Page 17 - Banking Finance October 017

ROUNDUP

Stability in banking sec- Essar Steel seeking another loan of Rs. 1000 crores
Essar Steel BSE 0.41 % is seeking another Rs 1,000 crore in
tor: Moody's
loans to keep the firm running. The firm is managed by an
Moody's Investors Service stated that insolvency professional pending resolution of Rs. 45, 655 crore
the In- debt.
dian
banking Microfinance Loans grew 26%
system is
"stable". The business of Indian non-banking finance companies
"The grew 26% on year in the first quarter of fiscal year 2017-
outlook on the system is also in line 18. Banks are the largest provider of micro-credit with
with the stable outlook for 10 of the a loan outstanding of Rs. 38,486 crore.
15 banks we rate in the system and
reflects stable operating environ- Myntra's profitable Private label biz
ment and improved prospects for Flipkart-owned fashion retailer Myntra recently
asset quality, among other factors," stated that its private labels and brands business has
Srikanth Vadlamani, Moody's Vice- turned profitable hitting an annual revenue run rate
President and Senior Credit Officer, of $2 billion. Myntra expects its portfolio of 13 fash-
said. The 15 banks rated by Moody's ion brands to double growth and generate revenues
in India altogether contribute about of around $300 million this financial year.
70 % of assets.
The report highlighted that profitabil- India targeted as 3rd-largest market by Coke
ity remains low, but is improving. On his first visit to India, the Chief executive Officer James Quincey stated, "The
Lending margins will be stable be- most immediate challenge for KK (T. Krishnakumar,
cause a drop in funding costs follow- president, Coca-Cola India and Southwest Asia) is
ing demonetisation will likely offset let's become No. 5 in the foreseeable future. In the
the pressure from re-pricing of loans end, my vision for India is that it will be one of the
to the marginal cost of lending rate. top three markets in the Coke system". In 2012,
Banks still face higher credit costs Coca-Cola had announced plans to invest $5 billion
due to tighter provisioning require- in India by 2020. "These investments are on track,"
ments for stressed loans, but these said Quincey.
charges will be lower in absolute
terms. Smaller treasury gains, how- Vedanta`s earnings rise due to zinc production
ever, will weigh on profitability. 0.30 % Resources said its quarterly core earnings rose about 48% as zinc pro-
In addition, banks will continue to duction at its Indian unit jumped. Diversified miner Vedanta reported an 84%
have strong funding and liquidity. jump in mined metal content, comprised mainly of zinc, at its Indian unit to
Banks have seen a surge of low-cost 233,000 tonnes for quarter ended on June 30, 2017. The production jump boosted
deposits following demonetisation, the unit's revenue by about 90 % to $695 million.
which has lowered their funding
costs. Horticulture production madea record of 300million

Of the 15 banks rated by Moody's, tonnes production
four are private sector banks with an Commercial horticulture crops' production touched
average baseline credit assessment a record high of 300 million tonnes in 2016-17. Ac-
(BCA) of ba1, while the other 11 are cording to the agriculture ministry, area under dif-
State-owned entities with weaker ferent horticulture crops which include fruits, veg-
standalone fundamentals and BCAs etables and spices rose from 24.5 million hectares in
of as low as caa1. 2015-16 to over 25 million hectares in 2016-17.

16 | 2017 | OCTOBER | BANKING FINANCE

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