Vodafone-Idea: Kumar Mangalam Birla has said in a letter to the central government that he is ready to give up his promoter stake to save the company.
Vodafone Idea (Vi), a debt-ridden telecom company, has now reached the verge of closure. A letter from Kumar Mangalam Birla, chairman of Aditya Birla Group, has blown the senses of Vodafone-Idea subscribers. In fact, Kumar Mangalam Birla has said in a letter to the central government that he is ready to give up his promoter stake to save the company. Let us tell you that he has a 27 percent stake in Vodafone Idea and 44 percent of the British telecom company Vodafone Plc. The current market cap of the company is Rs 21,264 crore.
Vodafone Idea has a debt of about Rs 1.8 lakh. Vodafone Plc has already written off its entire investment in the company. The company’s board had announced a capital raising of Rs 25,000 crore in September last year, but the company did not succeed in this.
Shares broken more than 10 percent
On Tuesday, Vodafone Idea Limited’s stock closed down more than 10 percent on the BSE. The shares of the company have broken due to the news of the letter written by Kumar Mangalam Birla to the Central Government. On Tuesday, it closed down 10.30 percent at Rs 7.40. At this stage, the company’s market cap stood at Rs 21,264.19 crore.
Vodafone Idea stock has fallen 78 per cent in three years. In August 2018, the share price of the company was Rs 33.30 per share, which has now come down to Rs 7.40.
1.8 lakh crore debt on the company
Vodafone Idea’s debt has increased manifold in the last 4 years. It was Rs 37,000 crore at the end of FY16, which has now increased to Rs 1.8 lakh crore. This includes spectrum liability and AGR dues. Last month, the Supreme Court dismissed Vodafone Idea’s plea to improve the AGR calculation. According to Vodafone Idea, it has AGR dues of Rs 21,500 crore, out of which it has paid Rs 7,800 crore. At the same time, according to DoT, the company has an AGR dues of about Rs 53,000 crore.
If Vodafone fails to clear its dues to the government and these guarantees are invoked, it will immediately turn into debt and will soon be classified as a non-performing asset (NPA). The impact on PSU banks will not be as big as their exposure as in recent years, lenders have sought significantly higher cash margins from Vodafone for their guarantees.
IDBI Bank is understood to have a margin of up to 40% for the guarantees given. But even then it will be so big that it will wipe out the profits of many. The loan will be recovered from the remaining operations of Vodafone Idea.
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