Sterlite Technologies Limited

Mihir Modi

CFO, STL

Pankaj Dhawan

HEAD IR, STL

Ankit Agarwal

MD, STL

37%

h the 2nd Quarter of last year, or even if we compare it to FY21, FY21, the gross margins were at 37% and current quarter we are at 37.6%. So, technically speaking, we have seen the business come bac

37.6%

even if we compare it to FY21, FY21, the gross margins were at 37% and current quarter we are at 37.6%. So, technically speaking, we have seen the business come back in terms of margins. However, the

rs,

k in terms of margins. However, the other expenses continue to increase, so the last couple of years, we have seen the expenses actually double for us. So, when do we see these costs, either stabilize

37 million

he second question is, in our presentation, we have given the OFC cable volume at somewhere 36 to 37 million, but we were of the understanding that currently we are at 33 million optical fiber cable capacit

33 million

e volume at somewhere 36 to 37 million, but we were of the understanding that currently we are at 33 million optical fiber cable capacity so just wanted to clarify on this number as well. Ankit Agarwal: S

Rs. 429 crore

ngs, one, I think overall, on the other expenses, if you look at it, we have increased from about Rs. 429 crores to about Rs. 478 crores. And as I said, some portion, at least as has come in terms of, you know

Rs. 478 crore

l, on the other expenses, if you look at it, we have increased from about Rs. 429 crores to about Rs. 478 crores. And as I said, some portion, at least as has come in terms of, you know, increasing in terms of

5.5 million

hat the major investment is in the U.S. So, that capacity will come in to Q3 in terms about 5 and 5.5 million capacity. And we have done marginal capacity increase in India in terms of cable improv

4 million

also again very small capacity in Italy. So, combination of all this has got us to add about 3 to 4 million currently and then this balance 36 to 37 to about 42 which we had needed will come from the U.S.

25%

ly, it's quite a positive development for us, where we got the opportunity to acquire the balance 25% stake from our JV partner. So, with this, then it will become a wholly owned Indian company and a

42 million

with our strategy, Nirav about what we said about leading with cable. So, as we move towards now 42 million of cable very soon, it's very important to be fully secured in our own manufacturing of fiber. So

14 million

e ownership, we will be scaling up our China operation. So, full capacity is close to about 12 to 14 million fiber kilometers, so we will scale up our fiber operations, and make sure that we have sufficient

“So, now with this complete ownership, we will be scaling up our China operation.”

“So, all of that technically will be moved, will be used for the international markets rather than China.”

“And whether you look at Indian operators, you look at BharatNet or defense, all of the areas we do expect pretty robust spending on the digital infrastructure, probably for the next four to five years.”

“So, overarchingly linked to our point on capital allocation, majority of our investment almost all of it will be focused in terms of our optical business.”

“In terms of the next year, currently, we foresee in the range of about Rs.”

“So, this is broadly for current year next year.”

“So, currently, while we create this balance, our target still at the company level is probably to settle back to the Rs.”

“So, as we continue to guide, we do believe Quarter 3 and Quarter 4 will be better.”

“And certainly into Q4 we have confidence that we will be moving towards the better margin profile, particularly of the optical business.”

“So, the small point what we can make sense is that from Quarter 4 onward will be the normalized quarters.”

Ankit Agarwal

17

Saket Kapoor

7

Moderator

6

Nirav Dalal

4

Sunny Gosar

4

Nirav Dalal

A couple of questions from me, first is on the other expenses. So, you did mention that logistics cost is increasing in absolute terms, and hence, we have seen the increase in other expenses. But if one looks at the gross profit margin, the gross profit margin has improved for us. So, if we compare it with the 2nd Quarter of last year, or even if we compare it to FY21, FY21, the gross margins were at 37% and current quarter we are at 37.6%. So, technically speaking, we have seen the business come back in terms of margins. However, the other expenses continue to increase, so the last couple of years, we have seen the expenses actually double for us. So, when do we see these costs, either stabilize or start to decline? That is question number one. And the second question is, in our presentation, we have given the OFC cable volume at somewhere 36 to 37 million, but we were of the understanding that currently we are at 33 million optical fiber cable capacity so just wanted to clarify on th

Ankit Agarwal

So, there are a couple of things, one, I think overall, on the other expenses, if you look at it, we have increased from about Rs. 429 crores to about Rs. 478 crores. And as I said, some portion, at least as has come in terms of, you know, increasing in terms of sheer volume that we spoke of has increased into Europe and U.S. and some of those costs. We have also had some cost particularly in this quarter related to legal and consulting fees, etc, which we believe is one time. So, I do believe looking at this, we need to break it out, our sales will continue to grow, as I said, even in terms of our export market segments so to that extent, that's something we are mindful of. But some of the other costs will start tapering down towards, you know, Q2 and Q3. So, I think it'll be a combination of, you know, both factors. In terms of the capacity what we have shared also earlier is that the major investment is in the U.S. So, that capacity will come in to Q3 in terms about 5 and 5.5 millio

Nirav Dalal

So, just staying on the other expenses -- just one is what were these legal expenses? And what is the quantum of that? And second is what would be logistics cost as a percentage of revenues for us. And if we could get a QoQ and YoY number?

Nirav Dalal

And just lastly, in terms of the China subsidiary, I think we are buying it out, does that mean that we would not be doing any business in China and what about the capacity there? If you could just clarify on that?

Ankit Agarwal

No, actually, it's quite a positive development for us, where we got the opportunity to acquire the balance 25% stake from our JV partner. So, with this, then it will become a wholly owned Indian company and absolutely no issues that we foresee in terms of running the operations. And it's all aligned with our strategy, Nirav about what we said about leading with cable. So, as we move towards now 42 million of cable very soon, it's very important to be fully secured in our own manufacturing of fiber. So, now with this complete ownership, we will be scaling up our China operation. So, full capacity is close to about 12 to 14 million fiber kilometers, so we will scale up our fiber operations, and make sure that we have sufficient fiber for our global cable requirements.

Nirav Dalal

So, all of that technically will be moved, will be used for the international markets rather than China. Is that the correct assumption?