a global / country study and report on brazil
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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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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
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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
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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-
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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
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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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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
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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
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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
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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
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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
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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
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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
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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.
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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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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
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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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
96
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
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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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