ITI scrip surges after govt extends guarantee on orders

NEW DELHI: Troubled state-owned telecom equipment maker ITI's shares surged 11% to close just under Rs 51 after the Union Cabinet on Wednesday extended an existing regulation till September 2010 under which BSNL & MTNL will have to source 30% of their equipment orders from it.

The move is set to make ITI more attractive as the government is looking at selling three of its six units. Several potential bidders have said that they would place a bid for buying out part of ITI if this 30% clause be made mandatory. The catch is that despite the existence of this clause, BSNL & MTNL have not placed orders with ITI for previous contracts citing its poor track record and its inability to deliver equipment on time.

ITI has close to 13,000 employees across its plants in Bangalore, Mankapur, Rae Bareily, Naini, Srinagar and Palakkad. The company, 2.87% owned by the government, recorded a net loss of Rs 191 crore for the quarter ended March 2009. So far, Huawei and Alcatel-Lucent are the only companies to have shown interest in buying out the plants run by the PSU.