our performance

Our Performance

Managing Director’s Message Annual Report FY 2018-19

Dear Shareholders,

I am delighted to pen down my much awaited annual letter to you, once again. Your Company has delivered another stellar performance across all strategic parameters in the year gone by. Closing FY19 with our outstanding order book at a record high, we are headed towards a phase of sustainable growth and improved profitability…
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Dear Shareholders,

I am delighted to pen down my much awaited annual letter to you, once again. Your Company has delivered another stellar performance across all strategic parameters in the year gone by. Closing FY19 with our outstanding order book at a record high, we are headed towards a phase of sustainable growth and improved profitability.

Business Strategy

Strength of business strategy and its subsequent execution often define the contours of future performances. It is in this light that our results strengthen my conviction of a vibrant future awaiting all of us. Allow me to reflect upon four salient aspects of our recent business performance namely capability, speed, profitability and consistency.

Capability: Since our early days in telecom equipment manufacturing, your Company has steadily been raising its business capabilities across its manufacturing as well as turnkey segments. Enhancement of capabilities percolates all around including network design and execution, market expansion in traditional as well as new business segments, technology and innovation, accretive partnerships and talent pool. It is heartening to see that HFCL of today is ready to pursue a much accelerated future growth over a long period of time, from capability standpoint.

Speed: The opportunity landscape is ripe with possibilities. The scale of deployment of your Company’s products and solutions is going to get bigger by the years. More so when we intensify exploration of international markets. Speed and a sense of urgency is a much desired trait that the winners of tomorrow would display. Your Company is demonstrating speed and urgency across bidding, project execution, new product development, capacity scaleup and technological advancements.

Profitability: All the strategy and intensive work of the recent past has landed us in a position where revenue growth becomes predictable and sustainable. Your Company has steadily been shifting its eye on profit margins as the indicator of future business success. Backward integration, speedy execution, O&M (Operation & Maintenance) orders, overseas markets and next generation products are the range of tools and avenues that we are deploying to enhance our profitability.

Consistency: To compete with our previous best performance and do every possible thing towards outperforming ourselves is an important mantra of HFCL today. This mantra has led to our consistent growth. While traditional businesses of telecom products and solutions would ensure steady business growth in the foreseeable future, the coming age of our new business segments of railways, defence and smart & safe cities shall act as the cherry on the cake.

New Initiatives

The year gone by was marked with a range of new initiatives undertaken at various business levels. Our backward integration project to enter into manufacture of optical fiber at our greenfield site at Hyderabad progressed well during the year. The Plant is headed towards commissioning by the end of 2019. In addition, we expanded our consolidated OFC (Optical Fiber Cable) manufacturing capacity to 18.5m fkm while also adding new products to our bouquet. Our thrust towards overseas wins led to our railway vertical securing its first two international EPC contracts in Mauritius and Bangladesh.

Towards intensification of R&D efforts, the Company has been consistently working for increasing its portfolio of products with new technologies and is developing new products like Backhaul Radios, High Capacity Radio Relay, Wi-Fi Network Products, Cloud-based Management Platform and Security and Surveillance products. In defence vertical, Electronic Fuses are under advance stage of development. We have made reasonable progress in other products like Night Vision Devices and UAV (Unmanned Aerial Vehicle) during the year. All these products being developed by the Company have high demand potential.

The Company has also acquired controlling stake in Raddef Private Ltd., an innovation focused company specialized in Radio Frequency and Microwave Systems with a wide bouquet of components and sub-systems for the applications in defence, aerospace and communication.

Financial Performance

FY19 proved to be a year of all time high performance on a number of parameters. We closed the year with a record Revenue, EBITDA and PAT of `4785 crore, `458 crore and `232 crore and corresponding y-o-y growth of 49%, 49% and 35% respectively. Our RoE of 17.95% improved by 177 basis point and EPS for the year improved to `1.75. Debt Equity stands at comfortable level of 0.41. Considering the stellar performance, the Board has also recommended a dividend of 10% on equity shares.

Riding on healthy contributions from OFC, Network Solutions, Railways and Safe & Smart City businesses, we closed the year with an outstanding order book of `11,350 crore, which is equivalent to 2.4 times of our FY19 revenue.

Road Ahead

Looking ahead into the future, the opportunity landscape continues to become bigger and brighter for us. Policy initiatives towards robust digital communication infrastructure will see huge telecom infrastructure development and extensive fiberisation. With aggressive 4G and FTTH rollout along with 5G on the anvil, networks shall become denser and deeper thereby creating more demand of the Company’s products and services. Further, Modernization of Railway Communication & Signalling System, ‘Make in India’ thrust for Defence Procurement and continued investments towards Smart Cities & Surveillance shall amplify HFCL’s growth prospects. From an operational standpoint, improving efficiency and profitability, capabilities towards governance, risk management, fiscal prudence, talent build up and sustainable development shall continue to remain our key priorities. All these will help in driving and managing the next phase of our growth.

I remain thankful for valuable guidance and immense experience of fellow Board members while acknowledging unshakable belief and ever evolving competence of our leadership team and staff. Allow me to close with expressing a heartfelt thanks to all customers, shareholders and other stakeholders for their increasing trust and confidence in us.

Let’s shape a vibrant future, together!

With best regards,

Mahendra Nahata
Managing Director

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HFCL Limited (formerly Himachal Futuristic Communications Limited)
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