Govt flags off divestment, ITI first off block

 THE government has kicked off the process of selling loss-making state-owned companies by putting India's first public sector unit Indian Telephone Industries (ITI) on the block, to be sold in parts.
    The communications ministry has invited expressions of interest (EoIs) from global equipment makers and equity investors to buy out or pick up stakes in three of the six manufacturing plants run by the telecom hardware firm, telecom secretary Siddharth Behura said.
    The other three units too will be sold. "Each of the six units operated by ITI can be separated and given to investors who can either enter into a JV or buy out the unit," Mr Behura told ET.
    The move comes after the Department of Telecom's efforts to merge the 60-year-old company with state-owned telecom operator BSNL were thwarted by the telco's employees.
    ITI has close to 13,000 employees across its plants in Bangalore, Mankapur, Rae Bareily, Naini, Srinagar and Palakkad. It recorded a net loss of Rs 191 crore for the quarter ended March 2009.
    The stock of the company, 92.87% owned by the government, ended 2% lower at Rs 41.15 on BSE on Wednesday.
    According to Mr Behura, the government is open to all combinations to sell the company. "For each unit, we are willing to explore different business models, from outright sale to stake sale or collaborations. We are open to all permutations and combinations," he said.
    For the past several years, the government has been exploring various options to revive ITI.
    In 2005-06, the government gave Rs 1,025-crore aid to ITI as part of a bailout package. The company sought an additional aid of around Rs 2,500 crore last year to write-off losses of Rs 2,820 crore.
    Recently, the government had sanctioned a revival package to help ITI clean up its balance sheet. But ET could not ascertain the amount approved under the package. Alcatel-Lucent has tie-up with ITI to use facility
EThad reported on April 4 that Alcatel-Lucent is interested in buying out a part of ITI, provided the government enforces the 'offset clause' for all telecom tenders issued by BSNL and MTNL, the two main clients of ITI, who contribute over 80% to its revenue. Under the offset policy, 30% of all telecom contracts (for hardware and equipment) awarded by BSNL and MTNL had to be sourced and manufactured by ITI. Alcatel-Lucent already has a tie-up with ITI to use the latter's production facilities in Rae Bareily and Mankapur for manufacturing GSM base stations, mobile switching controllers and broadband equipment.

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