A desperate turn for survival in the mid-1990s has transformed consumer durables maker Videocon into an energy giant, with three-fourths of its revenues expected to come from the new business. On the way, Venugopal Dhoot, the chemical engineer from Ahmedabad, seems to have mastered the alchemy of turning black gold into the real one.

Prolific energy fields abroad have helped the group rely progressively less on televisions, washing machines and electronic components, a business under threat from multinational corporations. The transformation pivots around discoveries in energy fields in Brazil and Mozambique it once purchased at token amounts.

Videocon and state-owned Bharat Petroleum Corporation (BPCL), which purchased 10% each in the Mozambique offshore fields for $75 million in 2005, have seen the value of their investments rise exponentially, as another partner Cove Energy of UK readies to sell its 8.5% stake for $650-850 million. The new valuation even beats Videocon?s market value of R6,485 crore on the Bombay Stock Exchange on Monday and R14,675 crore revenues it reported for financial year 2009-10.

Videocon and BPCL can pump out 15 trillion cubic feet of gas, which can be increased to 30 tcf. The new gas find is a shade lower than Reliance Industries? (RIL) 36 tcf from its Krishna-Godavari D6 gas field in India. A 10% stake fetches a value of roughly $1 billion at 15 tcf.

High crude prices have made oil exploration and production attractive in recent years. Brent crude prices have remained over the $100 a barrel mark for most part of 2011, touching $111.14 on Monday.

The consumer durables maker is not new to striking gold from crude. In the mid-90s, when its core business faced threat from Korean and Japanese companies like Samsung, LG and Sony, Dhoots paid $16 million and borrowed $48 million to purchase a 30% stake in India’s Ravva oilfield and partnered Oil and Natural Gas

Corporation, Australia’s Command Petroleum and Marubeni Corporation. Videocon has recovered

roughly $2 billion and expects to rake in an additional $500 million from this field which pumps 45,000 barrels oil a day now with an exploration licence until 2017.

?Our unrelated diversification was due to sheer survival threat and to bring down our reliance on consumer goods,? Venugopal Dhoot said in an interview to FE last week. ?The jackpot at Ravva oil field gave us the confidence to look overseas.?

Videocon’s unrelated push is to survive, but for partner BPCL, it is a de-risking strategy to make up for losses as it sells petrol, diesel and cooking gas home below their production

cost. BPCL, like Videocon, which owns a minority stake in oil and gas fields in Mozambique, Brazil and Indonesia through a wholly-owned subsidiary Bharat Petro Resources (BPRL) says gas will flow from Mozambique by the financial year 2017-18.

?It’s a matter of five years for BPCL,? RK Singh, chairman and managing director, told FE in an earlier interaction. ?When oil and gas assets abroad start giving results, the upstream company will start supporting BPCL.?

BRPL, like Videocon, owns 10% stake in Mozambique field that gives it right to sell 3 tcf of reserves. ?The huge revenue stream coming from that side will change BPCL’s complexion,? says Singh, who took over the reins in December 2010. BRPL owns 27 blocks, of which 10 are in Brazil, eight spread across Australia, Timor, Indonesia, Mozambique, Oman and the North Sea, and nine in India.

Another money-spinner for Videocon is its 10% stake in Brazilian oil field Wahoo with partners American oil refiner Anadarko Petroleum Corp and BPCL. Brazil’s output of over 150 billion barrels of oil a day eclipses leader Saudi Arabia’s roughly 265 billion barrels. ?The field can be economic by selling crude at $30 a barrel,? says Dhoot. The huge oil find forced Brazil to close doors for overseas investors.

?Financially it will work well, but strategically it may not, unless they integrate with their operations back home,? says professor Partha Ghosh, who teaches strategic management and leadership at Massachusetts Institute of Technology, US. An American refiner believes Wahoo could be its next mega project.

?We believe the results to date increase the potential resources in the prospect area, and from what we?ve seen so far, Wahoo has characteristics necessary to potentially become our next mega-project,? Bob Daniels, senior vice president of worldwide exploration for Anadarko, said in an interview with a wire agency.

Videocon Industries and Bharat Petroluem Corporation had acquired the stake from Canadian firm EnCana Corp for $283 million or Rs 1,300 crore in September 2007, two months before oil was discovered in Wahoo by Brazilian state-owned firm Petrobras.

Unlike its move to oil and gas business to stay afloat, Videocon, run by Dhoot brothers, is cautious in its mobile telephony business it entered in 2009 with Datacom Solutions. ?We will wait for the legal issues to settle down and the government’s new telecom policy, ? says Dhoot. The company, which had invested roughly Rs 300 crore, had earlier planned a nationwide launch. But consultants say mobile telephony is tough for new players.

?The challenges for new operators are slower growth and a sinking average revenue per user (Arpu),? says a joint report by global audit and consulting firm PricewaterhouseCoopers and Cellular Operators Association of India released in August 2011. ?New operators together have only 5% market share and 2% of the total revenue.? The average Arpu of new entrants was Rs 55, only a third of the Arpu of top 4 players at Rs 165 and around half that of mid-sized players at Rs 97.

But Dhoot is hoping on the subscriber churn to switch their mobile telephony operator and its vast retail distribution network selling television and washing machines. ?We have sales touch points and we understand customers,? says Dhoot. ?But oil and gas will drive Videocon Group’s future revenues. Our oil and gas revenues will be anywhere between 15 to 20 times our electronics business,? he adds.

(Nikita Upadhyay contributed to this article)