Mahindra & Mahindra has moved closer to establishing its presence in southeast Asia with an executive saying the company will make full payment by 7 February for Ssangyong Motor.
Mahindra, India’s largest utility vehicles maker, last year agreed to buy money-losing Ssangyong for KRW522.5bn (US$468.4m), Reuters noted. The purchase will give Mahindra access to advanced technologies and a foothold in the southeast Asian market from where it can launch its global ambitions.
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But, investors have been cautious about the major turnaround at Ssangyong, an SUV maker that has been under court-led restructuring since February 2009 as the global recession hit car sales, the report added.
Mahindra’s president for automotive sector Pawan Goenka downplayed the fears saying Ssangyong is “more or less” EBITDA neutral, and it more than doubled its sales in 2010.
Ssangyong sold 81,800 vehicles in 2010, compared with 35,300 in 2009, Goenka told Reuters on Tuesday.
On Friday, Ssangyong got final approval from its creditors for an amended rehabilitation plans, paving the way for Mahindra to go ahead with its buyout plans, Goenka said.
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By GlobalData“We expect the court to completely withdraw by end of March. We will have full management control thereafter.”
The new board of Ssangyong, which will be announced in two weeks, will have a Korean head and will continue to operate independently, Goenka added.
“In a sense, it is like an alliance. We work in tandem, but there is no loss of identity.”
Goenka said Mahindra would launch two Ssangyong models in India by 2011 but the two car makers would not do research and development together.
“There will be efforts made to synergise. But there is no plan whatsoever to combine the functions of the two,” Goenka said, adding there would be no downsizing at Ssangyong.
Over the past two years, Mahindra has been on a diversification spree through acquisitions and joint ventures, entering the heavy, medium and small trucks segment where Tata Motors is the leader and into the two-wheeler market with ambitions of making scooters and motorcycles.
Last April, Mahindra took over the sales of the no-frills Logan sedan in India by buying out the stake of French partner Renault and a month later agreed to buy a majority stake in India’s electric vehicle maker Reva.
Mahindra & Mahindra, which commands as much as half of India’s utility vehicle market share, posted a 22% rise in vehicle sales for January, in line with other Asian car makers, to get off to a strong start for 2011, Reuters said.
Goenka said Mahindra will launch 8-10 “substantially new” models by the end of the next financial year in March 2012, which will include a premium sports utility vehicle.
“We expect growth rate to moderate in FY12,” Goenka said.
