January 5, 2011 / 12:34 PM / in 7 years

De La Rue excluded from new India contracts - source

LONDON/NEW DELHI (Reuters) - British banknote printer De La Rue will not be awarded new contracts to supply the Reserve Bank of India (RBI) in the near future, a source close to the matter told Reuters.

A Kashmiri shopkeeper displays a garland made of Indian currency notes at a market in Srinagar May 20, 2008. Weakened British bank note printer De La Rue will not be awarded new contracts to supply currency paper to the Reserve Bank of India (RBI) in the near future, a source close to the development told Reuters. REUTERS/Fayaz Kabli/Files

That could harm De La Rue’s defence against an 895 million pound ($1.4 billion) approach from Oberthur Technologies, the world’s third biggest banknote maker. De La Rue rejected the approach from its French peer in December.

De La Rue said in July there had been production problems at one of its paper factories. The source told Reuters on Wednesday that, as a result, De La Rue would be excluded from contract wins with India in the near future.

Sources confirmed to Reuters the RBI was the key customer which De La Rue said in November it could lose following problems with faulty banknote paper.

A recent tender by India’s finance ministry for the supply of currency paper prompted suitor Oberthur on Tuesday to ask De La Rue to provide clarity on its prospects of winning future business with the key customer in question.

Oberthur said it believed a recent tender for the supply of 16,000 tons of currency paper by the RBI had been awarded to four of De La Rue’s competitors.

De La Rue said in response to Oberthur the ultimate outcome of the issue and the impact it would have on the group was still uncertain, adding orders taken by the group since last July were comparable year-on-year.

Its shares were down 0.4 percent to 834 pence at 1235 GMT, compared with the 905 pence level of Oberthur’s approach.

De La Rue and India’s finance ministry declined to comment.

($1 = 0.6428 pound)

Additional reporting by Matt Scuffham; Editing by Rosalba O'Brien

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