The Hindu Business Line : Debenture holders' stand key to reopening Dunlop unit

AN early reopening of Dunlop India Ltd's Ambattur factory in Tamil Nadu appears possible provided the company's debenture holders (mainly FIs) take a "compassionate" stand on the issue of realisation of their money which will be paid from the sales proceeds of the company's idle properties.

The Asset Sales Committee (ASC), set up by the Board for Industrial and Financial Reconstruction (BIFR) for monitoring the sale of DIL property, is understood to have sold the company's property in Chennai, Bangalore, Pune and Guwahati. The sales proceeds have been kept in an escrow account.

The DIL management feels that there is no problem of reopening the Ambattur factory if it is allowed by the Appelate Authority of Industrial and Financial Reconstruction (AAIFR) to spend at least 50 per cent of the sales proceeds for reopening purposes. The balance 50 per cent money can be given to the debenture holders.

AAIFR has, in the meantime, called a meeting with the debenture holders on June 23 to ascertain their views on how to disburse the funds which have already been made available from selling property.

It is learnt that the debenture holders want a "one-time-settlement" of their dues of Rs 29 crore from the sales proceeds, while the DIL management argues that the debenture holders should co-operate with it to reopen the factory by agreeing to take about 50 per cent of their dues. Otherwise, it may not be possible to re-start operations immediately at the Ambattur factory due to resource constraint. Once the operation starts, the balance dues of the debenture holders can be paid in easy instalments.

DIL may require about Rs 18 crore to re-start operations at the Ambattur factory. The management has plans to do conversion jobs for other reputed tyre companies instead of manufacturing its own brand of truck tyres. Similar conversion jobs will also be undertaken at the company's Sahagunj factory in West Bengal, according to informed sources.

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