The managing committee of Steel Development Fund (SDF) has agreed on realising Rs 45 crore per year as interest on loans from the Steel Authority of India Ltd (SAIL) for the time being, against Rs 194 crore payable in 1999-2000.
The decision was taken in view of a formal appeal by SAIL which said that the undertaking was not in a position to pay more than Rs 45 crore a year as interest, at least for the next three years.
Tata Steel will, however, have to shell out Rs 84 crore per year. The company too has made a formal request to Union steel secretary, Ashok Basu, for the waiver of its SDF loan. However, the issue was not even discussed at the managing committee's meeting.
Tata Steel's SDF loan along with the interest amounts to Rs 1,250 crore. SAIL's loan plus moratorium interest accrued but not due, on the other hand, amount to Rs 1311.4 crore, even after waiving Rs 4,761.45 crore.
According to SDF officials, "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 (BIFR). Tata Steel, on the other hand, has been consistent with profits."
The committee's decision to forego a significant amount from SAIL will also adversely affect its Research and Development (R&D) Mission. SK Sinha, executive secretary, joint plant committee and joint development commissioner for iron and steel told Business Standard that the Cabinet had decided that Rs 150 crore should be utilised every year for R&D.
