A package prepared by the Industrial Development Bank of India (IDBI) for turning SAIL around got the blessings of the Union steel ministry earlier this week. The financial restructuring part of the package has since, been forwarded to the Union ministry of finance.

The IDBI has proposed converting SAIL's Rs 4,427.71 crore debt from the steel development fund (SDF) into government equity, like preference shares. It has also recommended that the Rs 216.66 crore SAIL had lent to subsidiary, the Indian Iron and Steel Company (Iisco), be written off.

In return, SAIL will invest at least Rs 500 crore of the SDF loan-converted-into-equity in the first phase, for modernising Iisco. Incidentally, theroughly Rs 2,000-crore Iisco update proposal forwarded to the Centre earlier, also envisaged conversion of a part of SAIL's SDF loans into shares for the government.

The Iisco revamp proposal is awaiting nod from the Russian government, since SAIL's Russian partner in the venture intends to utilise some of the pending rupee-rouble debt repayment account to pay for its share of equity and other investments in Iisco. The Steel Authority of India plans to upgrade the antiquated steelworks of its subsidiary with technology and funds support from Russian steel consultants, Tyazhpromexport.

Union steel minister Naveen Patnaik has gone on record that the Russians were likely to take a ``positive view'' of the Tyazhpromexport proposal. Patnaik was in Moscow for the Indo-Russian Joint Commission.

Steel secretary Ashok Basu also acknowledged that the Iisco revival package was awaiting a signal from Moscow. He also confirmed that inter-ministerial consultations had begun for the financial restructuring package forSAIL, even though he refused to divulge details. The steel ministry is believed to have vetted most of IDBI's recommendations for a financial revamp of SAIL. The package is intended to inject new life into the steel behemoth, that had begun to limp following a recession in the demand for steel.