Pawan Ruia is struggling to keep the Sahagunj unit of Dunlop India running. He restarted production at the factory last month amid allegations that lack of working capital was hurting operations, and is yet to resolve the issue.
However, the DIL chairman, at the company?s 80th annual general meeting, told shareholders he should not be the only one to blame. He alleged that delay by the Board for Industrial and Financial Reconstruction (BIFR) to relieve the company of the sick tag and a recent stricture from the RBI that treats preference shares to foreign entities on a par with external commercial borrowings (ECB) guidelines having end-use restrictions are preventing the company from accessing funds from domestic and foreign sources.
The BIFR issue might drag on as, in the meantime, Sebi, acting on an application from Life Insurance Corporation of India, has got a BIFR order quashed that permitted a fast-track approval of the company’s rights issue.
While the Sahagunj unit has just started production, rolling out 50 tonne of tyres a day, Ruia hopes to re-start Dunlop?s Ambattur plant in the first week of August.
?We should no longer be treated as a sick company as our net worth has turned positive. However, there is a view that we have to first de-register ourselves from the BIFR, which is yet to happen. The sick-company tag is preventing us from getting funds from banks and financial institutions. As for getting funds from overseas, several foreign institutions have shown keen interest in investing in our company, but the recent directives issued by the RBI that treat preference issue to overseas bodies as ECBs have frustrated our move to raise funds,” Ruia told reporters after the AGM.
Dunlop does not have recourse to ECBs as the proceeds cannot be used as working capital or for settling past liabilities.