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More banks could disclose divergence, 3 PSU banks report

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Lakshmi Vilas Bank

New Delhi, Nov 2 : Within days of market regulator asking the listed PSU banks to report divergence in NPAs as estimated by them and RBI immediately to the bourses, three banks — Indian Bank, Union Bank and Uco Bank have done so and more could follow suit.

SBI had on Thursday directed all listed lenders to make disclosures on divergences and provisioning within a day of receipt of the RBI’s final risk assessment report (RAR).

Indian Bank in a disclosure to BSE said “in compliance to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SEBI circular of 31.10.2019, we enclose the report of divergence in asset classification and provisioning for NPAs as per Risk Assessment Report (RAR) of RBI for the year 2018-19.”

The Gross NPAs as on March , 2019 as reported by Indian Bank was Rs 13,353 crore while RBI assessed it as Rs 13,537 crore leading to a divergence of Rs 184 crore. There was divergence in Net NPA also but it was higher reported by the bank at RS 6,793 crore while RBI estimated it as Rs 5,973 crore resulting in a higher net NPA of Rs 820 crore by the Bank on books.

There was provisioning divergence naturally where RBI said provisioning is Rs 7,135 crore will bank put Rs 6,131 crore resulting in divergence of Rs 1,004 crore. Divergence in provisioning led to adjusted notional net loss for the the year ended March 31, 2019 is now at Rs 333 crore as per RBI against the net profit of Rs 321 crore as reported by Bank after the deferred tax assest or DTA.

Uco Bank reported a divergence in provisions for FY 19 at Rs 1390 crore. Its gross NPA divergence at Rs 1,217 crore and Net NPA divergence at Rs 165 crore where the bank has estimated higher net NPA than RBI. There was naturally divergence in provisions for FY 19 at Rs 1,390 crore.

The fiscal 2019 actual loss was Rs 4,321 crore by Bank estimates while with changes in provisioning the loss came to Rs 5,225 crore as per RBI. Union Bank of India has too reported a divergence in the reporting of net NPAs at Rs 998.70 crore for FY19. Its divergence in the reporting of gross NPAs stood at Rs 589 crore.

Private sector Lakshmi Vilas Bank (LVB) has also reported its net NPA divergence to the tune of Rs 54.9 crore in the last fiscal.

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Sensex opens 100 pts higher, Nifty above 11,900

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Sensex equity Nifty

The benchmark Sensex opened over 100 points higher at 40,408.20 from its Thursday’s close of 40,286.48. Strong buying was seen in PSU Bank. The Nifty PSU Bank index jumped over 4 per cent while auto and financial service stocks also gained.

At 10.07 a.m., the Sensex was up 194.09 points at 40,480.57 while the Nifty was up by 52 points at 11,924.10.

Bharti Airtel recovered sharply after opening in the red. It’s scrips jumped over 5 per cent despite the company posting massive Q2 losses. Vodafone Idea hit lower circuit after it reported Rs 50,922 crore loss for the September quarter from Rs 4,874 crore in the year earlier.

Vodafone Idea Ltd and Bharti Airtel Ltd had posted record losses in the September quarter, owing to the unfavourable Supreme Court verdict.

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AGR fallout: Vodafone Idea posts Rs 50,921 cr loss in Q2

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vodafone

New Delhi, Nov 14 : Vodafone Idea on Thursday posted a massive net loss of Rs 50,921 crore in the quarter ended September 30 on account of the Supreme Court judgement on the Adjusted Gross Revenue (AGR) matter.

As per a regulatory filing by the company, this was due to a one-time loss of Rs 30,774.5 crore the company incurred due to the recent Supreme Court verdict on AGR dues.

“We have accounted for the estimated liability of Rs 27,610 crore related to licence fee and Rs 16,540 crore billion related to spectrum usage charges up to September 30, 2019, including the interest, penalty and interest thereon of Rs 33,010 crore,” the regulatory filing said.

The company, which incurred a loss of Rs 4,873 crore in Q1 of the current fiscal, said that it is in the process of filing a review petition of the AGR judgment in the Supreme Court.

The company added that the Supreme Court order on AGR has resulted in liabilities on account of licence fee and spectrum charges to the tune of Rs 44,150 crore, which has to be paid within three months.

This estimate is based on demands received from the Department of Telecommunications (DoT) till date, an estimation for the period for which demands have not been raised, together with interest and penalty adjusting for certain computation corrections.

Vodafone Idea’s Q2 revenue stood at Rs 10,844 crore, a fall of 3.9 per cent quarter-on-quarter. Its EBIDTA was at Rs 3,347 croe, a huge drop of 9.1 per cent, while its margin dropped to 30.9 per cent.

The company said that there was significant doubt over its ability to generate cash flow to settle and refinance liabilities and guarantees, dependent on obtaining relief from the government.

The company is in the process of filing a review petition with the Supreme Court over the AGR judgement.

Further, through the Cellular Operators Association of India (COAI), the company has made representations to the government, urging it to provide relief to the telecom sector, including but not limited to requesting to not press for the AGR liability payment and grant waivers, not levy spectrum usage charges on non-licensed revenue/ income, reduction of licence fee and SUC rates, use of GST credit for payment of government levies and allow payment to be made in instalments after some moratorium and grant a moratorium of two years for the payment of spectrum dues beyond April 1, 2020 up to March 31, 2022.

The government has taken cognizance of these representations and has recently set up a Committee of Secretaries to evaluate the telecom operators’ plea and suggest measures to mitigate the financial stress, it said.

Any waiver and/or grant of deferred payment terms for the AGR liability by the government, reduction of license fee and/or SUC rates and a moratorium on payment of DoT spectrum instalments are essential to meet the funding requirements for the aforesaid payments.

These factors indicate that material uncertainty exists, casting significant doubts on the company’s ability to continue and its ability to generate the cash flow that it needs to settle, or refinance its liabilities and guarantees, Vodafone Idea said.

“The company’s ability to continue is dependent on obtaining relief from the government and positive outcome of the proposed legal remedy,” the telco said.

It added that during the financial year ended March 31, 2019, the company had classified Rs 10,206.2 crore from non-current borrowings to current maturities of long-term debt for not meeting certain covenant clauses under the financial agreements for specified financial ratios as on March 31, 2019.

The company had exchanged correspondences/been in discussions with these lenders for the next steps/waivers. While it has provided for SUC, considering that no spectrum is used for generating non-telecom income, the company is evaluating the levy of SUC on such income.

“Accordingly, during the quarter we recognised a charge of Rs 25,680 crore as a part of exceptional item after adjusting the available provision and potential payments, on satisfaction of contractual conditions, under a mechanism with Vodafone Group,” the operator added.

On fund raising and asset monetisation, it said the merger of Indus Towers and Bharti Infratel is awaiting regulatory approval from the DoT after having received all other required approvals. The long stop date on the original agreement has been extended to December 24, 2019.

Vodafone Idea also plans to monetise its 11.15 per cent stake in Indus on completion of the Indus-Infratel merger. In addition to exploring options to monetise nearly 1,60,000 km of intra-city and inter-city fibre, the company is exploring monetisation of its data centre.

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AGR fallout: Airtel slips into Rs 23,045 cr Q2 net loss

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airtel

New Delhi, Nov 14 : Sunil Mittal-owned Bharti Airtel on Thurday posted a mammoth net loss of Rs 23,045 crore in its July-September quarter as against loss of Rs 2,866 crore in Q1 on heavy provisioning towards the DoT’s AGR amount which has to be paid in three months as per the Supreme Court order.

The Gurugram-based operator’s net loss exceeded its consolidated revenue from operations which grew 4.9 per cent year on year to Rs 21,131 crore in the September quarter.

Airtel’s results come three weeks after the apex court upheld the government’s broader definition of revenue, on which it calculates levies on telecom operators, dealing a Rs 92,000 crore blow to the telecom industry, which is already burdened with falling tariffs and mounting debt.

“On October 24, 2019, the Supreme Court of India delivered a judgement in relation to a long outstanding industry-wide case upholding the view considered by Department of Telecommunications in respect of the definition of Adjusted Gross Revenue This Court Judgement has significant financial implications on the Company. The Court has allowed a period of three months to the affected parties to pay amounts due to DoT,” the company said.

Airtel said the company is hopeful of relief but in the absence of the same, has provided for an additional amount aggregating Rs 28,450 crore as a charge for the quarter comprising principal of Rs 6,164 crore, interest of Rs 12,219 crore, penalty of Rs 3,760 crore, and interest on penalty of Rs 6,307 crore with respect to the license fee as estimated based on the court judgement and spectrum usage charges (SUC) as estimated based on the definition of AGR.

Thus the liabilities/provisions as at September 30, 2019 aggregate Rs 34,260 crore (comprising principal of Rs 8,747 crore, interest of Rs 15,446 crore, penalty of Rs 3,760 crore and interest on penalty of Rs 6,307 crore).

In a statement, Gopal Vittal, MD and CEO, India & South Asia, said: “Despite being a seasonally weak quarter, we witnessed positive revenue growth in Q2 on the back of various initiatives aimed at providing superior differential services through our Thanks platform. We continue to witness strong data traffic growth of 81 per cent YoY and added 8 mn 4G customers on our network during the quarter. We remain committed to strengthening our network and providing a superior experience to our customers.

“Before exceptional items, the net loss stood at Rs 1,123 crore. The company’s India revenues increased by 3 per cent on year-on-year basis to Rs 15,361 crore. On the AGR verdict of the Supreme Court, we continue to engage with the government and are evaluating various options available to us. We are hopeful that the government will take a considerate view in this matter given the fragile state of the industry,” he said.

Mobile data traffic on the network grew to 4,661 PBs in the quarter and growth of 81 per cent YoY. Consolidated EBITDA was at Rs 8,936 crore while onsolidated EBITDA margin is at 42.3 per cent, up 10.8 per cent YoY. India revenues for Q2’20 at Rs 15,361 crore have increased by 5.7 per cent YoY (reported increase of 3.0 per cent) on an underlying basis.

Mobile revenues have witnessed a YoY growth of 7.1 per cent. Mobile data traffic has nearly doubled to 4,497 PBs in the quarter as compared to 2,478 PBs in the corresponding quarter last year. Mobile 4G data customers increased by 56.9 per cent to 103.1 mn from 65.7 mn in the corresponding quarter last year.

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