Institute of Chartered Financial Analysts of India (ICFAI) University 2006 Certification Finance Security Analysis - II - Question Paper

Dr. Anand Agarwal, Director and Chief Executive, Sterlite Optical Technologies Ltd is a B. Tech (Metallurgical Engineering) - IIT Kanpur. He also holds a MS & Ph.D (Materials Engineering) from UC, Berkeley (USA) -Rensselaer Polytechnic Institute (USA). In 1995, he was hired by Siemens Ltd as Assistant Manager (Quality Assurance), while pursuing Ph.D in the US. Later the identical year he joined Sterlite optical Technologies in Aurangabad in 1995, when their optical fiber project was starting. He was promoted to Chief Operating Officer, Optical Fiber Operations in 1999 and moved to Atlanta, USA in late 2001 to setup and manage international operations for an optical fiber cable facility, setup of an R&D facility for the fiber business and manage international business of the company. In July 2003, he was appointed as CEO of the company and moved back to India in 2004.

Sterlite’s Segment-wise Performance

Optical Fiber Business

Company is the only integrated manufacturer of optical fiber in the country with a manufacturing capacity of four Million kilometer (km) and has a strong focus on improvement of productivity and reduction in cost. This has given the Company with a competitive cost advantage compared to other players in the global market. Production of optical fiber during the year was 1.86 Million kilometers compared to 1.07 Million kilometers in the previous year. Production of fiber optic cables aggregated 0.72 Million fiber kilometers (FKM) compared to 0.43 Million fiber kilometers (FKM) in the previous year. Company continues to be the largest manufacturer of optical Fiber products in India with the share for Fiber Optic Products in India of about 60%.

Copper Telecom Cables Business

Restart of the Copper Telecom Cable business has been a different important feature of the company’s performance this year. Total sales of Copper Telecom Cables this year were Rs. 1,915.21 Million for supplies of 2.85 Million conductor kilometers (CKM) of Copper Telecom Cables. This was mainly to BSNL and MTNL. This sales revenue amounted to 51% of the total sales of the Company during FY 2004-05. Company's estimated market share for Copper Telecom Cables in India to be 25%.

Company has achieved a significant market share in China for its uncabled Optical Fiber. Company was the exclusive supplier of 754km of Fiber Optic Cables for an ONGC Videsh Project being executed in Sudan and of Fiber Optic Cables for Government of Assam's e-Governance Project (Pilot Phase). The total current order book figure is Rs.300 crore. The domestic demand for optical fiber cables has been going up steadily. The company has received orders for jelly-filled copper cables from SAARC countries and Africa recently. The company has also made strong inroads into the Chinese optical fiber cables and has captured seven per cent market share there. It is expected to make a significant breakthrough in Taiwan and Indonesia also shortly. Both optical fiber and copper cables have witnessed rise in prices in latest months, industry insiders observed. Sterlite Optical Technologies Ltd. has been awarded preferred supplier status by Siemens, Germany, 1 of the world largest electronics and communication companies. Siemens audited SOTL’s optical fiber and optical fiber cable facilities in Auranagabad and Silvassa based on stringent international approval standards and successful execution of orders to Siemens satisfactions. This preferred supplier status by a major global telecommunication companies should act as a fillip to SOTL’s growing export market.

Earning:   Approval pending.