Sterlite Technologies Ltd (STL), with business interests in the telecom and power sectors, has embarked upon an expansion programme that will help double its annual turnover to Rs 5,000 crore over the next three to four years. The company recently took possession of a 50-acre plot of land in the Shendra industrial estate at Aurangabad and is actively examining a plan to embark upon a project to manufacture LCD glass and subsequently LCD panels. In an interview with Business Line , Dr Anand Agarwal, CEO of STL, spoke on these proposals.

You are in the midst of capacity expansion for your optical fibre business. Can you elaborate on this?

On the optical fibre front, we manufacture the glass as well as draw fibre. Recently, we ramped up capacity at our plant at Waluj near Aurangabad to make 20 million km of glass from an existing capacity of 12 million km.

We can also produce 12 million km of optical fibre at Waluj and are setting up a second greenfield facility at Shendra (in the same vicinity) to draw another 4 million km of fibre. This should start operations by May or June. The capex for glass capacity addition is Rs 100 crore, and for the two new fibre units at Shendra and China, it is Rs 150 crore.

What are your plans in China?

The 75:25 joint venture between STL and Tongguang Communication will address the local market where we are currently selling 4 million km of fibre. The new plant, which will become operational in the first quarter of 2012, will have installed capacity to draw 4 million km of optical fibres and the glass for this will be come from India. Our share of investment in China is $15 million.

The total demand for optical fibre in China is 50 million km, so as of now we have around 8 per cent market share. If we can grow this to 8 million km, we could consider setting up a glass manufacturing facility there as well.

You recently acquired 50 acres of land at Shendra. What do you propose to set up there, and raise the funds for what I understand is an investment of over Rs 9,500 crore?

(At this location) we are evaluating a plan to make LCD glass (only four people make it globally) initially and then panels. We made an application to the Central Government around nine months ago as these projects qualify for grants under the semi-conductor policy. We are also in discussions with the State government for benefits.

The investment will be phased over 10 years, and 25 per cent will be through grants. The rest will be raised through initially internal accruals and debt. After the first few years, the unit will become self sufficient and generate its own revenues.

STL has been awarded the contract to develop 765kV transmission system on Build, Own, Operate, Maintain (BOOM) basis. Will you elaborate on these and the progress made till now.

We have three projects assigned to us. Work on the North East to East region began a year ago and the system will get operational in April 2013. We have been chosen vendors to develop system in Chhattisgarh, Madhya Pradesh and Maharashtra. The SPV to execute these has been established by the Government and we will take it over in the next three months. It will take another six months to do the financial closure. The projects will be commissioned three years after taking over the SPV.

The total value of these three projects is about Rs 4,000 crore, and the debt-equity ratio will be 75:25.

What is your guidance for the medium term and what will be the growth drivers?

We want to double the top line by 2014. Our fibre business accounts for around 40 per cent of the turnover, and the rest comes from the power business. We are doubling the first from 9-10 million km to 20 million km and growing conductors from 120,000 tonnes 200,000 tonnes by 2013. From FY 13, revenue from infrastructure projects also comes in. These will be the fundamental drivers to take us to annual revenues of Rs 5,000 crore.

Related Topics
comment COMMENT NOW