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

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Presentation on theme: "Corporate Performance and Strategy: A Case of the Indian Telephone Industries Ltd. By I.C.Awasthi Institute of Applied Manpower Research, Delhi (India)"— Presentation transcript:

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 ► First public sector units in the post-independence period ► Largest telecom company with a turnover of about Rs. 1,2100 Million annually I. Introduction 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 Major Business

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 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 Major ProblemsPossible Remedies Falling business due to change in product profile and fierce competition Up gradation of technology and technical collaboration Huge surplus workforceVRS and improved work practices Dependence on BSNL/MTNL for securing orders ITI must function as a commercial organization Lack of flexibility because of government ownership Make them as independent profit centers Majority of units incurring lossesMerger or closed down R&D is less than 1% of the total turnover.Without vigorous efforts the future does not appear to be promising. High cost of social overheadsWithdrawing subsidy or charging higher user prices 11

12 12 Thank You!!


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