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Mahindra Group is seeking new partners for its partnership with the South Korean automaker Ssangyong. The company has incurred massive losses during quarter four of the financial and is looking to cut down the budgets.
The company has announced that it is ready to give up control of Ssangyong, as the foreign brand is struggling to generate revenue for Mahindra amidst the huge losses incurred during the previous financial year. currently owns 75 per cent stake of Ssangyong brand.
Owning to the financial crisis during the ongoing Covid-19 pandemic, some companies have shut down. However, majority of the companies are choosing to downsize and reduce the losses during the current cash crush. This will help the business to keep functioning during the extreme cash crush across the world. Mahindra seems to be employing the same technique as well.
Pawan Goenka, Managing Director, Mahindra and Mahindra Limited stated that Ssangyong needs a new investor to support the company. He also informed that the company is currently working with the South Korean brand to bring in new investors.
Adding to the statement from Mr Goenka, Anish Shah, Deputy Managing Director, Mahindra and Mahindra Limited stated that after we onboard a new investor into the partnership, it will automatically take our stake down. The new investor could also buy our stake in the company, which would result in control over the foreign brand.
Mahindra took over the Ssangyong 10 year ago and introduced the Rexton SUV in the Indian market. The SUV was decently equipped at that time and rivalled the likes of Ford Endeavour and Toyota Fortuner. The Rexton failed to bring in volumes for the brand because of its well established in the Indian market.
As a result, Mahindra had to discontinue the SUV in the country. Although we do not see a Ssangyong model in the Indian market, the current flagship model from Mahindra, the Alturas G4, is a direct derivative of the latest iteration of the Rexton in the Indian market.
In addition to seeking new investor partners, the company will also be reviewing its entire businesses for the next 12 months. It will be deciding whether to keep the business afloat or shut down, that will help in minimizing losses.
Mahindra has also entered into a joint venture with US automotive giant Ford Motor in 2019. However, due to the current crisis, the progress has been affected in the completion of merger formalities between the two companies. The new alliance seems promising as it will spawn some good SUVs from both brands.
Thoughts About The Mahindra Seeking New Partners For Ssangyong Brand
Mahindra has reported a loss of Rs 3,255 crore In Q4 FY2020 and has generated 35 per cent less revenue as compared to the same previous during the previous financial year. As a result, the company is looking out for new investors to keep the South Korean auto manufacturer running.