Panel to come out with report on steel sector headwinds in Apr

An inter-ministerial committee (IMC) set up to suggest ways to tackle mounting financial woes including debt faced by the steel industry will submit its report this month.
The panel, headed by Steel Secretary Aruna Sundararajan, has been formed following directions from the government think-tank Niti Aayog in this regard, a senior government official said.
Senior officials from the coal ministry, state governments and other stakeholders concerned are also on board, the official added.
Another official confirmed that the committee will prepare a report in entirety on issues ailing the steel sector.
"Clearly, the government is concerned about the industry's huge debt burden and wants to address it. Also, there are other issues of the industry it wants to address and therefore, the Aayog has asked for a comprehensive report on these," he added.

According to analysts, domestic steel companies are sitting on a debt of more than Rs 3 lakh crore and falling prices have led to steeply lower realisation, making it difficult to service debt obligations.

Large advances to the steel industry are under stress and the analysts fear that a major part of them could be clubbed under non-performing assets (NPAs).
According to the industry, the sector's share in gross NPAs as well as restructured standard advances of scheduled commercial banks is 10-11 per cent. An estimated 26 per cent of the total advances to the iron and steel sector are under stress.

The development assumes significance as the over USD 100 billion steel industry has approached the government for a comprehensive financial relief package on the lines of that provided to textiles and sugar sectors.
The demand includes a year-long moratorium on payment of interest and principle amount as well as segregation of debt into two categories - sustainable and balance.
Sustainable debt will include long-term debt and working capital loans that are required to run the business as well as maintain cash flows to meet debt obligations.
The remaining -- balance debt -- will be repaid over an extended period by converting it into redeemable preference shares with a nominal rate.