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| Daewoo
assets sale not to be a smooth drive
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Praveen Chandran
24 June 2002 |
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Mumbai:
The move by financial institutions (FIs) to sell the
assets of the beleaguered Daewoo Motors India Ltd is not
going to be a smooth drive in the light that the three
probable buyers of the company Tata Engineering and
Locomotive Company, Maruti Udyog and Hyundai Motors have
adopted a lukewarm approach to the sale procedures.
FI sources say the huge debt exposure of Daewoo Motors and
the current surplus industry capacity are the major roadblocks
for the sale of the company. In May 2002, the lenders to
the local arm of South Koreas bankrupt Daewoo Corporation
had decided to sell the loss-making car company to recover
the loans.
IDBI, ICICI and
Exim Bank of India had lent nearly Rs 10 billion to Daewoo
Motors, which was the third largest carmaker in India before
its parent company went bankrupt in November 2000. Daewoo
Motors has a total investment of around Rs 30 billion.
The three leading Indian carmakers Maruti Udyog, Hyundai
Motor and Telco have all invested in large manufacturing
facilities of their own and do not need extra capacity.
Daewoo has a huge capacity of 300,000 engine and transmission
units per year. Telco, in response to a proposal forwarded
by the FIs recently, has written to the FIs declining to
take over Daewoos assets, the sources say.
Telcos plant in Pune, which has a capacity to produce over
1lakh cars annually, has more-than-adequate capacity to
handle any sudden rush in demand for Indica. Telco, therefore,
does not want to be burdened with unnecessary additional
capacity, the sources add. "Japans Suzuki Corporation,
which had acquired the government stake in Maruti with a
huge investment, would not go for another investment and
capacity addition. Both Maruti and Hyundai havent responded
to the FIs proposal so far."
The sources say most of Daewoos outstanding loans
were for setting up an ETA plant. "Any buyer would
have to make fresh investments to make alterations to the
ETA line." The Mumbai-based Debt Recovery Tribunal,
on a petition from the FIs, had earlier appointed a court
receiver to manage the Daewoo assets.
Sales
of the companys Matiz hatchback, which used to be between
4,000 to 5,000 units per month, have fallen to less than
500 cars a month on concern over the availability of spares
and the companys ability to continue providing services.
But General Motors, which had taken over some of the Korean
companys assets world over, has said it will continue to
supply the parts to Daewoo Motor for three more years.
Daewoo Motor India reported a loss of Rs 2.98 billion in the nine
months ending December 2001 on sales of Rs 1.96 billion.
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