DCA wants nine more directors on Dunlop India board

The government has come under pressure from the Dunlop Worker’s Union and the West Bengal government which has also raised serious doubts about the intention of Dunlop management in running the company.

Dunlop has been facing severe cash crunch in the last two years and there has been continuous fall in sales and profit of the company. The tyre manufacturerposted a loss of Rs 231 crore during the nine-month period ended December 31, 1997, along with drop in sales to Rs 207.77 crore compared to Rs 562.99 crore posted in the previous 12-month period. Highlighting the violation of Companies Act and financial irregularities by DIL, DCA has stated that the company had invested more than the funds available with it. DIL had invested Rs 79.14 crore and Rs 91.67 crore in 1994 and 1996 respectively against a surplus of Rs 45.18 crore and Rs 82.63 crore available with it during the same period. "This action of the management is in violation of the section 372 of the Companies Act," the petition said.

DIL had also invested funds outside its business mainly out of loan funds composed of secured and unsecured loans aggregating Rs 97.95 crore, Rs 110.09 crore and Rs 98.28 crore in 1993, 1994 and 1996 respectively. Apart from it, funds of the company were also diverted for investment in group companies.

"These are only a few of the instances of financial mismanagement bythe management/directors. The diversion of funds by the management has resulted in severe financial crisis seriously affecting the company’s overall production and profitablity in 1995-96 and 1996-97," the goverment has alleged in the petition. The profits of the company have dropped from Rs 39 crore for 15 months period ended March 1996 to Rs 5.80 crore in March 1997. During the same period turnover (including other income) fell from Rs 824 crore to Rs 562.99 crore.