HFCL board approves ₹580 crore preform manufacturing facility through subsidiary

Homegrown telecom gear maker HFCL Ltd on Wednesday (March 25) said it has approved the setting up of a preform manufacturing facility through its wholly owned subsidiary, HFCL Technologies Private Ltd (HTPL), with an estimated investment of about ₹580 crore. The board of directors cleared the proposal at its meeting held today.

The proposed facility will manufacture preform, the basic raw material used for the production of optical fiber. The project will add capacity of about 300–310 metric tonnes per annum.

HFCL said the initiative is aimed at achieving a higher level of backward integration within its Optical Fiber Cable (OFC) business. Preform is a key raw material required for the manufacture of optical fiber, and optical fiber availability depends on the uninterrupted supply of preform in required quantities.

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The company said sustained growth in demand for optical fiber cables has led to constrained supply conditions for optical fiber. Establishing the facility will support the availability of optical fiber, mitigate upstream supply risks and help ensure full capacity utilisation of the company’s optical fiber cable manufacturing capacities at its locations.

HFCL added that the facility is expected to be completed by July 2029. The investment will be financed through a mix of internal accruals, debt, fresh fund raise through a proposed preferential issue, or a combination of these.

The company said the project will support improved supply chain security and reduced import dependence, cost optimisation and margin improvement through backward integration and scale efficiencies, better quality control and product consistency, greater flexibility in capacity planning, and the adoption of advanced manufacturing technologies.

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HFCL said it is also considering a further increase in optical fiber manufacturing capacity beyond the expansion already underway. The company’s optical fiber capacity has increased to 28 million fiber kilometres from 14 million fiber kilometres earlier and is targeted to scale up to 33.90 million fiber kilometres, with additional capacity expansion under consideration.

The company said long-term demand for optical fiber remains strong, driven by expansion by global hyperscalers for data centres and high-speed networks, continued 5G rollout and future 6G readiness requiring dense fiber backhaul infrastructure, domestic demand led by government initiatives such as BharatNet, and demand from defence, railways, smart cities and enterprise networks. It also cited global supply chain diversification, with India emerging as a preferred manufacturing hub.

HFCL added that the project is eligible for central incentives.

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The company said the investment is aligned with its strategy to achieve backward integration, secure access to critical raw materials, optimise cost structures, support capacity expansion, increase presence in export markets and strengthen its position in the Optical Fiber Cable manufacturing business in the domestic market.

Shares of HFCL Ltd ended at ₹71.18, up by ₹1.44, or 2.06%, on the BSE.

(Edited by : Jomy Jos Pullokaran)