The US JV will manufacture and market optical fibre cable products, a company press release said.

The MoU envisages that GCC will spin off all its existing operations at Dayville, Connecticut, US into the JV and that SOTL will supply bare optic fibre to the JV for cabling. The JV will sell optical fibre cables in the US, Canada and Mexico. SOTC will also provide operational expertise to the JV while GCC will provide sales and marketing functions support.

SOTL had earlier announced that it is targeting the high growth US markets for exports. The global prices having increased in the past months from a low of $25 per fibre km to the current level of over $65 per fibre km. The market is said to be in an extremely tight demand-supply situation with demand on the higher side.

SOTL expects that the JV will enable the company to increase sales of optical fibre to the North American market, which is around 40 per cent of the global market. For GCC, the JV is expected to result in assured long term supplies of bare optical fibre.

According to the company, the JV is a part of the continuous foray of SOTL to expand its presence in the global high technology optical communications market. GCC is the third largest wire and cable company in the world with sales of $2.2 billion.

The company recently announced plans to put up a 10 million cable km optical fibre greenfield plant at an estimated cost of $250 million to $300 million.

Nearly 75 per cent of the new project is to be funded through internal accruals.

SOTL had already announced its intentions to set up its base in the US, as almost 90 per cent of its revenue come from exports.

The expansion is in view of the high demand growth for optical fibre in all major international markets. The expansion will enable SOTL to offer larger volumes to strategic international customers on a long term basis.

The first phase, with a capacity of 5 million km (mkm), will go onstream by 2002. The company has a present capacity of 3 mkm. With the green field project, the company will have a total capacity of over 13 mkm of commercial production of OFC by 2003.

The board of directors also recently passed an enabling resolution to raise up to $200 million from the international markets.

The SOTL board has also recently approved a proposal to access international markets by way of American Depository Receipts or Global Depository receipts (ADRs or GDRs) or other financial instruments. The amount can be raised in one or more tranches.