Dunlop India has finalised preliminary capital expenditure programme worth Rs 350 crore (Rs 3.5 billion) to kickstart production at its plants at Ambattur in Tamil Nadu and Sahagunj in West Bengal.
The company has acquired two second-hand boilers and placed orders for two new boilers for heat and steam generation, crucial inputs in the production of all rubber-based products including tyres.
"The Ambattur unit has an oil-fired boiler which has to be done away with since its operational cost is high and inefficient too," said chairman Pawan Kumar Ruia.
The boiler at the Sahagunj unit is in better shape, though its capacity has to be raised. Ruia said that as of now, all the four new boilers were to be installed at Ambattur.
However, the Sahagunj unit would get supplementary equipment as and when necessary, he said. The second-hand boilers would be put to use immediately, while the fabrication and delivery of the two new boilers would take at least four more months, Ruia said.
The maintenance work at Sahagunj will entail expenditure worth Rs 20-25 crore (Rs 200-250 million) and September 2006 has been set as the deadline for recommencement of production at the plant.
Ruia said that the total cost of the project was pegged at around Rs 350 crore (Rs 3.5 billion), of which Rs 125 crore (Rs 1.25 billion) would be for refurbishing and buying new capital equipment and Rs 100 crore (rs 1 billion) would be working capital. The Ambattur plant is expected to start producing commercial vehicle and truck tyres in four months.
The company has identified all major bottlenecks at both the plants, which are being addressed by installing new equipment. For example, the capacity at Sahagunj can be easily raised to 130 tonne per day (tpd) from 90 tpd.
The capacity hike and cutting down of manpower to 1,700 from 2,700 would go a long way in making Sahagunj one of the most productive factories in the country, claimed Ruia.
Ruia said the company had recruited 60-70 management level staff and more were expected to join.
Citing the example of Falcon Tyres, where the company has managed to raise the output, he expressed confidence that higher production at Sahagunj and Ambattur units would also be achieved shortly.
Falcon was likely to report sharp rise in sales and profit, he said. Falcon Tyres' capacity is also being raised to 350,000 two-wheeler tyres from 275,000 and to 550,000 pneumatic tubes from 425,000.
The group has lined up Rs 80 crore (Rs 800 million) capital expenditure for Falcon. The company's capacity will be further raised to 750,000 pieces each of tyres and tubes this financial year.
To speed up the revival of the Sahagunj unit, the group has chalked out a cost-saving programme in the factory township. According to Ruia, about a third of the 100-acre township was occupied by outsiders and trespassers.
They are using electricity at the company's cost. Many even running small manufacturing units using the Dunlop-supplied free electricity.
The power bill for the township attached to the closed factory was Rs 30 lakh (Rs 3 million) a month, and over the years the unpaid power bills and penalties had mounted to Rs 12 crore (Rs 120 million).
Dunlop is negotiating with the West Bengal State Electricity Board for adjustment or a deferred payment agreement.Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group
