The Indian operations of the company is one of the biggest investments made by the Korean company though it is still not making money for the Korean promoters. Recently, while speaking to this newspaper, DMIL managing director A G Awasthi said that the company has put off all the expansion plans and currently busy in promoting its cars - Matiz and an upgraded Cielo version called Nexia in the Indian market.

Though the performance of both cars was nothing to write home about, any financial difficulty will further cripple the organisation. In fact, DMIL's first offering to the Indian market - Cielo - was unable to generate good response. The car was priced at the higher end of the mid-sized market and as the demanddwindled, the company cut prices to sell more. Besides, consumers complained of massive fuel consumption of the car which led to lower sales.

The company is now banking on its good looking small car, Matiz to drive into profitability. But, it will take two to three years more to break even provided the company sells about 25,000 to 30,000 Matizs.

The Korean company was also planning to inject another Rs 750 crore to its Indian operations. But with the Korean company itself getting into problems, only a cash-rich white knight like General Motors can takeover the company and prevent a total collapse of the Indian operations.

A takeover by General Motors or any other bidder can bring the much-needed cash infusion into the Indian company. As the company has a modern automobile manufacturing plant near New Delhi, it will be an asset for the company which will take over the company.

UNI ADDS: Reacting to the possible bankruptcy of its parent firm, Byung-Soh Min, Deputy Managing Director of DMILsaid: ``It is business as usual for us... these are minor hiccups in the path of a major restructuring exercise which has been going on for a long time and we will see it through. There is not likely to be any impact on the Indian subsidiary.''

Earlier, South Korea's financial watchdog said on Monday the country's second largest conglomerate, the Daewoo Group, may go bankrupt if creditors refused its request to roll over short-term debt. The creditors are meeting on Tuesday to take a decision on a possible bailout.

Daewoo offered to provide $8.5 billion in collateral to its creditors to stay afloat amid a flood of maturing debt. The financial watchdog said Daewoo faced bankruptcy if creditors turned down its request to roll over seven trillion won ($5.9 billion) in debts maturing in the next 10 days.

Daewoo said the 10 trillion won in assets offered as collateral included 1.26 trillion won in equity shares to be donated by Daewoo Group chairman Kim Woo-choong. The new loans, if extended, would gotowards repaying maturing debts. Creditors would be given discretion over what to do with the collateral if the reform plans stumbled, it said.

Daewoo said chairman Kim would resign from his post after putting the prized auto units on a normal footing and the remaining affiliates would be run by professional managers. The group also said it would focus on the auto unit, along with trading and construction arm Daewoo Corp. It planned to cut the number of its affiliates to nine by the end of this year from 22 at the end of last month through mergers and sell-offs.