Sterlite Technologies Limited · NSE:STLTECH

Sterlite Technologies — Investor Presentation (May 2018)

47 slides from Sterlite Technologies's investor presentation, May 2018

  1. Slide 1: Investor Presentation – May 2018

    Investor Presentation – May 2018 1

  2. Slide 2: Disclaimer

    Disclaimer 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

  3. Slide 3: Contents

    Contents Topic Page No. Sterlite Tech Overview 4 Industry Dynamics 9 Fibre at the Core of Networks 14 Products Business 21 Services & Software Business 27 Financials 31 Strategic Direction 36 Appendix 41 3

  4. Slide 4: Sterlite Tech Overview

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  5. Slide 5: Sterlite Tech Designs, Builds and Manages Smarter Networks

    Sterlite Tech Designs, Builds and Manages Smarter Networks CUSTOMERS GLOBAL SERVICE SMART CITIES RURAL LARGE ENTERPRISES PROVIDERS BROADBAND e.g. DEFENCE BUSINESS DESIGN, BUILD AND MANAGE SMARTER NETWORKS SYSTEM OPTICAL TELECOM PRODUCTS INTEGRATION OFFERINGS SERVICES SOFTWARE 5

  6. Slide 6: End to End Capability to Deliver future Data Network Needs

    End to End Capability to Deliver future Data Network Needs Optical System Fibre Future Data Network Stack Silicon Integration System Integration Software Layer Network Layer Passive Layer (Fiber relevance increasing) Glass Fiber Software Preform Cables  Network capex shifting towards Fiber Complete

  7. Slide 7: With Technology at the Core of Our Offerings

    With Technology at the Core of Our Offerings Optical Fiber is a very specialized Technology Product Network Design at the Core of our System Integration Capabilities Highly interdisciplinary technologies • Glass Science • Chemical Engineering Center for Smarter Sterlite Tech • Fluid Mechanics Networ

  8. Slide 8: Company Snapshot

    Company Snapshot Rs 3,205 Cr FY18 consolidated net revenues and Rs 789 Cr of consolidated EBITDA 54% of FY18 consolidated net revenues came from international markets 8 of the global top 10 telecom operators use Sterlite’s innovative solutions 3 manufacturing locations – India , China and Brazil and

  9. Slide 9: Industry Dynamics

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  10. Slide 10: A Digital Revolution beckons us

    A Digital Revolution beckons us Connected Everything Data consumption Anytime, anywhere Connected Connected 2X 7X Internet Users Devices Industry Homes Video on Connected Demand Connected Cars Finance Figures are for 2020E from base year 2016 10

  11. Slide 11: Multiplier effect driving data growth

    Multiplier effect driving data growth… 58%* 61 GB* 3.5* of the Population will be of the traffic per month, networked devices and using the Internet per user connection per person up from 44% in 2016 up from 24 GB in 2016 up from 2.3 in 2016 80%* 53 Mbps* 20 Mbps* of all Internet traffic will averag

  12. Slide 12: 3X growth in the ZettaByte Era

    …resulting in 3X growth in the ZettaByte Era more more USERS APPS ZOOMING Traffic more more DEVICES DATA PER USER Crossed Keeps Growing 26% 1 ZB in 2016 at 1 ZB = 10 21bytes 1.06 In 2009, the WWW was ½ ZB Traffic was just 0.2 ZB Global IP traffic in Zettabytes 2011 2016 2021 Sources: Ericsson, BCG a

  13. Slide 13: New Technologies driving Hyper-Connected Data Networks

    New Technologies driving Hyper-Connected Data Networks Autonomous Driving 1 ms Augmented Reality Virtual Reality Tactile Internet ULTRA LOW LATENCY 10 ms Disaster Alert Real Time Gaming Cloud Computing Delay 100 ms Wireless Cloud Personal Cloud based Office 1000 ms Video Streaming HYPER CONNECTIVITY

  14. Slide 14: Fiber at the Core of Networks

    Fiber at the Core of Networks 14

  15. Slide 15: With each network generation, fiber is getting closer to the users

    With each network generation, fiber is getting closer to the users 2G Era 3G Era 4G Era 5G + FTTH Era Major cities Fibre is most cities, towns, sub-urban areas connecting: between towers, as backhaul small cells, buildings, homes Being Conventional Telcos CSPs / DSPs OTTs and Content Players deploye

  16. Slide 16: CapEx & Fiber Consumption Cycle: Network Gen Evolution

    CapEx & Fiber Consumption Cycle: Network Gen Evolution 3G to 4G: 1.6x 3G to 4G: 3.0x Top 15 Global Telco Capex (USD Bn) 1,204 2,345 351 2G to 3G: 1.3x 733 300 583 160 62 2G to 3G: 1.9x 189 146 790 376 293 426 309 65 12 32 112 53 59 2G (CY1999 to 2004) 3G (CY2005 to 2010) 4G (CY2011 to 2017) 2G (CY19

  17. Slide 17: 5G will be the Centre of Heterogeneous Networks

    5G will be the Centre of Heterogeneous Networks 5G Era 5G capabilities compared to Goals existing LTE Boundless Connectivity for 10x Lower • New radio design <1 ms • Distributed architecture all Latency 1 Vertical/ industrial Network economics 10x Lower IoT • Protocol optimization and innovations <1

  18. Slide 18: Fiber: Key component of 5G infrastructure

    Fiber: Key component of 5G infrastructure 4G Infrastructure 5G Infrastructure Illustrative 5x Small cells architecture Minimum Base 5G (25 Mbps (50 Mbps eNodeB Densification (Macro Cell) per User) per User) No. of Small Cells for 5G 5x 10x compared to 4G Macro Sites Legend Macro Cell Micro Cell 4G F

  19. Slide 19: Growth in data consumption linked with growth in Optical Fibre consumption

    Growth in data consumption is closely linked with growth in Optical Fibre consumption More More Data Fibre 500 1600 450 1400 400 1200 350 300 1000 250 CAGR: 17% 800 200 CAGR: 36% 600 Global Fiber Global Annual 150 IP traffic Consumption 400 (mfkm) 100 (Exabytes) 50 200 0 0 CY06 CY07 CY08 CY09 CY10 C

  20. Slide 20: Not Just more Fiber, But Fiber with Solutions

    Not Just more Fiber But Fiber with Solutions are making Smarter Networks Smarter Fibre Solutions Networks Open Source Solutions Dense Big Data Networks Analytics Limitless and Cloud Platforms Secure Storage and NFV Flexibility Ultra Low Latency Hyper Deep Learning / Connectivity Personalisation Edge

  21. Slide 21: Product Business

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  22. Slide 22: Global demand for optical fiber continues to reflect strong annual growth

    Global demand for optical fiber continues to reflect strong annual growth Optical Fiber Cable Demand (Mn fkm ) 493 3,561 North America 58 429 Europe 51 48 China 382 India 46 43 Others CAGR: 17% 314 40 41 263 246 40 34 286 218 37 189 32 244 173 38 29 216 29 30 140 27 156 25 118 20 132 30 121 95 26 75

  23. Slide 23: Decoding: Global Fiber Value Chain

    Decoding: Global Fiber Value Chain PREFORM Preform Capacity Global Fiber Demand (In mn fkm) Shortage Restricted: 550 550 STL is Players < 10 500 500 present 450 450 across 400 400 FIBER DRAWING 350 350 the value Limited: 300 300 chain Players < 50 250 250 200 200 150 150 CABLING 100 100 Extensive Co

  24. Slide 24: Sterlite Tech has fully integrated manufacturing operations

    Sterlite Tech has fully integrated manufacturing operations Strong emphasis on new product development to cater the needs of tomorrow Raw materials Preform Optic fiber OF cable • Silicon & • Integrated • 30m fkm • 15m fkm Power Core rod + Capacity Capacity • Certain cladding • Expanding • Portfolio

  25. Slide 25: Optical Products

    Our application centric customer offerings › Full suite of ITU-T fibre products from low loss to bend insensitive fibre OPTICAL OPTICAL FIBRE › AND PREFORM For NLD to Access Network applications COMMUNICATION PRODUCTS › Customized cabling products › For FTTx, utilities, oil and gas, transport and OP

  26. Slide 26: Accelerating the capacity expansion and utilization

    Accelerating the capacity expansion and utilization 50 85 - 100% 40 ~70% 30 28 22 ~40% 12 Mar ’12 Mar ’16 Mar ’17 Sep ’17 Dec ’18 Jun ’19 FY 17 FY 18 FY 19 Optical Fibre Capacity (Mn fkm) Optical Fibre Cable Capacity Utilization  Integrated plant project progressing well to achieve phased capacity

  27. Slide 27: Services & Software Business

    Services & Software Business 27

  28. Slide 28: Telecom Services: opportunities to implement Smarter Networks

    As networks grow deeper, there are services opportunities to implement Smarter Networks INTEGRATED Turnkey delivery of some of the largest interstate network infrastructure projects in India – 10,000 Km TELECOM of defence network in toughest terrains SERVICES Successfully deployed India’s first live

  29. Slide 29: Sterlite Tech is engaged in end to end data network creation

    Sterlite Tech is engaged in end to end data network creation End to End Capability to Design, Build & Manage Data Networks for Telcos, Smart Cities, Rural Broadband & Defence Future Network Stack Digital Customer System of Marketing Management Engagement Software & System of Records Solutions Layer

  30. Slide 30: Scaling Services & Software Business

    Scaling Services & Software Business • Sterlite completed Jaipur smart city project • Govt announced list of third 30 smart cities • 100 Smart Cities Mission • Sterlite wins Kakinada Smart City order launched by the Govt. of India Network • Kakinada project under execution Solutions 2015 2016 2017 •

  31. Slide 31: Financials

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  32. Slide 32: Growing International Presence with Tier-1 CSPs

    Growing International Presence with Tier-1 CSPs +223% 27% 54% of Total Revenues FY18 46% 37% of Total Revenues 13% 1,735 13% 24% of Total Revenues 957 Global Revenue Mix 537 11% FY 16 FY 17 FY 18 19% FY17 Revenue from exports (INR Cr.) 63% 7% • Deeping European market presence with new additions of

  33. Slide 33: Demonstrated Value Compounding

    Demonstrated Value Compounding +29% 3,205 789 2,594 +44% 2,275 542 475 1,619 345 1,148 181 FY 14 FY 15 FY 16 FY17 FY18 FY 14 FY 15 FY 16 FY17 FY18 Revenue (INR Cr.) EBITDA (INR Cr.) 334 30% +47% 20% 21% 201 18% 154 8% FY 16 FY 17 FY 18 FY 14 FY 15 FY 16 FY17 FY18 3 Year PAT (INR Cr.) - Post de-merge

  34. Slide 34: Strong Balance Sheet Supported by Healthy Cash generation

    Strong Balance Sheet Supported by Healthy Cash generation 1,007 1.3x Cash flow (Cr.) FY18 919 -12% 884 1.0x Cash Profit (After Tax ) 552 0.7x Operating Cash Flow 604 Capex 525 Net Cash flow 79 FY16 FY17 FY18 FY16 FY17 FY18 Net Debt (INR cr.) Debt to Equity Ratio 34

  35. Slide 35: Strong sales outlook riding on growing order book

    Strong sales outlook riding on growing order book Order Book Mix +73% 5223 4573 3832 3018 3140 4095 3335 2339 1541 1641 1477 1499 1493 1239 1128 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Products Services & Software • Long term customer engagement driving predictability • Customer segment diversification r

  36. Slide 36: Strategic Direction

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  37. Slide 37: Balanced Approach to drive Shareholders Value

    Balanced Approach to drive Shareholders Value Integrated Solutions with focused customer base Defined principles for Focus on Technology & Research: Inorganic Growth: Increasing patent portfolio Capability addition Approach Consistent Returns to the Shareholders: Expanding ROCE 30% of PAT as dividen

  38. Slide 38: Growth Plan: FY20

    FY20 Roadmap: $100Mn Net Income OF business GROW Glass/Pre-Form Add new products Technology: Growth OFC GROW $100 Mn business Plan: Application Engineering Value Add New Markets Net Income by FY20 FY20 Services, Software EXCEL Solutions In Execution business 38

  39. Slide 39: Levers of e×

    On Accelerated Growth Track Multiplier of Global A Fiber Demand Levers Led by 5G Simplified Business of Latent India Demand Model with predictable e× B for Product and Services Outcome & e× Growth Growth Strong Execution; C Capability & Market Access Drivers 39

  40. Slide 40: Key Takeaways

    Key Takeaways Sterlite Tech is well placed to strengthen its leadership position in new age digital infrastructure creation Data Broadband networks focused technology play High ROCE & ROE business profile Focused on Customers & Stakeholders value creation Geographic, customer and business diversific

  41. Slide 41: Appendix

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  42. Slide 42: Strong corporate governance

    Strong corporate governance Independent Directors on the Board of Sterlite Tech Sandip Das A. R. Narayanaswamy (Non-Executive & Independent Director) (Non-Executive & Independent Director)  One of Asia’s most respected telecommunications professionals and  Chartered Accountant & Management Consult

  43. Slide 43: Creating Shared Value

    Creating Shared Value EDUCATION ENVIRONMENT 172,000 students covered since inception 409 farmers impacted through Phase II and 89958 during FY 2017-19 of Project Jaldoot and a total of 867 since 2016 480 schools covered in 2017-18 94188 cu. m of water conserved in 2017 and a total of 738,188 m3 Clas

  44. Slide 44: Corporate structure & Shareholding Pattern

    Corporate structure & Shareholding Pattern Corporate structure Shareholding pattern Volcan Vedanta investments 69.7% Resources Plc. 22.7% Public shareholders 53.4% 54.0% 45.9% 14.2% 9.1% Sterlite Technologies Limited 58.0% 75.0% Promoters & promoter group Other Institutional Holders Brazil JV China

  45. Slide 45: Demonstrated growth on QoQ basis

    Demonstrated growth on QoQ basis +20% +44% 835 847 238 744 779 208 707 166 179 164 Q4 FY17 Q1 FY 18 Q2 FY 18 Q3 FY 18 Q4 FY 18 Q4 FY17 Q1 FY 18 Q2 FY 18 Q3 FY 18 Q4 FY 18 Revenue (INR Cr.) EBITDA (INR Cr.) +77% 112 90  Recorded 77% YoY growth in Q4 FY18 71 64 61  On course to achieve $100 Mn PAT (

  46. Slide 46: Financial Performance: Income Statement & Balance Sheet

    Financial Performance: Income Statement & Balance Sheet P&L (Cr.) FY17 FY18 Balance sheet (Cr.) As on 31st Mar, 2017 As on 31st Mar, 2018 Revenue 2,594 3,205 EBIDTA 542 789 Net Worth 925 1,257 EBITDA % 21% 25% Depreciation 159 182 Net Debt 919 884 EBIT 383 606 EBIT % 15% 19% Total 1,844 2,141 Intere

  47. Slide 47: Thank You

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