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Import of Vegetable Oils down by 14% in November to December 2016-SEA
Jan 13,2017

Import of vegetable oils during December 2016 is reported at 1,209,685 tons compared to 1,420,902 tons in December 2015, consisting of 1,174,296 tons of edible oils and 35,389 tons of non-edible oils. This is down by 15%. The overall import of vegetable oils during first two months of current oil year 2016-17, November & December 2016 is reported at 2,385,149 tons compared to 2,758,337 tons i.e. down by 14%, as per Solvent Extractors Association (SEA) of Indias compiled data on Import data of Vegetable Oils (edible & non-edible) for the month of December 2016.

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EPF Statutory dues for the month of December can be paid by 20th January 2017
Jan 13,2017

Considering the issues arising out of stabilisation of the Unified Portal for employers with UAN Based simplified Electronic Challan cum Return filing system the remittance for the month of December 2016 can be paid by 20th January 2017.

The Portal was launched by EPFO on 23.12.2016, which helps in submission of UAN based returns and challans. It has been noticed that due to increased traffic on the portal, many employers have faced some difficulty in upfront allotment of UAN, connectivity/login issues, website slowing down and also unfamiliarity of the new processes. The Statutory dues are to be paid by 15th of every month.

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Gartner Says Worldwide Semiconductor Capital Spending Is Forecast to Grow 2.9 Percent in 2017
Jan 13,2017

Worldwide semiconductor capital spending is projected to increase 2.9 percent in 2017, to $69.9 billion, according to Gartner, Inc. This is down from 5.1 percent growth in 2016.

The stronger growth in 2016 was fueled by Increased spending in late 2016 which can be attributed to a NAND flash shortage which was more severe in late 2016 and will persist though most of 2017. This is due to a better-than-expected market for smartphones, which is driving an upgrade of NAND spending in our latest forecast, said David Christensen, senior research analyst at Gartner. NAND spending increased by $3.1 billion in 2016 and several related wafer fab equipment segments showed stronger growth than our previous forecast. The thermal, track and implant segments in 2017 are expected to increase 2.5 percent, 5.6 percent and 8.4 percent, respectively.

Compared with early 2016, the semiconductor outlook has improved, particularly in memory, due to stronger pricing and a better-than-expected market for smartphones. An earlier-than-anticipated recovery in memory should lead to growth in 2017 and be slightly enhanced by changes in key applications.

Table 1: Worldwide Semiconductor Capital Spending and Equipment Spending Forecast, 2015-2020 (Millions of Dollars)

20162017201820192020Semiconductor Capital Spending ($M) 67,994.0 69,936.6 73,613.5 78,355.6 75,799.3Growth (%)5.12.95.36.4-3.3Wafer-Level Manufacturing Equipment ($M)35,864.438,005.438,488.741,779.739,827.0Growth (%)7.96.01.38.6-4.7Wafer Fab Equipment ($M) 34,033.2 35,978.6 36,241.1 39,272.8 37,250.4Growth (%)8.15.70.78.4-5.1Wafer-Level Packaging and Assembly Equipment ($M)1,831.22,026.82,247.62,506.92,567.7Growth (%)3.910.710.911.52.8

Source: Gartner (January 2017)

Foundries continue to outgrow the overall semiconductor market with mobile processors from Apple, Qualcomm, MediaTek and HiSilicon as the demand driver on leading-node wafers. In particular, fast 4G migration and more-powerful processors have resulted in larger die sizes than previous-generation application processors, requiring more 28 nanometer (nm), 16/14 nm and 10 nm wafers from foundries. Nonleading technology will continue to be strong from the integrated display driver controllers and fingerprint ID chips and active-matrix organic light-emitting diode (AMOLED) display driver integrated circuits (ICs).

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Government mounted SECC with the purpose of ranking households for receiving benefits under government programmes
Jan 13,2017

The Government mounted the Socio Economic and Caste Census (SECC) with the purpose of ranking households for receiving benefits under government programmes. The Socio Economic and Caste Census has been concluded. The Ministry of Rural Development has decided to use SECC data for identification of beneficiaries and for generating priority list of beneficiaries under its programmes.

An Expert Group under the Chairmanship of former Finance Secretary Shri Sumit Bose was constituted to study the objective criteria for allocation of resources to States and identification and prioritization of beneficiaries under various programme using Socio Economic and Caste Census (SECC) data.

The Expert Group during its interim discussion with MoRD had given a road map on selection of beneficiaries as well as criteria for allocation of resources to the states for Pradhan Mantri Awaas Yojana- Gramin (PMAY-G).

The Expert Groups interim advice has been accepted by the Ministry and accordingly appropriate guidelines have been issued to make inter -state allocation based on SECC data to cover households under Pradhan Mantri Awaas Yojana (PMAG) and Deendayal Antyodaya Yojana - National Rural Livelihood Mission (DAY-NRLM).

The Expert Group has concluded that the use of SECC data and its TIN Number would enable the government to improve the efficacy of its interventions and will result in improved outcome. However, the Expert Group has observed that regular updation and verification of SECC data is prerequisite to eliminate the need to mount standalone SECC in the long run, which would put additional burden on public resources. The SECC has the potential to move from being only a census-like socio-economic database to becoming the core of a functioning Social Registry Information System (SRIS). SRIS would result in several advantages in implementation of social sector schemes. It has the potential to streamline programme administration, reduce duplication of benefit and fraud, saving on time and costs for both programme applicants and services providers, monitoring the living standards of beneficiaries over time, better targeting of vulnerable and marginalized sections of the society and enable expansion of the coverage of the programmes. Finally, the use of SECC data would lead to better budgetary planning and allocation of resources for various programmes.

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India needs 80 lakhs Wi-Fi hotspots: ASSOCHAM-Deloitte study
Jan 13,2017

India needs over 80 lakhs hotspots as against the availability of about 31,000 hotspots with a view to reach the global level of one Wi-Fi hotspot penetration for every 150 people, according to ASSOCHAM-Deloitte joint study.

There are currently over 31,000 public Wi-Fi hotspots installed in India. However, for India to match the current global average of one public Wi-Fi hotspot per 150 people, an additional 80 lakhs hotspots need to be deployed, noted the study titled Digital India: Unlocking the Trillion Dollar opportunity, jointly conducted by ASSOCHAM and research firm Deloitte.

The biggest challenge faced by the Digital India programme is the slow/delayed infrastructure development. Spectrum availability in Indian metros is about a tenth of the same in cities in developed countries. This has put a major roadblock in providing high speed data services.

For Digital India to have a large scale impact on citizens across the nation, the digital divide needs to be addressed through last mile connectivity in remote rural areas. Currently, over 55,000 villages remain deprived of mobile connectivity. This is largely due to the fact that providing mobile connectivity in such locations is not commercially viable for service providers, adds the joint study.

n++For digital technology to be accessible to every citizen significant efforts are needed to customize apps and services to cater to local needs. Finding vendors who can provide such applications has become a challengen++.

Policy framework for Digital India: Challenges in policy, such as taxation, right of way, restrictive regulations etc. are major roadblocks in realizing the vision of Digital India.

Some of the common policy hurdles includes lack of clarity in FDI policies, for instance, have impacted the growth of e-commerce. Transport services like Uber have had frequent run-ins with the local government due to legacy policy frameworks which have not become attuned to the changing business landscape.

Implementation of the Digital India program has been hampered by contracting challenges such as several projects assigned to PSUs are delayed given challenges related to skills, experience and technical capabilities. Several RFPs issued by the government are not picked up by competent private sector organizations since they are not commercially feasible.

The reports suggest that, as recently as 2014, nearly 70% of Indian consumers indicated that lack of awareness was the main reason for not using internet services. Non-availability of digital services in local languages is also a major concern, noted the study.

With the proliferation of cloud-based services like DigiLocker, data security has emerged as a major challenge. The recent data breach in August 2016, in which debit card data for more than 3.2 million subscribers was stolen highlights the importance of implementing foolproof security systems, adds the study.

Development of digital infrastructure is a critical component of Digital India. To further enable development of digital infrastructure, the following measures should be considered as uniform policies for deploying telecom and optic fibre infrastructure.

A uniform RoW policy across all states with a reasonable cost structure is required along with a single window mechanism for granting RoW permissions. PPP models need to be explored for sustainable development of digital infrastructure, as has been the case for civic infrastructure projects like roads and metro project. In addition, the government should make efforts to make additional spectrum available to telecom service providers for deployment of high speed data networks.

Encourage collaboration with the private sector; Effective collaboration with the private sector is critical to the development of the digital infrastructure. Innovative engagement models that ensure commercial viability needs to developed jointly through consultation with industry bodies. This will encourage private sector participation and ensure a better response to infrastructure RFPs. In addition, startups need to be incentivized for the development of the last mile infrastructure and localized services and applications.

Existing government infrastructure assets (e.g., post offices, government buildings, CSCs) should be further leveraged for provision of digital services. In rural and remote areas, private sector players should be incentivized to provide last mile connectivity. USOF can be effectively used to incentivise and create a viable business model. The deployment of funds so far has been erratic and not been used to effectively to fund the cost of infrastructure creation in rural areas. Currently, the fund has over INR 451 billion in reserves which can be used to finance rural digital infrastructure growth in India through direct investment or subsidies.

Satellite communication solutions could be used to speed up broadband access in rural and remote areas. For instance, banks can use VSAT technology to connect remote ATMs, remote branches that need instant access to customer data. It could be used as a last mile connectivity solution in rural areas which lack telecom networks. Another example could be of the navigational system NAVIC (Navigation with Indian Constellation), which can have applications in terrestrial, aerial and marine navigation, disaster management, vehicle tracking and fleet management, integration with mobile phones, precise timing, mapping and geodetic data capture, terrestrial navigation aid for hikers and travellers and visual/ voice navigation for drivers.

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Create 11 lakhs new jobs in five years to reinvigorate Punjab economy: ASSOCHAM
Jan 13,2017

Punjab holds significant potential to create over 11 lakhs additional jobs from the current workforce of about 18.5 lakhs between the age of 15-30 years to attract more investments and attain double digit growth during the course of next five years, apex industry body ASSOCHAM said today.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) Special Task Force on Punjab has formulated a n++Sustainable Action Plann++ to achieve double digit growth on a sustainable basis to help the state to become one of the front ranking states in the country.

According to the paper, about 18.5 lakhs people are already a part of the workforce between the age group of 15-30 years. The current level of workforce participation rate stands at 35.7 percent and to achieve a similar rate an additional 11 lakhs jobs will need to be created in the next five years. The effective implementation of the investment projects holds key to growth of industry sector that will in turn help in creating lakhs of fresh job opportunities for 35.7 per cent of youth population that forms the workforce in the state.n++

As on 2015-16, the state has attracted Rs. 1.98 lakh crore outstanding investments and recorded a sharp deceleration over the years. The states outstanding investment growth rate has declined from the peak level of 91.0 percent in 2007-08 to -10.5 percent in 2015-16. ASSOCHAM suggest that the newly formed government must look at this on priority basis which will help accelerate investment activities in the state as well as encourage private sector to invest in the state.

n++The state has potential for agriculture and allied sector but the sector growth rate has recorded significant deceleration. The service sector has been the largest contributor of the state economy but last four years have witnessed significant moderation in its growth rate as well. Therefore, it is necessary that state concentrates on the corrective measure to revive the sectors. The government must also ensure that growth is job-augmenting, rural-oriented and participatory in nature,n++ noted the paper titled Action agenda for new government of Punjab, that was released by ASSOCHAM in Chandigarh today.

The states overall economic growth rate reached its lowest level from 10.2 percent in 2006-07 to 4.9 percent in 2014-15. In 2015-16, it witnessed a marginal improvement in its overall economic growth to 5.96 percent as compared to previous year growth rate. The states contribution to Indias economy has declined from 3.3 percent in 2004-05 to 2.9 percent in 2015-16.

The services sector growth rate has increased from 6.6 percent in 2005-06 to reach its peak level of 11.8 percent in 2011-12 thereafter it has recorded a downfall. In 2015-16, service sector gross value added growth rate is 6.3 percent, adds the paper.

Punjab is the eleventh largest state in India in terms of number of unregistered MSMEs (Micro Small and Medium Enterprise) and tenth largest state in terms of registered MSMEs. The states unregistered MSMEs account for 4.9 percent of Indias unregistered MSMEs and registered MSMEs account for 3.08 percent of Indias MSMEs. The MSMEs industry generates significant employment opportunities in Punjab. Unregistered MSMEs industry generates 14.16 lakh employments and registered MSMEs industry generates 4.16 lakh employments, highlights the paper.

On the industrial front, Punjab has recorded a compound annual growth rate (CAGR) of about 7.5% during 2004-05 to 2014-15. The states industrial sector contributes 27.0 percent of states economy in 2014-15 which was 24.7 percent in 2004-05. According to the census 2011, workforce dependent on industry is 3.9 percent of the total workforce in the state which was 3.7 percent in 2001, adds the paper.

Agriculture sector has remained the engine of economic growth in Punjab but sustainability of growth of the agriculture sector is under question. On the one side, the agriculture sector is turning less remunerative compared to the early green revolution period and on the other, natural resource constraint such as degradation of soil health and dramatically falling underground water table is increasingly becoming more severe. The sector has registered a compound annual growth rate of 1.6 percent during 2004-05 to 2014-15 that is worse than all India. The performance indicates that states agriculture sector is not operating at its potential level.

The states agriculture & allied sector growth rate is quite uneven over the years and has recorded sharp fluctuation. The sectors performance is indicating that the state has recorded a negative growth of 0.3 percent in 2009-10 and 0.5 percent in 2014-15. In 2015-16, agriculture & allied sector performance (GVA at 2011-12 base) is recorded at 5.2 percent.

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Food commodity prices fall for fifth year in a row in 2016
Jan 12,2017

Prices of major food commodities declined for the fifth year in a row in 2016, averaging 161.6 points for the year as a whole, some 1.5% below their 2015 levels.

Bumper harvests and prospects for staple cereals offset upward pressure on FAOs Food Price Index from tropical commodities such as sugar and palm oil, where production was impacted by El Nino.

In December 2016, the Index averaged nearly 172 points, unchanged from November.

The FAO Food Price Index is a trade-weighted index tracking international market prices for five key food commodity groups: major cereals, vegetable oils, dairy, meat and sugar.

2016 was marked by a steady decline in cereal prices, which fell 9.6% from 2015 and were down 39% from their 2011 peak. At the same time, sugar and vegetable oil prices rose over the year by 34.2% and 11.4%, respectively.

Economic uncertainties, including movements in exchange rates, are likely to influence food markets even more so this year, said FAO senior economist Abdolreza Abbassian.

FAOs Cereal Price Index, largely stable since September, increased 0.5% in the month of December, with rice and maize quotations firming up while larger-than-expected production estimates in Australia, Canada and the Russian Federation led to lower wheat prices.

FAOs Vegetable Oil Price Index rose 4.2% from November, capping a double-digit annual gain to reach its highest level since July 2014. Both palm oil and soy oil quotations rose, the former due to low global inventory levels and tight supplies, the latter on the prospect of rising use in the biodiesel sectors in North and South America.

The FAO Dairy Price Index also rose, by 3.3%, from November, due primarily to higher prices for butter, cheese and whole milk powder and restrained output in the European Union and Oceania.

The FAO Sugar Price Index, while up almost a third over the year, declined 8.6% in the last month of 2016. The sharp fall was mainly driven by an ongoing weakening of the Brazilian Real against the U.S. dollar, along with a reported 18% jump in expected production in the Centre South, Brazils main sugarcane-growing region.

The FAO Meat Price Index declined 1.1% from its revised November level. Its average value in 2016 was 7% below that of 2015, due mainly to falls in the international prices of bovine and poultry meats.

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Industrial production jumps 5.7% in November 2016
Jan 12,2017

Indias industrial production surged at 13-months high pace of 5.7% in November 2016 over November 2015, snapping 1.8% fall recorded in October 2016. The manufacturing sectors production jumped 5.5%, while mining output rebounded 3.9% after three months of decline, contributing to the increase in industrial production. Further, electricity generation also moved up at seven-month high pace of 8.9% in November 2016.

As per the use-based classification, the basic goods output improved 4.7% in November 2016 over a year ago, while the output of intermediate goods moved up 2.7%. The consumer goods output also moved up 5.6%. Within consumer goods, the production of consumer durables increased 9.8%, while that of consumer non-durables also gained 2.9% in November 2016. However, the output of capital goods zoomed 15% in November 2016, while snapping consistent sharp decline for last 12 straight months.

The IIP growth in October 2016 has been revised marginally upwards to (-) 1.8% in the first revision compared with (-) 1.9% reported provisionally. Meanwhile, the growth in August 2016 is unchanged at (-) 0.7% at the final revision from first revision as well as its provisional figure.

In terms of industries, sixteen out of the twenty two industry groups in the manufacturing sector have shown positive growth during the month of November 2016 as compared to the corresponding month of the previous year. The industry group Radio, TV and communication equipment & apparatus has shown the highest positive growth of 32.2%, followed by 23.2% in Electrical machinery & apparatus as well as in Motor vehicles, trailers and semi-trailers. On the other hand, Furniture; manufacturing has shown the highest negative growth of (-) 16.5% followed by (-) 5.2% in Office, accounting and computing machinery and (-) 3.2% in Tobacco products.

Some important items showing high positive growth during the current month over the same month in previous year include Cable, Rubber Insulated 185.0%, Tractors complete 95.0%, Telephone instruments including mobile phone and accessories 42.8%, Passenger cars 29.5%, Aviation Turbine Fuel 28.3%, Plastic Machinery including Moulding Machinery 24.1% and Sugar 21.2%.

Some important items that have registered high negative growth include H R Sheets (-) 49.7%), Kerosene (-) 35.7%, Molasses (-) 26.2%, Gems and Jewellery (-) 25.4%, Polypropylene (including co-polymer) (-) 23.1% and Sugar Machinery (-) 20.4%.

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CPI inflation dips to 25 months low of 3.4% in December 2016
Jan 12,2017

The all-India general CPI inflation dipped to 25-months low of 3.41% in December 2016 (new base 2012=100), compared with 3.63% in November 2016. The corresponding provisional inflation rate for rural area was 3.83% and urban area 2.90% in December 2016 as against 4.13% and 3.13% in November 2016. The core CPI inflation declined to 4.81% in December 2016 from 4.90% in November 2016. The cumulative CPI inflation was nearly flat at 4.85% in April-December 2016 compared with 4.79% in April-December 2015.

Among the CPI components, inflation of food and beverages declined to 1.98% in December 2016 from 2.56% in November 2016 contributing to the fall in CPI inflation. Within the food items, the inflation eased for Vegetables to -14.59% , Pulses and products -1.57% , Meat and fish 4.79% , Spices 6.06% and Sugar and Confectionery 21.06% . The inflation also eased for Egg 6.41% , Prepared meals, snacks, sweets etc. to 5.64% and Milk and products 4.40% On the other hand, inflation moved up for Oils and fats 2.86% and Cereals and products 5.25% in December 2016.

The inflation for housing eased to 4.98% , while that for miscellaneous items also fell to 4.73% in December 2016. Within the miscellaneous items, the inflation for Personal care and effects plunged to 6.42% , and Health 4.45% , while moved up for Household goods and services to 4.45% , Education 5.47% and Transport and communication 4.04% in December 2016.

The inflation for clothing and footwear eased marginally to 4.88% in December 2016, while the CPI inflation of fuel and light surged to 3.77% in December 2016.

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Demonetization resulted in decline in Terror Funding, Hawala Trade, Human Trafficking, says Law Minister Ravi Shankar Prasad
Jan 12,2017

Union Law, Justice and IT Minister Ravi Shankar Prasad on Thursday said the governments November 8 decision of demonetization had resulted in sharp decline in terror funding, hawala trade, supari killings and human trafficking, particularly of young girls as sex slaves, mainly from Nepal and the North East.

Indicating that the government would not hesitate to take steps to widen the tax base, he said that development was not possible without enlarging the tax kitty. ``There is only about Rs. Five lakh crore in the kitty of Finance Minister Arun Jaitley for development and it needs to grow, he said.

Mr. Ravi Shankar Prasad said that Aadhar enabled bank payments through smart phone would prove to be a ``game changer and a tool of empowerment. He said that out of 125 crore people only 3.7 crore pay taxes and 99 lakh file Income Tax returns but have no taxable income, two crore people show annual income of Rs. 6 lakh and only 24 lakh have an annual income of Rs. 10 lakh and above.

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Since 2014, a total amount of 409.06 lakh has been sanctioned for implementing the schemes on coconut in Bihar by the Coconut Development Board: Shri
Jan 12,2017

Shri Radha Mohan Singh said that Central Government is bound to promote the coconut cultivation and related activities in Bihar. Shri Singh told that since 2014 a total amount of Rs 409.06 lakhs has been sanctioned for implementing the schemes on Coconut cultivation in Bihar. Union Agriculture Minister said this on the occasion of Foundation Stone laying ceremony of Farmers Training Centre and Regional Office building at Patna on the 37th Foundation day of Coconut Development Board. Coconut Development Board was established on 12 January 1981.

Union Agriculture Minister told that Regional Office of the Coconut Development Board was shifted to Guwahati, Assam from Patna, Bihar on the basis of recommendations of a committee constituted under the chairmanship of ICAR in 2009. A central team was constituted by the Central Government focussing on the productivity of coconut in Bihar. This team has recommended to open a new and fourth Regional Office of the Board at Patna in place of State Centre Patna which was agreed upon by the Coconut Development Board in its 119th Board meeting held on 30 January 2015.

Shri Radha Mohan Singh also said that India is the global leader in production and productivity of coconut. Coconut is cultivated in 16 states and three union territories in an extent of 2.14 million ha. The crop sustains more than one crore farmer families of the country through cultivation, processing, marketing and trade related activities. In Bihar, Coconut is grown in 14,900 hectares producing 141.38 million nuts.

Shri Singh said that Kosi region in North Bihar which comprises places on either sides of the Kosi river is suitable for coconut cultivation. It is estimated that nearly 50,000 hectares of potential area in Bihar is available for coconut cultivation, mainly in North Bihar under irrigated condition. Union Agriculture Minister said that CDB aims to equip the coconut farmers in production, processing, marketing and export of coconut and its value added products thus making India the world leader in production, productivity, processing for value addition and export of coconut. Bihar belongs to nontraditional coconut cultivated area and special focus is being given for development of coconut sector in the state.

Shri Radha Mohan Singh further said that Establishment of a Farmers Training Centre, attached to the Regional Office, Patna has also been initiated. The Farmers Training Centre is expected to impart skills to farmers. The centre will strengthen coconut cultivation and industry in the state.

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MoUs worth Rs. 8,835 crore signed in textile sector during Vibrant Gujarat 2017
Jan 12,2017

Union Textiles Minister Smt. Smriti Zubin Irani said that given the entrepreneurial spirit of Gujaratis & the investment inflow, the textile story of Gujarat has just begun. She said that as an area with one of the largest concentrations of textiles in India, Gujarat is a one-point sourcing hub for all kinds of textiles. The Minister also said that there are huge possibilities in textile education in Gujarat. She said that the skill development programme in textile sector conducted at 28 ITIs of Gujarat running the Textiles courses has recorded a placement figure of 75%. The Minister said that two major institutes of Gujarat, namely, NIFT and NID, and various engineering colleges offer degrees in textile technology, textile processing and textile engineering.

The Minister witnessed signing of MoUs worth Rs. 8,835 crore in textile sector. MoUs have been signed in different sectors such as textile parks, textile processing, machinery, carpet development, etc. The Textiles Minister said that Gujarat produces 29% of Indias total cotton production; she said this indicates the trust of textile industries in the prospects of the state. Smt. Irani assured the support of her Ministry to the development of the textile value chain of Gujarat and to explore possibilities in technical textiles and research.

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Ind-Ra: Aurobindo Pharmas Acquisition of Portugal-Based Firms Unlikely to Impact Ratings
Jan 12,2017

India Ratings and Research (Ind-Ra) does not expect Aurobindo Pharmas (APL; IND AA+/Stable) INR9.7 billion acquisition of Generis Farmaceutica S.A. (Generis) and its subsidiaries in Portugal to impact its ratings.

The acquisition is likely to be funded largely through long-term debt and cash. Ind-Ra expects APLs net adjusted debt to increase to the extent of the cost of acquisition. However, the agency expects the companys net adjusted leverage to remain below the negative guideline level of 1.5x after the completion of the acquisition. APL registered strong operating cash flow at INR16.6 billion for FY16 and had INR7.03 billion in free cash at end-September 2016. Moreover, the EBITDA-accretive nature of the transaction will support net leverage. APLs net adjusted leverage stood at about 0.9x at end-September 2016 (FY16: 1.3x; FY15: 1.6x).

The acquisition provides APL an additional platform to sell its generic products in Portugal. As a part of the acquisition, APL will gain Generiss Europe-based large oral solid manufacturing facility. This would allow for the local manufacture of its wide product portfolio, especially to service orders when volumes are low or lead time is short, for sale in Portugal and other European countries. Such synergies are likely to yield additional profits from FY18. Generis registered an EBITDA margin of about 20% for 2015. The benefits of the acquisition are likely to accrue to the company gradually over the next three years.

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CRISIL launches a new credit rating system for infra projects
Jan 12,2017

Indias infrastructure sector needs Rs 43 lakh crore of investments over five years ending March 31, 2020, and that domestic corporate bond market will have to pitch in with at least Rs 11 lakh crore out of this because of capital constraints at public sector banks, says CRISIL.

CRISIL believes that there is a need for new innovative structures such as infrastructure debt funds, and credit enhancement mechanisms such as partial guarantees, that would enable long-term investors such as insurers and pension funds to pitch in and bridge the funding gap.

As a step towards innovation, CRISIL, in consultation with the Ministry of Finance and other stakeholders, has developed a new credit rating framework for infrastructure projects that would facilitate greater participation by long-term investors and lenders.

The new credit rating system is based on the expected loss (EL) methodology. Which means, the rating will be an expert judgment on EL over the life of the debt instrument by taking into account the two pillars of credit risk - the probability of default (PD), and the prospects of recovery.

By also factoring in the prospects of recovery after default, the new system will complement conventional credit ratings that convey opinions on PD. By combining the two pillars of credit risk, the new system provides crucial information to investors that is all the more relevant in the context of infrastructure projects, where debt tenures are way shorter than the economic lives of projects, ramp-up periods are unpredictable, and cash flows are volatile because of risks from counterparty, markets and operations.

Long-term investors and the corporate bond market have shied off infrastructure projects in India because of higher perceived risk and lower credit ratings. This is despite the fact that once such projects stabilise, their credit profiles improve significantly. Empirical evidence also shows the risk of default and loss reduces materially after stabilisation. Additionally, many public private partnership projects have embedded safeguards such as termination payments and contractual protection that limit losses to debt investors. By construct, conventional credit rating methodology does not adequately take into account this feature of infrastructure projects. But the new system does, and focusses on recovery of dues to investors and lenders over the lifecycle of an infrastructure project.

Says Somasekhar Vemuri, Senior Director, CRISIL Ratings, n++A rating system based on EL, which takes into account not only the PD, but also the loss given default (LGD), appropriately reflects the unique nature of the infrastructure sector. The new rating scale will provide a valuable input -- in addition to the existing rating scale based on the PD approach -- to investors for effective pricing of debt instruments, and consequently, investment decisions.n++

The ratings will be assigned on a scale from CRISIL INFRA EL1 to CRISIL INFRA EL7, with EL1 having the lowest expected loss and EL7 the highest. It will initially be used to assess completed and operational infrastructure projects. A key point of note is that need for conventional ratings will continue as indicators of default risk, while the new scale provides additional inputs related to recovery over project lifecycle for debt market investors.

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Fitch: Indian Point Closure Shows US Nuclear Sector Challenges
Jan 12,2017

The latest US nuclear plant shutdown highlights continued difficult operating conditions for merchant generators, due in large measure to low natural gas and energy prices amid sluggish demand, according to Fitch Ratings. Nuclear units are particularly vulnerable because of their high fixed operating and capital costs.

Indian Point units 2 and 3 have been added to the growing list of US nuclear power plants retiring before the end of their useful lives. Following a settlement agreement with New York state, Entergy Corp. agreed to shut Indian Point units 2 and 3 in April 2020 and April 2021, respectively. The closures will likely increase energy and capacity prices in the New York region, although the impact will ultimately depend on the type, amount and timing of replacement power. Likely beneficiaries are independent power producers operating within the region including NRG and Dynegy. New York Transco could also be a beneficiary of additional transmission opportunities.

The two Indian Point units, aggregating approximately 2,000 MW, join a list of five other nuclear units that have announced plans to prematurely retire between 2018 and 2025 and five other nuclear units that shuttered prematurely in 2013 and 2014. The closure stands in stark contrast to the Zero Energy Credit (ZEC) program implemented in New York in late 2016 that was intended to preserve the environmental attributes of two upstate nuclear plants. Indian Point, which has long been discussed by Governor Cuomo, was specifically excluded from the ZEC program because of its location in a constrained area that generally provided an uplift to wholesale energy prices.

As part of the agreement, New York state will withdraw legal challenges to Entergys license renewal application for the Indian Point units and issue the necessary permits and Entergy will request the Nuclear Regulatory Commission to shorten the term of the renewed license from 2033 and 2035 for units 2 and 3, respectively, to 2024 and 2025, providing some flexibility in the closures dates.

Entergy previously retired the Vermont Yankee nuclear plant in 2014 and announced plans for the early retirement of the Palisades and Pilgrim nuclear plants in 2018 and 2019, respectively (in each case before the expiration of their operating licenses), and completed the sale of the Fitzpatrick plant to Exelon Corp. The Indian Point closure will complete Entergys exit from the merchant energy business.

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