Instruments with ‘D’ rating are 'either' in default or are expected to be in default soon
CARE Ratings has qualified its ‘D’ rating on Videocon Telecommunications Ltd’s (VTL) bank facilities aggregating Rs 3,207 crore with the ‘issuer not co-operating’ tag.
As per the credit rating agency’s rating definition, instruments with ‘D’ rating are 'either' in default or are expected to be in default soon.
The credit rating agency said it has been seeking information from Videocon Telecommunications to monitor the rating via e-mail communication/letters and numerous phone calls.
“However, despite our repeated requests, the company has not provided the requisite information for monitoring the ratings. In line with the extant SEBI guidelines.
“CARE has reviewed the rating on the basis of the publicly available information which however, in CARE’s opinion is not sufficient to arrive at a fair rating,” the agency said.
Further, Videocon Telecommunications Ltd has not paid the surveillance fees for the rating exercise as agreed to in its rating agreement. The CARE ‘D’ rating is for both the term loan of Rs 2,562.50 crore and bank guarantee of Rs 644.92 crore.
According to the agency, during FY16, the promoters of VTL, which is a part of the Videocon Group, have done equity infusion of Rs 800 crore (Rs 921 crore in FY15) in the company. Furthermore, the promoters have infused funds to the tune of Rs 6,500 crore in the last four years to fund the losses and repayment obligations of the company.
VTL has a national long distance/international long distance licence which allows the company to offer long-distance domestic as well as international calls in all 22 circles across India. The company is operating NLD services and terminating ILD traffic on its own NLD network across India.
Delay in interest servicing and debt repayment
VTL was granted the licence for providing unified access services (UAS) in 21 circles by the Department of Telecommunications, Government of India (DoT) in 2008 and was also allotted spectrum in 20 circles.
CARE Ratings said: “The Hon’ble Supreme Court of India, vide its judgment dated February 02, 2012, quashed all the UAS licence granted on or after January 10, 2008, and subsequent allocation of spectrum to these licences, which also included the 21 UAS licences granted to the company and the spectrum allotted to it.
“Owing to the cancellation of licences and closure of its operations in 8 circles, it faced huge losses and severe liquidity crunch and was not in position to repay the debt on time.’’ The Hindu Business Line