Pawan Ruia's slipping turnaround tag

Till recently, Pawan Kumar Ruia was known in business circles as a ‘turnaround tycoon’.

The group website flaunts it as well but with his flagship tyre manufacturing company, Dunlop, and now even Jessop & Co staring at a shutdown, the title is in question.

The Kolkata-based group is contesting the Dunlop winding-up order in the Supreme Court.

While it has written to the West Bengal government seeking permission for shutting down wagon maker Jessop.

Both Dunlop and Jessop have a rich history, being the first manufacturing units in their respective fields -- tyre industry and engineering manufacturing.

Ruia’s explanation for the decisions: “In Dunlop and Jessop, law and order issues have come in the way of productivity.

“There is no production for four months now.

“There is also sabotaging going on in the complex. A huge theft has taken place at Jessop's Dum Dum plant, as was the case with Sahagunj (Dunlop).

“We have filed several FIRs (police cases) but there has been no remedy.

“We wanted to either link the wages to productivity or rationalise the workforce, but the state government indicated we should rather close down the plant.”

“While rejecting the two proposals, you proposed that let the management declare closure of the company and pay the legitimate dues of the workers. . .reluctantly, in the given situation we accept your proposal to declare closure of the factory (Jessop's Dum Dum plant) and pay all the workers their legal dues,” reads the letter sent by Jessop chief executive Rajesh Agarwal to West Bengal labour minister Purnendu Bose.

Business Standard has access to a copy of the letter.

As an industrialist, Ruia told this newspaper, he ‘cannot’ and ‘should not’ be identified with any political class but, he claims, that is what has affected him.

“I am not a CPI-M or a TMC-man. But, somehow, there is a wrong perception among many that I do not have a good equation with the present government and local authorities.

“This has adversely affected my business in the state.”

Ruia says he is still speaking to the employee unions at Jessop, as it still has a lot of opportunity and has Rs 300 crore (Rs 3 billion) of orders.

“I just want the authorities to ensure the environment to run the plant. The rest is my responsibility,” he says.

Labour minister Purnendu Bose says, “Hopefully, things will be sorted out soon.”

Whether it happens or not, Ruia claims he succeeded in turning around Dunlop and Jessop.

“I took a difficult task. I did revive both. . .they’d recorded a turnover of a few hundred crore. Jessop, in fact, turned profitable.

“Yes, the revival did not last long. But, if the environment is not conducive, it's not in my hands,” he says.

But it's not about only these two companies.

The foreign ventures of the group have also run into rough weather.

The five automotive companies (three in Germany, one in UK and Turkey) acquired in 2010 and 2011 were sold off about a year before.

Still, Ruia says, the group has not failed.

“The time has been challenging.

“We hived off the three automotive companies due to various reasons.

“We had decided to concentrate and consolidate.

“We did not make any loss in selling them.

“And, as far as Dunlop and Jessop are concerned, they were hardly making any profits for the group.

“In fact, this will cut our losses,” he said. The group still has annual turnover of Rs 2,500 crore (Rs 25 billion).

Group companies still sell two-wheeler and three-wheeler tyres under the Dunlop brands and have a market share of 20 per cent in the segment, generating most of the revenues for the group.

Ruia is also confident about getting a banking licence, for which he’s applied.

During the conversation, Ruia makes his best effort, to make the point that he is not out, much like the foreign business segment on the group's website, where details of all his overseas companies now bear the ‘coming soon’ tag.

Image: Pawan Kumar Ruia; Photograph, courtesy: Business Standard