The revival plan for the Indian Iron and Steel Company (Iisco) hinges on the decision of the finance ministry to allow the Russian trading house Tyazhpromexport (TPE) to route part of its proposed investment in the ailing SAIL subsidiary through the Rupee-rouble escrow account.
We hope that the finance ministry will look at the matter positively. If they approve it, the ailing plant will get a fresh lease of life, Union minister for steel and mines B P Baishya said.
With just a day left of the extended Board for Industrial and Financial Reconstruction (BIFR) deadline for submitting a rehabilitation package on Iisco, the finance ministry's decision is expected to be vital for the survival of the Burnpur-based unit itself.
TPE has suggested that it be allowed to route at least 10 per cent of the funds (or roughly Rs 300 crore) through the Rupee-rouble account. The remaining funds would be invested through the supply of machinery.
The steel ministry had forwarded Tyazhpromexport's proposal to the finance ministry last month.
The BIFR had earlier stipulated a revival plan for Iisco with the Steel Authority of India of India holding 51 per cent stake in the equity. Iisco is at present a wholly-owned subsidiary of SAIL.
The BIFR had directed SAIL to find a partner from the private sector who would be willing to invest funds in the modernisation of the project by October 31.
The private partner would have to pick up 37 per cent of the equity, while the government of West Bengal and employees of the plant are expected to pick up six per cent stake each.
A global tender was floated for the modernisation project to which 14 companies responded.
However, only the Japanese trading major Mitsui and Tyazhpromexport submitted the tender papers. Mitsui, not willing to invest in the equity as a minority partner, later backed out of the project leaving Tyazhpromexport as the sole contender.
Subsequently, the BIFR granted an extension of the deadline till January 3 on the request of the steel ministry.
During the first nine months of the current fiscal Iisco achieved a 10 per cent growth in the production of saleable steel over the corresponding period last year, while ingot steel production grew by 11 per cent.
The production of hot metal, ingot steel and saleable steel registered a growth of 10.2 per cent, 21.3 per cent and 27.9 per cent respectively during the third quarter of the current financial year.
The company recorded a growth of 24 per cent in saleable steel and 1.5 per cent in ingot steel in December.
The rod mill division registered a growth of 94.01 per cent during December compared with the corresponding period last year.