The Ruias, in a recent presentation to financial institutions, has said that negotiations with the two companies were at an advanced stage. NMDC and the multinational trading major together may pick up 30 per cent of the equity, which will lead to an equity infusion of Rs 188 crore.

The name of the international trading company could not be ascertained at this stage. The trading company, it is learnt, could enter into a long-term agreement with the Essar Minerals to lift around 1.5 million tonne of pellets for its international operations.

Sources close to the company said the exact equity contribution from the two possible partners has not been finalised yet, but added that NMDC is likely to take "a token stake". However, the total stakeheld by the two companies will increase over time.

The pellet project was set up at a cost of Rs 997 crore and has an installed capacity of 3.3 million tonnes. Following the hive-off, the capital base of the subsidiary stands at Rs 660 crore.

Essar Steel had earlier sought additional assistance of Rs 378 crore from the financial institutions for Essar Minerals to fund a proposed slurry pipeline between the pelletisation plant site at Vizag, Andhra Pradesh, and the iron ore mines at Bailadila in Orissa, and a beneficiation plant.

The institutions are yet to sanction funds for Essar Minerals, though they have approved fresh loans for the company's residual capital expenditure of around Rs 350 crore.

The primary objective of roping in the strategic investors, it appears, is to term the project as a joint sector-promoted venture, so that the proposed financial assistance sought for the pipeline and the beneficiation plant can be treated as differently from the ones to Ruia group companies. Consequently,the institutional exposure to Essar group will come down.