CALCUTTA, Feb 4: Dunlop Rims & Wheels, the overseas holding company of the MR Chhabria-controlled tyre major Dunlop India Ltd, has assured the company of full proportional subscription of the proposed Rs 66 crore rights issue, according to a press release. The company is expected to complete its external commercial borrowing exercise by June 30, 1998.DRW, which controls a 39 per cent stake in Dunlop, has assured the company that it is willing to additionally subscribe to the otherwise unsubscribed portion of the rights issue, if any.
Dunlop's board of directors had earlier approved the issue of equity shares on rights basis in the ratio of one equity share of each Rs 10 face value at a premium of Rs 25 per share. The release quoted managing director P J Rao as saying that he is confident that the company could be turned around in a span of 18-months.
Dunlop had cut down production drastically in the recent past due to acute shortage of working capital.
The release said that the management isdiscussing its external commercial borrowings with financial institutions and bankers. Dunlop requires Rs 120 crore as working capital while the actual disbursement from banks stand at Rs 38 crore. The release said that this was despite the fact that the banks have agreed in principle to revise the ceiling for working capital.
According to the release, the Dunlop management feels that the long term solution for Dunlop is rationalisation of manpower, upgradation of manufacturing facilities and optimising operating costs. The company's cost of production is three times that of the industry average. Moreover, the press release said that the company has 7,700 workers while the size and scale of its operation require only 4,000.
Dunlop's proposal to sell of the real estate of the company had attracted encouraging response, the press release said.
The Mumbai property alone is worth Rs 100 crore.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
