ITI Limited, one of the casualties of the Indian telecom revolution, is being nursed back to health. The Congress government has given it the needed funding; Alcatel CIT has given it the technology; and BSNL has given it much-needed contracts. There is new hope for the revival of a public sector unit (PSU) that contributed to more than 70 per cent of India’s telecom infrastructure in the notso-distant past.
The story was not quite so rosy a few years ago. In 2003-04, for instance, ITI had losses of Rs 6,964 million, its workforce had been pruned through VRS and there were reports that the NDA government was contemplating shutting down the unit.
At a time when the future seemed most bleak, the UPA government sanctioned Rs 10.32 billion for the revival of ITI as part of its National Common Minimum Programme to revive PSUs. At the same time, Alcatel CIT entered into a technology transfer agreement with ITI for GSM technology. Although ITI had tie-ups with Alcatel in the past, this was an important break for the company. It made it the first indigenous manufacturer of GSM equipment.
In previous agreements with Alcatel, ITI had sourced equipment from the vendor and set up networks. Under the new technology transfer agreement, ITI will service four west zone circles of BSNL that have been reserved for it. In all, 4 million lines will be provided by ITI. While the first 1 million lines are using equipment provided by Alcatel, the subsequent 3 million lines will, notably, be manufactured by ITI. The contract is valued at Rs 12.3 billion.
The initial 1 million lines are “in an advanced stage of completion”. The next 3 million lines will be installed and commissioned within the next 10 months on a turnkey basis. In this case, the base transceiver station, power plants, rooftop towers and shelters will be provided by ITI, while Alcatel will contribute the mobile switching centre (MSCs), base station controllers (BSCs), transcoders and operation and maintenance centres (OMCs).
ITI will manufacture this equipment at its newly refurbished Mankapur facility where the existing plant has been upgraded at a cost of Rs 430 million. A similar facility is being set up at its Rae Bareli plant. This will augment its capacity to 6 million lines per year. Some of the equipment produced at these and other plants will be made available for export to the SAARC region and Afro-Asian countries.
Though the inauguration of the Mankapur plant by Sonia Gandhi made headlines, this is just one of the many initiatives being taken by ITI. For instance, to cut overheads, the company has allocated different products to different plants. Now, the Bangalore complex will produce CDMA (WLL), CDMA (FWT) equipment, etc.; the Naini plant will produce the SDH family of equipment and telephones; and the Palakkad plant will produce OCB products and IP (next-generation network) products.
Thus, various plants are being refurbished and tasks reallocated to serve the company’s new contracts and tie-ups. Besides Alcatel, the company has tied up with ZTE, a Chinese vendor, to manufacture CDMA equipment. There are orders for 271,000 lines. An additional order of 280,000 lines is also likely to come in.
ITI has collaborated with Tekelec and will supply IP-TAX. It may supply signal transfer point switches if the need arises. It has also signed an MoU for entering into a technology transfer agreement with ITI to manufacture rural switching products.
Besides its collaborations with the private sector, ITI seems keen to enter into strategic relationships with state-run BSNL, MTNL and TCIL. The company is poised to implement a satellite-based broadband network for BSNL on a revenue-sharing basis. And it has bagged a project with TCIL in Afghanistan.
It is also keen to leverage its strength in encryption and has restarted the ASCON project with the Army. The company has promised that more than 90 per cent of the network will become operational before the end of the current financial year.
Although the renewed activity at ITI is an indication of a revival, it must be mentioned that the company is still dealing with many issues. One such issue is costcutting. The company has managed cost savings of Rs 440 million through various routes. Employees have taken deferred salary payments in some cases to this end. The PSU has gone one step further. It has supplemented its cost-cutting measures with innovative ways of revenue generation; for instance, it has entered into short-term manufacturing contracts.
It has also acknowledged the need for efficient resource utilisation and completion of projects in a timely manner. Y.K. Pandey, chairman and managing director, ITI emphasises the need for the PSU to honour its commitments. He feels that without this, the company cannot be successful in the services sector.
Overall, the company seems to be reinventing itself so that it can compete effectively in the new market scenario. It has two advantages. First, if BSNL and MTNL make it mandatory for their suppliers to have domestic manufacturing units, many companies would be keen to exploit tie-ups with ITI. Second, ITI can benefit enormously from the captive market it has among PSUs like BSNL. All in all, there is no reason why ITI cannot reclaim its old position.
