Financial Daily from THE HINDU group of publications
Tuesday, Dec 16, 2003
Financial Daily from THE HINDU group of publications Tuesday, Dec 16, 2003 |
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Corporate
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Sick Units Info-Tech - Telecommunications ITI declared `potentially sick' — DoT turns down plea for Rs 790-cr package G. Rambabu
New Delhi , Dec. 14 Even as telecom equipment major ITI Ltd has been declared a "potentially sick" company, the Department of Telecommunications (DoT) has turned down its plea for financial assistance of Rs 790 crore that would help it turn around. According to official sources, with net losses amounting to Rs 269 crore in the first half of the current fiscal over and above the Rs 375 crore in the previous year, the DoT has declared the public sector undertaking as being potentially sick and directed the management to chart out a revival plan. However, the department has expressed apprehensions that the Finance Ministry may object to giving it financial assistance of Rs 790 crore that has been sought on the ground that it would open floodgates of requests from other PSUs. "The non-receipt of expected orders, uneconomical prices and delay in realisation of supplies have dealt a severe blow to the company. The revival plan that is to be implemented would include rationalisation of product portfolio, rationalisation of business allocation to plants, reduction of surplus manpower, diversification of turnkey services business, disposal of surplus land/buildings and organisational restructuring," the sources said. Of the Rs 790-crore sought by the company over a three-year period, Rs 370 crore is for the implementation of a voluntary retirement scheme for its 11,000 "excess employees", Rs 200 crore as equity infusion and Rs 220 crore as soft loan for capital requirement. The sources pointed out that efforts were being made to strengthen the company without having to approach the Finance Ministry. Recently, BSNL and MTNL had invested Rs 200 crore and Rs 100 crore respectively in the form of redeemable preferential shares. DoT has advised ITI to take up the matter with other PSUs like Telecom Consultants India Ltd. They also said that a case for Government guarantee for the issue of preference shares worth Rs 100 crore expected to be taken by the financial institutions/banks had already been sent to the Finance Ministry and would be pursued. The major problem with the finances of the company is the sundry debtors of close to Rs 1,230 crore. Of this, Rs 584 crore is not realisable immediately as they are pending due to financial issues/techno-commercial issues, while the company has not issued the bills to various purchasers for an amount of Rs 261 crore. Further, Rs 179 crore is not realisable at present because of payment terms and only Rs 204 crore is realisable. The Government holds 77.14 per cent stake in the company, established in 1948. While 14.53 per cent stake is held by the public, the remaining shareholders include institutional investors, NRIs/OCBs and other private corporate bodies. The company manufactures a range of telecom equipment, which includes telephones, large digital switches, transmission systems - dig. microwave, fibre optic systems and satellite communication systems.
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