New Delhi: Vodafone Idea could be the largest bankruptcy ever in India as the inability to pay dues under the adjusted gross revenue (AGR) may push the Vodafone Plc and Aditya Birla joint venture in that direction.
If the promoters and management of Vodafone Idea file for bankruptcy, it will be an earthquake for India Inc. However, one legal view is that filing under IBC in the NCLT after the Supreme Court order will be to circumvent contempt of court.
Vodafone Idea, promoted by British telecoms giant, Vodafone Plc and Aditya Birla group, has said it will repay some of its obligations under AGR in the next few days. However, it has not disclosed how much the amount will be paid.
"The company is currently assessing the amount that it will be able to pay to Department of Telecommunications (DoT) towards the dues calculated based on AGR, as interpreted by the Hon'ble Supreme Court in its order dated 24 October 2019. The company proposes to pay the amount so assessed in the next few days", Vodafone said in a regulatory filing.
While the Supreme Court has come down heavily on telcos for non-payment of dues, it is not yet clear how much Vodafone Idea will pay and when. The company owes about Rs 44,000 crore, which is required to be paid before the court's next hearing on March 17.
In end-December, the company had cash and cash equivalents worth Rs 12,530 crore. The cash in hand for the company will be only one-fourth of the dues payable, making the situation grim and uncertain.
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The Modi government's earlier stance to go easy on telecom operators, Bharti Airtel, Vodafone Idea and Tata Teleservices on adjusted gross revenues (AGR) has once again revived the chants of a 'suit boot ki sarkar' and allegations of crony capitalism from the Opposition.
As it turns out, the three parties are also big donors to the BJP as accessed in electoral bonds data, further lending credence to the allegations of crony capitalism by the Opposition.
The Congress had on Saturday alleged a quid pro quo in the decision of the Modi government to allow a breather for telcos. Randeep Singh Surjewala, in-charge, Communications, AICC said in a statement that what is the quid pro quo for Modi government to defer recovery of Rs 1.02 lakh crore from telecom companies as per order dated 23rd January, 2020 over which Supreme Court has now issued contempt and deferment of recovery of Rs.42,000 crore from telecom companies vide Cabinet decision dated 29th November, 2019.
Surjewala also asked as to why Modi government is extorting Rs 1.60 lakh crore from the pockets of 112 crore prepaid cell phone users as tariffs have been raised by 30-40 per cent.
Surjewala also asked if the increase of 40% in cell phone tariff and data usage charge a method to recover Rs 1.02 lakh crore payable by telecom companies from the pockets of ordinary Indians.
On January 23, Surjewala said the Modi government issued an order for not recovering Rs 1.02 lakh crore from telecom companies and not to take any coercive action by stating "not to insist for any payment pursuant to the order passed by Supreme Court and not to take any coercive steps till further orders."
In 2017-18, for the BJP, 38 per cent of all its donations came from two donors -- Prudent Electoral Trust (Rs 154.30 crore) and Ab General Electoral Trust (Rs 12.5 crore).
As per media reports, the BJP raised well over Rs 800 crore between April 1, 2018 and March 31, 2019 before the Lok Sabha elections and the biggest single contribution came from the Tata group backed Progressive Electoral Trust, which donated Rs 356 crore.
Prudent Electoral Trust, predominantly funded by Bharti Airtel, DLF and the Hero group, sent in over Rs 67 crore to the BJP and Rs 39 crore to the Congress in 2018-19. The Aditya Birla General Electoral Trust has sent in over Rs 28 crore to the BJP and they donated Rs 2 crore to the Congress.
(IANS Report)
