 "Aruna Sharma")
With the steel ministry encouraging capacity enhancement in the domestic market to double per-capita consumption, lightening of companies’ debt burden is also a crucial requirement of the industry. Steel Secretary ARUNA SHARMA talks to Aditi Divekar about the ministry’s plan to help the six most heavily indebted steel companies. Edited excerpts:
What’s the ministry doing to help the debt-burden domestic primary steel producers?
The steel ministry has already had discussions with chairmen of all banks and the finance minister on the direction of RBI (Reserve Bank of India). Accordingly, the central bank issued directions last week where a combination of SDR (strategic debt restructuring), S4A (Scheme for Sustainable Structuring of Stressed Assets) and 5/25 scheme features can be used jointly to find a solution to heavy balance sheets. We are currently studying the amendments by RBI and have identified top six steel companies in trouble.
What kind of amendments has RBI made towards the steel producers?
There isn’t one solution that would fit all but a combination of features. So in some cases, a longer repayment tenure has been given; in others, banks are taking a hair cut; and in certain cases there is longer moratorium period. So, it’s different for every case. Since the domestic steel industry continues to be Ebitda (earnings before interest, taxes, depreciation and amortisation) positive despite weak business climate, it means the problem is outside the industry. This is one sector which, with some support from banks, can easily pay back and so the steel ministry is working to help debt-burden producers.
Coking coal is a huge input cost for steel producers. What is the ministry doing to help producers make steel more competitive?
We’re looking for a government-to-government agreement with major coking coal producing countries such as Australia, China and Canada from where this raw material can be brought. We’re looking for a long-term arrangement in pricing, which can protect the industry. Currently, the domestic steel industry imports 70 per cent of its coking coal requirement.
The steel ministry is laying thrust on enhancing domestic capacity to double the per-capita consumption to 120 kg. But, land acquisition is a big problem. How do you plan to handle this requirement?
There is enough land with public-sector enterprises in the steel industry. It is this land that we should immediately trap instead of looking for new land acquisition. Also, the new plants in the country no more require the land size it needed earlier mainly due to the technology advancement in the sector. We can, therefore, have higher-capacity steel plants in smaller space yielding higher-end. India’s focus should now be on steel-making.
