Except the US, where the supply is enough, the global demand for OFC is rising as its applications are very wide, ranging from telephony to broadband Internet access. To tap the huge demand, the company proposes to expand the capacity from 2 million km to 5 million km during this year. This will make it one of India's leading players in OFC. Realisations of OFC have already started improving in line with international trends in tandem to increased demand from the Asian region. More importantly, this will ensure that the company's telecom revenue stream becomes less dependent on DoT. Alongwith that, working capital reductions will reduce interest costs and increase earnings.

The management feels that it can maintain around 50 per cent return on capital employed (ROCE) for its telecom business. It might also think of diversifying into providing total telecom solutions as a forward integration effort to add value to its optical fibre business.Although the company has lost an earnest money deposit of Rs 1 crore as penalty, the loss was a blessing in disguise. Had the company been forced to execute the contract, it would have surely incurred a huge loss. DoT had invited tenders for 403 lakh cable kilometres (lckm) of jelly-filled telecom cables of various sizes. In respect of requirements for a particular size (200 pairs) of telecom cables, the price quoted by Sterlite was Rs 1.64 lakh per unit instead of around Rs 3 lakh per unit quoted by others including PSUs.

This appeared to be a genuine mistake since the bid for the cable size of 100 pairs was quoted at Rs 1.54 lakh per unit and bids generally move up in proportion to the cable size. Though it seems that the company could save itself from a potential direct loss, the indirect loss due to backtracking resulted in no further awarding of contracts last Monday.Irrespective of that, considering the potential of the OFC business, it will be worth getting into the stock after listing, which is expected in the near future.RPG Life ScienceRPG Life Science is struggling hard to come out of troubled waters. The sales for the year 1999-2000 declined to Rs 203 crore from Rs 240 crore in the previous year.Despite a substantial decline of 16 per cent in sales, the company improved its operating and net profit.

The operating profit margin increased from 14.31 per cent in 1998-99 to 18.59 per cent in the current year.The consistent fall in sales turnover in the last three quarters is because of the company's new policy of phasing out low margin products from its porfolio.The company initiated aggressive steps to discontinue high value-low margin pharmaceutical and agrochemicals products. The objective was to improve the bottomline of the company. These strategies have worked as per expectations which is evident from the fact that the operating profit margin for subsequent quarters has been improving.During the previous year, the company introduced new drugs like Losatec and Carvidol in the anti-hypertensive therapeutic segment where it does not face any serious competition. There are only two other products -- Losacar and Tozaar from Cadila and Torrent respectively.

The company introduced Zert-OD in the anti-depressant segment and also Spirudox, a natural nutritional supplement high in vitamins & proteins. In addition, the company has introduced Pantoprazole, an anti-peptic ulcerant drug.Company sources reveal that they are making rapid progress in fermentation technology. They have also produced Doxorubicim (an anti-cancer drug), Cyclosporin (an immuno-suppressant) and Lovastatin (a cholesterol reducer) and are also in the process of developing Simvastatin, again a cholesterol reducer.The market for Simvastatin has been rising rapidly and this drug has proved to be very effective in reducing low density serum cholesterol. These products will boost the turnover substantially coupled with better margins. The cardio-vascular market is growing at the rate of 26 per cent and manufacturers enjoy as much as a 40 per cent margin in this segment.The company introduced three drugs - Azoran, Acedip and Spromide, last year in the chronic illness segment. Though the company expectsa growth of 30 per cent from these drugs, the going may not be as easy as expected. That is because Spiromide, a fusemide-based diuretics drug has competitors like Lasix and Lasiride from Hoechst and some other equivalent drugs from Geno Pharma.RPG Life Sciences will have to rationalise the product mix anew and will have to put in a sustained marketing drive.

Only with a higher sales growth will the company be able to carve a niche for itself in this cut-throat competitive market.KSESH (with contributions from Manish Joshi and Dhruv Rathi)