Business Daily from THE HINDU group of publications
Thursday, Aug 03, 2006
Business Daily from THE HINDU group of publications Thursday, Aug 03, 2006 |
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Tyres Corporate - Outlook Ruias plan to divest 15 pc stake in Dunlop
K. Giriprakash
Expansion plans Plans to invest around Rs 200 cr in Falcon Tyres to set up a plant in Uttaranchal Initial investment of Rs 70 cr in Falcon Tyres towards setting up a 6-MW power plant and capacity expansion Dunlop Tyres expected to make profits in 2007-08
Bangalore , Aug 2 The Ruia Group is willing to divest up to 15 per cent of its stake in Dunlop Tyres to raise around Rs 450 crore to fund its expansion plan. It is also planning to invest around Rs 200 crore in Falcon Tyres for setting up a plant in Uttaranchal for manufacturing tyres for two- and three-wheeler vehicles. "We need to raise between Rs 400 crore and Rs 450 crore and we are willing to divest up to 15 per cent stake," the Ruia Group Chairman, Mr Pawan Kumar Ruia, told Business Line. He said the company was also in talks with a few Indian banks to raise the funds because they may not be keen on picking up stake. The Ruia Group currently holds 74 per cent stake each in Dunlop Tyres and Falcon Tyres. In Falcon Tyres, the initial investment of Rs 70 crore will go towards setting up a 6-MW power plant and for capacity expansion. While the tyre capacity is being expanded to 7.5 lakh units per month from 4.75 lakh units, the tube capacity is being expanded to 7.5 lakh units per month from 3.5 lakh units. The Uttaranchal plant's capacity will be around 125 tonnes per day. For the quarter ended June 2006, Falcon Tyres posted a 6.82 per cent increase in net profit to Rs 1.25 crore, while total income rose 30.72 per cent to Rs 69.9 crore. The Group has already invested around Rs 40 crore in the Chennai plant, while the workforce there is being reduced to 1,000 from 1,200. Around Rs 20 crore has been earmarked for this purpose. The Kolkata plant will see a reduction of the workforce to 1,200 from 2,000, which will entail an outgo of around Rs 42 crore towards VRS. Each of these plants has a capacity to produce 130 tonnes per day. While the truck tyres are produced at the Chennai plant, the Kolkata plant makes truck tyres and tyres for the LCVs. Dunlop Tyres is expected to start making profits by 2007-08. The total loss incurred by Dunlop is around Rs 650 crore but it has assets worth Rs 1,000 crore. Meanwhile, the natural rubber prices have started climbing down after they reached a peak of Rs 110 per kg a few weeks ago forcing the tyre makers to increase the prices of their products. The price of natural rubber has now reduced to Rs 90 per kg.
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