A top source told The Financial Express that the company would utilise this loan primarily for the clearance of its international liabilities (payment against import of copper concentrates) and liabilities on redemption of earlier bonds.

The IDBI loan, it is learnt, bears an interest payable at the rate of 16 per cent and carries a moratorium on the principal payment for the first two years. The interest will, however, be paid within the two years and as far as the whole amount is concerned, it will be paid in four years time, starting from the third year, said the source.

The entire loan would be termed as a working capital loan and would be applicable for the period 1998-99. The company could raise this loan only subject to a governmentguarantee which it has received early this month.

With an increase in the borrowing capacity, the copper major may be in a position to revert its financial losses as well as go in for some of its expansion plans which it has on hold.

It was also given permission by the government to convert loans worth Rs 183 crore into preference shares at an interest of 7.5 per cent. The government has also agreed to write off loans worth Rs 165 crore.

Meanwhile, the company is also awaiting a sum of Rs 100 crore from the central Government towards its voluntary retirement scheme for the current year. Last year, it had received a loan of Rs 65 crore for separation of its workers at its various units.

It expects to separate about 2,000-2,500 people in the current year. Last year almost 1,200 people had opted for the VRS.

The entire exercise of restructuring drawn up by Hindustan Copper is expected to help it arrest a decline in its margins which it has been subjected to since the last one year.

A continuousdecline in copper prices on the LME since the last one year has hit the company hard. This has led the company to scale down its expansion plans to reasonable limits and also resorting to the closure of three of its mines which were deemed as uneconomic.

The company was going in for debottlenecking at its Khetri smelter in Rajasthan where the capacity was being increased from 31,000 tonnes to 45,000 tonnes. It had also proposed for an expansion at its Ghatsila smelter from 16,500 tonnes to 25,000 tonnes. Both these would require investments of Rs 50 crore and Rs 25 crore respectively, the source said.

It may be recalled that Hindustan Copper had earlier planned to go in for a nearly Rs 550 crore expansion at this plant which would involve raising capacity from 31,000 tonnes to 1,00,000 tonnes, which was shelved due to financial problems.

The copper major has recently started working on the findings of European consulting firm AT Kearney, which has suggested a turnaround policy for the company byidentifying smelting and refining as its strong areas.