Iisco Revival Through Sdf To Shore Up Sail Bottomline

The Steel Authority of India Ltd (SAIL) could get a financial boost with the government contemplating to use about Rs 3,600 crore of its loans from the Steel Development Fund (SDF) for reviving Indian Iron and Steel Company (Iisco).

If accepted, the proposal would mean wiping off nearly four-fifths of SAILs Rs 5,000 crore loan from SDF.

The steel ministry is working on a proposal to convert Rs 2,100 crore of SAILs loans into equity in Iisco, besides offsetting about Rs 1,000 to 1,500 crore liabilities of SAILs sick subsidiary, ministry sources said. SAIL had proposed to revive Iisco using the SDF kitty in the wake of the joint venture proposal with Russian Tyazhpromexport (TPE) running into rough weather over the use of rupee-rouble account for investment. When contacted, steel secretary A K Basu refused to comment about the SDF proposal and said revival of Iisco is our priority.

 

Ministry sources said there will be no physical transfer of money in the SDF proposal, and only book adjustment will be made as SDF is a perpetual loan.

However, SAILs quota in SDF corpus would get reduced to about Rs 2,000 crore from the existing Rs 5,000 crore, besides reducing the total kitty in the SDF corpus by about half. The proposal will enhance SAILs capacity to borrow from the market as its balance sheet will look much healthier as the debts would go down.

Sources said this proposal is not likely to disturb the Rs 150 crore annual allocation for research and development (R&D) in steel from the interest proceeds of SDF loans.

They said even with the reduced corpus, the interest proceeds from SAIL and Tata Steel would be enough to meet R&D and other commitments.

SDF is a corpus set up for modernisation of integrated steel plants from the cess collected on steel produced by mainline units.