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V K Modi offers to run, turnaround MRL

Bhupesh Bhandari

In a fresh twist to the Modi Rubber imbroglio, Vinay Kumar Modi has asked the financial institutions to let him run the company and turn it around.

Contrary to the offer made by his brother, Bhupendra Kumar Modi, to buy out the 44 per cent of the institutions, V K Modi's latest proposal does not envisage a buyout.

According to sources, V K Modi has told the banks and institutions that he will also bring in the working capital required to restart the company's plant at Modinagar, which has bee shut for several months owing to shortage of working capital.

Modi Rubber falls under the "group approach" adopted by banks and institutions, wherein the working capital limits of several Modi companies have been frozen at the 1989 levels.

Earlier, Bhupendra Kumar Modi had offered to buy out the institutions from Modi Rubber at Rs 90 a share - the same price at which the Modi brothers made an open offer last year for 35 per cent shares of the company.

The institutions are yet to take a view on the matter. Bhupendra Kumar Modi would have had to spend around Rs 1 billion to pick up the 44 per cent stake of the institutions in the company.

Like his brother, Bhupendra Kumar Modi is also keen to re-start the Modipuram unit and this would require substantial investment.

Hence, he had asked for some sort of a deferred payment as buying out the institutions would involve almost Rs 1 billion. Modi had also asked the Securities and Exchange Board of India to exempt him from making an open offer consequent upon buying the institutions' stake.

Sebi's takeover code requires an acquirer to make an open offer for at least 20 per cent shares once it has acquired a 15 per cent stake in a listed company.

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