My dear Friends,

 When I joined ITI one year ago, it was with an agenda to revive the core competency of ITI - manufacturing, restructure Plants, rationalise of product allocation to them and to provide customer friendly project solutions and services, so that the business improves and our customers, particularly BSNL and MTNL, are satisfied with our performance.

 I had interaction with all of you at your respective locations, Plants, Corporate Office or even some of the Regional Offices.  A lot of interaction took place with Unions, Officers’ Associations supplemented by an open house with Union at Bangalore and Apex at Delhi .  I kept on intimating BSNL, MTNL, Ministry, Board of Directors and Hon’ble Minister of Communications about the plan of action based on my agenda and the progressive achievements.  Today, after one year, I have a sense of satisfaction that a lot has been accomplished.  All these achievements will definitely assure the Government about efforts and sacrifices being made by the Company for revival as outlined in the revival plan.

 In order to regain manufacturing, the core competency of the Company, a number of technology acquisitions have taken place as follows:

 1.       We entered into an agreement with Alcatel for transfer of technology of GSM equipment.  West Zone has been reserved for ITI.  Initially, one million lines will be supplied followed by 3.5 million lines to be supplied as a result of local manufacturing.

 2.       CDMA equipment is to be manufactured in collaboration with ZTE, China . There are orders for 2.71 lakh lines.  In addition to this, there will be an additional order for 2.8 lakh lines as a result of reservation.

 3.       SIM Cards:  Instead of remaining content with trading of SIM cards, stress is on their manufacturing.  Infrastructure is being further upgraded to increase value addition.

 4.       Initially, we will supply IP-TAX in collaboration with TEKELEC.  Signal transfer point switches are also to be supplied as and when tenders are floated.  There is an agreement for manufacturing of both of these products.  Depending upon quality, requirements for these products can be manufactured by ITI.

 5.       PABX under customer loyalty programme of MTNL has been offered to MTNL on a minimum rental per month. In case this materialises, PABX will be manufactured with technical assistance from Coral.  An MoU is being signed.  In any case, this agreement will lead to ITI supplying this PABX against various tenders

 6.       We are entering into an agreement for manufacturing of rural switching products under technology transfer from Siemens. MoU has been signed for this.

 7.       We have signed another agreement with Alcatel for manufacturing of ADSL equipment required for providing broadband support to customers.

 Allocation of products to Plants:

 One of the main objectives of business allocation to Plants was to minimize overheads. A beginning was made by shifting of EC Plant and merging it into the Bangalore Complex.  In the process, CDMA WLL production has been consolidated at Bangalore Complex.  In addition to this product, Bangalore Plant will continue to handle defence products, FWTs required for CDMA, PABXs, etc.  With the signing of Technology Transfer Agreement with Alcatel, the main production at Mankapur will be the GSM equipment. They will continue to manufacture bank mechanisation products, particularly the note counting machine.  Naini, as usual, will deliver SDH family equipment and telephone instruments.  Palakkad Unit, in addition to its OCB range of products, will also take up IP (Next Generation Network) product.  .  Rae Bareli Plant will be encouraged to expand its card repair capacity. Repair of C-DoT Cards has attained high efficiency at both Rae Bareli and Mankapur.  It is, however, planned that all repairs will ultimately be shifted to Rae Bareli.  Rae Bareli will continue to be in production of SMPS Power Plant.  It is envisaged that antenna production will also be taken up to meet the requirement of GSM as well as CDMA at Rae Bareli. In addition to this, all the Plants were advised to segregate the non-functional areas to save running expenditure further.

 All the Plants have been encouraged to take up contract manufacturing jobs and some of the Plants have excelled in obtaining sizable jobs from outside. Plants have been advised to continue taking up the activity for SMT card assembly, coils and transformers fabrication, hybrid manufacturing. Printed circuit boards and mechanical jobs for Railways and Defence, particularly Ordnance. The turnover, even if it is limited, needs to be pursued vigorously.

 VRS was announced in the month of October / November 2003.  We parted company with 3724 employees.  For want of funds, we could not announce another round of VRS before the last financial year.  It is hoped that those who left had better prospects elsewhere and this would result in Company’s salary bill coming down.

 Projects revival and Strategic relationships: The prestigious ASCON project had been in limbo for a very long time and there was no sign of litigation proceedings coming to an end.  By end of June 2003, this project was brought out of litigation through interaction with Army and the vendor involved. The project had to be brought back on rails. . It was a four year project and more than three years had passed without much progress having been made We have now given a commitment to the Army as well as DoT that more than 90% of the network will be operational before the end of current financial year.  This, of course, is a tall order.  For this commitment to be fulfilled, full thrust is being given with top most priority.

 One of the assurances that I had given during my interactions with the Ministry and Unions was to enter into strategic relationship with BSNL, MTNL and TCIL. Despite the precarious condition that the Company is in, we have been able to strike relationships with all three of them.  With BSNL, we are poised to implement a satellite based broad band network in revenue sharing mode.  Similarly, with MTNL, we are entering into a deal for implementation of ADSL based broad band service network, again on revenue share basis.  With TCIL, we have been able to bag a Rs.30 crore project for Afghanistan .  The success of all these projects, however, depends on efficient execution.  Be it the GSM project, or PGCIL optical fibre laying project, or internet expansion & RAS projects for MTNL and MLLN implementation project of BSNL, for one reason or the other, our performance has left much to be desired.  When we add problems being faced for Carnation and LICO VSAT for Army and CIVICON project for Ministry of Home Affairs, I find practically no project, which can be quoted as an example for our efficient project implementation.  This cannot be allowed to be continued.

 Keeping in view the large work force without work, one of the important decisions I took and wanted to percolate down to all levels was to stop outsourcing of jobs.  One such activity, which finds mention, is the card repairs.  There was virtually no card repair at Plants and the Regional Offices were mostly handling the logistics of the repairs.  Most of the repair work was being done by private vendors outside.  This has been brought down, with practically nothing being given out for repairs.  Plants are expected to be doing nearly 10,000 card repairs every month, against a few hundred cards earlier.  It was a matter of great satisfaction that NCES of BSNL had some good words about the efficiency that ITI could bring about in the repair process.  Maharashtra , Uttar Pradesh (West) and North East still remain areas of concern.  I am sure with strengthening of manpower resource connected with these Circles, similar efficiency will be achieved for these areas also.

 In these trying times for the Company, reduction in running expenditure is of paramount importance.  Though cost cutting is painful as it is bound to affect everyone, there has been no alternative but to resort to austerity measures wherever it was possible.  Without going into details of how we have been able to achieve cost cutting, I can only appreciate every one involved in sharing the burden and contributing ourselves to a cost saving of Rs.44 crore besides what we could generate as working capital through deferred salary payment.

 In order to further mobilize financial resources for our day-to-day activities, we have contemplated disposal of certain assets.  This is only one step in fulfilling the commitments that we have made to raise funds through disposal of surplus assets.  On the sundry debtors collection, Plants need to intensify their efforts on realization.  With working capital being a scarce commodity, realisation of old dues can provide us much needed respite.

 The success of all these projects, however, depends on efficient execution.  We continue to work in watertight compartments.  Unless we honor the commitments given to customers we cannot be successful in services sector. Though financial constraints prevail, I notice that we do not ensure timely completion of technical and commercial requirements of a project at different stages.

 Let us learn from our mistakes and failures in the past and not allow them to repeat.  Timely delivery of the equipment and timely completion of projects are the need of the hour in this year of revival. Let us turn around this great Company.  Let us strive for a better tomorrow.

Y.K. Pandey

Chairman & Managing Director