Co. needs Rs. 400 cr. to meet past liabilities; Ambattur unit may resume in Aug.
Asset sale proceeds transferred to new subsidiaries
Co. hopes to resume work at Ambattur in Aug.
KOLKATA: Through a part-revaluation of its assets and the sale of assets, including land in Tamil Nadu and a property in Mumbai, Dunlop India has reported a positive net worth of Rs. 1,358 crore in 2006-07 against a minus Rs. 400 crore net worth in 2005-06.
Company Chairman, Pawan Ruia, told The Hindu that the proceeds from the sale of ‘non-core’ assets were transferred to four new subsidiaries — Dunlop Properties, Dunlop Infrastructure, Dunlop Estates and Bhartiya Hotels — formed earlier this year. These would be non-Board for Industrial and Financial Reconstruction (BIFR) companies. The assets, which have been transferred at a consideration of Rs. 230 crore, were 58 acres near Ambattur and a property sale at Worli in Maharashtra which netted Rs. 150 crore. The BIFR was approached for deregistration and the company was awaiting the next hearing.
Although based on this part-financial recast a Rs. 78 crore net profit was carried to the balance sheet in 2006-07, working capital shortages were still plaguing the company’s revival plans for its units in Sahagunj in West Bengal and Ambattur in Tamil Nadu.
The Ambattur unit, where production had been stopped for some time now, expects to resume around August. The Sahagunj unit is operational but Mr. Ruia stated that commercial production could only start after stabilisation of production. Earlier, this was expected by April.
Mr. Ruia has invested Rs. 260 crore in Dunlop since his acquisition of the company from the Chhabrias in December 2005. Now nearly Rs. 400 crore is required to meet the working capital requirements and to meet past liabilities.
Mr. Ruia earlier told reporters after the company’s annual general meeting that funds flow, expected through a successful rights issue of Rs. 27 crore in April, was blocked after the Appellate Authority for Industrial & Financial Reconstruction (AAIFR) issued a stay order on the issue. The appellate authority issued its order following a complaint launched by LIC that the company was not following the procedures regarding the issue. LIC holds a six per cent stake in Dunlop.
While pointing out that some funds have been arranged, Mr. Ruia said Dunlop’s BIFR listing limited its recourse to bank finances and the stay order blocked its plans to raise money from the capital market. Trading in the company’s shares has been suspended for over four years now. He declined to name the bank beyond saying that it was a foreign bank with Indian operations.