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Kolkata, Nov. 17 Dunlop India plans to temporarily suspend production in its Sahagunj facility due to working capital crisis.

The 1,200 workers of plant will be offered a flat Rs 2,000 each a month till such time as the production resumes. The arrangement would bring down the monthly wage bill from approximately Rs 80 lakh-24 lakh. Dunlop’s Ambattur facility was closed for sometime.

According to the company Chairman, Mr P.K. Ruia, the company discussed the issue threadbare with the employees unions. The latter was expected to communicate their decision after due discussion with the employees later this evening.

“Dunlop had not received any working capital finance from banks and financial institutions as they were apprehensive about the company’s prospects. Accordingly the working capital requirements were so far met by the holding company. This coupled with a high cost and low returns due to low capacity utilisation, made the operations unviable for the time being,” Mr Ruia told Business Line.

“While costs are expected to come down to manageable levels in next couple of weeks or months, we have forwarded fresh proposals to banks for approximately Rs 200 crore working capital finance. Till these issues are worked out we plan to suspend production to cut losses and protect the longer term interests of the company,” he added.

Though Mr Ruia on Monday did not refer this as a fall out of the global liquidity crisis, in a recent interaction on the possible impacts of the same, he made it amply clear that Dunlop may be worst affected within the group in these troubled times. He was, however, confident that other group companies such as Falcon and Jessop which receive bank finance as well as enjoy better demand for its products would steer clear the crisis period.

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