Pawan Kumar Ruia, who acquired Dunlop Industries and Falcon Tyres recently from the Chhabria family, is planning to raise $100 million (Rs 460 crore) to fund the revival of the two firms as well as of group company Jessop and pay off creditors.
He also plans to use the money to fund more acquisitions. Ruia may raise the money through a public or a rights issue and a parellel GDR overseas.
Ruia told Business Standard that Dunlop and Falcon would need investments of about Rs 200 crore (Rs 2 billion) to become globally competitive tyre producers. Jessop will need another Rs 70 crore (Rs 700 million) to modernise its factories.
Ruia also plans to put together a war chest of Rs 115 crore (Rs 1.15 billion), or $25 million, to fund acquisitions in the engineering and metals space. "We are close to at least one major deal in the engineering products sector where the seller is one of the country's leading business houses," said Ruia.
He added that Rs 90 crore (Rs 900 million) would be needed to settle some dues and put the companies back on track. Ruia's group of companies now includes Jessop, Dunlop, Falcon and two privately held spinning and textile units. The assets of Jessop, Dunlop and Falcon were free from debts, he claimed.
However, some shares in Jessop continue to be held by the central government. Dunlop's fate will be decided by the Board for Industrial and Financial Reconstruction.
The options before Ruia are either to go in for borrowings or issue shares to the public or to existing shareholders on a rights basis. Jessop's capital was recently restructured by writing down the value of its shares from Rs 10 to Re 1 and infusion of fresh capital by Ruia to turn the sick company into one with a positive net worth.
Meanwhile, the boards of both Dunlop and Falcon have been restructured and the Chhabria nominees have resigned, making way for Ruia's team. Ruia paid Rs 125 crore (Rs 1.25 billion) as buyer's security for the acquisition.Of the two acquisitions, Falcon was a running tyre company with sales of Rs 240 crore (Rs 2.40 billion) in the last financial year. Ruia said he had visited the plant where the Falcon team said production and sales could be doubled with investments of around Rs 20 crore (Rs 200 million).