Top 10 : Rank 4: Sterlite Industries

Sterlite

Industries Ltd, the leader in Indian telephone cable market, put up an

impressive performance to reach a total telecom cable sales of Rs 920 crore, an

increase of 63.7 percent over the last year’s figure of Rs 562 crore,

according to Voice & Data estimates. This was about 34 percent of the total

turnover of Rs 2,706 crore that the company registered in 1999-00. This figure

is for April 1999 to March 2000, though the company’s official financial year

is from July to June. The company did a business of about Rs 507 crore in

telecom cables in the six months from October to March.

According to our estimates, its JFTC sales grew by about 30

percent and the OFC sales grew by about 160 percent in value terms. With the

long distance opening up and the local basic service market expected to see the

second round of action, it is bullish about sales of its telecom cables,

especially OFC.

Last year was a year of transformation for Sterlite. The

company appointed Arthur Andersen to suggest its restructuring strategy. Based

on its recommendations, its board decided to demerge the telecom business into a

separate company to provide total telecom solutions, leveraging on its twin

strength of telecom cables manufacturing and strong project management skills.

The company also decided to look beyond Indian boundaries for its telecom

business.

The company is doubling capacity to three million fibre

kilometres by financial year 2001 and 10 million fibre kilometres by 2005. This

is of immediate concern to the company because in 1999-00, it was not able to

respond to strong export queries from Singapore due of lack of capacity and

excessive domestic demand. Sterlite remains the #1 supplier to the DoT.

Recently, the company bagged an order of Rs 750 crore from DTS to supply telecom

cables. This is the highest order given to any company. It used to hold less

than 20 percent market share (still impressive in an industry with about two

dozen players) till the previous year. Now it holds about 22 percent market

share.

Sterlite has identified three areas in telecom to focus on.

The first and most obvious expansion will be in turnkey

infrastructure solutions. Though, because of its manufacturing expertise, the

company will have an upper hand in price, it will have to face strong

competition in this segment from companies like Punj Lloyd, HFCL, L&T and

TCIL, which is now refocusing on India.

The company is also planning to enter into bandwidth

business. Though it is yet to publicize its entry strategy, some industry

observers believe it will enter as part of a consortium, which will also have an

experienced service provider and a Right of Way owner as partners.

The third area is telecom software. Though not too

synergistic with its other businesses, this is a segment where most Indian

companies have made money. The company may use this as a fast cash earner to

fund other ambitious capital-intensive telecom projects.

Sterlite has entered into a strategic alliance with Alcatel to address

telecom opportunities in India. According to company sources, it is in

negotiation with at least one other global major for a possible alliance.

Sterlite dreams of being a technology-driven leader in optical communications

and a total solutions provider with an expected turnover of over Rs 3,000 crore

by 2003.