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12. March 2006

INDIA: Ruia Group may strike deal for Rs 3500-m loan for Dunlop/Lending consortium to pick up minority stake

Source: Daily "The Hindu Business Line", New Delhi; 11 Mar 2006

Kolkata. March 10
The Kolkata-based Ruia Group is close to firming up
long-term finance of around Rs 3500 million from a
consortium of foreign funding agencies to meet the
liabilities and modernisation costs of Dunlop India.

The consortium will also be allowed to pick up a
minority stake in Dunlop India in exchange for the
loan finance.

While it is not clear whether Dunlop will issue fresh
equity to the consortium, sources said that the stake
could be in the region of 5 to 10 per cent.

Though they did not mention the amount of loan finance
now being raised, the sources said that it would take
care of the entire Rs 3500-million requirement of
Dunlop India.

Settlement deal

Expecting to close the deal within a week, the company
aims to settle the liabilities of its secured
creditors including the fixed deposit holders latest
by April 10.

And, also to be settled shortly will be the Rs
1500-million book liability with banks and financial
institutions at a total consideration of Rs 400
million. While a settlement deal is already struck
with Bank of Tokyo Mitsubishi, others waiting for
settlement are Tamil Nadu Industrial Development
Corporation, Karnataka State Industrial Development
Corporation, Syndicate Bank and Bank of Madura.

Bengal option

It may be mentioned that Dunlop had previously applied
for loan finance from West Bengal Industrial
Development Corporation.

Though WBIDC had shown interest, in view of the latest
development, Dunlop, it is learnt, may not exercise
the option.

On the operational front, the company is expecting the
wage agreement at Ambattur facility in Tamil Nadu to
be struck shortly. The same for Sahagunj facility in
West Bengal, however, may be delayed.

Meanwhile, the West Bengal Commerce and Industry
Minister, Mr Nirupam Sen, said that the State
Government is working out a fiscal incentive package
for the company and would pave way for its reopening
at the earliest.


(Syed Rashid Ali, Karachi, Pakistan)

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