In a move aimed at bolstering its financial position, debt-laden telecom firm Vodafone Idea has secured approval from its board to raise Rs 2,075 crore from its promoter, the Aditya Birla group. This capital infusion is part of the company’s broader strategy to raise Rs 20,000 crore to support its operations and alleviate its debt burden.
Board Approval for Capital Raise
The board of Vodafone Idea has given the green light for the issuance of up to 1,395,427,034 equity shares, with a face value of Rs 10 each, at an issue price of Rs 14.87 per share. This includes a premium of Rs 4.87 per share. The equity shares will be issued to Oriana Investments Pte. Ltd, an entity within the Aditya Birla Group and part of the promoter group, on a preferential basis. The company will convene an extraordinary general meeting on May 8 to seek shareholders’ approval for these proposals.
Increase in Authorized Share Capital
Additionally, the board has approved an increase in the authorized share capital of Vodafone Idea from the existing Rs 75,000 crore to Rs 1 lakh crore. This augmentation will comprise Rs 95,000 crore of equity share capital and Rs 5,000 crore of preference share capital. The move reflects the company’s proactive measures to strengthen its financial foundation and enhance its capacity for future growth initiatives.
Strategic Objectives
The approvals granted by the board form part of Vodafone Idea’s comprehensive plan to raise Rs 20,000 crore in capital. This capital infusion will serve multiple strategic objectives, including bolstering the company’s operational capabilities, addressing its debt obligations, and positioning it for sustainable growth in the highly competitive telecom sector. By securing financial support from its promoter group, Vodafone Idea aims to navigate through challenging market conditions and emerge as a stronger player in the telecommunications landscape.
Impact on Financial Performance
The infusion of Rs 2,075 crore from the Aditya Birla group is expected to have a positive impact on Vodafone Idea’s financial performance. By strengthening its capital base, the company can enhance its liquidity position and pursue strategic investments to drive business expansion and customer acquisition efforts. Moreover, the increase in authorized share capital reflects investor confidence in Vodafone Idea’s long-term prospects and its ability to overcome current challenges.
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