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CABINET COMMITTEE ON ECONOMIC AFFAIRS (CCEA)

Financial Support of Rs.130 Crore to M/s. ITI Ltd. for Payment of Salary to its Employees

New Delhi: October 4,2012

The Cabinet Committee on Economic Affairs has approved the financial assistance of Rs. 130 crore in the form of grants-in-aid to M/s Indian Telephone Industries Ltd. (ITI Ltd.), for mitigating the hardship being faced by the company in paying salary to its employees, for the next four months.

The grants-in-aid will ensure that the employees of M/s ITI Ltd. will get their salary in time and be motivated to work in the company, which is on a slow and steady come back trail from being a `sick` company.

The direct beneficiaries will be the employees of M/s ITI Ltd. whose strength as on 1st February 2012 was 9655 and their family members.

BACKGROUND

M/s ITI Ltd., Bangalore, a Public Sector Undertaking under the Ministry of Communications & IT, Department of Telecommunications (DoT) was established in 1948 and converted into a PSU in 1950. It is the first PSU of this country. The company has incurred accumulated loss of Rs. 4149 crore till the end of September 2011.

Due to a change in the technology preference in the market coupled with inadequate in-house infrastructure and R&D for catering to an exponential increase in wireless technology, M/s ITI Ltd. has not been able to compete on its own strength. The high fixed costs alongwith the social obligation of running some of the non-profitable operations in the past, have resulted in the inability of the company to invest in R&D and new product lines, which could have helped the company to achieve better margins in this highly competitive market, where most technologies become obsolete very fast.


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