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Videocon sells general insurance biz, to use funds for working capital

The company has outstanding dues of Rs 22,000 crore to the lenders. These loans will be repaid by selling off our properties, says Venugopal Dhoot

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Venugopal Dhoot-controlled Videocon Industries has exited the general insurance business. Videocon, which held a 51.32% stake in the insurance joint venture with Liberty Mutual, sold its entire shareholding to two entities for an undisclosed sum.

Post the sale, Diamond Deal Trade Ltd, a special purpose vehicle of the D P Jindal group, will hold 26% and Enam Securities 25.32% in the insurance JV, while Liberty would retain its shareholding at 49%.

Videocon Industries, which is fighting a case with lenders in the National Company Law Tribunal (NCLT) for non-payment of bank loans of Rs 22,000 crore, said that proceeds will be utilised for the working capital needs of the company.

"The proceeds from the deal will be utilised for working capital needs. The company has outstanding dues of Rs 22,000 crore to the lenders. These loans will be repaid by selling off our properties," Venugopal Dhoot, chairman and managing director, Videocon Industries, told DNA Money.

"Videocon exited after it got into financial troubles, making it difficult to bring in equity into the joint venture. Of the two new partners, Enam Securities, which earlier had an insurance broking arm, will bring in experience. It has large investments across sectors and D P Jindal will add to the financial strength of the joint venture business. Both the new partners will infuse capital commensurate with their shareholding," Roopam Asthana, CEO & whole-time director of Liberty Mutual joint venture company in India, told DNA Money.

The joint venture has a paid-up capital of Rs 1,084 crore, one of the highest for any general insurance companies in India. It has registered a 38% growth up to February 2018 over the previous year in total premium collected, Asthana said, adding the company had collected a total premium of Rs 733 crore.

The company said in a release that it has received the necessary regulatory approval for re-branding and will soon apply to change its name to Liberty General Insurance Ltd with Register of Companies.

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