While the steel ministry and the Planning Commission have cleared the proposal, the finance ministry was in the final stages of preparing a Cabinet note when Parliament was dissolved.

The recast package, aimed primarily at bringing down SAIL's skewed debt-equity ratio of 2.5:1, includes waiver of 75 per cent of its Rs 6,069-crore Steel Development Fund (SDF) loan inclusive of accrued interest. Balance of the SDF loans has to be kept aside for R&D purposes as per a Cabinet decision taken earlier.

In addition, Rs 356 crore of loans from the Government to subsidiary Indian Iron & Steel Co (Iisco) routed through SAIL has also been proposed for waiver. SAIL has also proposed that Rs 506 crore of accruedinterest due from Iisco that it had waived earlier, be brought back to its books.

SAIL has also sought another Rs 1,500 crore from the Government to fund its proposed voluntary-retirement scheme (VRS) aimed at bringing down its 1.7-lakh work force to around one lakh over the next five years.

The company has argued that the financial assistance extended by the Centre can be recovered through dilution of government holding. The Centre presently holds 85.6 per cent in the PSU.

SAIL officials said that the aim, through the financial restructuring, was to bring down the debt-equity ratio by 1.5:1 by next year, and then finally to around 1:1.

The company's think-tank has ruled out the possibility of restructuring of its Rs 5,000 crore-and-odd equity base. This, the company feels, despite resulting in a low earnings per share, will defeat the purpose of reducing its high debt outstandings.

As per the turnaround strategy, SAIL has also undertaken several cost-reduction programmes which have led to a savingsof Rs 902 crore in the last fiscal. But for this, the net loss would have been even higher.

The increase in the retirement age to 60 has been a stumbling block in the company's VRS plan. But the number is expected to come down by another 26,000 by the end of next year, company officials said.

Other than the financial-restructuring plans, SAIL has also lined up a business-recast programme that includes asset restructuring and divestment of several non-core businesses like its captive power plants, the oxygen plant at Bhilai, the fertiliser unit at Rourkela, among others.