The Appellate Authority for Industrial and Financial Reconstruction (AAIFR) today passed an order directing the Industrial Development Bank of India (IDBI), the operating agency for Dunlop India, to circulate the draft rehabilitation scheme (DRS) for the company latest by July 24.
Manu Chhabria-controlled Dunlop India had moved AAIFR against delays in the finalisation of the rehabilitation package. Normally, companies appeal to AAIFR against orders passed by the Board for Industrial and Financial Reconstruction (BIFR). "This was a unique prayer made by Dunlop India," sources said.
Last year, Chhabria had pumped in Rs 32 crore into the company through a loan of Rs 26 crore and a line of credit of another Rs 6 crore. However, the fresh infusion runs the danger of being wiped out with the company losing almost Rs 7 crore every month on wages and interest payments at a time when the company's plant is shut. It was in this light that the company had moved the AAIFR to hasten the process.
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At the meeting today, AAIFR asked IDBI representatives what were the reasons for the delay. In response, the IDBI representatives said it had sent a set of queries to the firm on July 6. The company confirmed receiving the letter on July 8 and said it was planning to send its replies tomorrow.
Subsequently, AAIFR asked IDBI as to how soon can it circulate the DRS. To this, the IDBI representatives said it could do so within two weeks. Hence, AAIFR set the deadline of July 24. After the circulation, the banks and financial institutions will have 60 days to raise their objections to the DRS.
According to the sources, the AAIFR order is a recognition of the fact that if speedy action is not taken to rehabilitate the sick company, it might lead to an irreversible situation for it. "There is every likelihood that a question mark will be put on the future of the 7,000 employees of the company if some action is not taken quickly," the sources said.
Dubai-based Manu Chhabria is the principal shareholder in Dunlop India with a 39 per cent stake. The company is the only one to produce aero tyres in the country. It was referred to the BIFR a couple of years back after sustaining heavy losses.