Lenders to the company included ICICI Bank, Exim Bank, State Bank of India (SBI), Indian Overseas Bank (IoB), IDBI Bank and Canara Bank. However, their exposures were sold between 2005-2007 to Asset Reconstruction Company (India) Ltd and the Stressed Assets Stabilisation Fund (SASF) for recovery of dues.

According to two people aware of the development, while this is not the first time the property is going on sale, any recovery would cheer up lenders expecting a prolonged bad loan accretion following the end of a repayment moratorium. The total debt of Daewoo Motors is estimated to be over ₹3,500 crore. A process to sell these land assets was previously initiated in 2019.

The South Korean carmaker had entered India in the early 90s and was well-known for its hatchback Matiz and sedan Cielo. Then after a period of duress at the company, US-based General Motors (GM) decided to buy the company’s assets 2001, barring its India subsidiary, leading to its closure in 2003-04.

“The asset will go under the hammer on 7 September and we are hoping that after almost two decades, there will be some fruitful recovery,” said the first person cited above.

He added that past recoveries from this loan include ₹83 crore by selling the plant and machinery piecemeal. That apart, close to ₹277 crore paid by Pan India Motors and its subsidiary Argentum Motors, for acquiring the asset of the company in 2008, was forfeited when they failed to pay the rest of the sum.

Pan India Motors and Argentum were promoted by Ajay Singh of SpiceJet, automobile sector veteran BVR Subbu, Ashish Deora an entrepreneur and a couple of financial investors.

The sale of this 204-acre land, located in Greater Noida in UP, at a reserve price of ₹380 crore is expected to be the chunkiest so far, said the first person cited above.

The factory and land parcels of Daewoo have been on the block for some time now. It was expected to be utilised for developing and manufacturing electric vehicles but those plans didn’t see the light of the day. Several companies including some small Chinese manufacturers were also interested in buying the plant or using it for India operations.

“Argentum Motors also wanted to start making EVs there with some collaboration but none of the plans developed into anything concrete. Hence there is no other option but to auction the factory and other land parcels around it. Though the factory is small, Daewoo owned quite a few land parcels around it,” said the second person cited above.

However, with the covid-19-induced economic slowdown putting pressure on most automakers, chances of developing the factory as a site for making EVs are quite low. Hence lenders have no other alternative, the second person added.

Such delays in debt recovery are not uncommon in India where courts and even dedicated tribunals are overflowing with litigations that run for years on end. However, with the Reserve Bank of India (RBI) estimating a jump in bad loans by at least 400 basis points (bps) in FY21, recovery efforts are expected to lead to another pile up of legal cases. Lenders have recovered ₹12,861 crore through the DRT mechanism in 2018-19, showed data presented to the Parliament on 3 March 2020 by Anurag Thakur, the minister of state for finance.

After studying cases in the DRT, Prasanth V Regy and Shubho Roy of the National Institute of Public Finance and Policy found that the majority of delays are because of requests from the parties for more time to submit documents.

“Other common reasons include the absence of the lawyers or of tribunal officers,” the authors said in their working paper in May 2017.