SAIL officials are holding regular meetings with the planning commission and finance ministry officers to try to push through the programme. However, it would be difficult to get it passed by the cabinet in the its present form.Reports said the steel ministry has circulated a cabinet note that proposes a Rs 5,059 crore revival package for the ailing Steel Authority of India Ltd (SAIL).

The package includes the write-down of its fixed asset value in Durgapur, Rourkela and Bokaro by Rs 2,618crore and the waiver of another Rs 2,441 crore arising from SAIL's advances to Indian Iron and Steel Company (Iisco) and the accrued interest at the same time a Rs 3,130 crore business restructuring plan will be drawn up that involves the slashing of one lakh jobs over the next five years, cutting costs, sale of ideal assets, divestment from non-core areas, and the restructuring of special steel manufacturing. The steel giant has 1.76 lakh workers at present.

Reports said under the restructuring plan, write down and waiver will be set off against loans taken from the government as well as the Steel Development Fund by issuing preference shares with a face-value of Rs 1,000 each which will be simultaneously written down to a face-value of Rs one each. The complex piece of financial jugglery will in effect help SAIL replace loans worth Rs 4,703 crore from SDF and Rs 356 crore with preference shares worth just Rs 5.05 crore.

Under the business restrucring plan, SAIL's output will be raised from 8.69 milliontonnes at present to nearly 11 million tonnes.

SDF was created out of the cess on steel to promote the modernisation of the industry.

If the cabinet agrees to this expensive bail out, SAIL will be able to reduce its net loss for this fiscal from an estimated Rs 1057 crore to Rs. 3,334 crore. This will also help SAIL return to the black in the next fiscal. Otherwise, according to the note, SAIL will continue to make losses till 2000.

An expert says an interesting battle is developing with the steel ministry crossing swords with the finance ministry and the planning commission to help out its favoured child. SAIL currently has a paid up capital of Rs 4,1304 crore. Out of this government of India holds 85.8 per cent, the remainder has been held by financial institutions and private investors.SAIL has about Rs 20,000 crore worth of outside loan liabilities on March 31, 1998. This is 2.4 times its net worth. It is to overcome this problem that SAIL wants its SDF loans to be waived off.

In the first half of1998-99 the company achieved total sales of 3.7 million tonnes of saleable steel.Worldwide recession has, however, affected sales of items like plantes, slabs and billets. From the beginning of the year SAIL management has been trying to maximise sales and liquidate inventories. This has helped the company reduce its inventory level by nearly three lakh tonnes during April to September 1998 with closing inventories at 9.4 lakh tonnes.