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Corporate Performance and Strategy: A Case of the Indian Telephone Industries Ltd .

Corporate Performance and Strategy: A Case of the Indian Telephone Industries Ltd. By I.C.Awasthi Institute of Applied Manpower Research, Delhi (India). I. Introduction. First public sector units in the post-independence period

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Corporate Performance and Strategy: A Case of the Indian Telephone Industries Ltd .

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  1. Corporate Performance and Strategy: A Case of the Indian Telephone Industries Ltd. By I.C.Awasthi Institute of Applied Manpower Research, Delhi (India)

  2. I. Introduction • First public sector units in the post-independence period • Largest telecom company with a turnover of about Rs. 1,2100 Million annually Major Business i. Manufacture of Telecom Equipments ii. Research & Development iii. Joint Development Projects iv. Trading v. Turnkey Projects vi. Network Management vii. Software Applications viii.Micro Electronics ix. IT Products 2

  3. II. Role of ITI in the National Economy Pioneered the development of telecom • 44% switching lines • 4 % wireless phone lines • 67 % TAX lines • 63 % transmission routes electronic exchange • 67 % fixed telephones • Vertically integrated telecom equipment production facility • Seven state of the art manufacturing facilities and three most modern R&D • 13,000 workforce offering range of telecom equipments (switching, transmission and terminal equipments) • Joined the league of GSM technology • Nine million lines per annum • Products and services in priority sectors (Viz,telecom, defence, railways, power, oil etc.) 3

  4. III. Process of Disinvestment • Turnaround strategy • No outright or strategic sale • Raise capital through IPOs • Government equity above 51% 4

  5. IV. Impact of Globalisation • Technological collaboration • ALCATEL, France • NERA, Norway (Microwave equipments) • Tellabs, Denmark (Fibre optical system) • Siemens, Germany(ISDN EPABX) • VCON, Israel (video conferencing) • Diversification of Product Lines • GSM and WLL Technology • Voice over internet protocol system • Broadband network internet system • CDMA digital Wireless technology • Switched mode power supply • Downsizing of Workforce • 32,000 in 1990 to 13,000 in 2007-08 • Cut in social overhead expenses • Substantive cut 5

  6. V. Financial Performance • Monopoly till 1980s • 1990s saw sea change in telecom policy • DoT/BSNL (govt. owned enterprises) major customer • Stiff competition by ITI for unrealistically low prices • Exit of many players from the market 6

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  10. VI. Summing up the Overall Performance • Higher cost of production • Functions as unit for supplying Govt agencies • No policy for introducing new variants equipments • Uneconomic Units • Naini, Rae Bareili and Srinagar • Huge manpower strength • Higher Overhead Cost • Write-off obsolete raw material and components, interest out flows, wage bill, and employee cost and cost on welfare • Competition from Multinationals • High risk of obsolescence in technology • Strong presence of multinationals and high cost structure poses serious problem to ITI 10

  11. Major Problems and Possible Remedies 11

  12. Thank You!! 12

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