The board, which met in Mumbai, inducted Y.C Lumba, a retired professional aged around 65, as an executive director.

The management recast came in the wake of growing public condemnation over the year-long closure of Dunlop India which has pushed thousands of workers into penury and recently drove one of the employees to commit suicide.

The resignation of Rao, who was appointed MD in early 1997, was widely expected. He is being blamed for the early closure of the company?s accounts in 1997 and its referral to the Board for Industrial and Financial Reconstruction (BIFR) in order to secure a revival package that would allow the company to sell its real estates in Mumbai, Chennai, Bangalore and Calcutta, tax concessions from the governments of West Bengal and Tamil Nadu and loan reschedulement and fresh fund commitments from the company?s bankers.

The plan came unstuck as United Bank of India, the company?s lead bank, challenged the company?s 1997 accounts and vehemently opposed the sale of real estate.

A press release from Mumbai said the board had accepted Rao?s resignation.

The reconstituted Dunlop board includes T S Venkatesan, an executive director, Bansi Mehta. Air Marshal (Retd) P K Puri, R N Tripathi, Virendra Prakash, T S Shettigar, K Tozawa, M H Godhwani, all part-time directors. In addition, Komal Chhabria Wazir, daughter of Manu Chhabria, is an alternate director to the chairman.

Chhabria, who is being investigated by the enforcement directorate for Fera violations, has not been coming to the country for quite sometime.

Trade union leaders in Dunlop termed today?s board level changes as ?hogwash?. Citu general secretary Chittabrata Mazumdar?s reaction was typical: ?Has the chairman been changed??

Ranjit Neogi, general secretary of the Intuc-sponsored rubber factory union, said: ?We don?t trust Chhabria?s men. He has been changing managing directors in Dunlop at regular intervals. Over the years, we have lost count of these MDs.?

Neither Rao nor Lumba was available for comment on the development. However, sources in Dunlop do not attach any importance to the top level changes in the company which was shut down by the management through a mid-night notice that was put up at the factory gate at Sahagunj on February 8 last year. The next day, the management issued a similar cease-work notice at its Ambattur factory in Tamil Nadu.

The induction of Lumba into the Dunlop board is being touted as a renewed attempt to push through a revival package and delay any government action to take over the management of the company.

West Bengal Chief Minister Jyoti Basu and finance minister Asim Dasgupta had promised a government takeover of Dunlop and even invited private partners to run the company. But, it has not yet succeeded in its resolve.

According to the proposal cleared, Citicorp Finance India, the holding company of Citibank, will increase its capital base from $ 40 million to $ 50 million. The board also cleared the proposal of Telecom Investment India Ltd to bring in Rs 165 crore through non-convertible preference shares. GE Plastics, which manufactures advanced engineering plastics, has been allowed to increase the stake of the foreign partner to 60 per cent from 50 per cent by bringing in an additional Rs 15 crore through convertible preference shares. The share of IPCL, the Indian partner in GE Plastics, will come down by the same percentage after the shares are converted. The board also approved the proposal of French multinational Conpagnie de St. Gobain to increase its stake in the joint venture with Grindwell Norton from 90 per cent to 95 per cent.

A proposal by Owens Brockway to increase the capital base in its wholly-owned subsidiary in India by Rs 150 crore was also approved. The board cleared a proposal by Arjo Wiggins of France to set up a venture to manufacture bank notes and other speciality notes in India.

This was Planning Commission member Montek Singh Ahluwalia?s refrain at two meetings that he attended in the city today.

Making it clear that the states should cut down on central borrowing, Ahluwalia, while taking part at an interactive session with the Indian Chamber of Commerce, said state governments must rely more on internal revenue generation to fund their planned expenditure.

?There was a time when many states generated positive balance from current revenues which was used to finance part of their planned expenditure. Today almost all the states have a negative balance from current revenues which means they are borrowing even to meet current expenditure. This is a recipe for fiscal disaster,? he said.

Later addressing the 34th convocation of the Indian Institute of Management, Calcutta (IIMC), Ahluwalia said the states were ?courting fiscal disaster? by continuing to fund their plan expenditure through additional borrowings.

His comments came a day after West Bengal?s budget proposals for 1999-2000 that relied heavily on the central borrowing to meet the Rs 7603 crore gap between revenue and expenditure.

Ahluwalia admitted that it was difficult for the states to make fiscal corrections but could be done by downsizing governments and eliminating huge hidden subsidies.

Employment cell

In their representation to the RBI on credit policy, NBFCs said the central bank should encourage commercial banks to extend finance to NBFCs by way of preference shares, non-convertible debentures, term loans and cash credit.

The NBFCs have also asked the central bank to keep in abeyance the Vasudeva Committee recommendations that called for raising the statutory liquidity ratio (SLR) to 25 per cent in a phased manner. The present SLR is fixed at 12.5 per cent.

T. Thomas, former chairman of Hindustan Lever and Glaxo India, has been appointed chairman of French cement major Lafarge?s Indian arm. Thomas was also the director of Unilever in London, a company statement said here today. The statement said Thomas Farrell, Lafarge?s country manager, will become chief executive officer of Indian operations.

Pivotals down

Pivotals declined further on the National Stock Exchange (NSE) on speculative selling pressure coupled with lack of buying support from institutional investors today. The S&P CNX Nifty index closed at 1060.35 points, showing a net loss of 2.55 points as against the previous close of 1062.90 points. Total turnover on the NSE reported during this special session was Rs 738.86 crore.

Bharti Telenet

Bharti Telenet today launched its basic telecom services in Gwalior. The sevices were inaugurated by the Madhya Pradesh chief minister Digvijay Singh.

Air France offer