India’s first tyre maker Dunlop has shut shop. The company has indefinitely closed down both its manufacturing units at Sahagunj in West Bengal and Ambattur in Tamil Nadu, citing a slump in demand.
The step rendered the factory’s 1,202 workers in Sahagunj, who were earning about Rs 5,000 per month, eligible for a monthly subsistence pay of only Rs 2,000.
Chairman Pawan Ruia, who bought Dunlop from MR Chhabria’s Jumbo Group in 2005, cited working capital shortages and a sharp drop in demand of commercial vehicles tyres to explain the step.
The Sahagunj factory, which was limping along for the past two years, was almost shut since August 2008.
“We desperately needed to infuse fresh funds in the company but unfortunately we could not do so,” company spokesperson Dhrubojyoti Nandi said. “We hope to begin work the moment we are able to arrange the money.”
The Ambattur plant, which has 712 workers, was also in bad shape for the past month. “Last year itself Dunlop was crippled when the price of rubber shot from Rs 70/kg to about Rs 140/kg,” Nandi said. “The slowing down of the economy reduced demand from the commercial vehicles to unsustainable levels.”
On Sunday, rival Apollo Tyres announced a Rs 3,000-crore expansion plan.