The steel ministry is unlikely to advice steel PSUs – SAIL and RINL – to take over stressed companies such as Essar Steel, Bhushan Steel, Bhushan Power and Steel and Power and Monnet Ispat, which together form a large part of gross NPA in the banking system.
Sources, however, said that the steel ministry would not prohibit any of the PSUs to provide technical assistance or management supervision if sought by the stressed steel companies or by their lenders.
“Steel is a deregulated sector. PSUs under the administrative control of the steel ministry are commercial ventures themselves, with their own priorities and issues. Steel ministry is not going to force them to take over stressed assets as both SAIL and RINL are mired with their problems and have their hands full,” a steel ministry source said.
“However, in case any steel company or a bank needs any technical assistance or management supervision, PSUs are free to assess their priorities and act accordingly,” he added.
Sources said Bhushan Steel has over Rs 44,000 crore gross debt followed by Essar Steel and Bhushan Power and Steel at Rs 37,000 crore each, Monnet Ispat at Rs 12,000 crore and Electrosteel Steels at Rs 10,000 crore, as on March-end, 2016.
Both SAIL and RINL are in the red for a couple of years now having failed to live up to the competition from the onslaught of predatory imports which led to their margins shrink. Though SAIL has become EBITDA positive in recent times, RINL may take some more time to become EBITDA positive.
The government has taken a series of steps to take domestic steel firms out of the woods for the last couple of years with the latest being imposition of anti-dumping duty on both hot-rolled and cold-rolled products and a policy that mandates to provide preference to domestically manufactured iron and steel products (DMI&SP) in government procurement.
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