Waive Steel Fund Loan: Tisco

Tata Iron and Steel Co Ltd has made a formal request to Union steel secretary Ashok Basu for the waiver of its Steel Development Fund loan.

The company has also expressed its willingness to continue paying the Rs 1 crore per month interest, as stipulated by the fund's managing committee.

Tata Steel's loan plus funded interest amounts to Rs 1,250 crore.

Confirming the development to Business Standard, R C Nandrajog, vice-president, finance, said, "We have requested that the government treat us at par with other companies which have received the benefit of loan waiver from the Steel Development Fund."

"The last three years have been difficult for Tata Steel and we believe that we have reasonable grounds for asking for this benefit. Like other companies which availed of the loan, Tata Steel has also spent the money on modernisation and helping ailing subsidiaries like Timplate Company of India Ltd," he added.

A letter to this effect was forwarded by Tata Steel to the steel secretary in mid-April.

The ministry and the fund's managing committee, which has its headquarters in Calcutta, are yet to respond to the request.

The letter was authored by Nandrajog and it clearly hinted that Tata Steel be treated on par with public sector major Steel Authority of India Ltd.

Steel ministry sources said Tata group chairman Ratan Tata was in Delhi around the same time and met Union minister for steel Dilip Ray and Ashok Basu to take up the issue.

Tata Steel managing director Jamshed J Irani had told reporters at a press conference in early April that the company would seek a waiver of the loan, following the government's decision to waive SAIL's Rs 4,650 crore loan.

While Nandrajog is confident that the government will take a fair decision on the matter, senior SDF officials disagree. "Tata Steel cannot seek to be treated at par with SAIL, since their present financial positions are absolutely different. SAIL has slipped into the red and is likely to close fiscal 1999-2000 with a net loss of Rs 2,000 crore, bringing it perilously close to the Board for Industrial and Financial Reconstruction. Tata Steel, on the other hand, has been consistent with profits."

However, Nandrajog pointed out that Tata Steel, like SAIL, was denied the right to charge for its products at market prices during the control regime. "At that time, Tata Steel was treated as an integrated steel producer, at par with SAIL. The same conditions should apply now," said Nandrajog.