Hethel-based Lotus five year turnaround plan officially aborted
The Malaysian owner of Group Lotus has said a much heralded turnaround plan at the car maker has been aborted, yet has still not filled in the gaps about how he plans to pay off the debts and return the business to profit.
Khamil Jamil, managing director of DRB-Hicom - which bought Lotus parent company Proton in January - said in an interview with the Malaysian press the company has injected £100m this year and may have to pump in a further £100m by March.
Last week the company announced the Exige S would be rolling off the production line at Hethel at the end of the month and executives from DRB-Hicom met business secretary Vince Cable and South Norfolk MP Richard Bacon at the official opened of a new Group Lotus Regent Street shop.
DRB-Hicom is pushing on with a request for £10m of public money, but questions remain whether without the original turnaround plan the money will be available.
Since the sale of Lotus parent company Proton to DRB-Hicom, business secretary Vince Cable has said the government is ready to re-activate the £10m loan from its regional growth fund, but the bid was based on dismissed chief executive Dany Bahar’s plans to create five new models in five years creating 1,000 new jobs at Hethel.
DRB-Hicom has been reluctant to talk to the British press, beyond a series of press statements, only inviting Malaysian journalists to its Regents Street opening.
In the interview with the Malaysian Business Times, Mr Jamil described Lotus’ cash flow as “very bad”.
He said: “Lotus’ cash flow is very bad right now. Proton is funding the cash flow but I think there is light at the end of the tunnel.”
He told Malaysian journalists Lotus was being funded via internally generated funds from Proton and DRB-HICOM.
He also confirmed that Proton had submitted a revised plan to the national carmaker’s six big lenders.
He said: “I have made a personal presentation to the bankers and we are looking to work out a solution where we can draw down the loan.
“Between now and December, they (the bankers) will decide,” he said.
Lotus has already drawn down more than £200m before the banks stopped the remaining £62.5m to be disbursed to Lotus.
He said that if Lotus failed then DRB-HICOM would fail which would be a problem for Proton which has guaranteed the loans.
Mr Jamil said: “The five-year five-model plan was aborted by the previous management. We are in the midst of revising (new) plans for Lotus.”
Asked if Lotus could return to the black by 2014, Mr Jamil said it could be sooner or later but that the immediate aim for next three years was to keep Lotus in the positive in terms of cost, quality and delivery.
South Norfolk MP Richard Bacon said: “I welcome the fact that DRB-Hicom is showing this support to Group Lotus. We all know this has been a difficult period and it will take some time to recover from this but the underlying quality of the engineering and manufacturing business are very high and that does mean that there is a good underlying business that can be profitable and I welcome Hicom’s support.
Chris Starkie, programme director of the New Anglia local enterprise partnership, said: “We are heartened by the financial commitment shown by DRB Hicom towards Group Lotus. This should help reassure staff, suppliers and customers of the car company.
“We are also grateful for the support shown by the Government to backing such an important business for our local economy.
“The DRB Hicom management team recognises the skills and quality of the Lotus workforce and we look forward to continuing to assist them in their plans to take the company forward.”