| Pawan Ruia in Calcutta on Saturday. Picture by Kishor Roy Chowdhury
Calcutta, Dec. 3: Pawan Ruia is now busy working out ways to restart ailing Dunlop.
A day after he clinched the deal in Singapore, a visibly satisfied Ruia said Sumitomo Corporation, which owns the Dunlop brand worldwide, has evinced interest in partnering Dunlop India to set up a new plant.
“It is still early. But we are looking at partners to diversify the product-line and grow the business,” Ruia said in Calcutta today.
Dunlop has plants in Ambattur and Sahagunj. The Sahagunj factory has land that could be used for the new unit.
Ruia is planning to invest about Rs 100-150 crore in Dunlop, while the National Productivity Council (NPC) has worked out a revival package of Rs 210 crore.
“We will work out a package in consultation with the lenders, financial institutions and the Board for Industrial and Financial Reconstruction (BIFR),” Ruia said.
Dunlop has liabilities of Rs 600 crore and some 40-50 litigations.
However, the estimated value of the Dunlop brand is Rs 300 crore, while all assets put together would come to Rs 800-900 crore.
The biggest challenge for Ruia would be the 2,700-strong workforce at Sahagunj. The liability towards workers’ payments and sundry debtors amount to Rs 470 crore.
The state government will also play a crucial role in ‘rightsizing’ the workforce here. Ruia said no more than 1,000 people would be required at the initial stage.
“Government intervention will be necessary in settling labour dues, sales tax and electricity bills waivers,” Ruia noted.
The Ambattur facility will start work in six to nine months, while Sahagunj could be back in operation in another six months.
Ruia sees a turnaround in Dunlop in less than three years.
To start with, the Sahagunj factory will produce industrial products like conveyor belts, while Ambattur could churn out truck tyres.
Falcon Tyres, which is a profit making company, manufactures tyres for two and three- wheelers. With a small investment, the company’s turnover could be increased substantially, Ruia said.
Ruia acquired Dunlop through a complex offshore deal worth Rs 200 crore. A clutch of investors have put in money to fund the deal.
An investment company of the Ruia group bought the shares of the holding company of DIL Rims & Wheels, which in turn owns 76.5 per cent of Dunlop Industries Ltd. The holding company of DIL Rims & Wheels is based in SIngapore, while the company itself is registered in Mauritius.
Ruia did not disclose the identity of the investors, however, he said they would benefit by way of assured interest rates as well as certain upside on equity.
“The investors will have the option of exiting the venture in five years,” Ruia added.
Ruia said unlike Jessop, the Dunlop deal does not require BIFR’s clearance.
“Since I am acquiring shares of the holding company, which in turn is the holding company of Dunlop, BIFR approval is not required. For us, the acquisition is closed,” he said.
He claimed the mandatory open offer might not be required either for Dunlop or Falcon where he now owns 76.5 per cent and 75 per cent, respectively. “We are taking legal opinion and also keeping the Securities and Exchange Board of India (Sebi) posted,” he said.