Videocon locked at 5% lower circuit on buzz of insolvency proceedings against co

Shares of Videocon were locked in 5 percent lower circuit on Thursday as investors reacted to the news of insolvency proceedings being initiated on the firm.

The stock touched an intraday high of Rs 9.00 and an intraday low of Rs 8.62.

The National Company Law Tribunal (NCLT) has admitted the case of Videocon Industries for insolvency proceedings, according to a CNBC-TV 18 report.

As the leader of a consortium of over 20 banks, the State Bank of India (SBI) has moved the National Company Law Tribunal's Mumbai bench to initiate bankruptcy proceedings under the Insolvency and Bankruptcy Code, a banker confirmed.

Videocon’s lenders have an exposure of over Rs 20,000 crore, of which SBI’s dues amount to Rs 3,900 crore.

A senior public sector bank official said, "We will have to write-off the account as nothing is recoverable from the borrower for now. This action had to be taken. If it can get resolved, then we can get some of our money back."

The debt-ridden company earlier approached the principal bench of NCLT on April 25. It requested the court to direct all insolvency case, to consolidate all multiple insolvency cases filed by lenders at

three different courts of National Company Law Tribunal (NCLT) Mumbai and hear them together.

"This process has to be taken in place collectively," submitted Videocon Industries counsel adding that they all are part of one composite group.

The step-down subsidiaries include Videocon Telecom, Electro World and Millennium Appliances.

Videocon is in the second list of 28 defaulters by the Reserve Bank of India (RBI) under the Insolvency and Bankruptcy Code if a debt resolution plan couldn’t be agreed by the end of December 2017.

The principal bench has directed to list immediately the matter once affidavit is filed by Videocon Industries.

At 09:27 hrs Videocon Industries was quoting at Rs 8.62, down Rs 0.45, or 4.96 percent, on the BSE. It has touched a 52-week low of Rs 8.62.