Sail staff body tows board line on SDF money waiver

The letter by Sefi to the Finance Minister has come as a big support to the Sail management which is otherwise having a tough time convincing employees to facilitate restructuring of the organisation as per the McKinsey report. The Sail board has already sent in a proposal to the same effect to the Finance Ministry earlier.

The Sefi proposal is for waiving off 75 per cent of the SDF money in case of Sail. The total amount Sail owes to SDF is Rs 4,703 crore as on March 31, 1998.

The letter states that steel plants in Sail, some of which were set up more than 40 years back, were instrumental in economic development of the country. This was made possible through a system of regulated prices without any subsidies from the side of the Government to Sail. Accordingly, a fund was required to be created to finance future modernisation of these steel plants. In line with these objective, SDF was created and has been used appropriately to modernise the old steel plants.

The letter further states: “This apart, Sail had a regular pressure of meeting the priority sector requirements and produce more items which were categorised as joint plant categories (JPC) items. Sail being a public sector organisation was answerable to the Government of India, Parliament, apart from various other agencies like Government auditors, etc. Therefore, it had to primarily produce materials which were categorised as JPC items, price of which were controlled by the Government, leading to lower realisation to Sail. Some of the producers increased their production in non-JPC category (for which pricing were not controlled by the Government) by putting certain alloying elements, thus avoiding price regulations”.

Sefi has stated that Sail is only asking for adjustment of such funds which were created by Sail by charging from all its customers on per tonne basis. It has pointed out that since the Government has largest stake in the survival of Sail, therefore, it should take an early decision on this issue so that the bottomline of the company improves.

Though Sail officials are optimistic that waiver of SDF money will eventually come through, the Finance Ministry officials are still not too sure. The reason being that even private sector steel companies have been lobbying hard for the past few months for loans out of SDF. At the moment only Sail and Tisco can borrow money from the SDF. If the Government waives off money in the case of Sail, then Tisco, which owes Rs 1,200 crore to SDF, may also make a similar demand.