Mahindra’s SsangYong to raise USD 380-425 million in next three years

Homegrown automaker Mahindra and Mahindra on Thursday confirmed that it plans to invest around $400 million in its South Korean unit SsangYong Motor. It clarified that the business plans is aimed at leading profitability of the company in the next three years.  

“The board of SsangYong has approved a three-year business plan, which leads to the profitability of the company in the year 2022. This plan requires outside funding of 450-500 billion KRW ($380-425 million) over a period of three years. About half of this amount is to repay the existing loan and the remaining is to augment the capex required for new product development,” said Mahindra.

It also shared details about how the Korean company will source funds for its turnaround. Mahindra said that no equity proposal has been put up to the Mahindra board of directors so far.

“Funds required are expected to be generated by a combination of fresh bank loans, new investment and further equity investment by Mahindra. No equity proposal has been put up to the Mahindra board of directors as on date. A proposal will be presented to the board and a decision will be made only after Mahindra management has vetted the plan and evaluated its feasibility,” it said.

Earlier media reports quoting Pawan Goenka, MD, Mahindra and Mahindra said  SsangYong was expected to break even in 2019 but things started reversing last year due to a slowing global economy and a shift in its domestic market to petrol-fuelled cars from diesel. It added that Mahindra has drawn up a three-year turnaround plan, which has been approved by SsangYong’s board. SsangYong, a major utility vehicle (UV) player, was acquired by Mahindra in 2010.

Initially, Mahindra started selling SsangYong UVs in India but later stopped selling the models and had earlier stated that it has no plans to do so. Mahindra, however, uses platform and technology of its Korean unit to make SUVs and sell them as Mahindra products.