Way to go

Calcutta, Aug. 20: Dunlop India is close to signing an agreement with Tata Motors to sell the bulk of its light commercial vehicle and truck tyre production from its Ambattur unit in Chennai.

The southern plant will start production again on August 27 after being closed for about five years.

The company, under new chairman Pawan K. Ruia, is initially looking at a production of 40 tonnes a day.

Over the next four months, it will stabilise at 130 tonnes a day.

Dunlop is eyeing to sell 60 per cent of the production to Tata Motors, which is also expanding rapidly.

“The discussion is on. We hope to conclude the negotiations soon,” Ruia told The Telegraph.

Dunlop will supply to the Pune plant of Tata Motors from Ambattur. When the Sahagunj unit resumes production, it will start supplying to the Tatas’ Jamshedpur plant.

Maintenance work is currently on in the Bengal unit, which, Ruia feels will start production after the pujas.

Dunlop is eyeing sales of about Rs 300 crore this financial year. Since the tyre market is strong at present, it might also post a small profit in the first year of operations after being taken over by the Ruia group from the Chhabria family.

“No other time could have been better for Dunlop to re-enter the market,” Ruia added.

Dunlop also plans to tap Ashok Leyland for supplying truck tyres.

The company is setting up a dealer network to enter the replacement market, which normally works on a higher margin than the OEM segment.

The company has received export queries, but it may first look at consolidating its position in the domestic market.

So far, it has spent Rs 30 crore to start production at Ambattur. Earlier, Ruia contemplated reviving Sahagunj first, but negotiations with workers delayed the process.

Sahagunj can manufacture a wider variety of products, including high-margin items such as industrial belts.

It will also set up an industrial product line at Ambattur.

In Sahagunj, Dunlop will look also at the OTR (off the road) segment, which gives higher margin than regular products. The OTR segment finds application in industry.

With the Dunlop revival, the Ruia group will emerge as a force to reckon with in tyre business.