Sterlite Optical Trips On Order Denial

Shares of Sterlite Optical Technologies (SOTL) declined on the Bombay Stock Exchange (BSE) today, after the company denied it had bagged an order worth Rs 100-125 crore.

The stock slipped 2.64 per cent to close at Rs 73.90 on the BSE, amid a volume of 4.51 lakh shares.

In four sessions between August 20, 2002, and August 26, the SOTL scrip rose 19.8 per cent to Rs 75.90, from its 52-week low of Rs 63.35, on reports that the company had bagged an order worth Rs 100-125 crore from a leading domestic telecom major.

SOTL has been on a sustained downtrend on the bourses, and has been among the worst hit over the last few months, following depressed market conditions for optical fibre and optical fibre cables in the domestic as well as international markets.

 

Further, the company has said that a sustainable recovery seems unlikely in the near future. Prices of optical fibre and optical fibre cables continue to be weak.

The drastic reduction in Bharat Sanchar Nigam's (BSNL) jelly-filled telephone cables' tender quantity to 50 per cent of last year's requirement has also resulted in a reduced market for optical fibre cable makers.

Prices of optical fibre cables, too, are much lower than that of previous years. In the domestic market, the demand originates from public sector companies like BSNL, Mahanagar Telephone Nigam (MTNL), Power Grid Corporation of India (PGCIL), Railways and Gas Authority of India as well as from private sector groups like Reliance, Bharti, Tatas and Hughes.

Exports, too, have nearly ground to a halt following a downturn in the US telecommunications industry, which was their main market for optical fibre and optical fibre cables.

Global optical fibre prices have also crashed over the last few months, following the depressed state of the US telecom sector.

Following the difficult market conditions abroad as well as back home, the financial performance of SOTL has been disappointing for the recently concluded quarter.

For the first quarter ended June 30, 2002, SOTL registered a net loss of Rs 14.09 crore, as compared to a net profit of Rs 67.68 crore in the corresponding period of the previous year.

Sales also declined by 83.9 per cent to Rs 29.72 crore, from Rs 184.65 crore in JQ 2001. As on June 30, 2002, the promoter's holding in SOTL was 35.6 per cent, while the public and institutions held 39 per cent and 15.33 per cent, respectively.