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ITI Limited: New revival strategies

June 05, 2017
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By Kuhu Singh

While intense competition took a toll on industry revenues and profitability during 2016-17, ITI Limited bucked the trend and reported a phenomenal increase in its revenues. The company’s consolidated revenues increased by 30 per cent, from about Rs 12.46 billion during the year ended March 2016 to Rs 16.21 billion the following year. This marked the highest turnover for the company in the past six years. Its recent success can be largely attributed to the introduction of prudent financial and austerity measures, and an effort to revamp its focus areas.

ITI’s major business and growth strategies are as follows:

• Portfolio diversification: As a revival strategy, the company is working to diversify its portfolio of products. In addition to telecom equipment manufacturing, it plans to include high density polyethylene (HDPE) pipes, optic fibre cable (OFC), 3D printing and lithium-ion batteries in its manufacturing domain. To this end, it has recently established an HDPE pipe manufacturing line and installed a 3D printing facility at one of its manufacturing plants. Further, it is looking to manufacture Wi-Fi routers to tap the growing opportunities offered by Wi-Fi.

• Focus on emerging business areas: The company plans to focus on upcoming  technology domains such as the internet of things (IoT), e-governance, and information and communication technology-related projects. To this end, the company has been planning to establish a centre of excellence for skill development and IoT technology.

• Focus on Digital India: As a part of the Digital India initiative, ITI launched the “TAG-ITI” wallet, a digital mobile wallet that can be used by both prepaid and post-paid users for making online payments. The company currently operates a data centre at its Bengaluru plant in collaboration with a private company. However, it soon plans to open its own data centre with a rack space of 24,000 square feet. Currently, ITI provides Aadhaar-based authentication services to various agencies. However, with the establishment of the data centre, it would be able to provide e-banking and Aadhaar-based authentication based on the software-as-a-service platform.

• Participation in key projects: ITI is playing an integral role in key government projects. Under the BharatNet project, it is undertaking the supply, installation and commissioning of equipment for Bharat Broadband Network Limited based on the gigabit passive optical networks (G-PON) technology, wherein the Centre for Development of Telematics (C-DOT) is the technology provider. ITI has received two other orders for GPON equipment from Bharat Sanchar Nigam Limited and RailTel. In addition, ITI has been playing a role in the government’s various defence projects. To this end, it has secured orders for its encryptor, MIL PCM and other encryption products. The company also participated in the Army Static Switched Communication Network Phase IV tender and has technically qualified for it. According to ITI, “The company will deploy around 13,000 km of OFC under the Network for Spectrum project. It has already completed 70 per cent of the work and will complete the entire project by end-2017.”

Challenges and the way forward

Although the company has embarked on a journey for revival, it is not devoid of challenges. The growing presence of private players in the telecom manufacturing space has led to lower procurement of equipment from ITI by its  major customers. Further, ITI’s ageing workforce presents a challenge in its implementing technology-based projects. To overcome this challenge, ITI has been recruiting young engineers on a tenure basis. However, according to the company, “The declining market prices of telecom equipment have been a bigger challenge.” Although the company has successfully upgraded its infrastructure with the help of equity infusion from the government, working capital remains a major cause of concern. However, it is adopting prudent financial measures to overcome this challenge.

As per ITI, the government’s Digital India, Make in India and Smart Cities Mission initiatives along with upcoming technologies like IoT and 5G present a tremendous opportunity for the growth of the sector. The company has already laid out the roadmap to leverage upcoming business opportunities. Further, ITI has upgraded the infrastructure at its six plants to enable them to exploit the manufacturing opportunities offered by complex communication and electronic equipment.

The company has a three-point growth strategy in place for the next two years. This includes focusing on the key manufacturing and upcoming business areas and strengthening all manufacturing units, ensuring financial growth by breaking even in 2017-18 and making more profits in the coming years; and achieving a financial turnaround. However, achieving this turnaround in financial performance would require strong support from the government.

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