hfcl ltd share price Management discussions


Economic Overview


In 2022, the global economy experienced a slowdown, with GDP growth at 3.5%, compared to 6.3% in 2021, primarily caused by a combination of factors, including increasing geopolitical tensions, disruptions in supply chains and unusually high levels of inflation. During the pandemic, governments had already introduced substantial monetary support measures, injecting significant money into the economy. This infusion of liquidity exerted upward pressure on inflation. The situation escalated further with the outbreak of the Russia-Ukraine conflict, intensifying the inflationary pressures, particularly affecting energy, and commodity prices. The global economic sanctions on Russia, a major oil and gas producer, substantially impacted the Euro Area, a region heavily dependent on Russian gas. Consequently, the Euro Areas faced the risk of an energy crisis and other significant challenges following the disrupted supply of energy resources.

To combat the surging inflation rates, central banks of major economies, spearheaded by the US Federal Reserve, took decisive and synchronised steps to tighten monetary policies. While curbing inflation, these measures also raised worries about the possibility of a financial crisis. Nevertheless, Chinas decision to reopen its economy earlier than anticipated in November 2022, brought some relief, contributing to the recovery of economic losses experienced during the pandemic. Subsequently, emerging markets and developing economies, especially India and China, played a pivotal role in driving global economic expansion, while advanced economies faced stagnation during this period.

Global trade volume growth rate declined in 2022 to 5.2% from 10.7% in 2021, impacted by shifts in global demand, the lagged effects of US dollar appreciation, rising trade barriers and the persistence of high inflationary pressures. Global headline inflation is likely to ease in the coming years, influenced by factors such as tightening of monetary policy and declining international commodity prices. While overall inflation is likely to moderate, core inflation, which excludes volatile food and energy prices, is declining at a more gradual pace, particularly in advanced economies.


The global economy is likely to experience a slight decline in growth over the next two years. Advanced economies may face challenges in manufacturing while emerging markets show stable growth with some variations. Global trade growth is also likely to slow down due to changes in demand and trade barriers. Steps taken by central banks and governments to reduce financial risks have eased immediate concerns. However, challenges remain, including the possibility of high inflation, geopolitical tension and policy rate hikes affecting economic growth.


In FY23, Indias economy demonstrated strong resilience with a real GDP growth of 7.3%, surpassing earlier estimates. The growth was mainly driven by strong domestic demand, which nearly converged with prepandemic levels. Key sectors, including agriculture, manufacturing-led industry and services, played pivotal roles in economic growth. Rising employment levels further contributed to economic inclusivity and supported domestic demand. The agriculture sector achieved a twelve-quarter record high growth rate, while the industrial sector rebounded in Q4 FY23, primarily led by manufacturing activities. The contact-intensive services sector fully recovered to pre-pandemic levels, showcasing resilience and contributing significantly to economic growth.

The external demand worked for India until the first quarter of FY23 but slowed down in the second half, impacting merchandise exports. However, services exports continued to surge, driven by IT exports and professional services. The decline in global commodity prices reduced import costs, supporting economic activity. The Indian Governments continued thrust on massive public capital expenditure to attract private investment and boost demand, promises for its long-term fiscal health. With global businesses looking at diversifying their supply chains away from chronic China dependence, India could emerge as a preferred destination for sourcing.

Inflation emerged as a significant challenge in FY23, impacting economies worldwide. Indias inflation remained comparatively lower than other emerging and advanced economies, owing to effective supply-side measures and easing commodity prices. The Reserve Bank of India (RBI) managed to control inflation through targeted repo rate increases. Core inflation remained relatively sticky but started to decline from March 2023 onwards.

During FY23, Indias Goods and Services Tax (GST) collection witnessed encouraging trends. The cumulative gross collection for the year reached Rs.18.10 lakh crore, with an average monthly collection of Rs.1.51 lakh crore. The gross revenues for the year outpaced the previous year by 22%. This positive trend got supported by the Indian Governments focus on promoting voluntary tax compliance and reducing tax evasion. Simplifying return filing procedures and adopting advanced technology facilitated easier tax compliance for businesses and individuals alike. Technological advancements were crucial in streamlining tax administration, reducing administrative burdens and ensuring efficient revenue collection. Using digital platforms enhanced transparency and accountability, making the GST system more robust.

Key highlights of Union Budget FY24

• The Indian Government increased capital investment for the third consecutive year to Rs.10 lakh crore, a 33% rise from previous years outlay of 7.5 lakh crore, aiming to boost growth, jobs, private investments and counter global headwinds.

• Capital outlay of Rs.2.40 lakh crores provided for railways, the highest ever, nearly nine times the 2013-14 outlay.

• Plan to set up 100 labs for 5G application development, unlocking opportunities, business models and employment potential.


Indias economic outlook remains positive, with RBI forecasting GDP growth of 6.5% for FY24. Resilient urban demand and recovering rural demand will drive economic growth. Capital expenditure and private investments will contribute to sustained growth momentum. However, potential constraints include geopolitical stress, financial volatility, extreme weather events and weak global demand, which may impact Indias growth outlook for FY24. Prudent macroeconomic management and continued investment in supply-side infrastructure are essential to sustain growth and enhance Indias economic stability. Indias economy has shown remarkable resilience and with strategic planning and policy support, it is poised for long-term, sustainable growth, solidifying its position as a thriving economy.

Industry Overview


The telecom sector has witnessed remarkable growth and transformation over the past decade, driven by technological advancements, increased demand for connectivity and supportive government policies.

According to TRAI Telecom Subscriptions Reports, telephone connections have experienced significant growth, with total connection (wireless) reaching 1,143.93 million on, 31st March, 2023, from 904.51 million on 31st March, 2014. Urban and rural areas have seen a surge in telephone connections, with rural areas outpacing urban areas in growth rate. This increase has led to a rise in tele-density, indicating more widespread access to telecommunications services nationwide.

Internet and broadband services have thrived, substantially increasing internet connections and broadband subscriptions. This growth has been facilitated by a considerable decrease in the average revenue per subscriber for wireless data, making data more affordable for consumers. Thus, the average monthly data consumption per wireless subscriber has skyrocketed. Fiberoptic broadband, represented by Fiber to the Home (FTTH), has gained traction in rural and urban areas, contributing to improved broadband penetration. Certain regions, like Delhi have seen high adoption rates and FTTH has positively impacted household broadband connectivity.


Particulars Wireless Wireline Total (wireless+ wireline)
Broadband subscribers (million) 813.08 33.49 846.57
Urban telephone subscribers (million) 627.54 26.16 653.71
Rural telephone subscribers (million) 516.38 2.25 518.63
Total telephone subscribers (million) 1,143.93 28.41 1,172.34
Overall tele-density (%) 82.46 2.05 84.51
Urban tele-density (%) 128.45 5.36 133.81
Rural tele-density (%) 57.46 0.25 57.71
Share of urban subscribers (%) 54.86 92.09 146.95
Share of rural subscribers (%) 45.14 7.91 53.05

Source: Telecom Subscriptions Report, TRAI (March 2023)

The number of mobile base transceiver stations (BTS) and mobile towers have grown significantly, indicating the expansion of the telecom infrastructure to meet the increasing demand for mobile services. This expansion is crucial for providing reliable connectivity to users.


Aatmanirbhar Bharat in the telecom sector: The Ministry of Communications has given approval to 42 companies, including 28 MSMEs, under the PLI scheme to boost the Atmanirbhar Bharat Abhiyaan for indigenous production of telecom and networking products. These companies have committed to invest Rs.4,115 crore, which will likely result in sales of Rs.2.45 lakh crores and create >44,000 jobs.

This initiative promotes local manufacturing and establishes India as a global hub for telecom and networking products.

Space-based communication services:

TRAIs consultation paper on spectrum assignment for space-based communication services indicates the potential launch of satellite communication and internet services by the end of 2023, aiming to provide enhanced connectivity to remote areas.

Open RAN deployment: The deployment of open RAN solutions will transform the telecom sector, offering flexibility through diverse vendor choices, cost reduction and seamless integration of new technologies. This shift fosters collaborative growth and adaptability for 5G and beyond.

5G introduction in India: a transformative technological leap


The Indian Government laid the foundation for 5G services in the 8th Spectrum Auction held in July 2022. The auction featured a 72,098 MHz spectrum with 10 bands across 22 licensed services areas (LSAs). Of this, 51,236 MHz (71%) got sold, fetching a record bid of Rs.1,50,173 crore. The telecom reforms and clear policies like zero spectrum usage charges, flexibility in payments and improved surrender options have resulted in the success of the auction in ensuring enhanced telecom connectivity and service quality.


On 1st October 2022, the Indian Government launched 5G services, ushering in a new era of high-speed internet connectivity. The prime minister was presented diverse use cases of 5G in diverse sectors, including education, health, worker safety and smart agriculture from telecom service providers. The event also featured the introduction of an indigenous 5G Non-Standalone (NSA) core by the Centre for Development of Telematics (CDoT). It showcased pioneering technology demonstrations by Indian telecom start-ups, MSMEs, and industry leaders. The event unleashed possibilities across agriculture, health, education, smart cities, Industry 4.0 and financial inclusion, propelling Indias global tech standing.


• Indigenous 5G test bed: The Department of Telecommunications (DoT) established an Rs.Indigenous 5G Test Bed, a collaborative platform for academia and industry to validate 5G products, prototypes, algorithms and services in line with Indias self-reliance mission in 5G technology.

• 5G trials for telecom service providers (TSPs):

To advance 5G deployment, the DoT granted permissions to prominent TSPs for 5G trials in India. These trials highlight indigenous innovation and propel the Countrys progress in 5G adoption.

• 5G use case labs:

The DoT established dedicated labs for specific sectors, such as education, healthcare, and agriculture. These labs promote innovation and collaboration, positioning India as a 5G-driven advancements hub.


With the Indian Governments thrust and faster industry development, the 5G market in India is likely to witness substantial growth over the next decade. According to industry data, the 5G rollout in India has been rapidly advancing, with Reliance Jios 5G coverage stood at 406 cities till March 2023 and it plans for pan-India coverage by December 2023. Bharti Airtels 5G coverage crossed 500 cities till March 2023 and aiming to expand its 5G footprint all over urban India. Vodafone Idea also plans to launch 5G soon.

There is a significant opportunity for 5G network vendors in India. Telecom operators in India have been keen to harness the 5G opportunity, with strategic collaboration with equipment and infrastructure vendors being their focus. The potential applications of 5G are vast, including the agriculture, automotive, manufacturing, healthcare, education, energy & utilities and media & entertainment industries. In the agricultural industry, 5G is anticipated to transform smart irrigation, precision farming and monitoring of soil, crops, and livestock. In the automotive industry, it is expected to fast-track the implementation of connected cars, autonomous driving and smart transportation systems. In the healthcare industry, 5G will aid in the application of the Internet of Medical Things (IoMT), connected healthcare, patient data management and online consultation. 5G is also projected to have extensive use in smart cities, enabling smart utility management, traffic management systems, surveillance & analytics and waste management.


Optical fiber cables are used in various industries, including telecom, power utilities, defence and medical across the world. The global optical fiber cable (OFC) market showcased robust growth, reaching a valuation of US$10,349.63 million in 2022 and is likely to exhibit significant growth further in the coming years. Heightened demand for high-speed data transmission, widespread 5G adoption and increased broadband connectivity will drive this growth. Additionally, technological advancements, such as all-optical networks (AON) and innovative solutions like micro cables have fuelled market expansion. Collaborative efforts among nations and industry associations have extended network coverage and amplified communication capabilities, showcasing the sectors dedication to strengthening global connectivity.

Highlights of Union Budget 2023-24 for the Telecom Industry

• The Indian Government allocated Rs.975.79 billion for the Department of Telecommunications.

• The Indian Government will set up 100 labs to develop applications using the newly launched 5G services. The labs will cover, among other things, applications such as smart classrooms, precision farming, intelligent transport system and healthcare.

• Bharat Sanchar Nigam Limited (BSNL), which is rolling out 4G and 5G services this year, will get Rs.529.37 billion capital infusion from the Indian Government in 2023-24.

• The Indian Government allocated Rs.21.58 billion for optical fiber cable-based networks for defence services and Rs.7.16 billion for telecom projects in the north-eastern states.

• The Indian Government will set up three centres of excellence for artificial intelligence (AI) in leading educational institutions to realise the vision of Make AI in India and make AI work for India.

Increased connectivity, affordability of data, infrastructure expansion and the introduction of 5G services have fuelled the telecom sectors growth. These advancements have opened opportunities for various industries and sectors to leverage new technologies and improve their operations and services.


5G network rollout and increased connectivity:

The deployment of 5G networks has emerged as a pivotal driver escalating the demand for high-speed network connectivity. This surge fuels the need for resilient OFC infrastructure, which is essential for seamless data transmission over extensive distances. Fiber-based networks are fundamental to 5Gs backbone, bolstering efficient Fiber to the Home (FTTH) broadband solutions.

Digital transformation: The rise of 5G networks and intensifying digital transformation endeavours, significantly contribute to the mounting demand for OFC. Compared to traditional copper cables, its enhanced security, reliability, and bandwidth render it a preferred choice across various applications.

Critical role of submarine cables: Submarine cables underpin the global internet infrastructure, interconnecting continents and facilitating bandwidth-intensive services offered by cloud and content providers. Collaborative initiatives, like the Arctic fiber optic cable network, spotlight the industrys commitment to enhancing data transmission efficiency.

Advancements in fiber optic technology:

Optical couplers, optical switches and the development of alloptical networks (AON) drive efficiency improvements and augment communication capabilities, further stimulating market growth.

Data centre expansion:

The growing number of data centres, vital for high-speed data transmission, heavily relies on robust fiber cabling. Global tech giants, including Google, Amazon and Microsoft, have invested in expanding their global data centre networks, driving the demand for OFC. Governments also recognise the strategic importance of data centres, reinforcing the link between data centre expansion and the growth of the optical fiber cable market.


The BharatNet project, achieved significant progress in its mission to provide broadband connectivity to all Gram Panchayats (GPs) across India. As of April 3, 2023, the project had laid an extensive network of 6,26,170 kilometers of Optical Fiber Cable, facilitating high-speed connection to 1,97,147 GPs. In addition, 1,90,441 GPs have been made service ready.

Moving ahead with the BharatNet Project, the Government is planning to extend internet access to 6.4 lakh GPs and villages in the next 2.5 years. The Government has allocated substantial funds, around Rs.1.39 lakh crore, to support this expansion.

The demand for single-mode fiber to the home (FTTH) is gaining traction across FTTH broadband, 5G deployment, etc. Recent initiatives to migrate fundamental architecture toward FTTH will fuel full-fiber rollouts in the next few years, mainly in the United Kingdom, Germany, and Italy.

As per the FTTH Council, EU report, in 2022 EU 39 reached more than 111 million FTTH subscriptions and 62% of the connections were from EU27+UK. There will be more than 190 million FTTH subscriptions in Europe by 2027, with EU27+UK accounting for 65%, i.e., over 123 million.

Moreover, various countries are collaborating with fiber optic vendors to build the fiber optic network. For instance, in May2022, Prysmian Group announced its partnership with Telstra, an Australia-based operator, to build a new inter-capital fiber network in the market. The national fiber network project is a multi-year project, which will see Telstra, build a new state-of-the-art intercity dual fiber path that will add up to 20,000 route kilometres of new fiber optic terrestrial cable, boosting inter-capital capacity, as well as capacity for regional areas.

Indian Railway Telecommunication Sector

Telecommunication and signalling systems ensure seamless train control, operation and safety across the extensive Indian Railways (IR) network. With a strong emphasis on safety, efficiency and technological adoption, Indian Railways presents significant business opportunities for companies developing products related to telecommunication and signalling systems.


Indian Railways has undertaken a significant modernisation effort by widely adopting electronic interlocking (EI) systems. This initiative aims to enhance the efficiency and safety standards of the entire network, resulting in a more seamless and secure environment for train operations.

As of 31st May 2023, the implementation of EI has been extended to more than 3,100 stations, leveraging digital technologies to elevate the effectiveness of train operations and ensure safety.


The transition from traditional mechanical signalling to electrical/electronic signalling interlocking systems further underscores Indian Railways commitment to progress. A noteworthy achievement is incorporating these advanced systems in 98.8% of the total stations, totalling 6,427, resulting in heightened operational efficiency and new safety norms within the network.

Measures like introducing axle counters for automatic clearance of block section (BPAC) and integrating level crossing gates with signals at 11,093 locations have enhanced safety. These initiatives have streamlined train arrivals and line clearance processes and significantly contributed to an overall safer train operation environment.


The Kavach automatic train protection (ATP) system is a remarkable innovation in the signalling domain. With its automated brake application and weather-adaptive features deployed across 1,465 route kilometres and 121 locomotives on the South Central Railway zone, Kavach showcases Indian Railways technological prowess and commitment to cutting-edge solutions.

Indian Railways has allocated Rs.4,198 crores for modern signalling works for FY24. This investment further drives the adoption of advanced technologies, reinforces safety measures and strengthens standardised practices, ultimately leading to a safer, more efficient and technologically advanced rail network. This alignment with Indian Railways vision offers a promising avenue for businesses to contribute to a brighter and more interconnected railway network.

Highlights of Union Budget FY23 for the Railway Sector

• Capital expenditure for Indian Railways increased to Rs.2.40 lakh crores in Union Budget 2023-24, nearly nine times higher than FY14.

• Increased private investment in railway infrastructure, supported by the newly developed Infrastructure Finance Secretariat.

• Introduction of 400 new-generation Vande Bharat Express trains in the next three years to enhance travel efficiency and convenience.

Indian Defence Sector

The Indian defence sector achieved a historic milestone in FY23, with defence production standing at Rs.1,06,800 crore, this growth marks a remarkable surge of over 12% compared to Rs.95,000 crores in FY22. Moreover, Indias defence exports reached an all-time high of Rs.15,920 crores in FY23, a substantial increase from Rs.12,815 crores the previous year and >10x since 2016-17. With exports to more than 85 countries and 100 firms engaged in defence product export, the Indian defence sectors design and development capabilities gained international recognition. The rising export and participation of 104 countries in Aero India 2023 further showcases Indias flourishing defence manufacturing capabilities.


Enhanced budgetary provision: Increased budget forms the foundation for transformative changes, addressing critical priorities such as operational readiness, security infrastructure and domestic defence production. The investment aligns with global security trends, reinforcing the Indian Governments commitment to a robust and technologically advanced defence apparatus.

Indigenous innovation focus: The Aatmanirbhar Bharat initiative promotes indigenous design, development and manufacture of defence equipment, substantially reducing dependence on imports. A 9% increase in allocation to DRDO (23,264 crore) propels advancements in critical areas like radar systems, communication networks and cutting- edge technologies.

Robust manufacturing ecosystem: Government collaborations and policy reforms, including MSME and start-up integration, simplify industrial licensing processes and foster a vibrant manufacturing ecosystem. The iDEX initiative receives a notable increase of 93% to Rs.116 crores in FY23 from Rs.45 crores in the previous year, promoting collaboration between the defence industry and start-ups for technological progress and innovation.

Border security reinforcement: A 43% increase in Border Roads Organisations capital budget to Rs.5,000 crores emphasises the creation of strategic assets along borders, enhancing defence capabilities in remote and critical areas.

Highlights of Union Budget FY23 for the Defence Sector

• Earmarked 75% of the capital procurement budget for the domestic industry in FY24.

• Opened defence R&D for industry, startups and academia, with 25% of the budget allocated.

• Announced a plan to establish an independent nodal umbrella body for streamlined testing and certification processes.

Business Performance Review


In the post-COVID-19 landscape, the demand for optical fiber cables surged, driven by the increasing need for high-speed internet and the widespread expansion of Fiber to the Home networks. This growth is attributable to the heightened data traffic from remote work and online transactions.

During FY23, HFCL achieved a significant milestone by completing the commissioning of optical fiber Phase-II capacity in Q3 FY23. This expansion raised the annual capacity from 8mn fkm to 10 mn fkm.

HFCL is substantially expanding its optical fiber capacity from 10 mn fkm to 33.9 mn fkm per annum to meet the escalating demand. The ongoing construction work is progressing well, with the first phase of this expansion, taking capacity to 25 mn fkm, expected to be commissioned by Q3FY24. The remaining 9 mn fkm are likely to be commissioned by Q4FY25.

In FY23, HFCLs Hyderabad Fiber Plant achieved new certifications, including ISO 10002:2018 (Customer Satisfaction & Complaints Management) and ISO/IEC 27701:2019 (Privacy Information Management System). These certifications validate the organisations robust management systems for customer feedback and personal data management.

The Fiber Plants commitment to excellence is evident through its existing certifications: ISO 9001:2015 (Quality Management System), TL9000-H R6.3/R5.7 (Telecom industrys Quest Forum Quality Management System),

ISO 14001:2015 (Environmental Management System),

ISO 45001:2018 (Occupational Health & Safety Management System), ISO/IEC 27001:2013 (Information Security Management System), and ISO/IEC 20000-1:2018 (Service Management System).

HFCLs optical fiber products received the GR-20 Telcordia certification in Q1-FY23, a crucial approval for selling products in the North American market. The Company is proud to have passed the stringent testing requirements set by Telcordia, which include meeting strict international product standards and having a professional testing facility and quality control system in place.

Telcordia certification by Ericsson Network Infrastructure Solutions (NIS) is a testament to the Companys continued commitment to excellence and our drive to innovate in the telecommunication industry.

The Fiber Plant also garnered external recognition by receiving Frost & Sullivans Indian Manufacturing Excellence Award - Silver Merit Award, a testament to its operational excellence journey.

The Company is also in process of expanding its optical fiber cable production capacity from 25mn fkm to 35mn fkm in a phased manner, with the completion targeted by FY25.

HFCLs relentless pursuit of innovation led to Telcordias approval for GR-20 Core for several cable products as well. These approvals signify compliance with rigorous GR-20 Core testing criteria, underpinning the cables reliability and adherence to industry standards.

Diversifying its portfolio, HFCL designed and gained approval for fire rating and CE/UKCA compliance for various cable products, facilitating their entry into the UK and European markets. The testing facility at HFCL Goa Plant received the prestigious test data acceptance programme (TDAP) certification from the VDE Institute, Germany, affirming the facilitys commitment to quality and safety.

The Company successfully upgraded its Business Continuity Management System (BCMS) to ISO 22301:2019 standards, enhancing its resilience to disruptions at its Goa Plant. The Goa Plant also upgraded machinery and support systems to improve capacity and productivity.

Continuing its pursuit of innovation, during the year under review, the Company developed ultra-thin micro cables and a pioneering high-density ultra-light aerial cable. The Company is also developing newer types of optical fiber cables for overseas markets, required for Data centers, 5G & 6G networks and is seeking patents for newly developed optical fiber cable technologies.


The Indian Governments strong focus on improving communication networks across various sectors, such as telecom, railways and defence has led to demand for HFCLs communication business. To adapt to this changing landscape, the Company has shifted its revenue model, focusing more on product-led revenue than projects-based revenue. This shift is evident from the progress made over the past few years. In FY21,27% of the revenue came from products and 73% from EPC projects, while in FY23, revenue from products surged to 56% and EPC projects accounted for 44%.

The diverse product portfolio encompasses Wi-Fi 5 &

6 Access Points, Point to Point and Point to Multipoint backhaul Radio (Unlicensed Band Radios), L2/L3 Network Switches, Home Mesh Routers along with Cloud based Network Management System. The Companys export focus is expanding to encompass Wi-Fi and UBR offerings tailored for EMEA and APAC markets.

Driven by a steadfast dedication to addressing industry needs, the Company is developing various products for 5G RAN, 5G Fixed Wireless Access (FWA) CPEs, Transport networks (Routers) along with Wi-Fi 7 Access Points aligning with the Government of Indias nationwide 5G deployment and digital transformation objectives. The Companys ongoing pursuit of expanding its product offerings and exploring emerging technologies underscores its commitment to providing comprehensive, state-of-the-art solutions to clients.

FY23 witnessed significant collaborations with industry leaders such as Qualcomm, Microsoft and Wipro. These alliances accentuate the Companys commitment to technological innovation, amplifying research and development capabilities for advanced telecom network and turnkey solutions.

Furthermore, the Companys contributions to BharatNet programme, extend from connecting gram panchayats to villages, significantly broadening business prospects.

As a crucial partner for Reliance Jio in North India, the Company plays a vital role in their OFC and FTTH network rollout.

Government initiatives, including BharatNet and BSNL network upgrades for the upcoming 4G/5G rollouts, along with the modernisation of Indian Railways signalling and communication systems, play a pivotal role in driving this demand in EPC space. HFCL is a key contributor to the Government of Indias flagship BharatNet programme.

The growing appetite for Fiber to the Home (FTTH) services, coupled with industries growing focus on automation and

digitisation, presents significant growth opportunities and improved margins. The Company is actively responding to the increasing need for expanding 4G and 5G networks, enhancing BharatNet and extending global FTTH networks.


In 2019, HFCL launched its first in-house designed Wi-Fi and Unlicensed Band Radio product range, which saw great success in its debut year of commercial shipments.

The Companys emphasis on quality, performance, and cost-efficiency enabled it to compete globally and gain a significant market share.

Building on this momentum, HFCL increased its efforts in research and development (R&D), aiming to make advanced technology affordable to a wider audience. Despite shortage of semiconductors worldwide, the Company managed to ship over 200K units in FY23 and saw a notable increase in customer interest.

With a focus on New Products, New Customers, and New Geographies, HFCL invested in R&D for various offerings, including L2 switches, enhanced Wi-Fi 6 Access points and improved efficiency point-to-point and point-to-multi-point radios. The Company also expanded its channel partners for these products, increasing its customer base to over 50 and extending operations to more than 10 countries. The Company directed sales efforts towards emerging markets like Europe, Middle East and Africa, showcasing its industry leadership by offering TIP OpenWiFi and Open roaming compliant solutions.

During FY23, the Company secured notable projects from customers such as State Bank of India, Bank of Baroda, Life Insurance Corporation of India and Electronics Corporation of India Limited, deploying comprehensive Wi-Fi solutions managed by its cloud controller, integrated captive portal and L2 switches. The Companys commitment to innovation is evident as it is developing ultra-high-capacity Point-to- Point and Point-to-Multi Point Radios reaching up to 4 Gbps, future Wi-Fi 7 products exceeding 10 Gbps capacity, xPON products for the FTTH market and a new generation of 48- port L2 switches. These products are seamlessly managed through a Unified Cloud solution with advanced features, including integrated AI offerings.

In a world where seamless connectivity has become an essential aspect of daily life, HFCL has positioned itself as a key player in delivering high-quality telecom products.

The Companys collaboration with the World Broadband Alliance to deploy Open Roaming across its Wi-Fi portfolio showcases its commitment to offering a seamless and uninterrupted user experience. This initiative highlights the Companys endeavour to stay ahead of the curve in providing reliable and efficient Wi-Fi solutions. By leveraging its strategic partnerships and collaborations with global distributors, HFCL is well-positioned to expand its product presence across international markets. This expansion not only enhances the Companys global footprint but also underscores its dedication to providing cutting-edge solutions that cater to the increasing demands for high-speed connectivity and the eventual adoption of 5G technology.


As the world enters the era of 5G technology, HFCL has embraced this transformative wave with innovative products and solutions. The Companys collaboration with Microsoft to launch private 5G solutions for enterprises

is a testament to its commitment to ushering in the next generation of communication. This initiative showcases HFCLs dedication to supporting industrial transformation through high-speed, low-latency and secure 5G networks.

The Companys upcoming product launches, including 5G fixed wireless access CPE, small cells, routers and more, position it as a frontrunner in the 5G revolution.

With a projected total addressable market (TAM) of ~US$ 600 billion by FY30 for such products worldwide, HFCLs strategic initiatives align with the rapidly-evolving global landscape.

HFCLs 5G business unit caters to the needs of communication service providers, enterprises and industry verticals in Indian and global markets. The primary focus of the 5G Business is on:

• Products

• Global system integration services

• Innovation

The table summarises the cumulative market sizes for 5G RAN, Transport and Global System Integration services

Market segment Portfolio under development Impact/Opportunity landscape Cumulative market size (FY23-30)*
5G radio access network (RAN) • 5G 8T8R RU (radio unit) Compliant to 3GPPs Release 16 and based on open standards like open radio access network (O-RAN ). CSPs embracing O-RAN to unlock innovation, ensure rapid rollout of innovative 5G services and boost supply chain diversity. US$ 281.8 billion
• 5G 2T2R indoor small cell for FR1 (Sub 6 GHz)
• 5G 4T4R outdoor small cell for FR1
• FWA CPE (indoor and outdoor for FR1 and FR2) Small cells for improved coverage and capacity to complement the macro network.
FWA helps operators with a cost-effective way to deliver fiber-like internet speeds wirelessly over 5G networks. It enables new business opportunities for mobile operators by allowing them to offer fixed internet broadband services to consumers and enterprises using their 5G network infrastructure.
5G transport • Cell site router Modernisation required for transformation of transport network for 5G. US$ 87.3 billion
• DU (Distributed Unit) Aggregation Router Providing bandwidth delivery solutions for residential and enterprise customers.
• CU (Centralised Unit) Aggregation Router
• Enterprise Routers (Low, Medium & High Capacity)
Global system integration services • 5G integration services CSPs and enterprises want 5G lab services to test interoperability and system integration services to deploy end-to-end public/private 5G networks. Enterprises and industry verticals seek E2E services to automate operations with 5G enabled use-cases powered by data, analytics and AI. US$ 245.1billion
• 5G lab-as-a-service
• Private 5G networks
• 5G autonomous network operations

*Source: Feedback Advisory Report - August 2023

HFCL is building a portfolio of 5G products and services in these segments, as detailed below:

5G RAN products: The 5G RAN products are based on open standards like ORAN (Open RAN) and comply with 3GPPs Release 16 to address global market needs. Secure by design, enabling autonomous operations and providing enhanced customer experience are cornerstones of the 5G RAN product portfolio. Furthermore, the 5G RAN products are flexible to coexist with the 4G LTE through dynamic spectrum sharing (DSS). This feature enables network operators to monetise their current 4G LTE networks while ramping up 5G services.

The 5G RAN portfolio includes these products with more in the pipeline:

Macro RU (8T8R) is an open-RAN based disaggregated 5G radio unit compliant with ORAN specifications 7.2 split option. It is a dual carrier macro cell RU.

All-in-One Indoor Small Cell (2T2R) to deliver high-quality, secure cellular indoor coverage, complementing the macro network to improve coverage.

All-in-One Outdoor Small Cell (4T4R) to deliver high- quality, secure outdoor cellular coverage, complementing the macro network to improve coverage.

FWA CPE (indoor and outdoor) to address broadband requirements in rural, suburban and dense urban areas.

5G transport products: The transport network needs modernisation for 5G due to much higher bandwidth per cell site, densification of cell sites, ethernet and IP connectivity and stringent latency requirements. HFCLs portfolio of 5G transport products helps operators transform transport networks. HFCL has based its portfolio of 5G transport products on merchant silicon, network disaggregation and open standards like TIP (Telecom Infra Project) and Open Compute Project (OCP). The 5G transport portfolio includes the following products:

Cell site/access routers aggregate traffic from radio Baseband Unit (BBUs) and then backhaul it over an aggregation network to the CSPs core network.

Distributed unit (DU) aggregation routers aggregate traffic from multiple DUs and then backhaul it over an aggregation network to the operators mobile edge cloud (MEC) location or central data centre.

Centralised unit (CU) aggregation routers aggregate traffic from multiple CUs and then backhaul it over an aggregation network to the operators core location.

Enterprise routers (low, medium and high-capacity)

aggregate enterprise traffic and provide bandwidth delivery solutions for residential and enterprise customers.


The scope of global system integration services is to be a strategic partner to Communication Service Providers and Enterprise customers to help accelerate the adoption of 5G and enable their digital transformation journey. We provide a focused set of Digital Engineering Services at the convergence of network and IT. These digital engineering services include:

5G integration services: End-to-end 5G, virtualised radio access networks (vRANs) and O-RAN solution provider integrating HFCL products and third-party/ecosystem

products across network design and planning, installation, integration and commissioning and optimisation.

5G lab-as-a-service: Providing 5G lab services through a centre for testing multivendor/multi-device 5G vRAN/O-RAN deployments, interoperability, internet of things (IoT) device and application testing.

5G private networks: Includes managed service provider for 5G private networks and industry solutions for vertical markets that include manufacturing, defence, railways, smart cities and security and surveillance.

5G autonomous network operations enabled by data, analytics and AI to improve network operations and service management, customer care and overall customer experience through a consistent omni-channel experience.

Innovation in 5G and 6G: HFCL is a member of O-RAN ALLIANCE, TIP and TSDSI. As an O-RAN ALLIANCE member, HFCL will focus on contributing to standards that ensure a true open and multi-vendor RAN network with emphasis on front haul, beamforming, near-real-time RAN intelligent controller (RIC), service management and orchestration (SMO) and end-to-end test specifications. HFCL will also focus on integrating and validating its 5G products and solutions at plug fests with other O-RAN ALLIANCE members and contributors.

HFCL launched 5G lab-as-a-service to offer an automated test environment to the private sector, government and academia to work on 5G solutions and services. The 5G Lab provides a sandbox for rapid prototyping of 5G use cases addressing the needs of various industry segments that include manufacturing, transportation, healthcare,

education and retail. The 5G lab will help to create preintegrated and pre-validated 5G solutions for low mobility large cell (LMLC) needed for the rollout of rural mobile broadband in the Country.

HFCL invests in technology creation, research and standards contribution, patent portfolio and strong indigenous R&D capability. The focus areas of innovation in 5G include RF front end, antenna design, hybrid beamforming, autonomous operations of 5G networks, cloud-native architecture, edge computing, security, energy efficiency, integration of licensed and unlicensed radio (3GPP and Wi-Fi), usability and enhanced user experience. In pursuit of staying at the forefront of innovation and next-generation technological capabilities, HFCL has secured approval for its 5 patents filed for 5G Radio Access Network products. HFCL has also applied for four patents on 5G radio in energy efficiency and system performance improvement with beamforming radios.

HFCL will collaborate closely with leading academic and research institutes in India. In addition, HFCL is also investing in 6G research to study the various aspects of 6G like new waveforms, design considerations to operate over the 100 GHz spectrum band, convergence of terrestrial and satellite communication, human-centric network, energy efficiency and design considerations to realise the 6G new use cases like metaverse, holographic presence, tactile internet, realistic haptics and cyber-physical systems.


HFCL is transforming railway communication systems, including Metros, Main-line railways and Dedicated Freight Corridors, as part of its modernisation efforts for Indian Railways signalling and telecommunication infrastructure.

In the railway communication segment, HFCL is deploying advanced telecom networks for seven greenfield dedicated freight corridor projects for Indian Railways. The Companys portfolio drives the development of next-gen telecom products and technology solutions, aimed at upgrading communication systems for metros and mainline railways.

The Company collaborates domestically and internationally to integrate communication networks for projects like Kanpur- Agra Metro, Mauritius LRT Metro, Dhaka Metro, Surat Metro, and Delhi Metro rail projects. Additionally, HFCL implements video management systems at about 750 railway stations, enhancing rail safety and security through technology.

Leveraging its system integration expertise, HFCL is poised for substantial opportunities in the next three years, focusing on greenfield projects and metro expansions across India and selected foreign markets.


The Company is engaged in defence communication and defence electronics business. On the defence communication segment side, the Company has seen significant progress with large projects from the Indian armed forces. The Company is building a dedicated standalone optical multiprotocol label switching (MPLS) based network, end-to-end solution for multiple hybrid microwave broadband radio links in remote areas, exclusive and dedicated nationwide dense wavelength-division multiplexing-based optical transmission backbone network and integrating fiber network overlay with GIS maps, satellite images and commercial land-based data for the Indian armed forces with a contract value of Rs.8,098 crore. Overall, the unexecuted order book stands at ~1,846.57 crores.

In the defence electronics business, the Company has already developed products such as electro-optical devices, electronic fuses, high capacity radio relays and video management system (VMS) and video analytics, the revenue from which is expected to come from FY24 onwards.

In addition, prototypes of software-defined radios and surveillance radars are under final testing.

• The Company has participated in tenders for provision of thermal weapon sights for light machine gun and rocket launchers with indigenously developed products and both are in different stages of trials.

• Indigenously developed electronic fuses for artillery ammunition are being tested. The complete intellectual property rights (IPR) of these resides with HFCL and the extent of indigenisation of components is 80% in line with the Atmanirbhar Bharat Abhiyaan of the Indian Government.

• In the Make-II programme of the Indian Army, HFCL is one of the shortlisted vendors for upgradation of armament of BMP 2/2K and have recently successfully cleared the prototype trials for the same.


Revenue from operations: The net sales during FY23 stood at Rs.4,743.31 crores compared to Rs.4,727.11 crores in FY22.

The net revenue from the turnkey contracts and services decreased to Rs.2,103.60 crores in FY23 from Rs.2,671.74 crores in the previous year, contributing 44.35% of total consolidated revenue in FY23. The net sales from telecom products increased to Rs.2,637.97 crores in FY23 from Rs.2,055.16 crores in the previous year, contributing 55.61% of total consolidated revenue in FY23 which is as per our well thought of strategy to increase revenue from products. The benefit from shift

in revenue from project to product is quite eminent in the margin improvements.

Operating expenses: The total operating expenses for FY23 stood at Rs.4,124.63 crores against Rs.4,077.04 crores in FY22.

EBITDA: During FY23, EBITDA stood at Rs.665.86 crores as against Rs.692.98 crores in FY22.

Net profit: Net profit in FY23 stood at Rs.317.71 crores as against Rs.325.86 crores recorded in FY22. The net profit margin for the year under review decreased marginally to 6.70% from 6.89% in FY22. The earnings per share for FY23 stood at Rs.2.18 per share against Rs.2.38 in the previous year.

Dividend: The Board of Directors of the Company has recommended a final dividend @20%, i.e., Rs.0.20 (twenty paise) per equity share of face value Rs.1 each for FY23 subject to the approval of the shareholders of the Company at the ensuing Annual General Meeting of the Company.

Net worth: The Companys net worth increased to Rs.3,144.14 crores from Rs.2,818.37 crores in the previous year.

Debt: The Debt in FY23 stood at Rs.748.31 crores against Rs.742.80 crores in FY22.

Order book: The Company has a healthy consolidated order book of more than Rs.7,000 crores as on 31st March, 2023, providing clear visibility of earnings for the coming years.

The order book comprises high-margin O&M contract orders worth Rs.1,829 crore.


Authorised Share Capital

As on March 31, 2023, the Authorised Share Capital of the Company stood at Rs.760 crores (Rupees Seven Hundred Sixty crores only) divided into 510 crores (Five Hundred Ten crores) equity shares of face value of Rs.1/- (Rupee One) each, aggregating to Rs.510 crores (Rupees Five Hundred Ten crores only) and 2.50 crores (Two crores Fifty Lakhs) Cumulative Redeemable Preference Shares (CRPS) of Rs.100/- (Rupees Hundred) each, aggregating to Rs.250 crores (Rupees Two Hundred Fifty crores only).

Paid-up Share Capital

As on March 31, 2023, the Paid-up Equity Share Capital of the Company stood at Rs.137.78 crores comprising of 137,77,58,321 equity shares of face value of Rs.1/- each.

Allotment of equity shares/warrants: During the year, the Company, on June 08, 2022 , had allotted 11,74,100 equity shares of face value of Rs.1/- each, to HFCL Employees Trust for implementing the benefits of HFCL Employees Long Term Incentive Plan - 2017, in lieu of the vested Employee Stock Options (ESOPs) granted to eligible employees of the Company, pursuant to the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.

Further, during the year, the Allotment Committee (Warrants) of the Board of Directors, vide its resolution dated October 15, 2022, had allotted 1,41,00,000 (One crores Forty One Lakh) Warrants convertible into 1,41,00,000 equity shares at a price of Rs.80/- per Equity Share (Warrant Exercise Price), to persons belonging to Promoter and Non-Promoter category in accordance with the SEBI (Issue of Capital and Disclosure Requirements) Regulations,

2018 ("SEBI ICDR Regulations") and applicable provisions the Companies Act, 2013, as approved by the Board of Directors and the Shareholders of the Company at their meetings held on September 02, 2022 and September 30, 2022 respectively.

The Company had received an upfront amount of Rs.20/- (Rupees Twenty Only), per warrant which is equivalent to 25% of Warrant Exercise Price, being the warrants subscription price aggregating to Rs.28,20,00,000. The Warrant Holders will be required to make payments of balance 75% of the Warrants Exercise Price, at the time of exercise of the right attached to Warrant(s) to subscribe to equity share(s). The tenure of Warrants shall not exceed 18 (Eighteen) months from the date of allotment. If the entitlement against the Warrants to apply for the equity shares of the Company is not exercised by the Warrant Holders within the aforesaid period of 18 (Eighteen) months, the entitlement of the Warrant holder to apply for equity shares of the Company along with the rights

attached thereto shall expire and any amount paid by the Warrant Holders on such Warrants shall stand forfeited by the Company. There are 1,41,00,000 convertible warrants in the Company, which are pending for conversion, as on the date of this Report.

Qualified Institutions Placement: In order to meet funding requirements of capital expenditure for capacity expansion of optic fiber and optic fiber cables by the Company or through its subsidiaries ("OFC Expansion"); funding expenditure towards research & development initiatives including acquisition of technologies; repayments/pre-payments of short term borrowings availed from banks; funding working capital requirements and general corporate purposes, the Board of Directors of the Company at its meeting held on September 02, 2022 which was also approved by the Shareholders of the Company at its Annual General Meeting held on September 30, 2022, decided to raise funds up to Rs.650 crores by way of issue of Equity Shares, through various permissible modes under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 ("SEBI ICDR Regulations") and the Act and the rules made thereunder.

Subsequently, the Fund Raising Committee of Directors has, at its meeting held on August 28, 2023, approved that the proposed fund raise shall be by way of issue of Equity Shares through a qualified institutions placement ("QIP") in accordance with the provisions of the SEBI ICDR Regulations and the Act and the rules made thereunder, each as amended.

Pursuant to above, the Fund Raising Committee of Directors, has allotted 5,10,14,491 equity shares through QIP at an issue price of Rs.69/- per equity share (including a premium of Rs.68/- per equity share) aggregating to approximately Rs.352 crores, on August 31, 2023.

Pursuant to the said allotment, the paid-up equity share capital of the Company increased from Rs.137,77,58,321 divided into 137,77,58,321 equity shares of Rs.1/- each to Rs.142,87,72,812/- divided into 142,87,72,812 equity shares of Rs.1/- each, as at August 31, 2023.

Your Company has not issued equity shares with differential rights as to dividend, voting or otherwise.


As required under Regulation 34(3) read with Part B of Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details of key financial ratios are mentioned hereunder:

S. No Financial Ratios FY23 FY22 Reason for variations more than 25% during FY23
1 Debtors Turnover 1.98 1.70 -
2 Inventory Turnover 5.23 6.94 -
3 Interest Coverage 3.83 3.70 -
4 Current 1.91 1.75 -
5 Debt Equity 0.24 0.26 -
6 Operating Profit Margin (%) 14.04 14.66 -
7 Net Profit Margin (%) 6.70 6.89 -
8 Return on Net Worth 10.66 13.74 -

Business outlook

HFCL forges ahead with resolute commitment, charting a course toward sustainable growth. This journey is propelled by the ongoing expansion of capacities, innovative product offerings with intensive R&D efforts, system integration, a burgeoning customer base and an ever-expanding global presence. The Companys growth trajectory is further bolstered by the escalating global demand for high-speed, secure communication networks.

Embracing a technological evolution, HFCL is transitioning into a dynamic enterprise that spearheads innovation, devises cutting-edge solutions and manufactures products spanning diverse sectors like telecommunications, railways and defence. A strategic shift in revenue composition underscores HFCLs emphasis on product-centric endeavours, supported by substantial investments in astute marketing and strategic product placement. The impending goal is to establish HFCL as a preeminent global leader, boasting one of the worlds largest Optical Fiber Cable capacities, equipped with products and solutions aligned with global benchmarks.

In fortifying its inherent capabilities, HFCL is poised to cater adeptly to communication and network needs across the globe, offering highly competitive pricing.

The augmentation of capacities serves as a vital stride towards curbing dependence on imports, concurrently tapping into emerging opportunities arising from shifting global dynamics.

Several pivotal factors stand poised to drive HFCLs ascent to greater echelons of achievement and profitability.

The surging worldwide demands for OFC, coupled with the momentum behind Fiber-to-the-Home (FTTH) adoption, 5G deployment, 4G expansion, the BharatNet initiative, and burgeoning exports, constitute formidable growth catalysts.

The Indian Governments steadfast commitment to indigenous procurement of telecom and defence equipment, steadfast network expansion and upgrades by telecom operators and policy support for design-led manufacturing under the PLI scheme align seamlessly with HFCLs transformative growth strategy.

As HFCL embarks on this transformative journey, it remains steadfastly aligned with the Prime Ministers vision to connect every gram panchayat and village through OFC, rendering affordable broadband connectivity a reality.

This symbiotic synergy between HFCLs strategic blueprint and the ever-evolving landscape of global communication needs sets the stage for an epoch of remarkable transformation and growth.


HFCL stands as a technology-centric company with a strong emphasis on research and development (R&D), driving innovation and technological advancements at the forefront of its operations. HFCL boasts a robust R&D team comprising 252 dedicated professionals. This dynamic team is spread across three R&D centres located in Bengaluru, Gurugram and Hyderabad, each contributing significantly to the Companys technological progress.

The R&D efforts at HFCL have yielded remarkable collaborations with reputable companies, fostering a culture of knowledge exchange and expertise sharing. With a strategic focus on 5G technology, HFCL has successfully developed an impressive portfolio of communication, defence and 5G products. These products exemplify Companys commitment to pushing the boundaries of innovation, firmly establishing HFCL as a trailblazer in the telecommunication domain.

HFCL made significant strides by establishing cutting-edge R&D centres in Bengaluru and Gurugram. These centres play a pivotal role in shaping the Companys future by concentrating on vital areas such as 5G innovation, edge computing and licensed and unlicensed radio technologies (3GPP and Wi-Fi). Additionally, HFCLs R&D initiatives have extended to the development of newer types of optical fiber cables, demonstrating the Companys holistic approach to technology advancement.

HFCLs investment in technology creation and research has not only contributed to enhancing its product offerings but has also resulted in the creation of new industry standards. This strong emphasis on indigenous R&D capability has empowered HFCL to take ownership of its technological journey, driving the Companys evolution as a global technology leader. The Company is focused on building a rich patent portfolio and so far, it has been granted for approval its five patents filed for 5G Radio Access Network. The Company has also filed more 12 patent applications.

The Company has invested significantly in the development of various use cases to leverage the potential of 5G technology. Notably, the establishment of a 5G Lab as a service underscores the Companys dedication to exploring and harnessing the capabilities of 5G for diverse applications. HFCLs commitment to staying ahead of the global technological revolution is underlined by its continuous drive for innovation, backed by a talented and dynamic R&D team.

With a clear vision to seize the advantages of Industry 4.0, HFCL is diligently investing in innovative use cases that leverage the transformative power of 5G technology. These efforts align with the Companys overarching goal

of not just keeping pace with technological advancements but actively shaping the future of industries through its R&D prowess. As HFCL navigates through FY24, its R&D endeavours continue to serve as the driving force behind its commitment to technological excellence and innovation.


Specialisation No. of people
Communication 84
5G technologies 124
Defence and other technologies 19
Optical fiber cable 25
Total 252


Company Partnership
Qualcomm • Wi-Fi 6 and Wi-Fi 7 products
• 5G Outdoor and Indoor FWA CPE product (Sub 6, Millimetre Wave)
• 5G Outdoor Small Cell
Wipro and IP Infusion Partnership with each company separately for 5G transport products
VVDN Technologies • Wi-Fi 6 and Wi-Fi 7 products
• 5G Outdoor and Indoor FWA CPE product (Sub 6, Millimetre Wave)
• 5G Outdoor Small Cell
Nivetti Systems Partnership for switches
Wireless Broadband Alliance OpenRoaming Standard implementation
CommAgility Partnership for 5G indoor small cells
Aprecomm Partnership for artificial intelligence (Al)- based analytics
Olatech AAA and Captive Portal Solution
Anexgate Wi-Fi Security Solution
BigCat Wireless Partnership for software-defined radios
Capgemini Engineering, NXP Semiconductors and Metanoia Partnership with each company separately for 5G small cells
Xilinx 8T8R Macro RU (Open RAN)



5G indoor and outdoor FWA CPE 5G radio access network products (8T8R)

5G indoor and outdoor small cells (2T2R and 4T4R)

Access and aggregation routers

Ultra-high capacity point-to-point and point-to-multipoint UBRs Wi-Fi 7 access points


Software-defined radio Ground Surveillance Radar


We started our digital transformation journey in 2021 with a vision to enhance customer, partner, shareholders and employee experience and adopt future fit technologies. The first and foremost important step was to standardise business processes and develop new processes across verticals to adopt best practices for which we conducted comprehensive Business Process Re-engineering (BPR) exercise. The outcome of BPR was development of best fit business processes and development of Digital Transformation Roadmap for HFCL which is aligned with overall Business Strategy. As we embarked on Digital Transformation journey, our first step was focussed on strengthening our Digital Core by re-implementing latest version of ERP solution. This will help us to adopt and integrate best of breed solution on top of strong Digital Core. In Parallel, the Channel Sales & Distribution (CSD) portal is developed in-house for Distributors & Channel Partners of our Telecom products. It enables Distributors & Channel Partners to perform lot of activities independently and reduce turn-around-time through automated workflows.

While an organisation is on a journey of Digital Transformation, it is important to understand significance of Cybersecurity and should be integrated at every stage of digital implementation. As a starting point, to strengthen the cyber security posture of HFCL, we have internally started a campaign for spreading awareness among employees of various Cybersecurity threats & attacks which will help employees to further identify and safeguard themselves from these attacks. All of these are some of the initial projects that are under implementation. Since the journey of Digital Transformation is long, we would be starting with many more Digital Initiatives at right stage during the course of time.


HFCL believes that a committed, empowered and competent human capital is pivotal for driving long- term success and sustained value creation. The Company has developed a holistic people strategy in line with its strategy to explore new products and expand its business presence globally. This strategy includes attracting global talent, developing in-house skills, reskilling as required and retaining top performers with an attractive employee value proposition. This proposition offers a superior work environment, engaging initiatives, career growth and competitive compensation.

Recruitment and onboarding

In FY23, HFCL strategically expanded its workforce to meet business requirements, hiring 334 new on-roll employees. Among them were industry leaders and subject matter experts with extensive global experience, aligning with the Companys focus on new products, new customers and new geographies. HFCL has global presence through its sales, technical and application engineering personnel in various geographies - North America, Europe, Africa and Middle East who cater to the requirements of its global customer base. Plans are afoot to further enhance this presence in the coming years as we continue to grow our business in International Markets.

HFCL also recruited 51 campus recruits from renowned institutes to strengthen the talent base. Furthermore, highly qualified technical personnel were hired for the HFCL 5G and Wi-Fi Centre of Excellence in Bengaluru, supporting the Companys business growth strategy in the communication and 5G industries.

HFCL prioritised building robust sales and distribution teams to enhance its market presence. Additionally, the Company made new hires for new product development and product manufacturing and operations teams in the OFC, accessories and communication businesses.

As of March 31, 2023, HFCL employed a total of 3,474 employees (On-Roll and Off-Roll), including 209 female employees (On Roll and Off Roll).

Employee Development: HFCL is currently undergoing a transformative journey towards becoming a highly innovative organisation equipped with advanced technical and domain capabilities. This transformation enables the

Company to deliver cutting-edge products and services, leveraging the latest technology platforms in its respective business areas. Recognising the vital role of its employees in driving growth and success, HFCL places great emphasis on their development.

During FY23, HFCL implemented a comprehensive learning and development strategy encompassing diverse training programmes. These programmes covered technical, process, leadership and behavioural competencies delivered through various channels, including on-the- job, classroom, online and blended learning approaches. Notable flagship programmes included leadership competency model (LCM) programmes, wherein more than 300 managers and 50 senior leaders got trained. Technical programmes spanned across our entire product technology spectrum - 5G, WiFi communication, Optical Fiber and Cable and our services portfolio of Defence and Railway Communications. We conducted 16 Tech-for-All sessions on various technologies and products. Other programmes focused on behavioural and leadership competencies, personal finance management and new age technology areas such as big data analytics.

We conducted a total of 4,674 training effort days reaching 7,568 participants through a combination of instructor led programmes and through online platforms such as Udemy. Some of the key results of our learning & development efforts were as follows:

(a) 185 instructor led programs benefiting 2,111 unique employees. These programs spanned a total training effort of 3,136 training days and total participant count was 5229 (some participants attending more than one programme)

(b) 9230 hours of online course content was consumed through the Udemy and other online training platforms resulting in 1,538 training effort days (6 hours equivalent to 1 training effort day)

(c) More than 80% of this online learning was utilised for technology and domain capability building programmes.

Through these comprehensive training initiatives, HFCL empowers its employees to enhance their skills and competencies, contributing to the Companys growth.

These efforts underscore HFCLs commitment to fostering a culture of continuous learning and development.

HFCL CARES: HFCL CARES remained steadfast in shielding the HFCL family from physical and emotional traumas through various health and wellness initiatives and emotional resilience mindfulness programs. HFCL recognises that a healthy and happy workforce is paramount to business success. We are delighted that HFCL was honoured with the Rs.Best Companies for Employee Wellbeing Award at the World HRD Congress.

CARES, our comprehensive well-being programme, focuses on five essential aspects: physical, emotional, social, DEI, and culture building. The team implemented various employee assistance programme (EAP) initiatives, including residential comprehensive emotional and physical wellness programs, webinars, celebration of yoga and promoting awareness of healthy diets during nutrition awareness week, programs to prevent chronic illnesses, manage stress and mitigate burnout in the workplace. We also organised comprehensive medical check-ups and focused initiatives such as womens health, featuring health talks and awareness campaigns focusing on cervical cancer.

In conclusion, investing in the health and well-being of employees is an investment in the success of the Company. These initiatives have significantly contributed to our employees physical and mental well-being, preventing workplace burnout and enhancing work performance and productivity.

Employee engagement

Through HFCL CARES, we also seek to create a vibrant and inclusive work environment that boosts job satisfaction, retention and productivity. We prioritise our employees specific needs and priorities, continuously enhancing our initiatives to meet their evolving preferences.

Our engagement activities include monthly celebrations, Fun Fridays and cultural festivities like Diwali and Navratri, fostering team bonding and showcasing diversity. Technology quizzes during our technology week encourage employees to stay updated, while leadership coffee connects facilitate open communication and goal alignment.

These initiatives have yielded positive results, with higher retention rates and increased job satisfaction. HFCL remains committed to enhancing our employee engagement initiatives, ensuring their relevance and alignment with our valued workforces evolving needs and preferences.

Diversity, Equity and Inclusion (DEI):

HFCL is committed to fostering diversity and inclusion within the workplace and has implemented various initiatives to promote an equitable and inclusive environment. Our efforts include educating employees on the Prevention of Sexual Harassment (POSH) guidelines, organising workshops and panel discussions, celebrating International Womens Day.

We prioritise implementing our DEI policy across all HR processes. With an intent to build a strong bench of diversity talent within the Company, we launched the Future Women Leaders (FWL) programme directed towards our high potential women employees. This flagship programme is sponsored by our leadership team and incorporates diverse learning inputs, including classroom and online training, coaching and action learning projects, business unit and functional head mentoring to equip women with the necessary skills and confidence to take on leadership positions in the telecommunications industry.

In celebration of International Womens Day, we conduct theme-based workshops, panel discussions featuring internal and external women leaders and other activities that inspire and educate our employees. Compliance with the POSH guidelines is paramount as we strive to create a safe and respectful work environment for all our employees. Our Womens Day 2023 celebrations exemplified our commitment to diversity, equity and inclusion, with insightful sessions led by leadership coaches and talks by IT-Agile leaders.

At HFCL, we recognise that fostering diversity, equity and inclusion is crucial for attracting and retaining a diverse talent pool, driving innovation and ensuring the overall success of our organisation.

SPARK programme:

SPARK programme aims to hire students from premier institutes and subsequently monitor, guide and nurture them to become the future leaders of HFCL. In FY23, the Company inducted 51 campus graduates.

The Company organised a week-long plant visit for SPARK- batch 6, across various HFCL offices to align with the SPARK Programmes goal of innovation, commitment, continuous learning and a sense of ownership. The Company conducted employee engagement activities for all the SPARK employees working at different base locations to motivate and energise them to meet the goals of the Company. The SPARK team also organised annual meetings with all the Business unit and Functional heads to collect valuable feedback and suggestions from the leaders and make the functioning of the SPARK programme more effective.

HR Digitisation:

In line with the vision of making HFCL a digital organisation, we embarked on a digitisation initiative in 2021, aligning with the Digital India - Badhta India paradigm. As part of this transformation, our HR team has played a crucial role in implementing an agile HRMS called HiFi, migrating our existing processes completely online.

HiFi, our comprehensive HR management system, offers a range of innovative features designed to enhance efficiency and productivity. These include a centralised secure employee database, employee and manager selfservice portals, pre-designed rosters and MIS reports, a vibrant social platform for sharing posts, blogs, and announcements, streamlined leave and attendance management, talent hiring and candidate evaluation processes, seamless onboarding, performance management system and employee resignation and separation processes.

To ensure a smooth transition and widespread adoption of HiFi, our L&D team and HRBPs have conducted regular knowledge sessions to familiarise employees with the systems functionalities. Modules such as recruitment and onboarding, leave and attendance, performance management and employee separation are fully online, while the implementation of pending modules like travel management and expense reimbursement is underway and will get launched in the upcoming year.

Through digitisation, HFCL is paving the way for a more streamlined, technology-driven HR ecosystem. It enables faster and more efficient processes while empowering employees to manage their HR-related tasks easily.

This digital transformation aligns with our commitment to embrace technological advancements and propel HFCL into a digital future.


HFCL is actively engaged in a range of CSR initiatives that contribute to societal well-being. To promote healthcare among underserved communities, the Company along with its subsidiary operates eight Mobile Medical Clinics, delivering preventive healthcare services in remote regions and benefiting around 800 individuals daily. The Company also plays a crucial role in providing critical health support, including corrective surgeries and open-heart procedures.

As part of its CSR initiatives in education, HFCL sponsors the education for specially abled children and offers computer skills training to underprivileged youth. HFCL delivered basic education and nutritious meals to the street children in Delhi and paving the gap for their mainstream education. The Companys dedication to enhancing education quality is evident through its PEHAL program focused on Government schools.

In addition, the Company demonstrates its commitment to the elderly by constructing a womens wing at an old age home, ensuring dignified care for abandoned senior citizens.

The Company also extends its compassion to animal welfare, offering sustenance and shelter to stray animals. HFCLs CSR initiatives reflect its role in driving positive change within the community.

The full details of the Companys various CSR projects/ programmes and other relevant details are given in Directors Report which forms the part of the Annual Report.


HFCLs Risk Management Policy guides its approach in identifying, assessing and mitigating various risks inherent in its diverse business operations. This comprehensive framework enables the Company to proactively manage potential challenges and uncertainties.

The oversight of HFCLs risk management endeavours rests with the dedicated Risk Management Committee. This committee diligently evaluates and addresses significant risks across different business units and functions. By aligning practices with industry standards, HFCL ensures a vigilant and well-informed approach to risk assessment and mitigation.

Continual refinement of the Risk Management Policy is an ongoing responsibility of the Risk Management Committee. This ensures that risk evaluation processes remain effective and relevant, fostering a culture of risk awareness and informed decision-making. Furthermore, the Audit Committee provides additional oversight in managing financial risks and controls, enhancing the overall effectiveness of risk management strategies.

HFCL remains resolute in its proactive approach to risk management. While the Company maintains confidence in its current risk profile, its agility and readiness to address unforeseen operational risks underscore its commitment to sustaining business resilience and fostering growth.

Risks Mitigation measures Effect of risk mitigation measures
Economic risk The Countrys or industrys economic health may affect the Companys performance, demand for products and overall growth prospects. HFCL has strategically diversified its business portfolio by entering sectors like defence and railways, in addition to telecom. This diversification ensures a broader revenue base that can withstand slowdowns in any specific sector. HFCL reduces its dependency on a single industry, mitigating the adverse impact of an economic downturn by expanding into multiple sectors and maintaining a healthy order book.
Competition risk Intense competition in the market could reduce the Companys ability to win contracts and secure new projects. HFCL positioned itself as a complete solution provider with a proven track record of efficiently executing turnkey projects and fostering strong client relationships. Furthermore, ongoing R&D efforts drive innovation, enhancing the Companys competitiveness. The Companys strong market positioning and project execution capabilities lead to increased customer confidence, translating into a higher rate of order acquisition and overall business growth.
Risk of delay in order completion Failure to complete orders in time bound manner can lead to penalties and damage to the Companys reputation. HFCL employs robust operational policies supported by a skilled team of professionals. The Company adopts project management frameworks and employs digital tools for efficient project monitoring and execution, ensuring timely delivery. HFCLs strict adherence to operational policies and project management practices minimises project delays, averting penalties and maintaining positive customer relationships.
Risks Mitigation measures Effect of risk mitigation measures
Foreign exchange risk HFCLs imports and exports expose the Company to foreign exchange fluctuations, potentially leading to forex losses. HFCL deploys professional consultants to monitor currency fluctuations regularly. The Company employs financial instruments like forward contracts and hedging to mitigate the impact of unfavourable exchange rate movements. By actively managing foreign exchange risk through expert consultation, HFCL reduces potential forex losses and ensures stable financial performance.
Technology risk Rapid technological advancements may render certain products or solutions obsolete, affecting the Companys competitiveness. HFCL invests in continuous innovation and research and development (R&D) efforts. The Company is proactive in upgrading its technologies to stay at the forefront of market trends. The Companys commitment to innovation and technology upgrades enables it to introduce cutting-edge products and solutions, maintaining its competitiveness and relevance in a rapidly evolving market.
Government policy risk Changes in government policies, regulations, or priorities may disrupt business operations and impact growth prospects. HFCL benefits from the favourable pro-reform policies of the incumbent Government, which promote ease of doing business. The Company actively monitors policy developments and adjusts its strategies accordingly. The Companys adaptability to changing Government policies ensures business continuity and minimises the potential disruption caused by policy changes.

There are no risks which in the opinion of the Board threaten the existence of the Company.


In line with the business operations, the Company has a well-planned internal control framework covering various aspects of governance, compliances, audits, controls, and reporting. The Company has already designed and implemented a framework to ensure adequate internal financial controls concerning financial statements.

HFCL periodically reviews the internal financial controls considering the comprehensive procedures and policies laid down, which are adequate and operate effectively. The periodical review gets undertaken with the management and external and internal auditors to ensure the adequacy and efficiency of the internal control system.

The internal control system protects all Company assets from loss or unauthorised use. The internal control system ensures that financial and other records are reliable for preparing financial and other statements and maintaining asset accountability.

The internal control systems are further supplemented by the internal audit carried out by M/s Anil Aggarwal & Co., Chartered Accountants, having their office at 501, Surya Kiran Building, K. G. Marg, Connaught Place, New Delhi - 110001.

Extensive audits are undertaken by the internal auditors throughout the year at all locations and across all functional areas and they submit their reports to the Audit Committee of the Board of Directors. The Audit Committee monitors the internal audit system at regular intervals and directs necessary steps to further improve the internal control system.

The policies to ensure uniform accounting treatment are prescribed for the subsidiary companies as well.

The accounts of the subsidiaries and the joint venture companies are audited and certified by their respective statutory auditors for consolidation. During the year under review, such controls were assessed and no reportable material weaknesses in the design or operation were observed.

Accordingly, the Board is of the opinion that our Companys internal financial controls were adequate and effective during FY23.

Cautionary statement

Statements in this management discussion and analysis of the Company describing the Companys objectives, expectations or predictions may be forward-looking within the meaning of applicable laws and regulations. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. The Company assumes no responsibility to publicly amend, modify or revise forward-looking statements, based on any subsequent developments, information, or events. Thus, the Companys actual performance/results could differ from the projected estimates in the forward-looking statements. The discussions on our financial condition and result of operations should be read together with our audited, consolidated financial statements and the notes to these statements included in the Annual Report.