The PC pill: Can Rs 508 crore revive ITI?

Umr-e-daraaz maang ke laaye the chaar din 

do aarazoo mein kat gaye do intezaar mein

One sincerely hopes the famous couplet of Zafar is not prophetic about Indian telecom's last remaining link with its socialist past-Indian Telephone Industries (ITI). More than any other PSU, the ITI symbolizes Nehru's dream of public sector as the temples of modern India. It was no small thing that the first PSU to be established in independent India was in the area of telecom, not in any heavy industry-the in-thing then.

Today's ITI has almost decisively shattered that Nehruvian dream. When the whole world is raving about the growth of Indian telecom, it only looks ironic that what was once the nerve center of Indian telecom today lies pathetically sidelined. It's also important to ask another question-will the last-ditch attempt by the finance minister to rescue this ailing PSU work out? 

For those not in the know, the Budget 2004-05 announced by Chidambaram promises to infuse Rs 508 crore to keep ITI out of the BIFR net-as if that is an end in itself. However, one wouldn't be surprised if it indeed were the end, particularly in a coalition government where Left parties dictate the terms. 

The question is-will this actually result in starting its revival process, let alone in managing to revive it?

The odds are heavily against that. The company recorded a sale of Rs 1,278 crore in FY 2003-04. That was 28.8 percent less than its recorded revenue in FY 2002-03, which was also a drop of 22.5 percent from the corresponding figure the previous financial year (2001-02). The sales of the PSU are not just dropping every year, the rate of downslide is accelerating. 

That by itself is not an irreversible trend. But look at the fine prints, and you will know why this company still survives. In most of the tenders floated by BSNL and MTNL, certain percentages of the orders are reserved for ITI. While this may be anti-competitive for others, this should be helping ITI. But in reality, ITI has not done anything to use this to its advantage to revive itself. What it simply does is-it partners with one of the global suppliers who are only too willing to ally with it to get a major slice of the order. So most of the revenue, though it reflects in ITI's balance sheet as sales, goes to the MNC partner. And it does not add any value-financial or otherwise-to the company. 

Rs 508 crore-or for that matter any amount-is too small for restructuring a company that does not want to change and that has not learnt anything from its mistakes. Look at another PSU-BSNL. Though not really an epitome of efficiency, it has still been able to give a good run for their money to some of the private companies. BSNL has been able to do so because it has done at least some important things, if not all, right. 

Can ITI do that? Theoretically, it is still possible. But it needs a total revamp. It means quickly modernizing itself; dividing it vertically into two different units-one manufacturing and one services unit; run each of them as independently as possible. It also needs to actively explore the nascent African and Asian markets with immediate growth prospects, and even get into contract manufacturing, if required-all this with a brand new professional management team. All this may require some harsh decisions by the telecom minister, Dayanidhi
Maran. 

One doubts if he can take those decisions-even if he wants to-thanks again to the coalition partners. If he can, it will be an example for the rest of the world. If not, the taxpayer will see Rs 508 crore more of his money being wasted because of the whims of some dogmatic, ideologically bankrupt politicians.

CyberMedia News