Bonanza for loss making MTNL, gets Rs 177 cr income tax refund -Governance Now

Bonanza for loss making MTNL, gets Rs 177 cr income tax refund

Dogged with low performance and cash crisis, the income tax refund comes as a big relief for the PSU

PTI | June 16, 2011

In a bonanza for the loss making telecom PSU, state-run MTNL on Wednesday received over Rs 177 crore as income tax refund for the year 2010-11.

"MTNL has received a refund order amounting to Rs 177.76 crore from the Income Tax Department pertaining to Assessment Year 2010-11," MTNL said in a filing to the Bombay Stock Exchange.

MTNL had won the case in the Income Tax tribunal against Income Tax Department for a refund of over Rs 1,200 crore in tranches.

MTNL was earlier denied to consider the licence fee as business expense and was therefore charged income tax on it for nearly eight years. The PSU had challenged this and had won the case in the tribunal.

The company in financial year 2010-11 showed improvement in its revenue. In FY'11, total income rose to Rs 3,841.2 crore as against Rs 3,781 reported in FY 2009-10.

However, the company posted a net loss of Rs 2,826 crore, up 8.27 per cent from Rs 2,610.9 crore in the same period previous year.

Profit from the cellular service of the company had been declining drastically. In FY'11, loss of the company in this segment increased more than 10-fold from a profit margin of Rs 34.73 crore to Rs 346.47 crore loss.

The latest report of TRAI on telecom subscription shows that the company added only 367 new mobile subscribers in the month of April.

The company had been facing cash crunch and hence decided to restructure its Rs 7,000 crore loan taken for buying 3G and BWA spectrum last year.

The company is learnt to have restructured Rs 3,500 crore of debt, repaying Rs 500 crore and tying up with two state-run banks for the rest Rs 3,000 crore.

Under this kind of performance and cash crisis, the income tax refund for the company has come as a big relief for the PSU.

Shares of MTNL today closed flat at Rs 45.30 apiece on the Bombay Stock Exchange.

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