Steel Minister rules out SAIL taking over Monnet Ispat

Amid speculations that public sector Steel Authority of India Ltd (SAIL) may take over debt-ridden Monnet Ispat & Energy Ltd, Steel Minister Chaudhary Birender Singh has ruled out any such possibility.

When asked about SAIL's plans to take over Monnet Ispat, the minister said "why should we (SAIL) take it".

Talking to reporters on the sidelines of an event on Monday, Singh, however, said that steps are being taken to resolve the stress in the sector.

In March, an official had said that the government was examining the possibility of country's largest steel maker SAIL undertaking 'operation and maintenance' of ailing Monnet Ispat till the lenders find a buyer for the company.

"We (steel sector) are now about 28 per cent of the stressed debt but for last about 6-8 months, there is smooth repayment... If the new methodology is to be applied for six top defaulters then let us see what it comes out," the steel minister said on Monday.

Meanwhile, bankers are meeting to finalise their next course of action on six of the 12 bad loan accounts for immediate referral to NCLT after the RBI named the 12 big defaulters to face bankruptcy proceedings.

The first set of six troubled accounts are Bhushan Steel (Rs 44,478 crore), Essar Steel (Rs 37,284 crore), Bhusan Power and Steel (Rs 37,248 crore), Alok Industries (Rs 22,075 crore), Amtek Auto (Rs 14,074 crore) and Monnet Ispat (Rs 12,115 crore), a banker said.

According to RBI, these 12 accounts owe Rs 2.5 trillion to the system, which constitute around 25 per cent of gross bad loans. The steel minister further said that steel companies in the list will be complying with norms under the Insolvency and Bankruptcy Code.

Singh also said that he expects the interest rates to come down to 6-8 per cent since banks have enough funds for lending with increased deposits post demonetisation.

With 15 lakh crore deposited post noteban, the banks can now lend easily, he added. Last week, RBI's internal advisory committee (IAC) after its meeting had recommended 12 accounts totalling about 25 per cent of the gross NPAs of the banking system for immediate reference under IBC.

As for Monnet Ispat, the lenders have already sought bids from prospective buyers but have not received good response. Only JSW Steel has expressed keenness to take over MIEL which is facing debt problem. A consortium led by SBI, sources said, has taken over the debt-ridden company and is looking for a buyer as part of the strategic debt restructuring.

Monnet Ispat has a de-risked business portfolio that encompasses manufacturing and marketing of sponge iron, steel and ferro alloys. The company is also engaged in mining of minerals like coal and iron ore.

Meanwhile, the Prime Minister's Office (PMO) also held a stock-taking meeting on Monday with senior officials of the ministries of finance and corporate affairs to review the progress in resolution of NPAs in the light of the recent action taken by the Reserve Bank on stressed assets.

Total NPAs of the banking system stand at over Rs 8 trillion of which Rs 6 trillion are with public sector banks. Last month, the government had cleared an ordinance to amend the Banking Regulation Act, giving the RBI more powers to direct banks to resolve bad loans.