DAEWOO MOTORS INDIA LIMITED
ANNUAL REPORT 2001-2002
Your Directors have pleasure in presenting the 19th Annual Report
together with the Audited Accounts of the Company for the financial year
ended 31st March, 2002.
1. FINANCIAL RESULTS
Rs. in Lacs
Particulars 2001-02 2000-01
Sale of Products 29,572 117,745
and other Income
EBIDT(Earnings before (10,125) 13,353
Interest Depreciation & Tax)
Interest 13,221 13,004
Provision for 9,173 19,998
Previous year adjustment - (7)
(loss) (32,519) (19,642)
after tax for the year
Balance brought (39,053) (19,411)
forward from the
Balance carried (71,572) (39,053)
The year under review was very difficult year for the Company. During the
year Company produced 7668 cars and sold 8231 cars with the total turnover
of Rs.29,572 Lacs. Loss for the year was 85.32,519 Lacs The Company is
presently observing non-production schedule.
General Motors Company, LISA, while finalising the takeover Agreement with
Daewoo, Korea, has not included the Company in its buying list, though it
has agreed to reserve the right of first refusal. To ensure the continuous
flow of the Spare Parts aid Services, your company has entered into an
agreement, with newly formed GM Daewoo Auto & Technology Co. Korea on
02/10/02, which is yet to be approved by the Board.
After the recall of the loan in April 2002, Financial Institutions have
filed recovery suits against the Company. DRT, Mumbai, has appointed the
Receiver on the assets of the Company. Further, pursuant to the order dated
8/8/2002 of Hon'ble DRAT, Mumbai, in the case of ICICI Ltd. v/s DMIL &
others, D8T Receiver has initiated the process of sale of assets of the
Company and a public notice initiating the bids has been published in
Director General of Foreign Trade (DGFT) has also revoked on 22/05/02 the
extension of period granted to the Company for fulfillment of the Export
obligation Special leave petition of the Company is pending before the
Hon'ble Supreme Court of India and Hon'ble Supreme Court has granted an ad-
interim order in favour of the Company directing not to encash Bank
Guarantees in respect of the license of more than Rs.100 crones.
In view of minimum operational level, critical situation of the Company and
also in view of sale of the company's assets under the direction of DRT-
Mumbai, there appear to be no alternative for the company but to resort to
the closure of the plant and reduction of manpower.
Mr. M. Sudhendranath, Mr. Anand Gore and Mr. Rajeev Arora have been
nominated by ICICI Batik Ltd. w.e.f. 25.04.02, Mr. O.P.Singal,
W.S.K.Gautam, Mr.K.L.Garg, Mr.K.P.S. Dagur nave been nominated by IDBI
w.e.f. 06.05.02 and Mrs. H.S. Advani and Mr.N.E.Ookabhoy have been
nominated by Exim Bank Ltd. w.e.f. 07.05.02 as Directors on the Board of
Mr.Y.T. Cho resigned as Managing Director & CEO w.e.f. .30.06.2002 and from
the directorship w.e.f 18.09.02, Wg.Cdr (Retd) H.D. Talwani, Director
resigned from 01.01.02 and Mr. Vivek Khanna, Director, resigned
w.e.f. 28.09.02 from directorship of the Company. The Board has placed on
record its deep appreciation for the valuable contribution made by them.
Mr. D.W. Kim has been appointed as Managing Director & CEO w.e.f 1.10.2002
and Mr.Y.J. Kim, Mr.M.H.Jung and Mr.K.Y. Song were appointed as additional
directors w.e.f 25.04.02 and being eligible, offer themselves, for
4. LISTING REQUIREMENT
The Company's shares are listed at New Delhi, Mumbai, Chennai and Calcutta
Stock Exchanges. The Company has paid the listing fees to the Sock
Exchanges. As per Clause 32 of the Listing Agreement, Cash Flow Statement
is appended with the annual accounts of the Company.
5. FIXED DEPOSITS
The Company has neither invited not accepted any fixed deposit during the
year within the meaning of Section 58A of the Companies Act, 1956 and the
rules made thereunder. There were no deposits for which payments were
claimed but not paid. In compliance of Section 2050; of the Companies Act,
1956, the Company has deposited Rs.7.28 lac s unclaimed maturity amount
lying with the Company for more than 7 years, with the Investor Education
and Protection Fund.
6. CONSERVATION OF ENERGY, 'TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
A statement giving details of conservation of energy, technology absorption
arid foreign exchange earnings and outgo is given at Annexure 'A' to the
7. INDUSTRIAL RELATIONS
During the year, industrial relations of the Company continued to be
cordial. With a view to reduce the cost, the Company has also entered into
an agreement with Workers' Union for the purpose of informal lay off during
non-production days. The Agreement would be valid uptill January 2003. As
per said Agreement, workers will sacrifice 39% of their remuneration for
the non working days and will be paid the full remuneration for the working
The particulars of employees as per Section 217(2A) of the. Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975, are
forming part of the Directors' Report for the year ended 31st March, 2002,
and annexed as Annexure 'B' of the report.
8. DIRECTORS' RESPONSIBILITY
Pursuant to Section 217 (2AA) of the Companies (Amendment) Act, 2000, the
Directors' confirm that :
1) In the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanations relating to
2) Accounting policies have consistently been applied and disclosed
alongwith the material departures and adjustments and estimation have been
made with rational and prudence, so as to give a true and fair view of the
state of affairs of the Company at the end of the financial year and of the
loss of the Company for the year under review which is subject to
contingency as explained in the addendum to the Directors' Report attached
as annexure-C with this report.
3) Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities. However, worn out
& depleted LCV-Machinery & Equipment which was lying for many years, was
partialy disposed off by the Company under the Management Sanction. As the
same was not taken up with FI(s) and the Board of Directors, it is placed
before this AGM for Shareholders' approvals.
4) The Directors' have arranged preparation of the accounts for the
financial year 31st March, 2002, on the going concern basis.
9. AUDITORS'& THEIR REPORT
Your Board of Directors recommend the reappointment of M/s V.Malik &
Associates, Chartered Accountants, who have expressed their willingness and
eligibility, as Statutory Auditors' at the ensuing Annual General Meeting.
M/s. K.L. Jaisingh & Co., Cost Accountants, have been appointed as Cost
Auditors' of the Company for the year 2002-03.
The Auditors' observations are suitably replied and explained in the
addendum to the Directors' Report, annexed as Annexure 'C'.
10. CORPORATE GOVERNANCE
Report on status of the compliance with the Corporate Governance under the
Listing Agreement with the Stock Exchanges is enclosed as Annexure 'D'.
During this crucial time, your Directors wish to place on record their
sincere appreciation for the support and co-operation received from the
Central Government, State Government of U.R, District Administration,
Customers, Shareholders, Bankers, Financial Institutions and Vendors of the
The Directors also thank the employees at all levels for their co-
operation, dedication and sincere efforts.
For and on behalf of the Board
New Delhi M.H. JUNG D.W. KIM
25.11.02 Director MD & CEO
ANNEXURE 'A' TO THE DIRECTORS' REPORT
Information in accordance with the Companies (Disclosure of Particulars in
the Report of Board of Directors) Rules, 1988, and forming part of the
Directors' Report for the year ended March 31st, 2002.
A. ENERGY CONSERVATION
Energy Saving Activities were taken up on continuous basis all through the
year. Following activities were completed during this period.
a) Power supply source changed from Power Plant Diesel Generator to Car
Plant Diesel Generator set resulting in an expected cost saving of approx.
Rs.30 to Rs.35 sacs p.m.
b) Twin lights of all offices and other areas reduced to single light.
c) One out of four street lights have been activated, only emergency lights
made operational during non production hours.
d) Operation of airconditioner have been monitored and controlled to reduce
e) Close Energy Audit has been conducted to curb any excess energy unit and
B. TECHNOLOGY ABSORPTION
RESEARCH & DEVELOPMENT
1. SPECIFIC AREAS IN WHICH R&D ACTIVITY WAS CARRIED OUT
* Development of Matiz-LPG variant with the Italian kit to provide
alternate fuel option to customer. Testing of car on Indian roads and at
ARAI, Pune have been completed. Final CMVR certificate is awaited.
* Development of Matiz CNG has been undertaken during the period.
* Continuous value engineering and increased localization to improve cost
a) Awards and recognitions
* DMIL R&D is re-recognized by Department of Science & Technology under
Ministry of Industry for its in-house R&D activities.
* Rectification of the quality systems laid by DMIL for continuously
meeting customer and product requirements by external agency TUV
Suddeutschland is under process.
b) Activities to ensure meeting vehicle regulations released by Ministry of
Surface Transport, for example -
* Development of rear seat belt is under testing with ARAI Pune.
* Development of new warning triangle and spare headlamp bulbs.
* Development of auto dipper, however this regulation was dropped by
Ministry of Surface Transport.
c) Development of gasoline tank of five liters capacity for Cielo - CNG.
2. TECHNOLOGY TRANSFER, ABSORPTION, ADAPTION AND INNOVATION
a) Development of Matiz-II with more appealing changes in the Body,
enhanced braking and improvement in the emission performance.
b) Regular updation of Matiz design with the support of Daewoo Motor
3. BENEFITS DERIVED AS A RESULT OF ABOVE R&D ACTIVITIES
Above R&D activities have helped us in fulfilling environmental,
technological advancement and product economies responsibilities by
a) Increased product competitiveness in the market.
b) Introduction in near future of Matiz with alternate fuels.
c) Timely meeting of the government regulation applicable from time to
4. FUTURE PLAN OF ACTION
Close coordination with supplier for development and implementation of high
security futuristic registration plate.
EXPENDITURE INCURRED ON R & D
- Capital Nil
- Revenue Rs.27,032,398
- R&D expenditure 0.916
TECHNOLOGY TRANSFER, ABSORPTION, ADAPTATION & INNOVATION
* Technical data., drawings and documentation received from Daewoo Motors
Co. Ltd., have been provided to vendors and production for transfer and
adaptation, on going basis.
* Modification of the technology to suit the domestic and exports market is
a continuous process.
* Indigenisation of various components to reduce of all segments.
* Modification in the Company's product to suit the need of the domestic
and export market, with minimum cost escalation.
* Faciliating development of components/system for meeting regulatory
FOREIGN EXCHANGE EARNINGS AND OUT GO:
1. Activities relating to exports, initiatives to increase exports,
development of new export markets for products, services and export plans:
Special emphasis has been given to export. Continuous efforts for
exploration and development of new markets are on.
2. Total foreign exchange used and earned:
Rs. in Lacs
a. Earnings in foreign 540.32
b. Expenditures in foreign
i) import of goods 3429.32
ii) Interest, Travelling & Ors. 202.68
Annexure 'B' to the Directors' Report
Statement of particulars under section 217(2A) of the Companies Act, 1956
and the Companies (particulars of Employees) Rules, 1975 forming part of
the Directors' Report for the year ended March 31, 2002.
S. Name Desingnation & Remuneration Qualification
No. Nature of Duties
B. Employed for part of the year and were in receipt of remuneration at the
rate which in aggregate is not less than Rs. 200000 pm
1. Y.T.Cho M.D. & C.E.O. 2483538 Graduate
Name Experience Date of Commencement
Y.T. Cho 24 16.06.01
Name Age Particulars of last
Y.T. Cho 52 Executive Dir.
Y.T. Cho Daewoo Motors, Poland
* Service are Contractional
Notes : None of the employees mentioned above is relative of any Director
of the Company.
No employess of the Company who received remuneration in excess of the
remuneration drawn bythe Managing Director orWholotime Director holds by
himself or alongwith his spouse or dependent children 2% or more equity
shares of the company
ADDENDUM TO THE DIRECTORS REPORT
1. Apropos to the Para 3 of the Auditors Report read with Para 1,3,4 & 14
Annexure-I, regarding the deficiency in the records of the fixed assets,
your Directors wish to state that the Company has maintained proper records
for fixed assets of operating plants. However, record of consumption of
some of the fixed assets lying in the inoperative LCV plant in last couple
of years, have been recorded in the current year. The value of such
consumed fixed assets, constituted less than 1% of the total fixed assets
of the company and had been lying unused for last more-than 7 years. The
objective of such consumption was to economize in the context of repair and
maintenance of its running plant with car/ETA plant etc.
2. The Company has also provided full details regarding DRT proceedings and
stock taking activity to the Auditors, except the, valuation report which
has not been provided by the DRT Receiver to the company.
3. Apropos to Para 3 of the Auditors Report read with Para 9 of Annexure -I
para 4 (d) (Viii) of the Auditors Report, your Directors wish to state some
recovery of outstanding Inter Corporate deposits have been made in past.
Necessary actions, legal or otherwise, have been taken for recovery of
outstanding deposits. Keeping in view, legal status, negotiations with the
parties, financial health of companies and other inputs available, the
Company has made adequate provisions in the accounts.
4. Apropos to Para 4 (a) of the Auditors Report read with para 1 & 2 under
head "Loans" of annexure -2, your Directors wish to state that no new loan
agreement was entered during the year under review and the Agreements are
the same as in the previous year which were provided to the Auditors last
year as well as this year. Balance confirmation in relation to the loans,
from Daewoo Corporation, Korea and the Indian Financial Institutions are
5. Apropos to Para 4 (a) of the Auditors Report read with Para 1 under head
"Debtors and Creditors" of annexure-2, your Directors wish to refer Note 28
of schedule 12 of the Annual Report. Your Director also wish to state that
the company is using MFG-Pro, a renowned ERP - F&A package implemented by
the KPMG and the same is commensurate with the operations of the Company.
6. Apropos to Para 4 (a) of the Auditors Report read with Para 1 under head
"Vouchers and other book keeping" and "Details not provided" your Directors
wish to state that all the details mentioned in the annexure and the
vouchers (except some vouchers related to Chennai Branch) were provided to
the Auditors and were again provided to them subsequently for their
7. Apropos to Para 4 (a) of the Auditors Report read with Para 9 of
Annexure II, your Directors wish to refer Note 8 of Schedule -12 of the
8. Apropos to Para no.4 (d) (i), (ii) & (iii) of the Auditors report, your
Directors wish to refer notes 13, 14, & 15 of Schedule 12 of the Annual
Report, wherein observation of the Auditors has been suitably explained by
9. Apropos to Para 4 (d) (iv) (v) & (vi) of the Auditor Report, your
Directors wish to refer Notes 19,20 & 21 of Schedule 12 of the Annual
Report. The company is following the same policy as regards to the
provision of interest on ECB, running totally and interest on DA as in the
10. Apropos to the Para 4 (d) (vii) of Auditors Report, your Directors wish
to state that the Company has provided interest on the loan from Financial
Institution on the basis of contracted note of interest and penal interest
as demanded by the Us. However, the recall letter by FI's have indicated
different amounts in relation to the regular interest liabilities.
In consistancies between the figures are being reconcilled.
11. Apropos to Para 4 (d) (ix) of the Auditors Report, your Directors wish
to state that the amount of Rs. 140 Lacs relates the tooling advance and
has been considered good, accordingly provision has no been made.
12. Apropos to Para 4 (d) (x) & (xi) of the Auditors Report, your Directors
wish to refer the Note 1 (iii) (d) - significant accounting policy under
schedule 12 of the Annual Report and to state that depreciation for the
year on the ETA plant has not been provided as the plant has not been used
and is identified for sale Auditors have also recommended for non provision
of depreciation of ETA Plant. Since accounts are prepared on going concern
basis, net realizable value has not been estimated.
13. Apropos to the Para (4) (d) (xii) of the Auditors Report, your
Directors wish to refer Note 23 of schedule 12 of the annual report.
Extension of period of export obligations was revoked by DGFT in May 2002,
therefore there was no requirement for making any provision during the year
under review. The matter is sub judice before Hon'ble Supreme Court.
14. Apropos to Para 4 (d) (xiii) of the Auditors Report, your Directors
wish to state that worn and depleted part of LCV plant, which was part of
the assets mortgaged to banks and FI(s) but was lying inoperative for many
years, has been disposed off as per management sanction. As the same was
not taken up with the FIs and the Board of Directors, a resolution for
shareholders approval to the aforesaid sale(s) is placed before ensuing AGM
and is a part of the notice.
15. Apropos to Para 4 (d) (xiv) of Auditors Report, your Directors wish to
refer Note 24 & 33 of schedule 12 of the Annual Report, No transfer has
been registered in the company's records as no documents have been lodged
with the company till date. Further having regard to the uncertainties in
relation to the company and in view of substantial matters being sub-judice
before the Court/Tribunal your Directors have presented the accounts on
going concern basis as in the previous years.
16. Apropos to Para 4 (d) (xv) and para next there to numbered (xii) of the
Auditors Report, your Directors are of the opinion that auditors
observations has been adequately explained in the notes to accounts besides
suitable explanation stated herein above.