Aksh Optifibre Limited |
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Aksh Optifibre Limited (AOL) was
established in 1986 as Aksh India Pvt. Ltd. The present name was adopted in April 2000.
The company originally manufactured PVC and PE Insulated Specialty Cables and diversified
into Optical Fibre Cables in 1994. Initially, the plant capacity was 6500 CKM (Cable
Kilometers) per annum, which touched 33,222 CKM in 1998-99. In 1999, the company acquired
the OFC plant of CMI Ltd for Rs.822.12 lakhs., which increased the capacity by 17,136 CKM.
In order to integrate backwards, AOL started the manufacture of Optical Fibres with a
capacity of 150,000 fkm per annum with equipment supplied by Nokia of Finland.
The cable varieties manufactured by the company include Single-mode & Multi-mode
Cables, Duct Cables, Armoured & Aerial Cables, Indoor & outdoor Cables and Ribbon
fibre cables. The company is among the few to manufacture Proof Cables, used for the
manufacture of bullet proof articles.
AOL sold the PVC division to Icon Cables Ltd. for
Rs.350.81 lakhs in 1999.
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| Business |
AOL is one of the few optical fibre cable manufacturers that have backward integrated
themselves. The company has the Type Approval Certificate, which is required for
supplying cables to Department of Telecommunication Services (DOT). Supplies to DOT
accounts for 70 percent of the company's sales.
The company has also supplied cables to Railways, Private Telecom Operators and power
companies in the past.
AOL exports cables to western markets, U.K., Indonesia and Thailand. The plants are
ISO-9002 certified by Underwriters Laboratories, U.S. The Simplex and Duplex cables
manufactured by the company are listed with Underwriters Laboratories, US.
Competitor |
Capacity
In Ckm / Annum |
Aksh Optifibre
Ltd |
33000 |
CMI Ltd |
17100 |
Sterlite
Industries |
23647 |
RPG Cables |
17000 |
Sudarshan
Telecom |
12000 |
Himachal
Futuristic Communication |
11000 |
Birla Ericsson
Optical |
10710 |
Lucent
Technology Finolex Ltd |
10500 |
Gujarat
Optical Communication |
10080 |
ARM Limited |
9792 |
Uniflex Cables |
9180 |
BWL Ltd |
8570 |
HCL Naini |
5650 |
Optel Telecom |
4500 |
Surana Telecom |
4000 |
HCL Ltd |
700 |
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| Tie-Ups |
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AOL has a merger agreement with Telecords (India) Private Limited (TIPL), which
manufactures FRP Rods used as the main raw material to manufacture Optical Fibre Cable.
The agreement was to be effective from 1st April, 2000 subject to the approval
of the High Court of Jaipur.
The in-house manufacturing of FRP rods reduces the cost of OFC manufacture, since the
former accounts for 50 percent of the cost of the latter. The consideration for the said amalgamation is through stock swap in
the ratio of 167.4 equity shares of Rs.5/- each of AOL for every share of Rs.100 each of
TIPL. As a result of the amalgamation, additional 16,60,943 equity shares of Rs.5/- each
of Aksh will be issued to shareholders of TIPL.
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| Issue Proceeds |
The issue proceeds will be used to :
- Enhance the capacity of Optical Fibre Cables from 50,358 CKM
per annum to 81,000 CKM per annum.
- Increase the capacity of Optical Fibre from 1,50,000 FKM per
annum to 13,00,000 FKM per annum.
- Backward integrate into manufacturing of Quartz Preforms
with an installed capacity of 10,80,000 FKM per annum.
- Meet working capital requirements.
Fund Requirements |
Land,
Site Development and Building -For Optical Fibre and Quartz Preform
manufacturing |
100.00 |
Plant & Machinery
-Optical Fibre Cables
-Optical Fibre
-Quartz Preform
-Utilities
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499.95
1339.51
1059.88
205.00
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Misc.
Fixed Assets |
75.00 |
Long
Term Working Capital requirements/
General Corporate Purposes |
316.00 |
Contingencies |
345.27 |
Issue
Expenses |
183.39 |
Total |
4124.00 |
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The company has taken a term loan from ICICI for
Rs.687 lakhs.
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Promoters |
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AOL was originally promoted by two families - the Choudharis and the Navanis. The
former consisted of three brothers - Mr. Bharat S. Choudhari, Dr. Kailash S.Choudhari and
Mr. Sailesh S. Choudhari. Mr.H.V.Navani and his son Mr. Sanjeev Navani were from the
Navani family.
But all the members of both the families
have transferred their interest in favor of Dr. Kailash S. Choudhari, who is now the sole
promoter. He has over 15 years of experience in the industry.
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Financials |
Key Financials |
| Particulars |
FY96 |
FY97 |
FY98 |
FY99 |
FY2000 |
| Total Income |
6642.62 |
3522.05 |
2895.76 |
4623.03 |
10182.73 |
| PAT |
724.44 |
(93.53) |
(407.91) |
(306.26) |
534.39 |
Projections |
| Year Ending March 31 (lakhs) |
2001 |
2002 |
2003 |
2004 |
| Total Income |
1268 |
1811 |
2463 |
2463 |
| PAT |
82 |
111 |
197 |
202 |
| Reserves & Surplus |
491 |
579 |
749 |
923 |
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| High
Priced |
After FY96, the company earned a profit only in FY2000. The EPS for last year was
Rs.4.37 and the RONW was 22.87 percent. The average industry P/E is 13.5 (Industry:Cables
- Capital Market May 14, 2000). At an EPS of Rs.4.37 and the issue price of Rs.60/- a
share, the P/E of the company is 13.73, which is higher than the industry average. This
leaves little scope for the price to appreciate.
However, the company's business is well-established and there is good scope for further
rise since the demand for Optical Fiber Cables is expected to rise. Overall, the issue
price is high and one needs to keep this in mind before investing.
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