Videocon industries management: ‘Decline in operations hitting going concern’

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.

Videocon, Videocon Industries, Videocon debt, Videocon insolvency, Videocon bankruptcy, Videocon case, Insolvency and Bankruptcy Code, Business news, Indian Express

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.

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 Company has been referred to National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 as amended, and there are persistent severe strains on the working capital and there is considerable decline in level of operations of the Company and the Company has been incurring losses. These factors raise significant doubts on the ability of the Company to continue as a Going Concern,” according to the notes to the company’s accounts submitted with the BSE last week.

“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.

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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).

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