Kolkata: Pawan Kumar Ruia, chairman of Ruia Group, who took over embattled firms such as Jessop and Co. Ltd, Dunlop India Ltd and Falcon Tyres Ltd, is looking to step down from their boards as chairman because he wants to focus on acquiring new assets.
Ruia has already quit the board of wagon manufacturer Jessop, which he acquired from the Union government in 2003, and may soon step down from the board of Falcon. The company had already started searching for a professional who could replace him, Ruia said on Monday.
“I am seriously thinking of stepping down from the boards of Dunlop and Falcon so that I could focus on acquiring new companies. As soon as we find suitable professionals to head the companies, I will leave,” said Ruia, who despite having quit as Jessop chairman in September chaired its annual general meeting (AGM) on Monday at the request of shareholders.
A large section of Dunlop’s employees, however, see this move as Ruia’s attempt to distance himself from the closed tyre maker. He had mortgaged, in October, a 51% stake in Dunlop to an Indian bank to raise $120 million (Rs582 crore today). The Ruia Group holds around 75% in Dunlop.
Weighing options: Ruia Group chairman Pawan Kumar Ruia. Indranil Bhoumik / Mint
Earlier in December 2007, he had spun off Dunlop’s properties, such as buildings in upscale areas of Kolkata, Bangalore and Mumbai, into four firms and mortgaged these assets to borrow a similar amount from hedge funds. The hedge funds were later repaid with a loan from “an Indian bank”, Ruia had told Mint earlier.
“This is what a businessman like Ruia typically does—buy stressed companies on the cheap and then sell their assets one by one,” said Ashok Pal, vice-president of Dunlop Workers’ Union affiliated to the Centre of Indian Trade Unions. “He is clearly trying to wash his hands of Dunlop.”
Asked if stepping down from the board could send wrong signals to employees and shareholders, Ruia said, “It shouldn’t matter if it didn’t lead to diminution in shareholder value.” He added: “Even after quitting, I would continue to oversee the operations of these companies...exercise control by fixing budgets and targets for each, and keep a tab on important matters.”
The Kolkata-based group acquired Dunlop and Falcon in 2005 from the successors of M.R. Chhabria. Though Ruia managed to keep Falcon running, he couldn’t restart the operations of Dunlop for various reasons such as labour unrest, suspension of power supply, need for refurbishment, working capital shortage and paucity of demand.
In March, Ruia had said he was weighing options on selling Dunlop’s closed factory in Ambattur near Chennai and retrench its 700 workers. If it was a question of “survival”, Dunlop wouldn’t mind selling surplus land at its Sahaganj factory in West Bengal as well.
Meanwhile, addressing the Jessop AGM, Ruia said he was looking to list the wagon maker on the Bombay Stock Exchange. Currently, the group holds 95% in the firm, which will be brought down to 70-75% in line with listing norms.