Centre asks ITI to become profitable in 2011-12

The Central government has given a target to the state-run telecom equipment manufacturer Indian Telecom Industries (ITI Ltd.) to become a profit making entity in the fiscal 2011-12. An MoU regarding this has been signed between the ITI and Department of Telecom (DoT), as per which ITI has outlined various initiatives being taken by the company to help it make a turn-around.

As per the MoU, the Government has set a target before ITI to achieve a turnover of Rs 8,000 crore in the fiscal 2010-11 and bring down the losses further. The government has also given a rider to ITI to regain its number one position in execution of various turnkey projects.

In the fiscal ended March 31, 2010, ITI has achieved a record turnover of Rs 4,732.43 crore as per the provisional results with a year-on-year growth of close to three times, the highest ever turnover that the Bangalore-based company had registered. This has taken the company very close to achieving the revenue target of Rs 5,000 crore, which was earlier set by the DoT of the fiscal.

Even though it will take some time for the company to come out with the audited results, ITI said that the losses in FY2010 were expected to have come down to about Rs 250 crore. In the fiscal 2008-09, the company’s losses stood at around Rs 646 crore.

“Fiscal 2009-10 has proved to be a great year for ITI as we have not only been able to achieve a record turnover which is more than double of the previous high of Rs 2,317.63 crore recorded in 2001-02, we have considerably brought down the losses. We are very much on our target of making a turn-around in 2011-12 as has been asked by the government, by taking various initiatives,” Ravi Agarwal, Director (Production), ITI Ltd told Business Standard.

He said the company was working to augment the capacity utilisation of all its six plants from the present level of about 40 per cent to about 80-85 per cent during the next two years.

Besides, ITI was also looking at upgrading its technologies to be able to work for various defence related projects, which could possibly be a revenue drivers for the company in coming days. Agarwal, who is now working as the acting chairman and managing director (CMD) of ITI in absence of S K Chatterjee who superannuated on March 31 this year.

The government, meanwhile, has initiated the process to get a new CMD for the company, who is expected to join in the ongoing month.

Meanwhile, the Centre has decided to extend the prevailing reservation policy of BSNL and MTNL with regard to payment of advance for the equipment they are planning to buy from ITI, by three more years. As a part of the policy which was earlier valid till September 2010, BSNL and MTNL used to pay about 70 per cent of the total order they are placing before ITI for telecom equipment.

Besides, the Centre has also approved a working capital of Rs 180 crore to ITI for the fiscal 2010-11. This is on top of announcement made by the government last year to write-off Rs 2,820 crore of losses that ITI had accumulated during the last two-three years.

In 2009-10, ITI established the manufacturing facility for gigabit passive optical network (GPoN) at its Rae Bareli Plant in Uttar Pradesh other than supplying equipment to the tune of Rs 270 crore to BSNL in the current year.

ITI has also achieved the distinction of being the first company in the country to get technical approval certificate (TAC) for GPoN product.