Financial Daily from THE HINDU group of publications
Friday, Feb 22, 2002
Daewoo Motors gets reprieve from lenders
NEW DELHI, Feb. 21
DAEWOO Motors India Ltd has got a reprieve from its lenders, who have assured the loss-making car maker they would not press for repayment of interest and principal until April, a top company official said on Thursday.
The lenders have assured that until a final agreement is reached between General Motors and Daewoo Motor regarding the take-over of the Korean company, the banks and financial institutions would not press for repayment.
A final agreement is expected by April.
"There are about six banks and financial institutions who have informally told us about their decision to back us (by not asking for immediate repayment of loans and interest),'' Mr D.W. Kim, Deputy Managing Director (Plant Operation) told newspersons.
Mr Kim, however, did not disclose the amount of principal and interest DMIL owes to its lenders.
DMIL has been losing money since its car sales fell sharply following the news of the financial woes of its parent. 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. Mr Kim said the company, which was now selling about 600 cars a month, intended to restructure its business, finance and man power. It intended to further downsize its work force.
As part of the restructuring, DMIL intended to sell its now-defunct engine and transmission plant. Mr Kim would not disclose to which companies was DMIL talking to sell the plant.
However, company sources had recently told Business Line that DMIL had approached Tata Engineering and Locomotive Co. Ltd., which, had however, turned down the proposal.
DMIL is also gearing up to launch the new version of the Matiz with a larger engine and cosmetic changes, Mr Kim said on the sidelines of a conference to announce a tie up with Fuchs of Germany to launch engine lubricants for Daewoo cars.
Mr Kim denied reports about the company not having enough component kits to manufacture the Matiz, saying, "we have a stock for over three months and we will import as and when needed.''
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