The scale of the problems facing Lotus Cars has been laid bare by new information showing its Malaysian owner is facing legal action from several suppliers over non-payment of debts — said to total £23 million — and has asked the Inland Revenue if it can delay tax payments to conserve cashflow.
DRB-Hicom, owner of the Norfolk sports car maker, was not available for comment, but sources close to the company said many of the issues relate to the previous management. They added that in some cases DRB is challenging previous supply contracts over concerns about quality control.
But they also said DRB remains fully committed to the plant at Hethel, and turning Lotus around into a global brand. While a final plan to make Lotus self-sufficient should be ready soon, the enormity of the problems facing Aslam Farikullah, the new Lotus chief operating officer, is clear.
According to internal financial results for August, the company owes suppliers up to £23 million at 90 days overdue, and another £7 million between 30 and 90 days. Suppliers include ARM, Logica and OCS. One person close to the group said: “The danger is that someone may sue for winding-up.” Losses, after exceptional items, interest and tax, for the last five months to August are shown to be running at £23.6m.
The internal document states: “Cash flow: Critical. Overhead base is massively too high for current business, payroll bill for business is too high. Salaries top-end loaded.” It also says there was “insufficient inflow to meet the month’s supplier payments and payroll”.
DRB acquired Lotus earlier this year and then sacked chief executive Dany Bahart. Its latest model, the Exige, has been hit by delays and there are fears the new Esprit could be cancelled, amid speculation the management hopes to sell on Lotus to a Chinese owner.
Production of the cars has also been fraught with difficulties. The document says engineering delays to the Exige, its latest model, isarenow “severely impacting the whole business”, while the new Esprit has either been delayed or cancelled. Production was cancelled for a fortnight a few weeks ago, but the management hope to start work on the new models shortly.
