New Delhi, Feb 19 Vodafone Idea Chairman Kumar Mangalam Birla on Tuesday in a meeting with Telecom Secretary Anshu Prakash stressed that without government relief, the company may file for bankruptcy and land up at NCLT, leading to a cascading effect of rise in banks' NPAs, and damage India's image as an FDI-friendly nation.
While neither Birla nor the Department of Telecom (DoT) has revealed any details of their meeting, according to a source, Birla insisted on going to National Company Law Tribunal (NCLT) if relief from AGR was not given to the company.
He left the choices to the DoT on the exact form of relief, but apparently suggested that there could be staggered payments, or the dues could be limited to principal of the AGR without penalty and interest on penalty.
Sources said Birla also told Prakash that invocation of bank guarantees would wipe out Vodafone Idea's net worth, and that it would have to shut down operations straight away, leading to bank facing rise in non-performing assets (NPA), job losses and labelling of the country's image as a difficult FDI destination.
It would hinder governments' target to be among the top 50 countries in terms of ease of doing business against the current ranking of 64th.
With Communications Minister Ravi Shankar Prasad several times repeating that the government doesn't want duopoly, the message from Birla has been communicated to all stakeholders Prime Minister's Office (PMO), Law and Finance ministries on possible repercussions of Vodafone Idea landing up at NCLT.
With DoT being criticised by the Supreme Court in the last hearing, the department has sounded out these concerns, and sources said DoT too agrees on some of the impacts. The Finance Ministry is worried on the overall loans by PSU banks estimated at Rs 4 lakh crore including spectrum auction loans.
SBI alone has Rs 12,000 crore exposure in Vodafone Idea. DoT feels a duopoly is a worst scenario for consumers. Keeping legal angle in mind, sources said two options could be looked at a waiver of penalties or staggered payment with interest.
The current moratorium of 2 years on spectrum auction dues payment was also offered by governments after Birla had met DoT top brass expressing inability to pay the dues to government due to poor financial conditions of the sector and his company's on account of cheap and free services offered by Reliance Jio.
( With inputs from IANS )