Indian automobile giant, Mahindra and Mahindra is planning to let go of its loss making South Korean Unit SsangYong Motors as part of its initiative of giving up all money-loosing businesses amidst the ongoing coronavirus crisis. “SsangYong needs a new investor. We are working with the company to see if we can secure investment,” Pawan Goenka, Managing Director of Mahindra told in a statement.
The company earlier reported about the consolidated net loss of Rs 1955 crore against the net profit a year ago as it decided to reduce its investment in SsangYong and other international ventures.
Mahindra’s and SsangYong’s relationship began with the former rescuing the SUV maker from near-insolvency in 2010 but has constantly struggled to make it profitable. The company laid out a statement saying it won’t invest in SsangYong any further. “If a new investor comes on board, that automatically takes our stake down, or they may even buy our stake,” Mahindra’s deputy managing director, Anish Shah said.
Shah also explained that the company has decided to restructure itself and as a part of the same they will review all their loss-making businesses in next one year. The step is taken to cut costs and prioritize capital expenditure. For businesses that have no hope of becoming profitable, Mahindra has decided to look for partners or close down their businesses.
The firm will continue to invest in companies that can generate equity returns of 18% or those that are of strategic importance. Mahindra also told that the pandemic has delayed the merger formalities with US automaker Ford Motor but the companies have already started working together.