The Telegraph
Since 1st March, 1999
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Shourie sets ITI revival plan afoot

New Delhi, April 20: Communications minister Arun Shourie has directed officials to prepare a contingency plan to revive the sick ITI Ltd. This will save the company from being referred to the Board for Industrial and Financial Reconstruction (BIFR).

A decision to this effect was taken recently at a meeting of Telecom Commission members headed by its chairman Vinod Vaish.

ITI manufactures almost the entire range of telecom equipment. It has expertise in defence telecom and provides static network to the army. ITI’s clientele list include the railways, industrial organisations, state electricity boards.

A senior official in the communications ministry said quick action vis-a-vis ITI was required following the 46th report of the Parliamentary standing committee on information technology and communications that was presented in the Lok Sabha.

The committee was concerned over the fact that ITI, which has been making profits since 1997-98, is expected to suffer a loss of about Rs 196 crore for 2002-03.

Fast changes in telecom technology, surplus manpower of about 11,000 (even after giving voluntary retirement scheme option to 6,365 employees) and a small equity base of Rs 88 crore have been sighted as plausible causes for the company’s losses. These have led to ITI’s dependence on market borrowing at high interest rates with little value addition.

The committee, headed by Somnath Chatterjee of the CPI (M), has said, “As it will necessitate its reference to BIFR in 2003-04, the company has submitted a revival plan and it must be examined.”

Sources in the communications ministry said: “We have also drafted a revival plan. Both the revival plans will be examined and a draft will be prepared for Cabinet approval. It is likely to be in place by early next month. The company needs a financial assistance of Rs 772 crore.”

In its revival plan, ITI has proposed organisational re-structuring, product rationalisation leading to reallocation and reduction of manpower and other associated costs, closure of unviable units, identification of surplus assets and sale thereof and fresh equity infusion.

“The department of telecommunications, being the administrative department, has to act effectively as ITI’s presence is necessary to get benchmark price for telecom products in the country, ” states the committee in its report.

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