SAIL's buy back plan gets shareholders' nod

State-owned steel major Steel Authority of India Ltd (SAIL) on Friday said its shareholders have approved a proposal to buyback its own shares.

Following the announcement, shares of the company shot up by 7.68 per cent to close at Rs 92.55 apiece on the BSE.

"It (buyback of shares) is an enabling provision that has been accepted. Today there was no provision in the Article of the Association of the company. So we have made this provision and got this approved by the shareholders. Now if there is a need or our Board decides so, we can buy back shares," SAIL Chairman C S Verma said.

Verma, who was speaking to reporters here after annual general meeting of SAIL, declined to put any particular time frame for the buyback.

"Today only we have got the enabling approval. So let's see, let the time pass by and let me also have review of the market conditions," he said.

The largest domestic steel producer has been sitting on a cash reserves of Rs 6,415 crore as on March, 2012 and is among the selected state utilities for disinvestment by the government. In July, the Union Cabinet had approved sale of its 10.82 per cent stake in SAIL.

Verma, however, declined to comment on when disinvestment of the government shares will happen.

"It (the timing) has to be decided by the Department of Disinvestment," he said.

The SAIL chairman also said his firm will soon invite expression of interest (EoI) for selecting mine developers and operators (MDOs) for developing Chiriya mines in Jharkhand, which holds proven reserves of over 1.8 billion tonnes and is among the largest iron ore mines in Asia.

"We have secured stage-I forest approval and will soon seek stage-II approval. Soon, we will be inviting EoI for selecting MDOs for Chiriya Mines," Verma said, adding that the company has kept a capital expenditure target of Rs 12,000 crore on its modernisation and expansion this year.

According to Verma, a SAIL-led consortium that has emerged as the preferred bidder for mining exploration rights at three iron ore mines at Hajigak in Afghanistan last year will sign final agreements with the Afghan government within next two months.

"There are going to be some changes going to happen in mining laws of Afghanistan. We are waiting for that. In next two months time, we should be in a position to document these contracts and immediately thereafter, we should start work there," he said.

Besides developing iron ore mines, the project includes development of a steel plant, a thermal power plant and other necessary infrastructure with total investments of over $10 billion.