June 14, 2018:

Videocon is putting the blame on PM Narendra Modi, the Supreme Court and the Brazilian government for its Rs 39,000 Crore Debt.

Videocon Industries has blamed demonetisation, Supreme Court’s 2012 decision to cancel 2G licences and the Brazilian Govt. for its inability to pay back the loans to lenders in India.

Videocon Industries is facing the Bankruptcy Proceedings after National Company Law Tribunal (NCLT) admitted a plea from lenders, led by State Bank of India (SBI), to initiate a resolution process with a new owner to be found through a bidding process over the next 180 days.

NCLT-Mumbai order admitting SBI’s petition states that Videocon insists that it has always engaged in the timely loan repayment in past and its current default is because of the “unexpected and unforeseen” circumstances.

The Three Reasons for the default laid down by Videocon are:

  1. Modi government’s demonetisation move effectively ruined its cathode ray tube (CRT) television business, as its “suppliers were unable to provide the raw material. VIL was in the business of manufacturing and supply of cathode ray tube television and being only manufacturer earning considerable profit margin. The business was across the world as there was large demand of CPR-TV. “However, on account of demonetisation in India, the suppliers were unable to provide the raw material. As a result, there was sharp decline of business as a result VIL was constrained to close that business. Because of these reasons, the cash circulation was disturbed, which was beyond the control of VIL,” the order adds.
  2. Supreme Court, which in 2012 cancelled over a hundred 2G licences of various telecom operators in the aftermath of the 2G scam. According to Videocon, 21 of its own licenses were cancelled, resulting in its telecom business being “victimised”. It prompted the company to file an appeal to wrest back control.
  3. Videocon blames Brazilian Government for the delays in executing a 50:50 oil and gas joint venture with Brazil Petroleum Ltd in 2008. The delay was caused in obtaining the sanction from the local government, which resulted in heavy losses.

PM Modi’s demonetisation decision in November 2016 chocked supplies for making cathode ray tube (CRT) televisions and forced it to shut the business, Videocon said in the filing. While its oil and gas business got entangled in red tape in Brazil, the telecommunications venture suffered losses after the Supreme Court canceled licenses.

The company’s shares, which have plunged a whopping 96 per cent over the past five years, traded at Rs 7.56 at 2.10 pm on the BSE on Tuesday.

Source Agencies

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