Minda Corporation files insolvency of its German subsidiary

In a meeting held on June 09, 2020, the board of directors of Minda Corporation Limited took the decision to file for insolvency of its German subsidiary, Minda KTSN Plastic Solutions GmbH & Co. KG (MKTSN).

After vast discussions and multiple deliberations on the present and future cash flow requirements of MKTSN as well as the impact it has undergone due to COVID-19 pandemic, the board decided to not invest further in its subsidiary, and to instead allocate capital for growth and profitable business opportunities. In terms of financial implications, this move is likely to improve Minda Corporation's EBITDA by nearly 2 per cent and return on capital employed (ROCE) by 5 per cent.

MKTSN was engaged in the manufacturing of kinematic and non-kinematic plastic components for the automotive industry. Since MKTSN's acquisition in 2007, Minda Corporation has injected almost about 35 million euros in the said company.

Minda Corporation's management stated, "The group in India has gained expertise in plastic technology to build kinematic and non-kinematic plastic parts and set up business in India for light weighting and value added interior kinematics parts which are expected to grow to around 200 crore in 5 years with a double-digit profitability."

The management added further that it had tried every avenue to advance the fortunes of MKTSN over the years; however, the unexpected COVID-19 situation that has come about rendered all the efforts of the company and its subsidiary, useless.