NEW DELHI: State-owned BSNL, which is fast running out of cash to pay employee salaries, is looking to raise over Rs 12,000 crore long term loan, as it has depleted its reserves and desperately requires finding to meet upcoming capital and operating expenditures.
Executives in BSNL management admitted that the company was looking at banks to offer the PSU a lifeline, but denied reports that it had appointed SBI Capital Markets to arrange the loans.
ET had reported last month that BSNL, that was sitting on cash pile of over Rs 40,000 crore till March 2008, and was using its interest income to buttress its profits, may soon be forced to seek a government bailout to survive.
The telco is also learnt to have asked the government to fast track the process of refunding it about Rs 8,000 crore as the telecoms department had approved its plan to surrender its wireless broadband access spectrum in most circles. In the interim period, the telco wants a one-time grant equivalent to this amount to pay for its GSM tender for 14 million lines, expand its 3G offering and meet employee wage bills.
It had also sought about Rs 1,500 crore support from the Universal Service Obligation Fund to sustain its rural landline operations, a move that was turned down by the government.
BSNL had recorded a whopping loss of Rs 6,384 crore for the year-ended March 11, capping a series of dismal results in the last four years that saw the erstwhile monopoly being reduced to a bit player in the fast-growing market.
Once considered as jewel among the India’s state run companies, BSNL began the current financial year with reserves of just Rs 2500 crore. Off this, BSNL had a bank deposit of only Rs 840 crore while the rest is current account and being used for running its businesses.
But in March 2010, BSNL had cash reserves to the tune of Rs 30,343.40 crore.
“Our employee costs account fro 46.5% of the company’s total revenues. No company can survive if employee costs eats away a bulk of revenues,” BSNL’s chairman and managing director RK Upadhyay had told ET last month. On revenues of Rs 29,687 crore, the company has incurred employee cost of Rs 13,791 crore during the last fiscal, as per its balance sheet, a copy of which was reviewed by ET.
Upadhyay had further added that the telco’s cash reserves had collapsed as it paid out close to Rs 19,000 crore for 3G and wireless broadband access (BWA) spectrum in 2009. BSNL did not take part in the auctions, but was mandated to match the winning bid in all circles. This resulted in the telco paying up Rs 10,186.58 crore for 3G airwaves and a further Rs 8,314 crore for BWA airwaves.
BSNL also attempted to reduce its employee numbers by a third by offering about 100,000 employees a voluntary retirement scheme late last year, but the proposal failed to take off after severe opposition from its unions.
In 2009, a panel headed by Sam Pitroda, advisor to the prime minister on public information infrastructure and innovations, had advocated that loss-making BSNL take the VRS route to prune its near 2.77 lakh headcount by a third.
BSNL’s last order for mobile equipment was in 2006, when it issued a tender for 45 million lines, but this was eventually reduced to 22 million lines after former telecoms minister A Raja had intervened. In 2010,BSNL had cancelled its 93 million lines contract, the world’s largest for telecom equipment.
Following the junking of the 93 million lines contract, which had run into several controversies, including court cases and a probe by the Central Vigilance Commission, BSNL subsequently launched a tender for 5.5 million lines, which barred Chinese vendors initially, only to re-launch the bidding process to include the same, leading to protests from Western bidders resulting in the eventual cancellation of this tender.
After this, the telco had attempted a fresh tender for 15 million GSM lines, and Chinese participation in the bidding process has now raised fresh security concerns from the home ministry and the IB, forcing it to delay placing orders yet again.