After 12 years in the red, Dunlop India reported a positive net worth in April for 2006-07, paving the way for its emergence from the BIFR fold. Compared to a negative net worth of Rs 261.15 crore in 2005-06, Dunlop reported Rs 151.82 crore in positive net worth last year. What did the trick? Not some shop floor miracle, but some good old accounting jugglery. What Pawan Kumar Ruia, the Kolkata-based chartered-accountant-turned-takeover-tycoon, has done is to get international real estate firm Jones Lang LaSalle to evaluate the company's real estate assets, and the number that it has come up with is Rs 900 crore. The prized assets, not including its manufacturing units at Shahgunj near Kolkata and Ambattur near Chennai, comprise the 88,000 sq. ft, Bombay House in Worli (valued at Rs 300 crore), land and constructed area adjacent to the Shahgunj plant (Rs 100 crore) and a piece of land at Ambattur (Rs 500 crore). The Dunlop House in Mumbai is mortgaged to lenders against loans worth Rs 77 crore.

Instead of selling the real estate assets to a third party, Dunlop has transferred part of it to associate companies, including Dunlop Properties and Bhartiya Hotels. Instead of paying cash, these companies have issued shares of equal worth to Dunlop, which has booked them as other income, thereby shoring up its balance sheet. Says Ruia, Dunlop's Chairman: "This method was followed because BIFR would not have accepted a simple asset revaluation exercise. Such an approach only made it possible to turn the firm's net worth positive. This will also help us raise cash required to strengthen operations."

Dunlop plans to raise Rs 400 crore through debt and equity. It also plans to make a private placement to a clutch of foreign banks. Part of the equity inflow will be via a rights issue of Rs 27 crore. Six shares of Dunlop are being offered at Rs 10 on par for every 10 shares held. Following the issue, Dunlop's paid-up capital will go up to Rs 72 crore from Rs 45 crore. Ruia says Dunlop has placed a Rs 600-crore package before the State Bank of India (SBI), the operating agency appointed by the BIFR for Dunlop. "We are expecting BIFR to approve the scheme within the next three to four months," says Ruia.

Dunlop, which is producing 74 tonnes of tyres at its two plants, expects revenues of about Rs 60 crore in 2007-08. However, next financial year (2008-09), it hopes to crank up combined production to a peak capacity of 260 tonnes a day, pushing revenues to Rs 1,000 crore-perhaps even Rs 1,300 crore. Meanwhile, Ruia must keep his fingers crossed.

-Ritwik Mukherjee

Trucking Magnate
A former MP and media mogul builds his trucking core.

Driven by trucks: Sankeshwar

Folks at Ashok Leyland are unlikely to forget Vijay Sankeshwar in a hurry. In January, Sankeshwar made jaws drop at the Chennai-based truck manufacturer when he placed an order for 800 highly customised multi-axle trucks at an average cost of Rs 16 lakh each. It's the single-largest order that Ashok Leyland has received in its 59-year history. So, just who is Sankeshwar? For starters, he's the Chairman and Managing Director of Hubli-headquartered, Rs 440-crore trucking company, VRL Logistics, which also offers express (read: courier) service and passenger transport. For another, Sankeshwar, 56, is a former Member of Parliament (Lok Sabha) from Dharwad North, and also the man who launched Vijaya Karnataka and Vijaya Times, dailies in Kannada and English, respectively, which he later sold to Bennett, Coleman & Co. for an estimated Rs 130 crore.

But trucking is what built Sankeshwar. He started with a single truck in 1976, but now owns a fleet of 2,400 (including 250 buses), which the man says is the largest in the country today. Sankeshwar's plan is to take VRL national by ramping up fleet to 3,000 trucks at an additional cost of Rs 160 crore. To fund the plans, Sankeshwar is looking at either bringing in a strategic partner or a private equity investor. "All options are on the table. We will have more details to share probably within the next two months," says Sankeshwar. By the way, 250 of the 800 trucks have already arrived at Sankeshwar's depots.

-Venkatesha Babu

Nektar Taps Indian Skills
R&D hub to focus on innovative drugs.

Hyderabad it will be: Nektar's Robin

The US-based Nektar Therapeutics, which developed Exubera (the inhaler and the inhaled insulin powder) and out-licensed its worldwide manufacturing and marketing rights to Pfizer, is now setting up its first R&D hub outside the us in Hyderabad. Says Howard W. Robin, President & CEO, Nektar Therapeutics: "We expect to have the first phase up and running in 12-18 months." The Nektar facility, spread over 15 acres, will carry out cutting-edge research in synthetic chemistry, research biology and pharmaceutical development in what it calls "a research park setting". The company has aggressive expansion plans in India but would prefer to review them at the end of the first phase.

Incidentally, it already has a presence in India. Nektar Therapeutics (India) is a fully-owned subsidiary of Nektar Therapeutics, a biopharmaceutical company engaged in the development of novel drug delivery-based products like Exubera and Pegasys (for hepatitis C), both registered trademarks of Pfizer and Roche, respectively. It currently employs about 5 per cent of its global workforce of about 800 personnel in India, and will ramp up this headcount to about 100 over the next year; about 40 per cent of this will comprise PhDs. "Most of our new recruits will be drawn from the local talent pool, but we will also hire scientists abroad and relocate them to Hyderabad," says Robin, adding that recruits will "have advanced degrees (PhDs or masters) in pharmacy, chemistry, biology, chemical engineering, pharmacology, veterinary sciences and medicine".

Sarma Duddu, Managing Director, Nektar Therapeutics (India), says the company chose Hyderabad as its India base mainly because of its talent pool, good educational institutes, low costs and proactive government. "To us, the talent pool is what makes India attractive," he says.

Nektar has big plans for India. "We expect our India centre to be a fully integrated part of our global R&D set-up. It will allow us to accelerate our pioneering research in the pharmaceutical space and complement our other R&D sites (in the US) by providing synthetic chemistry and biology research expertise."

What is Nektar's business model and where does India fit into it? Says Robin: "Going forward, we are focussed on developing products that we can drive into late stage clinical development on our own. We may choose to out-license them at a later stage or commercialise them ourselves."

The company currently has a portfolio of 11 products in the market (and an equal number in various stages of clinical trails) and four others in pre-clinical phase. It typically has development and marketing arrangements with pharma majors like Pfizer, Roche, Amgen and Novartis. "Most people in the Indian pharmaceutical industry have a mindset that's geared towards generics. But we are not into generics or contract research (another field where several Indian pharmaceutical companies have a reasonable presence) but in the field of innovation. We come out with pioneering new products," says Duddu.

Two products in the Nektar pipeline are believed to have substantial potential of becoming the blockbusters of tomorrow. One is an inhaled drug for treating pneumonia and the other an oncology product. Will the India centre play a role in their development? All that Duddu is willing to say is: "Nektar India will play a significant role in most of the major products in the pipeline, including the one in development for the treatment of various cancers."

-E. Kumar Sharma