ITI wants to reduce revenue from BSNL and MTNL

ITI, the loss-making state-run telecom equipment manufacturer, is working out ways to reduce dependency on BSNL and MTNL, the largest customers of the company. This has been necessitated by a significant drop in the revenue contribution from these companies during the financial year 2010-11, K L Dhingra, CMD of ITI Ltd told Business Standard.

The company wants to reduce its revenue exposure to these companies to 60-65 per cent during the ongoing financial year, from the earlier 80-85 per cent, Dhingra said. ITI, which reduced losses in 2010-11 to Rs 382 crore from Rs 459 crore, reported a year ago, saw a significant drop in revenues in the year ended March 2011. The revenues of the company dropped over 54 per cent to Rs 2,101.2 crore compared to the previous year.

“We saw a huge drop in demand from our major customers BSNL and MTNL, which affected our turnover. Traditionally, we have been too dependent on both these companies for our revenues. Now, we want to reduce the dependency and diversify into newer areas such as defence and other allied sectors,” he said.

ITI is part of the consortium manufacturing the biometric cards for the Unique Identification Authority of India (UIDAI), the other two partners being Bharat Electronics Ltd (BEL) and Electronics Corporation of India Ltd (ECIL). While the project cost is estimated to be about Rs 700-Rs 750 crore, Dhingra said the company being the sole manufacturer of the cards, was expecting over 33 per cent of the project cost as revenues. Besides, ITI is also a hardware partner for the National Population Registry. The effort to bag defence contracts is on and the company has participated in some procedural tenders, he said.

“In 2011-12, we expect to derive about 45-45 per cent of our revenues from customers other than BSNL and MTNL. And we will slowly take this to more than 50 per cent as we go forward,” he said.

Meanwhile, the company is planning to introduce a voluntary retirement scheme (VRS) for employees. A proposal in this regard has been sent to the board of directors, which would take a decision on this in its next meeting, scheduled in July.

ITI employs about 11,000 across its six manufacturing units. Dhingra said the company was comfortable with having 6,000 people to run the organisation in efficient manner.

ITI has three of its manufacturing units located in Uttar Pradesh (Mankapur, Rae Bareli and Naini), while one each are located in Srinagar and Kerala (Palakkad). The main facility of the company is located in Bangalore. Three of the six units are said to be profitable.


Link:

http://www.business-standard.com/india/news/iti-wants-to-reduce-revenuebsnlmtnl/438323/