Apollo revises bid to acquire Modi Rubber

Buyout to give Apollo a production base in the northern market.

Two years after its first overtures, Apollo Tyres has revised its bid to acquire the tyre plant of Modi Rubber Ltd.

"We have today written to the creditors of the company saying we are interested in carrying out a financial and technical due diligence of the plant," Apollo Tyres Ltd Chairman Onkar Singh Kanwar told Business Standard.

The Apollo Tyres' letter follows an exclusive offer from Modi Rubber's creditors to take over the company's tyre manufacturing facility at Modipuram in Uttar Pradesh. Apart from Apollo Tyres, JK Industries, a Hari Shankar Singhania group company, had shown interest in acquiring the plant.

In its letter, Apollo Tyres has sought 30 days to carry out the due diligence. The plant has been shut for over two years now.

Kanwar indicated that this could affect the valuation of the asset. "We have to take into account the revised circumstances. We also have a partner in Michelin now," he said.

Apollo Tyres is interested in the Modi Rubber plant as it will give it a production base in the lucrative north Indian market.

According to sources in financial institutions, the total principal outstanding on the Modi Rubber plant is Rs 66.67 crore, while the outstanding interest is Rs 47.72 crore. Apollo Tyres wants a waiver of the interest overdue from August 7, 2001.

It wants to pay 40 per cent of the principal on the transfer of the tyre plant to its books and the balance 60 per cent to be converted into zero-coupon convertible bonds redeemable at the end of 10 and 13 years in equal instalments.

JK Industries had said it would pay 40 per cent of the principal in four annual instalments with 8 per cent per annum interest payable twice a year. The remaining 60 per cent it had offered to repay in five annual instalments from the sixth year with zero interest.

Attempts to sell the plant in the past have come to nought on account of differences between the promoters, brothers Vinay Kumar Modi and Bhupendra Kumar Modi, and the company's creditors. Kanwar is hopeful that this will not hinder the acquisition this time round.

"The brothers have resolved their differences with the banks and financial institutions," he said.

When contacted, Bhupendra Kumar Modi said it was now up to Apollo Tyres to come up with an offer for the plant.