A refrigerator manufactured by Videocon Industries Ltd. is displayed for sale. (Photographer: Adeel Halim/Bloomberg News)

Videocon Industries Admitted For Insolvency Proceedings

The Mumbai bench of the National Company Law Tribunal today admitted Videocon Industries Ltd. under the Insolvency and Bankruptcy Code, two bankers in the know confirmed on the condition of anonymity.

Anuj Jain from KPMG has been appointed as the interim resolution professional at the company by the NCLT.

State Bank of India had filed the insolvency petition against Videocon Industries in December last year, following directions from the Reserve Bank of India. The regulator in August 2017 had sent a list of 29 stressed corporate accounts to bankers for action under the insolvency process. The RBI gave banks six months to resolve the cases outside the NCLT, failing which, the insolvency process would be initiated.

Videcon Industries promoter Venugopal Dhoot said the company will not challenge the insolvency admission. “We already had a proposal approved by lenders where all our cash flows from the oil business would be given to banks. But before we could proceed on that, the NCLT issue came up. We are certain lenders will agree to withdraw since under our plan, they will get repaid fully,” said Dhoot told BloombergQuint over the phone.

According to the bankers quoted above, the claims of financial creditors may exceed Rs 20,000 crore. The Indian lending consortium to Videocon Industries consists of 27 banks, which includes SBI and its five associate banks. Together, Videocon’s gross borrowing stands at over Rs 47,000 crore, as on March 31, 2016, according to the India Corporate Health Tracker report by Credit Suisse released in February.

Videocon Industries fell into financial stress after its oil business suffered losses. The company attempted to sell some of its assets and repay banks, but nothing serious materialised. Lenders have been trying to resolve the stress in the company since 2016, under the previous stressed asset management framework.

The Central Bureau of Investigation in March had said that it had initiated an initial enquiry against Dhoot. This was in relation to alleged suspicious business dealings with Deepak Kochhar, whose wife Chanda Kochhar heads ICICI Bank. In 2016, investor Arvind Gupta had alleged that ICICI Bank’s loans to Videocon Group were approved under suspicious circumstances. An initial enquiry is conducted to establish facts before conducting a full fledged investigation.

Also read: Why Whistleblower Arvind Gupta Questioned Videocon-ICICI Bank Dealings In 2016