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Sick telecom major ITI struggles to keep afloat
Monday, 10 May 2004, 19:30 IST
BANGALORE: The sick public sector telecom behemoth ITI Ltd has charted a new course to keep itself afloat but its fortunes are tied to a 
3.5 billion ($78 million) bailout package from the central government.
Once a flagship for the Indian telecom sector, the company is on the verge of being handed over to the Board for Industrial and Financial Reconstruction (BIFR), an autonomous body that oversees sick industrial units.
"We are eagerly waiting for the grant in time so that we can tide over the present crisis and prevent ITI from going to the BIFR for being officially declared sick," ITI chairman Y.K. Pandey said.
"We need the grant before the company's annual general meeting in August or September," he told IANS in an interview here.
The company has already declared itself potentially sick, following successive losses during the past three ears resulting in its net worth being eroded by as much as 50 percent, Pandey said.
The company submitted a revised bailout proposal to the finance ministry in December but a subsequent announcement of national elections, which resulted in a vote-on-account instead of a regular budget, put paid to ITI's efforts.
A series of delays in securing orders and executing them also led the Bangalore-based company to post a whopping net loss of 6.96 billion ($155 million) in 2003-04 on a turnover of 12.78 billion ($284 million).
The net worth of the company, in which the government holds 77 percent, had been completely eroded by 2002-03.
"The main reason for our net loss dipping to an all-time low is the heavy burden of 1.8 billion ($40 million) incurred towards the voluntary retirement scheme," Pandey said.
Some 3,775 employees at the company's seven production facilities in Karnataka, Uttar Pradesh and Kerala opted for the scheme, he said. The outgo was the largest in ITI's history, reducing the staff to 15,300 from 19,074 employees.
ITI is hoping to cut down staff strength further to about 9,000 over the next couple of years.
In a bid to rejuvenate itself, Pandey said, ITI has not only closed down one of its two factories in Bangalore but rationalised its facilities at Rae Bareli, Mankapur and Naini in Uttar Pradesh, Bangalore in Karnataka and Palakkad in Kerala.
ITI has also entered a technology transfer tie-up with France's Alcatel to make mobile phone infrastructure equipment. It is setting up one million lines for Bharat Sanchar Nigam Ltd (BSNL) in the west zone for 3.5 billion.
"We have bagged another order from BSNL to execute 3.5 million GSM lines this fiscal at a cost of 12 billion in Maharashtra, Madhya Pradesh, Chattisgarh and Gujarat."
The GSM equipment will be manufactured at the Mankapur facility, making ITI the first Indian firm to acquire GSM know-how, Pandey said.
The company has secured a similar order under a tie-up with ZTE of China to make CDMA equipment and handsets. This 150,000-line order worth 500 million ($11 million) will also be executed for BSNL.
With 13 billion ($288 million) firm orders on hand till date and expectations for another 12 billion ($266 million) during the rest of this fiscal, the company is projecting a turnover of 25 billion ($555 million) for 2003-04.
Source: IANS
3.5 billion ($78 million) bailout package from the central government.
Once a flagship for the Indian telecom sector, the company is on the verge of being handed over to the Board for Industrial and Financial Reconstruction (BIFR), an autonomous body that oversees sick industrial units.
"We are eagerly waiting for the grant in time so that we can tide over the present crisis and prevent ITI from going to the BIFR for being officially declared sick," ITI chairman Y.K. Pandey said.
"We need the grant before the company's annual general meeting in August or September," he told IANS in an interview here.
The company has already declared itself potentially sick, following successive losses during the past three ears resulting in its net worth being eroded by as much as 50 percent, Pandey said.
The company submitted a revised bailout proposal to the finance ministry in December but a subsequent announcement of national elections, which resulted in a vote-on-account instead of a regular budget, put paid to ITI's efforts.
A series of delays in securing orders and executing them also led the Bangalore-based company to post a whopping net loss of 6.96 billion ($155 million) in 2003-04 on a turnover of 12.78 billion ($284 million).
The net worth of the company, in which the government holds 77 percent, had been completely eroded by 2002-03.
"The main reason for our net loss dipping to an all-time low is the heavy burden of 1.8 billion ($40 million) incurred towards the voluntary retirement scheme," Pandey said.
Some 3,775 employees at the company's seven production facilities in Karnataka, Uttar Pradesh and Kerala opted for the scheme, he said. The outgo was the largest in ITI's history, reducing the staff to 15,300 from 19,074 employees.
ITI is hoping to cut down staff strength further to about 9,000 over the next couple of years.
In a bid to rejuvenate itself, Pandey said, ITI has not only closed down one of its two factories in Bangalore but rationalised its facilities at Rae Bareli, Mankapur and Naini in Uttar Pradesh, Bangalore in Karnataka and Palakkad in Kerala.
ITI has also entered a technology transfer tie-up with France's Alcatel to make mobile phone infrastructure equipment. It is setting up one million lines for Bharat Sanchar Nigam Ltd (BSNL) in the west zone for 3.5 billion.
"We have bagged another order from BSNL to execute 3.5 million GSM lines this fiscal at a cost of 12 billion in Maharashtra, Madhya Pradesh, Chattisgarh and Gujarat."
The GSM equipment will be manufactured at the Mankapur facility, making ITI the first Indian firm to acquire GSM know-how, Pandey said.
The company has secured a similar order under a tie-up with ZTE of China to make CDMA equipment and handsets. This 150,000-line order worth 500 million ($11 million) will also be executed for BSNL.
With 13 billion ($288 million) firm orders on hand till date and expectations for another 12 billion ($266 million) during the rest of this fiscal, the company is projecting a turnover of 25 billion ($555 million) for 2003-04.
Source: IANS