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Hola Business News - January 2010

Scores of 2009 and Promises of 2010 for business with Latin America...

 

Renuka Sugar buys another Brazilian company for US$ 329 million February 2010

India's biggest sugar refiner Shree Renuka Sugars Ltd has signed a definitive agreement for a 51 percent stake in Brazil's Equipav SA Acucar e Alcool for $329 million. The Brazilian firm, which holds the sugar and alcohol assets of Equipav Group, owns two large sugar mills with integrated co-generation facilities, in southeastern Brazil. The sugar mills have a combined annual cane-crushing capacity of 10.5 million tonnes, co-generation capacity of 203 MW and 115000 hectares of cane growing land..The Indian firm will expand the co-generation capacity to 295 MW and cane-crushing capacity to 12 million tonnes annually with additional capital expenditure.

In November 2009, Renuka had acquired sugar and ethanol producer Vale Do Ivai S.A. Acucar E Alcool for $240 million.

With these Brazilian acquisitions, Renuka has become the third biggest sugar company in the world, the number one sugar firm in India and among the top five in Brazil.

 

Strides Arcolab acquires pharma assets of Aspen in Brazil for $ 75 million - March 2010

Strides Arcolab has bought Aspen's ( south african company ) facility in Campos, Brazil, with related products and intellectual properties for about $75 million. It is an all-cash acquisition.

The facility makes Penems and Penicillins and has annual turnover of $40 million.

Strides Arcolabs is already operating in Brazil as Cellofarm with a manufacturing unit in the port city of Vitoria near Rio de Janeiro.

Strides has a manufacturing facility in Mexico City in the name of Solara and has a marketing & trading operation in Venezuela as Sumifarma.

 

Latin America will grow by 4.3 % in 2010

This good news comes from ECLAC ( Economic Commission for Latin America and Caribbean- which is part of the United Nations) in their 10 December 2009 report.

The GDP of the region which fell by 1.8% in 2009 due to the global crisis will resume growth in 2010 with 4.3 %. The region had an annual average growth of 4.8% in the period 2003-2008. In this period, the region enjoyed a current account surplus as well as primary surplus, accumulated foreign exchange reserves, reduced external debts, booming exports and strong macroeconomic fundamentals. This is the strength which helped the region to withstand the global crisis in 2008-9 with only moderate adverse impact and bounce back in 2010.

The 4.3% growth of Latin America in 2010 is higher than the growth projected for developing countries ( 4%) except China and India.

Brazil will be the 2010 champion of the region with the highest growth of 6%. Ooops... I do not recall Brazil topping the growth chart of the region in recent times. Uruguay and Peru will be runners-up with 5% each.


Mexico, the second largest economy which suffered the worst GDP contraction of the region in 2009 with 6.7% will grow by 3.5%. Argentina, the third largest market will grow by 4%.
It is no surprise that the least growth in 2010 in the region will be in Honduras, which is in a political crisis.


While South America is expected to grow by 4.7% in 2010, the Caribbean and Central America are projected to grow by around 2%.

Inflation in the region in 2009 is estimated to have declined to 4.5% from 8.3% in 2008.

 

India´s trade with Latin America in 2009

India´s exports to the region  went down by about 30 percent in 2009 in comparison to 2008.  This was expected, after the global crisis and local import restrictions by the governments which wanted to protect domestic industries and minimise outflow of foreign exchange.

Below are the trade figures in Million US dollars:

 

India’s exports

India’s imports

2009

2008

2009

2008

Brazil
jan-nov

1906

3337

2920

948

Mexico
Jan-oct

785

1254

935

1305

Argentina
Jan-Dec

342

492

876

836

Colombia
Jan-Oct

412

430

292

14

Chile
Jan-Nov

251

428

858

1693

Peru
Jan-Oct

273

470

72

303

Uruguay
Jan-Dec

42

47

11

9

Paraguay
Jan-Dec

51

40

59

38

 

 

Indian IT company Global Sourcing Solutions (Flatworld Solutions) has opened a Centre in Buenos Aires in January 2010

Flatworld solutions has started off with 100 staff and has plans to expand. The company specialises in mobile software and operates call centres and BPOs. They have operations in Peru, Colombia, Paraguay and Bolivia in Latin America. Their website http://www.flatworldsolutions.com/

 

Devaluation of Venezuelan currency Bolivar – 8 January 2010

This was announced by the President of Venezuela on 8 January. Besides devaluation, the President also introduced a two tier exchange rate system. The bolivar will now have two government-set rates: 2.6 to the dollar for transactions deemed priorities by the government, and 4.3 to the dollar for other transactions.

The priority exchange rate of 2.6 Bolivar for a dollar will apply to imports of priority items such as food, machinery and equipment for economic development, health care items and books and supplies for schools, family and pensioner remittances as well as public sector imports. For all other imports and non essential items the exchange rate of 4.3 will apply.

Before this devaluation, the official exchange rate had been held by the government at 2.15 bolivars to the dollar after the last devaluation in March 2005. President Chavez imposed exchange controls in 2003 after the coup attempt against him. At that time the exchange rate was 1600 Bolivars to a dollar. In February 2004 the rate was changed to 1920 Bs for a dollar and later in 2005 it was further devalued to 2150 Bs to a dollar. In January 2008, the government changed the currency to a a strong Bolivar ( Bolivar Fuerte) and fixed the new rate at 2.15 to a dollar, eliminating three zeros from the old currency.

The black market rate in January 2010 is 6.25 Bs to a dollar. Because of the foreign exchange restrictions and complicated procedures to get foreign exchange, there has been a thriving black market in foreign exchange transactions since 2003.

 

4TH INDIA- LATIN AMERICA AND CARIBBEAN CONCLAVE 29-30 April 2010 at Taj Palace Hotel, New Delhi

The Confederation of Indian Industry (CII) is organizing the 4th India-Latin America and Caribbean Conclave: Enhancing Business Partnerships

4th in the series, the Conclave will discuss business opportunities and project partnerships between India and the LAC region in Agriculture, Agri-business and Food Processing, Irrigation, Telecommunications, Energy including Renewable Energy, Infrastructure, Software Services, Drugs & Pharmaceutical Products, Biotechnology, Chemicals including Agro-Chemicals, FMCG goods, Transportation & Logistics, Media & Entertainment, Tourism & Hospitality and Healthcare.

The Conclave will feature sessions devoted to sectoral business presentations followed by B2B meetings on each day. More details of the programme are being worked out and would be forwarded later.

CII would partially offset the cost of travel to India of these business participants from the LAC countries. This would be on first-come-first-served basis for business participants travelling to India to participate in the Conclave series for the first time and would be limited to one representative from one company. 

 

India- LAC Business Summit - March 30-31, 2010 - New Delhi

FICCI (Federation of Indian Chambers of Industry and Commerce) is organizing a Summit to bring Indian industry, investment promotion organisations, financial institutions and decision makers and their counterparts in Latin American countries together.

The event will focus on the following sectors: agriculture and food processing, pharma, biotech, IT, chemicals and fertilisers, machinery, automotives and transportation, energy, mining, jems and jewellery, textiles, garments, leather goods, wood and wood products and tourism.

More information: www.ficci.com   
           


 

 

Chile has become a OECD member in January 2010

The Organisation for Cooperation and Development (OECD) has announced that Chile has been invited to become the 31st member of the Organization. Chile will formally accept this invitation when an Accession Agreement is signed in the presence of Secretary-General Angel Gurría and President Bachelet on January 11, 2010. The country has been in negotiations to join the organization for two years. This means that Chile´s investment and tax policies will have to be in conformity with OECD standards.

Currently, Mexico is the only Latin American member of the organization.

Peru gets third investment grade rating in December 2009


Peru clinched its third investment grade rating from Moodys, a major credit evaluation agency which has praised the country's ability to withstand the global downturn better than some of its peers. The new rating is Baa3 from the earlier Ba1
Moody´s said " the decision to raise Peru's foreign currency ratings was driven by indications of increased shock-absorption capacity relative to similar or higher-rated sovereigns.¨ This will help Peru to lower its borrowing costs and attract foreign investment flows, which will contribute to higher growth.

Fitch and Standard & Poor's had given investment grading to peru last year. Peru´s economy has been a shining star in the last few years.

Chile and Brazil are the other Latin American economies with investment grade ratings.

 

Infosys sets up its first development centre in Belo Horizonte- december 2009


This is the company's third development centre in Latin America, the other two centres being in Mexico, which service 32 clients and employ 357 professionals.

The centre will offer Infosys' complete suite of services to its Brazilian clients and Brazilian subsidiaries of global customers and will provide language support in English, Portuguese and Spanish. One of the major clients to be servived from this centre is Philips Latin America.

 

Reliance deal with Ecopetrol of Colombia - december 2009

Under this deal, Ecopetrol will take a 20 percent stake in the Borojo North Block 42 and the Borojo South Block 43, which together cover an area of about 8,000 square kilometres in water depths ranging from 60-1,500 metres.Reliance's unit will hold the rest of the stake in the blocks and will be their operator.

 

Bharat Petroleum and Videocon consortium strike offshore oil in Brazil - November 2009

The consortium has discovered additional oil in an exploration acreage in the Campos basin, off the Brazilian coast.

The consortium has discovered more than 90 feet of high-quality oil in their Wahoo-2 well block, also identified as BM-C-30, The well is five miles to the north from the original Wahoo discovery well. In October 2008, the consortium had made its first discovery in the block during drilling of Wahoo well.

 

 

Renuka Sugars acquires Brazilian firm for US$ 240 million November 2009
 
 

Shree Renuka Sugars Ltd (SRSL), one of the largest Indian producers , has acquired Brazil’s Vale Do Ivaí SA Açúcar e Álcool (VDI) at an enterprise value of $240 million.

SRSL will pay $82 million (Rs 380 crore) now and the balance over eight years. It plans to finance the acquisition by leveraging the $105 million (Rs 506 crore) it raised through a qualified institutional placement (QIP) of shares in July.

The company operates eight sugar mills, five owned and three leased, with a cumulative daily crushing capacity of 35,000 tonnes.

The acquisition of VDI includes two sugar and ethanol production facilities in the southern Brazilian state of Parana, with a combined cane crushing capacity of 3.1 million tonnes a year. VDI holds strategic stakes in several logistics assets, including terminals for storage and loading of sugar and ethanol at the port of Paranagua.

The acquisition also includes 18,000 hectares of cultivable land under VDI, through which the company meets the larger part of its sugarcane requirements. The land is on long-term lease and used to cultivate cane with an average yield of 95 tonnes a hectare, with recovery of 13 per cent. In India, the yield (around 60-65 tonnes per hectare) and the recovery (a maximum of 11.5 per cent) are lower.

 

 

Infosys opens Second Latin America I.T. Development Center in Monterry, Mexico- 9 November 2009

Infosys Technologies Limited today opened the company’s second Latin American Development Center in Monterrey, Mexico, offering global, near-shore, and Latin American clients a full range of information technology (I.T.) services including Business and I.T. Consulting, Business Process Outsourcing (BPO), Packaged Solutions Implementation and Infrastructure Management.

"From our first development center opening with a few clients and a dozen employees, we now have some 30 clients and 330 professionals and the future looks muy brillante," said Ashok Vemuri, Senior Vice President and member of Executive Council, Infosys Technologies. "Our public-private partnership with the city of Monterrey and the government of Nuevo Leon, Mexico demonstrates that such unions create opportunities for the city’s very talented new graduates from local universities. And it clearly creates tremendous value for clients around the world who increasingly look to our centers in Latin America for the solutions they need."

 

Five year multi entry visa ..... for Indian businessmen visiting Argentina... free of cost....can´t believe it... but true !

Under the visa Agreement signed on 14 october during the visit of President of Argentina to Delhi, the Argentine government has agreed to grant five year multientry business visas ....and that too free of cost. Stay during each visit is 90 days extendable by another ninety days.

Fantastic... Let us thank the President and the Foreign Ministry of Argentina.

The embassy of India in Buenos Aires will do the same thing for Argentine visitors ...plus give free coffee under their Cafe con Visa system