» Steel prices have been rising for six months now, from a low of $160 per tonne to close to $340 currently. Prices will hold up for at least a year

» The tenure of Essar Steel's institutional debt of Rs 3,200 crore has been extended to 13-15 years, 40 per cent of the exposure can be converted into lower-cost foreign debt, and the average interest rate (on foreign as well as institutional loans) is now in the 11-12 per cent region, down from 16-19 per cent earlier

» The institutions have approved the Ruias' plan to buy back its foreign debt of Rs 2,200 crore. Essar hopes to negotiate with creditors and buy back at a 75 per cent discount which, if successful, will reduce the foreign debt by almost Rs 1,500 crore, bringing down the annual interest burden by Rs 100-150 crore

» Institutions are likely to resume disbursements at a lower interest rate-perhaps 9 per cent-allowing the Ruias to finally complete their refinery in 18-21 months.

» ABB has agreed to step in and bridge the equity gap in the refinery project, of Rs 582 crore

WHAT WENT WRONG

» A year after Essar Steel's plant went onstream in 1996-97, steel prices crashed into an unforeseen downtrend, eventually hitting a 40-year low

» As realisations dried up, interest costs on huge borrowings of Rs 5,400 crore took their toll. Result: Piled up losses of Rs 1,700 crore in the steel business, and defaults on interest payments

» Foreign equity for the refinery, to the tune of Rs 582 crore, couldn't be tied up. Sanctions by the US, post Pokharan nuclear tests, ensured that no foreign banks would lend

» To prevent default, Ruias decide to offer a stake in Essar Power to Marathon Power, plan doesn't work out. Essar defaults on the FRN payment

» Construction of the refinery got delayed courtesy damage caused by a cyclone in 1998 in Jamnagar

» By late 1998, institutions stopped disbursements because of the equity gap.

» A $250-million floating rate note, which was to be redeemed in July 1999, couldn't be refinanced.

» Perception of group being a siphoner of public funds, and of taking advantage of institutional largesse, gains ground.

GUILTY OR VICTIM?
Over the years, the Ruias have had to face plenty of heat.

CHARGE

» The group has raised crores from the public and diverted and siphoned out some Rs 4,000 crore for speculation on stockmarkets

» FIs doled out Rs 11,000 crore to the Ruias and have written off that sum

» All the exposures of group companies are non-performing assets

» There was misinformation galore in the prospectus of Essar Oil's public issue of FCDs

» No capacity or capability to develop Ratna oilfield in production-sharing agreement with ONGC

DEFENCE

» FM Jaswant Singh says in Parliament that he has not come across any diversion of funds for speculation

» Exposure to the FIs is Rs 7,138 crore and no loans have been written off. Minister of State for Finance Anant G. Geete says so in Rajya Sabha

» None of the group accounts are npas today but are regular. Only Essar Power was an NPA as of March 31, 2001

» Disclosures in accordance with SEBI guidelines. Former FM Manmohan Singh gives clean chit

» CVC tells Ministry of Petroleum & Natural Gas that it cannot substantiate any allegations, so case should be treated as closed

THE BUSINESSES

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