Dunlop To Woo Fis For Rights Issue Funding

With the Rs 10 crore commitment of advance contribution from chairman M R Chhabria now secured, Dunlop India Ltd is expected to begin hectic lobbying with financial institutions to get them to put in their contribution towards the Rs 26 crore rights issue being proposed by the company.

The company also hopes to raise a minimum of Rs 80 crore by selling its properties in Mumbai, Chennai and other locations.

According to sources, the company will begin the exercise of talking to the institutions shortly. While the FI s hold 34 per cent stake in the company, Chhabria holds 40 per cent.

The commitment by Chhabria is also based on the fact that the company will be able to put in place a restructuring plan and get back order and discipline in the operations.

The dialogue with the institutions is now seen as critical for Dunlop since an advance from them will go a long way in kick-starting the revival process well before the time schedule set by the BIFR, sources explained.

P J Rao, managing director, Dunlop, is also bullish about the prospects of revival, having drawn up a detailed revival plan which seeks little or no sacrifices from banks, creditors and state governments. "A minimum of Rs 80 crore is being targeted to be raised by us by sale of assets," Rao said. This apart, the Rs 26 crore scaled-down rights issue would also contribute to revival funds.

Strongly refuting reports that the company has been seeking major sacrifices from all quarters totalling Rs 300 crore, Rao said the plan required no sacrifice from creditors, and everything owed to them would be paid back.

Unsubstantiated reports had been doing the rounds that Dunlop had sought a sacrifice of Rs 75 crore from the creditors, and a waiver of bonus including minimum bonus to the workmen. Bonus, in fact, will be paid according to the Bonus Act, Rao said.