Mahindra & Mahindra, India’s biggest utility vehicle and tractor maker, on Friday said it plans to give up control over struggling South Korean automaker SsangYong Motor, as it looks to exit loss-making ventures amid the coronavirus pandemic.
“SsangYong needs a new investor. We are working with the company to see if we can secure investment,” Pawan Goenka, managing director at Mahindra & Mahindra said at a conference call with reporters.
Mahindra earlier reported a massive loss of Rs 3,255 crore for the March quarter due to the write down of investment in Ssangyong and other international subsidiaries. The auto-maker’s profit in the year-ago quarter was Rs 969 crore.
Mahindra, which owns a 75 per cent stake in SsangYong, rescued the sport-utility vehicle (SUV) maker from near-insolvency in 2010 but has struggled to revive its fortunes.
The Mumbai-based maker of Bolero and Scorpio model of SUVs in April had said it would not invest further in Ssangyong.
Moreover, it said it is re-examining the business outlook of other international subsidiaries, in view of the current environment, to decide on future capital allocation.
“If a new investor comes on board, that automatically takes our stake down in SsangYong or they may even buy our stake,” Anish Shah, deputy managing director at Mahindra & Mahindra said.
As part of a wider restructuring effort by the company to cut costs and prioritise capital expenditure as it rides out the coronavirus pandemic, Mahin-dra would review all its loss-making businesses over the next 12 months, he pointed out.
Where there is no clear path to profitability it would look for a partnership or close down those businesses, but in those that can clearly generate equity returns of 18 per cent or those that are of strategic importance, Mahindra would continue to invest, Shah said.
Mahindra, which entered into a joint venture with American automaker Ford Motor last year, said the pandemic had delayed the completion of merger formalities between the two companies but they continued to work together under the new alliance.