Given the nature of the industry the company is into, the investment in this IPO should be with a long-term perspective. An investor has to wait for at least one to two years for good appreciation.

With the rapid proliferation of the Internet and telecom, the demand for bandwidth is also increasing exponentially. This, in turn, has pushed every telecom service provider and ISP worth their names to go for networks which can carry much more voice and data than the conventional copper cable networks.

In optical fibre networks, the world has found an answer to this problem of bandwidth. Consider this, in India, the highest available speed at which data could be trasferred through the conventional cables is at 128 KB per second (kbps). Compared to this, optical fibre cables can carry data at more than 3000 gbps.

Unlike in conventional cables, where the data and voice is converted into electrical energy and sent across the country, optical fibres - as the name suggests - uses light waves to carry the signals. And world over, there is a demand-supply gap for optical fibre cables and the related networking equipment. According to leading research outfits in the area, this demand-supply mis-match will continue to remain for some years to come.

This in turn is making the optical sector players' valuations shoot through the roof, mainly on the Nasdaq. And venture capitalists are also pouring in money into start-ups in the sector and taking them public in no time.

In India, demand for bandwidth is going to pick up with the expansion of the Internet. But a number of players are gearing up anticipating the demands as the new telecom policy announced in 1999 proposes to create modern infrastructure for telecom and Internet access. It is anticipated that to criss-cross the country with optical fibre networks, there would be huge demand for optical fibre cables.

Aksh Optifibre is the second largest manufacturer of optical fibres cables in the country, next to Sterlite Industries. Aksh has an installed capacity of 50,350 kms for optical fibre cable and 1.5 lakh KMs of optical fibres.

One of the main objectives of the current issue is to expand its manufacturing capacities of these two products and also to start a manufacturing facility for preforms, a vital input for optical fibre.

Over the years, backward integration has helped Aksh to produce optical fibre cables at much lower price than its peers. This has been achieved by import substitution of vital raw materials. However, capacity utilisation has remained at substantially low levels, which, according to the company, is attributed to its dependence on the DoT orders for supply of cables. As the long distance telephone sector in the country is opened up to private players, the demand for cables will also grow.

The company has already placed orders for a number of important equipment required for the project.

The project cost is pegged at Rs 42 crore, of which Rs 6.9 crore is being financed by ICICI, Rs 2.02 crore through internal accruals and the balance from the issue proceeds. Also, ICICI has appraised the project.

For the fiscal 2000, the company had earned a net profit of Rs 5.34 crore from a total income of Rs 88 crore. For the previous three fiscal, however, the company had incurred losses to the tune of Rs 3.06 crore (FY 1999), Rs 4.07 crore (FY 1998) and Rs 93.53 lakh (FY 1997).

For the current fiscal, the company projects a net profit of Rs 8.2 crore form a total income of Rs 12.68 crore, increasing to a Rs 11.1 crore net in FY 2002 from a total income of Rs 18.11 crore.