Finance & Other Expenses as Important Cost Component: An Analysis with Special Reference to Individual Units of ITI Ltd, India

The public sector undertakings (PSUs) in India are playing a very vital role in the growth of the Indian economy. Indian Telephone Industries Limited (ITI Limited), as India’s first public sector enterprise, operated in the Telecommunication industry and its main business is in the area of manufacturing, installation and commissioning of Telecom Equipment. The change in technology from wire line to wireless along with increased emphasis on software driven to hardware has made it difficult for ITI to increase its value addition on the in-house manufactured products. This coupled with the drastic reduction in prices on the orders available from BSNL/MTNL has added to the miseries of ITI. The present study is under taken to analyze the finance and other expenses as important cost component in ITI Company especially with reference to the individual units and data for a period of 11 years have been used for this study because the company has started incurring losses for the last eleven years continuously. Correlation Analysis and Multiple Regression Analysis are the analytical tools used for the data analysis. ITI, with its already sunk cost, should be price competitive as compared to any other telecom equipment manufacturing company, which creates large infrastructure at today’s prices. Hence, suggestions have been made which would increase the profitability of the company. Thus, ITI Limited can turnaround in near future and is expected to go back to the old glorious days of ITI as a joint public sector Telecommunication company in India.