Once a dominant force in the Indian electronics market, Videocon’s journey from a humble beginning to a massive conglomerate and its eventual collapse is a compelling story of ambition, diversification, and the perils of excessive debt.
The Rise of a Household Name
The Videocon story began with the Dhoot family, farmers from the Marathwada region. The family patriarch, Nandlal Dhoot, was a successful sugarcane farmer who later ventured into business, including a dealership for Bajaj vehicles. His son, Venugopal Dhoot, along with his two brothers, started a company in 1986 that initially produced paper tubes .
A pivotal moment came when they pivoted to manufacturing picture tubes, a key component for TVs and computers. In 1991, Videocon was officially launched, and they partnered with Japan’s Toshiba to produce color TVs in India. By manufacturing their own picture tubes, Videocon was able to bypass import duties, allowing them to offer TVs at a significantly lower price. This strategic advantage quickly propelled them to the top of the market.
Building on this success, the company expanded its product line to include refrigerators, washing machines, and other electronic appliances, solidifying its position as a household name across India.
Diversification and Downfall
Videocon’s downfall began when it diversified into unrelated sectors, including glass manufacturing, oil and gas, and telecommunications. The company took on a staggering debt of 25,000 crores to enter the highly competitive telecom sector.
The primary reason for its collapse was a lack of experience and knowledge in these new business areas, which were funded by taking on huge loans. The company faced massive losses in its oil and gas ventures due to falling oil prices, leading to a debt of 23,000 crores.
Further compounding its problems, Videocon’s telecom licenses were revoked following the 2G spectrum scam, resulting in a huge financial setback. The company’s reputation was also tarnished by allegations of loan-related irregularities involving ICICI Bank’s former CEO, Chanda Kochhar .
By 2018, Videocon was declared bankrupt, and in 2021, the National Company Law Tribunal (NCLT) approved its takeover by Anil Agarwal’s Vedanta Group.
The story of Videocon serves as a powerful reminder that while diversification can be a path to growth, it can also be a perilous journey if not managed with caution and expertise.