10/26/2016 15h52

JK Group sees potential for $1bn investment in Brazil

Valor International

India’s industrial group JK plans to invest in the pulp segment in Brazil, and sees major business potential in other industries as the economy stabilizes. The group, which plans to double its revenues to $8 billion by 2020, makes tires, cement, genetic seeds, paper, and intends to expand its presence also in Southeast Asia and Africa.

The group has been selling its products in Brazil since 1992, which are shipped from plants in India and Mexico. “We understand the Brazilian market very well, and think that now it’s possible to take the step to invest,” said Mr. Chopra, who in Goa followed the talks of Brazilian representatives at the BRICS summit. ''One of our teams with eight people was recently traveling across Brazil, and I'll be there in early November.”

In Brazil, Mr. Chopra believes investments could gradually reach up to $1 billion, since he believes it should be easy to increase JK’s presence in the country as the economic activity gets back on track and because of the complementarity of both economies.

The most immediate interest in the pulp area is justified by growing demand in India. The Indian group points out that in Brazil a paper mill has access to the raw material within a radius of 100 kilometers.

In India, that distance is 600km, and that comes with a high cost. In the tire business, however, the group is cautious, noting that Brazil already has large capacity and the market has suffered a major contraction in recent years. On the other hand, JK sees opportunities in the segment of genetic seeds, especially in Brazil’s South.

The president of the Brazil-India Chamber of Commerce, Roberto Paranhos do Rio Branco, says most Indian groups are willing to invest in Brazil. ''And Brazilian entrepreneurs should, in turn, rediscover the’path to India’, because there are many opportunities there.''

Adi B. Godrej, CEO of Godrej Group and former president of the Confederation of Industries of India, has tried to buy a cosmetics company in Brazil in the past, but gave up complaining about tax issues and ended up making the acquisition in Argentina. Now, he told Valor that he ''would like to expand our operations in other countries of the BRICS.'' In addition to India, his group has operations in South Africa.

Last week, at the BRICS summit, Indian Prime Minister Narendra Modi promised incentives for business and proposed to establish a target to double to $500 billion intra-group trade by 2020.

Also present in Goa, the president of the Federation of Industries of the State of Rio de Janeiro (Firjan), Eduardo Eugenio Gouvea Vieira, advocated a Brazil-India business agenda. ''India knows that our ethanol is more efficient for production. On the other hand, while India needs more food, it has a surplus of oil products that Brazil needs. It’s cheaper to export crude oil to India and import fuel from them,” Mr. Vieira said.