Banks Are Now Willing To Lend To Steelmakers

UNION STEEL MINISTER Birender Singh joined the BJP four years ago, after 40 years in the Congress. Grandson of the legendary Sir Chhotu Ram, the blue-blooded Jat leader has steered the steel sector out of the doldrums it was in. Excerpts from an interview:

- Vijaya Pushkarna

How do you sum up developments in your ministry over the last four years?

The situation was bad from 2012 because of overproduction, especially by China. The markets in India crashed because China was dumping. Consumption remained static. But the recession was universal. We had to impose a minimum import price [MIP] and anti-dumping duty [ADD]. That gave some positive result. When the first MIP was imposed, import reduced by 38 per cent, since February 2016. Exports increased by 134 per cent. We have been a net steel exporting country for the last two years.

What is the impact of the turnaround ?

Now, most of the steel enterprises—integrated plants and secondary units—are in a comfortable position. Five of the six companies facing insolvency are in the steel sector. They owe ₹1.54 lakh crore to banks. As steel is now looking up, the results of insolvency resolutions are good. Tata has acquired Bhushan Steels. It was to give ₹44,000 crore. Banks were expecting a lot of haircut. Because of the good prospects, they got ₹37,000 crore, plus 12 per cent equity, and ₹1,200 crore for the creditors.

Banks were hostile to our industry. The sufferer was secondary steel. If the total non-performing assets is ₹2.27 lakh crore, secondary steel sector is not in default even to the extent of ₹3,000 crore. Now the banks have realised they should not be jittery about lending to the secondary units. They will get credit.

What kind of growth can we expect now?

In our 2017 steel policy, the target was to create a capacity of 300 million tonnes by 2030-31. That means we should be in a position to produce 255 million tonnes. At present, our production is 102 million and our capacity is 134 million. If we want to be competitive, we must go for value addition. It should not just be in crude steel, which may not find place in the world market.