Ladies and gentlemen, good day, and welcome to HFCL Limited Q1 FY 2024 earnings conference call, hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an option. There are more than 20 parties in the conference. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mohit from ICICI Securities. Thank you, and over to you, sir. Hi. Thanks, Simran. Good afternoon to all the participants. I am Mohit from ICICI Securities. I would like to thank management for providing this opportunity to host this earning call. From the management side, we have Mr. Mahendra Nahata, Promoter and Managing Director, Mr. V.R. Jain, CFO, Mr. Manoj Baid, Company Secretary, and Mr. Amit Agarwal, Head, Investor Relations. Without further delay, I now hand over the call to Mr. Nahata for the opening remarks. Thanks, and over to you, sir. This earning call for quarter one of financial year 2024. I truly appreciate and express my gratitude for making it to HFCL's earning call for the first quarter of financial year 2024. I trust that you got a chance to go through our financial results. Press release and investor presentation, which are available on the company website and stock exchanges. The recent study by International Monetary Fund predicts a decline in global growth by approximately 2.5% in 2023 due to ongoing effects of the Russia-Ukraine war. India continues to stand out as a promising destination for business and investors looking for growth in the years ahead. This optimism is fueled by India's strong domestic market, government initiatives and policies, and attractive investment opportunities. Despite the challenging and dynamic global macroeconomic environment, the opportunity landscape for manufacturers in the telecom and technology industry has grown manifold and looks promising ahead. As per Deloitte CRI report, Indian telecom industry will grow by $12.5 billion every three years with the advent of 5G. This growth will be further fueled with implementation of FTTH and other upcoming technologies and initiatives like BharatNet. With the increased adoption of digital technologies, 5G rollout, and growing demand for high-speed connectivity, driving innovation and investment in the sector, India will soon be among one of the top 5G ecosystems in the world. 5G rollout in key global economies, including India, FTTH, along with national priorities like development of homegrown products under PLI scheme, fiberization under BharatNet, are fueling massive opportunities for players like us. The launch of Bharat 5G Alliance further solidifies India's position as one of the world's top leaders in the mobile ecosystem, and we aim to be at the frontline, contributing to 5G, 6G technology and fostering the growth of Indian telecom sector. HFCL has been able to sustain its growth momentum with strategic initiatives focusing on margin-accretive products, shift in revenue mix from projects to products, backward and horizontal integration, capacity expansion, research and development, and tapping new geographies and widening its customer base. During quarter one, financial year 2024, we have significantly increased revenues from international business to INR 176.23 crores, witnessing a growth of 156% on a year-on-year basis. The share of product revenue has gone up to 67% in quarter one of FY 2024, as compared to 59% in the same quarter last year. Export and product revenue CAGR for last three years has been 88.0%, 02%, and 46.04%, respectively. All these initiatives have led to impressive increase in EBITDA margins to 16.04% in Q1 of FY 2024, as compared to 12.35% in Q1 of FY 2023. With complete focus on development of indigenously designed products with own IPR and emphasis on export sales, we expect EBITDA margins to improve continuously. We have begun this new financial year with unveiling of an enhanced corporate strategy and establishing valuable brand partnerships. HFCL has entered into a significant partnership with India's largest defense PSU, Bharat Electronics Limited, wherein both organizations will collaborate as partners and indigenously develop and deploy emerging technologies and technical solutions to address the requirement of defense, telecom, and railway sectors. As part of this strategic initiative, MoU between HFCL and BEL will actively seek out business opportunities by leveraging their specific domain expertise, technological strengths, and established market presence to bolster nation's defense capabilities, as well as support the expansion of telecommunications infrastructure and other critical emerging sectors. BEL and HFCL will consider various options, such as transfer of technology and joint production of mutually identified products and solutions, to address the requirement of defense, telecom, and railway sector, and thus further contribute to government's Atmanirbhar Bharat initiative. We are currently serving our Wi-Fi access points and unlicensed band radios to over 35 different customers in India, along with many indirect ones through few channel partners. These products also integrate new age technologies, like artificial intelligence and Internet of Things, to address emerging opportunities in the industry. Our aim is to among the top five Wi-Fi access points and unlicensed band radio players in the world over the next few years. For outdoor Wi-Fi access points, HFCL has a market share of 20%-25%, and point-to-point unlicensed band radio, we have about 30% market share in India. We believe that in terms of technological advancement, Wi-Fi 7, which has already been designed by us, is going to be one of the revolutionary solution for indoor coverages, especially the enterprise and the high-end applications like virtual reality, education, or at places with a lot of concurrent users which require enhanced capacities. The company is developing a number of products for 5G networks, like next generation 5G Fixed Wireless Access, cloud-based network management system, 5G Radio Access Network, 5G Transport Product, 5G Fixed Wireless Access Customer Premises equipment, management and orchestration solution for 5G autonomous network operation, which all are expected to start being commercially available in the current financial year. Total addressable market from product, such products worldwide, is expected to be approximately $600 billion by financial year 2030. The company is in process of setting up facility for the manufacture of these products and targeting revenue of INR 800 crores-INR 1,000 crores in the financial year 2024-2025, compared to the INR 138 crores achieved in financial year 2020-2023 from existing product portfolio. These products are also eligible for PLI incentives, up to INR 652 crores over the next period, a period of five to five years, as per approval received by the company. Increase in revenue from these products, which are own designed and manufactured, will also lead to higher margin and profitability. I also wish to update that expansion of optical fiber manufacturing capacities from 10 million fiber kilometer to 33 million fiber kilometer, is progressing well and shall be operational as planned. With this expanded capacity of optic fiber, the company is expected to generate additional profitability of INR 150 crores on annualized basis, computed at prevailing market price vis-a-vis current cost of in-house production of optical fiber. In addition, the company is also in process of expanding its optical fiber cable production capacity from 25 million fiber kilometer to 35 million fiber kilometer. This expansion will also lead to significant increase in revenue and profitability. The capacity will be added in a phased manner, with the completion targeted by financial year 2024-2025. This quarter was also marked with HFCL winning some key purchase orders. Some of our major wins in the quarter have been various contracts for INR 411.51 crores from leading telecom operators in India, and INR 80.90 crores from Delhi Metro Rail Corporation Limited, in addition to various other orders from domestic and overseas customers. The current order book of the company now stands at INR 6,585 crores. I am pleased to share that during the quarter one of FY 2024, CARE has upgraded the credit rating of your company to A1 from A2+ for short-term bank facilities, and has also reaffirmed the rating for long-term facilities at A with a stable outlook. I am also happy to share that our strategy to increase our revenue from products is well on track, and during the quarter under review, the revenue split between product versus project stands at 67% and 33%, from 56% and 44% in FY 2023, which used to be only 22% from products in FY 2020. The benefit from shifting revenue from projects to product is quite evident in the margin improvement. Secondly, with our focus to capitalize on wide global opportunities and boost revenue from international operations, we are actively developing new product portfolio as per international standards, appointing employees, engaging agents and distributors in key international markets. As a testament to our global leadership, we have secured various order wins from top European telcos for supply of different types of fiber optic cables. Catering to 80+ clients in 40+ countries, we have witnessed a sharp increase in our international business. Revenues to INR 176 crores in Q1 of FY 2024, achieving an impressive growth of 156% year-on-year basis. During the quarter, we also showcased and marked our presence in the key global events, including Mobile World Congress 2023, Barcelona, Africa's largest tech sourcing event, GITEX Africa 2023 in Morocco, Asia's largest ICT stage, CommunicAsia 2023, Singapore, ANGA COM in Germany, and FTTH Council Europe 2023. Last year, the Government of India had issued the guidelines for every telecom equipment to undergo mandatory testing and certification before being sold and used for telecom network deployment. Our foresight and significant investment in our state-of-the-art NABL certified equipment testing lab for telecom products in Bangalore is well positioned to aid the government and telcos to fast-track mandatory testing and certification process of telecommunication equipment. HFCL's testing labs are equipped to meet rigorous global evaluation lab parameters to ensure secure and high-quality equipment deployment, thus enabling growth of domestic telecommunication industry. In pursuit of staying at the forefront of innovation and next-generation technological capabilities, HFCL has secured approval for its five patents filed for 5G Radio Access Network products. In addition, we have also filed 12 more patent applications for different products. Friends, let me now brief you key performance metrics for Q1 of FY 2024. If you do year-over-year comparison, revenue for Q1 of FY 2024 stood at INR 995.19 crores as compared to INR 1,051.02 crores in Q1 of FY 2023. EBITDA for the quarter stood at INR 159.62 crores compared to INR 129.76 crores in Q1 of FY 2023. EBITDA margin stands at 16.04% for Q1 of FY 2024, as compared to 12.35% of Q1 of FY 2023. For Q1 of FY 2024, profit after tax stands at INR 75.56 crores, as compared to INR 53.10 crores in Q1 of FY 2023. Profit margin stands at 7.59% in Q1 of FY 2024, as compared to 5.05% in Q1 of FY 2023. Segment revenue for telecom products during the quarter stood at INR 662 crores, which is 67% of Q1 FY 2024 revenue, as compared to INR 620 crores, which was 59% of Q1 of FY 2023 revenue. To conclude, I would like to reiterate that our strategic initiatives of expansion of capacity, geographical expansion, strong focus on R&D, continued backward and horizontal integration, developing margin-accretive new products, and increasing our revenue from products will further add to our revenues and profitability in coming years. Our team is dedicated for delivering value to the shareholders. We will continue to work tirelessly to achieve our objectives. Thank you, friends, once again, for your keen participation. With this, I conclude my opening remarks and open the floor for question and answer session. Thank you very much. Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Balas ubramanian from Arihant Capital. Please go ahead, sir. Good afternoon, sir. Thank you so much for the opportunity. Sir, my first question regarding the turnkey segment. The overall revenue has been declined because of turnkey segment. That trend will continue in upcoming quarters also. I just want to understand any seasonality for these turnkey contracts, and the margins also is lower than 2%. Any specific reasons for that? Look, you know, first of all, this trend, you know, on an overall year basis, it will continue. Quarter to quarter, there may be some variation because of various reasons, you know, depending on which contract is getting executed and all that, but on an overall basis, the trend will continue. As you would recall, like Mr. Balas ubramanian, that I have been saying from the beginning, that we want to increase our revenue from products, decrease our revenue from projects. That trend you can see, and that has also increased our margins and profitability. I expect this trend to continue on an overall year basis. Yes, there may be some variations in quarter to quarter, depending upon seasons and depending upon which contract is getting executed at that particular point of time. Our strategy of, you know, increasing our revenue from products have really well paid off, and that is very evident from the increase in the margins, as you can see in the results. Okay, sir. My second question on the telecom product side, our shares stood at around 67%, which is highest in the last couple of quarters. Like, whether it is sustainable above 70% in upcoming years, and on the margin side also, it's been quite sustainable, above 19% in the last three quarters. Could you please guide for the margin side also? That would be really helpful. Look, you know, what I expect, again, as I said, there may be quarter to quarter variations. On overall basis, something like 65% or so, we would always have, some products. Rest 30%, 35%, you know, some percentages may vary, but, you know, more or less, 2/3, 1/3 kind of a, you know, distribution will continue. Again, one more point I would like to make clear, that we are only taking those projects where cash flow is good. If the cash flow is not good, we will not take any such project, even if it has got higher margins, because cash flow has to be given due importance. Where the higher margin is there, but the cash flow is bad, no point in taking such projects. That is why you see decline in the revenue of projects, because we intentionally did not take many of the projects, where either the profitability was low and cash flow was also bad, or both were not good. We are very conscious of taking projects now, and we take only those projects where the cash flow is good. Sir, on the margin side, for telecom products, like. On the margin side of telecom products, I believe the margin would continue more or less on the same range. Again, as I said, quarter to quarter, some variation could be there because of sometimes the raw material cost going up or down in many such cases. More or less, on a year-to-year basis, this will continue like this. Got it, sir. Sir, in last AGM, like, we made a resolution for fundraising. Any update on that? We are still in consideration of that. As soon as there is any final decision taken, we will update you. Okay, sir. Okay, got it. Also, on the CapEx side, like you are doing CapEx for OF and OFC side, could you please share more details about the progress in executions, CapEx spending, and the funding mix? That would be really helpful. Look, you know, CapEx, we have major CapEx is happening on optical fiber expansion, that expansion is in progress. Second aspect of is optical fiber cable. There also capacity is being enhanced, and it is at various stages. In optical fiber, from the current capacity of about 11 million to 12 million fiber kilometer per year, we are expanding it to 33 million in two stages. First stage will be completed earlier, and the second stage will be about six or eight months later. This would lead to 33 million fiber kilometer of fiber production within the company, which will take care of its own requirement, and most of it will be used for own consumption, and would definitely increase the profitability because of the cost difference, between what you produce and what you buy. Second is, of course, optical fiber cable, where the capacity is getting enhanced at various stages on all the three factories. Mostly it is directed towards products which we really need for exports, because there are specific requirements for different kind of cables for export. We are enhancing our capacity in those arena because our whole overall policy and strategy, if you look at the company, is two: One, increase revenue products, decrease from projects. Second, of course, is to increase exports, where 95% of the market is outside India. India is only 5% of the market, so it is important to look at the 95% of the market. As we have demonstrated, our export has got improved multifold, something like 86% CAGR of last three years, which is a very important number and a very appreciable number the team has done. With, you know, continuing on that strategy, we are increasing our production capacity of optical fiber cable, with the kind of cables which will be mostly used in the export market. Those both are in progress. Moreover, the another kind of capacity incur on the R&D, you know, in terms of creation of new products, mostly on the equipment side and some on the cable side also. On the equipment side, as you said, we are continuously working on, you know, 5G, new 5G products, the latest state-of-the-art 5G products, which would start coming into production and commercial offering during the current financial year. One by one, they would start coming in. Of course, our Wi-Fi access points and unlicensed and backhaul radios, which are already being sold commercially, and continuously orders are being received and being shipped to different customers, more than 35 customers in India, direct and indirect, there will be so many through channel partners. We would soon be starting export of these products in large quantities, and already company is making efforts for that. When we talk of increase in exports, a large portion would come from telecom equipment also. The another CapEx, which is happening is, of course, we will be creating a new facility for manufacturing telecom equipment by ourselves. It would not be large expenditure, but yes, there would be some, because we need to take advantage of the INR 652 crores of PLI, which has been sanctioned to us. These all capacity expansions will add into increase of the profitability and revenue of the company both. Thank you. Thank you. We take the next question from the line of Mr. Ritik Chopra from Buoyant Capital. Please go ahead, sir. Hi, sir. Thank you for the opportunity. I have two questions. One on the raw material prices. How are the raw material prices in this quarter and going forward? To answer your first question, Mr. Chopra, what I heard, raw material prices for fiber optic cable, let me start first, have come down considerably, whether it is plastic raw materials or fiber. The fiber, which is a major raw material, the prices which used to be something like INR 450 per fiber kilometer, if you convert dollars into rupee, have now come to around INR 360-INR 370 per kilometer. Around INR 360-INR 370. What used to be INR 440-INR 450, has come down to INR 360-INR 370. There have been some 10%-15% decline of the raw material prices of other products also, like HDPE and all that. There have been declines. Generally, there has been a declining trend. In fiber, it has come down a little bit more than 10%, 15%, maybe you can say 20%. Other raw material, 10%-15% reduction has been there. Generally, prices have gone down. All right. What are the end product prices right now in the domestic market and the export market? You know, in, if you talk of fiber optic cable, you know, roughly, we are looking at depending upon which kind of cable, which kind of a customer, you know, it's all varies. On an average, the realization per fiber kilometer is around INR 1,300. Around INR 1,300 per kilometer for fiber. you know, I'm not talking of cable, because cable has different types, so I'm just talking on an average per fiber kilometer of cable, it's around INR 1,300, which used to be about INR 230 in the previous quarter. If you compare with the first quarter of last year, it used to be about INR 1,100. From the last year's INR 1,100, it has gone up to about INR 1,300. you know. The same in domestic? You know, again, don't see that as a general trend, because, you know, it again depends on the mix of products, who are the customers. It all depends upon that, but generally, yes, there has been some increase. Okay. The prices are same in the domestic market and the export market, or are they marginal difference between both? Trend is same in the domestic and international market. Trend is same. All right. One last question: What are the utilization levels? Utilization level in terms of factory percentage, you know? Yeah. In the last quarter, generally, we had about 86% utilization. Again, please, you know, this is again a bit of a technical issue. When I say total capacity 100%, let us say, it is calculated on the basis of a particular type of cable being manufactured throughout the year. That is the way you calculate. It never happens, because customers place different orders for different kind of cable, different counts, and all that. Capacity utilization varies between what kind of cable you are manufacturing throughout the year, which kind of, what percentage, what length, you know, all that kind of things. If you look at that perspective, that a percentage of installed capacity, which is calculated on the basis of one particular kind of cable throughout the year, which never happens practically, it will be 86%. If you look at from another angle, whether the factory has been running throughout? Yes, it is 100%. Factory has been running 24/7 throughout the year, throughout the quarter. Okay. All right. Thank you. That was helpful. Thank you, sir. We'll take the next question from the line of Mr. Saral Dilip Seth Jain from Indsec Securities. Please go ahead, sir. Yeah, hi, sir. Congratulations for decent margins amid this global challenges. I believe we've been maintaining our margin expansion guidance over the last so many quarters, which has now been bearing fruits led by product mix. Sir, I want to understand what is really triggering this margin expansion. Is it a mix of better product and reduced project revenue? How much would be from RM, this kind of RM reduction? Look, you know, major reason is, of course, that we have reduced our revenue from projects and are constantly trying to improve our revenue from products. Okay. If you look into the current quarter only, the margin from the projects is quite low, which is abnormal in this particular quarter. This is an aberration, I will explain the reason also. Product margins have improved. Maybe small part is due to raw material cost also, it is more for the, you know, margin accretive products which we are selling. The point is, when I say that it is an aberration that this particular quarter, the margin from projects has been even lower than normally what it should be. The reason is being that, you know, our NFS, Network For Spectrum projects, which we are implementing for the army, though the expenses are always there because these are the manpower expenses, but lot of about INR 150 crores billing could not take place. The acceptance testing still remain incomplete, not because of us, but because of integration of the network has, which has to be done with the equipment to be supplied by some other vendor. That vendor could not complete its supply. That's why our final integration did not get completed with the network of that other vendor. As a result of that, acceptance testings could not happen and we could not bill. An entire expense for that is manpower has been booked into expense, so that has resulted in a bit of an aberration. Otherwise, there could have been this margin could have been even better. This small aberration is there. Otherwise, there could have been additional revenue and profitability both coming into the this quarter's P&L. This aberration happened unfortunately, nothing to do with us, but some other vendor. Sir, what would be our margin guidance for the full year? I won't go give you any guidance as such, but, yes, I expect that, quarter, as I said, quarter to quarter, there may be some change. We expect to continue the margins at a same level or maybe sometime better also. All right, sir. Sir, my second question is, our order book is very strong of INR 6,600 crores, which translates to one and a half year of revenue visibility. Can you give some guidance on the order book? Will we maintain similar levels or do we see very strong increase in order book led by exports? Like, you know, if you look at the equipment business, product business, orders keep on coming. In a project business, large orders come in one by, one go. In product business, it doesn't happen like that. Some INR 100 crore order will come, that will be supplied. Some another INR 80 crore order will come, that would be supplied. Orders keep on coming, and they keep on being supplied. Projects, orders come in a large number, large quantity in a single order. What I expect, the current order book, what you have, will at least continue. There is scope for some improvement also, because we are expecting some larger orders. We are expecting, I'm not sure when would they come, but we are definitely expecting next couple of months some larger orders to come. That could see increase in our order book also. I'm not worried about order book, because product orders keep on coming on very regular intervals. Sir, that was helpful. Sir, my final question is, how do we see defense as, or in the overall mix? It has been increasing gradually, sir. No, defense, you know, defense revenue, particularly defense communication, the projects we are implementing, as I said, has gone down in this quarter. It has gone down, particularly because, as I explained a little while ago, the integration could not place with the other vendors network. The other vendor has not completed its network. That's why the revenue has gone down. This year, this quarter, it has been considerably lower, but next quarter, we expect it to improve. Understood. As an overall, strategic mix, how do you see defense shaping up over the next two years? It will improve. It will improve. Particularly from defense products, it will improve. All right, sir. All right, sir, I'll fall back in queue. Thank you. Thank you. Thank you, sir. The next question is from the line of Mr. Neeraj Kumar Jain from N. Kumar & Company. Please go ahead, sir. Good afternoon, sir. Good afternoon, Neeraj. Sir, first of all, capital employed turnkey projects, it's around INR 2,900 crores. What's the rationale for this much of capital for an turnkey projects? I missed you, Neeraj. Can you repeat your question once again? Sir, we have the capital employed around INR 2,900 crores in Turkey projects. What is the rationale for this, when the revenue is very low compared to the product side? Yeah, I tell you. This is basically, is one receivables, second, retention money, which I said would be receivable on completion of the project, which is at least 10% of the, you know, overall revenue, which is the retention money, which is to be paid only when the project is completed. Project completion depends upon, in this particular case, where the large amount of money is due on the other vendor. The other vendor is still not able to complete his project, so we are not able to integrate. Third is the WIP. WIP, which is still there, and once, you know, WIP which is there, because the project is under implementation, that is there. Unbilled revenue is also there. We have completed our work, but again, not billed because of the AT is not happening and all that. That has put together, you know, INR 2,900 crores or so, that amount of money which is there, stuck in the projects, you know, which is receivable WIP, advances to other vendors. You know, vendors we have given advances where LTs are matured, we have paid, but billing has not happened. Those are the issues, unbilled revenue and the retention money of 10%, which is quite a hefty amount. Quite a hefty amount, because some INR 5,000 crores of work of NFS itself has been executed by the NF. Retention money itself amounts to hundreds of crores. Those are the reasons. Once we expect this project to be completed in about this financial year itself, I think. Lot of, you will find receivable will go down, as well as total investment in the project business, which is because of reduction in WIP, advances, receivable, and retention money coming in, you know, this investment, what is there in the projects will completely go down. Okay. Okay, sir. Second, sir, my second question is regarding, sir, regarding the product side, with, even from, if we compare the quarter to quarter, there is not very, far, betterment in sale of product side. It is INR 620 crore in the June quarter 2022, and around INR 660 crore in the June 2023. Look, you know, it is going to improve. Once this 5G product, which I have been talking about, starts coming in production, the newer version of this UBR and Wi-Fi comes into production, which has started coming in production. In fact, the newer version of licensed radio has already started coming in production. Also this Wi-Fi, sorry, 5G equipment getting completed in design, maybe another 3 months or so, you will start seeing revenue of products getting improved. Also with the increased capacity of fiber optic cable, this will further add into this increase in revenue. You will find quarter-on-quarter, there may be some variation quarter-on-quarter, but overall, year-to-year basis, you will find product revenue getting increased. Okay. Thank you, sir. Thank you. Thank you, sir. The next question is from the line of Divya Daga from Vijit Global Securities. Please go ahead. Yes. Miss Divya, your line is in talk mode. Please go ahead with your question. Hello. Hi, thank you for the opportunity. I have one question, that is, can you provide me the order book for export? Export order book could be something like INR 250 crores or so. As I said, export orders keep on coming. They keep on coming and keep on getting supplied, I don't have exact number, it should be around between INR 200 crores-INR 250 crores at this point of time. Orders keep on coming, keep on getting supplied. Okay. I have second question. My question is, after product execution or capacity expansion, we are planning for FY 2024 or 2025. What is, there will be a revenue expansion for sure. We will be focusing on the margin expansion as well, or the margin will be consistent around 19%-20%? Look, you know, margin, as I said, I expect to continue around this percentage. There may be quarter-to-quarter variation, and there could be slight improvement also, with the more and more products coming in. Yes, more or less, it should continue around the same percentage, but the revenue would keep on improving. Overall margin, you will see improvement. Percentage would be around the same or maybe some slight improvement could be there with the more products coming in. Okay, okay. Thank you so much. Thank you. We take the next question from the line of Mr. Aman Vij from Astute Investment Management. Please go ahead, sir. Good afternoon, sir. My first question is on the telecom 5G products. If you can talk about what are the revenue you are expecting for this year and as well as next year? The margins will be similar to the other products of 18%-20%, or here the margins can be higher? Look, you know, what I am expecting that in the current financial year, this should be about INR 400 crore, between INR 350 crore-INR 400 crore, something around that. Next financial year, with the 5G products coming in, I expect it to be between INR 800 crore-INR 1,000 crore. Margin would be around the same 20% or so, as I've, we have got in the current quarter. It should be around the same. Revenue would increase sharply in the next financial year. It should be around INR 800 crore-INR 1,000 crore. Sir, my question was on the 5G products only, not the overall products, number you have already shared, the INR 800 crore-INR 1,000 crore for next year. I was talking about 5G products for this year. INR 800 crore-INR 1,000 crore, out of which I would say if it is INR 1,000 crore, 70% would be 5G products. Okay. For this year, sir, FY 2024? FY 2024, it's INR 350 crore-INR 400 crore. Most of it would be non-5G products. Non-5G products, which is Wi-Fi, UBR. You know, this is again a misnomer. I will again tell you why. Lot of these products, UBR and Wi-Fi, I'm talking, are used as a part of 5G network also. They may not be called a 5G product, but like, for example, our UBR, Unlicensed Band Backhaul Radio, is being used for the backhauling of 5G traffic. You can call it a 5G product, because it's being used for backhauling 5G traffic. If you take that as a 5G product, because it's a part of 5G network, out of INR 350 crore, probably INR 200+ crore will be coming from 5G. You know, there's no sharp distinction as such, black and white, that what is 5G and what is non-5G. Like telephones, handsets would be a different, you know, and there are many handsets which are 4G plus 5G also. You know, UBR kind of a product, it can be 5G, 4G, it can be same product, can be 5G also, because it is being used for backhauling the 5G traffic also. There's no black and white distinction. You know, sometimes if you say INR 400 crores would have, if I take UBR as a 5G product, because it is being used for 5G backhauling, then, you know, INR 200 crores come from that in the current financial year. Next year, 70%-75%, would be from 5G-related products. Again, that black and white distinction would never be there. The routers, as an example, which we are developing, can be used for 5G, it can be used for non-5G also. Whether you call it a 5G product or not, it depends upon what application is being used, but the product is same. Sure, sir. Thanks for a detailed explanation. My next set of questions is on the defense portfolio. I wanted an update on the three segments individually. I believe we are into optical segments, and you have talked about optical products like BMP upgrade and night vision. What is the status as of now? You can talk about ammunition fuses, and finally, on the software-defined radios. If you can give the current update and when can we see some revenues or the tenders coming in? Look, as I said, revenue from defense product is not expected this year. We may start getting revenue from the next year. I'm not taking into account any revenue from this. Coming to the different products, software-defined radios under development, it will still take at least six months' time before the radio is completely developed. At least six months' time it is going to take, but the requirement is very, very large. Thousands and thousands of radio will be required. Six months or one month, two months, here or there, would not matter because the requirement is going to last for next 10, 15 years. Apart from local requirement, there will be large outside India requirement also. Number two2, the BMP upgrade. I am very happy to tell you, user trials happened. That got finished last week only, and we completely succeeded in our user trial. We have succeeded. Our equipment or the BMP, which we fitted with our modernized version, it has gone through the trial, different night, day, all kind of trials it has gone through, and it has successfully passed. Now, of course, we wait for the tender to come up. Once the trial for other manufacturers are also done, then the RFP will come, maybe another two to three months, RFP will come, a major RFP for upgradation of hundreds and hundreds of BMPs. Since we have gone through the trial and we have passed in that, I'm very sure that we should be competitive. Anyway, the tender is a tender, and one would know when it comes up. In terms of night vision devices, there was one tender which we had participated, where trials took place, but there have been some, what you call it, variation in the trial process, in terms of how Army did the trial, as a result of which all the suppliers have, you know, given, I would not say protest, but they've given their viewpoint that this should not have been done this particular manner. Army is considering retrial for everybody, and I'm expecting some sort of a communication to be received in next 15 days or so, where the retrial of, that happens, where the core itself has been developed by us. I'm expecting that, about 15 days or so such things, it is expected to happen. That I will know. Now, in terms of fuse. In the first trial, there had been some issue all the Indian manufacturers with the fuse. Now the new tenders are going to come up, we will participate in that. Those, you know, smaller issues we have resolved, and the new tender we will be participating. Sorry, sir. I believe something on the fuse side was supposed to happen in this quarter, so that there's no update on that part? No, no. As I said, not happen. With all Indian manufacturers, there are one or two issues where they could not comply with, one or two issues, not major issues, so we have improved that. Now, new tenders are coming, we will be participating in that. This will be this year, sir, the new tenders? Yeah, tenders are expected to be in this year. Tenders are expected. Revenue will not happen this year. Okay, tender for all the three, BMP upgrade, night vision, and fuses, are all expected this year? Night vision is already there. It's only the retrial has to happen. Fuse and BMP, both are expected this year. Okay, okay. These will be in few hundred crores, sir, worth tender size? I can't say. Yeah, it would, should be a few hundred crores, of course, of course. Sure, sir. Sure, sir. These are the questions from my side. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your question to two per participant. We take the next question from the line of Ms. Payal Lad from Progressive Shares. Please go ahead. Hi, good afternoon, sir. Thank you for the opportunity. Just one question, like, if you could just give some sort of detailed explanation in terms of the MOU that is being signed with BEL. How is it going to pan out for HFCL over a span of two years in terms of scaling on your defense, telecom, or the railway sector? Look, Payal, you know, this is a, you know, kind of a strategic MoU we have signed with them, and real implementation of this MoU is to start now. Basically, what we are looking at, BEL is very strong in defense. Some of the products which we are developing, which BEL may not be doing by itself, we will offer to them. Some of the projects they have, and they want us to manufacture that, and maybe for export market or maybe for indigenous also, if they do agree, we will do. What we are. Similar kind of a situation would happen for telecom, where we are stronger than BEL in telecom. We will help and support them. I can't say what kind of a numbers it would lead to. It's too early to say that, what kind of a numbers it would lead to, but we believe that, this should be beneficial for both organizations. What kind of numbers and all that, is a recently signed MOU, we are still working on the modalities that how to go ahead in the different product areas and all that. Maybe a couple of months later, we will be able to give you a much clearer idea that what it can lead to. Okay. One last question. It's mentioned in a press release that, you know, even you are anticipating a Wi-Fi 7 via the Qualcomm collaboration to be commercially available this financial year. What sort of revenue or margin improvement do you see from this particular domain? Look, you know, Wi-Fi 7 is improvement in the technology. It used to be Wi-Fi 5, then 6, now 7. It is higher speed, higher throughput. Margin level would continue to be same. What would happen? Wi-Fi 5 goes out, Wi-Fi 6 comes in. Wi-Fi 6 and 7 continue for some time together, then Wi-Fi 6 goes out, Wi-Fi 7 comes in. It would have some increase in the revenue, but margins would continue to be same. Margins would not different. One thing you must understand, we are the only company in India till now, as far as my understanding goes, who has been able to develop Wi-Fi 6 access points. It is already developed. Why it is not commercially available? Because the component costs are still high. If I compare between Wi-Fi 6 and Wi-Fi 7, the Wi-Fi 7 is much costlier. Consumer, customer may not accept that kind of a price at this point of time, even though throughput is higher. We are waiting for the component cost to come down, then only we will be able to offer it to the customer. The development is complete. We are just waiting for the component cost to come down. As more people go for Wi-Fi 7 worldwide, component cost will automatically come down. We are waiting for that to happen. What that number could be possibly? Like, if you said that it's higher as compared to 6, if you could quantify that. I can't quantify that number, that how much it will sell. The product is yet to be offered in the market, you know. Let it be offered, then we'll tell you. Okay, okay. Thank you so much, sir. Thank you. A reminder to all the participants to limit your question to two per participant. We take the next question from the line of Deepesh Sancheti from Manya Finance. Please go ahead. Yes, I said, what is the guidance looking forward in for FY 2024 and 2025? What is the vision of the company? I mean, as I heard that the company has did not participate in few projects, maybe the cash wasn't great. We're looking at going ahead then for the next two years. I mean, what should we see that the management is looking at? Look, as I said, I cannot give you a number guidance. Only thing I can tell you, that management strategy is to increase revenue from products, reduce on the projects. Does not mean that we do not outdo projects. We will do projects which are good in margin and good in cash flow. That is a basic strategy, number one. Number two is the increase in exports, that is the second thing. Now, projects which we did not participate are the ones which we didn't see a profitability or, you know, which are the EPC kind of projects which we thought the cash flow may not be good. We did not participate in that. That is the general guidance I can give you. Yes, I definitely see growth in revenue or at least a growth in profitability. Revenue grows or not, that's not my major issue. My major issue is profitability of the company should grow. Even if the same revenue, profitability is much higher, I am happy with that. Going ahead, as in, I mean, as long-term investors, we should look at the profits of the company going ahead, that the cash positions and the margins and the profits will go, I mean, will be higher. We should not look at the revenue growth to that kind of an extent. Is that what you want to mention? No, no, no. I never said that. I'm saying growth in profit is more important. More important. Very, you know, theoretical thing, that whether, you know, you need a 20% growth in revenue or a 20% growth in profit, or a higher growth in revenue and lower growth in profit. My saying is that profit growth is more important than revenue growth, but both are interlinked. Beyond a point, profit percentage cannot grow. You know, if I'm making a, let us say, 20% margin, it cannot become 30%, because there is a, not a monopoly market, there's a competitive market. Revenue also has to grow. Revenue has to grow, but you should take only those orders where profits are there. One should not be blind after revenue and take any and any order which may not have good cash flow or good profitability. What I am saying is profitability is more important, but revenue is also important because you cannot grow profit more than a certain percentage in the competitive market. Worldwide it is a competitive market. You should take only those orders where profitability is as per your requirement, as per your projection on what you deem to have a reasonable profitability in the company. Where the orders are there, where the profitability is very low, and there are some orders I've left about. I've not even touched. When the profitability was not there, why should I do that? Therefore, what I'm saying is, both are important, but only those orders you should take where the profitability is there. Right. just one last question, sir. That what is the product mix in there, will be in this year for telecom, for defense and for our railways, and going ahead for the next two years? Because I'm only talking about the long-term vision of the company. That what is the ideal order mix which we want going ahead, so that we can have a better margin, better profit, and whether, you know, an ideal situation which. An ideal situation would be 70% or so. It's few percentage here, there could always be there. Revenue coming from products, rest of the revenue coming from projects which are cash flow good and reasonably profitable projects. That would be the most ideal situation. In terms of percentage of product revenue in telecom, defense, railways, I would say if I take product revenue as 100, probably 70% should come from telecom, and that 30% come from mix of these things, you know, which could be railway, which could be defense, or which could be some other sector. Right now, Sorry to interrupt you, Mr. Deepesh may be requested to join the question queue, sir. We have several participants waiting for their turn. Thank you. A reminder to all the participants, in order to ensure that the management is able to address questions from all the participants, please limit your question to two. We take the next question from the line of Mr. Saket Kapoor, from Kapoor and Company. Please go ahead, sir. [Foreign language], and thank you for the opportunity. Sir, firstly, if you could give the number for this, other than this INR 150 crore, Indian Army project, what are the other contracts in which the milestones are awaited? You spoke about some receivables which we will be receiving for last, in the third quarter. Sir, I'm not able to hear you clearly. Mr. Kapoor, I can't hear you properly. Okay, sir. I just come again, sir. You can hear me? Yeah, go ahead. Yes, sir. Sir, you spoke about this INR 150 crore revenue from the Indian Army contract, which was, which we were unable to book because of some milestones pending from their end. Other than this INR 150 crore, sir, I think some BSNL milestones are also pending. What is the receivable from the BSNL end as of now? Look, you know, this about INR 150 crore. I'm not very, you know, precise on the number, about INR 150 crores revenue could not be booked because of, you know, those milestones not getting completed, which is nothing to do with us. It is because of BSNL or other vendors of Army and BSNL and all that. That is the one which is incomplete. The money due on this particular contract, which is still receivable, is about INR 800 crores. From BSNL? It's order is through BSNL, but money comes from the Consolidated Fund of India. It's not a BSNL. Okay. Okay, INR 800 crore is due from this contract? Yes. INR 150 crore of revenue is due. We will be booking INR 150 crore of revenue on account of this contract during the second quarter? I don't know. This all depends. Completion, yeah. Other vendor is able to m ake this model work. Okay, sir. Like you said, on the order book part, sir, what is the O&M component of the order book of INR 6,000 crores? I think it should be around INR 1,500 crores. Around INR 1,500 crores. Around 15. INR 4,500 crore is the current order book in terms of the EPC? I'm sorry, 1,500, 65 minus 5. Okay, INR 5,000. Sir, last point on not a hypothetical, but a elaborate answer. Sir, all the key players, whether you, whether HFCL or Sterlite, everybody is moving away from this EPC part of the story. Say that again. Moving away from? The EPC part of the story. This project part of the story, everybody's focusing on the optical part and also on the product part. When the major players are not taking up contracts, how do you think they will be laying off the networks going ahead, especially from the government front, when the major players are hesitant in taking up the key taking up projects going ahead? Look, you know, it's for the government to decide. I think they have to improve their terms of payments for the contracts and, you know, start distinguish between larger players and smaller players. What happens is that, you know, once you allow small, big, all players to participate in one particular tender, the smaller players tend to quote very, very low prices, and larger players would definitely not be interested in so such kind of contracts. Because of such kind of, I would not use the s word absurd, but non-economically gainful quotation, larger players will not quote. Government has to start differentiating between larger and smaller players and have the eligibility conditions set up accordingly, so that, you know, larger players do come in and they, you know, unless they earn a reasonable margin, they would not come in. Certain areas it has happened, but in BSNL case, in telecom, I have not seen it happening. That's why they don't find participation of the larger players. If they want to improve their performance in terms of quality of the network and all that, they have to start distinguishing, and a good example is BharatNet. In the phase one and two, they did not distinguish, and as a result, contracts went to very small players, and the network quality is very bad. Very bad quality of network. Government has to start working on this and, you know, really look at what kind of place they want and what kind of a network quality they want. Got it. Thank you, sir. Clarification again, sir. Sorry for interrupting you, Mr. Kapoor. Sir, may we request you to join the queue? Yes, ma'am, I will join the queue. Sir, I hope for your good health, sir. I heard you were not doing well earlier. No, I am very well. Don't worry, I am very, very well. Okay. Okay, sir. Thank you, sir. Thank you, sir. The next question is from the line of Mr. Hardik Vyas from Economic Times. Please go ahead. Sir, I had a couple of questions. The first one is, how much money have we invested in Wi-Fi 5, sorry, not Wi-Fi 5, 5G products? From where we are going to get about INR 800 crores to INR 1,000 crores of business in the next year. Look, you know, right now the money is being spent in R&D, and we would have spent around anywhere between INR 125 crore-INR 150 crore. In R&D. Of, R&D. T he products would start coming out now. The R&D is very, very expensive, you know. License fee has to be paid. Qualcomm itself license is $4 million, you know, and you need a Qualcomm license in 5G. You know, this is just one example. Similar such kind of license fees, royalties and, you know, manpower costs, equipment costs, test equipment costs, infrastructure costs, all are there. About INR 150 crores or so has already been invested. Okay. One would see products start coming out from the current year. Okay. I'm asking about ex-R&D. For the facility that is going to come up, for the products of 5G, that money, how much of that money are we investing? Is what I'm asking. That would not be much. Reason I tell you, part we want to do ourselves, part we want to get manufacture on contract basis. Assembly of PCBs and all that component assemblies, that we'll get done on contract basis. What we would be doing, the testing, final testing and integration. That investment could be something like INR 70 crores-INR 80 crores, not much. Okay. It would be that range only. Okay. The same thing would also apply to other products like Wi-Fi 5, 6, and then 7? Yes. Same thing would apply to other products, other telecom products also. Absolutely. Okay. It will not be much of the investment on our side. It would not be much of CapEx, so a large portion would be done by contract manufacturing, and that's the trend worldwide. Worldwide, it is being that way. If you look at Apple, for example, famous. You know, phones are manufactured by Flextronics and different kind of companies, you know. They do it, rather than Apple manufacturing by itself. The contract manufacturers have their own strengths, own sourcing capabilities, manufacturing capabilities, so one would use that, and that turns out to be cheaper than doing it yourself. Okay. Capacity will not be a constraint ever. We'll be having more contract manufacturers if we have more demand for such products. Yeah, yeah, definitely. There are so many contract manufacturers now, Flex and whatever. Many names I can keep on taking. Okay, sir. That was it from my part. Thank you so much, and all the best. Thank you. Thank you, sir. Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to the management for closing comments. Thank you, ladies and gentlemen, for being the part of this investors call, the earning call of HFCL for quarter one. As I said, we would continue to work on our well-defined and well-thought-of, and well being implemented strategy of increasing our revenue from products, increasing our revenue from exports, and taking only those EPC contracts where cash flow and profitability is good. You would see in future also, the company is in making good margins and growth in revenue from products as well as from export segment, where we are taking definitive steps to have our own IPR, our own products, and increase our presence in the international market, going to more countries, either by our own people or by agents and distributors. This strategy is going to continue, and I believe this strategy has paid dividends. It has increased the profitability of the company. With new products coming in, revenue going up, you will see the revenue and profitability both going up. The worldwide telecom market is in good shape. With the market being in good shape and our strategy of increasing products and product revenue and export will play out well to see good growth coming up in the company in future, so creating better and higher value for the shareholders. Thank you very much. Thank you very much. Thank you, sir. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.