GM says Daewoo buyout hiccups may force change of plan

General Motors India Ltd today said its takeover of Daewoo Motors' assembly plant in Surajpur, Uttar Pradesh has been hampered by disagreement over unsettled debts.

GM, the world's largest automaker, now plans to give a deadline to the two disagreeing parties""the Mumbai-based Debt Recovery Tribunal and the customs department""to convey that a prolonged delay in resolving the issue of debts might force it to "look at other options."

GM India's president and managing director Aditya Vij said the company will look for alternates routes for expansion after some time.

"There are certain legal and government issues which are being sorted out," he said, on the sidelines of a programme to launch a new look Chevrolet Optra .

Vij, however, did not provide the time-frame by which GM India will start looking for expansion alternatives.

In March, General Motors had made an offer to buy the unit from the principal lenders""ICICI Bank Ltd., Industrial Development Bank of India Ltd and Export-Import Bank of India. The Debt Recovery Tribunal, Mumbai had said the principal lenders should be given first preference in awarding any proceeds of the sale of the Daewoo unit.

On the other hand, customs officials claimed Daewoo India owed money to the department in the form of unfulfilled export commitments, against imported auto components

"It was a liability acquired by the former owners," Vij said, adding that the unused plants have suffered from deterioration and obsolescence.

The unit was to be used to re-launch Daewoo's compact car Matiz, rebadged as Chevrolet Spark. Parent GM has been manufacturing Spark in China for some time now.

Meanwhile, the new Optra has been launched to consolidate sales of the sedan segment.

The base model of 2005 NY Edition with a 1.6 litre petrol engine has been priced at Rs 7.47 lakh, ex-showroom, Delhi.

The car will be available in five variants and the top-end 1.8 litre automatic version will sport a price tag of Rs 10.84 lakh.

"GMI will continue to roll out new models to meet the changing tastes and needs of local consumers as part of its pledge to become a leader," Vij said at the launch. The Optra was launched in India in July 2003.

GMI, which has invested Rs 1,300 crore in its Indian operations, is in the process of doubling production capacity to 60,000 units annually by February next year at its Halol plant in Gujarat.