Tuesday, December 27, 2022

Dhoot's demise: From business tycoon to prison cell

Dhoot’s downfall: From business empire to jail cell


MUMBAI: Chanda Kochhar, the former CEO of ICICI Bank, ended up making headlines for what the CBI said was a deal with Videocon in exchange for something, but the promoter and chairman of the company, Venugopal Dhoot, managed to keep a low profile.

That is, up until Monday, when the CBI arrested the CEO of one of India's largest conglomerates, which had interests in power, energy, entertainment, and consumer durables. A complaint by the investigating authorities alleging that the industrialist invested money in the business of Chanda Kochhar's husband Deepak Kochhar in order to obtain out-of-turn loans was the impetus for Dhoot's (71) arrest.

Dhoot has managed to stay under the radar in recent years, with the exception of insolvency proceedings. Few people are aware that Videocon was the largest consumer durables company in the country and one of the largest manufacturers of color picture tubes in the world, giving Samsung and LG a run for their money.

Nandlal Madhavlal Dhoot set up Videocon Group in Aurangabad in 1984. The senior Dhoot's family also owned a Bajaj Auto dealership in Aurangabad and operated a sugar mill in the past. Sugarcane and cotton cultivation were interests of Nandlal. After that, the family set up Adhigam Trading to sell paper tubes, eventually expanding into consumer electronics.

While the senior Dhoot enrolled every one of his children — Venugopal, Rajkumar and Pradipkumar — in the privately-run company, it was Venugopal who was liable for increasing Videocon's tasks following a specialized restrict with Toshiba. Rajkumar, his younger brother, was a statesman who served as president of the industry group Assocham and was elected to the Rajya Sabha for two terms on a Shiv Sena ticket. However, Venugopal was the group's primary driver, forming manufacturing alliances and acquiring foreign competitors.

Dhoot expanded its operations through a series of acquisitions, including the purchase of the Philips color television plant in 1999, during the consumer boom that resulted from economic reforms. Videocon acquired Electrolux Kelvinator within weeks of acquiring Thomson's color television tube manufacturing business in 2005. In addition, the group agreed to acquire Daewoo Electronics, a debt-laden Korean company, taking the fight to the Korean domestic market.

The group reached a turning point when it began expanding beyond its core business of consumer durables. Videocon was one of the few organizations with the financial strength to compete for significant projects when the government started selling oil exploration blocks. The group made investments in oil and gas fields all over the world, including in Brazil, Indonesia, and Mozambique.

Videocon was one of the successful applicants when the government began issuing telecom licenses under a first-come, first-served policy in 2008. Even the CAG made scathing remarks about it for "jumping the queue." The group's troubles began when the Supreme Court revoked the allocations of 2G licenses amid controversy. Given that the group had invested several thousand crores in the company, this was a huge success. At the same time, Brazil's oil and gas industry became stuck after a change in government.

In addition to his manufacturing prowess, Dhoot gained notoriety for his association with Bollywood, which included hiring celebrities as brand ambassadors, founding the television broadcaster Videocon D2H, and attempting to acquire an IPL team.

The company was downgraded and eventually declared a non-performing asset (NPA) due to its inability to service debt. Videocon was one of the businesses that the RBI referred to banks to initiate insolvency proceedings, with acknowledged claims totaling Rs 71,500 crore.

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