The management of Videocon Industries, which is undergoing resolution under the Insolvency and Bankruptcy Code, has assumed that it would be difficult for the company to operate as a going concern due to significant deterioration of the operating business environment. The management said the company is in the process of ascertaining the “liquidation value of its assets”, in an admission which raises doubts on whether banks will be able to recover much of the loans given to the Videocon group during the resolution process.
“The management has assumed that the going concern concept stands vitiated and is in the process of ascertaining the liquidation value of the assets. The Company continues the process for ascertaining the liquidation value for remaining current assets such as raw materials, finished goods, stock-in-process, receivables etc., justifiably assuming that the going concern concept stands vitiated and necessary adjustments will be effected in the due course, the impact of which is not ascertainable at this stage,” the notes add.
With the Videocon Industries management expressing doubts on future of the firm, there are apprehensions in the government circles that the firm may be heading for liquidation, in which case the lenders may not be able to recover much of their exposure of over Rs 58,000 crore to the Videocon group. Its subsidiary, Videocon Telecommunications was also admitted for insolvency proceedings last month.
Based on a petition filed by SBI, the Mumbai bench of the NCLT admitted the Venugopal Dhoot-led Videocon Industries for insolvency proceeding under the IBC on June 6. Lenders have submitted claims over Rs 58,000 crore in the case of Videocon companies. Videocon Industries net loss more than doubled to Rs 5,264.04 crore in the fiscal year 2017-18. Its operating income was Rs 2,839.86 crore in the same year, down from Rs 12,252 crore in the 2017-18 (15 months period).
Source: July 26, 2018, The Indian Express