Modi Rubber on comeback trail

In talks with German gaint Continental for a joint venture tyre company in India.

Modi Rubber, which is getting back on its feet after fighting insolvency, is in talks with Germany-based Continental, a technical partner, for setting up a joint venture tyre company in India. Continental is the world's fourth largest tyre company.

OLD ALLIES

The Board for Industrial and Financial Reconstruction has shown green signal to Modi Rubber's rehabilitation scheme

The tyres will be marketed under the Modi Continental name as they used to be

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The company has asked the Bombay Stock Exchange to resume trading of its shares

"We are in talks with Continental for a future collaboration that will be much wider than the technical relationship we have right now. There is a desire on both sides for setting up a JV company and the modalities are being worked out," V K Modi, vice-chairman and managing director, told Business Standard.

The company has a technical collaboration with Continental and, before its closure in 2001, Modi Rubber's tyres were co-branded as Modi Continental.

Prior to 2001, Modi Rubber was a leading tyre producer with a market share of more than 14 per cent. It had the capacity to produce 1.1 million truck tyres annually.

"Since we have been out of the tyre market since the last seven years, all other companies have marched ahead in terms of capacity and market share. Most big players have a capacity of about 3 million tyres. We need to catch up," he said.

Modi Rubber's existing units are expected to begin operations by April-end. On January 18, the Board for Industrial and Financial Reconstruction (BIFR) approved the company's rehabilitation scheme and circulated the same to the company's secured and statutory creditors. It has also fixed a date (April 8) for a final hearing, following which a notification would be issued based on the creditors' consent.

Once the scheme gets notified, the facilities, with 1.1 million capacity, will start producing truck tyres and tubes. "These tyres will be marketed under the Modi Continental brand as they used to be before the units were shut down in 2001," he added.

Modi hopes for the scheme to get notified by mid-April. In the meanwhile, repair, technological upgradation and computerisation is being carried out at the company's Modipuram and Partapur units, both in Meerut. The company is getting its marketing and raw material purchase network back in place.

The trading of Modi Rubber's shares has been discontinued on the Bombay Stock Exchange since February 2003. However, the company is still listed. "We have requested the stock exchange to resume trading in our company's shares," Modi added.