Kolkata-based Pawan Ruia on Friday bought Dunlop along with Falcon Tyres from the Chhabria family-controlled Jumbo group. The deal was signed in Singapore.
Sources in the Jumbo group said the Chhabrias had sold Dil Rim & Wheels to a special purpose vehicle of Ruia, floated especially for the transfer. Dil Rim & Wheels owned a 76 per cent stake in Dunlop India and was incorporated in Mauritius.
However, the size of the deal was not revealed, though there were indications that it could be between Rs 75 crore (Rs 750 million) and Rs 100 crore (Rs 1 billion).
Ruia refused to comment on the value of the transaction. The value would be decided only after a complete assessment of the liabilities of the company was made. Ruia was being assisted by the same team that helped him pick up Jessop and turn it around.
The buyer would get the running Falcon Tyres factory as well as the trading operations of the group.
In the next stage, the plan was to start up the Ambattur, Tamil Nadu, factory as quickly as possible and then the Sahaganj, West Bengal, factory in six months.
Ruia would be obliged by the terms laid down by BIFR and AAIFR which was structuring the revival of the company.
Sources also pointed out that the primary task of the new owner would be to settle outstanding claims of Rs 500 crore (Rs 5 billion) on Dunlop. "It has gratuity and provident fund dues, and unpaid bills of electricity board and other agencies," they said.
However, Dunlop had as much as Rs 100 crore in an escrow account with the State Bank of India. The money is now under the control of the Appellate Authority for Industrial & Financial Reconstruction.
"Once the revival plan is through, this money could be used to clear the dues. The amount was raised through sale of some properties," added sources.
The new owner would submit a revised restructuring report of Dunlop to the AAIFR. The Jumbo sources said the revised report would lay stress on sale of property to revive the company. The report has been prepared by the operating agency, SBI, in consultation with National Productivity Council.
"Dunlop has large properties in Mumbai, Chennai and Kolkata which could be tapped. The report has suggested that the management should try to dispose of majority of the properties at an optimum price," sources said.
The company recently sold Dunlop House in Kolkata to the Pataka Bidi group for Rs 50 crore (Rs 500 million).