STL Eyes Mitigation Of EU Dumping Duty Aims To Be Among Top 3 Optic Fibre Cos Globally

(MENAFN- Live Mint) Sterlite Technologies Ltd is evaluating challenging the anti-dumping duty levy by the European Commission on imports of optic fibre from India, even as it looks to improve efficiency at its manufacturing facility in Italy that is supplying to the European market, albeit at higher costs than India.

“It is provisional (duty) and we're working on ways to mitigate or minimize this,” managing director Ankit Agarwal told Mint in an interaction. He did not share details of the procedures but said that the discussions with the authorities were ongoing.

“We are very well set up for all our requirements in Europe through our Italian facility. We're working on making it more cost competitive, so we are confident that we will not lose any customers. As we continue to scale up, we plan to get and increase our market share in Europe,” he said, adding that STL was the largest provider of optic fibre cables in the UK market which was excluded from the impact of the duty.

The European Commission Directorate General for Trade in June proposed to levy anti-dumping duty-between 8.7% and 11.4%-on nearly a dozen Indian optical fibre cable makers. The companies included Birla Cable Ltd, Universal Cables Ltd, Vindhya Telelinks Ltd and STL, among others, while exempting imports from HFCL Ltd and its subsidiary HTL Ltd.

Agarwal said that the Vedanta group backed company still aims to become one of the top three globally in the optic fibre manufacturing space over the next few years on the back of growth opportunities in the markets of Europe and the US, which can amount to about $10 billion, from optical connectivity products as well as optic fibre.

Fibre demand is expected to pick up in the US in the coming financial year with the initial set of funds coming in from the $42-billion Broadband Equity, Access, and Deployment (BEAD) programme, aimed at providing underserved and rural areas with internet access in the US.

“We've already made some inroads in the US, securing wins with our connectivity solutions. That's a positive sign. The early funds from the BEAD programme will start getting released in the next two quarters, which will be beneficial for us,” Agarwal added. The company opened its optic fibre and cable manufacturing facility in South Carolina last year with an investment of $56 million.

India's growing data centre market that is expected to triple to 3 GW in the next five years will also give its enterprise business a push with about 25% of the company's revenue expected to come from these segments in the next three years, up several notches from 5-7% that it contributes at present. To cater to graphics processing units or GPU-heavy data centres' demand, it introduced a comprehensive AI data centre portfolio which includes high fibre density optical cables, connectivity, and interconnect solutions.

Supplies of optic fibre cables to engineering, procurement and construction companies in India, and supplies of optic fibre to other cable makers-both segments will also provide it a $15-billion opportunity within the Indian market, the top executive added.

Agarwal added that the company's focus will be on generating cash from the current Ebitda levels of ₹1,000 crore, which, in turn, will be used to reduce leverage. Net debt stood at ₹2,021 crore as of the quarter ended June, while revenues for the quarter were at ₹836 crore with a ₹57 crore loss. He noted that capital expenditure had reduced to ₹150-200 crore and is expected to go down further. The company's order book stood at ₹9,883 crore as of the quarter ended June.

STL was trading at ₹121.85 on BSE, down 1.1%.

STL is unlikely to look at further sources of funding after having raised ₹1,000 crore in April through Qualified Institutional Placement (QIP) in April this year.“After the QIP, our interest costs have reduced by ₹50-70 crore. With ₹1,000 crore Ebitda, we'll be generating significantly more cash. The goal is for the business to generate cash, which will help us further reduce leverage,” he added.

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