With chips down, 145;IT Czar146; logs off

Dadan Bhai 8212; whose PC brand Pertech was once India8217;s number one 8212; was an agricultural engineer from IIT Kharagpur who used global components and Indian ingenuity to make cheap computers.

Now in his mid 50s and in hiding somewhere in Delhi, Dadan Bhai was once known for his lavish five-star press conferences in the days of the tech boom.

There are still customers across India who have paid Rs 10,000 each for a PC from Pertech Computers Ltd PCL, Altos8217; marketing partner. It8217;s hard to believe now that Dadan Bhai 8212; whose Pertech PC brand was India8217;s number one in the mid 1990s 8212; now spends most of his time fighting cases filed by unpaid raw material suppliers, banks and customers.

Dadan Bhai was one of the early stars of India8217;s IT boom. He made his money with a smart, simple idea: import computer components in bulk at rock-bottom prices from Far East, assemble and sell them under the PCL brand name.

Beginning as a bank officer, he moved to Hindustan Computers Ltd HCL and rose rapidly to head a division. He founded Altos, which originally made video games, with colleagues Bharat Goenka and Arjun Malhotra. PCL was Altos8217;s marketing division.

But Dadan Bhai8217;s chief problem was he could not keep his supply lines going, his diversifications didn8217;t work and there were questions raised about how a company that earned a net profit until 1995-96 suddenly reported a loss of Rs 366.12 crore the next year. The BIFR, which Dadan Bhai unsuccessfully approached, found this 8216;8216;grossly disproportionate8217;8217;.

HOW THEY GOT THE MONEY

The PCL saga begins in 1987 when Dadan Bhai visualised a day when PCs would replace electronic typewriters. A tie-up with the American company, Dell Computers, followed.

He also tied up with names like Microsoft, Novell, Motorola and 3Com to offer single solutions to corporate computerisation problems. The PC business also did well. By 1994-95, PCL was the No. 1 selling PC brand in the Indian market.

Sales soared from Rs 53 crore in 1988-89 to Rs 279 crore in 1992-93, a rise of Rs 525 per cent. From 1992 to 1994, Dadan Bhai8217;s surging companies freely raised money through rights issues, debentures and bank loans, setting up factories 8212; assembly plants really 8212; in Delhi and Goa, and a software facility in Bangalore.

His networking skills, good press and strong balance sheets helped enormously, attracting SBI Capital Markets and ICICI to his 1991 public issue as lead managers.

PCL8217;s arithmetic was simple: It would ask customers to pay the price 100 per cent in advance and wait for up to eight weeks for delivery. Meanwhile, it would order PCs from Taiwan and Singapore and get huge discounts for bulk orders. The PCs would be assembled in India and sold for Rs 25,000. It was a steal compared to Rs 35,000 in the grey market and Rs 60,000 from a branded PC like Compaq.

PCL was flooded with orders, but slipped on delivery commitments. With its international supply lines tottering, it had no fallback without a manufacturing base. The company, insiders say, also invested money in the software business called Mindware, which had had set up costly infrastructure and could not get business abroad. These investments in Mindware eventually killed PCL, explain insiders.

Dadan Bhai8217;s other diversification was component-assembly lines in Gurgaon for three US manufacturers. But the companies backed out and given India8217;s red-tape, he could not use that capacity to sell in the domestic market.

His bankers lost their enthusiasm when they saw Mindware sinking. The result: Dadan Bhai failed to deliver thousands of PCs though he had collected the advances. Mindware was also sold off, some part to a foreign bank and the rest pledged to the Exim Bank.

AND HOW THEY GOT AWAY

Dadan Bhai may not have got away from legal action, but no one is likely to get back the money he owes them. His close associates, Bharat Goenka, who originally owned Altos, and Bikram Dasgupta Marketing Director had serious differences with him and left before the company sank.

PCL did try the usual defaulter route of going to the BIFR in 2000. By then Dadan Bhai had already filed for insolvency, and the company even told its bankers that it could not foot the bill to undertake a special investigative audit.

But the BIFR rejected its plea on the ground that it was not a manufacturing company. PCL8217;s counsel did argue that it had a manufacturing facility but couldn8217;t back this up with documentary evidence. Today, creditors have no hope of recovering their money because the limited machinery and plants have little value that can be retrieved. 8216;8216;It8217;s all outdated, who will buy it?8217;8217; asks a senior IDBI official.

Indeed, official liquidator B K L Srivastava told The Indian Express in Chandigarh that Rs 90 lakh is the best offer he8217;s got for Altos8217;s assets valued at Rs 30 crore. 8216;8216;We8217;ll have to get it evaluated again as the machinery is becoming obsolete,8217;8217; he says.

Dadan Bhai, in court submissions, blames his downfall on a variety of factors: the withdrawal of component-assembly contracts by three US giants 8212; Dell, Seagate and Hewlett Packard; government policies; the failure of a 1994 rights issue; the lack of funds with him and his fellow first-generation technocrat entrepreneurs, and the fact that his bankers first assured him of a bailout and then back out.

It was in 1998 that the company8217;s secured creditors moved the Calcutta High Court to recover their money. PCL on February 24, 1999, scurried to the BIFR asking to be declared a sick company. By then on June 11, 1998, the Punjab and Haryana High Court had ordered the winding up of Altos India.

When The Indian Express visited his factory in Okhla in January 2000, Dadan Bhai was already gone. 8216;8216;Nobody knows where he is,8217;8217; then manager B B Gupta said. 8216;8216;He calls us, we can8217;t call him 8230; he has so many cases against him that he keeps running from one place to another.8217;8217; Two years on, nothing has changed.

With Ajay Jain