Ruia group's stake in Dunlop may decline to 38% from 65%

Promoter holdings led by Pawan Kumar Ruia in Dunlop India will be reduced to 38.53 per cent if the proposal to issue five crore fresh shares to offset a Rs 60 crore inter-corporate loan goes through.

Post-allotment, the Ruia group's control (the existing promoters) will be slashed from 65.29 per cent to 38.53 per cent, Ruia, the group chairman told PTI.

The loan was taken for working capital requirements and the allotment to these entities would help in better restructuring of the company.

Dunlop India would convene an Extraordinary General Meeting on April 28 to seek the shareholders' approval on the proposal to convert the Rs 60 crore loan into shares.

According to the proposed arrangement, Dunlop India would make preferential allotment of five crore shares of Rs 10 each at Rs 12 a share including a Rs 2 premium to Suncap Commodities Ltd (1.75 crore shares), Regus Impex Private Ltd (1.75 crore shares)and Salputri Commerce Private Ltd (1.5 crore shares).

The company said conversion of loan into equity shares was requested by these three firms in March to convert their outstanding loans totalling Rs 60 crore.

Dunlop had availed an inter-corporate loan from a group company, Stephens Financial Services Private Ltd in September, 2011. This loan was transferred to the three companies in January, 2012 through a deed of assignment.

Post issue, the paid up capital would increase from Rs 71.98 crore to Rs 121.98 crore.

Shares of Dunlop India are up around 20 per cent as of 12.30 on the Bombay Stock Exchange.