DVD players manufactured by Videocon Industries. (Photograph: Bloomberg)

Videocon Industries Gave Its Affiliates Rs 16,000 Crore

Videocon Industries Ltd. has given its group affiliates nearly Rs 15,968.15 crore as of September 2018, a review of the insolvent company’s books has revealed.

The company’s auditors, SZ Deskmukh & Co., said in an exchange filing that the money was given in the form of investments, advances and trade receivables. The auditors said that they were unable to express opinion on the extent of “realisability”—or the amount that can be realised—on money lent to the affiliates since they are part of insolvency resolution process.

There is severe strain on working capital and considerable decline in level of operations of the company resulting in losses, the auditors said, raising questions about its sustainability. A resolution professional had invited bids from prospective buyers to take control of the Venugopal Dhoot-led firm that has interests in consumer electronics, home appliances and oil and gas.

Videocon Industries fell into financial stress after its oil business suffered losses. Its net worth in the quarter ended September fell by around 99 percent year-on-year to Rs 40.37 crore from Rs 4,177.14 crore. Its liabilities, including borrowings and trade payables, was Rs 31,286.34 crore, of which:

  • Rs 14,959.9 crore was from the consumer electronics and home appliances segment.
  • Rs 1,696.60 crore was from its crude oil and natural gas division.
  • Unallocable liabilities, or those from apart its two main business segments, amounted to Rs 14,629.83 crore.

The principal bench of the National Company Law Tribunal had in October directed that all insolvency petitions related to entities of Videocon Industries be transferred to a single NCLT bench.

The auditors highlighted their inability to receive confirmation for certain secured and unsecured loans, bank balances, trade receivables and payables and loans and advances as “Emphasis of Matter”—which indicates uncertainty in the account books.

Auditors were also unable to ascertain the extent of impairment at the firm’s glass shell division—which makes TV picture tubes and panels—that has been shut since July 2017 due to poor demand.

Also read: Videocon, A Consumer Electronics Maker Buried Under Oil And Telecom Debt  

Revenue And Loss

Videocon Industries posted a loss of Rs 1,225 crore on a standalone basis for the September-ended quarter, the company said in an exchange filing. The maker of consumer electronic goods, however, didn’t disclose its consolidated profit and loss statement and balance sheet.

Highlights

  • Revenue fell by nearly three-fourths to Rs 200 crore.
  • Revenue for the first half of the fiscal was a little over Rs 400 crore compared with Rs 2,400 crore in the year-ago period.
  • Losses for the first half of the financial year stood at Rs 4,099 crore compared with Rs 1,919.5 crore year-on-year.
  • The company wrote-off loans and advances amounting to Rs 1,413.5 crore during this period.

The company hasn’t disclosed its consolidated earnings for over two years, said a Care Ratings report released in June 2017, which also pegged Videocon’s debt burden at over Rs 43,000 crore.

More than half of the company’s debt is dollar-denominated, lent by Standard Chartered Bank, Bank of America Merrill Lynch and Deutsche Bank, Dhoot, chairman and managing director of Videocon Industries, had told BloombergQuint in June.