SEOUL/NEW DELHI, NOV 4: South Korea’s ailing Daewoo Motor could face insolvency next week if it fails to obtain Union agreement on its reform plans, its main creditor, Korea Development Bank, said on Saturday."Without Union agreement on its restructuring plan, it would be difficult for us to extend loans to the company. Then it could face insolvency next week," Uhm Rak-yong, governor of the KDB, told reporters. "If the company is declared insolvent, the next step would be to put it under court receivership." He said Daewoo Motor would have to honour 170 billion won ($149.7 mn) in maturing debt between November 6-15.KDB on Wednesday rejected the automaker’s self-rescue plan, which calls for an 18.4 per cent cut in jobs, as meaningless without Union agreement. On Tuesday, Daewoo Motor vowed to cut 3,500 of its total 19,000 work force next year, slash operating costs and close or sell unprofitable overseas operations, but said it would need 830 billion won in support loans through the first half of 2001.But leaders of the company’s 13,000-member Union rejected the company’s cost-savings measures because of the job cuts. Analysts said the creditor’s objection appeared aimed at squeezing concessions from the restive labour Union and that creditors would soon have to inject fresh loans in order to sell the ailing automaker to General Motors."The labour Union’s cooperation is a prerequisite of the ailing automaker’s restructuring," Uhm said. "Without its agreement, the future of talks with GM are also uncertain." Potential buyers GM and partner Fiat SpA began a due diligence examination of Daewoo earlier this month after Ford Motor Co dropped out of talks with the Korean firm."GM has completed its preliminary inspection of Daewoo Motor’s books and is now reviewing the possibility of taking over the Korean firm," Uhm said. "A schedule for GM’s in-depth due diligence has not yet been made."Meanwhile, Suzuki Motor Corporation of Japan has decided to invest Rs. 200 crore in India to set up a die casting unit at Manesar, Haryana as part of its future expansion plans in India.In addition, the company is also planning to hike the production capacity at its joint venture company Maruti Udyog to six lakh units. Suzuki owns 50% stake in Maruti, while the remaining is held by government of India and employees of MUL. Similarly, Honda Motor Company, proposes to set up a Rs 700 crore export base station for South Asia in Gurgaon. This will be in addition to the Rs 500 crore project it has already set up to produce two-wheelers. A number of business enterprises in Japan, South Korea and Singapore have evinced interest in making investments in India.
