| Where do we go from here
Calcutta, Aug. 29: Financial institutions, led by the Industrial Development Bank of India (IDBI), are in talks with Indian auto makers to sell off assets of the beleaguered Daewoo Motors India Ltd (DMIL) and realise their outstanding dues. IDBI sources said talks are on with domestic auto majors which could be interested in DMIL’s assets.
“Talks are still in a premature stage and nothing concrete has so far been arrived at,” they added while refusing to divulge the names of the companies IDBI is talking to.
Sources pointed out that the financial institutions were compelled to file a suit against the company in the debt recovery tribunal as DMIL failed to submit any feasible proposal for the repayment of dues.
While IDBI alone has outstanding dues of Rs 400 crore with the company, other financial institutions and banks will get over Rs 600 crore.
“We have waited for a long time to get a revival proposal from the company. But it could not submit any such proposal which forced us to go to the DRT,” they said.
The tribunal has recently appointed a receiver who has taken custody of DMIL’s assets and will put up a notice inviting potential bidders for the auto company’s assets, sources said.
“It is very difficult to find a prospective buyer of automobile assets in the country now because of the supply glut. Moreover the recession in the industry has forced investors to keep quiet at least for the moment,” they said.
Meanwhile, top DMIL sources said the company has started fresh talks with General Motors to take over the Indian plant.
“The talks with GM have been initiated by some quarters in Korea and we hope to get a positive response,” the DMIL sources said.
On April 30, GM signed a $ 251-million deal to operate two Daewoo plants in South Korea and one in Vietnam. The auto major had also agreed to assume charge of eight sales units overseas, including seven in Europe and one in Puerto Rico. But the Indian plant, belonging to DMIL, was left outside the deal.
DMIL sources said the company is now making all efforts to tide over the crisis. The Surajpur plant near Delhi has ceased operations, but the company has worked out a two-pronged strategy that includes stringent cost cutting and optimum utilisation of resources. DMIL, which has around 1,100 employees, has no plans to retrench its workforce or offer a voluntary retirement scheme.
“This is a very hard time and we are trying to survive,” a top company executive said. Daewoo’s capital base of Rs 792 crore has already been eroded by more than 80 per cent because of the huge accumulated losses making it a strong case for landing up before the Board for Industrial and Financial Reconstruction.