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ISA seeks special package for steel industry from government and banks-The 17th China(Guangzhou)Int’l Metal &M
etallurgy Exhibition
2/18/2016 Metal &Metallurgy expo |
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Business Line reported that The Indian Steel Association has sought a special financial package from the Centre and the Indian Banks’ Association, similar to the support provided to the textile and sugar industries. As part of the package, the body which includes Tata Steel, JSW Steel, and Steel Authority of India Ltd has sought a moratorium period on payments of interest and principal amount.
Indian Steel Association said on “The moratorium will be a short-term measure that will help ensure continued operations of the steel industry while various remedial measures are put in place and produce sufficient positive impact. It will be a necessary step to ensure that a large part of the debt of steel companies remains standard.”
The industry has also called for splitting its total debt into sustainable debt and balance debt. It wants long term debt, working capital and a pre-determined debt service coverage ratio to form part of the sustainable debt component while the remaining can be part of the balance debt. It said “The balance debt is proposed to be repaid over an extended period of time by converting it into redeemable preference shares or redeemable bonds.”
Dr Sanak Mishra, Secretary General and Executive Head of the ISA, said “There is an urgent need for comprehensive support system involving participation of all stakeholders to ensure the survival of this core sector. The survival of the sector is crucial for the economy considering the large investments gone into create capacities.”
As on December 25, 2015, the total exposure of Indian banks to the steel sector was around INR 298,500 crore. Most companies are overleveraged with half of this debt with companies having a debt to EBIDTA ratio of greater than 12. Between December 2014 and December 2015, INR 8,891 crore of debt to the steel sector entered corporate debt restructuring (CDR). As on December 2015, the sector accounted for the highest amount of loans under CDR INR 54,051 crore.
-The 17th
China(Guangzhou)Int’l Metal &Metallurgy Exhibition
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