Weeks after issuing stop-work notice at Dunlop’s Sahaganj pant in West Bengal, the company has decided to lift the notice in a phased manner. Confident of turning around the the plant, Pawan Kumar Ruia, Chairman of the Ruia Group that owns Dunlop India Ltd (DIL), sees this as a final attempt to revive the company. In an interview with Probal Basak, Ruia talks about Dunlop’s revival plan and the group's acquisitions in Europe.
You have announced phase-wise withdrawal of suspension of work notice at Sahaganj. This is also your last attempt to revive the plant. But the trade unions do not seem too impressed by your offer. What is the future of Dunlop?
I have not spoken to the workers. I do not know exactly what they think. We will wait for their views. If they do not not agree to this withdrawal of suspension of work in phases, which happened earlier during the Ruia regime in 2006 and 2009, I don’t find any logic in that stand.
We have paid wages to the idle workforce for a period of 10 months, even though there was no production. We made expenses of Rs 1.5 crore a month during the period. But, this can not go on.
Is Dunlop heading towards a possible handover?
I don't think so. This can be the initial reaction of the workers. They should sit and think over it calmly because, no one wants the plant to close down permanently. At this particular moment who will agree to take over this plant?
If things go according to your plan, when do you expect Sahaganj to run at its full capacity?
I expect IP (industrial products) division to resume production in one and half months. For the OTR (large tyre) division, I think take it will take another one month. While the capacity for IP division is eight to ten tonnes a day, for OTR it’s 15-17 tonnes. So, we hope in about three months from now a total production of about 25 tonnes a day.
But, I cannot give a timeline for production of normal tyres. It is subject to the proposed 50-Mw power plant also, which is awaiting environmental clearance. Such clearances normally take a long time. But, we are trying to get it soon. We are using a new boiler so environmental situation will be anyway better.
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We want help from the government in two aspects -- law and order situation, and this power project.
What kind of investment are you looking at Dunlop? How are you going to generate funds?
Once the production starts there will be requirement of fresh investment. The Ruia group will take care of that. Our people are trying and working out things like working capital requirement and estimated cost for the refurbishing work. There were big thefts in the factory. We need to see what is the situation now.
Dunlop has lost its top officials in last few years. You have also stepped down both as a chairman and director? Is there going to be a new chairman or CEO in Dunlop?
The chairman will not be appointed. It is not compulsory to have a chairman. The board members will nominate any one of them to chair the board meetings. So far the CEO is concerned, I don’t think we need a big set up right now as operation will be less at this moment. We have to keep in mind the cost factor also. I think we have a sufficient number of people right now to run the company.
Dunlop is listed under CIBIL as a willful defaulter. What are you doing to come out of it?
Yes. Dunlop is in the wilful defaulter list because there were some bills which was not paid off. We are negotiating with company concerned to pay the matter off.
SBI Global Factors has also filed a petition against Dunlop at Calcutta High Court. What is your response to that?
SBI Global Factors is actually that the company concerned. We are aware of the petition. We are going to contest that. I am not sure about the status.
Dunlop is also understood to have initiated process to transfer its rights to trademarks to Ruia Sons Pvt Ltd, which is your flagship holding company Can you confirm?
The property is with the company. If the board of directors decides to sell it, I do not think there is any crime in that. I do not understand why people are so apprehensive of transferring the trademarks.
When you are talking of reviving the Dunlop, do you mean the brand?
I am not confirming that this transfer of trademarks is going to happen. I would like to mention here, there are so many products which are manufactured by someone, while the brand is owned by someone else. For example, today Monotona Tyre Ltd (Maharashtra-based tyre manufacturing company owned by Ruia Group) is selling under the Dunlop brand.
There seems to be some issues in your recent acquisition in Turkey. What went wrong there?
We are reviewing our investment strategy, whether or not we should invest. It was a very costly deal. We are reviewing the situation, whether we can go ahead with this at that particular cost in this changed economic scenario.
Whatever agreements we signed for the overseas acquisition, all except the one in Turkey has been finalised.
According to a report in a French daily, there are some problems with your acquisition in that country as well. Workers there have reportedly alleged that you intend to abandon Sealynx and PRECITURN. Is there any merit in the allegation?
In France there is nothing wrong in Ruia Sealynx. There are some workers issue at Preciturn. When our people went there to take over, they were literally gheraoed by workers. There is long story in that matter. We never backtracked from our commitment. It is not that we do not want to make investment there. The report was completely wrong and biased.
Still, we have not decided to abandon the company. The Government of France has come into the picture.We are debating the issues with them.