Dunlop eyes turnaround this fiscal

Dunlop India hopes to complete its turnaround in the current financial year, by betting on off-the-road tyres (OTR) sold to mining firms and by possibly re-entering the highly regulated aviation tyre segment by March 2007.

Ruias had brought the entire tyre business of the Chhabria family-controlled Jumbo group in December 2005 for Rs 200 crore.

The company's new chairman, Pawan Kumar Ruia, said while a chunk of the company's current year's revenues would come from cross-ply tyres (non-radials) for truck and bus segment, higher margins in OTR tyres would quicken the turnaround.

Ruia said Dunlop, which was the only tyre maker in India that rolled out aviation tyres till recently, still had the capability to produce the tyres, but would re-enter the segment only after addressing opportunities in the OTR and truck and bus segments.

He said while truck and bus tyres return margins of 2-4 per cent, the margins in OTR tyres are as high as 12 per cent. Of the target turnover of Rs 400 crore set for the year, an estimated Rs 130 crore was expected from OTR sales. The company also hopes to earn export revenues of Rs 100 crore this year.

Both the Ambattur plant near Chennai and the Shahgunj plant near Kolkata are expected to resume commercial production by September this year. An estimated 120,000 tyres would be rolled out of these two plants. If the company manages to sell all that it produces, it would have a market share of around 11 per cent in the domestic truck and bus tyre replacement market.

The OTR tyres would be produced in the Shahgunj unit, while cross-ply truck and bus tyres would roll out from the Shahgunj and Ambattur plants. Each of these plants can produce up to 130 tonne of tyres a day.

Ruia said investments in building the Dunlop brand would also start soon. "We would spend large sums in this exercise. At a later stage we would also look to sell Dunlop branded T-shirts and tennis rackets," Ruia said.

The company hopes to increase its turnover to Rs 1,000 crore in 2006-07 and push exports to 20-25 per cent of this. "We are building a large order book for exports. We have other brands in our portfolio such as Indon and Falcon that can be exported," he added.

Ruia owns the Dunlop brand only in India. Globally, Dunlop brand is owned by three or four entities, including the Apollo group in some African countries. Hence, Dunlop India cannot export under this brand name, without specific arrangement with other owners.