Reports: Modi Tyres Partnering Continental

Indian tyre manufacturer Modi Tyres has “re-forged” the Modi Continental technical and brand partnership it made with Continental AG in 2001. According to local news sources, the tyres manufactured under the agreement will now be marketed under the Continental brand only, rather than Modi Continental. The new partnership will reportedly be called Modi Tyre Company (MTC) and is described as “only technical in nature and does not involve any investment from the German tyre company.” According to the reports Modi Tyres is aiming to roll out 1.1 million truck tyres and tubes annually and expects to expand its network of dealers from 500 to 2,000. Continental already has a technical agreement with JK Tyres and the reports speculate that this deal may now end.

Running at 40 per cent of its 95,000 tyres-a-year capacity, Modi Tyres reportedly re-started exports in small volumes to Bangladesh, Sri Lanka and Afghanistan this year in an effort to emerge an apparent form of bankruptcy protection. It has also initiated marketing efforts reaching out to tyre dealers and truck fleet associations through calls and SMSes. Modi is aiming to reach full capacity by March 2010.

Talks have reportedly also been initiated with Tata Motors and Ashok Leyland. The commercial vehicle makers have asked for certification, for which tyres have been sent to the Indian Central Institute of Road Transport (CIRT).

Meanwhile, further reports countered earlier denials that there is no investment attached to the partnership. Wheel Unplugged reported that Modi Rubber Limited (MRL), is “looking to divest an undisclosed equity stake to German technology partner Continental AG, to fund expansion and as a strategic commitment,” quoting a top company executive.

MRL, which owns a tyre plant through its wholly owned subsidiary Modi Tyres Company Pvt Ltd, restarted production after a gap of eight years, having seen completed re-structuring in June this year.

VK Modi, vice chairman and managing director of MRL said, “We are looking at a strategic partner to ramp up our product portfolio and since we are already using the Continental brand we will like to bring them as an equity partner.” He did not disclose the quantum of stake that may be offloaded and whether it would be through fresh issue of shares.

Wheels Unplugged’s report added: “The company is producing 40,000 truck and bus tyres monthly under the Continental brand and has also exported 12,000 of these under its own Modi Tyres brand to Pakistan and Bangladesh last month.” The report concluded with the following quote from company owner VK Modi: “Our tie-up with Continental brand is only for the domestic market, while all overseas market will be tapped under our Modi brand.”