Videocon asks banks to extend loan tenure

The company owes Rs 22,000 cr to a clutch of domestic banks

Videocon Industries, which owes a debt of Rs 22,000 crore to domestic banks, has asked the lenders to extend the loan tenure to enable the company to balance a “temporary” mismatch between its cash flow and repayments.

 
Group Chairman, Venugopal Dhoot, said though the company had lucrative oil and gas assets across the world, it was facing a liquidity crunch owing to losses incurred in the telecom business. The group reportedly lost about Rs 25,000 crore in its telecom business after the Supreme Court cancelled spectrum licences in 2012. “We have paid close to Rs 26,000 crore as interest to banks in the last six years. We are now asking banks to increase the tenure of loans, and do not want banks to take any haircut,” he said. 
 
A top public sector bank official confirmed that Videocon is in talks with them to extend loan tenure. 
 
Dhoot said large amounts of money of the company was blocked in the stalled power and coal projects. “We are having 1,500 acres of land in Madhya Pradesh and another 700 acres in Raipur, Chhattisgarh, which have all related infrastructure... As a lot of funds is blocked in these stalled projects, we are now considering to exit these projects,” he said.  
 
Apart from selling its headquarters in Fort, Mumbai, for Rs 300 crore, the group plans to sell its stake in the general insurance venture at Rs 5,000 crore. “We have real estate worth Rs 10,000 crore, which is currently under liquidation to repay domestic debt,” said Dhoot.  The sale of “Kenstar” brand has evinced interest from at least 20 players, including private equities. The market capitalisation of Kenstar’s rival Crompton Greaves Consumer Electricals Ltd has more than doubled to Rs 13,186 crore as on today, compared to the acquisition valuation of Rs 5,000 crore by private equity firms.
 
Dhoot said the group is making all-out efforts to repay local banks. “Our track record with banks is very good, and they have participated in our growth story till date. We will take all steps to make sure that the loans are repaid,” Dhoot said.
 
Apart from domestic loans, the group has loans totalling Rs 22,000 crore from overseas banks which it took for its oil and gas operations in Brazil and Indonesia. The group exited its Mozambique gas field in 2014 for $2.45 billion, and a large chunk of this money was used to repay loans to banks abroad. 
 
Dhoot said the valuation of the group's oil and gas fields touched $12 billion. “Our international debt, which has a tenure of 15 years, would be repaid from our foreign business,” he said.
 
A large number of Indian companies, including Reliance Gas & Transportation, Avantha Group, Bhushan Steel, Essar Steel and Jaypee Group, have asked banks to extend the loan tenure. The cancellation of telecom and mining licences, lack of environmental clearances, land acquisition delays and lack of gas in the Andhra coast have resulted in many companies facing a debt crisis. Banks, on the other hand, are asking companies to liquidate assets to repay loans. Banks have even warned a few erring promoters that loans will be converted into equity under the Scheme for Sustainable Structuring of Stressed Assets scheme, and the company will be sold to new owners. (with inputs from Abhijit Lele)