Firm assures employees of clearing dues starting next month
Following the completion of its loan restructuring programme, Tulip Telecom seeks to stabilise operations, scout for new orders and clear outstanding salaries of employees.
In one month, the enterprise services provider would begin the process of clearing the pending dues of many of its 4,500-odd employees who have not been paid for several months. The salary backlog amounts to about Rs 40 crore, said Hardeep Singh Bedi, Tulip Telecom’s Chairman and Managing Director.
“Next month’s pay will include salary for 60 days. Thereafter, every month’s salary will contain pay for one and half months. We are committed to clear all pending dues to employees within a reasonable time frame,” he told Business Line.
Since Tulip Telecom had applied for the corporate debt restructuring (CDR) process, banks got on a ‘holding on mode’, significantly blocking the company’s access to working capital. The subsequent liquidity crunch made it difficult for the company to pay salaries and pursue new deals, said Bedi.
Last week, the company announced the completion of the CDR and restructuring of its master services agreements with lenders.
“With the CDR process behind us, we will now focus on releasing employee payments and stabilising operations. We will also start chasing new orders,” said Bedi. In the first round, staff responsible for collecting payables from clients would be paid; following which it will pending salaries to technical and support staff will be released, he added.
Over the last few years, Tulip had been accumulating short-term debt due to heavy investments in data centres and for financing its working capital requirements. However, these investments did not bring in revenues as expected, analysts believe.
It had defaulted on redemption of foreign currency convertible bonds (FCCB) worth $140 million which were due in August last year, apart from delaying salaries. Ultimately, the company used proceeds from the sale of its stake in the joint venture with Qualcomm to repay FCCB debt.
Further, the company had approached 13 of its lenders during the October-December period last year for recasting its debt, which stood at nearly Rs 3,000 crore. The package was approved by the lenders and so the company will now have to clear the loans over the next 12 years.
As to what has Tulip learnt from the entire episode, Bedi said, “The nature of the telecom infrastructure business is such that taking debt is inevitable However, it is always better to take long-term debt for say 15-20 years.’’