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Net worth eroded, auditors doubt if Vodafone Idea a 'going concern'
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SME Times News Bureau | 06 Aug, 2020
The auditors of Vodafone Idea
Ltd have raised serious doubts over the company's ability to continue as
a going concern, saying that it has lost its entire net worth, as of
June 30, as a result of the payment of levies and AGR dues.
In
its notes on the April-June quarterly earnings of the company, the
auditors said that the assumption of going concern is dependent upon a
positive outcome of the company's and DoT's application with respect to
deferred payment of its AGR liability, waiver of debt covenant breaches
and its ability to generate or arrange the cash flow that it needs to
settle or refinance its liabilities and guarantees as they fall due.
Owing
to its financial performance and financial condition, the company has
breached its debt covenants as at March 31, 2020 for which it is in
discussions with various lenders.
"During the quarter ended June
30, 2020 based on Supreme Court judgment of July 20, 2020, the company
has further provided Rs 194,405 million and its entire net worth is
eroded as at June 30, 2020," the notes said in Vodafone Idea's
regulatory filing said.
In the April-June quarter, Vodafone Idea
has recognised an additional charge of Rs 19,440.5 crore as exceptional
item towards the total estimated liability based on the DoT's demand
amounting to Rs 58,254 crore.
The auditors said that the telecom
operator's ability to generate the cash flow has been impacted, which it
needs to settle, refinance its liabilities and guarantees as they fall
due, resulting in "material uncertainty that casts significant doubt on
the company's ability to make the payments mentioned therein and
continue as a going concern".
On Thursday, the company reported a massive consolidated net loss of Rs 25,460 crore for the April-June quarter.
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