India’s Mahindra & Mahindra is looking to offload its struggling SsangYong subsidiary, the automaker’s managing director said.
The industrial conglomerate’s decision is part of a wider restructuring effort to cut costs and prioritize capital expenditure amid the coronavirus pandemic. The Indian company earlier reported a consolidated net loss of 19.55 billion rupees ($258 million), compared with a net profit a year ago, as it booked a writedown on its investment in SsangYong and other overseas units.
“SsangYong needs a new investor. We are working with the company to see if we can secure investment,” Pawan Goenka, Mahindra’s boss was cited as saying by Reuters.
See Also: FCA Wins Trade Case Against Mahindra, U.S. Sales Of Roxor To Be Blocked
Mahindra recently lost the trade case with FCA and was issued a U.S. import ban on Roxor components and kits
Mahindra owns a 75 percent stake in SsangYong, which it rescued from near-insolvency in 2010. However, the Indian company has struggled to revive the South Korean SUV maker. Back in April, the parent company said it would not invest further in SsangYong.
“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. The executive added that Mahindra would review all its loss-making businesses over the next 12 months.
Businesses that have no clear path to profitability will be either hooked up with a partner or shut down. Nevertheless, Mahindra would continue to invest in businesses that can clearly generate equity returns of 18 percent or those that are of strategic importance, Shah said.
So where does Mahindra stand on the joint venture with Ford it entered last year? Well, the pandemic has delayed the completion of merger formalities between the two companies but, according to the Indian firm, they continue to work together under the new alliance.
