The Hindu Business Line : Ruia group may buy Jumbo's stake in Dunlop, Falcon in block deal

THE Kolkata-based Ruia group is believed to have worked out a block deal to acquire the Dubai-based Jumbo Group's controlling interest in the three tyre companies, namely, Dunlop India, Falcon Tyre and the latter's trading arm - India Tyres Ltd (ITL).

ITL is a wholly owned subsidiary of Falcon. According to knowledgeable sources, the deal is likely to be completed this week.

While the Ruia group Chairman, Mr P.K. Ruia, was not available for comment, sources said the deal would be struck through a special purpose vehicle. The value of the proposed acquisition may run into a couple of hundred crores.

The Rs 300-crore Ruia group came into the limelight in 2003 when it acquired the ailing public sector Jessop & Co through its flagship company Ruia Cotex. Jessop was turned around in 2004-05.

When contacted, a spokesperson from the office of the Jumbo Group's chairperson, Ms Vidya Chhabria, in Dubai told Business Line that there was no such development. It may be mentioned that the deal, if it comes through, will also mark the virtual exit of Jumbo from India. The group had already sold its interests in liquor major Shaw Wallace & Co, Mather and Platt, Hindustan Dorr Oliver and the logistics business of Gordon Woodroffe. Apart from a wide array of other products, Dunlop, with two facilities at Sahagunj in West Bengal and Ambattur in suburban Chennai, was the only manufacturer of aero tyres in the country. The company became sick in the late nineties and as a result operations in both the facilities employing over 7,000 workers remained closed since 2003.

Currently listed with BIFR, over 76 per cent stake in the company is held by Indian (59.77 per cent) and foreign promoters (16.7 per cent). Institutional investors hold a little over 14 per cent. On the BSE, the company's price information was last updated in April 2002. Last price quoted was Rs 6.60. Falcon Tyre has been recording a steady decline in profitability over three years. It recorded a net profit of Rs 92 lakh in 2004-05 against Rs 1.6 crore in 2003-04. The promoters hold 81.86 per cent stake in the company. On the BSE, Falcon's share price closed today at Rs 148, down 2.57 per cent from Tuesday's close of Rs 151.90.

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