Dunlop Strikes Deal With Apollo To Revive TN Plant

Font Size

Print

Feedback

Email

Discuss

Chennai, Jan 5: : The Jumbo group?s Dunlop India Ltd is understood to have entered into an agreement with Apollo Tyres Ltd to revive its tyre manufacturing facility at Ambattur near Chennai. As per the deal, Dunlop?s Ambattur plant will start making tyres for Apollo soon. However, the financial details of the deal are not yet known. The Chennai unit of Dunlop has been under lock and key since 2001.

Sources close to the deal told FE that the management of the beleaguered Dunlop had struck a deal with Apollo Tyres for manufacturing latter?s brand of tyre in the Chennai factory. The management was in talks with industry majors such as Apollo Tyres and JK Tyres for conversion arrangement at its Chennai plant.

?The Dunlop management has closed the deal with Apollo and the factory will start rolling out Apollo brand of tyres soon,? sources said.

When contacted, a Dunlop spokesperson did not confirm the development but said: ?Dunlop was open to conversion agreements with other tyre majors so that the interest of the workers could be safeguarded in view of the delay in approval of rehabilitation plan by AAIFR? (Appellate Authority for Industrial and Financial Reconstruction). Apollo officials were not available for comment.

Chips went down for Dunlop?s 100 tonne per day (tpd) Chennai plant in 1998 following severe working capital constraints, high cost of operations and workers resistance to rationalisation of cost. Subsequently, the company was declared sick by the Board for Industrial and Financial Restructuring in 1998. The management had then submitted the draft rehabilitation scheme (DRS) for the consideration of BIFR.

BIFR in its hearing in January 2000 indicated that the process of revival of the company could be expedited if there was an injection of fresh funds by the promoters to commence the operations. Subsequently, the promoters had infused Rs 26 crore to set in motion the process of ?holding operations?.

Following this, the ?holding operations? were commenced at the factory in February 2000. Over a span of 10 months, the unit clocked a turnover of Rs 100 crore and around Rs 52 crore was paid out as wages. However, the ?holding operations? had to be suspended in April 2001 following acute financial constraints while the draft rehabilitation scheme pending before AAIFR. However, delay in approval of the rehabilitation package has forced the management to look for other options for reviving the factory.