Financial Daily from THE HINDU group of publications
Saturday, May 04, 2002
Daewoo India to seek financial restructuring
NEW DELHI, May 3
BELEAGUERED car maker Daewoo Motors India Ltd, left out of this week's GM-Daewoo international deal, on Friday said it is in negotiations with financial institutions and other creditors to restructure its debt.
The company, which is assuring customers regarding service of their vehicles despite being left out of the sale deal, said it is confident to arrive at a solution in the near future regarding the restructuring.
Daewoo India's South Korean parent, Daewoo Corp, had recently deferred payment of interest by the Indian company on some loans it had lent.
About half a dozen Indian banks and financial institutions had earlier put a similar moratorium on seeking payment of interest and principal on loans borrowed by Daewoo Motors India from them.
The lenders, including ICICI Ltd and State Bank of India Ltd, had earlier held the view that until a final agreement is reached between General Motors and Daewoo Korea, they will not press for repayment.
South Korea's Daewoo Corp holds 91.63 per cent equity in Daewoo Motors India Ltd, which used to make the Matiz small car and the Cielo and Nexia sedans.
Net losses in April-December were Rs 298.54 crore, up from the Rs 272.52-crore loss suffered in the same nine months a year earlier.
Tries to allay customer fears
Daewoo Motors on Friday also tried to allay customer fears of being left in the lurch by promising to service its vehicles with spares and other support.
It said the customers would continue to get spares and service for the Nexia, Cielo and Matiz cars despite the international buyout.
Daewoo Motors was the first company to launch a car (the Cielo) in India after the Government opened the car market for private and foreign participation in the early nineties.
"As of today, Daewoo Motors India has enough quantities of spare parts and it will continue to replenish,'' Mr D.W. Kim, Deputy Managing Director, said in a statement.
"As per the latest development in Korea, Daewoo Motors India will continue to get kits, parts and necessary technical assistance from Korea,'' Mr Kim said.
Similar claims by Daewoo earlier, that the GM deal has provisions for supply of engine kits and parts in the future as well, were, however, not substantiated by General Motors India.
Mr Kim also said that "some hard internal restructuring measures are also required and the same will be taken up immediately for resource generation.''
Daewoo India has been trying for a well over two years now to sell its engine, transmission and axle plant, originally set up to cater to the international markets.
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