EPC Deals Drive Vindhya Tele Profits

IT WAS IN 2014 that Rewa, Madhya Pradesh-based Vindhya Telelinks, which had all along been a telecom equipment manufacturing company making jelly-filled cables, optic fibre cables and specialty cables bagged a ₹1,036 crore order from Bharat Sanchar Nigam Ltd. (BSNL) for procurement, supply, trenching, laying, installation and testing of an optical fibre network on a turnkey basis for India’s defence services. That opened an entirely new dimension for the company.

Today, EPC (engineering, procurement and construction) is driving business. “Our customers, the telcos, were not happy with us being just suppliers. They wanted turnkey solutions. That’s when we set up the project division to support the manufacturing division. We entered new areas to meet rising demand for turnkey projects,” says Sandeep Chawla, president & CEO, Vindhya Telelinks. “We started diversifying. We started with telecom and got into power distribution, sewerage, system integration, oil & water pipelines and irrigation. It has been good for us strategically,” says Chawla.

Thanks to these projects, sales turnover more than doubled to ₹2,900.11 crore in FY23 from v1,323.95 crore in FY22. Total income also more than doubled from ₹1,499 crore to ₹3,162 crore. EPC division led the growth with ₹2,200 crore. Cables contributed ₹600 crore. The growth continued in first half of FY24 with cables division accounting for ₹300 crore and EPC reporting sales of ₹1,400 crore. Vindhya Telelinks has jumped 208 ranks in Fortune India The Next 500 rankings to 40.

In FY23, topline was driven by projects under government’s Har Ghar Jal programme for supplying water to all households. Under this, Vindhya has got orders for end-to-end water projects in Madhya Pradesh and Uttar Pradesh. The UP deal alone is worth ₹6,000 crore. It has also bagged irrigation orders from Chhattisgarh and Madhya Pradesh. Chawla says the group sees this as a growth opportunity for next 5-10 years. The company has also proposed providing fibre connectivity along water pipelines but is yet to get the go-ahead. “It will be a great way to provide fibre to rural homes,” says Chawla. He says growth over last two years has been driven by water and irrigation projects.

Meanwhile, Vindhya’s core telecom cables business was slow last quarter due to tepid demand from U.S. and China, but it is expecting orders to pick up in next couple of quarters. Within India, demand is growing for fibre connectivity under Bharat Net project that aims to connect all 2.5 lakh gram panchayats with optical fibre cable; 2.1 lakh have already been connected. Bharat Net entails laying of 12 lakh kms of fibre over next three years. That will create massive demand for optic fibre cables. In addition, the three largest telcos — Bharti, Reliance and Vodafone — are also laying fibre to meet rising demand for 5G and proposed 6G services. Therefore, cable manufacturing will remain a key revenue generator.

Vindhya is considering entering 5G manufacturing by joining hands with a company that has the relevant technology. The partner will be responsible for R&D. “We have signed an NDA (non-disclosure agreement). Manufacturing will be done like a Make in India project,” says Chawla. It is also expecting orders from Indian Railways that is looking at 4G/5G technology for its anti-collision device Kavach, the electronic system that activates braking system to prevent collision between locomotives.

Vindhya is also an IP-1 infrastructure provider that can build and maintain assets such as dark fibre (spare piece of fibre in the ground), right of way, duct space and towers for telecom services. It is focusing on North, Central, East and North-East India. The areas where it has provided fibre connectivity include Siachen, Kargil, Char Dham and Amarnath. Chawla says all telcos ride on their network.

For a company that has been connecting India in more ways than one, the big challenge is: What next? Chawla says they want to capitalise on opportunities in providing connectivity. That’s a good sign for millions looking for better opportunities, no matter where they are.