Lenders to the bankrupt Videocon Industries have filed an insolvency petition against 13 subsidiaries of the Venugopal Dhoot-led company.
Lenders to the bankrupt Videocon Industries have filed an insolvency petition against 13 subsidiaries of the Venugopal Dhoot-led company to recover their dues, sources close to the development told FE. Most of these subsidiaries are likely to be admitted by the National Company Law Tribunal (NCLT) for insolvency proceeding by next month.
The insolvency petition against Videocon Industries, which was filed by State Bank of India (SBI) in January, was admitted by the tribunal on June 6. Two days later, the NCLT admitted the lenders’ plea against Videocon Telecommunications as well. Financial creditors have submitted claims close to Rs 59,000 crore for Videocon Industries, while the claims amount for Videocon Telecommunications stands at Rs 20,552 crore.
Among Videocon Industries’ subsidiaries, lenders have filed insolvency petition against Electroworld Digital Solutions, Evans Fraser, Millenium Appliances, Applicomp India, Kail, CE India, Sky Appliances, Value Industries, Trend Electronics, Century Appliances, Techno Electronics, Techno Kart India and PE Electronics. Most of these companies supply components or finished products to Videocon Industries.
“The lenders have an exposure of around Rs 30,000-32,000 crore to these companies. Taking the subsidiaries to the NCLT was the most holistic way of recovering dues from them,” one of the sources quoted above said.
Apart from SBI, some of the other lenders to Videocon Industries and its subsidiaries include IDBI Bank, ICICI Bank, Central Bank of India and Union Bank. Videocon Industries reported a net loss of Rs 2,709 crore on net sales of Rs 13,743 crore in FY 2017, which was a 15-month period due to the change in the company’s financial year-end from December to March.
While Dhoot had tried to reach an out-of-tribunal settlement with the banks after his company was included in the RBI’s second list of corporate defaulters, it did not finally materialise. He had offered to repay his debt by selling land assets in cities like Chennai, Bengaluru, Kolkata and Mumbai.
The troubles for Videocon Industries stemmed from losses in the telecommunication, oil, consumer electronics and home appliances businesses. The steep fall in global oil prices in the last few years and increased competition in the consumer electronics space hurt the company. In India, Videocon Industries has a 25% stake in the Ravva oil and gas field, which is operated by Cairn India. Globally, Videocon through its subsidiaries has interests in eight overseas oil and gas blocks, of which seven are in Brazil and one in Indonesia.
ICICI Bank’s loans to Videocon Industries have come under the scanner because of a likely conflict in interest arising from a series of financial transactions between the Videocon Group and Deepak Kochhar, husband of Chanda Kochhar, the MD and CEO of ICICI Bank. There have been complaints that Chanda Kochhar may have violated the bank’s code of conduct and provisions relating to conflict of interest while giving loans to the Videocon Group. Chanda Kochhar has gone on leave till the enquiry into the loans to Videocon Group is complete.