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GM not to buy Daewoo assets
Joydeep Ray & Meghdoot Sharon in Ahmedabad | July 23, 2003 08:57 IST
General Motors India, the Indian arm of the automobile giant General Motors Corporation, said on Tuesday that the company is not planning to acquire the assets of Daewoo Motors India, at present gathering dust at the latter's Surajpur facility in UP.
General Motors Corporation, which had signed a $1.2 billion deal last year to acquire the key components of South Korea's Daewoo Motor Co, has confided that the estimated Rs 4,000 crore (Rs 40 billion) Daewoo liability remains the main obstacle for acquiring assets.
Aditya Vij, managing director of GM India, who was in Ahmedabad on Tuesday to attend the launch of Chevrolet Optra, said, "We have no plan whatsoever of acquiring assets of Daewoo Motors India and if we had any such intention, we could have done it at the time of acquiring the assets of Daewoo's Korea-based plant."
Under the Daewoo, Korea and General Motors Corporation deal, the later and its partner companies will be investing around $400 million to hold a combined 67 per cent stake in a newly established company to which Daewoo would sell its three key manufacturing plants - two in South Korea and one in Vietnam - and nine sales subsidiaries in Puerto Rico and European countries including Austria, France, Germany, Italy, Spain, Switzerland and the Netherlands.
"But nothing in India," stressed Vij.
Speculation is rife in the automobile industry that like Ford and Toyota, GM India is also eyeing Daewoo India assets and its officials had visited the Surajpur plant early this year.
Even Indian players such as Mahindra and Mahindra, Ashok Leyland and Hero Honda had shown interest but later all of them opted out, may be because of its heavy liabilities.
"We had visited the plant like other automobile players but we had never decided to buy the assets," said P Balendran, vice-president of GM India.
Among Daewoo India liabilities, Bank of India has a claim worth Rs 500 crore (Rs 5 billion), ICICI Bank is to get Rs 400 crore (Rs 4 billion), Exim Bank Rs 140 crore (Rs 1.40 billion) and another couple of hundreds of crore (billions) by various other Indian banks and loans from financial institutions abroad.
"Our plant at Halol in Gujarat is doing excellent work and we are working on its capacity expansion right now. Its capacity could be expanded even further as and when the demand for our vehicles grow. The Daewoo plant will solve no purpose for GM India and so we are not in the race," added Balendran.