Vodafone Idea Reports Record Losses, Becomes Weakest Link in Aditya Birla Group

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posted on 5 years ago — updated on 1 second ago

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The Aditya Birla group companies reported combined losses of Rs 6,134 crore in FY19 compared with a net profit of Rs 5,414 crore a year ago, said the report.

Vodafone Idea Ltd is turning out to be the weakest link for the Aditya Birla Group as it is for the first time in 10 years that the companies that are part of the conglomerate have reported loss at the group level in 2018-19, dragged down by the performance of the telecom firm, a report by Business Standard noted.

The Aditya Birla group companies reported combined losses of Rs 6,134 crore in FY19 compared with a net profit of Rs 5,414 crore a year ago, said the report. Vodafone Idea reported a net loss of Rs 14,604 crore in FY19, which partially offset the combined profits of other listed firms in the group. Excluding Vodafone Idea, the group reported a net profit of Rs 8,470 crore in the last fiscal, down from a profit of Rs 9,582 crore a year ago. For those unaware, the other key companies of the group include UltraTech Cement, Aditya Birla Capital, Grasim Industries, Aditya Birla Fashion and Retail and Hindalco.

Last fiscal’s trend is expected slipped into the recently-concluded quarter as well. The group companies reporting a combined loss of Rs 3,329 crore during the June 2019 quarter against a net profit of Rs 2,004 crore a year ago, the report noted. Excluding Vodafone Idea, the group companies reported net profit of Rs 1,545 crore during the June quarter against a profit of Rs 1,748 crore a year ago. Vodafone Idea reported a loss of Rs 4,874 crore during the June quarter.

The report also highlighted the rise in debt levels at key group firms. The group companies’ combined gross debt to Ebitda (earnings before interest, tax, depreciation and amortization) ratio reached a high of 7.4x in 2018-19 against 5.6x a year ago. However, if Vodafone Idea and Aditya Birla Capital are excluded, then the ratio stands unchanged from the previous year at 3.1x.

Aditya Birla group owned around 27% stake in Vodafone Idea through Grasim Industries, Hindalco Industries and Essel Mining in June 2019, with Vodafone UK being a senior partner in the joint venture with 42% stake, according to the report. Vodafone Idea is now the most indebted company in the group with total debt outstanding of Rs 1.26 trillion at the end of March and net debt to equity ratio of 2x.