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MRL board restores powers to B.K. Modi

K.R.Srivats

NEW DELHI, July 31

THE board of Modi Rubber Ltd (MRL) today restored to Dr B.K. Modi all the functionary powers vested with him prior to the fateful June 28 board meeting.

At its meeting today, the board passed a resolution to bring in ``status quo ante'' and restore the pre-June 28 situation as regards Dr Modi's role in the company's management.

Speaking to Business Line, Mr Panduranga Rao, Chairman, MRL, said that today's decision to restore Dr Modi's functionary powers was taken to ensure that ``the company's overall interests are best served.''

Mr Rao said that while arriving at the decision, the board also factored in the recent developments on the open offer made by the Modi brothers for acquiring an additional 35 per cent stake in the company. At the meeting, the board also took on record th e company's results for the quarter ended June 30, 2001.

Corporate observers felt that the decision to restore Dr Modi of his functionary powers marks an effective climbdown by the financial institutions after their earlier belligerent stance. The FIs, who controlled 44 per cent of MRL's equity, had in the Jun e 28 meeting divested Dr Modi of his role in the day-to-day running of the company. They held that Dr Modi was not devoting adequate time for MRL and therefore, his powers had to be transferred to his brother, Mr V.K. Modi, who is one of the company's tw o Managing Directors.

The observers said that the institutions' climbdown may have been prompted by the realisation that the Life Insurance Corporation's case seeking withdrawal of their participation may not hold water. The fact that the decision comes even before a final de cision on the LIC matter by the Mumbai High Court has been taken is significant in this context, they added.

Related links:
Modi Rubber board meet on July 31
Modi Rubber may defer board meet again
B.K. Modi blames it all on company secretary

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