The steel and finance ministries are working on a package for the steel sector that will be finalised in the next two months, Steel Secretary Aruna Sundararajan was quoted as saying in the media.
A number of options are being considered, including bringing in international investors to invest in domestic steel companies, Sundararajan said.
“There is 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.
“We are also looking at bringing in certain external or international investors who can pump fresh equity into these companies. There has been a fair degree of interest from international investors,” she added.
Sundararajan pointed out the government had already started taking steps to ease the troubles faced by the steel industry.
“The biggest support that the steel industry has been asking for is the minimum import price. Already, even though it is early days since it was announced, we are seeing much better sentiment in the market. Prices are going up and banks’ and companies’ financial health is improving,” she said.
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.
“There are companies that are over-leveraged. Those kinds of companies have to bring in some discipline. For others, we are looking at what can be done in terms of a broad financial package. We are in consultation with the department of financial services,” said Sundararajan.
The sector has been hit by a combination of adverse factors, including poor demand, a slump in prices, competition from cheaper imports and delays in project execution.