Tuesday, June 9, 2015

Despite getting Rs 150-cr as arrears this PSU's future is bleak

THE ailing public sector undertaking Indian Telephone Industries (ITI) might have received Rs 150 crore last week as part of a revival package but the future of the PSU is still uncertain. Employees of the ailing PSU were not receving salaries since January this year. With the Centre disbursing the amount, the...
company has finally paid salaries to its 6,056 employees.
“As part of the Rs 4,156.79-crore revival package prepared by BIFR last year, we received Rs 150 crore last week for salaries. Accordingly, we have paid salaries from January to April, while May salary is still pending,” KL Dhingra, CMD, ITI, said.
Employee utilisation at some units remains under 20 percent even as the company battles to get new projects and generate enough revenue, reported a financial daily.
But it is still unclear if ITI would be able to generate revenue to the extent of paying its staff for the next few months without sufficient projects in hand. The chairman told the daily that he was hopeful that ITI would recover in two years.
The government has since 2014 released around Rs 300 crore as soft loan, Rs 190 crore for infrastructure upgrade and Rs 165 for payment of salary arrears, as per the 1997 wage revision.
This was apart from the Rs 150 crore.
ITI started incurring losses from 2002-03 onwards due to falling prices of telecom equipment, rapid changes in technology, the high cost of production and labour costs and, importantly, competition from private players abroad. While the telecom sector saw rapid growth, ITI saw a decline.
The company has been reducing its losses in the recent past. It reported a Rs 297-crore net loss for 2014-15, the lowest in the last 13 years. Despite being referred to BIFR in 2004, the revival package was approved only in 2014.
“Around 50% of the loss is bank interest charge against borrowings. We have written to the government and the banks to reduce the interest rate by about 5%. This, clubbed with financial assistance in the form of a ‘revival package’, will alter the outlook of the company,” Dhingra was quoted as telling the daily.
Salary payments have been irregular since 2010 and employees have faced continued hardship while remaining under-utilised.
According to S Gopu, director (human resource) at ITI, around 70% of the total employee strength spread across three units in Uttar Pradesh is severly under-utlised. The Raebareli unit, which has 2,038 employees, has a utilisation rate of only 20%; Naini and Mankapur enjoy less than 10% utilisation. Only the Palakkad and Bengaluru units, which have 481 and 548 employees, respectively, are utilised to an extent of 70-80%, he said.
“The average age of an employee at ITI is 54 today. We have recommended a reduction of 1,200-1,500 employees through VRS and suggested the induction of fresh manpower in the company, who are skilled to handle newer technologies,” Dhingra said.
ITI was was established in 1948 as India's first PSU. Ever since, as a pioneering venture in the field of telecommunications, it has contributed to 50% of the present national telecom network.
With state-of-the-art manufacturing facilities spread across six locations and a countrywide network of marketing/service outlets, the company offers a complete range of telecom products and total solutions covering the whole spectrum of Switching, Transmission, Access and Subscriber Premises equipment.
However, in due course the PSU lost much of its sheen thanks to rise of the private players and the growing popularity of smartphones. It has six manufacturing units in the country.

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