The Hindu Business Line : Weekly News Round-up

Washington Mutual, the 119-year old US banking institution, on Friday, filed for bankruptcy protection under Chapter 11 after selling its banking operations to JPMorgan Chase. Washington Mutual, which has assets of over 300 billion dollars, is the second major financial entity after Lehman Brothers to file for bankruptcy protection. The fall of Washington Mutual is being viewed as the biggest banking failure in American history. The US financial turmoil triggered by the subprime mortgage crisis has taken a heavy toll on the global financial system, even as the US government is trying to work out a $700 billion bailout package. A meeting on Friday of Senate leaders and senior Congressmen with President George Bush failed to reach a compromise on the bail-out package. Efforts are still on to clear the package around the week-end.

Ranbaxy Laboratories' woes continued with New Zealand's Health Ministry saying that three drugs imported into that country will be voluntarily quarantined by the suppliers till further tests are done. These three drugs are part of the 30 medicines blocked by the United States Food and Drug Administration on the grounds that the Ranbaxy had failed to meet manufacturing standards in two of its plants in India.

Non-ferrous metals major Vedanta Resources announced shelving of its proposed group restructuring programme. The company said the decision was in view of the recent changes in global financial markets and investor feedback.

Banking operations were severely affected last Wednesday as nine lakh bank employees went on a two-day nationwide strike in protest against the government policy of encouraging merger of banks. Most of the bank's branches were closed.

Mobile operators, including Bharti Airtel, Vodafone Essar and Idea Cellular, may have to cough up as much as Rs 4,000 crore each for having spectrum beyond 6.2 Mhz for offering 2G cellular services. The one-time fee is being imposed on the grounds that the cellular licence does not mention spectrum allocation beyond 6.2 Mhz in each circle even as some of the operators have been given up to 12 Mhz in some areas. The proposed fee is being seen as a way to recover the value for the excess spectrum.

In a move that could help spur investments in sectors such as roads, power and telecom, the Government has further liberalised the external commercial borrowings policy. This will allow infrastructure companies to avail themselves of borrowings of up to $500 million a year, as against the existing limit of $100 million, for rupee expenditure under the approval route. The enhanced limit of up to $500 million comes with a rider that borrowings in excess of $100 million should have a minimum average maturity of seven years. The latest changes will particularly benefit telecom operators who will participate in the 3G auctions slated for October-November this year.

Mr Mukesh Ambani, Chairman of Reliance Industries said commercial production of gas from the D6 block in the Krishna Godavari basin would start from January-March quarter He said the company will be ready to sell gas from the January-March quarter next year.

HCL Technologies last Friday announced a cash offer of 650 pence a share for the UK-based SAP consulting company Axon Group valuing it at œ441.1 million, over eight per cent higher than the œ407 million offer made by rival Infosys Technologies last month. The proposed acquisition would be funded largely through loans with HCL Technologies tying up œ400 million debt, with the rest coming from the cash on its balance sheet.

The foreign exchange reserves increased by $2.51 billion to touch $291.972 billion for the week ended September 19, according to figures released by the Reserve Bank of India's Weekly Statistical Supplement. For the week ended September 12, the reserves were increased by $650 million to $289.461 billion.

Compiled by M J Madhavan
Podcast by S. Vasudevan