The expansion plans have been galvanised by demand recovery in company’s major markets, reflected in its order book which increased to Rs 10,705 crore in July-September quarter.
October 25, 2020
Data network solutions provider Sterlite Technologies has decided to “fast track” its planned augmentation of optical fibre cable capacity, buoyed by the order book and demand funnel, as it looks to undertake expansion in two phases, possibly at lower costs, a top company official said. Sterlite Technologies Ltd (STL) Group CEO Anand Agarwal said the company has decided to lift the “pause and hold” on expansion to move full throttle ahead.
The capacity is expected to rise from 18 million fibre km (FKm) to 24 million Fkm in the first phase by the end of December.
In the second phase, the company plans to move from 24 million Fkm to 33 million Fkm by March or April next year.
“We have decided to remove the hold and pause. So the first phase going from 18-24 million fibre km may happen by end of December itself and then 24-33 million fibre km may take a little longer, may be March or April. But in a modular fashion, we will bring on the capacity as fast as possible,” Agarwal told PTI.
The expansion plans have been galvanised by demand recovery in company’s major markets, reflected in its order book which increased to Rs 10,705 crore in July-September quarter.
The company is also enthused by the potential order funnel, Agarwal said, adding that the ongoing discussion with customers and new fibre build-outs planned in Europe strengthen the case for capacity augmentation. “The way most customers are moving forward is they are doing fibre-to-home, fibre to cell site and fibre to enterprise simultaneously,” he said.
Moreover, the company has already hit 90 per cent of its capacity utilisation, making expansion imminent. “So we have decided to now remove the pause and hold on investment plans…we have decided to fast track that currently, so this investment to go from 18-33 million fibre km, we are initiating now. We are trying that between March and June of next year that capacity comes up fully, in a modular fashion,” he said.
While STL had initially anticipated an investment of about Rs 300 crore for the expansion, it now believes that it may be able to complete it a lower cost. “We think we will be able to do it at slightly lower cost right now. We have re-engineered a lot of things…may be Rs 260 crore odd or so…All that work had been going on in the background, while we had paused this entire thing. A large part of this will get deployed over the next 6-7 months,” Agarwal said.
With its portfolio spanning optical fibre and cables, network design and deployment as well as network software, Pune-based STL positions itself as an integrated solutions provider for global data networks, with optical preform, fibre and cable manufacturing facilities in India, Italy, China and Brazil.
Asked how the company would undertake expansion across its different units, Agarwal said that the modalities are still being worked out. “We will have to work it out. From what I understand, Europe will happen a bit earlier because we are seeing great deal of activity and we are fast tracking Europe earlier, and India will follow. It is just a matter of 2-3 months, so wherever we can do it faster..,” he said.
STL posted over 63 per cent year-on-year decline in its consolidated net profit for the second quarter ended September 2020 at Rs 58.5 crore, hit by lower revenue and higher mix of services business.
However, profit and revenue in September quarter were substantially higher sequentially, and the company exuded confidence that the sequential growth logged would continue for the next two quarters as well. The net profit was nine-fold higher than Rs 6 crore reported in April-June. Revenue also rose over 32 per cent from June quarter.
