Dunlop in talks with banks for working capital loan

Pawan Ruia-controlled Dunlop India is looking at tying up with the banks for a working capital loan worth Rs 50 crore to start production at its Sahagunj factory, which reopened on Friday after a three months work suspension.

Addressing a press conference in Kolkata today, Pawan Kumar Ruia, chairman, Ruia group, said “ We are in the process of tying up with two or three banks to supply us a working capital loan of Rs 50 crore to resume production at the Sahagunj factory, expected to be at 30-40 tons per day initially. We are expecting the sanction letters within this month and disbursal immediately thereafter.”

However, he refused to divulge the names of the banks involved.

The group had earlier sought the help of the state government and West Bengal Industrial Development Corporation for a Rs 100 crore working capital loan, but was refused.

"We will try to resume full scale production in another two months and this time sustain the production at 30-40 tons per day and increase it thereafter," said Ruia.

This apart, he also informed that the company, at present, had no outstanding dues on account of provident fund, but only those pertaining to October and November wages, which were under negotiation with the union groups.

Around 563 workers opted for voluntary retirement scheme (VRS), out of which 42 workers have been paid. The VRS paid to 42 workers amounted to Rs 1.3 crore.

After the VRS is settled the one time settlement(OTS) would be given to some workers which is Rs 25,000 per worker. The total amount could be close to Rs 11-12 crore as pertaining to the dues of the 521 workers, another two-three crore more if OTS was included, Ruia said.

There are no outstanding dues of any nature in the provident fund account. "For all those who have retired as on December 31, 2008, all the outstanding dues have been cleared," he alleged.

Around Rs seven crore had been paid as Provident fund, Rs 1.30 crore as VRS and Rs 30 lakhs as ESI, he pointed out.

This apart, the company would be extending an additional Rs 1,000 ad hoc payment to each and every worker to tide over their urgent needs, barring the charge sheeted workers until the management reached an understanding with the unions over the wages, Ruia announced.

Negotiations were on since October and the management decided to pay Rs 2,000 per month to each and every worker till plant was closed, but still there was resistance from a faction, comprising 30-40 workers.

The company had suspended work ‘temporarily’ at Sahaganj on November 30, 2008, after talks between the Dunlop India management and the Citu and Intuc-affiliated trade unions representing 1,179 workers hit a roadblock.

The management had issued a notice on Tuesday asking 229 workers of the maintenance and engineering division to initially commence the repairing and the refurbishment job. The remaining 229 people are expected to join in the next few days.

“There are rumours that we will stick with 229 workers and lay off the others, it holds no truth, there will be no retrenchment and reduction in labour. All will be inducted in a phase-wise manner,” he said.