Modi Rubber vs. Financial Institutions|Finance|Case Study|Case Studies

Modi Rubber vs. Financial Institutions

            
 
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Case Details:

Case Code : FINC015
Case Length : 9 Pages
Period : 1989 - 2001
Pub. Date : 2002
Teaching Note : Available
Organization : Modi Rubber UT
Industry : Automobile & Automotive, Financial Services
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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The Power Struggle Contd...

He also said that there were no disputes between him and V K Modi. Analysts however took this with a pinch of salt as V K Modi was absent from the press conference.

On July 5, B K Modi sent a notice to V K Modi, charging him of breach of a shareholder's agreement between them.

(The agreement mentioned that while he would look after the production side of MRL, V K Modi would look after sales and marketing. Moreover, it had been agreed that any change in this arrangement would require the mutual consent of the two brothers.)

MRL's move against B K Modi eventually came to be seen as a major victory for financial institutions (FIs) in the decade long MRL/FI battle for control of the company...

Finance | Case Study in Management, Operations, Strategies, Finance, Case Studies

Background Note

MRL, established in 1971, was a part of the Modi Group of companies. While B K and V K Modi held 23.87% of MRL's equity, the FIs held 44.5% and the public held 31.63%.2 A major part of the FI stake in MRL was with Life Insurance Corporation (LIC) and UTI.

The other FIs involved were the Industrial Finance Corporation of India (IFCI) and the Industrial Credit and Investment Corporation of India (ICICI). The FIs had acquired their stake in MRL over the years, both through conversion of unpaid loans into equity and market purchases.

The company's business comprised the manufacturing and marketing of automobile tyres/tubes/flaps and retreading materials. A small portion of the revenue came from trading in tyres, tubes, flaps, garments and other articles. The company had a technical collaboration with Continental AG of Germany for manufacturing tyres. MRL's major customers included Telco, Ashok Leyland, Maruti Udyog, Punjab Tractors and Escorts...

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2] 1997 figures.

 

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