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Daewoo Motors' Land Assets in India up for Auction Again as Lenders Hope to Recover Dues

Representative Image

Representative Image

The fresh auction comes more than 16 years after Daewoo Motors shut its India operations in 2003-04.

For the second time in two years, land assets of the erstwhile South Korean automobiles giant, Daewoo Motors India Ltd in Greater Noida, which were taken over in 2008 by a newly-formed Pan India Motors, would go under the hammer on September 7. The Debt Recovery Tribunal, Mumbai aims to recover around Rs 2,304 crore dues from the auction.

The 204-acre land parcel was also up for sale last year, but the attempt was not successful. The fresh auction comes more than 16 years after the company shut its India operations in 2003-04. The leasehold land pertains to plot no A-1 at Surajpur Industrial Area, Noida, Dadri Road, Greater NOIDA, Gautam Budha Nagar district of Uttar Pradesh and measures 204 acres, or 8,25,612.23 sq metres, said a DRT order copy.

The assets will be sold in a single lot and the reserve price for the auction has been kept at Rs 380 crore. Every prospective bidder will have to quote a price higher than that. The amount by which the bid is to be increased shall be Rs 1 crore. In the event of any dispute arising as to the amount of bid, or as to the bidder, the property shall at once be again put up for auction.

"DRT No. III, Mumbai has drawn up the Recovery Certificate for the recovery of Rs 511,02,84,697.00 with interest and costs from the Certificate Debtors and a sum of Rs 1,793,48,11,643 is recoverable together with further interest, costs and charges as per the Recovery Certificate/Decree," said the order.

In addition, the successful bidder would have to clear the pending dues of the Uttar Pradesh State Industrial Corporation, estimated to be nearly Rs 66.58 crore as on August 31, 2018. It would include lease rent arrears, premium, any other dues, interest, penalties or taxes among other charges.

It also noted that a certain portion of the property is encroached upon, without DRT order, by one Anil Bahl. Gurgaon-based auctioneer C1 India has been assigned for the execution of the auction process between 2 pm and 3 pm on September 7. According to members of the company's employees union, there were seven lenders to the company, including ICICI Bank, IDBI, Yes Bank, and State Bank of India. Daewoo Motors India's assets went on sale in 2006 when a company named Pan India Motors took over the assets.

The shareholders of Pan India Motors included FirstRand Bank, a South African banking major, D.E. Shaw, a global investment and technology development company, infrastructure lending major IL&FS, which is also cash-strapped and is going through resolution, Ajay Singh, the co-founder and Chairman of SpiceJet, and B.V.R. Subbu, the former President of Hyundai India.

According to members of the employees union, the new company took over the Indian assets of the bankrupt South Korean company for around Rs 765 crore under a condition that it would turn around the company and it would continue with the automobile business.

There were higher bidders but the court gave it to Argentum as it was the only company that said it would restructure or restart the automobile business. The workers also said that whosoever comes in should retain them and restart the factory. Argentum thus got control of the bankrupt company.

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Argentum Motors was the operating company, while Pan India Motors was the holding company, said a former employee of that company. The company came under serious criticism as some promoters allegedly diverted from the primary objective of manufacturing automobiles and auto components to using its property for earning money. This also led to differences among the promoters.

The company also had tie-ups with General Motors (GM) and manufactured components for the American company, but later GM withdrew from the partnership owing to some accounting differences, people in the know said. According to its employee union, even the staff is awaiting their salary dues to this date.