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Manu seeks to ward off takeover bid, recasts Dunlop board, assures revival

Arup Chanda in Calcutta

In a pre-emptive move, Dubai-based NRI industrialist Manu Chhabria, chairman of Dunlop, has stalled all efforts by the West Bengal government and the Centre to take over the management of the company.

Operating from his base in Dubai, Chhabria has reconstituted the Dunlop board to revive the beleaguered tyre major.

The new board of directors has no place for oldtimer P J Rao who has been replaced with old loyalist T S Venkatesan and a corporate manager, Y C Lumba.

Other members of the new board are Komal Wazir Chhabria (alternate director to Manu Chhabria) and Air Marshall (retired) P K Puri, former LIC managing director R N Tripathi, former Delhi chief secretary Virendra Prakash, director (finance) of Jumbo International, T S Shettigar, K Tozawa, M H Godhwani and Bansi Mehta.

In a bid to assure the central government of his intention to put Dunlop back on the right track, Chhabria issued a statement from Dubai. He stated, "This uncertainty cannot go on unendingly. The top team has to work out a revival plan immediately and implement it in the good interests of the company and everybody affected."

"A company that is contributing millions of rupees to the state exchequer is struggling for survival. This situation must be brought to an end and a solution should be found to start Dunlop," he further said.

Corporate circles believe that by reconstituting the Dunlop board, Chhabria has cleverly obstructed the move by the Appellate Authority of Industrial and Financial Reconstruction. The AIFR had suggested a panel comprising representatives of unions, banks and the management to suggest ways to reopen the sick company.

The panel was likely to suggest the takeover of Dunlop management and sell some of its properties to reopen the sick units which would need more than Rs 1 billion.

With this move, Chhabria would now urge the AIFR from refraining from its planned action and let the new team evolve ways of reviving the company.

But his claim that the recent changes had been made to revive the company sounds hollow. In the last decade, the company had seven managing directors. Its two units, Sahaganj in West Bengal and Ambattur in Tamil Nadu, have been closed down and the company was referred to the Board for Industrial and Financial Reconstruction.

Chhabria took over the company in 1988. K L Kapoor was the first managing director under Chhabria's reign. He stayed till 1989-90. Chhabria replaced him the next year with S N Srivastav who was out shortly and in came Samir Ghosh in 1991-92. The following year it was S K Malhotra's turn to occupy the post of managing director.

In 1994 M D Shukla was made managing director and it 1996-97 the company was under a wholetime director, K K Chattopadhyay. P J Rao took over as managing director in 1997-98 and now with his exit has come Y C Luma as executive director.

The company's accounting period has been changed five times as if to somehow project a healthy financial picture.

The first year, in 1989-90, after Chhabria took over Dunlop, the company recorded a profit of Rs 81.5 million. In 1990-91 it slid sharply to Rs 53.4 million. Despite changing the accounting period to 15 months in 1991-92, profit after tax was Rs 24.3 million.

The profit sharply rose in 1996-97, to Rs 51.4 million but thereafter the company suffered a whopping loss of Rs 185.2 million during March-September, 1997.

In 1998, Chhabria closed down the two units and Dunlop was referred to the Board for Industrial and Financial Reconstruction.

As the West Bengal government held a series of meetings with the trade unions and pondered over a proposal to takeover the company, the suicide of Prasenjit Sarkar, a worker at the Sahaganj unit of the company, led to a furore.

West Bengal Chief Minister Jyoti Basu last week wrote to Prime Minister Atal Bihari Vajpayee that the Industrial Development Act be invoked and Dunlop be taken over.

The state government is looking for a promoter and had negotiated with another tyre manufacturer, MRF, to take over the management of Dunlop.

While West Bengal's finance minister, Asim Dasgupta, demanded Chhabria's arrest and the trade unions cried foul, the state government devised a temporary arrangement of providing dole to Dunlop workers under its current Budget.

The West Bengal government sent signals to the Centre indicating that it was serious about taking away the company from Chhabria's clutches and handing it over to another private promoter.

Chhabria was cool in spite of all these developments. But what alerted him was the move by BJP ally Trinamul Congress leader, Mamata Banerjee. In her Bengal package, revival of sick and closed industries is an important point.

The suicide of the Dunlop worker has given her an opportunity to take on the ruling Marxists and pressurise the Centre to ensure change of management of the company.

In order to pre-empt any such takeover following pressure from Banerjee, Chhabria effected a change of guard at Dunlop promising revival of the sick company.

However, the trade unions are not impressed and believe that only Chhabria's exit from Dunlop can turn the future of the company.

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