M&M reviews its investment in SsangYong Motor Company

Mahindra & Mahindra (M&M) in a filing to the exchanges stated that it has reviewed its investment in SsangYong Motor Company (SYMC) worth 500 billion Korean Won (KRW) or USD 406 million. The company has also discussed the approach to capital allocation embracing COVID-19 impact.

 SsangYong Motor Company is the fourth-largest South Korea-based automobile manufacturer. Post acquisition of the company, M&M holds a stake of 74.65 per cent in SYMC. Previously, the management and labour union of SYMC had requested M&M for a fresh injection of equity to help the company fund 500 billion KRW (USD 406 million) over the next three years. Considering the impact of the shutdown globally as well as in India, the board of M&M has been initiating several measures in order to tighten the capital allocation norms and also to ensure that the company is able to wade through the crisis. Thus, M&M came to a conclusion that it will not be able to inject any fresh equity into SYMC and also that SYMC must look at other alternate sources for funding. Despite this decision, the board of M&M has requested the management to consider a one-time special infusion of up to 40 billion KRW (USD 32 million) over the period of next three months. Additionally, M&M continues to support all other non-fund initiatives to help SYMC reduce capex so as to save costs and reduce funds.

Mahindra Group is a federation of companies, enjoying leadership position in utility vehicles, information technology, financial services and vacation ownership in India and is also considered as one of the world’s largest tractor company, by volume.

On Friday, the stock of the company closed at Rs 280.90, up by 3.03 per cent or Rs 8.25 per share. The 52-week high is 695.50 and 52-week low is Rs 245.80 on BSE.