Venugopal Dhoot’s Videocon is trying to offset its struggle in the appliances and telecom business with the gains from its oil interests
Venugopal Dhoot
Chairman, Videocon Industries
Age: 62
Rank in the Rich List: 30
Net Worth: $1.8 billion
The Big Challenge Faced in the Last Year: Managing high debt and losses arising from the telecom licence cancellation. Plans to start a bank came to naught as Videocon was not among the companies shortlisted by RBI
The Way Forward: Hoping to make hay on big oil finds in Brazil. Also bullish on the insurance, DTH and durable businesses
In oil and gas circles globally, Venugopal Dhoot, chairman of Videocon Industries, is acquiring a reputation quite different from what he has in India. In September this year, Cairn Energy founder and chairman Bill Gammell sought Dhoot out at a big fat Indian wedding in London; that of metal magnate Anil Agarwal’s daughter, Priya. The three-day affair was full of Bollywood bling—Shah Rukh Khan and Katrina Kaif flew in from Mumbai to entertain the guests with some foot-stomping dancing.
Amid the larger-than-life festivities, Dhoot was somewhat surprised when the Scottish oilman approached him to say: “We should get into partnership with you again, Mr Dhoot, you are a very lucky man.”
And Gammell knows a thing or three about luck. Much of Cairn’s fortune has been made as a wildcatter, using technology and, sometimes, sheer audacity to find oil in unexpected places. For instance, Rajasthan, when everyone else had given up. But that was in the previous decade. For the last couple of years, Gammell and Cairn have come under criticism for spending over a billion pounds drilling for oil off Greenland, with little to show for it.
Now Gammell’s search for a lucky charm is as much a reflection of Cairn’s poor form as it is of Dhoot’s winning streak during the same period. The past few years have found Videocon sitting pretty on hydrocarbon discoveries of a magnitude that are making the Saudis sit up and take notice. A consortium that Videocon was part of found huge gas reserves in Mozambique’s Rovuma basin in 2012; Dhoot recently sold his 10 percent stake to Indian oil companies, ONGC Videsh and Oil India Limited, for Rs 15,000 crore.
But during the year the sale was being negotiated, a far bigger opportunity was shaping up further afield. Large discoveries were made in Videocon’s blocks in Brazil. The most significant and recent of these, in the SEAL-11 exploration blocks off Brazil’s northeast state of Sergipe, is estimated to hold a billion barrels of oil. Videocon and Indian public sector oil company BPCL jointly have a 40 percent interest here; Brazilian national oil company Petrobras owns the rest. Announcing the find last month, an excited Petrobras CEO Maria das Gracas Foster said that it was a “beautiful discovery that would bring a rush of jobs and activity into the area”.
Dhoot’s windfall with the hydrocarbon finds—by his own assessment, the assets are valued at Rs 1.5 lakh crore (of which the Mozambique block has been sold)—has the potential to transform Videocon in the coming decade.
Changing fortunes
When Forbes India caught up with Dhoot and his nephew Saurabh at the Videocon corporate office at Fort House in Mumbai, India’s colour television doyen was in a bright and breezy mood. Standing on a box to pose cheerfully for pictures on his large terrace overlooking the busy DN Road, he fielded questions with typical Marwari acumen, his answers peppered with trademark quotes from the Bhagavad Gita. He has reason to be buoyant. In the Forbes India Rich List for 2013, he has moved up to 30th (from 38th last year) with a net worth of $1.8 billion (up from $1.5 billion in 2012).
This upswing in fortunes can be attributed to Dhoot’s attempts to de-leverage his balance sheet, the most significant move being the sale of the Mozambique stake. Till early this year, more than half of the promoter’s shares were pledged to banks. Lenders had even joined forces to insist on the sale of Dhoot’s real estate assets and to make his six durable and home appliances companies jointly and separately liable for repayments. The sale, however, provided only a temporary reprieve.
His affairs had reached this state because the early starter in the consumer durables business had lost its way with dozens of diversifications over the years. Consequently, the net debt for Videocon Industries stands close to Rs 25,000 crore. Not surprisingly, markets have consistently snubbed the company and the stock price has moved steadily downwards from Rs 294 in October 2010 to Rs 176 as on October 25, 2013. Analysts Forbes India spoke to said they are wary of the hyped prospects for new businesses. The Dhoot family, promoters of Videocon, holds 69 percent share in the company. Mutual funds have no stake and many fund houses don’t even track the group.
Discounted Conglomerate
(This story appears in the 28 November, 2013 issue of Forbes India. To visit our Archives, click here.)