Financial Daily from THE HINDU group of publications
Tuesday, May 25, 2004
GM working on alternative path if Daewoo plans hit roadblock
Bangalore , May 24
GENERAL Motors is putting together an alternative plan for manufacturing small cars in India in case its plans to takeover the Daewoo Motors' assembly plant does not come through.
"We are working on an alternative plan in case we decide not to go ahead with the acquisition after carrying out the due diligence," the General Motors India President and Managing Director, Mr Aditya Vij, told Business Line.
General Motors has said it will take another three months for the company to carry out the due diligence of the Surajpur plant of Daewoo Motors.
The world's largest carmaker is planning to manufacture Chevrolet Spark, the revamped Daewoo Matiz, in India. It currently produces Spark in its South Korean plant.
Mr Vij declined to say whether the alternative plan included the expansion of the existing facility. In March this year, General Motors said in a statement that it has offered to purchase the passenger car assembly assets of Daewoo Motors and that its principal creditors had accepted the offer subject to approval of the respective boards of General Motors, the creditors and judicial and government authorities. The Surajpur facility has an annual manufacturing capacity of 85,000 units.
Daewoo Motors is learnt to have a cumulative debt of about Rs 1,100 crore and total liabilities of around Rs 5,000 crore.
The due diligence will not cover the engine and transmission plant of Daewoo. General Motors has already acquired the passenger unit of Daewoo in South Korea along with Suzuki and Shanghai Automotive Industry Corp.
Before Daewoo India went bankrupt, it produced the Matiz small car, the Cielo and Nexia sedans. The principal creditors of Daewoo Motors are ICICI Bank, IDBI and Exim Bank.
General Motors produces Opel Corsa, the Corsa Sail, the Corsa Swing and the Chevrolet Optra. It imports Vectra and Chevrolet Forester. It recently launched Chevrolet Tavera, the multi utility vehicle, with a base price of Rs 5.15 lakh. General Motors invested around Rs 500 crore to manufacture the MUV, which has a localisation content of around 85 per cent.
The world's largest carmaker has already started the third shift in its Halol plant. It plans to eventually ramp up production to around 50,000 in a year. It sold 15,155 units last financial year and expects to double the sales during the current year.
General Motors which recently revamped its dealership network plans to expand it to cover 120 locations by year-end.
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