Steel industry body sends Govt, banks SOS for financial package

Indian Steel Association (ISA) has urged the government and banks for a financial package, including loan restructuring, to counter the crisis arising from cheap imports and subdued prices. ISA, representing the over $100 billion steel industry, met Steel Ministry official last month and sought a comprehensive support package on the lines of the ones extended to textiles and sugar sectors.

The industry body is also in talks with the Indian Banks Association (IBA) for the package. “A comprehensive support system involving participation of stakeholders is urgently required to ensure steel sector’s survival,” Indian Steel Association Secretary General Sanak Mishra said.

Indian Steel Association has requested the government as well as banks for an immediate dispensation in the form of a special package for the industry to tide over the current crisis, he added. The package will be in two parts - moratorium on payment of interest and principle amount and segregation of Sustainable and Balance debt, he said.

The moratorium will be a short-term measure to ensure continued operations, while various remedial measures are put into place. Sustainable Debt will consist of long-term debt and working capital required to run the business at optimum capacity level. 

Balance Debt will be repaid over an extended period of time by converting it into Redeemable Preference Shares with a nominal rate of about 0.01 per cent. According to Indian Steel Association, segregating debt into Sustainable and Balance will help the industry manage its financial burden.

Welcoming the efforts of government to safeguard the domestic steel industry, Mishra said many feel that the recently-imposed Minimum Import Price (MIP) will solve the woes, but it is not the case. “This will bring some relief, but one must note that it is for six months and does not include some products such as alloy steel, etc,” he added.

Earlier this month, the government imposed MIP on 173 steel products ranging between $341 to $752 per tonne to provide relief to domestic steel producers against cheap in-bound shipments. Besides, ISA said provisional Safeguard Duty of 20 per cent imposed in September last has been ineffective as steel prices have dropped over $100 per tonne since then, negating the benefits of the levy.