MUMBAI, March 9: The Rs 3,500-crore Videocon group has decided to shut down Videocon Leasing & Industrial Finance, a non-banking finance company. As a first step towards closing down the NBFC operations, the Dhoots, the promoters of the Videocon group, have decided to merge this company with one of the group firms. The modalities of the proposed merger are being worked out.Confirming the move, Videocon International's finance controller SM Hegde said, "We have decided to shut down our non-banking finance-related operations in the country and the most viable option is merging the NBFC with one of the existing Videocon group company."Videocon Leasing & Industrial Finance is mainly into bought-out deals, corporate deposits, leasing and hire purchase. Currently, it has stopped all NBFC activities.
"We want to concentrate on core areas and do away with the group's non-core activities. Currently, we have stopped all activities like corporate deposits, leasing and hire purchase and are in the process ofrecovering the money blocked in non-performing assets," Hegde said.
The group's decision to move out of the NBFC business follows the shake-out in the NBFC sector after the announcement of the prudential norms by the Reserve Bank of India, linking the credit rating to public deposit mobilisation. "Operating the NBFC is not a profitable proposition for us anymore at the time when even blue-chip NBFCs are finding it difficult to survive in the existing scenario," a senior company official said. Videocon entered the NBFC arena in 1986 when this sector was booming. "Though it was not a focussed activity for us, we decided to jump into this specialised area as things were happening in this sector. However, now we would like to shift our focus to areas where we are strong and have a market presence," a company source said.
According to the company sources, a major portion of the company's fund is blocked in bought-out deals which was one of its largest source of earning in the early nineties.
However, whenthe stock market went bust, the company lost a substantial amount. The company's long-term investment in equity is Rs 173 crore, Rs 134 crore in unquoted investments and Rs 27 crore in quoted investments.
