Daewoo Motors India assets to be auctioned to recover Rs 2,250-crore

Mumbai/New Delhi (IANS) Assets of the erstwhile South Korean global automobiles giant, Daewoo Motors India Ltd., which were taken over in 2008 by a newly-formed Pan India Motors, would again go under the hammer onApril 11 and DRT Mumbai aims to recover around Rs 2,250 crore from the auction.

Significantly, the auction comes more than 15 years after the company shut its Indian operations in 2003-04.

According to a recent notification issued by the Debt Recovery Tribunal’s (DRT) Mumbai, the online auction will be held in two lots. The Lot-1 of the e-auction would include the 204-acre of land at Greater Noida in Uttar Pradesh, which would also include the structures, furnitures and so on, for which the minimum reserve price has been set at Rs 528.61 crore.

In addition, the successful bidder would be required to clear out pending dues of the Uttar Pradesh State Industrial Corporation’s dues, estimated to be around Rs 66.58 crore.

In Lot-2, “all other properties on the same (204 acres) plot of land” would be put up for sale, with a minimum reserve price of Rs 83.01 crore.

People who have worked with Argentum Motors said that the auctions might be separately held for the land and the equipments installed.

Industry sources said Delhi-based auctioneer, C1 India has been assigned for the task. Despite repeated attempts, the company declined to comment on the developments and has not replied to an email questionnaire sent by IANS on the auction details.

An activist of the Daewoo Motors employees union, Ravinder Kumar, said there were seven lenders to the company including ICICI Bank, IDBI, Yes Bank and State Bank of India, and others.

This is not the first time that Daewoo Motors India’s assets have gone up for sale. The previous auction process by DRT Mumbai started in 2006 culminating with a company named Pan India Motors taking over the assets.

The shareholders of Pan India Motors included FirstRand Bank, a South African banking major, D. E. Shaw, a global investment and technology development company, infrastructure lending major IL&FS (interestingly it is also cash strapped now), Ajay Singh, the co-founder and Chairman of SpiceJet and B.V.R. Subbu, the former President of Hyundai India.

Ravinder Kumar told IANS that the new company took over the Indian assets of the bankrupt South Korean company for around Rs 765 crore under a condition that it would turnaround the company and continue with the automobile business.

“There were higher bidders but the court gave it to Argentum as it was the only company which said it would restructure or restart the business of automobile and the workers also said whosoever comes he should retain them and start the factory. So Argentum got it,” he said.

Argentum Motors was the operating company while Pan India Motors was the holding company, said another former employee of that company.

The promoters initially planned to manufacture automotive components and then gradually produce electric vehicles (EV). They also started as per the plan and made an EV model in tie-up with Reva and a French company.

Industry sources said that although the company had started with a primary target of manufacturing automobile and components, some of the promoters including IL&FS later reportedly wanted to use the company’s property to earn revenue which eventually led to differences among the promoters.

B.V. R. Subbu who left Hyundai Motors to start Argentum was the first one who parted ways and sources said he was averse to the idea of diverting the company’s objective. He did not remain a shareholder after 2010.

When contacted, Subbu refused to comment on the reasons behind his departure, but said: “When Pan India bid for it, our strategy was to start the power generation business, use the resultant cash flows to refurbish the components capacities, and then develop EVs. The EV developed at the plant was displayed at the Paris Motor Show. But things didn’t quite pan out eventually…”

The company also had tie ups with General Motors (GM) and manufactured components for the American company, but later GM withdrew from the partnership owing to some accounting differences, people in the know said.

The employees of the company have so far not received their dues and according to Ravinder Kumar the salary dues stand at around Rs 250 crore.

The workers had moved both the Delhi High Court and the Bombay High Court but they did not receive any compensation.

However, in a favourable order, the Bombay High Court had declared the employees as the primary creditors, bringing them at par with the banks, Kumar said.

Kumar, who currently runs his independent property business, hopes that when the outstandings are recovered after the auction in April, “even the employees would get their pending dues”.

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