Debt-ridden telecom operator Vodafone Idea Ltd's (VIL) stock was under pressure in trade on Tuesday ahead of the annual general meeting (AGM) scheduled to be held on September 30.
The company had said it will seek shareholders' approval to raise the borrowing limit to Rs 1 lakh crore, at the AGM. Shareholders of the company, which was earlier listed as Idea Cellular, had approved a borrowing limit of Rs 25,000 crore at AGM in September 2014.
In a regulatory filing, VIL said as the resolution passed by the company in September 2014 did not specify the securities premium, a necessary amendment is required to include securities premium in the borrowing powers.
It also said that after the amalgamation of erstwhile Vodafone India Ltd and Vodafone Mobile Services Ltd with the company in August 2018, "it is felt necessary that a fresh resolution be passed, encompassing the total overall borrowing limits of the company, post the amalgamation".
VIL is exploring various avenues for raising additional funds to ensure adequate cash flows for stable ongoing operations.
"It is, therefore, proposed to increase the borrowing limits to enable the board to borrow monies, provided that the total amount so borrowed by the board shall not at any time exceed Rs 1,00,000 crore or the aggregate of the paid-up capital, free reserves and securities premium account of the Company, whichever is higher," the filing said.
VIL will also seek shareholders' nod to create charge or mortgage or hypothecate on the company's properties up to the limit of Rs 1 lakh crore. The company will also seek the shareholders'' approval for a 10-year master service agreement (MSA) with Indus Towers and Bharti Infratel for renting mobile sites across India.
The transaction with Indus Towers, which is in the process of merging with Bharti Infratel, will cost VIL around Rs 10,000 crore every fiscal year from the current fiscal year onward.
The company already has an MSA with Indus Towers. VIL estimates the transaction cost of a 10-year master service agreement with Indus Towers is likely to be more than 10 percent of its annual consolidated turnover, at around Rs 10,000 crore per annum from the current financial year onward. Hence, it will seek the shareholders' approval to go ahead with the agreement as required under existing regulations.
Once the contract of Indus Towers is transferred to Bharti Infratel after the merger, the service will cost VIL around Rs 10,000-Rs 15,000 crore, according to the filing.
The company will also seek shareholders' approval to raise up to Rs 25,000 crore through debt or equity sale which was approved by its board on September 4.
Loss-making VIL has been struggling in the market for survival with net debt of over Rs 1.12 lakh crore, and the Supreme Court's order upholding the right of the government on statutory dues added to the financial woes of the company.(With inputs from PTI)