The government is expected to offer a Rs 1,000 crore bailout package to ailing equipment manufacturer Indian Telephone Industries (ITI) Ltd. | |
The package, sought by the department of telecommunications (DoT) to revitalise the public sector undertaking (PSU), includes a working capital assistance of Rs 200 crore from the government. | |
Senior government officials said the matter would be taken up by the Union Cabinet shortly. If the Cabinet gives its approval, it will be the largest bail-out since the United Progressive Alliance government took charge. | |
Finance Minister P Chidambaram had announced a Rs 500 crore restructuring plan for ITI in the Budget presented in July. | |
DoT officials said additional funds had been sought as the losses and dues of the PSU had mounted in the last few months and working capital was required to help restart manufacturing there. | |
In the last financial year, ITI's losses were estimated at Rs 705 crore on a turnover of Rs 1,256 crore. The PSU incurred a loss of Rs 131 crore during the quarter ended September 2004, compared with Rs 128 crore in the corresponding period last year. | |
The company has been making losses since the 2002-03 financial year. The government holds 77 per cent stake in the company with the remaining shares with the public and financial institutions. | |
The company has seven manufacturing units, with two in Bangalore, and one each in Srinagar, Palakkad (Kerala), Rae Bareli, Naini and Mankapur (all Uttar Pradesh). | |
The Cabinet had recently cleared a Rs 500 crore package for 24 public sector companies under the heavy industry ministry's purview. The package was used for clearing statutory dues like salaries and provident fund benefits. | |
ITI manufactures telephones, large digital switches, transmission systems including digital microwave, fibre optic systems and satellite communication systems. Bharat Sanchar Nigam Ltd, Mahanagar Telephone Nigam Ltd, the defence forces and the railway are other major customers of the PSU.
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