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Our Bureau

Kolkata. March 12 Close on the heels of a Madras High Court order declaring the Dunlop India Ltd as ‘revived’ and was out of the purview of BIFR, the Appellate Authority for Industrial & Financial Reconstruction (AAIFR) has dismissed the appeals filed by SEBI, BSE and Catholic Syrian Bank against the validity of the rights issue of Dunlop and listing and trading of its shares in stock exchanges.

In an order dated March 3, 2008, AAIFR observed that Dunlop is out of the purview of the Sick Industrial Companies (special provisions) Act (SICA) as its net worth has turned positive. Accordingly, “BIFR as well as the AAIFR ceases to have any jurisdiction in respect of Dunlop.”

The Order, if not contested further, will clearly pave way for resumption of trading on the stock. Trading of Dunlop shares is suspended at the BSE since April 15, 2002. The order also paves way for the proposed Rs 27-crore rights issue by P.K. Ruia controlled management.

“After the final order of AAIFR, Dunlop India Ltd now plans to take up the issue of dematerialisation and listing of its shares immediately with relevant authorities,” said a company press release issued today.

The AAIFR order actually validated a unique restructuring strategy adopted by Dunlop to get out of the clutches of SICA, BIFR and AAIFR way in April 2007.

Despite posting Rs 7.26 crore operating loss and when it was yet to resume operations, the company recorded a whopping Rs 447 crore ‘book’ net profit — riding on Rs 341 crore other income and an income of Rs 121 crore from exceptional items during 2006-07.

“The effort was essentially aimed at cleaning-up the balance sheet by transferring some properties to wholly owned subsidiaries. In turn, the subsidiaries have infused fresh equity into Dunlop,” company sources told Business Line.

Exceptional item of Rs 121 crore was generated out of settlement of the company’s liabilities with banks, financial institutions and sundry creditors at a lower cost than the book liability.

Naturally, the net worth of the company, which was negative at Rs 261 crore in 2005-06, has turned positive at Rs 151 crore.

After excluding the revaluation reserves, the net worth was Rs 106 crore.

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