Ready to roll

Calcutta, Nov. 7: Calcutta-based Ruia Group is in talks with Japan’s Sumitomo to build a radial tyre plant in India.

Sources said the project would cost around Rs 500 crore and both Ruia Group and Sumitomo would bring in equity for the venture.

The proposed unit is likely to be located in either Tamil Nadu or Karnataka.

Ruia Group chairman Pawan K. Ruia had last week said the talks with a “foreign player” were in advanced stage without naming the company. “We have been in dialogue for months. I think we should decide in the next 15-30 days whether to do the deal together or move on,” he had said.

While the new unit is likely to be an equal joint venture, there is a possibility that Sumitomo may hold a majority stake.

The Japanese firm will bring in the technology for car radials, while the Ruia group will provide the local market access, distribution and sales network.

Ruia Group owns tyre makers Falcon and Dunlop. Falcon is the largest manufacturer of two- and three-wheeler tyres in India and sells through the Dunlop brand in the domestic market.

Falcon’s plant is located in Mysore, Karnataka — a state in which Ruia has decided to invest more. The group has signed a memorandum of understanding with the state government to set up a unit there.

The development underlines Ruia’s reluctance to make fresh investments in existing Dunlop units at Sahagunj in Bengal and Ambattur in Tamil Nadu.

However, he has decided to carry on operations at the two facilities without ramping them up.

According to observers, the group may look at fresh investments at Sahagunj and Ambattur when the dust of their turbulent past settles. Both the units have suffered from industrial unrest.

Dunlop manufactures off-the-road and truck tyres. The group has also launched cycle tyres, but through a different company.

Sumitomo will fill up the gap of radial tyre in the Ruia group portfolio.

Meanwhile, Falcon has set its eyes on expanding outside Mysore. It plans to set up a unit in Uttarakhand at an investment of Rs 550 crore. It is going to be a two-wheeler tyre project and will mainly supply to Hero Honda.

Ruia is also closing in on a big acquisition in Europe in auto. The deal size could be $200-300 million.He had earlier acquired the assets of three European firms — Gumasol Werke and Draftex Automotive in Germany and UK-based Schlegel Automotive.