Sterlite Tech devises biz continuity plan to address COVID-19

Billionaire Anil Agarwal led group company Sterlite Technology has devised four-pronged strategy to business address uncertainty arising from the Coronavirus or COVID-19 outbreak.

In response to the scenario unfolding in China, Sterlite has formed a cross functional Business Continuity Planning team in early February to focus on four key aspects in this crisis.

This will include Employee & Ecosystem safety, Customer commitment fulfilment, Cash Flow planning and its readiness for a quick restart as the situation normalises.

Give its strong digital capability to ensure virtual collaboration, communication & secure data transmission while working from home, Sterlite hopes to respond its clients and maintain on-time deliveries in these difficult times.

Sterlite’s China plant is operating at Pre- COVID utilisations.

It’s Brazil Plant is also fully operational while the plant in Italy is expected to restart by 6th April, starting with dispatch and then moving to normalised operations.

Sterlite is receiving several enquiries from India and abroad for product supplies.

It has approached the relevant authorities for plant re-start within the regulations of essential services and continuous manufacturing as applicable.

Sterlite’s services projects in India are on temporary pause and it has submitted force majeure letters to its customers.

In terms of cash flow, its receivables are not significantly affected. Sterlite is maintaining a comfortable balance of cash and cash equivalents.

In the event that the lockdown situation persists longer than anticipated, it has more than sufficient liquidity to manage fixed costs & cash out flows.

However, in terms of business implications of COVID-19, Sterlite expects to see some negative short term financial impact.

The global fibre demand is expected to remain weak in the first half of CY20 and should come back in the second half. Overall the demand shall remain flat in the current calendar year & shall rebound in CY21.

The demand for services business is expected to remain strong as expected earlier.

Sterlite has reported an additional order book of about Rs. 1,500 crores in mid-February from a variety of clients and it will report the overall order position while releasing its full year results.

In terms of mid-term business implications, it expects world will move much faster towards digitisation.

The above assumption are based on expectations higher network usage for video conferencing and other related activities, allowing it for higher leverage.

Sterlite expects its customers to plan for a much higher redundancy in the network in the future thereby increasing the fibre count going forward.

STL has also announced a buyback plan via an open offer from the secondary markets at a price of Rs 150 aggregating Rs 145 crs on 24th March 2020.

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