INDIA Legal and government issues delay GM's Daewoo India deal
GM India president and managing director Aditya Vij has said that various issues are pending after completion of the due diligence in connection with the purchase of the Daewoo India assembly plant.
"We want to ensure that the unit is free from any liabilities before we purchase it," he said. GM India is committed to bringing the new Daewoo M3X ,badged as the Chevrolet Spark, into India and is keen to clinch the deal without unforeseen liabilities.
Unresolved are issues related to customs and EPCG (export promotion and capital goods) dues between the creditors and the government. GM is in negotiations with the creditor banks, ICICI Bank, IDBI Bank and EXIM Bank over the purchase of the unit while the government has claimed Daewoo India's dues of €180 million (INR10 billion) are the result of financial mismanagement by the company.
GM is also considering alternative plans if the plant purchase deal fails. The launch of the Spark is pivotal to plans to rise above sixth spot in the passenger car market but its current facility in Halol is too small to accommodate a volume product. The opportunity to acquire a production-ready-plant would help bring the new car to market faster.
Production capacity is currently near 30,000 units per year but in the process of expansion to 60,000 units by February 2005. GM has invested €236 million (INR 13 billion) in India since arrival in 1995.
Deepesh Rathore / Tilak Swarup