The revenue of Himachal Futuristic Communications Ltd (HFCL) dropped by 30.5 percent, to reach Rs 889.3 crore. The company slid to the 10th position in the V&D 100 Top 10 club, five places below its last year’s position of number five.

Profits dropped by a bigger percentage—67.5 percent—to reach Rs. 41.58 crore.

On the face of it, a decline of more than 30 percent in topline seems a very poor performance. However, the performance would not look so bad if one took a closer look at where the money came from. HFCL’s core business—manufacturing—actually grew by an impressive 61.2 percent. The reason for the sharp drop in the total revenue is the drop in its turnkey revenues, which dropped from Rs 804 crore in 2000-01 to Rs 292 crore in 2001-02—a drop of 63.7 percent. In comparison to a revenue break-up of about 62.4 percent from turnkey and 35.8 percent from equipment in 2000-01, in 2001-02, equipment contributed 66.3 percent and turnkey 32.8 percent. The informatics division that was small in the previous year became smaller and contributed less than Rs 10 crore in revenue terms.

But why did the turnkey business drop so drastically? The reason is the tight liquidity situation the company had in a bad market. According to company sources, to keep a healthy cash flow, it had to intentionally not take turnkey projects, where both topline and bottomline are good, but payment is deferred. The company hopes that with the liquidity situation improving, it will regain the turnkey business this year.

Apart from its traditionally strong area SDH, HFCL did well in the CDMA and CorDECT WILL business too and also got into DWDM and digital cross connect businesses. Among the major orders bagged by the company was a Rs 450 crore CDMA rural WiLL order. The company executed almost 75 percent of the order in 2001-02 and the rest in AMJ 2002. It also bagged a DWDM order worth Rs 60 crore directly, and a Rs 40-crore order through sister company Himachal Exicom. It was L1 in two tenders of MTNL and BSNL for supplying CorDECT system, totalling about Rs 54 crore. In its traditionally stronghold of SDH equipment, it bagged a Rs 150-crore order from BSNL. It also won a small order from Reliance for CoRDECT WiLL.

HFCL’s overseas exploration, which began in 2000, continued in this fiscal too. It is conducting a CorDECT demo of 1,200 lines for Nepal Telecom. The company was L1 for a Rs 60-crore multiple equipment tender in Bangladesh and for two orders worth Rs 16 crore and Rs 56 crore in Iran.

Himachal Futuristic Communications Ltd TURNOVER FACTSHEET CEO : Dr Ranjit Kastia No of employees : 1150 Area of Operation : Telecom carrier equipment and turnkey Address : 8 Commercial Complex, Masjid Moth, Greater Kailash II, New Delhi 110 048 Tel : 11-6471298, 6412624 Fax : 11-6217784, 6217156  Fax : 0124-6345112 Web site : www.hfcl.com  S W O T Strength  Leading top manufacturing company Weakness Areas other than manufacturing and turnkey Opportunity New technology areas like DWDM and broadband Threat  Chinese companies which play on cost

HFCL has partnered with various global technology companies and manufactures a major part of the equipment in India using technologies of those companies. Among the most important partnerships are with Hyundai for CDMA, with Huawei for DWDM, with UT Starcom for DLC, and with Marconi for digital cross connect.

HFCL is putting a lot of emphasis on R&D and plans to add 120 more people for R&D at both its locations—Bangalore and Gurgaon. The company has set an ambitious target of achieving 50 percent of its revenue from its own products by 2005-06.