Two months after writing to the government seeking support for Vodafone Idea, Kumar Mangalam Birla has resigned from his post as non-executive director and chairman of Vodafone Idea. The resignation comes even as the company looks to raise Rs 25,000 crore in cash.

To understand the regulatory and legal implications of these developments, CNBC-TV18 spoke with Sandeep Parekh, founder at Finsec Law Advisors.

“Mr Birla wants to hand over the company to the government. But is it as simple as that, I don’t think anyone is going to buy it. The only circumstance under which there would be a buyer would be an international player or private equity player who is willing to pump in USD 10 million. Telecom is not like any other company. For telecom, scale is very important. So unless someone is able to operate Voda-Idea at the current scale or larger than the current scale, it is anyway not going to survive.”

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Therefore, unless there’s a shock and awe theory which is available, government is trying to get rid of its toxic acids and not in the business of acquiring more toxic acids, so unless a third party who has very deep pockets and stays on in the game for several years of losses, pays up for all the past losses – that is the only circumstance under which the company can do well,” Parekh added.

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Birla Group runs some of the successful companies like Grasim, UltraTech etc., is there something the lenders can look at, any option for the lenders? Parekh said he had not read any of the agreements. He mentioned, “To the best of my information none of the group companies or Mr Birla have provided support or guarantees, which means the concept of limited liability applies, the lenders will be left holding. It is a straightforward deal, the company is in debt throes so unless there is a white knight who appears with significant capital, the lenders are going to suffer a huge loss. A significant portion would be written off and equity will be wiped out.”

For the full discussion, watch video.

(Edited by : Dipika Ghosh)