The Hindu Business Line : Assets sale helps Dunlop post Rs 317-cr net; no sales operations

Kolkata April 21 Dunlop India, which has not recorded any sales operations in the quarter ending March 2007, has reported a Rs 317-crore net profit during this period due to income recognised in the company's books from the transfer/sale of the company's real estate assets to wholly owned subsidiaries and other entities .

However, the company has posted an operating loss of Rs 1.58 crore during the quarter.

Consequently, the networth of the company, which was negative at Rs 261 crore in 2005-06, has now turned positive at Rs 151 crore. After excluding the revaluation reserves, the networth stands at Rs 106 crore (negative Rs 361 crore). Describing the results as a "book profit", a company spokesperson told Business Line that the effort was essentially a clean-up of the balance sheet by transferring some properties to wholly owned subsidiaries.

According to sources, among the properties transferred are Dunlop House at Worli in Mumbai valued at approximately Rs 150 crore and real estate in Ambattur in Tamil Nadu valued at roughly Rs 80 crore.

Settling liabilities

Sources said the exceptional items at Rs 121 crore were generated out of settlement of the company's liabilities with banks, financial institutions and sundry creditors at a lower cost than the book liability. The settlements took place in the third quarter of 2006-07, it is learnt.

This, coupled with the Rs 17-crore asset transfer to subsidiaries (during the quarter) resulted in a net profit of Rs 133 crore (loss Rs 1.63 crore) during the third quarter. Dunlop had finalised both the third and fourth quarter results in April 2007.

According to a company official, Dunlop's net worth will further improve following the rights issue ending on April 24. This would be followed by a preference issue of roughly Rs 100 crore to overseas funding agencies.

"The results in 2006-07 is an attempt to get out of BIFR fold by making the company's net worth positive," the official said.