New Delhi, March 3: General Motors, the world’s largest auto maker, today announced plans to acquire the car-assembly plant of beleaguered Daewoo Motors India Ltd (DMIL), ending speculation over the deal that has swirled for over a year.

“We are interested in buying only the car-assembly unit and the deal will not cover the engine, transmission and axle plant,” said P. Balendran, vice-president of GM India.

GM, which has a plant at Halol in Gujarat where it makes mid-size cars like the Opel Vectra and the sports-utility vehicle Chevrolet Forester, intends to make minis at the Daewoo plant at Surajpur in Uttar Pradesh, which can produce approximately 85,000 units a year.

“We hope to launch the mini, which will come from the GM stable, by next year,” Balendran said.

He admitted that GM would have to make substantial investments to refurbish the Daewoo plant that has been idle for the past 18 months. “The plant needs a lot of refurbishment. At the moment, it is difficult to say when it will be operational.”

Reluctant to reveal how much GM is likely to pay creditors, including IDBI, ICICI and Exim Bank, for the Daewoo assets, he said, “The proposal offered has been accepted by the creditors. The due-diligence process is on. It will take two to three months to reach a definitive agreement. Only then will we be able to decide on the price.”

He said a team of GM officials would come from abroad to conduct the due-diligence exercise. It will be assisted by Indian officials.

However, the final purchase of the car-assembly unit will depend on the approval of the respective boards of GM, the creditors, judicial and government authorities.

Daewoo Motors India was left in the lurch after being cut out of a GM-Daewoo Motors deal in April 2002 when the US auto maker acquired the profit-making car-making assets of the collapsing chaebol.

Today’s deal brings the Daewoo India plant within the GM stable but it is unlikely to produce any of the old models that Daewoo made in India like the once-popular small car Matiz and mid-size cars like the Cielo and the Nexia.

GM has secretly nurtured grand plans for India and the Daewoo deal is an important piece in that jigsaw. The Detroit-based auto maker has a 20 per cent stake in Suzuki Motor of Japan, which controls India’s largest car maker Maruti Udyog, and there has been speculation over what a grand alliance between GM, Suzuki Motor and Daewoo would mean for the automobile market in India.

Kalpana Morparia, deputy managing director of ICICI Bank, said, “Today’s development represents a significant milestone for the automobile industry in India. It sends a powerful message that India is a good place to invest and do business.”

In a statement issued in Singapore, F. A. Henderson, GM group vice-president and president of GM Asia Pacific, said, “This facility will allow us to produce a new generation of cost-competitive vehicles that can be marketed through our Chevrolet distribution channel.”

The ailing car company that entered India as an arm of erstwhile South Korean auto giant, Daewoo, in the mid-1990s was unable to clear debts of around Rs 1,100 crore to the three financial institutions.