Videocon loan case: The Rise and Fall of Venugopal Dhoot

Venugopal Dhoot

Starting with a family, which had a dealership of Bajaj Auto's scooters, to becoming the owner of a household name in consumer appliances who could afford to have Bollywood superstar Shah Rukh Khan as the brand ambassador, Venugopal Dhoot's is a story of an aggressive small town businessman's pursuit to be on the top. Now arrested in connection with the ICICI Bank loan fraud case, Dhoot, during his heyday, was not the one to simply sit on small achievements such as Videocon becoming the largest television set manufacturer in India.

The eldest son of late Nandlal Madhavlal Dhoot, who founded the Videocon Group in 1984, Venugopal was largely responsible for driving the conglomerate to diversify into various verticals, such as oil and gas, real estate and retail, beyond its successful consumer electronics and home appliances business.

Dhoot, the safari-suited businessman, was born into an agricultural family in Ahmednagar (Maharashtra), where his father had a cotton ginning mill and operated a wholesale grain trade. In 1982, when the public broadcaster Doordarshan began transmitting colour television programmes in India, it opened a new segment. Here the Dhoot family tried their luck in the uncharted territory of manufacturing conventional tube-based colour TV sets.

Venugopal Dhoot led Videocon, which began with manufacturing TVs, to success in consumer electronics, home appliances sectors. Pic/Twitter

Dhoot, who had an engineering degree from the University of Pune, set off to Japan for a year to be trained at electronics companies. In 1986, he founded Videocon International, which aimed at manufacturing 1,00,000 TV sets a year. It entered into technical collaboration with the Japanese major Toshiba and from here there was no looking back.

Also read: Videocon loan case: 'Venugpopal Dhoot bribed Kochhars to secure loan from ICICI Bank'

From colour TV sets, Videocon in the 1990s expanded into other verticals, such as refrigerators, washing machines, air conditioners, home entertainment systems and other small appliances. It pushed contemporary rivals like Mirc Electronic (Onida), Salora, Weston etc with affordable pricing. Its TV models like Bazooka and Bazoomba were the market's favourites in the early 90s.

After having success in its consumer electronics and home appliances business, Dhoot expanded Videocon Industries into other areas, such as oil and gas, cellular services and others. However, Dhoot's downfall started when it entered into the cellular service area with Videocon Telecommunications. It could launch commercial services only in 11 out of the 18 circles it held licences.

In 2012, after the 2G spectrum case, the Supreme Court cancelled 122 licences issued by the Central government in 2008, 21 licences belonged to Videocon. In the 2012 spectrum auction, Videocon won back licences in 6 circles but sold to the market leader Bharti Airtel and shut down operations. Moreover, in the late 90s South Korean giants like LG Electronics and Samsung entered the Indian market, which disrupted consumer electronics and appliances with the latest technology and quality products at affordable pricing.

Though Videocon Industries had several verticals, its main cash cow was the consumer electronics and appliances business. As Videocon failed to face the challenges from rivals Sony, LG and Samsungs, its revenue stagnated and gradually it sat on a pile of debt. Dhoot tried to pay off debts by selling some of his assets. The company merged its DTH business with Dish TV. They sold ownership in some of their gas fields and telecom business, but it did not work. Finally, in 2018, it was dragged to the insolvency tribunal NCLT by its creditor. It owed around Rs 31,000 crore to the banks, including interests.

At the request of lenders, the National Company Law Tribunal (NCLT) has conducted a consolidated corporate insolvency resolution process by combining Videocon Industries and the other 12 Videocon group companies. In June 2021, a bid of merely Rs 2,692 crore from billionaire Anil Agarwal's Twin Star Technologies to take over Videocon Industries was approved by the NCLT. This also got mired in controversy.

Earlier this year, the National Company Law Appellate Tribunal (NCLAT) had set aside Twin Star's R2,692-crore bid, directing it to invite fresh bids. Though it was challenged before the Supreme Court by Twin Star, the creditors of Videocon Industries are still looking for a buyer. According to some sources, the lenders may even consider liquidation, if they fail to find a buyer for the company, which once was a success story.

(Inputs from agencies)