Mumbai: Mahindra & Mahindra will invest $ 423 million to revive its South Korean unit Ssangyong Motor Company and make it profitable by 2022, a senior executive of the company told reporters in Mumbai on Tuesday.
Ssangyong, which builds sport-utility vehicles (SUVs), 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, said Pawan Goenka, managing director at Mahindra & Mahindra.
“Clearly from where we are, it is not going to be possible to turn profitable this year, that is not realistic. There is work that needs to be done,” said Mr Goenka.
Mahindra has drawn up a 3-year turnaround plan which has been approved by Ssangyong’s board, he said, adding that the $423 million investment will be a combination of equity and bank debt.
Mahindra rescued Ssangyong from near-insolvency in 2010, acquiring a majority stake, but despite several attempts it has struggled to revive the SUV maker’s fortunes.
In the latest effort, Ssangyong will focus on reducing its material costs to save $68-$76 million per year over a 2-year period. This will help improve the operating profit margin by around 3 per cent, said Mr Goenka.