New Delhi: The country's largest telecom operator will shut its business and move towards insolvency if it does not get any relief regarding the over Rs 40,000 crore adjusted gross revenue-based (AGR) dues it has to pay the Department of Telecom, Kumar Mangalam Birla, Chairman of Vodafone Idea, said on Friday.
Birla said that the issue of AGR is needed to be resolved urgently.
"We will shut shop if we don't get relief, it could be the end of the story for us. There is no company in world that could get that kind of money in three months," he said.
He further said that there will will be no further infusion in to the vent ure by either the Aditya Birla Group or Vodafone, however adding that, added that his telecom business cannot be called a failure.
The Supreme Court in a recent verdict allowed the Centre to recover Rs 92,641 crore in total AGR from telcos, which impacts Airtel and Vodafone Idea the most.
In November, the Department of Telecommunications (DoT) sent notices to the telcos, asking them to pay the AGR dues on a self-assessment basis within the next three months.
Speaking at the event, Birla, also said that the government has realised that telecom is a critical and strategic sector.
Following the statement by the Vodafone Idea Chairman, shares of the company on the BSE slumped and at 1.13 p.m., its shares were trading at Rs 6.84, lower by 0.47 paise or 6.43 per cent, from its previous close.
Birla said the government needs to do more than corporate tax cut and provide a strong fiscal stimulus for the economy.
He said fiscal prudence should be shown in business but a fiscal policy is also required in the year of slowdown to counter its impact.
"I am not an economist to begin with but I think we are nearing the bottom...I don't see credit growth to large corporates to pick up anytime soon. Most are still getting large debts in their balance sheets which I think they need to lop off. I also think there is a case for the government to give greater fiscal stimulus to the economy. Anyway FRBM Act (Fiscal Responsibility and Budget Management) provides half a per cent deviation," Birla said at a media event here.
Birla said the government needs to do more than a corporate tax cut.
"Tax cuts are always welcome. If the government decides to give us more tax breaks, that will be most welcome. They increase our cash flows; give us more elbow room to grow. The government has done a lot. I am not taking that away from that. One of the things that it could also do is to give stronger fiscal stimulus," Birla said.
He also said that some of the corporates would like to use the package to repay debt and some would like to use it for capacity expansion.
Birla played down that push to consumers spending by way of income tax rate cut would help the economy in the present scenario.
"We can't come out of this through a consumption story because as of now, people don't want to spend more, incomes are low. You have unemployment happening. The best to get out of it is only through fiscal stimulus. If GST (goods and services tax) is brought down to 15 per cent, that would be huge stimulus," he said.
The Aditya Birla Group's chairman also said the increase in government spending on infrastructure will have an impact that would be quite unparalleled.
In response to a question around the global economy and impact on the group's business, he said the global economy is already in a sombre mood but two of the group's overseas subsidiary due to their location have been able to mitigate the impact on business.
He said that now, countries seem to be moving away from globalisation.
"As of now, we seem to be moving away from globalisation. Some economists are calling it 'slowbalisation'. You are having a phase where you see more of localisation and regionalism. A global company must also focus on each region by itself and even within focal market. Regionalisation seems to be order of the day," Birla said.
While endorsing regional business pacts, Birla defended India's stand to refuse signing of proposed Regional Comprehensive Economic Partnership saying that there were several clauses in the pact that were against the interest of the country.