Taxman may net 45% of Daewoo sale

Auction of Daewoo's assets may generate up to Rs 3,000 crore.

After ITC, a settlement of Daewoo Motors India Ltd's Customs duty arrears is in sight. The revenue department is likely to pocket 45 per cent of the proceeds from the sale of the company's assets.

Revenue department officials told Business Standard a proposal had been put up before Finance Minister P Chidambaram for clearance.

As per the Debt Recovery Tribunal's order, bids for Daewoo Motors India's assets will close tomorrow. Daewoo's Customs arrears are around Rs 1,000 crore. The officials said the lenders would get a larger share since they had spent a large amount on maintaining the assets and auctioning them.

The lenders are open to sharing a part of the proceeds, but they have not agreed to the split formula so far. They have indicated that they are willing to give a maximum Rs 1,000 crore to the revenue department or the agreed proportion, whichever is lower.

According to an estimate, the auction of Daewoo's assets may generate up to Rs 3,000 crore. The revenue department has filed a petition in the Bombay High Court, pleading that the Centre's dues should be given precedence over those of lenders. The tribunal had earlier turned down a similar petition and ruled in favour of the lenders.

Officials said the department's case could prove to be weaker, as lenders and worker dues get preference in such a situation.

"We, therefore, started negotiations with the lenders, who are amenable to the idea of sharing a part of the proceeds," said an official.

On their part, the lenders are of the opinion the Central Board of Excise and Customs has powers to seize the assets even after they have been auctioned. This could discourage prospective bidders.

Prior to the tribunal's tender advertisement, the lenders had last year called for bids for the sale of the assets and companies like General Motors, Mahindra & Mahindra and the Tata group had shown interest. The lenders had proposed to go for a split sale of assets.

GM had also got in touch with the Uttar Pradesh government for taking over a part of the facility in Surajpur, but is now having second thoughts because of the delay in the sale of assets.

Chasing dues

• Daewoo's Customs arrears are around Rs 1,000 crore
• According to an estimate, the auction of Daewoo's assets may generate up to Rs 3,000 crore