ACC Cements CORPORATE PROFILE

ACC (ACC Limited) is India's foremost manufacturer of cement and concrete. ACC's operations are spread throughout the country with 16 modern cement zonal offices. It has a workforce of about 9,000 persons and a countrywide distribution network of over 9,000 dealers. factories, more than 40 Ready mix concrete plants, 21 sales offices, and several

Since inception in 1936, the company has been a trendsetter and important benchmark for the cement industry in many areas of cement and concrete development and specialized consultancy services. The company's various the only one of its kind in the Indian cement industry. technology. ACC has a unique track record of innovative research, product manufacturing units are backed by a central technology support services centre -

ACC has rich experience in mining, being the largest user of limestone. As the largest cement producer in India, it is one of the biggest customers of the domestic coal industry, of Indian Railways, and a considerable user of the materials and products.

countrys road transport network services for inward and outward movement of

Among the first companies in India to include commitment to environmental

protection as one of its corporate objectives, the company installed sophisticated pollution control equipment as far back as 1966, long before pollution control laws came into existence. Today each of its cement plants has state-of-the art pollution control equipment and devices.

ACC plants, mines and townships visibly demonstrate successful endeavours in quarry rehabilitation, water management techniques and greening activities. The company actively promotes the use of alternative fuels and raw materials and

offers total solutions for waste management including testing, suggestions for reuse, recycling and co-processing.

ACC has taken purposeful steps in knowledge building. We run two institutes

that offer professional technical courses for engineering graduates and diploma holders which are relevant to manufacturing sectors such as cement. The main beneficiaries are youth from remote and backward areas of the country.

ACC has made significant contributions to the nation building process by way of quality products, services and sharing expertise. Its commitment to sustainable development, its high ethical standards in business dealings and its on-going

efforts in community welfare programmes have won it acclaim as a responsible corporate citizen. ACCs brand name is synonymous with cement and enjoys a high level of equity in the Indian market. It is the only cement company that figures in the list of Consumer Super Brands of India.

ACC's brand name is synonymous with cement and enjoys a high level of equity in the Indian market. Our range of cements and blended cements is marketed through a countrywide network of Sales Units, Area Offices, and warehouses. are assisted by their sub-dealers.

This is backed by a vast distribution network of over 9,000 dealer who, in turn,

ACCs marketing, sales and distribution

processes are industry standards. Although we take immense pride in having supplied some of Indias most admired projects, ACC is essentially a peoples brand of cement with

more than 80 per cent of sales made through

an extensive dealer network that covers every masses of India - individual homebuilders in small towns, rural and semi-urban state in India. Its customer base represents the

India. ACC cement enjoys an image of assuring consistency and of high quality backed by in-house research and expertise.

Complementing this is a unique customer services cell comprising qualified civil service begins with selection of type and grade of cement (where applicable) to troubleshooting and on-site assistance.

engineers, who assist and advise customers with prior and post sales service. This

ACC manufactures the various kinds of Portland Cement for general construction and special applications.

SUBSIDIARIES AND ASSOCIATES of ACC CEMENTS:ACC Concrete Limited ACC set up India's first commercial Ready Mix Concrete (RMX) plant in Mumbai in 1994 which together with the promotion of bulk cement has played a key role in redefining the pace and quality of construction activity in our large cities and mega infrastructure projects.

The Ready Mix Concrete business of ACC was reorganized as a separate wholly owned subsidiary which was incorporated as ACC Concrete Limited with headquarters in Mumbai. Today this company is one of the largest manufacturers of Ready Mix Concrete in India with a countrywide network of plants, with modern equipment and a large fleet of transit mixers. ACC Mineral Resources Limited ACC's wholly owned subsidiary, The Cement Marketing Company of India Limited, was renamed as ACC Mineral Resources Limited (AMRL) in May 2009 use. ACC Mineral Resources Limited has already entered into Joint Venture in Madhya Pradesh and West Bengal. The company is also exploring other abroad

with an objective of securing valuable mineral resources, such as coal for captive arrangements for prospecting, exploration and mining coal from the coal blocks opportunities for securing additional coal and gypsum resources in India and Bulk Cement Corporation (India) Limited Situated at Kalamboli, in Navi Mumbai (formerly New Bombay), this company caters to bulk cement requirements of the city of Mumbai and its environs. It has two cement storage silos with a capacity of 5,000 tons each. The plant receives railway wagons and rakes and its own railway siding. The first of its kind in cement in bulk from ACC plants at Wadi. The plant has its own special purpose

India, BCCI is equipped with all the facilities required by increasingly

sophisticated construction sites in a bustling metropolis, including a laboratory, a fleet of specialized trucks and site silos for the convenience of customers and is capable of offering loose cement in bulk-tanker vehicles as well as packed strategically on the outskirts of Mumbai, just off the new Mumbai-Pune Expressway. It is a landmark structure spread over 30 acres of land. Lucky Minmat ACC acquired 100 per cent of the equity of Lucky Minmat Private Limited. This company holds limestone mines in the Sikar district of Rajasthan, and helps supplement limestone supply to the Lakheri Plant. National Limestone Company Private Limited National Limestone Company Private Limited is a wholly owned subsidiary. The company is engaged in the business of mining and sale of limestone. It holds mining leases for limestone in the state of Rajasthan. Encore Cement & Additives Private Limited ACC acquired 100 percent of the financial equity of this company which is a slag grinding plant in Vishakhapatnam in coastal Andhra Pradesh. This company became a wholly-owned subsidiary of ACC in January 2010.

cement in bags of varying sizes from 1 tonne down to 25 kg bags. BCCI is situated

Manufacturing Process of Cement at ACC

Map - Key 00. Limestone Quarry and Crushing plant 01. Limestone Stockpile 02. Additives Hopper 03. Additives Storage 04. Raw Mill Building 05. Blending and Storage Silo 06. Preheater 07. Gas Conditioning Tower and ESP 08. Kiln 09. Cooler 10. Deep Bucket Conveyor 11/12. Clinker/Gypsum Storage 13. Coal Mill Building 14. Cement Mill and Bag House 15. Cement Storage Silo 16. Packing & Dispatch 17. Central C

PRODUCTS QUALITY:Product Development has always been an important activity at ACC, arising out of a focus on quality and process improvement. It has been a constant partner, driving research, innovation and evaluation.

ACC has effectively pledged its reputation as the market leader in the quality of

cement. Maintaining this lead calls for harnessing the resources and expertise of all ACC factories are equipped with state-of-the-art process control by qualified personnel.

the company - from applied research and production to marketing. Accordingly, instrumentation and associated quality control and testing laboratories manned

As a result of this focus on quality, ACC cement specifications exceed those set by BIS by a wide margin. Today, all ACC cement plants have the ISO 9001 Quality Systems certification. This demonstrates our tradition of providing reliable and preferences of a nationwide customer base.

consistent quality through the application of modern technology, and justifies the

SWOT Analysis of ACC Cement: STRENGTHS:1. It is having a good image and brand loyalty among consumers. 2. Service is good 3. People ask for ACC end.

4. They have same price prevailing for wholesale at dealers/stockiest retailers

WEAKNESS:1. The competitors are doing much promotional activity rather than ACC Limited thats why it facing more problems in selling of product in the market.

2. Lack of awareness program for consumers. OPPORTUNITY:1. Rapid growth is taking place in Bihar and Madhya Pradesh.

2. People are opting for more stable structures and intensive use of cement is projects. Thus, this is the right time to fully tap these markets. is having a good future.

taking place, even government is spending heavily on infrastructure

3. As Indian core industry is also growing at rate of nearly 10% per annum, it 4. Foreign direct investment in infrastructure sector going to increase in 5. Roads are undergoing through the transformation process through which concrete roads. coming years, which will increase the demand of cement.

the traditional method of road building will be replaced by modern

THREATS: 1. Large number of players in cement industry makes it more competitive for ACC to carefully price its product and at the same time satisfy its dealers and customers.

2. Players such as Jaypee Cement, Prism Cement, and Birla Samrat are eating 3. Due to Indias exponential growth many new international cement companies are expected in coming years which will bring a tide of change and can start price war. up considerable market share.

4. The emergence of small players in this market may increase the They can also influence many retailers by giving better profit margin, and other Benefits.

competition and start the malpractices, and heavy discounts to retailers.

Cement Industry A Global Perspective: Global consumption of cement grew 9.9% last year to continue a strong rebound in demand as construction worldwide picks up since the economic downturn of 2008, according to a new report.

The ninth edition of International Cement Reviews Global Cement Report found that 3,294 million tonnes (Mt) were sold, topping the 2,998 million tonnes sold in 2009, which was a growth rate of 5.9%, strongly reversing a slowdown of record 3859Mt by 2012. 2.4% the previous year. Worldwide cement consumption is forecast to reach a

Global cement demand will rise 4.1 percent annually through 2013. Gains will be fueled by rising infrastructure investment in developing countries and improved markets in developed areas. Blended cement will increase its dominant position over portland. Ready-mix concrete will remain the fastest-growing outlet.

This study analyzes the 2.8 billion metric ton world cement industry. It presents historical demand data for the years 1998, 2003 and 2008, and forecasts for 2013 and 2018 by type (e.g., blended, portland), market (e.g., ready-mix (e.g., Asia/Pacific, Africa/Mideast) and for 46 major countries.

concrete, construction contractors, consumer, concrete products), world region

The study also considers market environment factors, details industry structure, Lafarge, Holcim and CEMEX.

evaluates company market share and profiles 34 industry participants, including

The report provides statistics for demand for the commodity in more than 160 world cement statistics, results show consuming more than a third of global

countries, along with additional data for clinker consumption. China dominates output or 1,851 million tonnes - in 2010, almost double 2004 levels. India, the

closest rival to China for economic growth was the second-largest consumer at to 69Mt.

212Mt, with the United States, the third-largest consumer, saw demand fall down

Turkey is the world's leading export nation of cement and clinker, with sales of 19Mt in 2010, overtaking China which recorded close to 17Mt of export sales. Thailand was third with 14Mt of cement and clinker exports.

Bangladesh is the largest cement and clinker importer, with over 12 million at close to 6 million a sixth of 2006 levels.

tonnes of deliveries in 2010, followed by Nigeria at 7 million tonnes and the USA

Lafarge remains the worlds biggest selling company, shifting 141.2Mt last year 136.7Mt and a turnover of EUR15.6 billion, a ahead of Heidelberg Cement. Lafarge.

to produce a turnover of EUR 15.8 billion, ahead of Holcim with cement sales of Holcim still has the largest global cement capacity, at 212Mt, 11Mt higher than

Major Cement Exporting Countries of the World: This is a list of top countries by cement production in 2010 based on USGS Mineral Program Cement Report. (Jan 2011).

While the top 3, China, India and USA, didn't change in the last 5 years, declining US production by 36.5% is noteworthy. The most progressing countries in terms of ranking are Turkey (10th to 4th), Brazil (13th to 5th) and Vietnam (17th to 9th). All top European cement producing countries except Turkey lost their financial crisis. rankings (Spain, Russia, Italy, Germany and France), as a result of the global

World Cement production in 2010e: Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 India Iran United States Turkey Brazil Japan Spain Viet Nam Russia Egypt South Korea Saudi Arabia Indonesia Italy Mexico Germany Thailand Pakistan Country/Region People's Republic of China mil Tonnes 1,800 290 74 63.5 60 59 56 50 50 49 48 46 45 42 35 34 31 31 30 520 3,413.5

Others
2010 World Production

Main drivers for doing business in Brazil

Brazil has the 10th largest economy and a population of more than 194 million.

Many local companies are undervalued and in need of restructuring, capital and technology Growth potential and consumer market Broad industrial base and infrastructure, and a diversified economy Abundant agricultural, mineral and energy resources and potential Established transportation networks (railways, highways, ports) and distribution channels in most industrialized areas Privatization in late stages and follow-on transactions still in development Increasing globalization and international trade, with Government policies favoring exports Goodwill generally tax deductible New regulations favoring minority shareholders

Main Challenges of doing Deals in Brazil

Complex tax and employee related regulatory environment, with high taxes and social charges on payroll, sales and income Multiple taxes with fast changing legislation affecting business plans and increasing risks of contingencies Economic environment still considered volatile as compared to more stable economies

Fast-changing business conditions Complex transfer pricing and foreign capital registration rules Difficulties in reorganizing companies quickly, including high costs for employee terminations High demand for investments in the distribution channels and infrastructure Semi-skilled and unskilled labor in certain developing areas Social extremes with unequal distribution of wealth - a significant portion of the population not participating in the consumer market

TABLE 1: DIFFERENT MODES OF SETTING UP BUSINESS IN BRAZIL MODES OF SETING UP A BUSINESS

DEFINITION The capital stock of the company is divided in shares, and the firm must necessarily aim at profits. It is always regarded as a trading company, no matter what its objectives, and can be considered open or closed, depending on whether or not the securities it issues are traded on the stock exchange. A private limited company may engage in commercial, industrial and service activities and has its bylaws registered with the Board of Trade. It has to be established by at least two partners. Shares represent the participation of each partner in the companys capital, with the partners liability limited to the value of their shares or quotas.

Joint Stock Company or Corporation (Sociedade Annima - S/A)

Limited Liability Company (Sociedade por Quotas de responsibilidade limitada Ltda)

A special form of the Ltda that can be utilised by partnerships without commercial activities or whose object is the exercise of the intellectual, scientific, literary or artistic professions. Simple partnership (Sociedade In this type of partnership, the partners are jointly and severally responsible Simple - S/S) for the companys debts should the companys assets be insufficient to pay them.

Individuals

Made up of a single individual that gives his or her name to the firm, making

MODES OF SETING UP A BUSINESS

DEFINITION himself or herself responsible for all the companys acts that involve economic activities such as the production and circulation of goods and services. This type of legal entity applies to industrial, commercial and service activities; however, it may not encompass the exercise of intellectual, scientific, literary or artistic professions. Source: Investing in Brazil

PESTLE Analysis PESTLE analysis is a useful tool for understanding the big picture of the

environment, in which you are operating, and the opportunities and threats that lie within it. By understanding the environment in which you operate (external to minimize the threats.

your company or department), you can take advantage of the opportunities and

addressed, which might be from any of the following standpoints: A company looking at its market A product looking at its market A brand in relation to its market

The PESTLE subject should be a clear definition of the market being

A local business unit or function in a business product

A strategic option, such as entering a new market or launching a new A potential acquisition

A potential partnership

An investment opportunity

A. Political System:Federal Republic similar to United States The federal republic has three independent branches independent branches: executive legislative and judicial. The President heads the executive branch. Under the President are a number of

executive departments, the heads of which are appointed and are known

collectively as the cabinet. Unlike those in many parliamentary democracies, its members need not be members of the legislative. Besides the executive regulatory. departments, there are a number of independent agencies many of which are Legislative power is exerted by Congress consisting of a Senate and house of Representatives. There are 81 senators, three from each state and the federal District of Brasila. The total membership of the House is 513, the number of

representatives from each state depending on its population. Voting is illiterate can opt to vote.

compulsory at the age of 18 but 16 and 17 year-olds, 70 years or older and The judicial branch consists of a system of federal, state and local courts throughout the country, headed by the Federal Supreme Court. i. Law Brazilian law is based on Roman-Germanic traditions and civil law

concepts prevail over common law practice. Most of Brazilian law is codified, although non-codified statutes also represent a substantial part, playing a complementary role. Court decisions set out interpretive guidelines; however, they are seldom binding on other specific cases. Doctrinal works and the works of academic jurists have strong influence in law creation and in law cases.

B. Economic- The local, national and world economy impact i. Economy of Brazil

largest economy at market exchange rates and the ninth largest in purchasing power parity (PPP), according to the International Monetary Fund and the World Bank. Its GDP (PPP) per capita is $10,200, putting Brazil in the 64th position manufacturing and service sectors, as well as a large labor pool.

Brazil is the largest national economy in Latin America, the world's tenth

according to World Bank data. It has large and developed agricultural, mining, Brazilian exports are booming, creating a new generation of tycoons.

Major export products include aircraft, electrical equipment, automobiles, corned beef. The country has been expanding its presence in international economies called the BRIC countries.

ethanol, textiles, footwear, iron ore, steel, coffee, orange juice, soybeans and financial and commodities markets, and is one of a group of four emerging Brazil pegged its currency, the real, to the U.S. dollar in 1994. However,

after the East Asian financial crisis, the Russian default in 1998 and the series of adverse financial events that followed it, the Central Bank of Brazil temporarily

changed its monetary policy to a managed-float scheme while undergoing a January 1999. ii. Key industries

currency crisis, until definitively changing the exchange regime to free-float in

motor vehicles and parts, other machinery and equipment. Major export products include aircraft, coffee, vehicles, soybean, iron ore, orange juice, steel, textiles, footwear and electrical equipment.

Key industries are textiles, shoes, chemicals, aviation, cement, agriculture,

iii.

largest recipient of foreign direct investment (FDI) in Latin America, and the United States is traditionally the number one foreign investor in Brazil. Since domestic savings is not sufficient to sustain long-term high growth rates, Brazil must continue to attract FDI. In order to attract increasing levels of FDI, many business groups and international organizations have highlighted the need for Brazil to improve its regulatory environment for investments and to simplify the

Brazil is generally open to and encourages foreign investment. Brazil is the

FDI

tax code. Brazil does not have a bilateral tax or investment treaty with the United private investment to infrastructure, was passed in 2004. In 2007, the

States. Legislation promoting public-private partnerships, a key effort to attract Government of Brazil initiated an ambitious infrastructure development program, known as the Growth Acceleration Program (PAC), to address the countrys significant road, rail, energy supply, and other infrastructure needs.

of people still live in poverty; social exclusion is quantitatively and qualitatively pronounced and structurally ingrained. But during the last several years, poverty full poverty rate fell from 34% of the population in 1995 to 25.6% in 2006. reduction and income distribution indicators have dramatically improved. The

Brazils inequality levels remains among the highest in the world. Millions

C. Sociological- The ways in which changes in society affect business

About 45% of the national wealth is concentrated in the upper 10% of the income pyramid, while the lower 20% control just over 2.4% of the wealth. Brazil exhibits a medium level of development according to key indicators, but national

Brazil still shows one of the worst values of income distribution worldwide.

mean values mask the great disparities between the relatively developed southern and southeastern regions, where conditions resemble those in industrialized

countries to some extent, and the socioeconomically disadvantaged northern and northeastern regions. i.

strong colonial ties with the Portuguese empire. Among other influences, the Portuguese introduced the Portuguese language, Roman Catholicism and colonial architectural styles. The culture was, however, also strongly influenced by aspects of Brazilian culture were influenced by the contributions of Italian, German and other European immigrants who arrived in large numbers in the

The core culture of Brazil is derived from Portuguese culture, because of its

Culture

African, indigenous and non-Portuguese European cultures and traditions. Some

South and Southeast of Brazil. The indigenous Amerindians influenced Brazil's language and cuisine; and the Africans influenced language, cuisine, music, dance and religion. ii.

of the population and is virtually the only language used in newspapers, radio,

The official language of Brazil is Portuguese which is spoken by almost all

Language

television, and for business and administrative purposes. The exception to this is

in the municipality of So Gabriel da Cachoeira where Nheengatu, an indigenous language of South America, has been granted co-official status with Portuguese. Brazil is the only Portuguese-speaking nation in the Americas, making the language an important part of Brazilian national identity and giving it a national culture distinct from those of its Spanish-speaking neighbors.

and enjoy being around others. At the same time, they are hardworking. Brazilians are proud of their country's natural resources and diverse culture. One

Brazilians are warm, fun-loving, and free-spirited. They are also outgoing

iii.

General Attitude

point of pride is the Brazilian waytheir ability to find creative ways around seemingly insurmountable problems. Brazilians often are opinionated and will argue for their convictions with vigor. In spite of economic difficulties, most Brazilians are hopeful about their country's future. iv. Personal Appearance

latest styles. People in urban areas like to wear brand-name clothing. People in the warmest and most humid regions dress more casually, and colors are lighter especially among the native peoples. and brighter year-round. In rural regions, more traditional clothing is common,

In general, Brazilians are fashionable and like to dress according to the

D. Technological- How new and emerging technology affects business? Brazil is a leader in science and technology in South America and in some

fields a global leader, such as biofuels, agricultural research, deep-sea oil production, and remote sensing. U.S. Government, private sector, and academic researchers have extensive ties with Brazilian counterparts, and the extent of bilateral scientific and technological cooperation is expanding. The Brazilian innovation, taking scientific advances from the laboratory to the marketplace. i. Technological Research

Government seeks to develop an environment that is more supportive of

and research institutes. But more than 73% of funding for basic research still comes from government sources. Some of Brazil's most notable technological hubs are the Oswaldo Cruz Institute, the Butantan Institute, the Air Force's Aerospace Technical Center, the Brazilian Agricultural

Technological research in Brazil is largely carried out in public universities

Corporation and the INPE. The Brazilian Space Agency has the most advanced

Research

space program in Latin America, with significant capabilities in launch vehicles, launch sites and satellite manufacturing. ii. Information Technology

products and services is forecast to pass US$25bn in 2010 and US$30bn by situation, but IT spending is still expected to increase to remain in positive territory in 2009, and to grow at a CAGR of 12% over the forecast period. This makes Brazil's one of the fastest growing global markets. The overall outlook

The Brazilian IT market is the largest in Latin America and spending on IT

2012. BMI has downwardly revised its five-year forecast, due to the economic

remains constructive for growth in IT spending, with an expanding economy reach. Brazils IT services market is expected to continue to grow strongly in

lifting millions into a middle class for whom computers are no longer beyond 2010, with total spending of around US$9.4bn as the economy continues to market revenues generated by services is high at around 38%, which corresponds more to developed market levels. iii. R&D

bounce back from recession. For a developing market, the percentage of Brazil IT

Most of Brazil's research and development activities take place in its main

public universities. Brazil, in particular, is an interesting country to consider, as scientific growth is in the beginning stages and offers tremendous future potential.

Brazils GDP declined in 2009 by 0.7%, with an equal drop in its R&D investment for that year. Its GDP and R&D are both expected to increase in 2010 by about 3.5%, to $2,048 billion and $18.637 billion respectively, from its 2009 levels. Brazils R&D as a share of its GDP is about 0.91%.

Brazils share of the worlds 7.1 million researchers increased from 1.2% in 2002 to 1.7% in 2007. According to UNESCO, Brazil has about 625 researchers for every million citizens of Brazil. So Brazil has great potential in growing the number of scientific papers its researchers publish, but is starting from a relatively low base. iv. Technology policy in Brazil: Old approaches to a new situation In 1990, the government has radically changed the framework conditions for industrial development. Acknowledging that the import substitution model had run into a dead end, it opted for a policy of gradually opening the market to foreign competitors, thus creating an environment that requires international competitiveness and thereby forces companies to attain international levels of

quality and efficiency. This has been accompanied by a number of technology and industrial policy programmes. However, they were either not implemented, or only after long delays, or have had little impact so far because the recession inhibited private sector investments. Even the Quality and Productivity Program that has pursued an innovative approach (mainly trying to build a consciousness for quality issues inside firms) and got a lot of publicity in Brazil apparently has only had a limited impact. v.

in the 1930s. Despite the accelerated pace of growth witnessed up until 1980, the level of development in the country still falls way below the levels reached by developed countries. Industry, which directs itself essentially to attending the demands of the internal market, is made up of a steady stream of embodied and disembodied external technology flows. Even so, Brazilian industry has been

Brazil got off to a late start in its process of industrialization, which began

Brazilian industry and technology

making considerable efforts in technology directed towards, in most cases, adapting the flow of external knowledge to its local context. These efforts have

also been brought on by local technological demands that the external flow of

technology has been unable to meet. Up until now, rare have been the cases of sectors in which firms generate flows of new knowledge in order to gain dynamic competitive advantages.

E. Legal- How local, national and world legislation affects business i. The Brazilian legal system It is based on Civil Law tradition. The Federal Constitution, in force since

October 5th, 1988, is the supreme rule of the country and is the characterized by

its rigid written form. The Constitution organizes the country as a Federative the Federal District. The 26 federate states have powers to adopt their own established in the Federal Constitution. ii. Municipalities It enjoy restricted autonomy as their legislation must follow the dictates of

Republic, formed by the indissoluble union of the states and municipalities and of Constitutions and laws; their autonomy, however, is limited by the principles

the Constitution of the state to which they belong, and consequently to those of the Federal Constitution itself. As for the Federal District, it blends functions of Organic Law, must also obey the terms of the Federal Constitution. federate states and of municipalities, and its equivalent to a constitution, named

Executive, the Legislative and the Judiciary, which are independent and harmonious amongst them. The head of the Executive is the President of the Republic, which is both the Chief of State and the Head of Government and is directly elected by the citizens. The Legislative, embedded in the form of National

The powers of the Union, as defined within the Constitution, are the

Congress and consists of two houses: The Chamber of Deputies (lower house) and

the Federal Senate (upper house), both constituted by representatives who are

elected by the citizens. The Judicial powers are vested upon the Federal Supreme Judges. There are also specialized courts to deal with electoral, labor and military disputes.

Court, the Superior Court of Justice, the Regional Federal Courts and Federal

F. Environmental- The local, national and world environmental issues Brazil holds about one-third of the world's remaining rainforests, including

a majority of the Amazon rainforest. Due to the vastness of the Amazon

rainforest, Brazil's average loss of 34,660 square kilometers of primary forest per cover. Nevertheless, deforestation in Brazil is one of the most important global

year between 2000 and 2005 represents only about 0.8 percent of its forest environmental issues today. Research led by the Woods Hole Research Center and

the Carnegie Institution's Department of Global Ecology found that each year the amount of forest degraded is roughly equivalent to the amount of forest cleared. The finding is trouble to ecologists because degraded forest has lower levels of is more susceptible to fires.

biodiversity and is more likely to be cleared in the future. Further, degraded forest

for pastureland by commercial and speculative interests, misguided government policies, inappropriate World Bank projects, and commercial exploitation of forest resources. For effective action it is imperative that these issues be addressed. Focusing solely on the promotion of sustainable use by local people would neglect the most important forces behind deforestation in Brazil.

A large portion of deforestation in Brazil can be attributed to land clearing

country: the decline in deforestation from 1988-1991 nicely matched the

Brazilian deforestation is strongly correlated to the economic health of the

economic slowdown during the same period, while the rocketing rate of

deforestation from 1993-1998 paralleled Brazil's period of rapid economic growth. During lean times, ranchers and developers do not have the cash to rapidly expand their pasturelands and operations, while the government lacks subsidies to forest exploiters. The Future foreseeable future. This author personally expects at least half the Amazon to be converted for agriculture or otherwise degraded by 2050. While this is It seems likely that deforestation will continue in the Brazil Amazon for the funds to sponsor highways and colonization programs and grant tax breaks and

discouraging, there is hope that improved agricultural techniquesperhaps could maybe increase productivity on already affected areas and reduce the need for further forest clearing.

based on research into how pre-Colombian societies managed these forests

rights to develop its economy. How it chooses to do so will likely be influenced by

It is important to recognize that Brazil is a sovereign state with its own

economic factors which may include how western countries value the services

(especially climate moderation and biodiversity preservation) provided by forests. If Western countries begin to place greater value on these services, then the protection of Brazil's rainforests can likely be "purchased" via the open market. believes it will become more so in the next few years. Scientists will play an media.

While right now the environment for such a scenario is not favorable, this author important role in disseminating the value of these forests to policymakers and the