Stoned, battered and depressed, Vodafone Idea as they see no signs of improvement to keep their company afloat. However, Chairman of the Aditya Birla Group Kumar Mangalam gave away his company stakes in the VIL to the government in the quest for the means of survival. According to the report published by the Business Standard, Vodafone CEO Nick Read said that “The telecom major will not be infusing fresh equity into debt-ridden Vodafone Idea (Vi).”.
Vodafone Idea’s gross debt, as of March 31, 2021, is ascertained to be nearly Rs 1.8 lakh crore. The State Bank of India has roughly around Rs 11,000 crore exposure to Vodafone Idea which comprises 0.5 per cent of its loan book.
Other major financial banks include: Yes Bank (Rs 4,000 crore or 2.4 per cent of the book), PNB (Rs 3,000 crore or 0.5 per cent of the loan book), Axis Bank (Rs 1,300 crore or 0.2 per cent of the loan book), ICICI Bank (Rs 1,700 crore or 0.2 per cent) and HDFC Bank (Rs 1,000 crore or 0.1 per cent) as stated by the numbers are based on a Nomura report.
Larger banks may not have to worry much because as a percentage of the book, exposure is not very high. Also, most banks had started providing for likely losses from Vi. Banks have been preparing for this for a while. But, that may not be the case with smaller lenders. “Most of the larger banks will absorb the hit given their very large balance sheet size. However, smaller mid-sized banks will have some issues,” added Jyoti Roy, Analyst at Angel Broking.
“For IndusInd Bank, the funded exposure is around Rs 1,000 crore and the balance is non-funded. Most of these banks are well capitalised. Lastly, the VI risk exposure has been on investors’ minds for the past two years and is not a new problem. Across banks, the exposure is already reported under ‘below investment grade,” the Nomura official data reported.
The Managing Director and CEO of Punjab National Bank, S S Mallikarjuna Rao, said “The developments in the last few days were areas of concern for the banking industry, referring the AGR-related issues for the telecom players. PNB’s exposure is not very high in VIL and it is not going to impact its balance sheet.”
“However, we will be definitely discussing with other bankers to see what kind of action we need to take going forward considering the statement of KM Birla only yesterday,” Rao averred.
IDFC First Bank has etched the account of VIL and has assured provisions of 15 per cent (Rs 487 crore) in relation to the outstanding exposure of Rs 3,244 crore (funded and non-funded).
“This provision translates to 24 per cent of the funded exposure on this account. The said account is current and has no overdue as of June 30, 2021,” the lender announced in an official investor presentation catering to “one large telecom account”.