MERGER OF KIA-HYUNDAI
Founded in 1944
Capital: 2.1 Trillion Won
Asset Value: 6.1 Trillion Won
Production in 1999: 800,000 units(500,000 exports)
Official announcement is yet to be made
By AMANULLAH BASHAR
Nov 08 - 14, 1999
With the merger of KIA Motors into Business group of Hyundai Corporation of Korea, another giant of automobile sector, the domestic operations as well as overseas regional headquarters will now be looked after by Hyundai.
KIA Motors was acquired by Hyundai in an auction where world's leading automobile companies had participated in the bidding.
Since Dewan Farooq Motors has the distribution rights for Hyundai motor in Pakistan, they would naturally take over the KIA operations in Pakistan, it is learnt. A formal announcement in this respect is yet to be made by Dewan Farooq Motors Company as they must be waiting for settling down the issue of refund of huge money allegedly misappropriated by Tawakal Group the former partners of KIA Motors in Pakistan.
According to informed sources, people in general had booked around 12,000 KIA vehicles and 700 of them made full payments for their cars while 20 per cent of the price was deposited by the rest of the buyers.
The poor customers, however, were never delivered the vehicles as the money collected by Tawakal Group was allegedly transferred to their other business interests out side Pakistan.
According to some of the affectees, as a result of this dishonesty, Tawakal Group running Naya Daur Motors in Pakistan not only damaged the credibility of the company and the partners but also brought a bad name for Pakistan.
Although KIA Motors of Korea has already announced its dissociation with Tawakal Group, yet the people who had deposited their hard earned money with Naya Daur to get a car are still running from pillar to post to get their money back.
The government has however attached the assets and properties of Tawakal Group. An amount of Rs650 million invested by Tawakal group in a Swiss company operating from Singapore has also been confiscated by the government, sources disclosed.
The change in the government and its firm declaration to carry out across the board accountability has kindled the hope of a large number of affectees who had earlier given up the hope for recovery of their amount. They are expecting that the new team of the government led by Gen. Pervez Musharraf would come to their rescue and would arrange refund of the misappropriated funds by liquidating the attached properties, assets and shares of Tawakal Group. They said that not only the customers but financial institutions like NDFC and a large number of downstream industries were also hoodwinked of their huge money in this case of what they called it a fraud.
They also alleged that Tawakal group was not serious in resolving the issue because some influentials in the Nawaz Sharif government including a member of the National Assembly were providing undue protection to Tawakal Group.
The new management of KIA Motors, founded in 1994 in Korea is striving for maximizing its efforts to make the best use of the synergistic effects resulting from its merger with Hyundai.
Company's management is focusing on the improvement of KIA's financial structure while at the same time strengthening its domestic marketing network to secure more enhanced sales competitiveness.
The sales targets of each year during this period are estimated at 900,000 units in the year 2000, 1.05 million units in 2001, 1.19 million units in 2002 and 1.3 million units in 2003, sources said.
The current strategy of KIA's management is to develop KIA into a more competitive global player with an annual sales of 1.3 million units comprising 540,000 units in the domestic market and 760,000 units in overseas markets.
The present management of KIA has outlined its plan to provide dynamic new leadership for the enlarged company based on performance, management, global competitiveness with independent technology and customer-oriented management process.
KIA has concentrated on re-establishing its business operations specially overseas. The merger is also expected to be cost effective and cut down various overheads due to reduction in platforms which are to be reduced from 23 manufacturing platforms to 7 only during next five years. The research and development (R&D) costs of the two companies could also save Hyundai/ KIA combination of $1 billion per year, it is estimated.
The company is determined to achieve its sale targets especially exports owing to credibility of KIA and Hyundai brands all over the world.