Videocon seeks Rs 22,100 crore loan repayment extension from consortium of 17 banks

Videocon Industries Ltd (VIL) is renegotiating the repayment period of its Rs 22,100 crore debt with a consortium of 17 Indian banks.

The stressed consumer electronics-to-energy conglomerate wants an extension in its loan repayment period by five years so that it can unload its assets to cut debt. VIL has not requested for any 'haircut' on interest payments.

Venugopal Dhoot, chairman of Videocon Industries, told DNA Money, "We are not asking for any interest waivers. We are only requesting banks to delay the repayment of the dues by five years. The stock price will bounce back after the initial panic as the company is backed by strong underlying assets."

Lightening the debt is Dhoot's top priority. Though the group is sitting on a debt pile of Rs 43,100 crore, Dhoot is less worried about the Rs 21,000 crore of foreign debt as it is secured against the oil and gas fields in Brazil and Indonesia which are valued at $12 billion.

"VIL owes Rs 22,100 crore to the domestic banks while the remaining debt of Rs 21,000 crore is from foreign banks like Bank of America and Standard Chartered. The loan is extended to VIL's subsidiary, Videocon Hydrocarbon Holdings Ltd. This portion of the loan cannot become stressed as we have a huge oil field asset to service it. If you look at our results, we reported operational profit but landed up in losses due to the interest payment burden, which is about Rs 2,500 crore annually," Dhoot said.

The VIL stock shed nearly 50% last week on worries whether the company would be able to repay its dues to the lenders. The hammering of the stock was triggered by Dena Bank declaring the loans to VIL as non-performing asset (NPA).

A senior banker confirmed that VIL was seeking for an extension in the loan repayment period. "The company has asked for a relaxation in the repayment period until the time assets are sold and cash flows are comfortable. The company claims that the fall in oil prices are hurting its cash flows."

VIL entered into rough weather after the Supreme Court cancelled 2G spectrum in 2012. Diversification into areas like real estate also brought trouble to the company. "The cancellation of the 2G spectrum in 2012 by the court led to the company falling into bad times. Diversification into real estate was also not a good decision," Dhoot said.

VIL has been offloading various assets to repay its debt. The group's headquarters, an iconic heritage building in the Fort area of Mumbai, was recently sold for Rs 300 crore. Only one floor measuring 20,000 square feet has been retained, which continues to be VIL's head office.

In March last year, the company sold spectrum to Bharti Airtel for Rs 4,428 crore. Earlier, in 2013, the group had sold its Mozambique gas field for $2.5 billion.

Dhoot said, "The proceeds from these sales were given to the banks. So we are doing everything we can to bring down the debt. The consumer electronics division is doing well with reasonably good sales, though there was some impact immediately after demonetization. Sales have started picking up again."

VIL has put more assets up for sale. The Kenstar brand is on the block. Dhoot expects the deal to fetch Rs 2000 crore. "We have got a number of bidders. We are evaluating all the bids and hope to conclude the deal in the next two to three months," he said.

Real estate will also see some chopping. "We have funds blocked in the coal and power business. We have 1,500 acre in Madhya Pradesh and another 700 acre in Chhattisgarh. We will sell a part of this land bank," Dhoot said.

The group has oil & gas fields in Indonesia and Brazil. The Indonesian block is likely to start production late next year or early 2019. The Brazilian fields are expected to produce their first oil in 2020.

...& ANALYSIS

• The VIL stock shed nearly 50% last week on worries whether the company would be able to repay its dues
   
• The hammering of the stock was triggered with Dena Bank declaring the loans to VIL as NPA