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Sterlite Technologies - Ramping up capacity to cater to domestic and global demand

August 15, 2009
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Despite the global financial crisis, the market for optical fibre continues to witness strong demand. The demand is especially high in the Asian markets, led by China, which accounts for 37 per cent of the global optical fibre consumption.

The market for optical fibre is expected to continue growing at a very fast rate as the number of fibre-to-the-home (FTTH) subscribers is expected to cross 100 million by the end of 2012. Sterlite Technologies, a key player in the optical fibre space, intends to leverage the business opportunities in markets like India and China.

The company is also making a serious play for international markets. It has, in fact, taken rapid steps to transform itself from an India-centric, manufacturingbased organisation into a global, marketcentric entity.

Background
Incorporated in 1988, Sterlite Technologies provides transmission solutions for the telecom and power industries. The company manufactures and supplies optical fibres, fibre optic cables, copper telecom cables, structured data cables and ADSL2+ modems. It is involved in manufacturing and supplying power transmission conductors and aluminium and alloy rods as well. The company also undertakes telecom integration projects and managed services.

Its clients include companies such as Bharat Sanchar Nigam Limited (BSNL), Reliance Communications, Tata Communications, Bharti Airtel, Mahanagar Telephone Nigam Limited, Indian Railways as well as power, oil and gas utilities.

With sales and representative offices in China, the UK, the US, Russia, Thailand and South Africa, Sterlite Technologies has made its presence felt in the global arena. It has made significant inroads in the African, Chinese and Russian optical fibre markets, with 8 per cent, about 7 per cent and 5 per cent market share respectively. International sales currently account for about 30 per cent of the company's net revenues.

The company has been involved in several overseas projects including network expansion projects in Algeria as well as installation of an operation support system/business support system for metro Ethernet networks.

Recent initiatives
The past year has been a busy one for Sterlite Technologies. Its key focus areas have been expansion of its global footprint, leveraging its operational strengths and new product development. For instance, it launched the Sterlite Fibre Powered Home Solution, which offers IP-based applications for enterprise and residential customers. According to the company, this is a cost-effective solution for all new FTTH network deployments.

During the past year, Sterlite Technologies was granted three patents in the US and India, which added to its earlier tally of 13 patents. Recently, the company won a contract from BSNL valued at Rs 3.72 billion to develop an FTTH network based on gigabit passive optical network technology. The work is expected to be completed by 2010.

Sterlite Technologies has chalked out an ambitious expansion plan to take the company to the top league in the global optical fibre industry. It is in the process of expanding its manufacturing facility's capacity from 6 million km to 12 million km in this year. It intends to increase the capacity further to 20 million km by 2011 at a capital investment of Rs 2.5 billion.

The higher manufacturing capacity will enable the company to meet the demand for new products that cater to high bandwidth applications like gaming. These applications are increasingly gaining momentum in markets across the world.

Key financials
Sterlite Technologies is on a strong financial wicket. Listed on the National Stock Exchange and the Bombay Stock Exchange, the company posted net revenues of Rs 4.36 billion for the quarter ended June 30, 2009, up from Rs 4.04 billion in the same quarter in 2008.

Similarly, the operating profit (earnings before interest, taxes, depreciation and amortisation) for the quarter increased by 93 per cent year on year to Rs 802.6 million, along with an improved profit margin of 18 per cent. The net profit (profit after tax) stood at Rs 454.8 million. Clearly, the company has shown strong resilience to the credit crunch and its order books have remained largely unaffected by the slowdown. Telecom product and solution sales for the quarter totalled Rs 1.4 billion.

With significant medium-term demand opportunities in India and abroad, Sterlite Technologies is confident of maintaining its leading position in the Indian market as well as increasing its global footprint.


 
 
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