Dunlop India Problems Becoming a Political Issue

Dunlop India is becoming something of a political hot potato in the run-up to the election in the Lok Sabha, the country’s house of representatives. With the support of West Bengal politician Mamata Banerjee, company chief managing director Pawan Ruia is reported by the Times of India to be perhaps placing political pressure on the West Bengal government to gain Dunlop India additional concessions of a nature normally reserved for ‘sick’ units; that is, companies that at the end of any financial year have accumulated losses equal to or exceeding their entire net worth. And the government, says the Times of India, is holding its tongue on political grounds.

According to the paper, the government is in no mood to give Ruia the benefits granted for the revival of sick units, but nobody is willing to say this much officially out of fear this may adversely affect the 1,200 workers from Dunlop’s Sahaganj factory. Leaders from the Centre of Indian Trade Unions, who previously called for the government to take control of the tyre manufacturer, have lobbied state labour minister Mrinal Banerjee and the Indian National Trade Union Congress to utilise state intervention in ending the deadlock. The state labour minister finds himself, so the saying goes, between a rock and a hard place.

“The state government can mediate talks with the management and the union and help the company resume production,” said Banerjee. “The government cannot be a party to the proposal of selling out the company’s assets and meeting workers’ dues when the company in question is neither sick, nor has it obtained winding-up operations from the BIFR (the Board for Industrial & Financial Reconstruction, the government body dealing with sick companies), as the procedure is. We cannot grant sops to such a company.”

Dunlop India was in the hands of the BIFR before Ruia took over in 2005. He managed to take the company out of BIFR control and approached industries minister Nirupam Sen in 2006 with a turnaround package and a voluntary retirement scheme proposal for a section of employees. Ruia reached an agreement with Sen and with the relevant worker’s unions, however the Times of India reports the company has not lived up to its promises