This move follows the company's failure to secure a political and risk coverage for its foreign-currency borrowing in the wake of sanctions imposed by the US.

"We have asked FIs to take a larger portion of our total debt requirement of about Rs 2,500 crore as it is becoming increasingly difficult to tie up debt in foreign currency," said a company source.

Hughes Ispat had earlier planned for a $416-million foreign-currency loan for which it had given the lead-arranger mandate to the Canadian Imperial Bank of Commerce. The company had even signed a memorandum of understanding with the US Exim to stand guarantee for the loan.

For this it had approached the Industrial Credit and Investment Corporation of India to lead arrange the rupee component of the debt totalling Rs 833 crore, while Bank of America was appointed the leadadvisor.

Apart from increasing the rupee component of its total debt requirement, Hughes Ispat is also in the process of securing guarantee from other agencies, especially European. Sources said that even if one European agency is able to provide a political and risk guarantee, the company may route its equipment through Europe.

Hughes Ispat plans to invest about Rs 3,500 crore in the project over the next five-year period. It has also committed to pay Rs 13,909 crore as licence fees over a 15-year period, and already paid Rs 397.50 crore as the first year's fee.

The company has announced its plans to offer services in the Mumbai-Pune region from the third quarter of this year. The services will be launched in phases over a three-month period. It plans to use the GMH 2000 WILL system developed by Hughes Network Systems of the US for providing the services.

As per the licence agreement, Hughes Ispat has to provide 10,000 telephone lines in the first year of operations and 607,000 lines within threeyears of signing the licence agreement.

The company is a joint venture between the Mittals of Ispat Industries, Hughes Electronics Corporation of the US and Alltel Corporation of Canada. The Ispat group has a 51 per cent stake, while Hughes Electronics Corporation holds 26.65 per cent. Alltel Corporation holds 13.35 per cent, while the balance is held by Kellerton, an Ispat group company.