Wednesday 8 March 2000

Y2K bug may scuttle Dunlop's Sahagunj plans

The Times of India News Service

CALCUTTA: One of the biggest problem that Dunlop India Limited might face after reopening its Sahagunj factory is the one relating to Y2K. As operations at the Sahagunj factory were suspended for the past two years, no steps could be initiated to make the factory Y2K compliant. The company management admits it could not take any measures to ensure that the Y2K bug does not hit the system. Though the Dunlop management is on record that Rs 20 crore is being invested by the promoter (Manu Chhabria) to restart operations at the Sahagunj factory, no one, however, knows how much of this amount will be eaten up only to make the plant Y2K ready.

Even Lodha and Company, the auditors of Dunlop, has mentioned in its report that nothing has been done to make the plant and machinery Y2K compliant. The auditors said the company does not have any future programme, including contingency plans relating to Y2K problems.

In the absence of any such measure, Lodha and Company said, "We are unable to express.....what could be the possible impact on the future operations of the Dunlop." Besides, the audit firm also failed to make an assessment how much it will cost the company to ensure Y2K compliance.

Dunlop's net worth has been completely eroded and the auditor has failed to determine the exact amount of the company's liability. "We are unable to comment on the outstanding," relating to income tax, sales tax, excise and customs duty, the auditor said. From the company's latest balance sheet (for the 15 month period ending March 31, 1999) it is evident that the provident fund dues have accumulated to Rs 12.85 crore while the sales tax and other dues are more than Rs 8 crore. Dunlop owes more than Rs 45 crore to the banks. Fixed deposits worth about Rs 9.42 crore has not been paid by the company.

While the company's net loss for 1998-99 was Rs 105.97 crore the accumulated loss stood at over Rs 235 crore. During the period, the company has written off debts valued at Rs 7.46 crore. Dunlop has received show cause notices from customs and excise authorities demanding duty of Rs 100 crore and Rs 26.32 crore respectively.

From the auditors' report it seems that Lodha and Company is sceptical on the profitability and financial viability of Dunlop irrespective of the rehabilitation measures.

http://www.timesofindia.com/080300/08mcal12.htm

-- Lee Maloney (leemaloney@hotmail.com), March 19, 2000