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HFCL Ltd.

BSE: 500183 Sector: Telecom
NSE: HFCL ISIN Code: INE548A01028
BSE 00:00 | 09 Apr 25.35 -0.25
(-0.98%)
OPEN

25.30

HIGH

25.80

LOW

24.95

NSE 00:00 | 09 Apr 25.35 -0.25
(-0.98%)
OPEN

25.60

HIGH

25.75

LOW

24.90

OPEN 25.30
PREVIOUS CLOSE 25.60
VOLUME 456204
52-Week high 34.75
52-Week low 8.70
P/E 22.43
Mkt Cap.(Rs cr) 3,256
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 25.30
CLOSE 25.60
VOLUME 456204
52-Week high 34.75
52-Week low 8.70
P/E 22.43
Mkt Cap.(Rs cr) 3,256
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

HFCL Ltd. (HFCL) - Chairman Speech

Company chairman speech

Dear friends

I take pleasure in presenting our Annual Report 2019-20. I hope thisletter finds you and your dear ones in the pink of health and pray for the well-being ofyou all.

The past five-six months have been a quite testing period for all ofus. While the entire country was (and parts of it still is) under lockdown or socialrestrictions the vital role of our communication industry in keeping us all connectedthrough mobile internet and broadband got emphasized.

The current adversity is going to incubate a new world order. Thecountry under its present leadership appears geared up to leverage it towards a largernational objective. The clarion call of Atmanirbhar Bharat a self-reliant India and Vocalfor Local are a true embodiment of dreams and aspirations of 1.3 billion Indians.

The time has come to accelerate innovations that drive mass benefitsoutclass our adversaries and pave way for larger export of Indian goods and servicesagain aimed at a larger global good. For our Company thankfully the opportunity isknocking at a time when it is ready to meet with full rehearsals that have been takingplace over the last four to five years. Having said that it is also important to remindus about the sudden brakes and pain that the pandemic is inflicting upon us in theintermittent phase of our protracted preparations of the past and prolonged acceleratedgrowth in the future. Thankfully the worst impact of pandemic appears to be well behindus and we have the ability to not only withstand but also excel in this intermittentphase.

Coming to our business strategy and performance in FY20 acceleratedinnovation and profitable growth were our two overarching themes. Our growth strategy isto produce technology Products and Solutions with competitive capabilities for a diverseand expanded Customer Base which is guided towards creating Shareholders' Value withstrong fundamentals for sustained growth. Our product development capabilities arecontinuously taking us forward as a technology enterprise where we develop products withlatest technologies with the futuristic approach which are cost effective and have ourIPRs. Our products have worldwide deployment capabilities with major global and IndianCertifications. Our products and technologies are expected to make our margins evenbetter.

I am glad to share with you that we have already developed Wi-FiNetwork Products High Capacity Radio Relay Microwave Radios and Cloud-Based ManagementPlatform. We are in the process of developing Switches and Routers and Intelligent AntennaSystems Software Defined Radios Ground Surveillance Radar Electro-Optic DevicesElectronic Fuses etc. either by ourselves or by collaborative research and development.The initial market response to our Wi-Fi products and solutions have been very positiveand our conviction in innovation-led HFCL stands reinforced. Furthering our technologicalquest with added speed we inked three investment deals with tech startups incomplementing fields. During the year we acquired a majority stake in Raddef PrivateLimited ("Raddef") making it an HFCL subsidiary. We also executed two separateshare purchase agreements one with Nivetti Systems Private Limited ("Nivetti")and another with BigCat Wireless Private Limited ("BigCat"). All three companiespossess deep technological and innovation capabilities and we intend to combine our scaleand financial strength in their respective pursuits of creating value.

The overall slowdown during the year and COVID-19-induced disruptionsin the last quarter of the year impacted our FY20 performance adversely. Our total revenuedropped by 19% to Rs 3861 crores from Rs 4781 crores recorded for the previous year.However our profitability-focused efforts helped to slightly improve our EBITDA and NetProfit to Rs 516 crores (' 459 crores in FY19) and Rs 237 crores (' 232 crores in FY19)respectively. The fact that these improvements were achieved despite a drop in revenue andwe boosted our EBITDA and Net Profit margins to 13.37% (378 bps rise over previous year)and 6.15% (129 bps rise over previous year) respectively.

Our order book stands protected with the only adverse impact beingelongation in the execution cycle. We closed the year with an order book of Rs 8409crores including the O&M component of Rs 1614 crores. Looking ahead our marginenhancement campaign would get further boosts from optimal operations of our optical fiberplant increasing realizations of annuity O&M revenues and high-margin next-generationproducts. In addition the stricter cost and efficiency regime would further aid ourmargin improvement goal. Successful launches from our innovation pipeline shall alsoincrease overall revenue and margins from turnkey projects.

The Government of India's (GOI) stated the doctrine of 'vocal forlocal' and proposal of levying anti-dumping duty on optical fiber cable augurs very wellfor your Company. Emphasizing the strategic importance of the telecom sector GOI isconsidering a slew of other measures to promote domestic players and manufacturing. Thebroadband connectivity drive covering the furthest villages including the bordering areaswould create multiplier demand for a couple of years. The honorable Prime Minister'spromise of providing OFC connectivity to the remaining 4.5 lakh villages over the next1000 days is the indication of the kind of opportunity coming our way. And then there isthe mega 5G opportunity that would make telecom infrastructure play to be a dream segmentto be in.

The opportunity landscape across all our other verticals namelydefence railways surveillance etc. is brimming with prospects. You will be happy tonote that your Company spotted these sectors wel in time and made the right investmentsand progress to become ready to participate in the ensuing growth phase with confidenceand credentials.

The Government of India's Make in India program particularly forDefence equipment and recent announcement to restrict imports in case of various productsopen up large opportunities for the Company. Besides Electronic Fuses and Electro-OpticDevices we are now identifying more products to be developed and manufacturedindigenously.

The post COVID-19 world would be ushering us into a new normal whichwould further accelerate digitalisation. While we are upping the ante on hyper-digitalcustomer offerings an equally sharper focus is on digitally transforming our working. Anextra layer of work safety hygiene and social distancing is getting ingrained in ourworking. These progressive changes are going to stay with us even after the scourge ofCOVID-19 gets eradicated. Safety and well-being of our people is paramount and central toour Company's success.

I conclude with expressing my sincere thanks to you our dearshareholders who have stood rock solid behind HFCL with a firm belief in our competencecapabilities and competitiveness. I place on record my heartfelt thanks to an ever growinglist of our esteemed customers and sincere appreciation to HFCL employees and partners fortheir innovative efficiency-accreting efforts that are reflecting in our improvedperformance.

The fight with this pandemic is going to be a little longer than whatwas estimated a few months ago. On a positive note the recovery is going to be muchsharper than estimated and the growth phase is going to be speedier.

Warm regards

Mahendra Nahata

.