"We have asked government to give guarantee to raise funds from the market mainly through the bond market," SAIL chairman and managing director Arvind Pande told PTI.

Government guarantee for mopping up Rs 1500 crore each for the current financial year's expenditure and VRS are part of the package proposed by SAIL for its financial and structural reorganisation to turn the corner this year, he added.

"There should be no problem in government guarantee as SAIL will be paying a guarantee charge at the rate of 1.25 per cent and therefore it will not entail any burden on the exchequer," Pande said.

Asked if this would make SAIL's cost of finance dearer, Pande said that SAIL would have to incur this as it was not in a position to tap the capital market directly and added that corporation would prefer to go forbond issues rather than bank borrowings to cut cost.

SAIL, which posted net loss of Rs 1574 crore in 1998-99, would use the Rs 1500 crore mobilised for 1999-2000 to partly meet its annual expenditure including the enhanced wage bill and partly for retiring its earlier debts. Pande said that possibilities of tapping the banks for mopping up funds was also being explored but nothing has been finalised.

SAIL, though budgeting losses for the current financial year in the face of high depreciation and repayment pressures amidst difficult market condition, could make profits in the current financial year itself if government approval for its package came through early, Pande said.

"Despite all the pressures, we ended the year with operating profits (Rs 1503 crore)," he added.

Pande clarified that though SAIL would raise Rs 1500 crore for its new VRS, the corporation would also seek some interest subsidy from the government for the purpose. Apart from government's clearance of its restructuring proposals thefortunes of the corporation would depend on revival of market in the current Financial year, Pande said.

The chairman said that SAIL was targeting sale growth of 13 per cent in 1999-2000 after achieving a 7.6 per cent growth in the last financial year amidst difficult conditions.