Telecom boom spurs HBL's growth

Hyderabad-based HBL Power Systems Limited (HBL), engaged in the manufacture of batteries and electronic products to telecom, defence, aviation, railways and industrial application, is expecting to achieve 100 per cent growth during the current financial year, thanks to the booming telecom sector in the country.

"Our sales estimate for 2007-08 is around Rs 1,000 crore as against Rs 511 crore last year. The primary reason for this is the growth in the telecom sector, which we expect to continue at least for another year," HBL chairman and managing director, AJ Prasad, told Business Standard adding that up to 70 per cent of the company's total turnover this year would be from the telecom business.

Last year, HBL's overall sales increased by 39 per cent compared with the 2005-06 turnover of Rs 367 crore. During the first half of the current financial year, HBL is set to post a turnover of about Rs 400 crore, Prasad said. In the quarter ended June 2007, HBL's turnover stood at Rs 140 crore.

While its competitors like Amara Raja Batteries concentrated on expanding their automobile battery business, HBL has established a 70-million amperes per month batteries manufacturing capacity at Vizianagaram in Andhra Pradesh.

The Rs 150-crore unit, totally dedicated for the telecom business, will be fully operational by December, this year. The first phase of the unit was inaugurated in April 2007.

"Today, we are the people with the capacity to meet the growing demand," Prasad said adding that the other competitive development on the batteries front had been the disappearance of the threat from Chinese suppliers.

This was primarily due to withdrawal of export subsidies by the Chinese government, and partly due to economies of scale achieved at HBL.

Besides the Vizianagaram unit, HBL has established a manufacturing unit in Haridwar and is setting up design and integration units at Maneshwar near Gurgaon and Washi near Mumbai.

To part finance its expansion programme, the company has tied up with a private equity firm to raise Rs 100 crore. The details of the agreement in this regard are being finalised.

For railways, HBL has developed electronic signalling products, which are currently undergoing field trials. The track circuit and interlocking systems, developed indigenously, would be able to track the location and movement (speed) of a train.

"The trials are expected to be completed by December, this year and we are hopeful of selling these products from April 2008," Prasad said adding that the market for such products in India was estimated at Rs 1,000 crore.

According to Prasad, the company had submitted two bids early this year for defence electronics contracts, totalling Rs 500 crore. However, the timelines in defence are such that the final result will be known only by the end of 2008.

Meanwhile, a secured communications project (a gateway encryptor) developed by the company has passed all tests required and is to be used widely by several government agencies, beginning early 2008.