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