Companies & Sectors
Fill infrastructural gaps hampering food processing in India: Assocham
With just over two per cent of annual production processed, industry body Assocham on Thursday urged the Centre to fill infrastructural gaps to improve growth of the food processing sector in India.
 
"Just over two per cent of annual production is processed in India, an abysmally low figure when compared to countries like Malaysia, the US and China, where around 83 per cent, 65 per cent and 23 per cent of produce, respectively, is processed," said Assocham Secretary General D.S. Rawat.
 
The Associated Chambers of Commerce of India asked the government to fill up gaps in its infrastructure availability, create awareness and improve efficiency of value chain that were hampering the growth of the sector.
 
It said the inefficiencies in supply chain, absence of economies of scale, technology up-gradation and quality issues were certain key challenges hindering India's Rs six lakh crore worth food processing industry.
 
Union Food Processing Minister Harsimrat Kaur Badal also held a meeting with various stakeholders on Thursday in an effort to identify the obstacles in business in the sector. 
 
"There is a need to lure more investments in infrastructure to bring in more organised sector investments into food processing as currently unorganised sector forms major part with a share of about 42 per cent," Rawat said. 
 
Growing at a compounded annual growth rate (CAGR) of about 10 per cent India's food processing industry accounts for almost 32 per cent of total food market and contributes nine to ten per cent to gross domestic product (GDP) in agriculture and manufacturing sector, ranking fifth in terms of production, consumption and exports.
 
Grains processing occupies maximum share in food processing sector accounting for 40 per cent of the industry size followed by horticulture and oil seed processing.
 
The industry body listed various challenges faced by the food processing sector including proliferation of unorganised players leading to a constraint in achieving economies of scale to increase output. 
 
It also pointed out that the sector lacked necessary monitoring mechanisms to implement quality norms.
 
Assocham proposed augmenting knowledge and skill levels of the workforce -- youth in particular, which is essential to enhance resource productivity. Besides, boosting innovation, managing finance, mitigating risks and improving decision making ability. 
 
It also suggested that the government should introduce measures like targeted training programs for different segments of food processing industry and effective use of synergy between public private partnerships including universities to promote the food processing sector.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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TRAI call for broadcast, cable tariff right step: Analysts
The Telecom Regulatory Authority of India's (TRAI) proposal for the broadcasting and cable services tariff is a step in the right direction, say analysts but feel some issues still need to be clarified.
 
The TRAI has floated a consultation paper on the draft Telecommunication (Broadcasting and Cable Services) (Eighth) (Addressable Systems) Tariff Order, 2016. Written comments on the draft are invited from the stakeholders by October 24, 2016.
 
The key points in the draft say every broadcaster should declare the nature of each channel as ‘free to air' or ‘pay' for different geographical areas; broadcaster can offer pay channels in the form of bouquet(s) and on a-la-carte basis. Price declaration should be as mentioned.
 
The paper said television households should pay Rs 130 as monthly rental per set-top box for 100 standard definition channels. 
 
Regulator has proposed a genre-wise ceiling on channel prices. And finally it has said distributors of television channels can form bouquets from la-carte channels of broadcasters. 
 
"While we consider the recommendations to be a step in right direction, we do note that there are still some issues which need to be clarified," stated a report by investment banker Bank of America Merrill Lynch.
 
It said categories are not clearly defined. In general entertainment channel, it is general or premium but nothing for regional or niche like English channels. 
 
"As digitisation is still not complete, it is not clear what each consumer is subscribing to and how much is being paid; educating the consumer on this new pricing and various options being available would not be easy and time consuming; any stakeholder not happy with the rules could take these in court where a stay could come."
 
Kotak Institutional Equities said TRAI prescribed price caps for genres look reasonable. 
 
"We expect broadcasters to set the market retail price (MRP) of most of the pay channels below price cap for optimum subscription revenues. In any case, broadcasters also have an option to declare a channel premium and set MRP that exceeds price cap."
 
A key objective of the proposed tariff structure is to protect consumer interest.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Continued losses can erase revenue reserves of public sector banks: CRISIL
A sharp decline in profitability and mounting losses could wipe out revenue reserves of some public sector banks (PSBs) and hamper their near-term ability to service coupon on additional tier 1 (AT1) bonds issued under Basel III capital regulations, says a research note. The Basel III-compliant AT1 bonds are meant to be loss absorbing in times of stress.  
 
In the report, ratings agency CRISIL says, "...some banks are reporting revenue reserves in their audited balance sheets without adjusting for profit and losses (P&L). Instead, these losses are being shown as a negative ‘balance in P&L Account’ on the liability side. As a result, reported revenue reserves do not deplete despite losses. For loss-making banks, the ability to service coupon on AT1 bonds depends only on adequacy of revenue reserves."
 
As many as 13 of the 21 PSBs (taking the State Bank of India and its associates as a consolidated entity, reported losses for fiscal 2016, and almost half of them could do so again this fiscal. As on date, 14 PSBs have Rs22,600 crore of AT1 bonds outstanding. "While Government of India has committed capital support to PSBs to sustain their capital ratios above regulatory minimum, the coupon on AT1 bonds can only be serviced through current year’s profit or from revenue reserves and hence any capital infusion by government alone cannot improve the bank’s ability to service coupon on these bonds," the report says.
 
Krishnan Sitaraman, Senior Director for Financial Sector and Structured Finance Ratings at CRISIL says, “A part from high probability of posting losses this fiscal, negative or low revenue reserves are likely to make six PSBs vulnerable. Of these, four have AT1 bonds outstanding, where continued losses could wipe out their revenue reserves and pose a challenge when it comes to coupon servicing. The other two have not issued any AT1 bonds so far."
 
According to the ratings agency, four other PSBs are also expected to post losses in the near term, but they have adequate revenue reserves, after adjusting for expected losses, to service coupon on AT1 bonds outstanding. "However, their ability to continue to do so over the medium term will depend on a return to profitability. On the other hand, 11 banks are expected to report a profit in the near term or have sizeable revenue reserves despite weaker profitability, which would help them service coupon obligations on AT1 bonds over the medium term," the report says.
 

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COMMENTS

Govinda Warrier

1 year ago

RBI and GOI need to take cognizance of the possible damage such vague observations about the possibility of some banks failing to meet payment obligations will cause to the banking system. The easiest way, traditionally, to kill a bank is to spread a rumour that it may not be able to meet payment obligations on due dates. Crisil has unwittingly done just that without mentioning the name of the bank.

B. Yerram Raju

1 year ago

PSU Banks have all professionals - most have qualified in banking diplomas from IIBF or IBL and several are also CAs. It is not so much professionalism that is lacking as integrity and support to integrity at various tiers in the organisation. If the seniority principle gives place to merit and proven integrity, half the ills of banks are cured. The other half is cured by the government not pushing its targets. Public sector bank executives are still measured by the targets they receive on government schemes. Same number of staff at various levels achieve millions of Jan Dhan and Mudra Accounts in just a couple of years that they missed out for decades!! Why the Finance Department of GoI is not able to see the red line in such target achievement? Both PSBs and the Government of India seem to be interested in scratching each other's back. Second, why the same Government cannot say that a portfolio of certain viable quantum and number of corporate accounts shall be managed by a person no less than a GM for at least three years continuously? Even if such GM were due for promotion in between such 3-year period, monitoring by the same person should be continued. Then accountability increases. Committee approach for sanctioning is okay but not for shifting responsibility and accountability. NPAs can significantly go down in the corporate sector at least in a couple of years.

REPLY

Govinda Warrier

In Reply to B. Yerram Raju 1 year ago

I agree with the contents, especially the opening two sentences. Though we are not raising these issues for the first time, at the risk of repetition, we need to talk out more often. As of now, the only option is to strengthen PSBs. If Privatisation was to help, post-nationalisation, the residual and new generation private sector banks would have subsumed a decent share of banking business by now. Their share remains below thirty percent means that they avoid a large section of clientele PSBs service. I am reminded of the prophetic assertion by All India Rural Credit Survey: "Cooperation has failed, cooperation must succeed"
PSBs, in whatever structural form they survive, need to be retained in good health.

Akshay Kini

1 year ago

Many of these PSU banks have incredibly high CASA ratio, yet are suffering. Shows how badly are run.

REPLY

Govinda Warrier

In Reply to Akshay Kini 1 year ago

Infuse professionalism, give them functional freedom to manage HR and compensate workers with level playing field compared to banks in private sector, when they are asked to do unremunerative business for meeting social objectives, make good their losses by appropriate interventions, just as GOI has made RBI's MPC a body of experts, take care to fill board vacancies and top positions with competent persons and ensure they remain in position for reasonably long tenure...

Shrikant Dattatraya Sahasrabuddhe

1 year ago

Names of banks not published.Why?

Shrikant Dattatraya Sahasrabuddhe

1 year ago

Names of banks not published.Why?

Govinda Warrier

1 year ago

Many are wise after the event. Some pretend to be. The compulsions to be realistic in accounting practices have forced some banks to report losses. Slowly some discipline is in sight. The overall position of public sector is painted grey by vested interests. As of now, there seems to be no escape from infusing professionalism into the working of public sector organizations. There are no takers for the 'ugly' but unavoidable work they are doing.

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