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The status of contracts with the Reserve Bank of India is at the centre of the latest dispute between De La Rue and its hostile French bidder Francois-Charles Oberthur Fidiuciaire.
De La Rue rejected an £895-million bid by privately-owned smart card maker, Oberthur, last month, dubbing it opportunistic. However, the French firm hasn't given up and this week stoked up tensions by demanding that De La Rue clarify the situation regarding the latest tender by the RBI for the supply of 16,000 tonnes of currency paper. Oberthur said it believes that the contract had been handed to four rivals.
“De La Rue should inform the market if it was an unsuccessful participant in such key tender or if it was not even invited to participate in that tender,” said the French firm.
Seeking clarity
Oberthur said it was seeking clarity on the prospects for future business from the RBI as well as for new business should it lose RBI as a client. De La Rue has suffered damage to its reputation as a consequence of such recent events, and the ability of De La Rue to win new profitable contracts and retain existing customers as a standalone business has been undermined.
As a customer, RBI accounts for around a quarter of De La Rue's profits.
‘Things are fine'
De La Rue said that nothing had changed regarding the situation in India, since its last update in November, and that it was in an ongoing dialogue with the customer concerned and uncertainty remained as to the ultimate outcome of the issue and its impact on the group.
De La Rue shares have fallen steeply since mid-July, after the firm revealed quality and production irregularities at one of its paper production facilities. Following a subsequent investigation, the firm found that some employees had deliberately falsified certain paper test certificates for a limited number of clients. RBI, which is widely understood to be one of those clients, has never been officially identified by De La Rue.
The crisis triggered the resignation of Mr James Hussey as chief executive of De La Rue. On Tuesday, Mr Tim Cobbold, the former chief executive of power systems group Chloride took his place, pledging to deliver on the firm's potential as an industry leader.
Oberthur maintains its ongoing interest in acquiring De La Rue, and that it included the material risk to the RBI deal in its bid.
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