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Mint
23-05-2025
- Business
- Mint
How Samsung and 20 others missed out on an ambitious incentives scheme
Jatin Grover The telecom products manufacturing scheme was expected to generate incentives claims of more than ₹ 12,000 crore. But that's not how it turned out. Top manufacturers such Samsung, HFCL Ltd, Netweb Technologies, Kaynes International, Optiemus unit GDN Enterprises and state-owned ITI Ltd have not claimed any incentives yet. Gift this article An ambitious scheme to boost local telecom manufacturing is still far from its target, four years after the government set aside ₹ 12,000 crore to get companies to build everything from network gear to set-top boxes. While beneficiaries of the scheme have sold goods worth over ₹ 80,000 crore during the period, incentive claims are still a fraction of the originalallocation. An ambitious scheme to boost local telecom manufacturing is still far from its target, four years after the government set aside ₹ 12,000 crore to get companies to build everything from network gear to set-top boxes. While beneficiaries of the scheme have sold goods worth over ₹ 80,000 crore during the period, incentive claims are still a fraction of the originalallocation. Top manufacturers such Samsung, HFCL Ltd, Netweb Technologies, Kaynes International, Optiemus unit GDN Enterprises and state-owned ITI Ltd have not claimed any incentives yet, as they either failed to start manufacturing or were unable to meet targets. The result: only a tenth of the incentives have been claimed by manufacturers so far. A Right To Information (RTI) request found that the scheme disbursed ₹ 1,162.04 crore by the end of FY25, against the ₹ 12,195 crore approved for five years. While 42 companies were shortlisted, only half claimed incentives. The scheme was introduced in February 2021 to incentivize the local manufacture of equipment such as network switches, transmission gear and set-top boxes. According to industry executives, the reasons include weak order book and demand, competition within the segment and the inability to meet set targets of investments and sales. 'Missed opportunity' 'The reason why many players missed the opportunity is owing to the market structure compared to that of smartphone PLI," a consultant who works with companies said. Telecom PLI serves the B2B market where the companies already have fixed clients, while the more successful smartphone PLI serves the B2C market, the consultant said on the condition of anonymity. The smartphone PLI scheme has been among the government's most successful ones. On 17 April, electronics and IT minister Ashwini Vaishnaw said in a post on X that in FY25, smartphone exports reached a record ₹ 2 trillion. Exports grew 55% in FY25. The telecom PLI scheme offers incentives of 4-7% of the incremental sales over the years. In the first, second and third years, MSMEs get a 1% higher incentive. 'Samsung has not started production and is meeting the equipment supplies to Indian telcos from imports," an industry executive aware of the matter said. The company did not respond to a query. HFCL's plan In February, domestic gear maker HFCL had said it expects to start claiming PLI incentives from FY26. PLI amount, we have still not been able to claim because…the amount of revenue we thought would come from telecom equipment, which will make PLI available to us would not be fulfilled during the current financial year. So, we expect to start claiming PLI from the next financial year," Mahendra Nahata, promoter and managing director of HFCL told analysts during an earnings call in February. 'If at all we are able to claim, this (PLI incentive) should be around ₹ 40-50 crore," Nahata added. On 1 November 2022, HFCL had said it would invest around ₹ 425 crore towards the development and manufacture of various eligible products under the PLI scheme. The company had said it was granted approval to avail of incentives up to ₹ 652.79 crore as part of the government's production-linked incentive (PLI) scheme from FY23 to FY27. Companies approved under the scheme were allowed to choose a period of five consecutive years either from FY22 to FY26, or FY23 to FY27, to achieve the net incremental sales. Queries sent to the Union communications ministry which administers the scheme, as well as HFCL, Kaynes, Samsung, Optiemus, Netweb Technologies and ITI remained unanswered. 'Successful' A government official, however, claimed the scheme was successful. 'The targets are set by the firms themselves. If they have not claimed any incentives, they may not have met the sales or investment target. Despite that, they have contributed to the overall sales and exports of telecom equipment," the official said on the condition of anonymity, adding the government steadily disburses the amounts. The ministry's PLI dashboard showed that the beneficiaries under the telecom scheme have invested ₹ 4,139 crore and generated sales of ₹ 80,927 crore as of March end. The companies have generated a cumulative employment of 26,345. Tata Group company Tejas Networks, which designs and manufactures telecom equipment, won incentives of ₹ 345.27 crore for FY23, FY24, and FY25 so far, the highest among all the companies, the RTI document showed. The company has gained from BSNL's 4G rollout order, and also exports its products to 75 countries. Jabil Circuit India, which contract-manufactures for Ericsson and Apple, was the second in the list, claiming incentives of ₹ 236 crore, the RTI document showed. Right strategies Contract manufacturers such as Flextronics Technologies India, Foxconn's Rising Stars Hi-Tech and Syrma SGS, got incentives of ₹ 90.31 crore, ₹ 80.33 crore, and ₹ 53.3 crore, respectively. VVDN Technologies and Dixon Electro Appliances received incentives of ₹ 48 crore and ₹ 34.8 crore so far, according to the document. Also read: After a new lifeline, Vodafone Idea searches for a new CEO 'The success under the PLI scheme also depended on the right sales and investment strategies, which most medium-size companies have been able to meet. The government gave the companies a free hand to decide on the targets which, maybe, were overestimated by some companies," said Paritosh Prajapati, chief executive officer and founder of Sweden-based GX Group. The company is manufacturing routers, switches and other telecom equipment under the scheme in India and has received incentives of ₹ 20.9 crore. Prajapati said the focus will now shift to exports as companies have set up domestic bases. Exports By the end of FY25, total exports under the telecom PLI scheme were at ₹ 14,838 crore. Nokia Solutions and Networks India exported equipment worth ₹ 4,487 crore, followed by Jabil at ₹ 4,356 crore. Nokia, so far, has been able to get incentives of only ₹ 47 crore under the scheme. The company supplies 4G/5G equipment to telecom operators in the country and globally. US-based Commscope, which provides network infrastructure solutions, exported telecom equipment worth ₹ 2,882 crore under the scheme. Domestic players such as VVDN Technologies exported products worth ₹ 1,293 crore, followed by Syrma SGS at ₹ 583 crore and Tejas at ₹ 420 crore. Sanmina-Sci India, a subsidiary of US-based Sanmina Corp., exported ₹ 384 crore worth of telecom equipment. Notably, Jio is currently manufacturing its devices in India under Reliance Industries' joint venture with Sanmina. The Department of Telecommunications (DoT) had notified the PLI scheme for telecom and networking products in February 2021 with an outlay of ₹ 12,195 crore. The incentives for eligible companies were in the range of 4-7% based on incremental sales of telecom and networking products manufactured. For MSMEs, a 1% higher incentive was there in year 1, year 2 and year 3 of the scheme. In June 2022, the government amended the scheme to facilitate design-led manufacturing with an additional incentive rate of 1% over and above the existing incentive rates. A sum of ₹ 4,000 crore from the ₹ 12,195 crore was set aside for the same. The government also extended the tenure of the scheme from five years (FY22 to FY26) to 6 years (FY22 to FY27). Companies approved under the scheme were allowed to choose a period of five consecutive years either from FY22 to FY26, or FY23 to FY27, to achieve the net incremental sales for the incentive claim. Investments, however, are allowed till FY25 or FY26 depending on the base year chosen by the companies. The extension was given as many companies failed to achieve their production targets due to covid-related supply chain disruptions when the scheme came into effect. Topics You May Be Interested In
Time of India
05-05-2025
- Business
- Time of India
Netweb Technologies shares zoom over 18% after Q4 net profit jumps 45% YoY on AI-led growth
Netweb Technologies shares jumped over 18% to Rs 1,681.4 in Monday's intraday trade on the BSE after the company reported a 45% year-on-year rise in net profit to Rs 43 crore for the quarter ended March 31, 2025. The growth was mainly driven by strong performance in its AI systems segment and robust demand from government and enterprise clients. Operating income for the fourth quarter rose 55.9% to Rs 415 crore, while operating EBITDA increased 47.9% to Rs 59.77 crore. For the full year, revenue surged 57.4% to a record Rs 1,158 crore. Net profit for the full year rose 50.8% to Rs 114 crore, while diluted earnings per share increased nearly 46% to Rs 20.24. Also Read: 8 Nifty Microcap stocks that can jump 100-230% in the next 12 months The AI systems segment posted 112% year-on-year growth in FY25, contributing 14.8% to total revenue, highlighting rising demand for artificial intelligence applications. The company launched during the year—a GPU-based infrastructure platform aimed at streamlining AI deployment and GPU resource management. Chairman and Managing Director Sanjay Lodha said the company achieved its 'highest-ever quarterly and full-year Income and PAT,' attributing the growth to a strong order pipeline and increased adoption of AI systems. The board has recommended a final dividend of Rs 2.5 per share, translating to a dividend payout ratio of 12.4%, subject to shareholder approval. Also Read: 5 timeless Warren Buffett quotes every investor should know The company also said it successfully implemented SAP S/4 HANA for enhanced operational oversight and received its first claim of Rs 5.94 crore under the Indian government's PLI Scheme 2.0 for IT hardware. Netweb ended FY25 with a net debt position of negative Rs 162 crore and an order book of Rs 325 crore. Netweb Technologies shares price target As per Trendlyne data, the average target price of the stock is Rs 2,560, which shows an upside of 57% from the current market prices. The consensus recommendation from 3 analysts for the stock is a 'Strong Buy'. Netweb Technologies shares price performance Netweb Technologies shares are down 44% year-to-date and 39% over the past six months. The company's market capitalisation is Rs 9,220 crore. ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Mint
05-05-2025
- Business
- Mint
Small-cap stock jumps over 18% after Q4 results 2025, 125% dividend. Do you own?
Netweb Technologies share price jumped over 18% in early trade on Monday after the company announced its Q4 results 2025 and declared a dividend. The small-cap stock, Netweb Technologies shares spiked as much as 18.37% to ₹ 1,681.45 apiece on the BSE. The high-end computing solutions provider Netweb Technologies India reported a net profit of ₹ 43 crore for the fourth quarter of FY25, registering a growth of 45% from ₹ 29.65 crore in the year-ago period, driven by growth in its AI systems segment. The company's revenue from operations in Q4FY25 jumped 55.9% to ₹ 414.6 crore from ₹ 265.89 crore, year-on-year (YoY). For full-year FY25, the total income surged 57.4% YoY to a record ₹ 1,158.4 crore. Diluted earnings per share rose 45.8 % to ₹ 20.24. At the operational level, EBITDA during the March 2025 quarter grew 47.9% to ₹ 59.77 crore from ₹ 40.42 crore, while EBITDA margin contracted by 79 basis points (bps) to 14.4% from 15.2%, YoY. Netweb Technologies said its income from AI Systems grew by 112% YoY during FY25, and its contribution to the company's operating revenue increased to 14.8% during the same period. The order book as on 31 March 2025 stood at ₹ 325.2 crore. 'We received our first claim under the PLI Scheme 2.0 for IT hardware, amounting to ₹ 59.4 Mn for the period from July 1, 2023, to March 31, 2024. This achievement underscores the success of the PLI scheme in boosting domestic production and creating employment opportunities,' said Sanjay Lodha, Chairman and Managing Director, Netweb Technologies. The company launched in FY25, a unified solution to set up a GPU-based AI infrastructure on the go that optimizes GPU resource management and simplifies deployment, he added. The board of directors of Netweb Technologies India recommended a dividend of ₹ 2.5 per share, aggregating to 125% of face value of ₹ 2 each. The dividend is subject to the approval of shareholders at the ensuing Annual General meeting, (AGM) which will be paid to the shareholders within 30 days of declaration of the same at the ensuing AGM, the company said. Netweb Technologies share price gained 10% in one month, but the small-cap stock has declined 43% on a year-to-date (YTD) basis. Netweb Technologies shares have fallen 38% in six months and the small-cap stock is down 11% in one year. At 10:20 AM, Netweb Technologies share price was trading 16.53% higher at ₹ 1,655.30 apiece on the BSE. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions. First Published: 5 May 2025, 10:24 AM IST
