Venugopal Dhoot: How a ‘loan scam’ led to Videocon owner’s downfall

His detention got here at the heels of the arrest of former ICICI Bank leader Chanda Kochhar and her husband Deepak for an alleged fraud wherein it’s far claimed that Kochhar sanctioned excessive-price loans to Dhoot’s employer in 2009 in change for funding in her husband’s renewables commercial enterprise.

ICICI is India’s third-biggest lender and Kochhar, an iconic CEO, became visible as a poster girl for the banking enterprise.

Kochhar and her husband have denied allegations of quid seasoned quo, announcing the funding from Dhoot’s employer became a true one.

These arrests mark a critical turning factor in a case that has visible its first arrests because the alleged offences have been recorded with the aid of using investigators in January 2019.

According to neighborhood media reports, Dhoot, who has been denying the allegations, has presented to show approver (provide evidence).

“This ought to open a Pandora’s box,” Arvind Gupta, an ICICI shareholder who blew the whistle at the alleged rip-off in 2016, informed the BBC.

“The research is a begin withinside the proper direction, however its scope desires to be widened given that Kochhar wasn’t the handiest man or woman at the ICICI credit score committee that authorised the loan,” Mr Gupta stated.

He introduced that the complexity of the alleged fraud could require inter-departmental coordination among all of India’s investigative groups to get to the lowest of the case.

The upward thrust of Venugopal Dhoot

Through the Nineteen Nineties and the early years of the brand new millennium, Venugopal Dhoot became a ubiquitous presence at enterprise events, company soirees and finances consultations.

He became a darling of commercial enterprise reporters due to his accessibility and willingness to provide a brief byte or quote, and his perspectives have been a good deal sought after.

Born in an agrarian own circle of relatives that had the licence to distribute Bajaj scooters in Aurangabad town and different components of the western nation of Maharashtra, Dhoot became instrumental in Videocon’s astounding transformation right into a patron items organization with the aid of using the Nineteen Nineties.

The employer became some of the first to introduce color tv units in India and progressively elevated into production different patron home equipment inclusive of washing machines, air conditioners and refrigerators, incomes Dhoot the moniker “king” of India’s white items marketplace.

Dhoot got here from a small metropolis and struggled with speakme English to start with however that failed to come withinside the manner of his constructing true relationships with politicians and different businessmen.

Until the Nineteen Nineties, he reaped the advantages of sky-excessive import responsibilities on international firms, which made it difficult for the ones manufacturers to compete with Videocon, in line with Arvind Singhal, chairman of retail consultancy Technopak Advisors.

But an competitive branding and distribution method became additionally a key cause why it outlasted different homegrown manufacturers withinside the marketplace for almost decades.

“They roped in cricketers and movie stars and invested in a pan-India community of distribution and carrier stores,” Mr Singhal says. “They have been primary withinside the marketplace, after which a first rate range and range 3 proper till 2008-09.”

The downfall

It became the aggregate of severe opposition from South Korean manufacturers inclusive of Samsung and LG, and Videocon’s needless diversification into “fantasies” inclusive of oil and fueloline and telecom at a time after they should’ve been shielding their middle turf, that prompted Dhoot’s downfall, Mr Singhal says.

After triumphing spectrum to release industrial operations, Videocon Telecommunications became some of the organizations that noticed their licences being cancelled following the 2G spectrum rip-off – referring to alleged irregularities withinside the promoting of telecom spectrum licences.

It received the licence lower back in a few states, however sooner or later wound down operations after promoting the spectrum to Bharti Airtel.

Dhoot’s ambition of metamorphosing into an oil and fueloline large failed to materialise both. His coverage commercial enterprise met a comparable fate.

By 2012, Videocon became one in every of a listing of different surprisingly indebted firms – inclusive of the Essar Group, GVK, GMR, and Reliance ADAG – that Credit Suisse’s House of Debt record stated posed a “attention risk” to Indian banks.

The combination debt of those 10 businesses became same to 13% of financial institution loans and 98% of the banking system’s internet worth.

A assessment of the scenario 3 years later with the aid of using Credit Suisse located that that no matter tries with the aid of using businesses like Videocon and GMR to lessen debt via asset sales, their economic pressure had “intensified further”, with Dhoot’s employer seeing amongst the biggest growth in debt levels.

By 2018, India’s financial disaster courtroom docket had initiated insolvency lawsuits towards Videocon. In beneathneath a year, Dhoot became additionally struggling with federal investigations into the ICICI Bank loan, for which he’s in custody.

The endgame

As a probe starts offevolved into the alleged wrongdoings, ICICI Bank stays a resilient force, and barring Kochhar, appears to have placed the disaster at the back of itself and moved on.

But for Dhoot, a comeback to the pole function he as soon as commanded may be a tall order.

His meteoric success, and dramatic downfall, are in lots of approaches no one of a kind from some of different Indian industrialists who via the 2000s varied via borrowings, says Amit Tandon, founder and dealing with director of IiAS, an institutional advisory.

“Diffused recognition and macro-financial headwinds hit many that both misplaced their commercial enterprise or are a light shadow of themselves.”