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July 24, 2001
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Money > Business Headlines > Report July 24, 2001 |
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Modis eye foreign partner, stake sale may fetch $20 millionBhupesh Bhandari The Modi brothers, after their successful open offer, which mopped up the targeted 35 per cent shares in Modi Rubber Ltd, is now planning to set the ball rolling in inducting a foreign partner into their tyre business. As the largest shareholders, the Modis, according to sources, now plan to hive off the tyre business of Modi Rubber into a fully-owned subsidiary of the company and offer a controlling stake to an overseas tyre major. The Modis reportedly expect the sale of the controlling stake to fetch Modi Rubber at least $20 million. The Modis are planning to use the subsidiary route to induct a foreign partner instead of getting the overseas company to invest directly in Modi Rubber as it has a number of investments in other Modi companies. As per the company's last balance sheet, Modi Rubber has close to Rs 780 million in a dozen quoted and unquoted investments in group companies as on September 30, 2000. "No foreign company would like to inherit these investments in its books," the sources said. Though Continental AG of Germany has a technical collaboration with Modi Rubber (it even has a director on the company's board), the Modis are known to be in talks with other global tyre majors as well. Continental has a technical tie-up with two other tyre producers in India-- the Onkar Singh Kanwar-controlled Apollo Tyres where also it has a continental nominee on the board -- and the Hari Shankar Singhania flagship, JK Industries. However, Modi Rubber has an edge over the other two companies as it has the exclusive rights to use the Continental brand for 25 years. The focus is now on the Modi Rubber board meeting scheduled for July 28. On the cards is a restructuring of the company's board of directors in light of the change in the shareholding. At the moment, apart from the Modi brothers and the Continental nominee, the board has four nominees of the financial institutions. Chairman T Panduranga Rao is a nominee of the Unit Trust of India. At a special board meeting held on June 28, the board had stripped BK Modi of his executive powers and transferred the same to VK Modi. In addition, three executives perceived to be close to BK Modi, were suspended. This matter too will come up at the forthcoming board meeting. Powered by YOU MAY ALSO WANT TO READ:
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