Mahindra & Mahindra seeks to give up control of Korean unit SsangYong

Mahindra & Mahindra prepares to give up control of struggling South Korean unit SsangYong Motor, the Indian automaker’s managing director stated on Friday, as it looks to depart from the loss-making ventures.

“SsangYong needs a new investor. We are working with the company to see if we can secure investment,” Pawan Goenka informed reporters.

Mahindra previously reported a consolidated net loss of ₹1,955 crore ($258 million), compared with a net profit a year earlier, as it booked a writedown on its investment in SsangYong and other global units.

Mahindra, which owns a 75% stake in SsangYong, saved the automaker from near-insolvency in 2010 but is having a hard time to revive its fortunes. The company stated in April it would not invest any more in SsangYong.

“If a new investor comes on board, that automatically takes our stake down, or they may even purchase our stake,” Mahindra’s deputy managing director, Anish Shah stated.

As part of a broader restructuring effort by the company to slash costs and prioritize capital expenditure as it rides out the coronavirus crisis, Mahindra would review all its loss-making businesses during the next 12 months, Shah added.

Where there is no clear way to profitability it would seek a partnership or close down those businesses, but in those that can clearly generate equity returns of 18% or those that are of strategic importance, Mahindra would keep investing, Shah stated.

Mahindra, which entered into a joint venture with Ford Motor last year, stated the pandemic had postponed the completion of merger formalities between the two automakers but they continued to work together under the new alliance.