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Himachal Futuristic Communications Ltd.

BSE: 500183 Sector: Telecom
NSE: HFCL ISIN Code: INE548A01028
BSE LIVE 15:51 | 15 Dec 28.45 0.20
(0.71%)
OPEN

28.75

HIGH

29.10

LOW

28.25

NSE 15:51 | 15 Dec 28.50 0.25
(0.88%)
OPEN

28.90

HIGH

29.15

LOW

28.35

OPEN 28.75
PREVIOUS CLOSE 28.25
VOLUME 937291
52-Week high 35.95
52-Week low 11.85
P/E 34.28
Mkt Cap.(Rs cr) 3,526
Buy Price 28.45
Buy Qty 23529.00
Sell Price 0.00
Sell Qty 0.00
OPEN 28.75
CLOSE 28.25
VOLUME 937291
52-Week high 35.95
52-Week low 11.85
P/E 34.28
Mkt Cap.(Rs cr) 3,526
Buy Price 28.45
Buy Qty 23529.00
Sell Price 0.00
Sell Qty 0.00

Himachal Futuristic Communications Ltd. (HFCL) - Chairman Speech

Company chairman speech

One of the most widespread socio-economic transformations of global significance istaking place in India. An ambitious all- encompassing vision is being fast converted intoreality. The vision comprises of a globally competitive manufacturing sector thatcontributes about 25% of the national GDP a modernised railway network that redefinespassenger and freight transport a broadband proliferation program that connects 250000Gram Panchayats a holistic agricultural uplift that doubles farmers' income a vibranturban infrastructure that makes the cities smarter with a perfect blend of technology andamenities and an inclusive social progress agenda that ensures housing and power for allin the country.

It is a matter of great privilege for us to be part of such a grand vision and make ourenhanced contribution in realising the India of our dreams. At HFCL we are spreading ouroperational universe to leverage our technological manufacturing and telecominfrastructure development prowess in order to profitably serve a larger part of theopportunity universe.

The year gone by was a year of greater significance for our Company. Building upon thestrategic groundwork of the previous year we made decisive foray into railway and smartcity segments while also making some inroads in long-gestation defence segment. Westrengthened our OFC business with capacity capability range and market expansion whileadding a few marquee deliveries in our turnkey business.

Strengthening our OFC offerings

FY17 proved to be a year of significant achievement for our OFC business. We modernizedand expanded the installed capacity of our Goa plant. Capacity expansion was alsoundertaken at the Chennai facility of HTL Limited a subsidiary company. Addition of FTTXcable in our manufacturing capability and increasing contribution of margin accretivevalue-added products and export sales augurs well for future. Recording a handsome growthof 25%

in export revenue OFC business clocked consolidated annual revenue of Rs.700 crore.

Worldwide shortage of optical fibre a key raw material has been posing a challenge ofsustainable sourcing for OFC manufacturing in the recent years. In order to reduce ourdependence on external sourcing we are entering into in-house manufacturing of opticalfibre with an initial installed capacity of 6 MFkm per annum. With an estimated investmentof Rs.225 crore the new plant at Hyderabad shall commence production by the end of FY19.

Raising Turnkey Business Capabilities

In Turnkey business our ability to develop and deliver telecom networks even indifficult terrains such as LWE area and hilly terrains in Jammu & Kashmir has wonappreciation from our customers. Our track record of delivering projects in a timelymanner and cost competitiveness continues to win promising projects for us. Proceduraldelays at our customers' end in flagging off two sizeable projects adversely impacted theperformance of turnkey business in FY17 while its carry forward impact has strengthenedour order book for the current year.

Emerging Business Segments

Winning two significant orders in both the dedicated freight corridors -Eastern andWestern marked a good beginning for our strategy of developing railway signalling andtelecom segment as a focused business vertical. A slew of initiatives towards raising ourvalue proposition and expanding our target market to metro rails and also internationalgeographies are gradually shaping up.

Winning another two orders in smart and safe city segment one in Ludhiana and other inJaipur marked an auspicious beginning for this segment. From digital surveillance totraffic management systems to energy management systems our opportunity universe in thissegment appears quite wider. Considering the vastness of unfolding demand in the immediatefuture we are fast scaling up our capabilities.

Developing a defence eco-system commensurate with country's vision of indigenizeddefence manufacturing matching global benchmarks is a time consuming one. Thankfully thegovernment and regulators are addressing the stumbling blocks with urgency anddecisiveness. Your Company's efforts are aligned with the steady stabilisation of thepolicy framework. During the year we signed an MoU with a French conglomerate foroptoelectronic night vision devices manufacturing facility for which has been planned atour Solan unit. We are exploring more such partnerships with global OEMs and areoptimistic of carving a sizeable defence manufacturing business for our Company.

Strengthening Organisational Capabilities

Sustaining our growth momentum over a longer period of time requires strengthening oforganisational capabilities beyond production and marketing. We are holisticallyupgrading our talent management system information sharing and data management systemcorporate governance enterprise risk management framework and business responsibilityacross environment community employees and customers. We are benchmarking our practicesagainst those of the best of our global peers.

Business Performance and Outlook

The fiscal year 2016-17 for the reasons mentioned above witnessed a drop in ourimmediate performance. Our net revenue decreased to Rs.2015.24 crore in FY17 in comparisonto Rs.2569.53 crore in FY16. Our net profit decreased to Rs.123.72 crore in FY17 fromRs.150.45 crore in FY16. The EBITDA stood at Rs.197.89 crore in FY17 as compared toRs.233.77 crore in previous financial year.

On the back of carry forward impact of our turnkey order pipeline coupled withpromising prospects for our newer businesses and added strengths of our OFC business weare confident of steadily improving our operational performance over the coming years.

Acknowledgement

FY17 marked significant advancement of our strategic goals and I congratulate everymember of team HFCL for making it happen. I extend my sincere thanks to our lenders andcustomers for their continued trust and patronage. It is your unstinting backing of ourbusiness plans and potential that fuels our journey from strength to strength dearshareholders. I call upon your continued participation in HFCL's journey on the path ofcontinued evolution and progress.

With best regards

Mahendra Nahata