Financial Daily from THE HINDU group of publications
Tuesday, Apr 27, 2004
Financial Daily from THE HINDU group of publications Tuesday, Apr 27, 2004 |
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Steel Corporate - Overseas Borrowings Steel sector seeks cheaper ECBs to replace costly debt Our Bureau
New Delhi , April 26 IN what may be called the second round of debt restructuring for the domestic steel industry, the Indian Steel Alliance (ISA) has approached the Ministry of Finance to permit the primary steel manufacturers to retire their high cost domestic debts with cheaper foreign loans. The President of ISA, Mr Moosa Raza, told Business Line that the Ministry of Finance is currently examining the proposal of replacing domestic debts by external commercial borrowings (ECBs) by the steel companies. The ISA represents the five main hot-rolled steel manufacturers — Steel Authority of India Ltd, Tata Steel, Jindal Vijaynagar, Essar Steel and Ispat Industries. In the first round of debt restructuring for three primary steelmakers — Jindal Vijaynagar, Essar and Ispat — the domestic institutions had modified the repayment terms with lower interest rates and longer repayment period. This time, according to Mr Raza, the replacement of domestic debts with ECBs will not affect the interest of the domestic financial institutions because, as per the existing norms of the loans, these FIs would get a compensation for the repayment. "However, even after paying the compensation, the steel companies will still be in a better position when compared to the burden of high interest loans. But everything is subject to the Finance Ministry's approval," Mr Raza said. Mr Raza also stated that the ISA has urged the Government to increase the customs duty on steel from the present 15 per cent to 20 per cent and restore the benefits under the Duty Entitlement Pass Book (DEPB) scheme with retrospective effect, that is, from the date on which it was withdrawn. He also mentioned that the ISA is urging the Government to come up with a policy that encourages establishment of new capacities in steel manufacturing.
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