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Rank 10: Himachal Futuristic Communications Ltd: Choosing to Lie Low?

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VoicenData Bureau
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The revenue of Himachal Futuristic Communications Ltd (HFCL) dropped by 30.5

percent, to reach Rs 889.3 crore. The company slid to the 10th position in the

V&D 100 Top 10 club, five places below its last year’s position of number

five.

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Profits dropped by a bigger percentage–67.5 percent–to reach Rs. 41.58

crore.

On the face of it, a decline of more than 30 percent in topline seems a very

poor performance. However, the performance would not look so bad if one took a

closer look at where the money came from. HFCL’s core business–manufacturing–actually

grew by an impressive 61.2 percent. The reason for the sharp drop in the total

revenue is the drop in its turnkey revenues, which dropped from Rs 804 crore in

2000-01 to Rs 292 crore in 2001-02–a drop of 63.7 percent. In comparison to a

revenue break-up of about 62.4 percent from turnkey and 35.8 percent from

equipment in 2000-01, in 2001-02, equipment contributed 66.3 percent and turnkey

32.8 percent. The informatics division that was small in the previous year

became smaller and contributed less than Rs 10 crore in revenue terms.

But why did the turnkey business drop so drastically? The reason is the tight

liquidity situation the company had in a bad market. According to company

sources, to keep a healthy cash flow, it had to intentionally not take turnkey

projects, where both topline and bottomline are good, but payment is deferred.

The company hopes that with the liquidity situation improving, it will regain

the turnkey business this year.

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Apart from its traditionally strong area SDH, HFCL did well in the CDMA and

CorDECT WILL business too and also got into DWDM and digital cross connect

businesses. Among the major orders bagged by the company was a Rs 450 crore CDMA

rural WiLL order. The company executed almost 75 percent of the order in 2001-02

and the rest in AMJ 2002. It also bagged a DWDM order worth Rs 60 crore

directly, and a Rs 40-crore order through sister company Himachal Exicom. It was

L1 in two tenders of MTNL and BSNL for supplying CorDECT system, totalling about

Rs 54 crore. In its traditionally stronghold of SDH equipment, it bagged a Rs

150-crore order from BSNL. It also won a small order from Reliance for CoRDECT

WiLL.

HFCL’s overseas exploration, which began in 2000, continued in this fiscal

too. It is conducting a CorDECT demo of 1,200 lines for Nepal Telecom. The

company was L1 for a Rs 60-crore multiple equipment tender in Bangladesh and for

two orders worth Rs 16 crore and Rs 56 crore in Iran.

Himachal Futuristic Communications Ltd

TURNOVER

FACTSHEET

CEO

:

Dr Ranjit Kastia

No of

employees
: 1150
Area of Operation : Telecom carrier equipment and turnkey
Address : 8 Commercial Complex,



Masjid Moth, Greater Kailash II,


New Delhi 110 048
Tel : 11-6471298, 6412624
Fax : 11-6217784, 6217156 
Fax : 0124-6345112
Web site : www.hfcl.com 
S

W O T
Strength  Leading top manufacturing company
Weakness Areas other than manufacturing and turnkey
Opportunity New technology areas like DWDM and broadband
Threat  Chinese companies which play on cost

HFCL has partnered with various global technology companies and manufactures

a major part of the equipment in India using technologies of those companies.

Among the most important partnerships are with Hyundai for CDMA, with Huawei for

DWDM, with UT Starcom for DLC, and with Marconi for digital cross connect.

HFCL is putting a lot of emphasis on R&D and plans to add 120 more people

for R&D at both its locations–Bangalore and Gurgaon. The company has set

an ambitious target of achieving 50 percent of its revenue from its own products

by 2005-06.

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