Ruia Group Acquires Dunlop India and Falcon Tyres
The privately owned Ruia Group has bought Dunlop India Ltd, Falcon Tyres Ltd and India Tyres from the Dubai-based Jumbo Group for a reported 2 billion rupees (£25 million).
“An agreement has been reached between Pawan Kumar Ruia and the (Chhabria) Jumbo Group to hand over both Dunlop India and Falcon Tyres,” said H Sandu, a group spokesman, confirming the development took place at a meeting in Mumbai.
According to India’s United News Agency, Ruia said the figure required for revival of the company was around 1.5 billion rupees, although the National Productivity Council projected the package would be around 2.1 billion rupees. He said the liability of Dunlop stood at around 6 billion rupees and negotiations with the staff and the bank will begin shortly. The Sahagunj and Ambattur factories will be opened shortly and the redevelopment will reportedly take around two years.
After visiting the factory with his family members and a group of executives, Ruia told the Business Standard that the condition of the Sahagunj plant was much better than expected. “I think, we could start production soon at the plant,” he said. However, Ruia qualified his optimism by saying he wanted to restart production in phases.
Most of the production lines, which include rubber pipe and hose production equipment, are reportedly “old”, but the factory also “has a modern conveyor belt line,” the Business Standard reported. At the last count, the Sahagunj unit had 2,700 employees. Production at the Ambattur factory is expected to restart in six months time.
Apart from the Ruias, Metro Tyres, MRF, Hero Honda, the Caparo Group of Lord Swraj Paul and the Sarda Group were all also in the in the running to purchase the assets.
Dunlop says it aims to become a leader in the tyre industry, even if it means getting into alliances with global tyre giants keen on India, said Pawan Ruia at the first media meeting after taking over Dunlop. According to the Business Standard, the Sumitomo name was mentioned as one such company.
Four Falcon board members quit
However high-profile the triple acquisition may have been, there have clearly been a number of corporate casualties. Only days after the company was bought by the Ruia group. The company informed Bombay Stock Exchange that Vidya Manohar Chhabria, Komal C Wazir, Mohan M Thakur and Deepak Chaudhuri (the former executive director) had all resigned. The resignations took effect on 1 December, it emerged.
The Ruia Group is now said to be considering the expansion of the company’s truck tyre manufacturing capacities at both its Sahagunj and Ambattur sites, India’s Business Line has reported. According to reports the group chairman, PK Ruia, said that Dunlop had a total capacity of producing close to 75,000 truck tyres a month at both the facilities.
Of the two, Ambattur has the larger capacity of 40,000 tyres a month. This is against a total market size of over 900,000 tyres a month, 70 per cent of which is provided by three players, the Business Line added.
This means Ambattur has the potential to become an original equipment hub for the company due to its proximity to the commercial vehicle manufacturing sector in south India. “Together, Falcon and Ambattur are equipped to cater to almost the entire demand for tyres, except the demand for car tyres in south India,” Business Line quoted Ruia as saying.