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Venugopal Dhoot, a well-known business mogul in India, was detained this week. This occurred nearly four years after he was accused with fraud and criminal conspiracy by India’s federal investigating agency.
His arrest came after Chanda Kochhar, the former CEO of ICICI Bank, and her husband, Deepak, were arrested for alleged fraud. Kochhar allegedly offered Dhoot’s company high-value loans in exchange for investments in her husband’s renewables firm in 2009.
ICICI is India’s third-largest bank, and Kochhar, the bank’s famed CEO, is regarded as a role model for women in banking.
Kochhar and her husband have denied any arrangement was struck in exchange for Dhoot’s investment.
These arrests are a significant step forward in a case that has seen no arrests since the alleged offenses were reported in January 2019.
According to local media, Dhoot, who has disputed the allegations, has offered to become an approver (give evidence).
He also stated that because the alleged fraud was so complex, all of India’s investigation agencies would have to collaborate to solve the issue.
The rise of Venugopal Dhoot
Venugopal Dhoot was a common presence at business events, corporate parties, and budget meetings in the 1990s and early 2000s.
Business journalists adored him because he was easy to talk to and always ready to provide a sound bite or statement. His thoughts were likewise highly sought.
Venugopal Dhoot was born into a farming family. His family was authorized to sell Bajaj scooters in Aurangabad and other western Maharashtra areas. Dhoot had helped Videocon transform into a consumer goods company by the 1990s.
The company was the first to sell color televisions in India. With the introduction of other household appliances such as washing machines, air conditioners, and refrigerators, Venugopal Dhoot earned the title “king” of India’s white goods market.
Dhoot was from a tiny village and initially struggled to communicate in English, but that didn’t stop him from establishing friends with politicians and other entrepreneurs.
Arvind Singhal, chairman of retail consultancy firm Technopak Advisors, claims that he benefited from sky-high import duties on multinational firms till the 1990s. Other brands found it difficult to compete with Videocon due to these levies.
However, a great marketing and distribution strategy was also a major reason why it outlasted rival local companies for nearly 20 years.
According to Mr. Singhal, Dhoot’s demise was caused by tough competition from South Korean companies such as Samsung and LG, as well as Videocon’s unnecessary diversification into “fantasies” such as oil and gas and telecommunications at a time when they should have been safeguarding their core turf.
After obtaining the necessary spectrum to begin operations, Videocon Telecommunications was one of the firms whose licenses were canceled due to the 2G spectrum fraud, which involved suspected issues with how telecom spectrum licenses were auctioned.
It regained the license in several states but was forced to close after selling the spectrum to Bharti Airtel.
Dhoot’s ambition to build a large oil and gas corporation did not come true. Instead, his insurance company followed suit.
By 2012, Credit Suisse’s House of Debt study stated that heavily indebted corporations like Videocon, Essar Group, GVK, GMR, and Reliance ADAG posed a “concentration risk” to Indian banks.
The aggregate debt of these ten groups amounted to 13% of bank loans and 98% of the banking system’s net worth.
Credit Suisse examined the scenario three years later and discovered that, despite efforts by companies such as Videocon and GMR to decrease debt by selling assets, their financial stress had “intensified even more,” with Dhoot’s company experiencing one of the largest increases in debt levels.
By 2018, India’s bankruptcy court had begun the process of shutting down Videocon. Venugopal Dhoot also dealt with government probes into the ICICI Bank loan in less than a year. Because of these investigations, he is now in jail.
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The final straw
Even as an inquiry into the alleged wrongdoings begins, ICICI Bank remains a solid organization. But, with the exception of Kochhar, it has moved on from the catastrophe.
But it will take more work for Venugopal Dhoot to reclaim his former position at the top.
According to Amit Tandon, the founder of IiAS, an institutional advising firm, his rapid ascent and catastrophic fall are similar to those of other Indian businesspeople who borrowed money to diversify their businesses in the 2000s.