<div>Steel Authority of India’s board, in its 40th annual general meeting held on 21st September, okayed the enabling approvals needed for the buyback of shares. The buyback route was a move sought by the government as an alternative to disinvestment which is part of its plans for raising up to Rs 40,000 crore from cash-rich PSUs. Through this method the PSU can purchase about 5 per cent of shares held by the government. The government currently holds 85.82 per cent in SAIL which has cash and bank balances Rs 6,415.70 crore (as on 31st March 2012). At a current market price of Rs 92.55, the government would earn about Rs 1,640 crore.</div><div><br /> </div><div>The buyback however, has received a lukewarm response from most PSUs. And though SAIL’s board may have cleared the proposal, they are not ready to implement it yet. Chairman C. S Verma said they would review the market conditions before commenting on a probable date for the buyback.</div><div><br /> </div><div>In terms of financials, SAIL reported the highest ever turnover of Rs 50,348 crore in 2011-12. Its profit, however, fell by 27 per cent compared to 2010-11. Profit before tax is currently Rs 3,543 crore while profit after tax stood at Rs 5,151 crore. This, Verma says, is largely due to the depreciation of rupee against the dollar as well as a rise in coking coal prices. The company lost Rs 900 crore due to the decline in dollar-rupee parity. Coking coal prices have gone up from average $213 during 2010-11 to $288 per million tonne during 2011-12. But with decreasing demand from economies like China, coking coal prices are expected to soften over the year.</div><div><br /> </div><div>Steel prices too, have been on a downward trend. Globally, prices of long products decreased from $655 per tonne to $608 per tonne since April 2012. Flat product prices decreased from $640 per tonne to $548 per tonne. Domestic prices of flat products decreased by Rs 3,500 per tonne to Rs 35,000 per tonne. Prices of long products prices fell by Rs. 3400 per tonne to Rs 44,000 per tonne. Verma however, is optimistic about the future. “Whatever adverse conditions could have happened, have happened. We have made all necessary provisions (to arrest the decline in profits). The worst is over,” he said.</div><div> </div><div> </div><div> </div><div>Among the factors he believes will buoy India’s steel industry is the demand which has gone up by 6.9 per cent between April and August 2012. “Ultimately, India is going to be the demand centre... They (China and developed economies) are all saturated,” said Verma. India’s per capita consumption per annum stands at just 55 kg compared to the world average of 200 kg. Our production in August 2012 grew by 2.6 per cent whereas the global figure was minus 1.0 per cent.</div><div> </div><div> </div><div> </div><div>The chairman will leave on 22nd September for a week-long trip to US to scout for coal assets. He will be accompanied by the secretary of steel DRS Chaudhary He did not however comment on the specifics only saying that the mines would include those in Virginia. This trip is part of the International Coal Ventures Pvt Limited (ICVL) agenda. ICVL was formed in 2009 as a joint venture between Coal India, SAIL, RINL, NMDC and NTPC. Its aim was to acquire 500 million tonnes of overseas coal assets by 2020. The joint venture is yet to score ownership of a single coal block abroad.</div>