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Covid-19 impact: M&M drops plans of infusing $406 million in SsangYong Motor Company

SsangYong Motor Company and its labour union had sought fresh injection of equity from M&M to help the company fund its 500 billion KRW (USD 406M) of requirements over the next three years, which was deliberated by the Board.

ET Bureau|
Last Updated: Apr 03, 2020, 08.41 PM IST
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Reuters
Mahindra-Reuters
M&M would make every effort to continue to support to all other non-fund initiatives that are currently in place to help SYMC reduce its capital requirement, save costs and secure funds.
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Mumbai: In light of the Covid-19 impact, Mahindra & Mahindra, India’s leading auto maker has decided to shelve its plans to infuse $400 million equity in SsangYong Motor Company to meet its next three year plan, in a special board meeting held on Friday.

The company has asked SsangYong to explore other sources of funding instead and it assured the South Korean SUV maker to assist them in finding new investors.

SsangYong Motor Company and its labour union had sought fresh injection of equity from M&M to help the company fund its 500 billion KRW (USD 406M) of requirements over the next three years, which was deliberated by the Board.

Mahindra & Mahindra in a statement said, after a 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

“However to enable SsangYong Motor Company 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,” added the statement.

The Board has also initiated several measures to tighten capital allocation norms and ensure that M&M remains strong through the current crisis and beyond.

M&M would make every effort to continue to support to all other non-fund initiatives that are currently in place to help SYMC reduce its capital requirement, save costs and secure funds.

M&M will be offer its new platforms such as W601, free of capex. It will support technology programs which would help reduce the South Korean SUV maker its capex. And it will support SYMC in material cost reduction program

“The Board hoped that the employees and management at SYMC understand the magnitude of the unfortunate and unforeseen crisis created by the COVID-19 virus, which has compelled it to take the difficult decision,” elaborated the statement.
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