What Killed IIT Madras Startup MidasCommunications?
In 2007, Midas bagged a contract from BSNL to supply more than a million units of its flagship product corDECT (a wireless broadband product). During this period, Midas entered into an agreement with Gemini Communications, under which the latter would supply components to the network solutions firm. In order to meet its expenses, Midas took loans from many financial institutions, including Axis Bank and Canara Bank.
But then everything went out of track. BSNL delayed the project by more than a year and eventually cancelled it in 2009. When the contract was cancelled, Midas was straddled with repayment problems to equipment suppliers (GeminiCommunications whose FIR led to arrest of Purohit) as well as lenders. That included 800 odd employees as well who worked for one-and-a-half years without pay at Midas because they were confident of success in the BSNL project but it didn’t work out.
The current picture of MidasCommunications is: The Group has died, Directors are no where to be found, CEO is in jail and nearly all 800 employees have quit. That apart, the equipment supplied by Gemini to Midas is no where to be found.
Is it BSNL’s fault?
Although it appears that the delayed and later cancelled BSNL contract proved to be Midas’s downfall, but things can be different than what they appear. Note that Midas and Gemini together had filed a case against BSNL, which they won. But now it’s surprising that the two are suddenly locking horns, now.