Mahindra to give up control of struggling South Korean unit amid Covid-19

Mahindra & Mahindra plans to give up control of struggling South Korean unit SsangYong Motor, the Indian automaker's managing director said on Friday, as it looks to exit loss-making ventures amid the coronavirus pandemic.

"SsangYong needs a new investor. We are working with the company to see if we can secure investment," Pawan Goenka told reporters.

Mahindra earlier reported a consolidated net loss of Rs 19.55 billion ($258 million), compared with a net profit a year ago, as it booked a writedown on its investment in SsangYong and other international units.

Mahindra, which owns a 75 per cent stake in SsangYong, rescued the sport-utility vehicle (SUV) maker from near-insolvency in 2010 but has struggled to revive its fortunes. The company said in April it would not invest further in SsangYong.

"If a new investor comes on board, that automatically takes our stake down, or they may even buy our stake," Mahindra's deputy managing director, Anish Shah said.

As part of a wider restructuring effort by the company to cut costs and prioritise capital expenditure as it rides out the coronavirus pandemic, Mahindra would review all its loss-making businesses over the next 12 months, Shah said.

Where there is no clear path to profitability it would look for a partnership or close down those businesses, but in those that can clearly generate equity returns of 18 per cent or those that are of strategic importance, Mahindra would continue to invest, Shah said.

Mahindra, which entered into a joint venture with US automaker Ford Motor last year, said the pandemic had delayed the completion of merger formalities between the two companies but they continued to work together under the new alliance.