In December 2020, SBI filed an Insolvency petition filed against Videocon Industries Limited (Videocon). Later in that month, Videocon informed investors of approval by the Committee of Creditors (CoC) in a regulatory filing of a resolution plan as submitted by Twin-Star Technologies Limited. Twin Star Technologies is a limited company promoted by the family of billionaire Anil Agarwal of Vedanta Group.
Further, the Mumbai bench of the National Company Law Tribunal has approved the resolution plan submitted by Twin-Star Technologies for acquiring Videocon Industries Limited. The former has offered to pay an amount to the tune of INR 2,962 Crores against the latter’s financial liabilities amounting to the tune of INR 62,000 Crores. However, there is a twist in the story, calculating the overall comprehensive debt; Fifty percent is accounted as debt while on the other hand rest in terms of guarantee for Videocon Oil Ventures Limited (VOVL). It has been recently reported that Mr. Anil Agarwal is desirous of increasing his stake in the Ravva oil field in the Krishna Godavari Basin located in coastal Andhra Pradesh.
It is common knowledge that through Cairn Oil & Gas, a vertical of Vedanta Ltd, Mr. Anil Agarwal hitherto owns a 22.5% stake in the Ravva oil field. State-run Oil and Natural Gas Corp (ONGC) has a 40% stake in Ravva; while Videocon Petroleum has 25% with the balance of 12.5% with Ravva Oil Singapore Private Limited. Thus, it can be deciphered Mr. Agarwal would indirectly control 47.5%, which is larger than ONGC’s stake in the Ravva oil field. However, the funding source for Mr. Agarwal /Vedanta Group is still a lurking question! Twin Star will have to pay around INR 3,000 Crores, besides an amount to the tune of INR 500 Crores cash lying with Videocon to the banks. Lenders will also get approximately INR 599 Crores worth of equity in Videocon after the takeover of the company by Twin Star.
What else is on the stakes?
The resolution plan so presented in the Mumbai bench of the National Company Law Tribunal includes all the 13 group companies of Videocon. The resolution for Videocon Oil, Trend Electronics, and KAIL is under process, and banks will recover dues from the three companies separately. Bank of India, Export-Import (Exim) Bank of India, Central Bank of India, IDBI Bank, ICICI Bank, and Union Bank of India led by the State Bank of India are part of the 17-member lenders’ consortium. Videocon, a consumer durables manufacturer of air-conditioners and washing machines, was among the first 12 companies pushed into bankruptcy after directions from the Reserve Bank of India in 2017.
Independent bankruptcy proceedings were also initiated against 15 Videocon Group companies. The tribunal had excluded two Videocon Group entities—KAIL Ltd and Trend Electronics Ltd— from the scope of consolidation and had designated Mr. Abhijit Guhathakurta as the resolution professional for the insolvency process.
“This is the first successfully concluded group insolvency case in the country and is a very significant milestone achievement for the country and for implementation of the Insolvency and Bankruptcy Code,”
- Deloitte, Advisory firm to the Resolution Professional
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