Sterlite board okays buyback before Sebi moves court

Our Bureau

Mumbai, Oct 30: Reacting fast to the favourable order from the Securities Appellate Tribunal (SAT), the board of directors of Sterlite Industries Ltd (SIL) on Tuesday decided to go ahead with the share buyback that was stalled by the order of Securities and Exchange Board of India (Sebi). The SAT on October 22 had reversed the Sebi order clearing the way for the company to take up the capital market activities.

In April this year, under the section 11 and 11 (b) of the Sebi Act 1992, Sebi had barred the company and its directors from entering capital markets for a period of two years, for the alleged involvement in price rigging of their own company’s shares during early 1998.

The SIL board’s decision thus becomes interesting, especially because it comes at a time when the Sebi now plans to challenge SAT’s order in the Mumbai high court. The company had decided to resort to buyback and had sought shareholders approval at the company’s annual general meeting held on December 2, 2000. This move was stalled after the Sebi barred the company from entering the capital market. Also, the validity of this approval from shareholders expires on December 1, 2001.

Now, the company, subject to the approval of the members at the ensuing annual general meeting to be held on December 8, 2001, has decided to purchase the Rs 5 fully paid up equity shares for an aggregate amount not exceeding Rs 280 crore and upto a maximum price of Rs 200 per share as the approval granted by the members of the company. On the BSE, the SIL stock closed lower on Tuesday at Rs 105.90 as compared to previous close of Rs 110.70. Expecting the share price to gallop after the share buyback is announced, the trading volume has soared on both the bourses. The volume at BSE jumped from an average low of 18,500 shares on Thursday last, to 45,365 shares on Tuesday.