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Sterlite Optical setting up plant in India -- Shifting headquarters to US

Our Bureau

MUMBAI, Dec. 14

IN a two-pronged move to grow its international presence, Sterlite Optical Technologies Ltd (SOTL) announced today that it is setting up a greenfield 10-million km optical fibre plant in India and shifting its headquarters to the US.

SOTL is setting up the plant at a tax-free zone, unnamed as yet by the company, at a cost of $250-300 million in two phases. In the first phase, five million km will come on stream by 2002.

With a demand estimated to grow from 60 million fibre km to 240 fibre km in four years, SOTL is looking to position itself as a global player alongside the world's five players in optical fibre -- Corning, Lucent, Alcatel, Pirelli and Sumitomo.

Currently, SOTL has one per cent share in the overall global optical fibre market. It plans to carve out a market share of 5-7 per cent.

The move to shift its head office to the US is to maintain its export growth. Currently, 90 per cent of SOTL's optical fibre and optical fibre cable is exported, Mr Anil Agarwal, Chairman of the Sterlite group, said.

``It is very important for us to stay in contact with our customers,'' Mr Agarwal said, explaining why the company is looking at the possibility of setting up office either in Atlanta or New York. Besides, the company's presence in the US would augur wel l for its proposed move into the area of photonics. For its photonics equipment business, SOTL has engaged a leading international consultant, Mr Ashok Panjwani, Director (Telecom), said.

With its proposed decision to move base to the US, the company is also looking at the possibility of an overseas listing, Mr Agarwal said.

``We have the technology in the area of optical fibre. We have a huge research team which has been working in this area,'' Mr Agarwal said. Currently, SOTL spends 12 per cent of its revenue on research and development. With an estimated turnover of $300 million, its R&D spend for the next year is expected to be $36 million.

The company is also examining the prospects of acquiring small but technology-rich outfits overseas.

The proposed expansion in its optical fibre capacity will enable SOTL to offer larger volumes to strategic international customers on a long-term basis.

SOTL will also be in a position to further consolidate its market leadership in the domestic market, which is expected to sustain the high 70 per cent CAGR over the next five years.

Currently, SOTL's optical fibre capacity is two million km and is expected to increase to three million km by January.

Mr Panjwani said the expansion will be funded 75 per cent through internal generations and the rest through external financing. ``We want to keep the debt portion low. That is the reason why we are expanding in phases,'' he said.

Picture: Mr Anil Agarwal, Chairman, Sterlite Optical Technologies Ltd (right), with Mr Ashok Panjarmi, CEO, at a meeting in Mumbai on Thursday.

Picture by Shashi Ashiwal