Home / Home / Mahindra Refuse Fresh Round of Investment in SsangYong


It has been about seven years since Mahindra purchased a controlling piece of the Korean carmakers SsangYong, but haven’t been able to bring about a turnaround in the latter’s fortunes.

In a statement released by Mahindra, the Indian auto giant confirmed that a meeting of the board of directors was convened in response to a request from SsangYong for a fresh round of investment. The request made was for an amount of 500 billion KRW or approximately Rs 3095 Crore to tide SsangYong over for the next three years. That is a serious chunk of change any way you look at it, and in an unprecedented global pandemic where companies across the world are tightening their belts and trimming the fat wherever possible, an investment of that magnitude would be difficult to justify. The board at Mahindra felt the same way too, as the statement cites the fallout from the COVID-19 outbreak as the prime reason for turning this request down.

However, Mahindra haven’t left SsangYong completely high and dry, here’s what the statement said, “after lengthy deliberation given the current and projected cash flows, the M&M Board took a decision that M&M will not be able to inject any fresh equity into SYMC and has urged SYMC to find alternate sources of funding. However, with a view to enable SYMC to have continuity of business operations, whilst they are exploring alternate sources of funding, the board has authorised the M&M management to consider a special one-time infusion of upto 40 billion KRW (USD 32M) over the next three months.”

So Mahindra are willing to inject about Rs 247 Crore into their Korean sub-brand. Along with this, they have also announced some other considerations to help SsangYong remain afloat. This includes sharing their W601 platform without any money changing hands and extending their support for technology programs that will allow SsangYong to bring down their overheads. Additionally, Mahindra will also support the material cost reduction programme that is underway at SsangYong, and crucially, also ‘Support SsangYong management to find new investors.’ Whether this is the first step down the path of Mahindra ending its association with SsangYong or an attempt to raise capital in the short-term is unclear at the moment. Considering this alliance has yielded excellent results in terms of Mahindra’s Indian lineup, the latest of which has been the popular XUV300, it would be unfortunate if the Mahindra-SsangYong team-up is dissolved.

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About the author: Harket Suchde



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