Mumbai: In a bid to recover huge dues worth over Rs 1,000 crore, Industrial Development Bank of India (IBBI), Exim Bank and ICICI have decided to restart the operations of Daewoo Motors India.

The financial institutions (FIs), which took over the management control of Daewoo India two months ago, have appointed its nominee V K Saxsena as chairman and managing director of the company. Production at Daewoo Motors’ Surajpur factory at Noida will start soon, say sources.

Says a senior FI official: “The FIs have chalked out a two-pronged strategy to revive the ailing Daewoo Motors. On the one hand, the lenders intend to have its nominee directors on the board to avoid asset stripping, and also to work out a revival package. On the other, they are in negotiations with all domestic and international carmakers to pick up the Daewoo India unit.”

Production at the Surajpur factory stopped in July 2002. The 500 cars already produced have been lying unsold in the factory premises and the kits imported last year for 2,000 cars are lying unused. The official says the FIs have already asked the customs and excise department to issue new export licences in favour of the institutions to meet the export obligations of Daewoo Motors.

In July, the central customs and excise department had cancelled five of Daewoo’s export licences and invoked bank guarantees worth Rs 26 crore. These guarantees were executed by Daewoo in lieu of the export obligations in its licence agreement with the director general of foreign trade.

The customs department was to encash the Rs 26-crore bank guarantees from Punjab National Bank and HDFC Bank. The cancelled licenses of Daewoo Motors were valid up to 2003. “We are even willing to give the firm the necessary working capital for restarting operations at a decent scale. But our first priority is to create a market for the unsold goods in the factory,” adds the official.

The company, which manufactures the popular small car Matiz, has an outstanding debt of around Rs 980 crore received as project finance from IDBI, ICICI and Exim Bank. Of the total, $150 million is dollar-denominated debt, taken during 1996 for initial investments in the Indian subsidiary and the plant.

The remaining $48 million was rupee-denominated debt taken in 1998 for further investments in the Matiz project, and the balance is the interest cost. The company had also borrowed another Rs 400 crore from the FIs and various banks for its working capital arrangements.