HTL now on revival path

Profitable and debt-free after divestment of Centre's majority stake; to set up new unit at Chennai

In 2001, the central government had divested majority stake in HTL, earlier named Hindustan Teleprinters, after the company accumulated sizable losses.

Since then, cashing on the huge demand demand in fibre optic cables due to the telecom broadband revolution, and introduction of fourth generation (4G) technology, the company has turned the corner.

Mahendra Nahata, chairman, Himachal Futuristic Communications (HFCL), which acquired 74 per cent stake from the central government in HTL in 2001 (the other 26 per cent remains with the Centre), said demand for  fibre optics was expected to increase to almost a million cable km every year from the current 600,000 km. The market size is estimated at Rs 3,000 crore and to be Rs 7,000-8,000 crore in four to five years.

The government’s Digital India and NOFN (national optic fibre network, laying 40,000 km of fibre optic backbone) is driving demand, from the defence sector, the railways (for communication of trains and signalling) and states, all of which are creating their own broadband networks. Also, the mobile telephone battle is shifting to data and all telecom companies need a fibre optic backbone, with 4G are creating a new market, he said.

To tap this, HTL plans to set up a new optical fibre cable unit in this city, for Rs 56.7 crore. Investment will be funded by promoter contribution and through loan.

“Today, we are debt-free (they used to have Rs 240 crore of debt) and bankers are ready to lend us,” said Nahata.

The Chennai facility will have a capacity to produce cables up to 70,000 km every year and HTL will be in a position to achieve annual turnover of Rs 300-350 crore, said Nahata. Once the Chennai unit goes on stream, he said, HFCL and HTCL together would be number two in this segment.

There are 15 ‘serious players’ in the industry and claims HFCL’s market share is around 15 per cent. To rise by fie or six percentage points once the Chennai plant begins producing.

“We have an advantage in the market, since we also do EPC (engineering, procurement and construction),” said Nahata. He added the supply of cables was only 10 per cent of their work; the rest involves EPC, which are 80 per cent of all orders. Currently, around 1,800 people are in HFCL’s EPC teams. HTL is also eyeing export markets from the Chennai unit. Nahata said they were targeting Rs 36 crore in the first year, and Rs 250 crore after two years. It already supplies to 27 countries, including in western Europe.

Before the divestment to HTL, the accumulated losses were more than the paid-up capital and free reserves.

In 2009, its bankers invoked the law to realise dues of Rs 325 crore and took over formal possession of not only its 11.2 acres but all the receivables. The attached land was sold in 2013, after the required government approvals. With the sale proceeds of Rs 272 crore. HTL was able to settle its entire liability.

It was incorporated in 1960 as a wholly-owned government company to make teleprinters and ancillary equipment. By 1990-91, teleprinters became obsolete and HTL started manufacturing medium and large telephone exchanges, transmission and data products. The telecom market then switched to mobile telephones based on wireless technology and all products of Indian telecom equipment manufacturing companies, including HTL, became obsolete.

FOCUS AGENDA

• HTL began in Chennai in 1960 under ministry of communications to make teleprinters for the national telecom network
   
• Firm expects Digital India, launch of 4G & rise in usage of data services all stoke growth
   
• Firm produced 125,000 electro mechanical teleprinters of Olivetti tech till 1987 & thereafter made 60,000 electronic teleprinters based on Sagem’s tech up to 1994
   
• With changes in tech & market, it decided to be a multi-product company in the field of telecom equipment
   
• Today, HTL is into digital switching, transmission, data & access products
   
• Focus areas include small, medium, large telephone exchanges with indigenous C-DOT technology, large switching exchange with Siemen’s know-how