The promoters, apart from pledging their entire holdings, have agreed to the institutions' condition of contributing 20 per cent of the cost overrun. They will pump in around Rs 200 crore, following which the equity base is to increase to Rs 1,565 crore.

The disbursal of funds from the institutions is, however, contingent on the Jindals agreeing to all the stipulations laid down by them. If the funds are isbursed, Jindal Vijaynagar proposes to reactivate the Corex by mid-June.

The proposed pelletisation plant is expected to come up by December, while the second 0.8-million-tonne Corex module is expected to go on stream in June 2000. In the interim, pellets will be sourced from Mandovi Pellets and Kudremukh IronOre Co.

HRC production at the 1.57-million-tonne steel complex has not resumed since October last year, when the 0.8-million-tonne Corex module hit a technical snag.

As a result of the funds crunch the company faces, restarting operations was dependent on the institutions approving additional funding of the cost overrun.

The company has entered into an agreement with the Steel Authority of India for procuring slab.

Jindal Vijaynagar Steel sources said that when operating full capacity, the company would need to outsource around 60 per cent of its slab requirement.

The company also proposes to begin mining operations at a later date, for which it has been allotted iron-ore mines. Engineering consultants Mecon have done a feasibility study, and have proposed that initial mining operations can be kicked off with a minor investment of Rs 20 crore.

The steel company has proposed an additional infusion of Rs 467 crore from the financial consortium, of which ICICI has approved funding of Rs 167 crore,and IDBI another Rs 151 crore.

The project cost has now gone up to Rs 5,215 crore, from the Rs 3,300 originally planned, while the debt portion has ballooned to Rs 3,650 crore.

The other institutions yet to sanction additional loans include IFCI (Rs 74 crore), LIC (Rs 49 crore), GIC (Rs 17 crore), and IIBI (Rs 9 crore).

The crisis at Jindal Vijaynagar, beset with a Rs 863-crore cost overrun, has taken its toll on two other companies--Jindal Praxair Oxygen Co and Jindal Tractabel Power--the captive projects associated with the integrated steel project.