M&M today completed all necessary formalities for acquiring a 70% stake in South Korean auto-maker, SsangYong Motor Company (SMC). The deal cost Mahindra $463 million, or about Rs. 2,105 crore.
After sealing the deal, SsangYong said that it would invest 240 billion won (Rs. 960 crore), up 70% from last year, for developing new vehicles in 2011. The company will also pump in an additional 40 billion won (nearly Rs 160 crore) on brand building measures – up 60% over 2010. Besides, Ssangyong is aiming to increase the overseas brand investment four times this year. Related: Mahindra signs $464-million deal to buy SsangYong
Five point agenda by Mahindra
Mahindra has proposed a five point agenda for SsangYong comprising strengthening the product pipeline, harnessing synergies between Mahindra and SsangYong, investing in the SsangYong Motor Company brand, building human resources and focusing on financial stability.
M&M President, Automotive and Farm Sector, Pawan Goenka told PTI, “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.”
Goenka said that Dilip Sundaram has been named the new CFO of SMC while Yoo-il Le will be its CEO. He added that a new, six-member board of directors will be formed. Also read: Mahindra’s upcoming SUV launches in India
However, Goenka said that no decision has been taken yet on rebranding and on sharing of common platforms. But in case there is such a possibility, Mahindra would explore sharing of vehicle platforms between SsangYong and Mahindra, he added.
Mahindra is planning to launch the Ssangyong Korando and Rexton SUVs in India. The Korando is a compact SUV that’s powered by an e-XDi 200 turbodiesel engine that puts out 175PS of power and claims to offer a fuel economy of about 16 kmpl. Mahindra will likely give out a launch date within the next 2-3 months though we’re expecting the Korando to hit Indian shores by the end of 2011. Also read: Mahindra Ssangyong Korando photo gallery