The Hindu Business Line : New revival plan for Dunlop soon — Ruia Group to raise funds for long-term needs

THE Ruia Group is considering a combination of loan fund and infusion of fresh equity, either through a rights issue or preferential allotment, to meet long-term capital requirements, including investment of roughly Rs150 crore.

The group is also planning to draft a new revival plan for Dunlop, for submission to the Board for Industrial and Financial Reconstruction in the next few weeks. The new plan will be drafted taking the workers into confidence. The company may also approach the BIFR for revaluation of assets in Dunlop.

According to sources, the group has come reasonably close to securing a concession package from the West Bengal Government against dues on sales tax and electricity for its Sahagunj facility. The State Government has extended its support to the new management.

The company has a total of close to Rs 214 crore sales tax dues, including roughly Rs 211 crore contingent liability with the West Bengal Government. The dues on account of past electricity charges are estimated to be Rs 40 crore.

According to sources, the State Government may defer bulk of the sales tax liability for eight years on very lenient terms. The electricity dues will come down to Rs 2-3 crore if the minimum guaranteed portion is waived. On issues related to finances, the group has held `fruitful' discussions with a few select bankers for working capital requirement.

While the consortium of overseas funding agencies, which had earlier paved the way for the Ruia Group's acquisition, has expressed its intention for an additional exposure to meet the liabilities needs to be settled, the group is also in touch with several government agencies for soft loans, primarily for working capital requirement.

While injection of equity capital up to Rs 120 crore is very much in consideration, the Dunlop management is currently weighing the projected impact of such enhancement of equity base on the company's share price-earning (PE) ratio.

Dunlop currently has approximately Rs 45-crore equity capital base.