Lenders ease Daewoo asset sale clause

The Asset Reconstruction Company India (Arcil) and IDBI have relaxed the requirement for parties interested in buying the manufacturing facility of erstwhile Daewoo India Motors.

Earlier the lenders wanted interested parties to give the entire payment at a stretch to buy Daewoo assets located at Surajpur in Uttar Pradesh.

"We are now open to the option where interested parties could acquire the assets by paying the entire value in installments," said a senior Arcil official.

The Daewoo assets are valued at about Rs 800 crore. Arcil is in the process of taking approval from Bombay High Court for reapplication of bid in the case of Daewoo assets.

For the last two years, General Motors India was in negotiations with the lenders to buy the property. However, in October 2005, GM dropped its plans to buy Daewoo's India plant owing to the government's inordinate delay in reaching an out-of-court settlement with the lenders and Arcil, an asset reconstruction fund overseeing the sale of the property.

"Other reasons for the pullout were the insistence of Arcil and other lenders to make payment on a stretch, besides the financial problems encountered by the Detroit-based parent General Motors," said the Arcil official.

ICICI Bank, Industrial Development Bank of India (IDBI) and Exim Bank were the three main lenders with an exposure to the tune of more than Rs 1,000 crore.

Both ICICI Bank and Exim Bank had sold their exposures to Arcil. In addition the government had claimed Rs 1,500 from customs duty which was waived for importing machinery to the UP plant.

"We would once again approach companies to bid for Daewoo assets after getting approval from the court," said the Arcil official.

In the meanwhile, Honda Siel Cars India, Toyota Kirloskar Motors, Tata Motors and Mahindra & Mahindra have begun discussions with Arcil to look into the possibilities of acquiring Daewoo India's assets.

Toyota and Honda have plans to manufacture small cars from India.