Dunlop India Ltd, the ailing tyre manufacturing entity owned by Manu Chhabria, has submitted a revised draft revival scheme (DRS) for the company to the Board for Industrial and Financial Reconstruction (BIFR).
The board had rejected the previous revival scheme of the company on October 19, 2001. The revised scheme was submitted to the operating agency, Industrial Development Bank of India (IDBI), in the last week of December.
A company spokesperson could not specify how the new scheme was better in terms of its character from the previous one.
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The new scheme was expected to incorporate one new component on the finance side. The company had proposed raising funds worth around Rs 25 crore through the sale or mortgage of properties including its head office at Mirza Ghalib Street in Kolkata and its sales office. The company was also negotiating with the West Bengal government on the matter.
The deal was yet to take shape owing to a few regulatory restrictions. This prevented the company from mortgaging the property to the West Bengal government.
At the last BIFR hearing, IDBI was directed to discuss the revised DRS with all stake holders including bankers and employees after the board had received it from the Dunlop management.
Employees at Dunlop said neither IDBI nor the management had held any meetings with them till date. The management was directed by BIFR to submit the package to IDBI two months from October 19, 2001. Bankers had opposed the last revival package on the question of repayment.
While the package mentioned that the payment process to the bankers will be initiated after three years when the company starts making profits, bankers wanted the repayment to be initiated on the first year.
BIFR also objected on the ground that in case the management was unable to raise the total amount envisaged in the scheme, no measures to bridge the shortfall had been outlined.
The revised scheme has only added the component of receipts from property transactions. The new scheme may not also ensure repayment to bankers from the first year.
Other source of fund includes withdrawal from pension fund at Rs 20 crore and subscription to equity share by promoters at Rs 26 crore.
Total liability of the company till date stands at Rs 230 crore, while its accumulated losses are close to Rs 300 crore. About a year's wages and salaries are due to employees.