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Aksh to increase optical fibre capacity

India's second-largest optical fibre cable maker, Aksh Optifibre Ltd, plans a fourfold increase in its fibre making capacity by March 2002 to meet a strong order book, a company official said on Friday.

Aksh, which had about 40 per cent of the Indian market for optical fibre cable last year, is already expanding fibre optic drawing capacity to 1.3 million km by the end of this month from 0.15 million, nearly a tenfold increase.

"Next year we will be going for another expansion, four million kilometre of fibre due by March 2002 and 200,000 km of fibre reinforced plastic rods," N K Ahuja, Aksh's vice president for finance said.

In April, Aksh completed an expansion that increased its capacity to make fibre reinforced plastic rods, a raw material, to 300,000 km. FRP rods are sometimes added to optical fibres to strengthen a cable, depending on a customer's needs.

The projects will be funded by internal accruals and some medium-term debt and take Aksh's fibre making capacity to 5.3 million km by March next year.

Optical fibre cables are increasingly being preferred to traditional copper ones due to their greater capacity to carry data. The cable is a collection of thin strands of glass or plastic capable of transmitting voice, video and computer data housed in protective material to withstand stress.

"We expect to do more than a million (fibre km) this year (2001-02 - April/March) and about 2.5 to three million (fibre km) in 2002-03," Ahuja said.

Sales totalled about 185,000 fibre km last year.

Ahuja estimated Aksh's outstanding order book at $215 million, to be executed over the next three years.

The opening up of India's domestic telecoms services market to private companies after decades of government monopoly has set off a scramble to set up a countrywide broadband network.

Ahuja estimated the domestic market to be 2.2 to 2.5 million km in 2001-02 (April-March), rising to 2.7 million in the next.

COSTS TO DECLINE

The commissioning of its fibre-making capacity will reduce costs and boost profits, he said. Last year, Aksh had capacity to meet only half its needs for fibre and bought the rest.

"The cost of fibre comes down from $55-60 per km, (the procured cost), to about $25 per km," he said.

The company was constrained last year by inadequate supply of optical fibre, without which sales would have increased to about Rs 2.25 billion in the year to March 2001, he added.

Aksh reported net profits of Rs 191.2 million on net sales of Rs 1.4 billion in the year to March.

Its profits in the last year to March were more than twice what it had forecast in an IPO document in July 2000 due to an increase in prices of optical fibre cable resulting from a world-wide scarcity.

The increase in cable prices benefit companies like Aksh which draw their own fibre and are protected from fluctuations in raw material prices through long-term supply contracts.

Aksh's shares ended up eight per cent at Rs 113.70 on the Bombay Stock Exchange.

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