Shares of Grasim Industries plunged nearly 6 percent on Friday as investors' worries over the fate of the Aditya Birla Group company's investment in Vodafone Idea weighed on the stock. Grasim holds 11.55 percent stake in Vodafone Idea.
The worries are that the company may have to write off its investments in a situation which could lead to Vodafone Idea going bankrupt as the Supreme Court upheld its October 24 ruling on adjusted gross revenue (AGR).
Vodafone Idea shares tanked as much as 40 percent intraday in trade on Friday. The stock quoted at Rs 4.60 apiece, down over 23 percent, at 10.55 am. It had closed at Rs 6 per share on Thursday. So far, almost 66 crore shares have exchanged hands on both bourses.
Grasim opened at Rs 715 and touched an intra-day low of Rs 680.45 per share on Friday. The scrip had closed at Rs 756.05 apiece on Thursday.
The telecom venture of British firm Vodafone and AB Group Idea will have to shell out Rs 53,039 crore by January 23 in additional spectrum payment and penalties after the apex court's decision.
Vodafone had asked the government for a relief package comprising a two-year moratorium on spectrum payments, lower licence fees and taxes and the waiving of interest and penalties on the Supreme Court case, which centred on regulatory fees.
Vodafone Idea chairman K.M. Birla had said the company may have to stop operations if it doesn't receive any relief from the government.
"We will have to shut shop," Birla told
CNBC-TV18 at the Hindustan Times Leadership Summit when asked about the course of action for the company going ahead in the absence of government relief. Birla indicated that his group will not invest any money in the company in the absence of relief from the government.
"Don’t think I can call telecom business a failure," Birla said. "There is no sense that good money should follow bad money."
Vodafone CEO Nick Read had also called the situation "challenging".
The Supreme Court judgement mandates the telcos to pay nearly Rs 1.02 lakh crore as statutory payment to the government by January 23. Bharti Airtel too will have to pay Rs 35,586 crore.
Meanwhile, Vodafone Idea continues to lose subscribers in a highly competitive market dominated by Mukesh Ambani-led Reliance Jio and Sunil Bharti Mittal-led Bharti Airtel.
Vodafone Idea, after witnessing a minor improvement in subscriber base in October, lost 9.7 percent or 36.4 million
wireless subscribers in November. In October, the telecom service provider added 1.89 lakh users.
Reliance Jio brought in 5.6 million wireless subscribers, while Bharti Airtel could only manage to add 1.6 million new customers in November.
Vodafone Idea’s market share fell to 29.12 percent, while Reliance Jio and Bharti Airtel held 32.04 percent and 28.35 percent market shares, respectively.
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