Move To Bail Out Pal-Peugeot

Vinod Doshi, executive chairman of Premier Automobiles said the company was currently going through financial difficulties and was looking at various options to help it tide over the situation.

"We have apprised Peugeot of the situation; they are aware of the company's difficulties," Doshi said.

The options being considered include a credit line being extended by Peugeot to Pal-Peugeot to finance the CKD supplies, Doshi said.

Doshi said there was no proposal to increase the Peugeot stake in the company, but this would be considered as and when the company needed greater capital.

One reason for deciding against a Peugeot stake increase was an agreement that commits PAL to a matching hike in its holding, which was not possible at this stage.

 

Premier Auto and Peugeot hold 32 per cent in the company.

Doshi said he was expecting things to look up during the second half of the current financial year with the resolution of the labour dispute at both the plants last month.

PAL-Peugeot has been plagued with difficulties right from the early days of its inception. It all started off with the devolvement of its bond issue in the first quarter of 1996.

This was followed by the long drawn-out, labour unrest in both Premier Automobiles and Pal-Peugeot.

The labour dispute reportedly resulted in the financial institutions going slow on the disbursement of the Rs 140 crore loan to the company, and even considering scaling down the loan amount to Rs 100 crore.

PAL-Peugeot's outstanding dues to Peugeot with regard to technical knowhow fee and licence fees is to the tune of about Rs 100 crore.

The financial problems were compounded by the large-scale cancellation of booking of the Peugeot 309.