When this reporter began looking for Dadan Bhai to find out what happened toone of the rising stars of the '90s infotech boom and visited PCL'sregistered premises at E-46/10, Okhla Industrial Area, Phase II, all companydocuments were being loaded onto a truck ``for transportation to thecompany's Calcutta office''. Dadan Bhai is the chief promoter of both theprojects and has 900 cases pending against him in consumer courts and 175cases under Section 138 for cheque bouncing.

If you run a random search on Dadan Bhai on the internet, you can find somemessages put out for him by a `friend' which reads -- ``looking for DadanBhai, whoever knows please e-mail his whereabouts.'' He is not available atany of his listed addresses. And his 60-something manager, B B Gupta, whowas in charge of the clearing out operations when this reporter landed upunannounced at Okhla, says: ``Nobody knows where he is. He calls us, wecan't call him...He has so many cases against him that he keeps running fromone place to another.''

PCL started off as a company which imported computer components, assembledthem in India and marketed the item under its own brand name. The company'sturnover increased from Rs 53 crore in 1988-89 to Rs 279 crore in 1992-93, agrowth of over 525 per cent in five years. No mean achievement this. Mostpeople wonder then, how did this bubble burst?

The PCL saga begins in 1987 when it entered the IT industry. Dadan Bhai, theman behind PCL, saw the expanding PC market as a more lucrative businessproposition compared to selling electronic typewriters. A tie-up with DellComputers followed, with PCL being the sole seller of Dell PCs in India inreturn for manufacturing motherboards for Dell.

PCL later got into the ``solution provider'' business, providing asingle-window solution using latest technologies from its internationalpartners. This concept of a `virtual corporation' took off with tie-ups withbig names like Microsoft, Novell, Motorola and 3Com. The PC business alsodid well. By 1994-95, PCL was the number one selling PC brand in the Indianmarket.

It then began to re-study the cost of manufacturing a PC. It found thatabove a certain basic amount, the interest element formed a major part ofthe cost. Advance payments could eliminate that. Also, PCL saw the benefitsof economies of scale. By out-sourcing components from original equipment,PCL saw itself able to provide PCs at Rs 25,000. The minimum cost of anunbranded PC, assembled in the grey market, was around Rs 35,000 at thattime. The cost of a branded PC from say Compaq was closer to Rs 60,000.

PCL's arithmetic was simple: It would ask customers to pay the price 100 percent in advance and wait for up to eight weeks for delivery. Meanwhile, itwould place its orders in the Taiwan and Singapore markets and get hugediscounts for bulk orders paid for in advance, put the PCs together in Indiaand complete the orders. So, as people in the US elsewhere were busyforgetting what a 486 is, PCL was supplying 486s at Rs 24,999. This wasbrought down to Rs 18,499 in the 1996 Diwali season. Pentiums were going atRs 26,999.

The big order boom that PCL received was unprecedented. Around 30,000computers were booked and Rs 100 crore collected as advance money. Of these,at least 20 to 30 per cent failed to reach customers, insiders claim.Result: consumers lodged several complaints with consumer courts; 900 ofthese are still on.

The company, insiders say, put all this advance money collected from bookingcomputers into the software business called Mindware. This company had ahuge set-up and was unable to get any business overseas. Maintenance of thelarge infrastructure in Mindware is what killed PCL, explain insiders.

Meanwhile, expecting financial institutions to lend money for Mindware,Dadan Bhai had overstretched himself in PCL and Altos, both of whichlanguished because of lack of funds. Financial institutions, however,changed their tune and saw Mindware sinking and through the advances coveredtheir exposure to the group. As a result Dadan Bhai failed to deliverseveral PCs for which he had already collected the advances. Result: severalpending consumer cases against the company.

Subsequently, insiders say, Mindware was also sold off, some part to aforeign bank and the rest pledged to the Exim Bank, Gupta explains.

(The series is concluded)

Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.