According to the latest media report, Aircel is considering filing for bankruptcy in the National Company Law Tribunal. As previously reported by People Matters, the telecom industry is undergoing a phase of consolidation in the industry. The smallest private mobile operator in the country stopped services for its 6 million subscribers in the six circles.
Apparently, the organization had been short of funds for quite some time and is debt-ridden now.
The Chief Executive Officer of Aircel, Kaizad Heerjee said, “Our financial situation has resulted in network and system outages. Millions of customers have been impacted.”
In an email to all the employees, Harjee stated, “We have had no funding for some time and have been dependent on cash generation from our current business processes.”
Especially after the entry of Reliance Jio in the market, the competition has gotten tougher and which has also acted as a trigger for the telecom organizations to organize themselves.
The operating profit of the company in Rs 120 crore in July 2016, which is before Reliance Jio started its operations in the country. While in July 2017, Aircel’s profit dropped to Rs 5 crore. Though in December 2017, the operating loss was Rs 120 crores. Maxis which owns Aircel was rumored to have planned to invest in the company but then had pulled the plug.
Though, the fate of the employees has not been stated in the email. Harjee has said that after the resignation of the directors who resigned, Aircel has appointed Sandeep Vats, Prakash Mishra, and Lakshmi Mittal. The board will re-group in the next week and evaluate the future options of the company.
The option to file bankruptcy is also being considered because RBI scrapped the debt revamp schemes after the introduction of the Insolvency and the Bankruptcy Code. Aircel hasn’t repaid its debt since September, and hence the banks are not in a position to restructure the loan for them.