Auto major
Mahindra & Mahindra (M&M) on Tuesday said it has completed the acquisition of a majority stake in South Korea's
SsangYong Motor Company (SMC).
Mahindra, which emerged as the preferred bidder for SsangYong in August 2010, will now hold a 70 per cent stake in SMC, for which it has shelled out $463 million (about Rs 2,105 crore).
With the new management taking control, SMC will invest over 240 KRW (nearly Rs 960 crore) this calendar year on product development and brand building. The firm will increase investment in product development by 70 per cent in 2011, as compared to last year, at over KRW 200 billion (over Rs 800 crore).
It will also invest over 40 billion KRW (about Rs 160 crore) for brand building in Korea - a 60 per cent increase over 2010 - and increase overseas brand investment by over four times in 2011.
"These investments will be funded by SMC's internal accruals. After the debt restructuring SMC's balance sheet is clean. Although it is unlikely that it will need debt for this investment, but if needed, it can raise," M&M President (Automotive and Farm Sector) Pawan Goenka told PTI from Seoul.
He said Yoo-il Lee has been appointed as the new CEO of SMC, while Dilip Sundaram from Mahindra will be the new CFO. Also a new board of directors with six members has been formed.
"There are three independent directors, along with one member from SMC and two from M&M," Goenka said.
From M&M, it will be Goenka himself and M&M Executive Director & Group CFO Bharat Doshi. The Korean firm will be represented by new SMC CEO Lee.
Asked if there will be a change of name of SMC, Goenka said: "No decision has been taken yet on the name change of the SMC and also on the branding side of products."
He said strategic plans such as the India project, which involves launching the Rexton and Korando-C in India, have already been kicked off. Earlier, he had said the two vehicles would be launched in India by the end of 2011.
Goenka also said discussions are on to explore opportunities for joint product and technology development and synergy in global operations and purchase.
"On the R&D front, SMC and M&M will remain independent but whenever there are possibilities of sharing platforms, it could be explored," he said.
Moreover, M&M is also reviewing utilisation if its IT systems for SsangYong, besides considering the possibility of Mahindra Finance setting up operations in Korea to enhance the sales of SsangYong vehicles.
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