Consumer electronics and petroleum conglomerate Videocon Industries on Thursday refuted rumours about law enforcement agencies searching its offices. The company’s shares declined 3.33% during the day after the reports emerged.
“Videocon categorically asserts there is no substance to rumours that the company’s offices were raided by any investigative agency,” the company said in its filing with the Bombay Stock Exchange. “The contention of the said reports regarding Chairman Venugopal Dhoot is totally false and malicious. Members are advised not to fall prey to such rumours.”
The company, which is facing insolvency proceedings, is renegotiating with lenders to extend the repayment period of its Rs 22,100-crore debt by five years, DNA reported on Wednesday. “We are not asking for any interest waivers,” Dhoot told the newspaper. “We are only requesting banks to delay the repayment of the dues by five years. The stock price will bounce back after the initial panic as the company is backed by strong underlying assets.”
The group has an overall Rs 43,100-crore debt, of which Rs 21,000 crore is foreign debt secured against the company’s oil and gas fields in Brazil and Indonesia worth $12 billion (Rs 78,000 crore). The foreign debt is from banks such as the Bank of America and Standard Chartered, and the loans are extended to the company’s subsidiary, Videocon Hydrocarbon Holdings Ltd, Dhoot said.
“This portion of the loan cannot become stressed as we have a huge oil field asset to service it,” the Videocon chairperson said. “If you look at our results, we reported operational profit but landed up in losses due to the interest payment burden, which is about Rs 2,500 crore annually.”
Videocon’s stocks have been declining since Dena Bank and Central Bank declared loans to the company as non-performing assets. It is among the most-leveraged groups in India, and a Credit Suisse study in October 2015 had named it among the 10 companies with the highest debt in India.
Several experts, including former Reserve Bank of India Governor Raghuram Rajan, have repeatedly voiced their concerns about the ticking time bomb of corporate debt in India.