HFCL's European expansion: New OFC plant in Poland to meet rising demand

HFCL Limited, a prominent technology enterprise specializing in integrated next-gen communications products, has announced today, a strategic move into Europe with the establishment of a cutting-edge optical fiber cable (OFC) manufacturing plant in Poland. This expansion aims to cater to the rising demand for OFC in key European markets such as the UK, Germany, Belgium, France, and Poland.

With goals to increase the share of exports in its OFC vertical revenue from 30 per cent to 70 per cent within the next 4-5 years, HFCL is eyeing Europe as a pivotal focus for its growth initiatives. The European OFC market is projected to experience a CAGR of approximately 4.5 per cent over the next 5 years, with expected demand reaching 90 million fiber kilometers per annum by 2028.

The move towards fiber-to-the-home (FTTH) connectivity, with an estimated 308 million homes in the EU region set to have FTTH connectivity by 2028, is driving the rapid expansion of FTTH networks and subsequently increasing the demand for OFC. Factors such as bandwidth limitations of traditional cable networks and regulatory mandates favoring fiber deployment further underscore the need for full fiber solutions.

In response to recent geopolitical developments and potential regulatory shifts, HFCL's decision to establish a manufacturing presence in Europe aims to mitigate risks and ensure enhanced access to target markets. Poland, chosen as the location for the manufacturing plant, offers market access to other European nations, incentive programs, cost competitiveness, strong connectivity, and a skilled workforce at relatively lower labor costs.

The manufacturing plant in Poland, initially starting with a capacity of 3.25 million fkm scalable up to 7 million fkm, with initial capital outlay up to Rs 144 Crores, fulfilling the increasing demand for OFC in the region. This strategic move is expected to enhance HFCL's agility, reduce transit times, and increase order fulfillment capacity. The establishment of the manufacturing facility will be facilitated through the incorporation of a new subsidiary under HFCL B.V., the company's wholly-owned subsidiary in the Netherlands.

Mr. Mahendra Nahata, Managing Director, HFCL, emphasized, “Our decision to set up a manufacturing unit in Poland underscores our commitment to meeting the evolving needs of our customers. With Europe expected to remain a key market for optical fiber cable led communication, our foray into Poland not only ensures unfettered access to this growing European market but also helps improve the agility and responsiveness in catering to increasing optical fiber cable demands of our customers. With this strategic expansion, we are poised to align with Europe's vision, which anticipates gigabit connectivity as a cornerstone of its future. Our commitment to Europe's digital future is based on the unique approach of superior quality, customised solutions and innovative solutions in fastest turnaround time.”

HFCL's expansion into Poland not only signifies its commitment to global leadership in telecommunication solutions but also aims to create employment opportunities and drive industrial advancement in the region. With three cutting-edge manufacturing plants in India, including its subsidiary HTL Limited, HFCL continues to uphold its reputation for delivering high-quality OFC to customers worldwide while expanding its international market reach.

HFCL Ltd's shares surged 4% on Wednesday, marking its third consecutive session of gains, following the company's announcement of setting up an OFC manufacturing plant in Poland as part of its European expansion.