I-T Dept Gives Consent To Dunlop'S Rs 45cr Vrs

In a bid to get the company back on the rails, Manu Chhabria-controlled tyre major Dunlop India Ltd has secured the clearance from the Income Tax department for its proposed Rs 45-crore VRS. The scheme is crucial to an early turnaround of the ailing tyre company.

Sources close to the Dunlop management said, the chief commissioner of Income Tax has approved the Dunlop VRS for exemption under section 10(10c) of the Income Tax Act 1961. The scheme was submitted by the Dunlop management for employees entitled to exemption.

The approval is for the year 1998-99, relevant to the assessment year 1999-2000.

 

"The move to approach the authorities quickly and secure this clearance is reflective of the management's commitment and quick action with a view to restarting operations as fast as possible," a source close the Dunlop management toldBusiness Standard.

Dunlop's VRS plan proposed a 44 per cent reduction in workforce over a three-year period.

The company, the sources said, was approaching the Industrial Investment Bank of India (IIBI) for funding the Rs 45 crore VRS outgo.

Dunlop's managing director P J Rao had recently claimed in an interview with Business Standard he was committed to restarting operations as quickly as possible. "The efforts to restart operations are being made on a war footing," the sources said. Rao has also said that in order to discipline operational activities and making them cost-effective towards ensuring viable operations, a reduction in the workforce has been envisaged. This, he said, was essential since the existing `overmanning' and consequent high personnel cost and low productivity were major hindrances to the company's revival and future well-being. Making it clear that no arbitrary retrenchment of workers was being planned, Rao said the workforce reduction scheme would be painless and the VRS phased and generous.

Sources said the scheme would get under way kick off immediately after negotiations with the unions. Dunlop chairman, Chhabria , had recently communicated to the company his commitment of funding in advance his 40 per cent share of the proposed Rs 26 crore rights issue being drawn up by the company.

Sources said the core management team of the company was now in the process of opening dialogues with the company's trade union, the state governments, creditors and bankers `in the most transparent manner' and on a tight time schedule to restart operations within the quickest possible time frame.