The consortium of banks funding M R Chhabria-controlled tyre company, Dunlop India Ltd, have once again decided to take a tough stand against the company's appeal to the Appellate Authority for Industrial & Financial Reconstruction (AAIFR) at the forthcoming hearing slated for October 20.
In the wake of the recent developments, including the company's appeal to the AAIFR against the Board for Industrial & Financial Reconstruction (BIFR) order as well as the latter's clearance to sell off its Pune property, the consortium of banks funding the company met yesterday (Thursday) to plan the next course of action.
At an informal meeting of the bankers' consortium convened just four days before the crucial AAIFR hearing, the banks deliberated on the strategy to be adopted at the hearing. Besides the United Bank of India, other members in the consortium include Hongkong & Shanghai Banking Corporation, State Bank of India, The Bank of Tokyo-Mitsubishi, Citibank, Standard Chartered, Allahabad Bank, Federal Bank and Catholic Syrian Bank.
Sources close to the banking circle claim the company has sought the AAIFR approval to sell off its Calcutta and the Mumbai property at a consideration of about Rs 22 crore and about Rs 60 crore respectively.
However, the bankers' consortium, according to the source, does not favour the company's sale of properties, especially at a price which is substantially lower than the prevailing market price.
"While the management might be keen to sell off the three properties and use the proceeds to resume operations at the Sahagunj and the Ambattur units, it is being done without prior consent from the creditors or the consortium of banks as per the BIFR directive," the source added.
Bankers contend that BIFR had asked the company to inform all the creditors, including the consortium of banks' funding the company, before taking a final decision on the sale of its unattached properties. They expressed their reservation on the BIFR's directive to sell off the Pune property since they were not given a chance to put forward their views.
Industry watchers have raised queries on the neutral stand adopted taken by the financial institutions like General Insurance Corporation and the Life Insurance Corporation who hold about 33.96 per cent in the ailing tyre company.
Meanwhile, the company has again called a bi-partite meeting with both the Dunlop India unions on October 21 despite the unions demand for convening tripartite meetings.
Both the Citu-affiliated Dunlop Workers' Union and the Intuc-affiliated Dunlop Rubber Factory Labour Union are in dialogue with the management to re-open the Sahagunj factory. Though the Sahagunj unions have placed seven pre-conditions to resuming operations, including immediate payment of their dues, a final decision is yet to be taken.
