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‘We Are Investing In Building A Portfolio Of 5G Products’
A leading manufacturer of optical fibre, optical fibre cables, passive interconnect solutions and high-end transmission and access equipment, HFCL is betting big on upcoming 5G expansion and PLI scheme, Mahendra Nahata, Promoter & Managing Director, HFCL tells Ashish Sinha of BW Businessworld.
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How is HFCL becoming 5G-ready? What’s the roadmap for upcoming products?
We have recently created a dedicated 5G business unit. The aim is to cater to the needs of communication service providers both in India and in overseas markets. The 5G business unit will deliver a variety of solutions to address myriad 5G use cases. Comprehensive 5G solutions will be designed and built using HFCL’s own 5G products and products from our partners. We are investing in building a portfolio of 5G products that include 5G Radio Access Network (RAN) products and 5G Transport products. These 5G products are in advanced design stage and based on open RAN standards like O-RAN. ‘Security by design’ is built into these 5G products. The 5G RAN products include Macro RU, 5G Indoor Small Cell and 5G Outdoor Small Cell. The 5G transport products include Fronthaul Gateway, Cell Site Routers, and Aggregation Routers. To facilitate smooth and speedy 5G deployment, we are ready to take the onerous responsibility of being an end-to-end system integrator for rollout of 5G networks based on our own as well as our partners’ 5G products.
What are your capex plans and how will expanded capacity look after this?
HFCL is one of the largest optical fibre cable manufacturers in the country with a dominant market share and product diversity. Cumulatively, for cable and defence manufacturing capacity ramp up, we will be investing around Rs 210 crore and all these new capacities will be available for commercial production gradually from September 2021 onwards. Of the Rs 210 crore capex, about Rs 170 crore will go towards adding new manufacturing capacities in optical fibre and optical fibre cable. These capacities will be augmented/ modernised across all three manufacturing locations namely Hyderabad, Goa and Chennai. Upon completion, our optical fibre capacities would ramp up to 10 million fibre kilometre per annum. Similarly, optical fibre cable capacities would further ramp up to 22.5 million fibre kilometre per annum and FTTH capacity will increase to 7.2 lakh cable kilometre per annum. Corresponding increases in the capacity of these three product lines would be 25 per cent, 22 per cent and 20 per cent respectively In addition, we are setting up a greenfield facility for manufacturing defence products at Hyderabad at an estimated capex of Rs 40 crore.
Give us a sense of the R&D investment and efforts that the company is making across segments like telecom, defence, railways, etc?
Our enhanced R&D capabilities have started to yield results in the form of expanding products and solutions bouquet with a growing market share. Buoyed by these initial results and breakthroughs in ongoing research, we will be increasing our R&D investment to Rs 150 crore in FY22 from Rs 125 crore last year. Our R&D programmes span the entire range of communication and telecom equipment, optical fibre cable, and defence electronics products. Most of the under-development products and solutions have a very high deployment potential – across 4G network expansion and 5G service rollouts, Bharat Net expansion, PMWANI programme and defence supplies. As a testament to our innovation capabilities, HFCL is the only Indian company to have successfully developed electronic fuses for artillery ammunition with own IPRs and has also been selected as one of the preferred agencies for the development of Software Defined Radio by the Indian Army. Besides bolstering our technological stature in India by building world-class products and solutions at globally competitive prices, we are working to aggressively leverage our R&D capabilities for exporting to international markets.
How does HFCL plan to tap the benefits of the PLI scheme?
Having decided to actively participate in the PLI scheme, HFCL is working on designing products in key areas of 5G with leading technology partners. Our design and manufacture focus will cover 5G radio, macro and small cells for both external and indoor coverage of 5G, carrier grade Wi-Fi 6-based equipment which is compatible with 5G, unlicensed band radios, routers, switches, software defined radios, advanced passive optical network equipment, intelligent antenna systems and ground surveillance radars.
What do you see HFCL growing over the next 3-4 years given the large opportunities at home and overseas?
We are moving ahead with our growth plans and are well aligned to seize more from the new opportunity areas, in India and also in overseas markets. If we look at one instance of domestic opportunity, FTTH connections, which today stand at a meagre 4 million is estimated to reach 50 million by 2024. Cumulative investments towards Bharat Net Phase II, Wi-Fi infrastructure, electronics and optic network is pegged to be around Rs 40,000 crore over the next few years in the country. Then, there is the game-changer 5G deployment with a massive capex of an estimated Rs 3,65,000 crore. Likewise, India’s defence electronics market is expected to grow substantially over the next five years. With a clear policy regime that is advantageous to home-grown players, the growth outlook for HFCL looks promising and very exciting.