The company had reported a profit of Rs 5.14 crore in 1996-97. The revival plan does not take into account any aid from the banks. The banks had refused to increase the working capital limit beyond Rs 38 crore, to Rs 93 crore as sought by the company, Rao said. The plan also omits the $25-million external commercial borrowing (ECB) that the management had announced last year.

Dunlop was listed as a sick company on June 22, 1998 by the Board for Industrial & Financial Reconstruction (BIFR). Rao said Dunlop will submit its plan to Industrial Development Bank of India, the operating agency for the revival scheme, within four weeks against the stipulated six weeks.The sale of real estateis expected to fetch Rs 80 crore, he said. The company has already identified three properties for disposal. Its solicitors have received a firm commitment of Rs 60 crore for a property at Mumbai.

The proposed rights issue at a premium of Rs 15 each will fetch another Rs 45 crore. Rao said that the UK-based Dunlop Rim & Wheel Corp Ltd, which holds 39.82 per cent in Dunlop, has offered to pick up any unsubscribed portion of the rights issue.

The third point is the restructuring -- in which the total workforce of 7500 at Dunlop's units in West Bengal and Tamil Nadu will be reduced to around 4500. Rao said the restructuring is "absolutely necessary".

Rao said the management is keen on a speedy revival as the company is losing around Rs 10 crore monthly on account of overheads. Rao felt that any delay in sanctioning the package will increase the debt burden. The company will have to reach a minimum turnover of Rs 11 crore per month just to break even, Rao said. The goal is an annual turnover of Rs 550crore.

He also criticised the financial institutions -- which hold a 33.36 per cent stake -- and the banks for refusing to increase the working capital limits to the earlier agreed requirement of Rs 93 crore.

RA Shah, an alternate director to K Tozawa, who chaired the AGM, assured shareholders that the company is not irreversibly sick. "Let's not use the word sick, let's say the net worth of Rs 127 crore has been eroded," Rao said.

SK Sukani, an equity shareholder, pointed out that not a single account has been reconciled which included even bank accounts. The management offered no response to this comment.

Shah said the company has reduced outstanding fixed deposits to to Rs 11.86 crore from Rs 18.52 crore. This figure will come down as soon as the revival plan is sanctioned.However, the latest annual report has listed ICD borrowings in the schedules to the accounts under the category of loans and advances. It states, "other loans and advances including intercorporate deposits with companies" as Rs7.87 crore as on December 31, 1997, against the previous year's figure of Rs 11.83 crore.

Managing director settles for smaller pay packet

Dunlop India Ltd managing director PJ Rao told shareholders on Friday that he will settle for a smaller pay packet of Rs 40,000 per month, all inclusive. He announced this after the shareholders criticised a resolution for increasing Rao's compensation to Rs 300,000 a month, excluding perks.

The resolution itself was passed by a majority. Rao is entitled to a monthly salary of Rs 200,000, allowances of Rs 100,000, and other items such as housing, transport, medical reimbursement, leave travel concessions, club fees, personal accident insurance, provident fund and superannuation fund.

Schedule XIII of the Companies Act of 1956 specifies the minimum remuneration for board members of companies in the case of absence or inadequacy of profits. The levels depend on the effective capital of the company concerned. Rao said he is committed to the speedy revival ofthe company and his remuneration will be Rs 40,000 per month all inclusive in "accordance with Schedule XIII of the Companies Act".

Schedule XIII says: "Notwithstanding anything contained in this Part, where in any financial year during the currency of tenure of the managerial person, a company has no profits or its profits are inadequate, it may pay remuneration to a managerial person, by way of salary, dearness allowance, perquisites and any other allowances, not exceeding ceiling limit of Rs 10,50,000 per annum or Rs 87,500 per month ...".

This pay packet holds true for managerial personnel in companies with effective capital over Rs 15 crore.