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IDBI okays Rs 7.7 billion package for six steel projects

Industrial Bank of India today approved a Rs 7.70 billion loan package for six private sector cash-starved steel projects at its board meeting today in New Delhi.

The six companies approved for additional funding are Ispat Industries, Ispat Metalics, Usha Ispat, SJK Steel Corporation, Essar Steel and Jindal Vijayanagar Steel, IDBI chairman G P Gupta said.

An expert committee will be appointed within two months to suggest relief for the seventh project, Essar Minerals, Gupta said.

The assistance to the steel companies is based on conditions which include strengthening of management, pledging of founders' shareholding with voting rights, giving option to convert 100 per cent of additional loans to equity at par and bringing back diverted funds immediately.

Promoters of the projects will have to bring in at least one third of the revised additional contribution upfront and the balance in a time-bound manner.

These conditions, according to Gupta, had been imposed ''with a view to enforcing discipline and ensuring timely completion of these projects''.

Term loans to the tune of Rs 950 million were also cleared by IDBI for a textile unit and an existing fertiliser company.

The IDBI board took the decision to help the steel companies based on recommendations of the sub-committee appointed by it in February 1999.

Besides the additional assistance of Rs 7.7 billion, the board cleared funding of interest during construction in respect of the six projects.

The board at its meeting on March 23 had considered the report of the sub-committee and approved its general approach. The bank today considered the individual projects based on the sub-committee recommendations.

UNI

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