Aksh knows all about making optical fibers, that’s understandable and obvious; what’s not is its recent involvement with some unusual services.
Aksh Optifibre Limited, incorporated in 1986, today stands at an aggregate 5.3 million tonnes capacity for optical fiber, OFC, and FRP rods. That’s quite a lot! The company has been seen experimenting with its product basket every now and then, however its foray into many unconventional services, for manufacturers view-point at least, such as e-Governance and banking has raised many eye brows and, of course, won many admirers.
Wire and Cable India magazine had had a lengthy chat with Mr. Satyendra Gupta, Executive Director & CFO, Aksh Optifibre Limited where he explained all what was asked in his quintessential simple and lucid manner. Being a man of numbers, he was straight in perceiving the pith of the query and more straight in his responses. His about 10 years at Aksh, and his own meticulous nature perhaps, make him at ease while expounding about Aksh. In this conversation, he explained everything right from Aksh’s capacity augmentation and export market expansion, to its deeper engagement with emerging services portfolio, to its abiding adherence to CSR & sustainable practices.
Here are the excerpts of the exchange:
Wire & Cable India: Aksh Optifibre’s FY 2014-15 results indicates profits up by 67 percent. Are you set to follow this aggressive growth trajectory further? Tell us how you intend to do it.
Satyendra Gupta: The company has performed exceptionally well during the last fiscal year with the strong growth in manufacturing as well as service sectors; the top-line has seen a growth of about 63 percent with the bottom line growth pegged somewhere at 67 percent. Since we are running at full capacities vis-à-vis manufacturing, the growth till the next year would be about 15-20 percent in the top-line and consequent to the increase in capacities, we will see further growth on the same line in the following years. The increase in capacities, which I am talking about, is expected to start from the next fiscal year i.e. April 2016 onwards.
WCI: Say a bit more on the planned capacity expansion.
SG: Presently, we have 1.2 million tonnes of capacity for optical fiber, 2.5 million tonnes for cable, and 1.6 million tonnes FRP (both domestic and overseas). We are thinking of expanding the capacity by 80-100 percent in all segments. In OFC, the capacity will be increased by around 90 percent in existing Indian facilities at Bhiwadi and Reengus. For FRP, we intend to 80 percent raise in the capacity in our 100 percent subsidiary based in Dubai (another 1.2 million tonnes being added).
The capacities are targeted to be operational by next fiscal year, April 2016 onwards. Rs. 120 odd crores is the investment target for the said capacity expansions. The board approval has already been taken and we are into finalization of necessary details.
As for machines and technology, we are going with the same technology which we have started with for FRP. We have already changed the technology to the latest in the new Dubai operations. In India, since we have already a thermal, we have now gone for UV based technology which is superior in terms of speed and product quality.
In OF and OFC, we’ll be utilizing the existing technology.
WCI: Tell us more about your newly constructed state-of-the-art facility for FRP rods in Jafza, Dubai.
SG: Basically, Aksh has long been into export market and has developed a good market overseas over a period of time. Our vision was to set up a manufacturing facility outside India to give better and timely customer service. Consequently, we opted to move out of the existing locations. There was a dual advantage too – better service to customers and proximity to port.
Moreover, this mitigates the risk of having all the capacity at a single location. We are supplier to some of the major companies like Corning, Prysmian, etc.; one of the risk factor for such companies is to source their supplies from a single location.
WCI: What’s the ratio of domestic vs. overseas supplies?
SG: In FRP, we are basically 25 percent domestic and 75 percent export. In OFC, because of the large growth coming from the Indian market, we were at 75 percent domestic, 25 percent export.
In FRP, the existing Indian facility will largely cater to the domestic market whereas the Dubai facility with the increased capacities will exclusively cater to our export market. Out of total 2.8 million tonnes, 1.2 million tonnes will be in India and 1.6 million tonnes in Dubai meant for only export. Out of this 1.2 million tonnes in India, some parts may also be exported. We are able to see the tremendous demand growth in FRP segment the world over; being one the largest manufacturers and supplying to all major OFC manufacturers around the globe, we intend to meet all the foreseeable FRP demands.
In export market, we are also looking at certain regions which are extremely promising for the cable export viz. the South East Asia and the Middle East. African continent is also showing very strong demand trends for OFC. Over a period of time, we are looking forward to capturing a ratio of 50:50 for domestic to the export.
WCI: It seems that the Govt.’s ‘Digital India’ program is spurring the entire OFC market. How does Aksh Optfibre plan to be part of this growing optical communication segment?
SG: We are already a part of this growing segment by being a part of NOFN. We were L1 in one of the packages for which a part of supplies has already been completed during the current fiscal year. The entire order was to the tune of Rs. 200 crores of which order worth Rs. 102 crores has been completed. We are proud to say that we were the first to complete the order. When the entire order of the first phase completes, the order for the next phase will commence which is expected to start within this fiscal year itself.
Then, there is NFS also which we are a part of. We are L1 in one of its package – Package F which mainly covers WB, Orissa, Bihar, Jharkhand, Andaman & Nicobar islands and Sikkim running about 6600 km. This is again a Rs. 102 crores order which we expect to complete partly this year. The supply has already commenced and we intend to complete it by June 2016. After we complete this, we expect to have additional quantities including that for maintenance work.
Moreover, all the major telecom players are looking for expansion in their network; Reliance Jio being one of them. We have been a major supplier to them supplying about 20 percent of their needs. We are also looking forward to working with other private telecom entities.
Now, if you look at ‘Digital India’ closely, what they say they are going to do, we have been doing since the beginning of 2008. We have been the part of the digital program led by the Govt. of Rajasthan, called e-Mitra. We are one of the largest private entities present in the segment till date. Yes, the footprint is huge with regards to ‘Digital India’ and NOFN as it gives the last mile connectivity to the gram panchayat level across India. We have been doing the same at the state level in association with the Rajasthan govt. Last year, we were running the e-Governance service in five districts which are now taken to all 33 districts after this sectors opened up.
WCI: I think you are referring to 1 Stop Aksh which is fast emerging as one of the most productive PPP model in the area of e-Governance. Where is the program heading right now? Do tell us about Aksh-SBI partnership in launching ATMs in Rajasthan.
SG: We started 1 Stop Aksh only last year, though our work in terms of e-Governance was ongoing since 2008. We have already opened about 4800 kiosks which we intend to take to a number of 10,000 to provide the last mile connectivity up to villages. We have ample experience in laying fibers and providing the connectivity which we would like to utilize here and take it forward.
Presently, we are doing this in Rajasthan which, I am sure, will be extended to neighboring states like Punjab, Haryana, HP, etc. We have already initiated the discussion with the state governments of Haryana, Punjab, and Bihar.
Our target first is to get the 10,000 kiosks in Rajasthan running successfully as this is not important to have just these kiosks; making these kiosks viable is more important. In order to do that, we have to introduce the various services which the kiosks owners find attractive to operate. Besides G2C services like deposition of various bills (electricity, water, etc.), we are also into some of the activities like Aadhar and Bhamashah cards.
Another significant service that you mentioned in your question is the introduction of micro ATMs in association with SBI. SBI has provided us about 1100 micro ATMs which are being installed at the kiosks level for the customers to withdraw an amount up to Rs. 1000. In addition, we have already tied up with PNB, where they are enabling Aadhar based payments to Aadhar card holders. There is difference between SBI’s micro ATMs and PNB’s Aadhar based withdrawal; in micro ATMs, you can withdraw an amount up to Rs. 1000, whereas with Aadhar based payments, amount up to Rs. 10,000 can be withdrawn.
WCI: It seems that you are quite serious that ‘1 Stop Aksh’ lives by its name by disseminating whole gamut of services at these kiosks level. Anything more planned under it?
SG: Yes, Indeed. 1 Stop Aksh is going to live by its name every bit. In addition to the services mentioned already, we are also looking forward to being a vehicle for digital literacy program under NLM where the basic aim is to provide basic computer education to rural India.
Another important development is that we have tied up with EESL – Energy Efficiency Services Limited for LED distributions in the state of Rajasthan. The LOI has already been allotted to us for one of the cities in Rajasthan – Ajmer, where we have already started working on this. There are two firms L1 and L2 involved in this; we are L2. That’s another big area. Revenues are linked with these kiosks holders.
There is also something, which we have shared no details until now to anybody – we are also working with Amazon to provide the logistics. It’s a pilot project with Amazon where we are to provide our logistics and distribution network for the purchases done on their website. This would provide Amazon with the deeper penetration in the state of Rajasthan. To be more precise, their goods will be available at our end which we would be warehousing and distributing to various part of the state through our wide network of kiosks. This same model is going to be applied in the LED distribution.
WCI: With this kind of services, do you think you have no longer remained only an OFC manufacturer? What kind of value will these services deliver to Aksh?
SG: If you look at the history of Aksh, we started with the manufacturing of OFC only to diversify later into many other products and services. We went into backward integration and started manufacturing two key raw materials needed for making OFC viz. OF and FRP. Then, we moved forward and started providing services like IPTV, VOIP, e-Governance, etc. just to ensure how best OFC can be used, or just to optimize the usages of OF, in other words. And, consequently, we entered into other related service areas.
For next year, the service segment would be our focus year because manufacturing as our core work is quite cemented in its place. We look at the large volume base for the service sector and intend to take the kiosk’s number to 10,000.
As for values these services are contributing, 5 percent to our total turnover while the remaining 95 percent from manufacturing. However, by the end of next fiscal year, we intend to take this share to 10-12 percent of the total turnover. Our ultimate target, over a period of time, will be to reach at the level of 25 percent in services.
WCI: Plantation of 15,000 saplings as part of your CSR activities made quite a news. Elaborate a bit more on Aksh’s CSR and sustainability commitments with other areas as focus (apart from planting trees).
SG: Aksh is deeply involved with CSR activities. It’s mandatory too. Plantation of 15,000 saplings is just the beginning and we have to attain much beyond that as part of our sustainability commitments. First initiative we took was in Bhiwadi to make the region clean and green. We started with the plantation of 15,000 saplings and there are 100,000 more to come in next one and a half years.
As part of long-standing CSR commitments, we also have adopted two schools around our manufacturing facilities in Bhiwadi and Reengus. We have tried making these schools and the area around a model for others to follow by renovating the entire infrastructure of the schools and the adjoining area. We have made roads for easy accessibility, provided computers, and started computer literacy programs for these schools. I am pleased to say that Aksh has been chosen for prestigious Bhamashah Award for 2015 by the Govt. of Rajasthan to be conferred by the Hon’ble CM, Rajasthan.
WCI: At last, any message for the readers?
SG: After long, OFC industry is being looked upon as a sun-rise industry. We are very far behind in terms of digital literacy and that’s a great opportunity too. Whatever initiatives have been taken by the Govt. of India, we have to support that by our own initiatives for the good of the country, for the good of the industry.
