A Debt End
By Team Legistify / 2017-07-21

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Videocon has approached banks for huge debt restructuring. Is the company staring at insolvency?

VIDEOCON HAS APPROACHED BANKS FOR ` 19,500 CRORE DEBT RESTRUCTURING AFTER MAKING HUGE LOSSES IN TELECOM AND PICTURE TUBE PLANT REVAMP. IS THE COMPANY STARING AT INSOLVENCY?

Venugopal Dhoot, the architect of the first homegrown consumer durables company in India, Videocon Industries, sounds distressed while talking about the recent insolvency proceedings by banks. “How can banks recover their loans by liquidating assets in this dull market?” he asks.

It's not dificult to fathom why Dhoot is worried. At a time when the Reserve Bank of India (RBI) is pushing banks to liquidate a fourth of the `8 lakh crore non-performing assets (NPAS) on their books, Videocon has approached lenders for restructuring its `19,500 crore debt. The company is among the 50 biggest defaulters in the country but has not been included in the first list of the 12 companies which face insolvency proceedings.

Videocon’s debt surged because of its failed telecom services business – it lost about `7,000 crore in telecom – and the picture tube plant modernisation in Gujarat that cost `4,000 crore. Also, things are not looking good at the flagship consumer durables business.

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