SAIL financial revamp likely

NEW DELHI, Nov 20: Union minister for steel and mines, Naveen Patnaik, announced on Friday that a financial restructuring'' of the Steel A...

NEW DELHI, Nov 20: Union minister for steel and mines, Naveen Patnaik, announced on Friday that a 8220;financial restructuring8221; of the Steel Authority of India Limited SAIL was 8220;under examination.8221;

The largest public sector undertaking PSU under the wings of the steel ministry has proposed a capital restructuring, involving conversion of its nearly Rs 4000 crore of loans from the Steel Development Fund SDF into government shares. The scheme also involves writing off close to Rs 2000 crore of interest on the loans.

The capital restructuring is expected to improve SAIL8217;s debt to equity ratio and so, its borrowing capacity. Steel secretary, Ashok Basu, told newspersons on Thursday that the proposal, now pending a nod from the finance ministry, had 8220;the support of the ministry of steel.8221;

The steel minister, who was addressing the consultative committee on the steel industry, said he was 8220;contemplating giving more autonomy and freedom to the PSUs,8221; while ensuring more 8220;accountability on theirpart.8221; Members of Parliament MPs attending the meeting, expressed concern about the current slow-down in the steel sector, but Patnaik said he was confident that the current phase of sluggishness in the steel market would be over soon.

The minister pegged his optimism on the cumulative efforts being made by different segments of the government to rejuvenate the steel industry. The commerce ministry has announced an anti-dumping duty on hot rolled coils from CIS countries and the ministry of finance is known to be working on a package of fiscal incentives for steel producers.

The steel minister said he had also been in touch with his counterparts in ministries that control steel-consuming industries, like the ministries of power, railways and urban affairs. The Centre8217;s plan to construct 20 lakh dwelling units is expected to give a fillip to the demand for steel.

The stagnant demand for steel has resulted in a slow growth in production. Steel production country-wide was 11.26 million tonne during thefirst half of this year, compared to 11.18 million tonne during the same period last year.

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The output of sponge iron was 2.76 million tonne in the first six months, compared to 2.60 million tonne in the first half of last year. Pig iron production actually declined by 14.5 per cent during the period.