The Hindu Business Line : Due diligence on at Surajpur facility — Daewoo workers pin hope on GM takeover proposal

Workers at Daewoo are resting their hopes on the verbal assurance given to them by Mr Sahib Singh Verma last year, that should the lenders be able to sell the plant the same set of workers will be employed at the plant.

New Delhi , April 9

THE news that General Motors is considering to purchase Daewoo Motor India's Surajpur facility in Uttar Pradesh has come as a ray of hope for the 1,400 to 1500-odd workers at the facility.

Though the agreement mediated by the Union Labour Minister, Mr Sahib Singh Verma, in mid-2003, provided some financial relief to the workers, the labour force (which is on the permanent rolls of Daewoo) has not received a proper monthly salary since March 2003. The only ones to receive monthly emoluments are around 150 workers who had been signed on by Punj Lloyd for maintenance work at the facility.

Following the agreement, Daewoo workers halted their agitation over the takeover of the plant by the lenders. They were promised the proceeds of the sales of spare parts and ready cars at the facility.

"The workers union received a lumpsum of around Rs 4.5 crore in December 2003 in lieu of nine months salary," points out a worker. Rough calculations show that this translates into a figure of about Rs 3,300 per month per worker.

"That was a very tough time for the workers, as many had come under debt. Things are still in a very bad shape. We have again received no salary or any proceeds since January. We plan to approach the Debt Recovery Tribunal to release the sum of about Rs 1 crore that was generated from the sale of spare parts. We have nowhere else to go," he adds.

But more than any immediate financial relief, the workers at Daewoo are resting their hopes on the verbal assurance given to them by Mr Verma last year, that should the lenders be able to sell the plant the same set of workers will be employed at the plant. The Daewoo Motor India's workers union is believed to have received an assurance from the Labour Ministry earlier this week that the Ministry would write to the lenders reiterating that the workers be taken back when the assembly facility is sold off to a new party.

However, the selective acquisition of the car assembly unit has enabled General Motors to avoid taking over the liabilities of Daewoo Motor India, implying that the company is not conditionally bound to use the current set of workers.

Daewoo Motors India was incorporated as DCM Toyota Ltd in the mid-80s. It was set up to manufacture light commercial vehicles in India. In 1995-96, Korea`s Daewoo Corporation bought over DCM Toyota`s equity and increased its holdings to over 90 per cent by 1997. Daewoo had invested upwards of $1 billion in the plant. The Surajpur facility has an annual manufacturing capacity of 85,000 cars.

Everything now hinges on whether General Motors does go in for the purchase of the assembly unit (which was earlier being used to make the Daewoo Matiz) following the completion of the ongoing due diligence in a couple of months. The company has plans to introduce the Chevrolet Spark in the country, which is based on the Matiz platform.

Till then the workers remain in a wait and watch mode, expectant of a change for the better in their fortunes.

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