The power and telecom sectors have been under tremendous pressure for a few quarters but Pune-based Sterlite Technologies, a sister company of Vedanta Group, is confident about business growth.
Sterlite that manufactures optical fibers, telecommunication cables among others did see its business impacted as the domestic business faced uncertain times.
Anand Agarwal, CEO, Sterlite Technologies, in an interview with Pravda Godbole talks about the economic environment, future growth orders and its expansion plans. Edited excerpts…
Between both our businesses--telecom and power--we are seeing good signs on the telecom side because the fibre business is showing optimistic signs in India. Within the government segment we are seeing some defence projects coming up. Yes, our power business is slower as transmission area is slow plus due to the coal generation issue it gets sluggish further.
Also another reason is poor trans-outlays in transmission projects and power grid projects. Domestically, lack of quick decision making on the Government’s part has impacted several large infra projects which would also include power projects. So, on the macro level yes, it looks alright because the demand on the short term level is good.
Could you elaborate on your business from telecom sector?
More and more mobile devices are becoming Internet ready and smart. Hence, the demand for data at the consumer end is increasing. Hence, spectrum usage is increasing from tower to tower and that is when players like us benefits at large.
But your business did see some impact due to the slowdown in the economy?
During 2011-12 there was a drop in profitability due to major shrinkage in order by one of the largest customers on the Power side. Coupled with it, there were cost escalations in our fiber business as we expanded our capacities which takes time for stabilization.
As we progressed into 2012-13, the cost stabilized and we could also manage to secure good margin orders in our power business, which resulted in improved profitability.
For Sterlite domestic business is 70% from domestic markets, how is the business environment changes now?
We have some Government projects lined up running into a few hundred crores in rupees. They are in the tendering process hence we cannot divulge any details currently. As for the payments, we are very selective of who we do business with and so we ensure that timelines are always followed.
The company has been also expanding into new geographies. What are the new focus regions for the company?
Latin America is a market we have recently entered, that is about one-and-a-half years back in terms of sales and for manufacturing, we entered in a joint venture with Conduspar, a leading cable manufacturer, in Brazil with an initial greenfield capacity of 0.5 million fibre kilo meter (fkm) of optical fibre cables to be ramped up to 1-2 million fkm in the next 2-3 years as market grows.
What is your current market share and how much do you see it growing in the next three years?
On the global level, in the fibre business we stand at 6% and for conductor business we are at 8%. Where as, on the India level, we have 35% market share in fiber and 25% market share in conductors . The India market size is 8-9 million kilo-meter of optical fibre while for conductors it is close to 6,00,000 metric tonne of conductors.
How do you see yourself aligning globally with the market condition?
Globally, the average bandwidth and energy consumption per user will continue to increase. As a company we continue to devise a unique portfolio of power and telecom offerings.
Our focus will be to bring value to our customers through a high degree of application engineering and new product offerings suiting to our customer network requirements. One of our new offering on the optical fiber side is bend
sensitive fiber.
On the conductor side, our new product line will be on high performance conductors, which transmit higher power at a much lesser energy loss. They have the capability to transmit more than double the power over an existing infrastructure of transmission line.
In July this year, the company faced trouble due to the situations in Assam and you had to stall the project. What kind of losses did the company incur during that time? Did the project finally come to a logical end?
The project will end in March 2014 which should have ideally ended in 2013. As part of the same project, the one in Bihar is already up and running.
Sterlite that manufactures optical fibers, telecommunication cables among others did see its business impacted as the domestic business faced uncertain times.
Anand Agarwal, CEO, Sterlite Technologies, in an interview with Pravda Godbole talks about the economic environment, future growth orders and its expansion plans. Edited excerpts…
Also Read
On the macro environment level, what kind of impact are you seeing on your business?
Between both our businesses--telecom and power--we are seeing good signs on the telecom side because the fibre business is showing optimistic signs in India. Within the government segment we are seeing some defence projects coming up. Yes, our power business is slower as transmission area is slow plus due to the coal generation issue it gets sluggish further.
Also another reason is poor trans-outlays in transmission projects and power grid projects. Domestically, lack of quick decision making on the Government’s part has impacted several large infra projects which would also include power projects. So, on the macro level yes, it looks alright because the demand on the short term level is good.
Could you elaborate on your business from telecom sector?
More and more mobile devices are becoming Internet ready and smart. Hence, the demand for data at the consumer end is increasing. Hence, spectrum usage is increasing from tower to tower and that is when players like us benefits at large.
But your business did see some impact due to the slowdown in the economy?
During 2011-12 there was a drop in profitability due to major shrinkage in order by one of the largest customers on the Power side. Coupled with it, there were cost escalations in our fiber business as we expanded our capacities which takes time for stabilization.
As we progressed into 2012-13, the cost stabilized and we could also manage to secure good margin orders in our power business, which resulted in improved profitability.
For Sterlite domestic business is 70% from domestic markets, how is the business environment changes now?
We have some Government projects lined up running into a few hundred crores in rupees. They are in the tendering process hence we cannot divulge any details currently. As for the payments, we are very selective of who we do business with and so we ensure that timelines are always followed.
The company has been also expanding into new geographies. What are the new focus regions for the company?
Latin America is a market we have recently entered, that is about one-and-a-half years back in terms of sales and for manufacturing, we entered in a joint venture with Conduspar, a leading cable manufacturer, in Brazil with an initial greenfield capacity of 0.5 million fibre kilo meter (fkm) of optical fibre cables to be ramped up to 1-2 million fkm in the next 2-3 years as market grows.
What is your current market share and how much do you see it growing in the next three years?
On the global level, in the fibre business we stand at 6% and for conductor business we are at 8%. Where as, on the India level, we have 35% market share in fiber and 25% market share in conductors . The India market size is 8-9 million kilo-meter of optical fibre while for conductors it is close to 6,00,000 metric tonne of conductors.
How do you see yourself aligning globally with the market condition?
Globally, the average bandwidth and energy consumption per user will continue to increase. As a company we continue to devise a unique portfolio of power and telecom offerings.
Our focus will be to bring value to our customers through a high degree of application engineering and new product offerings suiting to our customer network requirements. One of our new offering on the optical fiber side is bend
sensitive fiber.
On the conductor side, our new product line will be on high performance conductors, which transmit higher power at a much lesser energy loss. They have the capability to transmit more than double the power over an existing infrastructure of transmission line.
In July this year, the company faced trouble due to the situations in Assam and you had to stall the project. What kind of losses did the company incur during that time? Did the project finally come to a logical end?
The project will end in March 2014 which should have ideally ended in 2013. As part of the same project, the one in Bihar is already up and running.