Kumar Mangalam Birla steps down as Vodafone Idea chairman and director
Stocks of the crisis-hit telecom operator fell 18.51% and hit an all-time low in Wednesday’s trading.
Kumar Mangalam Birla stepped down on Wednesday as Vodafone Idea’s non-executive director and non-executive chairman. The company’s board of directors accepted Birla’s request, the telecom service provider said in a regulatory filing to the exchanges.
The board elected Himanshu Kapania as the company’s new non-executive chairman and appointed Sushil Agarwal as an additional director.
Birla’s decision came two days after a letter written by him to the government became public. In his letter to Cabinet Secretary Rajiv Gauba, dated June 7, Birla said that he was willing to hand over his 27.66% stake in the debt-laden company to any entity, public or private, that could keep it “going”.
His letter became public amid doubts over the company’s survival after the Supreme Court earlier this month did not allow telecom operators’ plea to revise their pending dues to the government.
According to official data, Vodafone Idea’s adjusted gross revenue liability is Rs 58,254 crore, of which it has paid Rs 7,854.37 crore. In addition to this, as of March 31 this year, the company owed Rs 96,270 crore in deferred spectrum payment obligations and another Rs 23,000 crore to banks and financial institutions.
In his letter, Birla warned that without the government’s immediate support, Vodafone Idea’s financial situation would drive its operations to an “irretrievable point of collapse”.
In reaction to the letter, Vodafone Idea stocks crashed 12% to hit a 52-week low in Tuesday’s intra-day trading. The stock managed some recovery by the time markets closed on Tuesday, but the company lost Rs 2,700 crore in market capitalisation – the market value of a publicly traded company’s outstanding shares.
On Wednesday, the company’s stock price fell a further 18.51% to close at Rs 6.03 on the Bombay Stock Exchange. In the intra-day trading, the stock had hit an all-time low price of Rs 5.94 per share.