Tata Motors inks $118 mn Daewoo truck plant deal

"We will conduct due diligence for 2-3 months before deciding on the final price," a senior Tata Motors executive told Business Standard. Tata Motors executives hope that this acquisition will help the company to expand its product line and make inroads into the Southeast Asian commercial vehicles market.

Sources close to the development said the acquisition would be funded from internal accruals. Tata Motors recorded an operating cash flow of Rs 1,300 crore in 2002-03. The company was advised by investment bankers DSP Merrill Lynch.

The $120 million Daewoo Commercial Vehicle Company has a capacity to manufacture 20,000 vehicles a year. The company was the truck making arm of embattled automobile company Daewoo till November 2002, when it was hived off into a separate company.

The facility can manufacture both heavy and medium commercial vehicles, but was used to manufacture only heavy commercial vehicles in the last one year. The company sold 5,000 heavy trucks in 2002.

Daewoo makes high-powered trucks in the 200-400 HP range, which will complement Tata Motors' existing range of trucks.

Daewoo Commercial Vehicles recorded an operating profit of $10 million in the half-year ended June 2003. It exports around 10 per cent of its production, mainly to China and other neighbouring countries.

Last month, Tata Motors was declared the preferred bidder among 10-odd bidders for the Daewoo plant.