Power ministry backs counter-guarantee for Mangalore project
Bangalore: The Union power ministry has sent a note to the finance ministry recommending that the counter-guarantee for the $1.3-billion, 1,000MW Mangalore power project be provided without any default escrow cover, it is reported. It is believed that finance ministry’s response has been positive.

Only, the counter-guarantee is likely to be restrictive and unlikely to cover the entire foreign debt service portion. It may cover only the loan principal.
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Institutions agree to scrap escrow for power projects
New Delhi: It is reported that financial institutions have agreed to drop their condition of escrow cover for financing of power projects. They will, however, demand first charge on the state electricity boards’ revenue accounts. They will also insist on the implementation of reforms by SEBs.
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Hinduja Finance will merge two firms
Mumbai: The Hinduja Finance Corporation board has decided to merge Hinduja Telecom India Ltd and Melody Trading Pvt Ltd with Hinduja Finance. An A.F. Ferguson & Company valuation study has fixed the exchange ratio at one Hinduja Finance share for every 29 shares of Hinduja Telecom, according to a company release.

The deal will give Hinduja Finance a 65.7 per cent stake in IndusInd Telecom Network, which in turn owns 30 per cent of Fascel Ltd, the cellular licensee for the Gujarat circle. Hinduja Telecom directly holds an additional 2.2 per cent of Fascel's equity. That will take the Hinduja group’s holding in Fascel to 32.2 per cent.

Melody Trading, which owns the Hindi movie cable channel CVO, will be merged on the basis of an exchange ratio of four Hinduja Finance shares for every 11 Melody Trading shares.
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Short list for East Coast Road
Chennai: The Tamil Nadu Road Development Company Ltd has short-listed 14 companies, including seven global firms, for improving and maintaining the East Coast Road, which connects Chennai and Cuddalore. As many as 30 companies had bid for the project.

The short list includes Ashok Buildcon, Nasik, Hindustan Construction Ltd, Mumbai, Larsen & Toubro, Chennai, Road Builder (M) Sdn. Bhd, Malaysia, United Gulf Construction, Kuwait, Gammon India Ltd, Mumbai, and Reliance Industries in association with Orient Structural Engineers and Consulting Engineers Services.

The East Coast Road was constructed by the Tamil Nadu government in January 1998. Already, about 13 km of the road are showing need for repair. Now the government has developed a maintenance-oriented contract for the project, which will cover maintenance for a period of three to five years from the date of completion of improvement.
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American banks raise key rate to 9.5%
New York: Following the US Federal Reserve’s raising of a key interest rate to its highest level in about a decade, American banks have raised the rate charged to prime borrowers. This will make auto, home and credit card loans costlier.

Bank of America, Bank One Corp., and First Union Corp. have jacked up their prime lending rates to 9.5 per cent from 9.0 per cent earlier.
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