ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Sound Base for Take-Over

Sound Base for Take-Over Hansavivek MODI RUBBER has fared very well and is paying a maiden dividend of 15 per cent for 1978-79, Sales, profits and margins are all higher than in the previous year and the distribution is covered 1.53 times. The company has entered into an agreement with Firestone Tire and Rubber of USA for the transfer to it of 33,30,000 equity shares of Rs 10 each for cash at par held by that company in Bombay Tyres International, subject to the approval of RBI, the Central government and the shareholders. Even though Bombay Tyres working has been adversely affected in previous years, the management believes that through its plans to modernise and upgrade the plant and induct latest technology this will prove a good long-term investment. The institutions, who have extended financial assistance to MR, have conveyed their approval to the proposed acquisition. The company started a rubber development project in Kerala in Septem ber last to help increase the yield of rubber per hectare. The project is helping 2,405 small holdings covering an area of 1,371 hectares. This is likely to improve the yield by 30 per cent to 35 per cent and efforts are afoot to achieve the objective. In view of the governments policy decision that the financial institutions should exercise their conversion option in respect of their loans in such a way that they do not acquire more than 40 per cent share capital of existing companies, the company has represented to the institutions to restrict to the minimum the aggregate of conversion options. The institutions have already exercised conversion option of 20 per cent with respect to the original as well as additional term loans granted to the company. Taking into account the additional shares allottable to the institutions, their shareholding along with that of the nationalised banks and insurance companies will aggregate to 41.79 per cent. The company has also represented to government that it should be treated on the same footing as other newly established units. In June 1976 it was given excise relief of 25 per cent of the duty payable on excess clearance over the base clearance effective until March 31, 1979. In July 1978, however, it was clubbed with old established units and was given relief of only 12.5 per cent, limited to 75 per cent of the licensed capacity, as against 25 per. cent given to other new units. Even the scheme of reduced relief has expired on March 31, 1980 and the company is awaiting its renewal. The company is seeking government approval for additional capacity with a view to mitigating scarcity of certain types of tyres. Meanwhile, it is expanding its production range by adding new tyres such as 12.00-20 truck tyres, cross-country pattern tyres, etc, HlCO PRODUCTS, which made a public issue and offer for sale of shares of Rs 10 each at a premium of Rs 6 per share, has shown encouraging wor- The Week's Companies (Ra Lakhs)

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