The Hindu Business Line : Daewoo plant assets to be sold for Rs 765 cr

Business Daily from THE HINDU group of publications Tuesday, Feb 13, 2007 ePaper

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Daewoo plant assets to be sold for Rs 765 cr

Neha Kaushik

The buyers: SpiceJet's Ajay Singh, Hyundai ex-President Subbu

Mr Ajay Singh

Mr B.V.R. Subbu

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New Delhi Feb 12 Five years after the shutters came down on Daewoo Motors' Surajpur facility, the assets of the beleaguered company have finally found a buyer.

The assets would be purchased by Crosslinks, a company jointly promoted by former Hyundai Motor India President Mr B.V.R. Subbu and Mr Ajay Singh, one of the promoters of SpiceJet Airlines.

Crosslinks had put in a bid of Rs 765 crore, which was accepted by the Debt Recovery Tribunal, Mumbai (DRT) in an order today. Industry sources said that Crosslinks plans to use the facility for manufacturing. Mr Subbu was unavailable for comment.

The sources said that the company's bid is a combination of cash, debt and equity.

Arcil recommendation

It is learnt that Arcil, the asset reconstruction company, which had received the mandate from the lenders to Daewoo Motors to sell the assets, had recommended Crosslinks to the tribunal.

The Crosslinks offer comprises 35 per cent cash, 30 per cent equity and the rest in debt.

Interestingly, there were few bidders from the automotive industry in this round of bidding; a few real estate companies were also attracted to the bidding process, a lawyer associated with the process said.

The Daewoo plant in Uttar Pradesh had a capacity of 85,000 cars a year.

Matiz

It produced the popular Matiz compact and the Cielo and Nexia sedans before shutting down, after its parent company collapsed in November 2000.

In March 2004, General Motors made an offer to buy the car assembly unit of Daewoo Motors India from its principal lenders - ICICI Bank, IDBI, Bank of India and Export and Import Bank of India. However, the US company major decided not to go ahead with its plans after differences crept up with the Revenue Department over whether the assets would be sold free of any encumbrances.

The assets of Daewoo India were put on sale in late 2002 after the company failed to repay debt of around Rs 1,000 crore to financial institutions and the Customs Department.

In earlier bidding processes, the DRT had kept a reserve price of Rs 1,100 crore for the entire assets.

At that time, several major auto companies had conducted due diligence for buying the assets but no bids were submitted.