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Dunlop India Ltd board has proposed to convert loan worth Rs 60 crore into equity worth Rs 50 crore.
It said the proposal is for issue of 5 crore equity shares of Rs10 each at Rs12 a share for conversion of outstanding loan of Rs 60 crore on preferential basis.
This is significant for the recovery of the financially troubled company, a Dunlop insider told Business Line. The assets are now under scrutiny of the Calcutta High Court. It will require court's approval for the conversion apart from statutory approvals (from shareholders and SEBI). Last week Dunlop informed BSE:
“We understand from our Solicitors that Hon'ble Division Bench of Calcutta High Court, vide its Order passed on March 29, has directed the Official Liquidator acting as the Provisional Liquidator of the Company to act as a Special Officer and not in a capacity as Provisional Liquidator of the Company.”
The board has fixed an EGM on April 28. The other proposal to be placed before the shareholders is reclassification of all un-issued 1,00,70,000 preference shares of Rs 100 each to equity shares of Rs 10 each of the company.
Two of the Dunlop's operational units stand closed now. About 1,310 employees are still on rolls, according to company's spokesperson.
Group company shines
Trading on Dunlop stock, listed on BSE, is currently under suspension. However, Mr Pawan Ruia-controlled Dunlop group company Falcon Tyres, closed up five per cent at Rs 31.75 on the BSE.
Incidentally, Falcon has also decided to issue over four crore shares of Rs 5 each on preferential basis at Rs 33.20 a share (including a premium of Rs 28.20 a share) to convert loan of Rs 1,44,04,49,993.
On last Wednesday, the Falcon board had proposed the conversion and fixed an extraordinary general meeting of the shareholders on April 26.
>jayanta_mallick@thehindu.co.in
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