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The move comes even as the Supreme Court is scheduled to hear modification petitions filed by telcos after the court upheld the government’s broad definition of telecom service providers’ adjusted gross revenues (AGR) based on which their levies and spectrum charges are calculated.
The steel to salt conglomerate is upset over the impact of this payout demand. “But we are realistic of the importance to have a payment plan in place,” one of the officials said.
BCCL
Tata Sons declined to comment.
If the top court allows telcos to negotiate with the telecom department (DoT) then the timeline for payment may get extended, and the Tata group company may not have to rush into clearing the AGR dues. Otherwise, it may have to make the payment immediately as the deadline fixed by the top court ended on January 23.
Top officials close to the development said the issue has been much debated by the holding company which is closely monitoring the capital allocation and return on capital of operating companies.
“It is an unreasonably huge amount, but we are aware that we have a reputation to protect of paying off every single due owed by group companies,” a group official said. “The Tata Sons board had also discussed various scenarios to best handle the financial impact when they last met before the NCLAT order in end 2019.”
The holding company’s finance team is handling the discussions on other possible avenues of raising funds to deal with the crisis that has come in a challenging business environment.
For the group this is a double whammy of sorts, coming at a time when the Tata Trust is fighting another legal battle with the income tax department.
The group is also worried about the impact of the payment on its balance sheets. “Our worries are also over the kind of impact it has on business decisions of foreign investors,” a top official said on condition of anonymity.
“How does (the group) focus on sensible capital allocation on growth when we continued to be distracted by industry legacy issues?”
To deal with such issues, the group is increasingly depending on the profits from TCS that has a market cap of Rs 8.2 lakh crore as of Tuesday.
“This is a major concern for us,” said another senior group executive. “We chose to do the right thing and paid off Docomo and banks so that we would close issues that would distract. Such issues keep distracting us from giving complete attention to other challenges that we are facing.”
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