Aaifr Decision Likely Today On Dunlop Rehab

At a meeting to be held today, the Appellate Authority for Industrial and Financial Restructuring (AAIFR) is expected to take a decision on the draft rehabilitation scheme of ailing tyre company Dunlop India Ltd.

Sources said that the company is hopeful of getting the draft scheme approved after it was circulated among concerned parties and financial institutions at the instance of the AAIFR.

According to sources, the rehabilitation process has got delayed with the Board for Industrial and Financial Reconstruction (BIFR) insisting that the bankers' consent first be obtained before the package is circulated.

As a result, the company had filed an appeal with the AAIFR to expedite the whole process and sought circulation of the draft rehabilitation scheme as early as possible.

Last year, Dubai-based Manohar Rajaram Chhhabria, the promoter Dunlop, injected Rs 26 crore into the company as debt as required by BIFR. A further Rs 6 crore was injected by way of a letter of credit.

However, sources said that the fund infusion has come to nought with the losses the company is incurring. The tyre firm is losing around Rs 8 crore a month -- almost Rs 27 lakh a day -- on wages to its 7,000-strong workforce and due to mounting debt as well as interest burden.

Dunlop was referred to the BIFR in January 1998 and declared a sick industrial unit in June 1998 under the Sick Industrial and Companies Act. The company submitted its first rehabilitation package in July 1998, which has been rejected by banks and institutions several times.

The company submitted a revised draft rehabilitation scheme to the operating agency, the Industrial Development Bank of India, on June 17, 2001, after two joint meetings on May 6 and May 30.

The latest demand from the bankers was to make some more payments in the first year, make minor changes to the payment schedule and to provide "comfort" by way of a second charge/first charge on assets. According to the company, this has been agreed upon.