Videocon Industries currently faces bankruptcy proceedings after the National Company Law Tribunal (NCLT) admitted a plea from lenders, led by SBI, to initiate a resolution process with a new owner to be found through a bidding process over the next 180 days. The flagship company of the Dhoots, Videocon Industries owes around £2 billion to the banks and has been irregular in clearing its dues. The bankruptcy court is due to hear a petition against Videocon Telecom, a company that does little business now but has run up bank loans of around £200 -300 million.
Sources said that close to a dozen companies of the Videocon Group, which has cumulative debt of around £4.4 billion, are facing action. While NCLT admitted the petition against Videocon Industries and appointed KPMG's Anuj Jain as the insolvency professional, the action will not cover its subsidiary Videocon Oil Ventures that has loans of around £1.2 billion and owns assets in Brazil and other countries. Videocon Industries chairman Venugopal Dhoot said that he was hoping to use a new provision where a case can be withdrawn if 90 per cent of the creditors agree. “In our case, 100 per cent lenders had said that they do not want our company to go to NCLT,” he said. “If the process does go though, lenders will recover 75-80 per cent of the value of the loans. Property itself is valued at £800 million, we have 17 manufacturing units, have a strong brand and a very good network of showrooms,” he added.
Videocon was on the second list of companies identified by the Reserve Bank of India (RBI), where banks were ordered to initiate insolvency action. The Dhoots join several top names from the corporate sector, ranging from the Ruias of Essar to the Singal's of Bhushan Group and Jaypee Group promoters the Gaurs, who are facing insolvency action after the government and the RBI launched a joint assault to rid banks of massive NPAs, that crossed the £85 billion mark at the end of March. Under the Insolvency & Bankruptcy Code (IBC), Jain will have 180 days to turn around the company, with an option to extend the deadline by 90 days. If a resolution plan is not finalised during this period, the company will have to go into liquidation.