Following the break-up of Finolex' 50:50 equity tie-up with Lucent Technologies International Inc last year, Finolex Technologies has been in trouble as it has not been able to get the critical technology to produce the raw fibre.
Besides, Finolex Technologies, a subsidiary of Finolex Cables, has been finding it extremely difficult to source the raw fibre from the global market as the demand for raw fibre far outstrips its supply.
"Worldwide there is a shortage of raw fibre and therefore we are able to get only 10 per cent of our requirement. Next week I am going abroad to lookout for an overseas partner who would provide us the technology to produce raw fibre," P P Chhabria, chairman of Finolex group, said.
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The raw fibre optic technology is very closely guarded worldwide by a select producers. In India too, a few companies produce it, including the Sterlite group.
In spite of the acute shortage of raw fibre optic, Chhabria said Finolex Technologies continues to service the requirements of Department of Telecommunication and other private parties in India.
For the extended 18-month financial year to September 30, 1999, Finolex Technologies recorded gross sales of Rs 34.28 crore, as against Rs 10.22 crore posted in the 12-month preceding financial year. The company sold 3,918 km of fibre optic cables during the extended financial year, as against 828 km in the previous year.
However, in the case of another 50:50 equity joint venture -- Finolex Essex Industries, a tie-up between Finolex Cables and Essex Group Inc of USA --
Finolex was able to absorb the technology that goes in the making of
continuous cast copper rods even after the overseas partner decided to get out of the joint venture.
Finolex Cables has acquired the 50 per cent equity stake of Essex for a price of $1 million. According to Chhabria, the acquisition of Essex's equity stake will enable it to get the critical raw material on-tap leading to substantial rationalisation in inventory holdings besides supporting its proposed cable expansion plans at Verna, Goa.
The continuous cast copper rod manufacturing plant of Finolex Cables is located in Goa and provides the key input of copper rods to its wide range of cables manufacturing units at Goa and Urse.
Meanwhile, Finolex Cables has already completed the acquisition of the share holding of its yet another joint venture partner in Finoram Sheets. Finolex Cables bought out 53.53 lakh equity shares of its joint venture partner thereby making Finoram Sheets its wholly owned subsidiary.