Ahluwalia at the G-20 meet in London. (AP)

Calcutta, March 15: Calcutta-based Ruia Group, owner of Dunlop India and Falcon Tyres, has set up a separate distribution entity to sell Dunlop brands in India.

Falcon Tyres will have some stake in the new company — Falcon Tyre Impex — but it will be primarily owned by other Ruia Group entities.

Falcon Tyre Impex will be responsible for the distribution, marketing and sales of Dunlop products in India, except two- and three-wheeler tyres, which Falcon makes for Dunlop.

Once the new company takes off, Dunlop’s distribution business will be merged with it.

After Pawan Ruia took over Dunlop and Falcon from the Chhabria family in late 2005, the former’s troubled Sahagunj unit in Bengal and the Ambattur plant in Tamil Nadu have had a chequered record.

The units limped back to production three-four times only to be closed down soon after either because of some technical snag or labour unrest.

As a result, Dunlop products such as truck tyres, OTR (off-the-road) tyres for the mining industry and industrial products (belts) have been arriving at and disappearing from the market, creating confusion among buyers.

Falcon Tyre Impex is entering into a contract manufacturing deal with two to three firms to make Dunlop-branded tyres for trucks and industrial purposes.

This will reduce Dunlop’s dependence on Sahagunj and Ambattur.

“Customers were not sure of the continuity and that affected sales. With this company, we will ensure that Dunlop products are always there in the market, irrespective of whatever happens to the manufacturing units,” Pawan K. Ruia told The Telegraph.

The new set-up is likely to dilute the importance of Sahagunj in Dunlop’s scheme of things. It will shield the group against future uncertainty at the Bengal plant and help Ruia to more effectively tackle labour issues.

Falcon Tyre Impex plans to expand to Southeast Asia, China, West Asia and South Africa.

An office has already been set up in Dubai .

“In India, Falcon Tyre Impex will use the distribution network of Falcon Tyres to sell Dunlop products. Abroad, Falcon will utilise the distribution unit of Falcon Tyre Impex,” Ruia said.

Falcon has made steady profits in the past and has a wide sales network in the country, providing a good fit with the plans of Falcon Tyre Impex.

The new international trading company is also eyeing contract deals with Chinese manufacturers. It could customise the products that Dunlop does not manufacture at Sahagunj and sell them in India.

For instance, Falcon Tyre Impex may bring in radial tyres under the Dunlop brand. In the past, Ruia had imported radials from Japan’s Sumitomo and received a good response.

Ruia Group owns the Dunlop brand in India. But when Falcon Tyre Impex ventures into other countries, it will not be able to use the Dunlop brand.

“We can get tyres manufactured under any brand and sell. For instance, Falcon Tyre Impex can get tyres done in China and sell them in South Africa ,” Ruia said. It will also be easier for the new company to raise loan compared to the troubled Dunlop.

Falcon Tyre Impex can use the fund to buy raw material for Dunlop and get tyres done of its choice. This arrangement may reduce the working capital requirement of Dunlop .