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'Korean developments won't hurt Daewoo India'

Daewoo Motors India Ltd on Thursday lifted the air of uncertainty owing to the declaration of bankruptcy of its parent in Korea and said the Indian operation has been independent without any additional financial support from Korea and it has been insulated from these developments.

''In order to protect the Indian operation, we have prepared ourselves well in advance. We took timely and proactive decisions on issues of parts," said DMIL managing director and CEO Young-Chang Kim. He also asserted that production in Daewoo Motor Korea would continue even under court proceedings.

''We are in perfect position to serve the requirements of all existing and future Daewoo car owners and to clear any doubts on Daewoo Motors India's service abilities in future," he said.

Daewoo Motors India started operations with production of Cielo cars in July 1995 and expanded its product range to Matiz in the small car segment, and Cielo and Nexia in mid-size segment. The company has invested Rs 40 billion for setting up its plant at Surajpur in Uttar Pradesh.

According to Kim, DMIL has secured enough quantities of parts and KD for the next four months. He expressed confidence that everything would be clear much before that. We are in a perfect position to serve the requirements of all existing and future Daewoo car owners," he said.

Commenting on the current financial situation of the company, Kim said, "DMIL has a positive cash flow generated through the domestic operations and we are expecting a strong cash flow growth in the year ahead."

He claimed that DMIL operations are fully protected from any side effects of the developments in Korea. DMIL's labour union has been fully co-operative in the ongoing restructuring efforts of the company, he said.

Kim said that the sale of Daewoo cars has increased manifold in the current year. Sales have jumped to 48,568 units during January-October this year from 20,725 units during the corresponding period last year registering an increase of 135 per cent.

Recalling that there has been a 5 per cent increase in the order position since October 8, he asserted that they would "continue to increase production, aggressively expand dealership network, after-sales outlets, and launch new marketing initiatives in anticipation of an increase in demand in India."

Talking on the reorganisation proceedings of the court which is the next step to be followed in Korea, Kim clarified that these proceedings implied a restructuring process to revive a company and not closure. It might result in a shift to judicial supervision from creditors' direct supervision.

According to him the main objective of this proceedings would be revival of Daewoo Motors Korea through restructuring.

He said these developments might also lead to a relatively easy takeover of Daewoo Motors Korea. He cited the examples of the sale of Kia Motors to Hyundai Motors and that of Samsung Motors to Renault during court proceedings.

DMIL has set up large facilities at Surajpur like press shop, aluminium die-casting shop, plastic moulding shop, paint shop, 48 mw captive power plant, research and development unit, test track and fully automated machine shops for manufacturing engines and gear boxes.

In addition, the commercial vehicle division at Surajpur has a separate facility to manufacture 15,000 commercial vehicles per annum.

UNI

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