Daewoo India Puts On Brave Front

Daewoo Motors India Ltd (DMIL) today said that it is insulated from the declaration of bankruptcy of its parent -- Daewoo Motor -- in South Korea.

Young-Chang Kim, managing director, DMIL, said in a statement: "DMIL has been operating independently without the parent company's additional financial support.

In fact, DMIL has been helping Daewoo Motor Korea by placing orders for huge quantities of knocked down kits and parts with full payment." He also said: "In order to protect the Indian operations, we have prepared ourselves well in advance. We took timely and proactive decisions on issues of parts and supply of knocked down kits. The production in Daewoo Motor Korea will continue even under court proceedings."

 

According to Kim, DMIL has secured enough quantities of parts and knocked down kits (Matiz engines) for the next four months. "I am confident that everything will be much clear before that," he said. "We are in a perfect position to serve the requirements of all existing and future Daewoo car owners and to clear any doubts on DMIL's service abilities in future," Kim added.

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."

In the case of the parent company, Kim has cited the labour union's rejection of the management's decision to reduce manpower (as part of a restructuring effort) as the sole reason why Daewoo Motor Korea has been declared bankrupt.

"It is really unfortunate that Daewoo Motor Korea's labour union has forced the company into the declaration of bankruptcy by disagreeing with the management's restructuring plan which was absolutely necessary under the present situation," Kim said in the statement.

Kim further said the that the reorganisation proceedings of the court imply a restructuring process in order to revive the company, and don't imply closure. "Court reorganisation proceedings may result in a shift to judicial supervision from creditors' direct supervision.

However, I would like to emphasise that the main objective of this reorganisation proceeding is to achieve revival of Daewoo Motor Korea through restructuring," Kim said in the statement. In the case of India, Kim said that DMIL's labour union has been fully cooperative in the ongoing restructuring efforts of the company.