Videocon loan conversion enabling resolution passed at EGM

Company again clarifies there was no plan to convert loans to equity and this was merely a compliance norm under Companies Act, 2013

Mumbai-based Videocon Industries today said that the enabling resolution for conversion of some part of its debt to equity was passed with requisite majority at an extraordinary general meeting (EGM) held yesterday.

The company, however, once again insisted in a statement to the stock exchanges that this was done simply to comply with norms under Section 62 (3) of the Companies Act, 2013.

"There are absolutely no proposals of conversion of loan into equity, either pending or envisaged anytime in the future," Videocon's chairman Venugopal Dhoot said.

"The financial position of the company is strong and the company is regularly paying interest and prinicipal amounts of its loans," he added.

Videocon had first issued a clarification pertaining to the enabling resolution on September 28 insisting that it was in keeping with the directives issued by the Reserve Bank of India. This was done following issue of notices to shareholders pertaining to the same.

In the September 28 statement, Videocon had said that the RBI had asked all banks to ensure compliance under 62 (3) of the Companies Act, 2013 for loans taken by corporate borrowers by obtaining an enabling resolution whether a proposal to convert debt to equity was there or not.

It was therefore complying with these directives, the company said.

Videocon's standalone debt, according to its last annual report of December 2014, is Rs 22,669 crore. On a consolidated basis, total debt stood at Rs 40,148 crore.