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Mahindra Investors Are Quite Wary About Ssangyong's Acquisition
In the past one and half years, Mahindra has made many JVs and acquisitions and has forayed into different sectors of automobile industry such as light, medium and heavy commercial vehicles. Mahindra is ambitious in two wheelers as well.
According to stock analysts, diverse investments of Mahindra's money might drain the cash flow which might have an impact on the stock. Mahindra's Logan, the car which did not do well during the JV venture with Renault, has picked up sales now and hence it had to concentrate on Logan's production. Mahindra's two wheeler business hasn't been surging and hence its quite a loss for the company.
Mahindra may take two or more years to get benefits from Ssangyong until which will also claim for further investments for product development. Also, 70 percent of Ssangyong's sales are to Europe and the currency fluctuations also pose a substantial risk.
There are optimistic investors too, who feel that the acquisition is definitely a strategic fit for Mahindra. It does not clash with its existing bouquet of products. Note that, Ssangyong's SUV's are already Euro V compliant and will be Euro VI compliant soon, while India is still now meeting Euro IV emission standards.
Since Ssangyong has been selling in Europe, South America, Russia, Middle East, Africa and Asia, Mahindra will now be open to these markets, that is a step ahead in its aim to become the global player. Analysts also feel that, Mahindra's core business of selling tractors and utility vehicles is strong and hence, the new ventures can take time to deliver and there is nothing to worry right now.
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