Kolkata-based Pawan Kumar Ruia group has lost control of Falcon Tyres, which it had acquired 10 years back.

The Ruia group had got a controlling stake in Falcon Tyres in December 2005 through an offshore deal.

As on the end of September 2014, the Ruia group had a 31.62 per cent stake in Falcon, which has considerable presence in the two-wheeler tyre segment.

According to a stock market notification of January 8, the Ruia group has lost control of Falcon as ICICI Bank has invoked 29.5 per cent of the 30.35 per cent shares that the Ruia group’s Mauritius-based Dim Rim and Wheel had pledged with the lender.

The Ruia group now holds just 2.12 per cent in Falcon.

While the stock market notification does not elaborate on the ownership status of Falcon, sources say ICICI Bank is now the de facto owner.

Neither ICICI Bank nor the Ruia group offered any comment.

ICICI Bank Singapore had lent $85 million to Wealthsea, a Mauritius-based investment arm of the Ruia group so that Dim Rim and Wheels could put through the Falcon buy.

As part of the re-financing deal, the shares of Falcon were pledged with ICICI Bank. According to sources, the Ruias planned to repay ICICI Bank by selling the properties of Dunlop, which the group had acquired. But that did not happen as a court barred sale of Dunlop properties. Wealthsea defaulted, and ICICI Bank took it to liquidation, in the second half of 2014. The Ruia group did not contest the decision, triggering a chain of events, including the invoking of the pledged Falcon shares.

Settlement soon?

According to SEBI takeover regulations, any change in ownership or acquisition of over 25 per cent should trigger an open offer to the existing shareholders. But ICICI Bank is yet to make any announcement on Falcon.

Sources, however, say the bank is in fresh negotiations with the Ruia group for settlement of dues and return of the Falcon shares. The total dues (including penal interests) now stand at nearly double the principal loan amount ($85 million).

Sources close to the Ruias claim the group enjoys the support of corporate bodies, which together own 63.79 per cent in Falcon.

Among the public shareholders, Suncap Commodities, Regus Impex and Salputri Commerce hold 56 per cent. A settlement, if it comes through, would require the Ruia group to raise fresh finances.

Meanwhile, uncertainty is taking a toll on Falcon. While the turnover is down to ₹18 crore in the September quarter from ₹126 crore in January-March 2014, the company’s accumulated losses for the first half of this fiscal are close to ₹20 crore.

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