Modi Tyres, Continental revive collaboration talks

Eight years after the manufacturing plant of Modi Tyres was closed due to financial problems, the company is set to re-enter the market with the same brand it had marketed earlier, of the German Continental AG, through a licensing agreement.

Modi Tyres Company, now Delhi-based, will produce a million cross-ply tyres for trucks under the Continental brand over the next year.

The German company has thus secured access to the Indian market of 12 million commercial tyres a year, pegged to grow at 7 per cent annually.

The agreements are for technical cooperation and a licensing one for Continental brand bias tyres. The Continental tyres will be distributed through the revived Modi sales network, stated a release from Continental.

Alok Modi, director, Modi Tyres, said, “We have modernised the plant at Uttar Pradesh (at Modipuram, 70 km from Delhi) through an overall fund infusion of Rs 400-500 crore. The tyres of the Continental brand produced there will be sold through 650 dealer outlets across the country. This is a completely new foray for us in the tyre industry.”

The plant has a monthly capacity of 95,000 tyres and will be regulated according to demand. No fresh capital infusion is required at this stage, he added.

Continental AG’s collaboration with Modi Tyre began in 1974.The tyres of the German maker were marketed under the name Modi-Continental and quickly gained the position of a benchmark in the Indian market.

However, Modi temporarily stopped production of bias tyres in 2001 and only started to reactivate the tyre plant two years earlier. New contacts were formed between Continental and Modi and the previous arrangements revived in the subsequent agreements.

Continental also has a technical agreement with JK Tyres for radials.

Sources say the German manufacturer is keen on expanding its reach in the Indian market for which it is scouting opportunities with Modi Tyre that also include an equity participation. “Further collaboration possibilities (between Continental and Modi Tyres) are currently being looked into,” stated a release from Continental.