Can’t pay November salaries to its 45,000 staffers.
While MTNL’s monthly salary bill is Rs 200 crore, its accumulated losses stand at Rs 2,936 crore; the debt-riddled national carrier also struggled to pay salaries until it received a Rs 980-crore infusion from the Centre.
Mahanagar Telephone Nigam Ltd (MTNL), once a Navratna company of the central government that enjoyed a high level of fiscal autonomy, now finds itself in a financial mess: it does not have the cash to pay its
employees their November salaries.
MTNL’s total debt at the end of the second quarter of the current fiscal was around Rs 19,000 crore. Its losses for the second quarter were Rs 859 crore, while its accumulated losses stood at Rs 2,936 crore as of March 31 this year.
The telecom major’s problems seem to mirror the woes of national carrier Air India. Reeling under a Rs 52,000-crore debt, AI also struggled to pay its staff salaries for May and July. It managed to pay the July salaries only in the second week of August, after it received an infusion of Rs 980 crore from the central government.
A November 28 letter written by the MTNL deputy general manager, banking and budget, to its executive directors in charge of the Mumbai and Delhi circles said, “Due to fund shortage, the advice to banks for payments of salary of November 2018 is not to be issued.”
Large, unproductive staff strength is another problem the company faces, and 92.2 per cent of its revenues go towards paying employee salaries. MTNL has around 45,000 employees, of which around 20,000 are in
Mumbai. Its monthly salary bill is around Rs 200 crore.
‘Net worth eroded’ MTNL’s auditors have pointed out that the company’s net worth has eroded completely. The company’s revenues declined from a high of Rs 4,921.55 crore in 2004 to Rs 2,371.91 crore in March 2018. The company’s Rs 10 value share traded at Rs.12.71at the end of day’s session at the BSE on Friday.
In the case of Air India, analysts believe the UPA government’s decision to merge it with the loss-making Indian Airlines was at the root of the problem. Besides this, the company’s purchase of Boeing aircraft at the cost of Rs 40,000 crore, and the resultant debt of Rs 22,000 crore, was another major reason for Air India’s slide.
State-owned MTNL’s decline was concomitant with the rise of private telecom operators. Rajnath Yadav, senior research analyst with brokerage house Choice Broking, told Mirror the reason is MTNL’s laidback attitude.
When private telecom companies were expanding aggressively, offering various schemes to customers and investing in the latest technology, MTNL did not take the initiative to try and retain its customer base, Yadav said.
“Unless the government infuses cash, brings in strategic investors, or merges it with BSNL, MTNL’s woes will continue,” he said.
Spectrum sale to blame?
Arvind Sawant, president of the MTNL Kamgar Sangh and Shiv Sena MP from South Mumbai, has a different view. “Till 2008, the company was in profit. It had posted a profit of Rs 2,800 crore in the 2007-08 financial year, but due to an inept, indifferent management and government interference, the company has been on a steady decline. Things have now come to such a pass that the company doesn’t have the money to pay salaries,” Sawant told Mirror.
“It all started with the 2008 spectrum sale, when the then UPA government forced MTNL, which has operations in just two metros, to buy spectrum worth Rs 10,000 crore; whereas BSNL, which has operations in the entire country, also spent the same amount on its spectrum purchase. MTNL had to raise loans to pay the government for the spectrum, but its revenues did not rise proportionately. It now takes loans from banks to meet even its daily expenditure, but even the banks have finally banks said no to further loans. As a result, salaries are not being paid,” he said.
“I have written several letters to the prime minister, the communication minister, and other seniors in government, with suggestions on how to improve the company’s financial health and make it competitive again. But no action was taken on any of my letters. In fact, I feel that like Air India, the government also wants to sell MTNL, which owns prime real estate in Mumbai and Delhi,” Sawant said.
Mirror’s calls and emails to MTNL Chairman and Managing Director PK Purwar were unanswered at the time of going to press. – Mumbai Mirror