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ITI Revival - Corpus of funds proposed

April 15, 2005
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Bangalore-based ITI Limited can expect a new lease of life. The UPA government has decided to revive the ailing company by offering VRS to its employees as against the previous government's view of closing it down due to accumulated losses. The prime minister recently announced that a corpus of Rs 10.32 billion would be set up towards its revival.

Further, ITI has entered into a technical tie-up with Alcatel of France to manufacture 3 million telephone lines. Alcatel will supply 1 million lines to ITI while the latter will manufacture 2 million lines.

Established in 1948 as Indian Telephone Industries, a departmental undertaking under the Ministry of Posts and Telegraph, it over the years emerged as a leading manufacturing company, delivering an entire range of telecom equipment, including telephones, large digital switches, transmission systems, microwave, fibre optic systems and satellite communication systems. It developed a strong R&D set-up and state-of-the-art infrastructure including a 1 micron VLSI facility, and six ISO 9000-accredited plants. It soon became a major supplier of equipment to DoT, the defence, railway and oil sectors, and major corporations. It also acquired overseas customers in several African and South Asian countries.

However, being a PSU, ITI had to contend with a huge workforce, which nearly rendered it unviable, especially given the competitive telecom environment. In the last few years, though, ITI has been trying to tide over the rough patch through consolidation of operations by becoming more cost effective in its products and services and positioning itself as a turnkey solution provider. But despite these efforts, by 2003 sales had dipped, from Rs 23 billion in 2002 to Rs 17.9 billion. Losses amounted to Rs 3.74 billion. It was clear that ITI would either require a fresh infusion of funds to make it viable or close shop bit by bit.

Under these circumstances, the government's initiative to set up a corpus should certainly help revive ITI's fortunes.

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