Companies can actually snatch

The possibilities are staggering. Out of the total six billion

dollars in pharmaceutical sales in Brazil, more than 75%

were done by foreign companies, mostly American and

European.

Indian companies can actually snatch the

generics market away from Brazil, translating into annual

sales worth $1.5 billion. Another sunrise area for Indian

companies in Brazil is IT and software services. In 2004,

software and software service sales in Brazil totaled

more than seven billion dollars.

Textiles are another big

area for Indian companies. With no more quotas, Indian

textile companies are in a unique position to tap the

Brazilian market.

If the promise presented by Brazil is

even partially true, it seems to be an appropriate moment

for India Inc. to brush up its Portuguese.

Helped the manufacturing sector

The telecom industry in Brazil, too, is going through exciting times, with rapid growth and huge foreign investments. Over the last six years, Brazil has attracted more than $34 billion in foreign investments in the telecom sector.

The oil and petroleum sector of Brazil resembles that of India in many ways. The sector was a state monopoly for decades, and it is only recently (like in India) that private and foreign players have been allowed to play a role.

The industry is dominated by the state-owned Petrobras group, which reported combined revenues of more than $30 billion in 2004.

The future of industry in Brazil appears to be bright. Growing domestic demand and sustained increases in foreign investments, helped the manufacturing sector in Brazil to grow by almost 13% in 2004, according to the Central Bank of Brazil.

Comparing its key indicators

Brazil is a large and relatively industrialised economy,

and comparing its key indicators with India gives a clear

picture. It is 2.6 times the size of India by area but has just

a sixth of the population.

 

According to World Bank figures, Brazil’s gross domestic

product (GDP) in purchasing power parity (PPP) terms

was $1.3 trillion 2003, whereas India’s was around $3

trillion.

 

However, the per capita income figures (2003) are

vastly different due to the difference in population size –

$7,700 for Brazil and $2,900 for India.

 

Yet, a telling

indicator of consumption patterns are the non-PPP GDP

figures in current US dollars for 2004, which are $578

billion for Brazil and $598 billion for India.

With a fragile economy

This vast country was christened Brazil after the pau do brasil (Brazil wood tree). In 1807, as Napoleon Bonaparte prepared to attack the Portuguese capital of Lisbon, Prince Dom Jao of Portugal was shipped off to Brazil. In 1821, Dom Jao headed back, leaving his son Dom

Pedro I in charge of the colony. However, Dom Pedro broke away from Portugal and declared Brazil’s independence. First sugar and then coffee became the primary produce of the country. 
 
The boom in coffee attracted almost a million European immigrants, mostly from Italy, who promptly backed a military coup to oust the king. The coffee magnates all but ruled the country for the first half of the 20th century, until the worldwide depression destroyed demand.

 The next 50 years were spent with a fragile economy, regularly punctuated by military rulers and coups. The military rulers embarked on large scale projects that benefited a wealthy few, at the expense of the majority.

Mega star cast

Mumbai’s first celebrity restaurant, India Talkies, which was built along the lines of Planet Hollywood, never even saw the daylight. Bollywood stars like Sunil Shetty, Sharad Kapoor, Chunky Pandey, Celina Jaitley and more recently our cricket captain Sourav Ganguly have plunged into the culinary business, but not all have been winning propositions.

Although celebrity endorsements can bring in the initial crowds, long term potential in India cannot be taken for granted. Ask Madhu Menon, who owns the popular ‘Shiok Far-Eastern Cuisine’ in Bangalore and he states, “Indians love value for money, therefore a celebrity name, especially Hollywood, is simply not enough to garner interest in a restaurant. In fact what’s important is the service”.

The association of a restaurant to a celebrity is akin to a mega star cast for a movie. However great your star cast is, the movie has to click with the audience.

Similarly these restaurants will have to better adapt to Indian tastes and preferences to ensure survival and cannot rely on a name alone. 

It would be a pity to squander

Soon after this, the company hived off its cement,

shipping and glass ventures. Years of painstaking cost

controls and renewed core business focus of the

company into engineering and construction (E&C) and

electricals and electronics (E&E) divisions helped L&T

record a compound annual growth rate (CAGR) of 33%

over a period of last four years.
However clichéd it might be, L&T should remember the

basics of sticking to the core while expanding globally.

The engineering and construction divisions still contribute

84.7% of the total revenue and any move away from this

would spell disaster surely.
L&T’s recent collaboration with Dubai Aluminium

Company, the attention towards China and Middle East

expansions, divestment of its dairy business have all

come in a relatively short span of time.
The past four

years have just about seen L&T consolidate and move

forward, and it would be a pity to squander a hard-earned

advantage. L&T seems to be going strong, but this is the

appropriate time to not repeat the mistakes of the past

and expand in a hurry.