ITI came under selling pressure today after the company reported hefty losses for the fourth quarter ended March 2003.

The stock of the state-run telecommunication equipment firm was down by 6.6% at Rs 16.10 on the BSE by the first half of the session. Earlier in the session, it plunged by as much as 11.3% to a low of Rs 15.30. 16,700 shares changed hands on the counter.

In late calendar year 2002, the ITI stock witnessed a rally, which lost steam later when the stock declined sharply from the higher levels. The stock surged by 41.5% within a few sessions from Rs 17.95 on 22 November 2002 to Rs 25.40 on 6 December 2002. The rally on the counter came to a halt with the stock plummeting to a low of Rs 14.15 on 31 March 2003. A broad-based surge in public sector undertaking (PSU) stocks on the back of divestment initiatives with the government putting RCF on the block in mid-April 2003, boosted the stock from that low when it reached the Rs 18-level recently. The ITI stock later moved in a band of Rs 16-17.50 ahead of the company's results.

After trading hours on Tuesday, ITI reported heavy losses in Q4 ended March 2003. It posted a loss of Rs 126.06 crore as compared to a profit after tax of Rs 70.51 crore in Q4 ended March 2002. A sharp fall in other income to some extent resulted in the heavy losses. ITI had reported a huge other income of Rs 146.95 crore in Q4 ended March 2002. Other income fell sharply by 79% to Rs 30.70 crore in the quarter ended March 2003.

The fall in Q4 net profit was also due to a sharp fall in sales. Net sales registered a massive 45.8% fall to Rs 551.90 crore from Rs 1,018.48 crore.

For the full year FY 2003, ITI posted a loss of Rs 313.95 crore as compared to a net profit of Rs 40.61 crore in FY 2002.

ITI manufactures almost the entire range of telecom equipment. It has expertise in defence telecom and provides static network to the army. ITI's clientele list include the railways, industrial organisations and state electricity boards.

But fast changes in telecom technology, a huge surplus manpower (even after giving voluntary retirement scheme option to 6,365 employees) are being cited as reasons for the company's woes. This has led to ITI's dependence on market borrowing at high interest rates with little value addition.

The Union Government is said to be considering a revival plan for ITI. In its revival plan, ITI has proposed organisational re-structuring, product rationalisation leading to reallocation and reduction of manpower and other associated costs, closure of unviable units, identification of surplus assets and sale thereof and fresh equity infusion.

ITI recently singed a Memorandum of Understanding (MoU) with Shenzhen-Zhongxing Telecom (ZTE Corporation) of China for setting up the infrastructure for Code Division Multiple Access (CDMA) network in India. The MoU envisages full assistance and collaboration on CDMA range of Wireless in Local Loop (WLL) equipment to meet 2000 1x standard. Both the companies have agreed to co-operate, indigenise and add new features to these products at the Bangalore plant of ITI. Further, ITI and ZTE will explore the opportunities for launching these products.