Videocon promoters to pump in Rs 3,000 cr more equity amid insolvency fears

Apart from its Kenstar brand, the firm plans to sell assets to reduce its Rs 22,000-cr domestic debt

With banks threatening to send consumer durables maker Videocon Industries to the National Corporate Law Tribunal (NCLT) under the insolvency and bankruptcy code, the promoters of Videocon Industries plan to invest Rs 3,000 crore more equity into the company.

This exercise would be apart from the company taking steps on its own to sell assets worth Rs 10,000 crore to reduce its domestic debt worth Rs 22,000 crore. The company says its overseas debt, which is worth another Rs 22,000 crore, is backed by global oil assets and it does not foresee any problem servicing its overseas loans. The company was declared a non-performing asset by Dena Bank early this year, leading to a sharp fall in its share prices.

The company has put its Kenstar brand on sale and, according to insiders, 20 companies have made a bid for the brand that sells home appliances. The brand would fetch around Rs 2,000 crore for the company.

The group has funds blocked in the power and coal business, spread across a land area of 1,500 acres in Madhya Pradesh and another 700 acres of land in Raipur, Chhattisgarh, with all related infrastructure. The group would also sell part of these land holdings. Its headquarters in Fort, Mumbai, has already been sold for Rs 300 crore.

The group owns a majority stake in a general insurance venture with Liberty Mutual of United States. It plans to reduce its stake at a valuation of Rs 5,000 crore.

The group has oil and gas fields in Indonesia and Brazil pegged at $12 billion. Of this, the Indonesian block is likely to start production towards the end of 2018 or early 2019, while the Brazilian fields are estimated to produce their first oil in 2020. The group plans to use the profits from its share of oil in the fields to repay its domestic debt.

In 2013, Videocon sold its Mozambique gas field for $2.5 billion. The proceeds were used to repay bank loans in India and abroad.

This is not the first time that the company has sold its assets. In March 2016, the company sold its spectrum to Bharti Airtel for Rs 4,428 crore. The company used the funds to repay bank loans in the country. In the past six years, the company has paid Rs 26,000 crore in interest to banks. The company said it fell on hard times due to the cancellation of telecom licenses by the Supreme Court in 2012.