According to ministry sources, SAIL took loans for Iisco from time to time and the total outstanding (principal + interest) on this account now stands at Rs 1567 crore. Steel ministry officials admit that this loan needs to be written off to provide a clean slate to the proposed joint venture between SAIL and Russian Tyazhpromexport (TPE).

The joint venture company, in which SAIL and TPE will have 51 per cent and 49 per cent stakes respectively, is slated to take over Iisco and take up a Rs 2107-crore modernisation programme.

The issue of writing off of SAIL's dues to SDF on the Iisco account will be taken up at the SDF managing committee meeting to be held on January 4, 1999, thesources told The Financial Express. The fund is managed by the Joint Plant Committee (JPC), a government body represented by the officials of the steel ministry and the main steel producers.

If the SDF managing committee agrees to write off the sum, it will be adjusted with SAIL's Rs 3500 crore contribution to SDF as was done in case of Visvesvaraya Iron & Steel Ltd (VISL), a wholly-owned subsidiary of SAIL.In case of VISL, Rs 248 crore dues was written off in 1997-98 and was adjusted with SAIL's contribution. Later another Rs 2.71 crore was adjusted based on the final audit report. VISL had earlier taken a loan of Rs 188 crore from SAIL.