“The board of directors of Vodafone Idea, at its meeting held today (Wednesday), have accepted the request of Kumar Mangalam Birla to step down as non-executive director and non-executive chairman of the board with effect from close of business hours on August 4, 2021,” the filing said.
KM Birla has stepped down as the non-executive chairman of financially-troubled Vodafone Idea, the company said in a regulatory filing on Wednesday. “The board of directors of Vodafone Idea, at its meeting held today (Wednesday), have accepted the request of Kumar Mangalam Birla to step down as non-executive director and non-executive chairman of the board with effect from close of business hours on August 4, 2021,” the filing said.
The board has elected Himanshu Kapania, currently a non-executive director, as the non-executive chairman. In the past, he was the MD of Idea Cellular before it was merged with Vodafone India. A telecom industry veteran, he is at present the chairman of the Ficci council on telecom, electronics and digital economy.
Birla’s stepping down comes at a time when VIL is going through a major financial crisis and has written to the Centre for relief in the form of extension of moratorium on spectrum instalments and fixing a floor price for voice and data tariffs.
In fact, on August 2, Birla’s June 7 letter written to Cabinet secretary Rajiv Gauba came to light in which he wrote that he’s willing to give up his stake in the company to any public sector, government, or domestic financial entity, which can keep the company as a going concern.
“It is with a sense of duty towards the 27 crore Indians connected by VIL, I am more than willing to hand over my stake in the company to any entity – public sector/government /domestic financial entity or any other that the government may consider worthy of keeping the company as a going concern,” Birla said in the letter. “I and my team will be more than happy to work with the government to urgently explore all possible options and solutions to save the company and strengthen it in the national interest without any consideration of our private interest,” it added.
The company also said in Wednesday’s regulatory filing that based on recommendations of the nomination and remuneration committee, the board has appointed Sushil Agarwal, a nominee of Aditya Birla Group, as an additional director (non-executive and non-independent) with effect from August 4, 2021.
In his June letter, Birla had also listed the areas where the Centre’s support was needed by the end of July. Without the help, he had said, the company’s operations would be driven to “an irretrievable point of collapse”.
The fate of VIL currently hangs in balance with its cash flows depleting, a massive debt of Rs 1.8 lakh crore and the company continuously losing customers to competition offering cheaper tariffs. The company has also highlighted it is facing challenges to raise the planned funds of Rs 25,000 crore as investors are wary about the future of the telecom sector due to the low pricing structure.
Analysts have said Birla’s offering his stake to the government has some basis as a lot of government money is riding on the company. For instance, of its Rs 1.8-lakh-crore net debt, government dues in the form of deferred spectrum payment (Rs 96,300 crore) and AGR dues (Rs 61,000 crore) come to around Rs 1.57 lakh crore.
The Aditya Birla Group has a 27.66% stake in Vodafone Idea. The other partner in the firm is Vodafone Plc, which has around 44% stake. The current market capitalisation of the company is around Rs 24,000 crore.