Mumbai: The Mumbai bench of the National Company Law Tribunal (NCLT) could soon be commencing a hearing in the insolvency case proceedings involving Venugopal Dhoot's debt-ridden Videocon Industries.
A Bloomberg report clarified that Anuj Jain of KPMG has been appointed as the interim resolution professional at Videocon by NCLT. Two anonymous bankers have been quoted by the report in suggesting that a case has been admitted under the Mumbai bench of the NCLT.
The petitioner in this case is the State Bank of India, which had filed a case against Videocon during December 2017. The PSU bank followed the Reserve Bank's guidelines in tackling large cases of bad loans. According to this directive, banks were expected to complete resolution processes outside NCLT within six months, before proceeding with insolvency proceedings.
Venugopal Dhoot was quoted as saying that his company may not challenge the admission into the NCLT proceedings.
He said that a proposal approved by lenders was being worked upon, but before the company could materialize on the proposal, the NCLT issue came up. He was hopeful that the lenders would withdraw from the insolvency proceeding since the proposal was lucrative enough to get lenders their dues.
He did not elaborate on the the total dues, but explained briefly that the proposal meant sharing with bankers the cash flow generated from Videocon's oil business.
Videocon's Indian lenders include a consortium of 27 banks- majorly SBI and its five associates.
Although various news-reports hinted that Videocon's dues had run into several thousands of crores, two bankers quoted in the report said that bankers were chasing dues pegged at roughly Rs 20,000 crores. A Credit Suisse report pegs the company's borrowings at Rs 47,000 crores.
Another version doing the media rounds is a total debt of Rs 44,000 crores or Rs 440 billion. Half of this amount has been lent to foreign subsidiaries and operations of the Videocon group. The case to be discussed in NCLT courts in Mumbai is most likely pertaining to the India operations of Videocon, as bankers reported that the overseas companies of Videocon were still repaying debts.
Videocon's financial performance can be labelled as a shadow of it's once rich legacy. The once venerated India's large consumer electronics company has been unable to square off losses from its investments in the oil and the petrochemical sector.
And if its not investing in bleeding sectors such as telecom, then there are cases of its own reputation being tarnished. A whistle-blower recently alleged Videocon entering into shady banking dealings with Deepak Kochhar, the husband of ICICI Bank's CEO Chanda Kochhar.
In the past two years, Videocon as part of managing its mounting debts has either sold or planned to sell its businesses. It also sold Kenstar, one among its flagship air-cooler and home appliances brand to PE firm to Everstone Group in November 2017, and also sold an office in Fort in Mumbai for Rs 300 crores.
Videocon also sold its stakes in Liberty Videocon General Insurance to Enam Securities and DP Jindal Group for anu undisclosed sum. Post the stake-sale in March 2018, the new entity has been named as Liberty General Insurance.
But, Videocon's lenders were pressurizing it to sell its petrochemical assets since 2016. The company was reported of operating oil in Mozambique, Australia, Brazil and Indonesia. Venugopal Dhoot had claimed during an interview published in Mint, that by 2018 oil revenue from Brazil and Indonesia will contribute Rs 10,000 crore each. In the interview, Dhoot made a startling comparison. He compared his business vision with that of India's biggest petroleum refiner- Reliance Industries Limited.
Dhoot's admission that crude oil will offer profits and silence his lenders has usually been reposnded with pessimism. But in 2018, a bull run for crude has already made lives difficult. Crude which is expected to hit all-time highs has presented a context for Videocon to profit from petroleum investments.
But, would it manage to clear off its dues, and more importantly would it satisfy lenders and the NCLT proceedings? This is something bankers and the NCLT courts will be eagerly awaiting to hear.