The ailing company and its short-listed bidders are waiting for the event, expected from 2007
As FY14 begins, a new hope has arisen in Tyre Corporation of India Ltd (TCIL) that the government will disinvest in the company this fiscal. Bidders shortlisted were sure that the government would complete an outright sale of the ailing tyre manufacturer this fiscal because the department of disinvestment (DoD) had set a mid-February time line to complete the sale. But for reasons unknown, the department withheld the sale of the 70-year-old tyre company. SBI Caps, the consultant appointed as advisor convened a meeting of the bidders on January 25 but after that nothing happened.
?We have no clue when would the disinvestment happen,? Dhrubajyoti Nandi, spokesperson of Dunlop India Ltd, the company shortlisted for bidding, said. Sanjay Budhia, managing director, Patton, another company shortlisted for bidding, said there were a number of issues on which the company has sought clarifications from SBI Caps. ?My company has queries relating to issues like hidden liability and others, but we have not got any answer from the advisor as yet,? Budhia said.
The DoD has shortlisted three bidders, Titagarh being the third group in the race.
SBI Caps, in its due diligence, has stated that the company?s loan fund has come down to zero, since the outstanding government of India loan of R202.86 crore has been converted into equity. The company?s equity was increased to R296.30 crore, but R266.67 crore worth equity has been used to adjust the accumulated losses of R292.95 crore. So the share capital of the company has come down to R29.63 crore, with the accumulated loss at R26.28 crore.
The conversion of loan into equity and then using the equity to adjust accumulated losses was done according to the sanctioned BIFR revival scheme, announced in 2007. The Cabinet gave nod for 100% disinvestment in the company following the declaration of the BIFR scheme. Five years have lapsed since, but the disinvestment is yet to take place.
The company continues to post losses and its net loss increased to R20.72 crore in FY12 from R13.19 crore in FY11. In FY10 the company had a net loss of R14.55 crore, up from a net loss of R7.27 crore in FY09. In FY08, when the Cabinet gave the nod for disinvestment, the company had a net loss of R50.01 crore. However, the company?s net worth has remained positive over the years and stood at R7.27 crore as of March 2012, up from a negative net worth of R82.48 crore in FY08.
Now SBI Caps has worked out the notional value of jobbing work at R181.87 crore, which would reflect the income the company books in case it sources its own raw material and sell the products under its own brand name. But TCIL at present carries out job works for tyre majors like Apollo, JK Tyre and Ceat.
TCIL, one of the oldest Indian tyre companies, was established before Independence by a Bengali entrepreneur KN Mukherjee. He bought the Inchek brand from the then Czechoslovakia and the company had a command over the market till the mid-80s when it was nationalised.
At present it has two units at Kakinada in the North 24 Parganas and Nadia (Kalyani) districts of West Bengal and the total land in these two units come to over 100 acres. The company had a unit at Tangra in the outskirts of Kolkata but it was auctioned off in 2003 for R30 crore.
TCIL managing director SK Mutreja earlier said that all the shortlisted bidders were experienced in their own domains. Titagarh Group has a history of successful domestic and foreign acquisitions of Cimmco Birla and AFR of France. Pawan Ruia bought Dunlop from Jumbo Group and acquired public sector undertaking Jessop through government?s divestment in early 2000.
Although the Dunlop unit at Sahaganj is not operational now and the Calcutta High Court has directed the liquidation of its assets, Ruia has the experience of making many foreign acquisitions. Patton owner Sanjay Budhia, a star category engineering exporter and manufacturer, has not made any acquisitions so far, but all his six manufacturing units are running well in the state.
TCIL has a staff strength of 500.
