The Top 10: Rank 8: HFCL

Himachal
Futuristic Communications Ltd (HFCL) got a major push in March this year when
Kerry Packer’s News Consolidated Press Holdings Ltd (CPH) acquired 10 percent
equity stake in it for $238 million. The money will help retire company’s debt
and move it towards what it calls, a "zero debt company". Major part
of the money will go towards its expansion plans, which include providing
broadband services in Punjab and adjoining states. This is likely to include
basic telephone services, Internet services, cable television, and a portal.
There is a plan for laying about 300 to 400 kilometre of

optic fibre.

The company also went in for a major diversification last
year and took a plunge in the New Economy. It entered into a JV with CPH for
software and e-commerce. HFCL’s Informatics Division was merged with the newly
incorporated software company, Consolidated Futuristic Software Solutions Ltd.
In the JV, HFCL will hold 51 percent, CPH 30 percent, while the remaining has
been earmarked for strategic investors.

Another JV into e-commerce will have a similar equity
structure and an investment of Rs 100 crore. The company, which is in the final
stages of formation, will focus on creating and developing network
infrastructure, establishment of payment gateways to support data and e-commerce
services. The company will also provide specialized solutions and services to
specific business areas. The venture will try to leverage on the growing B2B
e-commerce market in India.

In the year 1999-00, the company registered a growth of 47.6
percent in the turnover which grew from Rs 392.1 in 1998-99 to Rs 578.9 crore.
Turnkey contracts and services once again emerged as the major revenue earner
and accounted for Rs 331.3 crore (51 percent of the total turnover) while
components netted Rs 76.8 crore.

Its R&D division has a tie-up with IIT, Chennai and IIS,
Bangalore. It is engaged in exploring new technologies like designing of radio,
optical transmission equipment, and access equipment. It also specializes in
developing of software solutions incorporating network management systems. The
range of products the company manufactures includes transmission equipment,
access products, and optic fibre cable. DoT and MTNL remain the main customers,
besides some private players.

However, it is the turnkey division, started in 1995, which
has become the key driver for the company. It provides a single window solution
for services that include project planning, network design, equipment supply,
installation, commissioning and operating support systems. It also provides
engineering solutions on a turnkey basis to cellular operators and basic telecom
services operators for their telecom infrastructure requirements.

It is planning to bring out a set-top box for Direct-to-Home (DTH) services
in a tie-up with a Trivandrum-based company. It is targeting 1,00,000 boxes in
the first year. The product is expected to be available at reasonably low
prices. The boxes are targeted to be a multi-functional device. The company,
which had acquired Essar’s basic telecom licence for Punjab, is gearing up to
start its services soon. It is also vying for licence in Haryana, which is yet
to be awarded.