Dcm-Daewoo To Drop cm' From Name

DCM-Daewoo Motors Ltd (DDML) will restructure its board and drop DCM from its name by month-end as a direct fall out of the Korean company raising its equity to 75 per cent through a rights issue.

"The name will be changed and the board restructured by the end of February, though for both these a formal decision is awaited from Korea," top company officials said.

Daewoo Motors India Ltd (DMIL) is the most probable new name for the company. The company is the maker of the 'Cielo' luxury cars, in India.

After the restructuring of the board Daewoo is likely to have 13 members in the 15-member board, against its current number of eight while the financial institutions will continue to be represented by its solitary member. As a gesture DCM might be allowed to nominate one person to the board, the officials said adding "but it is entirely up to them to accept it or not as they will have no say in the management."

 

When contacted, vice-chairman of DDML and a DCM representative in the board, Vivek Bharat Ram refused to speak saying "I am busy with my son's birthday."

Daewoo recently increased its stake in the company from 51 per cent to 75 per cent through a rights issue that closed on February 13 and is awaiting clearance from the Cabinet Committee on Foreign Investment (CCFI) for raising it further to 87 per cent. DCM's equity in the company came down from 33.17 per cent to 9.17 per cent. Sources said though Toyota was holding only a minor portion of equity earlier it was allowed to keep a member in the board and that policy might prevail in the case of DCM also.

"Our relations will be good as we are not breaking on bad taste. It was only the circumstances that forced us to part ways," the sources said citing it as the reason Daewoo Corporation might allow a DCM nominee on board.

The managing director of the company S G Awasthi said "these changes will certainly bring India to the greater focus of Daewoo as decisions will now speed up and there will be an overhauling of the entire mechanism."

"Future financial needs of the company will also be easier now that the Indian operations is no more a joint venture and the Indian operations will be an extension of Daewoo's international operations," Awasthi said.

The change of name will incur higher costs for the company in the short-run as it has already started advertising as Daewoo. According to the present shareholding pattern, Daewoo holds 75 per cent equity, DCM group 9.17 per cent and the remaining is held by the financial institutions and public.

DCM group had filed an objection against the Daewoo move to raise equity to 87 per cent on January three on grounds that Daewoo was trying to raise its stake at a very low price.

But the issue got the approval of the foreign investment promotion board.