Conditions made by General Motors India Ltd. (GMI) for acquiring the idled Daewoo Motors India Ltd. (DMIL) assembly plant now have been met, according to WardsAuto.com.
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The report said it is now up to GMI to decide whether it still wants the plant to build its [recently redesigned] Chevy Spark, which is based on the Daewoo Matiz minicar – the facility, which used to build the [previous-generation] Matiz, has a capacity of 85,000 units annually.
WardsAuto.com said the auto maker offered to buy the facility a year ago but, tired of waiting, it recently set a June 30 deadline for creditors and government to settle tax issues over bankrupt DMIL property, which has been met.
Some analysts in India reportedly question whether the DMIL plant is worth the buy at any price, as it is aging through four years of closure and neglect.
Nevertheless, the Indian government has cleared the legal roadblocks and agreed to split the plant sale proceeds, with 45% going to the customs department and 55% to institutional investors, the report said.
According to WardsAuto.com, the government has also waived penalties and interest on unpaid customs duty due from DMIL.
It will not confiscate the closed assembly plant or hold the buyers responsible for the outstanding customs duty. Nor will any pending legal case against Daewoo touch the assets picked up by the buyer, the government and institutional investors reportedly say.
WardsAuto.com said it is not clear whether former employees will block entry to the plant – workers’ pay is outstanding back to 2003, and the Mumbai Debt Recovery Tribunal has ruled the money cannot be recovered from a buyer of piecemeal assets.
The report added that the total outstanding money due to the government and institutions is now $US350 million, down from $560 million – DMIL’s former engine and transmission plant and land are under the control of the financial institutions for sale to other interested parties.
