Lenders to Videocon Industries will join petroleum ministry’s delegation to Brazil later this month in an effort to push for troubled Petrobras project in the Sergipe Basin where the company is in a joint venture with Bharat Petroleum (BPCL), two senior bankers told FE. According to a banker, the government has asked a couple of senior lenders to accompany the team led by petroleum minister Dharmendra Pradhan. The visit to Brazil, the banker said, was scheduled for May but certain delays has pushed it to June. “It will be a meeting between the government of India and Brazil and we hope to lobby for quicker resolution of the project so that Videocon’s cashflows improve and consequently it is able to repay a chunk of its debt,” he said. Videocon was recently declared a non-performing asset (NPA) by public sector lender Dena Bank on May 9 and since then, the company has lost 71% in market cap on the BSE and stood at Rs 1,005 crore on June 8. Its gross debt stood a Rs 47,554 crore in December 2015. In FY16, the company’s consolidated net profit stood at Rs 1,368 crore on the back of Rs 10,311 crore in revenues.
While a couple of smaller banks have classified the company as an NPA in the March, 2017 quarter, the larger banks like State Bank of India (SBI), Punjab National Bank (PNB) have not. However, sources added that Videocon has repaid even in April and has therefore been classified as a bad loan by a majority of banks. Another banker added that while Videocon is trying to repay debt by selling some of its businesses like Kenstar and merge its direct-to-home (DTH) division with Dish TV, if the Petrobras project takes off, it will be in a much more comfortable position. “We could even look at exiting the project at a later stage then,” he added.
Brazil’s Petrobras owns a majority stake in BM-SEAL-11 and IBV Brazil – a 50-50 joint venture between Videocon and BPCL – own the rest of the project. While the companies had discovered oil in Sergipe Basin in 2015, the project is stuck following delays in development and the massive bribery scandal in Brazil.
Petrobras told agencies last year that it has yet to receive a formal proposal from its Indian partners to finance the project. Asked about the delays, Petrobras was quoted as saying in a statement, it has invested about $3.5 billion on exploration in the Sergipe blocks and expects to complete a development plan for the areas by 2020 but has no date for the first production of oil.