Sources in Raymond told The Financial Express that new alternatives were being explored as talks with Thyssen had not made much headway due to differences over sale price of the steel division.

Thyssen, which had initially offered $105 million (over Rs 400 crore) for the steel division had later cut its offer to $65 million, said sources.

``The German company also wanted waiver of export obligations on the company, which is not possible,'' they added.

Raymond has an export obligation of $180 million as the company had imported capital goods worth $30 million in 1995-96 under the zero duty export promotion capital goods (EPCG) scheme.

Raymond is also understood to have approached the commerce ministry for a suitable relaxation in its export obligation in viewof the fierce competition faced by the company from other global steel producers due to demand recession.

The steel division is making losses both in the domestic and international markets.

Industry sources said the German company was hopeful of acquiring Raymond's steel division at a lower cost as it was a loss-making entity and was having problem in meeting its export obligation. However, Raymond Ltd does not want to enter into any distress sale, sources added.

The steel division, for which Raymond had a technical collaboration with US-based Alleghany Ludlum Corporation, has an installed capacity of 45,000 tonne silicon steel and one lakh tonne of cold-rolled annealed steel. The steel division was set up at a total cost of about Rs 450 crore and the first phase was commissioned during 1995.

Thyssen had started negotiations with Raymond to form a new joint venture company by hiving off the latter's steel division. According to the proposal, EBG Gesellschaft, a 100 per cent subsidiary owned by theThyssen group, was to form a 76:24 joint venture with the steel division of Raymond to form a new company named EBG India Ltd.

KPMG Peat Marwick had been appointed by Thyssen to undertake a due diligence of the current assets owned by Raymond's steel division prior to its hiving-off. The global consultancy firm had evaluated the value of the fixed assets owned by Raymond's steel division at $106.5 million, out of which $56 million would form the equity capital of the new company.

The joint venture agreement, which was to be effective from June 1, 1998, had subsequently fallen through due to differences between the two partners.Raymond had registered a 79 per cent increase in net profit at Rs 80.77 crore for financial year ended March 1999, up from Rs 45.03 crore in the previous year.

Gross turnover was up at Rs 1,576.54 crore for 1998-99 as against Rs 1,518.91 crore in the previous year and total income was up at Rs 1,307.35 crore as against Rs 1,225 crore in the previous year.