A dead car plant and Rs 200 cr: Cost of PAL-Peugeot pow-wow

With its boxy Peugeot, the French left a Rs 200 crore dent on the Indian investor. The scion of India’s oldest automobile firm Premier ...

With its boxy Peugeot, the French left a Rs 200 crore dent on the Indian investor. The scion of India’s oldest automobile firm Premier Automobile Ltd, Maitreya Doshi, helped them pack the sizeable punch.

PAL-Peugeot Ltd crashed in an early 1997 implosion leaving thousands of workers in its Kalyan plant jobless, saddling financial institutions with huge non-performing assets (NPAs) and investors with dud shares. Shares and debentures helped them raise a total of Rs 200 crore in February 1996.

After driving a rickety ambassador for a decade, Dr Joy Thomas was happy with his decision to switch to Peugeot 309 in 1995. To show his solidarity to the company, he even bought shares worth Rs 10,000. The company vanished with his booking amount of Rs 25,000 and it didn’t bother with the consumer court hearing in Kozhikode. ‘‘I spent Rs 5,000 in advocate fees and running around in courts but nothing has happened,’’ he says. He realises that the money is never coming back. Guess which car Dr Thomas is driving about these days — a Maruti 800.

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Today, the plant is shut, all the directors have resigned and financial institutions are planning to auction it.

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Sources close to the Doshis say the company closed down due to three main reasons:

• Pull out of Rs 140 crore from financial institutions (read ICICI),

• Peugeot’s global policy to get out of India and China, and

• Devaluation of the rupee

LOOT & SCOOT: Readers Respond

Former director Maitreya Doshi defends himself: ‘‘We admit that it was a business failure. But we did not loot and scoot… we did our best to revive the company but the circumstances were against us.’’

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As for Peugeot, it regretted the joint venture which made them poorer by Rs 85 crore and gave the European brand a very bad name in India. It exited India by selling the shares to Doshis for free.

Financial institutions took the biggest hit of Rs 160 crore (investment of Rs 124 crore in the company’s debentures and another Rs 30 crore in its shares).

Small investors lost another Rs 41 crore. ‘‘We are planning to auction the plant and machineries to get back our funds,’’ says a top ICICI official. It’s anybody’s guess when ICICI or investors will get back their money back.

S Kale, a worker at Pal Peugeot’s Kalyan plant, has shifted to his native place in Kolhapur. He tried selling chapatis at Kalyan railway station after the company closed down. But the high cost of living in Mumbai was a bit too much. ‘‘I’ve lost Rs 35,000 in salary in the company. I wonder what mistake I made in working here for free,’’ he ponders. Any answers, Mr Doshi?

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