Sterlite Optical Technologies to acquire Power Transmission Conductor Business

Sterlite Optical Technologies Ltd has announced that the Board of Directors of the Company at its meeting held on August 21, 2006, would acquire the Power Transmission Line ("PTL") Division currently owned and operated by Sterlite Industries (India) Ltd ("SIIL"). The Company will assume all assets and associated liabilities of the PTL division for a net cash consideration of Rs 1485.10 million. The PTL division was Independently valued by Ernst and Young. The acquisition is subject to the necessary approvals of the shareholders of Sterlite Industries (India) Ltd and other statutory and regulatory authorities, which by law may be necessary to effect the sale.

SIIL´s PTL division is engaged in the business of manufacturing power conductors and has its manufacturing facilities at Silvassa (Dadra & Nagar Haveli) and Karanjwane, Pune. It is India´s largest manufacturer with a capacity of 75,000 MT per annum. It is a market leader with approximately 45% share in the high voltage power conductors market in India. For the year ended March 31, 2006, the PTL division had net revenues of Rs 5860 million and profit before tax of Rs 480 million.

With this acquisition, the Company is uniquely positioned to cater to buyers in the telecom and power sectors, both in India and overseas. SIIL´s PTL division´s rich experience in the power sector, which spans about a decade, would provide the Company an entry into the fast growing power sector and enable it to effectively capitalize on the scale benefits obtained through this acquisition. There exist intrinsic similarities between the power and telecom sectors, as utility Companies are the primary buyers. Additionally, there are operational, sourcing and selling synergies that can be effectively leveraged.

Said Mr. Pravin Agarwal, Director, of the Company, "The acquisition of the Power Transmission business will result in several synergies including a shared culture of quality performance, similarities in business sourcing and a powerful complementary knowledge set in the telecom and utilities sector."

Source : Equity Bulls

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