Pawan Ruia's Air India bid is another example of faith in his own abilities

Pawan Ruia has finally done it, a beaming Buddhadeb Bhattacharjee, then West Bengal Chief Minister, had said at the reopening of the 70-year-old Sahagunj factory owned by Dunlop in 2005. But with the Calcutta High Court passing a winding-up order in 2013 and the Trinamool Congress-led state government passing a Bill to take over the company in 2016, the once-upon-a-time undisputed leader in the Indian tyre industry looks vastly undone.

But that can hardly be a deterrent for Ruia, who has a penchant for making headlines one way or the other. The latest incident that has brought him back in focus is an expression of interest for a 100 per cent stake in the national carrier, Air India (the other parties are the Tata group and an employees’ consortium of the airline). 

The move, even by his standards, seems bold. Especially, when his companies — Jessop & Co, Dunlop — that earned him the moniker “turnaround tycoon”, are facing liquidation.

There are others: Falcon Tyres is facing liquidation under the insolvency resolution process (though the liquidation order has been challenged in the National Company Law Appellate Tribunal by the sole bidder) and a clutch of overseas acquisitions went awry too; some were sold between 2011 and 2012, some went into insolvency.

Yet, the Ruia story had started with a bang. He first shot to fame in 2003 when he acquired Jessop & Co (as part of the Vajpayee government’s disinvestment programme), which was then losing Rs 5 crore a month; within a year, it turned around.

“Jessop achieved its peak production of 90 wagons a month,” said a former executive, who added that the problem was that banks refused to extend funds for working capital because collateral guarantee requirements were not met and the company required fresh funds. Ruia, however, refuted problems with bank financing. 

Ruia’s big break came in 2005, when he bought Dunlop from the family of deceased businessman Manu Chhabria, outbidding the Singhanias of JK Tyre and Munjals of Hero. By the time he took Dunlop out of the Board for Industrial and Financial Reconstruction (BIFR) in 2007, his credibility had shot up (Falcon Tyres was also acquired along with Dunlop).    

It didn’t last long, though. From 2011-2012, labour problems, electricity arrears and production issues marred Dunlop’s performance. In 2013, the Calcutta High Court passed a winding-up order against the tyre maker.

But till the Left Front government-led by Bhatta­charjee was in power, it was all hunky-dory for Ruia. Things changed dramatically when the Trinamool Congress government assumed charge in 2011. The alarm bells, however, had gone off earlier.

In August 2009, Mamata Banerjee, then Union Railways minister, was meeting industrialists for the first time since her agitation had driven out the Nano project from Bengal. During the course of the meeting, she pulled up Ruia, asking whether he wanted to close down Dunlop and why Jessop had not met its contractual obligations to Railways. 

Purnendu Bose, who had dealt with Ruia during his time as labour minister in the Trinamool government, said, Dunlop never achieved its full production capacity (90 tonnes per day) even for a day (Ruia argues that production is a function of profitability and the company had never achieved its full production even in its heyday; it was doing 40-50 tonnes a day post-acquisition).

 “I had several meetings with Pawan Ruia for Dunlop’s revival, but he was never interested,” said Bose. That’s a recurring allegation against him from different quarters — workers, executives, government aside.

Finally, in February 2016 — with months to go before the Assembly elections — the West Bengal Assembly passed two pieces of legislation to take over management control of Dunlop and Jessop. The units of the two companies were shut then. 

The West Bengal government also promised to pay the workers Rs 10,000 a month, which it is still paying. But the Bills didn’t get the president’s nod and were permanently withheld in 2019-20. 

The nationalisation att­empt was a big blow to Ruia’s reputation, but it still wasn’t the lowest point. It was his arrest by the CID, West Bengal; the agency was probing a complaint of theft lodged by Railways at Jessop and a fire at the factory.

Can problems deter the determination of a person, Ruia asked? Perhaps, in keeping with this philosophy, he had applied for a banking licence through a family-owned non-banking financial company (NBFC), Suryamani Financing. That was only a few months after the Calcutta High Court ordered Dunlop be wound up. Ruia didn’t make the cut.

Currently, Dunlop is under winding-up and in possession of the official liquidator. As far as Jessop is concerned, physical possession is with the Ruia, but under the aegis of a liquidator. 

Ruia wants to make a last-ditch attempt to restart both the companies by leveraging their huge physical assets. 

That may still be far off. Meanwhile, Dunlop is likely to remain confined to the shelves of medicine stores as the maker of N95 masks only, leveraging the most premium asset Ruia owns: The exclusive right of the use of the Dunlop brand in India.