Investor Presentation August'19 - Sterlite Technologies
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Investor Presentation
August’19
© 2019-2020 Sterlite Technologies Limited
Safe Harbour
Certain words and statements in this communication concerning Sterlite Technologies Limited (“the Company”) and its prospects, and other statements relating to the
Company’s expected financial position, business strategy, the future development of the Company’s operations and the general economy in India & global markets, are
forward looking statements.
Such statements involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements of the Company, or
industry results, to differ materially from those expressed or implied by such forward-looking statements.
Such forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which
the Company will operate in the future.
The important factors that could cause actual results, performance or achievements to differ materially from such forward-looking statements include, among others,
changes in government policies or regulations of India and, in particular, changes relating to the administration of the Company’s industry, and changes in general
economic, business and credit conditions in India.
The information contained in this presentation is only current as of its date and has not been independently verified. No express or implied representation or
warranty is made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the information presented or contained in this presentation.
None of the Company or any of its affiliates, advisers or representatives accepts any liability whatsoever for any loss howsoever arising from any information
presented or contained in this presentation. Please note that the past performance of the Company is not, and should not be considered as, indicative of future
results. Furthermore, no person is authorized to give any information or make any representation which is not contained in, or is inconsistent with, this presentation.
Any such extraneous or inconsistent information or representation, if given or made, should not be relied upon as having been authorized by or on behalf of the
Company.
The Company may alter, modify or otherwise change in any manner the contents of this presentation, without obligation to notify any person of such revision or
changes.
Persons should consult their own financial or tax adviser if in doubt about the treatment of the transaction for themselves
These materials are, are being given solely for your information and for your use, and may not be copied, reproduced or redistributed to any other person in any
manner. The districonfidentialbution of this presentation in certain jurisdictions may be restricted by law. Accordingly, any persons in possession of this presentation
should inform themselves about and observe any such restrictions
© 2019-2020 Sterlite Technologies Limited 2
Contents
Topic Page No.
STL Overview 4
Unique Capabilities 11
The Future is Even More Exciting 16
Financial Priorities & Performance 23
Key Takeaways 28
Appendix 29
© 2019-2020 Sterlite Technologies Limited 3
STL Overview © 2019-2020 Sterlite Technologies Limited 4
STL at a Glance
1 Data Networks Innovator
Core Business
For the network creators
3
Innovation
Engines
System Based Solutions including
Connectivity, Network Services and Software
4
Customer
Segments
Communication
service providers
Citizen
networks
Large
enterprises
Cloud & content
providers
273 Patents 3 Innovation Centers 3300+ Employees
© 2019-2020 Sterlite Technologies Limited 5
Technology at the Heart of the Organization
Academia
3 2 273
Software
Innovation Patents
Delivery
Centres Globally
Centres
Centre of Excellence, Centre for Smarter Speciality Products Forums
Aurangabad Networks, Gurgaon Experience Labs
Core research on optical fibre for Technology and applied research on Experience Lab for Structured Cabling
high-speed connectivity smarter networks of the future Solutions
© 2019-2020 Sterlite Technologies Limited 6
Backed by Agile Delivery and Global Supply Chain
A GLOBAL PRESENCE B WORLD CLASS FACILITIES
Silicon to Fiber
State of the art integrated manufacturing plant in Aurangabad
Industry 4.0
Fully automated machines with Robotic Operations
Energy Efficient
Total gas management and pollution abatement systems
Clean Room
World class infrastructure with integrated HVAC systems
Market Presence Sales Offices Manufacturing Facilities
C FIBRE AND CABLE EXPANSION
50 33
30
22 15 Integrated Business Planning with Global Supply Chain
8
Doubling Capacity within an year of acquisition
FY’ 16 FY’18 Addition of Marquee Customers in Europe
Jun ’19 FY’15 FY’18 June’ 20
Optical Fibre Capacity (Mn fkm) Optical Fibre Cable Capacity (Mn fkm)
© 2019-2020 Sterlite Technologies Limited 7
And Strong Talent Profile in a Conducive Environment
Expertise within the Organization ranges across the Fields of
• Materials Engineering • Data Science & Analytics
• Photonics & Glass Science • Wireless Technology
• Program Management • Digital Transformation
• SDN/NFV • Industrial Automation
Hiring industry experts form global world-class organizations
Attracting young talent from Workforce Profile
Qualification Location Gender
Graduates and Post Graduates PhDs Others Overseas India Females Males
18% 16%
23%
3%
74% 84%
82%
8
Translating into Customer Wins and Deep Market Penetration
FY’19 Revenue by Customer Segment FY’19 Revenue by Geography Market Penetration
• Partner of Choice for key Telcos in
Citizen China India and Europe
Networks RoW 4%
7%
12% • Network creation partner for one of
the world’s largest greenfield rollouts
of 4G networks
Europe
Enterprise
25%
24% • More than 3x increase in exports
revenues in 3 years
Telcos
India
63%
65% • Breakthrough into two of the largest
Cloud & Content Providers
• Top 20 Customers account for ~75% of
the revenues
© 2019-2020 Sterlite Technologies Limited 9
Delivering Strong Performance and Value Compounding
5,087 1,164
+31% +35%
3,205 789
2,594 542
2,275 475
FY 16 FY17 FY18 FY19 FY 16 FY17 FY18 FY19
Revenue (INR Cr.) EBITDA (INR Cr.)
563 34%
30%
+54%
334 20% 21%
201
154
FY 16 FY 17 FY 18 FY 19 FY 16 FY17 FY18 FY19
PAT (INR Cr. ) ROCE
© 2019-2020 Sterlite Technologies Limited 10Unique Capabilities © 2019-2020 Sterlite Technologies Limited 11
Integrating our Unique Capabilities Across the Layers of Data Network
Bringing it all
together as…
E2E
Solution
Global Leader in the End to End Data Network Solutions
© 2019-2020 Sterlite Technologies Limited 12Solving Complex Problems of the Creators of Data Networks
Mobility Data Centre
Mobile Backhaul Data Centre
Private Networks Connectivity
Cloud Edge Networks
Telcos Companies Core
Rural Connectivity
Long Distance
Connectivity
Software
Access Enterprise Comm.
Citizen Large FTTX
Fixed Wireless
Network
Modernisation
Networks Enterprises Network Security
© 2019-2020 Sterlite Technologies Limited 13Through Innovative Offerings Across the Layers of the Data Network
AI Driven
Engagement Intellza
Affordable & Edge
Virtualization
Hyper Scale & Fast
Deployment
Algorithmic & End to End
Design
Hyper Scale Optical
Connectivity
© 2019-2020 Sterlite Technologies Limited 14Just to name a Few amongst Many!
Solution STL Algorithmic STL TruRibbon STL Intellza Solution (AI
FTTx Solution – Solution – Based)
Industry first end-to- 4x faster installation
end Fibre to the point compared to legacy Up to 70% increase in
Solution high-density fibre monetization revenue
solution
Application High Speed FTTx High capacity with extremely Increase customer
low latency retention
Customer Global Large Telco Hyperscale Cloud Company India Top 3 telco
© 2019-2020 Sterlite Technologies Limited 15The Future is Even
More Exciting
© 2019-2020 Sterlite Technologies Limited 16Industry is Witnessing
Major Tech & Capex Shifts
Massive Connected
5G Data Centres Everything Virtualization
has by cloud Enterprises Software
arrived companies embrace IoT disrupting
networks
Source: GSMA, Canalys, Company & Industry Estimates
© 2019-2020 Sterlite Technologies Limited 17
17These New Data Centric Networks are being Built on
1 2 3 4
Compute and
Vendor neutral
Denser Networks Deep Fiberization Open Source storage at the
and disaggregated
Edge
Access layer end points Fiber intensive network to Vendor neutral and Data Center coming closer
will multiply support latency and disaggregated networks to point of consumption
(5G and beyond) capacity requirements (hardware & software
getting decoupled)
© 2019-2020 Sterlite Technologies Limited 18Dense Fiberization Essential for New Age Networks
Tower Fiberization across the globe
70%
4Bn fkm 5G will require
deployed
25-30%
20-30x
the number of cells of a
conventional cellular network
Today For 5G
Majority of our map will
Fibre Deployment is
have 5G…We are doing
Key for 5G Rollout
1,000 fibre miles a month.
Source: McKinsey, Ericsson, CRISIL, Corning, RCR Wireless, Hans Vestberg, CEO Verizon Chuck Robbins, Chairman CISCO
Economic Times, Company Estimates
© 2019-2020 Sterlite Technologies Limited 19India at the Start of Network Creation Cycle
Fiber Kms per Capita
17x
1.7 Potential
India has
1.4
huge
fiberization
potential 0.1
USA China India
© 2019-2020 Sterlite Technologies Limited 20Creating Unique Opportunities for STL
Increasing addressable Market to $75bn
21Starting the Year with Highest ever Future Visibility Through Order Book
2.1x
10,516
1.6x
5,223 5,087
1.2x
1x 3,018 3,205
2,275 2,594
2,253
FY16 FY17 FY18 FY19
Revenues (INR Cr.) Order Book (INR Cr.)
© 2019-2020 Sterlite Technologies Limited 22Financial Priorities &
Performance
© 2019-2020 Sterlite Technologies Limited 23Financial Priorities under Strong Governance
Growth Earnings Capital Allocation
• Profitable Organic • Drive sustainable EPS • Focus on Free Cash Flow
Growth growth Generation
• EPS accretive strategic • Attain earning objectives • Sound Leverage and
acquisitions across economic cycles Working Capital Ratio
• Commitment to R&D • ROCE > 25% • Stated dividend policy with
and Talent consistent returns to
shareholders
© 2019-2020 Sterlite Technologies Limited 24Financial Performance (FY’18 Vs FY’19)
P&L (INR Cr.) FY18 FY19 Growth (%)
Balance Sheet (INR Cr.) FY18 FY19
Revenue 3,205 5,087 59%
EBIDTA 789 1,164 48% Net Worth 1,257 1,815
EBITDA % 25% 23%
Net Debt 884 1,733
Depreciation 182 195
Total 2,141 3,548
EBIT 606 969 60%
Interest 104 105 Fixed Assets 1,512 2,356
PBT 503 864 72%
Goodwill 74 107
Tax 133 278
Net Income (After Net Working Capital 555 1,085
334 563 68%
Minority Interest)
ROCE % 30% 34% Total 2,141 3,548
© 2019-2020 Sterlite Technologies Limited Note: The consolidated financials are inclusive of the performance of Metallurgica since the date of closure 25Debt Profile and Cash Flows
1,733
477
The business continues to
97 generate strong operational
cash flow
884 The increase in debt is on
855
account of organic &
inorganic investments done
579
for future growth
The benefits of these
investments will start getting
visible from FY20 onwards
Net Debt Operating Capex Dividend Investment Net Debt
31-Mar-18 Cash Flow 31-Mar-19
© 2019-2020 Sterlite Technologies Limited 26Increasing TAM and Evolving Business Profile
$75 Bn
Driven by double digit growth in profits with increasing ROCE profile
$20 Bn
$5Bn
$20 Bn
$5Bn 2019 & Beyond
Offerings : Global Data Network Solutions
$5Bn (Mobility, Access, Long Haul Connectivity and N/W
Modernisation)
2014-2017
Customers: Telcos, Internet Content
Offerings: Design, Build & Manage
2010-2014 (Optical Fiber and Cable, System
Providers, Citizen Networks, Large
Integration and OSS/BSS Software) Enterprises (Defence, Railway, Oil&Gas, etc.)
Offerings: Telecom Products
(Optical Fiber and Cable) Customers: Telcos, Defence, Citizen Asset Light
Networks
Customers: Telcos Expected Normalised ROCE: > 25%
Capital Intensity: Medium
Capital Intensity: High Expected Normalised EBITDA %: > 18-20% *
2017 Revenue : Rs. ~2600 Cr
2014 Revenue : Rs. ~1100 Cr 2019 Revenue : Rs. ~5100 Cr
* Depending upon the mix
© 2019-2020 Sterlite Technologies Limited 27Key Takeaways
STL uniquely placed
Increased end point Evolving Network to leverage these
consumption of data Architecture opportunities
STL provides Data Network Solutions focussed on mobility, access, core connectivity, network modernization & data
centre to its Telcos, Cloud & Content Providers, Large Enterprises and Citizen Networks
Increasing its addressable market to $75Bn by FY23 through new offerings, solutions, market penetration and
expansion
Delivery of high growth in the past while evolving the business model to suit the needs of the customers
Financial priorities of robust growth, sustainable earnings and prudent capital allocation
© 2019-2020 Sterlite Technologies Limited *Source: Industry Estimates 28Appendix © 2019-2020 Sterlite Technologies Limited 29
Growth in Demand of Optical Fiber has been Unabated across Centuries
World’s cumulative deployment of 1Bn fkm cable
Optical fiber cable deployment
has shrunk drastically from 38 years to 2 years
has outpaced the growth of
world economy by ~5x
13.9
38 years 5 years 3 years 2 years
1 Bn Fkm 2 Bn Fkm 3 Bn Fkm 4 Bn Fkm
2.9
1970-2008 2008-2013 2013-2016 2016-2018
1.3
Population GDP (World Optical
economy) Fibrer cable
20 years CAGR: 1997 to 2017
© 2019-2020 Sterlite Technologies Limited Source : CRU 30Global Demand for Optical Fiber Continues to Reflect Strong Annual Growth
Optical Fiber Cable Demand (Mn fkm )
511
493
65
58
North America 429
Europe 48 54
382 51
China
+16% 46 43
India
314
Others 40
41
263
246 40 279
218 34 281
37
189 32 244
173 38 29 216
29 30
140 27 156
20 25
11830 132
95 121
2624 99 25 29
75 25 20 80 87 20
20 12 15 33 42 15 16
6 9
17 23 9 9 7 4 81 84
3 7 53 57 62 65 72
3 29 32 35 37 41 48
22
CY 2005 CY 2006 CY 2007 CY 2008 CY 2009 CY 2010 CY 2011 CY 2012 CY 2013 CY 2014 CY 2015 CY 2016 CY 2017 CY 2018
Continuous growth of data driven by network evolution and changing consumption pattern reflecting strong demand for Fiber
Globally >4Bn kilometre cumulative fiber already deployed in the networks; replacement lifecycles building in
© 2019-2020 Sterlite Technologies Limited 31With Fiber reaching Closer to the End Consumer Creating a Multiplicative
Demand
Reduction in average fiber link by 10x, drives a 100x increase in fibers required to support the network
Network Densification
Fibers to cover 100 Mn connections
1,000,000 Access Today’s 4G Network Future 5G Network
100-200m
100
10,000 Metro 1KM
100
100 Long 20-25x
Haul
cell sites
100
Sub
1 Sea
10 10 10
0.1
• These cell sites will be connected through fiber
100,000 10,000 1,000 100 10 in the 5G network
Link Distance (Km)
Source: Corning Source: OFS 32
© 2019-2020 Sterlite Technologies LimitedSTL’s Complete Control over the Manufacturing Value Chain
High Tech: R&D Led Model
PREFORM
Restricted:
Increasing Barriers to Entry
Players < 10
STL is Centralized Platform for Glass/ Preform
present
across the Operational Excellence Model
layer FIBER DRAWING
Limited:
Players < 50
Global Platform for Fiber Draw
Application Oriented Solutions: Locally Presence Model
CABLING
Extensive Competition:
Cable Manufactures < 200
Global Platform for Fiber Cable Systems
• Glass Science • Fluid Mechanics • Wave Optics
• Chemical Engineering • Large scale Automation • High Temp processing ~ 2000 deg C
© 2019-2020 Sterlite Technologies Limited 33Strong Corporate Governance
Independent Directors on the Board of STL
Kumud Srinivasan Sandip Das
(Non-Executive & Independent Director) (Non-Executive & Independent Director)
• VP and Director of Non-Volatile Fab Manufacturing and • One of Asia’s most respected telecommunications professionals
Automation Systems at Intel Corporation and an acclaimed Chief Executive
• Has spent 30 years at Intel in US, leading multiple global • Ex-MD of Reliance Jio, Group-CEO, Maxis Communications and
functions, prominent ones being R&D for technology Hutchison Essar Telecom (now Vodafone), India
manufacturing, industrial automation and IoT for manufacturing • One of the founding members of private telephony in India and
facilities was part of the group of individuals that founded Hutchison Max
• She served as the President of Intel India from 2012 to 2016 Telecom in 1994
A. R. Narayanaswamy Arun Todarwal
(Non-Executive & Independent Director) (Non-Executive & Independent Director)
• Chartered Accountant & Management Consultant with over 35
• Partner of Todarwal & Todarwal, a Mumbai based firm of
years of industry experience
Chartered Accountants
• Member of The Institute of Chartered Accountants of India
• Member of The Institute of Chartered Accountants of India
• Provides consulting services in accounting, financial
• Has rich and varied experience spanning over three decades in
management and information technology across several
management consultancy, finance and audit
industry verticals
© 2019-2020 Sterlite Technologies Limited 34Sustainability & Governance | Positively Impacting Lives & the Environment
Overall impact since 2006
296,800+ 35,000 MT 99% Efficient 64,000+
Lives through Waste diverted Rakholi OFC Plant Lives through Water
Health away from Landfills received India’s 1st Conservation
initiatives ZWL Certification initiatives
457,800+ 7,600+
Lives through Over 830,000 Lives through Women
Education & Rural Lives impacted
development Empowerment
initiatives initiatives
© 2019-2020 Sterlite Technologies Limited 35Q1FY20 Financial Performance
P&L (INR Cr.) FY19 Q1FY20 Order-book standing at 9,853 Cr
Revenue 5,087 1,432
1%
EBIDTA 1,164 332
17%
EBITDA % 23% 23%
Depreciation 195 68
55%
EBIT 969 264 28%
Interest 105 46
PBT 864 217
Tax 278 73 Telcos
Enterprise
Net Income 563 141 Citizen Networks
Cloud Players
ROCE % 34% 28%
© 2019-2020 Sterlite Technologies Limited 36Corporate Structure & Shareholding Pattern
Corporate structure Shareholding pattern
Volcan Vedanta
investments 100%
Resources Plc.
22.7%
33.3%
Public
shareholders 53.8%
53.9% 54.0%
46.1%
14.2%
7.3%
9.1%
Sterlite Technologies Limited 5.6%
58.0% 100% 75.0%
Promoters & Promoter Group
Brazil JV China JV
Sterlite Tech s.p.a
FII
Other Institutional Holders
100%
Retail
Metallurgica Bresciana
Source: Company information; Karvy Shareholding Services; Data as of June 30, 2019
© 2019-2020 Sterlite Technologies Limited 37beyond tomorrow © 2019-2020 Sterlite Technologies Limited 38
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