Indian Telephone Industries Ltd. Reluctance to Change

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Indian Telephone Industries Ltd. Reluctance to Change 1.1 INTRODUCTION ITI Limited is India's pioneering venture in the field of telecommunications. Born in 1948, this premier PSU has contributed to 50% of the present national telecom equipment. With state-of-the-art manufacturing facilities spread across six locations and a countrywide network of marketing/service outlets, the Company offers a complete range of telecom products and total solutions covering the whole spectrum of Switching, Transmission, Access and Subscriber Premises equipment. Secure communications is the Company's forte with a proven record of engineering strategic communication networks for India's Defence forces. Extensive in-house R&D work is devoted towards specialized areas of Encryption, NMS, IT and Access products to provide complete customized solutions to various customers. The competitors of ITI have been Tata Telecom., Shyam Telecom Ltd., Krome Communications Ltd., Himachal Futuristic Communications Limited. and Bharti Telecommunications. 1.2 PROBLEM FACED BY COMPANY Since ITI ltd was one of the most prominent companies of its times, the decline of the company was a gradual process and not an impulsive one. ITI, on September 31, 2003, sought consent from its shareholders to inform the Board for Industrial and Financial Reconstruction of the fact that heavy losses had more than halved the company's net worth. For 2002-03, the company had suffered a loss of Rs. 375 crores with a net worth of Rs. 452.32 crores. The net worth per rupee of the company's Rs. 388 crore paid up capital was minus 10 paise. 1.3 METHODOLOGY OF RESEARCH The methodology we have applied to analyze the problems prevailing in the industry , is that we have done • Literature study of background of company, and problem faced by it. • Study and understanding the product characteristics and market structure. • Trend analysis between the sales, expenditure and PAT. • Particular instances of problems faced by ITI ltd that demonstrates its incompetence and coordination problems within its officials and outside the company. That was a major contributor in its decrease of profits over the years. • Analyzing declining Marginal Productivity of labour. • Suggestions and proposals 1.4 PRODUCT UNDERSTANDING AND MARKET STRUCTURE ANALYSIS ITI produces electronic equipment pertaining to telecom sector. ITI’s wireline equipment is its major product. Being a product for usage for wireline provider, it is a complementary product for the telecom service provider. Thus its demand rises, if demand for wireline rises, and falls if demand for wireline falls. This indicates that ITI’s sales are dependent on demand in market for wireline connections (DOT).

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