HFCL Limited (HFCL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Himachal Futuristic Communications Limited Q4 FY '21 Earnings Conference Call hosted by Arihant Capital Markets Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Jain from Arihant Capital. Thank you, and over to you, Mr. Jain.

Good morning, friends. On behalf of Arihant Capital, I welcome you all for the HFCL Q4 earnings call. And now I'm handing over to the management for the outlook going forward. Please go ahead, Nahataji.

Yes. Thank you, Abhishek. Good morning to everyone, and thanks to all of you for joining this quarter 4 and FY '21 earnings call of HFCL Limited. I'm sure that each one of you are keeping yourself and your loved ones safe in the midst of the second wave of COVID-19. The country ushered into a new financial year with surging infestation once again. Parts of the country are under varied lockdown measures. The pressure on health care infrastructure and vaccination drive keeps mounting. At HFCL, we have been adhering to prescribed guidelines and safety measures to keep both our people and our business protected. It has helped us deliver good growth for the quarter and also for the full year. I'm sure that you have had the chance to go through our results and earning presentation. Let me share key operational updates from the quarter. We have won orders for Kanpur and Agra Metro. Sale projects for the telecommunication network was INR 221 crores. The order involved setting up of telecommunication system across 32.4 kilometers length of Kanpur Metro and 14 kilometer length of Agra Metro. Shipment of our indigenously developed wireless solution products crossed 1.5 lakh unit mark during the quarter. This comprised of Wi-Fi access points and point-to-point unlicensed band radios. These products are being sold under brand name IO. With increasing and accelerated digital shift, future demand of our IO range of production shall also accelerate. We have strengthened our portfolio wireless solutions with the rollout of new dual-band Wi-Fi 6 products in addition to the existing Wi-Fi 5 range of products. In a promising diversification move, HFCL subsidiary company, HTL Limited, has forayed into wiring interconnect solutions, aimed at aerospace and defense and automotive and industrial markets. HTL has set up a dedicated production facility at its Chennai plant for this purpose. With the state-of-the-art wire handling facility, HTL extends, it took to deliver indigenously developed products to the defense PSUs and global and Indian OEM majors across the aerospace and defense value chain. Having sharpened our technological edge through a number of initiatives in the last 5 to 6 quarters, we have strengthened our process for aggressive 5G play. At a time when the 5G opportunity starts to unfold, we have established a new 5G business unit, which will consolidate our existing under development strengths, tower -- developing a rich portfolio of next-generation 5G-compatible products and services. Implementation of 5G and associated technologies will help unlock the transformative power of digital communication networks and enable us to achieve the digital empowerment goals. Another area of our interest has been to explore system integration opportunities in the international markets. We have steadily been strengthening our engineering and product portfolio towards international standards and its specifications. While our optical fiber cable has been exported to 30-plus countries, we are now confident our system integration footprints to beyond India in FY '22. I take immense pride in sharing that we are walking the talk in becoming an integral part of India's digital transformation, aligning with government's vision of Atmanirbhar Bharat. As a first step, we have set up a model PM-WANI village in Baslambi, Haryana. The model village is providing high-speed Wi-Fi to all its residents. The project is testament of HFCL's capabilities to supply PM-WANI-compliant Wi-Fi access points all over India. On the policy and reforms front, we believe that initiatives and schemes, such as PLI for the procurement of telecom products and Make in India will provide strong tailwinds to domestic telecom equipment manufacturing in India. Coming now to the financial performance. We have succeeded in keeping our order book robust quantitatively and qualitatively both. As of 31 March 2021, our consolidated order book stood at INR 6,875 crores on the back of strong order book and execution and our capacity utilization, and also remained at almost optimum level during the fourth quarter. Let me now summarize the performance highlights of the quarter and the full year. Revenue for quarter 4 of the financial year '21 stood at INR 1,391.40 crores as compared to INR 1,277.48 crores in quarter 3 of FY '21, recording a growth of 8.92%. EBITDA for the quarter stood at INR 187.77 crores. EBITDA margin slightly decreased by 36 basis points and stands at 13.49% for quarter 4 of FY '21. This happened because of revenue mix during the quarter. There is a slight increase in the operating margin. For quarter 4 FY '21, profit after tax rose to INR 86.47 crores as compared to INR 85.11 crore for quarter 3, recording a growth of 1.6%. PAT in absolute terms has also increased to INR 86.47 crores from INR 85.11 crores in quarter 3. However, PAT margin has slightly declined by 45 basis points as -- in quarter 4 as compared to 6.66% in quarter 3, again, due to revenue mix and interest cost. Segment revenue for telecom products during the quarter stood at INR 387 crores as compared to INR [indiscernible] for quarter 3. We expect revenue from telecom products to continue this upward trend. Turnkey contract and services reported a revenue of INR 1,003 crores as compared to INR 944 crores for the quarter 3. For the financial year ended March 31, 2021, our revenue stood at INR 4,422.96 crores, EBITDA stood at INR 585.71 crores, and PAT stood at INR 246.24 crores as against revenue of INR 3,838 crores of last financial year, that is financial year 2020. EBITDA in the same year was INR 516.17 crores, and PAT in the same year was INR 237 crores, which was March -- year ending March 2020. Looking ahead, we intend to further accelerate and amplify our innovation speed with R&D breakthroughs, technological advances through in-house and collaborative efforts. We remain enthused and optimistic with promising order inflows from domestic markets and increasing queries from overseas. The pandemic has [indiscernible] and we are ready with ever updating an expanding suite of products and solutions. Clubbed with our business expansion, initiatives, such as 5G and system integration exports, we shall continue to mine the opportunity landscape better and sustain our value creation drive for all stakeholders. I would like to conclude with the fact that Board of Directors has recommended a dividend of 15%, that is INR 0.15 per equity share for a face value of INR 1 each for the financial year 2021. With this, I close my remarks and leave the floor open for questions. Thank you very much, all of you.

[Operator Instructions] The first question is from the line of Sanjay Shah from KSA Securities.

Sir, congratulating on good numbers in this current pandemic situation and circumstances. So my question was regarding -- I've gone through the presentation, and it's really very informative. Sir, can you elaborate on the opportunity landscape in different segments? What are the progress on that side? And are we going for any benefit given by the PLI scheme to indigenized products? If yes, then what are our plans on that side?

Thanks, Mr. Sanjay Shah. Basically, if I divide opportunity landscape in the current scenario, there are 4, 5 areas I can talk about. One, as you all know, additional spectrum has been given to operators for 4G. This will entail some expansion of 4G networks also. This is an opportunity for equipment and service providers like us. Then large-scale FTTH rollout is happening, fiber to home. And as you know, we are the largest producers of FTTH cable in India. So that is another big opportunity for us. As the FTTH rollout happens, there will be huge demand for FTTH cables also. Third opportunity is upcoming BharatNet. As you all know, government has cleared BharatNet implementation of PPP model. And once fully implemented in 3 years' time frame, the total demand of fiberoptic cable is projected to be 10 lakh cable kilometers. 10 lakh cable kilometers is humongous demand. Added to that, with the demand of Wi-Fi systems, fiber to home equipment, router, switches, all of these products are now going to in the portfolio HFCL. So not only the demand of fiberoptic cable, the demand of all these equipment will result in very good market opportunity for HFCL in next 3 years to come. And I expect only FTTH -- this BharatNet-related market opportunity is going to be more than INR 60,000 crores, 70,000 crores. The FTTH market opportunity, 4G-related market opportunity are again not less than INR 30,000 crores, INR 40,000 crores. Then comes upcoming 5G. As you know, 5G has taken world by storm. And it is completely going to change the way the communication happens. So 5G auctions are expected to happen in India in December, January time frame. And in this December, January time frame, if an auction happens, network rollout will start immediately thereafter. In fact, operators are already preparing. Now 5G would mean many more number of cell sites because that -- it's a very dense network. It needs large number of cell sites, which results in more cell sites, more equipment required and more interconnectivity, which is mostly going to over fiber. So demand of fiberoptic cable, transport equipment, microwave radios, all are going to increase immensely. And that it would result in demand of more of 5G macro cells, small cells. So what we are doing in 5G space is, one, fiberoptic cable, we already have. Microwave radio, high-capacity radio required for connecting cell sites or fiberoptic -- this 5G, we already have [ E-band ] radio. Then most importantly, now we have embarked upon with a new development in our company. We have started developing 5G radio equipment, 5G cells. Macro cell design has already been kicked off from yesterday only. The small cell is going to be started in the next couple of weeks. So by the time 5G happens in India, we will be ready with our own radios, macro cells as well as small cells for 5G in our bouquet of products. And that -- those equipment are going to be required in huge numbers, thousands and thousands or lakhs in case of small cell, all over the world. And this we were all frequency ranges, frequency range of 3G as well as -- which is called mid-band and the millimetric band, which is 26 Gigahertz plus. And this is our own technology. It's not only for India, we will be exporting it worldwide. So these are major opportunities coming on telecom space in public communication. And demand because of 5G is going to be INR 3 lakh crores, INR 4 lakh crores kind of investment is projected in 5G network and with these equipments which we have, fiberoptic cable, macro cells, small cell, router, switches, I believe this is going to be another huge market opportunity for HFCL. So in public communication systems, next 7, 8 years, you can comfortably see a huge market opportunity there for the products, which we are manufacturing, number one. Now coming to railway communication, as you know, we have a very good position in railway communication. Railway communication networks are also going to be expanded, together with the signaling system. So with the expansion of new railway lines, modernization of signaling and communication systems, that also is a very good market opportunity for us. Then third comes the defense products. As you know, government's push is more and more indigenization, and time to come, 70% of defense equipment they want to source from Indian manufactures. So we are already -- our own designed defense product. The important point is, as a telecommunication products, most of which we are now going to bring in market are our own designed, router, switches, small cells, macro cells, Wi-Fi, and I can go on counting. These are all our own designed products, which are effectively going to do 2 things. One, increase share of revenue for telecom products rather than projects in our overall top line. Number two, make profit margins better because our own product gives you better profit margins. And then expand the market horizon because all products we're are able to export globally. So coming back to defense. We have electronic fuses already designed. Samples are ready. I believe army should be asking for these samples soon. We are ready to supply. We are the only Indian companies that have designed that extra modern product by our own -- with our own IPR. Electrooptics, we have started within night vision devices, first order also we have received those small order, but order, we have received of INR 11 crores. Many more tenders we have participated, which should be opened up in the next couple of months' time frame. And a number of more tenders, we are going to participate. And as I've told you in past in my earning calls, demand for night vision devices we expect to be something like INR 40,000 crores in next 6 to 7 years. So there are huge market opportunity communication, the huge market opportunity in railway communication, the huge market opportunity defense communication, defense communication as well as defense electronics products. And we are active all across the segments and which you would -- I expect from the market perspective, India and abroad, we're in a market, we only need to have the right products and right strategies to take share of that market. In a small percentage, it would be thousands of crores. And we are well geared up with the product design. We are well geared up with the expansion of our sales team, ability to market all over the world. So that was the first. Second, the PLI scheme. We will, of course be applying for the PLI scheme. And whenever government gives approval, yes, that is going to result in advantage to indigenous manufacturers like us, for the percentage 6% or so, whatever PLI they have announced, that is going to a major advantage to manufacturers like us, and we are definitely going to apply for that.

The next question is from the line of [ Deepak Raut ] from Arihant.

Sure, I just wanted -- what is the kind of revenue hit you may incur because of the pandemic and the lockdowns? That is the first question. And the second one is regarding, can we have some highlight on the pledged shares, please? There are some 20% release or something has been given. So some highlights on that, sir.

Thanks, Deepak. As far as first question of impact on revenue is concerned, till now, we are not seeing any major impact on our revenue, till now. But some impact at all, if at all, it comes -- it can come from if people are not allowed to move into cantonments and install and commission systems which we've put in because of pandemic. That may see some small impact. But otherwise, I don't see, at this moment, any major impact. Good thing about this time of lockdown and all that, they have not closed down the factories. So all our factories are operational. So factories being operational, I don't see that there will be any major impact on revenue of the quarter 1. We would maintain the revenues what we have been doing in the past couple of quarters that would be maintained in this quarter also. I do expect that. Now coming to the pledged shares. Some quantum of pledged shares have already been released, as you know. The last leg offer release of the shares, we have -- 8 banks are involved, 6 banks have already approved the release of shares. 2 banks, a proposal has gone to their higher authorities for consideration. I have no reason having the lead bank approved that and having 6 out of 8 banks have approved that, these 2 banks would also approve it. And this should be taking another 3, 4 weeks or so, depending upon the lockdown situation, how the banks are able to move. So in the next 3 -- I think, 4 to 6 weeks, these pledged shares will also be released. But again, let me tell you, this -- pledge of these shares is not against any loan taken against shares neither by promoter nor by the company. These are specifically as collaterals to the loan company has taken. And as per the loan conditions, they have all been fulfilled. These shares are to be released now.

The next question is from the line of [ Hemang ] from Annual Research.

Congratulations on great set of numbers. Sir, I just want to have your view on R&D spend. So how is the company is going to spend on the R&D because in these kind of industries, we need to develop the -- building technologies and the new equipment. So what will be the spend on the R&D side? Is there any benchmark that percentage of sales or a percentage of profit or kind of basically?

Our R&D spend in this year is going to be about INR 150 crores. And as I said in the answer of the last question, R&D is the key to our growth. It's key to our growth. And a lot of equipment we have designed, a lot of them are under design. Like, for example, first shipment, we designed for Wi-Fi and this point-to-point radio and now point to multi-point radio is also going to come in. Now that resulted in good success. First few -- first month of -- first year of the production and less than a year, we were able to sell 150,000 of those units. More orders are in our hand. Already, we have orders for about 40,000, 50,000 units on our hand from various operators. So all product design has improved and will also improve further as we go in and designing more products and sales increase from that. Our profitability, working capital cycle and also revenues. So current year's R&D expense is going to INR 150 crores. We are opening up a new R&D center in Bangalore. And this would have opened by now, but with the pandemic and lockdown and all this, this has got -- bit delayed. So as soon [indiscernible] opens some other 15 days after that, or 2 or 3 weeks, this new R&D center in Bangalore will be open. We have already started hiring people. So one, R&D is being done by our own R&D people in Gurgaon and Bangalore. Moreover, we have tie-ups with various R&D organizations, engineering companies, which design equipment for us. And the design is passed on to us and the further development for version 2, 3 is done by our own company. So there are 2, 3 R&D tie-ups, where people are designing equipment for us, nationally and internationally both. Then third, we have taken equity in a couple of companies, which are R&D companies, which are designing products for us, which, one example is, software-defined radio is being designed for us. Then there is R&D is happening in cable business. That also you must understand. So the cable business is also -- is not so technology intensive as communication products, but still, there is a new kind of cable, you to design less weight, less diameter, less raw material, consuming less space. So all are being done, micro modules cables, IFR cables and mostly those cables are required for export market. So that also is being done by us. And that R&D is being done by our Chennai and Goa plant. So put together, R&D expense is of INR 150 crores to INR 160 crores in the current financial, which is a reasonable number, it would be something like reasonable percentage. I don't want to say percentage otherwise, I would be talking about expected numbers from the current financial year, which I don't want to make a forward-looking statement. But INR 150 crores would be our R&D expenditure in the current year.

Okay. Okay. And one more question on the defense side. How the working capital will -- like payment cycles and working capital and the order gestation period for an order, execution period for the defense. Is the same as like telecom equipment side or like it is a different a ball game altogether?

Look, defense. For the product side, such order has been received, and we will supply and we will know the payment cycle, but it is -- as a product, it is a reasonably good payment cycle. But on the project side, there have been some hiccups. Hiccups is not because people don't want to pay or there are any problems in payments, but because of pandemic last year. As I mentioned a little while ago, last year, what happened throughout the year, there have been a lot of pandemic issues as -- because of that, restrictions are put on movement of people inside cantonments, particularly in Northern and Eastern command. And reason was not only pandemic, reason was the China border situation. So entry was completely restricted, so pandemic and China border situation, both contributed to very little access to the cantonments, where the most of the equipments are going to be put. Now most of them -- all of them, probably 80% of them. So the entry was completely restricted. And rightfully, so you can't blame defense forces for that because they cannot afford pandemic spreading in containments, particularly in the border situation which we had last year, which all of us know, in northern and eastern areas, both. So that resulted in not being able to achieve the milestones. Where payments are based on milestones. These are milestone-based payments. You do this particular percentage of completion of work, then you'll get so much a payment. So milestones could not be completed, not because of our fault, not because of customers' fault, because of the situation at that point of time. So what result happened as a result of that, that our working capital cycle increased, debtors increased because billing we did, but we could not receive payments. Some billing was done because equipment was supplied, part of services were rendered, billing was sent, but the entire milestone like regional completion was not being able to achieve. In certain places, you could not go inside the cantonment. So that resulted in longer elongated working capital cycle. But now that situation has improved, barring some small issues right now because of pandemic, but which we believe we'll be able to overcome that in the next couple of weeks' time, it's not as bad as what happened last year in terms of going inside cantonments and all that. So -- and maybe there may be some restrictions coming up in the next couple of months also. But by September this cycle, we'll get corrected. And whatever elongated working capital cycles or debtor cycle has become because of this kind of a situation where milestones could not be completed, it will get corrected by the month of September this year, where most of the services part of that installment commissioning would also be finished and lot of milestones will also be achieved. So there has been some turbulence in between, but we will overcome it by September.

Okay. That's great. And sir, on the last question on the margin side. So do we see any margin, like a fall in margin because of the rise in commodity prices and raw materials, mainly copper and all so -- or we will be able to get a pass-through in the coming quarters in a lag effect?

There is a small dip in the margin percentage, if you could see in the Q4, which was basically because of product mix and some increase in the commodity prices, not as much copper because copper does not impact much. More impact is because of rise in the plastic raw material, like HDPE, LDPE and those kind of -- and jelly and all that, which is our product requirements for fiberoptic cable. That did happen. But again, that has started easing out. But even if they remain at the same level, now it has been passed on to the customer because we work on the -- in-between margins. So cable price have also been increased. Wherever it is a cost-plus model, the price has increased. So for the time being, it impacted, but now that has been neutralized.

The next question is from the line of Rahul Porwal from Marathon Capital.

Congratulations on good set of numbers. Yes, sir, I have 3 questions. What is the revenue and EBITDA target for FY '22 and FY '23? Second question is, are you looking for any technical collaboration? And third, how much revenue can we achieve through our existing capacity?

What was the last question, how much revenue?

Can we achieve through our existing capacity? So whatever capacity you have for telecom equipment manufacturing, so how much revenue is the best revenue you can achieve, just so I understand?

Sure. First of all, you very well know, I cannot make the forward projection of revenue of current year or the next year, but I can only say that we will maintain the same growth trajectory, which you have seen in the last financial year and on account of strong order book and also a number of more orders expected and orders -- for the products, orders keep on coming, small, small orders. In products, you don't receive order of INR 2,000 crores at one go. Some order, INR 100 crore, another order INR 50 crore. Another order, INR 80 crores. They're kept on being received by us. So with a strong order book, good pipeline of orders, we will maintain the growth trajectory, what we have seen in the past. Same growth trajectory would be maintained. In terms of margins, again, we are hopeful that with our own designed products coming in, and there being -- has been -- becoming increased part of our sales revenue, I believe that part would also become -- margins could also become better than what we have seen in the last few years. I can tell you what we expect to be the share of products and turnkey services in our revenue mix. In the last year financial year '21, we had 73% revenue from turnkey and -- for projects, and 27% from products. Year before that, it was 78% from projects and 22% for products. In the current financial year, what we are in, I expect this 27% to become 45%. So out of total revenue, 45% will come from products as against 27% of last year, and projects will go down to 55% from 73%. So this is a major shift happening. And I have been talking of this in all my earnings calls that the focus of the company is to increase revenue from products. And you would see a clear shift in the current financial year that 27% is going to become 45%, almost double, not exactly double, but about 80% increase in the revenue of the product. So this is going to be a major shift. Now coming to third question and I'm mixing it the second question. One of the shift is going to come from fiberoptic cable. But we expect the revenue from fiberoptic cable business and accessories put together has been about INR 1,050 crores in the last financial year. We expect it to double. Our hope is to get it doubled in the current financial year to the INR 2,000 crores. Some part would come from wire harness business also, but major part is going to be from fiberoptic cable, FTTH and accessories related to fiberoptic cable. So this INR 1,050 crores, we expect we are hopeful to make it INR 2,000 crores. And of course, that would need some CapEx. Some CapEx would be required for that purpose. And we have already budgeted for that, and some of those projects are already under implementation. Total CapEx expected on fiberoptic cable and enhancement of capacity for optical fiber also. We produce 8 million fiber kilometers right now, which we are going to announce this year. So total CapEx expected to be about INR 170 crores in fiberoptic cable business. Then there is some CapEx going to be -- we're starting manufacturing of different defense equipment. So as I said, now we have started receiving orders for defense equipment. We would have to expand our capacity to -- create new capacity rather for manufacture defense equipment. So that would also have some CapEx. So about -- in terms of achieving current year's numbers, I would say, fiberoptic cable and fiber business would see CapEx of roughly about INR 170 crores.

The next question is from the line of Jigar Valia from OHM Group.

I have a few questions which are all linked to the exports. First question is, which are the geographies that we export to?

Well, in terms of geography, if you see our presentation, which is put on our website. We are exporting to about more than 30 countries, which includes Middle East, UAE, Saudi Arabia, Oman, Egypt. Then you have countries in Europe, which includes U.K., which includes Spain, Czechoslovakia, Lithuania, Ukraine.

Can give some broader breakup in terms of how much is Middle East, Africa?

Well, I don't have a breakup at this point of time. Africa is very little. [indiscernible] Middle East is there, which are very quality conscious. Europe is there. And even North America, we have exported and some part in South America. I don't have a breakup of each country-wide, but I think major exports are...

Some products originally, maybe are -- so yes, maybe we're seeing more traction or -- okay. Other is, with regards to exports, and is it mostly government or is it telecom companies? What are the...

All telecom companies, no government.

All telecom. Okay. And exports is all largely OFC or you export products as well?

Largely, it has been OFC. Some export has been there, railway communication area also.

Okay. Okay. And since this would all be just your product exports, right, no services with regards to exports?

There are pro services, when we implement the Mauritius Metro project, for example, for communication, Dhaka Metro for communication. There are some part of services also, but major would be equipment only.

Okay. So broadly, the margins and working capital cycle, both would be better as compared to the domestic piece?

Yes. When I say fiberoptic cable, yes, margins are better. Working capital cycle in exports, some cases, which is better, some cases it may not be. Because in some cases in fiberoptic cable, in India, we received very quick payments, very, very quick payments, about a month, 30 days payment, which may not happen in export. Some companies, yes, but otherwise, mostly the cycle of payment is about 60 to 90 days.

But it will be much better than the project business, generally?

Yes, absolutely.

Right. Sir, can we have the export numbers for FY '21? And maybe some color on margins for export versus the company...

Look, again, FY '21, we had export of over INR 200 crores as against INR 123 crores of FY '20. Of course, I don't have the percentage of margin on exports. But typically, I would say this will constitute a -- net profit margin should be -- I don't have those numbers with me, but I'm just on talking on the top of my head, what I know from my business. Something like 8% to 10%.

8% to 10% net margins?

Yes. But current year, we are, of course, targeting to increase our exports for cable as well as our products. The current year's export target is at least INR 350 crores from the INR 200 crores what we had last year. Every year, we want to increase our exports, every year. As I said, in fiber optic cable, also, we are -- we have got some very expensive machines to cater to the demand of European and American market, which are pretty expensive machines, but yes, we have done that. And those machines would be exclusively for the production of cable, which are required in these countries. So we are putting a lot of emphasis, a lot of efforts on the development of export market in the current year as well as the next year. Current year target is to reach to a number of INR 350 crores as against INR 200 crores what we did, we have seen other things put together in the FY '22.

Got it. Given that you're putting all these new machines and -- so can you give some idea on the longer term as to what is level that we would be looking at over a 3 to 4 years period?

In terms of numbers, revenue numbers?

In terms of revenue numbers, how much could -- or revenue number or as a percentage, how much could export be for us or something -- or absolute revenue number maybe -- can INR 350 crores be a INR 1,000 crores business for us?

No. What I'm saying is revenue numbers, I can't look at forward-looking prediction. But yes, looking at the market opportunity, what we have and which I described a little while ago, I have no doubt that the growth trajectory would be maintained, with increased profitability because of our -- more of our own products coming in play, more of our own products having share in the revenue and the product revenue going up to estimated about 45% in the current year from the 27% last year. So it would definitely result in increase in revenue, profitability both. But in terms of export, as I said, currently, as target, we hope to reach to a level of INR 350 crores and same kind of the number trajectory of growth I wish to maintain in the next financial year also. So next 2 years, we know what we have to do. But once we reach to the targets what we have planned for at least 2 years, then we will be looking forward. But this year, we want to make INR 200 crores to INR 350 crores and same growth trajectory in terms of numbers we want to maintain in the financial '23 also.

Next question is from the line of Nalin Shah from NVS Brokerage.

First of all, I would like to congratulate for excellent numbers, Nahataji, in spite of this COVID situation. You have given us a fairly good idea about, I mean, various distinct opportunities. And I'm sure that you would continue to perform very well. Now since you have said, sir, that the product component is likely to be around 45% from 27% and services, the projects will be around 55%. Can you give us some idea about what is the difference between the margin between these 2 groups?

Look, Mr. Shah. There are 2 issues. One, is margin, another is the working capital cycle, and third is overall working capital environment. In the project business, working capital involvement is higher than the product business. Because of it this is what happens you get paid on the basis of milestone achieved, when you do this part of completion then you get so much, then so much, then so much. So though you have supplied the products, you get paid 50%, rest 50% comes in stages. So that what happens, working capital cycle becomes higher and involvement of money working capital becomes higher. In the product business, it doesn't happen that way. In product business, you have an order, you supply the product, there's nothing called milestone there, nothing called milestone. You get paid once you get supply, when you supply. So your panel cycle is quicker. Overall working capital involvement is also much less because what you do, let us say, payment is 60 to 90 days. You are also able to take back to back credit from the suppliers also. So your working capital involvement goes down, it goes down. So which is a little bit less working capital, less stress on your funds, less stress on working capital and quicker payment. We are able to do more revenue with the same working capital, you can put it like that also. Either you are able to do the same revenue with less working capital or with the same working capital, you're able to more revenue. So it is always better. Profit margins in the projects and the products, it all depends. Projects -- different projects can have different profit margin. But more or less, if it is our own designed products, profit margin would be higher than projects. Definitely, it would be higher than projects. If a project is 8%, own products could reach to 12%, 13%, 15% also, depending upon case to case. So that is the kind of situation you have. When you have increased revenue from products, you have a higher profitability, particularly when there our own designed products, number one. Number two, your working capital involvement becomes less and working capital cycles also becomes better if it is product then the projects. And that is why I have been stressing, if you would have attended our other earning calls, that we want to increase our revenue from products. And that is showing results. 22% is going to 27%. We are hopeful that this year, it should be some 45%. There's a major shift.

Excellent. And then I'm listening to you, you have defined some opportunities, which are running into thousands of crores is a first -- your presentation, around 5 different segments you have different opportunities, which are all very large opportunities ranging from INR 30,000 crores, INR 40,000 crores up to maybe INR 3 lakh crores, INR 4 lakh crores range, as you said, in 5G sector. So can we just have some idea because these are little long-term -- spread over long term situation, can we have some idea about when do you fill the maximum kind of a momentum you may gather when this different cycle stages, you reach in 5G and other areas also? Where is the maximum in next, say, 3 to 4 years, where is the maximum momentum is likely to be gathering?

Very high momentum would be there. Right now also, it's going on very well. There's absolutely no issue. But it's actually when the storm is going to come, storm I'm talking in the sense that, huge opportunities were going to come. It would happen, I would suspect, end of the current calendar year and going into the entire '22, '23. One, because 5G rollout would have started. It's going to change the landscape completely. Number two, BharatNet would have started. That is going to be -- there is a huge demand opportunity. These 2 major things happening, which is expected to start from the end of this year to continue in the next 2 years, those 2 years, which I said, '22, '23 calendar year, are going to be a major shift in terms of demand, requirement and all that. And that shift has already started in terms of cable, for example. Cable prices started firming up. What you had the fiber prices earlier and what you have now have changed. If I could give you some data points on the fiber price, you'll be surprised. For example, if I start from '19, '20, financial '19/'20. In quarter 1, fiber price was INR 351 per fiber kilometer. Now these are -- I'm talking our purchase price. Market prices could be different, I do not know. I'm talking purchase price. This quarter 2 came down to INR 329. Quarter 3 and 4, which came down to about INR 315, INR 351 to INR 315. Then quarter 1 of the current financial year, and the quarter 2 of the current financial year, it came around INR 280. Quarter 3 and 4, it came down to INR 250. So that's why you see reduced realization per fiber kilometer of cable. What it was about, I would say, INR 1,200, came down to INR 800 or INR 900 per fiber kilometer. So with the same quantum of production, I was making less revenue. Though we increased the quantum of production and our revenue increased, that's a separate issue. But per fiber kilometer revenue came down. But now this INR 250 per fiber kilometer, the fiber price, it has already shot up to INR 275, INR 280 range. INR 280 range, it has already come up. So INR 280 range, which means I'm talking about, what was in the beginning of the year, that has started coming back. INR 280 become INR 250. Now INR 250 has again become INR 280. And I expect this would go up to by another INR 20 or so because there is a good demand in China. There's good demand in India and many other countries because FTTH, 5G and all kind of things. So this INR 280 could go up to INR 300 INR 310 also. So this would result in, again, the realization per cable kilometer, which is about INR 900, going up to about, I would say, INR 1,100 or so once again. So that would contribute to increase in revenue, which we have now factored in. When I say INR 2,000 crores, I've not factored in this INR 900 to become INR 1,100 crores. I've not it all factored in. I've factored in OPs at the current prices, what it was in the end of the last financial year. So that -- even it could increase, it has the possibility of increasing, but that has not been factored in, and our margins would remain unaffected. So what we are doing because of this increase in demand of cable, we're increasing our cable capacity, cable manufacturing capacity in the current year. As I explained, there is going to be considerable amount of CapEx, roughly about INR 170 crores for the cable and fiber. We are increasing our capacity for fiber. So this is, in my opinion, is going to be demand scenario, and by 2 years, '22, '23 -- calendar year, I'm talking about, 2022, '23, they're going to see huge demand opportunities. Current demand of opportunity is coming from expansion of 4G networks, FTTH networks, which are the ongoing things, which are happening all the time, this -- there is a current demand opportunity.

Excellent. And my last question is that since, I mean, this is the kind of situation of you going up to maybe, I mean, some different kind of the heights of top line, bottom line, et cetera. Will there be any plans in the near future to raise any equity funds to just, I mean, have a good ratio of debt equity, which you already have a very comfortable debt equity.

We are 0.43, which is very comfortable. And right now, we have no plans, Mr. Shah, to raise any equity.

[Operator Instructions] The next question is from the line of Chetan Shah from Jeet Capital.

Just 2 quick questions. While explaining the OFC business and railway business and defense business, you gave some flavor of expected CapEx. You said that OFC required some INR 170-odd crore of CapEx. So can you give us some highlight that how much CapEx we did in FY '21 company as a whole in total? And what is the target for '22 and '23, just to get some sense of cash flow?

Look, FY '21, our CapEx was roughly about INR 100 crores on a consolidated basis, about INR 100 crores. I may be wrong by a few crores here, about INR 100 crores. Then in terms of -- just one second. Then in terms of CapEx for the current financial year, as I explained, INR 170 crores odd is going to be from OFC and optical cable business. Then there is going to be defense equipment manufacturing, going about INR 40 crores. That CapEx is going to be there. And of course, R&D expense is going to be there, which I've already mentioned, but this entire R&D expense is not capitalized. All manpower expenses and all that kind of things are put in revenue. But only the equipment we buy for R&D or infrastructure, we create for R&D or any technology fee which we pay to R&D partners or the investment we make in their companies, they are capitalized. So that would be another INR 120 crores to INR 130 crores.

So sir, this INR 120 crores, INR 130 crore of R&D capitalization is over and above INR 150 crore, which are -- that included in that?

Yes, that's included in that. This is a total INR 150 crores, I talked about. Part capitalized, part is going to be OpEx.

Understood. Sir, one last question from my side. In terms of the working capital cycle and the mix, when our revenue mix is likely to change in FY '22 onwards, it will be more tilted towards product and less toward the projects. So do we expect this to improve your than what we had in last couple of years? How do you see our balance sheet getting changed and return ratio getting changed in next couple of years because I believe that our cash flow -- better.

I tell you why. With projects getting completed, and by September, as I said, this payment, which got delayed because milestones not being able to achieve because of the pandemic and border situation, that would be out. So that money would be available, so cash flow will become better. And products becoming more part of our revenue, this will also increase our cash flows and the better working capital cycle. So I expect this will definitely improve in the current financial year. [ Technical Difficulty ]

[Operator Instructions] Ladies and gentlemen, thank you for your patience. We have the line from Mr. Nahata reconnected. Sir, you may go ahead.

Sorry, just got dropped. I don't know why. Maybe should not have dropped. Anyway. So this cycle would start at improving, I would say, from the month of July, August time frame.

Understood. Understood. Understood. And sir, one last question from my side. In terms of -- somebody asked the similar question. But in terms of our existing capacity, and the CapEx, which we have already done till '21 and by end of '22, what kind of optimum utilization and revenue one can generate without major CapEx? I'm not talking about the normal CapEx which we are doing, say, INR 200 crores, INR 300 crores a year. If you can give some sense on that on a big picture? I'm not asking for any future guidance, but just to get a sense that how nicely we can sweat the existing assets, which we have in our portfolio. That's it from my side.

In terms of manufacturing the cable business, our fiberoptic cable business, as I said, including the CapEx, which we are doing in the current financial year, up to the -- and I'm talking the prices, which were prevailing when we did our annual offering plan exercise in February, end February, beginning of March, when it was completed. And the prices were lower and which increase now. But even at the lower prices, we estimated that we would be able to have a capacity utilization of 90% plus with a revenue of roughly INR 2,000 crores in the fiberoptic and fiber business. That's the kind of a CapEx you can see vis-Ã -vis revenue in cable manufacturing. Now other manufacturing of telecom products, which we do, which we are now getting them on a contract basis, Wi-Fi and all that. We don't manufacture ourselves. There's no CapEx required there. So we get it manufactured on contract basis, which is much easier for us because you don't have to bother about sourcing hundreds of components and the issues and all that. So -- and that's a worldwide trend. So there's no CapEx required for manufacturing additional telecom products. What is CapEx required in the defense communication because defense authorities want you to be your own manufacturing rather than doing it on a contract basis. So when we do -- and we would be starting that. It would be too premature to say that with the current CapEx of about INR 40 crores or so we would do, how much production it would achieve. That will depend upon numbers and all that and orders to we receive, but it could be reasonable enough to reach or foresee the number.

Sir, normally, you give a breakup between the government and nongovernment revenue, what is the status in the last financial year?

Look, in the last financial year, if you see the revenue mix, as I said, in the product mix, I have already explained. In terms of order book, I can say, right now, government, nongovernment, I think it would have been 50-50, mostly 50-50 kind of a thing. I think government could be 60% and nongovernment could be 40%. But going forward, it is going to become better in favor of nongovernment with the increase in products and all that and less projects. In terms of order book right now, I can talk about the government and nongovernment is roughly about 50-50.

The next question is from the line of [ Chetan Baria ] from [ Perlite Family Office ].

Sir, my question is on the CapEx for -- on the 5G by the telecom companies. So what kind of trend are you seeing in that? Is it accelerated it in the last, let's say, 1 year or so? And how does it look for the next 2, 3 years? And secondly, in terms of your own production run rate, because of this lockdown, everything here and restriction every -- elsewhere, are you seeing any kind of blocks in your production efficiency delivery at this point in time?

So the first question, I'm replying. 5g, no question of picking up because 5G is to start now. 5G, major CapEx is going to start when the spectrum is auctioned early part of next calendar year, as I said. So right now, preparation of 5G is happening. Some small expenditure in fiberoptic cable enhancement, and those are being done. The major CapEx on 5G is going to start from the time when the auction takes place. That is number one. And in terms of our production and all that because of the pandemic, there is hardly any impact. Any impact which has happened if is small, is because of some of the people, who are workmen falling sick because of COVID and they have to be kept out and their primary contacts have to be kept out, there have been small deviations in our Goa plant in the last couple of weeks, but there's no such major deficiency or major stoppage of production in either of the place.

Next question is from the line of Nilesh from Envision Capital.

So I had one broader question. Basically, as far as the optics fiber cable is concerned, so India, what is the share of domestically sourced and imported? And second question on the same itself is, what would be our market share in the domestic market? And who are the other players in the optic fiber cable? Whom you are competing with?

First of all, in terms of import of cable and domestic, I think more than 90% is domestic production. Hardly, there is an import of cable. And even 10%, I'm saying with a pinch of salt, it may not even 10%. Now our market share, first of all, I have a lot of pride in saying that we have highest market share in domestic market in fiberoptic cable business, highest. Now exact percentage, I wouldn't know because these datas are not made available. But primarily, I can say, and this is -- again, these are the estimated numbers, which we have that in terms of -- but our market share should be 50% or more, 50% or more in the domestic market. It can be reaching to 60% also. But in absence of numbers being available, authoritatively, I cannot say that. But what I know of the market, who is buying what and all that, I think our market share would not be less than 50% in the domestic market, which is a very credible thing. There has been 18, 20 manufacturers in the fiberoptic cable business. And if I'm able to maintain a 50% market share in the domestic market, I think that's a reasonably good thing to do.

This 50% would be largely because we have a higher wallet share in Reliance Jio?

That is one of the reasons. That is one of the reasons, but not the entirety of it. Jio, yes, of course. And they are very good customers, quantitively good requirement, good payment cycle. It's very good customers. We are proud to have Jio as our customer. But then we supply to a lot others. We supply to Larsen & Toubro as have turnkey players which supply to Tata projects. We have supplied the Bharat Electronics. We have supplied to BharatNet in Punjab, Jharkhand, Chhattisgarh. We have supplied in Maharashtra -- for their BharatNet project. We supply to Airtel also. So we supplied to all operators, all operators.

Understood. And then sir, last question would be on the 5G deployment side. So we say there is a huge opportunity as far as 5G deployment is concerned. But we are also saying at the same time, our share of products will increase going ahead. So are we be talking about that, we don't take a lot of EPC projects going ahead in the 5G deployment. And you'll only supply products to this 5G requirement?

There are 2 opportunities we are going to pursue in 5G. One is the product, of course, which is our ongoing business. And new products are going to be added in the 5G radio equipment, which is macro cell and small cells both, which are under design right now. Second, we have opened up a new division in the company at this time, system integration for 5G, 5G system integration, which includes not really turnkey projects. Equipment may be supplied by us, equipment may be supplied by Ericsson, Nokia, Samsung, whoever. Once -- right now, as you would have heard it, time has come for Open RAN. What we call Open RAN means different equipment would come from different suppliers. Our net used to be, if you are putting on a network Nokia -- most of the equipment have Nokia because they won't interoperate with others. Now it is Open RAN, you can buy core from somebody, radio network from somebody else, second part of it from somebody else. So what it results in, with multiple suppliers, you need somebody to integrate all that, system integration. So what we have done -- system integration unit in our company -- just pretty recently, pretty recently. And we are going to expand that and make it a full-fledged unit, for value-added system integration business more geared towards 5G, more geared towards different components of 5G. So it would not be turnkey for us as such, but it would be more of a system integration, where equipment could be supplied by us or somebody else, but it would be high-value system integration. And of course, the product business, as I mentioned, products will include switches, it will include the fronthaul gateways, routers, it will include small cells, macro cells, all those kind of things.

The next question is from the line of Malay Shah from Indsec Securities & Finance.

Just a couple of questions. One, if you can throw some light on the demand and supply scenario in China and help me understand what is the major deterrent for them to import products in the optical fiber cable products in a larger quantity to India?

Look, as much as I understand China, now new tenders are coming from China Mobile, China Telecom, and demand is picking up in China, and particularly in fiberoptic cable side, I've seen demand picking up in China. And if fiberoptic cable is going to pick up, everything else is going to pick up because fiberoptic cable is one part of them. 5G, FTTH, a lot of that is happening in China. 5G has also started in China, and 5G demand is going to be very good in China. Fiberoptic cable, there are, first of all, 15% custom duty. So it's not that -- they are 15% higher in any case. But even in terms of cost of production, we are as good as Chinese. We are able to compete with them in the export market, most of the case, unless they do dumping, one is able to compete. So with the 15% custom duty and our cost being similar to that of China because we also produce fiber, they produce fiber, we produce cable, they produce cable. So there's no reason that we cannot compete with Chinese companies in the world market. We are doing that. And very much so, we would be able to do in Indian -- local market also. And if you look at the last 5 years even, Chinese companies have not been able to put any fold in Indian cable market at all.

And sir, the next question was around metro cells and small cells. Can you help me understand what would be the market size, say, 2 or 3 years down the line? And what are we looking at?

The market size, if you look at India, I'm not estimated, particularly for those cells, but it is going to be thousands and thousands of crores, thousands of crores because -- just let me put some number. In terms of number of cells. If somebody has got 200,000 cell sites for 4G network, assume it, it would be easily 600,000 for 5G network. That is only a macro cell. And for micro cell, for the small cell, it would be many more because that would be required for inside coverage and all that. So if we just say a macro cell and -- and again, I'm talking just estimated numbers. If 1 cell site cost $5,000, assuming $5,000, and 600,000, you can multiple and see what numbers comes in dollars, multiply it by 3 or 4 operators, you can get the number, $5,000 into 6,000, including 3 or 4 in India and then multiply it by that by 5x or 6x or 10x for the world over quantity, you will get the numbers. humongous number, humongous number.

Understood. Understood. And where are we in the development stage currently for these particular products?

We have just started. Macro cell has just started. Last week only, we did the -- start of the macro cell. And small cell, we will be starting in a couple of weeks from now. We are just in finalizing now our chipset and all that, which chipset had to use and all that, A company or B company, we're evaluating that. And that evaluation should be done in the next couple of weeks, and we would be starting small cell also.

Okay. And what would be the time line for us to finally come up with the ready product?

We have estimated roughly about, I would say, 10 to 11 months.

The next question is from the line of [ Hardik Hiyas ] an individual investor.

I had a couple of queries. To begin with, we have crossed about 150,000 shipments of Wi-Fi in numbers. So in the fourth quarter, how much could we do?

I think it should have been about 50,000, in my opinion. I think so. I mean, exact quarter number, I don't have, but it should have been around.

Okay. And the run rate would be the same for the coming quarters as well, 50,000 every quarter. So can we look at about 200,000 or more for the current financial year?

That is what is our plan. That is what is our plan.

Okay. Sir, the second question comes as the capacity utilization of our Hyderabad plant. So has it come on stream more than 90% or 80% or...

It is 100%. Right now, it is 100%. We are increasing capacity. It is 100% capacity realization, rather we are doing more than the rated capacity. You have a rated capacity and you have actual production. We are doing more than the rated capacity. Rated capacity was -- let me just put my calculator. There, 6.4 x 12, and we're doing a little more than the rated capacity. So it's 100%, you can say.

Okay. Sir, you guided for CapEx of about INR 170 crores for optic fiber and fiber cables. So from 8 million fiber kilometers, we are likely to go up to how much for the optic fiber?

This is for optical fiber. We are going to 10 million fiber kilometers from 8 million fiber kilometers. Go ahead.

Optic fiber cables would -- that also would go up?

Yes, optical fiber cable would go up by about 4 million fiber kilometers.

Okay. Okay, fine. Sir, one last question I had. What is the status of our BharatNet apart from Punjab and Jharkhand, where we have done a lot of work? And GPON, if the -- can you put some light on GPON as well?

Yes. So BharatNet Punjab and Jharkhand, Jharkhand is almost getting finished. Punjab is already done. BharatNet, next phase is going to come on a PPP basis, as I've already explained. And whoever becomes the winner, we would surely like to supply cable and equipment and all those kind of things to them. And this is going to happen, in my personal opinion, as I said, government should come up with tenders in next 2, 3 months. With this pandemic have slowed down a bit. Next 2, 3 months, the tender should come and real implementation should start from the end of the year or beginning of the next financial year, calendar year. So that is BharatNet. And what was your second question?

Sir, GPON. If you could throw some light on GPON.

Yes, yes. So what we have done because GPON is not the right word, I would say PON. And PON has got many variations, which includes GPON. GPON, XGS-PON and NG-PON, NG-PON2. So there are various versions of PON equipment. So we have already tied up with C-DOT for transfer of technology. And then partnership to improve upon that technology, which would then -- improvement would be specifically ours for development of this PON equipment, which includes GPON, XGS-PON and NG-PON all various of that.

Okay. And we will be supplying that -- those equipments to the players?

Yes, absolutely.

Okay. And that would also be a huge opportunity for us?

Absolutely. BharatNet and all FTTH players would need it in a good number.

Okay, sir. Sir, one last question I had. That is about our order inflow. We have been having Agra and Kanpur Metro order inflow of INR 220 crores. Apart from that, have you had any other order inflows as well?

Well, these are major orders I talked about. But the small orders, like INR 50 crores, INR 70 crores, INR 80 crores, we keep on receiving fiberoptic able or Wi-Fi and all that. We keep on receiving those orders all the time.

Okay. And you guided for 45% product contribution to the revenues growing gradually from there as well. So we are also going to grow our services business as well, right? So that the product is not eating away into the services business and the total...

Not eating. Project business would also continue. I'm not saying that it will not. What I'm saying is the share of product business will go higher. Overall revenue will also increase, but the share of product business would -- from 27%, it will become 45%.

The next question is from the line of [ Dipesh ] from [ Mania Finance ].

First of all, congratulations on excellent set of numbers. I had just a couple of questions. One was regarding the trade receivables. Our trade receivables have gone up almost about INR 1,000 crores. So wanted to know exactly what is the reason for that? And how much of this trade receivables are good? I mean has any of them turned bad or above 360 days or something?

Look, all are good. Absolutely, there is no receivable, which is bad. We have a couple of them, which are -- small ones, which are more than 360 days, particularly from BSNL and TCIL. They are both government companies. BSNL is paying that back slowly. It is taking time, but slowly, slowly they are paying back. Earlier, it was INR 150 crores. Now, I think it should have come down to some INR 60 crores, INR 70 crores. TCIL, again, has receivables from BSNL, and they will pay to us on back to back basis. So as they receive from BSNL, they will also pay us. So those are the ones which are more than 360 days. There may be some small INR 2 crores, INR 4 crores, INR 5 crores here, there, which may be more than that, but there is no bad debt. These are all good receivables. There are no bad debts at all. And if you recall what I explained in the beginning of my question-answer session, why it has gone up? Because the projects could not be -- were not able to achieve the milestones against which you will receive payments, a large portion of payments because of this pandemic situation in the last year, first 6 months are very grossly impacted and also the border situation where you could not go into the cantonments and execute project, particularly north and east quarter. That situation will start easing out from July. By September, it would completely resolve. When you see the September, the situation would have changed completely.

Okay. I actually missed out on the initial discussion, yes. And my second question is regarding the finance cost. Finance cost every quarter has been consistently increasing. Going ahead, what is...

Good question. I will tell you why. 2 reasons. One, in the current year, we have taken a loan of INR 140 crores for establishment of fiber facility in Hyderabad. You find increased cost there. Most important reason because of pandemic, 6 months in the beginning of the year and later on also, the payment cycle got really differed from our customers, as I have explained a little while ago. So as a result of that, what we had to do and which is allowed by RBI, we had to increase the duration of LCs [ payable ]. So if the supply takes 30 days, we took it to 90, 120, 180 days. Of course, we had to bear interest for that. Then nonfunded limits were converted into funded limits as allowed by RBI to the bank. That interest cost also increased. So as a result of these 2 incidents, what happened, interest cost has gone up. One is INR 140 crores of loan for the factory in Hyderabad, and then also at the same point of time, increase in the LC duration because of this pandemic situation and also the nonfunded limits for the time being converted into funded limit. This resulted in higher CapEx, higher interest costs. What we would find this year, as the working capital cycle eases out, as I explained, this cost would reduce in the current financial year.

Great. So in the next few quarters, you would like to -- we would see it constant? Or are we looking at in some debt reduction?

Quarter 3 onwards, it will start coming down.

Start coming down. Okay. And are we looking at any debt reduction also in its incoming future?

Debt reduction, we keep on paying our debt as and when it becomes due, term loan and all that. Debt reduction would also happen in terms of working capital loans, we have taken specific to the projects, which are the defense projects. As these projects start being completed, that loan will also come down.

Ladies and gentlemen, due to time constraints, that will be the last question for today. I will now hand the conference over to Abhishek Jain for closing comments.

Maybe if there are 1 or 2 more questions, I can handle. If there are 1 or 2 more questions.

Sure, sir. The next question is from the line of [ Naman Dongal ] from [ IMX Trading Company ].

I would like to know all this CapEx and the R&D funding, I would like to know the funding process of the company. Is it going to be internal funding or all the acquisitions in R&D, how they're going to be funded?

Good question. There are 2 -- 3 ways. There could be some term loan for the CapEx. A term loan would be taken to some extent. Then internal funding. Internal funding coming from 2 sources: one, internal cash accruals, which you do because of the profit and all that. Second, we have 2 not unusual, extraordinary cash flows coming in, which is income tax refund of about INR 75 crores in the current financial year. And Hyderabad plant, when we started, we had a subsidy from central government and state government. That would also be disbursed in the current financial year. That would add other about INR 78 crores. That's a INR 75 crores. So INR 150 crores is going to be available in terms of income tax refund, for which assessments are complete. And INR 75 crores [indiscernible] So INR 150 crore of that additional money would be available for doing CapEx. So if there is a INR 300 crore CapEx, you would say INR 150 crores loan and INR 150 crores -- these 2 amounts, which we would be receiving. If we take INR 150 crore loan, but we may not take INR 150 crores. We may do part from internal accrual also. So these are the 3 ways we will be doing our -- one, some term loan and which is available at a reasonable rate of interest; two, refund of income tax and subsidy of INR 150 crores and internal network.

My second question is, I've been following your results for the past 8 to 12 quarters. There has been some kind of inconsistency, be it rather due to the pandemic or there was some Kashmir temperature issue in between. Can we take this quarter's results as base moving forward? And can we expect some consistency going forward?

I think you're a little uncharitable in saying that it's inconsistency because if you see Q1 of this year and Q4 of last year, it happened with every company, it happened with every company. Because the pandemic, you couldn't handle. You can't handle. Otherwise, we have been pretty consistent. And as far as the current situation is concerned, I have no reason to believe that there will be any inconsistency in my results this quarter. But if the whole country is locked down and any such event happens, neither you can help or I can help nor any other company would be able to help. But I don't see any such thing happening. Good. I think any one more question, I can. I said 2, so 1 more.

Next question is from the line of [ Deepak ] from [ Arihant Stockbroking ].

Yes, the question has been already answered.

Good. So thanks a lot to all of you.

Thank you very much. Abhishek Jain would like to make any closing comments.

Thank you, participants for being there on the HFCL call. For any queries, we'll be happy to help you on any other further queries also. Thank you for being there on the call. And with this, I'm concluding the call.

Yes, thank you very much to all participants being on the call and taking such a lot of interest. Any query, any question you have, kindly let us know, let Abhishek know or our advisers know. We will be very glad to answer all those queries. Thank you very much. Thanks a lot.

Thank you very much. On behalf of Arihant Capital Markets Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.