Last week, Videocon Industries was admitted by the National Company Law Tribunal (NCLT) for insolvency proceedings. The first homegrown consumer durable company in India owes a consortium of banks led by the State Bank of India around Rs 39,000 crore. According to Bloomberg, the beleaguered company is casting the blame on Prime Minister Narendra Modi, the Supreme Court and the Brazilian government for its financial woes. The report added that Videocon has also filed an appeal to wrest back control.
In a regulatory filing yesterday, Videocon attached a copy of the NCLT order where it has also pleaded its case. "Learned counsel [on behalf of Videocon Group] has also highlighted that the Corporate Debtor [Videocon Industries Limited] had always cooperated with the Bank Authorities in timely repayment of loan in the past, but at present the default has happened because of the unexpected and unforeseen circumstances," said the court order.
The first of these unforeseen circumstances to be listed is the Supreme Court's decision to cancel 156 2G licences of various telecom operators. The Group has alleged that the "telecom business was victimised" by the ruling and as a stakeholder Videocon too was badly affected. "The Group had suffered huge losses in telecom business on account of cancellation of license, which resulted into non-payment of bank liabilities," read the order. Next on the list is the Brazilian government, because red tapism on their part in granting sanctions to Videocon's joint venture with Brazil Petroleum Limited resulted in "heavy losses".
Even Modi's surprise demonetisation decision finds mention. "The Learned Counsel has also informed that [Videocon Industries] was in the business of manufacturing and supply of cathode ray tube televisions," said the court order, adding that Videocon was the only player boasting considerable profit margins. That is till demonetisation, on account of which suppliers were unable to provide the raw material, which in turn caused a sharp decline in the business and Videocon "was constrained to close that business".
The report added that the company's shares, which have plunged a whopping 96 per cent over the past five years, was trading at Rs 7.56 apiece on the BSE today.
Meanwhile, a response from Videocon states, "...in the notification filed by Videocon on the exchanges, Videocon has not blamed Honorable PM Narendra Modi for the its debt pile and has only pointed towards demonetisation for increased challenges in business."