Siemens, for example, has issued preference shares of Rs 107 crore, and has retired a lot of its high cost debt from Rs 600 crore in 1996, it reduced its debt to Rs 226 crore last year. The company sold properties, sold and then leased back IT equipment, and even got its parent to give it credit. BILT, similarly, diluted equity and retired debt. It issued onecrore shares at Rs 90 apiece to a Saudi Arabian company, and reduced its debt. It also hived off its chemical unit for Rs 125 crore to a group company which took over part of its debt.

In the public sector, the government is working out ways to recast the bloated equity structure, prior to their eventual privatisation. In the case of Nalco, the government has decided to virtually convert half its bloated equity of Rs 1,290 crore into debt -- a move, which according to HSBC Securities, will give a gain of 12 per cent to shareholders, post-restructuring. The Planning Commission has suggested a similar halving of equity for the state-owned Balco. And a couple of months prior to this, the Cabinet approved the capital restructuring of Hindustan Copper -- outstanding government loans of Rs 180 crore are to be converted into 7.5 per cent non-convertible redeemable preference shares. Several others, such as GAIL, MTNL, and VSNL are planning buyback of shares to make their equity more attractive. In this case,though, the move is also partly motivated by the government's desire to get more funds for the Budget.

Apart from the woes of a prolonged slowdown, the reason for the increased pace, of course, is the reluctance of banks and FIs to lend more funds to corporates unless they clean up their act. In the much-publicised Essar Steel case, for example, the institutions were finally persuaded to lend Rs 1,700 crore to the beleaguered company, but only after the Ruias themselves brought in Rs 800 crore to the table, possibly from selling off a large stake in its power plant. The Ruias have now engaged a consultant to help them find a buyer for the power plant, though it is not certain that the FIs are interested any more, at least for the time being.

Others such as Andrew Yule have begun spinning off units/divisions into subsidiaries over the past few months, as a pre-cursor to exiting business lines. Andrew Yule has transferred its belting division to a new company for enabling Phoenix AG to take a 74 per centstake. Siemens is in the process of hiving off its automobile business and its electronic equipment factory into two subsidiaries. Kothari Industrial Corporation is in the process of disposing off its textile unit. ``The reluctance of FIs to take on fresh exposure to the steel sector could also see the cement story being repeated in steel,'' according to CMIE. According to IDBI sources, institutions are expected to consider extending fresh loans to Essar Steel, Ispat, Jindal Iron, Rajinder Steel, Usha Ispat and others. In fact, IDBI has already prepared a list of 14 steel companies which need funds urgently. ``FIs have already put in over Rs 14,000 crore in these projects. Around Rs 25,000 crore is needed to complete these projects. It is also true that steel companies are not doing well,'' said an IDBI official. Escorts and Lloyds groups have also sought the help of institutions for restructuring the operations.

Institutions recently forced the Chowgules to sell their stake in Narmada Cement to L&T.Institutions have decided to press for a change in management at the beleaguered Rajinder Steel Ltd of the DS Batra Group. Institutions have suggested sale of one of the units of the Modern group. FIs have already sunk a huge amount in these groups and now they are insisting that promoters should also bring in funds as part of the revival package.In the case of the Modern group, institutions have asked the promoters to bring in funds to the tune of Rs 50 crore by selling Modern Denim. Others like the Mittals and the Lloyds group are also looking at the financial restructuring route by seeking the help of institutions.

In the first phase, the corporate sector witnessed a host of mergers and takeovers in the cement and pharmaceutical sectors. While the consolidation in the pharma sector was mostly part of the international M&A exercise and new patents laws, the restructuring in the cement sector -- L&T buying Narmada Cement and Tisco selling its cement division to LaFarge of France -- has gained momentum.``This kind of financial restructuring at the portfolio level has been taking place and more of it will happen in the next two years. It is a healthy trend,'' says Raj Nair, chairman of Business Consulting Group.

With shareholders and auditors asking embarrassing questions, corporates have understood the need to pull up their socks. Says R K Chari, a member of Bombay Stock Exchange: ``The manufacturing companies who have restructured on time like Mahindra & Mahindra are performing well in the stock markets... but Essar Steel, Lloyds have just corroded a shareholder's wealth.'' ``Those who do not overhaul their entire business, will see themselves obliterated from the business map. Nature has never favoured organisms that stood still... historically only those species that evolved have survived,'' adds Raj Nair of BCG.

Of course, there's a big difference between corporate restructuring in India and the way it happens internationally. In the western countries, the weaker capacities, which are notsustainable, are closed down. Mega corporates like Boeing and General Motors either close down units or cut production as soon as they see the signals of an economic slowdown. However, in India the weaker companies especially in the public sector continue to existThe saving grace, of course, could be the fact that, at a whopping Rs 45,000 crore, the non-performing assets of banks and FIs have clearly reached unsustainable levels -- international credit-rating agencies such as Standard & Poor, of course, feel the real NPAs are much higher. With the capital markets continuing to remain in a trough for the second year running, and FIs no longer so free with their money, the era of the free-lunch does seem to be dragging to a close.