Very few Indian technology companies have been able to match their global counterparts and cash in on the demand for transmission equipment from the telecom industry. But in a drastic shift from such trend, Pune-based Sterlite Technologies is not only growing big but is now aiming to break into the top 3 global players in the optical fiber domain. Dr. Anand Agrawal, CEO & Director, Sterlite Technologies shares more thoughts with TelecomTiger.

Q1) At a time when players would be apprehensive of initiating any major expansion plans due to ongoing meltdown, Sterlite has set its sight on the top 3 slot in terms of capacity for Optical Fiber & Cable. What was the belief behind this aggressive business move?

Ans: The telecommunication industry of India is one of the few to have weathered the recent economic slowdown and is undergoing a phase of rapid expansion and modernization, with the introduction of 3G and Next Generation Networks (NGN) imminent in the country. Besides, network operators and service providers are strongly focusing on roll-out out broadband services. Against this background, the telecom cables industry, which has seen appreciable growth over the past several years, is set for even stronger growth, going forward. In FY 2007-08, the industry grew by 50% over the previous fiscal.

In addition to India, high-growth markets like China and Russia are also rapidly gaining momentum, raising the expected fiber-to-the-home (FTTH) subscriber base to cross 100 million globally by the end of 2012. Sterlite Technologies is well positioned to capitalize on this opportunity. Being one of the most integrated fiber companies globally and the only company outside of US, Europe and Japan that makes its own glass, Sterlite Technologies has an inherent strength to constantly challenge theoretical limits in baseline manufacturing costs, giving the company a distinct advantage over competition.

Sterlite continues to be bullish on the optical fiber industry in Asia and globally. We would continue to leverage our global customer relationships and global presence, as well as the unique knowledge, expertise and infrastructural base created over the last 15 years in this business, to enhance our global market share in the growing optical fiber market.

Q2)  Is the expansion a move mainly to cater to overseas market or domestic market was also taken into consideration?

Ans: Overseas markets are and will remain an important focus for Sterlite Technologies. Export sales constitute over 25% of our net revenues. We have achieved tremendous success in key high-demand markets such as China, Eastern Europe, South East Asia, Middle East and Africa establishing a loyal customer base.

Sterlite is the market leader in India and continues to remain bullish on maintaining the highest market share for all our core product segments. The optical fiber industry is expanding globally. We constantly look to strengthen our existing markets, with an eye open for potential new high growth markets. The expansion of our fiber manufacturing capacity is in keeping with both, the India and overseas markets in mind.

Q3) Your product line banks more on fixedline medium than the wireless. But we know that even for broadband, wireless is perceived to be the way forward. Your view point.

Ans: It’s quite to the contrary actually. Wireless technologies like 3G and WiMAX, which are expected also to make broadband ubiquitous are in fact, fueling fiber demand.

The networks for these technologies would require the installation of transmission towers. Each tower, on an average, requires 3-4 km of fiber optic cable. Assuming that each fiber optic cable has an average fiber count of 20-30 fibers, this means at for ‘x’ km of fiber optic cable, there is a requirement of over ‘20x’ km of optical fiber. Having said that, there continues to be higher proportion of broadband subscribers within the internet subscriber base since 2008.

Further, by virtue of offering greater bandwidth and the ability to transmit voice and data reliably, fiber optic technology has rapidly attracted both individual and corporate users within the Indian market. Large organizations have been willing to invest in installing their own fiber-optic infrastructure to support specific needs. All in all, the growth of the telecom sector as a whole is an extremely positive sign and a sure indicator for the Company’s fiber optic business growth.

Q4) Sterlite’s growth till 2007-08 was phenomenal. But the last fiscal saw a slowed down growth. Is this trend to follow suit this fiscal as well?

Ans: The Company has shown sustained growth performance, backed by resilient balance sheet, low gearing, zero long term debt and compelling EPS growth with strong outlook.

In FY 2008-09, net revenue increased to Rs. 2,289 Crores (US$ 498 Million), compared with Rs. 1,686 Crores (US$ 419 Million) in FY 2007-08.  Sterlite’s EBITDA was Rs. 238 Crores (US$ 50 Million), compared to an EBITDA of Rs. 201 Crores (US$ 51 Million) in the last fiscal. This translates into a CAGR o