India readying financial package for beleaguered steel industry – report

The Indian government is finalising a financial package to help revive the steel sector and also prevent bank loans advanced to steel firms from turning bad, Mint newspaper reported.

It quoted Steel Secretary Aruna Sundararajan as saying that the package, on which the steel and finance ministeries are working, will be ready in the next two months.

A number of options are being considered, including bringing in international investors to invest in domestic steel companies, Sundararajan said at a CNBC TV18-Mint event.

“There are a broad range of proposals that include banks taking certain equity as redeemable preference shares and then giving the companies enough time to redeem them. There are other proposals, where we are looking at bringing in financial investors who can hold some of these stakes for a period of time, and then when the company comes back to health, they can disinvest,” Sundararajan said.

According to Mint, rtating agency Crisil Ltd estimates that the significant stress in the corporate loan book of the state-run banks could result in weak assets ballooning to Rs.7.1 trillion by 31 March 2017, or 11.3 percent of the total loan book, from around Rs.4 trillion as on 31 March 2015, or 7.2 percent of the loan book.

The steel sector has been hurting from cheap imports as a slowdown in China has forced Chinese companies to sell at lower prices. The government last month announced a minimum import price on 173 steel products for a period of six months to protect the domestic industry from cheap Chinese imports.

 

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