Videocon Industries can garner at least ₹6,000 crore in revenue in the first year after recommencing operations if the promoters’ proposal to repay about ₹30,000 crore to regain control of the firm is accepted by the lenders, said Pradeep Dhoot, former director of the debt-laden firm..
“Before going to the NCLT in October 2017, we and the banks had agreed on the repayment of ₹30,000 crore,” Mr. Dhoot said in an interview.
“However, the RBI directed that the company be sent to debt resolution. We have given the same proposal with an extended timeline of three years as two years have already been wasted in the IBC,” he added.
He stressed the proposal submitted under clause 12A of the IBC would lead to the promoters just managing the company again and not owning the firm. “All the shares, equity and the assets will remain with the bank till all the loans are repaid.
“A decision by the Committee of Creditors (CoC) is likely within two months,” Mr. Dhoot said. “We have given a proper business plan of up to 10-12 years. Of the ₹30,000 crore plus interest up to December 31, 2020, that we have proposed to repay, a major portion will come from asset monetisation and business generated by the company,” he added.
Monetising ‘huge’ assets
Mr. Dhoot said the company and Videocon Group had ‘huge assets’ which would be monetised in due course. He also expressed confidence in the proposal getting accepted.
If the proposal is accepted, “we will be able begin operations in a month and generate revenue of at least ₹6,000 crore in the first fiscal when the total market for the four products [ACs, washing machines, TVs and refrigerators] will be about ₹70,000 crore.The first quarter of the calendar year 2021 will be low, but then we will target about 9% of the market.”
He pointed out in 2017, when Videocon was still operational, the total share of Chinese players in these segments was about 12%. It had now grown to about 35%.
“The new players took our share, not the established players like Samsung and LG. Hence, I think it will be easier for us to take it back.”
Further, on account of the pandemic, the lenders were hardly receiving any offers. The highest offer right now was about ₹3,000-₹3,500 crore.
“Videocon has 15,000 retailers, 30,000 direct and indirect employees, many vendors. They will be saved,” he said.There are 20-crore customers. So, the belief in the company and the brand is very strong. The repayment structure we have stated mentioned will not be difficult.
“Once upon a time, they were having 20 bidders, but now, because of the pandemic, they hardly have four bidders. New investment is not coming,” he said. “The second thing is we know the company and we will be able to run this company very well. So, there is a great chance that they will accept this,” he added.
If the proposal was not approved, the firm would likely go to a new investor, he said adding the chance of liquidation was very low.“If our help is needed, we will support the investors because all vendors, employees and distributors, they all are dependent on this.”