Insolvency process: Videocon lenders’ claims at Rs 59,000 crore

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Mumbai | July 18, 2018 5:58 AM

NCLT accepts Rs 57,000 crore; case admitted in early June, that of telco arm two days later.

The company reported a net loss of Rs 2,709 crore on net sales of Rs 13,743 crore in FY17, which was a 15-month period following a change in the financial year-end from December to March.

Lenders to the bankrupt Videocon Industries, which was admitted by the National Company Law Tribunal (NCLT) for insolvency proceedings in early June, have submitted claims close to Rs 59,000 crore. The tribunal has so far accepted claims worth Rs 57,000 crore.

The company reported a net loss of Rs 2,709 crore on net sales of Rs 13,743 crore in FY17, which was a 15-month period following a change in the financial year-end from December to March.

Financial creditors of Essar Steel have filed claims worth Rs 54,917 crore, while those for Bhushan Steel had submitted claims worth Rs 56,079 crore, data from the companies’ websites showed.

The Mumbai bench of the NCLT admitted the Venugopal Dhoot-led Videocon Industries for insolvency proceeding under the Insolvency and Bankruptcy Code (IBC) on June 6, based on a petition filed by State Bank of India (SBI). While the promoters had attempted a settlement following a petition filed by SBI for insolvency in December 2017, it failed to materialise. The promoters had offered to repay the debt by selling land assets in cities like Chennai, Bengaluru, Kolkata and Mumbai.
Within two day of Videocon Industries being admitted by the NCLT, its subsidiary Videocon Telecommunications was also admitted for insolvency proceedings. As of July 6, financial creditors of Videocon Telecommunications had filed claims worth Rs 20,552 crore and claims worth Rs 18,406 crore have been admitted so far.

As of July 6, Videocon’s lenders including SBI, IDBI Bank, Central Bank of India, ICICI Bank, Union Bank and 45 other banks and financial institutions have filed claims worth Rs 58,731 crore, data from Videocon Industries’ creditors’ list showed. The highest claim by SBI stands at Rs 11,175 crore, followed by IDBI Bank’s claim at Rs 9,562 crore and Central Bank of India’s claim at Rs 5,064 crore.

The troubles for Videocon Industries stemmed from losses in the telecommunication, oil, consumer electronics and home appliances businesses.

The fall in crude oil prices a few years ago and the heightened competition in the consumer electronics space hurt the company. In India, Videocon Industries has a 25% stake in the Ravva oil and gas filed, which is operated by Cairn India. Globally, Videocon through its subsidiaries has interest in eight overseas oil and gas blocks, of which seven are in Brazil and one in Indonesia.

Videocon Telecommunications’ woes started in 2012 when the Supreme Court quashed all unified access services (UAS) licences granted on or after January 10, 2008, and the subsequent allocation of spectrum to these licences. The company was granted licence for providing UAS in 21 circles and was allotted spectrum in 20 circles. Owing to the cancellation of licences and closure of its operations in several circles, the company faced huge losses and severe liquidity crunch and was not in position to repay the debt on time.

Subsequently, Videocon Telecommunications participated in the auction conducted by the department of telecommunications in 2013, and was awarded UAS licences and spectrum in six circles — Bihar, Gujarat, Haryana, Madhya Pradesh, Uttar Pradesh (East) and Uttar Pradesh (West). The ability of the company to continue as a going concern depended on its ability to fund its operating and capital expenditure requirements. In 2016, it concluded a deal with Bharti Airtel for trading the right to use the spectrum allotted to it in these six circles for Rs 4,653 crore.

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