Spectre Of Dot Action Breaks Optic Fibre Cable Units Cartel

The cartel among optical fibre (OF) cable makers supplying to the department of telecommunications (DoT) has been decisively broken, with the companies quoting prices that are 40 to 50 per cent less than those quoted in a tender that opened in May last year.

Sources said the prices quoted in the tender have been driven to historic lows since companies fear that they might be blacklisted by DoT in future tenders. Last year, the department had scrapped a tender for 22,000 km of OF cables after 16 companies quoted prices in a very narrow price band. DoT then initiated an enquiry into what it felt was a clear case of cartelisation. However, a later tender brought down prices by about 25 per cent.

 

The current drop in prices has been so sharp that the department will now pay only Rs 130 crore for the total tender instead of the Rs 200 crore it had expected to. The prices have shocked the 16-company OF cable industry, with some companies feeling that the quotes are below raw material costs.

In the 22,000-km tender which opened last fortnight, Vikas Hybrid Electronics Ltd (VHEL) has won an order to supply 1,250-km of 24-fibre OF cable at a price of Rs 84,500 per km. The Rs 11.39 crore order has been secured at a price less than half that of the previous years tender.

Cable major Sterlite Industries has won a Rs 5.83 crore order for supply of 640 km of 24-fibre OF cable and Bhillai Wires a Rs 5.56 crore order for a 610 km order.

Only three companies have won the 24-fibre OF cable order as prescribed in the tender norms though all 16 companies participated in it. The total price of the 24-fibre OF cable supply works out to Rs 22.79 crore.

Ten companies have won orders in the 12-fibre OF cable category to collectively supply 12,500 km of the OF cable. Prices in this category too have dropped 40 per cent from about Rs 97,000 per km to a little over Rs 56,000.

Sterlite has bagged a major chunk of the order (2,500 km) worth some Rs 15 crore. The total size of orders on the other nine companies for supply of 12-fibre OF cable is estimated at Rs 60 crore.

Following the trend of southward prices, quotes in the six-fibre OF cable category also dropped 40 per cent. In this category, Birla Ericsson has quoted the lowest price (Rs 42,324 per km) compared with an order price of about Rs 70,000 last year.

However, since the company has said it can supply only 750 km of the cable, its order size is just Rs 3.37 crore compared with orders ranging between Rs 5.5 crore and Rs 5.67 crore to be placed on five other companies: Optel Telecom, VHEL, Sterlite, CMI and Aksh India.