HFCL aims to boost export revenue from fibre optics, targets North American market

Mahendra-Nahata-Managing-Director-HFCL

Communications solution provider HFCL plans to boost its export revenue from the fibre optics segment significantly. It aims at 70 percent of its fibre and 50 percent of its telecom equipment revenues from overseas markets in the next three years. It also expects a recovery in the global fibre optics industry with demand revival by the fourth quarter of the fiscal.

A top official said the company is homing in on North America to expand its fibre business, while it has gained a competitive advantage in Europe after the European Commission exempted its optical fibre cables from anti-dumping duties.

“The focus is to export our products in a big way. In fibre optics, we export to 40 countries; in telecom equipment, we have started exporting to four countries and will increase exports. To grow the telecom business, we are bringing new telecom products, including routers designed for rural communications,” HFCL Managing Director Mahendra Nahata told Moneycontrol. “We have started working on the North American market, have set up a team, and appointed distributors for the next financial year. We will have substantial revenue coming to North America.”

Nahata said the company will achieve its first-year target under the product-linked incentive scheme. “This is the first year for which we will file for incentives.”

The company has enough production capacity in India to support its export targets. However, Nahata stated that the company is considering a local unit in North America to secure business from companies under the BEAD program.

The Broadband Equity, Access and Deployment (BEAD) program is a major US government initiative worth $42.45 billion to expand high-speed internet access across the country, particularly in underserved and unserved areas.

“We have enough capacity, but need-based capacity will be required in new countries. In the US, we are looking at tapping the BEAD program. If we are to sell to companies that are creating networks that are financed under the program, then we will have to manufacture in the US. We are evaluating local manufacturing in the US,” Nahata said.

HFCL also expects the fibre market to revive from the last quarter of the fiscal year. “The market will start picking up. We are seeing signs of recovery as more tenders and enquiries are coming up,” he said.

"In Q1 FY25, the European Commission recognised HFCL as the only Indian company exempt from anti-dumping duties on optical fibre cables, bolstering our competitive edge in the European market," Nahata said. “We will have a 10 percent advantage in the region regarding Indian competition now that duty has been imposed.”

Opportunity in defence, aerospace 

The company has started zeroing in on defence and aerospace sectors to drive the next growth phase. It is in advanced discussions with companies in several countries to export defence products, including communication devices, electronic fuses, and radars.

“We are now also working with General Atomics Aeronautical Systems Incorporated to design radar subsystems. We are hoping to get more such contracts from other companies. Defence will become an important sector for us,” Nahata said.

HFCL is developing drone detection radar with General Atomics, which is expected to become a crucial element in modern drone detection systems.

With more partnerships in the defence space, HFCL aims to export defence products to “friendly” countries. “We will comply with all government regulations and export only to countries the government allows and considers friendly.”

Nahata said that HFCL has also been shortlisted for an upgrade of the electronic system, which includes fire control systems and a night vision division, for the military's BMP-II infantry combat vehicle. “We are among five shortlisted companies to whom tender has been issued.”

HFCL also makes wire harnesses for military aircraft and has won some orders in India. “Similarly, we won similar orders in the submarine space,” he said.