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Daewoo India delays loan repayment

The Indian unit of bankrupt South Korean automaker, Daewoo Motor Co, has delayed repaying some loans to Indian term-lenders, and is pushing to reschedule its debt, a company official said on Friday.

"There have been some delays in repayment but that situation is being rectified. We still continue to make repayments," Vivek Khanna, general manager of finance at Daewoo Motors India Ltd, said.

"They are considering that (a loan rescheduling) and are even working with us with the applications," he said, referring to the lending institutions.

Daewoo India is 91.6 per cent owned by South Korea's Daewoo Corp and makes the compact Matiz and the mid-sized Cielo and Nexia models.

Its passenger car sales have slid since November -- when news of its parent's bankruptcy broke -- owing to worries over the availability of spare parts and its ability to continue servicing cars.

Khanna declined to comment on how long the delay in repayment has been nor on the amount involved, but the Bombay edition of the Times of India newspaper said on Friday the company had defaulted on two installments of principal and interest amounting to about Rs 240 million.

But Khanna said the loans are still considered good in the books of the lending financial institutions.

He also said the passenger car operations were still strong and generating cash.

He said the company was trying to reschedule loans taken for the engine, transmission and axle plant, which it subsequently had to close down.

Daewoo India had debt of about $198 million owed to Indian term lenders at the beginning of this financial year, most of it incurred to set up the now shut ETA plant.

The ETA plant was set up to service export markets but poor demand and the financial woes of its parent forced its closure.

Daewoo is also considering spinning off the idle ETA facility into a subsidiary and finding a partner for a part or a full stake sale.

Last month, General Motors, the world's largest automaker, signed a memorandum of understanding with Daewoo's creditors to confirm it would take over four of the bankrupt South Korean automaker's 16 plants around the world, but left out the Indian operations.

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