classified the conditions and

terms required by the Ministry of Transport and Communications (MTC) as harsh and said

that they are unprecedented.

                                                            3 www.slideshare.net 

19  

Telefónica said that to comply with the MTC’s terms and conditions, it will have to do

extraordinary investments and also do management efforts. The telecom operator also

highlighted that it has fulfill its previous obligations, contributing significantly to the

“dramatic growth of mobile telephony in Peru with more coverage and increasingly

competitive rates.”

“The amount Telefonica had to commit to invest in rural coverage areas in exchange of the

renewal of license, around U.S.$1.2 billion, is very high,” Marceli Passoni, senior analyst

for Latin America at Informa Telecoms & Media told RCR Wireless News. “For instance,

in Brazil, the regulator raised U.S.$1.3 billion in its LTE auction, when six companies

acquired spectrum. However, the Peruvian government was want to impose some

conditions for the license renewal.”

Among the agreement’s positive aspects, Menutti said that mobile services will reach 409

district capitals and 1,848 locations where there was no Telefónica coverage, achieving

100% mobile coverage of the district capitals. “In addition, up to 1 million people will have

a reduced rate for mobile services, which will be reflected in increased service adoption.

These obligations are in line with the objectives of the National Plan for the Development

of Broadband in Peru asked to minimize the digital divide, ensuring that 100% of the

country’s districts have broadband,” he said.

On the negative side, the analyst pointed out that the negotiation delay for the contract

renewals resulted in the new district infrastructure deployments beginning at least one year

later than they should have, since Telefónica’s licenses expired between May 2011 and

February 2012.4

Commercialization Conditions in Telefónica:

The present commercialization conditions (hereinafter “Commercialization Conditions”)

are based on clause 5.3 of Blue Via General Conditions (hereinafter “General Conditions”)

previously accepted by the Developer, under which the Developer agrees that after

selecting the Application Stores in which it wishes to commercialize its Application the

                                                            4 http://www.rcrwireless.com/americas/20130123/carriers/telefonica-peru-finds-harsh-accepts-governments-conditions-renewal-licenses/ 

20  

Developer must accept additional Commercialization Conditions in order to commercialize

the Application through such Application Stores.

APPLICATION GUIDELINES:

Applications using Wi-Fi or data traffic as a base for voice or data P2P communications are

not allowed.

Games, Video streaming, Ringtones, SMS/MMS Alerts and Music related Applications

need to be authorized by The Operator previously to the Commercialization of the

Application trough The Application Stores. Developer must send an email to the Bluevia

Community Supportsupport@bluevia.com with a short description of the Application. The

Application will be supposed accepted by the Operator unless within 5 days following the

initial delivery of proposal, The Operator notifies Developer its non-acceptance, and then

such Application will not be uploaded to The Application Stores.

Import:

We use public shipping records to provide insights into the trading activities of importers

and exporters around the world.

Import Genius empowers your business with actionable data about your overseas suppliers

and domestic competitors. By tapping into genuine shipping records from U.S. Customs as

well as nine governments in Latin America, we can show you what goods your competitors,

suppliers and competitors' suppliers have been shipping.

Terms and conditions of Airtel:

1. Airtel Dhamaka Offers the service (hereinafter referred to as “Services”) bring to you by

Bharti Airtel Limited having its register office at Bharti Crescent, 1, Nelson Mandela Road,

Vasant Kunj, Phase II, New Delhi – 110 070 (herein after referred to as “Airtel”).

2. Services are valid only for customers who acquire a fresh postpaid relation (excluding

the customers who have company paid connection) for the period of the sponsorship time

i.e. 1st June’11 to 31st Aug’11

21  

3. Customer should describe the elected no. i.e. 55255 after 48 hrs from the instance of

activation of the SIM.

4. Customer can get benefit from the offer within 10 days from the activation of the SIM,

after which the offer will get failed.5

Policies:

This policy aims to:

Ø Provide an independent forum by means of the Office of the Ombudsperson, for

employees and external stakeholders of the company to raise concerns and complaints

about improper practices which are in breach of the Bharti Code of Conduct.

Ø Put in place a fair and equitable inquiry process and redressed mechanism.

Ø Reassure employees and other stakeholders raising the concerns, that each one will be

fully protected against possible reprisals, intimidation, coercive action, dismissal, demotion

or victimization when a serious and genuine concern of apparent unprofessional conduct

has been made in good faith.

Communication and implementation of the embeds person policy

The implementation of this policy will be the responsibility of the Ombudsperson.

A copy of the policy is available to all employees on the various company intranets. The

policy will be explained to new joinees at the time of induction and continuous

communication will ensure that awareness of the Code of Conduct and Ombudsperson

Policy is cascaded to all in the organization.

Export:

“India's Industrial Production (IIP)” approximately shrank in February due to a contraction

in infrastructure industry output and flagging demand, after a surprisingly strong increase in

January.

                                                            5 http://www.importgenius.com/venezuela/importers/informacion-telefonica-infortel-c 

22  

A consensus forecast by a poll of 26 economists showed factory production likely fell by

0.7 percent in February on a year earlier, following a 2.4 percent surge in January.

Before that surprise rise in January, industrial output had contracted in seven of the

previous 10 months.

Another fall does not bode well for Asia\'s third-largest economy, as it struggles to recover

after a decade low annual growth rate in the fiscal year that ended in March.

"Core infrastructure has dropped very sharply... it wouldn’t\'t be a big surprise at all if IP

came off quite sharply," said Aninda Mitra, an economist at Capital Economics in

Singapore, who forecasts a 3 percent contraction.

"It overall reflects a generalized slowdown in demand and production is just responding to

that," Mitra added.

Output in the country's eight key infrastructure industries, which make up almost 40

percent of factory production, contracted by an annual 2.5 percent in February and after

January, 3.9 percent rise.6

BUSINESS OPPORTUNITIES IN FUTURE

Since the beginning of internationalization, the company has practiced a significant growth.

Telefónica is a reference in the Latin American Telco market and has attained a relevant

scale in Europe.

They strengthened with global partnerships and collaboration agreements. As an engine for

economic sustainable development and innovation and to help overcome social divides.

Broadband increases productivity 5% in industrial sector and 10% in service sector due to

process improvement.

                                                            6http://www.airtel.in/wps/wcm/connect/airtel.in/airtel.in/home/whats+new/festival_terms_conditions 

23  

With a clear commitment with innovation and entrepreneurship into the following

ways:-

WAYRA, accelerator program created to find and nurture the best technology ideas and

talent.

Wayra provides technological resources, financing and support in order to simplify new

emerging startups across Europe and Latin America.

Telefónica also promotes social unity through the development of social programs.

•523,416 children at risk of social exclusion have been attended in Latin America to fight

against child labor.21, 687teachers have been trained. More than 26,000 volunteers have

taken part in harmony initiatives.8, 911young people have been trained to support the

development of 3,410 projects.” Total beneficiaries of Telefónica Foundation 1,510,449”

Telefónica boasts one of the industry’s most international profiles, generating 76% of its

business outside its home market. And is the foremost operator in the Spanish and

Portuguese speaking market.

In 2011 decisiveadvancesweremadetofosterTelefónica’stransformationprocess, making the

Company better placed to meet current and future challenges and to leverage the

opportunities gave by the growth of the digital world beyond communication needs;

evolving towards a smart, hyper-connected world.

The new digital world offers a unique opportunity to consolidate Telefónica’s leadership

and enhance its relationships with its customers. To take full advantage of these

opportunities, Telefónica has undertaken a wide-ranging alteration of the Company’s

organizational structure, creating two horizontal units (Telefónica Digital and Telefónica

Global Resources) in order to leverage the efficiency and opportunities offered by its global

scale and two business units for the two major regions in which we operate - Europe and

Latin America.

A listed company - Telefónica is a 100% listed company, with more than 1.5 million direct

shareholders. Its share capital currently comprises 4.551.024.586 ordinary shares traded on

the Spanish Stock Market and on those in London, New York, Lima, and Buenos Aires.

24  

Revenues in the first nine months of 2012 totaled 46,519 million euros thanks to the

persistent growth in main revenue drivers, Latin America and mobile data. Telefónica’s

Latino-America’s revenues grew by 5.9% year-on-year, while mobile data revenues

continued showing strong growth rising 14.2% year-on-year to account for more than 34%

of combined mobile service revenues. Telefónica Digital is a global business division of

Telefónica. Its mission is to seize the opportunities within the digital world and deliver new

growth for Telefónica.

And if the GDP is growing, we do think that the telecommunication sector is going to grow

accordingly. And in fact, we think that the telecommunication sector should fuel that

growth. And according to most of the surveys, the growth of the telecommunication sector

is going to be in the neighborhood of 7.7%, which is almost double the growth of the GDP.

And we think this is going to be a stable growth. From controlling point of view, there is no

major turmoil in the horizon.

And we have been able to reach new channels of communications to expand our services,

to enlarge our revenues and at the same time to lower our cost. In fact, since we use Twitter

as way of communicating with them, the cost of our call centers have been going down

20%.

Bharti Airtel should do well to endure this challenge as it has on its discarding the

incumbent operator advantage. The company is well positioned to expand its network in the

remote areas of the country. Also the fact that while new entrants will only have start-up

spectrum of 4.4MHz for use, Bharti will benefit from having more spectrum in most of the

circles.

Bharti through its association with SingTel is also on the positive side as far as experience

in offering 3G services goes. IT is expected to bid for pan-India 3G license and particularly

for metro circles where it is faced with the challenge of keeping a check on deteriorating

ARPUs.

25  

Bharti is aggressively eying acquisitions in the overseas market with a special focus on

emerging markets.7

 

 

 

 

 

 

                                                            7 http://www.telefonica.com/en/mwc/telefonica_mwc/ponentes_presentaciones.shtml 

26  

3.AIRLINES INDUSTRY

Introduction of Airlines

An airline is a company that provides air transport services for traveling passengers and

freight. Airlines lease or own their aircraft with which to supply these services and may

form partnerships or alliances with other airlines for mutual benefit. Airlines vary from

those with a single aircraft carrying mail or cargo, through full-service international airlines

operating hundreds of aircraft. Airline services can be categorized as being intercontinental,

intra-continental, domestic, regional, or international, and may be operated as scheduled

services or charters.

Introduction of Brazil Airlines

The Brazilian airport sector has been growing 10% a year, According to IATA (2010),

requiring appropriate terminals, adequate numbers of routes for the volume of passengers

and airlines companies for the long-term demands. However, this data is not a new

phenomenon once it has been widely analyzed by logistics airport experts for some years

with widespread concern about the capacity of the management sector and associated

innovations. Soon, through long-term growth, it is essential to understand competition,

prices charged by airlines and the necessary conditions to achieve profits according to

market behavior.

Introduction of Indian Airlines

Indian, formerly Indian Airlines (Indian Airlines Limited from 1993 and Indian Airlines

Corporation from 1953 to 1993) was a major Indian airline based in Delhi and focused

primarily on domestic routes, Along with several international services to neighboring

countries in Asia. It was state-owned, and was administered by the Ministry of Civil

Aviation. It was one of the two flag carriers of India, the other being Air India. The airline

officially merged into Air India on 27 February 2011. The airline operated closely with Air

India, India's national carrier. Alliance Air, a fully owned subsidiary of Indian, was

renamed Air India Regional.

Role of Indian Airlines in Economy

27  

The Ailines have contributed in a significant way to India's economic growth in the last few

years:

Airlines have enhanced the efficiency and reduce the costs for productive business

activities. The spped with small and large businesses are able to interact and

conclude business transactions and deals have increased.

Airlines have significantly eased the transport bottlenecks for tourists, business and

trade travelers as well as other travelers including doctors. Patients, engineers,

doctors, patients, etc. between and among far flung smaller cities and towns and the

metropolitan cities as well as foreign cities of business and tourist importance,

thereby reducing unnecessary delays and prompt response. This has enabled the

efficiency and productivity of the Indian economy to grow.

Brazil Airlince

GOL TRANSPORTES AÉREOS

INTRODUCTION

• Gol Transportes Aéreos ("Gol Air Transport," BM&F Bovespa: GOLL3, GOLL4,

/ NYSE:GOL) is a Brazilian low-cost airline based in ComandanteLineu Gomes

Square, Sao Paulo, Brazil. It also owns the brand Varig, although now that name

refers to the informally known "new" Varig, founded in 2006 and not to the "old"

Varig, founded in 1927. Gol operates a growing domestic and international

scheduled network. Its main hubs are São Paulo's Rio de Janeiro's Galeao

International Airport Congonhas.

HISTORY

• The airline was established in 2000 and started operations on January 15, 2001 with

a flight from Brasília to São Paulo. It is a subsidiary of the Brazilian conglomerate

GrupoÁurea based at Minas Gerais state, which has other transport interests

including Brazil's largest long-distance bus company. GrupoÁurea in turn is owned

28  

by the Constantino family. As of 2004, Gol had carried 11,600,000 passengers, and

constituted 20% of the Brazilian air travel market.

PROFILE

• Innovation, pioneering spirit and low prices

• Structure, systems and controls

• Aircraft and market expansion

Mission

Bring people closer safely and intelligently.

Vision

To be the best airline for travel, work and investment.

Data Statistics

Guidance 2012 versus 2012 Actual

29  

2012 Guidance Min. Max. 2012

Brazilian GDP Growth * 1.5% 2.5% 0.9%

Domestic Demand Growth (%RPK) 6.0% 9.0% 6.8%

Domestic Load Factor 71% 75% 71%

Passengers Transported (in million) 41 42 39

GOL Domestic Capacity (ASK billion) 48 49 48

RPK, System (in billion) 37 39 36

Departures (000) 354 364 349

CASK ex-fuel (R$ cents) 9.0 9.6 10.2

Fuel Liters Consumed (billion) 1.60 1.75 1.66

Average Exchange Rate (R$/US$) 1.95 2.00 1.95

Operating Margin (EBIT) Negative -11.2%

Terms and Condition of GOL Transportes Aéreos

• Fares are round trip. Fares incl. all fuel surcharges, our service fees and taxes.

• Tickets are non refundable, non transferable, non-assignable.

• Name changes are not permitted.

• Fares are subject to change without notice.

• Fares subject to availability.

• There is a higher probability of seats being available at this fare on Tuesday,

Wednesday and Thursday and may require a Saturday night stay at your destination.

TAM AIRLINES

INTRODUCTION

• TAM Airlines (Portuguese: TAM Linhas Aéreas is the Brazilian brand of LATAM

Airlines Group. The merger of TAM with LAN Airlines was completed on June 22,

2012. The company is currently the largest Brazilian airline. Before the takeover,

30  

TAM was Brazil's and Latin America's largest airline. Its headquarters are in Sao

Paulo, operating scheduled services to destinations within Brazil, as well as

international flights to Europe and other parts of North and South America. The

airline announced that it will withdraw from the Star Alliance during the second

quarter of 2014 and will join One world immediately afterwards. A date is expected

to be announced late 2013.

HISTORY

TAM – Taxi Aereo Marília

• TAM – Taxi Aereo Marília and TAM – Transportes Aéreos Regionais were two

different entities, although both belonged to the TAM Group. TAM – Marília, an air

taxi company founded in 1961, provided the start-up infrastructure for TAM –

Regionais.

• TAM – Transportes Aéreos Regionais (KK)

• On November 11, 1975, the Government of Brazil created the Brazilian Integrated

System of Regional Air Transportation and divided the country in five different

regions, for which five newly-created regional airlines received a concession to

operate air services. Founded by Rolim Adolfo AmaroTAM

• TAM (KK) joint operations with TAM (JJ)

• In August 1986, the company, under financial stress, went public and began floating

stock in the market. The same year, TAM – TransportesAéreosRegionais (KK)

acquired another regional airline, VOTEC, which operated in areas of northern and

central Brazil. VOTEC was then renamed Brasil Central LinhasAereas. The

different color schemes of the aircraft, and their designated areas of operation. In

1988, TAM flew its 3 millionth passenger. On May 15, 1990, the Brazilian

Government lifted restrictions on operational areas of regional airlines allowing

them to fly anywhere in Brazil. As a consequence, Brasil Central was renamed

TAM – Transportes Aéreos Meridionais, acquired the same color scheme of TAM

(KK) but maintained the IATA code JJ.

31  

• Agreement with LAN to create LATAM

• On August 13, 2010, TAM signed a non-binding agreement with Chilean airline

LAN Airlines to merge and create LATAM Airlines Group. This was changed into

a binding agreement on January 19, 2011. Latam agreement was approved with 11

restrictions by Chilean authorities on September 21, 2011 On December 14, 2011,

Brazilian authorities approved the agreement imposing similar restrictions as

Chilean authorities. Presently TAM has two pairs of slots while LAN has four. LAN

will have to cede two pairs to competitors interested in using them.

• DESTINATIONS AND FLIGHTS

1. Around 150 destinations in 22 countries.

2. Domestic operations in 6 countries (Argentina, Brasil, Chile, Colombia, Ecuador

and Peru).

3. International flights to/from Latin America,United States, Europe and Oceania.

4. Daily flights: average of 897 (TAM) + 575 (LAN) daily departures in 2011.

EMPLOYEES:

• Total =51600

• LAN=21800

• TAM=29800

• 13.5 Billion Gross Income [2011]

• 5.7 billion LAN

• 7.8 billion TAM• Total fleet: 310 aircraft (149 LAN + 161 TAM)

• Average fleet age: 6,9 years.

• Passengers Aircraft : 135 LAN + 161 TAM

• Cargo aircraft: 14 LAN

32  

• Orders: 240 (137 LAN + 103 TAM)

POLICY AND NORMS OF TAM AIRLINES

• Conclusions in the TAM Flight 3054 crash investigation report by São Paulo's

Instituto de Criminalística were released to the press today, after 16 months of

work. According to OESP, the report concludes that the plane crash was caused by a

series of errors at different decision levels. Although it confirms that the left thrust

lever was in full reverse while the right thrust lever was in "climb", the final report,

signed by Antonio de Carvalho Nogueira Neto, affirms pilots were not properly

trained by TAM, were not adequately informed about runway conditions, and

lacked an alarm, not installed in the Airbus, which could have warned them of

improper throttle handling.

INDIAN AIRLINES

AIR INDIA

Introduction

• Air India is the flag carrier airline of India. It is part of the government owned Air

India Limited (AIL). The airline operates a fleet of Airbus and Boeing aircraft

serving Asia, the United States, and Europe Its corporate office is located at the

Indian Airlines House, in the parliament street of New Delhi.

HISTORY

Early years

Tata Sons, a division of Tata Sons Ltd. (now Tata Group) was founded by J. R. D. Tata in

1932. The aviator NevillVintcent had an idea to run mail flights from Bombay and

Colombo that connected with the Imperial Airways flights from the United Kingdom. He

found a supporter for his plans from J. R. D. Tata of the Tata Iron and Steel Company.

After three years of negotiations Vintcent and Tata won a contract to carry the mail in April

1932 and in July 1932 the Aviation Department of Tata Sons was formed. On 15 October

33  

1932, J.R.D. Tata flew a single-engined De Havilland Puss Moth carrying air mail (postal

mail of Imperial Airways) from Karachi's Drigh Road Aerodrome to Bombay's Juhu

Airstrip via Ahmedabad. profit of 60,000 rupees its first year, and by 1937, that profit had

risen to 600,000 rupees.

The Government of India announced that Air India would be merged with Indian Airlines.

As part of the merger process, a new company called the National Aviation Company of

India Limited (NACIL) was established, into which all four airlines were merged. Again in

February 2011, Air India and Indian Airlines merged along with their subsidiaries to form

Air India Limited, which now operates only three Airlines, namely Air India, Air India

Express and Air India Regional.

SUBSIDIARIES

Air India Cargo

Air India Cargo Airbus A310-300F.

In 1954, Air India Cargo started its freighter operations with a Douglas DC-3 Dakota

aircraft, giving Air India the distinction of being the first Asian airline to operate freighters.

34  

The airline operates cargo flights to many destinations. The airline also has ground truck-

transportation arrangements on select destinations. A member of IATA, Air India carries all

types of cargo including dangerous goods (hazardous materials) and live animals, provided

such shipments are tendered according to IATA Dangerous Goods Regulations and IATA

Live Animals Regulations.

AIR INDIA REGIONAL

Air India Regional was started as a low-cost arm of Indian as Alliance Air As part of

Indian's merger with Air India

AIR INDIA EXPRESS:

Air India Express is the airline's low-cost subsidiary headquartered in Mumbai, operating

mainly from Indian state of Kerala. It operates services mainly to the Middle East and

Southeast Asia.

SERVICES:

• IN-FLIGHTENTERTAINMENT

• FREQUENT FLYER PROGRAMME

• PREMIUM LOUNGE

Jet Airways

INTRODUCTION

Jet Airways is the second largest Indian airline based in Mumbai, Maharashtra, both, in

terms of market share and passengers carried. It is owned by NareshGoyal. It operates over

400 flights daily to 76 destinations worldwide. Its main hub is Mumbai, with secondary

hubs at Delhi, Kolkata, Chennai, Bengaluru and Pune. It has an international hub at

Brussels Airport, Belgium.

History

1992-2009: Inception and growth

35  

Jet Airways was incorporated as an air taxi operator on 1 April 1992. It started commercial

operations on 5 May 1993 with a fleet of four leased Boeing 737-300 aircraft. In January

1994 a change in the law enabled Jet Airways to apply for scheduled airline status, which

was granted on 4 January 1995. NareshGoyal – who already owned Jetair (Private)

Limited,

SERVICES

• Cabin

• First Class

• Economy Class

• In-flight entertainment

Terms and Condition of Jet Airway

General Information

While compiling this information, Jet Airways has endeavored to ensure that all

information is correct. However, no guarantee or representation is made to the accuracy or

completeness of the information contained here. This information is subject to changes by

Jet Airways without notice.

• Non-Smoking

• Reservation

Reservation Requirements

• Ticketing / Fares and Time Limit

Jet Airways

Founded April 1, 1992

Commenced operations May 5, 1993

Hubs ChhatrapatiShivaji International Airport (Mumbai) (Primary Hub

& Maintenance Base)

 

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37  

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Hubs Sao Paulo-Congonhas Airport

Rio de Janeiro-Galeao International Airport

Brasília International Airport

Bengaluru International Airport (Bangalore)

Brussels Airport (Brussels)

Chennai International Airport (Chennai)

Indira Gandhi International Airport (Delhi)

NetajiSubhash Chandra Bose International Airport (Kolkata)

Pune International Airport (Pune)

CONCLUSION

• The airline was rebranded as Indian for advertising purposes as a part of a program

to revamp its image in preparation for an initial public offering (IPO). The airline

operated closely with Air India, India's national carrier. Alliance Air, a fully owned

subsidiary of Indian, was renamed Air India Regional. Airlines vary from those with

a single aircraft carrying mail or cargo, through full-service international airlines

operating hundreds of aircraft. Airline services can be categorized as being

intercontinental, intra-continental, domestic, regional, or international, and may be

operated as scheduled services or charters. This data is not a new phenomenon once

it has been widely analyzed by logistics airport experts for some years with

widespread concern about the capacity of the management sector and associated

innovations. Soon, through long-term growth, it is essential to understand

competition, prices charged by airlines and the necessary conditions to achieve

profits according to market behavior.

38  

4.AUTOMOBILE INDUSTRY

Brazil has transcended its condition as the biggest and most resource-rich country in

Latin America to now be counted among the world’s essential powers.

Brazil is not a conservative military power, it does not competitor China or India in

population or economic size, and it cannot counterpart the geopolitical history of

Russia. At rest, how Brazil defines and projects its benefit, a still-evolving process,

is critical to understanding the nature of the new multipolar and random global

order.

Brazil has plentiful natural resources and its economy is quite diversified.

Brazil has in the past, imposed strict pedals over cross border currency business

through a foreign exchange policy that required the register of transactions and

positioned controls mainly on transactions involving outflows of funds from the

country.

Brazil is also a vast industrial country. It benefits from its mineral ore capital and is

the second world exporter of iron and one of the main manufacturers of aluminum.

As an oil producer, the Brazil is aiming to become autonomous in the close to

future. The country is asserting itself more and more in the 1)textile, 2)aeronautics,

3) pharmacy, 4)automobile, 5)steel and 6)chemical industry sectors.

The auto mobile industry is often consideration of as one of the most global of all

the other industries. Its products have spread in the world, and it is under enemy

control by an undersized number of companies with worldwide recognition.

Though, in certain respects the industry is more local than global.

The extend of vehicle manufacture in developing countries inflated markedly in the

thunder years of rapid expansion in the emerging markets in the 1990s.

Global vehicle invention growth almost 7 million units between 1990 and 1997,

although the boost in sales over the same period lagged considerably behind this, at

just under 4 million units.

The automobile industry in country like South Korea, Brazil, China and India is

currently going through impressive growth.

This report discusses industrial development matters for the global auto industry

from the perspective of a global value chain analysis. It places of interest the way in

39  

which the blow of globalization processes on the auto industry of developing

countries in the 1990s was partial not only by changes in trade and investment

policies and the globalization strategies of leading companies, but also by changes

within auto industry value chains themselves.

It is related with the following selected countries and regions including 1. China, 2.

India, 3. Mexico, and countries of the Association of Southeast Asian Nations

(ASEAN), Argentina, Brazil, and countries in Central Europe .

These developments in automobile now-a-days suggest that global supply chain

networks are fetching more and more vital. Assemblers and suppliers expand

equivalent networks across the globe. For simplicity, immediately a single product

being supplied to one assembler operating in three different countries: the country

of the assembler’s core operations, and operations in two other locations.

Various developing countries used import substitution industrialization policies to

support the development of their conjugal auto industries. In the beginning of the

year 1990s, there were considerable self-contained vehicle industries in Latin

America, the ASEAN region, India and China with limited exports. Quantitative

limitations were phased out and tariffs concentrated, while Trade-Related

Investment Measures (TRIMs) like local content requirements and foreign exchange

balancing were under increasing hit. At the same time, the global production and

sales strategies of most important international auto companies were also shifting

and developing countries were becoming more essential to their plans. This report

tells that while these changes were most obvious in the assembly sector, even more

major changes were taking place in components production, ambitious as much by

the alterations in the nature of value chain relationships between assemblers and

suppliers as by the company’s globalization.

These changes have had a thoughtful effect on the structure and uniqueness of the

auto industry in developing countries. This report identifies the position of the up-

and-coming markets in the global auto industry. It considers how the industry

changed with time, what effects are for the policy options open to the governments

of developing countries, and what kinds of policies will be sufficient to create

40  

feasible auto industries in the new environment of lower levels of protection and

increasingly globalized construction systems.

Markets of BRICS countries now-a-days attracts never seen before in 1.USA,

2.Europe and 3.Japan, and therefore, opening opportunities for the development of

the restricted industry in those countries; Movement of the industry towards cleaner

alternatives, specifically about energy and engine and driving systems at the

vehicles.

There is 500 years of old relations between Brazil and India.

Diplomatic relations between such two companies established in 1948.

From some decades, this relation is extended to Science, Technology,

Pharmaceutical and Space.

Mutual relations between Brazil and India have developed significantly and a

strategic corporation exists between the two countries, said Mr Carlos Duarte,

Brazil’s Ambassador to India, while addressing a seminar on doing business with

Brazil organized by FIEO in connection with the Indo-Brazil Chamber of

Commerce and Industry on November 8, 2012 at New Delhi.

Mr .Duarte informed that in spite of a slowdown, the essentials for Brazil’s constant

inclusive growth remain solid. These include the rising rate of service, expansion of

credit, decreasing real interest rates, inflation under control, optimistic trade balance

and declining fiscal shortfall.

He appreciated that social policies have been winning in tackling dissimilarity, and

are helping to lift up and merge internal purchasing power.

At a time when some of the most important Western economies are slamming their

doors on Indian exports, Brazil is looking at ornamental trade ties with India.

This Latin American country is looking to boost mutual trade with India by

attractive the number of products which could be imported or exported between the

two countries - two of the best ever rising nations in the world.

The Brazilian automobile industry competed with other Latin American ones

(Mexico and Argentina) comparably till the year 1960 but had two jumps then,

making Brazil as regional leader at first and one of the World's leaders moreover.

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The Brazilian industry is regulated by the company “Associação National dos

Fabricants de Vacuoles Automotives (Anfavea)”,. A fovea is part of

the Organization International des Constructers’ d'Automobiles (OICA), based in

Paris. Most of huge global companies are present in Brazil; such

as 1.Fiat, 2.Volkswagen Group, 3,Ford, 4.GM, NissanMotors, Toyota, etc., and

also the rising nationalized companies such as Troller, Marco polo

S.A., Agrale, Random, Excalibur etc., some of them traditionally produces the

modern equipped replicas of old-timers.

1. On hand laws for components take back (tiers and batteries) but with little

effectiveness;

2. Discussion of laws aiming at regulation of vehicle examination, disassembly

facilities and parts recycle;

3. Design, assembly and supply practices attached to global strategies;

4. Hidden development of a sector of recycling of automotive components;

5. Sturdy players in the steel and extraction industry;

6. Lack of technology in recycling multifaceted components and materials;

7. Role of the producers in defining the ‘rules’ of the game;

Automobile industry has more than 50 years in Brazil. With the stable growing of

local market and the end of development /engineering centers, the country is now

one of the vast players in the international market. There are just about 500 parts

suppliers in the country.

This progress has permissible the Brazilian automobile industry to maintain itself on

the competitive universal market, such as for low-cost compact cars, as well as for

trucks, buses, and agricultural equipment for use in the unkind operating conditions

inbuilt to every country. This qualitative development has been both 1.vertical

2.horizontal.Vertical including the whole production chain from the manufacture of

steel plates, pieces and parts, to concluding details, and horizontal, in having

occurred in all the companies operating throughout Brazil’s vast landmass.

There are 49 industrial flora in the country, in 8 different states. it is an industrial

complex with capacity to produce 4 million vehicles, with a forecasted capacity of 6

million for the year 2013. The introduction of ‘flex’ engines is a major reference in

42  

the market for bio fuels; 87% of all the passenger car put on in brazil were ‘flex’

More companies are investing in brazil , including new entrants to the south

American market ,such as Chinese.

Brazil has now the 4th largest global producing industry, this year having moving in

advance of the U.S. and Germany. 

Brazilian Market: As symbols of a recovery in Brazil’s economy carry on to

accumulate, the automobile sector appears to be most important the way with good

news, with new assembly plants intended and reports pointing to major potential

development in developed capacity. Government played a major role in the

development of the industry in this country.

The Brazilian government has been annoying to attract foreign car manufacturers to

Brazil by offering tax breaks for those who majority-manufacture locally.

The government has long been hopeful Brazilians to buy more cars in a bid to boost

the economy, by reducing IPI (industrialized product tax) to zero on some models,

as well as ensuring cheaper loans.

Local automotive production has seen a fall of 2% compared to few last years,

which was recognized to a 20% fall in exports. Congestion in many global markets

makes it more tricky to export, but it must be noted that export markets account for

only 13% of restricted production, unlike many other countries that depend mainly

on exports.

Top four Automobile Industries in Brazil:

1. AGRALE :

1.Military vehicles,

2. Motorcycles,

3. Scooters commercial vehicles,

4. Engines and tractors.

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2. LOBINI: Sports car

3. TAC MOTORS: Four-wheel drive TAC STARK

4. TROLLER: Off-road vehicles , few convention races just about the world

including the Dakar Rally.

Policies: India: The economic needs of the country, efficient use of foreign

exchange and trade as well as consumer necessities are the basic factor which

influences India's import policy. On the import side the policy has three

objectives: to make necessary imported goods more easily presented, including

essential capital goods for modernizing and upgrading technology; to simplify

and streamline procedures for import licensing; to promote efficient import

substitution and self-reliance.

There are only 4 prohibited goods: tallow fat, creature rennet, wild animals and

natural ivory. There is a restricted list, but most of the restrictions are on basis of

security, health and environmental security or because the goods are reserved

for production by small and little enterprises, which are family or village-based

and which require low skills and employ a large number of people. But the

policy of restrict import of consumer goods is changing.

Exports are the major focus of India's trade policy and a thrust area is exports

involving higher value accompaniments. Most objects can be freely export from

India. A few items are subject to export control in order to avoid shortages in the

household market, to safeguard national property and to protect the

environment.

Brazil:The new tax incentive is an attempt to close that gap by offering tax

incentives to companies that invest in science, technology, and fuel

competence.

This long-term plan comes after short-term tax breaks that only temporarily

boosted auto sale.

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The Brazilian government does not anticipate this new tax break to be

challenged by the WTO because it applies to companies that domestically

produce cars as well as companies that import cars.

However Brazil is also uneasy that with the over-valued Real currency, and one

of the world’s top auto markets, it is losing ground to more spirited model from

Asia, mostly Korea and China, whose exports have multiply several time in the

last few years

The tax split, Brazilian officials stated, is for consumers to benefit; car prices in

Brazil are amongst the highest in the world and locally produced cars are often

cheaper in other countries.

The imposing of non automatic licenses for the automobile sector was announce

by Brazil. Bitter the import of at least 2.000 Argentine vehicles that were in the

general border ready to cross.

Brazil is Argentina’s main market for its successful car and auto-parts industries

and any interruptions could have severe consequences for the economy and full

employment.

The rebirth of Brazil more than the future share offer for the state-owned Petro

bras petroleum company, the details of which were announce on September

25th. It is to be the major single share offer where, ever and is expected to raise

about US$70bn .

The automobile industry in countries like Korea, Brazil, China and India is

currently going through remarkable growth. Governments have played a

important role in the growth of the industry. The Korean industry has made the

most noteworthy progress, and is now exporting cars to global markets. It is the

only country that have made invested in R&D for invention development, and

had determined sell abroad targets. The industry in Brazil is controlled

completely by multinational companies. Even though this has increased to

growth and espousal of bend over production, native product development is

missing. Tariff barriers have come downhill, forcing home production to

become more market reactive. Variable tariffs and taxes, and demand have

45  

characterized the companies. Indian industry is experiencing a rebellion with

fast growth and the entry of 9-10 MNCs and plans for 5 more to enter in the

next two years. The Chinese industry is also rising very speedily even if it is still

highly disjointed. Demand in Brazil, India and China is highly price responsive

and enlargement is led by the command for a small car. Import duties for

mechanism involve that the supplier base in these countries wants to develop

speedy

A major inference is that the future in China and India, the two major latent

markets, is unsure though brilliant. Governments appear to be grateful for the

necessity for steady policies, and regard the automobile industry as one of the

part for economic expansion. But, indecision exists about the degree of growth,

the degree to which suppliers can assemble demand, and the number of players

that will be talented to stay alive in the long run. Multinationals have followed

the carry out of introducing victorious models. The Brazilian industry is very

old than that of China or India, and will almost certainly carry on to experience

significant growth. Capacity is expected to reach near about 2.8 to 8 million by

the year 2007.. With stagnation in urbanized markets and enormous trappings of

capacity in emerging markets, monopoly of MNCs over car production could

wear away although they will continue to rule product development.

Brazil have strength like: 1.The top ranks of the global oil producer.

2.Financial system and the market for new cars in Brazil are better than they

have ever been before

3. Brazil is a relatively young country with an ever more large and rich middle

class-The country is debt free. Plus, the profit of sugarcane ethanol remains,

while other renewable capital continues to be explored and developed

4. A 30 year investment opportunity, with economic growth and inflows of

savings that will underwrite a reconstruction of the over-worked physical

communications

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The European Automotive Industry is a top in the global automotive market

with integrated automobile operations that combine study, design, development,

production and sales. It has a solid worldwide network of joint venture,

manufacture and assembly sites.

Global production of automotives is usually shared among Europe, the Asia-

Pacific region and North America. South America, Africa and the center east

also have some limited manufacture. In Europe the automotive sector honestly

employs over 2 million people, and ultimately supports about 10 million jobs in

other industries. The fitness of the sector affects roughly 8% of the EU's active

workforce.

Fostering European automotive exports and investment through improved

market access is an EU trade main concern. The EU seeks to do this by

negotiating the exclusion of barriers to automotive exports both multilaterally in

the WTO and bilaterally with our major trade partners.Although high tariff

barriers still seriously hamper market access for EU exporters in Asia and India,

it is often non-tariff barriers 'behind the border' that successfully ban EU vehicle

exports to the South East Asian, Chinese, also South American markets. These

barriers can take in burdensome and unfair guarantee supplies, extra testing

requirements for EU exports, excise and comfort taxes that add on to the sales

price of EU vehicles. Local content requirements and tax incentive for local

producer are also functional to the disadvantage of EU exporters. Strict rules for

joint venture or majority owned foreign company also hamper the activities of

European company.

In instant terms the basis for this unparalleled move lies in what is known as the

pre-sale, a rich and vast deposit of oil deep alternative off the coast of Brazil.

Petro bras wants the money to fund further exploration and then use of this

store, which will in turn force the country into the top ranks of the global oil

producer. For all the concern about global warming, resource reduction,

pollution, and the need to build up renewable source of power, the fact remnants

47  

that crude petroleum is as near to liquid money as it is possible to get. This is

why Petro bras should have little trouble raise the investment.

For the automotive industry contemplating the market in Brazil, however, the

Petro bras offer foretells of other things as well. Not least after many decades of

financial turbulence and doubt there can be no more doubt that future prospects

for the financial system and the market for new cars in Brazil are better than

they have ever been before, and that situation are likely to be good for a very

long time to come.

All the basics are right in the country now. There is general political constancy,

even if concerns remain over issues such as corruption and land change. The

financial system proved resilient during the global economic crisis of the last

couple of years and is growing at a sustainable rate of now over 5% per annum.

The country is debt free. Plus, the profit of sugarcane ethanol remains, while

other renewable capital continues to be explored and urbanized. For the likely

market, Brazil is a relatively young country with an ever more large and rich

middle class that is given to automobile ownership.

Many countries have already shown an interest in the trade. This year Brazil has

signed agreements with countries in 1.Africa,2. the Caribbean and3. Latin

America.

In glow of its experience of 1) hyperinflation, 2)inequality, 3)poverty, and

4)social exclusion,5)backsliding could have profound and negative implications

for the health of its democracy and community contract.

It also has wide raw material resources. Numerous sectors offer high-quality

business opportunities. The Brazilian economy is diversified and more and more

put on goods are produced and exported. The potential of the Brazilian domestic

market as well as the low price of labor are elements which may attract foreign

investors.

In spite of the intention to make its regulations more elastic, the Brazilian

Central Bank at rest imposes strict controls over cross border money

transactions. This is a major issue for foreign and domestic investors that seek to

invest abroad or in Brazil.

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In code, prior support from the Brazilian Central Bank is not an matter to the

extent that the dealings are supported by appropriate documentation. The

intention is to make procedures less bureaucratic and inspire the inflow and

outflow of funds to and from Brazil

Though, in practice, the control over inbound and outbound dealings has been

passed to Brazilian private banks that are responsible for ensuring compliance

with the Brazilian foreign exchange rules. Universally, foreign investments are

still topic to controls requiring their record with the Brazilian Central Bank

electronic system while remittances of funds out of the country must be made by

exact routes or codes, regulated by the Brazilian Central Bank through

International Capital and Foreign Exchange Market guideline.

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5.COFEE INDUSTRY

Coffee and the History of Brazil

Coffee took an essential part of the Brazilian history. The plant, originally from Etiopia,

was first brought to Brazil by some French settlers who established in the state of Pará in

the early 18th century. From the North of Brazil, the coffee fields started to spread along

the country, concentrating in the areas along the shore. By that time, the sugar cane

plantations represented the main economic activity in Brazil and coffee was only an

experience that no one could imagine would become the great protagonist of the Brazilian

contemporary history.

From 1820, coffee began to occupy the position of the most exported products from Brazil,

after the sugar cane started to lose importance in the international markets. The production

peaked when the coffee plantations gained the fertile soils of Vale do Paraíba - a region that

comprehends part of São Paulo and Rio de Janeiro states.

Along the 19th century, the Brazilian coffee was the number one filling up the European an

American cups and in 1840, Brazil became the largest coffee exporter of the world. The

country enriched and a new society is formed, ruled by the so-called “coffee barons”, the

wealthy owners of the grain’s plantations.

The “coffee barons” not only detained the economic power in Brazil, but also the political

power, first contributing to the Proclamation of the Republic and then strongly influencing

and even determining the direction of the country’s future presidents' elections.

During the coffee era, Brazil experienced a period of great progress, with the agrarian elite

investing in bank institutions, infrastructure, railways, credit expansion and

industrialization. The money earned from coffee exports was the essential capital that

would bring about important changes in the country’s society, economy and culture.

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Brazilian Coffee Industry and Exports

Brazil is by far the largest producer of coffee in the world, controlling more than 30% of

the international production. Coffee is one of the most important agribusiness commodity,

maintaining steady and growing value in the stock market. The golden grain was reponsible

for 10.2% of the Brazilian exported commodities in 2011. The exports of coffee from the

2011/2012 harvest invoiced USD 7,841 billion, a 5.6% increase compared to 2010. Around

10% of all the coffee exported was the Arabica type, followed by the Robusta variety with

5%.

The coffee industries are spread along 13 Brazilian states, but the largest ones are located in

the states of São Paulo, Minas Gerais, Rio de Janeiro, Espírito Santo, Bahia, Paraná and

Goiás (listed here in order of importance). It is estimated that there are around 300 thousand

coffee plantations in the country, spread in 1950 cities.

The traditional element of competitiveness is the coffee production costs in Brazil, which

determines the comparative advantages of this country compared to others. The Brazilian

climate conditions seem to have been made for the plantation of the grain. But the Brazilian

coffee production is based on quantitative parameters, what gave the country the image of a

producer of a bad quality coffee.

The Brazilian coffee is mostly exported as:

Green coffee

Soluble coffee

Roasted and ground coffee

Concentrated and essential extracts

Coffee residues

The largest buyers of the Brazilian coffee worldwide are: Germany, United States, Italy,

Japan and Belgium (in ascending order). An important institution regulating the coffee

exports is the Cecafé (Coffee Exporters Council).

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A brief introduction to ABIC

The ABIC (Brazilian Coffee Industry Association) was created in 1973 and represents the

most important regulatory institution of the coffee industry. Its operations integrate

industries, retail and consumption units. The institution counts with several programs

focusing on the purity, quality of Brazilian coffee and, more recently, the sustainability in

the coffee fields.

Currently, ABIC has approximately 500 roasting and grinding companies throughout the

national territory with headquarters located in Rio de Janeiro. The institution is formed by a

Deliberative Council, a Consulting Council and six Executive Boards: Management,

Communications, Economics and Finance, Marketing, Quality and Institutional Relations.

You can check all the ABIC’s associates in this file

ABIC provides to its associates a complete database with macroeconomic studies, opinion

and market polls, aside from sectoral diagnosis, legal guidance in the areas of taxation,

labor, constitutional and consumer protection, detailed register of companies, brands and

products; statistical information production and consumption, financial advisory and

business and technology development information.

It is interesting to quote that ABIC’s programs of quality that started in 1989 were

responsible for supervising the coffee sold in Brazil and abroad. One of the most successful

initiatives was the creation of the “Selo ABIC” a seal stamped in coffee packages, attesting

that the product was approved in the institution’s quality standards.

Coffee production in Brazil is responsible for about a third of all coffee,[1] making Brazil

by far the world's largest producer, a position the country has held for the last 150 years. In

2007, 2,249,010 metric tonnes was produced,80% of it was arabica(species of

coffee).Although Brazil is the world's largest coffee producer, Brazilian firms do not

dominate the international coffee industry. The country's domestic coffee market is

dominated by two US coffee processors, Sara Lee and Kraft Foods.

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Executive Summary

Silvera& Sons prepares green Arabica coffee beans grown in Brazil for exportation to

American specialty roasters and sells to wholesalers on the Brazilian market. We will

expand production capacity from 72,000/60kg bags per year to 120-160,000/60kg per year.

Our coffee stands out from that of the competition. We prepare the top five percent, in

terms of quality standards, of all Arabica beans on the market. Our customers seek this

product as it provides them with a point of differentiation to specialty roasters. In the past

six years, demand for our coffee has exceeded the amount we are able to supply and we

have been forced to refuse requests for larger shipments.

We predict growth of thirty percent in the first year with sales exceeding ($BRL)

expectations. In year three the plant will run at maximum capacity and based on the current

price of coffee we expect excellent profits ($BRL). We have positive indicators from

current importers that the additional amount of beans will be sold.

Our keys to success are:

1. Establishing and maintaining working relationships and contractual agreements with

American importers and Brazilian coffee brokers and wholesalers.

2. Bringing the new facility to maximum production within three years of operation.

3. Increasing our profit margin with the use of improved technology in the new

facility.

4. Effectively communicating to current and potential customers, through targeted

efforts, our position as a differentiated provider of the highest quality Arabica beans

in the world.

Readmore:

http://www.bplans.com/coffee_export_business_plan/executive_summary_fc.php#ixzz2PP1CuTJb

Brazilian Coffee History

Coffee was introduced in Brazil by Francisco de Mello Palheta in 1727 from Cayenne,

French Guiana. Today, Brazil is the world's largest coffee producer and is becoming a

53  

significant player in the specialty coffee industry. Bourbon, Typica, Caturra, and Mundo

Novo coffee varietals are grown in the states of Paraná, Espirito Santos, São Paulo, Minas

Gerais, and Bahia.

When the International Coffee Organization (ICO) and the Brazilian Institute do Café

(IBC) set quotas for importing and exporting coffees, it protected a few producers in Brazil

while deteriorating the specialty coffee sector. Since quotas were set, volume was expected.

Unfortunately, the focus was on coffee prices and quantity rather than quality. The

Brazilian coffee producers would mix together higher-quality coffees with low-quality

Brazilian coffees to meet the demands of the quota system. The producers would then

rename the coffees as Santos 1, Santos 2, etc. where Santos was the port where coffee was

exported. In the early 90's the new government in Brazil broke the quota and protection

laws for both the coffee and sugar industry. Subsequently, both the IBC and the IAA

(sugar) were closed. This brought about a revolution in how coffee was exported in Brazil,

thereby bringing about a reform in how coffee was grown, processed, and treated. Slowly

the amazing variety of coffee available in Brazil became evident as consumers exercised

their new right to purchase estate specific specialty coffees.

Today, Brazil coffee beans are not only used for coffee blending. Now that they are not pre-

blended for us we can roast them properly to amplify their diverse characteristics. Then, if

desired, we can blend the roasted coffees together to achieve a richer, bolder, and smoother

espresso blend. Since the breakdown of the IBC and the quota system internal coffee

consumption in Brazil has increased. Coffee exportation to the United States has also

increased. Brazil specialty coffee is on the rise and Brazil should no longer be viewed as a

country suitable only for blending.

Coffee Processing Methods

Brazil processes its coffee by the wet (washed), dry (natural), and semi-washed (pulped

natural) methods. The vast majority of Brazil coffee beans are still processed via the dry

method since Brazil is one of the few countries in the world that has the appropriate

weather to do so successfully. Due to Brazil's distinct dry and wet seasons, the flowering

and cherry maturation is homogeneous. This allows Brazilians to harvest coffee via the

54  

strip picking method and/or mechanically. Although under-ripe and overripe cherries are

also harvested, careful processing will easily remove these coffee cherries. In my

experience, I have found Brazil to have one of the most advanced and well-cared-for

processing systems in the industry.Brazil is the world's largest coffee producer and

produces around 25% of the world's supply of coffee. Eighty percent of coffee from Brazil

is Arabica.

Dry-Process: Dry-processed (Naturally processed) coffees are dried while they are still in

the cherry. Prior to drying, only cherries that float will be removed. Since the coffees are

dried in contact with the sweet mucilage, the coffee will be heavy in body, sweet, smooth,

and complex. This coffee is also one of the most complex to deal with do to the long drying

times and possibility of fermentation. However, since dry-processed coffees are more

difficult, Brazil has invested significant time and money to developing new drying systems

and drying practices to prevent fermentation.

Wet-Process:Wet-processing coffees is a relatively new method of removing the four

layers surrounding the coffee bean. This process results in a coffee that is cleaner, brighter,

and fruitier. Wet processing is done in a relatively small proportion to dry-processing in

Brazil, but offers another cleaner and brighter dimension to Brazilian coffees.

Pulped Natural: The pulped natural

method consists of pulping a coffee, but

emitting the fermentation stage to

remove the silverskin. This results in a

beverage that has characteristics of both

a dry- and wet-processed coffee.

Coffee Plant Growth and

Development

Three to four years after the coffee is

planted, sweetly smelling flowers grow

in clusters in the axils of the coffee

55  

leaves. Fruit is produced only in the new tissue. The Coffea Arabica coffee plant is self-

pollinating, whereas the Robusta coffee plant depends on cross pollination. About 6-8

weeks after each coffee flower is fertilized, cell division occurs and the coffee fruit remains

as a pin head for a period that is dependent upon the climate. The ovaries will then develop

into drupes in a rapid growth period that takes about 15 weeks after flowering. During this

time the integument takes on the shape of the final coffee bean. After the rapid growth

period the integument and parchment are fully grown and will not increase in size. The

endosperm remains small until about 12 weeks after flowering. At this time it will

suppress, consume, and replace the integument. The remnants of the integument are what

make up the silverskin. The endosperm will have completely filled the cavity made by the

integument nineteen weeks after flowing. The endosperm is now white and moist, but will

gain dry matter during the next several months. During this time the endosperm attracts

more than seventy percent of the total photsynthesates produced by the tree. The

mesocarps will expand to form the sweet pulp that surrounds the coffee bean. The coffee

cherry will change color from green to red about thirty to thirty-five weeks after

flowing. See Flash movie on Coffee Bean Development.

Coffee Table Preparation

In a coffee cupping session, the table is usually set up with 6 to 10 cups per coffee. These

are fashioned in a triangular manner. At the top of this triangle you should place a sample

of the roasted coffee and a sample of the green coffee. In the center of the table place a cup

of room temperature water and an empty cup containing the cupping spoons. Cover both

the green sample and roasted sample until the cupping session is over and the coffee aroma,

fragrance, and flavor profile have been documented. After this time, the coffee samples

could be uncovered and additional comments can be written based on appearance. This

method will help reduce the common "eye cupping" technique.

Coffee Flavor Analysis

After the coffee has cooled sufficiently take some coffee into the spoon and slurp the coffee

strongly to aspirate it over the entire tongue. It is important to aspirate strongly since you

are trying to cover the entire tongue evenly. Aspirating strongly will also cause tiny

56  

droplets of coffee to be distributed into the throat and into the nasal passage. The nose can

act as another powerful tasting tool. Most of the flavor observed in a coffee is a result of

aromatic compounds present in the coffee. This effect can be demonstrated by plugging

your nose while drinking coffee. While the nasal passage is blocked, the coffee will likely

taste similar to instant coffee due to its lack of aroma. When the nasal passage is opened, a

full rainbow of flavors will immediately become evident.

After each coffee taste test, write down your observations of coffee taste, acidity, aftertaste,

and body. Move to the next cup and try to compare the different cups. As the coffee in each

cup cools, it is often possible to detect new flavors. Therefore, it is important to cup a

coffee when it is both warm and when it has cooled to just above room temperature. The

best coffees will have positive characteristics at both ranges of temperature.

If you are cupping more than a couple cups of coffee, it is advisable to spit out the coffee

after evaluation. When cupping several coffees it is possible to have too much caffeine,

which can adversely alter your cupping ability.

Buying Specialty Green Coffee

The green coffee seller is responsible for grading coffee beans before sending the coffee to

the buyer. Once graded, "Exceptional" and "Specialty" green coffee beans can still have

problems that are not necessarily accounted for in coffee grading. These coffee "defects"

are less serious, but harm the potential of the coffee. You can tell a great deal about the

processing conditions of a coffee by looking at the appearance of the green coffee

beans. Although cupping is the definitive way to check for problems, a good prognostic

tool is to compare coffee beans.

Things to Consider when Buying Coffee:

1. The green coffee beans should be of nearly equal size 17/18, 15/16, 13/14 etc, be

similarly shaped, and have a similar color. The reason for this has to do with how evenly

the coffee will roast which will affect the appearance and taste of the roasted

coffee. Smaller coffee beans will roast differently than larger beans resulting in an uneven

57  

cup. Uneven coloring hints toward drying problems, whereas uneven shapes may indicate

a mixing of cultivars.

2. Ensure that the producer separates coffee

lots byboth geographic area and coffee

varietal. These lots should be harvested,

processed, and cupped separately before

blending in the silos.

3. Washed Arabica coffees should be even and

bright. The coffee beans should not have an

uneven or dull color. If they do, they are likely

to have been dried or processed

incorrectly. Coffee processing is essential for specialty green coffee. If the green coffee

beans look faded, the cup quality will be faded.

4. Inquire about the coffee drying conditions on the coffee estate. If they seem to have

invested a significant amount of time into ensuring that they are drying the coffee properly,

the coffee quality will generally show this in the cup. Improper drying on patios or in

mechanical dryers can usually be observed visually. Some people recommend drying

coffee on patios first to dry the skin, then transfer to mechanical dryers, and then bring the

coffee back to the patios for the final drying. They believe that this helps improve

color. Others send coffee beans to the dryers several times, while in between drying

sessions they allow the coffees to rest in silos so that the moisture content of the bean can

come to equilibrium. This is important since the outside of the coffee bean will dry faster

than the inside of the bean. Inquire about the temperature used on the dryers. Is it over

42°C? If so you can expect a dull or baked cup, resulting in a coffee grade that is less than

desirable.

5. For all coffees, inquire about the coffee processing. Make sure they process the coffee

estate is processing green coffee beans immediately upon harvesting. Otherwise you are

guaranteed a fermented cup since coffee begins fermenting immediately upon pickingIf

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coffee pulp is present in the tanks during processing, it can result in brownish tinges on the

green coffee beans. This is also indicative of harvesting over-ripe coffee cherries.

6. Natural (dry) processed coffees will often be covered in brown silverskin which has

attached itself to the bean. In Brazil they call this a "fox bean" and it is not considered a

defect. Novice classifiers might expect this type of bean to be a defect, but if you can

remove a portion of the silver-skin by rubbing on the black sorting mat it is not considered

a defect. Green (under ripe) coffee also has a silver-skin attached to it, but this cannot be

removed by simple rubbing. In a washed coffee, fox beans may indicate sour, fruity, or Rio

tastes. This should be confirmed in the cup and not visually.

59  

6.Brazil Media & Entertainment Industry:

Brazil media and entertainment (M&E) industry is one of the fastest growing industries in

the world. It is standing at an inflexion point with 'digital' being the buzzword.

Every segment across the industry (television, radio, advertisement, films, print) is getting

digitized in its own way and thereby leading to development of new media.

Evolution of sophisticated digital production and post-production techniques, along with

the factors such as entry of international corporate houses across the film value chain,

growth of digital distribution and exhibition, primarily through increasing penetration of

multiplexes are majorly influencing the film segment in Brazil.

The Media & Entertainment industry is often consideration of as one of the most global of

all the other industries. Its products have spread in the world, and it is under enemy control

by an undersized number of companies with worldwide recognition. Though, in certain

respects the industry is more local than global.

The extend of Media & Entertainment in developing countries inflated markedly in the

thunder years of rapid expansion in the emerging markets in the 1970s.

Brazil is internationally renowned for its Carnival in Rio de Janeiro, and is also host to

many other festivals and festivities throughout the country. The options for fun and

entertainment in Brazil are extravagant and diverse, from Bumba-meu-boi in the north of

the country to the typical dances and festivals with European influences in the south.

In the major Brazilian cities, such as Rio de Janeiro, São Paulo, Salvador and Brasilia, a

broad range of cultural options, such as museums, international-quality cuisine, operas and

concerts is on offer to the tourist.

One of the best ways to find out about upcoming events is to check listings in the local

English-language media. Details of English-language newspapers, radio and TV can be

found in this section.

Those who prefer nights in can also find details of how to access international English-

language TV stations

 

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61  

Type Broadcast television network

Branding "Record"

Country Brazil

First air date September 27, 1953

Founded 1953

by Paulo Machado de Carvalho

Slogan Do jeito que o povo gosta

Market share 17%

Headquarters Rua da Várzea, 240, Barra Funda, São Paulo

Owner Central Record de Comunicação

Established 1990

Affiliates See List of Rede Record affiliates

Official website rederecord.com.br

62  

INDUSTRY IN THE BRAZIL’S ECONOMY

Investment Opportunities and Challenges

Production, post-production and financing in Nollywood is largely an independent venture.

Production budgets are small, schedules are tight and financing is largely derived from

one’s own pocketbook, even for projects involving Nigeria’s top talent. Increased funding

could mean all the difference in giving a particular project the green light under such

circumstances. In Hollywood, movies are financed in a variety of ways ranging from

studios to individuals to hedge funds. With a culture that values doctors, lawyers and other

professionals far more than artists, corporate Nigeria has yet to fully embrace Nollywood

and all of its commercial promise, and has not been nearly as supportive as its American

counterparts. This leaves a real avenue for foreign investors willing to establish footing in

this emerging market.

Post-production is of particular importance to any feature film. In Hollywood, considerable

time and energy is spent on post-production, a key piece in the puzzle responsible for

adding significant details that is key to the movie’s overall tone and direction. However,

given the Nollywood pressure to get that DVD onto the market and make another movie in

order to stay relevant, little time is given to this part of the process in many instances.

47%

14%

28%

2%

1% 2%5%

2%

Television

Film

Print

Radio

Online

OOH

Animation,Gaming,Visualeffect

Music

63  

Sometimes, mistakes can be left in and the movie gets packaged and sold. Increased post-

production training could be an integral piece in ensuring that Nollywood filmmaking

enjoys continued advancement.

Hollywood can spend tens of millions of dollars to market one film around the world, while

in Nollywood, marketing is done largely via word-of mouth. This leaves much room to

expand revenues through increased marketing and merchandising. Nearly 70 percent of the

country is literate and there are approximately 32 million cellular phones in operation and

growing, providing a myriad of marketing opportunities. Instead of releasing a single DVD

and waiting for a trickle down -marketing effect, integrated movie-marketing campaigns

could provide advertising opportunities for marketers seeking ways to introduce their

products to a niche demographic. Trailers and commercials in theatres and in DVDs are not

the industry standard in Nigeria and again could provide opportunities for advertisers.

In summary, in the Indian Media & Entertainment sector, traditionally, HR has been non-

existent. Even today, while many companies have hired HR Heads, the role of HR remains

under-leveraged. Most companies continue to grapple with all issues pertaining to people -

from recruitment and retention, to performance management, training and development, or

even career and succession planning. The scope and challenges for professional HR is

tremendous.

INDIA’S ENTERTAINMENT INFRASTRUCTURE

In India today, only 113 million of the 214 million households have a television; thus, the

“television penetration rate” in India is only at 50% as compared to the U.S. rate of 90%.

Although the entertainment industry in the U.S. currently reaches 40% more users, India

has greater growth potential. Several factors, which make India relatively easy for

development, are increasing investors’ interest in the Indian entertainment industry as

compared with its competitors among the other “BRIC” emerging nations, Brazil, Russia

and China. Among these factors are the following:

(1) there are relatively few restrictions on foreign ownership in Indian media companies;

(2) India is a stable democracy;

(3) India has a growing middle class with income to spend on entertainment;

64  

(4) India has a sizeable base of English speakers and an educated workforce, providing a

market for entertainment imports from established companies such as Disney;

(5) the Indian legal system is based on British law; and finally.

(6) India has a prolific entertainment history, typically producing one thousand motion

pictures every year (to the United States’ one hundred).

Global Investments

Sony Entertainment Television (SET) was launched in 1995 and is 61% owned by Sony Pictures. SET’s family of channels includes general entertainment, films in Hindi and English, an “action series” channel, adventure reality, animation and Animax (a Japanese animation channel with an English feed distributed by SET Discovery – a joint venture between SET and Discovery Communications India). SET’s target audience is the young urban demographic interested primarily in unscripted programming. SET’s channels run local programs based on successful U.S. and U.K. formats such as “Big Brother,” “Dancing With The Stars” and “Idol.” Finally, SET MAX offers Hindi films and Hollywood “blockbusters” from the Sony / MGM library

Investment Opportunities and Challenges

The Director General of the National Film and Video Censors Board has referred to the

Nigerian film industry as an “unexplored gold mine.” Opportunities exist for development

and investment in the industry in virtually all aspects of the film value chain.

Production, post-production and financing in Nollywood is largely an independent venture.

Production budgets are small, schedules are tight and financing is largely derived from

one’s own pocketbook, even for projects involving Nigeria’s top talent. Increased funding

could mean all the difference in giving a particular project the green light under such

circumstances. In Hollywood, movies are financed in a variety of ways ranging from

studios to individuals to hedge funds. With a culture that values doctors, lawyers and other

professionals far more than artists, corporate Nigeria has yet to fully embrace Nollywood

and all of its commercial promise, and has not been nearly as supportive as its American

counterparts. This leaves a real avenue for foreign investors willing to establish footing in

this emerging market.

Compensation

65  

Salary ranges for media executives at the levels described above are US$175,000 –

$200,000, excluding bonuses and other benefits.

Media, Entertainment & Convergence Industry in India: Overview

Media, Entertainment & Convergence (MEC) is one of the most dynamic and fastest

growing sectors in Indian industry. Its growth is being accelerated and fuelled by many

developments taking place in the sector worldwide.

The traditional business of media continues to grow and expand with channels,

publications, theatres and other outlets being launched continuously all across India.

Digital revolution, the growing popularity of mobile and broadband channels will fuel the tremendous growth and development potential in the Media and Convergence space and create new channels and modes of Entertainment and Information worldwide. Digital animation and special effects have gained p articularly good traction in India

IMPACT ON TALENT AND ISSUES FACED

1. Existing Quality of Talent It’s a positive churn that is going on in the media companies and they have been in an increasing state of flux since the early 1980s, when cable and direct-broadcast satellite first became available.

2. 2. Shortage – Recruitment and Attraction of talent Being a creative and a skill based industry, and with constant product and service innovation, the industry is facing an acute shortage of talent at all levels. Also, with new corporate entrants, as the industry is beginning to corporatize and professionalize itself, there is a dire need for senior management talent too. The industry is forced to look outside for such talent, at the FMCG, Telecom, Advertising sectors and try and build domain skills on the job

3. 3. Salaries This shortage of talent in this sector as well as overall, coupled with the explosive total growth in the Indian economy has resulted in increasingly higher wage bills. This sector tops the charts with average salary increases of 184%.

4. 4. Training & Development A lot of executives are being cross-pollinated and then told to learn on the job and left to sink or swim! Companies are trying to transition their skills into new technology areas, but these efforts are at best, ad hoc. With the digital universe opening up, once again the opportunities about for many more jobs. But there is very little concerted effort to train and nurture or develop new skills

66  

COMPARISON OF TAXATION SYSTEM OF BRAZIL AND INDIA

Country Corporate tax Remittance tax Specific

mining tax

Fiscal stability

and fiscal

incentives

Brazil 15% + 10%1 Social

contribution of 9%

based on

net profit2 (worldwide

income

regime)

0% on

dividends3

15% on royalties

and

technical service

25% on others

25% on services

with no

transfer of

technology

The rate

varies

according to

the type

of mineral,

from 0.2% to

3%

Fiscal Stability

Regime: not

applicable

Depreciation:

the general rule

is

straight line

basis7

Specific

depreciation

rules for mining

exploration

activities

GENERAL OVERVIEW ON COMPETITION ISSUES IN BRAZIL RELATED TO

THE ENTERTAINMENT INDUSTRY

This article provides general information on the Brazilian policy to detect, prevent and

eliminate anticompetitive practices in Brazil, in accordance with Law No. 8,884/94 (the

“Antitrust Law”), which deals with the defense of free competition, basing its principles

67  

mainly on economic concepts that are crucial for the growth of the entertainment industry

locally.

The Ministry of Justice, through the Administrative Council for Economic Defense

(CADE), is entrusted with enforcing local antitrust rules and regulations. CADE is the

decision-making body in charge of reviewing and approving any transaction that must be

subject to antitrust clearance, as well as ruling on complaints and investigations related to

anticompetitive practices. In addition to CADE, there are two investigative (as opposed to

decision-making) entities: (i) the Secretariat of Economic Law, linked to the Ministry of

Justice; and (ii) the Secretariat of Economic Monitoring, linked to the Ministry of Finance.

Pursuant to Article 20 of the Brazilian Antitrust Law, any act in any way intended or able to

generate the following effects shall be deemed a violation to the economic order and be

subject to investigation by the Brazilian Antitrust Authorities: (i) to limit, restrain or in any

way harm open competition or free enterprise; (ii) to control relevant markets of certain

products or services; (iii) to increase profits on a discretionary basis; and (iv) to abuse one’s

dominant position. Under Article 20, the same law provides that to take possession of or

bar the use of intellectual property rights or technology will be deemed a violation of the

economic order. Some acts that may be deemed a violation of the economic order include

cartels, price discrimination, tie-in sales, refusal to deal, bid-riggings, predatory pricing and

resale price maintenance, which may also be related to the entertainment industry.

In view of the ruling of the case, CADE can order termination of the restrictive practice and

impose daily fines for non-compliance with its decision. A violation of the economic order

may subject the responsible parties to fines, which vary from 1-30% of the gross turnover

of the last financial year. (Note that the fine must not be lower than the advantage obtained

from the underlying violation, if assessable.) Managers directly or indirectly liable for their

company’s violation may also be subject to an additional fine.

In addition to these fines, CADE can impose several penalties, such as: (i) ineligibility for

official financing or participation in bidding processes involving purchases, sales, works,

services or utility concessions with the federal, state, municipal and the Federal District

Authorities and related entities, for a period equal to or exceeding five years and; (ii)

recommendation that the proper public agencies:

68  

(a) grant compulsory licenses for patents held by the violator and;

(b) deny the violator’s installment payment of federal overdue debts, or order total or

partial cancellation of tax incentives or public subsidies.

Antitrust matters in Brazil may also have criminal consequences, and third parties can bring

claims for damages caused by anticompetitive practices to civil courts.

Moreover, it is worth mentioning that CADE has authority to review and decide on

concentration acts or practices taking place outside the Brazilian territory, since Article 2 of

the Antitrust Law sets forth that it applies to acts wholly or partially performed within the

Brazilian territory, or the effects of which are or may be suffered therein.

PRESENT POSITION IN TREND OF BUSINESS(INDIA-BRAZIL)

Trends and Prospects

Exports are the major focus of India's trade policy. The export sector is a core sector in the economic growth of the country and is important for addressing macro economic concerns. The incentives offered by the export promotion package are comparable to that of any other country. The focus remains on inducing the foreign investors to set up export oriented units in India. India offers a production base for foreign markets around the world for sourcing components and products manufactured at a low cost. Export growth has shown a downward trend since the year 1996. Export growth during April-February 1997-98 is placed at 2.63% in dollar terms over that of the corresponding period in 1996-97. The 1997 figures stand at only 4%. The performance in the current fiscal year (1997-998) has been erratic - there was a sharp decline in the first quarter, which was somewhat reversed in the second quarter, again to slow down in the third quarter with a slight improvement noted in the month of February

PRESENT RATE BARRIERS POTENTIAL FOR IMPORT/EXPORT IN INDIA-

BRAZIL

Nontariff Barriers: Direct Price Influences

Subsidies

69  

Although countries sometimes make direct payments to producers to compensate them for

losses incurred by selling abroad, governments most commonly provide other types of

assistance to firms to make it cheaper or more profitable for them to sell overseas. For

example, most countries offer their potential exporters an array of services, including the

provision of information, sponsorship of trade expositions, and establishment of contacts

for businesses overseas.20 These types of service subsidies are frequently more justifiable

than tariffs from an economic standpoint, since they are designed largely to overcome

market imperfections rather than to create them.

CONCLUSION

Huge potential of trade between India and brazil

Invest more in infrastructure, communication and Digital Media

Make India more favorable for investment for brazil

India also needed to invest in brazil in order to reap benefits from higher rate of return

from brazil

Important not underestimate the culture difference

India has big opportunity to increase their GDP growth in digital media Sector and

Brazil has wider scope to Expand and generate Digital Revenue Model.

The government also needs to make policy changes like reserving the large-scale sector

so that it can achieve economies of scale and adopt a synergistic approach.

A great deal of work has been done by Indian trade and industry to comply with

ecological and environmental regulations, and so Indian media and entertainment can

adopt an appropriate model signifying a distinct quality.

70  

7.MINING INDUSTRY

The land that we now days call Brazil is claimed by Portugal in 1500. Initial Portuguese expeditions

to the interior of the large and apparently inexpugnable country were marked by failure. It was only

200 years later, in the 1690s that Brazilian colonial scouts - named Bandeirantes- found gold in the

mountains of Minas Gerais. The gold rush attracted 400,000 Portuguese and half a million African

slaves to the region.

I n the 16th and 17th century diamonds were so rare and expensive that ordinary people couldn't

tell one. Placer miners found many glassy stones and used them as chips in poker games. In 1725

the 'chips' were identified as diamonds and for the next 120 years Brazil was practically the World's

only diamond producer.

In 1891, Brazil's first Republican Constitution granted landowners mining rights over underground

mineral resources found on their lands, and allowed foreign-owned companies to work the mines of

Brazil.

Brazil, the world's fifth largest country boasts a rich geology and an astonishing variety of mineral

deposits - from iron ore and gold to diamonds and oil. Having only 30% of the territory geologically

mapped, having a vibrant and modern mining industry, an educated population, a developing

economy, and an open and stable legislation the future of mining in Brazil cannot be anything but

bright. This review provides a snapshot of the state of mining industry and lists specific topics for

companies that are interested in investing in Brazil’s mineral wealth. Many more links lead to

detailed resources, while the easy access to Info Mine’s comprehensive database could narrow the

search to any of the hundreds of active companies and their properties.

Brazil produces 70 mineral commodities: 21 metals, 45 industrial minerals and four fuels. The

South American giant is the second largest producer of iron ore worldwide, with 19% of total global

output. After oil, iron ore is the second largest Brazilian export commodity, with China, Japan,

Germany, France and Korea the leading importers.8

Brazil is the world’s principal producer of niobium, the seventh largest producer of tin and the

thirteenth largest gold producer in the world, producing approximately 55 metric tons (mt) of gold

in 2008 according to IBRAM. Recent high gold prices have led to new investments in expansion

and exploration so that Brazil’s gold production will increase significantly.

                                                            8 http:// www.mayerbrown.com 

71  

Introduction of Brazilian mining sector

The Brazilian mining sector is currently regulated by Decree-Law no. 227, dated February 28, 1967

(the “Mining Code”) and normative rulings issued by the National Department of Mineral

Production (Departamento Nacional de Propriedade Minerária – “DNPM”), the entity responsible

for monitoring the mining activities in Brazil, subordinated to the Ministry of Mines and Energy

(“MME”). The Federal Government, however, is in the process of drafting a bill of law setting forth

a new structure for the development of mining activities in the country.

The main goal of the reform being considered is the creation of a National Mining Agency, a

regulatory agency to replace DNPM and ensure the exploitation of mineral resources consistent

with the national development strategy. The model currently being considered is based on an

efficient regulatory system for the mineral industry, attracting investment and removing obstacles

that restrict the development of production. The National Mining Agency, as currently proposed,

will be empowered to monitor mining activities, with administrative, financial and decision-making

autonomy. Thus, it be able to develop a regulatory culture detached from the Government’s

immediate priorities. Its five Directors (one of which being the Chairman) are proposed to be

appointed for fixed terms by the President, subject to confirmation by the Senate, in the same

manner applicable to other Brazilian Regulatory agencies. Nowadays, Brazil has different regimes

for the exploration and use of mineral resources (exploration authorization, extraction authorization,

permit for artisan mining, licensing and extraction registration), the most relevant of which being

the authorization regime.

Before starting exploration, the entrepreneur must obtain an Exploration Authorization, which is

granted by DNPM after the fulfillment of certain procedures that consist mostly of paperwork.

When exploration works are completed, the entrepreneur may file an exploration report with the

DNPM and apply for an Extraction Authorization to be granted by the MME. This system is based

on the rationale of favoring first applications, which means that the person that first requests an

authorization regarding a particular area excludes any other person from developing activities in

that area until the expiration of the initial authorization.

The maximum time period being considered for the exploitation of mineral resources would be 35

years for the extraction -- with a possible extension for one period of equal length, the details of and

requirements for which are not yet defined -- and 5 years for exploration -- with one possible

extension for 3 years. These periods are intended for creating incentives to the development of

activities, contrary to the current practice of acquiring the rights for future development. The new

72  

framework also considers the creation of an entity to define the strategic policies for mining sector -

- the National Council for Mineral Policy (Conselho Nacional de Política MIneral – “CNPM”).

Introduction of mining company of Brazil

Brazil’s largest, and the world’s second largest, mining company is Companhia Valedo Rio Doce.

The company recently changed its brand name to VALE. Privatized in 1997, VALE is responsible

for more than 50% of Brazil’s mineral output based on value, and represents an excellent

opportunity for US equipment suppliers. VALE produces nearly 90% of Brazil’s iron ore; 100% of

Brazil’s potash, 85% of manganese, 43% of kaolin, 80% of bauxite, and it is also the top player in

aluminum, copper, and nickel production. The output of its main minerals in 2008 was 302 million

metric tons (Mt) of iron ore, 275 kt nickel, 11.6 Mt of bauxite, 5.0 Mt of alumina, 543 kt of

aluminum, 311 kt of copper, 607 kt of potassium chloride, 1.1 Mt of kaolin.

VALE was established in 1942 by the Brazilian Federal Government as Companhia Vale Do Rio

Doce (CVRD), Vale—as the company is now known—influences all levels of Brazil’s mining

industry. Privatized in 1997, Vale is now positioned as the world’s second largest mining company

with 2009 revenues of $28.5 billion and a permanent staff of 115,000. While Vale is a diversified

mining company with operations ranging from nickel extraction in Canada to potash in Argentina,

the company’s core revenue driver is the export of iron ore from Brazil, which represents 65% of

the company revenues.9

VALE is also the top logistics player in Brazil, especially for ports and railroads, not only for its

own use, but also as a supplier of logistics services to other companies. It is the largest Brazilian

consumer of electricity. In the last five years, VALE has become very internationally diversified,

having bought the Canadian company INCO (the world’s largest nickel producer); plus the above

mentioned coal projects, and many other projects in Latin America, Africa and Asia. Between 2002

and

Vale is by far and away the world’s largest producer of iron ore with an output of 230 million tone.

Similarly to BHP Billiton and Rio Tinto in the Pilbara, Vale’s key to success is the immense

infrastructure the company owns with more than 10,000 km of railway lines, 216 locomotives, nine

ports and a vast fleet of ships. Almost every single equipment supplier and services company with

operations in Brazil has Vale as a major customer. Vale is an omnipresent force throughout Brazil’s

mining industry.

                                                            9 

9 http://www.vale.com 

73  

Role of Mining industry in the Brazil’s Economy

1. Total national investment

Mining makes a very significant contribution to national investment totals especially when

mining activity is building up from a low base In the case of Brazil, Vale’s investments alone

are the equivalent of almost 5% of total annual national investment.

2. Exports

The contribution of mining to total exports in 2013 amounted to: Brazil 19.0%

3. Net foreign exchange earnings

The mining sector generates significant foreign exchange earnings. A substantial proportion of

these do not, however, enter the national economy as they are used by mining companies to

import goods and services during construction and operation.

4. Gross Domestic Product (GDP)

Mining typically provides only a modest direct contribution to a country’s GDP and the various

income modules that are components of GDP (typically around 2–4% of national totals). This

relatively low number is partly explained by the fact that developing host countries often lack

the industrial base to supply the sophisticated mining technology used in modern mines.

5. Employment and wages

Similar findings have been obtained in relation to mining’s contribution to employment. New

direct jobs created by large mining companies are normally well-remunerated compared to

prevailing national average income levels, though the numbers of such jobs are relatively small

– rarely more than 1.5% of total national employment.10

Structure of Mining Industry

The Brazilian mining market is dominated by approximately 15 mining companies of both

international and domestic origin. Iron ore is by far the most prevalent mineral exported to the

international market from Brazil. Vale’s pre-eminence in the Brazilian mining sector is expressed

by the company’s dominance over the iron ore market; representing 80% of total Brazilian

production, with CSN, Anglo American, MMX and Samarco making up the shortfall.

                                                            10 http:// www.icmm.com

74  

Comparison of Mining industry of Brazil and India

Overview of Brazil mining industry

Brazil’s largest installed mining operations are for iron ore, with 2010 output at 372 million metric

tons/year (Mt/y), representing nearly 17% of the world’s total. Brazil also produces:

Size of the Industry:

Brazil is the third largest country in the Americas after the USA and Canada, and has the world’s

ninth largest. Brazil has demonstrated reserves of several important commodities such as bauxite (2

800 Mt), Kaolin (1 700 Mt), iron ore (19 000 Mt), niobium (4.5 Mt Nb2O5) and nickel (6 Mt).

Overview of mining industry of India

Indian Mining Industry has been a major mineral producer in Asia and globally. Currently it is the

global producer of chromite, coal, iron ore and bauxite while enjoying economic growth during the

nineties. Mining is over 6000 years old in India. The oldest mines include lead-zinc mineral

deposits at Zawar, copper deposits at Khetri, and gold deposits in Karnataka. The mining

techniques used back then were much ahead of their time and technology specially the smelting

techniques. A timeless example and monument of the mastery of the old times craftsmen is the Iron

Pillar in the Qutab Minar complex in New Delhi. India's current state owned mining and benefitted

companies have been facing drastic production cuts, resulting in operations becoming

uneconomical which has eventually resulted in the closure of several mining operations. Reasons

have been given as lower grade reserves and excessive manpower quotas for poor results.

Size of the Industry:

India is the seventh largest country which extensively spreads over an area of 3.29 million square

kilometers. The Indian mining industry is the backbone of Industries in the country. The mining

industry is the main source of raw material for most of the industries producing as many as 84

minerals comprising 4 fuels, 11 metallic, 49 non metallic and 20 minor minerals. Today India has

resources of 12745 MT of iron ore, 2,525 MT of bauxite, 233 MT of magnesite, 76446 MT of

limestone, 70 MT of barites, 167 MT of lead & zinc ore, 176 MT of manganese ore and 90 MT of

chromite.

75  

Vedanta resources( India)

Vedanta resources are a globally diversified natural resources group committed to sustainable

development, supporting local communities and contributing to the economies of the areas where

Vedanta resources operate. Our assets and operations are located in the high growth markets of

India, Zambia, Namibia, South Africa, Liberia, Ireland and Australia. Vedanta resources are

primarily engaged in copper, zinc, silver, aluminum, iron ore and power business.

Vedanta resources have experienced significant growth in recent years through various expansion

projects for our copper, zinc, lead silver, aluminum, iron power and power businesses. Our Group

Revenue for the fiscal year ending 31 March 2011 was US$ 11.4 billion.

Vedanta resources have spent approximately two-third of our US$ 19 billion capital expenditure

programmed as of 30 September 2011. We are the world’s largest integrated Zinc Lead producer

and among the top producers of copper, iron ore and silver.

In the last five years, Vedanta resources have reduced our energy consumption by over 40%. Last

year, Vedanta resources planted 759,000 trees bringing the total number of trees on our operations

to 12 million Vedanta Resources is a London-based natural resources group, diversified in

operations. Vedanta resources currently operate in India, Zambia, Namibia, South Africa, Liberia,

Ireland and Australia, with extensive interests in aluminum, copper, zinc, lead and silver. Vedanta

resources employ over 31,000 people

Vedanta is the only manufacturing company out of a total of four Indian companies to have ever

received this award; the other recipients from India are in the technology and banking sector.

Products of Vedanta

Copper, Zinc ,aluminum, iron ore

GRE NRE COKE LTD. (GUJARAT)

Largest independent producer of Metallurgical Coke in India Profit earning and dividend paying with strong financials and credit rating Present Met Coke capacity of over 1.43 MT, being increased to 4 MT by 2015 Strong focus on the Environment with ISO 14001:2004 & OHSAS 18001:1999

certification Rated one of the top 10 company by 10-years profit performance issued by Business

Today on India’s Most Valuable Companies (Nov 2009 edition) Coke Exports by Gujarat NRE

Brazil

 

Brazil

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gold, coal a

76 

and

77  

Comparison of taxation system of Brazil and Indiacal Incentives

Country Corporate tax Remittance tax

Specific mining tax

Fiscal stability and fiscal incentives

Brazil 15% + 10%1 Social contribution of 9% based on net profit2 (worldwide income regime)

0% on dividends3 15% on royalties and technical service 25% on others 25% on services with no transfer of technology

The rate varies according to the type of mineral, from 0.2% to 3%

Fiscal Stability Regime: not applicable Depreciation: the general rule is straight line basis7 Specific depreciation rules for mining exploration activities

India Indian Company: 33.22%1 Foreign Company: 42.23%2

0% on dividends3 21.115% on interest4 10.5575% on Royalty and Fee for Technical Services5 42.23% on other income6

The value varies according to the type of mineral, from 0.2% to 20%7

Fiscal Incentives: 1)Tax holiday on mining in Special Economic Zones8 2)Special deduction on prospecting of minerals under Income Tax9 3)Concessional import duty rates on coal mining projects10 Fiscal Stability: 1)Limitation on enhancement of royalty and dead rent rates11

78  

Policy and norms of Brazil’s Mining industry

Regulatory framework

Under the Brazilian Constitution, title to mineral resources differs from title to the corresponding

surface land, as the former is exclusively owned by Brazil's federal government. Therefore, in order

to explore and exploit mineral resources under the authorization regime (see below), an exploration

permit and a mining concession, respectively, are required.

Exploration permits (Alvará de Pesquisa) are currently granted to Brazilian individuals or legal

entities headquartered in Brazil and managed by individuals domiciled in Brazil. Mining

concessions are granted solely to legal entities that are also headquartered in Brazil and managed by

individuals domiciled in Brazil.

The public authority responsible for the enforcement and application of mineral legislation in Brazil

is the National Department of Mineral Production (Departamento Nacional de Produção Mineral)

(DNPM), a department within the Ministry of Mines and Energy (Ministério de Minas e Energia)

(MME).

Licensing

Licenses can be granted for the extraction of certain mineral substances that have immediate use in

civil construction, rocks for use in pavement, clay for the manufacture of red ceramics, and

limestone for soil correction. Licenses are granted on an exclusive basis by local municipal

authorities to the owner of a given piece of land (or to a duly authorized individual), and must be

registered with the DNPM.

Country Name

April-2010-March-2011

%Share

April-2011-March-2012

%Share %Growth in INR

%Growth in US$ Values in Rs.

Lakh

Values in US$ Million

Values in Rs. Lakh

Values in US$ Million

India Import from BRAZIL

1,606,429.86 3,548.88 0.9542 2,065,962.78 4,321.99 0.8808 28.61 21.78

India export from BRAZIL

1,833,586.35 4,024.16 1.6043 2757688.27 5769.75 108811 50.4 43.38

79  

Taxation

Corporate income tax (Imposto de Renda de Pessoa Jurídica) (IRPJ) and social contributions on net

profits (Contribuição Social Sobre o Lucro Líquido) (CSLL).The profits of Brazilian companies are

subject to IRPJ and CSLL. The tax base for these taxes is defined according to the real profit system

(lucro real) or presumed profit system (lucro presumido). Some companies can choose between

either of the systems while other companies must adopt the real profit system, based on their

turnover and/or other characteristics.

Import Regulations

Since March 1990, Brazil has sought to deregulate and reduce trade barriers. The government has

eliminated many bureaucratic procedures that were considered obstacles to free trade.Despite the

government's efforts to reduce the bureaucracy connected with importing and exporting, the use of a

local customs agent remains essential in dealing with the peculiarities of the Brazilian customs

authorities. The Secretariat of Foreign Trade (Secretaria de Comércio Exterior - SECEX), an agency

of the Ministry Development, Industry and Foreign Trade, controls imports and exports in Brazil.

Companies engaged in foreign trade must register with the SECEX as importers or exporters.

Policies and norms of India for import and export

Availability of tax holiday

Mining companies in specified backward areas are eligible for a complete tax holiday for a

period of five years from commencement of production and a partial tax holiday thereafter. The

activities should begin in the period between April, 1993 and March 31, 1998.

Depreciation allowances

The benefits of accelerated depreciation are available for tax purposes. As a result, the total

amount of depreciation which is allowable as a tax deduction does not change but the company

is allowed to make such deductions earlier in the project’s life. Depreciation rates, in general,

are given alongside.

Withholding tax rate

Type of Payment (Rate(%)) Dividends (20)

Interest (20)

80  

Royalties (20)

Technical service fees (20)

Other taxable income (55)

Principal indirect taxes

Excise duties

Excise duties are levied in terms of the Central Excise and Salt Act, 1944 and the Excise

Tariff Act, 1985. Minerals in their finished from are excisable items. However, they have

been exempt from the whole of the duty of Excise leviable thereon. All manufacturers of

excisable goods are required to register under the Central Excise Rules, 1944. The

registration is valid for as long as production activity continues and no renewals are

necessary.

Custom duties

The Export-Import Policy (‘EXIM’) 1997-2000 regulates the import and export of goods.

Goods which are mentioned in the Negative List of Imports appended to the EXIM

Policies, are either prohibited from being imported or restricted through licensing,

canalized. Custom duties are levied as per the terms of the Custom Act, 1962 and Custom

Tariff Act, 1975. Custom duties are livable on all goods which are freely importable.

Mining has been classified as a manufacturing activity under the Export Promotion Capital

Goods (EPCG) Scheme. Capital goods imported for mining would qualify for concessional

rates of customs duty subject to certain export obligations.

Sales tax

Sales tax is a single point tax i.e. tax levied on sale of a commodity which is manufactured

of imported, and sold for the first time. Subsequent sale of the product without any process

is exempt from Sales tax. Sales tax is levied either under the Central or the State Sales tax

Acts. There is no Sales tax on services and exports.

Present trade Barriers for import and export

Brazil still needs to focus on improving infrastructure, lowering taxes and training workers for

the industry.

 

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Source: Ministry of Commerce & Industry, Government of India11 Future business opportunity in Brazilian mining industry In view of the rising worldwide demand for natural resources, the Brazilian

Government has recently released important information on potential changes to the

Brazilian mining regulations and on new opportunities for private entrepreneurs in

mining initiatives in Brazil. This article summarizes some of the highlights of such

changes and opportunities. The background of the proposed changes would basically be

intended to invigorate the State’s participation in the regulatory proceedings, to

maximize the exploitation of ore deposits, to avoid speculation with mineral rights and

to attract new investments to the mining sector. As to new opportunities, these would be

essentially associated with investments in new nuclear energy plants (which would

require additional uranium reserves), the increasing requirement for fertilizers in the

country and the international demand for rare earths.

                                                            11http:// www.eximbankindia.in

83  

TEXTILE INDUSTRY

The Brazilian textile and apparel industry comprises more than 30,000 companies in the

textile and apparel sectors, generating some 14 million to 15 million jobs, both direct and

indirect. Brazil is among the top 10 textile industry markets worldwide and among the top

five as an apparel producer.

Big Cotton And Textile Producer

Brazil is the fifth-largest producer of cotton, after China, India, the United States and

Pakistan The yield per hectare of cotton is rather high in Brazil, especially in the state of

Mato Grosso.

The Brazilian textile industry is constantly growing owing to the acquisition of modern

equipment and technical development applied to production, and also the promotion of its

professionals through training programs and increasing productivity. This development

program has already invested more than $8 billion. Its objective is to strengthen Brazil's

textile industry in the globalized and competitive market.

Brazil has around 4 million ring spindles and 330,000 rotors in operation. It produces and

consumes 5 percent of the world's total cotton crop. Producing approximately 1.2 million

metric tons of cotton annually, Brazil exports almost 400,000 metric tons to Indonesia,

Pakistan, Japan and Argentina.  

Introduction of textile industry of India

Second largest producer of textiles and garments after China

Second largest producer of cotton in the world

Second largest employer in India after agriculture–Direct Employment to 35mn.

people

Constitutes about 12% of India’s exports

Contributes about 14% to Industrial production

Contributes about 4% to GDP

Investment made in Textile sector since launch of TUFs scheme is Rs.208000

crores till June 2010

84  

Role of Textile industry in the Brazil’s Economy

Brazil's fast growing economy and the population's buoyant spending have resulted

in a large increase in textile and clothing consumption per head in the country - and

a knock-on boost to production, new research shows.

Between 2005 and 2010, textile and clothing production in Brazil rose by 25.2%,

and this trend is expected to continue, according to a report in the latest issue of

Textile Outlook International.

The industry is prominent in world terms and fulfils a central role in the country's

manufacturing sector. In 2010 it produced 2.25m tons of textiles and 1.96m tons of

made-up articles, making Brazil the world's fifth largest textile producer and fourth

largest clothing producer.

Moreover, there has been a sharp increase in domestic demand as personal

disposable incomes have risen, and this has manifested itself in an impressive 50%

rise in fibre consumption per head during the five years to 2010.

The increase in domestic demand has been met partly by a surge in imports,

according to 'Prospects for the Textile and Clothing Industry in Brazil Nonetheless,

domestic production has increased at an even faster rate.

Such fast growth has spurred a surge in acquisitions of new and more modern

machinery by Brazilian manufacturers in a bid to increase productivity. As a result,

the industry is becoming more capital intensive and has seen a reduction in its

labour costs.

The industry also benefits from local sources of raw materials, especially cotton.

Yields have risen to the point where they are among the highest in the world, and

Brazil has become a major cotton exporter.

Not surprisingly, cotton continues to dominate fibre consumption by Brazil's

spinning mills, and the country has become the world's second largest producer of

denim fabric.

 

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87  

the impressive growth in the EU market and grew by 16% and simultaneously increased its

market share from 6.0% to 7.3% in the first nine months of 2005. It is expected that by

2008, market share of the Indian textile industry would increase to 9% (IBEF, ICRA

Presentation, 2006).

Policy & Norms for Textile Industry for Import and Export 

Till 1985, the growth of Indian textile sector used to take place in very general terms. It was

in the year 1985; the significance of textile sector in India was realized for the first time. A

separate policy was declared to promote this industry. Later, National Textile Policy was

announced, in the year 2000 which aimed at availability of adequate quality cloth at

reasonable rates, catering to the majority of India’s population (put some ref). It also aimed

at providing employment to a large number of population. The same year also became

evident because the government took initiatives of setting up apparel parks; 2002 and 2003

showed a gradual decline in excise duties for most types of fabrics while 2004 offered the

CENVAT system on an optional basis. 

Indian Textile Industry plays a vital role in Indian economy. For the proper functioning and

operation of industry it is very essential to have some policies and regulation in place. In

India, the Ministry of Textile is responsible for the formulation of policy, planning,

execution, development, export promotion and regulation of the Textile Industry and

related sectors. There are several other bodies and organizations which help to formulate

and execute these policies. All policies should be implemented for the greater development

of the whole industry so that it can help to strengthen the economy.

Import Licensing

India has liberalized its Import regime for Textiles and apparel, but some of the part is still

limited for market access. Currently, there is no import restriction for yarns & fabrics items.

Apparel & Made-up textiles goods require a Special Import License (SIL). Govt. revised

Exim Policy on 31st March 1999 by eliminating Import Licensing Requirements for 894

consumer goods, agriculture products and textiles. On 28th December 1999 India and Us

signed an Agreement for the elimination of import restrictions of 1,429 agriculture, textiles,

consumer goods and apparel. India removed restrictions on 715 tariff items as of 1st April

2000.

88  

Custom Procedures

Marking, Labeling, and Packaging Requirements: Marking, Labeling, and Packaging

Requirements for Textile products are technically complex and difficult to implement.

According to textile regulation passed on 22nd july 1998 by GOI, Yarns, and Fabrics to

have the statutory markings and these markings should not mislead the consumers. For

instance, Cloths must be remarked with the name & address of manufacturer, a description

of cloth, sort number, length in meters and width in centimeters, and washing instructions.

The Man made fiber cloth must indicate whether it is made by spun or filament yarn. The

month & year of packaging, the exact composition of cloth. The Marking must appear on

the face plait of each piece of cloth. The language for marking must be in Hindi and

English with international numerals.

Export and Special Economic Zones: Govt. of India has established Export

Processing Zones (EPZs) and Special Economic Zones (SEZs). In EPZs units can

import goods free of custom duty. There is 5-year tax holiday to any industrial unit

in EPZs. Govt. has allowed 100% Fore3ign ownership of units under EPZs and

SEZs. The Govt. considers SEZs as foreign territory for trade and tariff purpose.

Units under SEZs may engage in Manufacturing, Trading and Services. Units are

exempt from routine checking of exports by customs, and they can sell in the

domestic market on payment of duty as applicable to imported goods.

FDI policies

As liberalisation in the economy has gathered up, FDI policies in the textile industry has

reformed to a great extent. The biggest driving force for the government has been the

manufacturing area as for most of the foreign investors it is much safe to invest in building

manufacturing potentials. Following this, the government is executing various schemes like

integrated textile and apparel sites. However this sector allows 100% FDI, but the firms are

not taking enough initiatives to tap this opportunity (Home Fashion, 2007)

Policy & Norms of India for Import and Export to the Brazil

Legal Document Requirements for Import/Export in Brazil

This section covers documents that are commonly used in exporting, but specific

requirements vary by destination and product. It is divided into the following subsections:

common export documents, transportation documents, export compliance documents,

89  

certificates of origin, other certificates for shipments of specific goods, other export-related

documents, and temporary shipment documents.

COMMON EXPORT DOCUMENTS

1. Commercial Invoice

A commercial invoice is a bill for the goods from the seller to the buyer. These invoices are

often used by governments to determine the true value of goods when assessing customs

duties. Governments that use the commercial invoice to control imports will often specify

its form, content, and number of copies, language to be used, and other characteristics.

2. Export Packing List

Considerably more detailed and informative than a standard domestic packing list, an

export packing list lists seller, buyer, shipper, invoice number, date of shipment, mode of

transport, carrier, and itemizes quantity, description, the type of package, such as a box,

crate, drum, or carton, the quantity of packages, total net and gross weight (in kilograms),

package marks, and dimensions, if appropriate. Both commercial stationers and freight

forwarders carry packing list forms.

3. Pro Forma Invoice

A pro forma invoice is an invoice prepared by the exporter before shipping the goods,

informing the buyer of the goods to be sent, their value, and other key specifications. It also

can be used as an offering of sale or price quotation.

TRANSPORTATION DOCUMENTS

1. Airway Bill

Air freight shipments require airway bills. Airway bills are shipper-specific (i.e., USPS,

Fed-Ex, UPS, DHL, etc.).

2. Bill of Lading

A bill of lading is a contract between the owner of the goods and the carrier (as with

domestic shipments). For vessels, there are two types: a straight bill of lading, which is

non-negotiable, and a negotiable or shipper's order bill of lading. The latter can be bought,

sold, or traded while the goods are in transit. The customer usually needs an original as

proof of ownership to take possession of the goods.

90  

3. Electronic Export Information Filing (formerly known as the Shipper’s Export

Declaration)

Electronic Export Information (EEI) is the most common of all export control documents. It

is required for shipments above $2,500* and for shipments of any value requiring an export

license. It has to be electronically filed via the AES Direct online system, which is a free

service from Census and Customs.

EXPORT COMPLIANCE DOCUMENTS

1. Export Licenses

An export license is a government document that authorizes the export of specific

goods in specific quantities to a particular destination. This document may be

required for most or all exports to some countries or for other countries only under

special circumstances. Examples of export license certificates include those issued

by the Department of Commerce’s Bureau of Industry and Security (dual use

articles), the State Department’s Directorate of Defense Trade Controls (defense

articles), the Nuclear Regulatory Commission (nuclear materials), and the U.S.

Drug Enforcement Administration (controlled substances and precursor chemicals

2. Destination Control Statement

A Destination Control Statement (DCS) is required for exports from the United

States for items on the Commerce Control List that are outside of EAR99 (products

for which no license is required) or controlled under the International Traffic in

Arms Regulations (ITAR). A DCS appears on the commercial invoice, ocean bill of

lading, or airway bill to notify the carrier and all foreign parties that the item can be

exported only to certain destinations.

CERTIFICATES OF ORGIN

1. Generic Certificate of Origin

The Certificate of Origin (CO) is required by some countries for all or only certain

products. In many cases, a statement of origin printed on company letterhead will suffice.

The exporter should verify whether a CO is required with the buyer and/or an experienced

shipper/freight forwarder or the Trade Information Center.

2. Certificate of Origin for claiming benefits under Free Trade Agreements

91  

Special certificates may be required for countries with which the United States has free

trade agreements (FTAs).Some certificate of origin including those required by the North

American Free Trade Agreement (NAFTA), and the FTAs with Israel and Jordan, are

prepared by the exporter. Others including those required by the FTAs with Australia; the

Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR)

countries; Chile; and Morocco; are the importer’s responsibility).

3. Certificate of Origin for goods not manufactured in the Brazil

Certificates of origin for goods not manufactured in the brazil can be obtained from the

Brazil Chamber of Commerce. The Brazil Chamber of Commerce uses EZCertOrigin™, a

service provided by ICS Consulting, LLC, to process all requests submitted for certificates

of origin. Exporters can visit EZCertOrigin or call 1-888-885-6650 to obtain the forms

required by the Brazil Chamber of Commerce and detailed instructions on how to fill out

the forms. The fee for each certificate is $40.00 for Brazil Chamber members. The fee for

each certificate is $150.00 for non-Brazil Chamber of Commerce members. It costs $5.00

per copy for certified copies of certificates.

Present Trends Barriers for Import & Export of textile

Foreign trade barrier

A foreign trade barrier is any barrier that impedes a company’s ability to trade in a foreign

company. The most common trade barriers are listed below:

Impact of Rupee Appreciation on Exports

Environmental Issues

Competitive Threats from Other Developing Countries

Fragmented Industry

Cost Competitiveness

Skewed Fibre Mix in India

Social Issues

Tariff and Customs,

Service Barriers,

Standards, testing, labeling, or Certification,

Rules of Origin,

Government Procurement Contracting,

92  

Intellectual Property Protection Problems,

Excessive Government Requirements,

Excessive Testing or Licensing Fees,

Bribery, and

Investment Barriers.

Potential for Import and Export in Indian Market

Indian Textiles-Export Growth Drivers

Textile manufacturing continues to shift to low cost Asian countries

Increasing cost of labor ,scarcity of raw material and other key resources like

power, rising domestic demand is restricting China’s ability to further increase its

share in the world trade there by making it as fourth largest importer of textiles

Buyers need to diversify sourcing risk

Availability of raw materials, especially cotton, integrated operations and design

skills in India

Favorable demographics, rising income and population levels, and rising retail

penetration in other developing countries (other Asia countries, Latin America etc.)

Hence…Good Opportunity for India to Increase Exports

Business Opportunities for India

1. Competition from ChinaRising

2. Household Incomes in India

3. .Green Clothing

4. Changing Consumerism

5. Availability of Skilled Labour

6. Strong Textile Production Base.

7. India - A Retail Sourcing Hub

8. Recent Depreciation of Rupee

9. Technical Textiles: Emerging Opportunities for India

93  

Conclusions

To effectively tackle the situation India needs to invest in research and development

to develop new products, reduce transaction costs, reduce per unit costs, and finally,

improve its raw material base. India needs to move from the lower-end markets to

middle level value-for-money markets and export high value-added products of

international standard. Thus the industry should diversify in design to ensure

quality output and technological advancement.

The weakest links in the entire chain are the powerlooms and the processing houses.

The latter especially are very important because they are responsible for the highest

value addition in the manufacturing line. A powerloom co-operative structure could

be evolved for pooling of common services and functions such as quality testing,

marketing, short-term financing, etc. Further, because of the geographical

proximity enjoyed, a cluster approach can be adopted.

The government also needs to make policy changes like dereserving the small-scale

sector so that it can achieve economies of scale and adopt a synergistic approach.

Handlooms by their very nature can adopt a strategy of "niche” marketing. In this

respect, export promotion, common credit and marketing facilities and more

significantly publicity are important areas for co-operation. Here too, a co-

operative structure would be useful though government agencies should be involved

because of their outreach. Newer and more innovative forms of involvement are

required where decentralisation should be a key element.

India has made little attempt to forge partnerships – in equity, technology and

distribution in overseas markets. The newer nuances of global apparel trade

demand joint control of brand positioning, distributing and quality assurance

systems.

The Indian textile industry has recognised the need for a cradle-to-grave approach

when tackling environmental issues i.e. eco prescription should be applied right

from the stage of cultivation to spinning to weaving to chemical processing to

packaging. Here especially there is great scope for private -public partnerships.

94  

A great deal of work has been done by Indian trade and industry to comply with

ecological and environmental regulations, and so Indian garments can adopt an

appropriate label signifying a distinct quality.

Suggestions

Provision of co-operative structures for quality testing, marketing, brand-building

Technological upgradation (egs. Effluent treatment plants, energy saving devices,

and other machinery related directly to the production process like spreading,

cutting, finishing, etc.

Adoption of environment-friendly technology to pre-empt the adverse impact of

non-tariff barriers. This includes environmental monitoring / testing equipment and

services, combating air pollution (package scrubber, special air pollutant treatment

for H2S, CS2), solid waste removal, wastewater disposal .

Development of textile-specific software for India, Computer-Aided Textile

Designing, aiding IT integration.

Working out alternative techniques / frame conditions such that sanitary and phyto-

sanitary measures are not a problem

Managerial training to encourage adoption of techniques like JIT, Quick Response

Systems

Usage of EPS (Electronic Point of Sale) software

Promoting labels like RUGMARK (carpets) in textiles so that consumers are

satisfied that child labour has not been employed, to counter negative publicity

generated by the "Clean Clothes" movement, etc.

Promoting hand-made articles by improving quality of raw materials and

introducing machinery where possible in the process so as to maintain standards of

quality and design

Development of new products

Adoption and adaptation of state-of-the-art information technology in enterprise

resource planning so as to pre-empt non-tariff barriers which curtail markets for the

Indian textile industry

Helping firms build close relationships with customers

95  

Improvement of synthetic fibre-base to reap economies of scale, use of genetic

engineering, bio-technology, and cellular biology in both natural and synthetic

fibre-base.

5 Bibliography

http://www.textileworld.com/Articles/2010/September/Sept-

Oct_Issue/ITMF_Brazil.html

http://www.just-style.com/analysis/economic-growth-boosts-brazils-textile-and-

clothing industry_id113241.aspx

http://business.mapsofindia.com/india-gdp/industries/textile.html

http:/ www.texprocil.com

www.raymondindia.com

www.welspuntowels.com

http://en.wikipedia.org/wiki/Textile_industry_in_India

http://export.gov/logistics/eg_main_018121.asp

http://envfor.nic.in/cpcb/ecomark/

http://business.mapsofindia.com/india-gdp/industries/textile.html

http://www.mapsofindia.com

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OIL AND GAS INDUSTRY

INTRODUCTION

Brazil is the 10th largest energy consumer in the world

and the third largest in the Western Hemisphere, behind

the United States and Canada. Total primary energy

consumption in Brazil has increased significantly in

recent years. In addition, Brazil has made great strides

in increasing its total energy production, particularly oil,

over the past decade. Increasing domestic oil production

has been a long-term goal of the Brazilian government.

OIL

According to Oil and Gas Journal (OGJ), Brazil had 12.2 billion barrels of proven oil

reserves in 2008, second-largest in South

America after Venezuela. The offshore

Campos and Santos Basins, located on the

country's southeast coast, contain the vast

majority of Brazil's proven reserves

NATURAL GAS

OGJ (oil and gas journal) reported that Brazil

had 12.3 trillion cubic feet (Tcf)3 of proven

natural gas reserves in 2010. The Campos and

Santos Basins hold the majority of reserves, but there are also sizable reserves in the

interior stretches of the country. Despite Brazil's sizable natural gas reserves, natural gas

production has grown slowly in recent years, mainly due to a lack of domestic

transportation capacity and low domestic prices. Brazil produced 349 billion cubic feet

(Bcf) of natural gas, up slightly from 2005.

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Labor Regime in the Oil & Gas Industry

The labor regime in the Oil & Gas Industry is regulated by Law n. 5,811/72, which foresees

specific provisions for employees involved in Oil & Gas activities. As per the mentioned

law, employees may be kept in their work stations under a shift rotation regime in cases

when an operational continuity is indispensable

Liquefied Natural Gas (LNG)

The construction of liquefied natural gas (LNG) terminals in Brazil could allow for larger

natural gas imports and a reduced dependency upon existing import sources. In early 2007,

Petrobras contracted with Golar LNG for two floating regasification and storage units

(FRSU)4, for delivery in 2008 and 2009.

Institutions in Brazilian Oil & Gas sector

ANP (National regulatory agency)

IBP (Brazilian Petroleum Institute)

ONIP (National Organization of the Petroleum Industry)

ABPIP (National Association of Independent Producers of Oil and Gas)

MME (Ministry of Energy & Mining)

Brazilian Oil Industry Innovation System

The oil industry presents a system of innovation consisting of a set of heterogeneous actors

(companies, universities, research institutes, government, professional associations etc.)

articulated with the aim of absorbing, generating and disseminating new technologies. The

productive side of such a system has two types of enterprises, namely the oil and oil supply

companies. Oil companies take on various steps of the production chain of oil and natural

gas, ranging from oil exploration and production to the distribution of the final processed

product. The subset of oil supply companies is characterized by its heterogeneity. They

supply the demands of the oil companies with a wide range of goods, materials and

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complex equipments, besides providing a wide range of services (Furtado, 2004).

In Brazil, the history of this system of innovation is intertwined with the history of

Petrobras. This national oil company (NOC) was established by Getulio Vargas’

government in October 1953, by the signing of the Act 2004, as a state monopoly of

research and mining, refining and transportation of oil and its derivatives. The objective of

the government with the creation of Petrobras was to reduce restrictions on

industrialization, related to a poor basis of oil resources.

Unfolding of Recent Events on the Sectoral Innovation System of the

Brazilian Oil Industry

As discussed in the previous section, studies concerning the profile of the BOIIS show that,

before the breaking of Petrobras’ monopoly, the system had certain structural weaknesses,

such as the centrality of Petrobras and low technological empowerment of the Brazilian oil

supply industry. However, there are indications that this situation may be changing as a

result of policies stimulating the oil sector, created after the breaking of the monopoly by

the Brazilian government and Petrobas itself. Also, it is worth

mentioning that the pre-salt discoveries may represent a new

impetus to the strengthening of this SSI, helping to overcome its

bottlenecks.

The R&D Clause

Another mechanism to support the BOIIS created after the breaking of the monopoly is

called R&D clause. As mentioned, Law 9.478/1997, besides the breaking of Petrobras’

monopoly, instituted ANP and established that one of the attributions of this regulatory

agency would “stimulate research and adoption of new technologies for exploration,

production, refining and processing” (Brazil, 1997) .

OVERVIEW OF THE COMPANY

Petrobras is a semi-public Brazilian transnational energy corporation headquartered in Rio

de Janeiro, Brazil.

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Petrobras is the largest company in Latin America by market capitalization and revenue,

and the largest company headquartered in the Southern Hemisphere by market value. The

company was founded in 1953 by Brazil government. While the company ceased to be

Brazil's legal monopolist in the oil industry in 1997, it remains a major oil producer, with

output of more than 2 million barrels of oil equivalent per day, as well as a major

distributor of oil related products. The company also has its own oil refineries and oil

tankers. Petrobras is a world leader in development of advanced technology from deep-

water and ultra-deep water oil production.

In September 2010 Petrobras conducted the largest share sale in history, when US$72.8

billion worth of shares in the company were sold on the BM&F Bovespa stock exchange.

Upon the sale Petrobras immediately became the fourth-largest company in the world

measured by market capitalisation.

BUSINESS

Petrobras is involved in the following areas of business:

Domestic sales: Domestic sales represent the majority of the company's profit and include

the extraction and distribution of oil, natural gas, derivatives, electricity and petrochemical

products;

Export: The main exports are not of oil extraction itself, but are related to mechanic

technologies. However, it is planned that the company starts to export oil in large quantities

when it begins to explore the Jupiter and the Tupi fields (see "List of recent oil field

discoveries");

Foreign exchange gains: The Company imports natural gas from other South American

countries, mostly from Bolivia. According to the Brazilian group National Petroleum

Agency, Petrobras owns Brazil's largest and most important gas pipe network, having a

near monopoly of the natural gas marketed in the country.

Petrobras works extensively with foreign acquisitions too, buying and controlling some of

the most important energy companies in South America and exploring huge deep-water

fields of West Africa and the Gulf of Mexico. Petrobras is known for its technology in

deep-water exploration. The Tupi field, which could be the world's third largest oil field is

a deep-water discovery, located in the pre-salt layer.

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FINANCIAL RESULTS

Net Income per segment (R$ million) 1

Segments (1) 2011 2010

Exploration & Production 40,594 29,691

Supply (9,955) 3,729

Other Segments (2) 6,076 3,746

The Company announces that its 2012 Annual Business Plan of R$ 87,545 million was

approved. The table below shows planned investment amounts per segment.

2012 Annual Business Plan

Segments Investments Rs. In Million

Percentage

Exploration & Production

41,838 47,8%

Supply 33,010 38%

Gas & Energy 4,400 5,0%

International 4,161 4,8%

Distribution 1,361 1,6%

Biofuels 1,339 1,5%

Corporate 1,436 1,6%

TOTAL 87,545 100%

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PETROBRAS SWOT ANALYSIS

Petrobras Strengths and Weaknesses

Strengths: Petrobras has a strong, nearly untouchable market position for more than four

decades in Brazil. Its operations are vertically integrated, a microeconomic and

management term that essentially means the company controls nearly everything involved

in production, from supply to downstream. This created a monopoly on oil and gas in the

region and led to extraordinarily strong financial performance.

Weaknesses: The strong performance and what many considered an unfair monopoly led to

sizeable amounts of litigation. In addition, the multinational company has an over-reliance

on its home as a base in Brazil.

Petrobras Opportunities and Threats

Opportunities: Expansion has been a key opportunity area for Petrobras. Particularly

significant was its downstream acquisitions in Chile. In addition, the oil and gas market

within Brazil is booming over the past several years, ensuring a stable home market.

Threats: Petrobras has been associated for some time as a poor steward of the environment.

As environmental consciousness has grown globally, so have environmental regulations

that curtail the operations of Petrobras. In addition, as it grew, the company faced problems

with political instability in Brazil. And, over time, Middle East oil productions, as well as

its technological improvements, have become a major competitor to Petrobras.

Pre-salt

In the year of 2007, Brazilian Government announced the discovery of a deep-sea field of

large oil and gas reserves. This area has been named Pre-Salt, considering its location

about 7 Km below the sea bed, under a series of layers of rock and salt. This

announcement has been very commented in the global community, emphasizing the impact

of this new resource for the Brazilian economy.

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Trade & Customs

Brazil remains one of the world’s largest exporters of agricultural products, although

exports of manufactured goods have largely increased and products such as airplanes,

steel, electronics and many more have reached similar statistics. The expansion of

Brazilian sales to non-traditional countries or those countries with a small share in total

exports has been an important feature in the success story of Brazilian exports. Exports to

Eastern Europe, Africa, Latin America, Asia and Oceania have shown an impressive

growth.

Exports

General Comments

Trade policy is conducted by the Chamber of Foreign Trade (CAMEX) which works under

the Ministry of Development, Industry and Commerce (MDIC). Exporters must register,

usually through the assistance of a forwarder, with Secretariat of Foreign Commerce

(SECEX) – a governmental agency responsible for controlling imports and exports.

Since an export transaction carries the requirement of executing a corresponding

currency exchange contract (for the exchange of foreign currency into Reais or vice

versa), exporters must also register transactions with Brazilian Central Bank

(BACEN), which is responsible for controlling the country’s inflow and outflow of

foreign currency.

In practice, each foreign exchange contract is linked to a specific customs transaction

through interconnected electronic systems, Integrated Foreign Trade System (SISCOMEX),

under which import and export transactions are registered, and its foreign currency

exchange counterpart, Brazilian Central Bank Information System (SISBACEN), which is

controlled by BACEN.

Export transactions generally do not require preapprovals, except for transactions

involving certain listed products. This list includes animals or products of animal origin,

oil, gas, goods containing nuclear and radioactive materials, and weapons, among others.

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Export Financing

The following types of financing on exports through authorized financial institutions:

Pre-Shipping: financing for the production of goods to be exported in specific

shipments.

Fast Pre-Shipping: financing for the production of goods to be exported within 6

to 12 months.

Special Pre-Shipping: financing for the domestic production of goods to be exported

that are not tied to specific shipments but have a preset time period for such.

Pre-Shipping anchor companies: financing for the sale of goods produced by

small and medium companies through an export company.

Post-Shipping: financing for the commercialization of goods and services abroad,

through refinancing to the exporter or through the use of a buyer’s credit facility.

Imports

General Comments

Considering that foreign trade balance is one of the main objectives of federal

economic policy, imports have been of critical importance and have played a

significant role in recent years in Brazil. Since the opening of the Brazilian

economy at the beginning of the 1990’s, when a strong spike on imports ensued

what would become the trademark of the last decade, this adverse condition has

been largely reversed in recent years by the historical improvements on exports.

This is largely due to the development, modernization and increased

competitiveness of the Brazilian industries exposed to the global economy.

While import restrictions have been a major element of Brazilian trade policies,

import tariffs have been reduced across the board in recent years. The negotiation

of a Mercosur Common External Tariff (TEC) has not only made Brazil one of

the major Players in the region but also demanded the simplification of import

regulations to the extent that imports, with some exceptions, do not require pre-

licenses. In addition, the introduction of the electronic system for the registration

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of imports and exports SISCOMEX has contributed to speeding up registrations

and customs clearance as a whole.

Brazilian importers must be registered with SECEX prior to carrying out import

transactions. Import transactions must also be registered in the SISCOMEX

electronic system under which an import declaration (DI) must be obtained to clear

customs.

Corporate income tax

Brazilian corporate income tax is charged on net taxable income. It applies at a

basic rate of 15%, plus a surtax of 10% on annual income that exceeds R$

240,000.00 per year or R$ 20,000.00 per month

INDUSTRY RELATION WITH REFERENCE TO INDIA

Petrobras will stay away from exploration (upstream) activities in India. Petrobras has good

relationship with ONGC in Brazil today; they have two blocks that they are (developing in

Brazil) together, According to the Brazilian state-owned oil company’s chief executive

officer Jose Sergio Gabrielli, statement on the sidelines of the Singapore International

Energy Week.

ONGC has a presence in Brazil through its wholly own subsidiary ONGC Videsh ltd, and

has interests in deepwater offshore blocks including BC-10 and ES-42, apart from other

assets under exploration.

Currently, 95 per cent of Petrograd’s investment in upstream is in Brazil because they have

discovered very big reserves. Petrobras Singapore managing director, Sillas Oliva Filho,

says that negotiations were underway between the Brazilian company and Indian

Refinering Company to increase crude exports to the country, which currently stand at two-

four million barrels per month. Petrobras’ downstream Indian partners include Reliance and

Essar.

Although the United States and China will remain the main consumers of Petrobras’ crude,

India will also stand to gain from the company’s plans to increase production. Petrobras

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could export as much as 1.6 million barrels per day by 2020, with overall production

reaching 4.9 million barrels per day during the same period.

EXPORTS – IMPORT TO AND FROM INDIA

Petrobras currently exports between 2 and 4 million barrels of crude per month to India and

imports between 600,000 and 1.2 million tonne per month of diesel and gas oil for its

domestic consumption. This is due to a shortage of their domestic refining capacity.

However increasing export quantities to India would depend on negotiations between two

countries.

Brazilian national oil exploration firm Petrobras is in negotiations to increase crude oil

exports to Indian refineries. However, Brazil's purchases of diesel and gas oil from Indian

refineries are likely to see a decline in the coming years as the South American nation's

own refining capacity is ramped up. This means, the scenario will change when Brazil

boosts its refining capacity to 3.1 million barrels per day.

Estimated to be endowed with 35 billion barrels of hydrocarbon resources, the capacity to

export 1.6 million barrels per day in the next 10 years.

OPPORTUNITY FOR INDIA IN BRAZIL

Brazil has got huge reserves of oil and gas which can be utilized by Indian companies like

ONGC VIDESH Ltd. and Videocon Energy. Therefore Brazil can help India get sufficient

reserves of scarce oil and gas.

Brazil is lacking at setting up of oil rigs for drilling. While Indian capital goods firms like L

& T can benefit a lot from this.

Aban Offshore, India's largest offshore drilling and oil-field services provider, had a half-a-

billion-dollar contract from Brazilian energy giant Petrobras for the deployment of its

drillship India has got huge refining capacity with big players like Reliance and Essar while

Brazil is lacking at it. Therefore negotiations are underway between the Brazilian company

and Indian refineries to increase crude exports to India.

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10.Cement Industry

Introduction:

The Brazilian cement industry consists of 79 plants among which 51 are productive units and 28

are grinding units. Together they play an important role in the national and international cement

sector with a production of 63 million tons in 2011, ranking 7th largest in the world.

The national cement industry is known for its technological advance, which raises its profile

among the best in the world. These advances are based on automation of productive processes,

and its tireless search for electric and thermal energy savings. Cement is obviously directly

linked to the development of the construction sector.

It represents the main component of concrete, an essential ingredient for the development of

infrastructure in the country as it is used in the construction of roads, bridges, water supply and

sewerage systems, schools, hospitals and housing.

In addition to its economic importance, cement and its production have contributed to the

solution of many environmental problems, by including in its productive process, many

industrial waste as raw material or fuel substitutes and by the use of mineral additions as in the

case of blast furnace slags and power station fly ash.

The use of cement kilns to burn waste has given the cement industry a new and relevant role as a

means to promote environmental sustainability and balance. Co processing in many cases is the

most efficient and economical solution for the management of waste without risking the quality

of Portland cement or the environment.

Brazilian cement industry: A foundation for the construction of development 15 The

technological advances of cement production and the replacement of fossil fuels and natural raw

materials with alternative materials have always been propelled by the search for thermal and

electric energy savings and by a rational use of natural non-renewable resources. With respect to

emissions of green-house gases, several measures have been adopted by the industry for

improvements of its productive processes, including monitoring and inventory of emissions,

programs to improve energy efficiency.

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Top 3 Cement Industry in Brazil

Votorantim Cimentos

Votorantim Cimentos is the largest cement company of Brazil and one of the 10 largest in

the world, the company was founded in 1933 and is headquartered in São Paulo. In

February 2010, the Votorantim Cimentos acquired 21.2% of the Portuguese cement

company Cimpor.[1] But in 2012 exchange its shares by some assets of the company in

Asia, Africa and South America.

The company operates plants in Brazil, Argentina, Bolivia, Canada, Chile, United States,

Uruguay, Paraguay, Peru and Portugal, being 50 production units of cement, mortar,

lime, limestone and aggregate and 90 concrete centers in Brazil and 6 units of cement,

150 units of aggregates and concrete centersin North America with a total capacity of 57

million tons/year of cement; 12.0 million m³/year of concrete and 29.0 million tons/year

of aggregates.

The company's main competitors are InterCement, Holcim, Cemex, Cimentos LIZ among

others.12

Companhia Siderúrgica Nacional

Companhia Siderúrgica Nacional (CSN) is the second major steel-maker company in

Brazil.[2] Its main plant is located in the city of Volta Redonda, in the state of Rio de

Janeiro. Its current CEO is Benjamin Steinbruch.

Companhia Siderúrgica Nacional is the largest fully integrated steel producer in Brazil

and one of the largest in South America in terms of crude steel production. CSN's Chief

Executive Officer is Benjamin Steinbruch. Its annual crude steel capacity and rolled

product capacity are 5.6 million and 5.1 million tons, respectively. It produces a broad

line of steel products, including slabs, hot- and cold-rolled, galvanized and tin mill

                                                            12 http://en.wikipedia.org/wiki/Votorantim_Cimentos 

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products. Its products are used by the distribution, packaging, automotive, home

appliance and construction industries.

CSN accounted for approximately 49% of the galvanized steel products sold in Brazil. In

2004, it accounted for approximately 98% of the tin mill products sold in Brazil. It is one

of the world's leading producers of tin mill products. CSN is also unique in owning its

own source of iron ore.13

Inter Cement

Inter Cement is the second largest Brazilian cement company, after Votorantim

Cimentos, the company was founded in 1967 and is headquartered in São Paulo. The

company is a subsidiary of Brazilian conglomerate Camargo Corrêa.

InterCement owns 3 cement companies in Latin America, 3 power dams in Brazil, and 1

holding company. Has 8 cement industrial plants in Brazil and 9 in Argentina, the

Company also owns 29 concrete plants, of which 18 are located in Brazil and 11 are in

Argentina, besides three aggregate mines, being two in Brazil (metropolitan area of São

Paulo) and one in the province of Buenos Aires.

In Brazil sells its products branded as Cauê and Cimento Brasil, in Argentina operates

through its subsidiary Loma Negra the largest Argentine cement company and Ferrosur

Roca a rail logistic company that distributes its products aorund the country, also operates

in Paraguay through Yguazú Cementos, in Bolívia through Itacamba Cementos and in

Angola.

In 2010 the company's parent Camargo Corrêa purchase 33% of shares the Portuguese

cement company Cimpor, this shares was tranfered to InterCement and currently the

company is the largest individual shareholder with 94.4% of the shares. In addition the

company produces more than 16 million tons of cement per year and its main competitors

is Votorantim Cimentos, CSN, Lafarge, Cemex, Holcim, Cimentos LIZ and Cimentos

Nassau14

                                                            13 http://en.wikipedia.org/wiki/Companhia_Sider%C3%BArgica_Nacional 14 http://en.wikipedia.org/wiki/InterCement 

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History of Cement in Brazil In Brazil, the first attempt of applying the knowledge regarding Portland cement manufacture

apparently occurred in 1888, when the Commander Anthony Proost Brill endeavored to

install a factory in the St. Anthony farm, a family property located in Sorocaba, Brazil.

There, he performed various sporadic cement manufacturing initiatives. The Rodovalho plant

operated from 1897 to 1904, resuming operations in 1907 and finally shutting down in 1918.

In Cachoeiro do Itapemirim, Espirito Santo state government founded in 1912, a factory that

operated until 1924, when operations were paralyzed and reinitiated production in 1936, after

its modernization

After many unsuccessful attempts, Companhia Brasileira de Cimento Portland was founded

in 1924 in the state of Sao Paulo. Its construction was considered the milestone of the

Brazilian cement industry’s implementation. The first tons were produced and sold to the

market in 1926. Until then, consumption of cement in the country depended entirely on

imported product. The national production was gradually elevated to the deployment of new

factories and the participation of imported products fluctuated during the following decades,

until its virtual disappearance in present days.15

In the 70ies, Brazilian cement production boosted reaching the country record of 27.2

produced tons in 1980•

During the 90ies, consumption growth was resumed, causing an increase in production,

reaching the new record level of 40.2 tons in 1999. The stagnation period enabled strong

productivity improvement and the final results achieved at that stage

As of 2000, production started to decrease as a result from successive crises and the

consequent global economic instability. In 2004, consumption finally stabilized, indicating

that the sector’s growth could be resumed. Finally, in 2006, cement consumption returned to

the level of 40 million tons mainly due to the growing demand from the civil construction

sector

                                                            15 http://www.falkeinformation.com/falke_cement_sample_(2008).pdf 

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Role of Cement Industry in Brazilian Economy

Brazilian Cement Industry Outlook: - 2014 FIFA World Cup and 2016 Olympic

Games Provide New Business Opportunities and Future Growth Potential.

The Brazilian cement industry recorded a CAGR of 17.56% during the 2007-2011 review

period. The cement market is projected to records a CAGR of 9.02% over the 2012-2016

forecast period.

Brazil's positive economic outlook is expected to drive construction industry growth. During

the review period, GDP recorded a CAGR of 3.90% and is projected to grow at a CAGR of

4.16% over the forecast period. Construction net output also registered significant growth

during the review period, with a CAGR of 15.08%. This healthy economic growth has driven

the infrastructure construction industry in Brazil, which will support cement consumptions.

Brazil will host both the 2014 FIFA World Cup and the 2016 Olympic Games. Preparation

for these event is expected to increase infrastructure investment over the forecast period. As

part of these preparation, there is expected to be an increase in the construction of stadiums,

hotels, commercial venue, airports and roads. As these construction project depend heavily

on cement this will drive the growth of a cement industry.

 

 

 

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Investments

Ambuja Cements Ltd plans to invest Rs 2,000 crore (US$ 370.37 million) to enhance its

cement capacities in Rajasthan and northern region. The proposed project at Rajasthan

would add five million tons (MT) capacity to the total cement production of India. "We

are adding new capacities. We are actively pursuing the five MT capacity expansion in

Rajasthan and neighboring northern regions," according to Ajay Kapur, Chief Executive

Officer, Ambuja Cements

Dalmia Cement plans to invest Rs 1,800 crore (US$ 333.33 million) to increase the

company's cement manufacturing capacity over the next two years. The company also

plans to set up a 2.5 million tonne (MT) greenfield unit in Karnataka

Germany-based Heidelberg Cement has commissioned Phase-I of its Jhansi grinding unit.

The company currently executing its Rs1,400 crore (US$ 259.36 million) expansion plan

through the recent initiative has escalated the capacity of its unit to 2.7 MT. The company

also aims to accelerate the operational capacity at its Damoh plant in Madhya Pradesh,

which will be raised to 6 MT

France-based Vicat Group is likely to sell 4.5 MT of cement in India in FY 2013, said Mr

Gilles du Manoir, Country-Head (India), Vicat. Apart from the newly-commissioned Rs

1,800 crore (US$ 333.33 million) joint venture (JV) cement plant, Vicat-Sagar Cement at

Chattrasal, Gulbarga district of Karnataka, Vicat owns 51 per cent stake in Bharathi

Cement

Amrit Cement India Ltd (ACIL) has announced the launch of Amrit Cement in North-

Eastern market. ACIL possesses ambitious plan to achieve annual production of 5 MT by

2015-16 through capacity addition in North-East and adding fresh capacities in Nepal and

Bihar for which initiative has already been taken

 

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Government Initiatives

India would require overall cement capacity of around 480 MT. The industry will have to add

another 150 MT of capacity during the period, according to the latest report from the working

group on the industry for the 12th Five Year Plan (2012-17).

Highlights of the Union Budget 2012-13:

Excise duty rationalised for packaged cement, whether manufactured by mini cement plants

or others.

Packaged cement, whether manufactured by mini-cement plants or others, attracts differential

excise duty depending on the Retail Sale Price per bag. It is proposed to prescribe a unified

rate of 12 per cent + Rs 120 (US$ 2.22) PMT for non-mini cement plants and 6 per cent + Rs

120 (US$ 2.22) PMT for mini-cement plants. It is proposed to charge this duty on the Retail

Sale Price less abatement of 30 per cent.

The Indian construction industry has shown significant development over the years with

eminent and efficient engineers at the helm and is among the best in the world, said Anand

Sundaresan, Managing Director, Schwing Stetter (India) Pvt Ltd, while inaugurating a

conference on 'Latest Trends in Construction Industry'

The private sector is expected to contribute 44 per cent of the total projected spend of US$

100 billion on roads and highways over the Twelfth Five Year Plan (2012-17) period

The Union Budget 2012- 13 is a pragmatic and growth-oriented one. "Infrastructure sector

has been given due thrust in the budget

 

 

 

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Relation between India and Brazil

Cultural Relation

A successful Festival of India was organised during the visit of President K.R. Narayanan to

Brazil in May 1998. There is also a presence of ISKCON, Satya Sai Baba, Maharishi Mahesh

Yogi, Bhakti Vedanta Foundation and other Indian spiritual gurus and organisations have

chapters in Brazil.

A statue of Mohandas Gandhi is located near the Parque Iberapuera at São Paulo and another

statue is also at Rio de Janeiro. A group called the Filhos de Gandhi (Sons of Gandhi)

participates regularly in the carnival in Salvador. Private Brazilian organisations occasionally

invite Indian cultural troupes.

Caminho das Índias, a popular telenovela in Brazil aired in 2009, popularised Indian culture in

Brazil. Books about India started to pop up on the best-selling list, the number of travels to India

by Brazilians tourists increased dramatically and restaurants and even nightclubs with Indian

themes starting to open

Economical Relation

In recent years, relations between Brazil and India have grown considerably and co-operation

between the two countries has been extended to such diverse areas as science and technology,

pharmaceuticals and space. The two-way trade in 2007 nearly tripled to US$ 3.12 billion from

US$ 1.2 billion in 2004.

Global software giant, Wipro Technologies, also set up a business process outsourcing centre in

Curitiba to provide shared services to AmBev, the largest brewery in Latin America. AmBev's

zonal vice president, Renato Nahas Batista, said "We are honoured to be a part of Wipro's

114  

expansion plans in Brazil and Latin America." AmBev's portfolio includes leading brands like

Brahma, Becks, Stella and Antarctica16

Cement Industry Market History

Brazil

Six Brazilian cement makers colluded to fix prices, hampering competition in the midst

of a construction boom, Brazil’s justice ministry said.

Switzerland’s Holmic, Portugal’s Cimpor and local producers Votorantim Cimentos,

Camargo Correa, Itabira Agro Industrial and CIA. De Cimentos Itambe set prices among

themselves to force smaller rivals from the market, the ministry’s economic-law

secretariat said in a report.

SDE, as the Brasilia-based agency is known, will submit its report to Cade, the nation’s

antitrust regulator, recommending that the companies be fined and condemned for anti-

competitive practices. Consumers overpaid 1.5 billion reais ($850 million) for cement

they bought last year, the report said.

“These companies made accords to fix prices, raise them too; divide market share;

coordinate their market actions in both the cement and concrete sectors,” secretariat head

Vinicius de Carvalho told reporters in Brasilia on Thursday.

The report, following a five-year inquiry, comes as allegations of corruption and cost

overruns dog preparations for the 2012 soccer World Cup and 2016 Rio de Janeiro

Olympics.

Cement sales in Brazil soared by about a third in the past two years due to a

commodities-based economic surge and the government’s efforts to reduce a housing

deficit and expand the country’s roads, ports and other infrastructure.

Brazil is the world’s fifth-biggest producer of cement, trailing China, India, the United

States and Turkey. Sales of cement reached 15 billion reais in 2010.

The structure of Brazil’s cement industry is largely uneven, with groups having strong

market control over specific regions, which increases the potential for collusion.

                                                            16 http://en.wikipedia.org/wiki/Brazil%E2%80%93India_relations

115  

The number of producers has shrunk dramatically from 19 in the early 1990s to about 10

in 2010.

In a statement e-mailed to Reuters, Votorantim said that any comment “will follow a

detailed analysis of the SDE report once the company is notified.”

Export Promotion Schemes

A. Target plus scheme to accelerate growth of exports.

B. Served from India scheme

C. Additional flexibility under EPCG

D. Import of fuel under DFRC entitlement allowed to be transferred to marketing agencies authorized by Min of Petroleum and Natural Gas.

E. The DEFB scheme will be continued.

F. EOUs shall be exempted from Service Tax in proportion to their exported goods and services.

G. A scheme to establish Free Trade and Warehousing Zone is introduced to create trade-related infrastructure to facilitate import and export with freedom to carry out trade transactions in free currency.

In order to showcase India's industrial and trade prowess to its best advantage and leverage

existing facilities to enhance the quantity of space and service the govt plans to transform Pragati

Maidan into a world-class complex with visitor friendliness ingress and egress system.

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Sectors Specific Limits of Foreign Investment in India

Sectors Specific Limits of Foreign Investment in India

Sector FDI Cap/Equity Entry Route

Other Conditions

A. Agriculture 1. Floriculture, Horticulture, Development of Seeds, Animal Husbandry, Piscicultures, Aquaculture, Cultivation of vegetables & mushrooms and services related to agro and allied sectors.

100%

Automatic

2. Tea sector, including plantation 100% FIPB

(FDI is not allowed in any other agriculturals sector /activity)

B. Industry 1. Mining covering exploration and mining of diamonds & precious stones; gold, silver and mineral.

100%

Automatic

2. Coal and lignite mining for captive consumption by power projects, and iron & steel, cement production.

100% Automatic

3. Mining and mineral separation of titanium bearing minerals

100% FIPB

C. Manufacturing 1. Alcohol- Distillation & Brewing

100%

Automatic

2. Coffee & Rubber processing & Warehousing.

100% Automatic

3. Defence production 26% FIPB

4.Hazardous chemicals and isocyanates

100% Automatic

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5.Industrial explosives -Manufacture 100% Automatic

6. Drugs and Pharmaceuticals 100% Automatic

7. Power including generation (except Atomic energy); transmission, distribution and power trading.

100% Automatic

(FDI is not permitted for generation, transmission & distribution of electricitys produced in atomic power plant/atomic energy since private investment in this activity is prohibited and reserved for public sector.)

D. Services 1.Civilaviation(Greenfield projects and Existing projects)

100%

Automatic

2. Asset Reconstruction companies 49% FIPB

3. Banking (private) sector 74% (FDI+FII).FII not to exceed 49%

Automatic

4. NBFCs : underwriting, portfolio management services, investments advisory services, financial consultancy, stock broking, assets management, venture capital, custodian, factoring, leasing and finance and housing finance, forex broking, etc.

100%

Automatic

s.t.minimum capitalisation norms

5. Broadcasting a. FM Radio b. Cable network; c. Direct to home; d. Hardware facilitie such as a up-linking, HUB. e. Up-linking a news and current affairs TV Channel

20% 49% (FDI+FII) 100%

FIPB

6. Commodity Exchanges 49% (FDI+FII) (FDI 26 % FII 23%)

FIPB

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7. Insurance 26% Automatic Clearance from IRDA

8. Petroleum and natural gas : a. Refining

49% (PSUs). 100% (Pvt. Companies)

FIPB (for PSUs). Automatic (Pvt.)

9. Print Media a. Publishing of newspaper and periodicals dealing with news and current affairs b. Publishing of scientific magazines / speciality journals/periodicals

26% 100%

FIPB FIPB

S.t.guidelines by Ministry of Information & broadcasting

10. Telecommunications a. Basic and cellular, unified access services, national / international long-distance, V-SAT, public mobile radio trunked service (PMRTS), global mobile personal communication services (GMPCS) and others.

74% (including FDI, FII, NRI, FCCBs, ADRs/GDRs, convertible preference share, etc.

Automatic up to 49% and FIPB beyond 49%.

Sectors where FDI is Banned

1. Retail Trading (except single brand product retailing);

2. Atomic Energy;

3. Lottery Business including Government / private lottery, online lotteries etc..

4. Gambling and Betting including casinos etc.;

5. Business of chit fund;

6. Nidhi Company;

7. Trading in Transferable Development Rights (TDRs);

8. Activities/sector not opened to private sector investment;

9. Agriculture (excluding Floriculture, Horticulture, Development of seed, Animal Husbandry,

Piscicultureand cultivation of vegetables, mushrooms etc. under controlled condition and services

related to agro and allied sectors) and Plantations (Other than Tea Plantations);

10. Real estate business, or construction of farm houses;

Manufacturing of Cigars, cheroot, cigarillos and cigarettes, of tobacco or of tobacco or of tobacco

substitutes.

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Suggestion

Cement is one of the main industries that plays a pivotal role in the growth and expansion

of a nation. The cement industry is the main beneficiaries of the infrastructure boom in

the country. The Indian cement industry is huge, it has great production capacity. The

total capacity of cement industry is about 165 million tonnes, which is second largest in

the world.

The Department of Industrial policy and promotion plays an active role in promoting

foreign investment in the cement industry by providing useful information to the

investors about the investment climate and opportunities in India. The department

provides advice to prospective investors on various policies and investment procedures.

In order to promote investment in the sector, this department has emphasized the

development of good transportation facilities to ensure smooth transportation of bulk

cement. It aims to support the investors by providing them with R&D facilities and

technological assistance.

The cement industry in India has been attracting several top-notch cement companies

worldwide, which reflects the fact this industry holds huge potential for investment. Also,

the boom in the housing sector world-wide and the increased activity of the development

of infrastructure, the demand for cement is increase globally. The investors having

nothing to lose and are all set to benefit from investing in India cement industry.

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Conclusion

Both Governments have good opportunities for investment in cement industry. Cement is the

vital constituents that is required for every construction purpose, such as industrial, housing,

and also for construction of infrastructures, such as roads, ports, power plants.Thus, the

cement industry is a significant contributor to the revenue collection of the government.

In India, the cement industry in the initial stages grew very slowly and the supply struggled

to meet the demands. The scenario changed drastically after the liberalization period. The

cement industry began to grow then the supply of cement has always managed to keep pace

with its demand.

Today, the cement industry in India is one of the most advanced and pioneering sectors in the

country, and the cement industry has a potential for growth and attracting new investments.

The cement industry in India uses the modern and technology. Also, because India has a high

quantity and quality of limestone deposits throughout the country, the cement industry

promises for growth.

The government of India has set ambitious plans to increase the production of cement in the

country, and to achieve the target the government has made huge investments in the sector.

The Department of Industrial Policy or Promotion, which falls under the central Ministry of

Commerce and Industry, is the agency that responsible for the development of the cement

industry in the country. The agency is actively involved in keeping track of the performance

of cement companies in the country and provides assistance and suitable incentives when

required by the company. The department is also involved in framing and administering the

industrial policy for foreign direct investments in the sector. Apart from formulating policies,

the department also promotes the industry to attract new foreign investments in the sector.

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Bibliography

http://www.researchandmarkets.com

http://www.thefreelibrary.com

http://www.globaltrade.net

http://www.fedex.com

http://articles.economictimes.indiatimes.com

http://www.equitymaster.com

http://www.rncos.com

http://www.smetimes.in

http://www.globalcement.com

http://investinbrazil.biz

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Annexure

1. Map of Brazil