Press Information Bureau

Government of India

Cabinet Committee on Economic Affairs (CCEA)

04-October-2012 20:35 IST

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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SH/SKS

Grants-in-aid secure timely salary payments and support employee welfare during public sector company restructuring. The Cabinet Committee on Economic Affairs approved a grant-in-aid of Rs.130 crore to ITI Ltd. to ensure timely payment of salaries for the next four months, aimed at mitigating employee hardship and maintaining workforce motivation while the PSU addresses accumulated losses, technological challenges, high fixed costs, and constraints on R&D and new product investment.