The Hindu Business Line : Ruias put Dunlop dues at Rs 300 cr — Management looks overseas to raise funds

Dunlop is now busy raising finances preferably loan finances without any equity string attached, mostly from overseas. Dunlop has also applied for a Rs 100-crore loan with a domestic agency to part-finance the same.

Kolkata , Jan. 29

TWO months after the acquisition of Dunlop India Ltd (and Falcon Tyres) through a Rs 200-crore block deal, the new promoters now estimate that the total fiscal liabilities payable by Dunlop over a period of two to three years are approximately Rs 300 crore.

The company has a book liability of over Rs 650 crore.

This coupled with an estimated Rs 100-crore capital expenditure required to get the plant and machinery in working order will require a funding of Rs 350 crore over a period of two to three years.

Given that Dunlop was acquired from Jumbo Group at a notional price of Rs 25 crore, the total acquisition cost inclusive of fiscal liabilities and excluding the capital expenditure required, are now estimated at Rs 375 crore.

Informed sources said that the Pawan Ruia-controlled management in Dunlop is now busy raising finances preferably loan finances without any equity string attached, mostly from overseas. Dunlop has also applied for a Rs 100-crore loan with a domestic agency to part-finance the same.

In case pure loan finance is not available, the company may consider preferential allotment to the financing agencies.

To prevent any substantial dilution of stake, the promoters may chip in some additional resources through subscription to warrants, which would be convertible in equity shares at a later date. The working capital requirement is pegged at Rs 150 crore, of which Rs 50-crore matching capital will be provided by the Dunlop management and the rest will be financed by domestic banks and financial institutions.

Meanwhile, the Dunlop management is busy settling its liabilities and fixing the payment schedule. Hectic activity is on for evaluation and settlement of Rs 212 crore book liability on sales tax and Rs 50 crore on electricity (and other statutory dues) default. The company sources are hopeful of settling the dues at a lower price.

Some progress has been achieved in settling Rs 150-crore book liability with banks and FIs, including Bank of Tokyo, Tamil Nadu Industrial Development Corporation, Karnataka State Industrial Development Corporation, Syndicate Bank and Bank of Madura.

Of the five, the company has entered into a settlement agreement with Bank of Tokyo at Rs 3.78 crore against a book-default of Rs 24 crore.