India's HFCL looks to grow its product revenue

HFCL, a prominent Indian telecom gear maker, is starting to see the fruits of its "projects to products" approach as revenue from new products begins to grow.

"Over the last few years, we have invested heavily in R&D to develop products for the domestic as well as international markets. Over the next three years we would like to increase the contribution of the products revenue from the current 56% in the first half of the current financial year to 70%," said HFCL's managing director, Mahendra Nahata.

To this end, the company launched several new products during the recently concluded India Mobile Congress 2023. HFCL claims to have designed and developed the country's first homegrown 5G fixed wireless access (FWA) customer premises equipment for both indoor and outdoor communications. "We believe this will see good demand in India as well as internationally," said Nahata. It has also launched Unlicensed Band Radio (UBR) and IP/MPLS (Internet Protocol/Multi-Protocol Label Switching) routers.

HFCL started its journey in 1987 as a manufacturer of fiber optic cable. Over the last few years, it started investing in developing telecom gear as well. The company began to focus on research and development to grow its export business. HFCL is also a beneficiary of the Indian government's production-linked incentive (PLI) scheme. It has committed to an investment of around 4.3 billion Indian rupees (US$51.04 million) for developing and manufacturing of products under the PLI scheme.

Export opportunity 

Even as the revenue from products continues to grow, the company has expanded capacity to manufacture fiber optics. "Currently, we are manufacturing 25 million fiber kilometer equivalent cable, which we are expanding to 35 million fiber kilometer equivalent cable," says Nahata. HFCL has five manufacturing units, two in Hyderabad and the others in Goa, Chennai and Hosur.

However, the fiber optic cable market is witnessing a bit of a downturn in India, as well as other markets. "In India, it is cyclical, with the demand coming down during the monsoon months. The US market is also experiencing a bit of sluggish demand but we do expect the demand for optic fiber cable to pick up in the first quarter of the next calendar year," said Nahata.

Indian telecom gear makers are trying to grow their profile in the global market. Vendors including Tata Group and Reliance Industries are trying to seize the opportunity as several countries have stopped working with Chinese vendors. In this context, HFCL is also aiming to grow its export revenue. Last year, export contributed 17.23% to the overall revenue but this dropped to 14.36% in the first half of the current fiscal year. The launch of new products could help the company reverse that trend.