CALCUTTA, February 16: The management of Dunlop India Ltd today informed the West Bengal government that the company had been referred to the Board for Industrial & Financial Reconstruction in January this year, before it had announced a work suspension at its Sahagunj factory.P J Rao, the tyremaker's managing director, told state labour commissioner Suvesh Das at a bipartite meeting that the company was referred to the BIFR within the meaning of Clause (O) of Section 3(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.Briefing reporters, Das said the purpose of the meeting was to ask the company to re-open its factory at Sahagunj as soon as possible. The fact that Dunlop has been referred to the BIFR does not come as much of a surprise to anyone, but the secrecy with which it has been done has taken everyone aback. Bankers to Dunlop have also confessed their ignorance about this step by the company management.Company law experts said that, under the SICA, a company has to notify itsbankers and the stock exchange when it goes to the BIFR. But stock exchange members said that no such notice has been given to the Calcutta Stock Exchange regarding Dunlop.Dunlop sources said that, in its application to the BIFR, it has already given a sketch of its plans for revival which include sale of assets, external commercial borrowings and the rights issue. Sources indicated that the rights issue is being modified to "private placement". In 1995-96, the company had reported a net profit of Rs 39 crore on paper. But the company had an `extraordinary' income in the form of sale of assets for Rs 169 crore. In 1996-97 also the company reported a net profit of Rs 5.14 crore.But bankers to Dunlop have expressed doubts about the profitability and have asked it to explain this profit figure. It was only in the first year of 1997-98 that the company `reported' losses of Rs 19.2 crore.For the last two fiscals, it had also reported net worth figures in excess of Rs 440 crore.UBI demandsexplanationCALCUTTA: Dunlop's action has taken its banking consortium totally by surprise. The bankers to a company are generally the first to be informed when a company is referred to the BIFR. In fact banking sources said that reference to the BIFR is usually routed through the company's bankers.United Bank of India, which has the largest exposure to Dunlop with around Rs 23 crore, has taken exception to the high-handed attitude adopted by Dunlop. Sources said that it has already written to the company asking it to explain its action.The other bankers are also flummoxed but are yet to take any action on the matter. The unions of Dunlop - who usually have an excellent information system - also expressed their ignorance of Dunlop's decision.
