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Modi Rubber Chairman Quits

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BUSINESS STANDARD
Last Updated : Jan 28 2013 | 12:29 AM IST

Modi Rubber chairman T Panduranga Rao has submitted his resignation to the Unit Trust of India, of which he is the nominee. The resignation, however, is yet to be considered by the Modi Rubber board of directors. Meanwhile, the financial institutions (FIs), who hold a 44 per cent stake in the company, have started scouting for a successor to Rao.

According to institutional sources, differences had cropped up between Rao and the FIs. The institutions had blamed Rao for their exit from the company not working out. On his part, Rao is known to have said that the FIs did not put their foot down on issues of mismanagement of the company raised by him. There are three other institutional nominees on the Modi Rubber board apart from Rao.

Sources said, Panduranga Rao had initially suggested to the institutions that they should give their consent to an open offer by the Modi brothers for not less than 70 per cent of the equity capital of Modi Rubber as this would have accommodated their entire 44 per cent stake. However, the board with the institutional nominees, gave its approval for an open offer of 35 per cent. As a result, the institutions could not participate in the issue. The Life Insurance Corporation had submitted its 12 per cent shares, but later contested it in a court of law.

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Rao is also known to have raised the issue of the sale of Modi Xerox shares held by Modi Rubber. In the past, he has said the shares could have fetched the company Rs 68 crore, as against the Rs 16-17 crore bandied later. The institutions have not objected to the deal.

Modi Rubber used to hold 4.36 million Modi Xerox shares alongwith 2,25,000 Modi Xerox Financial Services shares. The two companies have been amalgamated with Xerox Modicorp. As a result, Modi Rubber became the owner of 3.13 million Xerox Modicorp shares for a total value of Rs 4.59 crore.

A few months ago, the Modi Rubber board had stripped B K Modi of his executive powers as managing director and vested them on his brother, V K Modi, vice-chairman & managing director of the company. The executive powers of B K Modi were later restored by the board of directors.

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First Published: Dec 28 2001 | 12:00 AM IST

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