Q1 20/21

Aug 19, 2020

Ladies and gentlemen, good day, and welcome to the AGCL Limited Q1 FY 'twenty one Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. I would now like to hand the conference over to Mr. Anuj Sounpal from Valorum Advisors. Thank you, and over to you, Mr. Sounpal. Thank you, Janice. Good morning, everyone, and a warm welcome to you all. My name is Anuj Sounpal from Valorum Advisors. We represent the Investor Relations of HFCL Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings conference call for the first quarter of financial year twenty twenty one. Before we begin, I would like to mention a short cautionary statement. Some of the statements made in today's earnings conference call may be forward looking in nature. Such forward looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward looking statements in making any investment decisions. The purpose of today's earnings conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. I would now like to introduce you to the management participating with us in today's earnings conference call. We have with us Mr. Mahindra Nathar, promoter and Managing Director Mr. D. R. Jain, Chief Financial Officer. I would now like to request Mr. Natha to give his opening remarks. Thank you, and over to you, sir. Thank you, Anuj. Good morning to everyone, and warm welcome to the earnings call of HFCL for the first quarter of financial year twenty twenty one. I'm sure that all of you are countering these times with good health and resilience while staying safe with your families and dear ones. Let me first briefly introduce the company, its state of affairs, and how it has been navigating through the current COVID nineteen reduced challenges. HMCL, as you all know, is a leading technology enterprise, which contributes to a securely connected world through a range of integrated communication networks, products, solutions, and specialized services and offerings. It manufactures optical fiber, optical fiber cable, cable accessories, high end transmission and access equipment. Its technology to the advanced offering extend the entire value chain from manufacturing high-tech communication network products to providing specialized network implementation services, which get deployed across telecom, defense, railways, utility, security and cellular networks, both in private and as well in government sector. HFCS Centre of Excellence at Gurgaon and Banyaluru still exists in house research and development activities. The two centers are supported by a few other invested R and D houses and collaborators from different locations in India and overseas. Collectively, they work on developing a range of innovative technology products and solutions in a cost competitive manner. HFCI's integrated manufacturing network of five world class facilities to use wider range of new generation communication products in India. The company serves an enviable list of customers globally with exports to over 40 countries. The company continues to enjoy a strong order book of INR8135 crores, which is 2.1x of FY 'twenty revenue. It is at least supported with a promising pipeline of tenders and RFPs. And the order book, which is expected to be executed over the next six to eight quarters, ensures revenue and earnings visibility. The order book is fairly representative of all our business verticals and comes from a multitude of prestigious customers. Order book also includes O and M orders worth INR $15.73 crores, ensuring better margins and annuity revenue year on year. As a key enabler of next round of growth, we are accelerating innovation in every sphere of our business with a sharper focus on IPR creation. Next generation technology offerings of our cost competitive mass deployment would steer our technology led transformation. With a clear vision of global deployment capability, Our new product initiatives are backed with requisite global and Indian certification. Indigenously developed products and technologies with IPR ownership are expected to drive our margins upwards. As you are already aware, our innovation journey has integrated WiFi network products, high capacity radio relay, micro radio, and cloud based management platform. Our innovation pipeline includes switches, routers, intelligent antenna systems, software defined radio, ground surveillance radars, electro optic devices, and electronic fuses at various stages of development being carried out through in house as well as collaborative research and development. Company is in process of further expanding its R and D resources and capabilities to bring in more products in its portfolio. Let me now briefly take you through our resilient response to pandemic induced challenges. Having successfully embraced various ways of unlock, our operations have steadily been progressing towards pre lockdown levels. In spite of having continued threat of COVID-nineteen even during the first quarter of financial year twenty twenty one, our order book remained intact with zero cancellation. We converted the adversity of operational restrictions during lockdown to further digitize the organization and headed to enable a work from anywhere framework for our non production, non project workforce. Our disruptions due to COVID-nineteen and lockdown has led to revenue and profit erosion in the first quarter. There is no significant impact on our capital and financial resources. Elongated operating cycles have put some short term liquidity strength. However, we continue to maintain adequate working capital with a range of measures and levers available with the company. With that liquidity ratio of 0.43, we remain comfortable to meet our financial obligation. We continue to monitor the unfolding situation and keep adapting to a fairly periodic basis. Before I take up our quarterly performance, I would like to share that. First, the honorable prime minister's promise of providing robust connectivity to the remaining 4.5 lakh villages over the next thousand days is the indication of the kind of opportunity waiting for the company. While the ambitious national goal is just one of the growth drivers that industry has been presented with, the goal of connecting on an average four fifty villages every day signifies the priority and the advantage that the government is focused for a truly digital India. This opportunity will truly lift up the demand of optical fiber cables in the country. Second, the government of India's Making India program, particularly for defense equipment and recent announcement made to restrict imports in case of various products, opened up large opportunities for the company. Besides development of electronic fuses and electro optic devices, company is now identifying more products to be developed and manufactured indigenously. This is also going to boost up company's revenue in coming future. Further, as informed and committed during our last earnings call, we have been able to get 20% of our Comodus holdings released from the pledge, which has been placed as a collateral to the loan availed by the company. Now coming to our Q1 performance. This has been highly unusual quarter marked with production and execution constraints, and therefore the results are hardly comparable. On consolidated basis, our income was at INR704 crores, sequentially a bit better than the previous quarter's INR668 crores and lower than corresponding quarter's INR1349 crores. Revenue from Telecom Products segment in 20 Contracts and Services segment were INR189 crores and INR510 crores respectively. Both the segments recorded the sequential growth over the previous quarter, that is quarter four of FY 'twenty. Due to decreased revenue, EBITDA for the quarter was INR83 crores as against INR194 crores in the corresponding quarter of the previous year. EBITDA margin stood at 11.84% as against 14.4% during the Q1 of FY 'twenty. PBT stood at INR29 crores as compared with INR157 crores in the corresponding quarter of FY 'twenty. PATRIC is INR21 crores for the quarter as against INR117 crores in the corresponding quarter. Friends, I would like to mention that we are moving towards improved performance that has impacted the COVID situation, hope to achieve the normal levels of operation as soon as possible. Amidst the present situation, we can commit to increase the profitability and return ratios with our own technology products coupled with high margin orders. Our efforts to manage the cost efficiently along with effective working capital management shall also continue. Thank you once again for your team participation in our growth journey and wish you a good health. With this, I conclude my opening remarks and open the floor for question and answer session. Thank you very much. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press and one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue is assembled. The first question is from the line of Sanjay Shah from KSI Securities. Please go ahead. Yeah. Good morning, Hope you all are doing well, sir. So first, appreciating the performance on this critical circumstances. I would like to ask you, sir, how do you see the benefit of what you mentioned about the government's plan to reduce the import and where we stand, which are the products we see that we have a we have a road to ramp up our business on that side? Look, know, as a policy, government of India is pursuing Make in India program from last few years. One of the major plank has been a potential market access in the government tender, whereby indigenous manufacturers are given advantage in price quotation to a level of 20%. Of course, we have a supplier at L1 prices, but while evaluating the tenders in those areas where a PMA policy is applicable 20%, price advantage is given for that purpose evaluation and determining l one. That is one. Second, now in a different product as an example, lot of restrictions have been allowed on imports. It can be announced. Now number of these products, we would be manufacturing either they are some of them are in process of development, almost completed, and some more are under development. And some more such new products will be taken up for development. Examples of products which are almost developed in the company and will be ready in next couple of months. Introduced electronic features for which we have already participated in a very large RSPs of Indian Army. Electro optic devices, which are common terms you can call night vision devices. We are also participating in couple of tenders and products. Couple of types of those products are already ready. We are going to be developing entire family of electronic fuses and electro optic devices, which then not only we would be delivering large indigenous demand, but we will be exporting also. Similarly, products like high capacity radio unit has been partly indigenously developed and we have already participated in RFP by AD and R. Then we are in process of developing software defined radio, for which there is going to be large demand. And the radio network of the different forces are going to be shifted to software defined radio. And we have already started development of that. So that's another product. Likewise, we are now working on within our company, which are the new areas of such product development is to be taken to fulfill the local demand, which is large demand and then consume in the export also. So all this is going to result in, I would say, revenue and increase profitability because we are indigenously designed for us. And that's a good announcement for Indian industry, and our company will also benefit out of that. So, sir, last time you cited about 200 crore, to tell me it can come from that Wi Fi and microwave. Are that on the radar? So are they on target, or is there any Okay. Yes. They are on target. Definitely. You know, what I talked to you now was the import restriction which has been recently announced, which were different related products. Correct. Now coming to communication related products, there are number of products which we are working on. WiFi, that, of course, development is complete for that particular types of WiFi systems. And now, we are also started working, let me explain you, WiFi next generation WiFi, which is called WiFi six and WiFi six e. We have started working on that also, which is next generation WiFi. And next generation WiFi products from our company would be ready for mass production in the third quarter of the current year. Third quarter of the current year, they will be ready for mass production in the next generation. And nobody else in India has attempted that. Now, the whole idea is to have a complete range of WiFi products in our production. We should be able to cater to more than 80% of overall WiFi market. So that process has also started. Similarly, UBR, which is kind of microwave radio, that development is also complete, and we are going for development of next generation of UBR, which is based on eight zero two dot 11 x c standards for IEEE. And that is also being developed right now, and that would also be ready in the third quarter of current year. And we are, of course, on the target of achieving the 200 crore revenues to WiFi and the TVR micro radio products, there may be some few percentage here or there because of this COVID situation and implementation difficulties by our customers, but we are more or less on target for that. Now apart from this, now we are working on identifying few more products which we should take up for indigenous development. Another good thing that happened that, you know, Indian industry, other telecom operators in particular now are very very, know, important improvement on China. That puts up another opportunity for the indigenous manufacturers to design more and more products, which is better to evolve being imported from China. And when it comes to five g related products, definitely what we see the worldwide scenario unfolding, imposed on China would be getting quite restricted, you know. And as a result of that, there's a good opportunity for indigenous manufacturers who design products locally. So unless you design, you know, nothing much is there for profitability for you. Another disappointment of another opportunity to design new products and manufacture them indigenously to have higher revenue and profitability. Third area, optical fiber cable, though there has been not been much import of optical fiber cables in India from China, the Indian industry has been competitive. But even though there was any threat, that is also not going to happen now because, you know, and hardly any import is being done from optical fiber service from China. Now as you know, we have started manufacturing optical fiber also. So there were some threats from that side that Chinese import would be there and, you know, if there is a lack of demand in China, maybe we will to sell in India. But duty on imports and again lack of desire of Indian industry to import from China, but also fueling good growth in demand of optical fiber in India. So all put together, there is a huge opportunity for the local industry. In different sector, there your company started working some time ago looking forward into what is happening in the demand scenario. We started working in that. And then new security environment around our country is further going to fill in more demand for such products. Second, communication products where new opportunities are opening up, as I said, announcement by honorable prime minister for connecting entire 600,000 villages. That opens up a great opportunity for the business of fiber optic cable, fiber and turnkey humanitarian services where your company is in the forefront of those areas in the country. These are largest company largest, implementation services of fiber optic cable. Currently, services, your company has done the highest amount of work. So these areas, new business opportunities have opened up. This will certainly come contribute to better growth and drive the profitability in future. That's great, sir. Sir, this government announcement on this new opportunity, what you talked about connecting village, will that come in the BharatNet program, which already is on hold, no, right now because of liquidity issue from No. No. No. Let me tell you. It is definitely on the BharatNet program, but there's no liquidity issue in BharatNet because this money comes out of USO fund and there is, I think, if I'm not wrong, there is a balance of some 40 to 50,000 crores already existing in that fund as money available. So there is no debt of money in that fund. And that fund cannot be used for any other purposes than connecting rural India and unconnected villages. So money is absolutely no constraint. The program has not been on hold yet, but little bit on hold because government is now going on instead of implementing by itself. They looked at PPP model for implementation. Now that was the story when it was 250,000 villages to be connected. Now primary sales are now 600,000 villages. So government has not yet cleared which methodology they are going to use. It is going to PPP or some government led model or state government led model. We are yet to see that announcement, but whatever way they do it, our optic cable is going to be required. Implementation services are going to be required. So your company is definitely going to benefit from them, because it is being one of the largest manufacturer of the fiber optic cable, probably among the first two, definitely among the first two. And also being the largest implementer of fiber optic networks in the country, we are definitely going to have some better process for ourselves. That's great. It's a great opportunity. So my next question is regarding OLM. We are setting around the order of $1.05 $7.03 crore. How much that is to be executed current year and next year? No. No. It is going to be executed over next five to seven years. Five to seven years. Right. Yeah. Fine. Shall come back in queue for a few more questions. Thank you. Thank you. Thank you. The next question is from the line of from NBS Progres. Please go ahead. Hi. Good morning, sir. Yeah. Good morning. Yeah. So I've got a couple of questions. The first one is I'm really sorry if you have already answered, but, actually, I had actually missed a couple of things. The first question is related to your order book, sir. The when an order book is about 1,600 odd crores and the rest is for the other lines of business. What would be the margins on those order books, sir? To give a different order, you know, orders have different kind of margins. Generally, we will say it ranges from 8% to 20%. It's a general statement I'm making. So maybe less to be more, but generally, it is like that. Okay. Okay. So that's, like, quite a broad range, actually. Yeah. Absolutely. Absolutely. You know, some and and then it becomes orders for orders. Some are strategic order, you can get a competitive price, some are a better, you know, profitability. And customer to customer, order to order, you know, it varies. Okay. And so now, you know, the things have started, you know, opening up, things have started, you know, getting back to normal basically across India. So you feel that this year, you would at least do something which is equivalent to I 20 in terms of top line, or it will be a bit less more? What is your guidance on the scene? Look, I won't give any guidance, but I can tell you one thing. It's really improper for me to give a guidance in this kind of a situation. Yeah. Are doing well, and I we will be, you know, near the pre lockdown situation. Okay. Very soon. Because, you know, still some of the representatives do exist. Okay. Because of the fact that, number one, you know, this pandemic related migration of workers Uh-huh. Has some problems, you know, and that is still not normal. Okay. Number two, there are areas, you know, where implementation work is going on. Okay. And a large number of our orders from, you know, different sources. Now, number of 10 documents, still they don't allow outsiders to enter, particularly, Northeast and northern areas. We have Yeah. Particularly some northern areas where there are high amount amount number of forces have been deployed. Those tenderloins, they just don't allow outsiders to enter. Okay. I just think of that what happens to our implementation work has also supported. Okay. Some places, the factories, you know, there are three COVID related cases comes up. Please come for me. Okay. And those COVID related cases coming up, You know, there are intermittent partial closures of the operation as well government guidelines and also from the safety of our own workers' point of view. Some disruptions are called there. Like, there's a disruption going on in my Chennai plant right now Okay. Because of some COVID related cases have come up, which we try to make sure that our employees take as much care as possible, but you cannot control it 100%. Absolutely. Absolutely. Yeah. But it's kind of, you know, things do happen, and I think this would be the last quarter when these things will be happening in a in a significant number, and it would improve. But, yes, we would be soon coming to pre lockdown levels, pre COVID levels in our operations. Okay. And sir, as on FY '20, you had reported, you know, a total debt of almost close to what, $6.50 odd, 6 70 odd CR. Any plans of that going down in this year? And because, you know, even you have Promoters Holding as pledged. So I appreciate that you have already reduced the pledge this quarter, but any plans on, you know, pledge going down and the debt reducing? Look. You know, first of all, let me come out the pledge and the first question of debt, our Yeah. The debt. Yeah. The total debt. Yeah. I didn't explain. But as a pledge is concerned, first of all, let me tell you, there is no such pledge where any loan has been taken against share. Let me Okay. But 20% was also placed as a collateral to the loans which company had taken. Okay. Loans have been paid back, one of the, you know, loan which was with the US Bank. Now it was against the bank that I think says the billing, so that 30% shares have been released. Now 7% of that was pledging union bank of India against the some technical issues which were related to head off activity which we have created. That issue has also been resolved, and that 7% has also been released. That's only the share. The rest of the promoter holding also placed to the bank as coal addressed against the loan taken by the company. So there is again no loan against the share. So what we have now written to all the banks to release this price also. But other time, they will say, I do not know because once banks get some credit against any loan, it becomes very difficult for the banks to give it away, though it may not be in the loan condition. So we are still working on that, and some percentage of that, we hope we should be able to get released in few months from now. Okay. Okay. Let me again emphasize no loan against pleasure shares. Okay. Got it, sir. Got it. And what about the bank? Bank is concerned, it will be lower by 50 goron also during the current time. 0. Right? 50 goros? 50. 5 0 goros. It will be down by $5.00, sir. Okay. Perfect. Perfect. And, sir, I've got one last question, if I may. You know, with now people, you know, started to, you know, doing work from home and, you know, the entire five g, you know, saga, you know, coming in with all the buzz of five g around, How do you feel, you know, we'll perform not for the, say, it's just FY '21, but, you know, next three, four, five years going forward? Because, you know, the whole technology area is totally changing every single day. So how do you feel we will perform and where we'll we will stand in terms of competition and everything? You know, it's really good that, you know, these technologies are changing. And, you know, when the technology change, only those companies which have been able to change themselves with the changing technologies would only perform better. Not everybody. So there is a slight rise in the, you know, entry barrier or continuation barrier, I would say. Okay. Because then, people who do not invest in r and d, they are not going to be successful in this kind of a very rapidly changing technology environment. So what we feel as far as we are concerned, we are already preparing for five g. And I'll give you some of the examples. Like I mentioned in my opening remarks, Wi Fi six. WiFi six is going to be used as a whole or, you know, a common area, you know, network access points with five g. Because there's a larger throughput, so WiFi has to be able to take larger throughput and give a larger output So that's the speed with customer base improved. So we are already working on that. Even radio, which will be required for backhaul from tower to tower in number of cases, now for connecting different towers in five g applications, we are already working on that. Fiber optic cables, you know, which will be recording huge quantity in case of five g network because throughput is so high. And most of the cases, they will be really fiber optic cable. So we are in fiber optic cable with sufficient capacity. Fiber, we have already started. And likewise, we are now in pursuit of identifying couple of more products, which would be required in conjunction with the five g network. And once those products are also there, we will be taking advantage of one five g on incoming in the country or worldwide even. So our strategy now is to not to go for straight products from here and one there, but identify and design a family of products. Like WiFi, for example, it will grow in the family of products. Okay. We are unlicensed and ready. It will be a family of products. So electro optic devices, family of products. Electronics with this family of products. And our hope, our goal, then we would reach is to everything, but our goal is to be amongst the world's top five in the areas where we design our own equipment. So it would not be large number of different kind of equipment. It would be a final number of equipment or products, but the entire range, entire family of products, which would mean that you would like try to be in the top five of the world in this product area. That's our goal. And that's the way we are preparing ourselves. Okay. And, sir, out of the total order book, how much is for the difference? Our difference order would be roughly about 4,000 rupees. Okay. Okay. Perfect. Thank you so much, sir. Thank you. Best of luck, sir. Thank you. Thank you. The next question is from the line of Ekran Kashyap from Kira Securities. Please go ahead. Yes, sir. Good morning. Sir, question is related to telecom. I mean, since you are saying you are preparing for five gs, we we also know that government of India is banning Hawaii and Genti to perform a five for participating five g trial. Since they have a broad range of five g, four g, mid gen products like G Phone, NG Phone, DeepWDM, and many other products. So how do we stand to benefit from this move? And do we compete with LightShot, Wi, Nokia, ZT, CNR in the global market? Look, you know, the some of the products which you mentioned, the WDM and all that, those are not four g, still five g products. Are backup products on five g. Point is again not five g four g. That's again a access product on a five g network. So as far as this four g expansion of five g is concerned, definitely, as I said in answer to the previous question, that definitely we are going to benefit because it is going to show demand of new products, new technology. And some of those areas where we are working and we are designing our equipment like WiFi, VBR, maybe phone also in near future. And different other products like fiber optic cable and even radio and these kind of products. So now once we have those products, we would be and we can individually design and manufacture. We will be effectively be able to compete with anybody in the world. Like, fiber optic cable or fiber is an example. These are locally manufactured and, you know, produced. We are able to compete with anybody in the world in the world market also. In the overseas market also, we are able to compete well. Now our access to the international market is limited right now because we are very new entry in export markets in the last couple of years. So this year, we are participating much higher number of RFPs globally. The amount of orders coming up for power of the cable. So similarly, there is not many problems in competing with these companies which you mentioned in India or the whole market. Now if somewhere some government is funding those companies to explore for some strategic reasons, nobody can compete. If some country government is funding some con con Uh-huh. Company of their own to get a, you know, communication that was set up to spite the project, And this one, that company, none of us can do anything about that. But those examples are very not going to be very high. So we are effectively able to compete against anybody when the product had designed and manufactured in India. So I got the point. So as of my next question related to this again. We we are seeing a huge surge in fiber to home kind of opportunity that came out due to COVID nineteen that has accelerated. So do we tend to benefit from it in India at least, if not Google? Yeah. For FTPS, we definitely we are right now implementing about 300 cities, 500 home network, how they like. Mhmm. About 300 cities. Okay. Entire range of, you know, the the fibers of the cable for FTTH. We're supplying in a large volume to Reliance. Not only that, we are we are now expanding our capacity for fiber to home by putting up new plant and machine in Hyderabad. And this new production facility is to start production expect we expect to start production by first November by first November, maybe few days here or there. Uh-huh. In the month of November, it will be production. We are already expanding our capacity for FTTH five kind of a cable. Moreover, apart from that, accessories for FTTH cable are also being produced in Qinnai, and those are also being supplied in large quantities with the Jio. It's the biggest, you know, the largest implementation of FTTH network is the Jio. Right. My last question in BSNL four g rollout. Since we are seeing some delay in this program, so do we see more deferment or how you see this program to be rolled out? And how we they are going to benefit from it? No. This is one question which I don't think anybody can answer. Because right now, there is a committee setup. Yeah. This is all methodologies that how the four g network with BSN would be implemented. And the way that things are going on, different discussion, different experimentations are happening. I went and met BSN and chairman. I said, sir, whatever you do, please don't miss BSN and is an experimentation round. Otherwise, BSN is never going to succeed. So Yeah. He's very sure what you are buying and who you are buying and told me, made yourself a ground for experiments. Otherwise, as an operator, you will never succeed. So that committee is yet to submit report and my problem is to I told him also. So look, you need so much. Why you still implementing four g people would be in five g. Even four g will become old. Four g will be in a story, but three g happened. You know, now Yeah. If somebody wants to tell you that you buy a three g phone, you will never buy. You will buy either two g if you want a basic service or you want a four g. Mhmm. So same thing will happen to four g if five g comes up. So unless they implement quickly, you know, it's not going to be a bad beginning of proposition for DSN. They have to implement it very quickly and not to let them become a ground for experiments, you know. That's going to a big problem for them. So as far as we are concerned, we are now still looking this as an opportunity. We are one, we do not know what kind of instrument they want and what kind of implementation they do. Number two, payment issue. Unless there is a surety that how payments will be made and there is a commitment from government, not the SMS, that this is how the payment will be made or secured. I don't think a large number of companies will be going to participate in that because I I have been telling in all my conference calls, we have about almost 200 crores. That's only 200. 1 50 crores. Not sir. Not 200. I need the $2.59 that come down to $1.50. And then 50 crores cut off with more than one and a half year. So if you take and then we're disputing that money. It's not being paid because of the not having money. So if you take 10% interest rate also, every year, you have increased the incurring 15 crores interest on that. Mhmm. So unless, you know, it's not on interest. It's a cash flow issue. So unless we're sure about payment, it will be very difficult for us to take a look at that. Understand, sir. Thank you very much, sir, and wish you a wish of luck. Thank you. Thank you. The next question is from the line of Ravi Mehta from Deep Financial. Please go ahead. Yeah. Hi. Good morning. Good morning. Good set of numbers in the current tough environment. So few questions I had. One was the order book what you shared, 100 crores. If I take out o and m, then probably the executable part is close to 6 and a half thousand crores. So what would be the execution period for that? Execution period is six to eight quarters, about six to eight quarters. And but more orders will stay during that course of time. And what could be the bidding pipeline, if you can share any number, just to get a sense of how quickly this order book can again build up once It's very large. We must have been into more than 10,000 crores. This should be predominantly Approximate number I'm giving, but it was something like that. And this should be predominantly different, Delhi or if it Please repeat it again, Delhi. I missed you. This would be predominantly different, or it would be even telecom or It's different telecom, private, government, all. Hello? Ravi, we are not able to hear you. Yes, Ravi? Hello, Ravi? Ravi, we are not able to hear you. Have you audible now? Yeah. A little bit more. Yeah. So also on the hydrodoc, the FTTH facility you mentioned. Yeah. So is it is it the CapEx that we had to stop, I think, quarters back because of the demand scenario, and we are restarting that CapEx? Yes. It is the same CapEx we talked about a couple of quarters back, and we are doing that. It is not going to be very large CapEx because system has already been done, almost done. Now the internal work is going on and machine report is happening. So total expected CapEx is still not done, should be in the range of something like 15 crores also. Okay. 15 crores spending. That's it. $1.05. Yeah. Around. Okay. Okay. And and Mister Mehta, I'm so sorry to interrupt, but your audio is breaking up, sir. Your name is. Thank very much. Thank you. The next question is from the line of, individual investor. Please go ahead. Good morning, sir. I had a couple of questions. First, looking at the segmental breakup of revenues and EBIT, I would like to I would like to know why has we made less profits in terms of the product? Because if I see in services, we have made good margins on increased revenues. But in spite of increasing revenue on the product side, the profit has been quite less. So any explanation you can offer on that? You do know, one of first of all, one thing is that, you know, when you have a less capacity utilization, there's always a decrease in profitability. Okay. And Hyderabad plant has come up new. So if you see the profit coming down in that segment, the new plant reaching into optimum operational level also takes some time. So the depreciation and interest expense is higher in the beginning. And that's why the profit in those products have reduced. One is because less capacity utilization in Hyderabad plant has started started in the q one. So there was a ramp up time and optimal level of utilization took some time. So do we see that coming back to normal in a quarter's time? Maybe Oh, yeah. Yeah. Sure. Sure. %. Okay. Sir, could could I get a breakup of product revenue coming from optic fiber cables and Wi Fi systems if we have had anything. And so breakup of product revenue, if if I could get. Yeah. Yeah. Yeah. Sure. Sure. Sure. I can give you the give me a second. Product revenue was, you know, in terms of fiber optic cable would be about thousand and 62 crores about thousand and 62 crores. And Wi Fi would be used to the same sorry. This is order book. Sorry. I'm sorry. I'm sorry. Let me get the number. Yeah. Sorry. Q one, revenue from fiber optic cable and accessories on a consolidated basis is hundred and 90 crores. Okay. Wi Fi in the q one would be something like, in my opinion, some $30.40 crores or so. Okay. Okay. So about okay. Around this. And so that is online to be 200 crores for the year. Sir, during the whole year. Yeah. Yeah. Yeah. Okay. And, sir, where are our products in terms of development? As you said, that quarter three would be for Wi Fi Wi Fi, and it will be ready for mass production. So where do we see the fuses and the electro optic devices being ready for mass production or the defense production? Or Look. You know, Wi Fi current generation Wi Fi is already already in the production as I mentioned. Yeah. WiFi six, I said that would be available in q three. It's electronic fuses final, you know, of all our components are completed. RB wants it to be fully tried before opening of the tender. They have given a date of mid October, maybe extended by a few couple of one month or two months. Then the filing trial and all that will take place. You will be ready for production. But the order from army, once the trial army owned trial has gone and, you know, army owned trial has happened and the order is placed, the production from Indian army would still take about, in my opinion, you know, nine months before the order is still in production is started. So one for army to own trial and all that to be completed. Electro optic devices, I think it may be about I think something like six to nine months. Okay. So we expect it in '22 second half and then going forward. Yeah. You are right. You are right. So because in army, you know, the trial process and all that is even longer than the normal student product. Okay. And, sir, what the PM has announced that 450,000 will be able to be collected. What would be the size of opportunity in terms of rupees of the entire case and our share out of that in terms of products and services? I I can give a rough estimate. It's a very, very rough estimate, and don't take it as a projection for me. You know, roughly, it is about 4 kilometers per village optical fiber cable is required, roughly. Okay. So 450,000 villages multiplied by four. It is about 18 lakh kilometers of fiber optic cable would be required. 18 lakh kilometers multiplied by roughly about 40,000 rupees. Roughly about 40,000 rupees. Okay. Whatever that number comes. And I That that is Kevin only. That is Kevin only. Or I would rather put it in a different manner. 18 lakh kilometers multiplied 4 lakh rupees per kilometer. That is overall, you know, turnkey services, cable, accessory, jacks, you know, all kind of things, 4 lakh rupees per kilometer is a more or less general number which comes for including such a network. But I think it's only about 70 to thousand crore. Okay. This will also include the Wi Fi products that we have been developing. No. No. No. It does not include. This is only fiber optic network. Okay. Only fiber optic optic network product and services put together. Yeah. Absolutely. Wi Fi and all that does not come in that. Okay. That is additional. Okay. Sir, the last question from me is when do we see five g network, which will be put by either Jio or Parsee or Vodafone if he present around? How do we see the deployment of fiber happening and services from Telco's orders flowing in? Around time line, what are we expecting? So five g, you know, first of all, government has to auction the spectrum. And spectrum auction, in my opinion, is going to be five g would be six at least six months away, at least. It's not a couple of months more. So I would say six to nine months. If the auction in six to nine months, deployment of five g would be one and a half year from now, one to one and a half year. Okay. Okay. Sir, last question. How are the fiber prices behaving? We have been seeing a lot of Fiber prices in the last one quarter more or less holding same. You know, around 280 rupee per fiber kilometer, that's the prices I would say, for living in India right now. 180 so 280 rupees per fiber kilometer, and it is more or less steady now. Okay, sir. That is also my part. You have been very informative, sir. Thank you so much. Thank you. Thank you. The next question is from the line of Naman Sarawki from Sarawki and Sarawki. Please go ahead. Hello? Yeah. Good morning. Good morning, sir. Hope you are fine in your company. Everybody is doing well. Understand? Well, not everybody. Some people as I said in the factory. Let's let's let's hope for the best for all of them. Yeah. Yeah. Question be, sir, have you not received any new orders this quarter? No. Yeah. We keep on receiving orders. You know, fiber optic cable, orders keep on coming. 30 crores, 50 crores, 50 crores, 40 crores. You know, this is the order. Quarter, can you quantify how much order discount? 20 Quantify, I don't have the number. Right now, I can send you. Just send me a mail. I can send you the number. Right now, I don't have this. I pretty small order small small pieces of orders we received. Okay. Wi Fi, for example, we keep on receiving orders. You know? These are not very large orders in hundreds of crores, but they keep on paying them. Eventually, they become large. So just send me a mail at nahata@hfca.com. I will then let you know the access number. Sure, sir. Sure, sir. And my second question is, regarding China, sir. Right now, everybody is having a tough time with China, and there's a of import and export talk about with China trade, sir. How is HCL standing with that, sir? What import do we make from China? What export do we do? How is that relation with China in our product? Look, you know, as per our company's concern, there is not much of dependence on China. The key which we import from China, some components for Wi Fi, some components, which also we are now working on the different sources from Taiwan and, you know, Japan and those kind of places. But dependency is not too much right now, those components. This is electronic components, number one. Fiber, we don't import from China. Freeform, we don't import from China. This is all non China sources. Some machinery we are importing from China, which we are going to install in our upcoming FTTH facility in Hyderabad. And the reason is simple. The price difference of those kind of machine in European countries and China is huge, huge. Huge means when I cover 15 to 17 crores of, know, CapEx for that remaining CapEx for that facility. If I would do for European machines, they will probably cost me more than 30 to 35 crores. And and and we have been using those machines without any flaw in our Chennai plant already in the last four to five years. So those machines are importing from China, and that's fine. You know, that's a one time import. There's no dependence upon spares or anything. Spares are all we have developed locally. So that is the only difference, nothing more than that. And sir, any plans to increase promoter shareholding, sir? You sound very bullish on your company. Well, you know, we increased it a bit earlier. I can't say we can make this plan. We will keep on looking at it. Okay, sir. Thank you so much. Thank you. The next question is from the line of Giriraaj Dagar from KN Visaria. Please go ahead. Yeah. Hello, Kim. My first question is related to the, like, the China demand supply. Sorry if I missed that number since I missed the two key minutes of earlier call. So I just learned the what is the demand supply scenario looking in July 21 in China? And second, if you can give me the netback and cost base number. I couldn't understand, mister Girard. What part of your question? Demand and supply in China. You know, we just don't have that number. No. I mean, we used to share that there was, like, 500,000,000 kilometer of demand, and supply used to go to 600,000,000 Fiber. Fiber. You're talking fiber. Yeah. You know, I think Chinese demand would remain under something like 300,000,000, you know, 300,000,000 fiber kilometers, something like that. You know, there's no sign of any increase in that size of demand out of the total 600,000,000 demand, which people were thinking China would be going over three fifty. I think they will delay within 300,000,500 kilometers not going over that. Okay. And since the capacity as of now would be closer to home? Chinese capacity? Yeah. Chinese capacity will be something like my opinion is something like 400,000,000 fiber kilometers. 400, you said? Yeah. Yeah. Yeah. Mhmm. Okay. So we can expect that the prices of optic fiber will remain broadly similar to the next year at least one or two years. Say that again? Can optic fiber prices likely remain here only for next one to two years? There's no expected to increase I would no. Look. Right now, they're going steady. They are not showing any kind of decrease. Indian demand is going to pick up very soon with the prime minister's announcement, you know, this if we need 18 lakh kilometers of fiber and multiplied by 50, more or less, know, the demand Indian demand is going to pick up significantly, 90,000,000 fiber kilometers or something like that, you know, which is going to be this one project is going to be double up the demand of the project demand currently. So, I think fiber prices, if not increase, it will not going to go down. There may be some form of the fiber prices in near future because FTTH deployment is increasing worldwide now. So there may be some form of the fiber prices, but I don't think there will be any major movement. Okay. Okay. On the new capacity, which is seven five hundred kilometer optic fiber, is that the the let's say, on the the life of the project, are you expecting a project to similar kind of price or what is our earlier projections were higher for the warranty of the project? No. No. No. This is optical fiber cable. You are talking on new facility in case of the boat just now. No. No. We will we will up on one optic fiber also. Right? Yeah. Optic fiber is actually started. That's already in production started in March. So, you know, the prices, you know, again, you must be like that we buy preform and, you know, manufacture fiber. Since the fiber prices increase, then, you know, preform prices also go up. Fiber price decrease, preform prices also go down. For example, coupon prices were hundred $40 per kilo kg, has now come down to less than about $60 per kg. So our in between margin stays almost constant. That does not change. So if fiber prices have gone down more, you know, gone down from what we expected when we started our project, the prebomb prices also gone down significantly. So the margin remains almost there. Understood. Last thing, sir. Can you give me the net debt and gross debt number by June 9? Okay. There was one question, which was about the orders. So just let me give that number. In the quarter one, roughly, we have received 400 crores of order in the q one. And that was despite of COVID and every lockdown and every situation, still we received 400 crores of order in q one. We have lost that and had that. Our CFO will give you those numbers just now, so we can go to next question and while we give this number, go ahead and get Thank you. Thank you. The next question is from the line of Saket Kapoor from Kapoor and Company. Please go ahead. Hello? Yes. Good morning, sir. Thank you for the opportunity. Just to answer the last question, The debt is roughly about 606 hundred crore. Okay, sir. Sir, sir, we are also I IT one service provider. We have that license in the infrastructure. We we I don't know we have a real license, but we are certainly not a service provider. We are not I we don't have any IT one infrastructure. And IT one is not a target only. Okay. We don't intend to do either because IT one is something, you know, which operators do. And that's a CapEx oriented project where you run, you you know, on revenue on the CapEx. And that is not something, you know, which is our business. Our business is to is to our manufacture, supply a digital project, not to be an operating company. Because currently, as the government is tightening the news over over having the servers also in the country, so more data centers and things of the of those jobs are going to be there in the in the in India itself. So that would be providing a big opportunity to the to these players. So that was my No. No. But we would then supply to data centers. You know, we would supply we are trying to develop cables for data centers. We'll supply them cables for any other access to be required. Not to be creating and making data centers and operating them. That's not our business. Okay, sir. Sir, and we have taken some moratorium for our loans as being offered by us. Hardly hardly any moratorium. Hardly. We have not taken. We had we had not taken any moratorium? No. No. We have not taken any moratorium. Okay. Because of your your rating update on seventh July was speaking that we we did too. So that was the reason why I asked any reason that that I can We we have from that in my mind. Yes, sir. That that is in confirm. They mentioned that they they received moratorium, so that was my reason. No. We have not taken Azure. Oh, okay, sir. Sir, last two points. Sir, firstly, sir, this five g domain, sir, that Reliance spoke in their AGM that they would be doing something something all big thing indigenous in the country. And, Natasar, you being on the board also for GeoInfoCom, if I'm not mistaken, what is sir, what is the opportunity the the the players like you and others are Ken Gardner? And what is Reliance trying to explain when they say that they they will be doing 5 g in business? So it's a good I can't speak on behalf of Reliance. That's not it, sir. No, sir. That is not my point is. As far our company is concerned, anything happening indigenously opens up business opportunities for all local manufacturers. If Reliance will do indigenously, you know, all existing related products, everything will happen indigenously. And moreover, when they do indigenously, I believe that should be better in prices and, you know, requirement of India. So it's pretty good for the overall network. And every company will benefit, so would be weak. Sir, capacity wise, how does how how are we ranked in the country, and who are our nearest peers, sir? People are driver of the cable as much as I know, I didn't hear. As much as I know because people hardly disclose their capacity. In fiber optic cable, our end is stabilized capacity will be almost similar, fiber optic cable. And next would be, I think, maybe, and I don't know who would be the one after that. But first two would be and ourselves. And in the business model part, sir, just I wanted a likewise apple to apple comparison between you and the other industry organization. If we compare HFCL with another player in the same segment having more or less the same business domain, which it could be, sir? I don't know, you know, because Stellite would be in fiber optic cable, fiber and some of the project execution. Maybe he did not anything in the fiber optic cable and execution space, but they are not in defense products which we are in. So every company has got some different product areas. Sterilege may be having some other product areas, which we may not be there. So, you know, I I don't think there's any apple to apple comparison. Thank you. Well, ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Muhinder Narada of HFCL Limited for closing comments. Thank you very much, and I appreciate that all of you being present in today's call. As I said that we are overcoming this COVID crisis, and we are soon to return to a normal level of operation, and which would see improved the revenues and profitability in the future. And at the same point of time, as I said, our concentration on designing our own products, indigenous products and manufacturing, which would again give us a higher market capability not only in India but globally and we can improve performance parameters. The recent announcement by Prime Minister to put entire 6,000,000 believe in the country in the fiber optic cable network, but again, see a large demand surge in the fiber optic cable market, its accessories and implementation capability requirement, which is going to benefit the company. And moreover announcement with Honeywell Defense Minister as a negative list for imports, where those items will be procured locally only. That is also going to benefit the company in midterm and long term future. So we are there to take advantage of all this capability or all this opportunities which have come and spending more money on r and d, more money on creation of additional capacities for fiber optic cable, particularly for FTTH market, which is also going to improve our revenues in future. So thank you, gentlemen. And I wish that all of you stay well, stay safe in the current crisis, and gobbling you all if they come and stretch out of this. Thank you very much. Thank you. On behalf of AGFCR Limited, this concludes this conference. Thank you all for joining us. You may now disconnect your lines.