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Smt. Harsimrat Kaur Badal highlights the achievements of Food Processing Industries Ministry

Honble Union Minister of Food Processing Industries Smt. Harsimrat Kaur Badal along with Honble MoS Food Processing Industries Sadhvi Niranjan Jyoti held an interactive session with media and highlighted various initiatives of the Government. Honble Minister said that one of the major achievements in regard to transforming Food Economy through Food Processing has been creation of huge 32 Lakh MT Capacity worth Rs.9000 crores within two years which shall reduce wastage by 10% per annum ie Rs.9200 crores every year.

India has started moving toward Zero Tolerance of Food Wastages. Emphasizing the need to adopt Zero Tolerance on food wastages by all departments connected to food, Smt. Badal said that initiatives of MoFPI have now started bearing fruits and her target is to bring down the food wastages to zero level. To do that she highlighted the way she piloted the 100% FDI (Foreign Direct Investment) into Multi Brand Retail of Swadeshi Food produced and manufactured in India as one of the major steps along with the creation of huge capacity by way of 37 Mega Food Parks and 134 Cold Chain projects. Further, Honble Minister also announced that Ministry shall be announcing 100 Cold Chain Projects and a SAMPADA scheme focusing on seamless agri cluster development in the current year that shall take food processing industries to the next level.

Government has sanctioned 37 Mega Food Parks out of which 8 have been operationalized (6 in 2 years of NDA tenure vs 2 in 10 years of UPA tenure). Out of 134 Cold Chain Projects sanctioned 81 have been completed (44 in 2 years of NDA tenure vs. 37 during UPA tenure). Through Cold Chains alone, we have added a capacity of 1.28 Lakh Metric ton of Cold Storages/CA/MA, 53.05 MT per hour of Individual Quick Freeze (IQF), 19 lakh litres per day of Milk Processing and 240 Reefer vans, said the Honble Minister.

Food Processing is an employment intensive sector and to facilitate investments, a single window facilitation cell has been created to handhold overseas and domestic investors in food processing sector.

A Food Map identifying surplus and deficit areas of various agricultural and horticulture produce in the country has been made and is available on website of the ministry.

A Special Fund of Rs.2000 crores has been set up in NABARD to make available affordable credit to agro processing units in the designated food parks.

Honble Minister also announced that the Ministry shall be launching a Mobile App to provide ONE STOP information to farmers/ entrepreneurs to provide necessary skill set to them for setting up food processing units.

Briefing about tax incentives Honble Minister said that in last two years, Excise Duty on machinery for processing has been reduced from 10% to 6%. Pre-cold Storage services like pre-conditioning, pre-cooling, ripening, waxing, retail packing, labeling of fruits and vegetables have been exempted from Services Tax. Loans to food agro-based processing units and Cold Chains have been classified under agriculture activities for Priority Sector Lending subject to aggregate sanctioned limit of Rs.100 crore per borrower.

Ministry has launched an ONLINE SYSTEM to file claims under flagship schemes like Mega Food Park and Cold Chains to remove human interface and improve transparency. Ministry has also simplified procedures by reducing requirement of documents/affidavits and created Grievance Redressal Mechanism so that promoters are given opportunity of Personal Hearing.

Since September 2015, 24084 persons have been trained in food processing sector under Pradhan Mantri Kaushal Vikas Yojana.

The Honble Minister pointed out that her next target is to create small and medium enterprises in food processing sector all over the country, and to give it a big push she has launched a new scheme SAMPADA to focus on seamless development of Agri Processing clusters close to the surplus production areas. All these initiatives of the Ministry of Food Processing shall contribute in a big way in doubling farmers income and reducing food wastages.

MJPS/nb



PSBs unlikely to achieve FY17 loan recovery targets: Anil Agarwal

PSBs unlikely to achieve FY17 loan recovery targets: Anil Agarwal Interview with managing director amp; head of Asian financial research, Morgan Stanley

Anil Agarwal, managing director head of Asian financial research at multinational financial services entity Morgan Stanley, believes public sector banks will continue to lose market share. He has had a negative view on PSBs for five years and continues to prefer private banks, despite the higher valuations. A chat with Sheetal Agarwal Hamsini Karthik at the sidelines of the 18th Morgan Stanley India Annual Summit. Edited excerpts:

The March quarter results of most banks indicate that asset quality stress extends beyond the Reserve Banks quality review. How big is this demon? And, when do you see the worries easing on this?

For most banks, about two per cent of the loan book was a part of the Asset Quality Review exercise. But, some have reported four to five per cent of their loan books turning bad. It is obviously much higher than the AQR. Gross non-performing loans will keep going up but our view is that the big increase in new bad loan formation or slippages is behind us. They were 4.5-5 per cent of loans in FY16 and we think 2.5-3 per cent of the loan book will still turn bad this financial year. Bad loan formation this year will be meaningfully less than last year but loans from both banks#39; watch-lists, as well as outside these lists, will turn bad.

Most PSBs have given high targets of recoveries in FY17. Are these attainable?

I do not think they will be able to achieve those targets. In this cycle, every bank is saying they will recover 60-70 per cent of every Rs 100 loan. How? We have been talking about the same set of bad loans for four to six years. This means a large chunk of the loan book today which sits in these banks is only interest. So, if it was a Rs 60 loan five years back, it is now around a Rs 100 loan. The collateral against this might be Rs 40. So, today, if you are selling me down that loan of, say, Rs 100, you are not going to get 60-70; you are going to get a fraction of the Rs 40. So, the loss is going to be much higher, simply because a large chunk of corporate lending is just interest compounding.

How do you solve this?

You either write-off or need to make a provision. Right now, the provision coverage ratios in these state-owned banks is 40-45 per cent. So, if I sell it down and an ARC (asset reconstruction company) buys it at 30 cents to the dollar, the bank needs to take a big hit, which their PL (profit and loss statement) does not allow. So, there is a logjam in recoveries.

The pre-provision profit is only NII (net interest income), fees and costs, and is the buffer banks have in the PL to take credit costs. For private banks having higher corporate loans and a watch-list of bad loans, their pre-provision profits on loans is, say, 500 basis points and their credit costs about 100 bps. So. their profit margin is 400 bps. Now, even if their credit costs go up to 150-180 bps, they have a huge margin where they can take the hit and still make a return on equity of 10 per cent for one bank, 15 per cent for another. But, these banks will still have good return on equity (RoE).

For the state-owned banks, their pre-provision profits are now 150-180 bps and credit costs 170-180 bps, which is why most of these are making losses. In FY17, the margin before provision will keep trending down because net interest margins are under a lot of pressure. Thats the key reason why they are not providing (provisioning). But, if you don#39;t provide, you are saddled with the bad debt for a longer period of time; you raise capital and just write it off.

Two things will help state-owned banks. One is additional capital which can be used to write-off loans. The second thing which could happen is if the economy starts picking up meaningfully. Then, you will start seeing some recoveries, provision write-backs on some bad loans; the credit costs will start coming down. Given what#39;s happening globally, its tough to see that kind of recovery pick-up.

Last year, total bad loans for banks stood at Rs 3 lakh crore. They now stand at Rs 5 lakh crore. For FY17, where do you see the combined figure?

We are saying new bad loans will be 2.5 per cent of loans, roughly. That would mean $25-30 billion of new bad loan formation. Within that, you will some recoveries, upgrades and some write offs. So, net-net that number depends on how banks provide for it.

Do private banks continue to look attractive at these valuations?

I have a buy (rating) on private banks. Globally, most financial companies are not generating much growth. Those banks are struggling to get RoEs of six-seven per cent. In India, you have banks which are growing revenues at 20-25 per cent (annually) and will keep growing at these levels in the next five years. The compounding effect here is huge. So, I would be worried about valuation multiples only if their compounding effect reduces. Right now, the compounding effect is there and as the economy is stable, the competition for private banks is just not there. Weve had a sell (rating) on state-owned banks for five years now.



Bayer to choose banks for Monsanto offer

Bayer to choose banks for Monsanto offer Bayer will probably raise over $40 billion in short-term bridge financing and most of the remainder in term loans

Bayer is close to choosing banks to arrange funds for its proposed acquisition of Monsanto, according to people familiar with the matter, after the US company rejected the initial $62 billion bid as too low and sought reassurances on the potential financing.

Bayer will probably raise more than $40 billion in short-term bridge financing and most of the remainder in term loans, said the people, who asked not to be identified because the talks are private. The German company interviewed lenders at its headquarters in Leverkusen this week and is likely to select about half a dozen banks next week, the people said.

Funding negotiations are ongoing and the amounts could change, the people said. Banks are likely to offer additional financing to give Bayer room to increase its offer if needed, said the people. A spokesman for Bayer declined to comment.

Providing the terms of the funding may allay Monsanto#39;s concerns about the financing and let talks advance on Bayer#39;s bid to become the world#39;s biggest supplier of farm chemicals. On Tuesday, Monsanto said that while the original offer was inadequate, it#39;s open to further negotiations. Bayer remains confident about reaching an agreement on the deal, which would be the largest this year and biggest ever by a German company.

Bayer is considering selling convertible debt for $2 billion to $3 billion, two of the people said. Banks are offering $40 billion to $50 billion in bridge loans, the people said. These are short-term funds provided by lenders in an acquisition while the buyer arranges longer-term funding such as term loans and bonds. The term loans could total more than $20 billion, one of the people said.

Bank of America and Credit Suisse Group are Bayer#39;s main advisers and financiers. Rothschild is also advising Bayer.

Shares of Bayer closed 0.4 per cent lower at ^85.33 in Frankfurt on Friday. The stock has dropped 15 per cent since May 11, the day before Bloomberg News reported that Bayer was exploring a possible bid. Monsanto, which has climbed 21 per cent in the same period, closed 0.1 per cent lower at $109.49 in New York on Friday.

In unveiling its May 10 offer of $122 a share in cash, Bayer said the transaction would be funded with a combination of debt and equity, with about a quarter of the $62 billion in enterprise value coming from selling shares to existing investors. Bayer may also sell new hybrid bonds to a very limited extent, while relying largely on senior debt, Chief Financial Officer Johannes M Dietsch told analysts on Monday.

Bayer will probably make a higher bid, Jonas Oxgaard, an analyst with Sanford C Bernstein Co in New York, said Tuesday in a note, adding that an offer below $135 per share would be challenging for Monsanto to agree to. The offered price is unlikely to go beyond $140 a share, according to Jeffrey Holford, an analyst at Jefferies.



Key indices move in a narrow range

Key indices move in a narrow range

Key benchmark indices moved in a narrow range in positive zone in early afternoon trade. At 12:15 IST, the barometer index, the SP BSE Sensex, was up 31.26 points or 0.12% at 26,684.86. The Nifty 50 index was currently up 12.75 points or 0.16% at 8,169.40. The market breadth indicating the overall health of the market was positive. On BSE, 1,144 shares rose and 1,129 shares fell. A total of 153 shares were unchanged. The BSE Mid-Cap index was currently up 0.23%. The BSE Small-Cap index was currently up 0.38%. Both these indices outperformed the Sensex.

In overseas stock markets, Japanese stocks edged higher as the yen weakened against the dollar. The Nikkei 225 Average closed 1.39% higher. A weaker local currency benefits exporters, as they can sell their goods at more competitive prices overseas. Japanese Prime Minister Shinzo Abe said he would delay a sales tax hike scheduled for April next year by 2-1/2 years, Masahiko Komura, vice president of the ruling Liberal Democratic Party, told reporters today, 30 May 2016.

Chinese stocks edged higher in volatile trade after the Shanghai and Shenzhen stock exchanges on Friday, 27 May 2016, announced rules on share trading suspensions, removing one potential roadblock to inclusion Chinese A shares or yuan-denominated shares in MSCI Inc.s global benchmark indexes, a move which could direct large amount of capital into Chinas stock markets. In mainland China, the Shanghai Composite was currently up 0.25%. In Hong Kong, the Hang Seng index was currently up 0.52%. MSCI said in March a decision to include 5% of yuan-denominated shares in its index will depend on regulators implementing changes so that widespread halts cant happen again.

US stocks edged higher during the previous trading session on Friday, 27 May 2016, after the latest data showed that the economys slowdown in the first quarter wasnt as bad as initially thought. US GDP expanded at a 0.8% seasonally adjusted annual rate in the first three months of 2016, up from an initial estimate for 0.5% growth, the Commerce Department said on Friday, 27 May 2016. The faster-than-expected pace of growth, however, still represents a deterioration from the fourth quarters 1.4% growth.

Federal Reserve Chairwoman Janet Yellen said in a speech on 27 May 2016 that a rate increase would be appropriate in coming months if the economy continues to strengthen. The Fed has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015. The Federal Open Market Committee next undertakes monetary policy review on 14-15 June 2016.

Bank stocks witnessed a mixed trend. Among public sector banks, United Bank of India (up 1.69%), Syndicate Bank (up 1.33%), Corporation Bank (up 0.98%), Union Bank of India (up 0.78%) and Punjab National Bank (up 0.39%) edged higher. Bank of India (down 1.38%), Canara Bank (down 0.65%), Bank of Baroda (down 0.14%) and IDBI Bank (down 0.15%) edged lower.

State Bank of India (SBI) extended gains registered during the previous trading session after the banks Chairman Arundhati Bhattacharya said in a post-result conference call held on Friday, 27 May 2016, that bank proposes to contain fresh slippages ratio within 2.7% of advances in the year ending 31 March 2017 (FY 2017). The stock was currently up 1.25% at Rs 198. The SBI stock surged 6.42% to settle at Rs 195.55 during the previous trading session on Friday, 27 May 2016, shrugging off weak financial performance for Q4 March 2016. SBI has identified about Rs 31000 crore of loans as under special watchlist for FY 2017, which is just 2.1% of overall loan book. Of these watch list accounts, about 70% of loans have more chances of slipping to NPA category. About Rs 11655 crore of watchlist accounts come from restructured advance book, while the sectors contributing to the watch list accounts are power (Rs 4748 crore), iron steel (Rs 4299 crore), engineering (Rs 3574 crore), oil gas (Rs 3396 crore), construction (Rs 2608 crore), chemicals (Rs 2326 crore) etc. SBI aims to achieve credit growth of 12-14% in the current financial year, to be driven by retail credit and good quality corporate book.

SBIs net profit fell 66.23% to Rs 1263.81 crore on 10.10% increase in total income to Rs 53526.97 crore in Q4 March 2016 over Q4 March 2015. The result hit the market during trading hours on 27 May 2016.

Among private sector banks, Axis Bank (up 1.11%), Kotak Mahindra Bank (up 0.2%) and ICICI Bank (up 0.51%) gained. IndusInd Bank (down 0.27%) edged lower.

Index heavyweight HDFC Bank was down 0.32% at Rs 1,183.50. The stock hit a high of Rs 1,194.80 and a low of Rs 1,183.05 so far during the day.

Yes Bank rose 0.43% at Rs 1,031.10. The stock turned ex-dividend today, 30 May 2016, for final dividend of Rs 10 per share for the year ended 31 March 2016.

Auto stocks were mixed. Hero MotoCorp (up 1.72%) and Bajaj Auto (up 0.92%) edged higher. TVS Motor Company (down 2.04%), Ashok Leyland (down 1.08%) and Eicher Motors (down 0.51%) edged lower.

Tata Motors rose 3.9% at Rs 419.25 ahead of its Q4 March 2016 results today, 30 May 2016.

Mahindra Mahindra rose 0.53% at Rs 1,342.25 ahead of its Q4 March 2016 results today, 30 May 2016.

Maruti Suzuki India (MSIL) was off 1.18% at Rs 4,092.35. MSIL after market hours on Friday, 27 May 2016, announced that the car maker is all set to start exports of its much awaited light commercial vehicle (LCV) Super Carry to South Africa and Tanzania. The first lot of nearly 100 Super Carry LCVs has been dispatched for shipment, MSIL said. The shipment to South Africa and Tanzania is of the petrol variant of Super Carry, the company said. The petrol variant for export market is powered by G12B engine. Besides African markets, the company also plans to export the Super Carry to South Asian Association for Regional Cooperation (SAARC) nations, it added. Based on the feedback, the company will explore export opportunities for Super Carry in other international markets, MSIL said. The India launch for Super Carry is planned in Q2 September 2016. To begin with, it will be launched in select parts of the country. For the domestic market, Super Carry will be powered by the E08 diesel engine. The company is setting up a separate retail channel in the Indian market exclusively for the Super Carry, MSIL said.

NMDC declined 2.65% at Rs 90.05 after net profit dropped 58.95% to Rs 552.93 crore on 44.63% fall in total income to Rs 1967.94 crore in Q4 March 2016 over Q4 March 2015. The result was announced after market hours on Friday, 27 May 2016.

NMDC said that the company has incorporated a subsidiary company NMDC-Sail on 23 May 2016 in order to develop, explore, etc. sale/supply of iron ore from the allocated mining resource in Chhattisgarh. NMDC will hold 51% while Sail will hold 49% stake in the subsidiary.

Shares of Steel Authority of India (Sail) were up 1.17% at Rs 43.15.

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