Tata Steel sent a formal application to the steel ministry close on the heels of Steel Authority of India Ltd (SAIL) getting a Rs 5,454-crore write-off of its SDF loan as part of its restructuring package.

Ministry sources said that the Steel Development Commission is examining the issue "but both the cases are entirely different". "Tata Steel is a private sector organisation and the parameters surrounding SAIL were unique and different from those of Tisco", they added.

Tisco, one of the original contributors to the SDF kitty, has around Rs 1,200 crore loan and interest outstanding on the SDF account.

While the government allowed Rs 5,454-crore loan waiver for SAIL, even a Rs 1,000-crore loan waiver for Tisco will directly reduce its interest by Rs 80 crore per annum.

In the case of SAIL, the public sector signed a memorandum of understanding (MoU) with the government for the implementation of its business restructuring plan.

The Cabinet while approving the financial-cum-business restructuring package had directed SAIL to sign an MoU with the ministry so that the plan is implemented in a time-bound manner.

On the other hand, market observers opined that the private sector steel companies were left in the lurch as the cyclical downtrend overtook the steel sector and the economy.

"All steel producers including SAIL were affected by the same crisis. So in bailing out SAIL and not the others in the private sector from this crisis, the competitive spirit of the Indian companies will be distorted", they added. It may be pointed out that the private sector had contended that the fund was made out of common contributions from consumers and the purpose was modernisation of plants. Therefore, other steel units are also equally entitled to the benefit if the government intended to confer it on the industry.

The court had left the question of Tisco open, observing that it was for the government to take a decision.

Subsequently after the clearance of the package to SAIL, Ispat Industries along with some other companies had filed an appeal against the waiver.

While appealing against the government's decision on SAIL, the private sector companies had said that the Steel Development Fund was meant for the modernisation of the industry, adding that the government cannot give the same favour to Tisco.