Tata Motors has inched closer towards acquiring the commercial vehicles business of the bankrupt Korean Daewoo.

It has been selected the preferred bidder for Daewoo Commercial Vehicle Company in South Korea.

Tata Motors and Daewoo will have to sign a preliminary contract within a week, followed by detailed due diligence. The deal was expected to be completed by the end of this year, Tata executives said.

"We are very keen on seeing the deal go through. It will be a major step towards globalisation of Tata Motors," the executive said.

Daewoo Commercial Vehicle, spun off from the bankrupt Daewoo Motor Co last year, chose Tata Motors from 10 bidders for exclusive takeover talks. Tata Motors refused to divulge the takeover price for Daewoo, but it is estimated to be Rs 385-765 crore (Rs 3.85-Rs 7.65 billion).

If the deal goes through, Tata Motors will have a full production line by adding large truck operations.

"It is a 20,000 unit facility based on a two-shift operation, and has a complementary product mix," a Tata Motors executive added.

The plant, which manufactures heavy commercial vehicles, is not running to capacity. Daewoo also has the ability to manufacture medium commercial vehicles.

Daewoo Commercial Vehicle is the second largest player in South Korea with a market share of about 26 per cent.

Daewoo Commercial, which produces trucks, tractors and other utility vehicles, has been under court protection, while its parent Daewoo Motor sold most of its passenger car operations to General Motors Corporation and partners last year, creating GM Daewoo Auto & Technology Co.

Tata Motors is also looking at setting up a base in China for trucks, and has been in negotiations with possible Chinese partners. No deal has yet been inked on the issue.

Tata Motors holds nearly 67 per cent of the domestic truck market with its current range of products.

The company's trucks division posted a 37 per cent growth in September over its sales in September 2002.