Videocon denies Kenstar asset sale reports

In the past one year, the company has sold assets worth Rs 11,000 crore, to reduce its debt

In the past one year, Videocon Industries has sold assets worth Rs 11,000 crore, to reduce its debt. This week, speculation has spread that the conglomerate is selling a majority stake in Kenstar, its home and kitchen appliances business.

However, the company denied the news, in a filing on Friday to the stock exchanges.

Analysts say cutting its debt, Rs 47,554 crore at end-December 2015, is needed. Consolidated numbers for the year ended December 2016 have not been disclosed, with the company saying it was extending its accounting period by three months.

Kenstar, positioned as the company's second brand, after the flagship, has been valued at Rs 1,500 crore for the sale process. Videocon got Rs 4,500 crore for sale of telecom spectrum to Bharti Airtel in six circles last March and Rs 6,500 crore for merging its direct-to-home operations with Dish TV in November. If this is followed by a Kenstar sale, say sources, this would underline a message to its lenders that it is keen on monetising non-core brands and businesses.

Videocon's net worth — equity capital plus reserves — was Rs 8,090 crore for the full-year period ended December 2015. This implies the balance sheet was stretched, given its debt. The debt to equity ratio for the period under review was 5.88, higher than the 4.44 it reported for the full year ended December 2014.

In a recent email interaction with Business Standard, Venugopal Dhoot, chairman, said they were looking at monetising of its real estate and general insurance businesses. He was not available for this story.

Dhoot had said then that the net debt (real obligation to lenders) was around Rs 39,000 crore. "If you minus the March month's spectrum sale amount of nearly Rs 4,500 crore, which will be paid directly to the banks, then it comes to Rs 34,500 crore," he'd said.

Of this 34,500 crore, Dhoot said, Rs 21,000 crore was funding done offshore by foreign banks for the development of oil and gas fields in Brazil, Indonesia and other parts.

"So, what we are left with is Rs 13,500 crore domestic debt, where monetisation of assets in real estate and insurance will fetch us Rs 5,000 crore. The balance Rs 8,500 crore will be serviced by our current businesses, mainly Indian consumer durables, and the domestic and international oil and gas operations."