If the bank guarantees deposited with the government are encashed, Vodafone Idea will have to shut shop, said senior counsel Mukul Rohatgi on Monday. There is no way that the company can pay Rs 25,000 crore by Tuesday, Rohatgi told CNBC-TV18.
As per the government, Vodafone Idea owes Rs 56,709 crore in AGR dues. The company announced that it has paid Rs 2,500 crore to the government on Monday and will pay an additional Rs 1,000 crore by the end of the week.
Earlier in the day, the Supreme Court refused to provide more time to Vodafone Idea to clear its AGR dues.
Rohatgi told CNBC-TV18 that the only way out is a structured plan whereby payments can be made in instalments. He also added that on self-assessment Vodafone Idea owed the government Rs 7,000 crore and the interest and penalty of Rs 23,000 crore.
“Worst case is if bank guarantees are encashed tomorrow. Still there is hope since the company has paid some amount, it will get time. It’s not the case of siphoning of funds.”
Rohatgi said: “On self-assessment Vodafone Idea owes about Rs 7,000 crore to the government. Apart from that it will be interest, penalty and interest on penalty, the total of which may be around Rs 23,000-24,000 crore. This may be disputed by the government but the government’s figure is also disputed by Vodafone and subject to accounting with both sides a final figure can be reached.”
He further added: “Over the last few years Vodafone Idea have consistently lost money. By the end of 2019, about Rs 2 lakh crore have been lost by this joint venture. So there is hardly any money left in the kitty. So, whatever they have is some Rs 3,500 crore odd which they will pay and some amount of money they will retain to carry on with their business because there are 30 crore subscribers who have to be serviced by Vodafone.”
If Vodafone is to sell its towers and other assets and pay a few thousand more is possible, then obviously they have to shut shop as soon as possible, he said.
“If you shut shop, you kind of go the liquidation way, go in insolvency and then you don’t have the money to pay.”
“So the idea today is that we pay whatever we can, show our bonafides and engage with the government and ask them not to rock the boat by encashing bank guarantees because the moment you do that then obviously you have to shut shop the next day and which does not help anybody.”
“We want the govt to understand the stress of the system. If one can survive and carry on, we can earn and pay.”
“All I asked the court for today was to not rock the boat. Our point is if the bank guarantees are encashed, the company will go down.”
The Supreme Court on Monday refused to provide more time to the to clear its adjusted gross revenue (AGR) dues even as the cash-strapped telecom company proposed to make part payment of Rs 2,500 crore today (Monday) and another Rs 1,000 crore by Friday.
The apex court also rejected Vodafone Idea’s request to not take coercive action of encashing its bank guarantee till the next date of hearing on March 17.
Appearing on behalf of Vodafone Idea in the AGR case, Rohatgi claimed the principal due is Rs 7,000 crore and the company needed more time to resolve payment issues with the Department of Telecommunications (DoT).