Videocon lenders consider appointing common adviser

NEW DELHI: Lenders to consumer electronics major Videocon are mulling appointing a common financial advisor to run the auction process for 15 group companies against which bankruptcy proceedings have been initiated by them, according to people directly briefed on the matter.

The lenders are in favour of running a coordinated auction process, which will ensure that timelines for circulation of proposals to prospective suitors, and receipt of final bids and resolution plans will remain similar for all the entities going under the hammer, the sources said.

Several Videocon group entities against which recovery proceedings have been initiated have inter-linked operations. Hence, bidders would find it easier if they could submit combined bids for a group of entities rather than submitting separate resolution plans for each entity, sources said.


“The banks want to avoid an Amtek Auto-like situation where bidders had to submit separate resolution plans for different group companies whose operations are inter-linked thereby delaying the process,” a banker said on condition of anonymity.

Lenders, led by State Bank of India, discussed the proposal at a meeting on Monday where suggestions were made by several stakeholders, including legal advisors and resolution professionals.

A spokesperson for SBI was yet to respond to emailed queries as of press time Wednesday.Videocon is among a group of 28 defaulters identified by the Reserve Bank of India for admission into insolvency proceedings.

The Venugopal Dhoot-led company owes banks around Rs 20,000 crore. The insolvency courts have admitted petitions for a dozen entities belonging to the Videocon group, while orders have been reserved in a few cases where arguments of the promoters are still being heard.

Banks and operational creditors have submitted proofs of claims against the companies to the respective resolution professionals prior to kick-starting a formal process that would include the appointment of financial advisors and valuation and due diligence consultants.

Videocon has split its core electronics business into separate arms, some of which carry out manufacturing while others are involved in distribution and sales, or own a distinct set of brands.

The group also has an oil exploration business in Brazil in joint venture with state-run Bharat Petroleum Corporation and Brazil’s Petrobas. Dhoot is fighting to fend off lenders from initiating recovery proceedings against the oil exploration arm.