<dhhead>Managing Directors Message</dhhead>
On the Path of Sustainable Growth
Let me start this letter by expressing my sincere gratitude for yourfaith in the Company during trying times of the COVID-19 pandemic. During the year underreview the Company managed to deliver resilient financial and operational performancewhile strengthening its position in India and abroad through various strategic
Financial and Operational Performance
In FY22 the Company reported consolidated revenue of INR 4727 croresan increase of ~7% from INR 4423 crores in FY21. EBITDA for the year was INR 693 croresup 18% from INR 585 crores in the previous year. Profit before tax increased by 31% to INR442 crores from INR 337 crores in FY21 while profit after tax increased by 33% to INR 326crores from INR 246 crores in FY21. I would also like to mention that the Company hasincreased its product revenue to 43% in FY22 up from 27% in the previous fiscal yearwhich helped the Company to register better margins. In addition the Company's exportrevenue increased to INR 363 crores in FY22 from INR 201 crores in the previous year. Withsustained growth and fiscal consolidation CARE Ratings upgraded the Company's creditrating to A with stable outlook.
While the world was recovering from the impacts of multiple waves ofthe pandemic the Russian-Ukraine conflict created new geopolitical challenges for theworld economy. While many sectors were beginning to show signs of recovery given thechanging dynamics the world economy could still be on an uneven path of recovery.
In the Indian context healthy growth rate and forex reserves combinedwith steadily improving exchequer collections and a forecast of a good monsoon will helpthe Indian economy deliver another year of world-leading growth in FY23.
Opportunities in an Evolving Landscape
With rising data consumption and tariff increases the Indian telecomsector will see another year of revenue growth in FY23. As India prepares to roll out 5Gthere is a significant increase in demand for optic fibre cable and telecom and networkingproducts. Sectoral strengthening in the form of expanded networks AGR relief to telecomoperators and lower 5G spectrum prices will aid in fuelling growth in the telecomindustry.
The growth will further be supported by the Government's emphasis onindigenous procurement of telecom and defence equipment. Healthy telecom revenues willfeed into continued network expansion. Policy support for design-led manufacturing fortelecom equipment under the PLI scheme early roll out of 5G services adoption of FTTHconnectivity expansion of 4G services and finally the Prime Minister's vision to connectall gram panchayats via optical fibre cable to provide affordable broadband connectivityare the key opportunities in the industry.
As India's leading manufacturer of optical fibre cables and a reliablecommunication network solutions provider HFCL is well-positioned to capitalise on theopportunities and set new industry benchmarks.
Responding with Effective Strategy
To drive sustainable and profitable growth the Company has prioritisedfour strategic focus areas: continued capacity expansion and set up new facilitiesproduct innovation expanded global footprint and strategic partnerships. These measuresare transforming HFCL into a technology-driven global enterprise.
Capacity Expansion: HFCL is in the process of increasing its opticalfibre manufacturing capacity equivalent to 22 million fibre kilometres and optical fibrecable to 34.75 million fibre kilometres per annum. These expansions are likely to becompleted by FY 24. This will help bridge the gap between the growing fibre demand andcable capacity. It will also strengthen the supply chain and increase the Company'smargins. HFCL is also establishing a dedicated manufacturing facility for defence productsto support Make in India initiative of the Government.
Product Innovation: The Company has made significant investments fornew product developments including Wi-Fi-7 enabled access points point to point and pointto multi-point backhaul radios and routers. These products will be compatible with 5Gnetworks. The Company is also working on the development of software-defined radios 5Gradio and transport products and the progress made in these areas will help HFCL to enternew global markets. In addition to the prior developments a fresh initiative has alsobeen taken to develop new types of optical fibre cables for export markets.
Global Market Expansion: HFCL has formed two new wholly-ownedsubsidiaries in the Texas (USA) and Amsterdam (Netherlands) to meet the global demand forthe Company's products and to expand its business operations and activities overseas. Bothwholly-owned subsidiaries propose to trade in Optical Fibre Optical Fibre Cables Telecomand Networking Products as well as conduct related research and development.
Strategic Partnerships: HFCL formed several strategic alliances andassociations in FY22 enabling faster development of products. The Company joined theO-RAN alliance a global community of mobile network operators vendors and research andacademic institutions in the radio access network industry working together to build muchmore intelligent open virtualised and fully interoperable mobile networks. HFCL aims tointegrate and validate its 5G products and solutions with other members and contributorsto the O-RAN alliance.
In addition we partnered with WIPRO to co-develop various 5G transportproducts that will enable Communication Service Providers (CSPs) to modernise theirbackhaul networks and make them ready for 5G services. We also tied up with other renownedtechnology players and start-ups including Capgemini NXP IP Infusion Metanoia todevelop various 5G communication products. The Company engaged CommAgility as a criticaltechnology partner in the development of a comprehensive portfolio of 5G radio access andtransport network products.
The structural strengthening and sustained improvements in performancein FY22 have further solidified the Company's growth foundation. With a continued shift inrevenue mix towards products from services expansion of our product catalogue andinnovations we are confident in emerging as a market leader across various markets in thecoming years.
Finally I would like to thank all the stakeholders for their steadfastbelief in our capabilities. Also I would like to specially thank our employees for theirrelentless efforts and contribution towards the Company's vision.
|Stay safe and stay positive! |
|Best wishes |
|Mahendra Nahata |
|Managing Director |