Banks face ₹42,000-cr haircut as NCLT clears Vedanta firm’s ₹2,900-crore bid for Videocon


Anil Agarwal-backed company offers to pay ₹2,900 crore to lenders

Banks will take a ₹42,000-crore haircut after the Mumbai Bench of the National Company Law Tribunal approved a bid by Anil Agarwal-backed Twin Star Technologies’ to acquire Videocon Industries Ltd for ₹2,900 crore. Claims worth ₹46,000 crore had been admitted under the insolvency process that began in December 2017.

While the NCLT order ensures that the company’s former promoter, Venugopal Dhoot’s offer to take back control has been rejected finally, it also means that banks, led by SBI and IDBI Bank, will have to settle for a low recovery. Videocon, which is in multiple businesses ranging from oils to consumer durables, was controlled by the Dhoot family before lenders dragged it to the NCLT in 2017. Dhoot had promised to repay about ₹30,000 crore for taking back control of the conglomerate under Section 12A of the Insolvency and Bankruptcy Code, which allows the withdrawal of the debt resolution proceedings under NCLT if the majority of the lenders agree to it.

According to banking sources, the offer by the Dhoot family entailed repayments until 2035, which was not acceptable to many banks on Videocon’s Committee of Creditors (CoC). Then, in January, the lenders decided to pick the bid Twin Star Holdings Ltd, a Vedanta Group company. Even though the bid, at less than ₹3,000 crore, was not even 10 per cent of the group’s overall outstanding debt, the CoC went with it because it was slightly higher than the liquidation amount of ₹2,600 crore.

Credited to be the first Indian company to have got a licence to manufacture colour TVs in 1986, the Videocon Group was making air-conditioners, refrigerators and home entertainment systems, foraying later also into oil/gas, telecom, retail and DTH services.

The aggressive expansion led to increased borrowings, and businesses collapsed after Dhoot to into the hyper-competitive telecom market. The debt pile, which was around ₹7,000 crore in 2007, kept soaring.