The Hindu Business Line : Dunlop, Falcon acquisition — Cross-country holdings made it a complex deal, says Ruia

Mr Ruia said a special purpose vehicle was floated by the Ruia Group to acquire a 90 per cent stake of the Singapore-based holding company of DIL Rims and Wheels.

IN HAPPY MOOD: Delighted Ms Sarita Ruia with her husband Mr Pankaj Kumar Ruia after the announcement of the acquisition of Dunlop at a press conference in Kolkata on Saturday. — A. Roy Chowdhury

Kolkata , Dec. 3

THE Ruia Group's acquisition of Dunlop, Falcon and Indian Tyre & Rubber (ITR) was a complex affair, in view of the cross-country holdings in the three companies.

"It was not an easy takeover, I would say," said the group Chairman, Mr Pawan Kumar Ruia, on Saturday afternoon after sealing the overseas deal in Singapore on Friday.

The acquisition of Dunlop and Falcon was the most difficult part of the deal. He said a special purpose vehicle (SPV) was floated by the Ruia Group to acquire a 90 per cent stake of the Singapore-based holding company of DIL Rims and Wheels (DILRW).

While Mr Ruia refused to divulge the name of the Singaporean company, he said the remaining 10 per cent stake in it was taken by one of his associates. DIL Rims holds the promoters' stake of 68 per cent in Dunlop and 74.5 per cent in Falcon.

While Dunlop has no other promoting stake, in the case of Falcon, another seven per cent is held by employees and associates.

While it is not clear whether the Ruia Group SPV is located in Singapore, the Chairman said the acquisition was funded by some overseas funding agencies.

Though the details of the funding agencies were not divulged, he said the funding was based on a five-year loan term, including an equity write-back clause.

With the increase in market capitalisation of DIL and Falcon, the funding agencies may write back their equity stake in the Singapore-based company.

The combined equity stake of the funding agencies may go up to 20-30 per cent.

Mr Ruia, however, clarified that the acquisition is not mortgaged to the funding agencies. "The liabilities of this funding rest with Mr Ruia and his associates."

The acquisition of ITR was comparatively simpler. Though originally a wholly owned subsidiary of Falcon, the Rs 25-crore company was de-merged by Jumbo Group before disinvestments of the entire tyre business to Ruia.

The latter had acquired a 99 per cent stake in the company through one of the group's investment arms.

Talking about the possibility of an open offer for the acquisition of public shares, which is otherwise mandatory in case of any acquisition, Mr Ruia said that his group would seek clarification from SEBI on the same.

"Since it is not a case of direct acquisition and we have actually acquired the overseas holding company of DIL Rims and Wheels also based in foreign shores, it is not clear whether such clauses are applicable to us," he said.

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