HFCL Ltd Management Discussions

Global Economic Review

Global growth was 3.3% in CY24, maintaining a steady pace from the previous year and showing resilience. Performance varied across regions, with advanced economies recording slower expansion due to tight financial conditions and softer external demand, while emerging and developing economies experienced relatively stronger activity, supported by domestic demand and targeted policy measures. Labour markets continued to improve, with global employment rising and job indicators returning to pre-pandemic levels.

The operating environment remained mixed, with trade flows influenced by higher restrictions, geopolitical uncertainty, and limited fiscal capacity in some economies affecting public investment. In advanced economies, interest rates stayed high for much of the year, and bond yields rose as central banks worked to bring inflation under control and adjusted their forward guidance.

Infiation eased across most regions but remained above historical averages, particularly in advanced economies where services and wage costs kept pressure on prices. The ongoing conflicts in Eastern Europe and the Middle East continued to impact global commodity markets.

Outlook

The global economy is expected to slow in 2025, with growth in EMDEs moderating from 2024 levels before improving slightly in 2026, partially offset by continued weakness in advanced economies. The divergence in growth trajectories could widen further, depending on the pace of disinflation and the policy responses across regions. Risks from fiscal tightening and slowing global trade could

Global inflation is projected to decline to 4.3% in 2025 and 3.6% in 2026. While advanced economies may face prolonged inflationary pressures due to wage adjustments and supply-side constraints, inflation in EMDEs is likely to ease further, barring renewed food or commodity shocks. However, the rise in trade restrictions could reintroduce cost pressures and limit monetary flexibility.

Labour markets are expected to remain broadly stable, although employment growth is likely to slow slightly to 1.5% in 2025. Despite this moderation, job creation is expected to continue in most economies, especially in services and green transition sectors.

Interest rate trajectories will depend on inflation trends and external risks. While some central banks may consider gradual easing, decisions will likely remain data-dependent, especially in economies with inflation still above target. The divergence in monetary policy across major economies could influence capital flows and currency volatility. Overall, the global outlook remains cautious. While headline indicators suggest steady progress, underlying risks from geopolitical shift to tighter financial conditions require continued vigilance and policy agility.

Indian Economic Overview

Indias real GDP growth for FY25 is estimated at 6.5%, supported by higher agricultural output, early signs of recovery in manufacturing sector, sustained momentum in services, and steady rural consumption. In 2025, India emerged as the worlds fourth-largest economy, driven by ongoing domestic reforms and its expanding role in the global economy aligned with the strategic vision of Atmanirbhar Bharat.

Macroeconomic conditions remained stable, with a declining fiscal deficit, easing inflation, strong consumer demand, and a resilient external sector. The Governments continued focus on structural reforms and infrastructure investment is expected to support long-term growth. For FY26, a capital expenditure outlay of _11.21 lakh crore, equivalent to 3.1% of GDP, has been allocated to investment in transport, logistics, housing, and energy. These investments will enhance productivity and support greater private sector participation. Complementing this infrastructure push, the Government is also advancing digital connectivity through initiatives such as BharatNet Phase III and public Wi-Fi expansion under PM-WANI, which are expanding broadband access to underserved areas and improving service delivery.

Employment indicators showed continued improvement. Provisional data from Employees Provident Fund Organisation reported a net addition of 14.58 lakh members in March 2025, marking a 1.15% year-on-year increase. The unemployment rate among persons aged 15 and above stood at 5.1% in April 2025. The MSME sector remained a critical source of employment, second only to agriculture. The agriculture sector is projected to grow by 3.8% in FY25, driven by a record Kharif output of 1,647.05 lakh metric tonnes, which is 5.7% higher than the previous year and 8.2% above the five-year average. While manufacturing growth remained modest amid global demand challenges, early signs of recovery were evident with improved business sentiment.

Infiation and Fiscal Trends

Retail inflation moderated to 4.6% in FY25 remaining well within the RBIs tolerance band of 2-6% and marking the lowest since FY19. This reflects the effectiveness of monetary policy measures and improvements in supply-side management, including better foodgrain bu_er management and logistics interventions. Fiscal consolidation continued during the year, with the revised fiscal deficit estimate at 4.8% of GDP for FY25, projected to decline further to 4.4% in FY 26. This trajectory underscores the Governments commitment to prudent fiscal management and long-term macroeconomic stability.

Industry Overview

Indian Telecom Sector

Indias telecom industry, encompassing both wireless and wireline users, maintained its position as the second-largest telecom market globally, with a total subscriber base of 1,200.80 million as of March 31, 2025. The sector continued to evolve with growth in high-speed internet users and improved digital infrastructure. Internet subscribers grew from 954.40 million in FY24 to 969.10 million in FY25, reflecting a 1.54% year-on-year growth, driven by accelerated network expansion, rising data consumption, policy measures supporting digital inclusion and the adoption of advanced technologies such as 5G, FTTH, and fixed wireless access (FWA).

Broadband subscribers increased from 924.07 million to 944.12 million in FY25, a 2.16% rise, while narrowband users declined by 17.67%, from 30.34 million to 24.98 million, indicating a shift toward high-speed connectivity.

Wireless data subscribers rose from 913.34 million at the end of March 2024 to 939.51 million at the end of March 2025, up by 1.57%. Further, wireless data consumption rose from 1,94,774 PB to 2,28,779 PB, while wireless data revenue grew from _1,86,226 crore to _2,15,078 crore, reflecting a rise of 15.49%.

The sector witnessed strong investment activity, with Average Revenue Per User (ARPU) for wireless services rising from _149.25 in FY24 to _182.95 in FY25, a 22.57% increase. Average monthly Minutes of Usage (MOU) per subscriber grew from 963 to 1,026, marking a 6.54% increase.

Total telephone subscriptions grew marginally from 1,199.28 million in FY24 to 1,200.80 million in FY25 (0.12% growth). However, overall tele-density declined from 85.69% to 85.04%. Urban subscriptions increased slightly from 665.38 million in FY24 to 666.11 million in FY25 (0.11% growth), with urban tele-density falling from 133.72% to 131.45%. Rural subscriptions rose from 533.90 million in FY24 to 534.69 million in FY25 (0.15% growth), while rural tele-density declined from 59.19% to 59.06%.

Key Growth Drivers

Advancements in 5G Technology: Since the launch of 5G services in the Country, approximately 25 crore mobile subscribers were using 5G services by February 2025, supported by deployment of 4.69 lakhs 5G Base Transceiver Stations (BTSs) by the Telecom Service Providers (TSPs) across the Country. It is one of the fastest rollouts of 5G network globally.

Broadband Connectivity: India continued to see rapid expansion in high-speed internet access fuelled by the pandemic, rising smartphone usage and government efforts. While mobile broadband leads, wired connections especially _ber optic are expanding. Technological advancements in terrestrial wireline, wireless and satellite systems are further enhancing broadband access and bridging the digital divide across the Country.

Tech & Infrastructure Investment: In FY25, telecom operators invested heavily in 5G rollout, _ber infrastructure, OpenRAN and edge computing. These advancements enhanced network capacity, reduced latency and supported future technologies, driving improved connectivity across both urban and rural India. The Union Cabinet approved a _12,195 crore Production-Linked Incentive (PLI) scheme; 42 companies committed _4,115 crore investment, including MSMEs and global firms. As of March 2025, about _1,162 crore in incentive disbursements had been made to 21 of the approved companies. IoT Ecosystem: The Internet of Things (IoT) continued to gain momentum in FY25, particularly in healthcare, manufacturing, and urban infrastructure. This expansion drove demand for reliable telecom infrastructure and advanced semiconductor technologies, enabling greater operational efficiency, automation, and digital transformation across key sectors. The growing IoT ecosystem is expected to play a pivotal role in shaping Indias digital economy and enhancing sectoral productivity.

Domestic Manufacturing: In FY25, domestic manufacturing emerged as a key growth pillar for the telecom sector. Supported by the PLI scheme, India scaled up local production of telecom equipment, including 5G radios, routers and optical _ber components.

Artificial Intelligence (AI) and Edge Computing: The telecom sector saw increasing adoption of AI and edge computing in FY25, which played a pivotal role in improving network intelligence and efficiency. AI was used to automate fault detection, enable real-time network optimisation, and support predictive maintenance, helping operators reduce downtimes and operational costs. Simultaneously, the expansion of edge computing infrastructure brought data processing closer to users, thereby reducing latency and improving the performance of bandwidth-intensive services such as video streaming, gaming and IoT-based applications. These technologies are becoming integral to managing 5G networks, enabling use cases like network slicing, dynamic tra_c management, and personalised service delivery, positioning them as critical enablers of the telecom sectors ongoing digital transformation.

Cybersecurity: With the rapid expansion of digital services and 5G networks, cybersecurity remained a top priority for the telecom sector. According to CERT-In, India reported over 2 million cybersecurity incidents in 2024, underscoring the need for robust defense mechanisms. Telecom operators are increasingly investing in AI-enabled threat detection systems, secure network architectures and compliance with the Telecom Act 2023 to enhance protection against evolving cyber threats. These initiatives are critical to safeguarding core infrastructure and strengthening user trust in the digital ecosystem.

Localised Content and Services: Rising digital literacy and mobile access in Tier 2 and rural areas are driving demand for localised digital content and vernacular services. Telecom operators are partnering with ed-tech, OTT, government bodies, content platforms to deliver region-specific entertainment, education, and e-governance solutions, driving digital inclusion and deeper engagement across diverse linguistic and cultural segments.

Policy Support and Regulatory Reforms: The Telecommunications Act 2023, along with standardised Right of Way (RoW) rules, PLI scheme and targeted budget allocations continued to support infrastructure development, streamline rollout, reduce regulatory hurdles, and significantly boost domestic manufacturing and telecom equipment exports thereby strengthening Indias self-reliant digital ecosystem.

Sustainable Practices: Telecom operators strengthened their commitment to sustainability by adopting energy-e_cient networks, deploying solar-powered towers and promoting e-waste recycling, and investing in green data centres, aligned with Indias Net Zero 2070 commitment. These initiatives helped lower carbon emissions and supported Indias broader climate and environmental goals, enabling greener digital growth.

A_ordable Smartphones & Increased Internet Penetration: Indias smartphone user base crossed 750 million in FY25, propelled by affordable 4G/5G handsets and government-backed connectivity programs such as BharatNet. Increased rural internet penetration and mobile broadband access have significantly expanded the digital footprint, creating new demand for data services and digital payments.

Future-Ready Innovation and Growth: The Department of Telecommunications (DoT) has established a dedicated 6G Innovation and released the Bharat 6G Vision document, which envisages India as a frontline contributor in the design, development and deployment of 6G technology by 2030.

Government Push and Investment Momentum: Indias digital economy is projected to account for 13.42% of national income in FY25 and is expected to reach 20% by FY30, driven by telecom, IT and electronics manufacturing. In the Union Budget FY26, _81,005 crore (~US $9.27 billion) was allocated to the telecom and IT sectors, underscoring the Governments continued commitment to digital infrastructure development. Moreover, Foreign Direct Investment (FDI) in the telecom sector has reached approximately _2.4 lakh crore (US $39.99 billion) since 2000, driven by liberalised FDI norms, proactive policy reforms, and strong domestic demand. These inflows have supported network expansion, technological upgrades, and employment generation, reinforcing the sectors long-term growth trajectory.

Optical Fiber Cable Industry

Indias Optical Fiber Cable (OFC) and accessories market continued its growth trajectory, supported by initiatives such as Digital India, BharatNet Phase-III execution, 5G rollouts, data centre expansion, rising export demand along with increasing demand for high-speed broadband connectivity across the Country. According to the Department of Telecommunications (DoT), a cumulative total of 6,98,010 route km of optical _ber cable had been laid as of March 31, 2025 over the last three years, with annual demand exceeding 35 million _ber km in FY25. The rollout of FTTH connections under BharatNet also crossed 12.2 lakh by March 2025, significantly improving rural broadband access.

The market was valued at USD 748.5 million in 2023 and is expected to reach USD 1,501.9 million by 2030, growing at a CAGR of 10.5%.

Growth Drivers

Increased Demand for High-Speed Connectivity: The growing need for high-speed connectivity is fuelling the rapid expansion of the optical cable industry. Increased dependence on digital services across work, education, healthcare, and entertainment has heightened demand for faster, more reliable internet. OFC offer high bandwidth, low latency, and long-distance transmission, making them ideal for this shift. The rollout of 5G, rising data centers, smart city projects, and government initiatives such as BharatNet Phase-III execution and Digital India are accelerating _ber deployment and driving nationwide industry growth and investment.

Government Initiatives: Government initiatives are significantly boosting Indias OFC industry. Spectrum auctions and supportive policies are enabling telecom companies to expand 5G services, which rely heavily on dense OFC infrastructure. Additionally, the Smart Cities Mission promotes digital infrastructure and smart solutions, increasing the demand for robust OFC networks to support IoT, surveillance, and urban connectivity.

BharatNet Programme: Launched in 2011, BharatNet is a flagship initiative by the Government of India aimed at providing affordable, high-speed internet access to every Gram Panchayat across the Country. The project seeks to connect over 2,50,000 Gram Panchayats through Optical Fiber Cable, significantly enhancing rural connectivity. Under Phase III of the BharatNet project, the focus is on achieving universal _ber connectivity in rural areas using an IP MPLS ring architecture, which ensures higher reliability and redundancy. As of January 2025, 2.14 lakh Gram Panchayats have been connected under this initiative, and 6.92 lakh kilometers of OFC have been laid, marking substantial progress toward bridging Indias digital divide. With an overall outlay of _1.39 lakh crore, BharatNet Phase III aims to connect nearly 6 lakh villages, enabling access to e-governance, digital services, telemedicine, and online education, thus narrowing the rural-urban digital gap.

Infrastructure Development: The National Highways Authority of India (NHAI) is contributing to digital infrastructure by integrating OFC deployment with highway development. Through its Digital Highways initiative, NHAI allows OFC installation along national highways via dedicated utility corridors targeting 30,000 km by 2027. This enables faster and cost-e_ective _ber rollout across long distances. By leveraging its vast road network, NHAI is helping expand broadband connectivity, support 5G deployment, and boost Indias overall digital and telecom infrastructure.

Defence Sector

Indias defence production has witnessed remarkable growth since the launch of the "Make in India" initiative. Once heavily reliant on foreign suppliers, the nation is now emerging as a formidable player in indigenous defence manufacturing. This transformation underscores Indias commitment to self-reliance, enabling it to meet its strategic and security needs through home-grown capabilities. In line with this vision, the Government has identified the Defence and Aerospace sectors as critical pillars of the Atmanirbhar Bharat (Self-Reliant India) initiative, aiming to strengthen national security while driving economic growth.

Modernisation and Localisation of Defence Equipment and Infrastructure

To realise the vision of ‘Viksit Bharat @ 2047 with a technologically advanced and Atmanirbhar Armed Forces, India is accelerating its defence modernisation efforts while strengthening domestic defence manufacturing capabilities. In the Union Budget for FY26, the Ministry of Defence (MoD) was allocated _6,81,210.27 crore, marking a 9.53% increase over FY25. This allocation accounts for 13.45% of the total Union Budget, making it the highest among all ministries and reflects the Governments strategic focus on national security and self-reliance in defence production. A key focus of Indias defence strategy is indigenisation. In FY26, 75% of the defence modernisation budget, amounting to _1,11,544.83 crore, has been earmarked for procurement from domestic sources. Of this, _27,886.21 crore representing 25% of the domestic procurement share is specifically allocated to private Indian industries, reinforcing the Governments commitment to fostering a self-reliant defence ecosystem and encouraging private sector participation in strategic manufacturing. In parallel, investment in innovation and research has been strengthened. The Defence Research and Development Organisation (DRDO) has received an enhanced allocation of _26,816.82 crore for FY26, marking a 12.41% increase from FY25. Of this, _14,923.82 crore is dedicated to capital expenditure and funding R&D projects. The increased budget will boost DRDOs ability to develop advanced technologies with a special focus on fundamental research and collaboration with private firms under the Development-cum-Production Partner model.

This support, particularly through DRDOs flagship Technology Development Fund scheme, is expected to accelerate the growth of deep-tech capabilities and make Indias defence sector more self-reliant and globally competitive. In addition, the modernisation drive includes significant upgrades in secure defence communication systems, with the addition of telecom-grade optical _ber networks.

Growth Drivers

Policy and Initiatives

In recent years, the Government of India has undertaken several transformative initiatives to strengthen defence manufacturing and achieve self-reliance. Key reforms include liberalisation of the FDI policy in 2020, permitting up to 74% FDI via the automatic route, which has attracted _5,516.16 crore investments since April 2000. A major milestone was the inauguration of the Tata Aircraft ComplexinVadodara,inOctober2024,whichwilldomestically produce 40 of the 56 C-295 aircraft, marking significant progress towards Atmanirbharta. The Defence Testing Infrastructure Scheme (DTIS) is supporting the creation of eight testing facilities, with seven already approved. The annual Manthan event at Aero India 2025 brought together startups, academia, and industry, showcasing innovation and collaboration. Under Defence Acquisition Procedure (DAP)-2020, priority is given to domestic procurement, with 75% of the _1,11,544 crore modernisation budget allocated to Indian industry.

Industrial Corridors and Innovation

The Defence Industrial Corridors in Uttar Pradesh and Tamil Nadu are strategic initiatives under the ‘Make in India programme aimed at boosting indigenous defence and aerospace manufacturing. These corridors are designed to reduce imports, promote exports, and position India as a global defence manufacturing hub. So far, investments of over _8,658 crore have been made across six nodes in Uttar Pradesh (Agra, Aligarh, Chitrakoot, Jhansi, Kanpur, and Lucknow) and five nodes in Tamil Nadu (Chennai, Coimbatore, Hosur, Salem, and Tiruchirappalli). As of February 2025, 253 Memorandums of Understanding (MoUs) have been signed, with a projected investment potential of _53,439 crore. These corridors are enhancing manufacturing capabilities, generating employment and supporting the growth of Micro, Small and Medium Enterprises (MSMEs), startups, and private players propelling India towards self-reliance in defence production and innovation.

Promotion of Indigenous Design and Development of Defence Equipment

Introduced in the Defence Procurement Procedure (DPP) 2006 and refined over time, the MAKE procedure promotes indigenous defence manufacturing through three categories: MAKE-I: Government-funded (up to 70%, prototype development support capped at _250 crore per Development Agency), minimum 50% Indigenous Content (IC) MAKE-II: Industry-funded, minimum 50% IC, focused on import substitution MAKE-III: Manufacturing via foreign Transfer of Technology (ToT), requiring at least 60% IC

As of March 2025, 145 projects involving 171 industries are underway: 40 under MAKE-I

101 under MAKE-II 4 under MAKE-III

These initiatives are driving self-reliance in defence production fostering indigenous design and development and strengthening Indias strategic capabilities. Defence exports reached an all time high of _23,622 crore (US$ 2.76 billion) in FY25, a 12.04% year-on-year increase over _21,083crore in FY24.

Business Performance Review

Transformation of Revenue Mix

Transition from Project-driven to Product-centric Revenue:

The Company is strategically transitioning from project-led to product-led revenue having resolved not to engage in low-margin turnkey projects. This strategic pivot emphasises scalable, high-value product offerings with the potential to deliver higher margins, stronger cash flows, improved revenue visibility and enhanced market positioning. By focusing on innovation and long-term value creation, the Company aims to strengthen its financial health and build a more resilient business model.

Ramped-up Engagement with Private Entities:

The Company is strengthening its customer mix by prioritising higher-margin private clients. This strategic shift involves refining go-to-market approaches, optimising product offerings and aligning more closely with evolving market dynamics and customer expectations. By deepening engagement with private entities, the Company aims to enhance profitability, drive sustainable growth, and build a more agile and market responsive business model.

Enhanced Emphasis on Export-oriented Revenue:

The Company recorded strong consistent growth until FY23, followed by a slowdown in FY24 driven by global demand challenges. With early signs of recovery in FY25 and improving international market conditions, the Company is focused on accelerating export growth, expanding its global customer base and capturing higher market share. These efforts aims to establish a stronger global presence and drive long-term, sustainable growth through diversified revenue streams.

Optical Fiber Cable and Optical Fiber

Phased Expansion of Optical Fiber and Optical Fiber Cable Capacity

After experiencing subdued demand for Optical Fiber Cable over the past six to seven quarters, which led to lower capacity utilisation across manufacturing operations, the Company is now witnessing a notable recovery in operational performance driven by strengthening market conditions and emerging growth drivers.

As of Q1 FY26, the Companys optical _ber manufacturing operations have achieved full capacity, compared to 45% utilisation in FY25. Similarly, OFC manufacturing, which operated at 40% utilisation during the previous fiscal, is expected to achieve full capacity during the current quarter. This recovery is supported by favourable industry momentum, including:

• Nationwide 5G rollouts

• Data centre expansion

• Execution of BharatNet Phase III

• Rising export demand

In response to these opportunities, the Company is significantly expanding its optical _ber manufacturing capacity, increasing from 14 million _ber kilometre (fkm) per annum to 33.90 million fkm per annum. This expansion is progressing as planned and is expected to be fully operational by the end of FY26.

In line with the Companys strategy to diversify its optical _ber cable product portfolio, capture high-value market segments, and drive market expansion, the Board of Directors in its meeting held on July 11, 2025 has approved the enhancement of Intermittent Bonded Ribbon (IBR) cable manufacturing capacity from ~1.73 million _ber kilometres per annum (mfkm/p.a.) to ~19.01 mfkm/p.a. at its existing facilities in Hyderabad and Goa with a total capital outlay of approximately _125.55 crore. This expansion is aimed at meeting rising global demand, particularly from North America and Europe. The Company already has orders in hand of IBR cables from large hyperscalers, underscoring the markets confidence in its capabilities. It strategically positions HFCL as a key player in this specialized and high growth segment.

The expanded capacity is expected to be completed in a phased manner starting from December 2025 and is anticipated to be fully operational by June 2026. Upon completion of the aforesaid expansion, the Companys consolidated OFC manufacturing capacity will reach ~42.36 mfkm/p.a.

The Companys earlier plan to set up an OFC manufacturing facility under its subsidiary, HFCL Technologies Private Limited, has been temporarily put on hold due to the prevailing trans-border security situation in Jammu & Kashmir. In view of the current concerns and associated operational risks in the region, the proposed expansion will remain suspended until the situation stabilises and a favourable environment for industrial development is restored.

Quality Compliance and Certifications

The Companys Hyderabad Fiber Plant achieved several key quality and compliance milestones reinforcing its commitment to global standards and customer satisfaction. The plant earned:

• ISO 10002:2018 for Customer Satisfaction & Complaints Management

• ISO/IEC 27701:2019 for Privacy Information Management

• Fire resistance certification and CE/UKCA compliance for cable products, strengthening its market access in the UK and European regions

The Goa Plants testing facility received the prestigious TDAP certification from the VDE Institute, Germany further validating its technical capabilities. Both Hyderabad and Goa plants attained NABL accreditation for Optical Fiber and Cable testing, underscoring HFCLs commitment to precision and reliability.

The Company upgraded its Business Continuity Management System to ISO 22301:2019 ensuring operational resilience. The Company continues to maintain key certifications including:

• ISO 14001 (Environmental Management)

• ISO 45001 (Occupational Health & Safety)

• ISO 9001:2015 (Quality Management)

• CMMI-DEV Level 3 (Process Maturity for Development) The Companys optical _ber products earned GR-20 Telcordia certification from Ericsson Network Integrated Solutions (NIS), a key enabler for expanding its presence in North American markets. In recognition of its manufacturing capabilities, the Hyderabad Fiber Plant was honoured with the Frost & Sullivan Indian Manufacturing Excellence Award – Silver Merit Award further validating its industry leadership. These achievements reflect the Companys unwavering commitment to global quality standards, safety and operational excellence.

Growing International Presence in Europe

HFCL is accelerating its global expansion through strategic partnerships across Europe, Southeast Asia, and the Middle East, with a focus on delivering advanced solutions in _ber optics, telecommunications, and defense technologies. After two years of muted export performance, the Company is now well-positioned to capitalise on the rebound in global demand supported by a robust product portfolio and expanding international footprint. One of the key growth areas is the Fiber to the Home (FTTH) market, which is witnessing rapid growth, driven by rising demand for high-speed connectivity, smart home solutions, and digital infrastructure. By 2030, the number of FTTH subscribers is projected to reach:

• 158 million in EU27+UK region

• 221 million in the EU39 region

Globally, FTTH adoption is increasing, especially in developing regions such as Asia, Africa, and Latin America. Between 2024 and 2034, the FTTH market is expected to grow at a CAGR of 16.6% in H1 and 16.8% in H2 reflecting strong long-term demand and investment potential.

Product Innovation

The Company continues to strengthen its position as a technology-driven organisation by expanding its manufacturing and R&D capabilities to address the rising demand across core sectors. The Company has successfully developed ultra-thin micro cables and high-density _ber variants, specifically designed for data centers and next-generation 5G and emerging 6G networks. These innovations are currently patent pending, underscoring the Companys commitment to intellectual property and technological leadership. At ISE EXPO 2024, the Company showcased its innovation prowess with the launch of award-winning IBR cables and a new 864-_ber micro cable with compact diameter of 10.6mm, reinforcing its leadership in high-performance _ber optic solutions. These developments enable more efficient and scalable network deployments, catering to the evolving needs of global telecom operators and hyperscale data networks.

Telecom & Networking Products and Turnkey Solutions

HFCL continued to strengthen its position as a leading provider of advanced telecom solutions, with a portfolio that reflects its commitment to innovation and self-reliance. The Company introduced several cutting-edge, Made-in-India products, including:

• Indias first 5G Fixed Wireless Access (FWA) Customer Premises Equipment (CPE) with its own intellectual property rights (IPR)

• High-speed Unlicensed Band Backhaul Radios

• IP/MPLS Routers, Switches and Wi-Fi 7 Access Points

• Next-generation optical _ber products

HFCLs Unlicensed Band Radios currently deliver data speeds of up to 2 Gbps over distances ranging upto 35 kilometres.

Expansion of UBR Portfolio

We have strategically expanded our Unlicensed-Band Backhaul Radio (UBR) portfolio to cater to a broader range of deployment scenarios:

Compact Form Factor Radios

Tailored for enterprise campuses and urban networks, these radios are optimized for environments where tower space is limited and rapid deployment is essential.

Point-to-Multipoint (P2MP) Variants

Prototype trials are currently in progress to support applications such as last-mile connectivity under BharatNet Phase III. These P2MP UBR solutions are designed to connect multiple gram panchayats from a central hub, aligning with the Governments vision for rural broadband enablement.

Education Sector: A Flagship Success

Our deployment of Wi-Fi 6 Access Points (APs) at the University of Delhi marks our largest single-site implementation this year, reinforcing our leadership in next-generation connectivity solutions for the education sector.

Parameter	Details
Colleges & Campuses	60+
Covered
Students, Faculty & Staff	450,000+
Use Cases	Smart classrooms,
	digital administration,
	IoT labs

Thisinitiativesupportstheuniversitysdigitaltransformation goals by enabling high-density connectivity, seamless high-definition video streaming, and secure guest and roaming access. It stands as a testament to the scalability and performance of our Wi-Fi 6 technology in demanding academic environments.

IP/MPLS Routers

A key milestone during the year was the successful development of indigenous Multi-Protocol Label Switching (MPLS) Routers, specifically designed for 5G backhaul and enterprise networks. Engineered for rugged environments and dual-use applications across civil and defense sectors, these routers have already secured confirmed orders worth _800 crore, underscoring the Companys ability to deliver high-performance, scalable solutions that meet both domestic and international requirements.

FWA CPE

HFCL became the first Indian company to develop and commercially launch 5G FWA CPE, marking a significant milestone in the evolution of last-mile wireless connectivity in the 5G era. In its debut year, the Company dispatched around 6,00,000 units, reflecting strong market acceptance. Further underscoring its market leadership, HFCL has already secured confirmed orders worth more than _800 crore for the supply of this product.

Standards and Research

We are significantly increasing our investments in research and development across emerging technology domains, with a focus on next-generation Wi-Fi 8 and AI-driven radio for 5G, 5G Advanced and 6G technologies. These efforts are aimed at enhancing our innovation pipeline and maintaining technological leadership.

Aligned with the Indian Governments "Atmanirbhar Bharat" initiative and its push for digital connectivity across strategic sectors such as railways and defence, HFCL anticipates sustained demand for vertically integrated, indigenously developed networking solutions. Our commitment to building made-in-India products positions us strongly to meet this growing national imperative.

Strategic Wins Under BharatNet Phase III

During FY25, HFCL achieved significant milestones under the Government of Indias BharatNet Phase III initiative, aimed at delivering high-speed internet connectivity to all 6,40,000 villages across the Country. The Company participated in tenders floated by Bharat Sanchar Nigam Limited (BSNL) and emerged successful in securing major contracts.

HFCL received a contract worth approximately _2,501.30 crore for the design, supply, construction, installation, upgradation, operation, and maintenance of the middle-mile network in the Punjab Telecom Circle.

The Company also secured Advance Purchase Orders totalling approximately _2,166.99 crore from Rail Vikas Nigam Limited for the supply of Optical Fiber Cables, Telecom Equipment, and related accessories, along with annual maintenance services, for BharatNet Phase III in the Uttar Pradesh (East) and Uttar Pradesh (West) Telecom Circles. In addition to this the Company also received service order worth _56.36 crore from RVNL.

These cumulative orders, valued at over _4,700 crore, underscore HFCLs growing leadership in Indias digital infrastructure landscape and its proven capabilities in executing large-scale, mission-critical telecom projects. Beyond these wins, the Company sees significant potential to supply _ber, optical _ber cables, routers and passive connectivity solutions to other vendors involved in the remaining 13 telecom circles. According to the Department of Telecom, tenders worth over _50,000 crore in these circles are currently at various stages of award.

HFCL has played a pivotal role in earlier phases of BharatNet, particularly Phase II, where its advanced technologies and efficient execution contributed to transformative improvements in rural broadband connectivity in Punjab and Jharkhand. The Company remains committed to supporting the Governments ‘Digital India vision and the recently launched Digital Public Infrastructure (DPI) framework for rural services, by bridging the digital divide in underserved regions.

Furthermore, the Union Budget for FY26 has reinforced the importance of digital connectivity, proposing high-speed internetaccessforprimaryhealthcarecentersandgovernment secondary schools nationwide. The budget allocates _1.05 lakh crore for telecom and broadband infrastructure projects, including BharatNet Phase III execution and rural connectivity, which is expected to drive increased demand for broadband equipment and optical _ber cables, products manufactured by HFCL, positioning the Company to capture a substantial share of this emerging market opportunity.

5G Business Unit

The global telecom industry is projected to surpass 6.29 billion 5G subscriptions in 2030 from 2.3 billion in 2024, growing at a CAGR of 18%. In India, with 1.19 billion users and 1.06 billion wireless subscribers (as of December 2024), including 290 million 5G subscriptions (24% of total mobile connections) and an average per capita data usage of 32 GB per month, demand for _ber, 5G and advanced connectivity is surging, areas where HFCL holds a strong position. Through technology partnerships with Qualcomm, Broadcom, Intel, NXP, TI, Mediatek and IP Infusion, HFCL is accelerating next-gen telecom innovation. With a dedicated 5G business unit, HFCL is positioning itself to tap into the US$600 billion total addressable market (TAM) projected by FY30. The Companys focus spans 5G product development, global system integration, and enterprise-grade connectivity, positioning it as a key player in the 5G revolution and digital transformation.

Fixed Wireless Access (FWA) Customer Premises Equipment

HFCL offers comprehensive telecom solutions—indoor and outdoor, point-to-point or multipoint, front-haul to back-haul, designed for networks of all sizes. Our secure, scalable technologies are backed by intelligent network management tools that streamline con_guration and enhance performance. HFCL became the first Indian company to launch 5G FWA Customer Premises Equipment, dispatching over 400,000 units in FY25 and securing ~_205 crore of additional orders. The Companys innovative Indoor and Outdoor 5G FWA CPEs are boosting broadband penetration, bridging the digital divide, and positioning HFCL as a future-ready global telecom technology leader.

Routers

Modernizing transport networks is critical for 5G, driven by higher bandwidth demands per cell site, increased site density, and strict latency requirements. HFCLs 5G transport product portfolio supports this transformation through the use of merchant silicon, network disaggregation, and open standards such as the Telecom Infra Project (TIP) and Open Compute Project (OCP).

HFCLs IP/MPLS router portfolio includes 56 Gbps, 82 Gbps, 360 Gbps, and 800 Gbps models, supporting interfaces like 1G, 10G, 25G, 40G, 50G, and 100G. Designed for 5G transport networks, these routers serve as Access, Pre-Aggregation, and Aggregation Routers, with hot-swappable fans and power units for easy maintenance. For ease of operations and maintenance, all these routers can be managed remotely from a Network Operation Centre (NOC) by an Element Management System (EMS) that is built on a cloud native architecture.

Standards and Research on 5G, 5G Advanced and 6G

Innovation in 5G and 6G is a strategic priority for HFCL. As an active member of global and national forums such as TIP, TSDSI, B6GA, and NSG-5 (towards ITU-R WP5D), we are strengthening our R&D efforts in key areas, including AI/ML, energy efficiency, and Integrated Sensing and Communication (ISAC), where we are developing advanced algorithms, system prototypes, and contributing to pre-standardization efforts. These initiatives support the advancement of 3GPP standards and Open RAN specifications while driving innovation in RF front-end design, antenna systems, autonomous networks, edge computing, and sustainability.

HFCL also partners with leading academic and research institutions to accelerate cutting-edge 6G innovation. Our AI-enabled intelligent Macro RU use case was recognized by ITUs AI for Good platform and nominated for the prestigious SAIL award, showcasing our leadership in applying AI for next-generation networks.

We are also building a strong and future-focused IP portfolio of patents. The patents are mostly in the domains of energy efficiency, power management, ISAC and towards Radio Access Networks (RAN).

With strong domestic adoption, we are expanding globally, focusing on exports of FWA devices, routers, Wi-Fi 7 access points, switches, and _ber optic cables.

Expanding Horizons in the Defence Sector

The defence sector is emerging as a strategic growth driver for HFCL, offering long-term value creation opportunities. With the Government of India earmarking 75% of the defence capital procurement budget for domestic manufacturers, the policy thrust on indigenisation has created a conducive environment for companies like HFCL to contribute meaningfully to national security and self-reliance.

HFCL has made early and decisive investments in building a comprehensive portfolio of advanced defence technologies. These include:

• Ground and Coastal Surveillance Radars for securing strategic locations

• Night Vision Devices for enhanced operational effectiveness in low-visibility conditions

• Electronic Fuzes that improve safety and precision in modern munitions

• High Capacity Radio Relay Systems for real-time, high-bandwidth mission-critical communication

• Tactical Optical Fiber Cables, engineered for rapid deployment and rugged use in battlefield and disaster recovery scenarios These solutions are designed for both domestic and international defence markets, and the Company is already witnessing strong interest from the Indian armed forces as well as overseas clients. A notable addition to HFCLs defence portfolio is its Drone Detection Radar, which is currently under development and expected to enter production within the current financial year.

The Defence Division has been aggressively implementing Go-To-Market strategies in the Electro-Optics segment, establishing a distinct competitive position within the Indian Army. We are proud to share that HFCL is now a qualified vendor for the Indian Army. Intensive user trials were conducted by the Infantry Test & Development Unit (ITDU), Mhow, for our Thermal Weapon Sights (TWS) for AK-203 ri_es and Rocket Launchers. Our systems successfully cleared these rigorous field evaluations, demonstrating compliance with the stringent operational and technical standards of the Indian Army.

HFCL has achieved a strategic win with a landmark order from the Indian Army for the manufacture and supply of Thermal Weapon Sights, reinforcing its position in the defence sector. This order not only underscores our growing capabilities in the defence optics space but also reflects the increasing trust placed in HFCLs indigenously developed technologies by key defence stakeholders.

To support its growing defence business, HFCL inaugurated a state-of-the-art manufacturing facility in Hosur, Tamil Nadu. This facility is dedicated to producing indigenously developed defence products such as Thermal Weapon Sights, Electronic Fuzes, High Capacity Radio Relay Systems, and Surveillance Radars, tailored to meet the evolving needs of modern armed forces.

Further strengthening its R&D and innovation capabilities, HFCL signed two Technology Licensing Agreements with the Defence Research and Development Organisation (DRDO) for:

• A Compact Transhorizon Communication System, enabling high data rate, low latency terrestrial backhaul connectivity in remote areas, and

• A Multi-Mode Hand Grenade, reinforcing HFCLs commitment to delivering modular, battlefield-ready innovations.

HFCL has also developed Tactical Cables for use in battlefield environments, forming a critical part of its high-performance connectivity solutions. The Company has already secured a contract worth _44.36 crore from the Indian Army for the supply of these cables, with results from additional large tenders expected shortly.

In parallel, HFCLs subsidiary, HTL Ltd., has entered the wire harness segment for defence applications, a high-potential, low-capex business with strong profitability prospects. HTL is currently executing initial orders for critical applications in _ghter jet upgrades and T-72 tank modernization programs, further underscoring HFCLs growing role in Indias defence modernization efforts.

With increasing domestic demand and export potential, HFCL is well-positioned to scale its defence offerings and contribute meaningfully to Indias vision of self-reliance in defence manufacturing.

FINANCIAL REVIEW (CONSOLIDATED)

Revenue from Operations

The Company recorded a revenue from operations of _4,064.52 crore in FY25, showing a slight decrease from _4,465.05 crore in FY24.

Other Income

The Other income stood at _57.76 crore in FY25 as against _100.59 crore in FY24.

Total Income

The total income for FY25 stood at _4,122.28 crore, slightly down from _4,565.64 crore in FY24. This decline was primarily driven by drop in revenue from optical Fiber cables, coupled with global demand softness and a decrease in other income.

Total Expenses

The total expenses in FY25 amounted to _3,615.53 crore, compared to _3,883.51 crore in FY24. The decrease in expenses aligns with the reduced revenue.

EBITDA and EBITDA Margin

Earnings before Interest, Tax, Depreciation, and Amortisation (EBITDA) for FY25 was _506.75 crore, as against _682.13 crore in FY24. The EBITDA margin has reduced to 12.47% in FY25 from 15.28% in FY24 primarily due to low capacity utilisation of Optic Fiber Cable facilities.

Depreciation and Finance Cost

Depreciation expenses has slightly increased to _105.51 crore in FY25 from _81.76 crore in FY24, while finance costs also increased to _185.01 crore in FY25 from _147.28 crore in FY24.

Share of Net Profits/Loss of JVs

The share of net profits from joint ventures, accounted for using the equity method, stood at _0.36 crore in FY25, down from _0.93 crore in FY24.

Profit before Tax (PBT) and PBT Margin

Profit before Tax (PBT) for FY25 was _216.59 crore, reduced from _454.02 crore in FY24. The PBT margin also declined to 5.33% in FY25 from 10.17% in FY24.

Tax and Profit after Tax (PAT)

Tax expenses were _43.33 crore in FY25, compared to _116.50 crore in FY24. Profit after Tax (PAT) decreased to _173.26 crore in FY25 from _337.52 crore in FY24. The PAT margin also decreased to 4.26% in FY25 from 7.56% in FY24.

Other Comprehensive Income and Total Comprehensive Income

Other Comprehensive Income saw a significant decline and incurred loss of _35.83 crore in FY25 from _129.60 crore in FY24. Consequently, Total Comprehensive Income for FY25 was _137.43 crore, compared to _467.12 crore in FY24. The decrease in Other Comprehensive Income is attributable to the change in fair value of investments held by the Company in a listed entity, reflecting market fluctuations during the year under review.

Earnings Per Share (EPS) - Diluted

Earnings Per Share (EPS) for FY25 was _1.23, reduced from _2.33 in FY24, followed by dip in overall profitability in FY25.

Dividend

The Board of Directors of the Company has recommended a final dividend @10%, i.e. _0.10 (Ten paise) per equity share of face value _1 each for FY25 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 _4,119.32 crore from _3,999.83 crore in the previous year.

Debt

The Debt in FY25 stood at _1,341.06 crore against _977.26 crore in FY24.

Order book

The Company has a healthy consolidated order book of more than _9,967 crore as on March 31, 2025, providing clear visibility of earnings for the coming years. The order book comprises high-margin O&M contract order worth _3,675 crore.

Capital Structure

Authorised Share Capital

As on March 31, 2025, the Authorised Share Capital of your Company stood at _760 crore (Rupees Seven Hundred Sixty crore only) divided into 510 crore (Five Hundred Ten crore) equity shares of face value of _1/- (Rupee One) each, aggregating to _510 crore (Rupees Five Hundred Ten crore only) and 2.50 crore (Two crore Fifty lakhs) Cumulative Redeemable Preference Shares (CRPS) of _100/- (Rupees Hundred) each, aggregating to _250 crore (Rupees Two Hundred Fifty crore only).

Paid-up Share Capital

As on March 31, 2025, the Paid-up Equity Share Capital of your Company stood at _144.27 crore comprising of 144,26,72,812 equity shares of face value of _1/- each.

Allotment of Equity Shares

The Board of Directors and the Shareholders of the Company at their meetings held on September 02, 2022, and September 30, 2022, respectively, had approved raising of funds by way of preferential issue of securities (Warrants) 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 the Companies Act, 2013 ("Act") and the rules made thereunder.

Pursuant to the aforesaid authorisations, the Private Placement Offer Cum Application Letter (PAS-4) dated October 10, 2022 and pursuant to the applications received from persons belonging to Promoter and Non-Promoter category in the preferential issue under Chapter V of the SEBI ICDR Regulations (Issue), and Section 42 and Section 62 of the Act, as amended, read with the rules issued thereunder, the Allotment Committee (Warrants) of the Board of Directors, vide its resolution dated October 15, 2022, had approved the allotment of 1,41,00,000 (One Crore Forty-One lakhs) Warrants convertible into 1,41,00,000 equity shares at a price of _80/- per Equity Share

(Warrant Exercise Price).

Further, the Allotment Committee (Warrants) of the Board of Directors, vide its resolutions dated February 07, 2024, March 22, 2024 and April 11, 2024 had approved the allotment of 1,00,00,000 (One Crore), 22,00,000 (Twenty-Two Lakh) and 17,00,000 (Seventeen Lakh) equity shares, respectively, having face value of _1/- (Rupee One only) each, at a premium of _79/- per equity share, fully paid-up, upon conversion of warrants.

Pursuant to the said allotments, the paid-up equity share capital of the Company increased from _142,87,72,812 divided into 142,87,72,812 equity shares of _1/- each to _144,26,72,812/- divided into 144,26,72,812 equity shares of _1/- each, as of March 31, 2025. Further, the warrants allotted to one of the warrant holders, belonging to the non-promoter category and being a part of the senior leadership team, holding 2,00,000 warrants, who sought early retirement from the Company, and since retired, did not exercise the conversion option within 18 months from the date of the allotment, i.e. on or before April 14, 2024. Therefore, the 25% of Warrant Exercise Price i.e., _40 lakhs received by the Company stands forfeited as per provisions of Regulation 169(3) of Chapter V of the SEBI ICDR Regulations.

The proceeds amounting to _111.20 crore were utilised as per the objects and purpose of the Issue.

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

Key Financial Ratios

As mandated by Regulation 34(3) and Para B of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the key financial ratios are detailed below:

Financial Ratios	FY25	FY24	Reason for Variations more than 25% during FY25
Debtors Turnover	1.61	1.77	-
Inventory Turnover	3.52	4.20	-
Interest Coverage	2.17	4.08	The variation is primarily attributable to a reduction in profit during the financial year.
Current	1.86	2.08	-
Debt Equity	0.33	0.24	The variation is primarily due to increase in debt on account of manufacturing capacity enhancement.
Operating Profit Margin (%)	12.47	15.28	-
Net Profit Margin (%)	4.26	7.56	The variation is primarily attributable to a reduction in profit during the financial year.
Return on Net Worth (%)	4.27	9.45	The variation is primarily attributable to a reduction in profit during the financial year.

Business Outlook

HFCL strides forward with a steadfast commitment, steering its course towards sustainable growth. This progression is driven by continuous capacity expansion, strengthening value chain, a robust pipeline of innovative product and solution offerings backed by intensive R&D, comprehensive system integration, an ever-growing customer base, and an expanding global footprint. The rising global demand for high-speed, secure communication networks further accelerates the Companys upward growth trajectory. By reinforcing its core competencies, HFCL is strategically positioned to effectively meet global communication and networking requirements, ensuring competitive pricing while reducing reliance on imports and capitalising on emerging opportunities shaped by evolving global dynamics.

The anticipated surge in global demand for Optical Fiber Cable, along with the increasing penetration of Fiber-to-the-Home (FTTH), continued deployment of 5G, expansion of 4G networks, the nationwide BharatNet initiative, rapid proliferation of data centres, and rising exports, collectively serve as strong growth enablers.

The Indian Governments resolute emphasis on domestic procurement of telecom and defence equipment, coupled with the telecom operators continued network expansion and technology upgrades, align seamlessly with HFCLs ambitious and transformative growth strategy.

As HFCL progresses along this transformative path, it remains firmly aligned with the Prime Ministers vision of connecting every gram panchayat and village through Optical Fiber Cable, aiming to make affordable broadband connectivity a nationwide reality.

We remain confident that our focused initiatives, expanding our product portfolio across telecom, Optical Fiber Cable, passive connectivity solutions, and defence products; enhancing production capacity; deepening backward integration; broadening our customer base; transitioning from project-led revenue to product-led revenue; and exploring new geographies will drive consistent revenue growth, enhance margin and ensure optimal utilisation of working capital resources. With a strong sense of optimism, we look forward to unlocking future opportunities and delivering a successful year ahead.

Embracing the wave of technological transformation, HFCL is evolving into a dynamic enterprise dedicated to fostering innovation and delivering cutting-edge solutions and products across telecommunications, and defence sectors. The Company aims to position itself as a globally recognised technology player, equipped with one of the worlds largest Optical Fiber Cable manufacturing capacities and a portfolio of advanced Defence and Telecom Networking products and solutions built to international standards.

Research and Development (R&D) Capabilities

HFCL is a technology-driven enterprise with a strong focus on research and development (R&D) to drive innovation and stay at the forefront of technological advancement. With a talented R&D team of 351 professionals across its centres in Bengaluru, Gurugram, and Hyderabad, HFCL is actively shaping the future of telecommunications.

Strengthened in-house R&D Team

HFCL leads as a technology-driven company with R&D at its core. With 351 experts across Bengaluru, Hyderabad, and Gurugram, it pioneers 5G, edge computing, and radio innovations. Key milestones include global technology collaborations, indigenous product development, filing of multiple patents (including five in the 5G RAN domain), and the establishment of a 5G Lab-as-a-Service, enabling advanced testing and supporting Industry 4.0 transformation.

Digital Transformation and Operational Excellence

To standardise and elevate our business operations, HFCL undertook a comprehensive Business Process Re-engineering (BPR) initiative. This led to optimised workflows and the formulation of a digital transformation roadmap aligned with our strategic objectives. A key milestone in this journey was the successful implementation of SAP S/4HANA on RISE, establishing a uni_ed enterprise architecture that integrates all business verticals, ensures data consistency, and embeds global best practices through standardised processes and a single Chart of Accounts. This scalable and flexible platform enables seamless integration, fosters innovation, and strengthens long-term organisational resilience.

As part of our broader digital transformation, we are in the process of deploying a best-fit Customer Relationship Management (CRM) solution across all verticals. This initiative is designed to enhance customer experience by providing a comprehensive 360-degree view, enabling personalised engagement, improved responsiveness, and deeper customer insights.

In parallel, we developed an in-house Channel Sales & Distribution (CSD) portal to streamline telecom distributor operations. This platform facilitates efficient, self-managed workflows and significantly reduces turnaround times, markingasubstantialadvancementinourdigitalcapabilities.

Recognising the critical importance of cybersecurity in this transformation, HFCL has implemented industry-leading solutions for threat detection, brand monitoring, vulnerability assessment, and risk mitigation. Organisation-wide awareness campaigns were also conducted to equip employees with the knowledge to identify, prevent, and respond to cyber threats, thereby strengthening enterprise-wide security resilience.

Furthermore, HFCL has concluded its enterprise-wide Artificial Intelligence (AI) strategy, with a focused approach on:

These AI-driven initiatives are expected to improve operational efficiency, reduce costs, and accelerate time-to-market for innovative solutions, positioning HFCL to leverage emerging opportunities in next-generation networks and smart connectivity.

Investing in Human Capital

At HFCL, people form the backbone of innovation and operational excellence, driving sustainable growth across expanding global operations. In FY25, HFCL focused on building a future-ready workforce through strategic hiring, capability enhancement, and leadership development initiatives aligned with business priorities.

Recruitment and Onboarding

In FY25, we strengthened the Companys capacity to support its telecom, defence, and export-led growth plans by hiring 229 new on-roll employees and 485 off-roll/ fixed-term employees. A strong emphasis was placed on leadership roles, with 19 senior positions filled in business leadership, product line management, operations, sales, and technology functions. These hires were targeted towards high-growth segments such as Data Centre & Connectivity, Optical Fiber & Optical Fiber Cable, and Defence Products, ensuring the Company remains competitive in both domestic and international markets.

Recruitment efforts were optimised through in-house hiring capabilities, significantly reducing cost-per-hire and time-to-fill critical roles.

During the year, specialised technical talent was onboarded for HFCLs 5G and Wi-Fi Centre of Excellence in Bengaluru and key roles in Defence, OFC-Passive Connectivity Solutions, and PLM. Sales leaders were recruited for strategic international markets including the USA and UK. The Company also continued graduate hiring from premier engineering and management institutes to build a pipeline of future-ready talent.

As of March 31, 2025, HFCLs total workforce stood at 3,231 employees, with 195 female employees.

Employee Development

HFCL continues to evolve as a high-innovation enterprise, underpinned by a strong people-first philosophy. In FY25, we deepened our focus on capability development and leadership readiness. A competency-based model was initiated for critical roles in the OF and OFC businesses to prepare for future business scalability.

Our Learning & Development ecosystem matured further through a combination of on-the-job coaching, instructor-led sessions, virtual learning, micro-learning modules, and the HFCL Academy platform. Key development milestones included:

• 5G Readiness: 25 engineers certified in router con_guration and deployment.

• Quality Assurance: 14 quality engineers trained on NABL standards.

• Marketing Enablement: Teams upskilled in digital marketing strategies and tools.

• Leadership Development: 380 first-time managers enrolled in a structured program, with 63% demonstrating improved cross-functional collaboration and behavioural competencies.

HFCL CARES: Holistic Wellness and Safety

The HFCL CARES program took a more proactive approach this year, addressing physical, mental, and emotional wellbeing holistically.

To further strengthen employees financial security,

9 Employee Assistance Programs (EAPs) were conducted on tax planning, financial wellness, and wealth management. Workplace safety was reinforced through 22 safety programs covering fire drills, PPE usage, and National Safety Week observances. 18 inclusion sessions focused on Human Rights, POSH awareness, and Diversity, Equity & Inclusion (DEI) themes.

Employee Communication

HFCLs leadership places a strong emphasis on open and transparent communication to nurture a uni_ed and engaged organisational culture. Regular town halls, led by the Managing Director and business heads, serve as digital forums where key updates are shared and employee queries are addressed, fostering alignment and trust across teams.

The MDs newsletter further reinforces this commitment by highlighting strategic goals, business developments, and milestones, ensuring employees remain informed and connected to the Companys vision.

In addition to formal channels, informal interactions such as "co_ee connects" promote approachability and strengthen interpersonal relationships, contributing to a collaborative and inclusive work environment.

Employee Engagement

At HFCL, we believe that an engaged workforce is vital to our growth and long-term success. We are committed to fostering a vibrant, inclusive, and collaborative workplace that enhances employee satisfaction, retention, and productivity while instilling a strong sense of belonging. Our culture is enriched through initiatives such as team outings, "Fun Fridays," and festive celebrations, which strengthen interpersonal connections and promote camaraderie.

Extending this spirit beyond the workplace, our Personal Social Responsibility (PSR) philosophy motivates employees to contribute meaningfully to social and environmental causes. During the year, our people actively participated in initiatives such as blood donation camps, nationwide plantation drives, and CSR Week, during which employees visited NGOs and institutions under the motto "Smile with someone and let someone smile." Through the HFCL Champions of Good Work Award, we recognize and encourage employees, along with their families and friends, to dedicate their time, skills, and resources to community development. Many colleagues also volunteer by conducting online remedial classes for children, making a tangible difference in their education.

By integrating employee engagement with social responsibility, HFCL has created a workplace where professional fulfillment goes hand in hand with making a lasting, positive impact on society and the environment.

Diversity, Equity & Inclusion (DEI)

In FY25, HFCL continued to embed Diversity, Equity & Inclusion (DEI) into its organizational culture, reinforcing our commitment to a respectful, equitable, and inclusive workplace. Over 2,480 employees participated in awareness programs covering Prevention of Sexual Harassment (POSH), Human Rights, and Anti-Bribery & Anti-Corruption (ABAC) policies. Additionally, 23 POSH Committee members underwent advanced certification training to strengthen governance and compliance.

HFCL celebrated International Womens Day 2025 across multiple locations through speaker sessions, interactive workshops, and recognition activities, engaging more than 200 women employees / workers in meaningful dialogue and celebration.

We remain steadfast in our commitment to fostering an environment where diverse talent is empowered to thrive, contribute meaningfully, and drive sustainable business outcomes.

SPARK Programme

To support long-term growth and strengthen our leadership pipeline, HFCL recruited 43 campus graduates from reputed institutions under the SPARK Program in FY25. This cohort included 30 Graduate Engineer Trainees (GETs), 6 Postgraduate Engineer Trainees (PGETs), and 7 Management Trainees (MTs) who joined HFCL and HTL, a subsidiary of the Company. Aligned with SPARKs core values of innovation, ownership, and continuous learning, a comprehensive week-long induction program and plant tour were conducted to onboard the new talent. Ongoing engagement through Meet & Greet sessions, quarterly manager reviews, and an Annual Business Unit Meet provided structured feedback, performance evaluations, and targeted training interventions.

These initiatives ensure that SPARK participants remain energized, engaged, and aligned with HFCLs long-term strategic goals, while fostering a culture of growth and excellence.

HR Digitisation

Digital transformation continues to be a cornerstone of our HR strategy. Through our integrated HiFi HRMS platform, we have digitized key employee lifecycle processes, enabling 24/7 accessibility via mobile and web platforms.

We also introduced system-generated reports for Separation Clearance, Assignment Tracking, and consolidated Employee Master data across group entities. With Payroll MIS now fully operational on HiFi, salary data is centralized and available through automated dashboards as the foundational step towards digitizing Payroll module in next financial year. These digital initiatives enhance efficiency, compliance, and user experience strengthening HFCLs HR foundation for the future.

Corporate Social Responsibility

HFCL is actively engaged in a range of Corporate Social Responsibility (CSR) initiatives designed to promote societal well-being.

CSR Project Impact Overview

Advanced Healthcare – Corrective Surgeries for Polio-Related Deformities, Clubfoot, and Other Congenital Abnormalities

In collaboration with St. Stephens Patient Welfare Society - Delhi, this initiative facilitated transformative orthopaedic surgeries for individuals, mostly children, su_ering from debilitating polio-related deformities, clubfoot, and congenital musculoskeletal anomalies. These procedures were led by Dr. Mathew Varghese, one of Indias foremost orthopaedic surgeons and a global advocate for polio eradication, recognized by WHO and the Government of India for his public health service. Through meticulous surgical care and rehabilitative support, 92 underprivileged individuals regained mobility and independence, with 100% of beneficiaries belonging to vulnerable and marginalized groups. This project not only restored physical functionality but also enabled reintegration into educational and economic systems, reafirming healthcare as a tool for social equity.

Advanced Healthcare – Critical Cardiac Surgeries

Partnering with the National Heart Institute - Delhi, a premier cardiac care centre in India, this project enabled life-saving heart surgeries for 40 economically disadvantaged patients diagnosed with critical cardiovascular conditions such as congenital heart defects, valvular disease, and ischemic heart conditions. These high-cost, high-complexity procedures, often out of reach for families below the poverty line, were fully funded, ensuring zero out-of-pocket burden on patients. The program helped prevent avoidable mortality, reduce long-term disability, and exempli_ed a model of tertiary care inclusion. All beneficiaries were from financially and socially disadvantaged backgrounds, aligning with HFCLs healthcare equity mandate.

Preventive Healthcare – Mobile Medical Units (MMUs)

HFCLs flagship initiative in preventive and primary health care delivery involves the deployment of Mobile Medical Units (MMUs) across five geographies: Solan (Himachal Pradesh), Goa, Sardarshahar (Rajasthan), Ghazipur (Uttar Pradesh), and Hyderabad (Telangana). These fully equipped vans bring doorstep healthcare services to underprivileged and medically underserved communities, especially in remote, hilly, and urban slum areas.

Each MMU includes an MBBS doctor, pharmacist, lab technician, and a dedicated Social Protection Officer (SPO) responsible for community engagement, awareness, and grievance redressal. Services include general health checkups, maternal and child health, basic pathology tests, distribution of essential medicines, and preventive health awareness camps. Collectively, the MMUs served more than 1.31 lakhs individuals during FY25.

Inclusive Education – Support for Children with Special Needs

In partnership with Balwantrai Vidya Bhavan - Delhi, HFCL undertook a comprehensive initiative to support 50 children with developmental and intellectual disabilities, providing full educational sponsorship to cover their academic expenses. This effort reflects the Companys commitment to inclusive and equitable quality education, in alignment with the principles of the National Education Policy (NEP) 2020.

Beyond academic funding, HFCL extended a grant for the procurement of a specialized van to ensure safe and reliable transportation for the students. The initiative also included the revamping of an old printing press to facilitate experiential learning and the installation of smart classroom systems to enable tailored pedagogical approaches suited to the unique needs of special-needs learners.

All beneficiaries of this program come from marginalized socio-economic backgrounds, and the project is designed to foster long-term independence, integration, and empowerment. Through this initiative, HFCL continues to demonstrate its dedication to building an inclusive society and enabling transformative impact through education.

Skill Development – Digital Literacy for Rural Youth (Ghazipur, U.P.)

Aligned with Skill India and Digital India initiatives, HFCL in collaboration with Hari Prem Society established five digital learning centres across rural Ghazipur, Uttar Pradesh, a region with high youth unemployment and limited access to vocational training. These centres trained 645 youth in foundational and advanced computer skills, including data entry, office automation, and internet applications, thereby enhancing their employability in both formal and gig economies. All trainees were selected from economically disadvantaged rural communities, ensuring that technology becomes a bridge, not a barrier, to upward mobility.

CSR Initiatives: Beneficiary Reach and SDG Alignment

Project Category	Partner	Total Beneficiaries	% from Vulnerable Groups
Corrective Surgeries – Delhi	St. Stephens Patient	92	100
	Welfare Society
Critical Heart Surgeries – Delhi	National Heart Institute	40	100
MMU – Solan	HelpAge India	32,901	100
MMU – Goa	HelpAge India	26,884	100
MMU – Sardarshahar	HelpAge India	23,804	100
MMU – Ghazipur	Wockhardt Foundation	24,304	100
MMU – Hyderabad	Wockhardt Foundation	23,503	100
Inclusive Education –	Balwantrai Vidya	50	100
Special Needs Children - Delhi	Bhavan
Digital Skill Development - Ghazipur	Hari Prem Society	645	100

*SDG 1: No Poverty : SDG 3: Good Health and Well-being: SDG 4: Quality Education : SDG 8: Decent Work and Economic Growth : SDG 9: Industry, Innovation and Infrastructure : SDG 10: Reduced Inequalities

Conclusion: Purpose-Driven Progress and Community Empowerment

In FY25, HFCLs CSR initiatives embodied a community-first, impact-driven philosophy focused on healthcare inclusion, education equity, and livelihood enhancement. Across these domains, the Company extended direct and measurable benefits to more than 1.32 lakh individuals, all of beneficiaries drawn from socially and economically disadvantaged sections of society.

The programs have been aligned with national missions such as Ayushman Bharat, Skill India, and Samagra Shiksha, as well as the United Nations Sustainable Development Goals (SDGs), particularly SDG 3 (Good Health & Well-being), SDG 4 (Quality Education), SDG 8 (Decent Work), and SDG 10 (Reduced Inequalities).

Our healthcare	interventions advanced Universal
Health Coverage and rehabilitative collaborations and mobile outreach models. Concurrently, our educational and skilling programs created long- term pathways for independence, and income generation potential.	by providing curative, preventive, services through both institutional empowerment by fostering inclusion,

Risk Management

HFCLs Risk Management Policy provides a structured and strategic framework for identifying, assessing, and mitigating risks across its diverse business operations. This comprehensive approach enables the Company to proactively manage potential challenges and uncertainties, thereby safeguarding its long-term objectives.

The Companys risk management efforts are overseen by a dedicated Risk Management Committee, which evaluates key risks across business units and functions. By aligning its practices with industry standards, HFCL ensures a vigilant, systematic, and informed approach to risk assessment and mitigation.

The Risk Management Policy is reviewed by the Risk Management Committee, to ensure its relevance and effectiveness in a dynamic business environment. Furthermore, the Audit Committee provides additional oversight with a specific focus on managing financial risks and internal controls, thereby strengthening the overall effectiveness of HFCLs risk management strategies.

HFCL remains committed to a proactive and resilience risk management approach. While the Company maintains confidence in its current risk profile, its agility and preparedness to address unforeseen risks highlight its dedicationtooperationalcontinuityandsustainablegrowth. A few inherent risks associated with the Company are discussed herein.

Risks	Description	Mitigation Measures	Impact
Economic Risk	Macroeconomic fluctuations may impact demand, profitability, and growth.	Continuous monitoring of economic indicators, strategic business adjustments, financial prudence and diversifying revenue streams.	Enhances adaptability to economic cycles, ensuring sustained operations and growth during downturns.
Competition Risk	Intense market competition may affect order acquisition and margins.	Strong positioning as a number one optical _ber cable supplier in India, turnkey solution provider, robust client relationships, and sustained R&D investments to drive innovation.	Strengthens market presence and customer confidence, leading to higher order inflow.
Foreign Exchange Risk	Exposure to currency fluctuations due to import/export operations.	Active forex management through professional consultants, hedging instruments like forward contracts and options.	Minimizes forex losses and ensures financial stability.
Technology Risk	Rapid technological changes may render existing solutions obsolete.	Continuous investment in R&D and timely technology upgrades to stay ahead of market trends.	Maintains competitiveness through innovation and relevance in evolving markets.
Government Policy Risk	Changes in regulations or government policy priorities may disrupt operations.	Active monitoring of policy developments and strategic alignment with government initiatives.	Ensures compliance and operational continuity amidst regulatory changes.
Order Execution Risk	Delays in project execution may lead to penalties and reputational damage.	Robust project management practices along with policies, skilled workforce, and digital tools for real-time monitoring and execution.	Ensures timely delivery, mitigates penalties, and strengthens client trust.

Internal Control Systems and their Adequacy

HFCL has established a robust internal control framework that is well-aligned with the scale and complexity of its operations. This framework encompasses key elements such as governance, compliance, audits, controls, and reporting mechanisms, ensuring a comprehensive and integrated approach to risk and control management.

The Company has implemented a structured system of internal financial controls to ensure the accuracy and reliability of its financial statements. These controls are regularly reviewed and tested for adequacy and operational effectiveness, with active involvement from the management, internal auditors, and statutory auditors. The internal control system is designed to safeguard the Companys assets against loss or unauthorized use and to ensure the integrity of financial and operational records. This enables accurate reporting and accountability across all levels of the organization.

To further strengthen this framework, internal audits are conducted by M/s Anil Aggarwal & Co., Chartered Accountants, based at 501, Surya Kiran Building, K.G. Marg, Connaught Place, New Delhi – 110001. These audits are carried out across all locations and functional areas throughout the year. The findings and recommendations are submitted to the Audit Committee of the Board, which provides strategic oversight and directs necessary improvements to enhance the internal control environment. In addition, the Company has established policies to ensure uniform accounting practices across its subsidiaries. The financial statements of subsidiaries and joint ventures are audited and certified by their respective statutory auditors to facilitate accurate consolidation.

During the FY25, the internal control systems were thoroughly assessed, and no material weaknesses in either design or operation were identified.

Based on these evaluations, the Board afirms that the Companys internal financial controls were adequate and operating effectively during FY25.

Cautionary Statement

The statements made in this management discussion and analysis section regarding the Companys objectives, expectations, or predictions may contain forward-looking elements as defined by applicable laws and regulations. Forward-looking statements are based on specific assumptions and anticipations of future events. However, the Company cannot guarantee the accuracy or realisation of these assumptions and expectations.

It is important to note that the Company assumes no obligation to publicly amend, modify, or revise forward looking statements based on any subsequent developments, information, or events. Consequently, the actual performance or results of the Company may differ from the projected estimates provided in the forward-looking statements. The readers should consider the discussions on our financial condition and results of operations in conjunction with our audited, consolidated financial statements and the accompanying notes included in the Annual Report.