Videocon is a classic case of what debt can do to a company

Videocon Industries, an Indian electronic appliances maker, reported its annual financial results on Feb. 11. The company made a Rs1,367.94-crore loss (pdf) in 2016 (Videocon uses calendar year to report.) That’s 24.5 times the loss it made in 2015. The whopping increase is due to two main reasons: falling revenues and high debt.

The Mumbai-based company owes over Rs45,000 crore to lenders. This debt was accumulated over time as Videocon expanded into oil and gas, telecommunications and...

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