New York, September 23
Haggling over a $700-billion bailout to tackle the worst US financial crisis since the Great Depression looked set to drag into next week, threatening to keep markets on tenterhooks over the shape of the Wall Street rescue.

Asian stocks fell, the dollar dipped and US government bonds edged up after a night of negotiations among lawmakers about how to make Wall Street pay for the plan that lets the US treasury buy up toxic mortgage-related debt. Singapore’s sovereign wealth fund GIC echoed market caution.

“We should not assume that the worst is over and we continue to be watchful and prudent,” said Tony Tan, deputy chairman of the fund that manages assets estimated at $300 billion.

Without waiting for the bailout to take shape, US financial institutions kept up efforts to secure their future.

Morgan Stanley yesterday struck a deal with Mitsubishi UFJ Financial Group Inc making Japan’s biggest bank a major shareholder in the 73-year-old Wall Street institution. Under the deal, MUFG will pay up to $8.5 billion for about a fifth of the US bank.

Morgan Stanley and Goldman Sachs have given up their investment bank status to come under the wings of the Federal Reserve, together with its oversight and greater access to funds, to avoid the fate of rivals that collapsed or were sold in the meltdown of recent weeks.

The two institutions were the last of the big
five investment banks that shaped 20 years of Wall Street history, after the collapse of Bear Stearns and Lehman Brothers and the takeover
of Merrill Lynch.

As bank holding companies they will now face a thicket of new regulations, which will bolster their resources but also curb the spectacular profit growth that made investment bankers among the highest paid in the nation.

The investment-banking model effectively died in one dramatic week on Wall Street that saw panic-stricken investors drive Lehman Brothers to bankruptcy, Merrill Lynch into the arms of Bank of America and insurer AIG to a US government bailout.

AIG shares, however, gained 23 per cent today on reports its investors were hatching a plan to prevent the insurer from falling into government ownership, by repaying the Fed’s $85-billion loan that bankrolled its rescue. — Reuters

New York, September 23
Software giant Microsoft has been assigned the highest investment grade of ‘AAA’ by global credit rating agency Standard & Poor’s, making it the first American non-financial corporate debt issuer to receive this rating in a decade.

“Assigning a ‘AAA’ to Microsoft is a rare development in US credit history, and represents an unusual combination of qualities that are shared by few other companies. In addition to the size and scope of its operation, its dominant competitive position, and its strong growth capability, Microsoft has maintained a level of financial conservatism that reflects very limited credit risk,” S&P said today.

The rating came after the software behemoth said it would buy back shares worth $40 billion. Currently, only five other US corporates - Automatic Data Processing, Exxon Mobil, General Electric, Johnson & Johnson, Pfizer Inc - carry a ‘AAA’ rating.

The last ‘AAA’ was assigned to Automatic Data Processing in October 1998. However, S&P noted that Microsoft and the few other ‘AAA’ firms are likely to be part of an increasingly smaller group due to the expected ongoing trend toward reduced credit quality.

“Considering the move to higher-risk financial strategies by issuers, it is not
likely that there will be any additional ‘AAA’s anytime soon,” the rating agency
pointed out.

According to S&P, there were more than 30 industrials companies with ‘AAA’ ratings in early 1980s but major changes in the business environment, globalisation, and emerging technologies affected the rating of many of them.

“Companies like General Motors, IBM, AT&T, and Eastman Kodak lost the highest rating because of challenges they faced in their business environments. However, many other ‘AAA’s were lost because of changes in financial policies fuelled by shareholder pressure,” the rating agency said.

S&P noted that companies like Coca Cola, Procter & Gamble, DuPont, and Kellogg gave up their ‘AAA’ ratings not because of difficult business conditions at the time, but rather to be able to meet other business objectives.

“This acceptance of higher credit risk has also contributed in a major way to an overall deterioration in credit quality in corporate America,” S&P said. — PTI

London, September 23
Bondholders of the beleaguered Lehman Brothers may loose $110 billion on account of decline in the asset-value of the fourth-largest investment bank in the US, media reports say.

The value of the bonds of Lehman Brothers witnessed a major fall after the investment bank filed for bankruptcy protection, The Financial Times report said adding, “Further losses on its derivatives positions, which are still being unwound, could leave even less on the table for bond investors.”

According to the FT report, Loomis Sayles vice-chairman Dan Fuss has said: “I don’t know how this will play out for bondholders, but I doubt if its going to be good.”

The losses would have far-reaching effect on ordinary investors, FT said as Lehman bonds were widely held by investors such as pension funds and mutual funds.

Before Lehman filed for bankruptcy, its $110-billion of senior bonds were quoted around 95 cents on the dollar. Bond prices then plunged to 35 cents a week ago. They are now trading at about 18 cents to the dollar.

Last week, Lehman inked a deal to sell the North American investment banking business to Barclays for $1.75 billion.

“Even though approval of the deal was rushed through court, lawyers for Lehman Brothers said asset values then dropped to $47.4 billion from about $70 billion,” the report said.

In its bankruptcy filing, Lehman listed total debts of $613 billion, making it the largest ever US bankruptcy with $128 billion in debt securities, the media report said. — PTI

Mumbai, September 23
The war of words between Reliance Industries Limited (RIL) chairman Mukesh Ambani and his younger brother Anil Ambani took a turn for the worse today with the latter accusing the former of short-changing shareholders of Reliance Natural Resources Ltd (RNRL).

Addressing the annual general meeting of RNRL, chairman Anil Ambani insisted that the agreement it signed to share gas generated by RIL from the Krishna-Godavari basin was signed unilaterally.

“There was never any dispute over the price of gas. The RIL agreement sought to short-change RNRL shareholders. There was no will on the other side to uphold the contractual obligation. A unilateral gas supply pact did not guarantee a firm quantity and tenure,” Anil Ambani said.

Both RNRL and RIL are locked in combat in the courts over the sharing of gas. “Despite the clear-cut understanding that existed between RIL and RNRL, it is unfortunate that the former unilaterally finalised and signed a totally one-sided agreement with the latter. This happened when RIL still had full and effective management control of RNRL,” Anil Ambani said.

Regarding the business of RNRL, Ambani said the company was looking at mining and shipping sectors. The company would enter the shipping and cement businesses for captive purposes, he said.

Earlier in the day, at the annual general meeting of Reliance Power, Anil Ambani said the company plans to generate 28,000 MW of power over the next eight years. Apart from hydel power, the company aims plans to have solar, wind and nuclear power in its portfolio, he said.

Regarding the company’s existing power projects, Ambani said Reliance Power’s 1,200 MW Rosa Power Project would need investments to the tune of Rs 5,000 crore. So far, the company has achieved financial closure for the project’s phase-I, which would generate 600 MW of power. The plant is scheduled to go on stream six months ahead of its schedule.

Anil Ambani said Reliance Power would be setting up a huge solar power plant in the country. “We are considering the possibility of setting up a one-of-a-kind 100 MW grid interactive concentrating solar power plant through an exclusive relationship with a technology provider,” he said.

New Delhi, September 23
State carrier Air India is also initiating some major fuel-saving exercises to overcome the situation arising out of unprecedented increase in the price of the ATF.

These initiatives are designed to increase operational efficiency through effective fuel management that will help the cash-strapped carrier make huge annual savings.

Majority of private air operators are already into fuel saving regimes in view of rising ATF prices that are threatening to push the booming airline industry into serious red.

Air India had recently invited the IATA green team to undertake a fuel efficiency gap analysis of the airline’s operations relative to fuel efficiency and emissions reduction.

In its assessment, the IATA team predicted a potential saving of $198 million per year for the airline if certain changes were introduced.

On the basis of the recommendations, Air India managing director Raghu Menon has constituted a steering committee to look into matters of operational efficiency, fuel management and cost reduction.

Some major initiatives outlined include selecting modern computerised flight planning system based on cost optimisation, with features of dynamic cost index and delay cost management, which would support present and future commercial needs.

Reviewing the auxiliary power unit (APU) utilisation across the company with the objective of reducing APU usage.

Flight crews and ground personnel would be sensitised regarding the cost of APU and the use of air conditioning packs to minimise fuel consumption.

Formulating a common fuel policy across the company by improvising pilot flying procedures and techniques resulting in the carriage of less additional fuel and reduced APU usage, evolving procedures for taxi with an engine off for departure and arrival, and use of idle reverse thrust, all of which contribute to fuel savings.

Mumbai, September 23
Markets in Asia and Europe tumbled in the wake of the Dow sinking on Monday amidst concerns that a rescue attempt on American financial institutions could be a long drawn out affair.

The Indian markets took a hammering as investors unloaded stocks in the IT, realty and banking sectors.

The benchmark BSE Sensex plunged 424 points or 3 per cent to close at 13,570 levels. In the broader markets, the Nifty fell 2.3 per cent to close at 4,126 levels.

Among sectoral indices, the BSE-IT fell the most dropping more than 5 per cent while the realty index was down 4.7 per cent.

Among the Sensex losers, Ranbaxy fell the most falling more than 11 per cent after reports said the Canadian drug regulator, Health Canada, had issued a notice seeking a review of its medicines. Other losers included DLF and IT companies like Satyam Computers, TCS and Wipro.

Strike is because of delay in settlement of issues like wage revision, second pension option, he said.

UFBU, comprising nine all-India unions and organisation is protesting against the government’s policy of privatisation and consolidation, he said. — PTI

Chandigarh, September 23
Satellite viewing on board the various luxury trains like Shatabdis and Rajdhani Express will soon be a reality.

India’s leading DTH provider, DishTV, is now in advanced stage of talks with the railways on the issue.

Salil Kapoor, chief operating officer, DishTV, today said mobile division of the
company has crossed a major technological hurdle of setting up an MDU system
in moving vehicles.

“This will allow DTH Mobile to set up individual screens in luxury buses and train compartments, where each passenger will be able to watch channels of his or her choice,” he said.

Kapoor said the company was already in advanced stages of talks with the railways and the equipment is being tested.

“Besides, the railways, we are in touch with the leading tour operators for providing DTH with individual screens on luxury buses, especially those running on the Golden Triangle route (Delhi-Jaipur-Agra), Kerala and Mumbai-Pune route. Since these routes are taken not just by tourists, but also by businessmen, who like to remain in touch with the latest developments, we are tying up with the tour operators to provide DTH service,” he said.

He further stated that the company was also in the process of tying up with leading car manufacturers like Ford India, General Motors and Volvo, for providing DTH kits in their luxury cars and SUVs.

“These companies have already tested the DTH service in their vehicles in the Indian conditions and a formal agreement is to be signed with them,” he said.

Presently, the company provides DTH to individual cars/ SUVs and a kit, inclusive of the screen, dish antenna and the annual subscription is available for Rs 1-1.50 lakh.

New Delhi September 23
Signs of worry over the US financial crisis has started showing in the government as the chief economic advisor stated today that the financial flows will be affected by the crisis in the western world.

Though there is optimism and confidence over the fundamentals of the Indian companies but there could be a cautious and a calibrated approach of the foreign institutional investors when it comes to investing in India.

So far as FDI is concerned, it would depend on fundamentals of the economy
that had not altered after the US financial turmoil, chief economic advisor Arvind
Virmani said.

He expected around 9 per cent growth of the economy over the next four years and said despite global uncertainty there was a solid basis for Indian corporates’ growth.

Indian companies that are dependent on equity flows would feel the pinch, whether for the global operations or for their domestic operations and could be affected in the rest of this year, at least for the next three months, he said.

BRIEFLY

Ramanathan is finance secy
NEW DELHI: Financial services secretary Arun Ramanathan has been appointed as the finance secretary. “The appointments committee of the Cabinet has approved the appointment of Arun Ramanathan as finance secretary," an official statement said on Tuesday. Ramanathan takes the place of D.Subbarao, who succeeded Y.V Reddy as the RBI Governor. — PTI

Gold up by Rs 600
NEW DELHI: Gold prices surged by Rs 600 to Rs 13,300 per 10 gram at open in the national capital on Monday on heavy buying by stockists influenced by firming global trend. Gold in overseas markets soared to its highest level in seven-week on speculative buying as dollar dropped to multi-week lows against the euro on uncertainty over the US government bailout plans. — PTI

PunjLloyd bags contract
MUMBAI: PunjLloyd on Tuesday said it has bagged an $800-million contract for construction related work from Qatar Petroleum. In a filing to the BSE, PunjLloyd said under the contract it would undertake engineering, installation and commissioning order for laying of 211-km pipeline. — PTI

Godrej plans
KOLKATA: Godrej & Boyce is aiming a turnover of Rs 1,000 crore from the security solutions business by 2013, half of which would come from integrated security solutions, a senior company official said here on Tuesday. — PTI

Etisalat buyout
NEW DELHI: UAE’s telecom giant Etisalat on Tuesday entered, with the acquisition of 45 per cent stake in the unlisted Swan Telecom for $900 million, into the world’s second largest wireless market valuing the Indian company at $2 billion. — PTI