Dunlop gets 'relief undertaking' status from Bengal govt, hopes for immunity from winding up

This will prevent its creditors from seeking liquidation of its assets for recovery of their dues

In a major boost to tyre maker, Dunlop India, which is contesting a winding up order in Supreme Court, the West Bengal government has granted a 'relief undertaking' status to the company, preventing its creditors from seeking liquidation of its assets for recovery of their dues.

"We have been granted ''relief undertaking' by the state government. Thismeans, creditors cannot claim any dues from the company. The winding up matter is in Supreme court, we hope the company will not be wound up after this," Pawan Ruia, the leading promoter of company told Business Standard.

On January 31, 2013, Justice Sanjib Banerjee of Calcutta High Court had ordered winding up of the company. It had directed the official liquidator to take immediate possession of all of the company's assets and books of records, following an application from a Kerala-based partnership firm EV Mathai and Sons and many other creditors of the company.

However, Supreme Court later stayed the winding up order. The matter is still under review of the apex court and is likley to come up for hearing on October 14.

With West Bengal Industrial Reconstruction Department granting the ''relief undertaking'' the company is hoping to get immunity from its creditors' claims. Ruia, also said, the "valid dues" of the creditors who had moved court, has already been settled.

"Initially claims from creditors who had filed petitions stood at about Rs 60 crore. We have paid the dues. There are only six parties left whose total claim is about Rs 12 crore. But we are contesting their claim itself, hence we have not paid them," he said.

Until 2010, Dunlop used to enjoy protection from its unsecured creditors under a state Act- West Bengal Relief Undertakings (Special Provisions) Act. But the relief undertaking status was eventually withdrawn by the erstwhile Left Front later and the new government did not renew it.

However, there seems to be change of stance of the Mamata Banerjee government. Sources indicated Pawan Ruia had a series of meetings with the state's finance and industry minister Amit Mitra, following which the state government decided to grant the status.

Government officials said, the state has decided to provide Dunlop protection from its creditors only after its management had made a firm commitment to reopen the Sahaganj factory. Incidentally, the company has reopened company's Sahaganj factory in Hooghly district here yesterday. The 'relief undertaking' status is effective from September 25 for a period of six months, which is extendable.

"I visited the plant yesterday. It is not in a condition to operate immediately. A lot of refurbishment work needs to be done by a teamof 50 to 60 engineers. Within six months, we hope start production of industrial products (IP) in the first phase,which will be followed by production of OTR (large tyres)," he said.