Videocon Industries stock has given a nightmare to investors in the past five years. The microcap share which closed at Rs 167.25 on August 28, 2014 is trading at Rs 1.24, 4.03% higher than all-time low of Rs 1.19 on BSE. Videocon Industries share price hit an all-time low of Rs 1.19 on August 27, 2019. An investment of Rs 1 lakh in Videocon Industries on August 28, 2014 has shrunk to Rs 741.40 today. Videocon Industries share price has lost 73.73% in the last year and fallen 63.10% since the beginning of this year.
Videocon Industries came into limelight for all the wrong reasons on May 24, 2017 after state lender Dena Bank announced that it had classified loan of Rs 520 crore to the conglomerate as a non-performing asset. Dena Bank was the first lender to classify Videocon in bad loan category. Videocon Industries stock closed 9.95 percent or 6.45 points lower at Rs 58.35 on the BSE on that day.
A day later, another state-owned lender Central Bank of India declared its loan exposure to the Mumbai-based firm as a non-performing asset (NPA). Videocon Industries had borrowed Rs 2,700 crore from Central Bank of India. The stock was locked in the lower circuit of Rs 52.55, down 9.94 percent on the back of negative news flow and closed at the same level on May 25.
At the end of December 2015, Videocon Industries had a total debt of Rs 47,554 crore.
In August 2017, matters became worse for the Venugopal Dhoot-led conglomerate after Reserve Bank of India sent all the commercial banks a second list of 26 loan defaulters and asked them to start the process of debt resolution before initiating bankruptcy proceedings. The list included Videocon Industries and Jaiprakash Associates which were the two large companies among the list of 26 defaulters, accounting for over Rs 1 lakh crore.
In December 2017, lenders decided to refer 25 of 28 companies on the Reserve Bank of India's second list of large corporate defaulters to the National Company Law Tribunal (NCLT) for initiation of insolvency proceedings. Videocon Industries was among the companies that were referred to NCLT.
At that time, chairman and managing director Venugopal Dhoot said the total debt of Videocon Industries and Videocon Telecommunications that would be referred to NCLT stood at Rs 22,000 crore.
Videocon Industries share price which stood at Rs 64.8 on May 23, 2017 fell to Rs 19.65 on December 29, 2017. The stock lost 69% of its value during the period.
Three months later, Videocon Industries found itself embroiled in a bigger controversy relating to loans granted to its subsidiaries six years ago. In 2012, a consortium of over 20 banks and financial institutions gave Rs 40,000 crore to the Videocon group in loan.
Government-owned State Bank of India (SBI) was the lead banker in that consortium. Chanda Kochhar-led ICICI Bank which was also the part of consortium lent about Rs 3,250 crore to the Dhoot led group's subsidiary NuPower.
Before the loan was sanctioned, Venugopal Dhoot allegedly transferred his controlling stake in NuPower to an associate, Mahesh Chandra Punglia. After the loan was approved, Punglia sold his stake to Chanda Kochhar's husband Deepak Kochhar for a mere Rs 9 lakh.
In 2016, Arvind Gupta, a whistleblower, wrote to Prime Minister Narendra Modi and finance minister Arun Jaitley alleging favouritism by Chanda Kochhar in the loan extended to Videocon.
ICICI Bank appointed law firm Cyril Amarchand Mangaldas to probe the issue which gave Kochhar a clean chit in December 2016.
A probe by the Reserve Bank of India also found no misconduct. But in March 2018, the letter written by Gupta appeared in a blog which made headlines in main stream media and prompted the Central Bureau of Investigation to launch a probe into the matter. Since then, the stock has slid further.
The Central Bureau of Investigation (CBI) filed an initial inquiry into the case on March 31, 2018. The investigative agency later also questioned Deepak Kochhar and his brother Rajiv Kochhar.
Subsequently, Serious Fraud Investigation Office (SFIO) and market regulator Securities and Exchange Board of India (Sebi) started probing the case. ICICI Bank board also initiated a probe and appointed retired Supreme Court judge Justice BN Srikrishna to head the independent panel formed by the lender's board.
On May 23, 2018, Sebi served a notice to Chanda Kochhar relating to transactions of the private sector lender with Videocon Group and NuPower Renewables.
The market regulator asked Kochhar and the lender to send their responses till June 7 after a 12-page show cause notice was served to ICICI Bank and Kochhar on May 23. On June 8, 2018, ICICI Bank and Chanda Kochhar sought more time to reply to the show cause notice sent by Sebi. In June, the bank said Kochhar has gone on her annual planned leave.
Later, it was announced she would remain on leave until the completion of probe. On July 5, the market regulator asked Kochhar to reply to the show cause notice over alleged violation of listing disclosure norms by July 10.
On January 24, 2019, CBI booked former ICICI MD and CEO Chanda Kochhar, her husband Deepak Kochhar and Videocon MD Venugopal Dhoot in the ICICI-Videocon cheating case, which led to a loss of Rs 1,730 crore.
Besides, registering the First Information Report (FIR) in the ICICI-Videocon loan fraud case, the investigative agency also carried out raids at several locations including the Mumbai offices of Videocon and NuPower Renewables, the company run by Deepak Kochhar.
The negative developments affected Videocon Industries stock in 1.5 years since investigative agencies started probing the case. The stock which stood at around Rs 14 on March 26, 2018 has fallen to Rs 1.23 today leading to 91.21% erosion in value during the period. Investors in Videocon Industries have lost Rs 406.7 crore since March 26, 2018. Its market capitalisation has fallen from Rs 450.18 crore to Rs 43.48 crore on BSE.
An earlier version of this story referred to Arvind Gupta writing to Prime Minister Narendra Modi and finance minister Arun Jaitley alleging favouritism by Chanda Kochhar in the loan extended to NuPower Renewables. The loan was extended to Videocon Ltd, not NuPower Renewables. The error is regretted.
By Aseem Thapliyal