Mahindra & Mahindra is looking to inject KRW500bn (US$428m) in fresh capital into its struggling South Korean subsidiary Ssangyong Motor Company over the next three years, according to local reports.
The Indian automaker, which controls 75% of Ssangyong's equity, hopes the funds will be enough to secure a turnaround at its loss making subsidiary by the end of 2022.
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Ssangyong global sales fell by 6.5% to 132,799 units last year from 141,995 units in 2018 on weaker sales of key models such as the Tivoli and G4 Rexton.
The company has been accumulating losses since 2017.
Mahindra managing director Pawan Goenka, during his visit to South Korea last week, met with Lee Dong-gull, chairman of state-run Korea Development Bank (KDB), Ssangyong's main creditor bank, before visiting the company's Pyeongtaek SUV plant where he meet staff and union representatives.
Goenka is expected to return to South Korea next week to attend Ssangyong's board meeting on 30 January.
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By GlobalDataDuring his meeting with unions, Goenka confirmed the parent company had already agreed to make KRW230bn in fresh capital available to Ssangyong, with minority shareholders also contributing, if the KDB agrees to extend the company a further KRW200bn in fresh loans.
KDB has rolled over KRW10bn of the KRW30bn of debt it was due from Ssangyong at the end of 2019, according to local reports, with a further KRW90bn of KDB debt set to mature at the end of 2020.
