Himachal Futuristic Communicaitions Ltd

7/28/2019 Himachal Futuristic Communicaitions Ltd

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Areas of operation: One of the largest telecom equipment suppliers

in India

Transmission equipment

Terminal equipment

Access equipment

Fibre optic cable

Turnkey services to various operators and largemultinationals operating in the country


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Manufacturing operations

Solan in Himachal Pradesh

Verna in Goa

Penchant for Controversy :

Outrageous bids of Rs 86,000 crore to snare 13 telecom

circles in 1995

Sukhram Telecom scandal

Association with Ketan Parekh Deal with Kerry Packer (Channel 9)

Highest Share Price : 2,552.90 ( Year 2000) &

Lowest Share Price : 5.95 (Year 2008)


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1987: Company

Incorporated tomanufacture telecommunication

equipment

1987 : All sharesallocated to

Promoters /Directors, HPSEDC

1989 : IPO

1991 : BackwardIntegration to

reducedependence onforeign suppliers

1991: Two newcompanies: HTL &

MicrowaveCommunication

Ltd.

1994 : Massiveexpansion cum

diversification plan

1994: Acquiredinvestmentcompany &Coubndge

Construction

1997 : Ventured

into cellularhandset

manufacturing

1998: Enters into IT

to offer softwaresolutions to

telecom industry

2000 -01 : Entersinto dotcom

space, 45% stakein online shopping

mall jaldi.com

Promoters acquirestake in IVRCL

Infrastructures &Projects Ltd., a

construction major

JV to set up iSteelIndia

2002: GTB recallsall short-term loans

amounting toRs.185cr from HFCL

2003: Businessrestructuringexercise to

improve efficiency

2003 : ICICI Bankconverts part of its

loan into 12.65%stake in thecompany


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HFCL

HTL HFCL Infotel

HTL HFCL InfotelConnect

Broadband

Services

HTL HFCL InfotelConnect

Broadband

Services

MonetaFinance

HTL HFCL InfotelInfotel TowerInfrastructure

Ltd

MonetaFinance

HTLMoneta

Finance


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Strengths

Core expertise in telecom equipment

manufacturing & services

Strong client base

Strong manufacturing set up

Weaknesses

Inability to service liabilities

Liquidity problems

Inadequate WC

Lack of stability

Threats

Change in government policies

Intense competition from

multinationals and small companies

Opportunities

Govt emphasis on expanding

potential & reach oftelecommunication (allocation of 3G

licenses)

Greater shift towards contract

manufacturing


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Year High Low

1990 65 201991 50 151992 110 351993 80 321994 180 52.51995 145

42

1996 70 11.751997 25 12.551998 56.05 111999 692.05 35

Year High Low

2000 2,552.90 646.052001 1,409.80 24.92002 104.25 31.552003 41 11.252004 26.1 7.22005 28.6

14.75

2006 49.65 182007 46.85 16.92008 62.6 5.952009 17.4 6.652010 17.4 9.852011 21.35 7.85


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Aggressive expansion and diversification

Higher ratio of alliances / JVs with other

companies

Stiff competition especially from MNCs &

smaller companies

Mismanagement of funds, liquidity issues,

less WC


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Inability to repay the creditors resulting indefault

Inability to service interest obligations

Continued losses from operations includingsubsidiaries leading to rework of the existingCDR Programme

Lack of definite order book size

Mismanagement of working capital


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Income from Sales & services ~ expense on COGS& other expenses

Debts outstanding for a period > 6 months ~ Rs 286crores + other debts (considered good) ~ 47 crores

Waiver of loan & interest ~ Rs 228 crore consideredin other income due to which profit of Rs 40 crore isreported

Income Rs 000s Expenditure Rs 000s

Sales & Services 885,526 COGS 611,332

Less: Excise duty 21,379 Manufacturing &

other expenses

249,367

Total 864,147 Total 860,699


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Payment of outstanding principal amount of

secured loan amounting to Rs 102.5 crore in 84monthly installments @ 10% pa from April 2012 to

March 2019

WC loan to be converted to WCTL ~ 32 crore to be

repaid in 84 monthly installments from April 2012 to

March 2019

One time settlement of Funded Interest Term Loans

(FITL) at 25 % of the total outstanding, rest has

been waived off, i.e. payment of Rs 16.18 crore by

30th

September 2011


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ZCPBs ~ Rs 195 crores + part of premium accrued

~ 31 crores to be converted into equity

Secured WC loan ~ 17 crores to be converted intoequity

Interest accrued on TL of Rs 79.4 crores isconverted into FITL to be repaid in 3 equalinstallments from 2016 to 2018

There would be no change in the control of thecompany. The promoters would continue to holdmajority stake


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Sources of Funds(Rs crores) Mar'11 (6 months)

Post conversion ofdebt into equity

Total Share Capital 179.74 204.49

Equity Share Capital 99.24 123.99

Preference Share Capital 80.50 80.50

Reserves 222.00 341.54Revaluation Reserves 0.00 0.00

Networth 401.74 546.02

Secured Loans 278.10 278.10

Unsecured Loans 353.88 110.36

Total Debt 631.98 388.46

Total Liabilities 1,033.72 934.48


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Conversion into WCTLSecured &

unsecured WC loans 240,545Existing WCTL 76,406Total 316,951Repayment

84 monthly

installments

from April 2012

to March 2019Yearly outgo 45,279

Outstanding Principal amountof secured loanSecured loan 1,024,584Repayment

84 monthly

installments

from April 2012to March 2019

Interest rate 10%Yearly outgo 210,455

1 2

3Existing FITLAmount 647,34675% waived 485,510Settlement on OTS basis @

25% payable on 30th Sept2011 161,837

4New FITLInterest accruedon TL 506,500Repayment

3 equal installments

from 2016 to 2018Interest accruedon WC loans 287,200Repayment 3 equal installments

from 2016 to 2018Immediate l iabi l i t ies in current f inancial year due to CDR ~ 42 crore


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One WC lender having total outstanding ofRs 16 crore has not agreed to CDR

programme

Fresh proposal is under discussion with

lender


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Hive off HTL :

Losses have continued for FY 2010-11 with the

accumulated loss at Rs 491 crore

Subsidiarys current liabilities exceed its current assetsby Rs 238 crore

Subsidiary has overdrawn borrowings from banks & also

has overdue loans from Government of India

Subsidiary is faced with lack of orders Inability to raise working capital required to diversify into

new telecom products

Subsidiary has already been declared a sick company

by the BIFR in 2009


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Appoint a professional CEO instead of the

promoters holding the day to day reins


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